MAS FUNDS /MA/, 497, 2000-10-06

MAS FUNDS /MA/
497, 2000-10-06

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<PAGE>

[LOGO OF MAS FUNDS] ADVISER CLASS PROSPECTUS

January 31, 2000
(As Revised October 6, 2000)
------------------------------------------------------------------------------
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 29 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 . WEST
CONSHOHOCKEN, PA 19428
<PAGE>

TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT SUMMARY.......................................................... 1

Equity Portfolios

Equity.................................................................... 2

Mid Cap Growth............................................................ 3

Mid Cap Value............................................................. 5

Small Cap Value........................................................... 7

Value..................................................................... 9

Fixed Income Portfolios

Domestic Fixed Income..................................................... 10

Fixed Income.............................................................. 12

High Yield................................................................ 14

Balanced Portfolios

Balanced.................................................................. 16

Multi-Asset-Class......................................................... 18

FEES AND EXPENSES OF THE PORTFOLIOS......................................... 20

INVESTMENT STRATEGIES AND RELATED RISKS..................................... 22

PURCHASING SHARES........................................................... 27

REDEEMING SHARES............................................................ 28

VALUATION OF SHARES......................................................... 29

GENERAL SHAREHOLDER INFORMATION............................................. 29

FUND MANAGEMENT............................................................. 30

DISTRIBUTION PLAN........................................................... 34

FINANCIAL HIGHLIGHTS........................................................ 35
</TABLE>
<PAGE>

INVESTMENT SUMMARY

This section explains each Portfolio's:

[_] Investment Objective
[_] Principal Investment Strategy
[_] Principal Risks

Investor Suitability

[_] The Portfolios may be suitable for long-term investors who can accept the
risks of investing in the stock and bond markets.

[_] 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.

[_] 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 of large U.S. companies. The
Portfolio invests, to a limited extent, in stocks of small companies and foreign
equity securities.

Process

The Adviser assigns each member of the portfolio management team to specific
"value" or "growth" sectors. The Portfolio's overall sector allocation is driven
by bottom-up stock selection. The Adviser seeks to diversify the Portfolio's
investments across market sectors, and to obtain the best values within each
sector. In determining whether securities should be sold, the Adviser considers
factors such as deteriorating fundamentals and relative valuation.

Generally at least 65% of total Portfolio
assets invested in common stocks
-------------------------------------------
Equity capitalization generally greater
than $5 billion
-------------------------------------------
Benchmark: S&P 500 Index
-------------------------------------------
Ticker Symbol: Not Available
-------------------------------------------
CUSIP No.: 552-913-345

PORTFOLIO MANAGERS

Arden C. Armstrong, Steven Epstein,
James J. Jolinger, Brian Kramp, Robert J.
Marcin, Eric F. Scharpf and Gary G.
Schlarbaum

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

Foreign securities may involve greater risks than those issued by U.S. companies
or the U.S. government. Economic, political and other events unique to a country
or region will affect those markets and their issuers, but may not affect the
U.S. market or similar U.S. issuers. Some of the Portfolio's investments 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.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

[CHART]

EQUITY PORTFOLIO
Commenced operations on January 16, 1998

1999 28.39%

HIGH (QUARTER) LOW (QUARTER)
Quarter Ended 12/31/99 Quarter Ended 9/30/99
19.99% -9.64%

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

<TABLE>
<CAPTION>
EQUITY S&P 500
PORTFOLIO INDEX
--------------------------------------------------------------------------------------------------
<S> <C> <C>
One Year 28.39 21.04
--------------------------------------------------------------------------------------------------
Since Inception
1/16/98 25.41 25.92
</TABLE>

The bar chart and table above show the Portfolio's Adviser Class Shares perfor-
mance year-by-year, best and worst performance for a quarter, and average an-
nual 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 in-
vesting 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 of companies with
capitalizations in the range of companies included in the S&P MidCap 400 Index.
The Adviser focuses on companies that demonstrate one or more of the following
characteristics: high earnings growth rates, growth stability, rising
profitability and the ability to produce earnings that consistently beat market
expectations. The Portfolio may purchase shares issued as part of, or a short
period after, companies' initial public offerings ("IPOs"), and may at times
dispose of those shares shortly after their acquisition. The Portfolio may
invest, to a limited extent, in for-eign equity securities.

Generally 65% of total Portfolio assets
invested in common stocks 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, David P.
Chu and Steven B. Chulik

Process

The Adviser uses a quantitative screen to sort stocks based on proprietary
revisions to analysts' earnings predictions. The Adviser then researches those
companies with the most attractive earnings revisions, and evaluates their
market valuations to eliminate the most overvalued stocks. The Portfolio's
overall sector allocation is driven by bottom-up stock selection. The Adviser
follows a strict sell discipline, selling stocks when their earnings revision
scores fall to unacceptable levels, when research reveals unfavorable trends or
when their market valuations exceed levels that are reasonable in relation to
their growth prospects.

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

The prices of equity securities rise and fall in response to events that affect
entire financial markets or industries, and events that affect a particular
issuer. Investments in mid cap 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. Some 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.

The Portfolio's purchase of shares issued in IPOs exposes it to the risks
associated with companies that have little

[CHART]

MID CAP GROWTH PORTFOLIO

Commenced operations on January 31, 1997

1998 37.00%
1999 67.89%

HIGH (QUARTER) LOW (QUARTER)
Quarter Ended 12/31/99 Quarter Ended 9/30/98
39.22% -19.21%

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

MID CAP
GROWTH S&P MIDCAP
PORTFOLIO 400 INDEX
-------------------------------------------------------------------------------
One Year 67.89 14.72
-------------------------------------------------------------------------------
Since Inception
1/31/97 45.31 20.97

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 GROWTH PORTFOLIO (Continued)
operating history as public companies, as well as to the risks inherent in
those sectors of the market where these new issuers operate. The market for IPO
issuers has been volatile, and share prices of newly-public companies in the
technology sector have fluctuated in significant amounts over short periods of
time. In addition, the Adviser cannot guarantee continued access to IPOs.

Foreign securities may involve greater risks than those issued by U.S.
companies or the U.S. government. Economic, political and other events unique
to a country or region will affect those markets and their issuers, but may not
affect the U.S. market or similar U.S. issuers. Some of the Portfolio's
investments 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.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

4
<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 of companies with
capitalizations in the range of companies included in the S&P MidCap 400 Index.
The Portfolio purchases stocks that typically do not pay dividends. The
Portfolio may invest, to a limited extent, in foreign equity securities.

