MUTUAL SERIES FUND INC.
51 JOHN F. KENNEDY PARKWAY
SHORT HILLS, NEW JERSEY 07078
August 6, 1996
Dear Shareholder:
As you may know, Heine Securities Corporation ("HSC"),
the investment adviser to Mutual Series Fund Inc. has
entered into an agreement under which its assets will be
acquired by Franklin Mutual Advisers, Inc. ("Franklin
Mutual") and become part of the Franklin Templeton Group.
Because of the acquisition, it is necessary for the
shareholders of each of Mutual Shares Fund, Mutual Beacon
Fund, Mutual Discovery Fund, Mutual Qualified Fund and
Mutual European Fund to approve a new investment advisory
agreement between each Series and Franklin Mutual.
The following important facts about the transaction are
outlined below:
* The amount of shares you own and the advisory fees
charged to the Fund will not change.
* The investment objectives of the Fund will remain
the same and key employees of HSC will continue to
manage your Fund as they have in the past.
* As long as you maintain an investment in any of
the Mutual Series funds you may continue to make
investments and reinvest dividends and/or
distributions into any series of the fund without
a sales charge or 12b-1 fees.
* You will continue to receive the high quality
investment management and shareholder services
that you have come to expect over the years.
After careful consideration, the Board of Directors of
your Fund has unanimously approved this transaction and
recommends that you read the enclosed materials carefully
and then vote FOR all proposals.
Since all the funds in the Mutual Series family are
required to vote, we have grouped the funds on one proxy
statement to reduce costs. If you hold shares in more than
one fund you will receive one statement and a proxy card for
each fund you own. Please vote each proxy card you receive.
Your vote is important. Please take a moment now to
sign and return your proxy cards in the enclosed postage
paid return envelope. If we do not hear from you after a
reasonable amount of time you may receive a telephone call
from our proxy solicitor, Shareholder Communications
Corporation, reminding you to vote your shares. If you have
questions about the transaction you may call them at 800-
733-8481 Ext. 490.
Thank you for your cooperation and continued support.
Sincerely,
Michael F. Price
President
Q&A on reverse side
Q. WHAT IS HAPPENING?
A. HSC, not your Fund, has entered into an agreement for its
business to be acquired by Franklin Mutual. Importantly,
Michael F. Price and key members of HSC's management team
have signed contracts and, after the Closing, will continue
to be responsible for managing the Funds. Consequently, the
Transaction will not result in any changes in the portfolio
management of the Series, other than those that are
typically incidental to becoming part of a large fund
complex, such as aggregating positions for regulatory
purposes.
Q. WHY AM I BEING ASKED TO VOTE ON THIS PROPOSAL?
A. The Investment Company Act of 1940 requires a vote whenever
there is a change of ownership of an investment adviser.
As a result, the Act requires the approval of a new
investment advisory agreement by the shareholders of each
Series.
Q. HOW WILL THIS AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund shares will not change. You will still own the
same shares in the same Series in the form of a special
class of shares and you will continue to have no sales
charge and no 12b-1 fees. As long as you continue to be a
shareholder of any Series you may purchase all Series of the
Fund without sales charges and 12b-1 fees.
The primary difference is that HSC will change from a
privately-owned company to a corporate subsidiary of
Franklin Resources Inc. Key employees of HSC who have been
responsible for the management of your Fund, however, will
continue to act in the same capacities as before.
This transaction will not result in any adverse changes to
advisory services, expenses or in the quality of shareholder
services that you have come to expect over the years. After
the Closing, your Fund will offer new classes of shares to
new investors, but you and all other shareholders on the
Closing Date will own a special class of shares which will
permit continued investment on a no-load and no 12b-1 fee
basis in all Series of the Fund. Beginning approximately
six months after the Closing and thereafter, you will be
able to exchange (without any sales charges) any Mutual
Series Fund shares which have been held for at least six
months into shares of other Franklin Templeton funds in
accordance with the terms of any offering then being made by
such funds in their respective prospectuses.
Q. WILL I STILL BE ABLE TO INVEST WITHOUT A SALES CHARGE OR
12b-1 FEES?
A. Yes. As long as you maintain an investment in the existing
funds you will be able to invest new money into your Mutual
Series Fund accounts, open additional accounts in any Series
and reinvest distributions and dividends without sales
charges or 12b-1 fees.
Q. WILL THE INVESTMENT ADVISORY FEES BE THE SAME?
A. Yes, the fees for investment advice charged to your Fund
under the new advisory agreement will remain the same.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of Directors
unanimously recommends that you vote "FOR" the Proposals on
the enclosed proxy card.
Q. HOW DO I CONTACT YOU?
A. If you have any questions, please call 800-733-8481 Ext.
490.
Q. WHO IS SHAREHOLDER COMMUNICATIONS CORPORATION?
A. Shareholder Communications Corporation is a professional
proxy solicitation firm retained by HSC and Franklin Mutual
to assist them in coordinating shareholder questions and
soliciting shareholder votes.
PLEASE VOTE
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
MUTUAL SERIES FUND INC.
51 JOHN F. KENNEDY PARKWAY
SHORT HILLS, NEW JERSEY 07078
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 25, 1996
1-800-733-8481 Ext. 490
An Annual Meeting of Shareholders (the "Meeting") of all
series of MUTUAL SERIES FUND INC. (the "Fund") will be held at
the Madison Hotel, Madison Avenue, Convent Station, New Jersey,
on October 25, 1996 at 10:00 a.m. (DST) for the following
purposes:
1. To consider and act upon the approval of a new
investment advisory agreement between each Series of
the Fund and Franklin Mutual to take effect upon the
closing of the acquisition of the assets of HSC by
Franklin Mutual.
2. To consider and act upon Articles of Amendment to the
Fund's Charter to permit the Fund and each Series to
offer additional classes of shares.
3. To consider and act upon the election of 12 members of
the Board of Directors of the Fund to serve until the
next annual meeting or until their successors are
elected and qualified;
4. To consider and act upon the ratification of the
selection of Ernst & Young as independent auditors for
each Series of the Fund for the fiscal year ending
December 31, 1996; and
5. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The stock transfer books will not be closed but, in lieu
thereof, the Board of Directors has fixed the close of business
on July 31, 1996 as the record date for the determination of
shareholders of each Series entitled to notice of, and to vote
at, the Meeting.
By order of the Board of Directors
ELIZABETH N. COHERNOUR, Secretary
Short Hills, New Jersey
August 6, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE
MEETING IN PERSON OR BY PROXY; IF YOU DO NOT EXPECT TO ATTEND
THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
APPROPRIATE ENCLOSED PROXY OR PROXIES IN THE ACCOMPANYING
ENVELOPE PROVIDED FOR YOUR CONVENIENCE, WHICH REQUIRES NO
MUTUAL SERIES FUND INC
PROXY STATEMENT
FOR AN ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 25, 1996
1-800-733-8481 EXT. 490
INTRODUCTION
This Proxy Statement (the "Proxy") is furnished in
connection with the solicitation by the Board of Directors (the
"Board") of Mutual Series Fund Inc. (the "Fund") of proxies to be
voted at an Annual Meeting of Shareholders (the "Meeting") of the
Fund and each series of the Fund (the "Series") to he held at the
Madison Hotel, Madison Avenue, Convent Station, New Jersey on
October 25, 1996 at 10:00 a.m. (DST) and at any adjournment
thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The costs of preparing, printing, mailing and soliciting the
proxies will be borne equally by Heine Securities Corporation
("HSC") and Franklin Resources, Inc. ("FRI"). In addition,
certain officers, directors and employees of HSC and officers and
directors of the Fund (none of whom will receive additional
compensation therefor) may solicit proxies in person or by
telephone, telegraph or mail. Shareholder Communications
Corporation has been retained at its customary rates to solicit
proxies.
All properly executed proxies received prior to the Meeting
will be voted at the Meeting in accordance with the instructions
marked thereon or otherwise as provided therein. Unless
instructions to the contrary are marked, shares represented by
the proxies will be voted "FOR" all the proposals. All shares in
Fund-sponsored IRA accounts not voted by the account owner will
be voted by the IRA trustee in the same proportion (for, against
and abstain) as all other votes cast whether in person or by
proxy. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions will be counted
as present and broker "non-votes" (that is, proxies from brokers
or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled
to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be
treated as shares that are not present. Any proxy may be revoked
at any time prior to the exercise thereof by submitting another
proxy bearing a later date or by giving written notice to the
Secretary of the Fund at the Fund's address indicated above or by
voting in person at the Meeting. The affirmative vote of a
majority of the shares as defined under the Investment Company
Act of 1940 (a "Majority Vote") (either 67% of the shares present
at the Meeting, if holders of more than 50% of the outstanding
shares are present in person or by proxy, or more than 50% of the
outstanding shares, whichever is less) of each Series of the Fund
(Mutual Shares Fund, Mutual Qualified Fund, Mutual Beacon Fund,
Mutual Discovery Fund and Mutual European Fund) voting
separately, is necessary to approve each Series' respective new
investment advisory agreement. The affirmative vote of a
majority of the shares of all Series of the Fund voting as one
class is necessary to approve the amendment to the Fund's
Charter. The affirmative vote of a majority of each Series
voting separately is necessary to ratify the selection of
independent auditors with respect to the Series. A plurality of
shares of all the Series voting as one class is necessary to
elect each of the nominees for directors.
The Board of Directors of the Fund knows of no business
other than that specifically mentioned in the Notice of Meeting
which will be presented for consideration at the Meeting. If any
other matters are properly presented, it is the intention of the
persons named in the enclosed proxy to vote in accordance with
their best judgment.
The Board of Directors of the Fund has fixed the close of
business on July 31, 1996 as the record date (the "Record Date")
for the determination of shareholders of each Series of the Fund
entitled to notice of and to vote at the Meeting or any
adjournment thereof. Shareholders of each Series of the Fund on
that date will be entitled to one vote on each matter on which
they are entitled to vote for each share held and a fractional
vote with respect to fractional shares and shareholders will not
have cumulative voting rights. At the close of business on the
Record Date, the Fund had outstanding 65,104,575 shares of Mutual
Shares Fund Shares, 120,432,496 shares of Mutual Qualified Fund
Shares, 114,240,961 shares of Mutual Beacon Fund Shares,
135,889,975 shares of Mutual Discovery Fund Shares, and 8,215,731
shares of Mutual European Fund Shares, each with a par value of
$.001 per share, which comprise the only authorized Series of
shares of the Fund.
The principal executive offices of the Fund are located at
51 John F. Kennedy Parkway, Short Hills, New Jersey 07078. The
enclosed proxy and this proxy statement are first being sent to
the Fund's shareholders on or about August 6, 1996.
PRINCIPAL HOLDERS
As of the Record Date, to the best knowledge of the Fund, no
person beneficially owned more than 5% of any class of the
outstanding shares of Mutual Shares Fund, Mutual Qualified Fund,
Mutual Beacon Fund, Mutual Discovery Fund or Mutual European
Fund.
PROPOSAL NO. 1
TO CONSIDER A NEW ADVISORY AGREEMENT FOR EACH SERIES WHICH WILL
TAKE EFFECT UPON THE CLOSING OF THE ACQUISITION OF
THE ADVISER
SUMMARY OF THE TRANSACTION
On June 25, 1996, HSC entered into a definitive agreement
(the "Agreement') to merge the businesses of HSC and FRI through
a sale of HSC assets to Franklin Mutual Advisers, Inc. ("Franklin
Mutual"), a newly-organized subsidiary of FRI, for $550 million
in cash, 1,100,000 shares of FRI common stock, and up to $192.5
million of additional contingent consideration based on the
cumulative investment advisory revenues of Franklin Mutual over
the five year period beginning upon the closing of the sale (the
"Closing" and "Transaction", respectively). Specifically, if
cumulative annual five year revenue growth of Franklin Mutual (a)
equals 12.5%, HSC will receive an additional $100 million, or (b)
equals or exceeds 17.5%, HSC will receive an additional $192.5
million, or (c) equals any percentage between 121/2% and 171/2%, HSC
will receive a pro rata amount between (a) and (b). The
Transaction is expected to close on or prior to October 31, 1996
and is subject to various conditions, including approval by the
shareholders of each Series of new investment advisory agreements
between Franklin Mutual and each Series of the Fund (the "New
Advisory Agreements"). At the time of the Closing HSC will
purchase $150 million of Fund shares with a portion of the
proceeds which will be held by an escrow agent for five years,
subject to periodic distributions so long as the minimum amount
remaining in escrow does not fall below $100 million. After the
Closing, Franklin Mutual, as successor, will continue to operate
out of HSC's Short Hills, New Jersey office. Key members of HSC's
management team, including Michael F. Price, have signed
employment contracts and will continue to be responsible for
managing the day-to-day affairs of Franklin Mutual. See "The
Employment Agreements," below. Thus in the view of the Board and
HSC, the Transaction will not result in any changes in the
portfolio management and investment operations of the Fund, other
than those that are typically incidental to becoming part of a
large fund complex, such as aggregating positions for regulatory
purposes. In such circumstances, external constraints could
impact the maximum size of the Series' positions in a particular
security.
