<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MAS Funds
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
same
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MAS FUNDS
ONE TOWER BRIDGE
WEST CONSHOHOCKEN, PA 19428
July 1, 1999
Dear Shareholder:
The enclosed proxy statement relates to a special meeting of the
Shareholders of the High Yield Portfolio (the "Portfolio") of MAS Funds (the
"Fund"). The purpose of the special meeting is to permit Shareholders to
consider a proposal to approve an amendment to the investment advisory agreement
between the Fund and Miller Anderson & Sherrerd, LLP with respect to the High
Yield Portfolio.
The attached proxy statement seeks Shareholder approval of this proposal.
We encourage you to read carefully the full proxy statement, and have created a
brief question-and-answer section for your convenience.
Your vote is important and your participation
in the governance of the Fund does make a difference.
The proposal has been unanimously approved by the Board of Trustees of the
Fund, who recommend that you vote "FOR" the proposal. YOUR IMMEDIATE RESPONSE
WILL HELP PREVENT THE NEED FOR ADDITIONAL SOLICITATIONS. We look forward to your
participation, and we thank you for your continued confidence in the Fund.
PLEASE SIGN AND RETURN YOUR PROXY CARD
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Sincerely,
Lorraine Truten
President
1
<PAGE>
INFORMATION ABOUT YOUR PROXY STATEMENT
Q. WHY AM I RECEIVING THIS PROXY STATEMENT? WHAT CHANGES ARE BEING PROPOSED
FOR THE HIGH YIELD PORTFOLIO?
A. The Board of Trustees is recommending that Shareholders approve an
amendment to the investment advisory agreement between the Fund and Miller
Anderson & Sherrerd, LLP ("MAS") with respect to the High Yield Portfolio. The
amendment would increase the investment advisory fee payable to MAS for the
Portfolio.
Management fees for the fiscal year ending September 30, 1999 are shown below on
an actual and proposed basis:
<TABLE>
<CAPTION>
Existing Proposed
<S> <C> <C>
Management Fee 0.375% 0.450%
Institutional Class Total Expense Ratio 0.498% 0.573%
Investment Class Total Expense Ratio 0.650% 0.725%
Adviser Class Total Expense Ratio 0.746% 0.821%
</TABLE>
Q. WHAT IS THE PURPOSE OF THE PROPOSED FEE INCREASE?
A. The current fee structure was developed before high yield was widely
understood to be a stand-alone asset class. The growth of the market for high
yield investments demands increased human and technological resources to remain
a top industry performer. For example, the demand for talented analysts and need
for increasingly complex technology has made high yield portfolio management
more costly. The proposed fee structure will better support the infrastructure
requirements inherent in managing and researching the increasingly broad array
of eligible investments for the Portfolio and allow Miller Anderson & Sherrerd,
LLP to maintain the high level of service our investors expect.
Q. HOW DOES THE PROPOSED FEE COMPARE TO THE FEES OF OTHER HIGH YIELD MUTUAL
FUNDS?
A. The proposed fee remains extremely competitive within its peer group as
indicated below:
<TABLE>
<CAPTION>
Total Expense Ratio
--------------------
<S> <C>
MAS High Yield (Institutional Class) 0.573% (proposed)
MAS High Yield (Investment Class) 0.725% (proposed)
MAS High Yield (Adviser Class) 0.821% (proposed)
Lipper High Yield Group (as of 3/31/99) 1.316% (average)
</TABLE>
<PAGE>
The proposed Total Expense Ratio for each of the three classes will remain
considerably less than those of the high yield mutual funds that comprise the
Lipper High Yield Group Average. MAS remains committed to offering investment
management with very competitive, institutional management fees.
Q. HOW HAS THE HIGH YIELD PORTFOLIO PERFORMED RELATIVE TO OTHER HIGH YIELD
MUTUAL FUNDS?
A. The Portfolio has consistently been one of the top performing High Yield
mutual funds. Morningstar's recent designation of the High Yield Portfolio as an
overall five-star fund (out of 1534 taxable bond funds)/+/ measures the
performance of the Portfolio on both an absolute and risk-adjusted basis as of
April 30, 1999. In addition, Morningstar has given the Portfolio a five-star
rating for the current three-year (out of 1,534 taxable bond funds), five-year
(out of 1,059 taxable bond funds) and ten-year (out of 370 taxable bond funds)
periods ending April 30, 1999. The Portfolio's Institutional Class has
outperformed its benchmark index, the Salomon High Yield Index, over the one,
three, five, and ten-year and since inception periods through April 30, 1999
(see chart below). Of course, past performance is no guarantee of future
results. The Adviser believes that much of the Portfolio's success can be
credited to investment in a disciplined portfolio management strategy,
experienced analysts and portfolio managers, and technologies used to analyze
investments and maintain. The demands on the Adviser's resources continue to
increase as the high yield investment universe becomes more competitive.
