SAI
<PAGE>
As filed with the Securities and Exchange Commission on March 27,
1997
File Nos.
2-84012; 811-3752
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 __
Pre-Effective Amendment No. __
Post-Effective Amendment No. 39
X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 41 X
________________________
THE MANAGERS FUNDS
(Exact name of Registrant as Specified in Charter)
40 Richards Avenue, Norwalk, Connecticut 06854
(Address of Principal Executive Offices) (Zip
Code)
Registrant's Telephone Number, including Area Code: (203) 857-5321
copy to:
Donald S. Rumery Joel H. Goldberg,
Esq.
The Managers Funds, L.P. Shereff, Friedman, Hoffman &
Goodman, LLP
40 Richards Avenue 919 Third Avenue
Norwalk, Connecticut 06854 New York, New York 10022
(Name and Address of Agent for Service of Process)
It is proposed that this filing will become effective (check
appropriate box)
_ immediately upon filing pursuant to paragraph (b)
X on April 1, 1997 pursuant to paragraph (b)
_ 60 days after filing pursuant to paragraph (a)(1)
_ on (date) pursuant to paragraph (a)(1)
_ 75 days after filing pursuant to paragraph (a)(2)
_ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
_ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
Registrant has previously elected to register an indefinite number of
its shares of beneficial interest. The Registrant filed a notice
under such Rule for its Money Market Fund series for that series'
fiscal year ended November 30, 1996 on January 24, 1997, and will
file a notice under such Rule for its other nine series for their
fiscal year ended December 31, 1996 on or before February 28, 1997.
<PAGE>
THE MANAGERS FUNDS
POST-EFFECTIVE AMENDMENT NO. 38
CROSS REFERENCE SHEET
(as required by Rule 481(a))
<TABLE>
<CAPTION>
Form N-1A Item Location
<S> <C>
PART A -- Prospectus
Item 1. Cover Page Cover Page
Item 2. Synopsis....................... Illustrative Expense
Information;
Summary
Item 3. Condensed Financial
Information.................... Illustrative Expense
Information;
Financial Highlights
Item 4. General Description of
Registrant..................... Summary; Investment
Objectives,
Policies and Restrictions (Equity
Funds, Income Funds); Investment
Objectives and Policies (Money Market Fund); Certain
Investment Techniques and
Associated Risks; Additional Investment
Information and
Risk Factors (Money Maket Fund);
Investment Restrictions (Money Market Fund); Portfolio
Turnover
Item 5. Management of the Fund......... Management of the Funds
(Equity Funds and Income Funds);
Management of the Fund and Portfolio
(Money Market Fund);
Portfolio Transactions and Brokerage;
Special Information Concerning Hub and Spoke (Money
Market Fund)
Item 5A. Management's Discussion of
Fund Performance............... Not Applicable
Item 6. Capital Stock and
Other Securities............... Purchase and Redemption of
Fund
Shares; Description of Shares,
Voting Rights and Liabilities; Tax
Information
Item 7. Purchase of Securities
Being Offered.................. Purchase and Redemption of
Fund
Shares
Item 8. Redemption or Repurchase....... Purchase and Redemption of
Fund
Shares
Item 9. Pending Legal Proceedings...... Description of Shares, Voting
Rights and Liabilities
<PAGE>
Form N-1A Item Location
PART B -- Statement of Additional Information
Item 10. Cover Page..................... Cover Page
Item 11. Table of Contents.............. Table of Contents
Item 12. General Information and
History........................ Other Information
Item 13. Investment Objectives
and Policies................... Investment Restrictions;
Investment Objectives and Policies (Money Market Fund);
Portfolio
Turnover; Other Information
Item 14. Management of the Fund......... Trustees and Officers
Item 15. Control Persons and
Principal Holders
of Securities.................. Trustees and Officers;
Control
Persons and Principal Holders of
Securities
Item 16. Investment Advisory
and Other Services............. Management of the Funds; Fund
Management
Agreement; Asset Manager Profiles;
Investment Advisor
(Money Market Fund)
Item 17. Brokerage Allocation and
Other Practices................ Portfolio Securities
Transactions
Item 18. Capital Stock and
Other Securities............... Control Persons and Principal
Holders of Securities
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered.................. Net Asset Value
Item 20. Tax Status..................... Tax Information
Item 21. Underwriters................... Administrative Services;
Distribution
Agreements; Portfolio Administrator and
Distributor
(Money Market Fund)
Item 22. Calculation of Performance
Data........................... Performance Information;
Performance Data (Money
Market Fund)
Item 23. Financial Statements........... Financial Statements
</TABLE>
<PAGE>
PART C -- Other Information
Information required to be included in Part C of the
registration statement is set forth under the appropriate Item, so
numbered, in Part C to this Post-Effective Amendment.
<PAGE>
THE MANAGERS FUNDS
PROSPECTUS
Dated April 1, 1997
EQUITY FUNDS
The Managers Funds (the "Trust") is a no-load, open-end,
management investment company with ten different series (each, a
"Fund" and collectively, the "Funds"). Each Fund has distinct
investment objectives and strategies. The Funds' investment
portfolios are managed by asset managers selected, subject to the
review and approval of the Trustees of the Trust, by The Managers
Funds, L.P. (the "Manager"). The Manager is also responsible for
administering the Trust and the Funds. This Prospectus describes the
following Funds (the "Equity Funds"):
Managers Income Equity Fund-(the "Income Equity Fund") seeks a
high level of current income by investing primarily in income
producing equity securities.
Managers Capital Appreciation Fund-(the "Capital Appreciation
Fund") seeks long-term capital appreciation as its primary objective
and income as its secondary objective.
Managers Special Equity Fund-(the "Special Equity Fund") seeks
capital appreciation by investing primarily in the securities of
small to medium capitalization companies expected to have superior
earnings growth potential.
Managers International Equity Fund-(the "International Equity
Fund") seeks long-term capital appreciation as its primary objective
and income as its secondary objective by investing primarily in
non-U.S. equity securities.
This Prospectus sets forth concisely the information concerning
the Trust and the Equity Funds that a prospective investor ought to
know before investing. It should be retained for future reference.
The Trust has filed with the Securities and Exchange Commission a
Statement of Additional Information ("SAI"), dated April 1, 1997,
which contains more detailed information about the Trust and the
Funds and is incorporated into this Prospectus by reference. A copy
of the SAI may be obtained without charge by contacting the Trust at
40 Richards Avenue, Norwalk, Connecticut 06854, (800) 835-3879 or
(203) 857-5321.
Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and shares of the Trust are not
federally insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Pag
e
Illustrative Expense Information 3
Summary 4
Financial Highlights 5
Investment Objectives, Policies and Restrictions 10
Certain Investment Techniques and Associated Risks 12
Portfolio Turnover 17
Purchase and Redemption of Fund Shares 17
Management of the Funds 24
Portfolio Transactions and Brokerage 28
Performance Information 29
Description of Shares, Voting Rights and Liabilities 30
Tax Information 31
Shareholder Reports 32
<PAGE>
ILLUSTRATIVE EXPENSE INFORMATION
The following tables provide the investor with information
concerning annual operating expenses of the Equity Funds. The Funds
impose no sales load on purchases of shares or on reinvested
dividends and distributions, nor any deferred sales load upon
redemption. There are no redemption fees, exchange fees or Rule 12b-1
fees.
Equity Funds' Annual Operating Expenses: (based on average daily
net assets during fiscal 1996)
<TABLE>
<CAPTION>
Fund Total
Managemen Other Operatin
<S> t Fee Expenses g
<C * Expenses
<C <C>
Income Equity Fund** 0.75% 0.69% 1.44%
Capital Appreciation Fund** 0.80% 0.53% 1.33%
Special Equity Fund 0.90% 0.53% 1.43%
International Equity Fund 0.90% 0.63% 1.53%
</TABLE>
_____
* Other expenses reflect the expenses actually incurred by each
Fund during the year ended December 31, 1996. See "Management of the
Funds-Administration and Shareholder Servicing; Distributor; Transfer
Agent."
** A portion of the brokerage commissions that each of these Funds
pays is used to reduce Fund expenses. These reductions had a de
minimis impact on the expenses of Managers Income Equity Fund,
however, in the case of Managers Capital Appreciation Fund, in the
absence of such expense reductions, Other Expenses would have been
0.58% and Total Operating Expenses would have been 1.38%
Examples
An investor would pay the following expenses on a $1,000
investment in the respective Equity Funds over various time periods
assuming (1) a 5% annual rate of return, (2) redemption at the end of
each time period, and (3) continuation of any currently applicable
waivers of management fees. As noted above, the Funds do not charge
any redemption fees or deferred sales loads of any kind.
The examples should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those
shown.
<TABLE>
<CAPTION>
Fund 1 3 yea 5 yea 10 yea
<S> year rs rs rs
<C> <C> <C> <C>
Income Equity Fund $15 $46 $79 $172
Capital Appreciation Fund 14 42 73 160
Special Equity Fund 15 45 78 171
International Equity Fund 16 48 83 182
</TABLE>
<PAGE>
SUMMARY
General Description of the Trust and the Funds
The Trust is a no-load, open-end, management investment company
organized as a Massachusetts business trust, composed of the
following ten separate series:
<TABLE>
<CAPTION>
<S> <C>
Managers Income Equity Fund Managers Short and Intermediate Bond
Managers Capital Appreciation Fund Fund
Managers Special Equity Fund Managers Intermediate Mortgage Fund
Managers International Equity Fund Managers Bond Fund
Managers Short Government Fund Managers Global Bond Fund
Managers Money Market Fund
</TABLE>
This Prospectus relates to the Equity Funds. A Prospectus for
the other Funds (the "Income Funds" and the Money Market Fund) can be
obtained by calling (800) 835-3879 or (203) 857-5321.
Each of the Funds has distinct investment objectives and
strategies. There is, of course, no assurance that a Fund will
achieve its investment objectives.
Management
The Trust is governed by the Trustees, who provide broad
supervision over the affairs of the Trust and the Funds. The Manager
provides investment management and administrative services for the
Trust and the Funds. The assets of each Fund are managed by one or
more asset managers (each, an "Asset Manager" and collectively, the
"Asset Managers") selected, subject to the review and approval of the
Trustees, by the Manager. The assets of each Fund are allocated by
the Manager among the Asset Managers selected for that Fund. Each
Asset Manager has discretion, subject to oversight by the Manager and
the Trustees, to purchase and sell portfolio assets, consistent with
each Fund's investment objectives, policies and restrictions and the
specific investment strategies developed by the Manager. For its
services, the Manager receives a management fee from each Fund. A
portion of the fee paid to the Manager is used by the Manager to pay
the advisory fees of the Asset Managers. See "Management of the
Funds" for more detailed information.
Special Risks
There are certain risks associated with the investment policies
of each of the Equity Funds. For instance, to the extent that a Fund
invests in the securities of small to medium sized (by market
capitalization) companies, or financial instruments related to such
securities, the Fund may be exposed to a higher degree of risk and
price volatility because such investments may lack sufficient
liquidity to enable the Fund to effect sales at an advantageous time
or without a substantial drop in price. To the extent that a Fund
invests in securities of non-U.S. issuers or securities denominated
or quoted in foreign currencies, the Fund may face risks that are
different from those associated with investment in domestic U.S.
dollar denominated or quoted securities, including the effects of
changes in currency exchange rates, political and economic
developments, the possible imposition of exchange controls,
governmental confiscation or restrictions, less availability of data
on companies and a less well developed securities industry as well as
less regulation of stock exchanges, brokers and issuers. In general,
the value of fixed-income securities will rise when interest rates
fall, and fall when interest rates rise, affecting the net asset
value of a Fund. For more details on the risks associated with
certain investment techniques see "Certain Investment Techniques and
Associated Risks." Certain Funds experience high annual portfolio
turnover which may involve correspondingly greater brokerage
commissions and other transaction costs, and certain adverse tax
consequences to shareholders. See "Portfolio Turnover."
Purchase and Redemption of Shares
The minimum initial investment in the Trust is $2,000 per Fund
($500 for IRAs). For information on eligible investors, arrangements
for lower minimum investments and how to purchase and redeem shares
of the Fund, see "Purchase and Redemption of Fund Shares."
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables present financial highlights for each
Equity Fund for the last ten fiscal periods, or since inception, if
applicable, through December 31, 1996. The information has been
derived from the financial statements of the Trust which have been
audited by independent public accountants Coopers & Lybrand L.L.P.
for the years ended December 31, 1993 through December 31, 1996, and
by other accountants for the periods prior to 1993, and should be
read in conjunction with such financial statements. See "Financial
Statements" in the SAI.
<PAGE>
Financial Highlights
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Managers Income Equity Fund
Year ended December 31,
<S> 1996 1995 1994 1993 1992
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $28.43 $24.90 $27.89 $27.38 $28.62
Income from Investment Operations:
Net investment income (c) 0.76 0.87 0.80 0.81 0.99
Net realized and unrealized gain 3.97 7.47 (0.50) 2.54 1.72
(loss) on investments
Total from investment operations 4.73 8.34 0.30 3.35 2.71
Less Distributions to Shareholders:
From investment income (0.76) (0.86) (0.83) (0.76) (0.98)
From net realized gain on investments (1.91) (3.95) (2.46) (2.08) (2.97)
Total distributions to shareholders (2.67) (4.81) (3.29) (2.84) (3.95)
Net Asset Value, End of Period $30.49 $28.43 $24.90 $27.89 $27.38
Total Return (d) 17.08% 34.36% 0.99% 12.40% 9.80%
Ratio of expenses to average net 1.45% 1.33% 1.32% 1.20%
assets (c) 1.44%
(b)
Ratio of net investment income to 2.63% 2.85% 3.06% 2.75% 3.52%
average net assets (c)
Portfolio turnover 33% 36% 46% 41% 41%
Average commission rate (a) $0.06 - - - -
Net assets at end of period (000's $53,063 $37,807 $48,875 $40,965 $49,648
omitted)
</TABLE>
Managers Capital Appreciation Fund
<TABLE>
<CAPTION>
Year ended December 31,
<S> 1996 1995 1994 1993 1992
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $27.14 $23.25 $25.17 $24.67 $23.46
Income from Investment Operations:
Net investment income (c) 0.09 0.09 0.12 0.19 0.08
Net realized and unrealized gain 3.66 7.62 (0.49) 3.80 2.39
(loss) on investments
Total from investment operations 3.75 7.71 (0.37) 3.99 2.47
Less Distributions to Shareholders:
From net investment income (0.10) (0.08) (0.12) (0.19) (0.07)
From net realized gain on investments (4.45) (3.74) (1.39) (3.30) (1.19)
In excess of net realized gain on -__ -__ (0.04) -__ -__
investments
Total distributions to shareholders (4.55) (3.82) (1.55) (3.49) (1.26)
Net Asset Value, End of Period $26.34 $27.14 $23.25 $25.17 $24.67
Total Return (d) 13.73% 33.39% (1.50)% 16.38% 10.50%
Ratio of expenses to average net 1.36% 1.29% 1.18% 1.05%
assets (c) 1.33%(b
)
Ratio of net investment income to 0.34% 0.31% 0.53% 0.74% 0.33%
average net assets (c)
Portfolio turnover 172% 134% 122% 131% 175%
Average commission rate (a) $0.06 - - - -
Net assets at end of period (000's $101,28 $83,353 $86,042 $69,358 $56,196
omitted) 2
</Table
>
(a)All funds are now required to disclose their average commission
rate per share for security trades on which commissions are
charged. The amount may vary from period to period and from fund
to fund depending on the mix of trades executed in various markets
where trading practices and commissions rate structures may differ.
(b)The Funds have entered into arrangements with one or more third-
party broker-dealers who have paid a portion of each of the Fund's
respective expenses. Absent these expense reductions, the ratio of
expenses to average net assets for the year ended December 31, 1996
would have been 1.44% for Managers Income Equity Fund and 1.38% for
Managers Capital Appreciation Fund. Such payments were used to
reduce the custodian expense for Managers Income Equity Fund, and
the custodian and transfer agent expenses for Managers Capital
Appreciation Fund.
(c)Does not reflect investment advisory and management fees paid by
shareholders directly to the Manager prior to May 1990.
(d)For periods less than one year, returns are not annualized.
(e)Annualized.
<PAGE>
Financial Highlights
(For a share of beneficial interest outstanding throughout each period)
Managers Special Equity Fund
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
<S> 1996 1995(b) 1994 1993 1992
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $43.34 $36.79 $38.90 $36.14 $34.49
Income from Investment Operations:
Net investment income (loss) (c) (0.00) (0.07) (0.01) 0.02 0.05
Net realized and unrealized gain (loss) on 10.68 12.28 (0.76) 6.12 5.35
investments
Total from investment operations 10.68 12.21 (0.77) 6.14 5.40
Less Distributions to Shareholders:
From net investment income - - - (0.01) (0.05)
From net realized gain on investments (3.07) (5.66) (1.34) (3.37) (3.70)
Total distributions to shareholders (3.07) (5.66) (1.34) (3.38) (3.75)
Net Asset Value, End of Period $50.95 $43.34 $36.79 $38.90 $36.14
Total Return (d) 24.75% 33.94% (1.99)% 17.05% 15.64%
Ratio of expenses to average net assets (c) 1.43% 1.44% 1.37% 1.26% 1.29%
Ratio of net investment income (loss) to average(0.10)% (0.16)% (0.06)% 0.07% 0.14%
net assets (c)
Portfolio turnover 56% 65% 66% 45% 54%
Average commission rate (a) $0.05 - - - -
Net assets at end of period (000's omitted) $271,43 $118,36 $111,58 $99,032 $53,641
3 2 4
</TABLE>
Managers International Equity Fund
<TABLE>
<CAPTION>
Year ended December 31,
<S> 1996 1995(b) 1994 1993 1992
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $39.97 $36.35 $35.92 $26.52 $25.66
Income from Investment Operations:
Net investment income (loss) (c) 0.32 0.31 0.16 0.22 0.23
Net realized and unrealized gain (loss) on 4.76 5.59 0.56 9.88 0.85
investments
Total from investment operations 5.08 5.90 0.72 10.10 1.08
Less Distributions to Shareholders:
From net investment income (0.33) (0.13) (0.08) (0.29) (0.22)
In excess of net investment income - - - (0.11) -
(0.11)
From net realized gain on investments (1.03) (2.15) - (0.30) _
In excess of net realized gain on investments -__ -__ (0.21) -__ -__
Total distributions to shareholders (1.36) (2.28) (0.29) (0.70) (0.22)
Net Asset Value, End of Period $43.69 $39.97 $36.35 $35.92 $26.52
Total Return (d) 12.77% 16.24% 2.00% 38.20% 4.25%
Ratio of expenses to average net assets (c) 1.53% 1.58% 1.49% 1.47% 1.45%
Ratio of net investment income to average net 0.97% 0.80% 0.60% 0.78% 0.97%
assets (c)
Portfolio turnover 30% 73% 22% 46% 51%
Average commission rate (a) $0.03 - - - -
Net assets at end of period (000's omitted) $269,56 $140,48 $86,924 $62,273 $23,129
8 8
</TABLE>
(a)All funds are now required to disclose their average commission rate per
share for security trades on which commissions are charged. The amount
may vary from period to period and from fund to fund depending on the
mix of trades executed in various markets where trading practices and
commissions rate structures may differ.
(b)Calculated using the weighted average shares outstanding during the
year.
(c)Does not reflect investment advisory and management fees paid by
shareholders directly to the Manager prior to May 1990.
(d)For periods less than one year, returns are not annualized.
(e)Annualized.
<PAGE>
<TABLE>
<CAPTION>
Seven
months Year
Year Decembe ended ended
1991 ended r 31, 1988 December May 31,
<C> 1990 1989 <C> 31, 1987
<C> <C> 1987 <C>
<C>
$24.06 $30.23 $28.17 $23.59 $30.82 $28.25
1.11 1.48 1.68 1.45 0.82 1.49
5.82 (5.30) 4.77 4.84 (5.16) 3.31
6.93 (3.82) 6.45 6.29 (4.34) 4.80
(1.20) (1.45) (1.66) (1.43) (0.87) (1.54)
(1.17) (0.90) (2.73) (0.28) (2.02) (0.69)
(2.37) (2.35) (4.39) (1.71) (2.89) (2.23)
$28.62 $24.06 $30.23 $28.17 $23.59 $30.82
29.33% (13.04) 22.24% 26.10% 15.85% 16.95%
%
1.16% 0.80% 0.15% 0.17% 0.14%(e) 0.14%
4.00% 5.40% 5.34% 5.47% 4.89%(e) 5.18%
64% 57% 23% 26% 35%(e) 36%
- - - - - -
$70,077 $80,297 $116,103 $108,149 $108,581 $145,146
</TABLE>
<TABLE>
<CAPTION>
Seven
months Year
Year Decembe ended ended May
1991 ended r 31 1988 December 31,
<C> 1990 1989 <C> 31, 1986
<C> <C> 1987 <C>
<C>
$19.9 $21.84 $20.10 $17.38 $30.89 $30.55
9
0.25 0.60 0.91 0.75 0.45 0.81
6.10 (0.98) 3.47 2.72 (2.37) 2.47
6.35 (0.38) 4.38 3.47 (1.92) 3.28
(0.27 (0.61) (0.91) (0.75) (0.47) (0.82)
)
(2.61 (0.86) (1.73) - (11.12) (2.12)
)
- -__ -__ -__ -__ -__
__
(2.88 (1.47) (2.64) (0.75) (11.59) (2.94)
)
$23.4 $19.99 $21.84 $20.10 $17.38 $30.89
6
31.97 (1.98)% 21.05% 19.23% (9.41)% 10.89%
%
1.31% 1.09% 0.38% 0.33% 0.24%(e) 0.17%
1.07% 2.80% 4.04% 3.90% 3.22%(e) 2.85%
259% 124% 120% 95% 190%(e) 160%
- - - - - -
$53,2 $45,801 $52,724 $60,551 $74,245 $135,764
46
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Seven
months Year
Year Decembe ended ended
1991 ended r 31, 1988 December May 31,
<C> 1990 1989 <C> 31, 1987
<C> <C> 1987 <C>
<C>
$24.4 $32.45 $27.04 $22.97 $29.11 $29.56
6
0.22 0.33 0.54 0.51 0.25 0.42
11.78 (5.44) 8.57 5.43 (3.67) 2.03
12.00 (5.11) 9.11 5.94 (3.42) 2.45
(0.23 (0.36) (0.64) (0.40) (0.25) (0.44)
)
(1.74 (2.52) (3.06) (1.47) (2.47) (2.46)
)
(1.97 (2.88) (3.70) (1.87) (2.72) (2.90)
)
$34.4 $24.46 $32.45 $27.04 $22.97 $29.11
9
49.26 (16.05) 32.76% 25.26% (12.03)% 7.92%
% %
1.30% 1.19% 0.40% 0.60% 0.41%(e) 0.38%
0.73% 1.22% 1.65% 1.20% 1.54%(e) 1.58%
70% 67% 48% 62% 38%(e) 38%
- - - - - -
$40,6 $24,429 $37,316 $28,824 $21,769 $30,441
16
</TABLE>
<TABLE>
<CAPTION>
Seven
months
Year ended ended Year
1991 December 31, 1988 December ended
<C> 1990 <C> 31, May 31,
1989 1987 1987
<C> <C> <C> <C>
$22.09 $26.12 $23.80 $21.74 $35.32 $26.53
0.36 0.34 (0.16) 0.02 0.03 0.17
3.64 (2.85) 3.77 2.12 (3.17) 10.97
4.00 (2.51) 3.61 2.14 (3.14) 11.14
(0.36) (0.13) _ (0.08) (0.08) (0.13)
- - - - - -
(0.07) (1.39) (1.29) _ (10.36) (2.22)
-__ -__ -__ -__ -__ -__
(0.43) (1.52) (1.29) (0.08) (10.44) (2.35)
$25.66 $22.09 $26.12 $23.80 $21.74 $35.32
18.14% (9.68)% 15.10% 8.89% (11.63)% 44.10%
1.69% 2.33% 2.77% 1.68% 1.20%(e) 0.99%
1.50% 1.12% (0.73)% 0.12% 0.28%(e) 0.59%
158% 78% 117% 88% 159%(e) 188%
- - - - - -
$14,222 $9,871 $8,974 $7,337 $8,265 $11,613
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives of a Fund may not be changed without
approval of a majority of the outstanding voting securities of that
Fund, as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). There is no assurance that these objectives will be
achieved. Investors should refer to the prospectus section entitled
"Certain Investment Techniques and Associated Risks" and to the
"Other Information" section in the SAI for additional portfolio
management discussions and for a description of the ratings mentioned
below that are assigned by Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Ratings Group ("Standard &
Poor's"). Each Fund is subject to certain investment restrictions
which may not be changed without the approval of the holders of a
majority of that Fund's outstanding voting securities.
The Equity Funds pursue their investment objectives primarily by
investing in "equity securities," which for this purpose consist of
common stock, securities convertible into common stock, such as bonds
and preferred stocks, American Depositary Receipts and securities
such as rights and warrants which permit the holder to purchase
equity securities.
To the extent consistent with their investment objectives and
policies, the Equity Funds may also invest in fixed-income securities
for current income and capital preservation. Such fixed-income
securities will have a maximum remaining maturity of fifteen years.
The Equity Funds will invest in fixed-income securities issued by the
U.S. government and its agencies and instrumentalities, or corporate
bonds or debentures that are rated not less than Aa by Moody's or AA
by Standard & Poor's, or, in the case of debt securities not rated by
Moody's or Standard & Poor's, of comparable quality as determined by
the Asset Manager. Each of the Equity Funds may invest a portion of
its cash balances in shares of unaffiliated money market mutual
funds, when the Manager determines that such investments offer higher
net yields (after considering all direct and indirect fees and
expenses) than direct investments in cash equivalent securities. The
Equity Funds may also invest in fixed-income securities for capital
appreciation. Fixed-income securities may have a fixed or variable
rate. Any or all of the Funds may at times for defensive purposes
temporarily place all or a portion of their assets in cash,
short-term commercial paper, U.S. government securities, high quality
debt securities, including Eurodollar and Yankee Dollar obligations,
and obligations of banks when, in the judgment of the Fund's Asset
Manager, such investments are appropriate in light of economic or
market conditions. See "Other Information-Cash Equivalents" in the
SAI. In addition to these strategies, the International Equity Fund,
as a temporary defensive position policy, may invest in cash
equivalents of foreign issuers, foreign government bonds or other non-
U.S. dollar denominated cash equivalents.
Managers Income Equity Fund
The Fund's investment objective is to seek a high level of
current income from a diversified portfolio of income-producing
equity securities. The Fund ordinarily invests at least 65% of its
total assets in income-producing equity securities. The Fund does not
intend to invest in securities of companies without proven earnings.
Managers Capital Appreciation Fund
The Fund's primary investment objective is to seek long-term
capital appreciation and its secondary objective is to seek income by
investing in a diversified portfolio of equity securities.
Managers Special Equity Fund
The Fund's investment objective is to seek capital appreciation
by investing primarily in the equity securities of a diversified
group of companies expected to have superior earnings growth
potential. The Fund's investments will tend to be in the securities
of companies having small to medium market capitalizations. The Fund
ordinarily invests at least 65% of its total assets in such equity
securities. In selecting securities for the Fund, the Asset Manager
may purchase securities of companies which are in the early stages of
their corporate life cycle or not yet well recognized, or in more
established firms which are experiencing accelerated earnings growth.
<PAGE>
Managers International Equity Fund
The Fund's primary investment objective is to seek long-term
capital appreciation and its secondary objective is to seek income by
investing primarily in non-U.S. equity securities. The Fund
ordinarily invests at least 65% of its total assets in equity
securities of companies domiciled outside the United States, but up
to a combined total of 35% of its total assets may be invested in
equity and fixed-income securities of U.S. companies when, in the
estimation of the Asset Manager, expected returns from such
securities exceed those of non-U.S. equity securities. The Fund may
invest in fixed-income securities denominated in foreign currencies.
The Fund intends to diversify investments among countries and
normally intends to hold securities of non-U.S. companies in at least
three countries. Investments may be made in companies in developing
as well as developed countries. Currently, the Fund may invest in
securities of foreign issuers located in countries approved by the
Fund's Board of Trustees. The Fund intends to invest in non-U.S.
companies whose securities are traded on exchanges located in the
countries in which the issuers are principally based. For a
discussion of the risks associated with investing in foreign
securities, see "Certain Investment Techniques and Associated Risks-
Other Securities-Foreign Securities."
CERTAIN INVESTMENT TECHNIQUES AND ASSOCIATED RISKS
The following are descriptions of types of securities invested
in by the Equity Funds, certain investment techniques employed by the
Funds and risks associated with utilizing either the securities or
the investment techniques. Unless otherwise indicated, all of the
Funds may invest in the indicated securities and use the indicated
investment techniques.
General Risks Associated with Equity Funds
The Equity Funds are subject to normal market risks. In an
attempt to reduce risk of loss of principal due to changes in the
value of individual stocks, each of the Equity Funds invests in a
diversified portfolio of common stocks. Such diversification does not
eliminate all risks and investors should expect the net asset value
of their Equity Fund shares to fluctuate based on market conditions.
The securities of small- to medium-sized (by market
capitalization) companies, or financial instruments related to such
securities, may have a more limited market than the securities of
larger companies. Accordingly, it may be more difficult to effect
sales of such securities at an advantageous time or without a
substantial drop in price than securities of a company with a large
market capitalization and broad trading market. In addition,
securities of small- to medium-sized companies may have greater price
volatility as they are generally more vulnerable to adverse market
factors such as unfavorable economic reports.
Other Securities
Foreign Securities. Investments in foreign securities involve risks
that differ from investments in securities of domestic issuers. Such
risks may include political and economic developments, the possible
imposition of withholding taxes, possible seizure or nationalization
of assets, the possible establishment of exchange controls or the
adoption of other foreign governmental restrictions which might
adversely affect the Fund's investments. In addition, foreign
countries may have less well developed securities markets, as well as
less regulation of stock exchanges and brokers and different auditing
and financial reporting standards. Not all foreign branches of United
States banks are supervised or examined by regulatory authorities as
are United States banks, and such branches may not be subject to
reserve requirements. For additional information regarding the risks
associated with foreign branch issues, see "Other Information-
Obligations of Domestic and Foreign Banks" in the SAI. Investing in
the fixed-income markets of developing countries involves exposure to
economies that are generally less diverse and mature, and to
political systems which may be less stable, than those of developed
countries. Foreign securities often trade with less frequency and
volume than domestic securities and therefore may exhibit greater
price volatility. Changes in foreign exchange rates will affect the
value of those securities which are denominated or quoted in
currencies other than the U.S. dollar.
