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MAS Institutional class Prospectus
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MAS FUND
FIXED INCOME PORTFOLIO
MARCH 16, 1998,
AS REVISED JUNE 16, 1998
Client Services: 1-800-354-8185 Prices and Investment Results: 1-800-522-1525
MAS FUNDS (the Fund) is a no-load mutual fund consisting of twenty-nine
portfolios, one of which is described in this Prospectus. This Prospectus offers
the Institutional Class Shares of the Fixed Income Portfolio (the "portfolio").
The portfolio may invest to varying degrees in high yield, high risk securities
which are speculative with regard to payment of interest and return of principal
(commonly referred to as junk bonds); therefore, investments in this portfolio
may not be suitable for all investors. See High Yield Investing in the Glossary
of Strategies for additional information regarding certain risks associated with
investment in such securities.
PORTFOLIO PAGE REFERENCE
How to Use This Prospectus: 2
Portfolio Summary: 8
Prospectus Glossary:
Strategies 9
Investments 11
General Shareholder
Information: 19
Table of Contents: Back Cover
This Prospectus, which should be retained for future reference, sets forth
concisely information that you should know before you invest. A Statement of
Additional Information containing additional information about the Fund has been
filed with the Securities and Exchange Commission. Such Statement is dated
January 31, 1998 as revised from time to time, and has been incorporated by
reference into this Prospectus. A copy of the Statement may be obtained, without
charge, by writing to the Fund or by calling the Client Services Group at the
telephone number shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Miller
Anderson
& Sherrerd, LLP __ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185
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EXPENSE SUMMARY - INSTITUTIONAL CLASS SHARES
The following tables illustrate the various expenses and fees that a
shareholder in the portfolio will incur either directly or indirectly. The
Adviser may from time to time waive fees or reimburse expenses thereby
reducing total operating expenses.
SHAREHOLDER TRANSACTION EXPENSES:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets after
fee waivers)
12b-1 Fees None
Shareholder Servicing Fee None
INVESTMENT TOTAL
ADVISORY OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
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Fixed Income 0.375% 0.105% 0.480%
The Total Operating Expense ratios reflected in the table above may be higher
than the ratio of expenses actually deducted from portfolio assets because of
the effect of expense offset arrangements. The result of such arrangements is to
offset expenses that otherwise would be deducted from portfolio assets. Amounts
in the above table have been restated to reflect current fees and expenses.
EXAMPLE
The purpose of this table is to assist in understanding the various expenses
that a shareholder in the portfolio will bear directly or indirectly. The
following example illustrates the expenses that an investor would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return, and (2) redemption at the end of each time period. The example should
not be considered a representation of past or future expenses and actual
expenses may be greater or less than those shown.
Portfolio 1 Year 3 Year 5 Year 10 Year
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Fixed Income $5 $15 $27 $60
HOW TO USE THIS PROSPECTUS
A PROSPECTUS SUMMARY begins on page 3;
FINANCIAL HIGHLIGHTS and a description of YIELD AND TOTAL RETURN begin on
page 5;
GENERAL INFORMATION including INVESTMENT LIMITATIONS begins on page 6;
A SUMMARY PAGE for the portfolio's Objective, Policies and Strategies begins
on page 8;
The PROSPECTUS GLOSSARY which defines specific Allowable Investments,
Policies and Strategies printed in bold type throughout this Prospectus
begins on page 9; and
GENERAL SHAREHOLDER INFORMATION begins on page 19.
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MAS Fund - 2 Terms in BOLD TYPE are defined in the Prospectus Glossary
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SUMMARY INFORMATION:
The following information should be read in conjunction with the specific
information about the portfolio.
OBJECTIVES: The portfolio seeks to achieve its investment objective relative
to the universe of securities in which it is authorized to invest and,
accordingly, the total return or current income achieved by the portfolio may
not be as great as that achieved by another portfolio that can invest in a
broader range of securities. The portfolio will seek to produce total return
by actively trading portfolio securities. The objective of the portfolio is
fundamental and may only be changed with approval of holders of a majority of
the shares of the portfolio. The achievement of the portfolio's objective
cannot be assured.
RISK FACTORS: Prospective investors in the Fund should consider the following
factors as they apply to the portfolio's allowable investments and policies.
See the Prospectus Glossary for more information on terms printed in BOLD
TYPE:
* The portfolio may invest in REPURCHASE AGREEMENTS, which entail a risk of
loss should the seller default in its obligation to repurchase the security
which is the subject of the transaction;
* The portfolio may participate in a SECURITIES LENDING program which entails
a risk of loss should a borrower fail financially;
* FIXED-INCOME SECURITIES will be affected by general changes in interest
rates resulting in increases or decreases in the value of the obligations
held by the portfolio. The value of FIXED-INCOME SECURITIES can be expected
to vary inversely to changes in prevailing interest rates, i.e., as
interest rates decline, market value tends to increase and vice versa.
Certain FIXED INCOME SECURITIES may be highly sensitive to interest rate
changes, and highly sensitive to the rate of principal payments (including
prepayments on underlying mortgage assets). Investments in securities rated
below investment grade, generally referred to as HIGH YIELD, high risk or
junk bonds, carry a high degree of credit risk and are considered
speculative by the major rating agencies;
* COMMON STOCKS are subject to market risks which may cause their prices to
fluctuate over time. Changes in the value of portfolio securities will not
necessarily affect cash income derived from these securities, but will
affect the portfolio's net asset value;
* Investments in foreign securities involve certain special considerations
which are not typically associated with investing in U.S. companies. The
portfolio may also engage in foreign currency exchange transactions. See
FORWARDS, FUTURES & OPTIONS, and SWAPS;
* Securities purchased on a WHEN-ISSUED basis may decline or appreciate in
market value prior to their actual delivery to the portfolio;
* The portfolio may invest a portion of its assets in DERIVATIVES including
FUTURES & OPTIONS. Futures contracts, options and options on futures
contracts entail certain costs and risks, including imperfect correlation
between the value of the securities held by the portfolio and the value of
the particular derivative instrument, and the risk that a portfolio could
not close out a futures or options position when it would be most
advantageous to do so; and
* The portfolio may invest in certain instruments such as FORWARDS, certain
types of FUTURES & OPTIONS, certain types of MORTGAGE SECURITIES and
WHEN-ISSUED SECURITIES which require the portfolio to segregate some or all
of its cash or liquid securities to cover its obligations pursuant to such
instruments. As asset segregation reaches certain levels, the portfolio may
lose flexibility in managing its investments properly, responding to
shareholder redemption requests, or meeting other obligations and may be
forced to sell other securities that it wanted to retain or to realize
unintended gains or losses.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 3
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HOW TO INVEST: Institutional Class Shares of the portfolio are available to
clients of the Adviser with combined investments of $5,000,000 and Shareholder
Organizations who have a contractual arrangement with the Fund or the Fund's
Distributor, including institutions such as trusts, foundations or
broker-dealers purchasing for the accounts of others. Shares are offered
directly to investors without a sales commission at the net asset value of the
portfolio next determined after receipt of the order. Share purchases may be
made by sending investments directly to the Fund, subject to acceptance by the
Fund. The Fund also offers Investment and Adviser Class Shares which differ from
the Institutional Class Shares in expenses charged and purchase requirements.
Further information relating to the other classes may be obtained by calling
800-354-8185.
HOW TO REDEEM: Shares of the portfolio may be redeemed at any time at the net
asset value of the portfolio next determined after receipt of the redemption
request. The redemption price may be more or less than the purchase price. See
Redemption of Shares and Shareholder Services.
THE FUND'S INVESTMENT ADVISER: Miller Anderson & Sherrerd, LLP (the
"Adviser") is a Pennsylvania limited liability partnership founded in 1969,
wholly owned by indirect subsidiaries of Morgan Stanley Dean Witter & Co.,
and is located at One Tower Bridge, West Conshohocken, PA 19428. The Adviser
provides investment counseling services to employee benefit plans,
endowments, foundations and other institutional investors, and as of March
31, 1998 had in excess of $67.1 billion in assets under management.
THE FUND'S DISTRIBUTOR: MAS Fund Distribution, Inc. (the "Distributor")
provides distribution services to the Fund.
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MAS Fund - 4 Terms in BOLD TYPE are defined in the Prospectus Glossary
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FINANCIAL HIGHLIGHTS - FISCAL YEARS ENDED SEPTEMBER 30
Selected per share data and ratios for a share
outstanding throughout each period
The following information should be read in conjunction with the Fund's
financial statements which are included in the Annual Report to Shareholders
incorporated by reference in the Statement of Additional Information. The Fund's
financial statements for the year ended September 30, 1997 have been examined by
Price Waterhouse LLP whose opinion thereon (which was unqualified) is also
incorporated by reference in the Statement of Additional Information. (Data is
adjusted to reflect a 2.5 for 1 share split as of August 13, 1993.)
<TABLE>
<CAPTION>
NET GAINS DIVIDEND
NET ASSET OR LOSSES DISTRIBUTIONS CAPITAL GAIN
VALUE- NET ON SECURITIES TOTAL FROM (NET DISTRIBUTIONS
BEGINNING INVESTMENT (REALIZED AND INVESTMENT INVESTMENT (REALIZED NET OTHER
OF PERIOD INCOME UNREALIZED) ACTIVITIES INCOME) CAPITAL GAINS) DISTRIBUTIONS
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FIXED INCOME PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 11/14/84)
<S> <C> <C> <C> <C> <C> <C> <C>
1997++ $11.83 $0.80 $0.50 $1.30 ($0.78) ($0.13) --
1996 11.82 0.78 0.08 0.86 (0.79) (0.06) --
1995 10.93 0.80 0.69 1.49 (0.60) -- --
1994 12.86 0.77 (1.28) (0.51) (0.82) (0.47) $0.13)#
1993 12.67 0.88 0.75 1.63 (0.83) (0.61) --
1992 12.20 0.90 0.74 1.64 (1.02) (0.15) --
1991 10.94 0.94 1.25 2.19 (0.93) -- --
1990 11.64 0.92 (0.49) 0.43 (1.03) (0.10) --
1989 11.40 0.90 0.11 1.01 (0.76) (0.01) --
1988 10.86 0.97 0.43 1.40 (0.86) -- --
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS- NET ASSETS- RATIO OF RATIO OF
VALUE- END OF EXPENSES NET INCOME PORTFOLIO AVERAGE
TOTAL END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER COMMISSION
DISTRIBUTIONS PERIOD RETURN* (THOUSANDS) NET ASSETS+ NET ASSETS RATE RATE**
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997++ ($0.91) $12.22 11.47% $3,219,987 0.49% 6.73% 179% --
1996 (0.85) 11.83 7.63 1,790,146 0.48 6.77 162 --
1995 (0.60) 11.82 14.19 1,487,409 0.49 7.28 140 --
1994 (1.42) 10.93 (4.43) 1,194,957 0.49 6.79 100 --
1993 (1.44) 12.86 14.26 909,738 0.47 7.06 144 --
1992 (1.17) 12.67 14.35 859,712 0.47 7.50 137 --
1991 (0.93) 12.20 21.12 831,547 0.47 8.25 143 --
1990 (1.13) 10.94 3.79 666,736 0.46 8.43 209 --
1989 (0.77) 11.64 9.25 559,995 0.47 8.36 100 --
1988 (0.86) 11.40 13.43 405,385 0.49 8.91 168 --
</TABLE>
NOTES TO THE FINANCIAL HIGHLIGHTS
* Total return figures for partial years are not annualized.
** For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose the average commission rate per share paid for
security transactions on which commissions were charged.
# Represents distributions in excess of net realized gains.
+ For the respective periods ended September 30, the Ratio of Expenses to
Average Net Assets excludes the effect of expense offsets. If expense
offsets were included, the Ratio of Expenses to Average Net Assets would be
as follows for the respective periods.
PORTFOLIO 1995 1996 1997
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Fixed Income 0.48% 0.48% 0.48%
++ Per share amounts for the year ended September 30, 1997, are based on
average shares outstanding.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 5
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YIELD AND TOTAL RETURN:
From time to time the portfolio advertises its yield and total return. BOTH
YIELD AND TOTAL RETURN FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. The average annual total return
reflects changes in the price of the portfolio's shares and assumes that any
income dividends and/or capital gain distributions made by the portfolio
during the period were reinvested in additional shares of the portfolio.
Figures will be given for one-, five- and ten-year periods ending with the
most recent calendar quarter-end (if applicable), and may be given for other
periods as well (such as from commencement of the portfolio's operations).
The yield of the portfolio is computed by dividing the net investment income
per share (using the average number of shares entitled to receive dividends)
earned during a 30-day period by the closing price per share on the last day
of the period. For the purpose of determining net investment income, the
calculation includes as expenses of the portfolio all recurring fees and any
non recurring charges for the period stated.
The performance of the portfolio may be compared to data prepared by
independent services which monitor the performance of investment companies,
data reported in financial and industry publications, returns of other
investment advisers and mutual funds, and various indices as further
described in the Statement of Additional Information.
The performance of Institutional Class Shares, Investment Class Shares and
Adviser Class Shares differs because of any class-specific expenses paid by
each class and the shareholder servicing fees charged to Investment Class
Shares and distribution fees charged to Adviser Class Shares.
The Annual Report to Shareholders of the Fund for the Fund's most recent
fiscal year-end contains additional performance information that includes
comparisons with appropriate indices. The Annual Report is available without
charge upon request by writing to the Fund or calling the Client Services
Group at the telephone number shown on the front cover of this Prospectus.
GENERAL INFORMATION
SUITABILITY: The portfolio is designed for long-term investors who can accept
the risks entailed in investing in the stock and bond markets, and is not
meant to provide a vehicle for playing short-term swings in the market. The
portfolio is designed principally for the investments of tax-exempt fiduciary
investors who are entrusted with the responsibility of investing assets held
for the benefit of others. Since such investors are not subject to Federal
income taxes, securities transactions for the portfolio will not be
influenced by the different tax treatment of capital gains and dividend
income under the Internal Revenue Code.
SECURITIES LENDING: The portfolio may lend its securities to qualified
brokers, dealers, banks and other financial institutions for the purpose of
realizing additional income. Loans of securities will be collateralized by
cash, letters of credit, or securities issued or guaranteed by the U.S.
Government or its agencies. The collateral will equal at least 100% of the
current market value of the loaned securities. In addition, the portfolio
will not loan its portfolio securities to the extent that greater than
one-third of its total assets, at fair market value, would be committed to
loans at
that time.
ILLIQUID SECURITIES/RESTRICTED SECURITIES: The portfolio may invest up to 15%
of its net assets in securities that are illiquid by virtue of the absence of
a readily available market, or because of legal or contractual restrictions
on resale. This policy does not limit the acquisition of (i) restricted
securities eligible for resale to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933 or (ii) commercial paper issued
pursuant to Section 4(2) under the Securities Act of 1933, that are
determined to be liquid in accordance with guidelines established by the
Fund's Board of Trustees.
TURNOVER: The Adviser manages the portfolio generally without regard to
restrictions on annual turnover. In general, the portfolio will not trade for
short-term profits, but when circumstances warrant, investments may be sold
without regard to the length of time held.
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MAS Fund - 6 Terms in BOLD TYPE are defined in the Prospectus Glossary
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The annual turnover rate of the portfolio will ordinarily exceed 100% due to
changes in portfolio duration, yield curve strategy or commitments with respect
to forward delivery mortgage-backed securities.
High rates of annual turnover necessarily result in correspondingly heavier
brokerage and portfolio trading costs which are paid by the portfolio.
Trading in FIXED-INCOME SECURITIES does not generally involve the payment of
brokerage commissions, but does involve indirect transaction costs. In
addition to portfolio trading costs, higher rates of annual turnover may
result in the realization of capital gains. To the extent net short-term
capital gains are realized, any distributions resulting from such gains are
considered ordinary income for federal income tax purposes. The annual
turnover rate for the portfolio is shown in the Financial Highlights under
"Portfolio Turnover Rate."
CASH EQUIVALENTS/TEMPORARY DEFENSIVE INVESTING: Although the portfolio
intends to remain substantially fully invested, a small percentage of the
portfolio's assets is generally held in the form of CASH EQUIVALENTS in order
to meet redemption requests and otherwise manage the daily affairs of the
portfolio. In addition, the portfolio may, when the Adviser deems that market
conditions are such that a temporary defensive approach is desirable, invest
in CASH EQUIVALENTS without limit. In addition, the Adviser may, for
temporary defensive purposes, increase or decrease the average weighted
maturity or duration of the portfolio without regard to the portfolio's usual
average weighted
maturity.
CONCENTRATION: Concentration is defined as investment of 25% or more of a
portfolio's total assets in the securities of issuers operating in any one
industry. Except as provided in the portfolio's specific investment policies,
or as detailed in Investment Limitations, the portfolio will not concentrate
investments in any one industry.
INVESTMENT LIMITATIONS: The portfolio is subject to certain limitations
designed to reduce its exposure to specific situations. Some of these
limitations are:
(a) with respect to 75% of its assets, the portfolio will not purchase
securities of any issuer if, as a result, more than 5% of the portfolio's
total assets taken at market value would be invested in the securities of any
single issuer except that this restriction does not apply to securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities; and
(b) with respect to 75% of its assets, the portfolio will not purchase a
security if, as a result, the portfolio would hold more than 10% of the
outstanding voting securities of any issuer.
Limitations (a) and (b) and certain other limitations described in the
Statement of Additional Information are fundamental and may be changed only
with the approval of the holders of a majority of the shares of the
portfolio. Other investment limitations described here and in the Statement
of Additional Information are not fundamental policies; meaning that the
Board of Trustees may change them without shareholder approval. If a
percentage limitation on investment or utilization of assets as set forth in
this prospectus or the Statement of Additional Information is adhered to at
the time an investment is made, a later change in percentage resulting from
changes in the value or total cost of the portfolio's assets will not be
considered a violation of the restriction, and the sale of securities will
not be required.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 7
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FIXED INCOME PORTFOLIO
Objective: To achieve above-average total return over a market cycle
of three to five years, consistent with reasonable risk,
by investing in a diversified portfolio of U.S.
Government securities, corporate bonds (including bonds
rated below investment grade, commonly referred to as
junk bonds), foreign fixed-income securities and
mortgage-backed securities of domestic issuers and other
fixed-income securities. The portfolio's average weighted
maturity will ordinarily be greater than five years.
Approach: The Adviser actively manages the maturity and duration
structure of the portfolio in anticipation of long-term
trends in interest rates and inflation. Investments are
diversified among a wide variety of FIXED-INCOME
SECURITIES in all market sectors.
Policies: Generally at least 65% invested in FIXED-INCOME
SECURITIES May invest greater than 50% in MORTGAGE
SECURITIES DERIVATIVES may be used to pursue portfolio
strategy
Quality
Specifications: 80% INVESTMENT GRADE SECURITIES
Up to 20% HIGH YIELD
Maturity and
Duration: Average weighted maturity generally greater than 5
years
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<S> <C> <C> <C> <C>
Allowable Investments: AGENCIES FLOATERS INVESTMENT COMPANIES STRUCTURED NOTES
ASSET-BACKEDS FOREIGN BONDS LOAN PARTICIPATIONS SWAPS
BRADY BONDS FOREIGN CURRENCY MORTGAGE SECURITIES U.S. GOVERNMENTS
CASH EQUIVALENTS FORWARDS MUNICIPALS WHEN-ISSUED SECURITIES
CMOS FUTURES & OPTIONS PREFERRED STOCK YANKEES
CONVERTIBLES HIGH YIELD REPURCHASE AGREEMENTS ZERO COUPONS
CORPORATES INVERSE FLOATERS SMBS
Comparative Index: Salomon Broad Investment Grade
Lehman Brothers Aggregate
Strategies: MATURITY AND DURATION MANAGEMENT
VALUE INVESTING
MORTGAGE INVESTING
HIGH YIELD INVESTING
FOREIGN INVESTING
FOREIGN FIXED INCOME INVESTING
Portfolio
Management Team: Thomas L. Bennett, Kenneth B. Dunn and Richard B. Worley
</TABLE>
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MAS Fund - 8 Terms in BOLD TYPE are defined in the Prospectus Glossary
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PROSPECTUS GLOSSARY
CHARACTERISTICS AND RISKS OF STRATEGIES AND INVESTMENTS
STRATEGIES
FOREIGN FIXED INCOME INVESTING: The Adviser invests in FOREIGN BONDS and
other FIXED-INCOME SECURITIES denominated in foreign currencies, where, in
the opinion of the Adviser, the combination of current yield and currency
value offer attractive expected returns. When the total return opportunities
in a foreign bond market appear attractive in local currency terms, but where
in the Adviser's judgment unacceptable currency risk exists, currency FUTURES
& OPTIONS, FORWARDS and SWAPS may be used to hedge the currency risk.
