MAS FUNDS /MA/, 497, 1999-03-26

MAS FUNDS /MA/
497, 1999-03-26

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<PAGE>

- ----- MAS ----------------------------------- ADVISER CLASS PROSPECTUS ----
---------
MAS FUNDS

JANUARY 31, 1999
(AS REVISED MARCH 24, 1999)

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 30 different
investment portfolios, 10 of which are described in this prospectus. Miller
Anderson & Sherrerd, LLP (the "Adviser"), a division of Morgan Stanley Dean
Witter Investment Management, is the Fund's investment adviser. This prospectus
offers Adviser Class Shares of the following portfolios (each a "Portfolio" and
collectively the "Portfolios"):

EQUITY PORTFOLIOS
-----------------
EQUITY
MID CAP GROWTH
MID CAP VALUE
SMALL CAP VALUE
VALUE

FIXED INCOME PORTFOLIOS
-----------------------
DOMESTIC FIXED INCOME
FIXED INCOME
HIGH YIELD

BALANCED PORTFOLIOS
-------------------
BALANCED
MULTI-ASSET-CLASS

INVESTMENT ADVISER

MILLER ANDERSON & SHERRERD, LLP

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.

MORGAN STANLEY DEAN WITTER
- --------------------------
INVESTMENT MANAGEMENT ONE TOWER BRIDGE o WEST CONSHOHOCKEN, PA 19428
- --------------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INVESTMENT SUMMARY
INVESTOR SUITABILITY, INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES, RISKS AND PERFORMANCE......................................... 1
EQUITY PORTFOLIOS
EQUITY .................................................................... 2
MID CAP GROWTH ............................................................ 3
MID CAP VALUE ............................................................. 4
SMALL CAP VALUE ........................................................... 5
VALUE ..................................................................... 6
FIXED INCOME PORTFOLIOS
DOMESTIC FIXED INCOME ..................................................... 7
FIXED INCOME .............................................................. 9
HIGH YIELD ................................................................11
BALANCED PORTFOLIOS
BALANCED ..................................................................13
MULTI-ASSET-CLASS .........................................................15
IMPORTANT INVESTMENT INFORMATION
DESCRIPTION OF PRINCIPAL INVESTMENTS ......................................17
FEES AND EXPENSES OF THE PORTFOLIOS
SHAREHOLDER FEES AND ANNUAL PORTFOLIO OPERATING EXPENSES ..................22
PURCHASING SHARES ............................................................24
REDEEMING SHARES .............................................................25
VALUATION OF SHARES ..........................................................26
GENERAL SHAREHOLDER INFORMATION
EXCHANGE PRIVILEGE, DIVIDENDS AND DISTRIBUTIONS, AND TAXES ................26
FUND MANAGEMENT
INFORMATION ABOUT THE ADVISER, THE PORTFOLIO MANAGERS AND THE DISTRIBUTOR .28
DISTRIBUTION PLAN ............................................................31
YEAR 2000 DISCLOSURE STATEMENT ...............................................31
FINANCIAL HIGHLIGHTS .........................................................32
<PAGE>

- --------------------------------------------------------------------------------
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------

This section explains each Portfolio's:

o Investment Objective
o Principal Investment Strategy
o Principal Risks

The discussions on the following pages use a number of important investment
terms. These terms, printed in BOLD, are explained in the section entitled
"Important Investment Information," which follows the individual Portfolio
summaries.

There is more information about the Portfolios in the Statement of Additional
Information ("SAI"), which legally is a part of this prospectus. For details
about how to obtain the SAI, and other reports and information, see the back
cover of this prospectus.

INVESTOR SUITABILITY

o The Portfolios may be suitable for you if you are a long-term investor who can
accept the risks of investing in the stock and bond markets. In fact, some of
the Portfolios strive to meet their investment objectives over an extended
period. These Portfolios focus on a market cycle of three to five years. This
means that the Portfolios will strive to meet their respective investment
objectives within that period without regard to interim market fluctuations.

o The Portfolios are designed principally for investment by fiduciary investors
who are entrusted with the responsibility of investing assets held for the
benefit of others.

o While the Portfolios consider whether their securities transactions will
generate distributions taxable at capital gain or ordinary income rates,
minimizing such taxes is not a principal investment strategy.

1
<PAGE>

EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

OBJECTIVE

The Equity Portfolio seeks above-average total return over a market
cycle of three to five years.

APPROACH

The Portfolio invests primarily in common stocks and other EQUITY SECURITIES of
large companies. The Portfolio also makes targeted investments in stocks of
small companies and invests to a limited extent in FOREIGN EQUITY SECURITIES.
The Adviser may use DERIVATIVES in managing the Portfolio.

PROCESS

A team of portfolio managers, organized into "value" and "growth" units, manages
the Portfolio. While the Portfolio's overall sector allocation is driven by
bottom-up stock selection, the Adviser tries to diversify the Portfolio's
investments across market sectors, seeking the best values within each sector.
In determining whether securities should be sold, the Adviser considers factors
such as high price/earnings ratios and relative valuations.

EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on November 14, 1984

28.28% -0.09% 39.96% 7.78% 6.66% 0.50% 33.02% 20.59% 25.84% 19.67%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 12/31/98 QUARTER ENDED 9/30/90
21.34% -15.00%

GENERALLY AT LEAST 65% INVESTED IN EQUITY SECURITIES
- --------------------------------------------------------------------------------
EQUITY CAPITALIZATION GENERALLY GREATER THAN $1 BILLION
- --------------------------------------------------------------------------------
BENCHMARK: S&P 500 INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: NOT AVAILABLE
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-345

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
ARDEN C. ARMSTRONG, JAMES J.
JOLINGER, NICHOLAS J. KOVICH, BRIAN
KRAMP, ROBERT J. MARCIN AND
GARY G. SCHLARBAUM

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
EQUITY PORTFOLIO S&P 500 INDEX
- --------------------------------------------------------------------------------
ONE YEAR 19.67 28.57
- --------------------------------------------------------------------------------
FIVE YEARS 19.41 24.06
- --------------------------------------------------------------------------------
TEN YEARS 17.48 19.21
- --------------------------------------------------------------------------------
SINCE INCEPTION
11/14/84 17.26 18.70

The bar chart and table above show the Portfolio's Institutional Class Shares
performance year-by-year, best and worst performance for a quarter, and average
annual total return for the past 1, 5, and 10 year periods and since inception.
The table also shows the corresponding returns of the Portfolio's benchmark
index. The Adviser Class Shares would have had similar annual returns, but
returns would have generally been lower as expenses of this class are higher.
The variability of performance over time provides an indication of the risks of
investing in the Portfolio. How the Portfolio has performed in the past does not
necessarily indicate how the Portfolio will perform in the future.

2
<PAGE>

MID CAP GROWTH PORTFOLIO
- --------------------------------------------------------------------------------

OBJECTIVE

The Mid Cap Growth Portfolio seeks long-term capital growth.

APPROACH

The Portfolio invests primarily in common stocks and other EQUITY
SECURITIES having capitalizations in the range of companies included in the S&P
MidCap 400 Index. The Adviser particularly focuses on the expectations of stock
analysts and invests the Portfolio in stocks of companies that it believes will
report earnings growth exceeding analysts' expectations. The Portfolio may
invest to a limited extent in FOREIGN EQUITY SECURITIES. The Adviser may use
DERIVATIVES in managing the Portfolio.

PROCESS

The Adviser uses a quantitative screen to sort stocks based on revisions to
analysts' earnings predictions. The Adviser then conducts extensive fundamental
research into those companies with the most attractive earnings revisions.
Finally, the Adviser evaluates the valuation of the stocks to eliminate from
consideration the most overvalued stocks. The Adviser also follows a strict sell
discipline. The Portfolio sells stocks when their earnings revision scores fall
to unacceptable levels, fundamental research reveals unfavorable trends, or
their valuations exceed levels that are reasonable in relation to the stocks'
growth prospects.

PRINCIPAL RISKS
The prices of common stocks and other equity securities will rise and fall in
response to events that affect entire financial markets or industries, and
events that affect a particular issuer. Investments in smaller companies may
involve greater risk than investments in larger, more established companies, and
smaller companies' securities may be subject to more abrupt or erratic price
movements. Certain market conditions may favor growth stocks or stocks of
mid-sized companies, while other conditions may favor value stocks or stocks of
larger or smaller companies. Accordingly, a portfolio of mid cap growth stocks
may, over certain periods of time, underperform a portfolio of value stocks or
stocks of larger or smaller companies. The Portfolio also may be subject to the
risks associated with derivatives. The Portfolio's investments in foreign
securities are subject to certain risks, including the risks associated with
fluctuating currency exchange rates. Please read the section entitled "Important
Investment Information" for more information about these risks.

MID CAP GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on January 31, 1997

37.00%
1989

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 12/31/98 QUARTER ENDED 9/30/98
35.89% -19.21%

<PAGE>

GENERALLY 65% INVESTED IN EQUITY
SECURITIES OF MID CAP COMPANIES
- --------------------------------------------------------------------------------
EQUITY CAPITALIZATION GENERALLY MATCHING
THE BENCHMARK (CURRENTLY $500
MILLION TO $6 BILLION)
- --------------------------------------------------------------------------------
FOCUS ON GROWTH SECURITIES
- --------------------------------------------------------------------------------
BENCHMARK: S&P MIDCAP 400 INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: MACGX
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-436

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
ARDEN C. ARMSTRONG AND DAVID P. CHU

AVERAGE ANNUAL TOTAL RETURN (AS OF 12/31/98)
- --------------------------------------------------------------------------------
MID CAP GROWTH S&P MIDCAP
PORTFOLIO 400 INDEX
- --------------------------------------------------------------------------------
ONE YEAR 37.00 19.12
- --------------------------------------------------------------------------------
SINCE INCEPTION
1/31/97 34.75 24.37

The bar chart and table above show the Portfolio's Adviser Class Shares
performance year-by-year, best and worst performance for a quarter, and average
annual total return for the past 1 year period and since inception. The table
also shows the corresponding returns of the Portfolio's benchmark index. The
variability of performance over time provides an indication of the risks of
investing in the Portfolio. How the Portfolio has performed in the past does not
necessarily indicate how the Portfolio will perform in the future.

3
<PAGE>

MID CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------

OBJECTIVE

The Mid Cap Value Portfolio seeks above-average total return over a market cycle
of three to five years.

APPROACH

The Portfolio invests primarily in common stocks and other EQUITY SECURITIES
having capitalizations in the range of companies included in the S&P MidCap 400
Index. The Portfolio focuses on stocks that are undervalued based on the
Adviser's proprietary measures of value. While VALUE STOCKS typically pay
dividends, the Portfolio may purchase stocks that do not pay dividends based on
other value characteristics. The Portfolio may invest to a limited extent in
FOREIGN EQUITY SECURITIES. The Adviser may use DERIVATIVES in managing the
Portfolio.

PROCESS

The Adviser continually measures the relative attractiveness of the Portfolio's
current holdings against potential purchases, analyzing each security on a
fundamental basis. The Portfolio's holdings typically will have lower
price/earnings ratios than the average stock included in the S&P MidCap 400
Index. In determining whether securities should be sold, the Adviser considers
factors such as high valuations relative to other investment opportunities and
deteriorating short or long-term earnings growth projections. Sector weightings
normally are kept within 5% of those of the S&P MidCap 400 Index.