<PAGE>
Illiquid Securities. Each Fund may invest up to 15% of its net
assets in securities that are not readily marketable ("illiquid
securities"). These securities, which may be subject to legal or
contractual restrictions on their resale, may involve a greater risk
of loss to those Funds that purchase them. Securities that are not
registered for sale under the Securities Act of 1933, as amended (the
"1933 Act"), but are eligible for resale pursuant to Rule 144A under
the 1933 Act, will not be considered illiquid for purposes of this
restriction if the Asset Manager determines, subject to the review of
the Trustees, that such securities have a readily available market.
Repurchase Agreements. In a repurchase transaction, a Fund
purchases a security from a bank or a broker-dealer and
simultaneously agrees to resell that security to the bank or
broker-dealer at an agreed upon price on an agreed-upon date. The
resale price reflects the purchase price plus an agreed upon rate of
interest. In effect, the obligation of the seller to repay the
agreed-upon price is secured by the value of the underlying security,
which must at least equal the repurchase price. Repurchase agreements
could involve certain risks in the event of default or insolvency of
the other party, including possible delays or restrictions upon a
Fund's ability to dispose of the underlying securities. No Fund may
invest in repurchase agreements with a maturity of more than
seven days if the aggregate of such investments, along with other
illiquid securities, exceeds the Fund's limits on investments in
illiquid securities. For more information concerning repurchase
agreements, see "Other Information-Repurchase Agreements" in the SAI.
Securities Lending. Consistent with its investment objective and
policies, each Fund may lend its portfolio securities in order to
realize additional income. Any such loan will be continuously secured
by collateral at least equal in value to the value of the securities
loaned. The risk of loss on such transactions is mitigated because,
if a borrower were to default, the collateral should satisfy the
obligation. However, as with other extensions of secured credit,
loans of portfolio securities involve some risk of loss of rights in
the collateral should the borrower fail financially.
Segregated Accounts. When a Fund has entered into transactions such
as reverse repurchase agreements or certain options, futures and
forward transactions, the Fund will establish a segregated account
with its Custodian in which it will maintain cash and/or other liquid
securities equal in value to its obligations in respect to such
transaction.
Hedging Techniques
Unless otherwise indicated, the Funds' portfolio managers may
engage in the following hedging techniques to seek to hedge all or a
portion of a Fund's assets against market value changes resulting
from changes in market values, interest rates or currency
fluctuations. Hedging is a means of offsetting, or neutralizing, the
price movement of an investment by making another investment, the
price of which should tend to move in the opposite direction from the
original investment. The imperfect correlation in price movement
between a hedging instrument and the underlying security, currency,
index, futures contract or other investment may limit the
effectiveness of a particular hedging strategy.
A Fund's ability to establish and close out positions in futures
contracts and options on futures contracts will be subject to the
existence of a liquid secondary market. Although a Fund generally
will purchase or sell only those futures contracts and options
thereon for which there appears to be an active secondary market,
there is no assurance that a liquid secondary market on an exchange
will exist for any particular futures contract or option or at any
particular time.
Options. Each Fund may write ("sell") covered put and covered call
options covering the types of financial instruments in which the Fund
may invest (including individual stocks, stock indices, futures
contracts, forward foreign currency exchange contracts and
when-issued securities) to provide protection against the adverse
effects of anticipated changes in securities prices. A Fund may also
write covered put options and covered call options as a means of
enhancing its return through the receipt of premiums when the Fund's
portfolio manager determines that the underlying securities, indices
or futures contracts have achieved their potential for appreciation.
By writing covered call options, the Fund foregoes the opportunity to
profit from an increase in the market price of the underlying
security, index or futures contract above the exercise price except
insofar as the premium represents such a profit. The risk involved in
writing covered put options is that there could be a decrease in the
market value of the underlying security, index or futures contract.
If this occurred, the option could be exercised and the underlying
security, index or futures contract would then be sold to the Fund at
a higher price than its then current market value. A Fund will write
only "covered" options.
<PAGE>
When writing call options, a Fund will be required to own the
underlying financial instrument, index or futures contract or own
financial instruments or indices whose returns are closely correlated
with the returns of the financial instrument, index or futures
contract underlying the option. When writing put options a Fund will
be required to segregate with its custodian bank cash and/or other
liquid securities to meet its obligations under the put. By covering
a put or call option, the Fund's ability to meet current obligations,
to honor redemptions or to achieve its investment objectives may be
impaired.
The Fund may also purchase put and call options to provide
protection against adverse price effects from anticipated changes in
prevailing securities prices. The purchase of a put option protects
the value or portfolio holdings in a falling market, while the
purchase of a call option protects cash reserves from a failure to
participate in a rising market. In purchasing a call option, the Fund
would be in a position to realize a gain if, during the option
period, the price of the security, index or futures contract
increased over the strike price by an amount greater than the premium
paid. It would realize a loss if the price of the security, index or
futures contract decreased, remained the same or did not increase
over the strike price during the option period by more than the
amount of the premium. If a put or call option purchased by the Fund
were permitted to expire without being sold or exercised, its premium
would represent a realized loss to the Fund.
The staff of the Securities and Exchange Commission has taken
the position that purchased OTC options and the assets used as
"cover" for written OTC options are illiquid securities. However, a
Fund may treat the securities it uses as cover for written OTC
options as liquid provided it follows a specified procedure. A Fund
may sell OTC options only to qualified dealers who agree that the
Fund may repurchase any OTC options it writes for a maximum price to
be calculated by a predetermined formula. In such cases, the OTC
option would be considered illiquid only to the extent that the
maximum repurchase price under the formula exceeds the amount that
the option is "in-the-money" (i.e., current market value of the
underlying security minus the option's strike price). For more
information concerning options transactions, see "Other Information-
Covered Put Options-Covered Call Options," and "-Puts and Calls" in
the SAI.
Futures Contracts. A Fund may buy and sell futures contracts as a
hedge to protect the value of the Fund's portfolio against changes in
prices of the financial instruments in which it may invest. There are
several risks in using futures contracts. One risk is that futures
prices could correlate imperfectly with the behavior of cash market
prices of the instrument being hedged so that even a correct forecast
of general price trends may not result in a successful transaction.
Another risk is that the Fund's portfolio manager may be incorrect in
its expectation of future prices. There is also a risk that a
secondary market in the instruments that the Fund holds may not exist
or may not be adequately liquid to permit the Fund to close out
positions when it desires to do so. When buying or selling futures
contracts the Fund will be required to segregate cash and/or liquid
securities to meet its obligations under these types of financial
instruments. By so doing, the Fund's ability to meet current
obligations, to honor redemptions or to operate in a manner
consistent with its investment objectives may be impaired. See "Other
Information-Equity Index Futures Contracts" and "-Interest Rate
Futures Contracts" in the SAI.
Forward Foreign Currency Exchange Contracts. A Fund's Asset Manager
may attempt to hedge the risk that a particular foreign currency may
suffer a substantial decline against the U.S. dollar by entering into
a forward contract to sell an amount of foreign currency
approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. It may also enter
into such contracts to protect against losses resulting from changes
in foreign currency exchange rates between trade and settlement date.
Such contracts will have the effect of limiting any gains to the Fund
resulting from changes in such rates. Losses may also arise due to
changes in the value of the foreign currency or if the counterparty
does not perform under the contract. See "Other Information-Forward
Foreign Currency Exchange Contracts" in the SAI.
PORTFOLIO TURNOVER
In carrying out the investment policies described in this
Prospectus, each Fund expects to engage in a substantial number of
securities portfolio transactions, and the rate of portfolio turnover
will not be a limiting factor when an Asset Manager deems it
appropriate to purchase or sell securities for a Fund. High portfolio
turnover involves correspondingly greater brokerage commissions for a
Fund investing in Equity Securities and other transaction costs which
are borne directly by a Fund. In addition, high portfolio turnover
may also result in increased short-term capital gains which, when
distributed to shareholders, are treated for federal income tax
purposes as ordinary income. See "Portfolio Transactions and
Brokerage" and "Tax Information." For the Equity Funds' portfolio
turnover rates, see "Financial Highlights."
<PAGE>
PURCHASE AND REDEMPTION OF FUND SHARES
How to Purchase Fund Shares
Initial purchases of shares of the Funds may be made in a
minimum amount of $2,000 per Fund ($500 for IRAs). Arrangements can
also be made to open accounts with a $500 or $250 initial investment
and an agreement to invest at least $50 or $100, respectively, per
month until the minimum is attained. Call (800)835-3879 for more
information on these arrangements. There is no minimum for
additional investments, except for telephone Automated Clearing House
("ACH") purchases.
Investors may purchase shares of the Trust through their
financial planner or other investment professional who is (or who is
associated with) an investment adviser registered with the Securities
and Exchange Commission (a "Registered Investment Adviser") or
directly from the Trust as indicated below. Shares may also be
purchased by bank trust departments on behalf of their clients, other
institutional investors such as corporations, endowment funds and
charitable foundations, and tax-exempt employee welfare, pension and
profit-sharing plans.
The following shows the various methods for purchasing the
Trust's shares. For more complete instructions, see the account
application.
<TABLE>
<CAPTION>
Method
<S>
Initial Investment Additional Investments
<C> <C>
Minimums:
Regular accounts $2,000 (or lower, as No minimum
described above)
IRAs, IRA rollovers, SEP $500 No minimum
and SIMPLE IRAs
Method
Through your investment Contact your investment Send additional funds to
professional advisor, bank or other your investment
investment professional professional at the
address appearing on
your account statement
Direct by mail Send your account Send letter of
application and check instruction and check
(payable to The Managers (payable to The Managers
Funds) to the address Funds) to
indicated on the The Managers Funds
application c/o Boston Financial
Data Service, Inc.
P.O. Box 8517
Boston, MA 02266-8517
Please include your
account # on your check
Direct Federal Funds or Call (800) 358-7668 to Call the Transfer Agent
Bank Wire notify the Transfer at (800) 358-7668 prior
Agent, and instruct your to wiring additional
bank to wire U.S. funds funds
to:
ABA #011000028
State Street Bank &
Trust Company
Boston, MA 02101
BFN-The Managers Funds
AC 9905-001-5
FBO-Shareholder Name
By telephone Only for established Call the Transfer Agent
accounts with ACH at (800) 252-0682
privileges. Call
(800) 252-0682 with Minimum investment: $100
instructions for the
Transfer Agent
</TABLE>
<PAGE>
The employees and their families of The Managers Funds, L.P. and
selected dealers and their authorized representatives who are engaged
in the sale of Fund shares, may purchase shares of the Fund without
regard to a minimum initial investment.
Certain states may require Registered Investment Advisers that
purchase Fund shares for customers in those states to register as
broker-dealers. From time to time the Trust's distributor may supply
materials to Registered Investment Advisers to assist them in
formulating an investment program using the Trust for their clients.
Such materials are designed to be used and evaluated by investment
professionals, do not contain investment advice and are not available
for distribution to the general public.
Certain investors may purchase or sell Fund shares through
broker-dealers or through other processing organizations who may
impose transaction fees or other charges in connection with providing
this service. Shares purchased in this fashion may be treated as a
single account for purposes of the minimum initial investment.
Investors who do not wish to receive the services of a broker-dealer
or processing organization may consider investing directly with the
Trust. Shares held through a broker-dealer or processing organization
may be transferred into the investor's name by contacting the
broker-dealer or processing organization and the Trust's transfer
agent. Certain processing organizations may receive compensation from
the Trust's Manager, Administrator and/or an Asset Manager.
Trust shares are offered and orders accepted on each business
day (a day on which the New York Stock Exchange ("NYSE") is open for
trading). The Trust may limit or suspend the offering of shares of
any or all of the Funds at any time and may refuse, in whole or in
part, any order for the purchase of shares.
Purchase orders received by the Trust, c/o Boston Financial Data
Services at the address listed on the back cover of this prospectus,
prior to 4:00 p.m., Eastern Standard Time, on any business day will
receive the offering price computed that day. Orders received prior
to 4:00 p.m. by certain processing organizations which have entered
into special arrangements with the Manager will receive that day's
offering price. The broker-dealer, omnibus processor or investment
professional, is responsible for promptly transmitting orders to the
Trust. The Trust cannot accept orders transmitted to it at the
address indicated on the cover page of this prospectus, but will use
its best efforts to promptly forward such orders to the Transfer
Agent for receipt the next business day.
Federal Funds or Bank Wires used to pay for purchase orders must
be in U.S. dollars and received by 3:00 p.m. the following business
day, except for certain processing organizations which have entered
into special arrangements with the Trust.
Purchases made by check are effected when the check is received,
but are accepted subject to collection at full face value in U.S.
funds and must be drawn in U.S. dollars on a U.S. bank. Third party
checks which are payable to an existing shareholder who is a natural
person (as opposed to a corporation or partnership) and endorsed over
to a Fund or State Street Bank and Trust Company will be accepted. To
ensure that checks are collected by the Trust, redemptions of shares
purchased by check, or exchanges from such shares, are not effected
until 15 days after the date of purchase, unless arrangements are
made with the Administrator.
If the check accompanying any purchase order does not clear, or
if there are insufficient funds in your bank account to enable an
ACH, the transaction will be canceled and you will be responsible for
any loss the Trust incurs. For current shareholders, each Fund can
redeem shares from any identically registered account in such Fund or
any other Fund in the Trust as reimbursement for any loss incurred.
The Trust may prohibit or restrict all future purchases in the Trust
in the event of any nonpayment for shares.
In the interest of economy and convenience, share certificates
will not be issued. All share purchases are confirmed to the record
holder and credited to such holder's account on the Trust's books
maintained by the Transfer Agent.
Share Price and Valuation of Shares. The net asset value of shares
of each Fund is computed each business day, at the close of trading
on the NYSE, and is the net worth of the Fund (assets minus
liabilities) divided by the number of shares outstanding. Fund
securities listed on an exchange are valued on the basis of the last
quoted sale price on the exchange where such securities principally
are traded on the valuation date, prior to the close of trading on
the NYSE, or, lacking any sales, on the basis of the last quoted bid
price on such principal exchange prior to the close of trading on the
NYSE. Over-the-counter securities for which market quotations are
readily available are valued on the basis of the last sale price or,
lacking any sales, at the last quoted bid price on that date prior to
the close of trading on the NYSE. Securities and other instruments
for which market quotations are not readily available are valued at
fair value, as determined in good faith and pursuant to procedures
established by the Trustees. For further information, see "Net Asset
Value" in the SAI.
<PAGE>
Redeeming Shares
Any redemption orders received by the Trust as indicated below
before 4:00 p.m. New York time on any business day will receive the
net asset value determined at the close of trading on the NYSE on
that day. Redemption orders received after 4:00 p.m. will be redeemed
at the net asset value determined at the close of trading on the next
business day. The Trust cannot accept redemption orders transmitted
to it at the address indicated on the cover page of the prospectus,
but will use its best efforts to promptly forward such orders to the
Transfer Agent for receipt by the next business day. If you are
trading through a broker-dealer or investment adviser, such
investment professional is responsible for promptly transmitting
orders. There is no redemption charge. The Fund reserves the right to
redeem shareholder accounts (after 60 days notice) when the value of
the Fund shares in the account falls below $500 due to redemptions.
Whether a Fund will exercise its right to redeem shareholder accounts
will be determined by the Manager on a case-by-case basis.
<TABLE>
<CAPTION>
Method Instructions
<S> <C>
By mail-write to Send a letter of instruction which
The Managers Funds specifies the name of the Fund,
c/o Boston Financial Data dollar amount or number of shares to
Services,Inc. be sold, your name and account
P.O. Box 8517 number. This letter must be signed
Boston, MA 02266-8517 by all owners of the shares in the
exact manner in which they appear on
the account.
In the case of estates, trusts,
guardianships, custodianships,
corporations and pension and profit
sharing plans, other supporting
legal documentation is required.
By telephone For shareholders who have elected
telephone redemption privileges on
their applications, telephone the
Trust at (800) 252-0682.
By contacting your investment
professional
By writing a check (Managers Money For shareholders who have elected
Market Fund shareholders only) the checkwriting option with State
Street Bank and Trust Company, see
"Investor Services-Checkwriting
Privilege" below.
</TABLE>
Investor Services
Automatic Reinvestment Plan allows dividends or capital gains
distributions to be reinvested in additional shares, unless you elect
to receive cash.
Automatic Investments of preauthorized amounts from private bank
accounts can be made monthly, quarterly or annually. The amount you
specify will automatically be deducted from your bank account and
invested on the day you specify.
Systematic Withdrawals of $100 or more per Fund can be made
monthly by shareholders.
Dollar Cost Averaging allows for regular automatic exchanges
from any Fund to one or more other Funds, or can also be done through
the Automatic Investment service above. Before investing in the
Trust's Income Funds, shareholders must obtain a prospectus from the
Trust describing those Funds.
Individual Retirement Accounts, including SEP and SIMPLE IRAs,
IRA rollovers and 403(b) accounts, are available to shareholders at
no additional cost.
Checkwriting Privilege is available only to shareholders of the
Trust's Money Market Fund. Before investing in the Trust's Money
Market Fund, shareholders must obtain a prospectus from the Trust
describing the Money Market Fund and the conditions and limitations
pertaining to this privilege. Participating shareholders must return
a completed signature card and authorization form, and will be
provided a supply of checks. Checks may be drawn on State Street Bank
for amounts between $500 and $500,000. When such a check is presented
to State Street Bank for payment, a sufficient number of full and
fractional shares will be redeemed from the shareholder's account to
cover the amount of the check.
The check redemption privilege for withdrawal enables a
shareholder to receive dividends declared on the shares to be
redeemed (up to and including the day of redemption) until such time
as the check is processed. Because of this, the check redemption
privilege is not appropriate for a complete liquidation of a
shareholder's account. If the amount of a withdrawal check is greater
than the value of the shares held in the shareholder's account the
check will be returned unpaid, and the shareholder will be subject to
additional charges.
Managers Money Market Fund and State Street Bank each reserve
the right at any time to suspend or limit the procedure permitting
withdrawals by check.
Exchange Privilege. The exchange privilege permits shareholders
of any of the Funds to exchange their shares for shares of any of the
other Funds at the relative net asset value per share. Exchange
transactions may be made by writing to the Fund (see "Redeeming
Shares"), by contacting your investment professional, via the
Telephone Exchange Privilege (unless you have declined this option)
or on your signed account application. Call Investors Services at
(800) 252-0682 to utilize the Telephone Exchange Privilege.
Shareholders must receive a prospectus describing the Income Funds of
the Trust before requesting an exchange into one or more of those
Funds. By requesting an exchange into one of those Funds,
shareholders are deemed to confirm receipt of the prospectus
describing the Trust's Income Funds.
The exchange privilege is offered to shareholders for their
convenience and use consistent with their investment objectives. It
is not offered as a short-term market timing service. The Trust
reserves the right to refuse exchange orders from shareholders who
have previously been advised that their frequent use of the exchange
privilege is, in the opinion of the Manager, inconsistent with the
orderly management of the Funds' portfolios.
The Trust and its Transfer Agent will employ reasonable
procedures to verify the genuineness of telephonic redemption or
exchange requests. If such procedures are not followed, the Trust or
its Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. These procedures involve requiring
certain personal identification information.
<PAGE>
The above services are available only in states where the Funds
may be legally offered, and may be terminated or modified by one or
more Funds at any time upon 60 days written notice to shareholders.
None of the Funds, the Distributor, the Trust's Custodian, or
Transfer Agent, nor their respective officers and employees, will be
liable for any loss, expense or cost arising out of a transaction
effected in accordance with the terms and conditions set forth in
this Prospectus even if such transaction results from any fraudulent
or unauthorized instructions.
Income Dividends and Capital Gain Distributions
Income dividends will normally be paid on the Equity Funds at
the frequency noted in the following table. Income dividends will
normally be declared on the fourth business day prior to the end of
the dividend period, payable on the following business day, to
shareholders of record on the day prior to the declaration date.
Distributions of any capital gains will normally be paid annually in
December.
<TABLE>
<CAPTION>
Frequency Fund
<S> <C>
Monthly Income Equity Fund
Annually Capital Appreciation Fund,
Special Equity Fund,
International Equity Fund
</TABLE>
All dividends and distributions declared by a Fund will be
reinvested in additional shares of the Fund at the net asset value on
the "Ex-dividend" date(unless the shareholder has elected to receive
dividends or distributions in cash or invest them in shares of the
Money Market Fund). An election may be changed by delivering written
notice to the Fund at least ten business days prior to the payment
date.
MANAGEMENT OF THE FUNDS
Trustees
Information concerning the Trustees, including their names,
positions, terms of office and principal occupations during the past
five years, is contained in the SAI.
Investment Manager
It is the Manager's responsibility to select, subject to review
and approval by the Trustees, the Asset Managers who have
distinguished themselves by able performance in their respective
areas of expertise in asset management and to continuously monitor
their performance. The Manager and its corporate predecessors have
had over 20 years of experience in evaluating investment advisers for
individuals and institutional investors. In addition, the Manager
employs the services of a consultant specializing in appraisal and
comparison of investment managers to assist in evaluating asset
managers. The Manager is also responsible for conducting all
operations of the Funds except those operations contracted to the
Custodian and to the Transfer Agent.
The Trust has received an exemptive order from the Securities
and Exchange Commission (the "SEC") permitting the Manager, subject
to certain conditions, to enter into sub-advisory agreements with
Asset Managers approved by the Trustees without obtaining shareholder
approval. At meetings held on December 5, 1994 and December 15, 1994,
the shareholders of the Funds approved the operation of the Trust in
this manner. The order also permits the Manager, subject to the
approval of the Trustees but without shareholder approval, to employ
new Asset Managers for new or existing Funds, change the terms of
particular sub-advisory agreements or continue the employment of
existing Asset Managers after events that would cause an automatic
termination of a sub-advisory agreement. Although shareholder
approval is not required for the termination of sub-advisory
agreements, shareholders of a Fund will continue to have the right to
terminate such agreements for the Fund at any time by a vote of the
majority of the outstanding shares of the Fund. Shareholders will
continue to be notified of any Asset Manager changes.
<PAGE>
The following table sets forth the annual management fee rates
currently paid by each Equity Fund, the annual asset management fee
rates paid by the Manager to each Asset Manager for a particular Fund
during fiscal 1996, each expressed as a percentage of the Fund's
average daily net assets.
<TABLE>
<CAPTION>
Name of Fund Total Asset
<S> Managemen Managemen
t Fee t
<C> Fee
<C>
Income Equity Fund 0.75% *
Capital Appreciation Fund 0.80% 0.40%
Special Equity Fund 0.90% 0.50%
International Equity Fund 0.90% 0.50%
</TABLE>
___________
* The asset management fee paid to Scudder, Stevens & Clark, Inc.
is 0.35% and to Spare, Kaplan, Bischel & Associates is 0.40%.
Asset Managers
The following sets forth certain information about each of the
Asset Managers:
Income Equity Fund
Scudder, Stevens & Clark, Inc. ("Scudder")-The investment
adviser was founded in 1919, and was reorganized as a privately held
corporation in 1985. As of December 31, 1996, assets under management
totaled $115 billion. Its address is 345 Park Avenue, New York, NY
10154.
Robert T. Hoffman is the portfolio manager of the portion of the
Income Equity Fund managed by Scudder. He is a Managing Director of
Scudder, and has been with the firm since 1989.
Spare, Kaplan, Bischel & Associates ("SKB")-The firm was formed
in August 1989 by a group of investment professionals who were
formerly associated with Merus Capital-The Bank of California, a
wholly-owned subsidiary of Mitsubishi Bank Ltd. As of December 31,
1996, assets under management totaled $2.8 billion. Its address is 44
Montgomery Street, San Francisco, CA 94104.
Anthony E. Spare is the portfolio manager of the portion of the
Income Equity Fund managed by SKB. He is Chief Investment Officer of
SKB, and one of the founders of the firm.
Capital Appreciation Fund
Essex Investment Management Company, Inc. ("Essex")-The firm was
formed in 1976 and is owned by employees of the firm. As of
December 31, 1996, assets under management totaled $4.1 billion. Its
address is 125 High Street, Boston, MA 02110.
Joseph C. McNay and Donald V. Dougherty serve as the portfolio
managers of the portion of the Capital Appreciation Fund managed by
Essex. Mr. McNay is the Chairman and Chief Investment Officer of
Essex, a position he has held since the firm's inception. Mr.
Dougherty has served as a Vice President and portfolio manager of
Essex since 1994; prior to that time he served in a similar capacity
with Putnam Investments.
<PAGE>
Husic Capital Management ("Husic")-Husic commenced operations in
1986. The firm is a limited partnership which is 100% owned by Frank
J. Husic. As of December 31, 1996, assets under management totaled
approximately $4.1 billion. Its address is 555 California Street,
Suite 2900, San Francisco, CA 94104.
Frank J. Husic is the portfolio manager of the portion of the
Capital Appreciation Fund managed by Husic. He has been President and
Chief Investment Officer of Husic since the firm's inception.
Special Equity Fund
Liberty Investment Management ("Liberty")-The firm was
originally formed in 1976 and is currently a division of Goldman
Sachs Asset Managment. As of December 31, 1996, assets under
management totaled $5.6 billion. Its address is 2502 Rocky Point
Drive, Suite 500, Tampa, FL 33607.
Timothy G. Ebright is the portfolio manager of the portion of
the Special Equity Fund managed by Liberty. He is a Senior Vice
President of Liberty, a position he has held since 1988.
Pilgrim Baxter & Associates ("PBA")-The firm was formed in 1982
and is owned by United Asset Management, a public company. As of
December 31, 1996, assets under management totaled over
$14.7 billion. Its address is 1255 Drummers Lane, Wayne, PA 19087.
Gary L. Pilgrim is the portfolio manager of the portion of the
Special Equity Fund managed by PBA. He is President and Chief
Investment Officer of PBA, and one of the founders of the original
firm.
Westport Asset Management, Inc. ("Westport")-The firm was formed
in July 1983 and is owned by Andrew J. Knuth and Ronald H. Oliver. As
of December 31, 1996, assets under management totaled $825 million.
Its address is 253 Riverside Avenue, Westport, CT 06880.
Andrew J. Knuth is the portfolio manager of the portion of the
Special Equity Fund managed by Westport. He is the Chairman of
Westport, and one of the founders of the firm.
International Equity Fund
Scudder, Stevens & Clark, Inc.-See Income Equity Fund for a
description.
William E. Holzer is the portfolio manager of the portion of the
International Equity Fund managed by Scudder. He is a Managing
Director of Scudder, a position he has held since 1980.
Lazard, Freres Asset Management Co. ("Lazard")-The firm is a New
York limited liability company founded in 1848. As of December 31,
1996, the firm had $38 billion under management. Its address is One
Rockefeller Plaza, New York, NY 10020.
John R. Reinsberg is the portfolio manager of the portion of the
International Equity Fund managed by Lazard. He is a Managing
Director of Lazard, a position he has held since 1992. Prior to
joining Lazard, he served in a similar portfolio management <PAGE>
Administration and Shareholder Servicing; Distributor; Transfer Agent
Administrator. The Managers Funds, L.P. serves as the Trust's
administrator (the "Administrator") and has overall responsibility,
subject to the review of the Trustees, for all aspects of managing
the Trust's operations, including administration and shareholder
services to the Trust, its shareholders and certain institutions,
such as bank trust departments, dealers and registered investment
advisers, that advise or act as an intermediary with the Trust's
shareholders ("Shareholder Representatives"). The Administrator is
paid at the rate of 0.25% per annum of each Equity Fund's average
daily net assets.
Administrative services include (i) preparation of Fund
performance information; (ii) responding to telephone and in-person
inquiries from shareholders and Shareholder Representatives regarding
matters such as account or transaction status, net asset value of
Fund shares, Fund performance, Fund services, plans and options, Fund
investment policies and portfolio holdings and Fund distributions and
the taxation thereof; (iii) preparing, soliciting and gathering
shareholder proxies and otherwise communicating with shareholders in
connection with shareholder meetings; (iv) maintaining the Trust's
registration with Federal and state securities regulators;
(v) dealing with complaints and correspondence from shareholders
directed to or brought to the attention of the Administrator;
(vi) supervising the operations of the Trust's Transfer Agent; and
(vii) such other administrative, shareholder and shareholder related
services as the parties may from time to time agree in writing.
Distributor. The Managers Funds, L.P. serves as distributor of the
shares of the Trust. Its address is 40 Richards Avenue, Norwalk,
Connecticut 06854.
Transfer Agent. State Street Bank and Trust Co. serves as the
Trust's Transfer Agent.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Each Asset Manager is responsible for decisions to buy and sell
securities for each Fund or component of a Fund that it manages, as
well as for broker-dealer selection in connection with such portfolio
transactions. In the case of securities traded on a principal basis,
transactions are effected on a "net" basis, rather than a transaction
charge basis, with dealers acting as principal for their own accounts
without a stated transaction charge. Accordingly, the price of the
security may reflect an increase or decrease from the price paid by
the dealer together with a spread between the bid and asked prices,
which provides the opportunity for a profit or loss to the dealer.
Transactions in other securities are effected on a transaction charge
basis where the broker acts as agent and receives a commission in
connection with the trade. In effecting securities transactions, each
Asset Manager is responsible for obtaining best price and execution
of orders, provided that the Asset Manager may cause a Fund to pay a
commission for brokerage and research services which is in excess of
the commission another broker would have charged for the same
transaction if the Asset Manager determined in good faith that the
commission was reasonable in relation to the value of the brokerage
and research services provided, viewed in terms of the particular
transaction or in terms of all of the accounts over which the Asset
Manager has investment discretion. The dealer spread or broker's
commission charged in connection with a transaction is a component of
price and is considered together with other relevant factors. Any of
the Funds may effect securities transactions on a transaction charge
basis through a broker-dealer that is an affiliate of the Manager or
of one of that Fund's Asset Managers in accordance with procedures
approved by the Trustees. However, no Asset Manager for a Fund or its
affiliated broker-dealer may act as principal in any portfolio
transaction for any Fund with which it is an affiliate, and no
affiliate of the Manager may act as principal in a portfolio
transaction for any of the Funds.
PERFORMANCE INFORMATION
From time to time the Funds may advertise "yield" and/or "total
return." These figures are based on historical earnings and are not
intended to indicate future performance.