FOREIGN INVESTING: Investors should recognize that investing in FOREIGN BONDS
and foreign equities involves certain special considerations which are not
typically associated with investing in domestic securities.
As non-U.S. companies are not generally subject to uniform accounting,
auditing and financial reporting standards and practices comparable to those
applicable to U.S. companies, there may be less publicly available information
about certain foreign securities than about U.S. securities. FOREIGN BONDS and
foreign equities may be less liquid and more volatile than securities of
comparable U.S. companies. There is generally less government supervision and
regulation of stock exchanges, brokers and listed companies than in the U.S.
With respect to certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in those
countries. Additionally, there may be difficulty in obtaining and enforcing
judgments against foreign issuers.
Since FOREIGN BONDS and foreign equities may be denominated in foreign
currencies, and since the portfolio may temporarily hold uninvested reserves
in bank deposits of foreign currencies prior to reinvestment or conversion to
U.S. dollars, the portfolio may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies.
Although the portfolio will endeavor to achieve the most favorable execution
costs in its portfolio transactions in foreign securities, fixed commissions
on many foreign stock exchanges are generally higher than negotiated
commissions on U.S. exchanges. In addition, it is expected that the expenses
for custodial arrangements of the portfolio's foreign securities will be
greater than the expenses for the custodial arrangements for handling U.S.
securities of equal value. Certain foreign governments levy withholding taxes
against dividend and interest income. Although in some countries a portion of
these taxes is recoverable, the non-recovered portion of foreign withholding
taxes will reduce the income the portfolio receives from the companies
comprising the portfolio's investments.
HIGH YIELD INVESTING: Involves investing in HIGH YIELD securities based on
the Adviser's analysis of economic and industry trends and individual
security characteristics. The Adviser conducts credit analysis for each
security considered for investment to evaluate its attractiveness relative to
its risk. A high level of diversification is also maintained to limit credit
exposure to individual issuers.
To the extent the portfolio invests in HIGH YIELD securities it will be
exposed to a substantial degree of credit risk. Lower-rated bonds are
considered speculative by traditional investment standards. HIGH YIELD
securities may be issued as a consequence of corporate restructuring or
similar events. Also, HIGH YIELD securities are often issued by smaller, less
credit worthy companies, or by highly leveraged (indebted) firms, which are
generally less able than more established or less leveraged firms to make
scheduled payments of interest and principal. The risks posed by securities
issued under such circumstances are substantial.
The market for HIGH YIELD securities is still relatively new. Because of
this, a long-term track record for bond default rates does not exist. In
addition, the secondary market for high yield securities is generally less
liquid than that for investment grade corporate securities. In periods of
reduced market liquidity, high yield bond prices may become more volatile,
and both the high yield market and the portfolio may experience sudden and
substantial price declines. This lower liquidity might have an effect on the
portfolio's ability to value or dispose of such securities. Also, there
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 9
<PAGE>
may be significant disparities in the prices quoted for high yield securities by
various dealers. Under such conditions, the portfolio may find it difficult to
value its securities accurately. The portfolio may also be forced to sell
securities at a significant loss in order to meet shareholder redemptions. These
factors add to the risks associated with investing in HIGH YIELD securities.
High yield bonds may also present risks based on payment expectations. For
example, high yield bonds may contain redemption or call provisions. If an
issuer exercises these provisions in a declining interest rate market, the
portfolio would have to replace the security with a lower yielding security,
resulting in a decreased return for investors.
Certain types of high yield bonds are non-income paying securities. For example,
ZERO COUPONS pay interest only at maturity and payment-in-kind bonds pay
interest in the form of additional securities. Payment in the form of additional
securities, or interest income recognized through discount accretion, will,
however, be treated as ordinary income which will be distributed to shareholders
even though the portfolio does not receive periodic cash flow from these
investments.
MATURITY AND DURATION MANAGEMENT: One of two primary components of the Adviser's
fixed-income investment strategy is maturity and duration management. The
maturity and duration structure of the portfolio is actively managed in
anticipation of cyclical interest rate changes. Adjustments are not made in an
effort to capture short-term, day-to-day movements in the market, but instead
are implemented in anticipation of longer term shifts in the levels of interest
rates. Adjustments made to shorten portfolio maturity and duration are made to
limit capital losses during periods when interest rates are expected to rise.
Conversely, adjustments made to lengthen maturity are intended to produce
capital appreciation in periods when interest rates are expected to fall. The
foundation for maturity and duration strategy lies in analysis of the U.S. and
global economies, focusing on levels of real interest rates, monetary and fiscal
policy actions, and cyclical indicators. See VALUE INVESTING for a description
of the second primary component of the Adviser's fixed-income strategy.
About Maturity and Duration: Most debt obligations provide interest (coupon)
payments in addition to a final (par) payment at maturity. Some obligations also
have call provisions. Depending on the relative magnitude of these payments and
the nature of the call provisions, the market values of debt obligations may
respond differently to changes in the level and structure of interest rates.
Traditionally, a debt security's term-to-maturity has been used as a proxy for
the sensitivity of the security's price to changes in interest rates (which is
the interest rate risk or volatility of the security). However, term-to-maturity
measures only the time until a debt security provides its final payment, taking
no account of the pattern of the security's payments prior to maturity.
Duration is a measure of the expected life of a FIXED-INCOME SECURITY that was
developed as a more precise alternative to the concept of term-to-maturity.
Duration incorporates a bond's yield, coupon interest payments, final maturity
and call features into one measure. Duration is one of the fundamental tools
used by the Adviser in the selection of FIXED-INCOME SECURITIES. Duration is a
measure of the expected life of a FIXED-INCOME SECURITY on a present value
basis. Duration takes the length of the time intervals between the present time
and the time that the interest and principal payments are scheduled or, in the
case of a callable bond, expected to be received, and weights them by the
present values of the cash to be received at each future point in time. For any
FIXED-INCOME SECURITY with interest payments occurring prior to the payment of
principal, duration is always less than maturity. In general, all other factors
being the same, the lower the stated or coupon rate of interest of a
fixed-income security, the longer the duration of the security; conversely, the
higher the stated or coupon rate of interest of a FIXED-INCOME SECURITY, the
shorter the duration of the security.
There are some situations where even the standard duration calculation does not
properly reflect the interest rate exposure of a security. For example, floating
and variable rate securities often have final maturities of ten or more years;
however, their interest rate exposure corresponds to the frequency of the coupon
reset. Another example where the interest rate exposure is not properly captured
by duration is the case of mortgage pass-through securities. The stated final
maturity of such securities is generally 30 years, but current prepayment rates
are more critical in determining the securities' interest rate exposure. In
these and other similar situations, the Adviser will use sophisticated
analytical techniques that incorporate the economic life of a security into the
determination of its interest rate exposure.
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MAS Fund - 10 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
MORTGAGE INVESTING: At times it is anticipated that greater than 50% of the
portfolio's assets may be invested in mortgage-related securities. These include
MORTGAGE SECURITIES which represent interests in pools of mortgage loans made by
lenders such as commercial banks, savings and loan associations, mortgage
bankers and others. The pools are assembled by various organizations, including
the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC), Fannie Mae, other government agencies, and private issuers.
It is expected that a portfolio's primary emphasis will be in MORTGAGE
SECURITIES issued by the various government-related organizations. However, the
portfolio may invest, without limit, in MORTGAGE SECURITIES issued by private
issuers when the Adviser deems that the quality of the investment, the quality
of the issuer, and market conditions warrant such investments. Securities issued
by private issuers will be rated investment grade by Moody's or Standard &
Poor's or be deemed by the Adviser to be of comparable investment qualtity.
VALUE INVESTING: One of two primary components of the Adviser's fixed-income
strategy is value investing, whereby the Adviser seeks to identify undervalued
sectors and securities through analysis of credit quality, option
characteristics and liquidity. Quantitative models are used in conjunction with
judgment and experience to evaluate and select securities with embedded put or
call options which are attractive on a risk- and option-adjusted basis.
Successful value investing will permit the portfolio to benefit from the price
appreciation of individual securities during periods when interest rates are
unchanged. See MATURITY AND DURATION MANAGEMENT for a description of the other
key component of the Adviser's fixed-income investment strategy.
INVESTMENTS
The portfolio may invest in the securities defined below in accordance with its
listing of Allowable Investments and any quality or policy constraints.
AGENCIES: are securities which are not guaranteed by the U.S. Government, but
which are issued, sponsored or guaranteed by a federal agency or federally
sponsored agency such as the Student Loan Marketing Association or any of
several other agencies.
ASSET-BACKEDS: are securities collateralized by shorter term loans such as
automobile loans, home equity loans, computer leases, or credit card
receivables. The payments from the collateral are passed through to the security
holder. The collateral behind asset-backed securities tends to have prepayment
rates that do not vary with interest rates. In addition the short-term nature of
the loans reduces the impact of any change in prepayment level. Due to
amortization, the average life for these securities is also the conventional
proxy for maturity.
Possible Risks: Due to the possibility that prepayments (on automobile loans
and other collateral) will alter the cash flow on asset-backed securities, it
is not possible to determine in advance the actual final maturity date or
average life. Faster prepayment will shorten the average life and slower
prepayments will lengthen it. However, it is possible to determine what the
range of that movement could be and to calculate the effect that it will have
on the price of the security. In selecting these securities, the Adviser will
look for those securities that offer a higher yield to compensate for any
variation in average maturity.
BRADY BONDS: are debt obligations which are created through the exchange of
existing commercial bank loans to foreign entities for new obligations in
connection with debt restructuring under a plan introduced by former U.S.
Secretary of the Treasury, Nicholas F. Brady (the Brady Plan). Brady Bonds
have been issued fairly recently, and, accordingly, do not have a long
payment history. They may be collateralized or uncollateralized and issued in
various currencies (although most are dollar-denominated) and they are activel
y traded in the over-the-counter secondary market. For further information on
these securities, see the Statement of Additional Information. The portfolio
will only invest in Brady Bonds consistent with quality specifications.
CASH EQUIVALENTS: are short-term fixed-income instruments comprising:
(1) Time deposits, certificates of deposit (including marketable variable
rate certificates of deposit) and bankers' acceptances issued by a commercial
bank or savings and loan association. Time deposits are non-negotiable
deposits
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 11
<PAGE>
maintained in a banking institution for a specified period of time at a stated
interest rate. Certificates of deposit are negotiable short-term obligations
issued by commercial banks or savings and loan associations against funds
deposited in the issuing institution. Variable rate certificates of deposit are
certificates of deposit on which the interest rate is periodically adjusted
prior to their stated maturity based upon a specified market rate. A bankers'
acceptance is a time draft drawn on a commercial bank by a borrower usually in
connection with an international commercial transaction (to finance the import,
export, transfer or storage of goods).
The portfolio may invest in obligations of U.S. banks, and in foreign branches
of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars).
Euro and Yankee dollar investments will involve some of the same risks of
investing in international securities that are discussed in the FOREIGN
INVESTING section of this Prospectus.
The portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in other
currencies, or, in the case of domestic banks which do not have total assets of
at least $1 billion, the aggregate investment made in any one such bank is
limited to $100,000 and the principal amount of such investment is insured in
full by the Federal Deposit Insurance Corporation, (ii) in the case of U.S.
banks, it is a member of the Federal Deposit Insurance Corporation, and (iii) in
the case of foreign branches of U.S. banks, the security is deemed by the
Adviser to be of an investment quality comparable with other debt securities
which may be purchased by the portfolio;
(2) The portfolio may invest in commercial paper rated at time of purchase by
one or more Nationally Recognized Statistical Rating Organizations ("NRSRO") in
one of their two highest categories, (e.g., A-l or A-2 by Standard & Poor's or
Prime 1 or Prime 2 by Moody's), or, if not rated, issued by a corporation having
an outstanding unsecured debt issue rated high-grade by a NRSRO (e.g. A or
better by Moody's, Standard & Poor's or Fitch);
(3) Short-term corporate obligations rated high-grade at the time of purchase
by a NRSRO (e.g. A or better by Moody's, Standard & Poor's or Fitch);
(4) U.S. Government obligations including bills, notes, bonds and other debt
securities issued by the U.S. Treasury. These are direct obligations of the
U.S. Government and differ mainly in interest rates, maturities and dates of
issue;
(5) Government Agency securities issued or guaranteed by U.S. Government
sponsored instrumentalities and Federal agencies. These include securities
issued by the Federal Home Loan Banks, Federal Land Bank, Farmers Home
Administration, Farm Credit Banks, Federal Intermediate Credit Bank, Fannie Mae,
Federal Financing Bank, the Tennessee Valley Authority, and others; and
(6) REPURCHASE AGREEMENTS collateralized by securities listed above.
CMOS--COLLATERALIZED MORTGAGE OBLIGATIONS: are DERIVATIVES which are
collateralized by mortgage pass-through securities. Cash flows from the mortgage
pass-through securities are allocated to various tranches (a "tranche" is
essentially a separate security) in a predetermined, specified order. Each
tranche has a stated maturity - the latest date by which the tranche can be
completely repaid, assuming no prepayments - and has an average life - the
average of the time to receipt of a principal payment weighted by the size of
the principal payment. The average life is typically used as a proxy for
maturity because the debt is amortized (repaid a portion at a time), rather than
being paid off entirely at maturity, as would be the case in a straight debt
instrument.
Possible Risks: Due to the possibility that prepayments (on home mortgages and
other collateral) will alter the cash flow on CMOs, it is not possible to
determine in advance the actual final maturity date or average life. Faster
prepayment will shorten the average life and slower prepayments will lengthen
it. However, it is possible to determine what the range of that movement could
be and to calculate the effect that it will have on the price of the security.
In selecting these securities, the Adviser will look for those securities that
offer a higher yield to compensate for any variation in average maturity.
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MAS Fund - 12 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
Like bonds in general, MORTGAGE SECURITIES will generally decline in price when
interest rates rise. Rising interest rates also tend to discourage refinancings
of home mortgages with the result that the average life of MORTGAGE SECURITIES
held by a portfolio may be lengthened. This extension of average life causes the
market price of the securities to decrease further than if their average lives
were fixed. In part to compensate for these risks, mortgages will generally
offer higher yields than comparable bonds. However, when interest rates fall,
mortgages may not enjoy as large a gain in market value due to prepayment risk
because additional mortgage prepayments must be reinvested at lower interest
rates.
CONVERTIBLES: are convertible bonds or shares of convertible PREFERRED STOCK
which may be exchanged for a fixed number of shares of COMMON STOCK at the
purchaser's option.
CORPORATES--Corporate bonds: are debt instruments issued by private
corporations. Bondholders, as creditors, have a prior legal claim over common
and preferred stockholders of the corporation as to both income and assets for
the principal and interest due to the bondholder. The portfolio will buy
Corporates subject to any quality constraints. If a security held by the
portfolio is down-graded, the portfolio may retain the security if the Adviser
deems retention of the security to be in the best interests of the portfolio.
DERIVATIVES: A financial instrument whose value and performance are based on the
value and performance of another security or financial instrument. The Adviser
will use derivatives only in circumstances where they offer the most economic
means of improving the risk/reward profile of the portfolio. The Adviser will
not use derivatives to increase portfolio risk above the level that could be
achieved in the portfolio using only traditional investment securities. In
addition, the Adviser will not use derivatives to acquire exposure to changes in
the value of assets or indexes of assets that are not listed in the applicable
Allowable Investments for the portfolio. Any applicable limitations are
described under each investment definition. The portfolio may enter into
over-the-counter Derivatives transactions with counterparties approved by the
Adviser in accordance with guidelines established by the Board of Trustees.
These guidelines provide for a minimum credit rating for each counterparty and
various credit enhancement techniques (for example, collateralization of amounts
due from counterparties) to limit exposure to counterparties with ratings below
AA. Derivatives include, but are not limited to, CMOS, FORWARDS, FUTURES AND
OPTIONS, SMBS, STRUCTURED NOTES and SWAPS.
FIXED-INCOME SECURITIES: Commonly include but are not limited to U.S.
GOVERNMENTS, ZERO COUPONS, AGENCIES, CORPORATES, HIGH YIELD, MORTGAGE
SECURITIES, SMBS, CMOS, ASSET-BACKEDS, CONVERTIBLES, BRADY BONDS, FLOATERS,
INVERSE FLOATERS, CASH EQUIVALENTS, REPURCHASE AGREEMENTS, PREFERRED STOCK, and
FOREIGN BONDS.
FLOATERS--Floating and Variable Rate Obligations: are debt obligations with a
floating or variable rate of interest, i.e. the rate of interest varies with
changes in specified market rates or indices, such as the prime rate, or at
specified intervals. Certain floating or variable rate obligations may carry a
demand feature that permits the holder to tender them back to the issuer of the
underlying instrument, or to a third party, at par value prior to maturity. When
the demand feature of certain floating or variable rate obligations represents
an obligation of a foreign entity, the demand feature will be subject to certain
risks discussed under FOREIGN INVESTING.
FOREIGN BONDS: are FIXED INCOME SECURITIES denominated in foreign currency and
issued and traded primarily outside of the U.S., including: (1) obligations
issued or guaranteed by foreign national governments, their agencies,
instrumentalities, or political subdivisions; (2) debt securities issued,
guaranteed or sponsored by supranational organizations established or supported
by several national governments, including the World Bank, the European
Community, the Asian Development Bank and others; (3) non-government foreign
corporate debt securities; and (4) foreign MORTGAGE SECURITIES and various other
mortgages and asset-backed securities.
FOREIGN CURRENCY: A portfolio investing in foreign securities will regularly
transact security purchases and sales in foreign currencies. The portfolio may
hold foreign currency or purchase or sell currencies on a forward basis (see
FORWARDS).
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 13
<PAGE>
FORWARDS--Forward Foreign Currency Exchange Contracts: are DERIVATIVES which are
used to protect against uncertainty in the level of future foreign exchange
rates. A forward foreign currency exchange contract is an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. Such contracts do not eliminate fluctuations caused by
changes in the local currency prices of the securities, but rather, they
establish an exchange rate at a future date. Also, although such contracts can
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time they limit any potential gain that might be realized.
The portfolio may use currency exchange contracts in the normal course of
business to lock in an exchange rate in connection with purchases and sales of
securities denominated in foreign currencies (transaction hedge) or to lock in
the U.S. dollar value of portfolio positions (position hedge). In addition, the
portfolio may cross hedge currencies by entering into a transaction to purchase
or sell one or more currencies that are expected to decline in value relative to
other currencies to which the portfolio has or expects to have portfolio
exposure. The portfolio may also engage in proxy hedging which is defined as
entering into positions in one currency to hedge investments denominated in
another currency, where the two currencies are economically linked. The
portfolio's entry into forward contracts, as well as any use of cross or proxy
hedging techniques will generally require the portfolio to hold liquid
securities or cash equal to the portfolio's obligations in a segregated account
throughout the duration of the contract.
The portfolio may also combine forward contracts with investments in securities
denominated in other currencies in order to achieve desired credit and currency
exposures. Such combinations are generally referred to as synthetic securities.
For example, in lieu of purchasing a foreign bond, the portfolio may purchase a
U.S. dollar-denominated security and at the same time enter into a forward
contract to exchange U.S. dollars for the contract's underlying currency at a
future date. By matching the amount of U.S. dollars to be exchanged with the
anticipated value of the U.S. dollar-denominated security, the portfolio may be
able to lock in the foreign currency value of the security and adopt a synthetic
investment position reflecting the credit quality of the U.S. dollar-denominated
security.
There is a risk in adopting a transaction hedge or position hedge to the extent
that the value of a security denominated in foreign currency is not exactly
matched with the portfolio's obligation under the forward contract. On the date
of maturity, the portfolio may be exposed to some risk of loss from fluctuations
in that currency. Although the Adviser will attempt to hold such mismatching to
a minimum, there can be no assurance that the Adviser will be able to do so. For
proxy hedges, cross hedges or a synthetic position, there is an additional risk
in that these transactions create residual foreign currency exposure. When the
portfolio enters into a forward contract for purposes of creating a position
hedge, transaction hedge, cross hedge or a synthetic security, it will generally
be required to hold liquid securities or cash in a segregated account with a
daily value at least equal to its obligation under the forward contract.