Process

The Adviser analyzes securities to identify stocks that are undervalued, and
measures the relative attractiveness of the Portfolio's current holdings against
potential purchases. Sector weightings normally are kept within 5% of those of
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.

Generally at least 65% of total Portfolio
assets invested in common stocks 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: MMCAX
-------------------------------------------
CUSIP No.: 552-913-337

PORTFOLIO MANAGERS

Bradley S. Daniels, William B. Gerlach,
Vitaly V. Korchevsky and Gary G.
Schlarbaum

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

The prices of equity securities rise and fall in response to events that affect
entire financial markets or industries, and to events that affect a particular
issuer. Investments in mid cap 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. Some 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.

[CHART]

MID CAP VALUE PORTFOLIO
Commenced operations on July 17, 1998

1999 19.56%

HIGH (QUARTER) LOW (QUARTER)
Quarter Ended 6/30/99 Quarter Ended 9/30/99
17.65% -6.82%

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

<TABLE>
<CAPTION>
MID CAP VALUE S&P MIDCAP
PORTFOLIO 400 INDEX
-----------------------------------------------------------------------------------------------
<S> <C> <C>
One Year 19.56 14.72
-----------------------------------------------------------------------------------------------
Since Inception
7/17/98 14.30 13.83
</TABLE>

5
<PAGE>

MID CAP VALUE PORTFOLIO (Continued)
those currencies compared to the U.S. dollar may affect the value of the
Portfolio's investments.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

6
<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 of companies with equity
capitalizations in the range of companies included in the Russell 2000 Index.
The Portfolio purchases stocks that typically do not pay dividends. The
Portfolio may invest, to a limited extent, in foreign equity securities.

Process

The Adviser analyzes securities to identify stocks that are undervalued, and
measures the relative attractiveness of the Portfolio's current holdings against
potential purchases. Sector weightings normally are kept within 5% of those of
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.

Generally at least 65% of total Portfolio
assets invested in common stocks 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: MCVAX
-------------------------------------------
CUSIP No.: 552-913-261

PORTFOLIO MANAGERS

Bradley S. Daniels, William B. Gerlach,
Vitaly V. Korchevsky and Gary G.
Schlarbaum

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

The prices of equity securities 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. Some market
conditions may favor value stocks or stocks of small companies, while other
conditions may favor growth stocks or stocks of larger companies.

[CHART]

SMALL CAP VALUE PORTFOLIO
Commenced operations on July 1, 1986

1990 -16.55%
1991 63.78%
1992 22.77%
1993 21.16%
1994 2.18%
1995 21.04%
1996 35.15%
1997 30.63%
1998 -1.42%
1999 26.02%

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

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

<TABLE>
<CAPTION>
SMALL CAP RUSSELL 2000
VALUE PORTFOLIO INDEX
---------------------------------------------------------------------------------------------
<S> <C> <C>
One Year 26.02 21.26
---------------------------------------------------------------------------------------------
Five Years 21.56 16.69
---------------------------------------------------------------------------------------------
Ten Years 18.62 13.40
---------------------------------------------------------------------------------------------
Since Inception
7/1/86 14.15 11.01
</TABLE>
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.

7
<PAGE>

SMALL CAP VALUE PORTFOLIO (Continued)
Some of the Portfolio's investments 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.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

8
<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 of companies with equity
capitalizations greater than $2.5 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. The Portfolio may purchase stocks that do not pay dividends.
The Portfolio may invest, to a limited extent, in foreign equity securities.

Generally at least 65% of total Portfolio
assets invested in common stocks
-------------------------------------------
Equity capitalization generally greater
than $2.5 billion
-------------------------------------------
Focus on value securities
-------------------------------------------
Benchmark: S&P 500 Index
-------------------------------------------
Ticker Symbol: MPVAX
-------------------------------------------
CUSIP No.: 552-913-451

PORTFOLIO MANAGERS

Richard M. Behler and Robert J. Marcin

Process

The Adviser selects investments through a three part analysis. The Adviser
identifies stocks with low price/earnings ratios. The Adviser then applies
fundamental analysis and its investment judgment to determine which of those
securities are the most attractive. Finally, the Adviser 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 Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

The prices of equity securities 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. Some market
conditions may favor value stocks, while other conditions may favor growth
stocks.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

[CHART]

VALUE PORTFOLIO

Commenced operations on July 17, 1996

1997 22.99%
1998 -3.11%
1999 -2.34%

HIGH (QUARTER) LOW (QUARTER)
Quarter Ended 9/30/99 Quarter Ended 9/30/98
15.24% -19.10%

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

VALUE PORTFOLIO S&P 500 INDEX
--------------------------------------------------------------------------------
One Year -2.34 21.04
--------------------------------------------------------------------------------
Since Inception
7/17/96 11.15 29.57

9
<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 in a diversified mix of dollar denominated fixed income
securities, particularly U.S. Government, corporate and mortgage securities. The
Portfolio will ordinarily maintain an average weighted maturity in excess of
five years. Although there is no minimum or maximum maturity for any individual
security, the Adviser actively manages the interest rate risk of the Portfolio
within a range relative to the benchmark. The Portfolio invests exclusively in
securities issued by U.S.-based entities that carry an investment grade rating
at the time of purchase. The Adviser may use futures, swaps and other types of
derivatives in managing the Portfolio.

100% U.S. issuers
-----------------------------------------
Generally at least 65% of total
Portfolio assets invested in fixed
income securities
-----------------------------------------
At least 80% of fixed income securities
rated A or higher (or equivalent) at
time of purchase
-----------------------------------------
Up to 20% of fixed income securities
rated BBB (or equivalent) at time of
purchase
-----------------------------------------
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, Angelo G. Manioudakis
and Scott F. Richard

Process

The Adviser employs a value approach toward fixed income investing. The
Adviser's research teams identify relative attractiveness among corporate,
mortgage and U.S. Government securities. The Adviser relies upon value measures
to guide its decisions regarding sector and security selection, such as the
relative attractiveness of the extra yield offered by securities other than
those issued by the U.S. Treasury. The Adviser also measures various types of
risk, focusing on the level of real interest rates, the shape of the yield
curve, credit risk and prepayment risk. The Adviser's management team builds an
investment portfolio designed to take advantage of its judgment on these
factors, while balancing the overall risk of the Portfolio. The Adviser may sell
securities when it believes that expected risk-adjusted return is low compared
to other investment opportunities.