PRINCIPAL RISKS
The prices of common stocks and other equity securities will rise and fall in
response to events that affect entire financial markets or industries, and to
events that affect a particular issuer. Investments in smaller companies may
involve greater risk than investments in larger, more established companies, and
smaller companies' securities may be subject to more abrupt or erratic price
movements. Certain market conditions may favor value stocks or stocks of
mid-sized companies, while other conditions may favor growth stocks or stocks of
larger or smaller companies. Accordingly, a portfolio of mid cap value stocks
may, over certain periods of time, underperform a portfolio of growth stocks or
stocks of larger or smaller companies. The Portfolio also may be subject to the
risks associated with derivatives. The Portfolio's investments in foreign
securities are subject to certain risks, including the risks associated with
fluctuating currency exchange rates. Please read the section entitled "Important
Investment Information" for more information about these risks.

MID CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on December 30, 1984

32.71% 40.77% 39.58% 16.05%
1995 1996 1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 12/31/98 QUARTER ENDED 9/30/98
22.46% -13.80%

<PAGE>

GENERALLY AT LEAST 65% INVESTED IN
EQUITY SECURITIES OF MID CAP
COMPANIES
- --------------------------------------------------------------------------------
EQUITY CAPITALIZATION GENERALLY MATCHING
THE BENCHMARK (CURRENTLY $500
MILLION TO $6 BILLION)
- --------------------------------------------------------------------------------
FOCUS ON VALUE SECURITIES
- --------------------------------------------------------------------------------
BENCHMARK: S&P MIDCAP 400 INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: NOT AVAILABLE
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-337

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
BRADLEY S. DANIELS, WILLIAM B. GERLACH, CHRIS LEAVY AND GARY G. SCHLARBAUM

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
MID CAP VALUE S&P MIDCAP
PORTFOLIO 400 INDEX
- --------------------------------------------------------------------------------
ONE YEAR 16.05 19.12
- --------------------------------------------------------------------------------
SINCE INCEPTION
12/30/94 31.87 25.20

The bar chart and table above show the Portfolio's Institutional Class Shares
performance year-by-year, best and worst performance for a quarter, and average
annual total return for the past 1 year period and since inception. The table
also shows the corresponding returns of the Portfolio's benchmark index. The
Adviser Class Shares would have had similar annual returns, but returns would
have generally been lower as expenses of this class are higher. The variability
of performance over time provides an indication of the risks of investing in the
Portfolio. How the Portfolio has performed in the past does not necessarily
indicate how the Portfolio will perform in the future.

4
<PAGE>

SMALL CAP VALUE PORTFOLIO (Not currently being offered to new investors)
- --------------------------------------------------------------------------------

OBJECTIVE

The Small Cap Value Portfolio seeks above-average total return over a market
cycle of three to five years.

APPROACH

The Portfolio invests primarily in common stocks and other EQUITY SECURITIES
with equity capitalizations in the range of companies included in the Russell
2000 Index. The Portfolio focuses on stocks that are undervalued based on the
Adviser's proprietary measures of value. While VALUE STOCKS typically pay
dividends, the Portfolio may purchase stocks that do not pay dividends based on
other value characteristics. The Portfolio may invest to a limited extent in
FOREIGN EQUITY SECURITIES. The Adviser may use DERIVATIVES in managing the
Portfolio.

PROCESS

The Adviser continually measures the relative attractiveness of the Portfolio's
current holdings against potential purchases, analyzing each security on a
fundamental basis. The Portfolio's holdings typically have lower price/earnings
and price/book ratios than the stocks in the Russell 2000 Index. In determining
whether securities should be sold, the Adviser considers factors such as high
valuations relative to other investment opportunities, and deteriorating short
or long-term earnings growth projections. The Portfolio will normally keep its
sector weightings within 5% of those of the index.

PRINCIPAL RISKS
The prices of common stocks and other equity securities will rise and fall in
response to events that affect entire financial markets or industries, and to
events that affect a particular issuer. Investments in smaller companies may
involve greater risk than investments in larger, more established companies, and
smaller companies' securities may be subject to more abrupt or erratic price
movements. Certain market conditions may favor value stocks or stocks of small
companies, while other conditions may favor growth stocks or stocks of larger
companies. Accordingly, a portfolio of small cap value stocks may, over certain
periods of time, underperform a portfolio of growth stocks or stocks of larger
companies. The Portfolio also may be subject to the risks associated with
derivatives. The Portfolio's investments in foreign securities are subject to
certain risks, including the risks associated with fluctuating currency exchange
rates. Please read the section entitled "Important Investment Information" for
more information about these risks.

SMALL CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on July 1, 1986

17.61% -16.55% 63.78% 22.77% 21.16% 2.18% 21.04% 35.15% 30.63% -1.42%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 3/31/91 QUARTER ENDED 9/30/90
31.89% -27.20%

<PAGE>

GENERALLY AT LEAST 65% INVESTED IN
EQUITIES OF SMALL CAP COMPANIES
- --------------------------------------------------------------------------------
EQUITY CAPITALIZATION GENERALLY
MATCHING THE BENCHMARK (CURRENTLY
$100 MILLION TO $2 BILLION)
- --------------------------------------------------------------------------------
FOCUS ON VALUE SECURITIES
- --------------------------------------------------------------------------------
BENCHMARK: RUSSELL 2000 INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: NOT AVAILABLE
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-261
- --------------------------------------------------------------------------------

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
BRADLEY S. DANIELS, WILLIAM B. GERLACH, CHRIS LEAVY AND GARY G. SCHLARBAUM

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
SMALL CAP RUSSELL 2000
VALUE PORTFOLIO INDEX
- --------------------------------------------------------------------------------
ONE YEAR -1.42 -2.55
- --------------------------------------------------------------------------------
FIVE YEARS 16.57 11.87
- --------------------------------------------------------------------------------
TEN YEARS 17.80 12.92
- --------------------------------------------------------------------------------
SINCE INCEPTION
7/1/86 13.25 10.23

The bar chart and table above show the Portfolio's Institutional Class Shares
performance year-by-year, best and worst performance for a quarter, and average
annual total return for the past 1, 5 and 10 year periods and since inception.
The table also shows the corresponding returns of the Portfolio's benchmark
index. The Adviser Class Shares would have had similar annual returns, but
returns would have generally been lower as expenses of this class are higher.
The variability of performance over time provides an indication of the risks of
investing in the Portfolio. How the Portfolio has performed in the past does not
necessarily indicate how the Portfolio will perform in the future.

5
<PAGE>

VALUE PORTFOLIO
- --------------------------------------------------------------------------------
OBJECTIVE

The Value Portfolio seeks above-average total return over a market cycle of
three to five years.

APPROACH

The Portfolio invests primarily in common stocks and other EQUITY SECURITIES
with equity capitalizations greater than $1.5 billion. The Portfolio focuses on
stocks that are undervalued in comparison with the stock market as a whole, as
measured by the S&P 500 Index. While VALUE STOCKS typically pay dividends, the
Portfolio may purchase stocks that do not pay dividends based on other value
characteristics. The Portfolio may invest in FOREIGN EQUITY SECURITIES to a
limited extent. The Adviser may use DERIVATIVES in managing the Portfolio.

PROCESS

The Adviser narrows the Portfolio's universe of possible investments through a
three part analysis. The Adviser selects stocks having the lowest price/earnings
ratios. The Adviser applies fundamental analysis and its investment judgment to
determine which of those securities are the most attractive. The Adviser also
may favor securities of companies that are in undervalued industries. The
Adviser employs a formal sell discipline, under which the Portfolio sells
securities when their price/earnings ratios rise.

PRINCIPAL RISKS
The prices of common stocks and other equity securities will rise and fall in
response to events that affect entire financial markets or industries, and to
events that affect a particular issuer. Investments in smaller companies may
involve greater risk than investments in larger, more established companies, and
smaller companies' securities may be subject to more abrupt or erratic price
movements. Certain market conditions may favor value stocks, while other
conditions may favor growth stocks. Accordingly, a portfolio of value stocks
may, over certain periods of time, underperform a portfolio of growth stocks.
The Portfolio also may be subject to the risks associated with derivatives. The
Portfolio's investments in foreign securities are subject to certain risks,
including the risks associated with fluctuating currency exchange rates. Please
read the section entitled "Important Investment Information" for more
information about these risks.

VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on July 17, 1996

22.99% -3.11%
1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 6/30/97 QUARTER ENDED 9/30/98
14.57% -19.10%

<PAGE>

GENERALLY AT LEAST 65% INVESTED IN
EQUITIES
- --------------------------------------------------------------------------------
EQUITY CAPITALIZATION GENERALLY GREATER
THAN $1.5 BILLION
- --------------------------------------------------------------------------------
FOCUS ON VALUE SECURITIES
- --------------------------------------------------------------------------------
BENCHMARK: S&P 500 INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: MPVAX
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-451

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
RICHARD M. BEHLER, NICHOLAS J. KOVICH AND ROBERT J. MARCIN

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
VALUE PORTFOLIO S&P 500 INDEX
- --------------------------------------------------------------------------------
ONE YEAR -3.11 28.57
- --------------------------------------------------------------------------------
SINCE INCEPTION
7/17/96 17.15 33.21

6
<PAGE>

DOMESTIC FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
OBJECTIVE

The Domestic Fixed Income Portfolio seeks above-average total return over a
market cycle of three to five years.

APPROACH

The Portfolio invests exclusively in U.S. Government securities and other
investment grade FIXED INCOME SECURITIES of U.S. issuers, including corporate
bonds and MORTGAGE SECURITIES. The Adviser will use futures, swaps and other
DERIVATIVES in managing the Portfolio.

PROCESS

The Adviser actively manages the maturity and DURATION of the Portfolio in
anticipation of long-term trends in interest rates and inflation. Depending on
the Adviser's outlook for the economy, interest rates and inflation, the Adviser
may lengthen or shorten the Portfolio's average maturity or duration. The
portfolio managers as a team determine the Portfolio's overall maturity and
duration targets and sector allocations. The portfolio managers then
individually select particular securities for the Portfolio in various sectors
within those overall guidelines. The Adviser alters the Portfolio's weightings
in various sectors based on its perception of value. The Adviser may sell
securities when it believes that expected risk-adjusted return is low compared
to other investment opportunities.