Yield
The Income Equity Fund may advertise "yield." Yield refers to
income generated by an investment in the Fund during a 30-day (or one
month) period. This income is then annualized. That is, the amount of
income generated during the period is assumed to be generated during
each 30-day (or one month) period over a one-year period and is shown
as a percentage of the investment.
<PAGE>
Total Return
Each of the Funds may include total return figures in its
advertisements. In calculating total return, the net asset value per
share at the beginning of the period is subtracted from the net asset
value per share at the end of the period (after assuming and
adjusting for the reinvestment of any income dividends and capital
gains distributions), and the result is divided by the net asset
value per share at the beginning of the period to ascertain the total
return percentage.
A Fund also may include comparative performance information in
advertising or marketing the Fund's shares. Such performance
information may include data from industry publications, business
periodicals, rating services and market indices. For more detailed
information on performance calculations and comparisons, see
"Performance Information" in the SAI.
The Funds' annual reports contain additional performance
information and are available upon request without charge.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust offers a single class of shares of beneficial
interest, without par value, and currently offers ten series of its
shares as described in the Trust's Prospectus. The Trustees have the
authority to create new series of shares in addition to the existing
ten series without the requirement of a vote of shareholders of the
Trust.
Shares of each Fund are entitled to one vote per share.
Shareholders have the right to vote on the election of the Trustees
and on all other matters on which, by law or the provisions of the
Trust's Declaration of Trust or by-laws, they may be entitled to
vote. On matters relating to all Funds and affecting all Funds in the
same manner, shareholders of all Funds are entitled to vote. On any
matters affecting only one Fund, only the shareholders of that Fund
are entitled to vote. On matters relating to all the Funds but
affecting the Funds differently, separate votes by Fund are required.
The Trust and its Funds are not required, and do not intend, to
hold annual meetings of shareholders, under normal circumstances. The
Trustees or the shareholders may call special meetings of the
shareholders for action by shareholder vote, including the removal of
any or all of the Trustees. The Trustees will call a special meeting
of shareholders of a Fund upon written request of the holders of at
least 10% of that Fund's shares.
Under Massachusetts law, the shareholders and trustees of a
business trust may, in certain circumstances, be personally liable
for the trust's obligations to third parties. However, the
Declaration of Trust provides, in substance, that no shareholder or
Trustee shall be personally liable for the Trust's obligations to
third parties, and that every written contract made by the Trust
shall contain a provision to that effect. The Declaration of Trust
also requires the Fund to indemnify shareholders and Trustees against
such liabilities and any related claims and expenses. The Trust will
not indemnify a Trustee when the loss is due to willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the Trustee's office.
Two lawsuits seeking class action status have been filed against
Managers Intermediate Mortgage Fund, Managers Short Government Fund,
the Investment Manager and the Trust, among other defendants. In
both of these cases, the plaintiffs seek unspecified damages based
upon losses alleged in the two funds named above. In the suit
relating to Managers Short Government Fund, after plaintiff amended
the complaint, a second motion to dismiss was filed. In that action,
the parties have now entered into a preliminary agreement to settle
all claims by the purported class. However, the parties have not
finalized their settlement nor have they obtained the required court
approvals. For these and other reasons, there can be no assurance
that the settlement will be consummated. In addition, a non-class
action lawsuit based on similar allegations has been filed by a
customer against certain of the defendants named in the class action
lawsuits, as well as Managers Short and Intermediate Bond Fund.
Certain other customers, who are potentially members of the plaintiff
class in each of the two class action lawsuits referred to above,
have asserted that they may file similar lawsuits based on similar
claims, but have not done so. Management continues to believe that
it has meritorious defenses and, if the cases are not settled,
Management intends to defend vigorously against these actions.
As of March 11, 1997, Resource Bank and Trust Company owned more
than 25% of the shares of Managers Capital Appreciation Fund and
customers of Charles Schwab & Co. owned more than 25% of the shares
of the Managers Special Equity Fund.
<PAGE>
TAX INFORMATION
The Funds
Each Fund has qualified and intends to continue to qualify as a
regulated investment company under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), under which each Fund
is regarded as a separate regulated investment company.
All dividends and distributions designated as capital gains are
generally taxable to shareholders whether received in cash or
additional shares.
Although distributions are generally taxable to a shareholder in
the taxable year in which the distribution is made, dividends
declared in October, November or December of a taxable year with a
record date in such a month and actually received during the
following January, will be taxed as though received by the
shareholder on December 31 of such year.
Generally, each Fund is required to back-up withhold 31% of
distributions paid to a shareholder who fails to provide a social
security or taxpayer identification number and certify that such
number is correct and that such shareholder is not subject to, or is
otherwise exempt from, back-up withholding.
Shareholders should consult their own tax advisers for more
information regarding the Federal, foreign, state, and local tax
treatment with respect to their own tax situation. For more
information concerning taxes, see "Tax Information" in the SAI.
SHAREHOLDER REPORTS
Shareholders will receive annual and semi-annual reports which
include financial statements showing the results of operations,
investment portfolio and other information of the Funds in which they
have invested. Shareholders will also receive annual tax statements
indicating the tax status of distributions made during the year.
Confirmations of transactions will be sent to shareholders following
purchases, redemptions or exchanges by the shareholder, and quarterly
statements of account will be sent to all shareholders.
<PAGE>
THE MANAGERS FUNDS
PROSPECTUS
Dated April 1, 1997
INCOME FUNDS
The Managers Funds (the "Trust") is a no-load, open-end,
management investment company with ten different series (each, a
"Fund" and collectively, the "Funds"). Each Fund has distinct
investment objectives and strategies. The Funds' investment
portfolios are managed by asset managers selected, subject to the
review and approval of the Trustees of the Trust, by The Managers
Funds, L.P. (the "Manager"). The Manager is also responsible for
administering the Trust and the Funds. This Prospectus describes the
following five Funds (the "Income Funds"):
Managers Short Government Fund-(the "Short Government Fund")
seeks high current income while preserving capital by investing
primarily in U.S. government securities with an average maturity not
exceeding three years.
Managers Short and Intermediate Bond Fund-(the "Short and
Intermediate Bond Fund") seeks high current income by investing in a
portfolio of fixed-income securities with an average portfolio
maturity between one and five years.
Managers Intermediate Mortgage Fund-(the "Intermediate Mortgage
Fund") seeks high current income by investing primarily in
mortgage-related securities.
Managers Bond Fund-(the "Bond Fund") seeks income by investing
primarily in fixed-income securities.
Managers Global Bond Fund-(the "Global Bond Fund") seeks high
total return, through both income and capital appreciation, by
investing primarily in domestic and foreign fixed-income securities.
This Prospectus sets forth concisely the information concerning
the Trust and the Income Funds that a prospective investor ought to
know before investing. It should be retained for future reference.
The Trust has filed with the Securities and Exchange Commission a
Statement of Additional Information ("SAI"), dated April 1, 1997,
which contains more detailed information about the Trust and the
Funds and is incorporated into this Prospectus by reference. A copy
of the SAI may be obtained without charge by contacting the Trust at
40 Richards Avenue, Norwalk, Connecticut 06854, (800) 835-3879 or
(203) 857-5321.
Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and shares of the Trust are not
federally insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> Pag
e
<C>
Illustrative Expense Information 3
Summary 4
Financial Highlights 5
Investment Objectives, Policies and Restrictions 11
Certain Investment Techniques and Associated Risks 18
Portfolio Turnover 26
Purchase and Redemption of Fund Shares 26
Management of the Funds 33
Portfolio Transactions and Brokerage 36
Performance Information 37
Description of Shares, Voting Rights and Liabilities 38
Tax Information 39
Shareholder Reports 40
</TABLE>
<PAGE>
ILLUSTRATIVE EXPENSE INFORMATION
The following tables provide the investor with information
concerning annual operating expenses of the Income Funds. The Funds
impose no sales load on purchases of shares or on reinvested
dividends and distributions, nor any deferred sales load upon
redemption. There are no redemption fees, exchange fees or Rule 12b-1
fees.
Income Funds' Annual Operating Expenses: (based on average daily
net assets during fiscal 1996, after expense reimbursements)
<TABLE>
<CAPTION>
Fund Total
<S> Managemen Other Operating
t Fee* Expenses* Expenses*
<C> * *
<C> <C>
Short Government Fund 0.20% 0.97% 1.17%
Short and Intermediate Bond Fund 0.50% 0.95% 1.45%
Intermediate Mortgage Fund 0.45% 0.74% 1.19%
Bond Fund 0.625% 0.73% 1.36%
Global Bond Fund 0.70% 0.86% 1.56%
</TABLE>
_____
* The management fees reflect the fees payable by each Fund under
the current investment advisory agreements, except that in the
case of the Short Government Fund, the management fee also
reflects a voluntary fee waiver by the Manager. In the absence
of such waiver, the management fee for this Fund would be 0.45%.
** Other expenses reflect the expenses actually incurred by each
Fund during the year ended December 31, 1996. With respect to
the Short Government Fund, where no administrative fee is
currently being charged, such expenses reflect a voluntary
waiver of administrative fees by the Manager. In the absence of
all such waivers, other expenses would be 1.17% and the total
operating expenses would be 1.62%. See "Management of the
Funds-Administration and Shareholder Servicing; Distributor;
Transfer Agent."
These fee waivers may be modified or terminated at anytime at
the sole discretion of the Manager. Shareholders will be notified of
any such modification or termination at the time it becomes
effective.
Examples
An investor would pay the following expenses on a $1,000
investment in the respective Income Funds over various time periods
assuming (1) a 5% annual rate of return, (2) redemption at the end of
each time period, and (3) continuation of any currently applicable
waivers of management fees. As noted above, the Funds do not charge
any redemption fees or deferred sales loads of any kind.
The examples should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those
shown.
<TABLE>
<CAPTION>
Fund 1 3 5 10
<S> year years years years
<C> <C> <C> <C>
Short Government Fund $12 $37 $64 $142
Short and Intermediate Bond Fund 15 46 79 174
Intermediate Mortgage Fund 12 38 65 144
Bond Fund 14 43 74 164
Global Bond Fund 16 49 85 186
</TABLE>
<PAGE>
SUMMARY
General Description of the Trust and the Funds
The Trust is a no-load, open-end, management investment company
organized as a Massachusetts business trust, composed of the
following ten separate series:
Managers Income Equity Fund Managers Short and Intermediate Bond
Managers Capital Appreciation Fund Fund
Managers Special Equity Fund Managers Intermediate Mortgage Fund
Managers International Equity Fund Managers Bond Fund
Managers Short Government Fund Managers Global Bond Fund
Managers Money Market Fund
This Prospectus relates to the Income Funds. A Prospectus for
the other Funds (the "Equity Funds" and the Money Market Fund) can be
obtained by calling (800) 835-3879 or (203) 857-5321.
Each of the Funds has distinct investment objectives and
strategies. There is, of course, no assurance that a Fund will
achieve its investment objectives.
Management
The Trust is governed by the Trustees, who provide broad
supervision over the affairs of the Trust and the Funds. The Manager
provides investment management and administrative services for the
Trust and the Funds. The assets of each Fund are managed by one or
more asset managers (each, an "Asset Manager" and collectively, the
"Asset Managers") selected, subject to the review and approval of the
Trustees, by the Manager. The assets of each Fund are allocated by
the Manager among the Asset Managers selected for that Fund. Each
Asset Manager has discretion, subject to oversight by the Manager and
the Trustees, to purchase and sell portfolio assets, consistent with
each Fund's investment objectives, policies and restrictions and the
specific investment strategies developed by the Manager. For its
services, the Manager receives a management fee from each Fund. A
portion of the fee paid to the Manager is used by the Manager to pay
the advisory fees of the Asset Managers. See "Management of the
Funds" for more detailed information.
Special Risks
There are certain risks associated with the investment policies
of each of the Income Funds. For instance, to the extent that a Fund
invests in securities of non-U.S. issuers or denominated or quoted in
foreign currencies, the Fund may face risks that are different from
those associated with investment in domestic U.S. dollar denominated
or quoted securities, including the effects of changes in currency
exchange rates, political and economic developments, the possible
imposition of exchange controls, governmental confiscation or
restrictions, less availability of data on companies and a less well
developed securities industry as well as less regulation of stock
exchanges, brokers and issuers. To the extent that a Fund invests in
municipal obligations, the Fund is vulnerable to the economic,
business or political developments that might affect particular
municipal issuers or municipal obligations of a particular type. To
the extent that a Fund invests in mortgage-related or asset-backed
securities, a loss could be incurred if the payments or prepayments
on those securities are made at rates other than those anticipated at
the time of purchase, or if the collateral backing the securities is
insufficient. In general, the value of fixed-income securities, and
consequently the Funds' net asset values, will rise when interest
rates fall, and fall when interest rates rise, affecting the net
asset value of a Fund. For more details on the risks associated with
certain securities and investment techniques see "Certain Securities
and Investment Techniques and Associated Risks." Certain Funds
experience high annual portfolio turnover which may involve
correspondingly greater brokerage commissions and other transaction
costs, and certain adverse tax consequences to shareholders. See
"Portfolio Turnover."
Purchase and Redemption of Shares
The minimum initial investment is $2,000 per Fund ($500 for
IRAs). For information on eligible investors, arrangements for lower
minimum investments and how to purchase and redeem shares of the
Fund, see "Purchase and Redemption of Fund Shares."
FINANCIAL HIGHLIGHTS
The following tables present financial highlights for each Income
Fund for the last eleven fiscal periods, or since inception, if
applicable, through December 31, 1996. The information has been
derived from the financial statements of the Trust which have been
audited by independent public accountants Coopers & Lybrand L.L.P.
for the years ended December 31, 1993 through December 31, 1996, and
by other accountants prior to 1993, and should be read in conjunction
with such financial statements. See "Financial Statements" in the
SAI.
<PAGE>
Financial Highlights (For a share of beneficial interest outstanding
throughout each period)
Managers Short Government Fund
<TABLE>
<CAPTION>
Year ended December 31,
<S> 1996 1995(d 1994 1993 1992
<C> ) <C> <C> <C>
<C>
Net Asset Value, Beginning of $17.76 $16.96 $19.35 $19.86 $20.35
Period
Income from Investment
Operations:
Net investment income (a) 1.02 0.98 0.86 1.28 1.26
Net realized and unrealized (0.37) 0.63 (2.01) (0.53) (0.49)
gain (loss) on investments
Total from investment 0.65 1.61 (1.15) 0.75 0.77
operations
Less Distributions to
Shareholders:
From net investment income (1.01) (0.50) (1.17) (1.26) (1.26)
In excess of net investment _ _ _
income ______ (0.31) (0.07) ______ ______
Total distributions to (1.01) (0.81) (1.24) (1.26) (1.26)
shareholders
Net Asset Value, End of Period $17.40 $17.76 $16.96 $19.35 $19.86
Total Return (b)(e) 3.89% 9.71% (6.18) 3.81% 3.90%
%
Ratio of net expenses to 1.17% 1.25% 0.97% 0.87% 0.76%
average net assets (a)
Ratio of net investment income 5.85% 5.62% 7.06% 8.71% 6.24%
to average net assets (a)
Portfolio turnover 169% 238% 140% 189% 168%
Net assets at end of period $6,113 $5,836 $10,26 $87,87 $142,874
(000's omitted) 3 4
Ratio of total expenses to 1.62% 1.65% 1.03% 0.96% 0.83%
average net assets, absent
waiver (f)
Ratio of net investment income 5.40% 5.22% 7.00% 8.62% 6.17%
to average net assets, absent
waiver (f)
</TABLE>
Managers Short and Intermediate Bond Fund
<TABLE>
<CAPTION>
Year ended December 31,
<S> 1996 1995 1994 1993 1992
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of $19.67 $18.06 $21.23 $20.89 $20.33
Period
Income from Investment
Operations:
Net investment income (a) 1.03 1.28 1.45 1.38 1.69
Net realized and unrealized (0.24) 1.45 (3.17) 0.34 0.57
gain (loss) on investments
Total from investment 0.79 2.73 (1.72) 1.72 2.26
operations
Less Distributions to
Shareholders:
From net investment income (1.01) (1.09) (1.37) (1.38) (1.70)
In excess of net investment - (0.03) (0.08) - -
income
Total distributions to (1.01) (1.12) (1.45) (1.38) (1.70)
shareholders
Net Asset Value, End of Period $19.45 $19.67 $18.06 $21.23 $20.89
Total Return (b)(e) 4.15% 15.57% (8.37) 8.49% 11.55%
%
Ratio of net expenses to 1.45% 1.50% 1.05% 0.94% 0.86%
average net assets (a)
Ratio of net investment income 5.43% 6.52% 7.11% 6.58% 8.33%
to average net assets (a)
Portfolio turnover 96% 131% 57% 126% 117%
Net assets at end of period $22,38 $25,24 $30,95 $112,2 $72,03
(000's omitted) 0 1 6 28 1
Ratio of total expenses to N/A
average net assets, absent N/A N/A N/A N/A
waiver (f)
Ratio of net investment income N/A
to average net assets, absent N/A N/A N/A N/A
waiver (f)
</TABLE>
(a) Does not reflect investment advisory and management fees paid by
shareholders directly to the Manager for periods prior to May 1990.
(b) For periods less than one year, returns are not annualized.
(c) Annualized.
<PAGE>
<TABLE>
<CAPTION>
For the period
October 15,
1987
(commencement
Year ended of operations)
1991 December 31, 1988 to
<C> 1990 <C> December 31,
1989 1987
<C> <C>
<C>
$19.86 $19.96 $19.85 $20.06 $20.00
1.58 1.42 1.65 1.42 0.29
0.49 (0.03) 0.11 (0.21) (0.01)
2.07 1.39 1.76 1.21 0.28
(1.58) (1.49) (1.65) (1.42) (0.22)
_ _ _ _ _
______ ______ ______ ______ ______
(1.58) (1.49) (1.65) (1.42) (0.22)
$20.35 $19.86 $19.96 $19.85 $20.06
10.82% 7.07% 8.68% 5.90% 1.29%
0.58% 1.01% 0.56% 0.44% 1.82%(c)
6.08% 6.78% 8.34% 7.30% 6.77%(c)
84% 183% 235% 232% 578%(c)
$144,042 $27,683 $10,438 $27,056 $9,109
0.59% 2.84% N/A N/A N/A
8.25% 8.35% N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Seven
months Year
Year ended December 31, ended ended
1991 December May 31,
1990 1989 31, 1987
1988 1987 <C>
<C> <C>
<C>
<C> <C>
19.43 $19.69 $19.32 $19.82 $19.89 $21.56
1.50 1.57 1.70 1.70 1.02 1.80
0.88 (0.19) 0.37 (0.48) (0.06) (0.58)
2.38 1.38 2.07 1.22 0.96 1.22
(1.48) (1.64) (1.70) (1.71) (1.03) (1.80)
-- -- -- (0.01) -- (1.09)
(1.48) (1.64) (1.70) (1.72) (1.03) (2.89)
$20.33 $19.43 $19.69 $19.32 $19.82 $19.89
12.78% 7.22% 10.61% 5.79% 4.67% 5.41%
0.96% 0.56% 0.12% 0.10% 0.10%
0.10%(c)
7.41% 8.05% 8.81% 8.61% 8.70%
9.00%(c)
536% 477% 202% 348% 254%(c) 308%
$52,168 $115,223 $152,106 $192,706 $211,909 $221,298
1.00% 0.58% N/A N/A N/A N/A
7.37% 8.03% N/A N/A N/A N/A
</TABLE>
(d) Calculated using average shares outstanding method.
(e) Total return would have been lower had certain expenses not been
reduced during the year.
(f) Ratio information assuming no fee waivers or reimbursements had been
in effect during the year.
(g) Not annualized.
<PAGE>
Financial Highlights (For a share of beneficial interest outstanding
throughout each period)
Managers Intermediate Mortgage Fund
<TABLE>
<CAPTION>
Year ended December 31,
<S> 1996 1995 1994 1993 1992
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.54 $14.20 $20.65 $21.13 $21.77
Income from Investment Operations:
Net investment income (a) 0.87 0.93 1.52 1.94 2.58
Net realized and unrealized gain (0.38) 1.45 (6.56) 0.44 (0.40)
(loss) on investments
Total from investment operations 0.49 2.38 (5.04) 2.38 2.18
Less Distributions to Shareholders:
From net investment income (0.86) (1.03) (1.41) (2.28) (2.40)
In excess of net investment income _ (0.01) _ _ _
From net realized gain on investments _ _ _ (0.51) (0.42)
In excess of net realized gain on _ _ _ _
investments ______ ______ ______ (0.07) ______
Total distributions to shareholders (0.86) (1.04) (1.41) (2.86) (2.82)
Net Asset Value, End of Period $15.17 $15.54 $14.20 $20.65 $21.13
Total Return (b)(d) 3.33% 17.27% (25.00 11.45% 10.50%
)%
Ratio of net expenses to average net 1.19% 1.17% 0.85% 0.75% 0.79%
assets (a)
Ratio of net investment income to 5.78% 6.33% 8.37% 8.90% 11.30%
average net assets (a)
Portfolio turnover 232% 506% 240% 253% 278%
Net assets at end of period (000's $24,84 $40,02 $55,98 $271,8 $115,8
omitted) 6 2 6 61 85
Ratio of total expenses to average net 0.92% 0.82% 0.84%
assets, absent waiver (e) N/A N/A
Ratio of net investment income to 8.30% 8.83% 11.25%
average net assets, absent waiver (e) N/A N/A
</TABLE>
Managers Bond Fund
<TABLE>
<CAPTION>
Year ended December 31,
<S> 1996 1995 1994 1993 1992
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $23.13 $18.92 $22.18 $21.88 $22.60
Income from Investment Operations:
Net investment income (a) 1.35 1.44 1.59 1.49 1.48
Net realized and unrealized gain (0.29) 4.23 (3.16) 0.98 0.23
(loss) on investments
Total from investment operations 1.06 5.67 (1.57) 2.47 1.71
Less Distributions to Shareholders
from:
Net investment income (1.36) (1.46) (1.55) (1.50) (1.48)
Net realized gain on investments _ _
______ ______ (0.14) (0.67) (0.95)
Total distributions to shareholders (1.36) (1.46) (1.69) (2.17) (2.43)
Net Asset Value, End of Period $22.83 $23.13 $18.92 $22.18 $21.88
Total Return (b) 4.97% 30.91% (7.25) 11.56% 7.88%
%
Ratio of expenses to average net assets 1.36% 1.34% 1.20% 1.15% 0.93%
(a)
Ratio of net investment income to 6.13% 6.84% 7.28% 6.65% 6.61%
average net assets (a)
Portfolio turnover 72% 46% 84% 373% 292%
Net assets at end of period (000's $31,81 $26,37 $30,76 $44,03 $39,11
omitted) 9 6 0 8 7
</TABLE>
(a) Does not reflect investment advisory and management fees paid by
shareholders directly to the Manager for periods prior to May 1990.
(b) For periods less than one year, returns are not annualized.
(c) Annualized.
<PAGE>
<TABLE>
<CAPTION>
Seven
months Year
Year ended December 31, ended ended
1991 December May 31,
1990 1989 31, 1987
1988 1987 <C>
<C> <C> <C>
<C> <C>
$20.31 $20.19 $19.24 $19.68 $19.80 $19.62
2.03 1.80 1.87 1.90 1.13 1.91
1.48 0.17 0.94 (0.43) (0.13) 0.17
3.51 1.97 2.81 1.47 1.00 2.08
(2.05) (1.85) (1.86) (1.91) (1.12) (1.90)
_ _ _ _ _ _
_ _ _ _ _ _
_ _ _ _ _ _
______ ______ ______ ______ ______ ______
(2.05) (1.85) (1.86) (1.91) (1.12) (1.90)
$21.77 $20.31 $20.19 $19.24 $19.68 $19.80
18.18% 10.19% 14.69% 7.38% 4.97% 10.02%
0.69% 0.55% 0.19% 0.22% 0.19%(c) 0.26%
9.91% 9.06% 9.44% 9.66% 9.92%(c) 9.46%
172% 161% 144% 149% 151%(c) 202%
$165,358 $119,118 $102,229 $81,222 $71,376 $86,325
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Seven
months Year
Year ended December 31, ended ended
1991 1990 1989 1988 December May 31,
<C> <C> <C> 31, 1987
<C> 1987 <C>
<C>
$20.95 $21.34 $20.54 $20.60 $21.61 $23.63
1.70 1.88 1.93 1.80 1.06 2.03
2.12 (0.33) 0.79 (0.05) (0.09) (0.43)
3.82 1.55 2.72 1.75 0.97 1.60
(1.72) (1.94) (1.92) (1.81) (1.07) (2.02)
_ _ _
(0.45) ______ ______ ______ (0.91) (1.60)
(2.17) (1.94) (1.92) (1.81) (1.98) (3.62)
$22.60 $20.95 $21.34 $20.54 $20.60 $21.61
19.04% 7.53% 13.10% 8.03% 4.41% 5.97%
1.02% 0.84% 0.26% 0.44% 0.29%(c) 0.25%
7.82% 8.98% 9.37% 8.63% 8.91%(c) 8.50%
182% 64% 94% 90% 101%(c) 154%
$36,659 $31,648 $46,028 $31,241 $27,529 $35,496
</TABLE>
(d) Total return would have been lower had certain expenses not been
reduced during the year.
(e) Ratio information assuming no fee waivers or reimbursements had been
in effect during the year.
<PAGE>
Financial Highlights (For a share of beneficial interest outstanding
throughout each period)
Managers Global Bond Fund
<TABLE>
<CAPTION>
For the
period
March
Year ended 25, 1994
December 31, (commenc
<S> 1996 ement
1995 of
<C> operatio
<C> ns) to
December
31, 1994
<C>
Net Asset Value, Beginning of Period $21.74 $19.10 $20.00
Income from Investment Operations:
Net investment income 1.21 0.95 0.48
Net realized and unrealized gain (loss) on (0.27) 2.66 (0.77)
investments
Total from investment operations 0.94 3.61 (0.29)
Less Distributions to Shareholders:
From net investment income (0.87) (0.93) (0.50)
In excess of net investment income - (0.04) (0.11)
From net realized gain on investments _ _
(0.41) ______ ______
Total distributions to shareholders (1.28) (0.97) (0.61)
Net Asset Value, End of Period $21.40 $21.74 $19.10
Total Return (a)(d) 4.39% 19.08% (1.52)%
Ratio of net expenses to average net assets 1.57% 1.55% 1.73%(b)
Ratio of net investment income to average net 4.98% 5.07% 4.19%(b)
assets
Portfolio turnover 202% 214% 266%(c)
Net assets at end of period (000's omitted) $16,852 $18,823 $9,520
Ratio of total expenses to average net assets, 1.60% 1.69% 2.03%(b)
absent waiver (e)
Ratio of net investment income to average net 4.95% 4.93% 3.89%(b)
assets, absent waiver (e)
</TABLE>
(a) For periods less than one year, returns are not annualized.
(b) Annualized.
(c) Not annualized.
(d) Total return would have been lower had certain expenses not been
reduced during the periods shown.
(e) Ratio information assuming no fee waivers or reimbursements had been
in effect during the periods shown.
</R
>
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives of a Fund may not be changed without
approval of a majority of the outstanding voting securities of that
Fund, as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). There is no assurance that these objectives will be
achieved. Investors should refer to the prospectus section entitled
"Certain Securities and Investment Techniques and Associated Risks"
and to the "Other Information" section in the SAI for additional
portfolio management discussions and for a description of the ratings
mentioned below that are assigned by Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Ratings Group ("Standard &
Poor's").
Each Fund is subject to certain investment restrictions which
may not be changed without the approval of the holders of a majority
of that Fund's outstanding voting securities.
The Income Funds pursue their investment objectives primarily by
investing in various types of debt securities. Each Income Fund may
purchase securities on a when-issued basis, and, unless otherwise
indicated, may engage in options and futures transactions. The Short
Government Fund, Short and Intermediate Bond Fund and Bond Fund may
invest, and the Intermediate Mortgage Fund will primarily invest, in
mortgage-related securities, including collateralized mortgage
obligations ("CMOs"), Interest Only ("IOs") and Principal Only
("POs") mortgage-related securities. Such Funds may also purchase
asset-backed securities. The Funds will not purchase asset-backed or
privately issued mortgage-related securities rated less than AA by
Standard and Poor's or the equivalent. The Short Government Fund,
Short and Intermediate Bond Fund, Intermediate Mortgage Fund, Bond
Fund and Global Bond Fund may enter into dollar rolls. See "Certain
Securities and Investment Techniques and Associated Risks-Other
Securities," "-Special Risks Associated with Asset-Backed and
Mortgage-Related Securities," "-When-Issued Securities," and "-
Hedging Techniques." Any Income Fund may from time to time invest a
portion of its cash balances in shares of unaffiliated money market
mutual funds, when the Manager determines that such investments offer
higher net yields (after considering all direct and indirect fees and
expenses) than direct investments in cash equivalent securities.
As described below, certain Income Funds may invest in
securities denominated in currencies other than the U.S. dollar
("foreign securities") including those denominated in European
Currency Units (ECUs).
For the purposes of portfolio maturity limitations, a security
which has an interest rate that adjusts or re-sets periodically
("variable rate securities") will be considered to have a maturity
equal to the period of time remaining until the next readjustment of
the interest rate, and a mortgage-related security will be deemed to
have an average maturity equal to its average life as determined by
the Asset Manager based on the prepayment experience of the
underlying mortgage pools. The maturity of a security with a demand
feature may be deemed to be the period of time remaining until the
demand feature is exercisable unless the Asset Manager believes that
the demand feature will probably not be exercised. If the rating of
any security held by any Fund is changed so that the instrument would
no longer qualify for investment by the Fund, the Fund will seek to
dispose of the instrument as soon as is reasonably practicable, in
light of the circumstances and consistent with the interests of the
Fund.
Any or all of the Funds may at times for defensive purposes
temporarily place all or a portion of their assets in cash,
short-term commercial paper, U.S. government securities, high quality
debt securities, including Eurodollar and Yankee Dollar obligations,
and obligations of banks when, in the judgment of the Fund's Asset
Manager, such investments are appropriate in light of economic or
market conditions. In addition, each of the Funds may invest a
portion of its cash balances in shares of unaffiliated money market
mutual funds when the Manager determines that such investments offer
higher net yields (after considering all direct and indirect fees and
expenses) than direct investments in cash equivalent securities. See
"Other Information-Cash Equivalents" in the SAI. The following
discussions of the individual Income Funds' objectives and policies
is modified by the above.
<PAGE>
Managers Short Government Fund
The Fund's investment objective is to seek high current income
consistent with the preservation of capital by investing in debt
securities.