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

[CHART]

DOMESTIC FIXED INCOME PORTFOLIO
Commenced operations on September 29, 1987

1990 7.19%
1991 21.54%
1992 9.12%
1993 13.75%
1994 -3.89%
1995 18.85%
1996 3.89%
1997 9.62%
1998 7.23%
1999 -1.64%

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

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

<TABLE>
<CAPTION>
SALOMON
DOMESTIC FIXED BROAD INVESTMENT
INCOME PORTFOLIO GRADE INDEX
--------------------------------------------------------------------------------------------
<S> <C> <C>
One Year -1.64 -0.85
--------------------------------------------------------------------------------------------
Five Years 7.38 7.74
--------------------------------------------------------------------------------------------
Ten Years 8.30 7.75
--------------------------------------------------------------------------------------------
Since Inception
9/29/87 8.82 8.60
</TABLE>
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.

10
<PAGE>

DOMESTIC FIXED INCOME PORTFOLIO (Continued)

The Portfolio is subject to the risks of investing in fixed income securities.
The prices of fixed income securities respond to economic developments,
particularly interest rate changes and changes in the actual or perceived
creditworthiness of the issuer of the fixed income security. Securities with
longer durations are likely to be more sensitive to changes in interest rates,
generally making them more volatile than securities with shorter durations.
Lower rated fixed income securities have greater volatility because there is
less certainty that principal and interest payments will be made as scheduled.
Prices of fixed income securities generally will move in correlation to changes
in an issuer's credit rating.

Mortgage securities are subject to the risk that if interest rates decline,
borrowers may pay off their mortgages sooner than expected. The Portfolio's
return may be reduced if prepayments occur and the Portfolio has to reinvest at
lower interest rates. Prepayment rates can also shorten or extend the average
life of the Portfolio's mortgage securities.

The Portfolio is subject to the risks of using derivatives. A derivative
instrument may involve risks different from, or greater than, the risks of
investing directly in the underlying asset. A derivative instrument may be
illiquid and changes in its value may not correlate to changes in the value of
its underlying asset, which may magnify losses.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

11
<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 primarily in a diversified mix of dollar denominated
investment grade fixed income securities, particularly U.S. Government,
corporate and mortgage securities. The Portfolio ordinarily will maintain an
average weighted maturity in excess of five years. Although there is no minimum
or maximum maturity for any individual security, the Adviser actively manages
the interest rate risk of the Portfolio within a range relative to the
benchmark. The Portfolio may invest opportunistically in non-dollar denominated
securities and in below investment grade securities. The Adviser may use
futures, swaps and other types of derivatives in managing the Portfolio.

Generally at least 65% of total
Portfolio assets invested in fixed
income securities
-----------------------------------------
Average weighted maturity generally
greater than 5 years
-----------------------------------------
At least 80% investment grade securities
at time of purchase
-----------------------------------------
Up to 20% high yield securities at time
of purchase
-----------------------------------------
May invest over 50% in mortgage
securities
-----------------------------------------
Benchmark: Salomon
Broad
Investment Grade Index
-----------------------------------------
Ticker Symbol:
MFXAX
-----------------------------------------
CUSIP No: 552-913-444

PORTFOLIO MANAGERS

W. David Armstrong, Thomas L. Bennett,
Kenneth B. Dunn and Roberto M. Sella

Process

The Adviser employs a value approach toward fixed income investing. The
Adviser's research teams identify relative attractiveness among corporate,
mortgage and U.S. Government securities, and also may consider the relative
attractiveness of non-dollar denominated issues. The Adviser relies upon value
measures to guide its decisions regarding sector, security and country
selection, such as the relative attractiveness of the extra yield offered by
securities other than those issued by the U.S. Treasury. The Adviser also
measures various types of risk, focusing on the level of real interest rates,
the shape of the yield curve, credit risk, prepayment risk, country risk and
currency valuations. The Adviser's management team builds an investment
portfolio designed to take advantage of its judgment on these factors, while
balancing the overall risk of the Portfolio. The Adviser may sell securities
when it believes that expected risk-adjusted return is low compared to other
investment opportunities.

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

[CHART]

FIXED INCOME PORTFOLIO

Commenced operations on November 7, 1996

1997 9.34%
1998 6.63%
1999 -0.84%

HIGH (QUARTER) LOW (QUARTER)
Quarter Ended 6/30/97 Quarter Ended 6/30/99
3.98% -1.57%

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

FIXED INCOME SALOMON BROAD
PORTFOLIO INVESTMENT GRADE INDEX
--------------------------------------------------------------------------------
One Year -0.84 -0.85
--------------------------------------------------------------------------------
Since Inception
11/7/96 4.92 5.52

12
<PAGE>

FIXED INCOME PORTFOLIO (Continued)
The Portfolio is subject to the risks of investing in fixed income securities.
The prices of fixed income securities respond to economic developments,
particularly interest rate changes and changes in the actual or perceived
creditworthiness of the issuer of the fixed income security. Securities with
longer durations are likely to be more sensitive to changes in interest rates,
generally making them more volatile than securities with shorter durations.
Lower rated fixed income securities have greater volatility because there is
less certainty that principal and interest payments will be made as scheduled.
Prices of fixed income securities generally will move in correlation to changes
in an issuer's credit rating.

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 actual or perceived 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.

Foreign fixed income securities may involve greater risks than those issued by
U.S. companies or the U.S. government. Economic, political and other events
unique to a country or region will affect those markets and their issuers, but
may not affect the U.S. market or similar U.S. issuers. Some of the Portfolio's
investments 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.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

13
<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 investment grade fixed income
securities, including U.S. Government securities, corporate bonds and mortgage
securities. The Portfolio may invest to a limited extent in foreign fixed income
securities, including emerging market securities. The Adviser may 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.

Generally at least 65% of total
Portfolio assets invested in high yield
securities
---------------------------------------
Average weighted maturity generally
greater than 5 years
---------------------------------------
Benchmark: CS First Boston
High Yield Index
---------------------------------------
Ticker Symbol: MAHYX
---------------------------------------
CUSIP No.: 552-913-428

PORTFOLIO MANAGERS

Robert E. Angevine, Stephen F. Esser,
Gordon W. Loery and Deanna L. Loughnane

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

[CHART]

HIGH YIELD PORTFOLIO
Commenced operations on January 31, 1997

1998 2.83%
1999 7.61%

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

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

<TABLE>
<CAPTION>
CS FIRST
BOSTON SALOMON
HIGH YIELD HIGH YIELD HIGH
PORTFOLIO INDEX YIELD INDEX
----------------------------------------------------
<S> <C> <C> <C>
One Year 7.61 3.28 1.74
----------------------------------------------------
Since Inception
1/31/97 8.14 5.28 5.97
</TABLE>
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 CS
First Boston High Yield Index. Previously, the Portfolio's returns had been
compared to the Salomon High Yield Index. The Adviser believes that the CS First
Boston High Yield Index has a more comprehensive coverage of geographic regions
and types of securities in which the Portfolio may invest. 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.