FUTURES & OPTIONS--Futures Contracts, Options on Futures Contracts and Options:
are DERIVATIVES. Futures contracts provide for the sale by one party and
purchase by another party of a specified amount of a specific security, at a
specified future time and price. An option is a legal contract that gives the
holder the right to buy or sell a specified amount of the underlying security or
futures contract at a fixed or determinable price upon the exercise of the
option. A call option conveys the right to buy and a put option conveys the
right to sell a specified quantity of the underlying security.
The portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts in
combination with its outstanding obligations with respect to options
transactions would exceed 50% of its total assets. It will maintain assets
sufficient to meet its obligations under such contracts in a segregated account
with the custodian bank or will otherwise comply with the Securities and
Exchange Commission's ("SEC's") position on asset coverage.
Possible Risks: The primary risks associated with the use of Futures and Options
are (i) imperfect correlation between the change in market value of the
securities held by the portfolio and the prices of futures and options relating
to the stocks, bonds or futures contracts purchased or sold by the portfolio;
and (ii) possible lack of a liquid secondary market for a futures contract and
the resulting inability to close a futures position which could have an adverse
impact on the portfolio's ability to execute futures and options strategies.
Additional risks associated with options transactions are (i) the risk that an
option will expire worthless; (ii) the risk that the issuer of an over-the-
counter option will be unable to fulfill its obligation to the portfolio due to
bankruptcy or related circumstances; (iii) the risk that options may exhibit
greater short-term price volatility than the underlying security; and (iv) the
risk that the portfolio may be forced to forego participation in the
appreciation of the value of underlying securities, futures contracts or
currency due to the writing of a call option.
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MAS Fund - 14 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
HIGH YIELD: High yield securities are generally considered to be CORPORATES,
PREFERRED STOCKS, and CONVERTIBLES rated Ba through C by Moody's or BB through D
by Standard & Poor's, and unrated securities considered to be of equivalent
quality. Securities rated less than Baa by Moody's or BBB by Standard & Poor's
are classified as non-investment grade securities and are commonly referred to
as junk bonds or high yield, high risk securities. Such securities carry a high
degree of risk and are considered speculative by the major credit rating
agencies. The following are excerpts from the Moody's and Standard & Poor's
definitions for speculative-grade debt obligations:
Moody's: Ba-rated bonds have "speculative elements" so their future "cannot
be considered assured," and protection of principal and interest is
"moderate" and "not well safeguarded during both good and bad times in the
future." B-rated bonds "lack characteristics of a desirable investment" and
the assurance of interest or principal payments "may be small." Caa-rated
bonds are "of poor standing" and "may be in default" or may have "elements
of danger with respect to principal or interest." Ca-rated bonds represent
obligations which are speculative in a high degree. Such issues are often
in default or have other marked shortcomings. C-rated bonds are the "lowest
rated" class of bonds, and issues so rated can be regarded as having
"extremely poor prospects" of ever attaining any real investment standing.
Standard & Poor's: BB-rated bonds have "less near-term vulnerability to
default" than B- or CCC-rated securities but face "major ongoing
uncertainties . . . which may lead to inadequate capacity" to pay interest
or principal. B-rated bonds have a "greater vulnerability to default than
BB-rated bonds and the ability to pay interest or principal will likely be
impaired by adverse business conditions." CCC-rated bonds have a currently
identifiable "vulnerability to default" and, without favorable business
conditions, will be "unable to repay interest and principal." The rating C
is reserved for income bonds on which "no interest is being paid." Debt
rated D is in "default", and "payment of interest and/or repayment of
principal is in arrears."
While these securities offer high yields, they also normally carry with them a
greater degree of risk than securities with higher ratings. Lower-rated bonds
are considered speculative by traditional investment standards. High yield
securities may be issued as a consequence of corporate restructuring or similar
events. Also, high yield securities are often issued by smaller, less credit
worthy companies, or by highly leveraged (indebted) firms, which are generally
less able than more established or less leveraged firms to make scheduled
payments of interest and principal. The price movement of these securities is
influenced less by changes in interest rates and more by the financial and
business position of the issuing corporation when compared to investment grade
bonds.
The risks posed by securities issued under such circumstances are substantial.
If a security held by the portfolio is down-graded, the portfolio may retain the
security.
INVERSE FLOATERS--Inverse Floating Rate Obligations: are FIXED-INCOME
SECURITIES, which have coupon rates that vary inversely at a multiple of a
designated floating rate, such as LIBOR (London Inter-Bank Offered Rate). Any
rise in the reference rate of an Inverse Floater (as a consequence of an
increase in interest rates) causes a drop in the coupon rate while any drop in
the reference rate of an Inverse Floater causes an increase in the coupon rate.
Inverse Floaters may exhibit substantially greater price volatility than fixed
rate obligations having similar credit quality, redemption provisions and
maturity, and Inverse Floater CMOS exhibit greater price volatility than the
majority of mortgage pass-through securities or CMOS. In addition, some Inverse
Floater CMOS exhibit extreme sensitivity to changes in prepayments. As a result,
the yield to maturity of an Inverse Floater CMO is sensitive not only to changes
in interest rates but also to changes in prepayment rates on the related
underlying mortgage assets.
INVESTMENT COMPANIES: The portfolio is permitted to invest in shares of other
open-end or closed-end investment companies. The 1940 Act generally prohibits
the portfolio from acquiring more than 3% of the outstanding voting shares of an
investment company and limits such investments to no more than 5% of the
portfolio's total assets in any one investment company and no more than 10% in
any combination of investment companies. The 1940 Act also prohibits the
portfolio from acquiring in the aggregate more than 10% of the outstanding
voting shares of any registered closed-end investment company.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 15
<PAGE>
To the extent the portfolio invests a portion of its assets in Investment
Companies, those assets will be subject to the expenses of the investment
company as well as to the expenses of the portfolio itself. The portfolio may
not purchase shares of any affiliated investment company except as permitted by
SEC rule or order.
INVESTMENT GRADE SECURITIES: are those (a) rated by one or more nationally
recognized statistical rating organization (NRSRO) in one of the four highest
rating categories at the time of purchase (e.g. AAA, AA, A or BBB by Standard &
Poor's Corporation (Standard & Poor's) or Fitch Investors Service, Inc., (Fitch)
or Aaa, Aa, A or Baa by Moody's Investors Service, Inc. (Moody's)); (b)
guaranteed by the U.S. Government or a private organization; or (c) considered
by the Adviser to be investment grade quality. Securities rated BBB or Baa
represent the lowest of four levels of Investment Grade Securities and are
regarded as borderline between definitely sound obligations and those in which
the speculative element begins to predominate. MORTGAGE SECURITIES, including
mortgage pass-throughs and CMOS, deemed investment grade by the Adviser, will
either carry a guarantee from an agency of the U.S. Government or a private
issuer of the timely payment of principal and interest (such guarantees do not
extend to the market value of such securities or the net asset value per share
of the portfolio) or, in the case of unrated securities, be sufficiently
seasoned that they are considered by the Adviser to be investment grade quality.
The Adviser may retain securities if their ratings fall below investment grade
if it deems retention of the security to be in the best interests of the
portfolio. Any portfolio permitted to hold Investment Grade Securities may hold
unrated securities if the Adviser considers the risks involved in owning that
security to be equivalent to the risks involved in holding an Investment Grade
Security.
LOAN PARTICIPATIONS: are loans or other direct debt instruments which are
interests in amounts owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending syndicates,
to suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments involve the risk of loss in case of
default or insolvency of the borrower. Direct debt instruments may offer less
legal protection to the portfolio in the event of fraud or misrepresentation. In
addition, loan participations involve a risk of insolvency of the lending bank
or other financial intermediary. Direct debt instruments may also include
standby financing commitments that obligate the investing portfolio to supply
additional cash to the borrower on demand.
MORTGAGE SECURITIES--Mortgage-backed securities represent an ownership interest
in a pool of residential and commercial mortgage loans. Generally, these
securities are designed to provide monthly payments of interest and principal to
the investor. The mortgagee's monthly payments to his/her lending institution
are passed through to investors such as the portfolio. Most issuers or poolers
provide guarantees of payments, regardless of whether the mortgagor actually
makes the payment. The guarantees made by issuers or poolers are supported by
various forms of credit, collateral, guarantees or insurance, including
individual loan, title, pool and hazard insurance purchased by the issuer. The
pools are assembled by various governmental, government-related and private
organizations. Portfolios may invest in securities issued or guaranteed by the
Government National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC), Fannie Mae, private issuers and other government agencies.
There can be no assurance that the private insurers can meet their obligations
under the policies. Mortgage Securities issued by non-agency issuers, whether or
not such securities are subject to guarantees, may entail greater risk. If there
is no guarantee provided by the issuer, mortgage-backed securities purchased by
the portfolio will be those which at time of purchase are rated investment grade
by one or more NRSRO, or, if unrated, are deemed by the Adviser to be of
investment grade quality.
There are two methods of trading Mortgage Securities. A specified pool
transaction is a trade in which the pool number of the security to be delivered
on the settlement date is known at the time the trade is made. This is in
contrast with the typical Mortgage Security transaction, called a TBA (to be
announced) transaction, in which the type of Mortgage Securities to be delivered
is specified at the time of trade but the actual pool numbers of the securities
that will be delivered are not known at the time of the trade. The pool numbers
of the pools to be delivered at settlement will be announced shortly before
settlement takes place. The terms of the TBA trade may be made more specific if
desired. Generally, agency pass-through Mortgage Securities are traded on a TBA
basis.
A mortgage-backed bond is a collateralized debt security issued by a thrift or
financial institution. The bondholder has a first priority perfected security
interest in collateral, usually consisting of agency mortgage pass-through
securities, although other assets, including U.S. Treasuries (including ZERO
COUPON U.S. Treasuries), agencies, cash equivalent securities, whole loans and
corporate bonds, may qualify. The amount of collateral must be continuously
maintained at levels from 115% to 150% of the principal amount of the bonds
issued, depending on the specific issue structure and collateral type.
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MAS Fund - 16 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
Possible Risks: Due to the possibility that prepayments on home mortgages will
alter cash flow on Mortgage Securities, it is not possible to determine in
advance the actual final maturity date or average life. Like bonds in general,
mortgage-backed securities will generally decline in price when interest rates
rise. Rising interest rates also tend to discourage refinancings of home
mortgages, with the result that the average life of Mortgage Securities held by
the portfolio may be lengthened. This extension of average life causes the
market price of the securities to decrease further than if their average lives
were fixed. However, when interest rates fall, mortgages may not enjoy as large
a gain in market value due to prepayment risk because additional mortgage
prepayments must be reinvested at lower interest rates. Faster prepayment will
shorten the average life and slower prepayments will lengthen it. However, it is
possible to determine what the range of that movement could be and to calculate
the effect that it will have on the price of the security. In selecting these
securities, the Adviser will look for those securities that offer a higher yield
to compensate for any variation in average maturity.
MUNICIPALS--Municipal Securities: are debt obligations issued by local, state
and regional governments that provide interest income which is exempt from
federal income taxes. Municipals include both municipal bonds (those securities
with maturities of five years or more) and municipal notes (those with
maturities of less than five years). Municipal bonds are issued for a wide
variety of reasons: to construct public facilities, such as airports, highways,
bridges, schools, hospitals, mass transportation, streets, water and sewer
works; to obtain funds for operating expenses; to refund outstanding municipal
obligations; and to loan funds to various public institutions and facilities.
Certain industrial development bonds are also considered municipal bonds if
their interest is exempt from federal income tax. Industrial development bonds
are issued by or on behalf of public authorities to obtain funds for various
privately-operated manufacturing facilities, housing, sports arenas, convention
centers, airports, mass transpo rtation systems and water, gas or sewage works.
Industrial development bonds are ordinarily dependent on the credit quality of a
private user, not the public issuer.
General obligation municipal bonds are secured by the issuer's pledge of full
faith, credit and taxing power. Revenue or special tax bonds are payable from
the revenues derived from a particular facility or, in some cases, from a
special excise or other tax, but not from general tax revenue.
Municipal notes are issued to meet the short-term funding requirements of local,
regional and state governments. Municipal notes include bond anticipation notes,
revenue anticipation notes and tax and revenue anticipation notes. These are
short-term debt obligations issued by state and local governments to aid cash
flows while waiting for taxes or revenue to be collected, at which time the debt
is retired. Other types of municipal notes in which the portfolio may invest are
construction loan notes, short-term discount notes, tax-exempt commercial paper,
demand notes, and similar instruments. Demand notes permit an investor (such as
the portfolio) to demand from the issuer payment of principal plus accrued
interest upon a specified number of days' notice. The portfolio may also
purchase AMT bonds. AMT bonds are tax-exempt private activity bonds issued after
August 7, 1986, the proceeds of which are directed, at least in part, to
private, for-profit organizations. While the income from AMT bonds is exempt
from regular federal income tax, it is a tax preference item in the calculation
of the alternative minimum tax. The alternative minimum tax is a special
separate tax that applies to a limited number of taxpayers who have certain
adjustments to income or tax preference items.
PREFERRED STOCK: are non-voting ownership shares in a corporation which pay a
fixed or variable stream of dividends.
REPURCHASE AGREEMENTS: are transactions by which the portfolio purchases a
security and simultaneously commits to resell that security to the seller (a
bank or securities dealer) at an agreed upon price on an agreed upon date
(usually within seven days of purchase). The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or date of maturity of the purchased security. Such agreements
permit the portfolio to keep all its assets at work while retaining overnight
flexibility in pursuit of investments of a longer term nature. The Adviser will
continually monitor the value of the underlying collateral to ensure that its
value, including accrued interest, always equals or exceeds the repurchase
price.
Pursuant to an order issued by the SEC, the Fund's portfolios may pool their
daily uninvested cash balances in order to invest in Repurchase Agreements on a
joint basis. By entering into Repurchase Agreements on a joint basis, it is
expected that the portfolios will incur lower transaction costs and potentially
obtain higher rates of interest on such Repurchase Agreements. Each portfolio's
participation in the income from jointly purchased Repurchase Agreements will be
based on that portfolio's percentage share in the total Repurchase Agreement.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 17
<PAGE>
SMBS--Stripped Mortgage-Backed Securities: are DERIVATIVES in the form of
multi-class mortgage securities. SMBS may be issued by
agencies or instrumentalities of the U.S. Government and private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose
entities of the foregoing.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. One
type of SMBS will have one class receiving some of the interest and most of the
principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In some cases, one class will
receive all of the interest (the interest-only or IO class), while the other
class will receive all of the principal (the principal-only or PO class). The
yield to maturity on IOs and POs is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage assets, and
a rapid rate of principal payments may have a material adverse effect on the
portfolio's yield to maturity. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the portfolio may fail to
fully recoup its initial investment in these securities, even if the security is
in one of the highest rating categories.
Although SMBS are purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, these securities were
only recently developed. As a result, established trading markets have not yet
developed and, accordingly, certain of these securities may be deemed illiquid
and subject to the portfolio's limitations on investment in illiquid securities.
STRUCTURED NOTES: are DERIVATIVES on which the amount of principal repayment and
or interest payments is based upon the movement of one or more factors. These
factors include, but are not limited to, currency exchange rates, interest rates
(such as the prime lending rate and LIBOR) and stock indices such as the S&P 500
Index. In some cases, the impact of the movements of these factors may increase
or decrease through the use of multipliers or deflators. The use of Structured
Notes allows the portfolio to tailor its investments to the specific risks and
returns the Adviser wishes to accept while avoiding or reducing certain other
risks.
SWAPS--Swap Contracts: are DERIVATIVES in the form of a contract or other
similar instrument which is an agreement to exchange the return generated by one
instrument for the return generated by another instrument. The payment streams
are calculated by reference to a specified index and agreed upon notional
amount. The term specified index includes, but is not limited to, currencies,
fixed interest rates, prices and total return on interest rate indices,
fixed-income indices, stock indices and commodity indices (as well as amounts
derived from arithmetic operations on these indices). For example, the portfolio
may agree to swap the return generated by a fixed-income index for the return
generated by a second fixed-income index. The currency Swaps in which the
portfolio may enter will generally involve an agreement to pay interest streams
in one currency based on a specified index in exchange for receiving interest
streams denominated in another currency. Such Swaps may involve initial and
final exchanges that correspond to the agreed upon notiona l amount.
The portfolio will usually enter into Swaps on a net basis, i.e., the two return
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the portfolio receiving or paying, as the case
may be, only the net amount of the two returns. The portfolio's obligations
under a swap agreement will be accrued daily (offset against any amounts owing
to the portfolio) and any accrued but unpaid net amounts owed to a swap
counterparty will be covered by the maintenance of a segregated account
consisting of cash or liquid securities. The portfolio will not enter into any
swap agreement unless the counterparty meets the rating requirements set forth
in guidelines established by the Board of Trustees.
Possible Risks: Interest rate and total rate of return Swaps do not involve the
delivery of securities, other underlying assets, or principal. Accordingly, the
risk of loss with respect to interest rate and total rate of return Swaps is
limited to the net amount of interest payments that the portfolio is
contractually obligated to make. If the other party to an interest rate or total
rate of return swap defaults, the portfolio's risk of loss consists of the net
amount of interest payments that the portfolio is contractually entitled to
receive. In contrast, currency swaps may involve the delivery of the entire
principal value of one designated currency in exchange for the other designated
currency. Therefore, the entire principal value of a currency swap may be
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. If there is a default by the counterparty, the
portfolio may have contractual remedies pursuant to the agreements related to
the transaction. The swap market has grown substantially in recent years with a
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MAS Fund - 18 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Swaps that include caps, floors, and
collars are more recent innovations for which standardized documentation has not
yet been fully developed and, accordingly, they are less liquid than Swaps.
The use of Swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If the Adviser is incorrect in its forecasts of market
values, interest rates, and currency exchange rates, the investment performance
of the portfolio would be less favorable than it would have been if this
investment technique were not used.
U.S. GOVERNMENTS--U.S. Treasury securities: are FIXED-INCOME SECURITIES which
are backed by the full faith and credit of the U.S. Government as to the payment
of both principal and interest.
WHEN-ISSUED SECURITIES: are securities purchased at a certain price even though
the securities may not be delivered for up to 90 days. No payment or delivery is
made by the portfolio in a when-issued transaction until the portfolio receives
payment or delivery from the other party to the transaction. Although the
portfolio receives no income from the above described securities prior to
delivery, the market value of such securities is still subject to change. As a
consequence, it is possible that the market price of the securities at the time
of delivery may be higher or lower than the purchase price. The portfolio will
maintain with the custodian a segregated account consisting of cash or liquid
securities in an amount at least equal to these commitments.
YANKEES: are U.S. dollar-denominated FIXED-INCOME SECURITIES issued by a foreign
government or corporation and sold in the U.S.
ZERO COUPONS--Zero Coupon Obligations: are FIXED-INCOME SECURITIES that do not
make regular interest payments. Instead, zero coupon obligations are sold at
substantial discounts from their face value. The difference between a zero
coupon obligation's issue or purchase price and its face value represents the
imputed interest an investor will earn if the obligation is held until maturity.
Zero Coupons may offer investors the opportunity to earn higher yields than
those available on ordinary interest-paying obligations of similar credit
quality and maturity. However, zero coupon obligation prices may also exhibit
greater price volatility than ordinary FIXED-INCOME SECURITIES because of the
manner in which their principal and interest are returned to the investor.
GENERAL SHAREHOLDER INFORMATION
PURCHASE OF SHARES
Institutional Class Shares are available to clients of the Adviser with combined
investments of $5,000,000 and Shareholder Organizations who have a contractual
arrangement with the Fund or the Fund's Distributor, including institutions such
as trusts, foundations or broker-dealers purchasing for the accounts of others.
Institutional Class Shares of the portfolio may be purchased at the net asset
value per share next determined after receipt of the purchase order. The
portfolio determines net asset value as described under General Shareholder
Information-Valuation of Shares each day that the portfolio is open for
business. See Other Information-Closed Holidays and General Shareholder
Information--Valuation of Shares.
INITIAL PURCHASE BY MAIL: Subject to acceptance by the Fund, an account may
be opened by completing and signing an Account Registration Form (provided at
the end of the prospectus) and mailing it to MAS Funds c/o Miller Anderson &
Sherrerd, LLP, One Tower Bridge, West Conshohocken, Pennsylvania 19428-0868
together with a check ($5,000,000 minimum) payable to MAS Funds.
The portfolio requested should be designated on the Account Registration Form.