The Fund will maintain an overall maximum dollar-weighted
average maturity of three years or less. The Fund is not a money
market fund and does not seek to maintain a stable price per share.
As a matter of operating policy, under normal circumstances, the Fund
will at all times have at least 65% of its total assets invested in
securities issued or guaranteed as to principal or interest by the
U.S. government, its agencies or instrumentalities. Up to 35% of the
Fund's total assets may be invested in corporate bonds and notes,
debentures, non-convertible fixed-income preferred stocks, eurodollar
certificates of deposit and eurodollar bonds. The Fund may invest a
substantial portion of its assets in mortgage-related securities
(including CMOs, IOs and POs) that are issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. In addition, the
Fund may invest in privately issued mortgage-related securities
(including CMOs, IOs and POs) and asset-backed securities. The Fund
may also invest in variable rate securities including inverse
floating obligations. See "Certain Securities and Investment
Techniques and Associated Risks-General Risks Associated with Income
Funds" and "-Special Risks Associated with Asset-Backed and
Mortgage-Related Securities."
The Fund may invest up to 10% of its assets in foreign
securities, including those issued by foreign governments. Investing
in foreign securities may subject the Fund to certain additional
risks. The Fund may purchase options on securities and futures
contracts, write options on securities and futures contracts it
holds, buy and sell futures contracts on securities and securities
indices and foreign currencies, buy and sell interest rate futures
contracts, and enter into forward foreign currency exchange
contracts. See "Certain Securities and Investment Techniques and
Associated Risks-Hedging Techniques" and "-Other Securities-Foreign
Securities."
The Fund will not purchase debt instruments, including cash
equivalents, that have been rated lower than A or the equivalent by
Standard & Poor's or by Moody's. In addition, the Fund's investments
in privately issued mortgage-backed securities and asset-backed
securities will be limited to those rated AA or Aa, respectively, by
those agencies. Instruments denominated in currencies other than the
U.S. dollar will also be limited to those rated AAA or Aaa. The Fund
may purchase unrated securities in any of the above categories,
provided that such securities are of comparable quality to such rated
instruments, as determined by the Asset Manager.
Managers Short and Intermediate Bond Fund
The Fund's investment objective is to seek high current income
by investing in fixed-income securities having an average
dollar-weighted portfolio maturity between one and five years.
The Fund invests in obligations of the U.S. government, its
agencies and instrumentalities and corporate bonds, debentures,
non-convertible fixed-income preferred stocks, eurodollar
certificates of deposit and eurodollar bonds. The Fund may invest a
substantial portion of its assets in mortgage-related securities
(including CMOs, IOs and POs) that are issued or guaranteed by the
United States government, its agencies or instrumentalities. In
addition, the Fund may invest in privately issued mortgage-related
securities (including CMOs, IOs and POs) and asset-backed securities.
For a discussion of mortgage-related and asset-backed securities and
related risks, see "Certain Securities and Investment Techniques and
Associated Risks-Special Risks Associated with Asset-Backed and
Mortgage-Related Securities." Ordinarily, at least 65% of the Fund's
total assets will be invested in bonds.
The Fund may invest up to 10% of its assets in foreign
securities. Investing in foreign securities may subject the Fund to
certain additional risks. See "Certain Securities and Investment
Techniques and Associated Risks-Other Securities-Foreign Securities"
and "General Risks Associated with Income Funds." The Fund may
actively trade in the securities in which it invests. See "Portfolio
Turnover." The Fund may invest in securities that have a fixed or
variable rate interest, including inverse floaters. The Fund invests
primarily in securities rated investment grade by Moody's or
Standard & Poor's (or, if unrated, of comparable quality as
determined by the Asset Manager), including securities rated in the
lowest investment grade category. Securities rated in the lowest
investment grade category have speculative characteristics and
changes in economic conditions or other circumstances are more likely
to lead to a weakened capacity to pay principal or interest on such
securities than on higher grade securities. In addition, the Fund may
invest in securities rated below investment grade, but rated at least
Ba by Moody's or BB by Standard & Poor's (or, if unrated, of
comparable quality as determined by the Asset Manager). The Fund does
not expect to invest more than 5% of its net assets in securities
rated (or, if unrated, of comparable quality as determined by the
Asset Manager) lower than investment grade (sometimes referred to as
"junk bonds"). However, the rating of an issue of securities may be
reduced subsequent to the purchase of the securities by the Fund, and
this may cause the amount of below investment grade securities held
by the Fund to exceed 5% of the Fund's net assets. The downgrade will
not require sale of the securities by the Fund, but the Asset Manager
will consider this event in its determination of whether the Fund
should continue to hold the securities. Investing in below investment
grade securities may subject the Fund to additional risks. See
"Certain Securities and Investment Techniques and Associated Risks-
Special Risks Associated with Lower-Rated Securities" in the
Prospectus, and "Other Information-Ratings of Debt Instruments" in
the SAI.
<PAGE>
Managers Intermediate Mortgage Fund
The Fund's investment objective is to seek high current income
by investing primarily in mortgage-related securities.
Under normal circumstances, the Fund will invest at least 65% of
the value of its total assets in mortgage-related securities
(including CMOs, IOs and POs) issued by governments and
government-related and private organizations, and the Fund will
invest more than 25% of its assets in the mortgage and mortgage
finance industry even during temporary defensive periods. Due to this
concentration, the Fund will be subject to certain risks peculiar to
the mortgage and mortgage finance industry. See "Certain Securities
and Investment Techniques and Associated Risks-Special Risks
Associated with Asset-Backed and Mortgage-Related Securities" in the
Prospectus and "Other Information-Mortgage-Related Securities" in the
SAI.
The Fund may invest up to 35% of the value of its total assets
in (i) non-mortgage-related securities issued or guaranteed by the
United States government, its agencies and instrumentalities,
(ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of
more than $1 billion and which are members of the Federal Deposit
Insurance Corporation, and (iii) commercial paper rated A-1 by
Standard & Poor's or P-1 by Moody's or, if not rated, issued by
companies which have an outstanding debt issue rated AAA by
Standard & Poor's or Aaa by Moody's. It is currently the operating
policy of the Asset Manager to invest 100% of the Fund's assets in
securities issued by governments and government-related organizations
and securities rated AAA by Standard & Poor's or Aaa by Moody's or,
if not rated, that are of comparable quality as determined by the
Asset Manager. In addition, at any given time a portion of the Fund's
assets may be in cash or may be invested in repurchase agreements due
to portfolio purchases and sales, and to otherwise manage cash flows.
The Fund may invest in securities that have a fixed rate of interest
and in variable rate securities, including inverse floaters. The Fund
may also enter into dollar rolls. In addition, the Fund may write
options on the securities held in its portfolio. See "Certain
Securities and Investment Techniques and Associated Risks-General
Risks Associated with Income Funds" and "-Other Securities-
When-Issued Securities and Dollar Rolls," and "-Hedging Techniques."
The Fund will maintain a dollar-weighted average portfolio
maturity of more than three years but no more than ten years. In
order to maintain a dollar-weighted average portfolio maturity of
from three to ten years, the Asset Manager will monitor the
prepayment experience of the underlying mortgage pools of the Fund's
mortgage-related securities and will purchase and sell securities in
order to shorten or lengthen the average maturity of the Fund's
portfolio, as appropriate.
Managers Bond Fund
The Fund's investment objective is to seek income by investing
in fixed-income securities having a remaining maturity not greater
than forty years from the date of purchase by the Fund. The Fund
invests in a diversified portfolio of obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities
as well as in corporate bonds, debentures, preferred stocks,
mortgage-related securities (including CMOs, IOs and POs),
asset-backed securities, eurodollar certificates of deposit and
eurodollar bonds. The Fund may invest up to 10% of its total assets
in non-U.S. dollar denominated securities. Investing in foreign
securities may subject the Fund to certain additional risks.
Ordinarily, at least 65% of the Fund's total assets will be invested
in bonds. The Fund may invest in both fixed and variable rate
securities, including inverse floating obligations. See "Certain
Securities and Investment Techniques and Associated Risks-General
Risks Associated with Income Funds," "-Special Risks Associated with
Asset-Backed and Mortgage-Related Securities," and "-Foreign
Securities." Although the Fund expects to invest in bonds with a full
range of maturities, the average maturity of the Fund may be adjusted
in response to market conditions. The Fund will actively trade in the
securities in which it invests. See "Portfolio Turnover."
<PAGE>
The Fund invests primarily in securities rated investment grade
by Moody's or Standard & Poor's (or, if unrated, of comparable
quality as determined by the Asset Manager), including securities
rated in the lowest investment grade category. Securities rated in
the lowest investment grade category have speculative characteristics
and changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity to pay principal or interest on
such securities than on higher grade securities. In addition, the
Fund may invest in securities rated below investment grade, but rated
at least Ba by Moody's or BB by Standard & Poor's (or, if unrated, of
comparable quality as determined by the Asset Manager). The Fund does
not expect to invest more than 5% of its net assets in securities
rated (or, if unrated, of comparable quality as determined by the
Asset Manager) lower than investment grade (sometimes referred to as
"junk bonds"). However, the rating of an issue of securities may be
reduced subsequent to the purchase of the securities by the Fund, and
this may cause the amount of below investment grade securities held
by the Fund to exceed 5% of the Fund's net assets. The downgrade will
not require sale of the securities by the Fund, but the Asset Manager
will consider this event in its determination of whether the Fund
should continue to hold the securities. Investing in below investment
grade securities may subject the Fund to additional risks. See
"Certain Securities and Investment Techniques and Associated Risks-
Special Risks Associated with Lower-Rated Securities" in the
Prospectus, and "Other Information-Ratings of Debt Instruments" in
the SAI.
Managers Global Bond Fund
The Fund's primary objective is to seek a high total return
through both income and capital appreciation by investing in a
portfolio of domestic and foreign fixed-income securities.
The Fund ordinarily invests at least 65% of its total assets in
an actively managed portfolio of domestic and foreign bonds issued by
governments, corporations and supranational organizations such as the
World Bank, Asian Development Bank, European Investment Bank and
European Economic Community, all of which will be rated investment
grade as determined by Moody's or Standard & Poor's, or, if unrated,
of comparable quality as determined by the Asset Manager. The Fund
will invest in securities denominated in currencies other than the
U.S. dollar. Normally, investments will be made in a minimum of three
countries, one of which may be the United States. The Fund's weighted
average maturity will vary, but is generally expected to be ten years
or less. The Fund may engage in currency hedging strategies through
the use of forward currency exchange contracts, options and futures
contracts. See "Certain Securities and Investment Techniques and
Associated Risks-Other Securities-Foreign Securities" and "-Hedging
Techniques."
The Global Bond Fund is "non-diversified," as that term is
defined in the 1940 Act, but intends to qualify as a "regulated
investment company" for federal income tax purposes. This means, in
general, that although more than 5% of the Fund's total assets may be
invested in the securities of any one issuer (including a foreign
government), at the close of each quarter of the Fund's taxable year
the aggregate amount of such holdings may not exceed 50% of the value
of its total assets, and no more than 25% of the value of its total
assets may be invested in the securities of a single issuer. To the
extent that the Fund holds the securities of a smaller number of
issuers than if it were "diversified" (as defined in the 1940 Act),
the Fund will be subject to greater risk than a fund that invests in
a large number of securities, because changes in the financial
condition or market assessment of particular issuers may cause
greater fluctuations in the Fund's net asset value or adversely
affect its total return.
CERTAIN SECURITIES AND INVESTMENT TECHNIQUES AND
ASSOCIATED RISKS
The following are descriptions of types of securities invested
in by the Funds, certain investment techniques employed by the Funds
and risks associated with utilizing either the securities or the
investment techniques. Unless otherwise indicated, all of the Funds
may invest in the indicated securities and use the indicated
investment techniques.
<PAGE>
General Risks Associated with Income Funds
The Income Funds are subject to normal interest rate, credit and
market risks. Market prices of fixed-income securities will fluctuate
and will tend to vary inversely with changes in prevailing interest
rates. If interest rates increase from the time a security is
purchased, such security, if sold, might be sold at a price less than
its purchase cost. Conversely, if interest rates decline from the
time a security is purchased, such security, if sold, might be sold
at a price greater than its purchase cost. Generally, the longer an
instrument's maturity, the more sensitive the instrument's price will
be to interest rate changes. In an attempt to reduce market risks
resulting from fluctuations in the principal value of debt
obligations due to changes in prevailing interest rates the Funds
carefully monitor and seek to adjust the maturities of their
investments and may invest in variable rate securities. Such
investment techniques do not eliminate all risks and investors should
expect the value of their Fund shares to fluctuate based on interest
rate, credit and market conditions.
Duration measures the timing of a Fund's cash flow (i.e.,
principal and interest payments) and is essentially a weighted
average term-to-maturity where cash flows are expressed in terms of
their present value. Accordingly, duration takes into account the
time value of money in addition to the amount and timing of all
interim and final payments. Duration incorporates the size of the
coupon payments, the time to maturity, and the portfolio's yield to
maturity into a single composite index. The longer a Fund's duration,
the more its price will fluctuate, in percentage terms, in response
to a given change in interest rates and the greater the market risk.
From time to time, the Income Funds may advertise the duration of
their portfolios.
Special Risks Associated with Asset-Backed and
Mortgage-Related Securities
Mortgage-Related Securities. The Funds will be subject to
prepayment risk on mortgage-related securities. Prepayments of
principal by mortgagors or mortgage foreclosures may shorten the
average life of the mortgage-related securities remaining in a Fund's
portfolio. Reinvestment of prepayments could occur at lower interest
rates than the original investment, thus decreasing the yield of the
Fund. In periods of rising interest rates, the rate of prepayment
tends to decrease, thereby lengthening the average life of a pool of
mortgage-related securities. Conversely, in periods of falling
interest rates the rate of prepayment tends to increase, thereby
shortening the average life of a pool. See "Other Information-
Mortgage-Related Securities" in the SAI.
CMOs are obligations fully collateralized by a portfolio of
mortgages or mortgage-related securities. Payments of principal and
interest on the mortgages are passed through to the holders of the
CMOs on the same schedule as they are received. Certain classes of
CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of
CMOs in which a Fund invests, the investment may be subject to a
greater or lesser risk of prepayment than other types of
mortgage-related securities. In other mortgage-related securities,
all interest payments go to one class of holders "Interest Only" or
"IO"-and all of the principal goes to a second class of
holders-"Principal Only" or "PO." The yield to maturity on an IO
class is extremely sensitive to the rate of principal prepayments on
the related underlying mortgage assets, and a rapid rate of principal
payments will have a material adverse effect on yield to maturity. If
the underlying mortgage assets experience greater than anticipated
prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities, even when the securities are
rated AA or the equivalent. Conversely, if the underlying mortgage
assets experience less than anticipated prepayments of principal, the
yield on a PO class would be materially adversely affected. As
interest rates rise and fall, the value of IOs tends to move in the
same direction as interest rates. The value of the other
mortgage-related securities described herein (including POs), like
other debt instruments, will tend to move in the opposite direction
from interest rates. In general, the Funds treat IOs and POs as
subject to the restriction on investments in illiquid instruments
except that IOs and POs issued by the U.S. government, its agencies
and instrumentalities and backed by fixed-rate mortgages may be
excluded from this limit if, in the judgment of the Asset Manager
(subject to the oversight of the Trustees) such IOs and POs are
readily marketable.
<PAGE>
Asset-Backed Securities. Asset-backed securities, in which certain
Funds may invest, involve the passing through of payments on debt
obligations including automobile loans, credit card loans, home
equity loans, computer leases and other types of consumer loans.
Generally, the obligations underlying most asset-backed securities
are unsecured. In the case of auto loans, the underlying security
interests in the automobiles are not transferred to the entity
issuing the asset-backed security. In addition, like mortgage-related
securities, asset-backed securities may be subject to the risk of
prepayments of the underlying obligations.
Special Risks Associated with Lower-Rated Securities
Generally, lower-rated debt securities and unrated securities of
comparable quality offer a higher current yield than is offered by
higher-rated securities. However, lower-rated debt securities involve
greater risks, in that they are especially subject to adverse changes
in general conditions and in the industries in which the issuers are
engaged, to changes in the financial condition of the issuers and to
price fluctuation in response to changes in interest rates. During
periods of economic downturn or rising interest rates, highly
leveraged issuers may experience financial stress which could
adversely affect their ability to make payments of principal and
interest and increase the possibility of default. The market for
lower-rated securities may be thinner and less active than that for
higher quality securities, which may limit a Fund's ability to sell
such securities at fair value in response to changes in the economy
or the financial markets. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may also decrease the
values and liquidity of lower-rated securities, especially in a
thinly traded market. In addition, the prices for lower-rated debt
securities may be affected by legislative and regulatory
developments.
Other Securities
Foreign Securities. Investments in foreign securities involve risks
that differ from investments in securities of domestic issuers. Such
risks may include political and economic developments, the possible
imposition of withholding taxes, possible seizure or nationalization
of assets, the possible establishment of exchange controls or the
adoption of other foreign governmental restrictions which might
adversely affect the Fund's investments. In addition, foreign
countries may have less well developed securities markets, as well as
less regulation of stock exchanges and brokers and different auditing
and financial reporting standards. Not all foreign branches of United
States banks are supervised or examined by regulatory authorities as
are United States banks, and such branches may not be subject to
reserve requirements. For additional information regarding the risks
associated with foreign branch issues, see "Other Information-
Obligations of Domestic and Foreign Banks" in the SAI. Investing in
the fixed-income markets of developing countries involves exposure to
economies that are generally less diverse and mature, and to
political systems which may be less stable, than those of developed
countries. Foreign securities often trade with less frequency and
volume than domestic securities and therefore may exhibit greater
price volatility. Changes in foreign exchange rates will affect the
value of those securities which are denominated or quoted in
currencies other than the U.S. dollar.
Inverse Floating Obligations. The Income Funds may invest up to 25%
of their assets in "inverse floating obligations" or "residual
interest bonds" (some of which are known as "support floaters").
These are variable rate securities on which the interest rates
typically decline as market rates increase and increase as market
rates decline. Such instruments can be expected to be more volatile
than fixed rate or other variable rate securities. For example, in
periods of rising interest rates, the interest rate on an inverse
floating obligation will decline, accentuating the decrease in the
market value of the obligation. This has a similar effect on a Fund's
net asset value as if the Fund had created a degree of leverage in
its portfolio. The net asset value of a Fund which has invested a
large percentage of its assets in inverse floaters will tend to be
more volatile in periods of fluctuating interest rates than that of a
Fund holding other types of variable rate and/or fixed-rate
securities. To seek to limit a Fund's volatility, the Asset Managers
may purchase inverse floaters with shorter term maturities or which
contain limitations on the extent to which the interest rate may
vary. The Asset Managers may also seek to limit volatility by
diversifying the inverse floaters in a Fund's portfolio by the type
of underlying security and by the type of index to which they are
linked. See "Other Information-Inverse Floating Obligations" in the
SAI.
Illiquid Securities. Each Fund may invest up to 15% of its net
assets in securities that are not readily marketable ("illiquid
securities"). These securities, which may be subject to legal or
contractual restrictions on their resale, may involve a greater risk
of loss to those Funds that purchase them. Securities that are not
registered for sale under the Securities Act of 1933, as amended (the
"1933 Act"), but are eligible for resale pursuant to Rule 144A under
the 1933 Act, will not be considered illiquid for purposes of this
restriction if the Asset Manager determines, subject to the review of
the Trustees, that such securities have a readily available market.
<PAGE>
Repurchase Agreements. In a repurchase transaction, a Fund
purchases a security from a bank or a broker-dealer and
simultaneously agrees to resell that security to the bank or
broker-dealer at an agreed-upon price on an agreed upon date. The
resale price reflects the purchase price plus an agreed upon rate of
interest. In effect, the obligation of the seller to repay the
agreed-upon price is secured by the value of the underlying security,
which must at least equal the repurchase price. Repurchase agreements
could involve certain risks in the event of default or insolvency of
the other party, including possible delays or restrictions upon a
Fund's ability to dispose of the underlying securities. No Fund may
invest in repurchase agreements with a maturity of more than seven
days if the aggregate of such investments, along with other illiquid
securities, exceeds the Fund's limits on investments in illiquid
securities. For more information concerning repurchase agreements,
see "Other Information-Repurchase Agreements" in the SAI.
Securities Lending. Consistent with its investment objective and
policies, each Fund may lend its portfolio securities in order to
realize additional income. Any such loan will be continuously secured
by collateral at least equal in value to the value of the securities
loaned. The risk of loss on such transactions is mitigated because,
if a borrower were to default, the collateral should satisfy the
obligation. However, as with other extensions of secured credit,
loans of portfolio securities involve some risk of loss of rights in
the collateral should the borrower fail financially.
When-Issued Securities and Dollar Rolls. Consistent with its
investment objectives and policies, each Fund may purchase or sell
U.S. government or municipal securities on a when-issued or delayed
delivery basis. When-issued or delayed delivery transactions are
those where securities are purchased or sold by a Fund with payment
and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the
time of entering into the transaction. During the period between
purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. However, the value of the Fund's
assets will fluctuate with the value of the security to be purchased.
Accordingly, these transactions may have a similar effect on a Fund's
net asset value as if the Fund had created a degree of leverage in
its portfolio. See "Segregated Accounts." When-issued securities may
also be known as "TBAs."
In a dollar roll, a Fund sells securities for delivery in the
current month and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a
specified future date from the same party. During the period between
the sale and forward purchase, the Fund forgoes principal and
interest paid on the securities sold, and does not list the
securities sold as an asset on the Fund's books. The Fund realizes a
capital gain on the difference between the current sales price and
the forward price for the future purchase (often referred to as the
"drop") as well as by the interest earned on the cash proceeds of the
initial sale. A "covered roll" is a specific type of dollar roll for
which there is an offsetting cash position or a cash equivalent
security position which matures on or before the forward settlement
date of the dollar roll transaction.
Dollar rolls involve the risk that the market value of the
securities subject to the Fund's forward purchase commitment may
decline in value below the price of the securities the Fund has sold.
In the event the buyer of securities under a dollar roll files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds of
the current sale portion of the agreement may be restricted pending a
determination by the other party, or its trustee or receiver, whether
to enforce the Fund's obligation to purchase the similar securities
in the forward purchase transaction.
The Funds will engage in dollar roll transactions to enhance
return and not for the purpose of borrowing. Each dollar roll
transaction is accounted for as a sale of a portfolio security and a
subsequent purchase of a substantially similar security in the
forward market.
Segregated Accounts. Certain transactions, such as certain options,
futures and forward transactions, dollar rolls, or purchases of
when-issued or delayed delivery securities, may have a similar effect
on a Fund's net asset value as if the Fund had created a degree of
leverage in its portfolio. However, if a Fund enters into such a
transaction, the Fund will establish a segregated account with its
Custodian in which it will maintain cash or other liquid securities
equal in value to its obligations in respect to such transaction.
<PAGE>
Hedging Techniques
Unless otherwise indicated, the Funds' portfolio managers may
engage in the following hedging techniques to seek to hedge all or a
portion of a Fund's assets against market value changes resulting
from changes in market values, interest rates or currency
fluctuations. Hedging is a means of offsetting, or neutralizing, the
price movement of an investment by making another investment, the
price of which should tend to move in the opposite direction from the
original investment. The imperfect correlation in price movement
between a hedging instrument and the underlying security, currency,
index, futures contract or other investment may limit the
effectiveness of a particular hedging strategy.
A Fund's ability to establish and close out positions in futures
contracts and options on futures contracts will be subject to the
existence of a liquid secondary market. Although a Fund generally
will purchase or sell only those futures contracts and options
thereon for which there appears to be an active secondary market,
there is no assurance that a liquid secondary market on an exchange
will exist for any particular futures contract or option or at any
particular time.
Options. Each Fund may write ("sell") covered put and covered call
options covering the types of financial instruments in which the Fund
may invest (including individual stocks, stock indices, futures
contracts, forward foreign currency exchange contracts and
when-issued securities) to provide protection against the adverse
effects of anticipated changes in securities prices. A Fund may also
write covered put options and covered call options as a means of
enhancing its return through the receipt of premiums when the Fund
portfolio manager determines that the underlying securities, indices
or futures contracts have achieved their potential for appreciation.
By writing covered call options, the Fund foregoes the opportunity to
profit from an increase in the market price of the underlying
security, index or futures contract above the exercise price except
insofar as the premium represents such a profit. The risk involved in
writing covered put options is that there could be a decrease in the
market value of the underlying security, index or futures contract.
If this occurred, the option could be exercised and the underlying
security, index or futures contract would then be sold to the Fund at
a higher price than its then current market value. A Fund will write
only "covered" options.
When writing call options, a Fund will be required to own the
underlying financial instrument, index or futures contract or own
financial instruments or indices whose returns are closely correlated
with the returns of the financial instrument, index or futures
contract underlying the option. When writing put options a Fund will
be required to segregate with its custodian bank cash and/or other
liquid securities to meet its obligations under the put. By covering
a put or call option, the Fund's ability to meet current obligations,
to honor redemptions or to achieve its investment objectives may be
impaired.
The Fund may also purchase put and call options to provide
protection against adverse price effects from anticipated changes in
prevailing securities prices. The purchase of a put option protects
the value of portfolio holdings in a falling market, while the
purchase of a call option protects cash reserves from a failure to
participate in a rising market. In purchasing a call option, the Fund
would be in a position to realize a gain if, during the option
period, the price of the security, index or futures contract
increased over the strike price by an amount greater than the premium
paid. It would realize a loss if the price of the security, index or
futures contract decreased, remained the same or did not increase
over the strike price during the option period by more than the
amount of the premium paid. If a put or call option purchased by the
Fund were permitted to expire without being sold or exercised, its
premium would represent a realized loss to the Fund.
The staff of the Securities and Exchange Commission has taken
the position that purchased OTC options and the assets used as
"cover" for written OTC options are illiquid securities. However, a
Fund may treat the securities it uses as cover for written OTC
options as liquid provided it follows a specified procedure. A Fund
may sell OTC options only to qualified dealers who agree that the
Fund may repurchase any OTC options it writes for a maximum price to
be calculated by a predetermined formula. In such cases, the OTC
option would be considered illiquid only to the extent that the
maximum repurchase price under the formula exceeds the amount that
the option is "in-the-money" (i.e., current market value of the
underlying security minus the option's strike price). For more
information concerning options transactions, see "Other Information-
Covered Put Options-Covered Call Options," and "-Puts and Calls" in
the SAI.
<PAGE>
Futures Contracts. A Fund may buy and sell futures contracts as a
hedge to protect the value of the Fund's portfolio against changes in
prices of the financial instruments in which it may invest. There are
several risks in using futures contracts. One risk is that futures
prices could correlate imperfectly with the behavior of cash market
prices of the instrument being hedged so that even a correct forecast
of general price trends may not result in a successful transaction.
Another risk is that the Fund's portfolio manager may be incorrect in
its expectation of future prices. There is also a risk that a
secondary market in the instruments that the Fund holds may not exist
or may not be adequately liquid to permit the Fund to close out
positions when it desires to do so. When buying or selling futures
contracts the Fund will be required to segregate cash and/or liquid
securities to meet its obligations under these types of financial
instruments. By so doing, the Fund's ability to meet current
obligations, to honor redemptions or to operate in a manner
consistent with its investment objectives may be impaired. See "Other
Information-Equity Index Futures Contracts" and "-Interest Rate
Futures Contracts" in the SAI.
Forward Foreign Currency Exchange Contracts. A Fund's Asset Manager
may attempt to hedge the risk that a particular foreign currency may
suffer a substantial decline against the U.S. dollar by entering into
a forward contract to sell an amount of foreign currency
approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. It may also enter
into such contracts to protect against losses resulting from changes
in foreign currency exchange rates between trade and settlement date.
Such contracts will have the effect of limiting any gains to the Fund
resulting from changes in such rates. Losses may also arise due to
changes in the value of the foreign currency or if the counterparty
does not perform under the contract. See "Other Information-Forward
Foreign Currency Exchange Contracts" in the SAI.
PORTFOLIO TURNOVER
In carrying out the investment policies described in this
Prospectus, each Fund expects to engage in a substantial number of
securities portfolio transactions, and the rate of portfolio turnover
will not be a limiting factor when an Asset Manager deems it
appropriate to purchase or sell securities for a Fund. High portfolio
turnover involves correspondingly greater transaction costs which are
borne directly by a Fund. In addition, high portfolio turnover may
also result in increased short-term capital gains which, when
distributed to shareholders, are treated for federal income tax
purposes as ordinary income. See "Portfolio Transactions and
Brokerage" and "Tax Information." For the Income Funds' portfolio
turnover rates, see "Financial Highlights."
PURCHASE AND REDEMPTION OF FUND SHARES
How to Purchase Fund Shares
Initial purchases of shares of the Funds may be made in a
minimum amount of $2,000 per Fund ($500 for IRAs). Arrangements can
be made to open accounts with a $500 or $250 initial investment and
an agreement to invest at least $50 or $100, respectively, per month
until the minimum is attained. Call (800)835-3879 for more
information on these arrangements. There is no minimum for additional
investments except for telephone Automated Clearing House ("ACH")
purchases.
Investors may purchase shares of the Trust through their
financial planner or other investment professional who is (or who is
associated with) an investment adviser registered with the Securities
and Exchange Commission (a "Registered Investment Adviser") or
directly from the Trust as indicated below. Shares may also be
purchased by bank trust departments on behalf of their clients, other
institutional investors such as corporations, endowment funds and
charitable foundations, and tax-exempt employee welfare, pension and
profit-sharing plans.
The following shows the various methods for purchasing the
Trust's shares. For more complete instructions, see the account
application.
<PAGE>
<TABLE>
<CAPTION>
Initial Investment Additional Investments
<S> <C> <C>
Minimums:
Regular accounts $2,000 (or lower, as No minimum
described above)
IRAs, IRA rollovers, SEP $500 No minimum
and SIMPLE IRAs
Method
Through your investment Contact your investment Send additional funds
professional advisor, bank or other to your investment
investment professional professional at the
address appearing on
your account statement
Direct by mail Send your account Send letter of
application and check instruction and check
(payable to The (payable to The
Managers Funds) to the Managers Funds) to
address indicated on The Managers Funds
the application c/o Boston Financial
Data
Services, Inc.