PRINCIPAL RISKS
Market prices of the Portfolio's holdings respond to economic developments,
especially changes in interest rates, as well as to perceptions of the
creditworthiness of individual issuers. Generally, fixed income securities
decrease in value as interest rates rise and vice versa. Prices of fixed income
securities also generally will fall if an issuer's credit rating declines, and
rise if it improves. The prices of mortgage securities may be particularly
sensitive to changes in interest rates because of the risk that borrowers will
become more or less likely to refinance their mortgages. For example, an
increase in interest rates generally will reduce prepayments, effectively
lengthening the maturity of some mortgage

DOMESTIC FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on September 29, 1987

11.22% 7.19% 21.54% 9.12% 13.75% -3.89% 18.85% 3.89% 9.62% 7.23%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 9/30/91 QUARTER ENDED 3/31/92
7.48% -2.28%

<PAGE>

100% U.S. ISSUERS
- --------------------------------------------------------------------------------
GENERALLY AT LEAST 65% INVESTED IN
FIXED INCOME SECURITIES
- --------------------------------------------------------------------------------
80% OF FIXED INCOME SECURITIES RATED
A OR HIGHER (OR EQUIVALENT)
- --------------------------------------------------------------------------------
UP TO 20% OF FIXED INCOME SECURITIES
RATED BBB (OR EQUIVALENT)
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY GENERALLY GREATER THAN 5 YEARS
- --------------------------------------------------------------------------------
MAY INVEST OVER 50% IN MORTGAGE SECURITIES
- --------------------------------------------------------------------------------
BENCHMARK: SALOMON BROAD
INVESTMENT GRADE INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: NOT AVAILABLE
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-279

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
THOMAS L. BENNETT, KENNETH B. DUNN AND RICHARD B. WORLEY

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
DOMESTIC FIXED SALOMON BROAD
INCOME PORTFOLIO INVESTMENT GRADE INDEX
- --------------------------------------------------------------------------------
ONE YEAR 7.23 8.72
- --------------------------------------------------------------------------------
FIVE YEARS 6.88 7.30
- --------------------------------------------------------------------------------
TEN YEARS 9.63 9.31
- --------------------------------------------------------------------------------
SINCE INCEPTION
9/29/87 9.80 9.48

7
<PAGE>

DOMESTIC FIXED INCOME PORTFOLIO (Continued)
- --------------------------------------------------------------------------------
securities, and make them subject to more drastic price movements. Because of
prepayment issues, it is not possible to predict the ultimate maturity of
mortgage securities. The Portfolio also is subject to the risks associated with
using derivatives. Please read the section entitled "Important Investment
Information" for more information about these risks.

8
<PAGE>

FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
OBJECTIVE

The Fixed Income Portfolio seeks above average total return over a market cycle
of three to five years.

APPROACH

The Portfolio invests in a diversified portfolio of FIXED INCOME SECURITIES,
including U.S. Government securities, corporate bonds, MORTGAGE SECURITIES, and
to a limited extent, FOREIGN FIXED INCOME SECURITIES. The Portfolio invests
primarily in investment grade securities, but also may invest a portion of its
assets in HIGH YIELD SECURITIES, also known as "junk bonds." The Adviser will
use futures, swaps and other DERIVATIVES in managing the Portfolio.

PROCESS

The prices of mortgage securities may be particularly sensitive to changes in
interest rates because of the risk that borrowers will become more or less
likely to refinance their mortgages. For example, an increase in

FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on November 7, 1996

9.34% 6.63%
1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 6/30/97 QUARTER ENDED 3/31/97
3.98% -0.17%

<PAGE>

GENERALLY AT LEAST 65% INVESTED IN
FIXED INCOME SECURITIES
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY GENERALLY
GREATER THAN 5 YEARS
- --------------------------------------------------------------------------------
80% INVESTMENT GRADE SECURITIES
- --------------------------------------------------------------------------------
UP TO 20% HIGH YIELD SECURITIES
- --------------------------------------------------------------------------------
MAY INVEST OVER 50% IN MORTGAGE SECURITIES
- --------------------------------------------------------------------------------
BENCHMARK: SALOMON BROAD
INVESTMENT GRADE
INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: MFXAX
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-444
- --------------------------------------------------------------------------------

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
THOMAS L. BENNETT, KENNETH B. DUNN AND RICHARD B. WORLEY

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
FIXED INCOME SALOMON BROAD
PORTFOLIO INVESTMENT GRADE INDEX
- --------------------------------------------------------------------------------
ONE YEAR 6.63 8.72
- --------------------------------------------------------------------------------
SINCE INCEPTION
11/7/96 7.72 8.62

9
<PAGE>

FIXED INCOME PORTFOLIO (Continued)
- --------------------------------------------------------------------------------

interest rates generally will reduce prepayments, effectively lengthening the
maturity of some mortgage securities, and making them subject to more drastic
price movements. Because of prepayment issues, it is not possible to predict the
ultimate maturity of mortgage securities.

The Portfolio's investments in high yield securities expose it to a substantial
degree of credit risk. Prices of high yield securities will rise and fall
primarily in response to changes in the issuer's financial health, although
changes in market interest rates also will affect prices. High yield securities
may experience reduced liquidity, and sudden and substantial decreases in price,
during certain market conditions.

The Portfolio also is subject to the risks of investing in derivatives and, to a
limited extent, foreign fixed income securities. Foreign fixed income securities
may be denominated in foreign currencies, which will fluctuate in value relative
to the U.S. dollar. The Portfolio may use derivatives to hedge some or all of
the risks associated with foreign currencies. Certain hedging strategies or
instruments may not be available or practical in certain markets or under
certain conditions. Hedging the Portfolio's currency risks involves certain
risks, including the possibility of mismatching the Portfolio's obligations
under a forward or futures contract with the value of securities denominated in
a particular currency. Please read the section entitled "Important Investment
Information" for more information about these risks.

10
<PAGE>

HIGH YIELD PORTFOLIO
- --------------------------------------------------------------------------------

OBJECTIVE

The High Yield Portfolio seeks above average total return over a market cycle of
three to five years.

APPROACH

The Portfolio invests primarily in HIGH YIELD SECURITIES (commonly referred to
as "junk bonds"). The Portfolio also may invest in other FIXED INCOME
SECURITIES, including U.S. Government securities, investment grade corporate
bonds and, to a limited extent, MORTGAGE SECURITIES. The Portfolio may invest to
a limited extent in FOREIGN FIXED INCOME SECURITIES, including EMERGING MARKET
SECURITIES. The Adviser will use futures, swaps and other DERIVATIVES in
managing the Portfolio.

PROCESS

The Adviser uses equity and fixed income valuation techniques, together with
analyses of economic and industry trends, to determine the Portfolio's overall
structure, sector allocation and desired maturity. The Adviser emphasizes
securities of companies that have strong industry positions and favorable
outlooks for cash flow and asset values. The Adviser conducts a credit analysis
for each security considered for investment to evaluate its attractiveness
relative to the level of risk it presents. The Portfolio maintains a high level
of diversification to minimize its exposure to the risks associated with any
particular issuer. The Adviser may sell securities when it believes that
expected risk-adjusted return is low compared to other investment opportunities.

PRINCIPAL RISKS
Market prices of the Portfolio's fixed income securities holdings respond to
economic developments, especially changes in interest rates, as well as to
perceptions of the creditworthiness of individual issuers. The Portfolio's
investments in high yield securities expose it to a substantial degree of credit
risk. These investments are considered speculative under traditional investment
standards. Prices of high yield securities will rise and fall primarily in
response to changes in the issuer's financial health, although changes in market
interest rates also will affect prices. Generally, fixed income securities
decrease in value as interest rates rise and vice versa. High yield securities
may experience reduced liquidity, and sudden and substantial decreases in price,
during certain market conditions.

<PAGE>

HIGH YIELD PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on January 31, 1997

2.83%
1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 12/31/98 QUARTER ENDED 9/30/98
5.09% -6.36%

AVERAGE WEIGHTED MATURITY GENERALLY
GREATER THAN 5 YEARS
- --------------------------------------------------------------------------------
GENERALLY AT LEAST 65% INVESTED IN
HIGH YIELD SECURITIES
- --------------------------------------------------------------------------------
BENCHMARK: SALOMON HIGH YIELD
INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: NOT AVAILABLE
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-428

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
ROBERT E. ANGEVINE, THOMAS L. BENNETT AND STEPHEN F. ESSER

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
HIGH YIELD SALOMON HIGH
PORTFOLIO YIELD INDEX
- --------------------------------------------------------------------------------
ONE YEAR 2.83 3.61
- --------------------------------------------------------------------------------
SINCE INCEPTION
1/31/97 8.41 8.26

11
<PAGE>

HIGH YIELD PORTFOLIO (Continued)
- --------------------------------------------------------------------------------

The Portfolio also is subject to the risks associated with using derivatives.
Foreign fixed income securities may be denominated in foreign currencies, which
will fluctuate in value relative to the U.S. dollar. The Portfolio may use
derivatives to hedge some or all of the risks associated with foreign
currencies. Certain hedging strategies or instruments may not be available or
practical in certain markets or under certain conditions. Hedging the
Portfolio's currency risks involves certain risks, including the possibility of
mismatching the Portfolio's obligations under a forward or futures contract with
the value of securities denominated in a particular currency. Please read the
section entitled "Important Investment Information" for more information about
these risks.

12
<PAGE>

BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
OBJECTIVE

The Balanced Portfolio seeks above average total return over a market cycle of
three to five years.

APPROACH

The Portfolio invests in a mix of EQUITY and FIXED INCOME SECURITIES. The
Portfolio normally invests 45-75% of its assets in equity securities and 25-55%
of its assets in fixed income securities. The Portfolio may invest up to 25% of
its assets in FOREIGN EQUITY and FOREIGN FIXED INCOME SECURITIES, including
EMERGING MARKET SECURITIES. Equity securities generally will be issued by larger
corporations. Fixed income securities will include U.S. Government securities,
corporate bonds, MORTGAGE SECURITIES, HIGH YIELD SECURITIES (commonly called
"junk bonds") and foreign fixed income securities. The Adviser will use futures,
swaps and other DERIVATIVES in managing the Portfolio.

PROCESS

The Adviser determines the Portfolio's equity and fixed income investment
strategies separately and then determines the mix of those strategies that will
maximize the return available from both the stock and bond markets, based on
proprietary valuation disciplines and analysis. The Adviser evaluates
international economic developments in determining the amount to invest in
foreign securities. In determining whether securities should be sold, the
Adviser considers factors such as deteriorating earnings, cash flows and other
fundamentals, as well as high valuations relative to the Portfolio's investment
universe.

PRINCIPAL RISKS

The prices of common stocks and other equity securities will rise and fall in
response to events that affect entire financial markets or industries, and to
events that affect a particular issuer.

Market prices of the Portfolio's fixed income securities respond to economic
developments, especially changes in interest rates, as well as to perceptions of
the creditworthiness of individual issuers. The prices of mortgage securities
may be particularly sensitive to changes in interest rates because of the risk
that borrowers will become more or less likely to refinance their mortgages. For
example, an increase in interest rates generally will reduce prepayments,
effectively lengthening the maturity of some mortgage securities, and make them
subject to more drastic price movements. Because of prepayment issues, it is not
possible to predict the ultimate maturity of mortgage securities.

