SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
MUTUAL SERIES FUND INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY COPY
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 (the
"Adviser"), the investment adviser to Mutual Series Fund
Inc. (the "Fund") has entered into an agreement under
which its assets will be acquired by Franklin Mutual
Advisors, Inc. ("Franklin Mutual"), a subsidiary of
Franklin Resources, Inc. ("FRI"). Because of the acqui-
sition, 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 (the
"Series") to approve a new investment advisory agreement
between such Series and Franklin Mutual. Your vote is
important in this matter.
It is important to keep in mind that the business of
the Adviser, NOT YOUR FUND, will be acquired by Franklin
Mutual. THE TRANSACTION WILL NOT CHANGE YOUR FUND
SHARES, THE ADVISORY FEES CHARGED TO YOUR FUND OR YOUR
FUND'S INVESTMENT OBJECTIVES, AND KEY EMPLOYEES OF THE
ADVISER WHO HAVE BEEN RESPONSIBLE FOR THE MANAGEMENT OF
YOUR FUND WILL CONTINUE TO ACT IN THE SAME CAPACITIES TO
YOUR FUND AS BEFORE. Most importantly, you will continue
to receive the high quality investment management and
shareholder services that you have come to expect over
the years. To receive answers to any questions you may
have about this proxy, please feel free to call us at 800
________________. ______________________ Inc. has been
retained to solicit proxies and may call to remind share-
holders to vote or otherwise assist you in doing so.
Because all the Series in the Mutual Series family
are affected similarly by this transaction, we determined
it was most efficient to prepare a single Proxy Statement
to be used by all shareholders. While we encourage you
to read the full text of the Proxy Statement, we thought
it would be helpful to put together a few brief Questions
and Answers (Q&A). That Q&A is on the reverse side of
this page.
AFTER CAREFUL CONSIDERATION, THE DIRECTORS OF YOUR
FUND HAVE VOTED UNANIMOUSLY TO RECOMMEND THAT YOU VOTE
"FOR" ALL THE PROPOSALS ON THE ENCLOSED PROXY CARD. AS
ALWAYS, WE THANK YOU FOR YOUR CONFIDENCE AND SUPPORT.
Sincerely,
Michael F. Price
President
Q & A on reverse side.
Q. WHAT IS HAPPENING?
A. The Adviser, not your Fund, has entered into an agreement
for its business to be acquired by Franklin Mutual. Impor-
tantly, Michael F. Price and key members of the Adviser's
management team have signed contracts and, after the Clos-
ing, will continue to be responsible for managing the Funds.
Consequently, we believe there will be no 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 pur-
poses.
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 invest-
ment 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 the Adviser will change from
a privately-owned company to a corporate subsidiary of FRI.
Key employees of the Adviser 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. You will also receive the
right to exchange into the Franklin Templeton Funds.
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 unani-
mously 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-[CALL-SAM].
Q. WHO IS _____________________ , INC.?
A. _____________________________________ Inc. is a profes-
sional proxy solicitation firm retained by Franklin Mutual
and the Adviser 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-____________________]
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. (New York time) for the follow-
ing purposes:
1. To consider and act upon the approval of a new invest-
ment advisory agreement between each Series of the Fund
and Franklin Mutual to take effect upon the closing of
the acquisition of the assets of the Adviser by Frank-
lin 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 selec-
tion 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
[800-CALL-SAM]
INTRODUCTION
This Proxy Statement (the "Proxy") is furnished in connec-
tion 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. (New York time) and at any ad-
journment 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
(the "Adviser") and Franklin Resources, Inc. ("FRI"). In addi-
tion, certain officers, directors and employees of the Adviser
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. __________________________.
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 instruc-
tions 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 separate-
ly, is necessary to approve each Series' respective new invest-
ment 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 adjourn-
ment 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 [______________] shares of Mutual
Shares Fund Shares, [______________] shares of Mutual Qualified
Fund Shares, [_____________] shares of Mutual Beacon Fund Shares,
[______________] shares of Mutual Discovery Fund Shares, and
[_____________] shares of Mutual European Fund Shares, each with
a par value of $.001 per share, which comprise the only autho-
rized 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, Heine Securities Corporation, (the
"Adviser" or "HSC") entered into a definitive agreement (the
"Agreement') to merge the businesses of the Adviser and FRI
through a sale of HSC assets to Franklin Mutual Advisors, 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 five year revenue growth of Franklin Mutual (a)
equals 12.5%, HSC will receive an additional $100 million, (b)
equals or exceeds 17.5%, HSC will receive an additional $192.5
million, and (c) equals any percentage between 121/2% and 171/2%, HSC
will receive a pro rata amount between (a) and (b). The Transac-
tion is expected to close on or prior to October 31, 1996 and is
subject to various conditions, including approval by the Share-
holders 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 the
Adviser'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, so that
in the view of the Board and the Adviser, there will be no
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. See "The Employment Agree-
ments," below.