The Board has also approved a plan under Rule 18f-3 of the
1940 Act to create two new classes of each Series (Class I and
Class II), that will be identical to the current classes offered
by the Franklin Templeton Funds, which will allow for different
distribution channels to permit the Series to be sold to a
broader base of shareholders. Effectuation of this plan depends
upon shareholders approving the Transaction and Proposal 2,
below. After the Closing it is anticipated that the Class I and
Class II shares of each Series will be sold to new shareholders
on the same terms as other Franklin Templeton Funds. Existing
Fund shareholders will remain in a separate class and will
continue to be able to purchase shares in any of the Series
without any sales charges or 12b-1 fees. In addition, beginning
approximately six months after the Closing and thereafter, shareholders
will be able to exchange (without any sales charges) any Mutual Series
Fund shares which have been held for at least six months into
shares of other Franklin Templeton funds in accordance with the
terms of any offering then being made by such funds in their
respective prospectuses. An exchange of Fund shares will require
a sale of the existing Mutual Series Fund shares and a purchase
of the Franklin Templeton fund shares. Except with respect to
certain types of investors, the shares of the Franklin Templeton
Funds are generally not otherwise available without sales
charges. In order to implement the exchange privilege, the Fund
anticipates retaining an affiliate of FRI as transfer agent to
the Series.
FRI is a large, diversified financial services organization.
Through its operating subsidiaries, the company provides a
variety of investment products and services to investors
throughout the United States and abroad. One of the United
States' largest investment management organizations, FRI provides
management, administrative and distribution services for the $147
billion, 115-member Franklin Templeton Group of Funds and
institutional clients. The funds are distributed through a
global network of broker-dealers, financial planners and
investment advisors. The principal foreign markets in which the
company's services are offered include Canada, the United
Kingdom, Germany, Japan, and Australia. The company also serves
investors in Hong Kong, South America, and other parts of Europe
and the Middle East. At March 31, 1996, the company was
represented in 18 different countries employing over 4,700
individuals world-wide. FRI is headquartered in San Mateo,
California, and its common stock is listed on the New York Stock
Exchange, as well as on the Pacific and London Stock Exchanges.
Pursuant to Section 15 of the Investment Company Act of
1940, as amended (the "1940 Act"), each Series' existing
investment advisory agreement terminates automatically upon its
assignment, which is deemed to include any change of control of
the investment adviser. Section 15(a) of the 1940 Act prohibits
any person from serving as an investment adviser to a registered
investment company except pursuant to a written contract that has
been approved by the shareholders. Therefore, in order for
Franklin Mutual to provide investment advisory services to the
Fund after the closing of the Transaction, the shareholders of
each Series must approve a New Advisory Agreement.
The Transaction also contemplates that HSC, Franklin Mutual,
FRI and other persons will comply with the requirements of
Section 15(f) of the 1940 Act after the Closing. Section 15(f)
provides, in pertinent part, that HSC may receive any amount or
benefit in connection with a sale of securities of, or a sale of
any other interest in, HSC which results in an assignment of an
investment advisory contract if (1) for a period of three years
after such event, at least 75% of the members of the board of
directors of the investment company which it advises are not
"interested persons" (as defined in the 1940 Act) of the new or
old investment adviser; and (2) for a two-year period there is no
"unfair burden" imposed on the investment company as a result of
the Transaction. In the Agreement with HSC, Franklin Mutual and
FRI have represented and warranted to HSC that they have no
express or implied understanding or arrangement that would impose
an unfair burden on the Fund as a result of the Transaction.
Franklin Mutual and FRI have agreed to indemnify and hold HSC
harmless from and against and in respect of any and all losses
arising in connection with the imposition of any unfair burden on
the Fund constituting a breach or violation of, or non-compliance
with, Section 15(f) of the 1940 Act which is caused by acts or
conduct within the control of Franklin Mutual, FRI or their
affiliates.
The New Advisory Agreements, if approved by each Series'
shareholders, will commence at the Closing. Thereafter, each New
Advisory Agreement will remain in effect for an initial two-year
term and will continue in effect thereafter for successive
periods if and so long as such continuance is specifically
approved annually by (a) the Board of Directors or (b) a Majority
Vote of a Series' shareholders, provided that in either event,
the continuance also is approved by a majority of the directors
who are not "interested persons" by vote cast in person at a
meeting called for the purpose of voting on such approval.
After careful consideration, the Board of Directors of the
Fund unanimously recommends that shareholders vote of each Series
"FOR" the New Advisory Agreement between the Fund on behalf of
such Series and Franklin to replace the current advisory
agreements with HSC upon consummation of the Transaction. See
"Evaluation by the Boards" below.
BENEFITS TO SHAREHOLDERS
The Board has identified the following benefits which the
shareholders are anticipated to realize as a result of the
Transaction:
1. Michael F. Price and five senior members of the Fund's
investment management team have agreed to remain employed
pursuant to employment contracts;
2. As a member of the Franklin Templeton family of mutual
funds, the Fund will be able to offer its shareholders
enhanced customer service, including longer shareholder
service hours (Monday through Friday from 8:30am to 11:00pm
EST and on Saturday from 9:30am to 5:30pm EST);
3. Beginning approximately six months after the Closing and
thereafter, shareholders will be able to exchange (without
any sales charges) Mutual Series Fund shares which have been
held for at least six months into shares of other Franklin
Templeton mutual funds (of which there are currently
approximately 115), in accordance with the terms of any
offering then being made by such funds in their respective
prospectuses. Dividends received from such exchanged funds
may also be reinvested without sales charges. Franklin
Templeton offers a broad range of investment portfolios,
including taxable and tax-exempt money market instruments,
tax-exempt municipal bonds, long-term United States and
global fixed income debt securities, and global equities;
and
4. Franklin Mutual and FRI have agreed that, for a period of
three years after the Closing, the aggregate expenses
incurred in the ordinary course of business by each Series
(on a percentage of net assets basis) will not be higher
than they are expected to be as of the Closing, based on the
annualized expense ratio at that time; provided, however,
that increases in expenses shall not be included in such
determinations if it can be established to the Board's
satisfaction that such expenses would also have been higher
(based upon such considerations as the amount and
composition of assets under management, the number of
security transactions, number of shareholder accounts,
regulatory requirements and general industry and economic
conditions) had the Transaction not taken place. Series
expense ratios generally have been higher in 1996 than in
1995 as a result of a number of factors. Franklin Mutual
has also agreed not to seek any increase in investment
advisory fees for at least three years after the Closing.
THE INVESTMENT ADVISER
Heine Securities Corporation, 51 John F. Kennedy Parkway,
Short Hills, New Jersey 07078 currently serves as each Series'
investment adviser. HSC manages each Series' investments,
provides various administrative services and supervises each
Series' daily business affairs, subject to supervision by the
Fund's Board of Directors. Portfolio Manager Michael F. Price
has been responsible for the day to day management of the Fund
for more than ten years.
Michael F. Price, President, Chief Operating Officer,
Chairman and sole shareholder of HSC, is director and sole
shareholder of Clearwater Securities Inc. ("Clearwater"), a
registered broker-dealer, and is Chairman of the Board and
President of the Fund. Edward J. Bradley is Treasurer of
Clearwater and is Treasurer and Chief Financial and Accounting
Officer of HSC and of the Fund. Peter A. Langerman is a Research
Analyst with HSC as well as a Director and Executive Vice
President of the Fund. Elizabeth N. Cohernour is General Counsel
and Secretary of HSC, Clearwater and the Fund. Eric LeGoff is a
Vice President of HSC. Jeffrey A. Altman, Robert L. Friedman,
Raymond Garea and Lawrence N. Sondike, Research Analysts with
HSC, are Vice Presidents of the Fund.
THE EMPLOYMENT AGREEMENTS
Michael F. Price has entered into an employment agreement
that provides for his continued service; it also provides that he
cannot be terminated except for cause or disability and contains
non-competition provisions. Pursuant to the agreement, Mr. Price
will continue to be employed after the Closing as Chief Executive
Officer (which shall be the most senior executive position) and
he shall have authority to manage Franklin Mutual subject to the
overall supervision of its Board of Directors. Mr. Price's
authority as Chief Executive Officer shall include responsibility
over, among other things, day-to-day management, overall
strategy, expansion of product line, establishing an annual
budget upon which he and the Chief Executive Officer of FRI (to
whom he will report) shall agree, hiring and firing employees,
all compensation decisions related to employees of Franklin
Mutual (other than certain decisions relating to the five key
employees with employment agreements) and enhancing material
business relationships. He shall also have the authority to
introduce new investment products subject to the consent of the
Board of Directors of Franklin Mutual. Mr. Price's agreement has
a term of five years, provided that at any time after the second
anniversary of the Closing, Mr. Price has the option to cease to
be Chief Executive Officer (with the right to work less than full
time after the first anniversary), but he is obligated to and
intends to assist with the gradual transition to new management
as mutually agreed with Franklin and will make himself available
to the extent necessary to provide continuity of management.
The other key members of the HSC's investment management
team, Peter A. Langerman, Jeffrey A. Altman, Robert L. Friedman,
Raymond Garea, and Lawrence N. Sondike have also entered into
five-year employment and non-compete contracts with HSC (which
agreements will be assumed by Franklin Mutual), which provide
long-term compensation incentives. They will continue to have
senior management roles.
THE NEW ADVISORY AGREEMENTS
Pursuant to the current advisory agreements between HSC and
the Fund, HSC has been retained to manage the investments of the
Fund and to provide such investment research, advice and
supervision, in conformity with each Series' investment
objectives and policies, as may be necessary for the operations
of each Series of the Fund. The New Advisory Agreements provide
the same authority. The current advisory agreement for each
Series was last continued on May 30, 1996. The current advisory
agreements and New Advisory Agreements provide that the Fund
shall pay to HSC a fee for its services which is equal to the
following annual percentage or percentages of each Series'
average daily net asset value: .60% for each of Mutual Shares
Fund, Mutual Qualified Fund and Mutual Beacon Fund, and .80% for
each of Mutual Discovery Fund and Mutual European Fund. During
each Series' fiscal year ended December 31, 1995, HSC's net fees
earned were: $27,500,952 for Mutual Shares Fund, $14,607,723 for
Mutual Qualified Fund, $17,720,127 for Mutual Beacon Fund and
$7,930,967 for Mutual Discovery Fund. Mutual European Fund
commenced operations on July 3, 1996.
The New Advisory Agreements provide for the furnishing of
the same advisory services for the same advisory fees as the
current advisory agreements with each Series. The current
advisory agreements provide, among other things, that HSC will
bear all expenses of its employees and overhead incurred in
connection with its duties, and that the Fund will reimburse HSC,
if HSC has paid, all direct and indirect costs, charges, and
expenses of or related to the Fund's business and operations,
including the compensation of the Fund's directors (other than
those who are interested persons of HSC), as well as the pro rata
portion of the salaries, bonuses, health insurance, retirement
benefits and all similar employment costs for the time spent on
the Fund's operations of all personnel employed by HSC who devote
substantial time to the Fund's operations including
administrative and other personnel. The New Advisory Agreements
do not contain such a reimbursement provision. Instead, it is
proposed that the Fund enter into a separate Administration
Agreement with Franklin Templeton Services, Inc. an affiliate of
FRI, which relates to the provision of the same types of services
for which the Fund currently reimburses HSC under the current
advisory agreements. Franklin Mutual and FRI have agreed that,
for a period of three years after the Closing, the aggregate
expenses incurred in the ordinary course of business by each
Series (on a percentage of net assets basis) will not be higher
than they are expected to be based on the annualized expense
ratio as of the Closing; provided, however, that increases in
expenses shall not be included in such determinations if it can
be established to the Board's satisfaction that such expenses
would also have been higher (based upon such considerations as
the amount and composition of assets under management, the number
of security transactions, number of shareholder accounts,
regulatory requirements and general industry and economic
conditions) had the Transaction not taken place. For the year
ended December 31, 1995 total reimbursements were $1,392,294 for
Mutual Shares Fund, $720,315 for Mutual Qualified Fund, $886,843
for Mutual Beacon Fund and $412,166 for Mutual Discovery Fund. A
form of the New Advisory Agreement and the Administration
Agreement are attached as Appendix A.