/+/Morningstar proprietary ratings reflect historical risk-adjusted performance
as of April 30, 1999. Ratings are subject to change every month and are
calculated from the Funds' 3-, 5-, and 10-year average annual returns in excess
of 90-day treasury bill returns with appropriate fee adjustments, and a risk
factor that reflects fund performance below 90 day T-bill returns. The top 10%
of the funds in a broad asset class received five stars, the next 22.5% received
four stars and the next 35% received three stars. Past performance is no
guarantee of future returns.
Annual Average Total Returns
<TABLE>
<CAPTION>
Time Period MAS Funds High Yield Salomon High
----------- -------------------- ------------
ending 5/31/99 Portfolio-Institutional Class Yield Index
--------------- ----------------------------- -----------
<S> <C> <C>
One Year 2.6% 0.7%
Three Year 11.1% 9.2%
Five Year 11.2% 10.1%
Ten Year 11.2% 10.8%
Since Inception (2/28/89) 11.1% 10.7%
</TABLE>
The Portfolio's returns are net of fees and assume the reinvestment of all
dividends and income. Returns reflect past performance and are compared to an
unmanaged market index. Past performance is not a guarantee of future results.
The investment return and principal value of an
<PAGE>
investment will fluctuate so that an investor's shares, when redeemed, may be
worth either more or less than their original cost. Performance for the
Investment and Adviser classes will differ.
Q. WHY DO I NEED TO VOTE?
A. Your vote is needed to ensure that the proposal can be implemented. Your
immediate response on the enclosed proxy card(s) will help prevent the need for
any further solicitations for a Shareholder vote.
Q. HOW DOES THE BOARD OF TRUSTEES SUGGEST THAT I VOTE?
A. After careful consideration, the Board of Trustees unanimously recommends
that you vote "FOR" the proposal.
Q. WHO IS PAYING FOR EXPENSES RELATED TO THE SHAREHOLDER MEETING?
A. The Portfolio will pay for expenses relating to the Shareholder meeting.
Q. WHERE DO I MAIL MY PROXY CARD?
A. You may use the enclosed postage-paid envelope or mail your proxy card(s)
to:
ADP Investor Communications Services
51 Mercedes Way
Edgewood, New Jersey 11717-8311
Q. WHOM DO I CALL IF I HAVE QUESTIONS?
A. We will be happy to answer your questions about the proxy solicitation.
Please call us at 1-800-354-8185.
<PAGE>
MAS FUNDS
ONE TOWER BRIDGE
WEST CONSHOHOCKEN, PA 19428
- --------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE HIGH YIELD PORTFOLIO
TO BE HELD ON SEPTEMBER 16, 1999
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF THE HIGH YIELD PORTFOLIO:
You are cordially invited to attend a special meeting of the Shareholders
of the High Yield Portfolio (the "Portfolio") of MAS Funds (the "Fund") on
September 16, 1999, at 10:00 a.m. (Eastern Time) or at any adjournment thereof
(the "Special Meeting"), at the offices of Miller Anderson & Sherrerd, LLP, One
Tower Bridge, West Conshohocken, PA 19428-0868. Shareholders of the Portfolio
will be asked to consider the following proposals at the Special Meeting:
1. To approve or disapprove an amendment to the investment advisory
agreement between the Fund and Miller Anderson & Sherrerd, LLP with
respect to the High Yield Portfolio which would increase the
investment advisory fee payable to Miller Anderson & Sherrerd, LLP;
and
2. To transact such other business as may properly come before the
Special Meeting or any adjournments thereof.
Shareholders of record of the Portfolio at the close of business on June
18, 1999 are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof. The enclosed proxy card(s) will enable you to vote on the
proposal. (You will receive a separate solicitation for each account you have
with the Fund that has invested in the Portfolio.)
By Order of the Board of Trustees
July 1, 1999 Richard J. Shoch
Secretary
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. A POSTAGE PAID ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE SO THAT YOU MAY RETURN YOUR PROXY CARD AS SOON
AS POSSIBLE. IT IS MOST IMPORTANT AND IN YOUR INTEREST FOR YOU TO SIGN AND DATE
YOUR PROXY CARD AND RETURN IT SO THAT A QUORUM WILL BE PRESENT AND A MAXIMUM
NUMBER OF SHARES MAY BE VOTED. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
ITS USE.
<PAGE>
MAS FUNDS
ONE TOWER BRIDGE
WEST CONSHOHOCKEN, PA 19428
____________________
PROXY STATEMENT
____________________
SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 16, 1999
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Trustees (the "Board") of MAS Funds (the
"Fund"), for use at the Special Meeting of Shareholders of the High Yield
Portfolio (the "Portfolio"), or at any adjournment thereof (the "Special
Meeting"). The Special Meeting will be held on September 16, 1999, at 10:00
a.m. (Eastern Time) at the offices of Miller Anderson & Sherrerd, LLP, One Tower
Bridge, West Conshohocken, PA 19428. The approximate mailing date of this proxy
statement and accompanying form of proxy is July 1, 1999.