Pursuant to Section 15 of the Investment Company Act of
1940, as amended (the "1940 Act"), each Series' existing invest-
ment advisory agreement terminates automatically upon its assign-
ment, which is deemed to include any change of control of the
investment adviser. 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, as 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.
The Transaction also contemplates that the Adviser, 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 the Adviser may receive
any amount or benefit in connection with a sale of securities of,
or a sale of any other interest in, the Adviser 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
the Adviser, Franklin Mutual and FRI have represented and war-
ranted to the Adviser 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 the Adviser 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.
In order to preserve the existing no load, no 12b-1 fee
structure for current shareholders after the Transaction while
allowing for different distribution channels to permit the Series
to be sold to a broader base of shareholders, the Board 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.
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, shareholders that have held any Series shares for at
least 6 months will be able to exchange their Mutual Series Fund
investment into shares of the Franklin Templeton funds without
any sales charges. 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. 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.
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 agree-
ments with the Adviser upon consummation of the Transaction. See
"Evaluation by the Boards" below.
BENEFITS TO SHAREHOLDERS
The Board has identified the following benefits which the Share-
holders are anticipated to realize as a result of the Transac-
tion:
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. Shareholders on the Closing date will be able to exchange
into the Franklin Templeton mutual funds (of which there are
currently approximately 115) without any front end or back
end sales load beginning approximately six months after the
Closing. Franklin Templeton offers a broad range of invest-
ment 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 in-
curred 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 con-
siderations 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. FRI has also agreed not to seek any increase in
investment advisory fees for at least three years after the
Closing.
DESCRIPTION OF FRI
Franklin Resources, Inc. 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 $145 billion, 116-member Franklin Templeton Group of Funds
and institutional clients. The funds are distributed through a
global network of broker-dealers, financial planners and invest-
ment advisors. The principal foreign markets in which the
company's services are offered include Canada, the United King-
dom, 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 repre-
sented 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.
THE INVESTMENT ADVISER
Heine Securities Corporation, 51 John F. Kennedy Parkway,
Short Hills, New Jersey 07078 currently serves as each Series'
investment adviser. The Adviser manages each Series' invest-
ments, 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 the Adviser, 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 Clear-
water and is Treasurer and Chief Financial and Accounting Officer
of the Adviser and of the Fund. Peter A. Langerman is a Research
Analyst with the Adviser as well as a Director and Executive Vice
President of the Fund. Elizabeth N. Cohernour is General Counsel
and Secretary of the Adviser, Clearwater and the Fund. Jeffrey
A. Altman, Robert L. Friedman, Raymond Garea and Lawrence N.
Sondike, Research Analysts with the Adviser, are Vice Presidents
of the Fund.
THE EMPLOYMENT AGREEMENTS
Michael F. Price has entered into an employment agreement
that provides that he cannot be terminated except for cause or
disability and also contains non-competition provisions. Pursu-
ant 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 sole and
complete 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 strate-
gy, 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 anniversa-
ry 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 Adviser'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 the Adviser
(which agreements will be assumed by Franklin Mutual), which
provide long-term compensation incentives and will continue to
have senior management roles.
THE NEW ADVISORY AGREEMENTS
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 the Fund
will bear all expenses of its employees and overhead incurred in
connection with its duties, and will reimburse the Adviser, if
the Adviser 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 the Adviser), 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 the
Adviser 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 the
Adviser 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 determi-
nations 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 indus-
try 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 there-
under, 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 advisor
subject to the requirements of the 1940 Act.
Pursuant to the current advisory agreements between the
Adviser and the Fund, the Adviser has been retained to manage the
investments of the Fund and to provide such investment research,
advice and supervision, in conformity with each Series' invest-
ment objectives and policies, as may be necessary for the opera-
tions 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 the Adviser 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, the
Adviser'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.