Subject to acceptance by the Fund, payment for the purchase of shares received
by mail will be credited at the net asset value per share of the portfolio next
determined after receipt. Such payment need not be converted into Federal Funds
(monies credited to the Fund's Custodian Bank by a Federal Reserve Bank) before
acceptance by the Fund. Please note that payments to investors
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 19
<PAGE>
who redeem shares purchased by check will not be made until payment of the
purchase has been collected, which may take up to eight business days after
purchase. Shareholders can avoid this delay by purchasing shares by wire.
INITIAL PURCHASE BY WIRE: Subject to acceptance by the Fund, Institutional Class
Shares of the portfolio may also be purchased by wiring Federal Funds to the
Fund's Custodian Bank, The Chase Manhattan Bank (see instructions below). A
completed Account Registration Form should be forwarded to MAS Funds' Client
Services Group in advance of the wire. Notification must be given to MAS Funds'
Client Services Group at 1-800-354-8185 prior to the determination of net asset
value.
Institutional Class Shares will be purchased at the net asset value per share
next determined after receipt of the purchase order. (Prior notification must
also be received from investors with existing accounts.) Instruct your bank to
send a Federal Funds Wire in a specified amount to the Fund's Custodian Bank
using the following wiring instructions:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, NY 10081
ABA #021000021
DDA #910-2-734143
Attn: MAS Funds Subscription Account
Ref: (Fixed Income Portfolio, Account Number, Account Name)
ADDITIONAL INVESTMENTS: Additional investments of Institutional Class Shares at
net asset value may be made at any time (minimum additional investment $1,000)
by mailing a check (payable to MAS Funds) to MAS Funds' Client Services Group at
the address noted under Initial Purchase by Mail or by wiring Federal Funds to
the Custodian Bank as outlined above. Shares will be purchased at the net asset
value per share next determined after receipt of the purchase order.
Notification must be given to MAS Funds' Client Services Group at 1-800-354-8185
prior to the determination of net asset value.
OTHER PURCHASE INFORMATION: The Fund reserves the right, in its sole discretion,
to suspend the offering of the portfolio or to reject any purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interest of the Fund. The Fund also reserves the right, in its sole discretion,
to waive the minimum initial and additional investment amounts.
Purchases of the portfolio's shares will be made in full and fractional shares
of the portfolio calculated to three decimal places. In the interest of economy
and convenience, certificates for shares will not be issued except at the
written request of the shareholder. Certificates for fractional shares, however,
will not be issued.
Institutional Class Shares of the portfolio are also sold to corporations or
other institutions such as trusts, foundations or broker-dealers purchasing for
the accounts of others (Shareholder Organizations). Investors purchasing and
redeeming shares of the portfolio through a Shareholder Organization may be
charged a transaction-based fee or other fee for the services of such
organization. Each Shareholder Organization is responsible for transmitting to
its customers a schedule of any such fees and information regarding any
additional or different conditions regarding purchases and redemptions.
Customers of Shareholder Organizations should read this Prospectus in light of
the terms governing accounts with their organization. The Fund does not pay
compensation to or receive compensation from Shareholder Organizations for the
sale of Institutional Class Shares.
REDEMPTION OF SHARES
Shares of the portfolio may be redeemed by mail, or, if authorized, by
telephone. No charge is made for redemptions. The value of shares redeemed may
be more or less than the purchase price, depending on the net asset value at the
time of redemption which is based on the market value of the investment
securities held by the portfolio. See Other Information-Closed Holidays and
Valuation of Shares.
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MAS Fund - 20 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
BY MAIL: The portfolio will redeem shares at the net asset value next determined
after the request is received in good order. Requests should be addressed to MAS
Funds, c/o Miller Anderson & Sherrerd, LLP, One Tower Bridge, West Conshohocken,
PA 19428-0868.
To be in good order, redemption requests must include the following
documentation:
(a) The share certificates, if issued;
(b) A letter of instruction, if required, or a stock assignment specifying the
number of shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which the shares are registered;
(c) Any required signature guarantees (see Signature Guarantees); and
(d) Other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit sharing
plans and other organizations.
SIGNATURE GUARANTEES: To protect your account, the Fund and the Administrator
from fraud, signature guarantees are required to enable the Fund to verify the
identity of the person who has authorized a redemption from an account.
Signature guarantees are required for (1) redemptions where the proceeds are to
be sent to someone other than the registered shareholder(s) and the registered
address, and (2) share transfer requests. Please contact MAS Funds' Client
Services Group for further details.
BY TELEPHONE: Provided the Telephone Redemption Option has been authorized by
the shareholder on the Account Registration Form, a redemption of shares may be
requested by calling MAS Funds' Client Services Group and requesting that the
redemption proceeds be mailed to the primary registration address or wired per
the authorized instructions. Shares cannot be redeemed by telephone if share
certificates are held for those shares.
BY FACSIMILE: Written requests in good order (see above) for redemptions,
exchanges, and transfers may be forwarded to the Fund via facsimile. All
requests sent to the Fund via facsimile must be followed by a telephone call to
MAS Funds' Client Services Group to ensure that the instructions have been
properly received by the Fund. The original request must be promptly mailed to
MAS Funds, c/o Miller Anderson & Sherrerd, LLP, One Tower Bridge, West
Conshohocken, PA 19428-0868.
Neither the Distributor nor the Fund will be responsible for any loss,
liability, cost, or expense for acting upon facsimile instructions or upon
telephone instructions that they reasonably believe to be genuine. In order to
confirm that telephone instructions in connection with redemptions are genuine,
the Fund and Distributor will provide written confirmation of transactions
initiated by telephone.
Payment of the redemption proceeds will ordinarily be made within three business
days after receipt of an order for a redemption. The Fund may suspend the right
of redemption or postpone the date of redemption at times when the New York
Stock Exchange ("NYSE"), the Custodian, or the Fund is closed (see Other
Information-Closed Holidays) or under any emergency circumstances as determined
by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay the redemption proceeds in whole or in part by
a distribution in-kind of readily marketable securities held by a portfolio in
lieu of cash in conformity with applicable rules of the SEC. Investors may incur
brokerage charges on the sale of portfolio securities received in such payments
of redemptions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE: The portfolio's Institutional Class Shares may be exchanged
for shares of the Fund's other portfolios offering Institutional Class Shares
based on the respective net asset values of the shares involved. The exchange
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 21
<PAGE>
privilege is only available, however, with respect to portfolios that are
qualified for sale in a shareholder's state of residence. There are no exchange
fees. Exchange requests should be sent to MAS Funds, c/o Miller Anderson &
Sherrerd, LLP, One Tower Bridge, West Conshohocken, PA 19428-0868.
Because an exchange of shares amounts to a redemption from one portfolio and
purchase of shares of another portfolio, the above information regarding
purchase and redemption of shares applies to exchanges. Shareholders should note
that an exchange between portfolios is considered a sale and purchase of shares.
The sale of shares may result in a capital gain or loss for tax purposes.
The officers of the Fund reserve the right not to accept any request for an
exchange when, in their opinion, the exchange privilege is being used as a tool
for market timing. The Fund reserves the right to change the terms or conditions
of the exchange privilege discussed herein upon sixty days' notice.
TRANSFER OF REGISTRATION: The registration of Fund shares may be transferred by
writing to MAS Funds, c/o Miller Anderson & Sherrerd, LLP, One Tower Bridge,
West Conshohocken, PA 19428-0868. As in the case of redemptions, the written
request must be received in good order as defined above. Unless shares are being
transferred to an existing account, requests for transfer must be accompanied by
a completed Account Registration Form for the receiving party.
VALUATION OF SHARES
Net asset value per share is computed by dividing the total value of the
investments and other assets of the portfolio, less any liabilities, by the
total outstanding shares of the portfolio. The net asset value per share is
determined as of one hour after the close of the bond markets (normally 4:00
p.m. Eastern Time) on each day the portfolio is open for business (See Other
Information-Closed Holidays). Bonds and other FIXED-INCOME SECURITIES listed on
a foreign exchange are valued at the latest quoted sales price available before
the time when assets are valued. For purposes of net asset value per share, all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the bid price of such currencies against U.S.
dollars.
Net asset value includes interest on bonds and other FIXED-INCOME SECURITIES w
hich is accrued daily. Bonds and other FIXED-INCOME SECURITIES which are traded
over the counter and on an exchange will be valued according to the broadest and
most representative market, and it is expected that for bonds and other
FIXED-INCOME SECURITIES this ordinarily will be the over-the-counter market.
However, bonds and other FIXED-INCOME SECURITIES may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. The prices provided by a pricing
service are determined without regard to bid or last sale prices but take into
account institutional size trading in similar groups of securities and any
developments related to specific securities. Bonds and other FIXED-INCOME
SECURITIES not priced in this manner are valued at the most recent quoted bid
price, or when stock exchange valuations are used, at the latest quoted sale
price on the day of valuation. If there is no such reported sale, the latest
quoted bid price will be used. Securities purchased with remaining maturities of
60 days or less are valued at amortized cost when the Board of Trustees
determines that amortized cost reflects fair value. In the event that amortized
cost does not approximate market, market prices as determined above will be
used. Other assets and securities, for which no quotations are readily available
(including restricted securities), and, to the extent permitted by the SEC,
securities for which the value has been materially affected by events occurring
after the close of the market on which they principally trade, will be valued in
good faith at fair value using methods approved by the Board of Trustees.
Net asset value per share for Investment Class Shares, Institutional Class
Shares and Adviser Class Shares may differ due to class-specific expenses paid
by each class, and the shareholder servicing fees charged to Investment Class
Shares and distribution fees charged to Adviser Class Shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The portfolio normally distributes substantially all of its net investment
income to shareholders on a quarterly basis.
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MAS Fund - 22 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
If the portfolio does not have income available to distribute, as determined in
compliance with the appropriate tax laws, no distribution will be made.
If any net gains are realized from the sale of underlying securities, the
portfolio normally distributes such gains with the last distribution for the
calendar year.
All dividends and capital gains distributions are automatically paid in
additional shares of the portfolio unless the shareholder elects otherwise. Such
election must be made in writing to the Fund and may be made on the Account
Registration Form.
Undistributed net investment income is included in the portfolio's net assets
for the purpose of calculating net asset value per share. Therefore, on the
ex-dividend date, the net asset value per share excludes the dividend (i.e., is
reduced by the per share amount of the dividend). Dividends paid shortly after
the purchase of shares by an investor, although in effect a return of capital,
are taxable as ordinary income.
Certain MORTGAGE SECURITIES may provide for periodic or unscheduled payments of
principal and interest as the mortgages underlying the securities are paid or
prepaid. However, such principal payments (not otherwise characterized as
ordinary discount income or bond premium expense) will not normally be
considered as income to the portfolio and therefore will not be distributed as
dividends. Rather, these payments on mortgage-backed securities will be
reinvested on behalf of the shareholders by the portfolio in accordance with its
investment objectives and policies.
TAXES: The following is a summary of some important tax issues that affect the
portfolio and its shareholders. The summary is based on current tax laws and
regulations, which may be changed by legislative, judicial or administrative
action. No attempt has been made to present a detailed explanation of the tax
treatment of the portfolio or its shareholders. More information about taxes is
in the Statement of Additional Information. Shareholders are urged to consult
their tax advisors regarding specific questions as to federal, state and local
income taxes.
FEDERAL TAXES: The portfolio is treated as a separate entity for federal income
tax purposes and intends to qualify for the special tax treatment afforded
regulated investment companies. As such, the portfolio will not be subject to
federal income tax to the extent it distributes net investment company taxable
income and net capital gains to shareholders. The Fund will notify shareholders
annually as to the tax classification of all distributions.
Income dividends received by shareholders will be taxable as ordinary income,
whether received in cash or in additional shares.
Distributions paid in January but declared by the portfolio in October, November
or December of the previous year are taxable to shareholders in the previous
year.
The portfolio intends to declare and pay dividends and distributions so as to
avoid imposition of the federal excise tax applicable to regulated investment
companies. Further discussion is included in the Statement of Additional
Information.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends and capital gains distributions) paid to
shareholders. In order to avoid this withholding requirement, shareholders must
certify on their Account Registration Forms that their Social Security Number or
Taxpayer Identification Number is correct, and that they are not subject to
backup withholding. Exchanges and redemptions of shares in the portfolio are
taxable events.
FOREIGN INCOME TAXES: Investment income received by the portfolios from sources
within foreign countries may be subject to foreign income taxes withheld at the
source.
STATE AND LOCAL INCOME TAXES: The Fund is formed as a Pennsylvania Business
Trust and is not liable for any corporate income or franchise tax in the
Commonwealth of Pennsylvania. Shareholders should consult their tax advisors for
the state and local income tax consequences of distributions from the portfolio.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 23
<PAGE>
TRUSTEES OF THE TRUST: The affairs of the Trust are supervised by the Trustees
under the laws governing business trusts in the Commonwealth of Pennsylvania.
The Trustees have approved contracts under which, as described above, certain
companies provide essential management, adm inistrative and shareholder services
to the Trust.
INVESTMENT ADVISER: The Investment Adviser to the Fund, Miller Anderson &
Sherrerd, LLP (the "Adviser"), is a Pennsylvania limited liability partnership
founded in 1969, wholly owned by indirect subsidiaries of Morgan Stanley Dean
Witter & Co., and is located at One Tower Bridge, West Conshohocken, PA 19428.
The Adviser provides investment services to employee benefit plans, endowment
funds, foundations and other institutional investors and as of March 31, 1998
had in excess of $67.1 billion in assets under management. On May 31, 1997,
Morgan Stanley Group Inc., then the indirect parent of the Adviser, merged with
Dean Witter, Discover & Co. to form Morgan Stanley Dean Witter & Co. (formerly,
Morgan Stanley, Dean Witter, Discover & Co.) In connection with this
transaction, the Adviser entered into a new Investment Management Agreement
("Agreement") with MAS Funds dated May 31, 1997, which Agreement was approved by
the shareholders of each portfolio at a special meeting held on May 1, 1997 or
at an adjournment of such meeting held on May 12, 1997. The Adviser will retain
its name and remain at its current location, One Tower Bridge, West
Conshohocken, PA 19428. The Adviser will continue to provide investment
counseling services to employee benefit plans, endowments, foundations and other
institutional investors.
Under the Agreement with the Fund, the Adviser, subject to the control and
supervision of the Fund's Board of Trustees and in conformance with the stated
investment objectives and policies of each portfolio of the Fund, manages the
investment and reinvestment of the assets of each portfolio of the Fund. In this
regard, it is the responsibility of the Adviser to make investment decisions for
the Fund's portfolios and to place each portfolio's purchase and sales orders.
As compensation for the services rendered by the Adviser under the Agreement,
the portfolio pays the Adviser an advisory fee calculated by applying a
quarterly rate. The Adviser's contractual rate (annualized) for the portfolio's
1997 fiscal year was 0.375% and the Adviser's actual rate of compensation was
0.375%.
PORTFOLIO MANAGEMENT
A description of the business experience during the past five years for each of
the investment professionals who are primarily responsible for the day-to-day
management of the portfolio is as follows:
Thomas L. Bennett, Managing Director, Morgan Stanley, joined MAS in 1984. He
assumed responsibility for the Fixed Income Portfolio in 1984, the Domestic
Fixed Income Portfolio 1987, the High Yield Portfolio in 1985, the Fixed Income
Portfolio II in 1990, the Special Purpose Fixed Income and Balanced Portfolio in
1992, the Multi-Asset-Class Portfolio in 1994, the Balanced Plus Portfolio in
1996 and the Multi-Market Fixed Income Portfolio in 1997.
Kenneth B. Dunn, Managing Director, Morgan Stanley, joined MAS in 1987. He
assumed responsibility for the Fixed Income and the Domestic Fixed Income
Portfolios in 1987, the Fixed Income II Portfolio in 1990, the Mortgage-Backed
Securities and Special Purpose Fixed Income Portfolios in 1992, the Municipal
and PA Municipal Portfolios in 1994 and the Multi-Market Fixed Income Portfolio
in 1997.
Richard B. Worley, Managing Director, Morgan Stanley, joined MAS in 1978. He
assumed responsibility for the Fixed Income Portfolio in 1984, the Domestic
Fixed Income Portfolio in 1987, the Fixed Income Portfolio II in 1990, the
Balanced and Special Purpose Fixed Income Portfolios in 1992, the Global Fixed
Income and International Fixed Income Portfolios in 1993, the Multi-Asset-Class
Portfolio in 1994, the Balanced Plus Portfolio in 1996 and the Multi-Market
Fixed Income Portfolio in 1997.
ADMINISTRATIVE SERVICES: MAS serves as Administrator to the Fund pursuant to an
Administration Agreement dated as of November 18, 1993. Under its Administration
Agreement with the Fund, MAS receives an annual fee, accrued daily and payable
monthly, of 0.08% of the Fund's average daily net assets, and is responsible for
all fees payable under any sub-administration agreements. Chase Global Funds
Services Company, a subsidiary of The Chase Manhattan Bank, 73 Tremont Street,
Boston MA 02108-3913, serves as Transfer Agent to the Fund pursuant to an
agreement also dated as of November 18, 1993, and provides fund accounting and
other services pursuant to a sub-administration agreement with MAS as
Administrator.
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MAS Fund - 24 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
GENERAL DISTRIBUTION AGENT: Shares of the Fund are distributed exclusively
through MAS Fund Distribution, Inc., a wholly-owned subsidiary of the Adviser.
PORTFOLIO TRANSACTIONS: The investment advisory agreement authorizes the Adviser
to select the brokers or dealers that will execute the purchases and sales of
investment securities for each of the Fund's portfolios and directs the Adviser
to use its best efforts to obtain the best execution with respect to all
transactions for the portfolios. In doing so, a portfolio may pay higher
commission rates or markups on principal transactions than the lowest available
when the Adviser believes it is reasonable to do so in light of the value of the
research, statistical, and pricing services provided by the broker or dealer
effecting the transaction.
It is not the Fund's practice to allocate brokerage or principal business on the
basis of sales of shares which may be made through intermediary brokers or
dealers. However, the Adviser may place portfolio orders with qualified
broker-dealers who recommend the Fund's portfolios or who act as agents in the
purchase of shares of the portfolios for their clients.
Some securities considered for investment by each of the Fund's portfolios may
also be appropriate for other clients served by the Adviser. The Adviser may
place a combined order for two or more accounts or portfolios for the purchase
or sale of the same security if, in its judgement, joint execution is in the
best interest of each participant and will result in best price and execution.
If purchase or sale of securities consistent with the investment policies of a
portfolio and one or more of these other clients served by the Adviser is
considered at or about the same time, transactions in such securities will be
allocated among the portfolio and clients in a manner deemed fair and reasonable
by the Adviser. Although there is no specified formula for allocating such
transactions, the various allocation methods used by the Adviser, and the
results of such allocations, are subject to periodic review by the Fund's
Trustees. The Adviser may use its broker dealer affiliates, including Morgan
Stanley & Co., a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.,
the parent of MAS's general partner and limited partner, to carry out the Fund's
transactions, provided the Fund receives brokerage services and commission rates
comparable to those of other broker dealers.
OTHER INFORMATION: Description of Shares and Voting Rights: The Fund was
established under Pennsylvania law by a Declaration of Trust dated February 15,
1984, as amended and restated as of November 18, 1993. The Fund is authorized to
issue an unlimited number of shares of beneficial interest, without par value,
from an unlimited number of series (portfolios) of shares. Currently the Fund
consists of twenty-nine portfolios.
The shares of the Fund are fully paid and non-assessable, and have no preference
as to conversion, exchange, dividends, retirement or other features. The shares
of the Fund have no preemptive rights. The shares of the Fund have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees if
they choose to do so. Shareholders are entitled to one vote for each full share
held (and a fractional vote for each fractional share held), then standing in
their name on the books of the Fund.
Meetings of shareholders will not be held except as required by the 1940 Act and
other applicable law. A meeting will be held to vote on the removal of a Trustee
or Trustees of the Fund if requested in writing by the holders of not less than
10% of the outstanding shares of the Fund. The Fund will assist in shareholder
communication in such matters to the extent required by law.
CUSTODIANS: The Chase Manhattan Bank, New York, NY and Morgan Stanley Trust
Company (NY), Brooklyn, NY serve as custodians for the Fund. The custodians hold
cash, securities and other assets as required by the 1940 Act.
TRANSFER AND DIVIDEND DISBURSING AGENT: Chase Global Funds Services Company, a
subsidiary of The Chase Manhattan Bank, 73 Tremont Street, Boston, MA
02108-3913, serves as the Funds' Transfer Agent and dividend disbursing agent.
REPORTS: Shareholders receive semi-annual and annual financial statements.