GENERALLY 45-75% INVESTED IN EQUITIES,
25-55% IN FIXED INCOME SECURITIES
- --------------------------------------------------------------------------------
AT LEAST 25% INVESTED IN SENIOR FIXED
INCOME SECURITIES
- --------------------------------------------------------------------------------
UP TO 25% INVESTED IN FOREIGN EQUITY
AND FOREIGN FIXED INCOME SECURITIES
- --------------------------------------------------------------------------------
UP TO 10% INVESTED IN BRADY BONDS (A
TYPE OF EMERGING MARKET FIXED
INCOME SECURITY)
- --------------------------------------------------------------------------------
EQUITY CAPITALIZATION GENERALLY GREATER
THAN $1 BILLION
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY OF FIXED
INCOME SECURITIES GENERALLY GREATER
THAN 5 YEARS
- --------------------------------------------------------------------------------
BENCHMARK: WEIGHTED BLEND OF QUARTERLY RETURNS OF
60% S&P 500 INDEX
40% SALOMON BROAD INVESTMENT GRADE INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: MBAAX
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-394

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
THOMAS L. BENNETT, BARTON M. BIGGS,
GARY G. SCHLARBAUM, HORACIO A.
VALEIRAS AND RICHARD B. WORLEY

13
<PAGE>

BALANCED PORTFOLIO (Continued)
- --------------------------------------------------------------------------------
countries may be more likely to experience political turmoil or rapid changes in
economic conditions, and issuers in those countries may be in more precarious
financial condition. These characteristics can cause securities in emerging
market countries to experience significant price volatility. Brady Bonds are
subject to certain risks, including the risk of default by the issuer.

Many of the Portfolio's foreign securities will be denominated in a foreign
currency. Brady Bonds also may be denominated in a foreign currency. Changes in
the values of those currencies compared to the U.S. dollar may affect the value
of the Portfolio's investments. These changes may happen separately from and in
response to events that do not otherwise affect the value of the security in the
issuer's home country. The Adviser may, in its discretion, use derivatives and
other techniques to hedge currency risks. However, the Adviser cannot guarantee
that it will succeed in doing so. Certain hedging strategies or instruments may
not be available or practical in certain markets or under certain conditions.
Hedging the Portfolio's currency risks involves certain risks, including the
possibility of mismatching the Portfolio's obligations under a forward or
futures contract with the value of securities denominated in a particular
currency.

At various times, equity securities may perform better or worse than fixed
income securities. There is a risk that the Portfolio could invest too much or
too little in an asset class, which could adversely affect the Portfolio's
overall performance.

The Portfolio also is subject to the risks of using derivatives. Please read the
section entitled "Important Investment Information" for more information about
these risks.

BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on November 1, 1996

19.26% 15.09%
1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 12/31/98 QUARTER ENDED 9/30/98
12.08% -6.81%

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
SALOMON BROAD 60/40
BALANCED S&P 500 INVESTMENT BLENDED
PORTFOLIO INDEX GRADE INDEX INDEX*
- --------------------------------------------------------------------------------
ONE YEAR 15.09 28.57 8.72 21.24
- --------------------------------------------------------------------------------
SINCE INCEPTION
11/1/96 17.67 31.59 8.86 22.59

*The 60/40 Blended Index is an unmanaged index comprised of 60% S&P 500 Index
and 40% Salomon Broad Investment Grade Index.

14
<PAGE>
MULTI-ASSET-CLASS PORTFOLIO
- --------------------------------------------------------------------------------
OBJECTIVE

The Multi-Asset-Class Portfolio seeks above average total return over a market
cycle of three to five years.

APPROACH

The Portfolio seeks to invest in a combination of asset classes that do not move
in tandem with each other in order to improve potential return and control the
Portfolio's overall risk. The Portfolio invests in EQUITY SECURITIES and FIXED
INCOME SECURITIES of U.S. and foreign issuers, including EMERGING MARKET
SECURITIES, in accordance with the Adviser's target allocation among certain
asset classes. The Portfolio's equity securities generally will be issued by
larger corporations. Fixed income securities will include U.S. Government
securities, foreign government securities, corporate bonds, MORTGAGE SECURITIES
and HIGH YIELD SECURITIES (commonly called "junk bonds"). The Portfolio's
neutral position is generally 50% domestic equity securities, 24% domestic fixed
income securities, 14% foreign equity securities, 6% foreign fixed income
securities and 6% high yield securities. The Adviser will use futures, swaps
and other DERIVATIVES in managing the Portfolio.

MULTI-ASSET-CLASS PORTFOLIO
- --------------------------------------------------------------------------------
Commenced operations on July 29, 1994

24.62% 15.93% 17.48% 13.87%
1995 1996 1997 1998

HIGH (QUARTER) LOW (QUARTER)
-------------- -------------
QUARTER ENDED 12/31/98 QUARTER ENDED 9/30/98
12.82% -8.64%

GENERALLY AT LEAST 65% INVESTED IN
ISSUERS LOCATED IN AT LEAST 3 COUNTRIES,
INCLUDING THE U.S.
- --------------------------------------------------------------------------------
EQUITY CAPITALIZATION GENERALLY GREATER
THAN $1 BILLION
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY OF FIXED
INCOME SECURITIES GENERALLY GREATER
THAN 5 YEARS
- --------------------------------------------------------------------------------
BENCHMARK: A WEIGHTED BLEND OF QUARTERLY RETURNS OF 50% S&P 500 INDEX
14% MSCI EAFE-GDP WEIGHTED INDEX 24% SALOMON BROAD
INVESTMENT GRADE INDEX 6% SALOMON WORLD GOVERNMENT BOND
EX-U.S. INDEX 6% SALOMON HIGH YIELD INDEX
- --------------------------------------------------------------------------------
TICKER SYMBOL: NOT AVAILABLE
- --------------------------------------------------------------------------------
CUSIP NO. 552-913-634

PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
THOMAS L. BENNETT, BARTON M. BIGGS, J. DAVID GERMANY, GARY G. SCHLARBAUM,
ANN D. THIVIERGE, HORACIO A. VALEIRAS, AND RICHARD B. WORLEY.

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/98)
- --------------------------------------------------------------------------------
SALOMON BROAD MSCI EAFE-GDP
MULTI-ASSET-CLASS S&P 500 INVESTMENT WEIGHTED BLENDED
PORTFOLIO INDEX GRADE INDEX INDEX INDEX*
- --------------------------------------------------------------------------------
ONE YEAR 13.87 28.57 8.72 26.71 22.05
- --------------------------------------------------------------------------------
SINCE INCEPTION
7/29/94 15.69 27.65 8.76 10.58 18.57

* The Blended Index is an unmanaged index comprised of 50% S&P 500 Index, 24%
Salomon Broad Investment Grade Index, 14% MSCI EAFE-GDP Weighted Index, 6%
Salomon High Yield Index and 6% Salomon World Government Bond Ex-U.S.
Index.

The bar chart and table above show the Portfolio's Institutuional Class Shares
performance year-by-year, best and worst performance for a quarter, and average
annual total return for the past 1 year period and since inception. The table
also shows the corresponding returns of the Portfolio's benchmark index. The
Adviser Class Shares would have similar annual returns, but returns would have
generally been lower as expenses of this class are higher. The variability of
performance over time provides an indication of the risks of investing in the
Portfolio. How the Portfolio has performed in the past does not necessarily
indicate how the Portfolio will perform in the future.

15
<PAGE>

MULTI-ASSET-CLASS PORTFOLIO (Continued)
- --------------------------------------------------------------------------------

PROCESS

The Adviser makes strategic judgments based on proprietary measures used to
compare the relative risks and returns of stock and bond markets around the
world. The Adviser's asset allocation team sets the target exposures for
domestic and international equity and fixed income securities, high yield
securities and cash, depending on the Adviser's appraisal of the relative
attractiveness of each type of investment. In determining whether securities
should be sold, the Adviser considers factors such as deteriorating earnings,
cash flows and other fundamentals, as well as high valuations relative to the
Portfolio's investment universe.

PRINCIPAL RISKS

The prices of common stocks and other equity securities will rise and fall in
response to events that affect entire financial markets or industries, and to
events that affect a particular issuer.

The Portfolio is subject to the risks of investing in foreign securities. News
and events unique to a country or region will affect those markets and their
issuers, yet may have little or no effect on the U.S. economy or similar issuers
located in the United States. Emerging market countries are generally considered
to be less economically mature than developed nations. Emerging market countries
may be more likely to experience political turmoil or rapid changes in economic
conditions, and issuers in those countries may be in a more precarious financial
condition. These characteristics can cause securities in emerging market
countries to experience significant price volatility.

Many of the Portfolio's foreign securities will be denominated in a foreign
currency. Changes in the values of those currencies compared to the U.S. dollar
may affect the value of the Portfolio's investments. These changes may happen
separately from and in response to events that do not otherwise affect the value
of the security in the issuer's home country. The Adviser may use derivatives
and other techniques to manage these risks. However, the Adviser cannot
guarantee that it will succeed in doing so. Certain hedging strategies or
instruments may not be available or practical in certain markets or under
certain conditions. Hedging the Portfolio's currency risks involves certain
risks, including the possibility of mismatching the Portfolio's obligations
under a forward or futures contract with the value of securities denominated in
a particular currency.

At various times, some asset classes will perform better or worse than others.
There is a risk that the Portfolio could invest too much or too little in
particular asset classes, which could adversely affect the Portfolio's overall
performance.

The Portfolio also is subject to the risks of using derivatives. Please read the
section entitled "Important Investment Information" for more information about
these risks.

16
<PAGE>

IMPORTANT INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

Each Portfolio involves the risk that an investor may lose money. Some of the
Portfolios may actively trade their securities to achieve their investment
objectives. High levels of portfolio turnover are likely to lead to increased
transaction costs and possible tax consequences. Nonetheless, short-term trading
activities represented by high portfolio turnover rates are not incompatible
with these Portfolios' stated objectives of achieving long-term capital
appreciation or other multi-year goals, in that short-term trading can lead to
gains that ultimately will increase the value of the investor's shares.

The following section describes the principal types of investments that various
Portfolios may make and some of the risks associated with those investments.
More information about these investments and risks is contained in the Statement
of Additional Information.

EQUITY SECURITIES

Equity securities include common stock, preferred stock, convertible securities,
ADRs, rights, warrants and shares of investment companies. Equity securities in
which the Portfolios may invest may be publicly traded on securities exchanges
or over-the-counter. The Portfolios also may invest in securities that are not
publicly traded. These securities may be more difficult to sell than other
equity securities and their value may fluctuate more dramatically than other
securities. Each Portfolio may purchase shares of other investment companies
subject to limits imposed by the Investment Company Act of 1940 ("1940 Act") and
any other applicable law.

Equity securities are subject to the risk that prices will fluctuate in response
to events affecting particular issuers, or entire industries or markets. Smaller
companies are subject to additional risks because they may have more limited
markets and financial resources, narrower product lines or lack of depth of
management. Smaller companies' securities also may be less liquid, and subject
to more abrupt or erratic price movements. ADRs are U.S. dollar-denominated
securities that represent claims to shares of foreign stocks. The Fund treats
ADRs as U.S. securities for purposes of foreign investment limitations.

Growth stocks generally are characterized by higher growth rates, betas, and
price/earnings ratios, and lower yields than the stock market in general as
measured by an appropriate stock market index. Value stocks are those stocks
that 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
characteristics such as price/earnings 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.