14
<PAGE>

HIGH YIELD PORTFOLIO (Continued)
of fixed income securities generally will move in correlation to changes in an
issuer's credit rating.

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. High yield
securities may experience reduced liquidity and sudden and substantial
decreases in price.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

15
<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. The Portfolio's investments generally will include mortgage
securities and high yield securities (commonly called "junk bonds"). The Adviser
uses 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. The Adviser also measures various types of risk, focusing on
the level of real interest rates and credit risk. In determining whether
securities should be sold, the Adviser considers factors such as deteriorating
earnings, cash flow and other fundamentals, as well as high valuations relative
to the Portfolio's investment universe.

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

Generally 45-75% of Portfolio assets
invested in equities, 25-55% in fixed
income securities
-----------------------------------------
At least 25% of Portfolio assets
invested in senior fixed income
securities
-----------------------------------------
Up to 25% of Portfolio assets invested
in foreign equity and foreign fixed
income securities
-----------------------------------------
Up to 10% of Portfolio assets 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, Gary G. Schlarbaum
and Horacio A. Valeiras

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

16
<PAGE>

BALANCED PORTFOLIO (Continued)

Foreign securities may involve greater risks than those issued by U.S.
companies or the U.S. government. Economic, political and other events unique
to a country or region will affect those markets and their issuers, but may not
affect the U.S. market or similar U.S. issuers. A substantial portion of the
Portfolio's investments 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 risks are greater in emerging market
countries.

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.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

[CHART]

BALANCED PORTFOLIO

Commenced operations on November 1, 1996

1997 19.26%
1998 15.09%
1999 15.91%

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

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

SALOMON BROAD 60/40
BALANCED S&P 500 INVESTMENT GRADE BLENDED
PORTFOLIO INDEX INDEX INDEX*
--------------------------------------------------------------------------------
One Year 15.91 21.04 -0.85 12.21
--------------------------------------------------------------------------------
Since Inception
11/1/96 17.12 28.16 5.69 19.21

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

17
<PAGE>

MULTI-ASSET-CLASS PORTFOLIO (Not currently open in the Adviser Class)

Objective

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

Approach

The Portfolio invests in equity securities and fixed income securities of U.S.
and foreign issuers in accordance with the Adviser's target allocation among
certain classes. These securities may include, to a limited extent, emerging
market securities. The Portfolio's equity securities generally will be issued by
large corporations. The Portfolio's investments generally will include mortgage
securities and high yield securities (commonly called "junk bonds"). 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 risks. 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 uses futures, swaps and other derivatives in managing
the Portfolio.

Generally at least 65% of Portfolio
assets 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
24% Salomon Broad Investment Grade
Index
14% MSCI EAFE Index
6% Salomon World Government Bond Ex-
U.S. Index
6% CS First Boston 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 and
Horacio A. Valeiras

[CHART]

MULTI-ASSET-CLASS PORTFOLIO

Commenced operations on July 29, 1994

1995 24.62%
1996 15.93%
1997 17.48%
1998 13.87%
1999 16.84%

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

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)

SALOMON
MULTI- BROAD
ASSET-CLASS S&P 500 INVESTMENT MSCI EAFE BLENDED
PORTFOLIO INDEX GRADE INDEX INDEX INDEX*
-----------------------------------------------------------------------------
One Year 16.84 21.04 -0.85 26.96 13.91
-----------------------------------------------------------------------------
Five Years 17.69 28.55 7.74 12.83 19.20
-----------------------------------------------------------------------------
Since Inception
7/29/94 15.90 26.40 6.92 11.38 17.65

* The Blended Index is an unmanaged index comprised of 50% S&P 500 Index, 24%
Salomon Broad Investment Grade Index, 14% MSCI EAFE Index, 6% Salomon World
Government Bond Ex-U.S. Index and 6% CS First Boston High Yield Index.
Previously, the Blended Index included the Salomon High Yield Index as its
high yield component. The Adviser believes that the CS First Boston High
Yield Index has a more comprehensive coverage of geographic regions and types
of securities in which the Portfolio may invest. If the Blended Index were to
include the Salomon High Yield Index, its performance would have been 13.81%
for the 1 year period, 19.24% for the 5 year period and 17.68% since
inception.

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 and 5 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.

18
<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. The Adviser also measures various
types of risk, focusing on the level of real interest rates and credit risk. 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 opportunities.

Principal Risks

The Portfolio is subject to various risks that could adversely affect its net
asset value, yield and total return. It is possible for an investor to lose
money by investing in the Portfolio.

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

Foreign securities may involve greater risks than those issued by U.S.
companies or the U.S. government. Economic, political and other events unique
to a country or region will affect those markets and their issuers, but may not
affect the U.S. market or similar U.S. issuers. A substantial portion of the
Portfolio's investments 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 risks are greater in emerging market
countries.

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.

Please see "Investment Strategies and Related Risks" for further information
about these and other risks of investing in the Portfolio.

19
<PAGE>

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 other fees when you purchase or redeem shares.

FEES AND EXPENSES OF THE PORTFOLIOS

Annual Portfolio
Operating
Expenses
(expenses that are deducted from Portfolio assets)
<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% .120% .870%
-------------------------------------------------------------------------------
Mid Cap Growth Portfolio .500% 0.25% .130% .880%
-------------------------------------------------------------------------------
Mid Cap Value Portfolio .750% 0.25% .120% 1.120%
-------------------------------------------------------------------------------
Small Cap Value Portfolio .750% 0.25% .110% 1.110%
-------------------------------------------------------------------------------
Value Portfolio .500% 0.25% .130% .880%
-------------------------------------------------------------------------------
Domestic Fixed Income Portfolio .375% 0.25% .125% .750%**
-------------------------------------------------------------------------------
Fixed Income Portfolio .375% 0.25% .105% .730%
-------------------------------------------------------------------------------
High Yield Portfolio .450% 0.25% .115% .815%
-------------------------------------------------------------------------------
Balanced Portfolio .450% 0.25% .130% .830%
-------------------------------------------------------------------------------
Multi-Asset-Class Portfolio .650% 0.25% .150%* 1.050%**
</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 and/or voluntary waivers.
* 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.