Annual financial statements are audited by Price Waterhouse LLP, independent
accountants.
LITIGATION: The Fund is not involved in any litigation.
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 25
<PAGE>
CLOSED HOLIDAYS: Currently, the weekdays on which the Fund is closed for
business are: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
YEAR 2000: The management and distribution services provided to the Fund by the
Adviser and the Distributor depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or 1980, due to the manner in which dates were encoded
and calculated. That failure could have a negative impact on the handling of
securities trades, pricing and account services. The Adviser and the Distributor
have been actively working on necessary change s to their own computer systems
to deal with the year 2000 problem and expect that their systems will be adapted
before that date. There can be no assurance, however, that they will be
successful. In addition, other unaffiliated service providers may be faced with
similar problems. The Adviser and theDistributor are monitoring their remedial
efforts, however, there can be no assurance that they and the services they
provide will not be adversely affected.
In addition, it is possible that the markets for securities in which the
portfolios invest may be detrimentally affected by computer failures throughout
the financial services industry beginning January 1, 2000. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies and overall economic
uncertainties. Earnings of individual issuers will be affected by remediation
costs, which may be substantial and may be reported inconsistently in U.S. and
foreign financial statements. Accordingly, the portfolio's investments may be
adversely affected.
- --------------------------------------------------------------------------------
MAS Fund - 26 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
TRUSTEES AND OFFICERS
The following is a list of the Trustees and the principal executive officers of
the Fund and a brief statement of their present positions and principal
occupations during the past five years:
THOMAS L. BENNETT,* Chairman of the Board of Trustees; Managing Director, Morgan
Stanley; Portfolio Manager and member of the Executive Committee, Miller
Anderson & Sherrerd, LLP; Director, MAS Fund Distribution, Inc.; formerly,
Director, Morgan Stanley Universal Funds, Inc.
THOMAS P. GERRITY, Trustee; Dean and Reliance Professor of Management and
Private Enterprise, Wharton School of Business, University of Pennsylvania;
Director, Digital Equipment Corporation; Director, Sun Company, Inc.; Director,
Fannie Mae; Director, Reliance Group Holdings; Director, CVS Corporation;
Director, IKON Office Solutions, Inc.; formerly, Director, Union Carbide
Corporation.
JOSEPH P. HEALEY, Trustee; Headmaster, Haverford School; formerly Dean, Hobart
College; Associate Dean, William & Mary College.
JOSEPH J. KEARNS, Trustee; investment consultant; Chief Investment Officer, The
J. Paul Getty Trust; Director, Electro Rent Corporation; Trustee, Southern
California Edison Nuclear Decommissioning Trust; Director, The Ford Family
Foundation.
VINCENT R. MCLEAN, Trustee; Director, Legal and General America, Inc.; Director,
William Penn Life Insurance Company of New York; formerly, Executive Vice
President, Chief Financial Officer, Director and Member of the Executive
Committee of Sperry Corporation (now part of Unisys Corporation).
C. OSCAR MORONG, JR., Trustee; Managing Director, Morong Capital Management;
Director, Ministers and Missionaries Benefit Board of American Baptist Churches,
The Indonesia Fund, The Landmark Funds; formerly, Senior Vice President and
Investment Manager for CREF, TIAA-CREF Investment Management, Inc.
*Trustee Bennett is deemed to be an "interested person" of the Fund as that term
is defined in the Investment Company Act of 1940, as amended.
JAMES D. SCHMID, President, MAS Funds; Principal, Morgan Stanley; Head of Mutual
Funds, Miller Anderson & Sherrerd, LLP; Director, MAS Fund Distribution, Inc.;
formerly, Chairman of the Board of Directors, The Minerva Fund, Inc.; formerly,
Vice President, The Chase Manhattan Bank.
LORRAINE TRUTEN, CFA, Vice President, MAS Funds; Principal, Morgan Stanley; Head
of Mutual Fund Services, Miller Anderson & Sherrerd, LLP; President, MAS Fund
Distribution, Inc.
JAMES A. GALLO, Treasurer, MAS Funds; Head of Fund Administration, Miller,
Anderson and Sherrerd, LLP; formerly, Manager, Investment Accounting and then
Vice President and Director of Investment Accounting, PFPC, Inc.
JOHN H. GRADY, JR., Secretary, MAS Funds; Partner, Morgan, Lewis & Bockius LLP.
RICHARD J. SHOCH, Assistant Secretary, MAS Funds; Fund Compliance Officer,
Miller, Anderson & Sherrerd, LLP; formerly, Fund Legal Administrator and then
Counsel, Vice President and Assistant Secretary, SEI Corporation.
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 27
<PAGE>
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- --------------------------------------------------------------------------------
MAS Fund - 28 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- --MAS---------------------------------------------------------------------------------ACCOUNT REGISTRATION FORM---------------------
MAS FUNDS
MAS Fund Distribution, Inc.
General Distribution Agent
- ------------------------------------------------------------------------------------------------------------------------------------
(1) |
REGISTRATION/PRIMARY ||_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
MAILING ADDRESS |
||_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|
| Attention |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
Confirmations and |
month-end statements | Street or P.O. Box |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
will be mailed |
to this address. | City |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| State |_|_| Zip |_|_|_|_|_|-|_|_|_|_|
|
| Telephone No. |_|_|_|-|_|_|_|-|_|_|_|_|
|
| Form of Business
| Entity: [ ] Corporation [ ] Partnership [ ] Trust [ ] Other _____________________________
| Type of Account: [ ] Defined Benefit Plan [ ] Defined Contribution Plan [ ] Profit Sharing/Thrift Plan
|
| [ ] Other Employee Benefit Plan ___________________________________________
|
| [ ] Endowment [ ] Foundation [ ] Taxable [ ] Other (Specify)_________
|
| [ ] United States Citizen [ ] Resident Alien ______ [ ] Non-Resident Alien, Indicate Country of Residence
- ------------------------------------------------------------------------------------------------------------------------------------
(2) |
INTERESTED PARTY |
OPTION |
|
In addition to the |Attention |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
account statement |
sent to the above | Company
registered address, | (If Applicable) |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
the Fund is |
authorized to mail | Street or P.O. Box |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
duplicate statements |
to the name and | City |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| State |_|_| Zip |_|_|_|_|_|-|_|_|_|_|
address provided |
at right. | Telephone No. |_|_|_|-|_|_|_|-|_|_|_|_|
|
For additional |
interested party |
mailings, please |
attach a separate |
sheet. |
- ------------------------------------------------------------------------------------------------------------------------------------
(3) INVESTMENT
For Purchase of:
[ ] NY Municipal Portfolio $_________________
- ------------------------------------------------------------------------------------------------------------------------------------
(4) TAXPAYER IDENTIFICATION NUMBER
Part 1.
Social Security Number IMPORTANT TAX INFORMATION
|_|_|_|-|_|_|-|_|_|_|_| You (as a payee) are required by law to provide us (as payer) with your correct
taxpayer identification number. Accounts that have a missing or incorrect
or taxpayer identification number will be or subject to backup withholding at a 31%
Employer Identification Number rate on ordinary income and capital gains distribution as well as redemptions.
Backup withholding is not an additional tax; the tax liability of person subject
|_|_|-|_|_|_|_|_|_|_| to backup withholding will be reduced by the amount of tax withheld.
Part 2. BACKUP WITHHOLDING You may be notified that you are subject to backup withholding under Section
[ ] Check the box if the account 3406(a)(1)(C) because you have underreported interest or dividends or you were
Backup Withholding under the provisions required to, but failed to, file a return which would have included a reportable
of Section 3406(a)(1)(C) of the interest or dividend payment. If you have been is subject to so notified, check
Internal Revenue Code. the box in PART 2 at left.
- ------------------------------------------------------------------------------------------------------------------------------------
MILLER
ANDERSON
__& SHERRERD, LLP __ ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185 ________________________________________________
SIDE ONE OF TWO +
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- --MAS-------------------------------------------------------------------------------------------------------------------------------
MAS FUNDS
(5) TELEPHONE REDEMPTION OPTION
Please sign below if you wish to redeem or exchange shares by telephone. Redemption proceeds requested by phone may only be mailed
to the account's primary registration address or wired according to bank instructions provided in writing. A signature guarantee is
required if the bank account listed below is not registered identically to your Fund Account. The Fund and its agents shall not be
liable for reliance on phone instructions reasonably believed to be genuine. The Fund will maintain procedures designed to
authenticate telephone instructions received.
Telephone requests for redemptions or exchanges will not be honored unless signature appears below.
(X)
- -----------------------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------------------------------------------------------------
(6) WIRING INSTRUCTIONS -- THE INSTRUCTIONS PROVIDED BELOW MAY ONLY BE CHANGED BY WRITTEN NOTIFICATION.
Please check appropriate box(es):
[ ] Wire redemption proceeds
[ ] Wire distribution proceeds (please complete box (7) below)
____________________________________________________________________ _____________________________________________
Name of Commercial Bank (Net Savings Bank) Bank Account No.
____________________________________________________________________________________________________________________________
Name(s) in which your Bank Account is Established
____________________________________________________________________________________________________________________________
Bank's Street Address
___________________________________________________________________________________________ ______________________________
City State Zip Routing/ABA Number
- ------------------------------------------------------------------------------------------------------------------------------------
(7) DISTRIBUTION OPTION -- Income dividends and capital gains distributions (if | (8) WIRING INSTRUCTIONS
any) will be reinvested in additional shares if no box is checked below. THE |
INSTRUCTIONS PROVIDED BELOW MAY ONLY BE CHANGED BY WRITTEN NOTIFICATION. | FOR PURCHASING SHARES BY WIRE,
| PLEASE SEND A FEDWIRE PAYMENT TO:
|
[ ] Income dividends and capital gains to be paid in cash. | THE CHASE MANHATTAN BANK
| 1 Chase Manhattan Plaza
[ ] Income dividends to be paid in cash and capital gains distribution in | New York, NY 10081
additional shares. | ABA# 021000021
| DDA# 910-2-734143
[ ] Income dividends and capital gains to be reinvested in | Attn: MAS Funds Subscription Account
additional shares. | Ref. (Fixed Income Portfolio, your
| Account number,
IF CASH OPTION IS CHOSEN, please indicate instructions below: | your Account name)
|
[ ] Mail distribution check to the name and address in which account is |
registered. |
|
[ ] Wire distribution to the same commercial bank indicated in Section 6 above. |
|
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
SIGNATURE(S) OF ALL HOLDERS AND TAXPAYER CERTIFICATION
The undersigned certify that I/we have full authority and legal capacity to purchase shares of the Fund and affirm that I/we have
received a current MAS Funds Prospectus and agree to be bound by its terms. UNDER PENALTIES OF PERJURY I/WE CERTIFY THAT THE
INFORMATION PROVIDED IN SECTION 4 ABOVE IS TRUE, CORRECT AND COMPLETE. THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO
ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
(X)__________________________________________________________ ______________________________________________________________
SIGNATURE DATE | |
| |
(X)__________________________________________________________ | FOR INTERNAL USE ONLY |
SIGNATURE DATE | |
| (X)________________________________________________________ |
(X)__________________________________________________________ | Signature Date |
SIGNATURE DATE | |
| __________________________________________________________ |
(X)__________________________________________________________ | |
SIGNATURE DATE | O [ ] F [ ] |
THIS APPLICATION IS SEPARATE FROM THE PROSPECTUS. | |
| |
|______________________________________________________________|
MILLER
ANDERSON
__& SHERRERD, LLP __ ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185 ________________________________________________
SIDE TWO OF TWO
</TABLE>
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 31
<PAGE>
MAS Prospectus
- --------
MAS FUND
FIXED INCOME PORTFOLIO
MARCH 16, 1998,
AS REVISED JUNE 16, 1998
INVESTMENT ADVISER AND ADMINISTRATOR: TRANSFER AGENT:
MILLER ANDERSON & SHERRERD, LLP CHASE GLOBAL FUNDS SERVICES COMPANY
ONE TOWER BRIDGE 73 TREMONT STREET
WEST CONSHOHOCKEN, BOSTON, MASSACHUSETTS 02108-0913
PENNSYLVANIA 19428-2899
GENERAL DISTRIBUTION AGENT:
MAS FUND DISTRIBUTION, INC.
ONE TOWER BRIDGE
P.O. BOX 868
WEST CONSHOHOCKEN,
PENNSYLVANIA 19428-0868
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Page Page
Fund Expenses 2 General Shareholder Information
Prospectus Summary 3 Purchase of Shares 19
Financial Highlights 5 Redemption of Shares 20
Yield and Total Return 6 Shareholder Services 21
Investment Suitability 6 Valuation of Shares 22
Investment Limitations 7 Dividends, Distributions and Taxes 22
Portfolio Summary 8 Investment Adviser 24
Prospectus Glossary Portfolio Management 24
Strategies 9 Administrative Services 24
Investments 11 General Distribution Agent 25
Portfolio Transactions 25
Other Information 25
Trustees and Officers 27
Miller
Anderson
& Sherrerd, LLP__ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185
<PAGE>
MAS INSTITUTIONAL CLASS PROSPECTUS
- ----------
MAS FUNDS
VALUE PORTFOLIO
MARCH 16, 1998,
AS REVISED JUNE 16, 1998
- --------------------------------------------------------------------------------
Client Services: 1-800-354-8185 Prices and Investment Results: 1-800-522-1525
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MAS FUNDS (the Fund) is a no-load mutual fund consisting of twenty-nine
portfolios, one of which is described in this Prospectus. This Prospectus offers
the Institutional Class Shares of the Value Portfolio (the "portfolio").
- --------------------------------------------------------------------------------
PORTFOLIO PAGE REFERENCE
------------------------
How To Use This Prospectus: 2
Portfolio Summary: 8
Prospectus Glossary:
Strategy 9
Investments 9
General Shareholder
Information: 13
Table of Contents: Back Cover
- --------------------------------------------------------------------------------
This Prospectus, which should be retained for future reference, sets forth
concisely information that you should know before you invest. A Statement of
Additional Information containing additional information about the Fund has been
filed with the Securities and Exchange Commission. Such Statement is dated
January 31, 1998 as revised from time to time, and has been incorporated by
reference into this Prospectus. A copy of the Statement may be obtained, without
charge, by writing to the Fund or by calling the Client Services Group at the
telephone number shown above.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MILLER
ANDERSON
& SHERRERD, LLP __ ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185
<PAGE>
EXPENSE SUMMARY - INSTITUTIONAL CLASS SHARES
The following tables illustrate the various expenses and fees that a shareholder
in the portfolio will incur either directly or indirectly. The Adviser may from
time to time waive fees or reimburse expenses thereby reducing total operating
expenses.
SHAREHOLDER TRANSACTION EXPENSES:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets after fee waivers)
12b-1 Fees None
Shareholder Servicing Fee None
INVESTMENT TOTAL
ADVISORY OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- --------------------------------------------------------------------------------
Value 0.500% 0.100% 0.600%
The Total Operating Expense ratios reflected in the table above may be
higher than the ratio of expenses actually deducted from portfolio assets
because of the effect of expense offset arrangements. The result of such
arrangements is to offset expenses that otherwise would be deducted from
portfolio assets. Amounts in the above table have been restated to reflect
current fees and expenses.
EXAMPLE
The purpose of this table is to assist in understanding the various expenses
that a shareholder in the portfolio will bear directly or indirectly. The
following example illustrates the expenses that an investor would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return, and (2) redemption at the end of each time period. The example should
not be considered a representation of past or future expenses and actual
expenses may be greater or less than those shown.
PORTFOLIO 1 YEAR 3 YEAR 5 YEAR 10 YEAR
- --------------------------------------------------------------------------------
Value $6 $19 $33 $75
HOW TO USE THIS PROSPECTUS
A PROSPECTUS SUMMARY begins on page 3;
FINANCIAL HIGHLIGHTS and a description of YIELD AND TOTAL RETURN begin on
page 5;
GENERAL INFORMATION including INVESTMENT LIMITATIONS begins on page 6;
A SUMMARY PAGE for the portfolio's Objective, Policies and Strategies is located
on page 8;
The PROSPECTUS GLOSSARY which defines specific Allowable Investments, Policies
and Strategies printed in bold type throughout this Prospectus begins on page 9;
and
GENERAL SHAREHOLDER INFORMATION begins on page 13.
- --------------------------------------------------------------------------------
MAS Fund - 2 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
SUMMARY INFORMATION:
The following information should be read in conjunction with the specific
information about the portfolio.
OBJECTIVES: The portfolio seeks to achieve its investment objective relative to
the universe of securities in which it is authorized to invest and, accordingly,
the total return or current income achieved by the portfolio may not be as great
as that achieved by another portfolio that can invest in a broader range of
securities. The objective of the portfolio is fundamental and may only be
changed with approval of holders of a majority of the shares of the portfolio.
The achievement of the portfolio's objective cannot be assured.
RISK FACTORS: Prospective investors in the Fund should consider the following
factors as they apply to the portfolio's allowable investments and policies. See
the Prospectus Glossary for more information on terms printed in BOLD TYPE:
* The portfolio may invest in REPURCHASE AGREEMENTS, which entail a risk of
loss should the seller default in its obligation to repurchase the security
which is the subject of the transaction;
* The portfolio may participate in a SECURITIES LENDING program which entails a
risk of loss should a borrower fail financially;
* Common Stocks are subject to market risks which may cause their prices to
fluctuate over time. Changes in the value of portfolio securities will not
necessarily affect cash income derived from these securities, but will affect
the portfolio's net asset value;
* Investments in foreign securities involve certain special considerations
which are not typically associated with investing in U.S. companies. The
portfolio may also engage in foreign currency exchange transactions. See
FORWARDS, FUTURES & OPTIONS, and SWAPS;
* Securities purchased on a WHEN-ISSUED basis may decline or appreciate in
market value prior to their actual delivery to the portfolio;
* The portfolio may invest a portion of its assets in DERIVATIVES including
FUTURES & OPTIONS. Futures contracts, options and options on futures
contracts entail certain costs and risks, including imperfect correlation
between the value of the securities held by the portfolio and the value of
the particular derivative instrument, and the risk that the portfolio could
not close out a futures or options position when it would be most
advantageous to do so; and
* The portfolio may invest in certain instruments such as FORWARDS, certain
types of FUTURES & OPTIONS and WHEN-ISSUED SECURITIES which require the
portfolio to segregate some or all of its cash or liquid securities to cover
its obligations pursuant to such instruments. As asset segregation reaches
certain levels, the portfolio may lose flexibility in managing its
investments properly, responding to shareholder redemption requests, or
meeting other obligations and may be forced to sell other securities that it
wanted to retain or to realize unintended gains or losses.
HOW TO INVEST: Institutional Class Shares of the portfolio are available to
clients of the Adviser with combine investments of $5,000,000 and Shareholder
Organizations who have a contractual arrangement with the Fund or the Fund's
Distributor, including institutions such as trusts, foundations or
broker-dealers purchasing for the accounts of others. Shares are offered
directly to investors without a sales commission at the net asset value of the
portfolio next determined after receipt of the order. Share purchases may be
made by sending investments directly to the Fund, subject to acceptance by the
Fund. The Fund also offers Investment and Adviser Class Shares which differ from
the Institutional Class Shares in expenses charged and purchase requirements.
Further information relating to the other classes may be obtained by calling
800-354-8185.
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 3
<PAGE>
HOW TO REDEEM: Shares of the portfolio may be redeemed at any time at the net
asset value of the portfolio next determined after receipt of the redemption
request. The redemption price may be more or less than the purchase price. See
Redemption of Shares and Shareholder Services.
THE FUND'S INVESTMENT ADVISER: Miller Anderson & Sherrerd, LLP (the "Adviser")
is a Pennsylvania limited liability partnership founded in 1969, wholly owned by
indirect subsidiaries of Morgan Stanley Dean Witter & Co., and is located at One
Tower Bridge, West Conshohocken, PA 19428. The Adviser provides investment
counseling services to employee benefit plans, endowments, foundations and other
institutional investors, and as of March 31, 1998 had in excess of $67.1 billion
in assets under management.
THE FUND'S DISTRIBUTOR: MAS Fund Distribution, Inc. (the "Distributor") provides
distribution services to the Fund.
- --------------------------------------------------------------------------------
MAS Fund - 4 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
FINANCIAL HIGHLIGHTS - FISCAL YEARS ENDED SEPTEMBER 30
Selected per share data and ratios for a share
outstanding throughout each period
The following information should be read in conjunction with the Fund's
financial statements which are included in the Annual Report to Shareholders
incorporated by reference in the Statement of Additional Information. The Fund's
financial statements for the year ended September 30, 1997 have been examined by
Price Waterhouse LLP whose opinion thereon (which was unqualified) is also
incorporated by reference in the Statement of Additional Information.