The primary purpose of the Special Meeting is to amend the investment
advisory agreement between the Fund and Miller Anderson & Sherrerd, LLP (the
"Adviser") with respect to the Portfolio as set forth in Proposal 1.
Shareholders of record of the Portfolio on June 18, 1999 (the "Record
Date") may participate and vote at the Special Meeting. Shareholders will be
entitled to one vote for each share of the Portfolio ("Share") they hold and a
fraction of a vote equal to the proportion of a full Share represented by any
fractional Share they hold.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED SEPTEMBER 30, 1998 AND SEMI-ANNUAL REPORT FOR THE SIX MONTHS
ENDED MARCH 31, 1999 TO ANY SHAREHOLDER REQUESTING SUCH REPORT. REQUESTS FOR
THE ANNUAL AND SEMI-ANNUAL REPORTS SHOULD BE MADE IN WRITING TO MAS FUNDS, ONE
TOWER BRIDGE, WEST CONSHOHOCKEN, PA 19428 OR BY CALLING 1-800-354-8185.
On the Record Date, there were issued and outstanding [NUMBER] Shares of
the Portfolio.
VOTING
All properly executed proxies received prior to the Special Meeting will be
voted at the Special Meeting in accordance with the instructions marked thereon.
Proxies received prior to the Special Meeting on which no vote is indicated will
be voted "FOR" the proposal as to which it is entitled to vote. Abstentions and
proxies signed and returned by brokers without voting on a proposal ("broker
non-votes") will not be counted for or against the proposal, but will be counted
<PAGE>
as votes present for purposes of determining a "majority of the outstanding
Shares" present at the Special Meeting. Abstentions and broker non-votes,
therefore, have the effect of counting against the proposal. Although 40% of
the outstanding Shares entitled to vote on a proposal must be present in person
or by proxy to have a quorum to conduct business at the Special Meeting,
approval of the amendment to the investment advisory agreement requires the vote
of a majority of the outstanding Shares of the Portfolio, as defined below.
Shareholders who execute proxies may revoke them at any time before they
are voted by sending the Fund a written notice of revocation, by delivering a
duly executed proxy bearing a later date or by attending the Special Meeting and
voting in person.
The Board recommends that you cast your vote FOR approval of the amendment
---
to the investment advisory agreement.
THE PROPOSAL: APPROVAL OF AN AMENDED ADVISORY AGREEMENT
GENERAL
On May 27, 1999, the Trustees of the Fund, including all of the Trustees
who are not "interested persons" of the Fund (the "Independent Trustees") within
the meaning of the Investment Company Act of 1940 (the "1940 Act"), unanimously
approved, subject to the approval of the shareholders of the Portfolio, an
amendment to the investment advisory agreement between the Fund and the Adviser
(the "Amended Advisory Agreement") that would increase the rate of the fee
payable to the Adviser for managing the Portfolio. Under the investment
advisory agreement currently in effect with respect to the Portfolio (the
"Current Advisory Agreement"), the Portfolio pays the Adviser an annual
investment advisory fee equal to 0.375% of the Portfolio's average daily net
assets. The advisory fee is allocated proportionately among the outstanding
classes of the Portfolio on the basis of their relative net asset values.
Under the Amended Advisory Agreement, the Portfolio would pay the Adviser
an annual investment advisory fee equal to 0.450% of the Portfolio's average
daily net assets. The advisory fee would continue to be allocated among the
outstanding classes of the Portfolio on the basis of their relative net asset
values. The effect of this change is to increase the annual fee for each class
by 0.075%.
BOARD OF TRUSTEES' CONSIDERATIONS
THE BOARD'S RECOMMENDATION. The Independent Trustees met on May 26, 1999
and the full Board of Trustees met on May 27, 1999 to consider the proposed
increase in the Portfolio's investment advisory fee and its anticipated effects
on the Portfolio. At the May 27th meeting, the Trustees, including all of the
Independent Trustees, approved the increase in the advisory fee, subject to
approval by the Portfolio's shareholders.
-2-
<PAGE>
THE BOARD'S RESPONSIBILITIES. In determining whether to approve the
proposed increase in the Portfolio's advisory fee, the Trustees, assisted by
outside counsel, analyzed the proposal in light of their fiduciary duties as
Trustees in order to determine whether the increase in the advisory fee is in
the best interests of the Portfolio's shareholders. In addition to advising the
Independent Trustees about their fiduciary duties, outside counsel assisted the
Independent Trustees in analyzing the proposed fee increase and in evaluating
the potential effects of the increase on the Fund.