<TABLE>
<CAPTION>
TOTAL ANNUAL FUND OPERATING
EXPENSES AFTER MAS WAIVER/
REIMBURSEMENT & OFFSETS
-------------------------------------------------------------
<S> <C>
Domestic Fixed Income Portfolio .750%
-------------------------------------------------------------
Multi-Asset-Class Portfolio 1.030%
-------------------------------------------------------------
</TABLE>

20
<PAGE>

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.

FEES AND EXPENSES OF THE PORTFOLIOS (Continued)

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

<TABLE>
<CAPTION>
EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C>
Equity Portfolio $ 89 $278 $482 $1,073
---------------------------------------------------------------------------
Mid Cap Growth Portfolio $ 90 $281 $488 $1,084
---------------------------------------------------------------------------
Mid Cap Value Portfolio $114 $356 $617 $1,363
---------------------------------------------------------------------------
Small Cap Value Portfolio $113 $353 $612 $1,352
---------------------------------------------------------------------------
Value Portfolio $ 90 $281 $488 $1,084
---------------------------------------------------------------------------
Domestic Fixed Income Portfolio $ 77 $240 $417 $ 930
---------------------------------------------------------------------------
Fixed Income Portfolio $ 75 $233 $406 $ 906
---------------------------------------------------------------------------
High Yield Portfolio $ 83 $260 $452 $1,008
---------------------------------------------------------------------------
Balanced Portfolio $ 85 $265 $460 $1,025
---------------------------------------------------------------------------
Multi-Asset-Class Portfolio $107 $334 $579 $1,283
</TABLE>

21
<PAGE>

INVESTMENT STRATEGIES AND RELATED RISKS

EQUITY SECURITIES

Equity securities include common stock, preferred stock,
convertible securities, ADRs, rights, warrants and shares
of investment companies. The Portfolios may invest in
equity securities that are publicly traded on securities
exchanges or over-the-counter or in equity securities that
are not publicly traded. Securities that are not publicly
traded may be more difficult to sell 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.

Smaller companies carry greater risk than larger companies.
The securities issued by smaller companies may be less
liquid. In addition, smaller companies may have more
limited markets, financial resources and product lines, and
may lack the depth of management of larger companies.

ADRs are U.S. dollar-denominated securities that represent
claims to shares of foreign stocks. The Portfolios treat
ADRs as U.S. securities for purposes of foreign investment
limitations.

Growth stocks generally have 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 stocks that are deemed by
the Adviser to be undervalued relative to the stock market
in general. The Adviser makes value decisions guided by the
appropriate market index, based on value characteristics
such as price/earnings and price/book ratios. Value stocks
generally are dividend paying common stocks. However, non-
dividend paying stocks also may be selected for their value
characteristics.

IPOs

Equity Portfolios of the Fund may purchase shares issued as
part of, or a short period after, companies' initial public
offerings ("IPOs"), and may at times dispose of those
shares shortly after their acquisition. A Portfolio's
purchase of shares issued in IPOs exposes it to the risks
associated with companies that have little operating
history as public companies, as well as to the risks
inherent in those sectors of the market where these new
issuers operate. The market for IPO issuers has been
volatile, and share prices of newly-public companies have
fluctuated in significant amounts over short periods of
time.

FIXED INCOME SECURITIES

Fixed income securities are securities that pay a fixed
rate of interest until a stated maturity date. Fixed income
securities include U.S. Government securities, securities
issued by federal or federally sponsored agencies
("agencies"), corporate bonds and notes, asset-backed
securities, mortgage securities, high yield securities,
municipal bonds, loan participations and assignments, zero
coupon bonds, convertible securities, Eurobonds, Brady
Bonds, Yankee Bonds, repurchase agreements, commercial
paper and cash equivalents.

These securities are subject to risks related to changes in
interest rates and in the financial health or credit rating
of the issuers. 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

22
<PAGE>

INVESTMENT STRATEGIES AND RELATED RISKS (Continued)
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.

Adjustable rate 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. 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. Fixed income securities include
inverse floaters, which are designed to respond in a
targeted fashion to changes in interest rates.

Fixed income securities may be called (redeemed by the
issuer) prior to final maturity. If a callable security is
called, a Portfolio may have to reinvest the proceeds at a
lower rate of interest.

Duration

The average duration of a portfolio of fixed income
securities represents its exposure to changing interest
rates. A portfolio with a lower average duration generally
will experience less price volatility in response to
changes in interest rates than a portfolio with a higher
average duration.

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
creditworthy 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.

Mortgage Securities

These are fixed income securities that derive their value
from or represent interests in a pool of mortgages or
mortgage securities. Mortgage securities are subject to
prepayment risk--the risk that, as interest rates fall,
borrowers will refinance their mortgages and "prepay"
principal. A portfolio holding mortgage securities that are
experiencing prepayments will have to reinvest these
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. It can
be difficult to measure precisely the remaining life of a
mortgage security or the average life of a portfolio of
such securities.

Eurobonds

Eurobonds may include bonds issued and denominated in euros
(the new currency unit implemented on January 1, 1999 by
the countries participating in the European Monetary
Union). Eurobonds may be issued by government and corporate
issuers in Europe. As a result, Eurobonds carry the foreign
investment risk and currency risk discussed below.

Brady Bonds

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).

23
<PAGE>

INVESTMENT STRATEGIES AND RELATED RISKS (Continued)

Yankee Bonds

Yankee bonds are U.S.-dollar denominated debt obligations
issued by foreign governments and corporations and sold in
the United States. They are considered U.S. securities for
purposes of Portfolio investments, except for the Domestic
Fixed Income Portfolio.

FOREIGN SECURITIES

Foreign issuers generally are subject to different
accounting, auditing and financial reporting standards than
U.S. issuers. 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. 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 an
investing portfolio's investment. There also can be
difficulty obtaining and enforcing judgments against
issuers in foreign countries. 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.

Foreign Currency

Foreign securities are denominated in foreign currencies.
The value of foreign currencies fluctuates relative to the
value of the U.S. dollar. Since investing 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 derivatives to offset this risk. 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. In addition, 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, the market
may be dominated by a few issuers or sectors. 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 by
foreign investors.