Pursuant to both the current and new Advisory Agreements,
although the adviser intends to devote such time and effort to
the business of the Fund as is reasonably necessary to perform
its duties to the Fund, the services of the adviser are not
exclusive and the adviser may provide similar services to other
investment companies and other clients and may engage in other
activities.
The current agreements and New Advisory Agreements both
provide that in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations
thereunder, the adviser is not liable to the Series or any of the
Series' shareholders for any act or omission by the adviser in
the supervision or management of its respective investment
activities or for any loss sustained by the Fund or the Fund's
shareholders, and that the Fund will indemnify the adviser
subject to the requirements of the 1940 Act.
Both the current and the New Advisory Agreements may be
terminated at any time by the Fund, without the payment of any
penalty, upon the vote of a majority of the Fund's Board or a
majority of the outstanding voting securities of the respective
Series or by HSC, on 60 days' written notice by either party to
the other.
EVALUATION BY THE BOARDS
On July 1 and 2, 1996, the independent directors of the
Board met and discussed the Transaction and its possible effect
on the Fund and evaluated the New Advisory Agreements. Senior
officers of FRI and HSC were present to answer questions from the
Board. In evaluating the New Advisory Agreements, the Board
reviewed materials furnished by HSC and Franklin relevant to its
decision. Those materials included information regarding HSC,
Franklin Mutual, FRI and their affiliates and their personnel,
operations and financial condition. Representatives of HSC and
FRI discussed with the Board HSC's philosophy of management,
performance expectations and methods of operation insofar as they
related to the Fund and indicated their belief that, as a
consequence of the Transaction, the operations of HSC and its
ability to provide services to the Fund would not be adversely
affected and would likely be enhanced by the resources of FRI.
The Board considered the potential benefits to shareholders, in
particular the ability of the Series' shareholders, beginning
approximately six months after the Closing and thereafter, to
exchange (without any sales charges) any Mutual Series Fund
shares which have been held for at least six months into
shares of other Franklin Templeton funds in accordance with
the terms of any offering then being made by such funds in
their respective prospectuses. In addition it is expected
that enhanced shareholder services will be provided. In
its deliberations, the Board considered the terms of the
Transaction, including, among other things, the
continued employment of all of the senior members of the
management team of HSC including Michael F. Price, which it
believed to be important to assure continuity of the advisory
services provided by HSC to the Fund. HSC's $150 million
investment in the Fund and the Escrow Agent's obligation not to
release the escrow if it is less than $100 million were also
considered significant. The Board also considered comparative
information on other investment companies with similar investment
objectives. Michael Lipper of Lipper Analytical Services, Inc.,
made a presentation to the directors and discussed these
materials with the Board of Directors. In addition, the Board
reviewed and discussed the terms and provisions of the New
Advisory Agreements and compared fees and expenses under the New
Advisory Agreements with those paid by other investment
companies. The Board considered the benefits that the Fund
might obtain from the sale of the business of HSC to FRI,
including expanded research capabilities and shareholder
services. The Board engaged in extensive discussion with
respect to the provision of administrative services pursuant to the
Administration Agreement in order to evaluate the benefits to the
Fund and to seek to maintain the current expense ratios for
services to the extent practicable. It explored the differences
between the current expense structure and the proposed
administrative services. It also reviewed transfer agency
services necessary to implement the exchange privilege and
multiclass structure. The Board determined to defer any decision
on the Administration Agreement pending receipt of more detailed
information. In connection therewith, Mr. Wade, chairman of the
Audit Committee was designated by the Board to gather additional
data. Mr. Wade and counsel to the disinterested directors met
with personnel of FRI and its affiliates at FRI's offices on July
9 and July 10, 1996. FRI provided detailed information with
respect to the nature, quality and prices of all anticipated Fund
services other than investment advisory services to be performed
by its affiliates. During his visit, Mr. Wade obtained
assurances on the expense limitation described in Item 4 under
"Benefits to Shareholders" above. The directors met on July 23,
1996 to consider the matter, and approved the Administration
Agreement, in part based on the FRI undertakings regarding
advisory fees and expense limitations as well as on Mr. Wade's
report to the Board regarding the apparent observed high quality
and cost-effectiveness of the FRI operations. The Board was
satisfied that the Fund was likely to obtain services of a
quality at least as high as those currently obtained, and would
receive valuable additional types of services not currently
provided.
The Board was advised by its own counsel and considered all
information that it determined was relevant to its deliberations.
It also considered the factors under Rule 12b-1 and Rule 18f-3 of
the 1940 Act with respect to implementing the multi-class
distribution system that is to become effective on the Closing.
In determining to recommend that shareholders of each Series
vote to approve the New Advisory Agreements as being in the best
interest of the Fund's shareholders, it was noted that the
advisory services to be provided by HSC would be performed by the
same people and that there were certain assurances that expenses
to be incurred under the new Administration Agreement would
generally not be greater than those that would be incurred under
the current advisory agreements.
ACCORDINGLY, AFTER CONSIDERATION OF THE ABOVE, AND SUCH
OTHER FACTORS AND INFORMATION AS IT DEEMED RELEVANT, THE BOARD,
INCLUDING ALL OF THE BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS
(AS SUCH TERM IS DEFINED BY THE 1940 ACT), UNANIMOUSLY APPROVED
EACH NEW ADVISORY AGREEMENT AND VOTED TO RECOMMEND ITS APPROVAL
TO THE RESPECTIVE SERIES' SHAREHOLDERS.
PROPOSAL NO. 2
AMENDMENT TO CHARTER
After the Closing, it is proposed that the Fund be made
available to new investors through the nationwide network of
independent broker-dealers which now distribute the Franklin
Templeton funds. New investors will be offered shares in new
classes of the Fund - Class I and Class II. In connection with
the Transaction, it is proposed that shareholders who are
shareholders of the Fund on the Closing date will generally have
exchange privileges into the funds in the Franklin Templeton fund
complex as soon as practicable, which is anticipated to take
approximately six months. Except with respect to certain types
of investors, those funds are generally not otherwise available
without sales charges. If the Transaction is approved, new
investors who purchase shares of any Series after the Closing
will acquire Class I or Class II shares of each respective Series
with a sales charge while existing shareholders will own a
special class of shares sold without sales charges. As a
technical matter, in order to implement the new class structure,
which has been approved by your Board of Directors contingent
upon occurrence of the Closing of the Transaction, it is
necessary to amend Article V of the Fund's Charter to provide
that each of the Series may issue multiple classes of shares.
The specific language of the Articles of Amendment is attached as
Appendix B. APPROVING THIS AMENDMENT WILL NOT IN ANY WAY CHANGE
THE EXPENSES, FEES OR CHARGES TO CURRENT SHAREHOLDERS AFTER THE
CLOSING. IT WILL ONLY AFFECT NEW INVESTORS, WHO WILL BE SUBJECT
TO RULE 12B-1 FEES AND SALES CHARGES APPROVED BY THE BOARD OF
DIRECTORS AND THE INITIAL SHAREHOLDER WITH RESPECT TO THE NEW
CLASSES. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THIS PROPOSAL.
PROPOSAL NO. 3
ELECTION OF THE BOARD OF
DIRECTORS OF THE FUND
At the Meeting, 12 directors will be elected to serve until
the next Annual Meeting of Shareholders and until their
successors are elected and qualified. The affirmative vote of a
plurality of the shares of the Fund present at the Meeting is
required to elect the nominees. It is the intention of the
persons named in the enclosed proxy to vote in favor of the
election of the persons listed below. The Board of Directors
recommends that you vote "FOR" the nominees.
The Board of Directors of the Fund knows of no reason why
any of the nominees listed below will be unable to serve but in
the event of any such unavailability, the proxies received will
be voted for such substitute nominees as the Board of Directors
may recommend.
Certain information concerning the nominees is set forth
below. The eight nominees that are currently directors of the
Fund were elected by shareholders at the last annual meeting of
shareholders other than Anne Torre Grant and Barry F. Schwartz,
who were subsequently added by the Board of Directors. Messrs.
Hines, Lippman, Millsaps and Rubin were nominated by the Board of
Directors at its meeting of July 23, 1996. The "interested"
directors (as defined by Section 2(a)(19) of the Investment
Company Act of 1940) are indicated by an asterisk(*). The
directors who are not "interested directors" are hereinafter
called "independent directors".
Fund
Principal Director Shares
Occupations or of the Owned % of
Name and Age Employment in Fund as of Shares
Past 5 Years Since 7/23/96 Outstanding
Michael F. Chairman of the 1980(1) S 28,432.534 (3)
Price* Board and President Q 19,129.300
Age: 45 of the Fund. B 64,059.839
President, Chief D 123,687.465
Operating Officer E 101,774.590
and Chairman of
HSC.
Peter A. Executive Vice 1989 S 9,381.717 (3)
Langerman* President of the Q 3,346.720
Age: 41 Fund. Financial B 9,033.804
Analyst with HSC D 45,339.778
since 1986. E 7,500.000
William Senior Vice (2) B 131.822 (3)
Lippman* President of FRI,
Age: 70 Franklin Advisers,
Inc., Franklin
Advisory Services,
Inc. and
Franklin/Templeton
Distributors, Inc.;
Director, Templeton
Worldwide, Inc.;
officer and
director, trustee
or managing general
partner, as the
case may be, of
some of the
investment
companies in the
Franklin Group of
Funds. Until June
1988, President,
Chief Executive
Officer, and
Director of L.F.
Rothschild Fund
Management, Inc.,
Director of L.F.
Rothschild Asset
Management, Inc.,
Administrative
Managing Director
and Director of
L.F. Rothschild &
Co., Incorporated.
Edward I. Max L. Heine 1987(1) S 5,182.887 (3)
Altman, Professor of D 1,742.333
Ph.D. Finance and Vice
Age: 55 Director of the New
York University
Salomon Center,
Leonard H. Stern
School of Business;
editor and author
of numerous
financial books and
articles; financial
consultant.
Ann Torre Executive Vice 1995 S 352.092 (3)
Grant President, Chief D 873.362
Age: 38 Financial Officer
and Treasurer, NHP
Incorporated
(manager of
multifamily
housing); prior to
March 1995
positions including
Vice President and
Treasurer, US Air,
Inc.
Andrew H. Consultant for the (2) Q 997.000 (3)
Hines, Jr. Triangle Consulting
Age: 73 Group; chairman of
the board and chief
executive officer
of Florida Progress
Corporation (1982-
February, 1990) and
chairman and
director of Precise
Power Corporation;
executive-in-
residence of Eckerd
College (1991-
present); and a
director of
Checkers Drive-In
Restaurants, Inc.;
director or trustee
of all of the U.S.
registered
Templeton
investment
companies.
Bruce A. President of A.A. 1974(1) B 12,505.670 (3)
MacPherson MacPherson, Inc. D 53,479.163
Age: 66 Boston, Mass.
(representative for
electrical
manufacturers).
Fred R. Manager of personal (2)
Millsaps investments (1978-
Age: 67 present); Chairman
and Chief Executive
Officer of Landmark
Banking Corporation
(1969-1978);
financial Vice
President of
Florida Power and
Light (1965-1969);
vice president of
The Federal Reserve
Bank of Atlanta
(1958-1965);
director or trustee
of all of the U.S.
registered
Templeton
investment
companies.
Leonard Chairman of the (2)
Rubin Board, Carolace
Age: 70 Embroidery Co.,
Inc.; President,
F.N.C. Textiles,
Inc.; Vice
President, Trimtex
Co. Inc.; and
trustee of three of
the investment
companies in the
Franklin Group of
Funds.
Barry F. Executive Vice 1995 S 9,572.472 (3)
Schwartz President and B 8,682.581
Age: 47 General Counsel, D 23,465.720
MacAndrews & Forbes E 16,904.806
Holdings, Inc. (a
diversified holding
Company).
Vaughn R. Practicing 1982(1) S 81.558 (3)
Sturtevant, physician. Q 987.715
M.D. B 23,455.678
Age: 73 D 2,501.076
Robert E. Practicing 1993 S 389.860 (3)
Wade attorney. Q 737.562
Age: 50 B 1,928.757
D 8,341.218
All directors and officers as a group (16 persons) owned an
aggregate of 58,776.664 shares of Mutual Shares; 50,677.839
shares of Mutual Qualified; 126,157.674 shares of Mutual Beacon;
361,188.963 shares of Mutual Discovery; and 163,729.396 shares of
Mutual European as of July 23, 1996 (less than 1% of the shares
outstanding on such date of each Series and of the Fund as a
whole). The letters next to shares owned indicate the Series
owned; B for Mutual Beacon; D for Mutual Discovery; E for Mutual
European; Q for Mutual Qualified; and S for Mutual Shares.