THE ADVISER'S MEMORANDUM TO THE BOARD. On April 26, 1999, in order to
provide the Trustees with additional time for advance review of the Proposal to
increase the advisory fee for the Portfolio, the Adviser sent the Trustees an
explanatory memorandum describing the Proposal. In its memorandum, the Adviser
explained that the Portfolio's current fee structure does not adequately support
the infrastructure required to manage and research the broad array of eligible
investments for the Portfolio. The Adviser also provided information to assist
the Trustees in their consideration of the Amended Advisory Agreement, including
discussions of the development of the high yield market and the historical
performance of the Portfolio, as well as a comparative analysis of expense
ratios for comparable funds in the Morningstar High Yield Bond Universe.
THE BOARD'S CONSIDERATION OF THE FEE INCREASE. The Trustees carefully
considered and discussed the proposed increase at the meeting of the Independent
Trustees held prior to the full Board meeting, and at the full Board meeting.
The Trustees considered and discussed the following factors: (i) the nature and
quality of the advisory services rendered and the results achieved by the
Adviser in the management of the Portfolio; (ii) the likely effect of the
proposed fee on the Portfolio's performance relative to that of comparable
mutual funds; (iii) the relative size of the proposed advisory fee for the
Portfolio and the advisory fees paid by comparable mutual funds, the effect of
the proposed increase in the advisory fee on the Portfolio's expense ratio, the
Portfolio's pro forma expense ratio and the expense ratios of comparable mutual
--- -----
funds; (iv) the costs borne by the Adviser in providing investment advisory
services to the Portfolio; (v) the profits of the Adviser in providing services
to the Portfolio; (vi) the effect of the proposed increase on the ability of the
Adviser to attract and retain highly qualified personnel to manage the Fund; and
(vii) the Adviser's view that the proposed fee structure represents a reasonable
return to the Adviser and will not prevent the Fund from continuing to achieve a
competitive performance. On the basis of these factors and all of the
information obtained, the Trustees, including all of the Independent Trustees,
determined that it is in the Fund's and the shareholders' best interests to
approve the Amended Advisory Agreement.
COMPARISON OF THE CURRENT ADVISORY AGREEMENT AND THE AMENDED ADVISORY AGREEMENT
The Current Advisory Agreement was last approved on May 1, 1997 by
shareholders of each portfolio of the Fund, including shareholders of the High
Yield Portfolio, at a special meeting relating to the merger of the Adviser's
then-parent corporation, Morgan Stanley Group Inc., and Dean Witter Discover &
Co. Except for the change in the amount of the High Yield
-3-
<PAGE>
Portfolio's advisory fee, the Amended Advisory Agreement is unchanged from the
Current Advisory Agreement, which was last approved by the Board of Trustees on
May 27, 1999.
The Amended Advisory Agreement shall continue in effect for successive annual
periods, provided that such continuation is approved by the Fund's Independent
Trustees or by vote of the holders of a majority of a Portfolio's outstanding
voting securities, as well as by a majority of the Fund's Trustees. The Amended
Advisory Agreement may be terminated with respect to any portfolio at any time,
without the payment of any penalty, by vote of a majority of the Trustees of the
Fund or by vote of a majority of the outstanding voting securities of the
portfolio on 60 days' written notice to the Adviser. The Amended Advisory
Agreement may be terminated by the Adviser at any time, without the payment of
any penalty, upon 90 days' written notice to the Fund. The Amended Advisory
Agreement will automatically terminate in the event of its assignment. The
Amended Advisory Agreement is attached to this Proxy Statement as Exhibit A.
The description of the Amended Advisory Agreement set forth in this Proxy
Statement is qualified in its entirety by reference to Exhibit A.
The Amended Advisory Agreement provides that Miller Anderson & Sherrerd,
LLP, as Adviser thereunder, in return for its fee, will manage the investment
and reinvestment of the assets of each portfolio of the Fund, 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. In this regard,
it is the Adviser's responsibility to make investment decisions for each
Portfolio and to place each portfolio's purchase and sale orders for investment
securities. The Amended Advisory Agreement states that the Adviser will
provide, at its own expense, adequate office space, furnishings, equipment, and
personnel to perform its advisory services for the Fund.
The Amended Advisory Agreement provides that, in the absence of (i) willful
misfeasance, bad faith or gross negligence on the part of the Adviser in
performance of its obligations and duties, (ii) reckless disregard by the
Adviser of its obligations and duties, or (iii) a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services, the
Adviser shall not be liable to the Fund, or to any Shareholder of the Fund, for
any error of judgment, mistake of law or any other act or omission in connection
with rendering services under the respective agreements, including for any
losses that may be sustained in connection with the purchase, holding,
redemption or sale of any security on behalf of any portfolio of the Fund.
The Adviser's services are not to be deemed exclusive. The Adviser and its
officers are free to render investment advisory and other services to others,
including other investment companies, and to engage in other activities, as long
as its services to the Fund under the Amended Advisory Agreement are not
impaired thereby. The Adviser's officers may serve as officers or Trustees of
the Fund, and the Fund's officers or Trustees may serve as officers of the
Adviser, to the extent permitted by law.