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 the Adviser, 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 the Adviser were present to answer questions
from the Board. In evaluating the New Advisory Agreements, the
Board reviewed materials furnished by the Adviser and Franklin
relevant to its decision. Those materials included information
regarding the Adviser, Franklin Mutual, FRI and their affiliates
and their personnel, operations and financial condition. Repre-
sentatives of the Adviser and FRI discussed with the Board the
Adviser'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 the Adviser 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 to purchase shares of mutual funds
advised by Franklin Templeton as well as Mutual Series Shares
without sales charges and to exchange any shares held for at
least 6 months after the Transaction for shares of the Franklin
Templeton funds. 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 the Adviser including Michael
F. Price, which it believed to be important to assure continuity
of the advisory services provided by the Adviser to the Fund.
The Adviser'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 also was 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 provi-
sions 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 Adviser to FRI,
including expanded research capabilities and shareholder servic-
es.
The Board engaged in extensive discussion with respect to
the provision of administrative services pursuant to the Adminis-
tration Agreement in order to evaluate the benefits to the Fund
and to seek to maintain the current cost structure for services
to the extent practicable. It explored the differences between
the current expense structure and the proposed administrative
services, including transfer agency services necessary to imple-
ment the exchange privilege and multiclass structure. The Board
determined to defer any decision on these issues 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 disinterest-
ed 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 Adminis-
tration Agreement, in part based on the FRI undertakings regard-
ing 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 distri-
bution 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
services to be provided by the Adviser would be performed by the
same people and that there were certain assurances that expenses
to be incurred under the New Advisory Agreements would 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
In connection with the Transaction, it is proposed that
Shareholders who are Shareholders of the Fund on the Closing date
will have net asset value exchange privileges into all the funds
in the Franklin Templeton fund complex as soon as practicable,
which is anticipated to take approximately six months. Those
funds all generally charge 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 no-load shares. As a technical
matter, in order to implement the new class structure, which has
been approved by your Board of Directors contingent upon occur-
rence 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 succes-
sors 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 % of
Occupations or of the Owned Shares
Name and Employment in Past Fund as of Out-
Age 5 Years Since 7/23/96 standing
Michael F. Chairman of the 1980(1) S31,314.281 (3)
Price* Board and President Q21,083.465
Age: 45 of the Fund. Pres- B168,126.030
ident, Chief Oper- D199,801.237
ating Officer and E100,000.000
Chairman of the
Adviser.
Peter A. Executive Vice 1989 S9,381.717 (3)
Langerman* President of the B9,033.804
Age: 41 Fund. Financial D45,339.778
Analyst with the E7,500.000
Adviser since 1986. Q3,346.720
William Senior Vice Presi- (2) (3)
Lippman* dent since March
Age: 70 1990; Senior Vice
President, Franklin
Advisers, Inc. and
Franklin/Templeton
Distributors, Inc.;
Director, Templeton
Worldwide, Inc.;
officer and direc-
tor, trustee or
managing general
partner, as the
case may be, of
some of the invest-
ment companies in
the Franklin Group
of Funds. Until
June 1988, Presi-
dent, Chief Execu-
tive Officer, and
Director of L.F.
Rothschild Fund
Management, Inc.,
Director of L.F.
Rothschild Asset
Management, Inc.,
Administrative Man-
aging Director and
Director of L.F.
Rothschild & Co.,
Incorporated.
Edward I. Professor of Fi- 1987(1) S5,182.887 (3)
Altman, nance and Vice Di- D1,742.333
Ph.D. rector of the New
Age: 55 York University
Salomon Center,
Leonard H. Stern
School of Business;
editor and author
of numerous finan-
cial publications;
financial consul-
tant.
Ann Torre Executive Vice 1995 S 352.092 (3)
Grant President, Chief D 873.362
Age: 38 Financial Officer
and Treasurer, NHP
Incorporated (man-
ager of multifamily
housing); prior to
March 1995 she was
Vice President and
Treasurer, US Air,
Inc.
Andrew H. Consultant for the (2) (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 direc-
tor of Precise Pow-
er Corporation;
executive-in-resi-
dence of Eckerd
College (1991-pres-
ent); and a direc-
tor of Checkers
Drive-In Restau-
rants, Inc.
Bruce A. President of A.A. 1974(1) B7220.377 (3)
MacPherson MacPherson, Inc. D21,596.831
Age: 66 Boston, Mass. (rep-
resentative for
electrical manufac-
turers).
Fred R. Manager of personal (2)
Millsaps investments (1978-
Age: 67 present); Chairman
and Chief Executive
Officer of Landmark
Banking Corporation
(1969-1978); finan-
cial Vice President
of Florida Power
and Light (1965-
1969); vice presi-
dent of The Federal
Reserve Bank of
Atlanta (1958-
1965); and a direc-
tor of various oth-
er business and
nonprofit organiza-
tions.