P.O. Box 8517
Boston, MA 02266-8517
Please include your
Direct Federal Funds or Call (800) 25 account number on your
Bank Wire 682 to notify CCall (800)358-7668 to check
notify Please include
the Transfer Agent, and Call the Transfer Agent
instruct your bank to at (800) 358-7668 prior
wire U.S. funds to: to wiring additional
ABA #011000028 funds
State Street Bank &
Trust Company
Boston, MA 02101
BFN-The Managers Funds
AC 9905-001-5
FBO-Shareholder Name
By telephone Only for established Call the Transfer Agent
accounts with ACH at (800) 252-0682
privileges. Call Minimum investment:
(800) 252-0682 with $100
instructions for the
Transfer Agent
</TABLE>
The employees and their families of The Managers Funds, L.P. and
selected dealers and their authorized representatives who are engaged
in the sale of Fund shares, may purchase shares of the Funds without
regard to a minimum initial investment.
Certain states may require Registered Investment Advisers that
purchase Fund shares for customers in those states to register as
broker-dealers. From time to time the Trust's distributor may supply
materials to Registered Investment Advisers to assist them in
formulating an investment program using the Trust for their clients.
Such materials are designed to be used and evaluated by investment
professionals, do not contain investment advice and are not available
for distribution to the general public.
Certain investors may purchase or sell Fund shares through
broker-dealers or through other processing organizations who may
impose transaction fees or other charges in connection with providing
this service. Shares purchased in this fashion may be treated as a
single account for purposes of the minimum initial investment.
Investors who do not wish to receive the services of a broker-dealer
or processing organization may consider investing directly with the
Trust. Shares held through a broker-dealer or processing organization
may be transferred into the investor's name by contacting the
broker-dealer or processing organization and the Trust's transfer
agent. Certain processing organizations may receive compensation from
the Trust's Manager, Administrator and/or Asset Manager.
Trust shares are offered and orders accepted on each business
day (a day on which the New York Stock Exchange ("NYSE") is open for
trading). The Trust may limit or suspend the offering of shares of
any or all of the Funds at any time and may refuse, in whole or in
part, any order for the purchase of shares.
<PAGE>
Purchase orders received by the Trust, c/o Boston Financial Data
Services at the address listed on the back cover of this prospectus,
prior to 4:00 p.m. Eastern Standard Time, on any business day will
receive the offering price computed that day. The broker-dealer,
omnibus processor or investment professional, is responsible for
promptly transmitting orders to the Trust. The Trust cannot accept
orders transmitted to it at the address indicated on the cover
page of this prospectus, but will use its best efforts to promptly
forward such orders to the Transfer Agent for receipt no later than
the next business day.
Federal Funds or Bank Wires used to pay for purchase orders must
be in U.S. dollars and received by 3:00 p.m. the following business
day, except for certain processing organizations which have entered
into special arrangements with the Trust.
Purchases made by check are effected when the check is received,
but are accepted subject to collection at full face value in U.S.
funds and must be drawn in U.S. dollars on a U.S. bank. Third party
checks which are payable to an existing shareholder who is a natural
person (as opposed to a corporation or partnership) and endorsed over
to a Fund or State Street Bank and Trust Company will be accepted. To
ensure that checks are collected by the Trust, redemptions of shares
purchased by check, or exchanges from such shares, are not effected
until 15 days after the date of purchase, unless arrangements are
made with the Administrator.
If the check accompanying any purchase order does not clear, or
if there are insufficient funds in you bank account to enable an ACH,
the transaction will be canceled and you will be responsible for any
loss the Trust incurs. For current shareholders, each Fund can redeem
shares from any identically registered account in such Fund or any
other Fund as reimbursement for any loss incurred. The Trust may
prohibit or restrict all future purchases in the Trust in the event
of any nonpayment for shares.
In the interest of economy and convenience, share certificates
will not be issued. All share purchases are confirmed to the record
holder and credited to such holder's account on the Trust's books
maintained by the Transfer Agent.
Share Price and Valuation of Shares. The net asset value of shares
of each Fund is computed each business day, at the close of trading
on the NYSE, and is the net worth of the Fund (assets minus
liabilities) divided by the number of shares outstanding. Fund
securities listed on an exchange are valued on the basis of the last
quoted sale price on the exchange where such securities principally
are traded on the valuation date, prior to the close of trading on
the NYSE, or, lacking any sales, on the basis of the last quoted bid
price on such principal exchange prior to the close of trading on the
NYSE. Over-the-counter securities for which market quotations are
readily available are valued on the basis of the last sale price or,
lacking any sales, at the last quoted bid price on that date prior to
the close of trading on the NYSE. Securities and other instruments
for which market quotations are not readily available are valued at
fair value, as determined in good faith and pursuant to procedures
established by the Trustees. For further information, see "Net Asset
Value" in the SAI.
Redeeming Shares
Any redemption orders received by the Trust as indicated below
before 4:00 p.m. New York time on any business day will receive the
net asset value determined at the close of trading on the NYSE on
that day. Redemption orders received after 4:00 p.m. will be redeemed
at the net asset value determined at the close of trading on the next
business day. The Trust cannot accept redemption orders transmitted
to it at the address indicated on the cover page of the prospectus,
but will use its best efforts to promptly forward such orders to the
Transfer Agent for receipt by the next business day. If you are
trading through a broker-dealer or investment adviser, such
investment professional is responsible for promptly transmitting
orders. There is no redemption charge. The Fund reserves the right to
redeem shareholder accounts (after 60 days notice) when the value of
the Fund shares in the account falls below $500 due to redemptions.
Whether a Fund will exercise its right to redeem shareholder accounts
will be determined by the Manager on a case-by-case basis.
<TABLE>
<CAPTION>
Method Instructions
<S> <C>
By mail-write to The Managers Funds, Send a letter of instruction which
c/o Boston Financial Data specifies the name of the Fund,
Services, Inc. dollar amount or number of shares to
P.O. Box 8517 be sold, your name and account
Boston, MA 02266-8517 number. This letter must be signed
by all owners of the shares in the
exact manner in which they appear on
the account. In the case of estates,
trusts, guardianships,
custodianships, corporations and
pension and profit sharing plans,
other supporting legal documentation
is required.
By telephone For shareholders who have elected
telephone redemption privileges on
their applications, telephone the
Trust at (800)252-0682.
By contacting your investment
professional
By writing a check (Managers Money For shareholders who have elected
Market Fund Shareholders only) the checkwriting option with State
Street Bank and Trust Company, see
"Investor Services-Checkwriting
Privilege" below.
</TABLE>
Investor Services
Automatic Reinvestment Plan allows dividends or capital gains
distributions to be reinvested in additional shares, unless you elect
to receive cash.
Automatic Investments of preauthorized amounts from private bank
accounts can be made monthly, quarterly or annually. The amount you
specify will automatically be deducted from your bank account and
invested on the day you specify.
Systematic Withdrawals of $100 or more per fund can be made
monthly by shareholders.
Dollar Cost Averaging allows for regular automatic exchanges
from any Fund to one or more other Funds or can be done through the
Automatic Investment service above. Before investing in the Trust's
Equity Funds, shareholders must obtain a prospectus from the Trust
describing those Funds.
Individual Retirement Accounts, including SIMPLE and SEP IRAs,
IRA rollovers and 403(b) accounts, are available to shareholders at
no additional cost.
Checkwriting Privilege is available only to shareholders of the
Money Market Fund. Before investing in the Trust's Money Market Fund,
shareholders must obtain a prospectus from the Trust describing the
Money Market Fund and the conditions and limitations pertaining to
this privilege.
Exchange Privilege permits shareholders of any of the Funds to
exchange their shares for shares of any of the other Funds at the
relative net asset value per share. Exchange transactions may be made
by writing to the Fund (see "Redeeming Shares"), by contacting your
investment professional, via the Telephone Exchange Privilege (unless
you have declined this option) or on your signed account application.
Call Investors Services at (800) 252-0682 to utilize the Telephone
Exchange Privilege. Shareholders must receive a prospectus describing
the Equity Funds or Money Market Fund of the Trust before requesting
an exchange into one or more of those Funds. By requesting an
exchange into one of those Funds, shareholders are deemed to confirm
receipt of the prospectus describing the Trust's Equity Funds or
Money Market Fund, as the case may be.
The exchange privilege is offered to shareholders for their
convenience and use consistent with their investment objectives. It
is not offered as a short-term market timing service. The Trust
reserves the right to refuse exchange orders from shareholders who
have previously been advised that their frequent use of the exchange
privilege is, in the opinion of the Manager, inconsistent with the
orderly management of the Funds' portfolios.
The Trust and its Transfer Agent will employ reasonable
procedures to verify the genuineness of telephonic redemption or
exchange requests. If such procedures are not followed, the Trust or
its Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. These procedures involve requiring
certain personal identification information.
<PAGE>
The above services are available only in states where the Funds
may be legally offered, and may be terminated or modified by one or
more Funds at any time upon 60 days written notice to shareholders.
None of the Funds, the Distributor, the Trust's Custodian, or
Transfer Agent, nor their respective officers and employees, will be
liable for any loss, expense or cost arising out of a transaction
effected in accordance with the terms and conditions set forth in
this Prospectus even if such transaction results from any fraudulent
or unauthorized instructions.
Income Dividends and Capital Gain Distributions
Income dividends will normally be paid on the Income Funds at
the frequency noted in the following table. Except for Short
Government Fund, income dividends will normally be declared on the
fourth business day prior to the end of the dividend period, payable
on the following business day, to shareholders of record on the day
prior to the declaration date. Distributions of any capital gains
will normally be paid annually in December.
<TABLE>
<CAPTION>
Frequency Fund
<S> <C>
Monthly Short and Intermediate Bond Fund,
Intermediate Mortgage Fund, Bond
Fund
Quarterly Global Bond Fund
Daily* Short Government Fund
</TABLE>
_______
* Dividends declared daily and paid monthly on the third business day
prior to month end.
All dividends and distributions declared by a Fund will be
reinvested in additional shares of the Fund at net asset value on the
"Ex-Dividend" date(unless the shareholder has elected to receive
dividends or distributions in cash or invest them in shares of the
Money Market Fund). An election may be changed by delivering written
notice to the Fund at least ten business days prior to the payment
date.
MANAGEMENT OF THE FUNDS
Trustees
Information concerning the Trustees, including their names,
positions and principal occupations during the past five years, is
contained in the SAI.
Investment Manager
It is the Manager's responsibility to select, subject to review
and approval by the Trustees, the Asset Managers who have
distinguished themselves by able performance in their respective
areas of expertise in asset management and to continuously monitor
their performance. The Manager and its corporate predecessors have
had over 20 years of experience in evaluating investment advisers for
individuals and institutional investors. In addition, the Manager
employs the services of a consultant specializing in appraisal and
comparison of investment managers to assist in evaluating asset
managers. The Manager is also responsible for conducting all
operations of the Funds except those operations contracted to the
Custodian and to the Transfer Agent.
<PAGE>
The Trust has received an exemptive order from the Securities
and Exchange Commission (the "SEC") permitting the Manager, subject
to certain conditions, to enter into sub-advisory agreements with
Asset Managers approved by the Trustees without obtaining shareholder
approval. At meetings held on December 5, 1994 and December 15, 1994,
the shareholders of the Funds approved the operations of the Trust in
this manner. The order also permits the Manager, subject to the
approval of the Trustees but without shareholder approval, to employ
new Asset Managers for new or existing Funds, change the terms of
particular sub-advisory agreements or continue the employment of
existing Asset Managers after events that would cause an automatic
termination of a sub-advisory agreement. Although shareholder
approval is not required for the termination of sub-advisory
agreements, shareholders of a Fund will continue to have the right to
terminate such agreements for the Fund at any time by a vote of the
majority of the outstanding shares of the Fund. Shareholders will
continue to be notified of any Asset Manager changes.
The following table sets forth the maximum annual management fee
rates currently paid by each Income Fund, the annual asset management
fee rates paid by the Manager to each Asset Manager for a particular
Fund and the actual management fee paid during fiscal 1996, each
expressed as a percentage of the Fund's average daily net assets.
<TABLE>
<CAPTION>
Total
Management
Total Asset Fee Paid
Managemen Management During
Name of Fund t Fee Fee the Year Ended
<S> <C> <C> December 31,
1996
<C>
Short Government Fund 0.45% 0.20% 0.20%*
Short and Intermediate Bond 0.50% 0.25% 0.50%
Fund
Intermediate Mortgage Fund 0.45% 0.20% 0.45%
Bond Fund 0.625% 0.25% 0.625%
Global Bond Fund 0.70% 0.35% on 1st $20 0.70%
million,
0.25% thereafter
</TABLE>
* Reflects voluntary fee waivers by the Manager which may be
modified or terminated at any time at the sole discretion of the
Manager.
Asset Managers
The following sets forth certain information about each of the
Asset Managers:
Short Government Fund
Jennison Associates Capital Corp.("Jennison")-The firm was
founded in 1969 and is a wholly-owned subsidiary of The Prudential
Insurance Company of America. As of December 31, 1996, assets under
management totaled $33.1 billion. Its address is One Financial
Center, Boston, MA 02111
Thomas F. Doyle serves as the portfolio manager of the Short
Government Fund. He is a Director and Executive Vice President of
Jennison, responsible for fixed income portfolio management. He has
been with Jennison since 1987.
Short and Intermediate Bond Fund
Standish, Ayer & Wood, Inc. ("SAW")-The firm, founded in 1933,
is a privately owned corporation with 19 directors (two of whom each
own more than 10% equity in the firm). The firm offers equity,
balanced and fixed income management. As of December 31, 1996, the
firm managed more than $30.6 billion in assets. Its address is One
Financial Center, Suite 26, Boston, MA 02111.
Howard B. Rubin serves as the portfolio manager of the Short and
Intermediate Bond Fund. He is a Director of SAW, responsible for
fixed income portfolio management. He has been with SAW since 1984.
<PAGE>
Intermediate Mortgage Fund
Jennison Associates Capital Corp.-See Short Government Fund for
a description.
Michael Porreca and John Feingold are the portfolio managers of
the Intermediate Mortgage Fund. They are both Directors and Senior
Vice Presidents of Jennison, responsible for fixed income portfolio
management. Mr. Porreca has served in this capacity since
November 1992; prior to that time he served in a similar capacity
with Dewey Square Investors. Mr. Feingold has been with Jennison
since January 1993. Prior to that time he served as a Director and
head of the CMO desk at Salomon Brothers.
Bond Fund
Loomis, Sayles & Company, Inc.-The firm was established in 1926
and is a wholly-owned but autonomous subsidiary of New England
Investment Companies. As of December 31, 1996, assets under
management totaled $50.5 billion. Its address is One Financial
Center, Boston, MA 02110.
Daniel J. Fuss, C.F.A., has been the Fund's co-portfolio manager
since its inception in 1984 and has been the sole portfolio manager
since March 1993. He is a Managing Director of Loomis, Sayles &
Company, Inc., a position he has held since 1976.
Global Bond Fund
Rogge Global Partners plc.-The firm was established in 1984 is
owned by United Asset Management, a public company. As of
December 31, 1996, assets under management totaled $3.9 billion. Its
address is 5-6 St. Andrews Hill, London, England EC4V-5BY.
Olaf Rogge has been the Fund's portfolio manager since the
Fund's commencement of operations. Mr. Rogge is Managing Director and
Principal Executive of Rogge Global Partners, which he founded in
1984.
Administration and Shareholder Servicing; Distributor; Transfer Agent
Administrator. The Managers Funds, L.P. serves as the Trust's
administrator (the "Administrator") and has overall responsibility,
subject to the review of the Trustees, for all aspects of managing
the Trust's operations, including administration and shareholder
services to the Trust, its shareholders and certain institutions,
such as bank trust departments, dealers and registered investment
advisers, that advise or act as an intermediary with the Trust's
shareholders ("Shareholder Representatives"). The Administrator is
paid at the rate of 0.25% per annum of each Income Fund's average
daily net assets, except for the Short Government Fund where the
administrator is currently waiving its fee of 0.20%.
Administrative services include (i) preparation of Fund
performance information; (ii) responding to telephone and in-person
inquiries from shareholders and Shareholder Representatives regarding
matters such as account or transaction status, net asset value of
Fund shares, Fund performance, Fund services, plans and options, Fund
investment policies and portfolio holdings and Fund distributions and
the taxation thereof; (iii) preparing, soliciting and gathering
shareholder proxies and otherwise communicating with shareholders in
connection with shareholder meetings; (iv) maintaining the Trust's
registration with Federal and state securities regulators;
(v) dealing with complaints and correspondence from shareholders
directed to or brought to the attention of the Administrator;
(vi) supervising the operations of the Trust's Transfer Agent; and
(vii) such other administrative, shareholder and shareholder related
services as the parties may from time to time agree in writing.
Distributor. The Managers Funds, L.P. serves as distributor of the
shares of the Trust. Its address is 40 Richards Avenue, Norwalk, CT
06854.
Transfer Agent. State Street Bank and Trust Co. serves as the
Trust's Transfer Agent.
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Each Asset Manager is responsible for decisions to buy and sell
securities for each Fund or component of a Fund that it manages, as
well as for broker-dealer selection in connection with such portfolio
transactions. In the case of securities traded on a principal basis,
transactions are effected on a "net" basis, rather than a transaction
charge basis, with dealers acting as principal for their own accounts
without a stated transaction charge. Accordingly, the price of the
security may reflect an increase or decrease from the price paid by
the dealer together with a spread between the bid and asked prices,
which provides the opportunity for a profit or loss to the dealer.
Transactions in other securities are effected on a transaction charge
basis where the broker acts as agent and receives a commission in
connection with the trade. In effecting securities transactions, each
Asset Manager is responsible for obtaining best price and execution
of orders. The dealer spread or broker's commission charged in
connection with a transaction is a component of price and is
considered together with other relevant factors. Any of the Funds may
effect securities transactions on a transaction charge basis through
a broker-dealer that is an affiliate of the Manager or of one of that
Fund's Asset Managers in accordance with procedures approved by the
Trustees. However, no Asset Manager for a Fund or its affiliated
broker-dealer may act as principal in any portfolio transaction for
any Fund with which it is an affiliate, and no affiliate of the
Manager may act as principal in a portfolio transaction for any of
the Funds.
PERFORMANCE INFORMATION
From time to time the Funds may advertise "yield" and or "total
return." These figures are based on historical earnings and are not
intended to indicate future performance.
Yield
The Funds may advertise "yield." Yield refers to income
generated by an investment in the Fund during a 30-day (or one month)
period. This income is then annualized. That is, the amount of income
generated during the period is assumed to be generated during each
30-day (or one month) period over a one-year period and is shown as a
percentage of the investment.
Total Return
Each of the Funds may include total return figures in its
advertisements. In calculating total return, the net asset value per
share at the beginning of the period is subtracted from the net asset
value per share at the end of the period (after assuming and
adjusting for the reinvestment of any income dividends and capital
gains distributions), and the result is divided by the net asset
value per share at the beginning of the period to ascertain the total
return percentage.
A Fund also may include comparative performance information in
advertising or marketing the Fund's shares. Such performance
information may include data from industry publications, business
periodicals, rating services and market indices. For more detailed
information on performance calculations and comparisons, see
"Performance Information" in the SAI.
The Trust's annual report contains additional performance
information and is available upon request without charge.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust offers a single class of shares of beneficial
interest, without par value, and currently offers ten series of its
shares as described in the Trust's Prospectuses. The Trustees have
the authority to create new series of shares in addition to the
existing ten series without the requirement of a vote of shareholders
of the Trust.
Shares of each Fund are entitled to one vote per share.
Shareholders have the right to vote on the election of the Trustees
and on all other matters on which, by law or the provisions of the
Trust's Declaration of Trust or by-laws, they may be entitled to
vote. On matters relating to all Funds and affecting all Funds in the
same manner, shareholders of all Funds are entitled to vote. On any
matters affecting only one Fund, only the shareholders of that Fund
are entitled to vote. On matters relating to all the Funds but
affecting the Funds differently, separate votes by Fund are required.
The Trust and its Funds are not required, and do not intend, to
hold annual meetings of shareholders, under normal circumstances. The
Trustees or the shareholders may call special meetings of the
shareholders for action by shareholder vote, including the removal of
any or all of the Trustees. The Trustees will call a special meeting
of shareholders of a Fund upon written request of the holders of at
least 10% of that Fund's shares.
<PAGE>
Under Massachusetts law, the shareholders and trustees of a
business trust may, in certain circumstances, be personally liable
for the trust's obligations to third parties. However, the
Declaration of Trust provides, in substance, that no shareholder or
Trustee shall be personally liable for the Trust's obligations to
third parties, and that every written contract made by the Trust
shall contain a provision to that effect. The Declaration of Trust
also requires the Fund to indemnify shareholders and Trustees against
such liabilities and any related claims and expenses. The Trust will
not indemnify a Trustee when the loss is due to willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the Trustee's office.
Two purported class action lawsuits have been filed in the
federal district courts in Connecticut and Minnesota against Managers
Intermediate Mortgage Fund and Managers Short Government Fund, the
Manager, the former portfolio manager and certain other affiliates
and affiliated individuals. The plaintiffs allege that, from May 1,
1992 to June 13, 1994 and from May 10, 1993 to September 12, 1994,
for the two Funds, respectively, defendants violated the Securities
Act of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940, and common law by, among other things, failing
to disclose adequately the Funds' investment strategies and risks
associated with an investment in the Funds. Plaintiffs allege that
they suffered unspecified damages based on losses incurred over the
course of the respective class periods.
The Managers Funds, its affiliates and affiliated individuals,
as well as certain of the other defendants, have filed motions to
dismiss these actions, on the basis that, among other grounds, the
relevant prospectus fully disclosed the Funds' respective investment
strategies and all material risks related to an investment in these
Funds, including, but not limited to, the risk of loss of principal.
There has been no decision yet from the court relating to Managers
Intermediate Mortgage Fund motion. In the case involving Managers
Short Government Fund, the motion to dismiss was granted in part, and
defendants again moved for dismissal after plaintiff amended the
complaint. In that action, the parties have now entered into a
preliminary agreement to settle all claims by the purported class.
However, the parties have not finalized their settlement nor have
they obtained the required court approvals. For these and other
reasons, there can be no assurance that the settlement will be
consummated.
In addition, a non-class action lawsuit based on similar
allegations has been filed by a customer against certain of the
defendants named in the class action lawsuits, as well as Managers
Short and Intermediate Bond Fund. Certain other customers, who are
potentially members of the plaintiff class in each of the two class
action lawsuits referred to above, have asserted that they may file
similar lawsuits based on similar claims, but have not done so.
Despite management's efforts to resolve all of the pending lawsuits,
it believes that it has meritorious defenses and, if the cases are
not settled, it intends to defend against the actions vigorously.
TAX INFORMATION
Each Fund has qualified and intends to continue to qualify as a
regulated investment company under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), under which each Fund
is regarded as a separate regulated investment company.
All dividends and distributions designated as capital gains are
generally taxable to shareholders whether received in cash or
additional shares.
Although distributions are generally taxable to a shareholder in
the taxable year in which the distribution is made, dividends
declared in October, November or December of a taxable year with a
record date in such a month and actually received during the
following January, will be taxed as though received by the
shareholder on December 31 of such year.
Generally, each Fund is required to back-up withhold 31% of
distributions paid to a shareholder who fails to provide a social
security or taxpayer identification number and certify that such
number is correct and that such shareholder is not subject to, or is
otherwise exempt from, back-up withholding.
<PAGE>
Shareholders should consult their own tax advisers for more
information regarding the Federal, foreign, state, and local tax
treatment with respect to their own tax situation. For more
information concerning taxes, see "Tax Information" in the SAI.
SHAREHOLDER REPORTS
Shareholders will receive annual and semi-annual reports which
include financial statements showing the results of operations,
investment portfolio and other information of the Funds in which they
have invested. Shareholders will also receive annual tax statements
indicating the tax status of distributions made during the year.
Confirmations of transactions will be sent to shareholders following
purchases, redemptions or exchanges by the shareholder, and quarterly
statements of account will be sent to all shareholders.
<PAGE>
THE MANAGERS FUNDS
MONEY MARKET FUND PROSPECTUS
Dated April 1, 1997
Managers Money Market Fund - (the "Money Market Fund" or the
"Fund") seeks to maximize current income and maintain a high level of
liquidity. It is designed for investors who seek to preserve capital
and earn current income from a portfolio of high quality money market
instruments.
Unlike other mutual funds which directly acquire and manage
their own portfolio of securities, the Fund seeks to achieve its
investment objective by investing all of its investable assets in The
Money Market Portfolio (the "Portfolio"), a diversified open-end
management investment company having the same investment objective as
the Fund. The Fund invests in the Portfolio through a two-tier master-
feeder investment fund structure. See "Special Information Concerning
Investment Structure" on page 8.
This Prospectus sets forth concisely the information concerning
the Fund that a prospective investor ought to know before investing.
It should be retained for future reference. The Trust has filed with
the Securities and Exchange Commission a Statement of Additional
Information ("SAI"), dated April 1, 1997, which contains more
detailed information about the Trust and the Fund and is incorporated
into this Prospectus by reference. A copy of the SAI may be obtained
without charge by contacting the Trust at 40 Richards Avenue,
Norwalk, Connecticut 06854, (800) 835-3879 or (203) 857-5321.
Investments in the Fund are not deposits or obligations of, or
guaranteed or endorsed by, the U.S. Government, Morgan Guaranty Trust
Company of New York ("Morgan") or any other bank. Shares of the Fund
are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other governmental
agency. An investment in the Fund is subject to risk that may cause
the value of the investment to fluctuate, and when the investment is
redeemed, the value may be higher or lower than the amount originally
invested by the investor. Although the Fund seeks to maintain a
stable net asset value of $1.00 per share, there can be no assurance
that it will be able to continue to do so.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
ILLUSTRATIVE EXPENSE INFORMATION
The following tables provide the investor with information
concerning the aggregate annual operating expenses of the Money
Market Fund and the Portfolio. Investors incur no sales load on
purchases of shares or on reinvested dividends and distributions, nor
any deferred sales load upon redemption. There are no redemption
fees, exchange fees or Rule 12b-1 fees.
The Trustees of the Trust believe that at current asset levels
the aggregate per share expenses of the Fund and the Portfolio will
be approximately equal to and may be less than the expenses that the
Fund would incur if it retained the services of an investment adviser
and invested its assets directly in portfolio securities.
Annual Operating Expenses* (after fee waiver and expense
reimbursements):
The expenses set forth below reflect a waiver by the Fund
Administrator of its fee of 0.25%, as well as reimbursement by the
Fund Administrator of certain Fund expenses. See "Management of the
Fund and the Portfolio."
<TABLE>
<CAPTION>
Total
Manageme Other Operatin
nt Expense g
Fee s Expenses
<S> <C> <C>
0.12% 0.20% 0.32%
</TABLE>
_____
* Other Expenses and Total Operating Expenses are expressed as a
percentage of average net assets of the Fund for its fiscal year
ended November 30, 1996, and have been restated to reflect the
fee waiver and expense reimbursement in effect on the date of
this prospectus. In the absence of the fee waiver and expenses
reimbursement, Other Expenses and Total Operating Expenses,
based on the Fund's fiscal 1996 average net assets of $28
million and the Portfolio's average net assets of $3.5 billion,
would have been 0.62% and 0.75%, respectively.
The fee waiver and expense reimbursements may be modified or
terminated at any time at the sole discretion of the Fund
Administrator. For information regarding current operating expenses
of the Fund, call (800)835-3879.
Examples
An investor would pay the following expenses on a $1,000
investment in the Fund over various time periods assuming (1) a 5%
annual rate of return, (2) redemption at the end of each time period,
and (3) continuation of any currently applicable waivers of
management fees. As noted above, the Fund does not charge any
redemption fees or deferred sales loads of any kind.
The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those
shown.
<TABLE>
<CAPTION>
Fund 1 3 yea 5 yea 10 yea
<S> year rs rs rs
<C> <C> <C> <C>
Money Market Fund $3 $10 $18 $41
</TABLE>
The above expense table is designed to assist investors in
understanding the various direct and indirect costs and expenses that
investors in the Fund bear. The fees and expenses included in Other
Expenses include the fees paid to the Fund Administrator under the
Administration and Shareholder Services Agreement, the fees paid to
Morgan under the Portfolio's Administrative Services Agreement, the
fees paid to Funds Distributor Inc. ("FDI") under the Portfolio's Co-
Administration Agreement, the fees paid to Pierpont Group, Inc. under
the Portfolio Fund Services Agreement, the fees paid to State Street
Bank and Trust Company as custodian and transfer agent, and other
usual and customary expenses of the Fund and the Portfolio. For a
more detailed description of contractual fee arrangements and of the
fees and expenses included in Other Expenses, see "Management of the
Fund and the Portfolio" and "Administration and Shareholder
Servicing; Distributor; Transfer Agent."
<PAGE>
SUMMARY
General Description of the Trust and the Funds
The Managers Funds (the "Trust") is a no-load, open-end,
management investment company organized as a Massachusetts business
trust, currently composed of the following ten separate series:
Managers Income Equity Managers Short and Intermediate
Fund Bond Fund
Managers Capital Managers Intermediate Mortgage
Appreciation Fund Fund
Managers Special Equity Managers Global Bond Fund
Fund
Managers International Managers Bond Fund
Equity Fund
Managers Short Government Managers Money Market Fund
Fund
This Prospectus relates only to the Money Market Fund. A
Prospectus for the other series (the "Equity Funds" and the "Income
Funds") can be obtained by calling (800) 835-3879 or (203) 857-5321.
Each of the Funds has distinct investment objectives and
strategies. There is, of course, no assurance that a Fund will
achieve its investment objectives.
Purchase and Redemption of Shares
The minimum initial investment in the Fund is $2,000 ($500 for
IRAs). For information on eligible investors and how to purchase and
redeem shares of the Fund, see "Purchase and Redemption of Fund
Shares."
FINANCIAL HIGHLIGHTS
The following table presents financial highlights for the Money
Market Fund, for the last twelve fiscal periods, through November 30,
1996. The information has been derived from the financial statements
of the Trust which have been audited by independent public
accountants Coopers & Lybrand L.L.P. for the years ended December 31,
1993 and December 31, 1994, the period January 1, 1995 to
November 30, 1995, and the fiscal year ended November 30, 1996, and
by other accountants prior to 1993, and should be read in conjunction
with such financial statements. See "Financial Statements" in the
SAI.