(1) Includes service as directors of one or more predecessor
funds prior to each of their mergers into the Fund in February
1988. The Fund was incorporated in late 1987 to be the successor
by merger to the predecessor funds.
(2) Not currently serving as a director.
(3) Less than 1%.
The Fund has no standing compensation committee of the Board
of Directors, but does have a committee composed of Ms. Grant
(Chairman) and Messrs. Sturtevant and Wade that evaluates
director compensation and performance. The Fund has an audit
committee composed of Messrs. Wade (Chairman) and Altman and Ms.
Grant, which is charged with recommending a firm of independent
auditors to the independent directors of the fund and reviewing
accounting and related matters with the auditors and the Fund.
The Fund also has a nominating committee composed of Messrs.
MacPherson (Chairman), Chasse and Schwartz which screens and
recommends nominees for the Board who are not interested persons
of HSC. Dr. Chasse, currently a director, has determined to
retire and is not standing for reelection. As a general matter,
the committee does not consider nominees recommended by
shareholders.
Five meetings of the Board of Directors of the Fund were
held between January 1995 and December 31, 1995. In that period,
all incumbent directors attended more than 75% of the meetings.
Four meetings of the Audit Committee were held during that
period with all incumbent members of such committee attending at
least 75% of the meetings. No meetings of the nominating
committee were held.
Only the independent directors receive remuneration from the
Fund for acting as a director. During the 1995 fiscal year,
director fees for independent directors were set at $15,000 per
annum plus $750 for each Board of Directors meeting attended plus
out-of-pocket expenses. Directors are paid $500 plus out-of-
pocket expenses for each Committee meeting attended. In 1993,
the Board approved a retirement plan which generally provides
payments to directors who have served 10 years and retire at age
70. At the time of retirement, Directors are entitled to annual
payments equal to one half of the retainer in effect as of the
time of retirement. Pursuant to the current investment advisory
agreement with HSC, HSC provides personnel to serve as officers
of the Fund, subject to their consent. As noted above, pursuant
to such agreements, HSC is reimbursed for the proportionate
salary, bonus, benefits and any costs of its personnel who devote
a substantial amount of their time to Fund administrative
matters.
The following table sets forth certain information regarding
compensation of the Fund's Board of Directors and officers.
Except as disclosed below, no executive officer or person
affiliated with the Fund received compensation from the Fund for
the calendar year ended December 31, 1995 in excess of $60,000.
Compensation Table
Pension or
Retirement Estimated
Aggregate Benefits Accrued Annual
Compensation As Part of Retirement
Name and Position From Fund Fund Expenses Benefits
Michael F. Price 0 0 0
Director
Peter A. Langerman 0 0 0
Director
Edward I. Altman, Ph.D. 20,750 0 7,500
Director
Richard L. Chasse, M.D. 18,750 0 7,500
Director
Ann Torre Grant 20,750 0 7,500
Director
Bruce A. MacPherson 18,750 0 7,500
Director
Barry F. Schwartz 18,750 0 7,500
Director
Vaughn R. Sturtevant,
M.D. 18,750 0 7,500
Director
Robert E. Wade 25,750 0 7,500
Director
The Board of Directors recommends that you vote "FOR" each of the
nominees.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
Ernst & Young ("E&Y") have been selected by the vote cast in
person by a majority of the Board of Directors, including a
majority of the independent directors, subject to the
ratification by the shareholders at the Meeting, as the
independent auditors to audit the accounts of each Series of the
Fund for and during the fiscal year ending December 31, 1996.
Representatives of E&Y will attend the Meeting, will have an
opportunity to make a statement if they desire to do so, and will
be available to answer questions.
THE AFFIRMATIVE VOTE OF A SIMPLE MAJORITY OF SHARES OF EACH
SERIES PRESENT AND VOTING AT THE MEETING IS REQUIRED TO RATIFY
THE SELECTION OF E&Y. THE BOARD OF DIRECTORS RECOMMEND THAT THE
SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS.
BROKERAGE FEES AND PORTFOLIO TRANSACTIONS
Currently, HSC effects portfolio transactions for each
Series through a broker which is an affiliated person of the Fund
or HSC only if in HSC's judgment such broker is able to obtain
the best combination of price and execution. Currently the only
broker affiliated with the Fund or HSC is Clearwater. Although
an affiliated broker such as Clearwater is entitled to and is
paid a commission for executing brokerage transactions for the
Fund, Clearwater does not act as a principal for its own account
in any portfolio transactions with the Fund. Clearwater will not
provide services to the Fund after the Closing and it is not
currently anticipated that Franklin Mutual will utilize the
services of an affiliated broker.
For the fiscal year ended December 31, 1995, the aggregate
amount of commissions paid to Clearwater was $2,814,750. The
percentage of the Fund's aggregate commissions paid to Clearwater
was 12.5%.
HSC makes its portfolio decisions for each Series based on
its judgement as to the best interest of such Series, taking into
account factors such as relative size, cash position, investment
restrictions and tax consequences to the client. Securities
considered for purchase or sale by a Series are often also
appropriate for purchase or sale by the other Series advised by
HSC. When more than one of such Series is purchasing or selling
the same securities at or about the same time, the transactions
are averaged as to price.
Under the New Advisory Agreements, Franklin Mutual is
responsible for effecting securities transactions of the Fund and
will do so in a manner deemed fair and reasonable to shareholders
of the Fund and not according to any formula.
DEADLINE FOR SHAREHOLDER PROPOSALS
The Fund does not hold regularly scheduled annual meetings.
Any shareholder desiring to present a proposal for inclusion at
the next meeting of shareholders should submit such proposal to
the Fund.
OTHER MATTERS
The management knows of no other matters which are to be
brought before the Meeting. However, if any other matters not
now known or determined properly come before the Meeting, it is
the intention of the persons named in the enclosed form of Proxy
to vote such Proxy in accordance with their best judgment on such
matters.
All Proxies received will be voted in favor of all the
proposals, unless otherwise directed therein.
Very truly yours,
MICHAEL F. PRICE
President
August 6, 1996
APPENDIX A
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of __________, 1996
between _____________, a series (composed of one or more classes)
_____ of Mutual Series Fund Inc., a corporation organized under
the laws of the State of Maryland (hereinafter referred to as the
"Fund"), and Franklin Mutual Advisers, Inc. (hereinafter referred
to as the "Investment Adviser").
In consideration of the mutual agreements herein made,
the Fund and the Investment Adviser understand and agree as
follows:
1. The Investment Adviser agrees, during the life of
this Agreement, to manage the investment and reinvestment of the
Fund's assets consistent with the provisions of the Fund's
Charter, By-laws and the investment policies adopted and approved
by the Fund's Board of Directors and shareholders pursuant to the
Investment Company Act of 1940 (the "1940 Act"). In pursuance of
the foregoing, the Investment Adviser shall have sole and
exclusive discretion in all determinations with respect to the
purchasing and selling of securities and other assets for the Fund
and in voting and exercising all other rights appertaining to such
securities and other assets on behalf of the Fund, and shall take
all such steps as may be necessary to implement those
determinations.
2. The Investment Adviser is not required to furnish
any personnel, overhead items or facilities for the Fund,
including trading desk facilities or daily pricing of the Fund's
portfolio, but personnel employed by the Investment Adviser may
act as officers and/or directors.
3. The Investment Adviser shall be responsible for
selecting members of securities exchanges, brokers and dealers
(such members, brokers and dealers being hereinafter referred to
as "brokers") for the execution of the Fund's portfolio
transactions consistent with the Fund's brokerage policy and, when
applicable, the negotiation of commissions in connection
therewith. All decisions and placements shall be made in
accordance with the following principles:
a. Purchase and sale orders will usually be placed
with brokers which are selected by the Investment
Adviser as able to achieve "best execution" of such
orders. "Best execution" shall mean prompt and
reliable execution at the most favorable securities
price, taking into account the other provisions
hereinafter set forth. The determination of what
may constitute best execution and price in the
execution of a securities transaction by a broker
involves a number of considerations, including,
without limitation, the overall direct net economic
result to the Fund (involving both price paid or
received and any commissions and other costs paid),
the efficiency with which the transaction is
executed, the ability to effect the transaction at
all where a large block is involved, availability
of the broker to stand ready to execute possibly
difficult transactions in the future, and the
financial strength and stability of the broker.
Such considerations are judgmental and are weighed
by the Investment Adviser in determining the
overall reasonableness of brokerage commissions.
b. In selecting brokers for portfolio transactions,
the Investment Adviser shall take into account its
past experience as to brokers qualified to achieve
"best execution", including brokers who specialize
in any foreign securities held by the Fund.
c. The Investment Adviser is authorized to allocate
brokerage business to brokers who have provided
brokerage and research services, as such services
are defined in Section 28(e) of the Securities
Exchange Act of 1934 (the "1934 Act") for the Fund
and/or other accounts, if any, for which the
Investment Adviser exercises investment discretion
(as defined in Section 3(a)(35) of the 1934 Act)
and, as to transactions for which fixed minimum
commission rates are not applicable, to cause the
Fund to pay a commission for effecting a securities
transaction in excess of the amount another broker
would have charged for effecting that transaction,
if the Investment Adviser determines in good faith
that such amount of commission is reasonable in
relation to the value of the brokerage and research
services provided by such broker, viewed in terms
of either that particular transaction or the
Investment Adviser's overall responsibilities with
respect to the Fund and the other accounts, if any,
as to which it exercises investment discretion. In
reaching such determination, the Investment Adviser
will not be required to place or attempt to place a
specific dollar value on the research or execution
services of a broker or on the portion of any
commission reflecting either of said services. In
demonstrating that such determinations were made in
good faith, the Investment Adviser shall be
prepared to show that all commissions were
allocated and paid for purposes contemplated by the
Fund's brokerage policy; that the research services
provide lawful and appropriate assistance to the
Investment Adviser in the performance of its
investment decision-making responsibilities, and
that the commissions were within a reasonable
range. Whether commissions were within a
reasonable range shall be based on any available
information as to the level of commissions known to
be charged by other brokers on comparable
transactions, but there shall be taken into account
the Fund's policies that (i) obtaining a low
commission is deemed secondary to obtaining a
favorable securities price, since it is recognized
that usually it is more beneficial to the Fund to
obtain a favorable price than to pay the lowest
commission; and (ii) the quality,
comprehensiveness, and frequency of research
studies which are provided to the Investment
Adviser are useful to the Investment Adviser in
performing its advisory services under its
Agreement. Research services provided by brokers
to the Investment Adviser are considered to be in
addition to, and not in lieu of, services required
to be performed by the Investment Adviser under
this Agreement. Research furnished by brokers
through which the Fund effects securities
transactions may be used by the Investment Adviser
for any of its accounts, and not all such research
may be used by the Investment Adviser for the Fund.
When execution of portfolio transactions is
allocated to brokers trading on exchanges with
fixed brokerage commission rates, account may be
taken of various services provided by the broker.
d. Purchases and sales of portfolio securities within
the United States other than on a securities
exchange shall be executed with primary market
makers acting as principal, except where, in the
judgment of the Investment Adviser, better prices
and execution may be obtained on a commission basis
or from other sources.
e. Sales of Fund Shares (which shall be deemed to
include also Shares of other registered investment
companies which have either the same adviser or an
investment adviser affiliated with the Fund's
Investment Adviser) by a broker are one factor
among others to be taken into account in deciding
to allocate portfolio transactions (including
agency transactions, principal transactions,
purchases in underwritings or tenders in response
to tender offers) for the account of the Fund to
that broker; provided that the broker shall furnish
"best execution," as defined in subparagraph A
above, and that such allocation shall be within the
scope of the Fund's policies as stated above;
provided further, that in every allocation made to
a broker in which the sale of Fund Shares is taken
into account, there shall be no increase in the
amount of the commissions or other compensation
paid to such broker beyond a reasonable commission
or other compensation determined, as set forth in
subparagraph C above, on the basis of best
execution alone or best execution plus research
services, without taking account of or placing any
value upon such sale of Fund's Shares.
4. The Fund agrees to pay to the Investment Adviser as
compensation for such services a fee for its services based upon a
percentage of the Fund's average daily net assets, payable at the
end of each calendar month. This fee shall be calculated daily at
the following annual rates: .60% for each of Mutual Shares Fund,
Mutual Qualified Fund and Mutual Beacon Fund, and .80% for each of
Mutual Discovery Fund and Mutual European Fund.