The Fund currently is authorized to issue three classes of shares pursuant
to a plan adopted by the Board of Trustees under Rule 18f-3 under the 1940 Act.
These classes are
-4-
<PAGE>
designated as Institutional Class Shares, Investment Class Shares and Adviser
Class Shares and differ in their purchase requirements and expenses charged. As
of the record date, the Portfolio had outstanding Institutional, Investment and
Adviser Class Shares.
The following table compares the existing fees and expenses of the
Portfolio's three classes under the Current Advisory Agreement for the fiscal
year ended September 30, 1998, and the pro forma fees and expenses of each of
those classes under the Amended Advisory Agreement. These figures have not been
audited.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Distribution Shareholder Total Fund
Advisory (12B-1) Service Other Operating
Fees Fees Fees Expenses Expenses
---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C>
Institutional Class
Existing .375% None None .123% .498%
Pro Forma .450% None None .123% .573%
Investment Class
Existing .375% None .150% .125% .650%
Pro Forma .450% None .150% .125% .725%
Adviser Class
Existing .375% 0.25% None .121% .746%
Pro Forma .450% 0.25% None .121% .821%
</TABLE>
EXAMPLE
Assuming a hypothetical investment of $10,000, a 5% annual return and redemption
at the end of each time period, an investor in the shares above would have paid
transaction and operating expenses at the end of each year as follows:
<TABLE>
<CAPTION>
Institutional Class Investment Class Adviser Class
------------------- ---------------- -------------
Existing Pro Forma Existing Pro Forma Existing Pro Forma
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 year....... $ 51 $ 59 $ 66 $ 74 $ 76 $ 84
3 years...... $160 $184 $206 $232 $238 $262
5 years...... $279 $320 $358 $403 $415 $456
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
10 years..... $626 $717 $802 $900 $926 $1,015
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
For the fiscal year ended September 30, 1998, the aggregate fee paid by the
Fund to the Adviser for investment advisory services on behalf of the Portfolio
was $2,363,000. If the proposed fee had been in effect, the Adviser would have
received $2,835,673, which equals a 20% increase over the fee that the Adviser
actually received under the Current Advisory Agreement. These figures have not
been audited.
THE ADVISER
The Adviser to the Fund, Miller Anderson & Sherrerd, LLP is a Pennsylvania
limited liability partnership founded in 1969 and is located at One Tower
Bridge, West Conshohocken, Pennsylvania 19428. The Adviser provides investment
services to employee benefit plans, endowment funds, foundations and other
institutional investors and as of March 31, 1999 had approximately $62.4 billion
in assets under management.
The following information is provided for the principal executive officers
of the Adviser. It includes his or her name, position with the Adviser, and
principal occupation. The address for each is One Tower Bridge, West
Conshohocken, Pennsylvania 19428.
<TABLE>
<CAPTION>
Name, Position with the Adviser Principal Occupation
- ------------------------------- --------------------
<S> <C>
Thomas L. Bennett, Managing Portfolio Manager
Director
Robert J. Marcin, Managing Portfolio Manager
Director
Gary G. Schlarbaum, Managing Portfolio Manager
Director
Marna C. Whittington, Managing Chief Operating Officer, Morgan Stanley Dean
Director Witter Institutional Investment Management
Richard B. Worley, Managing President, Morgan Stanley Dean Witter
Director Investment Management; Portfolio Manager
</TABLE>
Miller Anderson & Sherrerd, LLP serves as the investment adviser or sub-
adviser to certain other registered investment companies with investment
objectives similar to that of the Portfolio. Although their investment
objectives are similar to the Portfolio's, the Adviser follows different
policies and strategies for each. The approximate net assets of each such fund
(or portfolio) and the annual advisory fee payable by each are as follows:
-6-
<PAGE>
<TABLE>
<CAPTION>
Fund Net Assets ($000) Annual Fee Total Net Expense
- ---- ----------------- ---------- -----------------
as of 03/31/99 Ratio/(1)/
-------------- ----------
<S> <C> <C> <C>
Morgan Stanley 42,172 .500% on the first $500 million 0.80%
Dean Witter of assets
Universal .450% on assets from $500
Funds High million to $1 billion
Yield Portfolio .400% on assets in excess of $1
(adviser) billion
Morgan Stanley 121,537 sub-advisory fee of .700% 2.23%
High Yield aggregate advisory fee of .700%
Portfolio, Inc.