DERIVATIVES AND OTHER INVESTMENTS

Derivatives are financial instruments whose value and
performance are based on the value and performance of
another security or financial instrument. Derivatives
sometimes offer the most economical way of pursuing an
investment strategy, limiting risks or enhancing returns,
although there is no guarantee of success. Hedging
strategies or instruments may not be available or practical
in all circumstances. Derivative instruments may be
publicly traded or privately negotiated. Derivatives used
by the Adviser include futures contracts, options
contracts, forward contracts, swaps, collateralized
mortgage obligations ("CMOs"), stripped mortgage-backed
securities ("SMBS"), and structured notes.

A forward contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by
the

24
<PAGE>

INVESTMENT STRATEGIES AND RELATED RISKS (Continued)
parties, at a price set at the time of the contract.
Forward contracts are used to protect against uncertainty
in the level of future foreign currency exchange rates. A
futures contract provides for the future sale by one party
and purchase by another party of a specified amount of a
specific security at a specified future time and at a
specified price. The Portfolios may use futures contracts
to gain exposure to an entire market (e.g., stock index
futures) or to control their exposure to changing foreign
currency exchange rates.

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
or 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.

Collateralized mortgage obligations (CMOs) and stripped
mortgage-backed securities (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").

A Portfolio 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 its 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.

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 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

25
<PAGE>

INVESTMENT STRATEGIES AND RELATED RISKS (Continued)
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 that require a Portfolio to
segregate some or all of its cash or liquid securities to
cover its obligations under those instruments. 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.

Risks of Derivatives

The primary risks of derivatives are: (i) changes in the
market value of securities held or to be acquired 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)
magnification of losses incurred due to changes in the
market value of the securities to which they relate.

Hedging the Portfolio's currency risks involves the risks
of mismatching the Portfolio's obligations under a forward
or futures contract with the value of securities
denominated in a particular currency.

Mortgage derivatives 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 those
experienced by mortgage securities generally, depending on
whether the payments are predominantly based on the
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 suffer
losses.

TEMPORARY DEFENSIVE INVESTMENTS

When the Adviser believes that changes in economic,
financial or political conditions warrant, each Portfolio
may invest without limit in fixed income securities for
temporary defensive purposes, as described in the Statement
of Additional Information. If the Adviser incorrectly
predicts the effects of these changes, the defensive
investments may adversely affect the Portfolio's
performance.

PORTFOLIO TURNOVER

Consistent with their investment policies, the Portfolios
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.
Nonetheless, short-term trading activities that result in
high turnover rates are not incompatible with a stated
objective of long-term capital growth or other long-term
goals, and can lead to gains that may increase share value.

26
<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 the Fund's Custodian Bank, The
Chase Manhattan Bank ("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. For all
Portfolios, notification must be given to Client Services
at 1-800-354-8185 prior to the determination of NAV.

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.

27
<PAGE>

REDEEMING SHARES

By Mail

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. 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 payment of
redemption proceeds at times when the New York Stock
Exchange ("NYSE") is closed, the Fund is closed or under
other circumstances in accordance with interpretations or
orders of the U.S. Securities and Exchange Commission.

If we 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.

28
<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 portfolio securities may change on a day
when you cannot purchase or redeem shares if a Portfolio
invests 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.

29
<PAGE>

GENERAL SHAREHOLDER INFORMATION (continued)

Dividends and Distributions

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

<TABLE>
<CAPTION>
PORTFOLIO QUARTERLY ANNUALLY
<S> <C> <C>
Equity X
---------------------------------------------------------------------------------------------
Mid Cap Growth X
---------------------------------------------------------------------------------------------
Mid Cap Value X
---------------------------------------------------------------------------------------------
Small Cap Value X
---------------------------------------------------------------------------------------------
Value X
---------------------------------------------------------------------------------------------
Domestic Fixed Income X
---------------------------------------------------------------------------------------------
Fixed Income X
---------------------------------------------------------------------------------------------
High Yield X
---------------------------------------------------------------------------------------------
Balanced X
---------------------------------------------------------------------------------------------
Multi-Asset-Class X
</TABLE>

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.

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., and is a division of Morgan Stanley Dean
Witter Investment Management ("MSDW"). 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 November 30, 1999,
Morgan Stanley Dean Witter Investment Management had in
excess of $177 billion in assets under management.

30
<PAGE>

FUND MANAGEMENT (Continued)

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 1999 fiscal
year.

<TABLE>
<CAPTION>
CONTRACTUAL FY 1999
COMPENSATION ACTUAL
RATE COMPENSATION RATE
------------------------------------------------------------------
<S> <C> <C>
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 .375
------------------------------------------------------------------
Fixed Income Portfolio .375 .375
------------------------------------------------------------------
High Yield Portfolio+ .450 .375
------------------------------------------------------------------
Balanced Portfolio .450 .450
------------------------------------------------------------------
Multi-Asset-Class Portfolio* .650 .627
</TABLE>
* 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.
+ Effective October 1, 1999, the Management Fee for the
High Yield Portfolio increased from .375% to .450%.

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.

W. David Armstrong, Managing Director, MSDW, joined MSDW as
a Portfolio Manager in 1998. He served as a Senior Vice
President and Manager of U.S. proprietary trading at Lehman
Brothers from 1995-1997. He joined the management team for
the Fixed Income and Special Purpose Fixed Income
Portfolios in 2000.

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.

31
<PAGE>

FUND MANAGEMENT (continued)

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 Fixed Income II Portfolio in 1990, the Special
Purpose Fixed Income and Balanced Portfolios in 1992, the
Multi-Asset-Class Portfolio in 1994 and the Multi-Market
Fixed Income Portfolio in 1997.

Barton M. Biggs, Managing Director, 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 team for the Multi-Asset Class Portfolio in
1999.

David P. Chu, Principal, 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 and Small Cap
Growth Portfolios in 1998.

Steven B. Chulik, Vice President, MSDW, joined MAS in 1997.
He served as a Quantitative Hedge Fund Analyst at IBJ
Schroder Bank and Trust from 1994 to 1995. He attended the
Wharton School of the University of Pennsylvania from 1995
to 1997 and received his MBA in 1997. He served as an
Equity Analyst at MAS from 1997 to 1999. He joined the
management team for the Mid Cap Growth and Small Cap Growth
Portfolios in 1999.

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
Portfolio in 1987, the Special Purpose Fixed Income
Portfolio in 1992 and the Multi-Market Fixed Income
Portfolio in 1997.