Notwithstanding the foregoing, if the total expenses of
the Fund (including the fee to the Investment Adviser) in any
fiscal year of the Fund exceed any expense limitation imposed by
applicable State law, the Investment Adviser shall reimburse the
Fund for such excess in the manner and to the extent required by
applicable State law. The term "total expenses," as used in this
paragraph, does not include interest, taxes, litigation expenses,
distribution expenses, brokerage commissions or other costs of
acquiring or disposing of any of the Fund's portfolio securities
or any costs or expenses incurred or arising other than in the
ordinary and necessary course of the Fund's business. When the
accrued amount of such expenses exceeds this limit, the monthly
payment of the Investment Adviser's fee will be reduced by the
amount of such excess, subject to adjustment month by month during
the balance of the Fund's fiscal year if accrued expenses
thereafter fall below the limit.
The Investment Adviser may waive all or a portion of its
fees provided for hereunder and such waiver shall be treated as a
reduction in the purchase price of its services. The Investment
Adviser shall be contractually bound hereunder by the terms of any
publicly announced waiver of its fee or any limitation of the
Fund's expenses, as if such waiver or limitation were fully set
forth herein.
5. This Agreement shall become effective on
__________, 1996 and shall continue in effect through __________,
1998. If not sooner terminated, this Agreement shall continue in
effect for successive periods of 12 months each thereafter,
provided that each such continuance shall be specifically approved
annually by the vote of a majority of the Fund's Board of
Directors who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such
approval and either the vote of (a) a majority of the outstanding
voting securities of the Fund, as defined in the 1940 Act, or (b)
a majority of the Fund's Board of Directors as a whole.
6. Notwithstanding the foregoing, this Agreement may
be terminated by either party at any time, without the payment of
any penalty, on sixty (60) days' written notice to the other
party, provided that termination by the Fund is approved by vote
of a majority of the Fund's Board of Directors in office at the
time or by vote of a majority of the outstanding voting securities
of the Fund (as defined by the 1940 Act).
7. This Agreement will terminate automatically and
immediately in the event of its assignment (as defined in the 1940
Act).
8. In the event this Agreement is terminated and the
Investment Adviser no longer acts as Investment Adviser to the
Fund, the Investment Adviser reserves the right to withdraw from
the Fund the use, if any, of the name "Franklin", "Templeton", or
any name misleadingly implying a continuing relationship between
the Fund and the Investment Adviser or any of its affiliates.
9. Except as may otherwise be provided by the 1940
Act, neither the Investment Adviser nor its officers, directors,
employees or agents shall be subject to any liability for any
error of judgment, mistake of law, or any loss arising out of any
investment or other act or omission in the performance by the
Investment Adviser of its duties under the Agreement or for any
loss or damage resulting from the imposition by any government of
exchange control restrictions which might affect the liquidity of
the Fund's assets, or from acts or omissions of custodians, or
securities depositories, or from any war or political act of any
foreign government to which such assets might be exposed, or for
failure, on the part of the custodian or otherwise, timely to
collect payments, except for any liability, loss or damage
resulting from willful misfeasance, bad faith or gross negligence
on the Investment Adviser's part or by reason of reckless
disregard of the Investment Adviser's duties under this Agreement.
It is hereby understood and acknowledged by the Fund that the
value of the investments made for the Fund may increase as well as
decrease and are not guaranteed by the Investment Adviser. It is
further understood and acknowledged by the Fund that investment
decisions made on behalf of the Fund by the Investment Adviser are
subject to a variety of factors which may affect the values and
income generated by the Fund's portfolio securities, including
general economic conditions, market factors and currency exchange
rates, and that investment decisions made by the Investment
Adviser will not always be profitable or prove to have been
correct.
10. a. The Fund hereby agrees to indemnify the
Investment Adviser and each of the Investment Adviser's directors,
officers, employees, and agents (including any individual who
serves at the Investment Adviser's request as director, officer,
partner, trustee or the like of another corporation) (each such
person being an "Indemnitee") against any liabilities and
expenses, including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees (all as
provided in accordance with applicable corporate law) reasonably
incurred by such Indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether civil
or criminal, before any court or administrative or investigative
body in which he may be or may have been involved as a party or
otherwise or with which he may be or may have been threatened,
while acting in any capacity set forth above in this Section 10 or
thereafter by reason of his having acted in any such capacity,
except with respect to any matter as to which he shall have been
adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Fund and
furthermore, in the case of any criminal proceeding, so long as he
had no reasonable cause to believe that the conduct was unlawful,
provided, however, that (1) no Indemnitee shall be indemnified
hereunder against any expense of such Indemnitee arising by reason
of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence
or (iv) reckless disregard of the duties involved in the conduct
of his position (the conduct referred to in such clauses (i)
through (iv) being sometimes referred to herein as "disabling
conduct"), (2) as to any matter disposed of by settlement or a
compromise payment by such Indemnitee, pursuant to a consent
decree or otherwise, no indemnification either for said payment or
for any other expenses shall be provided unless there has been a
determination that such settlement or compromise is in the best
interests of the Fund and that such Indemnitee appears to have
acted in good faith in the reasonable belief that his action was
in the best interests of the Fund and did not involve disabling
conduct by such Indemnitee and (3) with respect to any action,
suit or other proceeding voluntarily prosecuted by any Indemnitee
as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such
Indemnitee was authorized by a majority of the full Board of the
Fund.
b. The Fund shall make advance payments in
connection with the expenses of defending any action with respect
to which indemnification might be sought hereunder if the Fund
receives a written affirmation of the Indemnitee's good faith
belief that the standard of conduct necessary for indemnification
has been met and a written undertaking to reimburse the Fund
unless it is subsequently determined that he is entitled to such
indemnification and if the directors of the Fund determine that
the facts then known to them would not preclude indemnification.
In addition, at least one of the following conditions must be met:
(A) the Indemnitee shall provide a security for his undertaking,
(B) the Fund shall be insured against losses arising by reason of
any lawful advance, or (C) a majority of a quorum consisting of
directors of the Fund who are neither "interested persons" of the
Fund (as defined in Section 2(a)(19) of the Act) nor parties to
the proceeding ("Disinterested Non-party Directors") or an
independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
Indemnitee ultimately will be found entitled to indemnification.
c. All determinations with respect to
indemnification hereunder shall be made (1) by a final decision on
the merits by a court or other body before whom the proceeding was
brought that such Indemnitees is not liable by reason of disabling
conduct or, (2) in the absence of such a decision, by (i) a
majority vote of a quorum of the Disinterested Directors of the
Fund, or (ii) if such a quorum is not obtainable or even, if
obtainable, if a majority vote of such quorum so directs,
independent legal counsel in a written opinion. All
determinations that advance payments in connection with the
expense of defending any proceeding shall be authorized shall be
made in accordance with the immediately preceding clause (2)
above.
The rights accruing to any Indemnitee under these
provisions shall not exclude any other right to which he may be
lawfully entitled.
11. It is understood that the services of the
Investment Adviser are not deemed to be exclusive, and nothing in
this Agreement shall prevent the Investment Adviser, or any
affiliate thereof, from providing similar services to other
investment companies and other clients, including clients which
may invest in the same types of securities as the Fund, or, in
providing such services, from using information furnished by
others. The Fund acknowledges that the Investment Adviser renders
services to others, that officers and employees of the investment
adviser invest for their own accounts, and the Fund is not
entitled to, and does not expect, to obtain the benefits of any
investment opportunities developed by the Investment Adviser or
such officers or employees in which the Investment Adviser acting
in good faith, does not cause the Fund to invest.
12. This Agreement shall be construed in accordance
with the laws of the State of Maryland, provided that nothing
herein shall be construed as being inconsistent with applicable
Federal and state securities laws and any rules, regulations and
orders thereunder.
13. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be deemed to
be severable.
14. Nothing herein shall be construed as constituting
the Investment Adviser an agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have cause this
Agreement to be executed by their duly authorized officers and
their respective corporate seals to be hereunto duly affixed and
attested.
[ ]
a series _____ of
Mutual Series Fund Inc.
By:__________________________
FRANKLIN MUTUAL ADVISERS, INC.
By:__________________________
Name:
Title:
FORM OF
ADMINISTRATION AGREEMENT BETWEEN
FRANKLIN TEMPLETON SERVICES, INC. AND
MUTUAL SERIES FUND, INC.
AGREEMENT dated as of _____, 1996, between _______ (the
"Fund"), a series of Mutual Series Fund Inc., a Maryland
corporation which is a registered open-end investment
company and Franklin Templeton Services, Inc. ("FSI").
In consideration of the mutual promises herein made,
the parties hereby agree as follows:
(1) FSI agrees, during the life of this Agreement, to
be responsible for:
(a) providing office space, telephone, office
equipment and supplies for the Fund;
(b) paying compensation of the Fund's officers
for services rendered as such;
(c) authorizing expenditures and approving bills
for payment on behalf of the Fund;
(d) supervising preparation of annual and
semiannual reports to shareholders, notices
of dividends, capital gains distributions and
tax credits, and attending to routine
correspondence and other communications with
individual shareholders;
(e) daily pricing of the Fund's investment
portfolio and preparing and supervising
publication of daily quotations of the bid
and asked prices of the Fund's Shares,
earnings reports and other financial data;
(f) monitoring relationships with organizations
serving the Fund, including custodians,
transfer agents and printers;
(g) providing trading desk facilities for the
Fund;
(h) supervising compliance by the Fund with
recordkeeping requirements under the
Investment Company Act of 1940 (the "1940
Act") and the rules and regulations
thereunder, with state regulatory
requirements, maintenance of books and
records for the Fund (other than those
maintained by the custodian and transfer
agent), preparing and filing of tax reports
other than the Fund's income tax returns;
(i) monitoring the qualifications of tax deferred
retirement plans for the Fund; and
(j) providing executive, clerical and secretarial
personnel needed to carry out the above
responsibilities.
(2) The Fund agrees, during the life of this
Agreement, to pay to FSI as compensation for the foregoing a
monthly fee equal on an annual basis to % of the first
$ million of the aggregate average daily net assets of
the Fund during the month preceding each payment, reduced as
follows: on such net assets in excess of $ million up to
$ million, a monthly fee equal on an annual basis to %;
on such net assets in excess of $ million up to $
billion, a monthly fee equal on an annual basis to %; and
on such net assets in excess of $ billion, a monthly fee
equal on an annual basis to %.
(3) This Agreement shall remain in full force and
effect through _________, 1998 and thereafter from year to
year to the extent continuance is approved annually by the
Board of Directors of the Fund.
(4) This Agreement may be terminated by the Fund at
any time on sixty (60) days' written notice without payment
of penalty, provided that such termination by the Fund shall
be directed or approved by the vote of a majority of the
Directors of the Fund in office at the time or by the vote
of a majority of the outstanding voting securities of the
Fund (as defined by the 1940 Act); and shall automatically
and immediately terminate in the event of its assignment (as
defined by the 1940 Act).
(5) In the absence of willful misfeasance, bad faith
or gross negligence on the part of FSI, or of reckless
disregard of its duties and obligations hereunder, FSI shall
not be subject to liability for any act or omission in the
course of, or connected with, rendering services hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized
officers and their respective corporate seals to be hereunto
duly affixed and attested.
_____________________________
By: _________________________
ATTEST:
___________________________
Name:
Title:
Franklin Templeton Services, Inc.
By: _____________________________
Name:
Title:
ATTEST:
__________________________
Name:
Title:
Appendix B
ARTICLES OF AMENDMENT
OF
MUTUAL SERIES FUND INC.
Mutual Series Fund, Inc., a Maryland corporation,
having its principal office at 51 John F. Kennedy Parkway,
Short Hills, New Jersey 07078 (the "Corporation"), certifies
as follows:
FIRST: The Charter of the Corporation is hereby
amended by deleting Article V thereof and inserting in its
place the following:
ARTICLE V
CAPITAL STOCK
(1) (a) The total number of shares of the
capital stock which the Corporation shall have
authority to issue is 1,300,000,000 shares of
stock, with a par value of $.001 per share, to be
known and designated initially as follows:
200,000,000 of the authorized shares of stock
shall constitute a separate series designated as
"Mutual Shares Fund Stock Series"; 200,000,000
shares of the authorized shares of stock shall
constitute a separate series designated as "Mutual
Qualified Fund Stock Series"; 200,000,000 shares
of the authorized shares of stock shall constitute
a separate series designated as "Mutual Beacon
Fund Stock Series"; 300,000,000 shares of the
authorized shares constitute a separate series
designated as the "Mutual Discovery Fund Stock
Series"; and 400,000,000 of the authorized shares
shall constitute a separate series designated as
"Mutual European Fund Stock Series." The
aggregate par value of all of the authorized
shares of the capital stock of the Corporation is
$1,300,000.00
(b) Subject to the provisions of these
Articles of Incorporation, the Board of Directors
shall have the power to issue shares of capital
stock of the Corporation from time to time, at
prices not less than the net asset value, public
offering price or par value thereof, whichever is
greater, for such consideration and in such form
as may be fixed from time to time pursuant to the
direction of the Board of Directors.