(sub-adviser)
Morgan Stanley 186,336 sub-advisory fee of .350% 0.92%
Dean Witter aggregate advisory fee of .375% (Class B)
Institutional
Funds High
Yield Portfolio
(sub-adviser)
Van Kampen 40,609 sub-advisory fee of .375% 2.00%
High Yield & aggregate advisory fee of .750% (Class B and
Total Return Class C)
Portfolio (sub-
adviser)
Van Kampen 213,410 sub-advisory fee of .425% 2.20%
Worldwide aggregate advisory fee of .750% (Class B and
High Income Class C)
Portfolio (sub-
adviser)
Venture Vision 199,000 sub-advisory fees of 0.84%
MIT High .350% on the first $50 million
Yield Portfolio .300% on the next $150 million
(sub-adviser) .250% on the next $300 million
.200% in excess of $500 million
aggregate advisory fee of .775%
GE Funds High 21,534 sub-advisory fee of .375% 1.70%
Yield Portfolio aggregate advisory fee of .600% (Class B)
(sub-adviser)
</TABLE>
/(1)/ The advisor is voluntarily waiving a portion of its fee and/or reimbursing
certain expenses for Morgan Stanley Dean Witter Universal Funds High Yield
Portfolio, Van Kampen High Yield and Total Return Portfolio and GE Funds
High Yield Portfolio. The total gross expense for these portfolios are
1.15%, 2.64% and 1.87% respectively.
-7-
<PAGE>
REQUIRED VOTE
Approval of the amendment to the investment advisory agreement requires the
affirmative vote of a majority of the outstanding shares of the Portfolio. For
purposes of this proposal, "majority of the outstanding shares" means the vote
of (i) 67% or more of the Portfolio's outstanding shares present at the Meeting,
if the holders of more than 50% of the outstanding shares of the Portfolio are
present or represented by proxy, or (ii) more than 50% of the Portfolio's
outstanding shares, whichever is less. All shareholders of each class of shares
of the Portfolio will vote together.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE
---
AMENDMENT TO THE INVESTMENT ADVISORY AGREEMENT ON BEHALF OF THE FUND.
ADDITIONAL INFORMATION
CURRENT TRUSTEES AND OFFICERS OF THE FUND
As of June 18, 1999, the Trustees and officers of the Fund as a group
beneficially owned less than [1%] of the Shares of the Portfolio.
BENEFICIAL OWNERS
To the knowledge of Fund's management, as of June 18, 1999, the following were
beneficial owners of 5% or more of the outstanding Shares of the Portfolio:
<TABLE>
<CAPTION>
Name and Address Amount of Percentage of
Beneficial Portfolio's
Ownership Shares
<S> <C> <C>
</TABLE>
EXPENSES
The Portfolio will bear the expense of preparing, printing and mailing the
enclosed form of proxy, the accompanying Notice and this Proxy Statement. In
order to obtain the necessary quorum at the Special Meeting, additional
solicitation may be made by mail, telephone, telegraph, facsimile or personal
interview by representatives of the Fund, MAS or by ADP Investor Communications
Services ("ADP"), a solicitation firm located in Edgewood, New Jersey that has
been engaged to assist in proxy solicitation at an estimated cost of $17,500.
Certain parties who own Shares of record on behalf of beneficial owners also may
solicit proxies, directly or through a solicitation firm, and incur costs which
will be reimbursed by the Portfolio.
-8-
<PAGE>
TRANSACTIONS/AGREEMENTS WITH AFFILIATES
ADMINISTRATION
Pursuant to an administration agreement between MAS and the Fund, MAS provides
administrative services to the Portfolio. For its services under the
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.
For the fiscal year ended September 30, 1998, the Fund paid administration fees
to MAS of approximately $504,000 for the Portfolio. MAS will continue to serve
as Administrator regardless of whether the Amended Advisory Agreement is
approved.
DISTRIBUTION
MAS Fund Distribution, Inc. ("MASDI"), a wholly-owned subsidiary of MAS
located at One Tower Bridge, West Conshohocken, PA 19428, serves as the
Portfolio's Distributor. MASDI receives no compensation for the distribution
services provided to the Institutional Class Shares of the Portfolio. MASDI
receives shareholder servicing fees of 0.15% for the shareholder services
provided to the Investment Class Shares of the Portfolio. MASDI receives 12b-1
fees of 0.25% for the distribution services provided to the Adviser Class Shares
of the Portfolio. MASDI will continue to serve as Distributor regardless of
whether the Amended Advisory Agreement is approved.
GENERAL
The Fund knows of no business other than the Proposal that will be presented
for consideration at the Special Meeting. Management of the Fund does not
intend to present and does not have reason to believe that others will present
any other items of business at the Special Meeting. If any other matters are
properly presented, it is the intention of the persons named on the enclosed
proxy to vote proxies in accordance with their best judgment. If sufficient
votes to approve the Proposal are not received at the Special Meeting, the
persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of proxies, whether or not a quorum is
present, provided they determine that such an adjournment and additional
solicitation is reasonable and in the interest of Shareholders based on a
consideration of all relevant factors, including the percentage of affirmative
votes then cast, the percentage of negative votes then cast, the nature of the
proposed solicitation activities and the nature of the reasons for such further
solicitation. The meeting may be held as adjourned within a reasonable period
of time after the date set for the original Special Meeting without further
notice.