(Data is adjusted to reflect a 2.5 for 1 share split as of August 13, 1993.)
<TABLE>
<CAPTION>
NET GAINS DIVIDEND
NET ASSET OR LOSSES DISTRIBUTIONS CAPITAL GAIN
VALUE- NET ON SECURITIES TOTAL FROM (NET DISTRIBUTIONS
BEGINNING INVESTMENT (REALIZED AND INVESTMENT INVESTMENT (REALIZED NET OTHER TOTAL
OF PERIOD INCOME UNREALIZED) ACTIVITIES INCOME) CAPITAL GAINS) DISTRIBUTIONS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VALUE PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 11/05/84)
1997++ $15.61 $0.34 $5.75 $6.09 ($0.30) ($1.03) -- ($1.33)
1996 14.89 0.30 2.20 2.50 (0.32) (1.46) -- (1.78)
1995 12.63 0.31 3.34 3.65 (0.31) (1.08) -- (1.39)
1994 12.76 0.30 0.59 0.89 (0.29) (0.73) -- (1.02)
1993 12.67 0.30 1.92 2.22 (0.31) (1.82) -- (2.13)
1992 12.92 0.35 1.05 1.40 (0.38) (1.27) -- (1.65)
1991 10.29 0.44 3.79 4.23 (0.44) (1.16) -- (1.60)
1990 14.56 0.52 (3.14) (2.62) (0.62) (1.03) -- (1.65)
1989 12.42 0.54 2.73 3.27 (0.47) (0.66) -- (1.13)
1988 15.81 0.48 (1.68) (1.20) (0.46) (1.73) -- (2.19)
</TABLE>
<TABLE>
<CAPTION>
NET ASSET NET ASSETS- RATIO OF RATIO OF
VALUE- END OF EXPENSES NET INCOME PORTFOLIO AVERAGE
END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER COMMISSION
PERIOD RETURN* (THOUSANDS) NET ASSETS+ NET ASSETS RATE RATE**
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 11/05/84)
1997++ $20.37 41.25% $3,542,772 0.62% 1.93% 46% $0.0577
1996 15.61 18.41 1,844,740 0.61 2.07 53 0.0572
1995 14.89 32.58 1,271,586 0.60 2.43 56 --
1994 12.63 7.45 981,337 0.61 2.40 54 --
1993 12.76 19.67 762,175 0.59 2.48 43 --
1992 12.67 12.83 448,329 0.60 2.87 55 --
1991 12.92 45.54 458,117 0.60 3.67 64 --
1990 10.29 (19.88) 369,044 0.59 3.87 51 --
1989 14.56 28.49 726,776 0.59 4.05 35 --
1988 12.42 (5.40) 619,287 0.59 3.96 47 --
</TABLE>
NOTES TO THE FINANCIAL HIGHLIGHTS
*Total return figures for partial years are not annualized.
**For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose the average commission rate per share paid for security
transactions on which commissions were charged.
+ For the respective periods ended September 30, the Ratio of Expenses to
Average Net Assets excludes the effect of expense offsets. If expense offsets
were included, the Ratio of Expenses to Average Net Assets would be as
follows for the respective periods.
PORTFOLIO 1995 1996 1997
--------- ---- ---- ----
Value 0.60 0.60 0.61
++ Per share amounts for the year ended September 30, 1997, are based on
average shares outstanding.
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 5
<PAGE>
YIELD AND TOTAL RETURN:
From time to time the portfolio advertises its yield and total return. Both
yield and total return figures are based on historical earnings and are not
intended to indicate future performance. The average annual total return
reflects changes in the price of the portfolio's shares and assumes that any
income dividends and/or capital gain distributions made by the portfolio during
the period were reinvested in additional shares of the portfolio. Figures will
be given for one-, five- and ten-year periods ending with the most recent
calendar quarter-end (if applicable), and may be given for other periods as well
(such as from commencement of the portfolio's operations).
The yield of the portfolio is computed by dividing the net investment income per
share (using the average number of shares entitled to receive dividends) earned
during a 30-day period by the closing price per share on the last day of the
period. For the purpose of determining net investment income, the calculation
includes as expenses of the portfolio all recurring fees and any non recurring
charges for the period stated.
The performance of the portfolio may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported in
financial and industry publications, returns of other investment advisers and
mutual funds, and various indices as further described in the Statement of
Additional Information.
The performance of Institutional Class Shares, Investment Class Shares and
Adviser Class Shares differs because of any class-specific expenses paid by each
class and the shareholder servicing fees charged to Investment Class Shares and
distribution fees charged to Adviser Class Shares.
The Annual Report to Shareholders of the Fund for the Fund's most recent fiscal
year-end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge upon
request by writing to the Fund or calling the Client Services Group at the
telephone number shown on the front cover of this Prospectus.
GENERAL INFORMATION
SUITABILITY: The portfolio is designed for long-term investors who can accept
the risks entailed in investing in the stock and bond markets, and is not meant
to provide a vehicle for playing short-term swings in the market. The portfolio
is designed principally for the investments of tax-exempt fiduciary investors
who are entrusted with the responsibility of investing assets held for the
benefit of others. Since such investors are not subject to Federal income taxes,
securities transactions for the portfolio will not be influenced by the
different tax treatment of capital gains and dividend income under the Internal
Revenue Code.
SECURITIES LENDING: The portfolio may lend its securities to qualified brokers,
dealers, banks and other financial institutions for the purpose of realizing
additional income. Loans of securities will be collateralized by cash, letters
of credit, or securities issued or guaranteed by the U.S. Government or its
agencies. The collateral will equal at least 100% of the current market value of
the loaned securities. In addition, the portfolio will not loan its portfolio
securities to the extent that greater than one-third of its total assets, at
fair market value, would be committed to loans at that time.
ILLIQUID SECURITIES/RESTRICTED SECURITIES: The portfolio may invest up to 15% of
its net assets in securities that are illiquid by virtue of the absence of a
readily available market, or because of legal or contractual restrictions on
resale. This policy does not limit the acquisition of (i) restricted securities
eligible for resale to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933 or (ii) commercial paper issued pursuant to
Section 4(2) under the Securities Act of 1933, that are determined to be liquid
in accordance with guidelines established by the Fund's Board of Trustees.
TURNOVER: The Adviser manages the portfolio generally without regard to
restrictions on annual turnover. In general, the portfolio will not trade for
short-term profits, but when circumstances warrant, investments may be sold
without regard to the length of time held.
CASH EQUIVALENTS/TEMPORARY DEFENSIVE INVESTING: Although the portfolio intends
to remain substantially fully invested, a small percentage of the portfolio's
assets is generally held in the form of CASH EQUIVALENTS in order to
- --------------------------------------------------------------------------------
MAS Fund - 6 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
meet redemption requests and otherwise manage the daily affairs of the
portfolio. In addition, the portfolio may, when the Adviser deems that market
conditions are such that a temporary defensive approach is desirable, invest in
CASH EQUIVALENTS or the FIXED-INCOME SECURITIES listed for the portfolio without
limit.
CONCENTRATION: Concentration is defined as investment of 25% or more of a
portfolio's total assets in the securities of issuers operating in any one
industry. The portfolio will not concentrate investments in any one industry.
INVESTMENT LIMITATIONS: The portfolio is subject to certain limitations designed
to reduce its exposure to specific situations. Some of these limitations are:
(a) with respect to 75% of its assets, the portfolio will not purchase
securities of any issuer if, as a result, more than 5% of the portfolio's total
assets taken at market value would be invested in the securities of any single
issuer except that this restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities; and
(b) with respect to 75% of its assets, the portfolio will not purchase a
security if, as a result, the portfolio would hold more than 10% of the
outstanding voting securities of any issuer.
Limitations (a) and (b) and certain other limitations described in the Statement
of Additional Information are fundamental and may be changed only with the
approval of the holders of a majority of the shares of the portfolio. Other
investment limitations described here and in the Statement of Additional
Information are not fundamental policies; meaning that the Board of Trustees may
change them without shareholder approval. If a percentage limitation on
investment or utilization of assets as set forth in this prospectus or the
Statement of Additional Information is adhered to at the time an investment is
made, a later change in percentage resulting from changes in the value or total
cost of the portfolio's assets will not be considered a violation of the
restriction, and the sale of securities will not be required.
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 7
<PAGE>
VALUE PORTFOLIO
Objective: To achieve above-average total return over a market cycle
of three to five years, consistent with reasonable risk,
by investing in common stocks with equity capitalizations
usually greater than $300 million which are deemed by the
Adviser to be relatively undervalued, based on various
measures such as price/earnings ratios and price/book
ratios. While capital return will be emphasized somewhat
more than income return, the portfolio's total return will
consist of both capital and income returns. It is expected
that income return will be higher than that of the Equity
Portfolio because stocks which are deemed to be
undervalued in the marketplace have, under most market
conditions, provided higher dividend income returns than
stocks which are deemed to have long-term earnings growth
potential which normally sell at higher price/earnings
ratios.
Approach: The Adviser selects common stocks which are deemed to be
undervalued relative to the stock market in general as
measured by the Standard & Poor's 500 Index, based on the
value measures such as price/earnings ratios and
price/book ratios, as well as fundamental research.
Policies: Generally at least 65% invested in EQUITY SECURITIES,
which are deemed to be undervalued Up to 5% invested in
FOREIGN EQUITIES (excluding ADRs) DERIVATIVES may be used
to pursue portfolio strategy
Capitalization Range: Generally greater than $300 million
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Allowable Investments: ADRs CORPORATES FUTURES & OPTIONS SWAPS
AGENCIES FOREIGN BONDS INVESTMENT COMPANIES U.S. GOVERNMENTS
CASH EQUIVALENTS FOREIGN CURRENCY PREFERRED STOCK WARRANTS
COMMON STOCKS FOREIGN EQUITIES REPURCHASE AGREEMENTS WHEN ISSUED SECURITIES
CONVERTIBLES FORWARDS RIGHTS ZERO COUPONS
</TABLE>
Comparative Index: S&P 500 Index
Strategy: VALUE STOCK INVESTING
Portfolio
Management Team: Richard M. Behler, Nicholas J. Kovich and Robert J.
Marcin
- --------------------------------------------------------------------------------
MAS Fund - 8 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
PROSPECTUS GLOSSARY
CHARACTERISTICS AND RISKS OF STRATEGIES AND INVESTMENTS
STRATEGY
VALUE STOCK INVESTING: Emphasizes COMMON STOCKS which are deemed by the Adviser
to be undervalued relative to the stock market in general as measured by the
appropriate market index, based on value measures such as price/earnings ratios
and price/book ratios. Value stocks are generally dividend paying COMMON STOCKS.
However, non-dividend paying stocks may also be selected for their value
characteristics.
INVESTMENTS
The portfolio may invest in the securities defined below in accordance with its
listing of Allowable Investments and any quality or policy constraints.
ADRs--American Depository Receipts: are dollar-denominated securities which are
listed and traded in the United States, but which represent claims to shares of
foreign stocks. ADRs may be either sponsored or unsponsored. Unsponsored ADR
facilities typically provide less information to ADR holders. ADRs also include
American Depository Shares.
AGENCIES: are securities which are not guaranteed by the U.S. Government, but
which are issued, sponsored or guaranteed by a federal agency or federally
sponsored agency such as the Student Loan Marketing Association or any of
several other agencies.
CASH EQUIVALENTS: are short-term fixed-income instruments comprising:
(1) Time deposits, certificates of deposit (including marketable variable rate
certificates of deposit) and bankers' acceptances issued by a commercial bank or
savings and loan association. Time deposits are non-negotiable deposits
maintained in a banking institution for a specified period of time at a stated
interest rate. Certificates of deposit are negotiable short-term obligations
issued by commercial banks or savings and loan associations against funds
deposited in the issuing institution. Variable rate certificates of deposit are
certificates of deposit on which the interest rate is periodically adjusted
prior to their stated maturity based upon a specified market rate. A bankers'
acceptance is a time draft drawn on a commercial bank by a borrower usually in
connection with an international commercial transaction (to finance the import,
export, transfer or storage of goods).
The portfolio may invest in obligations of U.S. banks, and in foreign branches
of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars).
Euro and Yankee dollar investments will involve some of the same risks of
investing in international securities that are discussed in the FOREIGN
INVESTING section of this Prospectus.
The portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in other
currencies, or, in the case of domestic banks which do not have total assets of
at least $1 billion, the aggregate investment made in any one such bank is
limited to $100,000 and the principal amount of such investment is insured in
full by the Federal Deposit Insurance Corporation, (ii) in the case of U.S.
banks, it is a member of the Federal Deposit Insurance Corporation, and (iii) in
the case of foreign branches of U.S. banks, the security is deemed by the
Adviser to be of an investment quality comparable with other debt securities
which may be purchased by the portfolio;
(2) The portfolio may invest in commercial paper rated at time of purchase by
one or more Nationally Recognized Statistical Rating Organizations ("NRSRO") in
one of their two highest categories, (e.g., A-l or A-2 by Standard & Poor's or
Prime 1 or Prime 2 by Moody's), or, if not rated, issued by a corporation having
an outstanding unsecured debt issue rated high-grade by a NRSRO (e.g. A or
better by Moody's, Standard & Poor's or Fitch);
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 9
<PAGE>
(3) Short-term corporate obligations rated high-grade at the time of purchase by
a NRSRO (e.g. A or better by Moody's, Standard & Poor's or Fitch);
(4) U.S. Government obligations including bills, notes, bonds and other debt
securities issued by the U.S. Treasury. These are direct obligations of the U.S.
Government and differ mainly in interest rates, maturities and dates of issue;
(5) Government Agency securities issued or guaranteed by U.S. Government
sponsored instrumentalities and Federal agencies. These include securities
issued by the Federal Home Loan Banks, Federal Land Bank, Farmers Home
Administration, Farm Credit Banks, Federal Intermediate Credit Bank, Fannie Mae,
Federal Financing Bank, the Tennessee Valley Authority, and others; and
(6) REPURCHASE AGREEMENTS collateralized by securities listed above.
COMMON STOCKS: are EQUITY SECURITIES which represent an ownership interest in a
corporation, entitling the shareholder to voting rights and receipt of dividends
paid based on proportionate ownership.
CONVERTIBLES: are convertible bonds or shares of convertible PREFERRED STOCK
which may be exchanged for a fixed number of shares of COMMON STOCK at the
purchaser's option.
CORPORATES--Corporate bonds: are debt instruments issued by private
corporations. Bondholders, as creditors, have a prior legal claim over common
and preferred stockholders of the corporation as to both income and assets for
the principal and interest due to the bondholder. The portfolio will buy
Corporates subject to any quality constraints. If a security held by the
portfolio is down-graded, the portfolio may retain the security if the Adviser
deems retention of the security to be in the best interests of the portfolio.
DEPOSITARY RECEIPTS: include both Global Depositary Receipts ("GDRs") and
European Depositary Receipts ("EDRs"), in addition to other similar types of
depositary shares, and are securities that can be traded in U.S. or foreign
securities markets but which represent ownership interests in a security or pool
of securities by a foreign or U.S. corporation. Depositary Receipts may be
sponsored or unsponsored. The depositary of unsponsored Depositary Receipts may
provide less information to receipt holders.
DERIVATIVES: A financial instrument whose value and performance are based on the
value and performance of another security or financial instrument. The Adviser
will use derivatives only in circumstances where they offer the most economic
means of improving the risk/reward profile of the portfolio. The Adviser will
not use derivatives to increase portfolio risk above the level that could be
achieved in the portfolio using only traditional investment securities. In
addition, the Adviser will not use derivatives to acquire exposure to changes in
the value of assets or indexes of assets that are not listed in the applicable
Allowable Investments for the portfolio. Any applicable limitations are
described under each investment definition. The portfolio may enter into
over-the-counter Derivatives transactions with counterparties approved by the
Adviser in accordance with guidelines established by the Board of Trustees.
These guidelines provide for a minimum credit rating for each counterparty and
various credit enhancement techniques (for example, collateralization of amounts
due from counterparties) to limit exposure to counterparties with ratings below
AA. Derivatives include, but are not limited to, FORWARDS, FUTURES AND OPTIONS,
and SWAPS.
EQUITY SECURITIES: Commonly include but are not limited to COMMON STOCK,
PREFERRED STOCK, ADRS, RIGHTS, WARRANTS, CONVERTIBLES, AND FOREIGN EQUITIES.
PREFERRED STOCK is contained in both the definition of Equity Securities and
FIXED-INCOME SECURITIES since it exhibits characteristics commonly associated
with each type.
FIXED-INCOME SECURITIES: Commonly include but are not limited to U.S.
GOVERNMENTS, ZERO COUPONS, AGENCIES, CORPORATES, CONVERTIBLES, CASH EQUIVALENTS,
REPURCHASE AGREEMENTS, PREFERRED STOCK, and FOREIGN BONDS. PREFERRED STOCK is
contained in both the definition of EQUITY SECURITIES and Fixed-Income
Securities since it exhibits characteristics commonly associated with each type
of security.
FOREIGN BONDS: are FIXED INCOME SECURITIES denominated in foreign currency and
issued and traded primarily outside of the U.S., including: (1) obligations
issued or guaranteed by foreign national governments, their agencies,
instrumentalities, or political subdivisions; (2) debt securities issued,
guaranteed or sponsored by supranational
- --------------------------------------------------------------------------------
MAS Fund - 10 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
organizations established or supported by several national governments,
including the World Bank, the European Community, the Asian Development Bank and
others; and (3) non-government foreign corporate debt securities.
FOREIGN CURRENCY: A portfolio investing in foreign securities will regularly
transact security purchases and sales in foreign currencies. The portfolio may
hold foreign currency or purchase or sell currencies on a forward basis (see
FORWARDS).
FOREIGN EQUITIES: are COMMON STOCK, PREFERRED STOCK, RIGHTS and WARRANTS of
foreign issuers denominated in foreign currency and traded primarily in non-U.S.
markets. Foreign Equities also include DEPOSITARY RECEIPTS. Investing in foreign
companies involves certain special considerations which are not typically
associated with investing in U.S. companies.
FORWARDS--Forward Foreign Currency Exchange Contracts: are DERIVATIVES which are
used to protect against uncertainty in the level of future foreign exchange
rates. A forward foreign currency exchange contract is an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. Such contracts do not eliminate fluctuations caused by
changes in the local currency prices of the securities, but rather, they
establish an exchange rate at a future date. Also, although such contracts can
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time they limit any potential gain that might be realized.
The portfolio may use currency exchange contracts in the normal course of
business to lock in an exchange rate in connection with purchases and sales of
securities denominated in foreign currencies (transaction hedge) or to lock in
the U.S. dollar value of portfolio positions (position hedge). In addition, the
portfolio may cross hedge currencies by entering into a transaction to purchase
or sell one or more currencies that are expected to decline in value relative to
other currencies to which the portfolio has or expects to have portfolio
exposure. The portfolio may also engage in proxy hedging which is defined as
entering into positions in one currency to hedge investments denominated in
another currency, where the two currencies are economically linked. The
portfolio's entry into forward contracts, as well as any use of cross or proxy
hedging techniques will generally require the portfolio to hold liquid
securities or cash equal to the portfolio's obligations in a segregated account
throughout the duration of the contract.
The portfolio may also combine forward contracts with investments in securities
denominated in other currencies in order to achieve desired credit and currency
exposures. Such combinations are generally referred to as synthetic securities.
For example, in lieu of purchasing a foreign bond, the portfolio may purchase a
U.S. dollar-denominated security and at the same time enter into a forward
contract to exchange U.S. dollars for the contract's underlying currency at a
future date. By matching the amount of U.S. dollars to be exchanged with the
anticipated value of the U.S. dollar-denominated security, the portfolio may be
able to lock in the foreign currency value of the security and adopt a synthetic
investment position reflecting the credit quality of the U.S. dollar-denominated
security.
There is a risk in adopting a transaction hedge or position hedge to the extent
that the value of a security denominated in foreign currency is not exactly
matched with the portfolio's obligation under the forward contract. On the date
of maturity, the portfolio may be exposed to some risk of loss from fluctuations
in that currency. Although the Adviser will attempt to hold such mismatching to
a minimum, there can be no assurance that the Adviser will be able to do so. For
proxy hedges, cross hedges or a synthetic position, there is an additional risk
in that these transactions create residual foreign currency exposure. When the
portfolio enters into a forward contract for purposes of creating a position
hedge, transaction hedge, cross hedge or a synthetic security, it will generally
be required to hold liquid securities or cash in a segregated account with a
daily value at least equal to its obligation under the forward contract.