(c) Pursuant to Section 2-105 of the
Maryland General Corporation Law, the Board of
Directors of the Corporation shall have the power
to designate one or more series of shares of
capital stock and sub-series (classes) thereof,
and to classify or reclassify any unissued shares
with respect to any series or sub-series thereof
(including the unissued shares of the series
designated pursuant to subsection (1)(a) above),
and such series and sub-series (subject to any
applicable rule, regulation or order of the
Securities and Exchange Commission or other
applicable law or regulation) shall have such
preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption
and other characteristics as the Board may
determine, which shall not be inconsistent with
the provisions contained in paragraphs (a) through
(m) contained in Section (2) below, (it being
understood that such preferences, conversion or
other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms
and conditions of redemption and other
characteristics may be inconsistent with
paragraphs (a) through (c) contained in Section
(3) below).
(d) At any time when there are no
shares outstanding or subscribed for a particular
series or sub-series previously established and
designated herein or by the Board of Directors,
the series or sub-series may be eliminated by the
Board of Directors.
(e) All persons who shall acquire stock
or other securities of the Corporation shall
acquire the same subject to the provisions of
these Articles of Incorporation, as they may be
from time to time amended.
(2) Each series and sub-series of stock of
the Corporation shall have the following powers,
preferences and participating, voting or other
special rights and the qualifications,
restrictions and limitations and characteristics
thereof shall be as follows:
(a) As more fully set forth below, the
assets and liabilities and the income and expenses
of each series (or sub-series) of the
Corporation's stock may be determined separately
and, accordingly, the net asset value, the
distributions payable to holders, and the amounts
distributable in the event of dissolution of the
Corporation to holders, of shares of the
Corporation's stock may vary from series to series
and sub-series to sub-series.
(b) The net asset value of each share
of each series and sub-series of the Corporation's
stock issued and sold or redeemed or purchased at
net asset value shall be the current net asset
value per share of the shares of that series or
sub-series as determined in accordance with
procedures adopted from time to time by the Board
of Directors which comply with the 1940 Act with
such current net asset value to be based on the
assets belonging to each such series less the
liabilities charged to each series (and, in the
case of a sub-series, any additional liabilities
to be charged to the sub-series) all in the manner
contemplated herein.
(c) All consideration received by the
Corporation for the issue or sale of shares of a
series of the Corporation's stock, together with
all income, earnings, profits and proceeds
thereof, including any proceeds derived from the
sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be
(collectively referred to as "assets belonging to"
that series), shall irrevocably belong to that
series for all purposes, subject only to the
rights of creditors of the Corporation, and shall
be so recorded upon the books of account of the
Corporation. For purposes of the preceding
sentence, the assets of any corporation or
business trust or other entity merged with and
into the Corporation pursuant to a merger in which
the Corporation is the surviving corporation shall
be deemed to be assets belonging to that series of
the Corporation's stock the shares of which are
issued by the Corporation pursuant to the merger.
Except in cases where shares of a sub-series are
to be charged with certain liabilities in the
manner contemplated by the Articles Supplementary
establishing such sub-series, each share of a
series shall have equal rights with each other
share of that series with respect to the assets of
the Corporation pertaining to that series.
(d) For purposes of determining the net
asset value per share of stock of a series or sub-
series of stock, the assets belonging to a series
of the Corporation's stock shall be charged with
the liabilities of the Corporation with respect to
that series (and, in the case of a sub-series,
liabilities of or attributable to the sub-series
including any sales charges or Rule 12b-1 fees)
and with that series' share of the liabilities of
the Corporation not attributable to any particular
series or sub-series, in the latter case in the
proportion that the net asset value of that series
(determined without regard to such unattributable
liabilities) bears to the net asset value of all
series of the Corporation's stock (determined
without regard to such unattributable liabilities)
as determined in accordance with procedures
adopted by the Board of Directors. The
determination of the Board of Directors shall be
conclusive as to the allocation of liabilities,
including accrued expenses and reserves, and
assets to a particular series. Liabilities to
be charged to a particular sub-series, shall be
determined in the manner contemplated by the
Articles Supplementary establishing the particular
sub-series. The liabilities of any corporation or
business trust or other entity merged with and
into the Corporation pursuant to a merger in which
the Corporation is the surviving corporation shall
be charged to that series of the Corporation's
stock the shares of which are issued by the
Corporation pursuant to the merger.
(e) Shares of each series or sub-series
of stock shall be entitled to such dividends or
distributions, in stock or in cash or both, as may
be declared from time to time by the Board of
Directors, acting in its sole discretion, with
respect to such series or sub-series, provided
that dividends or distributions shall be paid on
shares of a series of stock only out of lawfully
available assets belonging to that series. The
assets of and the dividends payable to the holders
of any sub-series (subject to any applicable
rules, regulation or order of the Securities and
Exchange Commission or any other applicable law or
regulation) may be charged with any pro rata
portion of distribution expenses paid pursuant to
a Plan of Distribution or multi-class Plan adopted
by or applicable to such sub-series in accordance
with Rule 12b-1 and/or Rule 18f-3, respectively,
or their successors under the 1940 Act, which
dividend shall be determined as directed by the
Board and need not be individually declared, but
may be declared and paid in accordance with a
formula adopted by the Board.
(f) The Board of Directors shall have
the power in its discretion to distribute to the
shareholders of the Corporation or to the
shareholders of any series or sub-series thereof
in any fiscal year as dividends, including
dividends designated in whole or in part as
capital gain distributions, amounts sufficient, in
the opinion of the Board of Directors, to enable
the Corporation or any series thereof to qualify
as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended, or any
successor or compatible statute thereof, and
regulations promulgated thereunder (collectively,
the "IRC"), and to avoid liability of the
Corporation or any series thereof for Federal
income tax in respect of that year and to make
other appropriate adjustments in connection
therewith.
(g) The Board of Directors shall have
the power, in its discretion, to make such
elections as to the tax status of the Corporation
or any series or sub-series of the Corporation's
stock as may be permitted or required under the
IRC as presently in effect or as amended, without
the vote of shareholders of the Corporation or any
series or sub-series thereof.
(h) In the event of the liquidation or
dissolution of the Corporation, the stockholders
of a series or sub-series of the Corporation's
stock shall be entitled to receive, as a series,
out of the assets of the Corporation available for
distribution to stockholders, the assets belonging
to that series. The assets so distributable to
the stockholders of a series shall be distributed
among such stockholders in proportion to the
number of shares of that series held by them and
recorded on the books of the Corporation; provided
that liabilities attributable to a particular sub-
series shall be taken into account prior to
distributing assets to the holders of such sub-
series. In the event that there are any assets
available for distribution that are not
attributable to any particular series of stock,
such assets shall be allocated to all series in
proportion to the net assets of the respective
series in proportion to the net assets of the
respective series and then distributed to the
holders of stock of each series in proportion to
the number of shares of that series held by the
respective holders.
(i) The holder of each share of stock
of the Corporation shall be entitled to one vote
for each full share and a fractional vote for each
fractional share of stock then standing in his or
her name in the books of the Corporation. On any
matter submitted to a vote of shareholders, all
shares of the Corporation then issued and
outstanding and entitled to vote, irrespective of
the series, shall be voted in the aggregate and
not by series or sub-series except (1) when
otherwise expressly provided by the Maryland
General Corporation Law; (2) when required by the
1940 Act, shares shall be voted by individual
series or sub-series; and (3) when the matter does
not affect any interest of the particular series
or sub-series, then only shareholders of the
affected series or sub-series shall be entitled to
vote thereon. Holders of shares of stock of the
Corporation shall not be entitled to cumulative
voting in the election of directors or on any
other matter.
(j) The Board of Directors may provide
for a holder of any series of stock of the
Corporation, who surrenders his certificate in
good form for transfer to the Corporation or, if
the shares in question are not represented by
certificates, who delivers to the Corporation a
written request in good order signed by the
shareholder, to convert the shares in question on
such basis as the Board may provide into shares of
stock of any other series of the Corporation.
(k) The Corporation may issue shares of
stock in fractional denominations to the same
extent as its whole shares and shares in
fractional denominations shall be shares of stock
having proportionately to the respective fractions
represented thereby all the rights of whole
shares, including without limitation the right to
vote, the right to receive dividends and
distributions and the right to participate upon
liquidation of the Corporation, but excluding the
right to receive a stock certificate representing
fractional shares.
(l) The Corporation shall be entitled
to purchase shares of its stock, to the extent
that the Corporation may lawfully effect such
purchase under the laws of the State of Maryland,
upon such terms and conditions and for such
consideration as the Board of Directors shall deem
advisable, at a price not exceeding the net asset
value per share.
(m) In the absence of any specification
as to the purpose for which shares of stock of the
Corporation are redeemed or purchased by it, all
shares so redeemed or purchased shall be deemed to
be retired in the sense contemplated by the laws
of the State of Maryland and the number of
authorized shares of stock of the Corporation
shall not be reduced by the number of any shares
redeemed or purchased by it. Until their
classification is changed in accordance with this
Article V, all shares so redeemed or purchased
shall continue to belong to the same series or
sub-series to which they belonged at the time of
their redemption or purchase.
(3) All of the shares of the Mutual Shares
Fund Stock Series, Mutual Qualified Fund Stock
Series, Mutual Beacon Fund Stock Series, Mutual
Discovery Fund Stock Series and Mutual European
Fund Stock Series shall be subject to the
following additional provisions, it being
understood that shares which are later designated
as a sub-series of any of the foregoing series or
any new series or sub-series hereafter designated
need not be subject to the following provisions:
(a) Each holder of stock of the
Corporation, upon request to the Corporation
(accompanied by surrender of the appropriate stock
certificate or certificates in proper form for
transfer, if any certificate or certificates have
been issued to represent such shares), shall be
entitled to require the Corporation to redeem, to
the extent that the Corporation may lawfully
effect such redemption under the laws of the State
of Maryland and the federal securities laws, all
or any part of the shares of stock standing in the
name of such holder on the books of the
Corporation at a price per share equal to the net
asset value per share.
(b) Payment by the Corporation for
shares of stock of the Corporation surrendered to
it for redemption shall be made by the Corporation
within seven business days of such surrender out
of the funds legally available therefor, provided
that the Corporation may suspend the right of the
holders of stock of the Corporation to redeem
shares of stock and may postpone the right of such
holders to receive payment for any shares when
permitted or required to do so by applicable
statutes or regulations. Payment of the aggregate
price of shares surrendered for redemption may be
made in cash or, at the option of the Corporation,
wholly or partly in such portfolio securities of
the Corporation as the Corporation shall select.
(c) The right of any holder of stock of
the Corporation redeemed by the Corporation as
provided in subsection (a) above to receive
dividends thereon and all other rights of such
holder with respect to such shares shall terminate
at the time as of which the purchase or redemption
price of such shares is determined, except the
right of such holder to receive (i) the redemption
price of such shares from the Corporation or its
designated agent and (ii) any dividend or
distribution to which such holder had previously
become entitled as the record holder of such
shares on the record date for such dividend or
distribution.
SECOND: The total number of shares of stock of all
classes which the Corporation had authority to issue
immediately before the amendment set forth in Article FIRST
hereof was 1,300,000,000 shares of capital stock with a par
value of $.001 per share and an aggregate par value of
$1,300,000. Such shares of capital stock were designated as
follows: 200,000,000 of the authorized shares of stock were
designated as Mutual Shares Fund Stock; 200,000,000 shares
of the authorized shares of stock were designated as Mutual
Qualified Stock; 200,000,000 shares of the authorized shares
of stock were designated as Mutual Beacon Fund Stock;
300,000,000 shares of the authorized shares were designated
as Mutual Discovery Fund Stock and 400,000,000 of the
authorized shares were designated as Mutual European Fund
Stock.