FIXED INCOME SECURITIES

Fixed income securities include a wide variety of investments, such as U.S.
Government securities, securities issued by federal or federally sponsored
agencies ("agencies"), corporate bonds, asset-backed securities, mortgage
securities, high yield securities, municipal bonds, loan participations and
assignments, zero coupon bonds, convertible securities, Yankee bonds, repurchase
agreements, commercial paper and cash equivalents.

17
<PAGE>

IMPORTANT INVESTMENT INFORMATION (Continued)

Fixed income securities generally are subject to risks related to changes in
interest rates and in the financial health or credit rating of the issuers. The
value of a fixed income security typically moves in the opposite direction of
prevailing interest rates: if rates rise, the value of a fixed income security
falls; if rates fall, the value increases. The maturity and duration of a fixed
income instrument also affects the extent to which the price of the security
will change in response to these and other factors. Longer term securities tend
to experience larger price changes than shorter term securities because they are
more sensitive to changes in interest rates or in the credit ratings of the
issuers. Certain types of fixed income securities, such as inverse floaters, are
designed to respond differently to changes in interest rates.

Certain fixed income securities pay a floating or variable rate of interest. The
interest rates on these securities will vary with changes in specified market
rates or indices, such as the prime rate, or at specified intervals. The
variation in the interest rate may enable an investor to trade a floating or
variable rate security at par on a daily or periodic basis. Some obligations
carry a demand feature permitting the holder to tender them back to the issuer
or to a third party at par value before maturity. If the demand feature is an
obligation of a foreign entity, it will be subject to certain risks described in
the section below entitled "Foreign Securities."

Some fixed income securities may be called (redeemed by the issuer) prior to
final maturity. The risk of holding a callable security is that if it is called,
a Portfolio may have to reinvest the proceeds at a lower rate of interest.

DURATION

The average duration of a fixed income portfolio measures its exposure to the
risk of changing interest rates. A Portfolio with a lower average duration
generally will experience less price volatility in response to changes in
interest rates as compared with a Portfolio with a higher average duration.

MORTGAGE SECURITIES

Mortgage securities are subject to the risk that as interest rates fall,
borrowers will refinance their mortgages, resulting in prepayment of principal.
A Portfolio holding mortgage securities that are experiencing prepayments will
have to reinvest these principal payments at lower prevailing interest rates. On
the other hand, when interest rates rise, borrowers are less likely to
refinance, resulting in lower prepayments. This can effectively extend the
maturity of a Portfolio's mortgage securities, resulting in greater price
volatility.

HIGH YIELD SECURITIES

Fixed income securities that are not investment grade are commonly referred to
as junk bonds or high yield, high risk securities. These securities offer a
higher yield than other, higher rated securities, but they carry a greater
degree of risk and are considered speculative by the major credit rating
agencies. High yield securities may be issued by companies that are
restructuring, are smaller and less credit worthy or are more highly indebted
than other companies. This means that they may have more difficulty making
scheduled payments of principal and interest. Changes in the value of high yield
securities are influenced more by changes in the financial and business position
of the issuing company than by changes in interest rates when compared to
investment grade securities.

18
<PAGE>

IMPORTANT INVESTMENT INFORMATION (Continued)
- --------------------------------------------------------------------------------
YANKEE BONDS

Yankee bonds are U.S.-dollar denominated fixed income instruments issued by
foreign governments and corporations and sold in the United States. They are
considered U.S. securities for purposes of the Portfolios' investment policies
(except for the Domestic Fixed Income Portfolio).

FOREIGN SECURITIES

While many of the characteristics and risks of foreign equity and fixed income
securities are similar to those of domestic securities, investing in foreign
securities involves certain additional risks. Foreign issuers generally are
subject to different accounting, auditing and financial reporting standards than
U.S. companies. There may be less information available to the public about
foreign issuers. Securities of foreign issuers can be less liquid and experience
greater price movements. Foreign stock exchanges, broker-dealers, and listed
issuers may be subject to less government regulation and oversight. The cost of
investing in foreign securities, including brokerage commissions and custodial
expenses, can be higher than in the United States. In some foreign countries,
there is also the risk of government expropriation, excessive taxation,
political or social instability, the imposition of currency controls, or
diplomatic developments that could affect the Portfolios' investments in those
countries. There also can be difficulty obtaining and enforcing judgments in
foreign countries.

Foreign securities are denominated in foreign currencies. The value of foreign
currencies fluctuates relative to the value of the U.S. dollar. Since the
Portfolios must convert the value of foreign securities into dollars, changes in
currency exchange rates can increase or decrease the U.S. dollar value of the
Portfolios' assets. The Adviser may use certain derivatives to offset this risk.
The risks of hedging currency risk are described in the section below entitled
"Derivatives and Other Investments." The Adviser may in its discretion choose
not to hedge against currency risk. In addition, certain market conditions may
make it impossible or uneconomical to hedge against currency risk.

EMERGING MARKET SECURITIES

Investing in emerging market securities enhances the risks of foreign investing.
The risk of political or social upheaval, expropriation, and restrictive
controls on foreign investors' ability to repatriate capital is greater in
emerging markets. Emerging market securities generally are less liquid and
subject to wider price and currency fluctuations than securities issued in more
developed countries. In certain countries, there may be few publicly traded
securities, and the market may be dominated by a few issuers or sectors. Fixed
income securities issued by emerging markets issuers are more likely to be
considered equivalent to risky high yield securities. Investment funds and
structured investments are mechanisms for U.S. and other investors to invest in
certain emerging markets that have laws precluding or limiting direct
investments in their securities by foreign investors. Brady Bonds are debt
obligations created as part of the restructuring of commercial bank loans to
entities in emerging market countries. Brady Bonds may be collateralized or not,
and may be issued in various currencies (most are U.S.-dollar denominated).

DERIVATIVES AND OTHER INVESTMENTS

The Portfolios may use derivatives to pursue portfolio strategies and
objectives. Derivatives are financial instruments whose value and performance
are based on the value and performance of

19
<PAGE>

IMPORTANT INVESTMENT INFORMATION (Continued)
- --------------------------------------------------------------------------------

another security or financial instrument. Derivatives include futures, options,
forward contracts, swaps, collateralized mortgage obligations ("CMOs"), stripped
mortgage-backed securities ("SMBS"), and structured notes. Derivatives sometimes
offer the most economical way of pursuing a particular investment strategy,
limiting certain risks or enhancing potential returns.

Certain derivative instruments are publicly traded on exchanges or
over-the-counter, while others are privately negotiated. The Portfolios may
enter into public or private over-the-counter derivatives transactions with
counterparties that meet the Fund's requirements for credit quality and
collateral. A Portfolio will not use derivatives to increase a Portfolio's level
of risk above the level that could be achieved using only traditional investment
securities. A Portfolio will not use derivatives as an indirect way of investing
in assets that it cannot, as a matter of policy, invest in directly. Forward
contracts are used to protect against uncertainty in the level of future foreign
currency exchange rates. The Portfolios may use futures to gain exposure to an
entire market(e.g., stock index futures) or to control their exposure to
changing foreign currency exchange rates. Portfolios investing in fixed income
securities will use futures to control their exposure to changes in interest
rates and to manage the overall maturity and duration of their securities
holdings. If a Portfolio buys an option, it buys a legal contract giving it the
right to buy or sell a specific amount of a security or futures contract at an
agreed-upon price. If a Portfolio "writes" an option, it sells to another person
the right to buy from or sell to the Portfolio a specific amount of a security
or futures contract at an agreed-upon price. The Portfolios may enter into swap
transactions which are contracts in which a Portfolio agrees to exchange the
return or interest rate on one instrument for the return or interest rate on
another instrument. Payments may be based on currencies, interest rates,
securities indices and commodity indices. Swaps may be used to manage the
maturity and duration of a fixed income portfolio, or to gain exposure to a
market without directly investing in securities traded in that market.
Structured investments are units representing an interest in assets held in a
trust that is not an investment company as defined in the 1940 Act. The trust
may pay a return based on the income it receives from those assets, or it may
pay a return based on a specified index.

RISKS OF DERIVATIVES

The primary risks of derivatives are: (i) changes in the market value of
securities held by a Portfolio, and of derivatives relating to those securities,
may not be proportionate, (ii) there may not be a liquid market for a Portfolio
to sell a derivative, which could result in difficulty closing a position, and
(iii) certain derivatives can magnify the extent of losses incurred due to
changes in the market value of the securities to which they relate. See the
Statement of Additional Information for more about the risks of different types
of derivatives.

The amount that a Portfolio may invest in futures and options depends on the
type of portfolio. The limitations are as follows:

Any Fixed Income Portfolio may enter into futures contracts and options on
futures contracts for bona fide hedging purposes to an unlimited extent. It also
can enter into futures contracts and

20
<PAGE>

IMPORTANT INVESTMENT INFORMATION (Continued)
- --------------------------------------------------------------------------------

options thereon for other purposes, provided that no more than 5% of the
Portfolio's total assets at the time of the transaction are required as margin
and option premiums to secure the Portfolio's obligations under such contracts.

Any Equity Portfolio or Balanced Portfolio may enter into futures contracts
subject to the limitation that it cannot incur obligations to purchase
securities under futures and options contracts in excess of 50% of the
Portfolio's total assets. It also is subject to the limit that no more than 5%
of the Portfolio's total assets at the time of the transaction may be required
as margin and option premiums to secure the Portfolio's obligations under
futures contracts and options thereon entered into for purposes other than bona
fide hedging.

Each Portfolio may invest in certain derivatives, such as forwards, futures,
options and mortgage derivatives as well as when-issued securities which require
the Portfolio to segregate some or all of its cash or liquid securities to cover
its obligations under those instruments. At certain levels, this can cause a
Portfolio to lose flexibility in managing its investments properly, responding
to shareholder redemption requests, or meeting other obligations. A Portfolio in
that position could be forced to sell other securities that it wanted to retain
or to realize unintended gains or losses.

MORTGAGE DERIVATIVES

CMOs and SMBS are derivatives based on mortgage securities. CMOs are issued in a
number of series (known as "tranches"), each of which has a stated maturity.
Cash flow from the underlying mortgages is allocated to the tranches in a
predetermined, specified order. SMBS are multi-class mortgage securities issued
by U.S. government agencies and instrumentalities and financial institutions.
They usually have two classes, one receiving most of the principal payments from
the mortgages, and one receiving most of the interest. In some cases, classes
may receive interest only (called "IOs") or principal only (called "POs"). Both
CMOs and SMBS are subject to the risks of price movements in response to
changing interest rates and the level of prepayments made by borrowers.
Depending on the class of CMO or SMBS that a Portfolio holds, these price
movements may be significantly greater than that experienced by mortgage
securities generally, depending on whether the payments are predominantly based
on principal or interest paid on the underlying mortgages. In addition, the
yield to maturity of IOs and POs is extremely sensitive to prepayment levels. As
a result, a high rate of prepayments can have a material effect on a Portfolio's
yield to maturity and could cause a Portfolio to lose money on the investment.

When the Adviser believes that changes in economic, financial or political
conditions warrant, each Portfolio may invest without limit in certain fixed
income securities for temporary defensive purposes. See the Statement of
Additional Information for more information about the types of fixed income
securities in which the Portfolios may invest. If the Adviser incorrectly
predicts the effects of these changes, such defensive investments may adversely
affect the Portfolios' performance. Consistent with their investment policies,
the Portfolios also will purchase and sell securities without regard to the
effect on portfolio turnover. Higher portfolio turnover (e.g., over 100% per
year) will cause the Portfolio to incur additional transaction costs and may
result in taxable gains being passed through to shareholders.