<PAGE>
Managers Money Market Fund
Financial Highlights
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
<S> Year Eleven
ended months
November ended Year
30, November 1994 ended Decembe 1991
1996 30, <C> 1993 r 31, <C>
<C> 1995 <C> 1992
<C> <C>
Net Asset Value,
Beginning of Period $ $ $ $ $ $
1.000 1.000 1.000 1.000 1.000 1.000
Income from
Investment
Operations:
Net investment 0.054 0.044 0.035 0.022 0.030 0.054
income (d)
Net realized and _ _ _ _ _
unrealized gain on _______ ______ ______ ______ ______ 0.003
investments
Total from 0.044_ 0.035_ 0.030 0.057
investment 0.054_ 0.022_
operations
Less Distributions
to Shareholders
from:
Net investment (0.054) (0.044) (0.035) (0.022) (0.030) (0.054)
income
Net realized gain _ _ _ _ _
on investments ______ ______ ______ ______ ______
(0.003)
Total (0.044)
distributions to (0.054)_ (0.035) (0.022) (0.030) (0.057)
shareholders
Net Asset Value, End $ $ $ $ $ $
of Period 1.000 1.000 1.000 1.000 1.000 1.000
Total Return (c) 5.53% 4.51%(b) 3.61% 2.48% 3.12% 5.35%
Ratio of net 0.12% 1.13%(b) 0.73% 0.74% 0.67% 0.57%
expenses to average
net assets (d)
Ratio of net 5.35% 4.85%(b) 3.84% 2.48% 3.05% 5.69%
investment income
to average net
assets (d)
Net assets at end of $36,091 $11,072 $17,269 $7,368 $9,320 $4,868
period (000's
omitted)
Expense Waiver (a)
Ratio of total 0.75% 1.18%(b) 1.03% 0.99% 0.98% 1.06%
expenses to average
net assets
Ratio of net 4.71% 4.80%(b) 3.54% 2.23% 2.74% 5.21%
investment income
to average net
assets
</TABLE>
(aRatio information assuming no waiver of investment advisory and
)management fees and/or administrative fees in effect for the periods
presented, if applicable.
(bAnnualized.
)
(cThe total returns would have been lower had certain expenses not been
)reduced during the periods shown.
(dDoes not reflect investment advisory and management fees paid directly
)to the Manager for periods prior to May 1990.
<PAGE>
<TABLE>
<CAPTION>
Seven
months
Year ended ended Year
1990 December 31, 1988 December ended May 1986
<C> 1989 <C> 31, 31, <C>
<C> 1987 1987
<C> <C>
$ $ 1.000 $ $ 1.000 $ $
1.000 1.000 1.000 1.000
0.081 0.900 0.075 0.042 0.063 0.070
_ _ _
______ ______ 0.010 0.001 0.001 ______
0.081 0.090 0.085 0.043 0.064 0.070
(0.081) (0.090) (0.075) (0.042) (0.063) (0.070)
_ _ _
______ ______ (0.001) ______
(0.010) (0.001)
(0.090) (0.043)
(0.081) (0.085) (0.064) (0.070)
$ $ 1.000 $ $ 1.000 $ $
1.000 1.000 1.000 1.000
7.66% 8.73% 7.25% 3.81% 5.83% 7.25%
0.27% 0.16% 0.16% 0.17%(b) 0.15% 0.18%
8.09% 9.12% 7.35% 6.99%(b) 6.19% 7.67%
$14,944 $83,743 $86,567 $103,041 $105,594 $70,869
0.32% N/A N/A N/A N/A N/A
8.04% N/A N/A N/A N/A N/A
</TABLE>
<PAGE>
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE
Unlike other mutual funds which directly acquire and manage
their own portfolio of securities, the Fund is an open-end management
investment company which seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, a separate
registered investment company with the same investment objective as
the Fund. The investment objective of the Fund or Portfolio may be
changed only with the approval of the respective holders of the
outstanding voting securities of the Fund and the Portfolio, as the
case may be. Shareholders of the Fund shall receive 30 days prior
written notice before any such change. Shareholders of the Fund have
approved changes in fundamental investment restrictions and
investment policy, permitting the Fund to invest in the Portfolio.
The master-feeder investment fund structure has been developed
relatively recently, so shareholders should carefully consider this
investment approach.
In addition to selling a beneficial interest to the Fund, the
Portfolio may sell beneficial interests to other mutual funds or
institutional investors. Such investors will invest in the Portfolio
on the same terms and conditions and will bear a proportionate share
of the Portfolio's expenses. However, the other investors investing
in the Portfolio may sell shares of their own using a different
pricing structure than the Fund. Such different pricing structures
may result in differences in returns experienced by investors in
other funds that invest in the Portfolio. Such differences in returns
are not uncommon and are present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is
available from the Fund Administrator at (800) 835-3879.
The Trust may withdraw the investment of the Fund from the
Portfolio at any time if the Board of Trustees of the Trust
determines that it is in the best interests of the Fund to do so.
Upon any such withdrawal, the Board of Trustees would consider what
action might be taken, including the investment of all the assets of
the Fund in another pooled investment entity having the same
investment objective and restrictions as the Fund or the retaining of
an investment adviser to manage the Fund's assets in accordance with
the investment policies described below with respect to the
Portfolio.
Certain changes in the Portfolio's investment objective,
policies or restrictions, or a failure by the Fund's shareholders to
approve a change in the Portfolio's investment objective or
restrictions, may require withdrawal of the Fund's interest in the
Portfolio. Any such withdrawal could result in a distribution in kind
of portfolio securities (as opposed to a cash distribution) from the
Portfolio, which may or may not be readily marketable. The
distribution in kind may result in the Fund having a less diversified
portfolio of investments or adversely affect the Fund's liquidity,
and the Fund could incur brokerage, tax or other charges in
converting the securities to cash. Notwithstanding the above, there
are other means for meeting shareholder redemption requests, such as
borrowing.
Smaller funds investing in the Portfolio may be materially
affected by the actions of larger funds investing in the Portfolio.
For example if a large fund withdraws from the Portfolio, the
remaining funds may subsequently experience higher pro rata operating
expenses, thereby producing lower returns. Additionally, because the
Portfolio would become smaller, it may become less diversified,
resulting in potentially increased portfolio risk (however, these
possibilities also exist for traditionally structured funds which
have large or institutional investors who withdraw from a fund).
Also, funds with a greater pro rata ownership in the Portfolio could
have effective voting control of the operations of the Portfolio.
Except as permitted by the Securities and Exchange Commission,
whenever the Fund is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund
and will cast all of its votes proportionately as instructed by the
Fund's shareholders. The Trust will vote the shares held by Fund
shareholders who do not give voting instructions in the same
proportion as the shares of Fund shareholders who do give voting
instructions. Shareholders of the Fund who do not vote will have no
impact on the outcome of such matters.
For more information about the Portfolio's investment objective,
policies and restrictions, see "Investment Objective and Policies,"
"Additional Investment Information and Risk Factors," and "Investment
Restrictions." For more information about the Portfolio's management
and expenses, see "Management of the Fund and the Portfolio."
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of each of the Fund and the Portfolio
is described below, together with the policies each employs in its
efforts to achieve this objective. Additional information about the
investment policies of the Fund and the Portfolio appears in the SAI
under "Investment Objective and Policies." There can be no assurance
that the objective of the Fund or the Portfolio will be achieved.
The Fund's investment objective is to maximize current income
and maintain a high level of liquidity. The Fund is designed for
investors who seek to preserve capital and earn current income from a
portfolio of high quality money market instruments. The Fund attempts
to achieve its objective by investing all of its investable assets in
The Money Market Portfolio, a diversified open-end management
investment company having the same investment objective as the Fund.
The Portfolio seeks to achieve its investment objective by
maintaining a dollar-weighted average portfolio maturity of not more
than 90 days and by investing in high quality U.S. dollar-denominated
securities which have effective maturities of 397 calendar days or
less. The Portfolio's ability to achieve maximum current income is
affected by its high quality standards (discussed below).
United States Government Obligations. The Portfolio may invest in
obligations issued or guaranteed by the U.S. Government and backed by
the full faith and credit of the United States. These securities
include Treasury securities, obligations of the Government National
Mortgage Association, the Farmers Home Administration and the Export
Import Bank. The Portfolio may also invest in obligations issued or
guaranteed by U.S. Government agencies or instrumentalities where the
Portfolio must look principally to the issuing or guaranteeing agency
for ultimate repayment; some examples of agencies or
instrumentalities issuing these obligations are the Federal Farm
Credit System, the Federal Home Loan Banks and the Federal National
Mortgage Association.
Bank Obligations. The Portfolio may invest in high quality U.S.
dollar-denominated negotiable certificates of deposit, time deposits
and bankers' acceptances of (i) banks, savings and loan associations
and savings banks which have more than $2 billion in total assets and
are organized under U.S. federal or state law, (ii) foreign branches
of these banks or of foreign banks of equivalent size (Euros) and
(iii) U.S. branches of foreign banks of equivalent size (Yankees).
The Portfolio may also invest in obligations of international banking
institutions designated or supported by national governments to
promote economic reconstruction, development or trade between nations
(e.g., the European Investment Bank, the Inter-American Development
Bank, or the World Bank). These obligations may be supported by
appropriated but unpaid commitments of their member countries, and
there is no assurance these commitments will be undertaken or met in
the future.
Commercial Paper; Bonds. The Portfolio may invest in high quality
commercial paper and corporate bonds issued by U.S. corporations. The
Portfolio may also invest in bonds and commercial paper of foreign
issuers if the obligation is U.S. dollar-denominated and is not
subject to foreign withholding tax.
Asset-Backed Securities. The Portfolio may also invest in
securities generally referred to as asset-backed securities, which
directly or indirectly represent a participation interest in, or are
secured by and payable from, a stream of payments generated by
particular assets, such as motor vehicle or credit card receivables
or other asset-backed securities collateralized by such assets.
Asset-backed securities provide periodic payments that generally
consist of both interest and principal payments. Consequently, the
life of an asset-backed security varies with the prepayment
experience of the underlying debt obligations.
Quality Information. The Portfolio will limit its investments to
those securities which, in accordance with guidelines adopted by the
Portfolio's Trustees, present minimal credit risk. In addition, the
Portfolio will not purchase any security (other than a U.S.
Government security) unless (i) it is rated with the highest rating
assigned to short-term debt by at least two nationally recognized
statistical rating organizations such as Moody's Investors
Services, Inc. ("Moody's") or Standard & Poor's Ratings Group
("Standard & Poor's"), (ii) it is rated by only one agency with the
highest such rating, or (iii) it is not rated and is determined to be
of comparable quality. Determinations of comparable quality shall be
made in accordance with procedures established by the Portfolio's
Trustees. For a more detailed discussion of applicable quality
requirements, see "Investment Objective and Policies" in the SAI.
These standards must be satisfied at the time an investment is made.
If the quality of the investment later declines below the quality
required for purchase, the Portfolio shall dispose of the investment,
subject in certain circumstances to a finding by the Portfolio's
Trustees that disposing of the investment would not be in the
Portfolio's best interest.
<PAGE>
The Portfolio may also invest in securities on a when-issued or
delayed delivery basis and in certain privately placed securities.
The Portfolio may also enter into repurchase and reverse repurchase
agreements and lend its portfolio securities. For a discussion of
these investments and for more information on foreign investments,
see "Additional Investment Information and Risk Factors."
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
When-Issued and Delayed Delivery Securities. The Portfolio may
purchase securities on a when-issued or delayed delivery basis.
Delivery of and payment for these securities may take as long as a
month or more after the date of the purchase commitment. The value of
these securities is subject to market fluctuation during this period
and, for fixed income securities, no interest accrues to the
Portfolio until settlement. At the time of settlement, a when-issued
security may be valued at less than its purchase price. The Portfolio
maintains with the custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these
commitments. When entering into a when-issued or delayed delivery
transaction, the Portfolio will rely on the other party to consummate
the transaction; if the other party fails to do so, the Portfolio may
be disadvantaged. It is currently the policy of the Portfolio not to
enter into when-issued commitments exceeding in the aggregate 15% of
the market value of the Portfolio's total assets less liabilities
other than the obligations created by these commitments.
Repurchase Agreements. The Portfolio may engage in repurchase
agreement transactions with brokers, dealers or banks that meet the
credit guidelines established by the Portfolio's Trustees. In a
repurchase agreement, the Portfolio buys a security from a seller
that has agreed to repurchase it at a mutually agreed upon date and
price, reflecting the interest rate effective for the term of the
agreement. The term of the agreement usually ranges from overnight to
one week. A repurchase agreement may be viewed as a fully
collateralized loan of money by the Portfolio to the seller. The
Portfolio always receives as collateral securities with a market
value at least equal to the purchase price plus accrued interest, and
this value is maintained during the term of the agreement. If the
seller defaults and the collateral value declines, the Portfolio
might incur a loss. If bankruptcy proceedings are commenced with
respect to the seller, the Portfolio's realization upon the
disposition of collateral may be delayed or limited. Investments in
certain repurchase agreements and certain other investments which may
be considered illiquid are limited. See "Illiquid Investments;
Privately Placed and other Unregistered Securities" below.
Loans of Portfolio Securities. Subject to applicable investment
restrictions, the Portfolio is permitted to lend its securities in an
amount up to 3313% of the value of the Portfolio's net assets. The
Portfolio may lend its securities if such loans are secured
continuously by cash or equivalent collateral or by a letter of
credit in favor of the Portfolio at least equal at all times to 100%
of the market value of the securities loaned, plus accrued interest.
While such securities are on loan, the borrower will pay the
Portfolio any income accruing thereon. Loans will be subject to
termination by the Portfolio in the normal settlement time, generally
three business days after notice, or by the borrower on one day's
notice. Borrowed securities must be returned when the loan is
terminated. Any gain or loss in the market price of the borrowed
securities which occurs during the term of the loan inures to the
Portfolio and its respective investors. The Portfolio may pay
reasonable finders' and custodial fees in connection with a loan. In
addition, the Portfolio will consider all facts and circumstances,
including the creditworthiness of the borrowing financial
institution, and the Portfolio will not make any loans in excess of
one year.
Loans of portfolio securities may be considered extensions of
credit by the Portfolio. The risks to the Portfolio with respect to
borrowers of its portfolio securities are similar to the risks to the
Portfolio with respect to sellers in repurchase agreement
transactions. See "Repurchase Agreements" above. The Portfolio will
not lend its securities to any officer, Trustee, Director, employee
or other affiliate of the Fund or Portfolio, Morgan, the Portfolio Co-
Administrator or the Distributor (each as defined below under
"Management of the Fund and the Portfolio"), unless otherwise
permitted by applicable law.
Reverse Repurchase Agreements. The Portfolio is permitted to enter
into reverse repurchase agreements. In a reverse repurchase
agreement, the Portfolio sells a security and agrees to repurchase it
at a mutually agreed upon date and price, reflecting the interest
rate effective for the term of the agreement. For purposes of the
Investment Company Act of 1940, as amended (the "1940 Act"), it is
considered a form of borrowing by the Portfolio and, therefore, is a
form of leverage. Leverage may cause any gains or losses of the
Portfolio to be magnified. See "Investment Restrictions" for
investment limitations applicable to reverse repurchase agreements
and other borrowings. For more information, see "Investment
Objective and Policies" in the SAI. See "Investment Restrictions" for
investment limitations applicable to reverse repurchase agreements
and other borrowings.
<PAGE>
Foreign Investment Information. The Portfolio may invest in certain
U.S. dollar-denominated foreign securities. Investment in securities
of foreign issuers and in obligations of foreign branches of domestic
banks involves somewhat different investment risks from those
affecting securities of U.S. domestic issuers. There may be limited
publicly available information with respect to foreign issuers, and
foreign issuers are not generally subject to uniform accounting,
auditing and financial standards and requirements comparable to those
applicable to domestic companies. The Portfolio may only invest in
foreign securities that are not subject to foreign withholding tax.
Investors should realize that the value of the Portfolio's
investments in foreign securities may be adversely affected by
changes in political or social conditions, diplomatic relations,
confiscatory taxation, expropriation, nationalization, limitation on
the removal of funds or assets, or imposition of (or change in)
exchange control or tax regulations in those foreign countries. In
addition, changes in government administrations or economic or
monetary policies in the United States or abroad could result in
appreciation or depreciation of portfolio securities and could
favorably or unfavorably affect the Portfolio's operations.
Furthermore, the economies of individual foreign nations may differ
from the U.S. economy, whether favorably or unfavorably, in areas
such as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments
position; it may also be more difficult to obtain and enforce a
judgment against a foreign issuer. Any foreign investments made by
the Portfolio must be made in compliance with U.S. and foreign
currency restrictions and tax laws restricting the amounts and types
of foreign investments.
Synthetic Instruments. The Portfolio may invest in certain
synthetic instruments. Such instruments generally involve the
deposit of asset-backed securities in a trust arrangement and the
issuance of certificates evidencing interests in the trust. The
certificates are generally sold in private placements in reliance on
Rule 144A. The Advisor will review the structure of synthetic
instruments to identify credit and liquidity risks and will monitor
those risks. See "Illiquid Investments; Privately Placed and Other
Unregistered Securities."
Illiquid Investments; Privately Placed and Other Unregistered
Securities. The Portfolio may not acquire any illiquid securities
if, as a result thereof, more than 10% of the Portfolio's net assets
would be in illiquid investments. Subject to this fundamental policy
limitation, the Portfolio may acquire investments that are illiquid
or have limited liquidity, such as private placements or investments
that are not registered under the Securities Act of 1933 (the "1933
Act") and cannot be offered for public sale in the United States
without first being registered under the 1933 Act. An illiquid
investment is any investment that cannot be disposed of within seven
days in the normal course of business at approximately the amount at
which it is valued by the Portfolio. The price the Portfolio pays for
illiquid securities or receives upon resale may be lower than the
price paid or received for similar securities with a more liquid
market. Accordingly the valuation of these securities will reflect
any limitations on their liquidity.
The Portfolio may also purchase Rule 144A securities sold to
institutional investors without registration under the 1933 Act.
These securities may be determined to be liquid in accordance with
guidelines established by the Advisor and approved by the Trustees of
the Portfolio. The Trustees of the Portfolio will monitor the
Advisor's implementation of these guidelines on a periodic basis.
INVESTMENT RESTRICTIONS
The investment objective of the Fund and the Portfolio, together
with the investment restrictions described below and in the SAI,
except as noted, are deemed fundamental policies, i.e., they may be
changed only by a "vote of the holders of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the
Fund and the Portfolio, respectively. The Fund has the same
investment restrictions as the Portfolio, except that the Fund may
invest all of its investable assets in another open-end investment
company with the same investment objective and restrictions (such as
the Portfolio). References below to the Fund's investment
restrictions also include the Portfolio's investment restrictions.
<PAGE>
As a diversified investment company, 75% of the assets of the
Fund are subject to the following fundamental limitations: (a) the
Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except U.S. Government securities, and
(b) the Fund may not own more than 10% of the outstanding voting
securities of any one issuer. The Fund is subject to additional
non-fundamental requirements governing non-tax exempt money market
funds. These non-fundamental requirements generally prohibit the Fund
from investing more than 5% of its total assets in the securities of
any single issuer, except obligations of the U.S. Government and its
agencies and instrumentalities.
The Fund may not (i) acquire any illiquid securities if as a
result more than 10% of the market value of its net assets would be
in investments which are illiquid, (ii) enter into reverse repurchase
agreements exceeding, together with any permitted borrowings,
one-third of the market value of its total assets, less certain
liabilities, (iii) borrow money, except from banks for extraordinary
or emergency purposes and then only in amounts up to 10% of the value
of the Fund's total assets, taken at cost at the time of borrowing,
or purchase securities while borrowings exceed 5% of its total
assets; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowings in amounts up to 10% of the value
of the Fund's net assets at the time of borrowing; or (iv) invest
more than 25% of its assets in any one industry, except there is no
percentage limitation with respect to investments in U.S. Government
securities, negotiable certificates of deposit, time deposits, and
bankers' acceptances of U.S. branches of U.S. banks.
For a more detailed discussion of the above investment
restrictions, as well as a description of certain other investment
restrictions, see "Investment Restrictions" in the SAI.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
Trustees. Information concerning the Trustees of the Fund and the
Portfolio, including their names, positions, and principal
occupations during the past five years, is contained in the SAI.
The Portfolio has entered into a Portfolio Fund Services
Agreement with Pierpont Group, Inc. to assist the Trustees of the
Portfolio in exercising their overall supervisory responsibilities
for the Portfolio's affairs. The fees to be paid under the agreement
approximate the reasonable cost of Pierpont Group, Inc. in providing
these services to the Portfolio and certain other registered
investment companies subject to similar agreements with Pierpont
Group, Inc. Pierpont Group, Inc. was organized in 1989 at the request
of the Trustees of The Pierpont Family of Funds for the purpose of
providing these services at cost to these funds. See "Trustees and
Officers" in the SAI. The principal offices of Pierpont Group, Inc.
are located at 461 Fifth Avenue, New York, New York 10017. See
"Administration; Custodian and Transfer Agent; and Distributor."
Advisor. The Fund has not retained the services of an investment
advisor because the Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio. The
Portfolio has retained the services of Morgan as Investment Advisor.
Morgan, with principal offices at 60 Wall Street, New York, New York
10260, is a New York trust company which conducts a general banking
and trust business. Morgan is a wholly-owned subsidiary of J.P.
Morgan & Co., Incorporated ("J.P. Morgan"), a bank holding company
organized under the laws of Delaware. Through offices in New York
City and abroad, J.P. Morgan, through Morgan and other subsidiaries,
offers a wide range of services to governmental, institutional,
corporate and individual customers and acts as investment advisor to
individual and institutional clients with combined assets under
management of over $208 billion. Morgan provides investment advice
and portfolio management services to the Portfolio. Subject to the
supervision of the Portfolio's Trustees, Morgan makes the Portfolio's
day-to-day investment decisions, arranges for the execution of
portfolio transactions and generally manages the Portfolio's
investments. See "Investment Advisor and Administrative Services
Agent" in the SAI.
Morgan uses a sophisticated, disciplined, collaborative process
for managing all asset classes. The following persons are primarily
responsible for the day-to-day management and implementation of
Morgan's process for the Portfolio (the inception date of each
person's responsibility for the Portfolio and his business experience
for the past five years is indicated parenthetically): Robert R.
Johnson, Vice President (since June, 1988, employed by Morgan since
prior to 1992) and Daniel B. Mulvey, Vice President (since January,
1995, employed by Morgan since 1992).
<PAGE>
As compensation for the services rendered and related expenses
borne by Morgan under the Investment Advisory Agreement with the
Portfolio, the Portfolio has agreed to pay Morgan a fee, which is
computed daily and may be paid monthly, at the annual rate of 0.20%
of the Portfolio's average daily net assets up to $1 billion, and
0.10% of average daily net assets in excess of $1 billion.
Under a separate agreement, Morgan also provides administrative
and related services to the Portfolio. See " Investment Advisor and
Administrative Services Agent" in the SAI.
Administration; Custodian and Transfer Agent; and Distributor
Portfolio Co-Administrator. Pursuant to a Co-Administration
Agreement with the Portfolio, FDI serves as the Co-Administrator for
the Portfolio. FDI (i) provides office space, equipment and clerical
personnel for maintaining the organization and books and records of
the Portfolio; (ii) provides officers for the Portfolio; (iii) files
Portfolio regulatory documents and mails Portfolio communications to
Trustees and investors; and (iv) maintains related books and records.
For its services under the Co-Administration Agreement, the Portfolio
has agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-pocket expenses.
The amount allocable to the Portfolio is based on the ratio of its
net assets to the aggregate net assets of the Portfolio and certain
other registered investment companies subject to similar agreements
with FDI.
Fund Administrator. The Managers Funds, L.P. serves as the Fund's
administrator and shareholder servicing agent (the "Fund
Administrator") and has overall responsibility, subject to the review
of the Trustees of the Trust, for all aspects of managing the Fund's
operations, including administration and shareholder services to the
Fund, its shareholders and certain institutions, such as bank trust
departments, dealers and registered investment advisers, that advise
or act as an intermediary with the Fund's shareholders ("Shareholder
Representatives"). At the date of this Prospectus, the Fund has
agreed to pay a fee to the Fund Administrator at the rate of 0.25%
per annum of the Fund's average daily net assets. As of the date of
this prospectus, the Fund Administrator is voluntarily waiving all of
its fee.
Administrative services include (i) preparation of Fund
performance information; (ii) responding to telephone and in-person
inquiries from shareholders and shareholder representatives regarding
matters such as account or transaction status, net asset value of
Fund shares, Fund performance, Fund services, plans and options, Fund
investment policies and Fund distributions and the taxation thereof;
(iii) preparing, soliciting and gathering shareholder proxies and
otherwise communicating with shareholders in connection with
shareholder meetings; (iv) maintaining the Trust's registration with
federal and state securities regulators; (v) dealing with complaints
and correspondence from shareholders directed to or brought to the
attention of the Fund Administrator; (vi) supervising the operations
of the Fund's Transfer Agent; and (vii) such other administrative,
shareholder and shareholder-related services as the parties may from
time to time agree to in writing.
Custodian and Transfer Agent. State Street Bank and Trust Company
("State Street Bank"), serves as the Fund's and the Portfolio's
custodian and fund accounting and transfer agent, and the Fund's
dividend disbursing agent. State Street Bank also keeps the books of
account for the Fund and the Portfolio.
Distributor. The Managers Funds, L.P. serves as distributor of the
shares of the Fund. Its address is 40 Richards Avenue, Norwalk,
Connecticut 06854.
<PAGE>
PURCHASE AND REDEMPTION OF FUND SHARES
How to Purchase Fund Shares
Initial purchases of shares of the Fund may be made in a minimum
amount of $2,000 ($500 for IRAs). Arrangements can also be made to
open accounts with a $500 or $250 initial investment and an agreement
to invest at least $50 or $100, respectively, per month until the
minimum is attained. Call (800)835-3879 for more information on
these arrangements. There is no minimum for additional investments,
except for telephone Automated Clearing House ("ACH") purchases.
Investors may purchase shares of the Fund through their
financial planner or other investment professional who is (or who is
associated with) an investment adviser registered with the Securities
and Exchange Commission (a "Registered Investment Adviser") or
directly from the Fund as indicated below. Shares may also be
purchased by bank trust departments on behalf of their clients, other
institutional investors such as corporations, endowment funds and
charitable foundations, and tax-exempt employee welfare, pension and
profit-sharing plans.
The following shows the various methods for purchasing the
Fund's shares. For more complete instructions, see the account
application.
<TABLE>
<CAPTION>
<S> Initial Investment Additional Investments
<C> <C>
Minimums:
Regular accounts $2,000(or lower, as No minimum
described above)
IRAs, IRA rollovers, SEP $500 No minimum
and SIMPLE IRAs
Method
Through your investment Contact your investment Send additional funds to
professional adviser, bank or other your investment
investment professional professional at the
address appearing on
your account statement
Direct by mail Send your account Send letter of
application and check instruction and check
(payable to The Managers (payable to The Managers
Funds) to the address Funds) to:
indicated on the The Managers Funds
application c/o Boston Financial
Data Services, Inc.
P.O. Box 8517
Boston, MA 02266-8517
Please include your
account # on your check
Direct Federal Funds or Call (800) 358-7668 to Call the Transfer Agent
Bank Wire notify the Transfer at (800) 358-7668 prior
Agent, and instruct your to wiring additional
bank to wire U.S. funds funds
to:
ABA #011000028
State Street Bank &
Trust Company
Boston, MA 02101
BFN-The Managers Funds
AC 9905-001-5
FBO-Shareholder Name
By telephone Only for established Call the Transfer Agent
accounts with ACH at (800) 252-0682
privileges. Call (800) Minimum investment: $100
252-0682 with
instructions for the
Transfer Agent
</TABLE>
The employees and their families of The Managers Funds, L.P. and
selected dealers and their authorized representatives who are engaged
in the sale of Fund shares, may purchase shares of the Fund without
regard to a minimum initial investment.
Certain states may require Registered Investment Advisers that
purchase Fund shares for customers in those states to register as
broker-dealers.
Fund shares are offered and orders accepted on each business day
(a day on which the New York Stock Exchange ("NYSE") and Federal
Reserve Bank are open for trading). The Fund may limit or suspend the
offering of shares of the Fund at any time and may refuse, in whole
or in part, any order for the purchase of shares.
Purchase orders received by the Fund, c/o Boston Financial Data
Services, Inc. (the "Transfer Agent") at the address listed on the
back cover of this prospectus, prior to 4:00 p.m., New York Time, on
any business day will receive the offering price computed that day.
See "Income, Dividends and Capital Gains Distributions." The
broker-dealer, omnibus processor or investment professional is
responsible for promptly transmitting orders to the Fund. The Fund
cannot accept orders transmitted to it at the address indicated on
the cover page of this prospectus, but will use its best efforts to
promptly forward such orders to the Transfer Agent for receipt no
later than the next business day.
Federal Funds or Bank Wires used to pay for purchase orders of
the Fund must be in U.S. dollars and received in advance, except for
certain processing organizations which have entered into special
arrangements with the Fund.
Purchases made by check are effected when the check is received,
but are accepted subject to collection at full face value in U.S.
funds and must be drawn in U.S. dollars on a U.S. bank. Third party
checks which are payable to an existing shareholder who is a natural
person (as opposed to a corporation or partnership) and endorsed over
to the Fund or State Street Bank and Trust Company will be accepted.
To ensure that checks are collected by the Fund, redemptions of
shares purchased by check, or exchanges from such shares, are not
effected until 15 days after the date of purchase, unless
arrangements are made with the Administrator.
If the check accompanying any purchase order does not clear, or
if there are insufficient funds in your bank account to enable an
ACH, the transaction will be canceled and you will be responsible for
any loss the Fund incurs. For current shareholders, the Fund can
redeem shares from any identically registered account in the Fund or
any other series of the Trust as reimbursement for any loss incurred.
The Trust may prohibit or restrict all future purchases in the Fund
in the event of any nonpayment for shares.
In the interest of economy and convenience, share certificates
will not be issued. All share purchases are confirmed to the record
holder and credited to such holder's account on the Fund's books
maintained by the Transfer Agent.
Redeeming Shares
Any redemption orders received by the Fund as indicated below
before 4:00 p.m. New York time on any business day will receive the
net asset value determined at the close of trading on the NYSE on
that day. Payments for wire redemption orders received prior to
1:00 p.m. will be sent out that day. The Trust cannot accept
redemption orders transmitted to it at the address indicated on the
cover page of the prospectus, but will use its best efforts to
promptly forward such orders to the Transfer Agent for receipt by the
next business day. If you are trading through a broker-dealer or
investment adviser, such investment professional is responsible for
promptly transmitting orders. There is no redemption charge. The Fund
reserves the right to redeem shareholder accounts (after 60 days
notice) when the value of the Fund shares in the account falls below
$500 due to redemptions. Whether the Fund will exercise its right to
redeem shareholder accounts will be determined by the Fund
Administrator on a case-by-case basis.