THIRD: The total number of shares of stock of all
classes the Corporation has authority to issue, as amended,
is 1,300,000,000 shares of stock, with a par value of $.001
per share and an aggregate par value of $1,300,000. Until
such time as the Board of Directors shall provide otherwise
pursuant to the authority granted in Section (1) of the
amended Article V of the Corporation's Charter as set forth
in Article FIRST hereof, 200,000,000 of the authorized
shares of stock shall constitute a separate series
designated as Mutual Shares Fund Stock Series; 200,000,000
shares of the authorized shares of stock shall constitute a
separate series designated as Mutual Qualified Stock Series;
200,000,000 shares of the authorized shares of stock shall
constitute a separate series designated as Mutual Beacon
Fund Stock Series; 300,000,000 shares of the authorized
shares shall constitute a separate series designated Mutual
Discovery Fund Stock Series and 400,000,000 of the
authorized shares were designated as Mutual European Fund
Stock Series.
FOURTH: A description, as amended, of each series or
class of the Corporation's stock with the preferences,
conversion and other rights, voting powers, limitations as
to dividends, qualifications, terms and conditions of
redemption and other characteristics is set forth in Article
FIRST hereof.
FIFTH: (a) All of the Corporation's currently
issued and outstanding shares of Mutual Shares Fund Stock
are hereby reclassified as shares of "Mutual Shares Fund
Stock" and shall be deemed to be a sub-series of the shares
of the Corporation's series designated as Mutual Shares
Fund Stock Series, established and designated pursuant to
the amendment made to Article V of the Corporation's Charter
as set forth in Article FIRST hereof. All of the
Corporation's currently issued and outstanding shares of
Mutual Qualified Fund Stock are hereby reclassified as
shares of "Mutual Qualified Fund Stock" and shall be deemed
to be a sub-series of the shares of the Corporation's series
designated as Mutual Qualified Fund Stock Series,
established and designated pursuant to the amendment made to
Article V of the Corporation's Charter as set forth in
Article FIRST hereof. All of the Corporation's currently
issued and outstanding shares of Mutual Beacon Fund Stock
are hereby reclassified as shares of "Mutual Beacon Fund
Stock" and shall be deemed to be a sub-series of the shares
of the Corporation's series designated as Mutual Beacon Fund
Stock Series, established and designated pursuant to the
amendment made to Article V of the Corporation's Charter as
set forth in Article FIRST hereof. All of the Corporation's
currently issued and outstanding shares of Mutual Discovery
Fund Stock are hereby reclassified as shares of "Mutual
Discovery Fund Stock" and shall be deemed to be a sub-series
of the shares of the Corporation's series designated as
Mutual Discovery Fund Stock Series, established and
designated pursuant to the amendment made to Article V of
the Corporation's Charter as set forth in Article FIRST
hereof. All of the Corporation's currently issued and
outstanding shares of Mutual European Fund Stock are hereby
reclassified as shares of "Mutual European Fund Stock" and
shall be deemed to be a sub-series of the shares of the
Corporation's series designated as Mutual European Fund
Stock Series, established and designated pursuant to the
amendment made to Article V of the Corporation's Charter as
set forth in Article FIRST hereof.
(b) All of the shares of each of the sub-series
of the Corporation's capital stock established pursuant to
sub-paragraph (a) of this Article FIFTH shall, subject to
the terms and conditions of the Corporation's Charter as
amended pursuant to the amendment made to ARTICLE V of the
Corporation's Charter as set forth in Article FIRST hereof,
represent proportionate interests in the portfolio of
investments attributable to their respective Series. All of
the shares of each of the sub-series established pursuant to
sub-paragraph (a) of this Article FIFTH shall have the
rights and be subject to the provisions set forth in
numbered paragraph (3) of ARTICLE V of the Corporation's
Charter as amended in the manner set forth in Article FIRST
hereof.
SIXTH: This amendment was approved by a majority of
the Corporation's Board of Directors and by a majority vote
of the holders of each class of the Corporation's capital
stock currently outstanding at an annual meeting of the
Corporation's stockholders duly convened on ____________,
all in accordance with the Maryland General Corporation Law
and the Charter and By-Laws of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these
Articles of Amendment to be signed in its name and on its
behalf on this _____ day of __________ by its President, who
acknowledges that these Articles of Amendment are the act of
Mutual Series Fund Inc. and that to the best of his
knowledge, information and belief and under penalties for
perjury, all matters and facts contained herein are true in
all material respects,
ATTEST: MUTUAL SERIES FUND INC.
_______________ By: _____________________(SEAL)
Michael F. Price
President
1996 Annual Meeting
Mutual Beacon Fund Series of Mutual Series Fund Inc.
51 John F. Kennedy parkway, Short Hills, New Jersey 07078
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If
no direction is made this proxy will be voted FOR proposals
1, 2, 3 and 4.
1. To consider and act upon the approval of FOR ( ) AGAINST ( )
a new investment advisory agreement to ABSTAIN ( )
take effect upon the closing of the ac-
quisition of the assets of the Adviser by
Franklin Mutual.
2. To consider and act upon Articles of FOR ( ) AGAINST ( )
Amendment to the Fund's Charter to per- ABSTAIN ( )
mit the Fund and each Series to offer
additional classes of shares.
3. To consider and act upon the election of FOR ( ) AGAINST ( )
12 members of the Board of Directors of ABSTAIN ( )
the Fund to serve until the next annual
meeting or until their successors are
elected and qualified. STOCKHOLDERS MAY
WITHHOLD THEIR VOTE FOR ANY NOMINEES BY
STRIKING OUT THE NAME OF SUCH NOMINEE OR
NOMINEES.
Michael F. Price Peter A. Langerman
Edward I. Altman Ann Torre Grant
Andrew H. Hines Bruce A. MacPherson
Fred R. Millsaps Leonard Rubin Barry
F. Schwartz Vaughn R. Sturtevant
Robert E. Wade
4. To consider and act upon the ratification FOR ( ) AGAINST ( )
of the selection of Ernst & Young as ABSTAIN ( )
independent auditors for the Series for
the fiscal year ending December 31, 1996.
5. To transact such other business as may FOR ( ) AGAINST ( )
properly come before the meeting or any ABSTAIN ( )
adjournments thereof.
(OVER)
MUTUAL BEACON FUND SERIES OF MUTUAL SERIES FUND INC
PROXY SOLICITED BY THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS MICHAEL F. PRICE AND ELIZA-
BETH N. COHERNOUR AS PROXIES, EACH WITH THE POWER TO APPOINT
HIS OR HER SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRE-
SENT AND TO VOTE, AS DESIGNATED BELOW, ALL SHARES OF MUTUAL
BEACON FUND STOCK (THE "SERIES") OF MUTUAL SERIES FUND INC.
(THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON JULY 31,
1996, AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS OF THE FUND
TO BE HELD ON OCTOBER 25, 1996 OR ANY ADJOURNMENT THEREOF.
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU
AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL AS MARKED, OR IF
NOT MARKED TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY
ATTEND THE MEETING PLEASE COMPLETE AND MAIL THIS CARD AT
ONCE IN THE ENCLOSED ENVELOPE.
Please sign name or names as
printed on proxy to authorize
the voting of your shares as
indicated. Where shares are
registered with joint owners
all joint owners should sign.
Persons signing as executors,
administrators, trustees, etc.
should so indicate.
_______________________________
Signature
_______________________________
Signature
_______________________________
Date
1996 Annual Meeting
Mutual Shares Fund Series of Mutual Series Fund Inc.
51 John F. Kennedy parkway, Short Hills, New Jersey 07078
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If
no direction is made this proxy will be voted FOR proposals
1, 2, 3 and 4.
1. To consider and act upon the approval of FOR ( ) AGAINST ( )
a new investment advisory agreement to ABSTAIN ( )
take effect upon the closing of the ac-
quisition of the assets of the Adviser by
Franklin Mutual.
2. To consider and act upon Articles of FOR ( ) AGAINST ( )
Amendment to the Fund's Charter to per- ABSTAIN ( )
mit the Fund and each Series to offer
additional classes of shares.
3. To consider and act upon the election of FOR ( ) AGAINST ( )
12 members of the Board of Directors of ABSTAIN ( )
the Fund to serve until the next annual
meeting or until their successors are
elected and qualified. STOCKHOLDERS MAY
WITHHOLD THEIR VOTE FOR ANY NOMINEES BY
STRIKING OUT THE NAME OF SUCH NOMINEE OR
NOMINEES.
Michael F. Price Peter A. Langerman
Edward I. Altman Ann Torre Grant
Andrew H. Hines Bruce A. MacPherson
Fred R. Millsaps Leonard Rubin Barry
F. Schwartz Vaughn R. Sturtevant
Robert E. Wade
4. To consider and act upon the ratification FOR ( ) AGAINST ( )
of the selection of Ernst & Young as ABSTAIN ( )
independent auditors for the Series for
the fiscal year ending December 31, 1996.
5. To transact such other business as may FOR ( ) AGAINST ( )
properly come before the meeting or any ABSTAIN ( )
adjournments thereof.
(OVER)
MUTUAL SHARES FUND SERIES OF MUTUAL SERIES FUND INC
PROXY SOLICITED BY THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS MICHAEL F. PRICE AND ELIZA-
BETH N. COHERNOUR AS PROXIES, EACH WITH THE POWER TO APPOINT
HIS OR HER SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRE-
SENT AND TO VOTE, AS DESIGNATED BELOW, ALL SHARES OF MUTUAL
SHARES FUND STOCK (THE "SERIES") OF MUTUAL SERIES FUND INC.
(THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON JULY 31,
1996, AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS OF THE FUND
TO BE HELD ON OCTOBER 25, 1996 OR ANY ADJOURNMENT THEREOF.
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU
AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL AS MARKED, OR IF
NOT MARKED TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY
ATTEND THE MEETING PLEASE COMPLETE AND MAIL THIS CARD AT
ONCE IN THE ENCLOSED ENVELOPE.
Please sign name or names as
printed on proxy to authorize
the voting of your shares as
indicated. Where shares are
registered with joint owners
all joint owners should sign.
Persons signing as executors,
administrators, trustees, etc.
should so indicate.
_______________________________
Signature
_______________________________
Signature
_______________________________
Date
1996 Annual Meeting
Mutual Qualified Fund Series of Mutual Series Fund Inc.
51 John F. Kennedy parkway, Short Hills, New Jersey 07078
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If
no direction is made this proxy will be voted FOR proposals
1, 2, 3 and 4.
1. To consider and act upon the approval of FOR ( ) AGAINST ( )
a new investment advisory agreement to ABSTAIN ( )
take effect upon the closing of the ac-
quisition of the assets of the Adviser by
Franklin Mutual.
2. To consider and act upon Articles of FOR ( ) AGAINST ( )
Amendment to the Fund's Charter to per- ABSTAIN ( )
mit the Fund and each Series to offer
additional classes of shares.
3. To consider and act upon the election of FOR ( ) AGAINST ( )
12 members of the Board of Directors of ABSTAIN ( )
the Fund to serve until the next annual
meeting or until their successors are
elected and qualified. STOCKHOLDERS MAY
WITHHOLD THEIR VOTE FOR ANY NOMINEES BY
STRIKING OUT THE NAME OF SUCH NOMINEE OR
NOMINEES.
Michael F. Price Peter A. Langerman
Edward I. Altman Ann Torre Grant
Andrew H. Hines Bruce A. MacPherson
Fred R. Millsaps Leonard Rubin Barry
F. Schwartz Vaughn R. Sturtevant
Robert E. Wade
4. To consider and act upon the ratification FOR ( ) AGAINST ( )
of the selection of Ernst & Young as ABSTAIN ( )
independent auditors for the Series for
the fiscal year ending December 31, 1996.
5. To transact such other business as may FOR ( ) AGAINST ( )
properly come before the meeting or any ABSTAIN ( )
adjournments thereof.
(OVER)
MUTUAL QUALIFIED FUND SERIES OF MUTUAL SERIES FUND INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS MICHAEL F. PRICE AND ELIZA-
BETH N. COHERNOUR AS PROXIES, EACH WITH THE POWER TO APPOINT
HIS OR HER SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRE-
SENT AND TO VOTE, AS DESIGNATED BELOW, ALL SHARES OF MUTUAL
QUALIFIED FUND STOCK (THE "SERIES") OF MUTUAL SERIES FUND
INC. (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON JULY
31, 1996, AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS OF THE
FUND TO BE HELD ON OCTOBER 25, 1996 OR ANY ADJOURNMENT
THEREOF.
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU
AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL AS MARKED, OR IF
NOT MARKED TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY
ATTEND THE MEETING PLEASE COMPLETE AND MAIL THIS CARD AT
ONCE IN THE ENCLOSED ENVELOPE.