21
<PAGE>

FEES AND EXPENSES OF THE PORTFOLIOS
- --------------------------------------------------------------------------------

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)

The Securities and Exchange Commission (the "Commission") requires all funds to
disclose in the table to the right the fees and expenses that you may pay if you
buy and hold shares of the Portfolios. The Portfolios do not charge any sales
loads or similar fees when you purchase or redeem shares.
<TABLE>
<CAPTION>
TOTAL
ANNUAL FUND
MANAGEMENT DISTRIBUTION OTHER OPERATING
FEES (12B-1) FEES EXPENSES EXPENSES
----------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY PORTFOLIO .500% 0.25% .110%* .860%
- -----------------------------------------------------------------------------------------------------
MID CAP GROWTH
PORTFOLIO .500% 0.25% .116% .866%
- -----------------------------------------------------------------------------------------------------
MID CAP VALUE
PORTFOLIO .750% 0.25% .154%* 1.154%
- -----------------------------------------------------------------------------------------------------
SMALL CAP VALUE
PORTFOLIO .750% 0.25% .110%* 1.110%
- -----------------------------------------------------------------------------------------------------
VALUE PORTFOLIO .500% 0.25% .097% .847%
- -----------------------------------------------------------------------------------------------------
DOMESTIC FIXED
INCOME PORTFOLIO .375% 0.25% .142%* .767%**
- -----------------------------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO .375% 0.25% .108% .733%
- -----------------------------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO .375% 0.25% .121% .746%
- -----------------------------------------------------------------------------------------------------
BALANCED PORTFOLIO .450% 0.25% .136% .836%
- -----------------------------------------------------------------------------------------------------
MULTI-ASSET-CLASS
PORTFOLIO .650% 0.25% .174%* 1.074%**
- -----------------------------------------------------------------------------------------------------
</TABLE>

Total Annual Fund Operating Expenses reflected in the table above may be
higher than the expenses actually deducted from portfolio assets because of
the effect of expense offset arrangements.
* Other expenses are based on estimated amounts for the current year.
** The Adviser has voluntarily agreed to reduce its advisory fee and/or
reimburse the Portfolios so that total expenses will not exceed the rates
shown in the table below. Fee waivers and/or expense reimbursements are
voluntary and the Adviser reserves the right to terminate any waiver and/or
reimbursement at any time and without notice.

TOTAL ANNUAL FUND OPERATING EXPENSES
AFTER MAS WAIVER/REIMBURSEMENT & OFFSETS
--------------------------------------------------------------------------
DOMESTIC FIXED INCOME PORTFOLIO .750%
--------------------------------------------------------------------------
MULTI-ASSET-CLASS PORTFOLIO 1.030%
--------------------------------------------------------------------------

22
<PAGE>

FEES AND EXPENSES OF THE PORTFOLIOS (Continued)
- -------------------------------------------------------------------------------

EXAMPLE

The example assumes that you invest $10,000 in each Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example assumes that your investment has a 5% return each year and
that each Portfolio's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be
equal to the amounts reflected in the table to the right.

This example is intended to help you compare the cost of investing in each
Portfolio with the cost of investing in other mutual funds.

EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------
EQUITY PORTFOLIO $ 88 $274 $477 $1,061
- -------------------------------------------------------------------------------
MID CAP GROWTH PORTFOLIO $ 88 $276 $480 $1,068
- -------------------------------------------------------------------------------
MID CAP VALUE PORTFOLIO $118 $367 $635 $1,402
- -------------------------------------------------------------------------------
SMALL CAP VALUE PORTFOLIO $113 $353 $612 $1,352
- -------------------------------------------------------------------------------
VALUE PORTFOLIO $ 86 $270 $470 $1,045
- -------------------------------------------------------------------------------
DOMESTIC FIXED INCOME PORTFOLIO $ 78 $245 $426 $951
- -------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO $ 75 $234 $408 $910
- -------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO $ 76 $238 $415 $926
- -------------------------------------------------------------------------------
BALANCED PORTFOLIO $ 85 $267 $464 $1,032
- -------------------------------------------------------------------------------
MULTI-ASSET-CLASS PORTFOLIO $110 $342 $592 $1,310

23
<PAGE>

PURCHASING SHARES
- -------------------------------------------------------------------------------

Adviser Class Shares are available to clients of the Adviser with combined
investments of $500,000 and corporations or other institutions, such as trusts,
foundations or broker-dealers, who have a contractual arrangement with the Fund
or its Distributor and who purchase shares for the accounts of others
(Shareholder Organizations).

Adviser Class Shares of each portfolio may be purchased at the net asset value
per share (NAV) next determined after we receive your purchase order.

INITIAL PURCHASE BY MAIL

You may open an account, subject to acceptance by MAS Funds, by completing and
signing an Account Registration Form provided by MAS Funds Client Services
("Client Services") and mailing it to MAS Funds c/o Miller Anderson & Sherrerd,
LLP, One Tower Bridge, West Conshohocken, PA 19428-0868 together with a check
payable to MAS Funds.

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. You can avoid this delay by purchasing
shares by wire.

INITIAL PURCHASE BY WIRE

You may purchase Adviser Class Shares of each portfolio by wiring Federal Funds
to Chase. You should forward a completed Account Registration Form to Client
Services in advance of the wire. For all portfolios, notification must be given
to Client Services at 1-800-354-8185 prior to the determination of NAV. See the
section below entitled "Valuation of Shares." (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 Chase using the following wire
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: (Portfolio Name, Account Number, Account Name)

ADDITIONAL INVESTMENTS

You may make additional investments in Adviser Class Shares (minimum additional
investment $1,000) at the NAV next determined after the request is received in
good order, by mailing a check (payable to MAS Funds) to Client Services at the
address noted under Initial Purchase by Mail or by wiring Federal Funds to Chase
as outlined above.

OTHER PURCHASE INFORMATION

We may suspend the offering of shares, or any class of shares, of any Portfolio
or reject any purchase orders when we think it is in the best interest of the
Fund. We may waive the minimum initial and additional investment amounts in
certain cases.

Purchases of a Portfolio's shares will be made in full and fractional shares of
the Portfolio calculated to three decimal places. Certificates for shares will
not be issued except if you request them in writing. Certificates for fractional
shares, however, will not be issued.

24
<PAGE>

REDEEMING SHARES
- --------------------------------------------------------------------------------

You may redeem shares of each Portfolio by mail, or, if authorized, by telephone
at no charge. The value of shares redeemed may be more or less than the purchase
price, depending on the NAV at the time of redemption.

BY MAIL

Each Portfolio will redeem shares at the NAV 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. 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 Client Services for further details; and

(d) Other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianship, corporations, pension and profit sharing
plans and other organizations.

BY TELEPHONE

If you have authorized the Telephone Redemption Option on the Account
Registration Form, you may request a redemption of shares by calling Client
Services at 1-800-354-8185 and requesting that the redemption proceeds be mailed
or wired to you. You cannot redeem shares by telephone if you hold share
certificates for those shares.

BY FACSIMILE

Written requests in good order for redemptions, exchanges and transfers may be
forwarded to the Fund via facsimile at (610) 940-5284. If you make a request via
facsimile, you must call Client Services to ensure that the Fund properly
received your instructions. The original request must be promptly mailed to MAS
Funds, c/o Miller Anderson & Sherrerd, LLP, One Tower Bridge, West Conshohocken,
PA 19428-0868.

We will ordinarily pay redemption proceeds within three business days after
receipt of your request. We 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 or under any emergency circumstances.

In certain cases, we may determine that it is in the best interest of other
shareholders not to pay redemption proceeds in cash. We may pay you partly or
entirely by distributing to you readily marketable securities held by the
portfolio from which you are redeeming. You may incur brokerage charges when you
sell those securities.

25
<PAGE>

VALUATION OF SHARES
- --------------------------------------------------------------------------------

We determine the NAV of the following portfolios at the following times on each
day the portfolio(s) is open for business:

[] Equity Portfolios as of the close of the NYSE (normally 4:00 p.m.
Eastern Time).

[] Fixed Income Portfolios as of one hour after the close of the bond markets
(normally 4:00 p.m. Eastern Time).

[] Balanced and Multi-Asset-Class Portfolios as of the later of the close of
the NYSE or one hour after the close of the bond markets (normally 4:00 p.m.
Eastern Time).

Each Portfolio values its securities at market value. When no quotations are
readily available for securities or when the value of securities has been
materially affected by events occurring after the close of the market, we will
determine the value for those securities in good faith at fair value using
methods approved by the Board of Trustees.

The NAV of Adviser Class Shares may differ from that of other classes because of
class-specific expenses that each class may pay, the distribution fees charged
to Adviser Class Shares and the shareholder servicing fees charged to Investment
Class Shares.

The Fund is closed for business on weekends and the following holidays: New
Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The value
of certain portfolio securities may change on a day when you can't purchase or
redeem shares because some portfolios invest in foreign securities that trade on
days when the Fund is closed.

GENERAL SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

EXCHANGE PRIVILEGE

You may exchange each Portfolio's Adviser Class Shares for Adviser Class Shares
of the Fund's other Portfolios based on their respective NAVs. The exchange
privilege is only available with respect to Portfolios offering Adviser Class
Shares that are qualified for sale in your state of residence. We charge no fee
for exchanges. You should send exchange requests to MAS Funds, c/o Miller
Anderson & Sherrerd, LLP, One Tower Bridge, West Conshohocken, PA 19428-0868, or
by facsimile with a follow-up phone call. Exchange requests can also be made by
telephone, provided the telephone redemption option has been authorized. We
reserve the right to change the terms or conditions of the exchange privilege
upon sixty days' notice.

Frequent trading by shareholders can disrupt management of a Portfolio and raise
its expenses. Therefore, we may not accept any request for an exchange when we
think the exchange privilege is being used as a tool for market timing, and we
may bar a shareholder who trades excessively from making further purchases for
an indefinite period.

26
<PAGE>

GENERAL SHAREHOLDER INFORMATION (Continued)
- --------------------------------------------------------------------------------

DIVIDENDS & DISTRIBUTIONS

The Portfolios normally distribute substantially all of their net investment
income to shareholders& Distributionsas follows:

PORTFOLIO QUARTERLY ANNUALLY
- --------------------------------------------------------------------------------
Equity o
- --------------------------------------------------------------------------------
Mid Cap Growth o
- --------------------------------------------------------------------------------
Mid Cap Value o
- --------------------------------------------------------------------------------
Small Cap Value o
- --------------------------------------------------------------------------------
Value o
- --------------------------------------------------------------------------------
Domestic Fixed Income o
- --------------------------------------------------------------------------------
Fixed Income o
- --------------------------------------------------------------------------------
High Yield o
- --------------------------------------------------------------------------------
Balanced o
- --------------------------------------------------------------------------------
Multi-Asset-Class o

If any net gains are realized from the sale of underlying securities, the
portfolios normally distribute the gains with the last distributions for the
calendar year. All dividends and distributions are automatically paid in
additional shares of the portfolio unless you elect otherwise. If you want to
change how your dividends are paid you must notify MAS Funds in writing.