<PAGE>
<TABLE>
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Method Instructions
<S> <C>
By mail-write to Send a letter of instruction which
The Managers Funds specifies the name of the Fund,
c/o Boston Financial Data dollar amount or number of shares to
Services, Inc. be sold, your name and account
P.O. Box 8517 number. This letter must be signed
Boston, MA 02266-8517 by all owners of the shares in the
exact manner in which they appear on
the account.
In the case of estates, trusts,
guardianships, custodianships,
corporations and pension and profit
sharing plans, other supporting
legal documentation is required.
By telephone For shareholders who have elected
telephone redemption privileges on
their applications, telephone the
Fund at (800) 252-0682.
By contacting your investment
professional
By writing a check For shareholders who have elected to
have this option, using special
checks provided by State Street Bank
and Trust Company, as discussed
under "Investor Services-
Checkwriting Privilege."
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Investor Services
Automatic Reinvestment Plan allows dividends or capital gains
distributions to be reinvested in additional shares, unless you elect
to receive cash.
Automatic Investments of preauthorized amounts from private bank
accounts can be made monthly, quarterly or annually. The amount you
specify will be deducted from your bank account on the day you
specify.
Systematic Withdrawals of $100 or more from the Fund can be made
monthly by shareholders.
Dollar Cost Averaging allows for regular automatic exchanges
from any Fund to one or more other series of the Trust through the
Automatic Investment service above. Before investing in the Trust's
Equity Funds or Income Funds, shareholders must obtain a prospectus
from the Trust describing those Funds.
Individual Retirement Accounts, including SEP and SIMPLE IRAs,
IRA rollovers and 403(b) accounts, are available to shareholders at
no additional cost.
Checkwriting Privilege is available to shareholders of the Fund.
Participating shareholders must return a completed signature card and
authorization form, and will be provided a supply of checks. Checks
may be drawn for amounts between $500 and $500,000. When such a check
is presented to State Street Bank for payment, a sufficient number of
full and fractional shares will be redeemed from the shareholder's
account to cover the amount of the check.
The check redemption privilege for withdrawal enables a
shareholder to receive dividends declared on the shares to be
redeemed (up to and including the day of redemption) until such time
as the check is processed. Because of this, the check redemption
privilege is not appropriate for a complete liquidation of a
shareholder's account. If the amount of a withdrawal check is greater
than the value of the shares held in the shareholder's account the
check will be returned unpaid, and the shareholder may be subject to
additional charges.
The Fund and State Street Bank each reserve the right at any
time to suspend or limit the procedure permitting withdrawals by
check.
<PAGE>
Exchange Privilege permits shareholders of the Fund to exchange
their shares for shares of any of the other series of the Trust at
the relative net asset value per share. Exchange transactions may be
made by writing to the Fund (see "Redeeming Shares"), by contacting
your investment professional, via the Telephone Exchange Privilege
(unless you have declined this option) or on your signed account
application. Call Investors Services at (800) 252-0682 to utilize the
Telephone Exchange Privilege. Shareholders must receive a prospectus
describing the Equity Funds or Income Funds of the Trust before
requesting an exchange into one or more of those series. By
requesting an exchange into one of those series, shareholders are
deemed to confirm receipt of the prospectus describing the Trust's
Equity Funds and/or Income Funds.
The exchange privilege is offered to shareholders for their
convenience and use consistent with their investment objectives. It
is not offered as a short-term market timing service. The Trust
reserves the right to refuse exchange orders from shareholders who
have previously been advised that their frequent use of the exchange
privilege is, in the opinion of the Fund Administrator, inconsistent
with the orderly management of the Funds' portfolios.
The Fund and its Transfer Agent will employ reasonable
procedures to verify the genuineness of telephonic redemption or
exchange requests. If such procedures are not followed, the Fund or
its Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. These procedures involve requiring
certain personal identification information.
The above services are available only in states where the Fund
may be legally offered, and may be terminated or modified by the Fund
at any time upon 60 days written notice to shareholders. Neither the
Fund, the Distributor, the Fund's Custodian, the Transfer Agent, nor
their respective officers and employees, will be liable for any loss,
expense or cost arising out of a transaction effected in accordance
with the terms and conditions set forth in this Prospectus even if
such transaction results from any fraudulent or unauthorized
instructions.
Income Dividends and Capital Gain Distributions
Income dividends and distributions of short-term capital gains
or losses will normally be declared daily on all settled shares
(including purchases made with immediately available funds prior to
3:00 p.m. on that day) and paid monthly on the third business day
prior to month end. Distributions of any long term capital gains will
normally be declared annually in December.
All dividends and distributions declared by the Fund will be
reinvested in additional shares of the Fund (unless the shareholder
has elected to receive dividends or distributions in cash) at net
asset value. An election may be changed by delivering written notice
to the Fund at least ten business days prior to the payment date.
In connection with the intention to maintain a constant $1.00
net asset value per share, the Trustees of the Trust have approved
the following procedures in the event the Fund has a negative amount
of net investment income on any day. Such a negative amount could
occur, for instance, upon default by an issuer of a security held by
The Money Market Portfolio. In such event, the Fund would first
offset the negative amount with respect to each shareholder account
from the dividends declared but unpaid during the month with respect
to such account. If and to the extent that such negative amount
exceeds such declared but unpaid dividends, the Trustees of the Trust
would consider what other action might be taken, including reducing
the number of its outstanding shares by treating each shareholder as
having contributed to the capital of the Fund that number of full and
fractional shares in the account of such shareholder which represents
its proportion of the amount of such excess. Each shareholder will be
deemed to have agreed to such contribution in these circumstances by
its investment in the Fund.
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NET ASSET VALUE
Net asset value per share for the Fund is determined by
subtracting from the value of the Fund's total assets (i.e., the
value of its investment in the Portfolio and other assets) the amount
of its liabilities and dividing the remainder by the number of its
outstanding shares, rounded to the nearest cent. Expenses are accrued
daily. The Portfolio values all portfolio securities by the amortized
cost method. This method attempts to maintain for the Fund a constant
net asset value per share of $1.00. No assurances can be given that
this goal can be attained. The Fund's net asset value is computed at
4:00 p.m., New York time on Monday through Friday, except that the
net asset value is not computed for the Fund on the holidays listed
under "Net Asset Value" in the SAI and may be computed at earlier
times as set forth in the SAI.
PERFORMANCE INFORMATION
From time to time the Fund may advertise "yield" and/or "total
return." These figures are based on historical earnings and are not
intended to indicate future performance.
Yield
The Fund may advertise "current yield" and "effective yield."
"Current yield" refers to the income generated by an investment in
the Fund over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized," that is, the amount
of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in
the Fund is assumed to be reinvested. The "effective yield" will be
slightly higher than the "current yield" because of the compounding
effect of this assumed reinvestment.
Total Return
The Fund may include total return figures in its advertisements.
In calculating total return, the net asset value per share at the
beginning of the period is subtracted from the net asset value per
share at the end of the period (after assuming and adjusting for the
reinvestment of any income dividends and capital gains
distributions), and the result is divided by the net asset value per
share at the beginning of the period to ascertain the total return
percentage.
The Fund also may include comparative performance information in
advertising or marketing the Fund's shares. Such performance
information may include data from industry publications, business
periodicals, rating services and market indices. For more detailed
information on performance calculations and comparisons, see
"Performance Data" in the SAI.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust offers a single class of shares of beneficial
interest, without par value, and currently offers ten series of its
shares as described in the Trust's prospectuses. The Trustees have
the authority to create new series of shares in addition to the
existing ten series without the requirement of a vote of shareholders
of the Trust.
Shares of each series are entitled to one vote per share.
Shareholders have the right to vote on all matters on which, by law
or the provisions of the Trust's Declaration of Trust or by-laws,
they may be entitled to vote. On matters relating to all series and
affecting all series in the same manner, shareholders of all series
are entitled to vote. On any matters affecting only one series, only
the shareholders of that series are entitled to vote. On matters
relating to all the series but affecting the series differently,
separate votes by series are required.
The Trust and its series are not required, and do not intend, to
hold annual meetings of shareholders, under normal circumstances. The
Trustees or the shareholders may call special meetings of the
shareholders for action by shareholder vote, including the removal of
any or all of the Trustees. The Trustees will call a special meeting
of shareholders of the Fund upon written request of the holders of at
least 10% of the Fund's shares.
Under Massachusetts law, the shareholders and trustees of a
business trust may, in certain circumstances, be personally liable
for the trust's obligations to third parties. However, the
Declaration of Trust provides, in substance, that no shareholder or
Trustee shall be personally liable for the Trust's obligations to
third parties, and that every written contract made by the Trust
shall contain a provision to that effect. The Declaration of Trust
also requires the Fund to indemnify shareholders and Trustees against
such liabilities and any related claims and expenses. The Trust will
not indemnify a Trustee when the loss is due to willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the Trustee's office.
<PAGE>
Two lawsuits seeking class action status have been filed against
Managers Intermediate Mortgage Fund, Managers Short Government Fund,
The Managers Funds, L.P. and the Trust, among other defendants. In
both of these cases, the plaintiffs seek unspecified damages based
upon losses alleged in the two funds named above. In the suit
relating to Managers Short Government Fund, after plaintiff amended
the complaint, a second motion to dismiss was filed. In that action,
the parties have now entered into a preliminary agreement to settle
all claims by the purported class. However, the parties have not
finalized their settlement nor have they obtained the required court
approvals. For these and other reasons, there can be no assurance
that the settlement will be consummated. In addition, a non-class
action lawsuit based on similar allegations has been filed by a
customer against certain of the defendants named in the class action
lawsuits, as well as Managers Short and Intermediate Bond Fund.
Certain other customers, who are potentially members of the plaintiff
class in each of the two class action lawsuits referred to above,
have asserted that they may file similar lawsuits based on similar
claims, but have not done so. Management continues to believe that it
has meritorious defenses and, if the cases are not settled,
Management intends to defend vigorously against these actions.
TAX INFORMATION
The Fund has qualified and intends to continue to qualify as a
regulated investment company under the provisions of the Internal
Revenue Code of 1986, as amended, under which the Fund is regarded as
a separate regulated investment company. The Portfolio intends to
qualify as an association treated as a partnership for federal income
tax purposes. As such, the Portfolio should not be subject to tax.
The Fund's status as a regulated investment company is dependent on,
among other things, the Portfolio's continued qualification as a
partnership for federal income tax purposes.
All dividends and distributions designated as capital gains are
generally taxable to shareholders whether received in cash or
additional shares.
Although distributions are generally taxable to a shareholder in
the taxable year in which the distribution is made, dividends
declared in October, November or December of a taxable year with a
record date in such a month and actually received during the
following January, will be taxed as though received by the
shareholder on December 31 of such year.
Generally, the Fund is required to back-up withhold 31% of
distributions paid to a shareholder who fails to provide a social
security or taxpayer identification number and certify that such
number is correct and that such shareholder is not subject to, or is
otherwise exempt from, back-up withholding.
A shareholder should consult its own tax advisers for more
information regarding the Federal, foreign, state, and local tax
treatment of such shareholder with respect to its own tax situation.
For more information concerning taxes, see "Tax Information" in the
SAI.
SHAREHOLDER REPORTS
Shareholders will receive annual and semi-annual reports which
include financial statements showing the results of operations,
investment portfolio and other information of the Fund and Portfolio.
Shareholders will also receive annual tax statements indicating the
tax status of distributions made during the year. Confirmations of
transactions will be sent to shareholders following purchases,
redemptions or exchanges by the shareholder, and quarterly statements
of account will be sent to all shareholders.
<PAGE>
THE MANAGERS FUNDS
STATEMENT OF ADDITIONAL INFORMATION
dated April 1, 1997
40 Richards Avenue, Norwalk, Connecticut 06854
Investor Services: (800) 835-3879
This Statement of Additional Information relates to the
Managers Income Equity Fund, Capital Appreciation Fund, Special
Equity Fund, International Equity Fund, (collectively the "Equity
Funds") and the Managers Short Government Fund, Short and
Intermediate Bond Fund, Intermediate Mortgage Fund, Bond Fund, and
Global Bond Fund (collectively the "Income Funds"), (each a "Fund"
and collectively the "Funds") of The Managers Funds, a no-load, open-
end management investment company, organized as a Massachusetts
business trust (the "Trust"). Additional Information regarding the
Managers Money Market Fund is contained separately in Managers Money
Market Fund Statement of Additional Information.
This Statement of Additional Information is not a
prospectus; it should be read in conjunction with the Prospectuses of
the Funds, dated April 1, 1997, copies of which may be obtained
without charge by contacting the Trust at 40 Richards Avenue,
Norwalk, CT 06854 (800) 835-3879 or (203) 857-5321.
This Statement of Additional Information is authorized for
distribution to prospective investors only if preceded or accompanied
by effective prospectuses for the Funds.
<PAGE>
TABLE OF CONTENTS
I. INVESTMENT RESTRICTIONS 1
II. PORTFOLIO TURNOVER 4
III. TRUSTEES AND OFFICERS 5
IV. MANAGEMENT OF THE FUNDS 7
V. FUND MANAGEMENT AGREEMENT 9
VI. ASSET MANAGER PROFILES 13
VII. ADMINISTRATIVE SERVICES; DISTRIBUTION
ARRANGEMENTS 16
VIII. PORTFOLIO SECURITIES TRANSACTIONS 16
IX. NET ASSET VALUE 18
X. TAX INFORMATION 20
XI. CUSTODIAN, TRANSFER AGENT AND
INDEPENDENT PUBLIC ACCOUNTANT 23
XII. CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES 24
XIII. OTHER INFORMATION 25
XIV. PERFORMANCE INFORMATION 42
XV. FINANCIAL STATEMENTS 44
<PAGE>
I. INVESTMENT RESTRICTIONS
Except as described below, the following investment
restrictions are fundamental and may not be changed with respect
to any Fund without the approval of a majority of the outstanding
voting securities of the Fund, as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
Provided that nothing in the following investment restrictions
shall prevent the Trust from investing all or substantially all
of a Fund's assets in an open-end management investment company,
or a series thereof, with the same investment objective or
objectives as such Fund, no Fund may:
1. Invest in securities of any one issuer (other than
securities issued by the U.S. Government, its agencies and
instrumentalities), if immediately after and as a result of such
investment the current market value of the holdings of its
securities of such issuer exceeds 5% of its total assets; except
that up to 25% of the value of the Intermediate Mortgage Fund's
total assets may be invested without regard to this limitation.
The Global Bond Fund may invest up to 50% of its assets in bonds
issued by foreign governments which may include up to 25% of such
assets in any single government issuer.
2. Invest more than 25% of the value of its total assets
in the securities of companies primarily engaged in any one
industry (other than the United States Government, its agencies
and instrumentalities). Such concentration may occur
incidentally as a result of changes in the market value of
portfolio securities, but such concentration may not result from
investment; provided, however, that the Intermediate Mortgage
Fund will invest more than 25% of its assets in the mortgage and
mortgage-finance industry even during temporary defensive
periods. Neither finance companies as a group nor utility
companies as a group are considered a single industry for
purposes of this restriction.
3. Acquire more than 10% of the outstanding voting
securities of any one issuer.
4. Borrow amounts in excess of 5% of its total assets
taken at cost or at market value, whichever is lower. It may
borrow only from banks as a temporary measure for extraordinary
or emergency purposes. It will not mortgage, pledge or in any
other manner transfer any of its assets as security for any
indebtedness.
5. Invest in securities of an issuer which together with
any predecessor, has been in operation for less than three years
if, as a result, more than 5% of its total assets would then be
invested in such securities.
<PAGE>
6. Invest more than 15%, of the value of its net assets in
illiquid instruments including, but not limited to, securities
for which there are no readily available market quotations,
dealer (OTC) options, assets used to cover dealer options written
by it, repurchase agreements which mature in more than 7 days,
variable rate industrial development bonds which are not
redeemable on 7 days demand and investments in time deposits
which are non-negotiable and/or which impose a penalty for early
withdrawal.
7. Invest in companies for the purpose of exercising
control or management.
8. Purchase or sell real estate; provided, however, that
it may invest in securities secured by real estate or interests
therein or issued by companies which invest in real estate or
interests therein.
9. Purchase or sell physical commodities, except that each
Fund may purchase or sell options and futures contracts thereon.
10. Engage in the business of underwriting securities
issued by others.
11. Participate on a joint or a joint and several basis in
any trading account in securities. The "bunching" of orders for
the sale or purchase of marketable portfolio securities with
other accounts under the management of The Managers Funds, L.P.
or any portfolio manager in order to save brokerage costs or to
average prices shall not be considered a joint securities trading
account.
12. Make loans to any person or firm; provided, however,
that the making of a loan shall not be construed to include (i)
the acquisition for investment of bonds, debentures, notes or
other evidences of indebtedness of any corporation or government
entity which are publicly distributed or of a type customarily
purchased by institutional investors (which are debt securities,
generally rated not less than Baa by Moody's or BBB by Standard &
Poor's, privately issued and purchased by such entities as banks,
insurance companies and investment companies), or (ii) the entry
into "repurchase agreements." It may lend its portfolio
securities to broker-dealers or other institutional investors if,
as a result thereof, the aggregate value of all securities loaned
does not exceed 33-l/3% of its total assets, except that there is
no such percentage limitation with respect to the Short
Government Fund. See "Other Information -- Loan Transactions."
13. Purchase the securities of other Funds or investment
companies except (i) in connection with a merger, consolidation,
acquisition of assets or other reorganization approved by its
shareholders, (ii) for shares in the Money Market Fund in
accordance with an order of exemption issued by the Securities
and Exchange Commission (the "SEC"), and (iii) each Fund, may
purchase securities of investment companies where no underwriter
or dealer's commission or profit, other than customary broker's
commission, is involved and only if immediately thereafter not
more than (a) 3% of such company's total outstanding voting stock
is owned by the Fund, (b) 5% of the Fund's total assets, taken at
market value, would be invested in any one such company or (c)
10% of the Fund's total assets, taken at market value, would be
invested in such securities.
14. Purchase from or sell portfolio securities to its
officers, trustees or other "interested persons" (as defined in
the l940 Act) of the Fund, including its portfolio managers and
their affiliates, except as permitted by the l940 Act.
15. Purchase or retain the securities of an issuer if, to
the Trust's knowledge, one or more of the directors, trustees or
officers of the Trust, or the portfolio manager responsible for
the investment of the Trust's assets or its directors or
officers, individually own beneficially more than l/2 of l% of
the securities of such issuer and together own beneficially more
than 5% of such securities.
16. Issue senior securities.
<PAGE>
Unless otherwise provided, for purposes of investment
restriction (2) above, relating to industry concentration, the
term "industry" shall be defined by reference to the SEC Industry
Codes set forth in the Directory of Companies Required to File
Annual Reports with the Securities and Exchange Commission.
In addition to the foregoing investment restrictions
which may not be changed without shareholder approval, the Funds
are subject to the following operating policies which may be
amended by the Trust's Board of Trustees. Pursuant to these
operating policies, no Fund may:
1. Invest in real estate limited partnership interests.
2. Invest in oil, gas or mineral leases.
3. Invest more than 5% of its net assets in warrants or
rights, valued at the lower of cost or market, nor more than 2%
of its net assets in warrants or rights (valued on the same
basis) which are not listed on the New York or American Stock
Exchanges.
4. Purchase a futures contract or an option thereon if,
with respect to positions in futures or options on futures which
do not represent bona fide hedging, the aggregate initial margin
and premiums paid on such positions would exceed 5% of the Fund's
net asset value. The Money Market Fund may not purchase futures
contracts or options thereon.
5. Purchase securities on margin, except for such short-
term credits as are necessary for clearance of portfolio
transactions; provided, however, that each Fund may make margin
deposits in connection with futures contracts or other
permissible investments.
6. Effect short sales of securities.
7. Write or sell uncovered put or call options. The
security underlying any put or call purchased or sold by a Fund
must be of a type the Fund may purchase directly, and the
aggregate value of the obligations underlying the puts may not
exceed 50% of the Fund's total assets.
II. PORTFOLIO TURNOVER
Generally, securities are purchased for the Managers Income
Equity Fund, Capital Appreciation Fund, Special Equity Fund, and
International Equity Fund for investment purposes and not for
short-term trading profits. However, these Funds may dispose of
securities without regard to the time they have been held when
such action, for defensive or other purposes, appears advisable
to their portfolio managers.
For the fiscal year ended December 31, 1996, the portfolio
turnover rate for Income Equity Fund was 33%, for Capital
Appreciation Fund was 172%, for Special Equity Fund 56%, and for
International Equity Fund was 30%. For the fiscal year ended
December 31, 1995, the portfolio turnover rate for Income Equity
Fund was 36%, for Capital Appreciation Fund was 134%, for Special
Equity Fund was 65%, and for International Equity Fund was 73%.
For the fiscal year ended December 31, 1996, the portfolio
turnover rate for Short Government Fund was 169%, for Short and
Intermediate Bond Fund was 96%, for Bond Fund was 72% and for
Global Bond Fund was 202%. For the fiscal year ended December
31, 1995, the annual portfolio turnover rate for Short Government
Fund was 238%, for Short and Intermediate Bond Fund was 131%, for
Bond Fund was 46% and for Global Bond was 214%. The higher than
100% turnover rate for the Short and Intermediate Bond Fund was
due to sales of portfolio investments to meet shareholder
redemptions.
<PAGE>
The Intermediate Mortgage Fund generally engages in a
significant amount of trading of securities held for less than
one year. Accordingly, it can be expected that the Fund will
generally have a higher incidence of short-term capital gains,
which is taxable as ordinary income, than might be expected from
investment companies which invest substantially all of their
assets on a long-term basis. The Intermediate Mortgage Fund's
rates of portfolio turnover for the years ended December 31, 1996
and December 31, 1995 were 232% and 506%, respectively.
With the exception of the Intermediate Mortgage Fund, the
higher portfolio turnover rates for the Income Funds are not
expected to result in significantly higher brokerage fees because
the securities primarily purchased and sold by these Funds are
usually traded on a principal basis with no commission paid. The
added costs from brokerage fees and the possibility of more
highly taxed short-term capital gains, which may be offset
against capital loss carryovers, with respect to the Intermediate
Mortgage Fund are weighed against the anticipated gains from
trading.
The Bond, Short and Intermediate Bond and Short Government
Funds trade more actively to realize gains through market timing
and/or to increase yields on investments by trading to take
advantage of short-term market variations. This policy generally
results in higher portfolio turnover for these Funds.
III. TRUSTEES AND OFFICERS
The Trust is governed by the Trustees who provide broad
supervision over the affairs of the Trust and the Funds. The
Trustees and officers of the Trust are listed below together with
their principal occupations during at least the past five years,
as well as Trustees' dates of birth. References to The Managers
Funds, L.P., the Manager of the Trust, should be read to apply to
Evaluation Associates Investment Management Company, the
predecessor of The Managers Funds, L.P., for periods prior to
August 17, 1990.
<TABLE>
<CAPTION>
Name, Address and Position with Principal Occupation During Past
Trust 5 Years
<S> <C>
ROBERT P. WATSON1 President and Trustee of The
40 Richards Avenue Managers Funds; Chairman and
Norwalk, CT 06854 Chief Executive Officer,
Chief Executive Officer, Evaluation Associates Investment
President, Trustee Management Company (predecessor
of The Managers Funds, L.P.)
Date of birth: 1/21/34 (prior to June 1988 and from
August 1989 to August 1990);
Partner, The Managers Funds,
L.P. (since August 1990);
Executive Vice President,
Evaluation Associates, Inc.
(June 1988 to August 1989).
WILLIAM W. GRAULTY Practicing Attorney (1977 to
65 LaSalle Road present); Executive Vice
West Hartford, CT 06107 President and Head of Trust
Trustee Division, The Connecticut Bank
and Trust Company, N.A. (1956 to
Date of birth: 12/30/23 1976); President, American
Bankers Association, Trust
Division (1974 to 1975);
President Connecticut Bankers
Association, Trust Division (1966
to 1968).
MADELINE H. McWHINNEY President, Dale, Elliott &
24 Blossom Cove Company (management consultants)
Middletown, NJ 07701 (1977 to present); Assistant Vice
Trustee President and Financial
Economist, Federal Reserve Bank
Date of birth: 3/11/22 of New York (1943 to 1973);
Trustee and Treasurer, Institute
of International Education (since
1975); Assistant Director,
Operations, Whitney Museum of
American Art (1983 to 1986);
Member, Advisory Committee on
Professional Ethics, New Jersey
Supreme Court (March 1983 to
present).
<PAGE>
Name, Address and Position with Principal Occupation During Past
Trust 5 Years
STEVEN J. PAGGIOLI Executive Vice President and
479 West 22nd Street Director, Wadsworth & Associates,
New York, NY 10011 Inc. (1986 to present); Vice
Trustee President, Secretary and
Date of birth: 4/3/50 Director, First Fund
Distributors, Inc. (1991 to
present); Vice President,
Secretary and Director;
Investment Company Administration
Corporation (1990 to present);
President and Director,
Southampton Investment Management
Company, Inc. (1991 to present);
Trustee of Professionally Managed
Portfolios (1991 to present).
THOMAS R. SCHNEEWEIS Professor of Finance (1985 to
University of Massachusetts present), Associate Professor of
School of Management Finance (1980-1985), Ph.D.
Amherst, MA 01003 Director (Acting) (1985 to 1986),
Trustee Chairman (Acting) Department of
Date of birth: 5/10/47 General Business and Finance
(1981-1982), and Assistant
Professor of Finance (1977-1980),
University of Massachusetts;
Teaching Assistant, University of
Iowa Principal Occupation (1973-
1977); Financial Consultant,
Ehlers and Associates (1970-
1973).
PETER M. LEBOVITZ Director of Marketing, The
40 Richards Avenue Managers Funds, L.P. (September
Norwalk, CT 06854 1994 to present); Director of
Vice President Marketing, Hyperion Capital
Management, Inc. (June 1993 to
June 1994); Senior Vice President
and Chief Investment Officer,
Greenwich Asset Management, Inc.
(April 1989 to June 1993)
DONALD S. RUMERY Director of Operations, The
40 Richards Avenue Managers Funds, L.P. (December
Norwalk, CT 06854 1994 to present)
Treasurer (Principal Financial Vice President, Signature
and Accounting Officer) Financial Group (March 1990 to
December 1994)
Vice President, The Putnam
Companies (August 1980 to March
1990).
KATHLEEN WOOD Vice President (July 1992 to
40 Richards Avenue present) and Assistant Vice
Norwalk, CT 06854 President (August 1989 to June
Secretary 1992), The Managers Funds, L.P.;
Analyst, Evaluation Associates,
Inc. (May 1986 to August 1989).
GIANCARLO (JOHN) E. ROSATI Vice President (July 1992 to
40 Richards Avenue Present) and Assistant Vice
Norwalk, CT 06854 President (July 1986 to June
Assistant Treasurer 1992), The Managers Funds, L.P.;
Accountant, Gintel Co. (June 1980
to June 1986).
PETER M. McCABE Portfolio Administrator, The
40 Richards Avenue Managers Funds, L.P. (August 1995
Norwalk, CT 06854 to Present); Portfolio
Assistant Treasurer Administrator, Oppenheimer
Capital, L.P. (July 1994 to
August 1995); College Student
(September 1990 to June 1994).
</TABLE>
Trustees' Compensation:
The Trust's Disinterested Trustees receive an annual
retainer of $10,000, and meeting fees of $750 for each in-person
meeting attended and $200 for participating in each telephonic
meeting. There are no pension or retirement benefits provided by
the Trust or any affiliate of the Trust to the Trustees. The
Trust does not pay compensation to its officers. The following
chart sets forth the aggregate compensation paid to each
Disinterested Trustee for the year-ended December 31, 1996:
<TABLE>
<CAPTION>
<PAGE>
Aggregate Total
Compensation from
Compensation Registrant and Fund
Complex
Name of Trustee from Trust Paid to
Trustees
<S> <C> <C>
William W. Graulty $12,250 $12,250
Madeline H. McWhinney 13,000 13,000
Steven J. Paggioli 13,000 13,000
Thomas R. Schneeweis 13,000 13,000
</TABLE>
As indicated above, certain of the Trust's officers also
hold positions with The Managers Funds, L.P., the Manager of the
Trust. All Trustees and officers as a group owned less than 1%
of the shares of any of the Funds outstanding on the date of this
Statement of Additional Information.
IV. MANAGEMENT OF THE FUNDS
The Trust is governed by the Trustees, who provide broad
supervision over the affairs of the Trust and the Funds. The
Trust has engaged the services of The Managers Funds, L.P. (the
"Manager") as investment manager and administrator to each of the
Funds. The assets of the Funds, are managed by asset managers
(each, an "Asset Manager" and collectively, the "Asset Managers")
selected by the Manager, subject to the review and approval of
the Trustees. The Trust has also retained the services of the
Manager as administrator to carry out the day-to-day
administration of the Trust and the Funds.
The Manager recommends Asset Managers for each Fund to the
Trustees based upon its continuing quantitative and qualitative
evaluation of the Asset Managers' skills in managing assets
pursuant to specific investment styles and strategies. Unlike
many other mutual funds, the Funds are not associated with any
one portfolio manager, and benefit from independent specialists
carefully selected from the investment management industry. Short-
term investment performance, by itself, is not a significant
factor in selecting or terminating an Asset Manager, and the
Manager does not expect to recommend frequent changes of Asset
Managers. The Trust has obtained from the SEC an order
permitting the Manager, subject to certain conditions, to enter
into sub-advisory agreements with Asset Managers approved by the
Trustees but without the requirement of shareholder approval. At
meetings held on December 5, 1994 and December 15, 1994, the
shareholders of the Funds approved the operation of the Trust in
this manner. Pursuant to the terms of the order, the Manager is
to be able, subject to the approval of the Trustees but without
shareholder approval, to employ new Asset Managers for new or
existing Funds, change the terms of particular sub-advisory
agreements or continue the employment of existing Asset Managers
after events that under the 1940 Act and the sub-advisory
agreements would be an automatic termination of the agreement.