FUTURES & OPTIONS--Futures Contracts, Options on Futures Contracts and Options:
are DERIVATIVES. Futures contracts provide for the sale by one party and
purchase by another party of a specified amount of a specific security, at a
specified future time and price. An option is a legal contract that gives the
holder the right to buy or sell a specified amount of the underlying security or
futures contract at a fixed or determinable price upon the exercise of the
option. A call option conveys the right to buy and a put option conveys the
right to sell a specified quantity of the underlying security.
The portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts in
combination with its outstanding obligations with respect to options
transactions would exceed 50% of its total assets. It will maintain assets
sufficient to meet its obligations under such contracts in a
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 11
<PAGE>
segregated account with the custodian bank or will otherwise comply with the
Securities and Exchange Commission's ("SEC's") position on asset coverage.
Possible Risks: The primary risks associated with the use of Futures and Options
are (i) imperfect correlation between the change in market value of the
securities held by the portfolio and the prices of futures and options relating
to the stocks, bonds or futures contracts purchased or sold by the portfolio;
and (ii) possible lack of a liquid secondary market for a futures contract and
the resulting inability to close a futures position which could have an adverse
impact on the portfolio's ability to execute futures and options strategies.
Additional risks associated with options transactions are (i) the risk that an
option will expire worthless; (ii) the risk that the issuer of an over-the-
counter option will be unable to fulfill its obligation to the portfolio due to
bankruptcy or related circumstances; (iii) the risk that options may exhibit
greater short-term price volatility than the underlying security; and (iv) the
risk that the portfolio may be forced to forego participation in the
appreciation of the value of underlying securities, futures contracts or
currency due to the writing of a call option.
INVESTMENT COMPANIES: The portfolio is permitted to invest in shares of other
open-end or closed-end investment companies. The 1940 Act generally prohibits
the portfolio from acquiring more than 3% of the outstanding voting shares of an
investment company and limits such investments to no more than 5% of the
portfolio's total assets in any one investment company and no more than 10% in
any combination of investment companies. The 1940 Act also prohibits the
portfolio from acquiring in the aggregate more than 10% of the outstanding
voting shares of any registered closed-end investment company.
To the extent the portfolio invests a portion of its assets in Investment
Companies, those assets will be subject to the expenses of the investment
company as well as to the expenses of the portfolio itself. The portfolio may
not purchase shares of any affiliated investment company except as permitted by
SEC rule or order.
PREFERRED STOCK: are non-voting ownership shares in a corporation which pay a
fixed or variable stream of dividends.
REPURCHASE AGREEMENTS: are transactions by which the portfolio purchases a
security and simultaneously commits to resell that security to the seller (a
bank or securities dealer) at an agreed upon price on an agreed upon date
(usually within seven days of purchase). The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or date of maturity of the purchased security. Such agreements
permit the portfolio to keep all its assets at work while retaining overnight
flexibility in pursuit of investments of a longer term nature. The Adviser will
continually monitor the value of the underlying collateral to ensure that its
value, including accrued interest, always equals or exceeds the repurchase
price.
Pursuant to an order issued by the SEC, the Fund's portfolios may pool their
daily uninvested cash balances in order to invest in Repurchase Agreements on a
joint basis. By entering into Repurchase Agreements on a joint basis, it is
expected that the portfolios will incur lower transaction costs and potentially
obtain higher rates of interest on such Repurchase Agreements. Each portfolio's
participation in the income from jointly purchased Repurchase Agreements will be
based on that portfolio's percentage share in the total Repurchase Agreement.
RIGHTS: represent a preemptive right of stockholders to purchase additional
shares of a stock at the time of a new issuance, before the stock is offered to
the general public, allowing the stockholder to retain the same ownership
percentage after the new stock offering.
SWAPS--Swap Contracts: are DERIVATIVES in the form of a contract or other
similar instrument which is an agreement to exchange the return generated by one
instrument for the return generated by another instrument. The payment streams
are calculated by reference to a specified index and agreed upon notional
amount. The term specified index includes, but is not limited to, currencies,
fixed interest rates, prices and total return on interest rate indices,
fixed-income indices, stock indices and commodity indices (as well as amounts
derived from arithmetic operations on these indices). For example, the portfolio
may agree to swap the return generated by a fixed-income index for the return
generated by a second fixed-income index. The currency Swaps in which the
portfolio may enter will generally involve an agreement to pay interest streams
in one currency based on a specified index in exchange for receiving interest
streams denominated in another currency. Such Swaps may involve initial and
final exchanges that correspond to the agreed upon notional amount.
- --------------------------------------------------------------------------------
MAS Fund - 12 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
The portfolio will usually enter into Swaps on a net basis, i.e., the two return
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the portfolio receiving or paying, as the case
may be, only the net amount of the two returns. The portfolio's obligations
under a swap agreement will be accrued daily (offset against any amounts owing
to the portfolio) and any accrued but unpaid net amounts owed to a swap
counterparty will be covered by the maintenance of a segregated account
consisting of cash or liquid securities. The portfolio will not enter into any
swap agreement unless the counterparty meets the rating requirements set forth
in guidelines established by the Board of Trustees.
Possible Risks: Interest rate and total rate of return Swaps do not involve the
delivery of securities, other underlying assets, or principal. Accordingly, the
risk of loss with respect to interest rate and total rate of return Swaps is
limited to the net amount of interest payments that the portfolio is
contractually obligated to make. If the other party to an interest rate or total
rate of return swap defaults, the portfolio's risk of loss consists of the net
amount of interest payments that the portfolio is contractually entitled to
receive. In contrast, currency swaps may involve the delivery of the entire
principal value of one designated currency in exchange for the other designated
currency. Therefore, the entire principal value of a currency swap may be
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. If there is a default by the counterparty, the
portfolio may have contractual remedies pursuant to the agreements related to
the transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Swaps that include caps, floors, and
collars are more recent innovations for which standardized documentation has not
yet been fully developed and, accordingly, they are less liquid than Swaps.
The use of Swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If the Adviser is incorrect in its forecasts of market
values, interest rates, and currency exchange rates, the investment performance
of the portfolio would be less favorable than it would have been if this
investment technique were not used.
U.S. GOVERNMENTS--U.S. Treasury securities: are FIXED-INCOME SECURITIES which
are backed by the full faith and credit of the U.S. Government as to the payment
of both principal and interest.
WARRANTS: are options issued by a corporation which give the holder the option
to purchase stock.
WHEN-ISSUED SECURITIES: are securities purchased at a certain price even though
the securities may not be delivered for up to 90 days. No payment or delivery is
made by the portfolio in a when-issued transaction until the portfolio receives
payment or delivery from the other party to the transaction. Although the
portfolio receives no income from the above described securities prior to
delivery, the market value of such securities is still subject to change. As a
consequence, it is possible that the market price of the securities at the time
of delivery may be higher or lower than the purchase price. The portfolio will
maintain with the custodian a segregated account consisting of cash or liquid
securities in an amount at least equal to these commitments.
ZERO COUPONS--Zero Coupon Obligations: are FIXED-INCOME SECURITIES that do not
make regular interest payments. Instead, zero coupon obligations are sold at
substantial discounts from their face value. The difference between a zero
coupon obligation's issue or purchase price and its face value represents the
imputed interest an investor will earn if the obligation is held until maturity.
Zero Coupons may offer investors the opportunity to earn higher yields than
those available on ordinary interest-paying obligations of similar credit
quality and maturity. However, zero coupon obligation prices may also exhibit
greater price volatility than ordinary FIXED-INCOME SECURITIES because of the
manner in which their principal and interest are returned to the investor.
GENERAL SHAREHOLDER INFORMATION
PURCHASE OF SHARES
Institutional Class Shares are available to clients of the Adviser with combined
investments of $5,000,000 and Shareholder Organizations who have a contractual
arrangement with the Fund or the Fund's Distributor, including institutions such
as trusts, foundations or broker-dealers purchasing for the accounts of others.
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 13
<PAGE>
Institutional Class Shares of the portfolio may be purchased at the net asset
value per share next determined after receipt of the purchase order. The
portfolio determines net asset value as described under General Shareholder
Information-Valuation of Shares each day that the portfolio is open for
business. See Other Information-Closed Holidays and General Shareholder
Information--Valuation of Shares.
INITIAL PURCHASE BY MAIL: Subject to acceptance by the Fund, an account may be
opened by completing and signing an Account Registration Form (provided at the
end of the prospectus) and mailing it to MAS Funds c/o Miller Anderson &
Sherrerd, LLP, One Tower Bridge, West Conshohocken, Pennsylvania 19428-0868
together with a check ($5,000,000 minimum) payable to MAS Funds.
The portfolio requested should be designated on the Account Registration Form.
Subject to acceptance by the Fund, payment for the purchase of shares received
by mail will be credited at the net asset value per share of the portfolio next
determined after receipt. Such payment need not be converted into Federal Funds
(monies credited to the Fund's Custodian Bank by a Federal Reserve Bank) before
acceptance by the Fund. Please note that payments to investors who redeem shares
purchased by check will not be made until payment of the purchase has been
collected, which may take up to eight business days after purchase. Shareholders
can avoid this delay by purchasing shares by wire.
INITIAL PURCHASE BY WIRE: Subject to acceptance by the Fund, Institutional Class
Shares of the portfolio may also be purchased by wiring Federal Funds to the
Fund's Custodian Bank, The Chase Manhattan Bank (see instructions below). A
completed Account Registration Form should be forwarded to MAS Funds' Client
Services Group in advance of the wire. Notification must be given to MAS Funds'
Client Services Group at 1-800-354-8185 prior to the determination of net asset
value.
Institutional Class Shares will be purchased at the net asset value per share
next determined after receipt of the purchase order. (Prior notification must
also be received from investors with existing accounts.) Instruct your bank to
send a Federal Funds Wire in a specified amount to the Fund's Custodian Bank
using the following wiring instructions:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, NY 10081
ABA #021000021
DDA #910-2-734143
Attn: MAS Funds Subscription Account
Ref: (Value Portfolio, Account Number, Account Name)
ADDITIONAL INVESTMENTS: Additional investments of Institutional Class Shares at
net asset value may be made at any time (minimum additional investment $1,000)
by mailing a check (payable to MAS Funds) to MAS Funds' Client Services Group at
the address noted under Initial Purchase by Mail or by wiring Federal Funds to
the Custodian Bank as outlined above. Shares will be purchased at the net asset
value per share next determined after receipt of the purchase order.
Notification must be given to MAS Funds' Client Services Group at 1-800-354-8185
prior to the determination of net asset value.
OTHER PURCHASE INFORMATION: The Fund reserves the right, in its sole discretion,
to suspend the offering of the portfolio or to reject any purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interest of the Fund. The Fund also reserves the right, in its sole discretion,
to waive the minimum initial and additional investment amounts.
Purchases of the portfolio's shares will be made in full and fractional shares
of the portfolio calculated to three decimal places. In the interest of economy
and convenience, certificates for shares will not be issued except at the
written request of the shareholder. Certificates for fractional shares, however,
will not be issued.
Institutional Class Shares of the portfolio are also sold to corporations or
other institutions such as trusts, foundations or broker-dealers purchasing for
the accounts of others (Shareholder Organizations). Investors purchasing and
redeeming shares of the portfolio through a Shareholder Organization may be
charged a transaction-based fee or other fee for the services of such
organization. Each Shareholder Organization is responsible for transmitting to
its
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MAS Fund - 14 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
customers a schedule of any such fees and information regarding any additional
or different conditions regarding purchases and redemptions. Customers of
Shareholder Organizations should read this Prospectus in light of the terms
governing accounts with their organization. The Fund does not pay compensation
to or receive compensation from Shareholder Organizations for the sale of
Institutional Class Shares.
REDEMPTION OF SHARES
Shares of the portfolio may be redeemed by mail, or, if authorized, by
telephone. No charge is made for redemptions. The value of shares redeemed may
be more or less than the purchase price, depending on the net asset value at the
time of redemption which is based on the market value of the investment
securities held by the portfolio. See Other Information-Closed Holidays and
Valuation of Shares.
BY MAIL: The portfolio will redeem shares at the net asset value next determined
after the request is received in good order. Requests should be addressed to MAS
Funds, c/o Miller Anderson & Sherrerd, LLP, One Tower Bridge, West Conshohocken,
PA 19428-0868.
To be in good order, redemption requests must include the following
documentation:
(a) The share certificates, if issued;
(b) A letter of instruction, if required, or a stock assignment specifying the
number of shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which the shares are registered;
(c) Any required signature guarantees (see Signature Guarantees); and
(d) Other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit sharing
plans and other organizations.
SIGNATURE GUARANTEES: To protect your account, the Fund and the Administrator
from fraud, signature guarantees are required to enable the Fund to verify the
identity of the person who has authorized a redemption from an account.
Signature guarantees are required for (1) redemptions where the proceeds are to
be sent to someone other than the registered shareholder(s) and the registered
address, and (2) share transfer requests. Please contact MAS Funds' Client
Services Group for further details.
BY TELEPHONE: Provided the Telephone Redemption Option has been authorized by
the shareholder on the Account Registration Form, a redemption of shares may be
requested by calling MAS Funds' Client Services Group and requesting that the
redemption proceeds be mailed to the primary registration address or wired per
the authorized instructions. Shares cannot be redeemed by telephone if share
certificates are held for those shares.
BY FACSIMILE: Written requests in good order (see above) for redemptions,
exchanges, and transfers may be forwarded to the Fund via facsimile. All
requests sent to the Fund via facsimile must be followed by a telephone call to
MAS Funds' Client Services Group to ensure that the instructions have been
properly received by the Fund. The original request must be promptly mailed to
MAS Funds, c/o Miller Anderson & Sherrerd, LLP, One Tower Bridge, West
Conshohocken, PA 19428-0868.
Neither the Distributor nor the Fund will be responsible for any loss,
liability, cost, or expense for acting upon facsimile instructions or upon
telephone instructions that they reasonably believe to be genuine. In order to
confirm that telephone instructions in connection with redemptions are genuine,
the Fund and Distributor will provide written confirmation of transactions
initiated by telephone.
Payment of the redemption proceeds will ordinarily be made within three business
days after receipt of an order for a redemption. The Fund may suspend the right
of redemption or postpone the date of redemption at times when the
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 15
<PAGE>
New York Stock Exchange ("NYSE"), the Custodian, or the Fund is closed (see
Other Information-Closed Holidays) or under any emergency circumstances as
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay the redemption proceeds in whole or in part by
a distribution in-kind of readily marketable securities held by a portfolio in
lieu of cash in conformity with applicable rules of the SEC. Investors may incur
brokerage charges on the sale of portfolio securities received in such payments
of redemptions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE: The portfolio's Institutional Class Shares may be exchanged
for shares of the Fund's other portfolios offering Institutional Class Shares
based on the respective net asset values of the shares involved. The exchange
privilege is only available, however, with respect to portfolios that are
qualified for sale in a shareholder's state of residence. There are no exchange
fees. Exchange requests should be sent to MAS Funds, c/o Miller Anderson &
Sherrerd, LLP, One Tower Bridge, West Conshohocken, PA 19428-0868.
Because an exchange of shares amounts to a redemption from one portfolio and
purchase of shares of another portfolio, the above information regarding
purchase and redemption of shares applies to exchanges. Shareholders should note
that an exchange between portfolios is considered a sale and purchase of shares.
The sale of shares may result in a capital gain or loss for tax purposes.
The officers of the Fund reserve the right not to accept any request for an
exchange when, in their opinion, the exchange privilege is being used as a tool
for market timing. The Fund reserves the right to change the terms or conditions
of the exchange privilege discussed herein upon sixty days' notice.
TRANSFER OF REGISTRATION: The registration of Fund shares may be transferred by
writing to MAS Funds, c/o Miller Anderson & Sherrerd, LLP, One Tower Bridge,
West Conshohocken, PA 19428-0868. As in the case of redemptions, the written
request must be received in good order as defined above. Unless shares are being
transferred to an existing account, requests for transfer must be accompanied by
a completed Account Registration Form for the receiving party.
VALUATION OF SHARES
Net asset value per share is determined by dividing the total market value of
the portfolio's investments and other assets, less any liabilities, by the total
outstanding shares of the portfolio. Net asset value per share is determined as
of the close of the NYSE (normally 4:00 p.m. Eastern Time) on each day the
portfolio is open for business (See Other Information-Closed Holidays). EQUITY
SECURITIES listed on a U.S. securities exchange or Nasdaq for which market
quotations are available are valued at the last quoted sale price on the day the
valuation is made. Price information on listed EQUITY SECURITIES is taken from
the exchange where the security is primarily traded. EQUITY SECURITIES listed on
a foreign exchange are valued at the latest quoted sales price available before
the time when assets are valued. For purposes of net asset value per share, all
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at the bid price of such currencies against U.S. dollars.
Unlisted EQUITY SECURITIES and listed U.S. EQUITY SECURITIES not traded on the
valuation date for which market quotations are readily available are valued at
the mean of the most recent quoted bid and asked price. The values of other
assets and securities for which no quotations are readily available (including
restricted securities), and, to the extent permitted by the SEC, securities for
which the value has been materially affected by events occurring after the close
of the market on which they principally trade, are determined in good faith at
fair value using methods approved by the Trustees.
Net asset value per share for Investment Class Shares, Institutional Class
Shares and Adviser Class Shares may differ due to class-specific expenses paid
by each class, and the shareholder servicing fees charged to Investment Class
Shares and distribution fees charged to Adviser Class Shares.
- --------------------------------------------------------------------------------
MAS Fund - 16 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
The portfolio normally distributes substantially all of its net investment
income to shareholders on a quarterly basis.
If the portfolio does not have income available to distribute, as determined in
compliance with the appropriate tax laws, no distribution will be made.
If any net gains are realized from the sale of underlying securities, the
portfolio normally distributes such gains with the last distribution for the
calendar year.
All dividends and capital gains distributions are automatically paid in
additional shares of the portfolio unless the shareholder elects otherwise. Such
election must be made in writing to the Fund and may be made on the Account
Registration Form.
Undistributed net investment income is included in the portfolio's net assets
for the purpose of calculating net asset value per share. Therefore, on the
ex-dividend date, the net asset value per share excludes the dividend (i.e., is
reduced by the per share amount of the dividend). Dividends paid shortly after
the purchase of shares by an investor, although in effect a return of capital,
are taxable as ordinary income.
TAXES: The following is a summary of some important tax issues that affect the
portfolio and its shareholders. The summary is based on current tax laws and
regulations, which may be changed by legislative, judicial or administrative
action. No attempt has been made to present a detailed explanation of the tax
treatment of the portfolio or its shareholders. More information about taxes is
in the Statement of Additional Information. Shareholders are urged to consult
their tax advisors regarding specific questions as to federal, state and local
income taxes.
FEDERAL TAXES: The portfolio is treated as a separate entity for federal income
tax purposes and intends to qualify for the special tax treatment afforded
regulated investment companies. As such, the portfolio will not be subject to
federal income tax to the extent it distributes net investment company taxable
income and net capital gains to shareholders. The Fund will notify shareholders
annually as to the tax classification of all distributions.
Income dividends received by shareholders will be taxable as ordinary income,
whether received in cash or in additional shares. Corporate shareholders may be
entitled to a dividends-received deduction for the portion of dividends they
receive which are attributable to dividends received by the portfolio from U.S.
corporations. Capital gains distributions are taxable to shareholders at capital
gains rates. The portfolio will designate capital gains distributions to
individual shareholders as either subject to the federal capital gains rate
imposed on property held for more than 18 months or on property held for more
than 1 year but not more than 18 months.
Distributions paid in January but declared by the portfolio in October, November
or December of the previous year are taxable to shareholders in the previous
year.
The portfolio intends to declare and pay dividends and distributions so as to
avoid imposition of the federal excise tax applicable to regulated investment
companies. Further discussion is included in the Statement of Additional
Information.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends and capital gains distributions) paid to
shareholders. In order to avoid this withholding requirement, shareholders must
certify on their Account Registration Forms that their Social Security Number or
Taxpayer Identification Number is correct, and that they are not subject to
backup withholding. Exchanges and redemptions of shares in the portfolio are
taxable events.
FOREIGN INCOME TAXES: Investment income received by the portfolio from sources
within foreign countries may be subject to foreign income taxes withheld at the
source.