Steven Epstein, Vice President, MSDW, joined MAS as a
Financial Analyst in 1996. He attended the Wharton School,
University of Pennsylvania, from 1994-1996, receiving an
MBA. He joined the management team for the Equity Portfolio
in 2000.

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 and the Multi-
Market Fixed Income Portfolio in 1997.

32
<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.

Vitaly V. Korchevsky, Vice President, MSDW, joined MAS as a
Portfolio Manager in 1999. He served as an
Analyst/Portfolio Manager for Gardner Lewis Asset
Management from 1998-1999, and as a Portfolio Manager for
Crestar Asset Management Co. from 1995-1998. He joined the
management team for the Mid Cap Value and Small Cap Value
Portfolios in 2000.

Brian Kramp, Principal, 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.

Gordon W. Loery, Principal, MSDW, joined MAS in 1996. He
served as a Fixed Income Analyst at Morgan Stanley Asset
Management Inc. from 1990 to 1996. He joined the management
team for the High Yield Portfolio in 1999.

Deanna L. Loughnane, Principal, MSDW, joined MAS as a
Financial Analyst in 1997. She served as a Vice President
and Senior Corporate Bond Analyst for Putnam Investments
from 1993-1997. She joined the management team for the High
Yield Portfolio in 2000.

Angelo G. Manioudakis, Principal, MSDW, joined MAS in 1993.
He served as a Fixed Income Analyst from 1993 to 1995. From
1995 to 1998, he served as a Fixed Income Portfolio
manager. He joined the management team for the Intermediate
Duration Portfolio in 1998 and the Domestic Fixed Income
and Fixed Income II Portfolios in 2000.

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.

Scott F. Richard, Managing Director, MSDW, joined MAS in
1992. He joined the management team for the Limited
Duration, Intermediate Duration and Advisory Mortgage
Portfolios in 1995, the Targeted Duration Portfolio in 1998
and the Domestic Fixed Income and Fixed Income II
Portfolios in 2000.

Eric F. Scharpf, Vice President, MSDW, joined MAS as a
Financial Analyst in 1997. He attended the Wharton School,
University of Pennsylvania, from 1995-1997, receiving an
MBA, and served as a Financial Analyst for Salomon Brothers
from 1993-1995. He joined the management team for the
Equity Portfolio in 2000.

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.

Roberto M. Sella, Managing Director, MSDW, joined MAS in
1992. He served as a Financial Analyst from 1992-1998, and
as a Portfolio Manager beginning in 1998. He joined the
management team for the Fixed Income and Special Purpose
Fixed Income Portfolios in 2000.

33
<PAGE>

FUND MANAGEMENT (Continued)

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.

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.

34
<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, 1999 Annual Report to Shareholders.

The Adviser Class Shares of the Multi-Asset-Class Portfolio had not commenced
operations as of September 30, 1999, 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.

<TABLE>
<CAPTION>
Net Gains
or Losses
on Dividend Capital Gain Net
Net Asset Securities Distributions Distributions Asset
Value Net (realized Total from (net (realized net Value
Beginning Investment and Investment investment capital Other Total End of Total
of Period Income unrealized) Activities income) gains) Distributions Distributions Period Return**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Portfolio (Commencement of Adviser Class Operations 1/16/98)
1999 $20.42 $ 0.11 $ 5.21 $ 5.32 ($0.12) ($5.83) -- ($5.95) $19.79 29.80%
1998 20.50 0.10 (0.09) 0.01 (0.09) -- -- (0.09) 20.42 (0.02)
Mid Cap Growth Portfolio (Commencement of Adviser Class Operations 1/31/97)
1999 $18.55 ($0.05) $10.58 $10.53 -- ($3.49) -- ($3.49) $25.59 63.87%
1998 21.81 (0.03) 0.20 0.17 -- (3.43) -- (3.43) 18.55 1.79
1997 17.04 (0.02) 4.79 4.77 -- -- -- -- 21.81 27.99
Mid Cap Value Portfolio (Commencement of Adviser Class Operations 7/17/98)
1999+++ $18.12 $ 0.07 $ 5.01 $ 5.08 ($0.03) ($1.31) -- ($1.34) $21.86 29.12%
1998+++ 21.82 0.01 (3.71) (3.70) -- -- -- -- 18.12 (16.96)
Small Cap Value Portfolio (Commencement of Adviser Class Operations 1/22/99)
1999+++ $17.32 $ 0.06 $ 1.24 $ 1.30 -- -- -- -- $18.62 7.51%
Value Portfolio (Commencement of Adviser Class Operations 07/17/96)
1999+++ $15.13 $ 0.17 $ 1.12 $ 1.29 ($0.24) ($2.61) -- ($2.85) $13.57 8.10%
1998 20.35 0.29 (3.38) (3.09) (0.32) (1.81) -- (2.13) 15.13 (16.66)
1997+++ 15.61 0.30 5.74 6.04 (0.27) (1.03) -- (1.30) 20.35 40.87
1996 14.11 0.01 1.49 1.50 -- -- -- -- 15.61 10.63
Domestic Fixed Income Portfolio (Commencement of Adviser Class Operations 3/01/99)
1999 $10.85 $ 0.39 ($0.43) ($0.04) ($0.28) -- -- ($0.28) $10.53 (0.40%)

<CAPTION>
Ratio of
Expenses
Net Assets to Ratio of
End of Average Net Income Portfolio
Period Net to Average Turnover
(thousands) Assets+ Net Assets Rate
<S> <C> <C> <C> <C>
Equity Portfolio (Commencement of Adviser Class Operations 1/16/98)
1999 $ 2,123 0.87% 0.34% 103%
1998 373 0.88* 0.65* 77
Mid Cap Growth Portfolio (Commencement of Adviser Class Operations 1/31/97)
1999 $263,312 0.88% (0.31%) 208%
1998 51,058 0.87 (0.25) 172
1997 1,200 0.88* (0.41)* 134
Mid Cap Value Portfolio (Commencement of Adviser Class Operations 7/17/98)
1999+++ $ 40,636 1.12% 0.33% 244%
1998+++ 4,919 1.24* 0.25* 213
Small Cap Value Portfolio (Commencement of Adviser Class Operations 1/22/99)
1999+++ $ 16,117 1.11%* 0.45%* 251%
Value Portfolio (Commencement of Adviser Class Operations 07/17/96)
1999+++ $254,483 0.88% 1.10% 53%
1998 325,272 0.85 1.52 56
1997+++ 201,253 0.90 1.63 46
1996 15,493 0.86* 1.66* 53
Domestic Fixed Income Portfolio (Commencement of Adviser Class Operations 3/01/99)
1999 $ 1,192 0.75%* 6.73%* 115%
</TABLE>