As a Pennsylvania business trust, the Fund is not required to hold annual
Shareholder meetings. Shareholders who wish to present a proposal for action at
the next meeting should submit the proposal to the Secretary of the Fund,
Richard J. Shoch, c/o MAS, One Tower Bridge, West Conshohocken, Pennsylvania
19428 to be considered for inclusion in the Fund's proxy statement for a
subsequent meeting.
-9-
<PAGE>
Failure of a quorum to be present at the Special Meeting may necessitate
adjournment and may necessitate additional proxy solicitations.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
July 1, 1999 Richard J. Shoch
Secretary
-10-
<PAGE>
EXHIBIT A
AMENDED ADVISORY AGREEMENT
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 31st day of May, 1997, by and between MAS Funds (the
---- --- ----
"Fund"), a business trust organized under the laws of the Commonwealth of
Pennsylvania, and Miller Anderson & Sherrerd, LLP (or any successor-in-interest
(by merger or otherwise) thereto or transferee thereof that does not involve an
"assignment" within the meaning of the Investment Company Act of 1940 and that
is a limited liability partnership or other entity wholly owned, directly or
indirectly, by Morgan Stanley Asset Management Holdings, Inc. and/or its
affiliates; Miller Anderson & Sherrerd, LLP or such successor-in-interest or
transferee being referred to herein as the "Adviser").
1. DUTIES OF ADVISER. The Fund hereby appoints the Adviser to act as
investment adviser to each of the Portfolios listed on Schedule A hereto (the
"Portfolios"), for the period and on such terms set forth in this Agreement.
The Fund employs the Adviser to manage the investment and reinvestment of the
assets of the Portfolios, to continuously review, supervise and administer the
investment program of each of the Portfolios, to determine in its discretion the
securities to be purchased or sold and the portion of each such Portfolio's
assets to be held uninvested, to provide the Fund with records concerning the
Adviser's activities which the Fund is required to maintain, and to render
regular reports to the Fund's officers and Board of Trustees concerning the
Adviser's discharge of the foregoing responsibilities. The Adviser shall
discharge the foregoing responsibilities subject to the control of the officers
and the Board of Trustees of the Fund, and in compliance with the objectives,
policies and limitations set forth in the Fund's prospectus and applicable laws
and regulations. The Adviser accepts such employment and agrees to render the
services and to provide, at its own expense, the office space, furnishings and
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
each of the Portfolios and is directed to use its best efforts to obtain the
best available price and most favorable execution, except as prescribed herein.
Subject to policies established by the Board of Trustees of the Fund, the
Adviser may also be authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if the
Adviser determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund. The execution of
such transactions shall not be deemed to represent an unlawful act or breach of
any duty created by this Agreement or otherwise. The Adviser will promptly
communicate to the officers and Trustees of the Fund such information relating
to portfolio transactions as they may reasonably request.
<PAGE>
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Fund shall pay to the
Adviser at the end of each of the Fund's fiscal quarters, an advisory fee
calculated by applying a quarterly rate, based on the annual percentage rates
set forth opposite each Portfolio's name on Schedule A hereto, to each
Portfolio's average daily net assets for the quarter.
In the event of termination of this Agreement, the fee provided under
this Section shall be computed on the basis of the period ending on the last
business day on which this Agreement is in effect subject to a pro rata
--- ----
adjustment based on the number of days elapsed in the current fiscal quarter as
a percentage of the total number of days in such quarter.
4. OTHER SERVICES. At the request of the Fund, the Adviser, in its
discretion may make available to the Fund office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the Fund
at the Adviser's cost.
5. REPORTS. The Fund and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
6. STATUS OF ADVISER. The services of the Adviser to the Fund are not
to be deemed exclusive, and the Adviser shall be free to render similar services
to others so long as its services to the Fund are not impaired thereby.
7. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act, the Adviser shall
not be subject to any liability whatsoever to the Fund, or to any shareholder of
the Fund, for any error or judgment, mistake of law or any other act or omission
in the course of, or connected with, rendering services hereunder including,
without limitation, for any losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security on behalf of any Portfolio
of the Fund.
8. PERMISSIBLE INTERESTS. Subject to and in accordance with the
Declaration of Trust of the Fund and the Partnership Agreement (or other
governing or organizational documents) of the Adviser, Trustees, agents and
shareholders of the Fund are or may be interested in the Adviser (or any
successor thereof) as officers or partners, or otherwise; officers, agents and
partners of the Adviser are or may be interested in the Fund as Trustees,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Fund as a shareholder or
<PAGE>
otherwise. The effect of any such interrelationships shall be governed by said
Declaration of Trust or Partnership Agreement (or other governing or
organizational documents) and provisions of the Investment Company Act.