- --------------------------------------------------------------------------------
Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 17
<PAGE>
STATE AND LOCAL INCOME TAXES: The Fund is formed as a Pennsylvania Business
Trust and is not liable for any corporate income or franchise tax in the
Commonwealth of Pennsylvania. Shareholders should consult their tax advisors for
the state and local income tax consequences of distributions from the portfolio.
TRUSTEES OF THE TRUST: The affairs of the Trust are supervised by the Trustees
under the laws governing business trusts in the Commonwealth of Pennsylvania.
The Trustees have approved contracts under which, as described above, certain
companies provide essential management, administrative and shareholder services
to the Trust.
INVESTMENT ADVISER: The Investment Adviser to the Fund, Miller Anderson &
Sherrerd, LLP (the "Adviser"), is a Pennsylvania limited liability partnership
founded in 1969, wholly owned by indirect subsidiaries of Morgan Stanley Dean
Witter & Co., and is located at One Tower Bridge, West Conshohocken, PA 19428.
The Adviser provides investment services to employee benefit plans, endowment
funds, foundations and other institutional investors and as of March 31, 1998
had in excess of $67.1 billion in assets under management. On May 31, 1997,
Morgan Stanley Group Inc., then the indirect parent of the Adviser, merged with
Dean Witter, Discover & Co. to form Morgan Stanley Dean Witter & Co. (formerly,
Morgan Stanley, Dean Witter, Discover & Co.) In connection with this
transaction, the Adviser entered into a new Investment Management Agreement
("Agreement") with MAS Funds dated May 31, 1997, which Agreement was approved by
the shareholders of each portfolio at a special meeting held on May 1, 1997 or
at an adjournment of such meeting held on May 12, 1997. The Adviser will retain
its name and remain at its current location, One Tower Bridge, West
Conshohocken, PA 19428. The Adviser will continue to provide investment
counseling services to employee benefit plans, endowments, foundations and other
institutional investors.
Under the Agreement with the Fund, the Adviser, subject to the control and
supervision of the Fund's Board of Trustees and in conformance with the stated
investment objectives and policies of each portfolio of the Fund, manages the
investment and reinvestment of the assets of each portfolio of the Fund. In this
regard, it is the responsibility of the Adviser to make investment decisions for
the Fund's portfolios and to place each portfolio's purchase and sales orders.
As compensation for the services rendered by the Adviser under the Agreement,
the portfolio pays the Adviser an advisory fee calculated by applying a
quarterly rate. The Adviser's contractual rate (annualized) for the portfolio's
1997 fiscal year was 0.500% and the Adviser's actual rate of compensation was
0.500%.
PORTFOLIO MANAGEMENT
A description of the business experience during the past five years for each of
the investment professionals who are primarily responsible for the day-to-day
management of the portfolio is as follows:
Richard M. Behler, Principal, Morgan Stanley, joined MAS in 1995. He served as a
Portfolio Manager from 1992 through 1995 for Moore Capital Management. He
assumed responsibility for the Value Portfolio in 1996.
Nicholas J. Kovich, Managing Director, Morgan Stanley, joined MAS in 1988. He
assumed responsibility for the Equity Portfolio in 1994 and the Value Portfolio
in 1997.
Robert J. Marcin, Managing Director, Morgan Stanley, joined MAS in 1988. He
assumed responsibility for the Value Portfolio in 1990 and the Equity Portfolio
in 1994.
ADMINISTRATIVE SERVICES: MAS serves as Administrator to the Fund pursuant to an
Administration Agreement dated as of November 18, 1993. Under its Administration
Agreement with the Fund, MAS receives an annual fee, accrued daily and payable
monthly, of 0.08% of the Fund's average daily net assets, and is responsible for
all fees payable under any sub-administration agreements. Chase Global Funds
Services Company, a subsidiary of The Chase Manhattan Bank, 73 Tremont Street,
Boston MA 02108-3913, serves as Transfer Agent to the Fund pursuant to an
agreement also dated as of November 18, 1993, and provides fund accounting and
other services pursuant to a sub-administration agreement with MAS as
Administrator.
GENERAL DISTRIBUTION AGENT: Shares of the Fund are distributed exclusively
through MAS Fund Distribution, Inc., a wholly-owned subsidiary of the Adviser.
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MAS Fund - 18 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
PORTFOLIO TRANSACTIONS: The investment advisory agreement authorizes the Adviser
to select the brokers or dealers that will execute the purchases and sales of
investment securities for each of the Fund's portfolios and directs the Adviser
to use its best efforts to obtain the best execution with respect to all
transactions for the portfolios. In doing so, a portfolio may pay higher
commission rates or markups on principal transactions than the lowest available
when the Adviser believes it is reasonable to do so in light of the value of the
research, statistical, and pricing services provided by the broker or dealer
effecting the transaction.
It is not the Fund's practice to allocate brokerage or principal business on the
basis of sales of shares which may be made through intermediary brokers or
dealers. However, the Adviser may place portfolio orders with qualified
broker-dealers who recommend the Fund's Portfolios or who act as agents in the
purchase of shares of the portfolios for their clients.
Some securities considered for investment by each of the Fund's portfolios may
also be appropriate for other clients served by the Adviser. The Adviser may
place a combined order for two or more accounts or portfolios for the purchase
or sale of the same security if, in its judgement, joint execution is in the
best interest of each participant and will result in best price and execution.
If purchase or sale of securities consistent with the investment policies of a
portfolio and one or more of these other clients served by the Adviser is
considered at or about the same time, transactions in such securities will be
allocated among the portfolio and clients in a manner deemed fair and reasonable
by the Adviser. Although there is no specified formula for allocating such
transactions, the various allocation methods used by the Adviser, and the
results of such allocations, are subject to periodic review by the Fund's
Trustees. The Adviser may use its broker dealer affiliates, including Morgan
Stanley & Co., a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.,
the parent of MAS's general partner and limited partner, to carry out the Fund's
transactions, provided the Fund receives brokerage services and commission rates
comparable to those of other broker dealers.
OTHER INFORMATION: Description of Shares and Voting Rights: The Fund was
established under Pennsylvania law by a Declaration of Trust dated February 15,
1984, as amended and restated as of November 18, 1993. The Fund is authorized to
issue an unlimited number of shares of beneficial interest, without par value,
from an unlimited number of series (portfolios) of shares. Currently the Fund
consists of twenty-nine portfolios.
The shares of the Fund are fully paid and non-assessable, and have no preference
as to conversion, exchange, dividends, retirement or other features. The shares
of the Fund have no preemptive rights. The shares of the Fund have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees if
they choose to do so. Shareholders are entitled to one vote for each full share
held (and a fractional vote for each fractional share held), then standing in
their name on the books of the Fund.
Meetings of shareholders will not be held except as required by the 1940 Act and
other applicable law. A meeting will be held to vote on the removal of a Trustee
or Trustees of the Fund if requested in writing by the holders of not less than
10% of the outstanding shares of the Fund. The Fund will assist in shareholder
communication in such matters to the extent required by law.
CUSTODIANS: The Chase Manhattan Bank, New York, NY and Morgan Stanley Trust
Company (NY), Brooklyn, NY serve as custodians for the Fund. The custodians hold
cash, securities and other assets as required by the 1940 Act.
TRANSFER AND DIVIDEND DISBURSING AGENT: Chase Global Funds Services Company, a
subsidiary of The Chase Manhattan Bank, 73 Tremont Street, Boston, MA
02108-3913, serves as the Funds' Transfer Agent and dividend disbursing agent.
REPORTS: Shareholders receive semi-annual and annual financial statements.
Annual financial statements are audited by Price Waterhouse LLP, independent
accountants.
LITIGATION: The Fund is not involved in any litigation.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 19
<PAGE>
CLOSED HOLIDAYS: Currently, the weekdays on which the portfolio is closed for
business are: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
YEAR 2000: The management and distribution services provided to the Fund by the
Adviser and the Distributor depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or 1980, due to the manner in which dates were encoded
and calculated. That failure could have a negative impact on the handling of
securities trades, pricing and account services. The Adviser and the Distributor
have been actively working on necessary change s to their own computer systems
to deal with the year 2000 problem and expect that their systems will be adapted
before that date. There can be no assurance, however, that they will be
successful. In addition, other unaffiliated service providers may be faced with
similar problems. The Adviser and theDistributor are monitoring their remedial
efforts, however, there can be no assurance that they and the services they
provide will not be adversely affected.
In addition, it is possible that the markets for securities in which the
portfolios invest may be detrimentally affected by computer failures throughout
the financial services industry beginning January 1, 2000. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies and overall economic
uncertainties. Earnings of individual issuers will be affected by remediation
costs, which may be substantial and may be reported inconsistently in U.S. and
foreign financial statements. Accordingly, the portfolio's investments may be
adversely affected.
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MAS Fund - 20 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
TRUSTEES AND OFFICERS
The following is a list of the Trustees and the principal executive officers of
the Fund and a brief statement of their present positions and principal
occupations during the past five years:
THOMAS L. BENNETT,* Chairman of the Board of Trustees; Managing Director, Morgan
Stanley; Portfolio Manager and member of the Executive Committee, Miller
Anderson & Sherrerd, LLP; Director, MAS Fund Distribution, Inc.; formerly,
Director, Morgan Stanley Universal Funds, Inc.
THOMAS P. GERRITY, Trustee; Dean and Reliance Professor of Management and
Private Enterprise, Wharton School of Business, University of Pennsylvania;
Director, Digital Equipment Corporation; Director, Sun Company, Inc.; Director,
Fannie Mae; Director, Reliance Group Holdings; Director, CVS Corporation;
Director, IKON Office Solutions, Inc.; formerly, Director, Union Carbide
Corporation.
JOSEPH P. HEALEY, Trustee; Headmaster, Haverford School; formerly Dean, Hobart
College; Associate Dean, William & Mary College.
JOSEPH J. KEARNS, Trustee; investment consultant; Chief Investment Officer, The
J. Paul Getty Trust; Director, Electro Rent Corporation; Trustee, Southern
California Edison Nuclear Decommissioning Trust; Director, The Ford Family
Foundation.
VINCENT R. MCLEAN, Trustee; Director, Legal and General America, Inc.; Director,
William Penn Life Insurance Company of New York; formerly, Executive Vice
President, Chief Financial Officer, Director and Member of the Executive
Committee of Sperry Corporation (now part of Unisys Corporation).
C. OSCAR MORONG, JR., Trustee; Managing Director, Morong Capital Management;
Director, Ministers and Missionaries Benefit Board of American Baptist Churches,
The Indonesia Fund, The Landmark Funds; formerly, Senior Vice President and
Investment Manager for CREF, TIAA-CREF Investment Management, Inc.
*Trustee Bennett is deemed to be an "interested person" of the Fund as that term
is defined in the Investment Company Act of 1940, as amended.
- --------------------------------------------------------------------------------
JAMES D. SCHMID, President, MAS Funds; Principal, Morgan Stanley; Head of Mutual
Funds, Miller Anderson & Sherrerd, LLP; Director, MAS Fund Distribution, Inc.;
formerly, Chairman of the Board of Directors, The Minerva Fund, Inc.; formerly,
Vice President, The Chase Manhattan Bank.
LORRAINE TRUTEN, CFA, Vice President, MAS Funds; Principal, Morgan Stanley; Head
of Mutual Fund Services, Miller Anderson & Sherrerd, LLP; President, MAS Fund
Distribution, Inc.
JAMES A. GALLO, Treasurer, MAS Funds; Head of Fund Administration, Miller,
Anderson and Sherrerd, LLP; formerly, Manager, Investment Accounting and then
Vice President and Director of Investment Accounting, PFPC, Inc.
JOHN H. GRADY, JR., Secretary, MAS Funds; Partner, Morgan, Lewis &Bockius LLP.
RICHARD J. SHOCH, Assistant Secretary, MAS Funds; Fund Compliance Officer,
Miller, Anderson & Sherrerd, LLP; formerly, Fund Legal Administrator and then
Counsel, Vice President and Assistant Secretary, SEI Corporation.
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 21
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- --MAS---------------------------------------------------------------------------------ACCOUNT REGISTRATION FORM---------------------
MAS FUNDS
MAS Fund Distribution, Inc.
General Distribution Agent
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(1) |
REGISTRATION/PRIMARY ||_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
MAILING ADDRESS |
||_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|
| Attention |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
Confirmations and |
month-end statements | Street or P.O. Box |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
will be mailed |
to this address. | City |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| State |_|_| Zip |_|_|_|_|_|-|_|_|_|_|
|
| Telephone No. |_|_|_|-|_|_|_|-|_|_|_|_|_|
|
| Form of Business
| Entity: [ ] Corporation [ ] Partnership [ ] Trust [ ] Other _____________________________
| Type of Account: [ ] Defined Benefit Plan [ ] Defined Contribution Plan [ ] Profit Sharing/Thrift Plan
|
| [ ] Other Employee Benefit Plan ___________________________________________
|
| [ ] Endowment [ ] Foundation [ ] Taxable [ ] Other (Specify)_________
|
| [ ] United States Citizen [ ] Resident Alien [ ] Non-Resident Alien, Indicate Country of Residence _______
- ------------------------------------------------------------------------------------------------------------------------------------
(2) |
INTERESTED PARTY |
OPTION |
|
In addition to the |Attention |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
account statement |
sent to the above | Company
registered address, | (If Applicable) |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
the Fund is |
authorized to mail | Street or P.O. Box |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
duplicate statements |
to the name and | City |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| State |_|_| Zip |_|_|_|_|_|-|_|_|_|_|
address provided |
at right. | Telephone No. |_|_|_|-|_|_|_|-|_|_|_|_|_|
|
For additional |
interested party |
mailings, please |
attach a separate |
sheet. |
- ------------------------------------------------------------------------------------------------------------------------------------
(3) INVESTMENT
For Purchase of:
[ ] NY Municipal Portfolio $_________________
- ------------------------------------------------------------------------------------------------------------------------------------
(4) TAXPAYER IDENTIFICATION NUMBER
Part 1.
Social Security Number IMPORTANT TAX INFORMATION
|_|_|_|-|_|_|-|_|_|_|_| You (as a payee) are required by law to provide us (as payer) with your correct
taxpayer identification number. Accounts that have a missing or incorrect
or taxpayer identification number will be or subject to backup withholding at a 31%
Employer Identification Number rate on ordinary income and capital gains distribution as well as redemptions.
Backup withholding is not an additional tax; the tax liability of person subject
|_|_|-|_|_|_|_|_|_|_| to backup withholding will be reduced by the amount of tax withheld.
Part 2. BACKUP WITHHOLDING You may be notified that you are subject to backup withholding under section
3406(a)(1)(C) because you have underreported interest or dividends or you were
[ ] Check the box if the account required to, but failed to, file a return which would have included a reportable
Backup Withholding under the provisions interest or dividend payment. If you have been is subject to so notified, check
of Section 3406(a)(1)(C) of the the box in PART 2 at left.
Internal Revenue Code.
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MILLER
ANDERSON
__& SHERRERD, LLP __ ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185 ________________________________________________
SIDE ONE OF TWO +
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- --MAS-------------------------------------------------------------------------------------------------------------------------------
MAS FUNDS
(5) TELEPHONE REDEMPTION OPTION
Please sign below if you wish to redeem or exchange shares by telephone. Redemption proceeds requested by phone may only be mailed
to the account's primary registration address or wired according to bank instructions provided in writing. A signature guarantee is
required if the bank account listed below is not registered identically to your Fund Account. The Fund and its agents shall not be
liable for reliance on phone instructions reasonably believed to be genuine. The Fund will maintain procedures designed to
authenticate telephone instructions received.
Telephone requests for redemptions or exchanges will not be honored unless signature appears below.
(X)
- -----------------------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------------------------------------------------------------
(6) WIRING INSTRUCTIONS -- THE INSTRUCTIONS PROVIDED BELOW MAY ONLY BE CHANGED BY WRITTEN NOTIFICATION.
Please check appropriate box(es):
[ ] Wire redemption proceeds
[ ] Wire distribution proceeds (please complete box (7) below)
____________________________________________________________________ _____________________________________________
Name of Commercial Bank (Net Savings Bank) Bank Account No.
____________________________________________________________________________________________________________________________
Name(s) in which your Bank Account is Established
____________________________________________________________________________________________________________________________
Bank's Street Address
___________________________________________________________________________________________ ______________________________
City State Zip Routing/ABA Number
- ------------------------------------------------------------------------------------------------------------------------------------
(7) DISTRIBUTION OPTION -- Income dividends and capital gains distributions (if | (8) WIRING
any) will be reinvested in additional shares if no box is checked below. THE | INSTRUCTIONS
INSTRUCTIONS PROVIDED BELOW MAY ONLY BE CHANGED BY WRITTEN NOTIFICATION. | FOR PURCHASING SHARES BY WIRE,
| PLEASE SEND A FEDWIRE PAYMENT TO:
|
[ ] Income dividends and capital gains to be paid in cash. | THE CHASE MANHATTAN BANK
| 1 Chase Manhattan Plaza
[ ] Income dividends to be paid in cash and capital gains distribution in | New York, NY 10081
additional shares. | ABA# 021000021
| DDA# 910-2-734143
[ ] Income dividends and capital gains to be reinvested in |
additional shares. | Attn: MAS Funds Subscription Account
| Ref. (NY Municipal Portfolio, your
If cash option is chosen, please indicate instructions below: | Account number,
| your Account name)
[ ] Mail distribution check to the name and address in which account is |
registered. |
|
[ ] Wire distribution to the same commercial bank indicated in Section 6 above. |
|
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE(S) OF ALL HOLDERS AND TAXPAYER CERTIFICATION
The undersigned certify that I/we have full authority and legal capacity to purchase shares of the Fund and affirm that I/we have
received a current MAS Funds Prospectus and agree to be bound by its terms. UNDER PENALTIES OF PERJURY I/WE CERTIFY THAT THE
INFORMATION PROVIDED IN SECTION 4 ABOVE IS TRUE, CORRECT AND COMPLETE. THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO
ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
(X)__________________________________________________________ ______________________________________________________________
SIGNATURE DATE | |
| |
(X)__________________________________________________________ | FOR INTERNAL USE ONLY |
SIGNATURE DATE | |
| (X)________________________________________________________ |
(X)__________________________________________________________ | Signature Date |
SIGNATURE DATE | |
| __________________________________________________________ |
(X)__________________________________________________________ | |
SIGNATURE DATE | O [ ] F [ ] |
| |
THIS APPLICATION IS SEPARATE FROM THE PROSPECTUS. | |
|______________________________________________________________|
MILLER
ANDERSON
__& SHERRERD, LLP __ ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185 ________________________________________________
SIDE TWO OF TWO
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MAS Fund - 25 Terms in BOLD TYPE are defined in the Prospectus Glossary
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Terms in BOLD TYPE are defined in the Prospectus Glossary MAS Fund - 26
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- --------------------------------------------------------------------------------
MAS Fund - 27 Terms in BOLD TYPE are defined in the Prospectus Glossary
<PAGE>
MAS PROSPECTUS
- ---------
MAS FUNDS
VALUE PORTFOLIO
MARCH 16, 1998,
AS REVISED JUNE 16, 1998
INVESTMENT ADVISER AND ADMINISTRATOR: TRANSFER AGENT:
MILLER ANDERSON & SHERRERD, LLP CHASE GLOBAL FUNDS SERVICES COMPANY
ONE TOWER BRIDGE 73 TREMONT STREET
WEST CONSHOHOCKEN, BOSTON, MASSACHUSETTS 02108-0913
PENNSYLVANIA 19428-2899
GENERAL DISTRIBUTION AGENT:
MAS FUND DISTRIBUTION, INC.
ONE TOWER BRIDGE
P.O. BOX 868
WEST CONSHOHOCKEN,
PENNSYLVANIA 19428-0868
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
Page Page
<S> <C> <C> <C>
Fund Expenses 2 Redemption of Shares 15
Prospectus Summary 3 Shareholder Services 16
Financial Highlights 5 Valuation of Shares 16
Yield and Total Return 6 Dividends, Distributions and Taxes 17
Investment Suitability 6 Investment Adviser 18
Investment Limitations 7 Portfolio Management 18
Portfolio Summary 8 Administrative Services 18
Prospectus Glossary General Distribution Agent 18
Strategy 9 Portfolio Transactions 19
Investments 9 Other Information 19
General Shareholder Information Trustees and Officers 21
Purchase of Shares 13
</TABLE>
MILLER
ANDERSON
& SHERRERD, LLP __ ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428 o 800-354-8185