Leonard Chairman of the (2)
Rubin Board, Carolace
Age: 70 Embroidery Co.,
Inc.; President,
F.N.C. Textiles,
Inc.; Vice Presi-
dent, Trimtex Co.
Inc.; and trustee
of three of the
investment compa-
nies in the Frank-
lin Group of Funds.
Barry F. Executive Vice 1995 S9572.472 (3)
Schwartz President and Gen- B1108.382
Age: 47 eral Counsel, E8000.000
MacAndrews & Forbes
Holdings, Inc. (a
diversified holding
Company).
Vaughn R. Practicing physi- 1982(1) S 81.558 (3)
Sturtevant, cian. Q 987.715
M.D. B23,455.678
Age: 73 D1808.318
Robert E. Practicing attor- 1993 S3891.860 (3)
Wade ney. Q 737.562
Age: 50 B1928.757
D8341.218
All directors and officers as a group (16 persons) owned an
aggregate of 65,183,421.585 shares of Mutual Shares;
120,412,307.110 shares of Mutual Qualified; 114,527,579.163
shares of Mutual Beacon; 135,874,341.140 shares of Mutual
Discovery; and 7,705,248.943 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%.
(4) Includes shares owned by such director's spouse or family
member living in the same household.
The Fund has no standing compensation committee of the Board
of Directors, but does have a committee composed of Ms. Grant
(Chairman) and _______________ that evaluates director compensa-
tion 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. Richard Chasse,
MacPherson (Chairman) and Schwartz which screens and recommends
nominees for the Board who are not interested persons of the
Adviser. 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 share-
holders.
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 commit-
tee 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 the Adviser, the Adviser provides personnel to
serve as officers of the Fund, subject to their consent. As
noted above, pursuant to such agreements, the Adviser is reim-
bursed 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 affili-
ated 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
Name and Position Compensation As Part of Retirement
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 ratifica-
tion 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 INDEPEN-
DENT AUDITORS.
BROKERAGE FEES AND PORTFOLIO TRANSACTIONS
The Adviser effects portfolio transactions for each Series
through a broker which is an affiliated person of the Fund or the
Adviser only if in the Adviser's judgment such broker is able to
obtain the best combination of price and execution. Currently
the only broker affiliated with the Fund or the Adviser is
Clearwater. Clearwater will not provide services to the Fund
after the Closing and it is not currently anticipated that FRI
will utilize the services of an affiliated broker. 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.
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%.
The Adviser 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 the Adviser. 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.
The Adviser under the New Advisory Agreements 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 ADVISORS, 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 fol-
lows:
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 Char-
ter, 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 exclu-
sive discretion in all determinations with respect to the purchas-
ing and selling of securities and other assets for the Fund and in
voting and exercising all other rights appertaining to such secu-
rities 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, includ-
ing trading desk facilities or daily pricing of the Fund's portfo-
lio, 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 transac-
tions consistent with the Fund's brokerage policy and, when appli-
cable, 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 exe-
cuted, the ability to effect the transaction at all
where a large block is involved, availability of
the broker to stand ready to execute possibly dif-
ficult transactions in the future, and the finan-
cial 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 In-
vestment 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 In-
vestment 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 com-
mission reflecting either of said services. In
demonstrating that such determinations were made in
good faith, the Investment Adviser shall be pre-
pared to show that all commissions were allocated
and paid for purposes contemplated by the Fund's
brokerage policy; that the research services pro-
vide lawful and appropriate assistance to the In-
vestment Adviser in the performance of its invest-
ment decision-making responsibilities, and that the
commissions were within a reasonable range. Wheth-
er 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, com-
prehensiveness, 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 ex-
change shall be executed with primary market makers
acting as principal, except where, in the judgment
of the Investment Adviser, better prices and execu-
tion 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 In-
vestment 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 execu-
tion," 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 subpara-
graph 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 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].
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 thereaf-
ter fall below the limit.
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, pro-
vided that each such continuance shall be specifically approved
annually by the vote of a majority of the Fund's Board of Direc-
tors 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 secu-
rities 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", 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 result-
ing 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 Invest-
ment 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 expens-
es, including amounts paid in satisfaction of judgments, in com-
promise or as fines and penalties, and counsel fees (all as pro-
vided 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 connec-
tion with the expenses of defending any action with respect to
which indemnification might be sought hereunder if the Fund re-
ceives 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 indemnifi-
cation and if the directors of the Fund determine that the facts
then known to them would not preclude indemnification. In addi-
tion, 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 direc-
tors 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 indemnifica-
tion 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 pre-
ceding clause (2) above.