TAXES

Income dividends you receive will be taxable as ordinary income, whether you
receive them 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 such portfolios from
U.S. corporations. Capital gains distributions may be taxable at different rates
depending on the length of time the Fund holds its assets.

Investment income received by the Portfolios from sources within foreign
countries may be subject to foreign income taxes. The Portfolios may be able to
pass through to you for foreign tax credit purposes the amount of foreign income
taxes that they paid.

Distributions paid in January but declared by a portfolio in October, November
or December of the previous year are taxable to you in the previous year.

Exchanges and redemptions of shares in a Portfolio are taxable events.

27
<PAGE>
FUND MANAGEMENT
- --------------------------------------------------------------------------------

ADVISER

The Investment Adviser to the Fund, Miller Anderson & Sherrerd, LLP ("MAS" or
the "Adviser"), is a Pennsylvania limited liability partnership founded in 1969.
The Adviser is wholly owned by indirect subsidiaries of Morgan Stanley Dean
Witter & Co. (MSDW), and is a division of Morgan Stanley Dean Witter Investment
Management. The Adviser is located at One Tower Bridge, West Conshohocken, PA
19428-0868. The Adviser provides investment advisory services to employee
benefit plans, endowment funds, foundations and other institutional investors.
As of December 31, 1998, Morgan Stanley Dean Witter Investment Management had in
excess of $163 billion in assets under management.

The Adviser makes investment decisions for the Fund's portfolios and places each
portfolio's purchase and sales orders. Each portfolio, in turn, pays the Adviser
an annual advisory fee calculated by applying a quarterly rate. The following
table shows the Adviser's annual contractual and actual rates of compensation
for the Fund's 1998 fiscal year.

CONTRACTUAL FY 1998
COMPENSATION ACTUAL
RATE COMPENSATION RATE
---------------------------------
Equity Portfolio .500 .500
- --------------------------------------------------------------------------------
Mid Cap Growth Portfolio .500 .500
- --------------------------------------------------------------------------------
Mid Cap Value Portfolio .750 .750
- --------------------------------------------------------------------------------
Small Cap Value Portfolio .750 .750
- --------------------------------------------------------------------------------
Value Portfolio .500 .500
- --------------------------------------------------------------------------------
Domestic Fixed Income Portfolio* .375 .361
- --------------------------------------------------------------------------------
Fixed Income Portfolio .375 .375
- --------------------------------------------------------------------------------
High Yield Portfolio .375 .375
- --------------------------------------------------------------------------------
Balanced Portfolio .450 .450
- --------------------------------------------------------------------------------
Multi-Asset-Class Portfolio* .650 .608

* The Adviser is voluntarily waiving a portion of its fee and/or reimbursing
certain expenses for the Domestic Fixed Income Portfolio and the
Multi-Asset-Class Portfolio to keep Total Operating Expenses from exceeding
.750% and 1.030%, respectively.

PORTFOLIO MANAGERS

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 Fund's portfolios is as follows:

ROBERT E. ANGEVINE, Principal, MSDW, joined Morgan Stanley Dean Witter
Investment Management Inc. in 1988 as a Fixed Income Portfolio Manager. He
joined the management team for the High Yield Portfolio in 1996.

ARDEN C. ARMSTRONG, Managing Director, MSDW, joined MAS in 1986. She joined the
management team for the Mid Cap Growth Portfolio in 1990 and the Equity
Portfolio in 1994.

28
<PAGE>
FUND MANAGEMENT (Continued)
- --------------------------------------------------------------------------------

RICHARD M. BEHLER, Principal, MSDW, joined MAS in 1995. He served as a Portfolio
Manager from 1992 through 1995 for Moore Capital Management. He joined the
management team for the Value Portfolio in 1996.

THOMAS L. BENNETT, Managing Director, MSDW, joined MAS in 1984. He joined the
management team for the Fixed Income Portfolio in 1984, the Domestic Fixed
Income Portfolio in 1987, the High Yield Portfolio in 1985, the Fixed Income II
Portfolio in 1990, the Special Purpose Fixed Income and Balanced Portfolios in
1992, the Multi-Asset-Class Portfolio in 1994, the Balanced Plus Portfolio in
1996 and the Multi-Market Fixed Income Portfolio in 1997.

BARTON M. BIGGS, Managing Director of MSDW since 1975, Chairman of Morgan
Stanley Dean Witter Investment Management Inc. since 1980 and a director of
Morgan Stanley Group, Inc. He is also a director and chairman of various
registered investment companies to which Morgan Stanley Dean Witter Investment
Management, Inc. and certain of its affiliates provide investment advisory
services. He joined the management teams for the Balanced, Balanced Plus and
Multi-Asset Class Portfolios in 1999.

DAVID P. CHU, Vice President, MSDW, joined MAS in 1998. He served as Senior
Equity Analyst from 1992 to 1997 and as Co-Portfolio Manager in 1997 for
NationsBank and its subsidiary, TradeStreet Investment Associates. He joined the
management team for the Mid Cap Growth Portfolio in 1998.

BRADLEY S. DANIELS, Principal, MSDW, joined MAS in 1985. He joined the
management team for the Small Cap Value Portfolio in 1986 and the Mid Cap Value
Portfolio in 1994.

KENNETH B. DUNN, Managing Director, MSDW, joined MAS in 1987. He joined the
management team 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 and the Multi-Market Fixed
Income Portfolio in 1997.

STEPHEN F. ESSER, Managing Director, MSDW, joined MAS in 1988. He joined the
management team for the High Yield Portfolio in 1989 and the Multi-Market Fixed
Income Portfolio in 1997.

WILLIAM B. GERLACH, Principal, MSDW, joined MAS in 1991. He served as a Research
Associate from 1991 to 1996 and has served as an Equity Portfolio Manager since
1996. He joined the management team for the Small Cap Value and Mid Cap Value
Portfolios in 1996.

J. DAVID GERMANY, Managing Director, MSDW, joined MAS in 1991. He joined the
management team for 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.

29
<PAGE>
FUND MANAGEMENT (Continued)
- --------------------------------------------------------------------------------
JAMES J. JOLINGER, Principal, MSDW, joined MAS in 1994. He served as an Equity
Analyst from 1994 to 1997, and has served as an Equity Portfolio Manager and
Director of Research since 1997. He joined the management team for the Equity
Portfolio in 1997.

NICHOLAS J. KOVICH, Managing Director, MSDW, joined MAS in 1988. He joined the
management team for the Equity Portfolio in 1994 and the Value Portfolio in
1997.

BRIAN KRAMP, Vice President, Morgan Stanley, joined MAS in 1997. He served as
Analyst/Portfolio Manager for Meridian Asset Management and its successor,
CoreStates Investment Advisors from 1985 to 1997. He joined the management team
for the Equity Portfolio in 1998.

CHRIS LEAVY, Vice President, MSDW, joined MAS in 1997. He served as a Portfolio
Manager for Capitoline Investment Services from 1995 to 1997; a Portfolio
Manager for Premier Trust Company from 1994 to 1995; and as a Research Analyst
for Leavy Investment Management from 1993 to 1994. He joined the management team
for the Mid Cap Value and Small Cap Value Portfolio in 1998.

ROBERT J. MARCIN, Managing Director, MSDW, joined MAS in 1988. He joined the
management team for the Value Portfolio in 1990 and the Equity Portfolio in
1994.

GARY G. SCHLARBAUM, Managing Director, MSDW; Director, MAS Fund Distribution,
Inc.; joined MAS in 1987. He joined the management team for the Equity and Small
Cap Value Portfolios in 1987, the Balanced Portfolio in 1992 and the
Multi-Asset-Class and Mid Cap Value Portfolios in 1994.

ANN D. THIVIERGE, Managing Director, MSDW, joined Morgan Stanley Dean Witter
Investment Management Inc. in 1986, and has been a member of its asset
allocation committee since 1991. She joined the management team for the
Multi-Asset-Class Portfolio in 1999.

HORACIO A. VALEIRAS, Managing Director, MSDW, joined MAS in 1992. He joined the
management team for the International Equity Portfolio in 1992, the Emerging
Markets Value Portfolio in 1993, the Multi-Asset-Class Portfolio in 1994 and the
Balanced Portfolio in 1996.

RICHARD B. WORLEY, Managing Director, MSDW, joined MAS in 1978. He joined the
management team for the Fixed Income Portfolio in 1984, the Domestic Fixed
Income Portfolio in 1987, the Fixed Income II Portfolio 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. Mr. Worley has also served as the President of Morgan Stanley
Dean Witter Investment Management since 1998.

30
<PAGE>
FUND MANAGEMENT (Continued)
- --------------------------------------------------------------------------------

DISTRIBUTOR

Shares of the Fund are distributed exclusively through MAS Fund
Distribution, Inc., a wholly-owned subsidiary of the Adviser.

DISTRIBUTION PLAN
- --------------------------------------------------------------------------------

The Fund has adopted a Plan of Distribution for each Portfolio's Adviser Class
Shares pursuant to Rule 12b-1 under the 1940 Act (the "Plan"). Under the Plan,
each Portfolio pays the Distributor a monthly distribution fee at an annual rate
of 0.25% of the Portfolio's average daily net assets attributable to Adviser
Class Shares. The Distributor may keep any or all of this fee as compensation
for its services in connection with distributing Adviser Class Shares or
providing shareholder or account maintenance services. The Distributor also may
use this fee to pay financial intermediaries, plan fiduciaries, and investment
professionals, including the Adviser, for providing distribution support
services, and/or account maintenance services to shareholders (including, when
applicable, any underlying beneficial owners) of Adviser Class Shares.

YEAR 2000 DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------

The management and distribution services that the Adviser and Distributor
provide to the Fund 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 some other date, 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 Distributor
have been actively working on necessary changes 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 Distributor 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 portfolios' investments may be
adversely affected.

31
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following financial highlights tables are intended to help you understand
the financial performance of each Portfolio for the past five years or, if less
than five years, the life of the Portfolio or Class. The total returns in the
tables represent the rate that an investor would have earned (or lost) on an
investment in each Portfolio (assuming reinvestment of all dividends and
distributions). This information has been extracted from the Fund's financial
statements which were audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are incorporated by reference into the
Fund's Statement of Additional Information and are included in the Fund's
September 30, 1998 Annual Report to Shareholders.

The Adviser Class Shares of the Small Cap Value, Domestic Fixed Income and
Multi-Asset-Class Portfolios had not commenced operations as of September 30,
1998, therefore Institutional Class Share information is provided to investors
for informational purposes only and should be referred to as a historical guide
to a portfolio's operations and expenses. Past performance does not indicate
future results.