Please sign name or names as
printed on proxy to authorize
the voting of your shares as
indicated. Where shares are
registered with joint owners
all joint owners should sign.
Persons signing as executors,
administrators, trustees, etc.
should so indicate.
_______________________________
Signature
_______________________________
Signature
_______________________________
Date
1996 Annual Meeting
Mutual Discovery Fund Series of Mutual Series Fund Inc.
51 John F. Kennedy parkway, Short Hills, New Jersey 07078
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If
no direction is made this proxy will be voted FOR proposals
1, 2, 3 and 4.
1. To consider and act upon the approval of FOR ( ) AGAINST ( )
a new investment advisory agreement to ABSTAIN ( )
take effect upon the closing of the ac-
quisition of the assets of the Adviser by
Franklin Mutual.
2. To consider and act upon Articles of FOR ( ) AGAINST ( )
Amendment to the Fund's Charter to per- ABSTAIN ( )
mit the Fund and each Series to offer
additional classes of shares.
3. To consider and act upon the election of FOR ( ) AGAINST ( )
12 members of the Board of Directors of ABSTAIN ( )
the Fund to serve until the next annual
meeting or until their successors are
elected and qualified. STOCKHOLDERS MAY
WITHHOLD THEIR VOTE FOR ANY NOMINEES BY
STRIKING OUT THE NAME OF SUCH NOMINEE OR
NOMINEES.
Michael F. Price Peter A. Langerman
Edward I. Altman Ann Torre Grant
Andrew H. Hines Bruce A. MacPherson
Fred R. Millsaps Leonard Rubin Barry
F. Schwartz Vaughn R. Sturtevant
Robert E. Wade
4. To consider and act upon the ratification FOR ( ) AGAINST ( )
of the selection of Ernst & Young as ABSTAIN ( )
independent auditors for the Series for
the fiscal year ending December 31, 1996.
5. To transact such other business as may FOR ( ) AGAINST ( )
properly come before the meeting or any ABSTAIN ( )
adjournments thereof.
(OVER)
MUTUAL DISCOVERY FUND SERIES OF MUTUAL SERIES FUND INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS MICHAEL F. PRICE AND ELIZA-
BETH N. COHERNOUR AS PROXIES, EACH WITH THE POWER TO APPOINT
HIS OR HER SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRE-
SENT AND TO VOTE, AS DESIGNATED BELOW, ALL SHARES OF MUTUAL
DISCOVERY FUND STOCK (THE "SERIES") OF MUTUAL SERIES FUND
INC. (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON JULY
31, 1996, AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS OF THE
FUND TO BE HELD ON OCTOBER 25, 1996 OR ANY ADJOURNMENT
THEREOF.
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU
AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL AS MARKED, OR IF
NOT MARKED TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY
ATTEND THE MEETING PLEASE COMPLETE AND MAIL THIS CARD AT
ONCE IN THE ENCLOSED ENVELOPE.
Please sign name or names as
printed on proxy to authorize
the voting of your shares as
indicated. Where shares are
registered with joint owners
all joint owners should sign.
Persons signing as executors,
administrators, trustees, etc.
should so indicate.
_______________________________
Signature
_______________________________
Signature
_______________________________
Date
1996 Annual Meeting
Mutual European Fund Series of Mutual Series Fund Inc.
51 John F. Kennedy parkway, Short Hills, New Jersey 07078
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If
no direction is made this proxy will be voted FOR proposals
1, 2, 3 and 4.
1. To consider and act upon the approval of FOR ( ) AGAINST ( )
a new investment advisory agreement to ABSTAIN ( )
take effect upon the closing of the ac-
quisition of the assets of the Adviser by
Franklin Mutual.
2. To consider and act upon Articles of FOR ( ) AGAINST ( )
Amendment to the Fund's Charter to per- ABSTAIN ( )
mit the Fund and each Series to offer
additional classes of shares.
3. To consider and act upon the election of FOR ( ) AGAINST ( )
12 members of the Board of Directors of ABSTAIN ( )
the Fund to serve until the next
annual meeting or until their
successors are elected and qualified.
STOCKHOLDERS MAY WITHHOLD THEIR VOTE
FOR ANY NOMINEES BY STRIKING OUT THE
NAME OF SUCH NOMINEE OR NOMINEES.
Michael F. Price Peter A. Langerman
Edward I. Altman Ann Torre Grant
Andrew H. Hines Bruce A. MacPherson
Fred R. Millsaps Leonard Rubin Barry
F. Schwartz Vaughn R. Sturtevant
Robert E. Wade
4. To consider and act upon the ratification FOR ( ) AGAINST ( )
of the selection of Ernst & Young as ABSTAIN ( )
independent auditors for the Series
for the fiscal year ending December
31, 1996.
5. To transact such other business as may FOR ( ) AGAINST ( )
properly come before the meeting or ABSTAIN ( )
any adjournments thereof.
(OVER)
MUTUAL EUROPEAN FUND SERIES OF MUTUAL SERIES FUND INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS MICHAEL F. PRICE AND ELIZA-
BETH N. COHERNOUR AS PROXIES, EACH WITH THE POWER TO APPOINT
HIS OR HER SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRE-
SENT AND TO VOTE, AS DESIGNATED BELOW, ALL SHARES OF MUTUAL
EUROPEAN FUND STOCK (THE "SERIES") OF MUTUAL SERIES FUND
INC. (THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON JULY
31, 1996, AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS OF THE
FUND TO BE HELD ON OCTOBER 25, 1996 OR ANY ADJOURNMENT
THEREOF.
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU
AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL AS MARKED, OR IF
NOT MARKED TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY
ATTEND THE MEETING PLEASE COMPLETE AND MAIL THIS CARD AT
ONCE IN THE ENCLOSED ENVELOPE.
Please sign name or names as
printed on proxy to authorize
the voting of your shares as
indicated. Where shares are
registered with joint owners
all joint owners should sign.
Persons signing as executors,
administrators, trustees, etc.
should so indicate.
_______________________________
Signature
_______________________________
Signature
_______________________________
Date
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000825063
<NAME> MUTUAL SERIES FUND
<SERIES>
<NUMBER> 1
<NAME> MUTUAL SHARES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,304,628
<INVESTMENTS-AT-VALUE> 5,206,470
<RECEIVABLES> 83,896
<ASSETS-OTHER> 21,458
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,311,824
<PAYABLE-FOR-SECURITIES> 32,427
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49,823
<TOTAL-LIABILITIES> 82,250
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,178,667
<SHARES-COMMON-STOCK> 60,491
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 12,074
<ACCUMULATED-NET-GAINS> 179,161
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 883,820
<NET-ASSETS> 5,229,574
<DIVIDEND-INCOME> 67,015
<INTEREST-INCOME> 74,833
<OTHER-INCOME> 3,316
<EXPENSES-NET> 31,881
<NET-INVESTMENT-INCOME> 113,283
<REALIZED-GAINS-CURRENT> 711,761
<APPREC-INCREASE-CURRENT> 311,203
<NET-CHANGE-FROM-OPS> 1,136,247
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 102,773
<DISTRIBUTIONS-OF-GAINS> 674,838
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,892
<NUMBER-OF-SHARES-REDEEMED> 3,348
<SHARES-REINVESTED> 8,345
<NET-CHANGE-IN-ASSETS> 1,483,848
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 27,501
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 31,881
<AVERAGE-NET-ASSETS> 4,587,613
<PER-SHARE-NAV-BEGIN> 78.69
<PER-SHARE-NII> 1.99
<PER-SHARE-GAIN-APPREC> 20.51
<PER-SHARE-DIVIDEND> 1.93
<PER-SHARE-DISTRIBUTIONS> 12.81
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 86.45
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000825063
<NAME> MUTUAL SERIES FUND
<SERIES>
<NUMBER> 2
<NAME> MUTUAL QUALIFIED FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,582,294
<INVESTMENTS-AT-VALUE> 2,987,069
<RECEIVABLES> 52,754
<ASSETS-OTHER> 14,570
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,054,393
<PAYABLE-FOR-SECURITIES> 19,831
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32,429
<TOTAL-LIABILITIES> 52,260
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,509,617
<SHARES-COMMON-STOCK> 100,959
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 5,929
<ACCUMULATED-NET-GAINS> 102,648
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 395,797
<NET-ASSETS> 3,002,133
<DIVIDEND-INCOME> 35,040
<INTEREST-INCOME> 46,267
<OTHER-INCOME> 2,354
<EXPENSES-NET> 17,528
<NET-INVESTMENT-INCOME> 66,133
<REALIZED-GAINS-CURRENT> 327,189
<APPREC-INCREASE-CURRENT> 156,170
<NET-CHANGE-FROM-OPS> 549,492
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 58,854
<DISTRIBUTIONS-OF-GAINS> 289,683
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29,376
<NUMBER-OF-SHARES-REDEEMED> 6,937
<SHARES-REINVESTED> 11,322
<NET-CHANGE-IN-ASSETS> 1,210,192
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,608
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17,528
<AVERAGE-NET-ASSETS> 2,437,990
<PER-SHARE-NAV-BEGIN> 26.67
<PER-SHARE-NII> 0.66
<PER-SHARE-GAIN-APPREC> 6.33
<PER-SHARE-DIVIDEND> 0.65
<PER-SHARE-DISTRIBUTIONS> 3.27
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.79
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000825063
<NAME> MUTUAL SERIES FUND
<SERIES>
<NUMBER> 3
<NAME> MUTUAL BEACON FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 3,131,633
<INVESTMENTS-AT-VALUE> 3,532,306
<RECEIVABLES> 88,541
<ASSETS-OTHER> 18,640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,639,487
<PAYABLE-FOR-SECURITIES> 23,928
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42,262
<TOTAL-LIABILITIES> 66,190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,073,700
<SHARES-COMMON-STOCK> 99,411
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 7,873
<ACCUMULATED-NET-GAINS> 119,814
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 387,656
<NET-ASSETS> 3,573,297
<DIVIDEND-INCOME> 47,001
<INTEREST-INCOME> 57,535
<OTHER-INCOME> 2,352
<EXPENSES-NET> 21,370
<NET-INVESTMENT-INCOME> 85,518
<REALIZED-GAINS-CURRENT> 274,784
<APPREC-INCREASE-CURRENT> 297,322
<NET-CHANGE-FROM-OPS> 657,624
<EQUALIZATION> 0,77,358
<DISTRIBUTIONS-OF-INCOME> 200,920
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 39,266
<NUMBER-OF-SHARES-SOLD> 13,339
<NUMBER-OF-SHARES-REDEEMED> 7,089
<SHARES-REINVESTED> 1,512,844
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17,720
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21,370
<AVERAGE-NET-ASSETS> 2,957,634
<PER-SHARE-NAV-BEGIN> 31.03
<PER-SHARE-NII> 0.87
<PER-SHARE-GAIN-APPREC> 7.09
<PER-SHARE-DIVIDEND> 0.84
<PER-SHARE-DISTRIBUTIONS> 2.21
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 35.94
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000825063
<NAME> MUTUAL SERIES FUND
<SERIES>
<NUMBER> 4
<NAME> MUTUAL DISCOVERY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1,204,958
<INVESTMENTS-AT-VALUE> 1,368,427
<RECEIVABLES> 16,841
<ASSETS-OTHER> 3,839
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,389,107
<PAYABLE-FOR-SECURITIES> 6,822
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,064
<TOTAL-LIABILITIES> 18,886
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,181,144
<SHARES-COMMON-STOCK> 90,357
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,232
<ACCUMULATED-NET-GAINS> 37,098
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 156,211
<NET-ASSETS> 1,370,221
<DIVIDEND-INCOME> 17,265
<INTEREST-INCOME> 11,429
<OTHER-INCOME> 1,037
<EXPENSES-NET> 9,854
<NET-INVESTMENT-INCOME> 19,872
<REALIZED-GAINS-CURRENT> 84,891
<APPREC-INCREASE-CURRENT> 129,809
<NET-CHANGE-FROM-OPS> 234,572
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,921
<DISTRIBUTIONS-OF-GAINS> 66,854
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 37,915
<NUMBER-OF-SHARES-REDEEMED> 10,252
<SHARES-REINVESTED> 4,882
<NET-CHANGE-IN-ASSETS> 644,890
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,931
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,859
<AVERAGE-NET-ASSETS> 993,186
<PER-SHARE-NAV-BEGIN> 12.55
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> 3.40
<PER-SHARE-DIVIDEND> 0.14
<PER-SHARE-DISTRIBUTIONS> 0.82
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.16
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