35
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Continued)

<TABLE>
<CAPTION>
Net Gains
or Losses
on Dividend Capital Gain Net
Net Asset Securities Distributions Distributions Asset
Value Net (realized Total from (net (realized net Value
Beginning Investment and Investment investment capital Other Total End of Total
of Period Income unrealized) Activities income) gains) Distributions Distributions Period Return**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Income Portfolio (Commencement of Adviser Class Operations 11/07/96)
1999+++ $12.23 $0.74 ($0.72) $ 0.02 ($0.69) -- ($0.30) ($0.99) $11.26 0.07%
1998+++ 12.22 0.75 0.14 0.89 (0.71) (0.17) -- (0.88) 12.23 7.63
1997+++ 12.04 0.70 0.20 0.90 (0.59) (0.13) -- (0.72) 12.22 7.79
High Yield Portfolio (Commencement of Adviser Class Operations 1/31/97)
1999+++ $ 8.99 $0.84 ($0.11) $ 0.73 ($0.77) ($0.04) ($0.15) ($0.96) $ 8.76 8.44%
1998+++ 10.15 0.83 (0.93) (0.10) (0.80) (0.26) -- (1.06) 8.99 (1.37)
1997+++ 9.39 0.56 0.59 1.15 (0.39) -- -- (0.39) 10.15 12.63
Balanced Portfolio (Commencement of Adviser Class Operations 11/01/96)
1999+++ $13.43 $0.42 $ 1.71 $ 2.13 ($0.40) ($1.36) -- ($1.76) $13.80 16.76%
1998+++ 15.30 0.44 (0.12) 0.32 (0.47) (1.72) -- (2.19) 13.43 2.49
1997 14.05 0.42 2.60 3.02 (0.38) (1.39) -- (1.77) 15.30 23.82
Multi-Asset-Class Portfolio (Commencement of Institutional Class Operations 7/29/94)
1999 $11.74 $0.37 $ 1.62 $ 1.99 ($0.34) ($0.96) -- ($1.30) $12.43 17.71%
1998+++ 13.64 0.38 (0.45) (0.07) (0.34) (1.49) -- (1.83) 11.74 (0.46)
1997+++ 12.28 0.38 2.57 2.95 (0.51) (1.08) -- (1.59) 13.64 26.50
1996 11.34 0.46 1.05 1.51 (0.42) (0.15) -- (0.57) 12.28 13.75
1995 9.97 0.44 1.33 1.77 (0.40) -- -- (0.40) 11.34 18.28

<CAPTION>
Ratio of
Expenses
Net Assets to Ratio of
End of Average Net Income Portfolio
Period Net to Average Turnover
(thousands) Assets+ Net Assets Rate
<S> <C> <C> <C> <C>
Fixed Income Portfolio (Commencement of Adviser Class Operations 11/07/96)
1999+++ $141,709 0.73% 6.38% 103%
1998+++ 131,303 0.73 6.22 121
1997+++ 76,683 0.77*++ 6.50* 179
High Yield Portfolio (Commencement of Adviser Class Operations 1/31/97)
1999+++ $ 13,701 0.74% 9.29% 45%
1998+++ 10,236 0.75 8.55 75
1997+++ 4,327 0.78* 8.68* 96
Balanced Portfolio (Commencement of Adviser Class Operations 11/01/96)
1999+++ $ 29,210 0.83% 2.97% 111%
1998+++ 24,654 0.84 3.11 100
1997 27,366 0.85*++ 3.24* 145
Multi-Asset-Class Portfolio (Commencement of Institutional Class Operations 7/29/94)
1999 $152,862 0.78%++ 2.86% 101%
1998+++ 165,039 0.78++ 2.98 107
1997+++ 173,155 0.74++ 3.07 141
1996 129,558 0.58++ 3.82 122
1995 96,839 0.58++ 4.56 112
</TABLE>

36
<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.

<TABLE>
<CAPTION>
Portfolio 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
Equity 0.82* 0.85
Mid Cap Growth 0.86* 0.84 0.86
Mid Cap Value 1.17* 1.11
Small Cap Value 1.10*
Value 0.85* 0.89 0.84 0.87
Domestic Fixed Income 0.74*
Fixed Income 0.76* 0.72 0.72
High Yield 0.76* 0.73 0.73
Balanced 0.84* 0.82 0.82
Multi-Asset-Class 0.58 0.58 0.74 0.78 0.78
</TABLE>

++ 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.

<TABLE>
<CAPTION>
Voluntarily waived and/or reimbursed expenses for:
Portfolio 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
Domestic Fixed Income... --
Fixed Income............ 0.01%* -- --
Balanced................ 0.03* -- --
Multi-Asset-Class....... 0.14 0.08 0.08 0.04 0.02
</TABLE>

+++Per share amounts for the year are based on average shares outstanding.

37
<PAGE>

[LOGO OF MAS FUNDS] ADVISER CLASS PROSPECTUS

January 31, 2000
(As Revised October 6, 2000)

Trustees of the Fund
--------------------
Thomas L. Bennett, Thomas L. Gerrity
Chairman Joseph J. Kearns
Joseph P. Healey C. Oscar Morong, Jr.
Vincent R. McLean
James H. Scott

Officers of the Fund
--------------------
Lorraine Truten, Richard J. Shoch,
President Secretary
James A. Gallo, Vice John H. Grady, Jr.,
President & Assistant Secretary
Treasurer

In addition to this prospectus, the Fund has a Statement of Additional
Information ("SAI"), dated January 31, 2000, 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 1-202-942-8090);
(2) On-line: you may retrieve information from the Commission's web site at
http://www.sec.gov; (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. 20549-0102; or (4) By e-mail: you may
request documents, upon payment of a duplicating fee, by e-mailing the
Securities and Exchange Commission at the following address:
[email protected]. 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.

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

[LOGOS OF MAS FUNDS]
_________________________________
ADVISER CLASS PROSPECTUS
JANUARY 31, 2000
(As Revised October 6, 2000)
_________________________________
MORGAN STANLEY DEAN WITTER
INVESTMENT MANAGEMENT
903-promas-adv82500
ONE TOWER BRIDGE . WEST CONSHOHOCKEN, PA
19428 . 800-354-8185