Net Gains Dividend
Net Asset or Losses Distributions Capital Gain Net Asset
Value- Net on Securities Total from (net Distributions Value-
Begining Investment (realized and investment investment (realized net Other Total End of
of Period Income unrealized) Activities income) capital gains) Distibutions Distibutions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 1/16/98)
1998 $20.50 $0.10 ($0.09) $0.01 ($0.09) -- -- ($0.09) $20.42
MID CAP GROWTH PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 01/31/97)
1998 $21.81 ($0.03) $0.20 $0.17 -- ($3.43) -- ($3.43) $18.55
1997 17.04 (0.02) 4.79 4.77 -- -- -- -- 21.81
MID CAP VALUE PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 7/17/98)
1998 $21.82 $0.01 ($3.71) ($3.70) -- -- -- -- $18.12
SMALL CAP VALUE PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 7/01/86)
1998 $24.97 $0.16 ($4.33) ($4.17) ($0.14) ($3.29) -- ($3.43) $17.37
1997 19.64 0.15 8.39 8.54 (0.11) (3.10) -- (3.21) 24.97
1996 18.28 0.18 3.62 3.80 (0.20) (2.24) -- (2.44) 19.64
1995 17.67 0.19 2.49 2.68 (0.14) (1.93) -- (2.07) 18.28
1994 17.55 0.16 1.14 1.30 (0.24) (0.94) -- (1.18) 17.67
VALUE PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 07/17/96)
1998 $20.35 $0.29 ($3.38) ($3.09) ($0.32) ($1.81) -- ($2.13) $15.13
1997+++ 15.61 0.30 5.74 6.04 (0.27) (1.03) -- (1.30) 20.35
1996 14.11 0.01 1.49 1.50 -- -- -- -- 15.61
DOMESTIC FIXED INCOME PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 9/29/87)
1998 $11.27 $0.73 $0.32 $1.05 ($0.79) ($0.13) -- ($0.92) $11.40
1997 10.89 0.74 0.33 1.07 (0.67) (0.02) -- (0.69) 11.27
1996 11.03 0.56 (0.09) 0.47 (0.57) -- (0.04)# (0.61) 10.89
1995 9.87 0.52 0.87 1.39 (0.23) -- -- (0.23) 11.03
1994 11.99 0.94 (1.23) (0.29) (0.95) (0.73) (0.15)# (1.83) 9.87
</TABLE>
[RESTUBBED]
<TABLE>
<CAPTION>
Net Assets- Ratio of Ratio of
End of Expenses Net Income Portfolio
Total Period to Average to Average Turnover
Return** (thousands) Net Assets+ Net Assets Rate
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EQUITY PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 1/16/98)
1998 (0.02%) $373 0.88%* 0.65%* 77%
MID CAP GROWTH PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 01/31/97)
1998 1.79% $51,058 0.87% (0.25%) 172%
1997 27.99 1,200 0.88* (0.41)* 134
MID CAP VALUE PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 7/17/98)
1998 (16.96%) $4,919 1.24%* 0.25%* 213%
SMALL CAP VALUE PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 7/01/86)
1998 (18.34%) $716,729 0.86% 0.71% 163%
1997 49.81 897,396 0.86 0.70 107
1996 24.00 585,457 0.86 0.99 145
1995 18.39 430,368 0.87 1.20 119
1994 8.04 308,156 0.88 0.91 162
VALUE PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 07/17/96)
1998 (16.66%) $325,272 0.85% 1.52% 56%
1997+++ 40.87 201,253 0.90 1.63 46
1996 10.63 15,493 0.86* 1.66* 53
DOMESTIC FIXED INCOME PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 9/29/87)
1998 9.83% $76,042 0.51%++ 6.32% 145%
1997 10.20 96,954 0.51++ 6.48 217
1996 4.41 95,362 0.52++ 5.73 168
1995 14.33 36,147 0.51++ 6.80 313
1994 (2.87) 36,521 0.50++ 7.65 78
</TABLE>

32
<PAGE>

FINANCIAL HIGHLIGHTS (Continued)

<TABLE>
<CAPTION>
Net Gains Dividend
Net Asset or Losses Distributions Capital Gain Net Asset
Value- Net on Securities Total from (net Distributions Value-
Begining Investment (realized and Investment investment (realized net Other Total End of
of Period Income unrealized) Activities income) capital gains) Distibutions Distibutions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED INCOME PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 11/07/96)
1998+++ $12.22 $0.75 $0.14 $0.89 ($0.71) ($0.17) -- ($0.88) $12.23
1997+++ 12.04 0.70 0.20 0.90 (0.59) (0.13) -- (0.72) 12.22
HIGH YIELD PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 01/31/97)
1998+++ $10.15 $0.83 ($0.93) ($0.10) ($0.80) ($0.26) -- ($1.06) $8.99
1997+++ 9.39 0.56 0.59 1.15 (0.39) -- -- (0.39) 10.15
BALANCED PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 11/01/96)
1998+++ $15.30 $0.44 ($0.12) $0.32 ($0.47) ($1.72) -- ($2.19) $13.43
1997 14.05 0.42 2.60 3.02 (0.38) (1.39) -- (1.77) 15.30
MULTI-ASSET-CLASS PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 7/29/94)
1998+++ $13.64 $0.38 ($0.45) ($0.07) ($0.34) ($1.49) -- ($1.83) $11.74
1997+++ 12.28 0.38 2.57 2.95 (0.51) (1.08) -- (1.59) 13.64
1996 11.34 0.46 1.05 1.51 (0.42) (0.15) -- (0.57) 12.28
1995 9.97 0.44 1.33 1.77 (0.40) -- -- (0.40) 11.34
1994 10.00 0.07 (0.10) (0.03) -- -- -- -- 9.97
</TABLE>
[RESTUBBED]
<TABLE>
<CAPTION>
Net Assets- Ratio of Ratio of
End of Expenses Net Income Portfolio
Total Period to Average to Average Turnover
Return** (thousands) Net Assets+ Net Assets Rate
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIXED INCOME PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 11/07/96)
1998+++ 7.63% $131,303 0.73% 6.22% 121%
1997+++ 7.79 76,683 0.77*++ 6.50* 179
HIGH YIELD PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 01/31/97)
1998+++ (1.37%) $10,236 0.75% 8.55% 75%
1997+++ 12.63 4,327 0.78* 8.68* 96
BALANCED PORTFOLIO (COMMENCEMENT OF ADVISER CLASS OPERATIONS 11/01/96)
1998+++ 2.49% $24,654 0.84% 3.11% 100%
1997 23.82 27,366 0.85*++ 3.24* 145
MULTI-ASSET-CLASS PORTFOLIO (COMMENCEMENT OF INSTITUTIONAL CLASS OPERATIONS 7/29/94)
1998+++ (0.46%) $165,039 0.78%++ 2.98% 107%
1997+++ 26.50 173,155 0.74++ 3.07 141
1996 13.75 29,558 0.58++ 3.82 122
1995 18.28 96,839 0.58++ 4.56 112
1994 (0.30) 51,877 0.58*++ 4.39* 20
</TABLE>

33
<PAGE>

FINANCIAL HIGHLIGHTS (Continued)
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL HIGHLIGHTS

*Annualized
**Total return figures for partial years are not annualized.
#Represents distribution in excess of net realized gains.
+For the respective periods ended September 30, the Ratio of Expenses to
Average Net Assets for the following portfolios 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 1998
Equity -- -- -- 0.82*
Mid Cap Value -- -- -- 1.17*
Mid Cap Growth -- -- 0.86* 0.84
Value -- 0.85* 0.89 0.84
Domestic Fixed Income 0.50 0.50 0.50 0.50
Fixed Income -- -- 0.76* 0.72
High Yield -- -- 0.76* 0.73
Balanced -- -- 0.84* 0.82
Multi-Asset-Class 0.58 0.58 0.74 0.78
Small Cap Value 0.87 0.86 0.86 0.86

++ For the periods indicated, the Adviser voluntarily agreed to waive its
advisory fees and/or reimburse certain expenses to the extent necessary in
order to keep total operating expenses actually deducted from portfolio
assets for the respective portfolios from exceeding voluntary expense
limitations. For the respective periods ended September 30, the voluntarily
waived and reimbursed expenses totaled the below listed amounts.

VOLUNTARILY WAIVED AND/OR REIMBURSED EXPENSES FOR:
PORTFOLIO 1994 1995 1996 1997 1998
Domestic Fixed Income 0.03% 0.09 0.01 0.01 0.01
Fixed Income -- -- -- 0.01* --
Balanced -- -- -- 0.03* --
Multi-Asset-Class 0.26* 0.14 0.08 0.08 0.04

+++Per share amounts for the years ended September 30, 1997 and September 30,
1998, are based on average shares outstanding.

34
<PAGE>

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<PAGE>

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<PAGE>

- ----- MAS ----------------------------------- ADVISER CLASS PROSPECTUS ----
---------
MAS FUNDS

JANUARY 31, 1999
(AS REVISED MARCH 24, 1999)

TRUSTEES OF THE FUND
--------------------

Thomas L. Bennett, Chairman Thomas L. Gerrity
Joseph P. Healey Joseph J. Kearns
C. Oscar Morong, Jr. Vincent R. McLean

OFFICERS OF THE FUND
--------------------

James D. Schmid, President John H. Grady, Jr., Secretary
Lorraine Truten, Vice President Richard J. Shoch, Compliance Officer
James A. Gallo, Treasurer

In addition to this prospectus, the Fund has a Statement of Additional
Information ("SAI"), dated January 31, 1999, which contains additional, more
detailed information about the Fund and the Portfolios. The SAI is incorporated
by reference into this prospectus and, therefore, legally forms a part of this
prospectus.

The Fund publishes annual and semi-annual reports ("Shareholder Reports") which
contain additional information about each Portfolio's investments. In the Fund's
annual report, you will find a discussion of the market conditions and the
investment strategies that significantly affected each Portfolio's performance
during the last fiscal year.

You may obtain the SAI and Shareholder Reports without charge by contacting the
Fund at the toll-free number below. If you purchased shares through a financial
intermediary, you may also obtain these documents, without charge, by contacting
your financial intermediary.

Information about the Fund, including the SAI and Shareholder Reports, may be
obtained from the Securities and Exchange Commission in any of the following
ways. (1) In person: you may review and copy documents in the Commission's
Public Reference Room in Washington D.C. (for information call 1-800-SEC-0330);
(2) On-line: you may retrieve information from the Commission's web site at
http://www.sec.gov; or (3) By mail: you may request documents, upon payment of a
duplicating fee, by writing to Securities and Exchange Commission, Public
Reference Section, Washington, D.C. 20549-6009. To aid you in obtaining this
information, the Fund's Investment Company Act registration number is 811-03980.

MAS FUNDS

ONE TOWER BRIDGE, WEST CONSHOHOCKEN, PA 19428-0868.
FOR SHAREHOLDER INQUIRIES, CALL CLIENT SERVICES AT 1-800-354-8185.
PRICES AND INVESTMENT RESULTS ARE AVAILABLE AT 1-800-522-1525.

<PAGE>

- ----- MAS -------------------------------------------------------------------
---------
MAS FUNDS

- ------------------------
Adviser Class prospectus
January 31, 1999
(As Revised March 24, 1999)
- ------------------------

MORGAN STANLEY DEAN WITTER
- --------------------------
INVESTMENT MANAGEMENT

ONE TOWER BRIDGE O WEST CONSHOHOCKEN, PA 19428 O 800-354-8185