Objective

The objective of the International Blended Equity Fund is to provide long-term growth of capital and to keep pace with or exceed the rate of inflation over time by investing in companies located outside of the United States. There is no guarantee that these objectives will be met.

Strategy

The International Blended Equity Fund is actively managed, meaning that it attempts to outperform its benchmark, the EAFE Index. The EAFE Index is broadly representative of the stock markets of Europe, Australia and the Far East. The net return will be the result of the broad international markets' performance, plus the extent to which the fund managers outperform, minus investment and administration expenses.

Assets are allocated among several active managers who diversify their stock selections using different approaches, including, but not limited to:

• Value-based investing, which seeks to identify stocks that are selling at a price believed to be lower than fair market value and which may enjoy capital appreciation when they begin to sell at a higher value.
• Growth-oriented investing, which seeks to identify stocks with strong future earnings growth and therefore the potential for price increases.
• Core-style investing, incorporating elements of both value and growth, as described above.
• Investing across the spectrum of company sizes, from large, well established companies, to smaller companies that usually have less market recognition. The preponderance of holdings are expected to be large capitalization companies, but managers are permitted to hold smaller ones as well.
• Investing across the spectrum of country development, from mature economies and markets to those in more embryonic stages. The latter are called emerging markets and carry more risk (see below). Since they are riskier, they are used only on an opportunistic basis and do not have a target allocation; at any point in time they are expected to comprise less than 10% of the total portfolio.

Opportunities

Historically, over long periods of time, global equity (stock) markets have tended to provide higher returns than other investments, such as bonds or money market instruments. While there is no guarantee that this will be the case in the future, investment theory suggests that higher returns over the long term are a key reason investors would select an option like this one.

Because this fund is actively managed, the portfolio managers make conscious decisions about which stocks to include due to their favorable prospects, and which to exclude due to unfavorable prospects. These decisions are made in an attempt to produce higher returns than the equity market performance alone as measured by the EAFE Index.

The International Blended Equity Fund engages a variety of managers with contrasting investing styles. When one manager is performing less well there is the possibility that another will be performing better. This can provide a smoother investment experience than being concentrated in a single manager or style. In addition, because this fund covers publicly-traded companies of all sizes and because it covers many countries outside the United States, it has a broad range of choices from which to access good investments.

The International Blended Equity Fund provides an opportunity to access good investments outside of the United States. This recognizes that the world is becoming increasingly global, and that the U. S. is only one part of the world economy. This fund is well diversified among various regions of the world and diversified among industries within regions.

It is possible that during times when the U.S. equity market is in decline non-U.S. markets may decline less or even be positive; this is sometimes true, but not always.

This fund may hold a portion of its investments in emerging markets, such as China, Russia and South Korea. These fast-growing economies may provide opportunities for higher returns than in developed countries, such as England or Japan.

Risks

All securities investments risk the loss of capital. Since this fund is invested entirely in equities (stocks), the chance of losing a percentage of your original investment is much higher than with some other investment options.

All stock markets can be volatile. Although, over long periods of time, investors in stocks may enjoy higher returns than investors in other options receive, they can also lose more money than those investing in other options. Sharp and unpredictable changes in value, either positive or negative, can be especially acute over shorter periods of time.

The active decisions that the portfolio managers make with respect to which stocks to include and which to exclude may not turn out as expected and may detract from total fund return rather than enhancing it. This fund's return may vary meaningfully from its benchmark, especially over periods shorter than one year.

International investing carries certain additional risks. Currency risk is one of the primary additional risks for investors in international equities. Currency risk refers to the possibility that the foreign currencies in which investments are denominated will fall in relation to the U.S. dollar. (Conversely, foreign currencies could rise in relation to the dollar and benefit the investment return.)

Political, social and economic developments in foreign countries can reduce investment returns. This includes the establishment of foreign exchange controls or other government-imposed investment restrictions.

The International Blended Equity Fund may be expected to have a small percentage of investments (estimated at less than 10%) invested in emerging markets, such as China, Russia and Brazil. In contrast to developed countries, such as England and Japan, emerging markets may be especially volatile, rising or falling even more sharply than the U.S. or developed non-U.S. stock markets.

Emerging markets are typically less liquid, as well. If a portfolio manager decides to sell some shares of emerging market companies there may not be ready buyers. This means that the portfolio may not be able to sell their shares until buyer(s) come forward. Should this occur at a time when prices are declining then the shareholder's loss may be greater than if he were able to sell immediately.

Circumstances in emerging markets are constantly changing, and some of the other issues that portfolio managers contend with are corporate governance, accounting standards and the local conventions of doing business. For a list of risks attendant to emerging markets, click here.

If you are uncomfortable with the risks associated with the International Blended Equity Fund, youmay want to consider another MMBB investment option.

Fund Performance

To offer historical perspective on the long-term risk and return of this investment option in comparison to MMBB's other investment options, see the diagram below. It summarizes risk and return for more than ten years, and encompasses both rising and falling stock market periods as well as both economic expansions and recessions.

• The horizontal placement of the fund indicates the volatilityof the investment option, one measure of risk. Volatility of returns can be mathematically measured and attracts a lot of attention among investors because the higher the volatility the more the value of your investment tends to rise and fall. If you decide to exit the investment when it is declining, the value of your investment may be less than you expected. The further to the right, the more the value of the fund is likely to fluctuate; the further to the left, the more stable, or reliable, the return of the option, historically.
• The vertical placement of the fund indicates the average return the investment option generated over the last 10+ years. The higher up on the diagram, the greater the return, the lower down, the more modest the return, on average, per year.

In reading this graph, please note the following:

• The data in the chart is periodically updated. As a result, the plot points may change.
• Past experience is no guarantee of future returns. This chart is just one tool to assist you in comparing one option to another.
• Returns can be negative as well as positive, especially in the short term.

			TOTAL RETURN AS OF SEPTEMBER 9, 2010
FUND	Price		1 Day	Year to Date	1 Year	3 Years	5 Years	Since Inception*
International Blended Equity Fund	$11.77		0.61%	-4.55%	-0.68%	-8.48%	0.67%	1.55%
			*The inception date is February 1, 2000.

While it is valuable to view investment performance over long-term time horizons, looking at shorter time periods can give one insight as to how returns may fluctuate from over shorter time periods. The table below displays calendar year returns.

MMBB contracts with external managers to execute the International Blended Equity Fund investment strategy . The fund managers for the International Blended Equity Fund currently include:

Artisan Partners
Mellon Capital Management
Morgan Stanley

For the year 2010 total expenses are estimated at 1.31%. Returns shown are net of all expenses.

* “Morgan Stanley” is a registered trademark of Morgan Stanley Dean Witter & Co. “MSCI” and “EAFE” are registered trademarks of Morgan Stanley Capital International Inc.