The rights accruing to any Indemnitee under these provi-
sions shall not exclude any other right to which he may be lawful-
ly entitled.
11. It is understood that the services of the Invest-
ment 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 ADVISORS, 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 compa-
ny 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 semian-
nual reports to Shareholders, notices of
dividends, capital gains distributions and
tax credits, and attending to routine corre-
spondence and other communications with indi-
vidual Shareholders;
(e) daily pricing of the Fund's investment port-
folio and preparing and supervising publica-
tion 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 Invest-
ment 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 trans-
fer agent), preparing and filing of tax re-
ports other than the Fund's income tax re-
turns;
(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 re-
sponsibilities.
(2) The Fund agrees, during the life of this Agree-
ment, 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 amend-
ed 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 aggre-
gate 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 capi-
tal stock and sub-series (classes) thereof, and to
classify or reclassify any unissued shares with
respect to any series or sub-series thereof (in-
cluding the unissued shares of the series desig-
nated pursuant to subsection (1)(a) above), and
such series and sub-series (subject to any appli-
cable rule, regulation or order of the Securities
and Exchange Commission or other applicable law or
regulation) shall have such preferences, conver-
sion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms
and conditions of redemption and other character-
istics 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 prefer-
ences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, quali-
fications, 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 ac-
quire 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, restric-
tions 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 distri-
butions payable to holders, and the amounts dis-
tributable 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 proce-
dures 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 there-
of, 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 (collec-
tively 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 Corpora-
tion. 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 estab-
lishing 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 adopt-
ed by the Board of Directors. The determination
of the Board of Directors shall be conclusive as
to the allocation of liabilities, including ac-
crued expenses and reserves, and assets to a par-
ticular 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 lia-
bilities 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 por-
tion 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 share-
holders 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 Corpora-
tion or any series thereof to qualify as a "regu-
lated investment company" under the Internal Reve-
nue Code of 1986, as amended, or any successor or
compatible statute thereof, and regulations pro-
mulgated thereunder (collectively, the "IRC"), and
to avoid liability of the Corporation or any se-
ries thereof for Federal income tax in respect of
that year and to make other appropriate adjust-
ments in connection therewith.
(g) The Board of Directors shall have
the power, in its discretion, to make such elec-
tions 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 num-
ber 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 dis-
tributing assets to the holders of such sub-se-
ries. In the event that there are any assets
available for distribution that are not attribut-
able to any particular series of stock, such as-
sets shall be allocated to all series in propor-
tion 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 out-
standing 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 Corpo-
ration 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-se-
ries, then only shareholders of the affected se-
ries or sub-series shall be entitled to vote
thereon. Holders of shares of stock of the Corpo-
ration shall not be entitled to cumulative voting
in the election of directors or on any other mat-
ter.
(j) The Board of Directors may provide
for a holder of any series of stock of the Corpo-
ration, who surrenders his certificate in good
form for transfer to the Corporation or, if the
shares in question are not represented by certifi-
cates, 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 fraction-
al denominations shall be shares of stock having
proportionately to the respective fractions repre-
sented 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 re-
ceive 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 con-
sideration 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 autho-
rized 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 follow-
ing 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 Corpo-
ration, upon request to the Corporation (accompa-
nied by surrender of the appropriate stock certif-
icate or certificates in proper form for transfer,
if any certificate or certificates have been is-
sued to represent such shares), shall be entitled
to require the Corporation to redeem, to the ex-
tent 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 stat-
utes 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 divi-
dends 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 immedi-
ately 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 designat-
ed as Mutual Shares Fund Stock; 200,000,000 shares of the
authorized shares of stock were designated as Mutual Quali-
fied 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 autho-
rized 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 designat-
ed 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 autho-
rized 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 re-
demption 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, estab-
lished 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 desig-
nated 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 in-
vestments 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 num-
bered paragraph (3) of ARTICLE V of the Corporation's Char-
ter 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 knowl-
edge, information and belief and under penalties for perju-
ry, 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
any ) ABSTAIN ( ) 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
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<DISTRIBUTIONS-OF-GAINS> 66,854
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<NET-CHANGE-IN-ASSETS> 644,890
<ACCUMULATED-NII-PRIOR> 0
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</TABLE>