9. DECLARATION OF TRUST. The Adviser is hereby expressly put on notice
of the limitation of shareholder liability as set forth in Article VIII of the
Declaration of Trust of the Fund and agrees that the obligations assumed by the
Fund pursuant to this Agreement shall be limited in all cases to the Fund and
its assets, and the Adviser shall not seek satisfaction of any such obligation
from the shareholders or any shareholder of the Fund. Nor shall the Adviser
seek satisfaction of any such obligations from the Trustees or any individual
Trustee.
10. DURATION AND TERMINATION. This Agreement, unless sooner terminated
as provided herein, shall continue until May 31, 1999 and thereafter for
------------
additional periods of one year from the anniversary thereof, but only so long as
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Trustees of the Fund who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Trustees of the Fund or by vote of a majority of the outstanding
voting securities of each Portfolio of the Fund; provided, however, that if the
-------- -------
holders of any Portfolio fail to approve the Agreement as provided herein, the
Adviser may continue to serve in such capacity in the manner and to the extent
permitted by the Investment Company Act and Rules thereunder. This Agreement
may be terminated by any Portfolio of the Fund at any time, without the payment
of any penalty, by vote of a majority of the entire Board of Trustees of the
Fund or by vote of a majority of the outstanding voting securities of the
Portfolio on 60 days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time, without the payment of any penalty, upon
90 days' written notice to the Fund. This Agreement will automatically and
immediately terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered or mailed postpaid,
to the other party at any office of such party.
As used in this Section 10, the terms "assignment," "interested
persons," and "a vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the Investment Company Act.
11. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Fund must be approved (a) by a vote of a
majority of those members of the Board of Trustees of the Fund who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (b)
by vote of a majority of the outstanding voting securities of each Portfolio of
the Fund.
12. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this 31st day of May, 1997.
---- --- ----
MILLER ANDERSON & SHERRERD, LLP MAS FUNDS
By /s/James Schmid By /s/Lorraine Truten
-------------------- -------------------------
Name James Schmid Name: Lorraine Truten
------------------ ----------------------
Title: Principal - Morgan Stanley Title: Vice President
----------------------------- ---------------------
<PAGE>
SCHEDULE A
to the Investment Advisory Agreement
dated May 31, 1997, as amended May 27, 1999
Portfolio Rate
- --------- ----
Advisory Foreign Fixed Income .375%
Advisory Mortgage .375%
Balanced .450%
Balanced Plus .550%
Cash Reserves .250%
Domestic Fixed Income .375%
Equity .500%
Fixed Income .375%
Fixed Income II .375%
Global Fixed Income .375%
Growth .500%
High Yield .450%
Intermediate Duration .375%
International Fixed Income .375%
Limited Duration .300%
Mid Cap Growth .500%
Mid Cap Value .750%
Multi-Asset-Class .650%
Multi-Market Fixed Income .450%
Municipal .375%
NY Municipal .375%
Small Cap Growth 1.000%
Small Cap Value .750%
Special Purpose Fixed Income .375%
Targeted Duration .375%
Value .500%
Value II .500%
<PAGE>
MAS Funds
High Yield Portfolio
Proxy for Special Meeting of Shareholders, September 16, 1999
The undersigned Shareholder(s) of the High Yield Portfolio (the "Portfolio") of
MAS Funds (the "Fund"), revoking previous proxies, hereby appoint(s) Lorraine
Truten, James A. Gallo and Richard J. Shoch, and each of them (each with full
power of substitution), as the proxy or proxies of the undersigned to attend the
Special Meeting of Shareholders of the Fund to be held on September 16, 1999,
and any adjournment thereof (the "Meeting"), and to vote all of the shares of
the Fund that the signer would be entitled to vote if personally present at the
Meeting on the proposal set forth below and, in accordance with their own
discretion, on any other matters properly brought before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE FUND WHICH
RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
1. To approve an amendment to the investment advisory agreement between the
Fund and Miller Anderson & Sherrerd, LLP with respect to the High Yield
Portfolio which would increase the investment advisory fee payable to Miller
Anderson & Sherrerd, LLP.
[_] FOR [_] AGAINST [_] ABSTAIN
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting of Shareholders and the Proxy Statement of the Board of
Trustees.
This proxy will, when properly executed, be voted as directed herein by the
signing shareholder. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL DESCRIBED ABOVE AND
WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
Your signature on this proxy should be exactly as your name or names appear on
this proxy. If the shares are held jointly, each holder should sign. If
signing is by attorney, executor, administrator, Trustee or guardian, please
print your full title below your signature.
Dated: _____________, 1999
_________________________
Signature
_________________________
Signature
Please date, sign and return promptly whether or not you expect to attend the
Meeting. You may nevertheless vote in person if you attend the Meeting.