Although shareholder approval will not be required for the
termination of sub-advisory agreements, shareholders of a Fund
will continue to have the right to terminate such agreements for
the Fund at any time by a vote of a majority of outstanding
voting securities of the Fund. The Manager and its corporate
predecessor have had over 20 years of experience in evaluating
investment advisers for individuals and institutional investors.
The assets of each Fund are allocated by the Manager among
the Asset Managers selected for that Fund. Each Asset Manager
has discretion, subject to oversight by the Trustees, and the
Manager, to purchase and sell portfolio assets, consistent with
each Fund's investment objectives, policies and restrictions and
specific investment strategies developed by the Manager. For its
services, the Manager receives a management fee from each Fund. A
part of the fee paid to the Manager is used by the Manager to pay
the advisory fees of the Asset Managers.
Generally, no Asset Manager provides any services to any
Fund except asset management and related recordkeeping services.
However, an Asset Manager or its affiliated broker-dealer may
execute portfolio transactions for a Fund and receive brokerage
commissions in connection therewith as permitted by Section 17(e)
of the 1940 Act
<PAGE>
An Asset Manager may also serve as a discretionary or non-
discretionary investment adviser to management or advisory
accounts unrelated in any manner to The Managers Funds, L.P. or
its affiliates. The advisory agreement with each Asset Manager
(each, an "Asset Management Agreement") requires the Asset
Manager of a Fund to provide fair and equitable treatment to such
Fund in the selection of portfolio investments and the allocation
of investment opportunities, but does not obligate the Asset
Manager to give such Fund exclusive or preferential treatment.
Although the Asset Managers make investment decisions for
the Funds independent of those for their other clients, it is
likely that similar investment decisions will be made from time
to time. When a Fund and another client of an Asset Manager are
simultaneously engaged in the purchase or sale of the same
security, the transactions are, to the extent feasible and
practicable, averaged as to price and allocated as to amount
between the Portfolio and the other client(s) pursuant to a
formula considered equitable by the Asset Managers. In specific
cases, this system could have detrimental effect on the price or
volume of the security to be purchased or sold, as far as the
Fund is concerned. However, the Trustees believe, over time,
that coordination and the ability to participate in volume
transactions should be to the benefit of such Fund.
The Board of Trustees and the Manager have adopted a joint
Code of Ethics under Rule 17j-1 of the 1940 Act (the "Code").
The Code generally requires employees of the Manager to preclear
any personal securities investment (with limited exceptions such
as government securities). The preclearance requirement and
associated procedures are designed to identify any substantive
prohibition or limitation applicable to the proposed investment.
The substantive restrictions applicable to all employees of the
Manager include a ban on trading securities based on information
about the Funds' trading.
V. FUND MANAGEMENT AGREEMENT
The Trust has entered into a Fund Management Agreement (the
"Fund Management Agreement") with the Manager which, in turn, has
entered into Asset Management Agreements with each of the Asset
Managers selected for the Funds.
The Manager is a Delaware limited partnership. Its general
partner is a corporation that is wholly owned by Robert P.
Watson, President and a Trustee of the Trust.
Under the Fund Management Agreement, the Manager is required
to (i) supervise the general management and investment of the
assets and securities portfolio of each Fund; (ii) provide
overall investment programs and strategies for each Fund; (iii)
select and evaluate the performance of Asset Managers for each
Fund and allocate the Fund's assets among such Asset Managers;
(iv) provide financial, accounting and statistical information
required for registration statements and reports with the SEC;
and (v) provide the Trust with the office space, facilities and
personnel necessary to manage and administer the operations and
business of the Trust, including compliance with state and
federal securities and tax laws, shareholder communications and
recordkeeping.
The Fund Management Agreement runs from year to year so long
as its continuance is approved at least annually by the Trustees
or by a 1940 Act majority vote of the shareholders of each Fund
and those Trustees who are not "interested persons" of the Trust
(as defined in the 1940 Act) and who have no direct or indirect
financial interest in the agreements (the "Disinterested
Trustees"). Any amendment to the Fund Management Agreement must
be approved by a 1940 Act majority vote of the shareholders of
the relevant Fund and by the majority vote of the Trustees. The
Fund Management Agreement is subject to termination, without
penalty, by the Disinterested Trustees or by a 1940 Act majority
vote of the shareholders of each Fund on 60 days written notice
to the Manager or by the Manager on 60 days written notice to the
Fund, and terminates automatically if assigned.
<PAGE>
The following table sets forth the annual management fee
rates currently paid by each Fund to the Manager, together with
the portion of the management fee that is retained by the Manager
as compensation for its services, each expressed as a percentage
of the Fund's average net assets. The remainder of the
management fee is paid to the Asset Managers. Individual Asset
Manager fees are set forth in the Prospectuses under the heading
"Management of the Funds - Investment Manager," and vary,
including in some cases among Asset Managers of a single Fund.
<TABLE>
<CAPTION>
Weighted Average
Total Management of the Manager's
Name of Fund Fee portion of the
<S> <C> Total Management
Fee
<C>
Income Equity Fund 0.75% 0.375%
Capital Appreciation 0.80% 0.40%
Fund
Special Equity Fund 0.90% 0.40%
International Equity 0.90% 0.40%
Fund
Short Government 0.20% 0.00%
Fund*
Short and 0.50% 0.25%
Intermediate Bond
Fund
Intermediate 0.45% 0.25%
Mortgage Fund
Bond Fund 0.625% 0.375%
Global Bond Fund 0.70% 0.35%
</TABLE>
* Reflects voluntary fee waiver by the Manager which may be
modified or terminated at any time in the sole discretion of
the Manager. In the absence of such waiver, the maximum
total management fee payable by the Short Government Fund
would be 0.45% and the weighted average of the Manager's
portion of the total management fee would be 0.25%.
The amount of each Fund's management fee that is retained by
the Manager may vary for a Fund due to changes in the allocation
of assets among its Asset Managers, the effect of an increase in
the Fund's net asset value on the fees payable to its Asset
Managers, and/or the implementation, modification or termination
of voluntary fee waivers by the Manager and/or one or more of the
Asset Managers. Given the asset management arrangements
currently in effect, the Manager's portion of the Income Equity
Fund and the Short Government Fund's total management fees would
not exceed 0.40% and 0.25%, respectively.
During the fiscal years ended December 31, 1994, 1995 and
1996, the Funds paid the following fees to the Manager under the
Fund Management Agreement and the Manager paid the following fees
to each Asset Manager under the Asset Management Agreements:
<PAGE>
<TABLE>
<CAPTION>
January 1, 1996- January 1, 1995-
December 31, 1996 December 31, 1995
Approxi- Fee Approxi- Fee
mate Paid to mate Paid to
Fee Fee Asset Fee Fee Asset
Name of Fund/Asset Paid to Retaine Manager Paid to Retaine Manager
Manager Manager d by by Manager d by by
<S> <C> Manager Manager <C> Manager Manager
<C> /1 <C> /1
<C> <C>
Income Equity Fund $349,82 $175,51 $299,82 $150,56
1 9 4 5
Scudder, Stevens & $86,220 $74,220
Clark, Inc.
Spare, Kaplan, Bischel $88,082 $75,039
&
Associates
Capital Appreciation $761,92 $380,96 $635,58 $318,71
Fund 5 3 8 6
Essex Investment
Management N/A N/A
Company, Inc./8
Husic Capital $60,917 N/A
Management/2
Special Equity Fund $1,572, $698,73 $977,86 $435,34
132 3 9 3
Liberty Investment $266,03 $187,69
Management 0 1
Inc.
Pilgrim Baxter & $305,19 $190,98
Associates/6 8 1
Westport Asset $302,17 $163,85
Management, Inc. 1 4
International Equity $1,856, $824,77 $948,51 $422,51
Fund 193 4 4 2
Lazard Fr?res Asset $516,15 $215,23
Management Co/7 7 2
Scudder, Stevens & $515,26 $310,77
Clark, Inc. 2 0
Short Government Fund $11,423 $0 $15,835 N/A
Jennison Associates $11,423 $15,835
Capital
Corp/3
Short and Intermediate $116,03 $58,018 $128,25 $64,209
Bond Fund 7 4
Standish, Ayer & Wood, $58,019 $34,464
Inc.
Intermediate Mortgage $143,80 $79,890 $214,14 $118,96
Fund 3 1 7
Jennison Associates $63,913 $95,174
Capital
Corp/4
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
January 1, 1994-December
31, 1994
Approxi- Fee
mate Paid to
Fee Fee Asset
Name of Fund/Asset Paid to Retaine Manager
Manager Manager d by by
<S> <C> Manager Manager
<C> /1
<C>
Income Equity Fund $339,06 $170,11
1 0
Scudder, Stevens & $83,842
Clark, Inc.
Spare, Kaplan, Bischel $85,108
&
Associates
Capital Appreciation $669,94 $335,07
Fund 0 4
Essex Investment
Management N/A
Company, Inc./8
Husic Capital N/A
Management/2
Special Equity Fund $972,49 $468,41
5 3
Liberty Investment $194,58
Management 8
Inc.
Pilgrim Baxter & $33,634
Associates/6
Westport Asset $160,02
Management, Inc. 7
International Equity $728,27 $323,63
Fund 2 9
Lazard Fr?res Asset N/A
Management Co/7
Scudder, Stevens & $404,63
Clark, Inc. 3
Short Government Fund $197,69 $109,43
2 8
Jennison Associates $2,338
Capital
Corp/3
Short and Intermediate $433,53 $217,37
Bond Fund 1 5
Standish, Ayer & Wood, $84,716
Inc.
Intermediate Mortgage $646,91 $439,61
Fund 6 4
Jennison Associates $23,470
Capital
Corp/4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
January 1, 1994-December
31, 1994
Approxi- Fee
mate Paid to
Fee Fee Asset
Name of Fund/Asset Paid to Retaine Manager
Manager Manager d by by
<S> <C> Manager Manager
<C> /1
<C>
Bond Fund $237,88 $142,66
6 4
Loomis, Sayles & $95,222
Company, Inc.
Global Bond Fund $52,093 $27,100
Rogge Global $24,993
Partners/5
</TABLE>
1/Does not reflect payments made to asset managers whose relationship with a
Fund has been
terminated.
2/ Portfolio manager hired during 1996.
3/Portfolio manager hired during 1994. Reflects waiver of a portion of
management fees by the Manager. In the
absence of such waiver, the Manager would have received an additional
$29,861, $19,793 and $14,280 for the fiscal
years ended December 31, 1994, December 31, 1995 and December 31,
1996, respectively.
4/Portfolio manager hired during 1994. Reflects waiver of a portion of
management fees by the Manager. In the
absences of such waiver, the Manager would have received an additional
$115,723 and $130,528 for the
fiscal years ended December 31, 1994 and December 31, 1993, respectiv
ely.
5/Fund commenced operation during 1994.
6/ Portfolio manager hired during 1994.
7/ Portfolio manager hired during 1995.
8/ Portfolio manager hired during 1997.
<TABLE>
<CAPTION>
January 1, 1996- January 1, 1995-December
December 31, 1996 31, 1995
Approxi- Fee Approxi- Fee
mate Paid to mate Paid to
Fee Fee Asset Fee Fee Asset
Name of Fund/Asset Paid to Retaine Manager Paid to Retaine Manager
Manager Manager d by by Manager d by by
<S> <C> Manager Manager <C> Manager Manager
<C> /1 <C> /1
<C> <C>
Bond Fund $180,19 $108,24 $162,59 $97,557
7 0 4
Loomis, Sayles & $71,957 $65,037
Company, Inc.
Global Bond Fund $126,04 $62,024 $86,482 $43,466
3
Rogge Global $64,019 $43,016
Partners/5
</TABLE>
<PAGE>
Voluntary Fee Waivers and Expense Limitation
From time to time, the Manager may agree voluntarily to
waive all or a portion of the fee it would otherwise be entitled
to receive from a Fund. The Manager may waive all or a portion
of its fee for a number of reasons such as passing on to the Fund
and its shareholders the benefit of reduced portfolio management
fees resulting from (i) a reallocation of Fund assets among Asset
Managers, (ii) negotiation by the Manager of a lower fee payable
to an Asset Manager, or (iii) a voluntary waiver by an Asset
Manager of all or a portion of the fees it would otherwise be
entitled to receive from the Manager with respect to the Fund.
The Manager may also decide to waive all or a portion of its fees
from a Fund for other reasons, such as attempting to make a
Fund's performance more competitive as compared to similar funds.
The effect of the fee waivers in effect at the date of this
Statement of Additional Information on the management fees
payable by the Funds is reflected in the tables above and in the
Illustrative Expense Information located in the front of the
Prospectuses of the Equity Funds and the Income Funds. Voluntary
fee waivers by the Manager or by any Asset Manager may be
terminated or reduced in amount at any time and solely in the
discretion of the Manager or Asset Manager concerned.
Shareholders will be notified of any change on or about the time
that it becomes effective.
VI. ASSET MANAGER PROFILES
The Asset Managers for each Fund are set forth in the
respective Prospectuses. Assets of each of the Equity Funds are
currently allocated among more than one Asset Manager to provide
diversification among investment strategies. However, not all
Asset Managers with whom Asset Management Agreements are in
effect will be funded at all times. As of the date of this
Statement of Additional Information, the following are the Asset
Managers for each Fund. These Asset Managers have no affiliations
with the Funds or with the Manager.
The following information regarding the names of all
controlling persons of each Asset Manager and the basis of such
control has been supplied by such Asset Manager.
INCOME EQUITY FUND
SPARE, KAPLAN, BISCHEL & ASSOCIATES
The firm is owned 93% by the ten principals (Anthony E.
Spare, Kenneth J. Kaplan, Andrew W. Bischel, James G. McCluskey,
Mark E. McKee, Shelley H. Mann, Giri Bogavelli and Lesley R.
Margolis) and 7% by outside investors.
<PAGE>
SCUDDER, STEVENS & CLARK, INC.
Scudder, Stevens & Clark, Inc. is a privately-held Delaware
corporation. Daniel Pierce is the Chairman of the Board and
Edmond D. Villani is the President and Chief Executive Officer of
Scudder. Stephen R. Beckwith, Lynn S. Birdsong, Nicholas Bratt,
E. Michael Brown, Mark S. Casady, Linda E. Coughlin, Margaret D.
Hadzima, Jerard K. Hartman, Richard A. Holt, Dudley H. Ladd,
Thomas H. O'Brien, John T. Packard, Kathryn L. Quirk, Cornelia M.
Small and Stephen A. Wohler are the other members of the Board of
Directors of Scudder. The principal occupation of each of the
above named individuals is serving as a Managing Director of
Scudder.
All of the outstanding voting and non-voting securities of
Scudder are held of record by Stephen R. Beckwith, Daniel Pierce,
Juris Padegs and Edmund D. Villani in their capacity as
representatives (the "Representatives") of the beneficial owners
of such securities, pursuant to a Security Holders' Agreement
among Scudder, the beneficial owners of securities of Scudder,
and the Representatives. Pursuant to such Security Holders'
Agreement, the Representatives have the right to reallocate
shares among the beneficial owners from time to time. Such
reallocation will be at net book value in cash transactions. All
Managing Directors of Scudder own voting and non-voting stock;
all Principals own non-voting stock.
CAPITAL APPRECIATION FUND
ESSEX INVESTMENT MANAGEMENT COMPANY, INC.
Essex was founded in 1976, and is a Massachusetts
corporation which is controlled by Joseph C. McNay.
HUSIC CAPITAL MANAGEMENT
The firm is was formed in 1986 as a limited partnership
which is 100% owned by Frank J. Husic.
SPECIAL EQUITY FUND
LIBERTY INVESTMENT MANAGEMENT
Liberty Investment Management is a division of Goldman Sachs
Asset Management, which itself is a separate operating division
of Goldman, Sachs & Co. The general partners of Goldman, Sachs &
Co. are The Goldman Sachs Group, L.P. (a Delaware Limited
Partnership) ("GSGLP") and The Goldman, Sachs & Co. L.L.C. (a
Delaware limited liability company) ("GSCLLC"). The Goldman
Sachs Corporation ("GSC") is the parent company of both GSGLP and
GSCLLC. GSGLP is also a parent of GSCLLC. GSC is the sole
general partner of GSGLP.
PILGRIM BAXTER & ASSOCIATES
Pilgrim Baxter & Associates is owned by United Asset
Management, a public company.
WESTPORT ASSET MANAGEMENT, INC.
Westport Asset Management, Inc. is owned by Andrew J. Knuth
(5l%) and by Ronald H. Oliver (49%), each of whom is active as a
portfolio manager/analyst.
<PAGE>
INTERNATIONAL EQUITY FUND
SCUDDER, STEVENS & CLARK, INC.
(See INCOME EQUITY FUND)
LAZARD, FRERES ASSET MANAGEMENT CO.
Lazard, Fr?res Asset Management Co. is a New York limited
liability company founded in 1848. The managing directors are
Eileen D. Alexanderson, Thomas F. Dunn, Norman Eig, Herbert W.
Gullquist, Larry A. Kohn, Robert P. Morgenthau, John R. Reese,
John R. Reinsberg, Michael S. Rome and Alexander E. Zagoreos.
SHORT GOVERNMENT FUND
JENNISON ASSOCIATES CAPITAL CORP.
Jennison Associates Capital Corp. is a wholly-owned
subsidiary of The Prudential Securities Company of America.
SHORT AND INTERMEDIATE BOND FUND
STANDISH, AYER & WOOD, INC.
Edward H. Ladd, Director and Chairman, and George W. Noyes,
Director and President, each owns more than 10% of the
outstanding voting securities of Standish. Caleb F. Aldrich,
Managing Director and Vice President, Davis B. Clayson, Managing
Director and Vice President, Dolores S. Driscoll, Managing
Director and Vice President, Richard C. Doll, Director and Vice
President, Maria D. O'Malley, Director and Vice President, and
Richard S. Wood, Director, Vice President and Secretary, each own
more than 5% of the outstanding voting securities of Standish.
Nicholas S. Battelle, Walter M. Cabot, David H. Cameron, Karen K.
Chandor, Lawrence H. Coburn, James E. Hollis, III, Laurence A.
Manchester, Arthur H. Parker, Howard B. Rubin, Austin C. Smith
and Ralph S. Tate are each a Director and Vice President of
Standish. Each owns less than 5% of the outstanding voting
securities of Standish.
INTERMEDIATE MORTGAGE FUND
JENNISON ASSOCIATES CAPITAL CORP.
(See SHORT GOVERNMENT FUND)
BOND FUND
LOOMIS, SAYLES & COMPANY, INC.
The New England owns 92% of Loomis, Sayles (which operates
independently) with the remaining 8% owned by about 70
professionals.
GLOBAL BOND FUND
ROGGE GLOBAL PARTNERS plc
Rogge Global Partners plc. is owned by United Asset
Management, a public company.
<PAGE>
VII. ADMINISTRATIVE SERVICES; DISTRIBUTION ARRANGEMENTS
The Trust has also retained the services of The Managers
Funds, L.P. as administrator (the "Administrator").
The Managers Funds, L.P. also serves as distributor (the
"Distributor") in connection with the offering of each Fund's
shares on a no-load basis. The Distributor bears certain
expenses associated with the distribution and sale of shares of
the Funds. The Distributor acts as agent in arranging for the
sale of each Fund's shares without sales commission or other
compensation and bears all advertising and promotion expenses
incurred in the sale of shares.
The Distribution Agreement between the Trust and the
Distributor may be terminated by either party under certain
specified circumstances and will automatically terminate on
assignment in the same manner as the Fund Management Agreement.
The Distribution Agreement may be continued annually if
specifically approved by the Trustees or by a vote of the Trust's
outstanding shares, including a majority of the Trustees who are
not "interested persons" of the Trust or the respective
Distributor, as such term is defined in the 1940 Act, cast in
person at a meeting called for the purpose of voting on such
approval.
VIII. PORTFOLIO SECURITIES TRANSACTIONS
The Asset Management Agreements between the Manager and the
Asset Managers provide, in substance, that in executing portfolio
transactions and selecting brokers or dealers, the principal
objective of each Asset Manager is to seek best price and
execution. It is expected that securities will ordinarily be
purchased in the primary markets, and that in assessing the best
net price and execution available to the applicable Fund, the
Asset Manager shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of
the broker or dealer and the reasonableness of the commission, if
any (for the specific transaction and on a continuing basis).
In addition, the Asset Managers, in selecting brokers to
execute particular transactions and in evaluating the best net
price and execution available, are authorized by the Trustees to
consider the "brokerage and research services" (as those terms
are defined in Section 28(e) of the Securities Exchange Act of
1934), provided by the broker. The Asset Managers are also
authorized to cause a Fund to pay a commission to a broker who
provides such brokerage and research services for executing a
portfolio transaction which is in excess of the amount of
commission another broker would have charged for effecting that
transaction. The Asset Managers must determine in good faith,
however, that such commission was reasonable in relation to the
value of the brokerage and research services provided viewed in
terms of that particular transaction or in terms of all the
accounts over which the Asset Manager exercises investment
discretion. Brokerage and research services received from such
brokers will be in addition to, and not in lieu of, the services
required to be performed by each Asset Manager. The Funds may
purchase and sell portfolio securities through brokers who
provide the Fund with research services.
The Trustees will periodically review the total amount of
commissions paid by each Fund to determine if the commissions
paid over representative periods of time were reasonable in
relation to commissions being charged by other brokers and the
benefits to each Fund of using particular brokers or dealers. It
is possible that certain of the services received by the Asset
Manager attributable to a particular transaction will primarily
benefit one or more other accounts for which investment
discretion is exercised by the Asset Managers.
The fees of the Asset Managers are not reduced by reason of
their receipt of such brokerage and research services.
Generally, no Asset Manager provides any services to any Fund
except portfolio investment management and related record-keeping
services. However, an Asset Manager for a particular Fund or its
affiliated broker-dealer may execute portfolio transactions for
such Fund and receive brokerage commissions for doing so in
accordance with Section 17(e) of the 1940 Act and the procedures
adopted by the Trustees in accordance with the rules thereunder.
An Asset Manager for a Fund or its affiliated broker-dealers may
not act as principal in any portfolio transaction for any Fund
with which it is affiliated.
<PAGE>
In allocating portfolio transactions for a Fund among
several broker-dealers, an Asset Manager may, but is not required
to, take into account any sales of shares of that Fund by the
broker-dealer or by an affiliate of the broker-dealer.
For the fiscal year ended December 31, 1996, the aggregate
brokerage commissions paid by each of the Funds incurring any
such commissions was $44,936 for Income Equity Fund, $421,852 for
Capital Appreciation Fund, $278,627 for Special Equity Fund, and
$555,519 for International Equity Fund. For the fiscal year
ended December 31, 1995, the aggregate brokerage commissions paid
by each of the Funds incurring any such commissions were $69,964
for Income Equity Fund, $283,673 for Capital Appreciation Fund,
$119,418 for Special Equity Fund and $421,365 for International
Equity Fund. For the fiscal year ended December 31, 1994, the
aggregate brokerage commissions paid by each of the Funds
incurring any such commissions were $73,083 for Income Equity
Fund,$276,975 for Capital Appreciation Fund, $117,854 for Special
Equity Fund and $109,595 for International Equity Fund.
During the fiscal year ended December 31, 1996, the Capital
Appreciation Fund paid brokerage commissions totaling $49,756 to
Fahnestock & Co.("Fahnestock"), an affiliated broker-dealer of
Hudson Capital Advisers which then served as an Asset Manager.
Effective September 1996, Husic Capital Management replaced
Hudson Capital Advisers as an Asset Manager for this Fund.
During the fiscal year ended December 31, 1995, the Capital
Appreciation Fund paid brokerage commissions totaling $41,584 to
Fahnestock. During the fiscal year ended December 31, 1994, the
Capital Appreciation Fund paid brokerage commissions totaling
$69,584 to Fahnestock. The brokerage commissions paid to
Fahnestock by the Capital Appreciation Fund represented 12% of
the total brokerage commissions paid by that fund during the
fiscal year ended December 31, 1996; 15% during the fiscal year
ended December 31, 1995; and 25% during the fiscal year ended
December 31, 1994. Such commissions were paid in connection with
portfolio transactions the dollar amount of which represented 8,
16% and 22%, respectively, of the aggregate dollar amount of all
portfolio transactions involving the payment of commissions by
the Fund during those fiscal years. Brokerage commissions were
paid to Fahnestock in compliance with procedures established by
the Trustees, pursuant to which the commissions were determined
to be comparable to commissions charged by other brokers for
similar transactions and by Fahnestock to similarly situated
clients.
IX. NET ASSET VALUE
;
The net asset value of the shares of each Fund is determined
each day on which the New York Stock Exchange ("NYSE") is open
for trading (a "Pricing Day"). The weekdays that the NYSE is
expected to be closed are New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.
Assets of the Funds are valued as follows:
Equity securities listed on an exchange are valued on the
basis of the last quoted sale price on the exchange where such
securities principally are traded on the valuation date, prior to
the close of trading on the NYSE, or, lacking any sales, on the
basis of the last bid price on such principal exchange prior to
the close of trading on the NYSE. A security which is listed or
traded on more than one exchange is valued at the quotation on
the exchange determined by the Asset Manager to be the primary
market for such security. Over-the-counter securities for which
market quotations are readily available are valued on the basis
of the last bid price on that date prior to the close of trading
on the NYSE. Securities and other instruments for which market
quotations are not readily available are valued at fair value, as
determined in good faith by the Asset Manager pursuant to
procedures established by the Trustees.
<PAGE>
Fixed-income securities are generally valued at the last
quoted bid price prior to the close of trading on the NYSE.
Fixed-income securities for which quoted prices are not readily
available will be valued at fair market value, as determined in
good faith by the Asset Manager pursuant to procedures
established by the Trustees. Certain foreign fixed-income
securities are valued at the last quoted sale price
Trading of securities owned by a Fund, particularly the
International Equity Fund and Global Bond Fund, for which the
principal trading market is a foreign securities exchange may
occur on days other than Pricing Days. Accordingly, the values
of securities in a Fund's portfolio may be subject to changes on
such days, which changes would not be reflected in the Fund's net
asset value until the next Pricing Day. In addition, trading on
foreign securities exchanges may not take place on all Pricing
Days. Generally securities traded on foreign securities
exchanges will be valued for net asset value purposes at the
close of the principal exchange on which they are traded, which
may not be the same time that the Fund's net asset values are
determined. If an event occurs after the close of a principal
exchange that is likely to affect the valuation of a particular
security trading on that exchange, such security may be valued at
fair value, as determined in good faith by the Asset Manager
pursuant to procedures established by the Trustees.
For purposes of determining the net asset value of any Fund
which holds non-dollar denominated portfolio instruments, all
assets and liabilities initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean
between the bid and offered quotations of such currencies against
U.S. dollars as last quoted by any recognized dealer. If such
quotations are not available, the rate of exchange will be
determined in accordance with policies established in good faith
by the Trustees. Gains or losses between trade and settlement
dates resulting from changes in exchange rates between the U.S.
dollar and a foreign currency are borne by the Fund. To protect
against such losses, the International Equity Fund, and Global
Bond Fund may enter into forward foreign currency exchange or
futures contracts, which will also have the effect of limiting
any such gains. See "Other Information-Forward Foreign Currency
Exchange Contracts."
<PAGE>
X. TAX INFORMATION
Each Fund intends to qualify each year as a regulated
investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order to so
qualify, a RIC must, among other things, (i) derive at least 90%
of its gross income from dividends, interest, payments with
respect to certain securities loans, gains from the sale of
securities, certain gains from foreign currencies, or other
income (including but not limited to gains from options, futures
or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (ii) derive
less than 30% of its gross income from gains from the sale or
other disposition of securities, options, futures, forward
contracts and certain investments in foreign currencies held for
less than three months; (iii) distribute at least 90% of its
dividend, interest and certain other taxable income ("Investment
Company Taxable Income") each year, as well as 90% of its net tax-
exempt interest income; (iv) at the end of each fiscal quarter
maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment
companies, and other securities of issuers which represent, with
respect to each issuer, no more than 5% of the value of the RIC's
total assets and 10% of the outstanding voting securities of such
issuer; and (v) at the end of each fiscal quarter have no more
than 25% of its assets invested in the securities (other than
those of the U.S. government or other RICs) of any one issuer or
of two or more issuers which the RIC controls and which are
engaged in the same, similar or related trades and businesses.
In any year in which a RIC distributes 90% of its Investment
Company Taxable Income and 90% of its net tax-exempt interest
income, it will not be subject to corporate income tax on amounts
distributed to its shareholders.
If for any taxable year a Fund does not qualify as a RIC,
all of its taxable income (including its net capital gain) will
be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such
distributions will be taxable as ordinary dividends to the extent
of such Fund's current and accumulated earnings and profits. Such
distributions generally will be eligible for the dividends-
received deduction in the case of corporate shareholders.
If for any taxable year a Fund complies with certain
requirements, then some or all of the dividends (excluding
capital gain distributions) payable out of income of the Fund
that are attributable to dividends received from domestic
corporations may qualify for the 70% dividends-received deduction
available to corporations.
Ordinary income distributions and distributions of net
realized short-term capital gains to shareholders who are liable
for federal income taxes will be taxed as ordinary dividend
income to such shareholders. Distributions of net long-term
capital gains to such shareholders are taxable as long-term
capital gains regardless of how long such shareholders have held
shares of a Fund. These provisions apply whether the dividends
and distributions are received in cash or accepted in shares.
Any loss realized upon the redemption of shares within six months
from the date of their purchase will be treated as a long-term
capital loss to the extent of any distribution of net long-term
capital gains during such six-month period. A loss may be
disallowed on the sale of shares of a Fund to the extent the
shareholder acquired other Fund shares within 30 days prior to
the sale of the loss shares or 30 days after such sale.
Dividends and other distributions by any Fund may also be
subject to state and/or local taxes. Shareholders should consult
with their own tax advisers concerning the foregoing state and
local tax consequences of investing in a Fund. Additionally,
shareholders who are foreign persons should consult with their
own tax advisers concerning the foreign tax consequences of
investing in a Fund.
All of the Funds except for International Equity Fund may
invest in futures contracts or options. Certain options, futures
contracts and options on futures contracts are "section 1256
contracts." Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital
gains or losses ("60/40") regardless of the length of time the
contract was held. Also, section 1256 contracts held by a Fund at
the end of each taxable year are treated for federal income tax
purposes as being sold on such date for their fair market value.
The resultant paper gains or losses are also treated as 60/40
gains or losses. When the section 1256 contract is subsequently
disposed of, the actual gain or loss will be adjusted by the
amount of any preceding year-end paper gain or loss. The use of
section 1256 contracts may force a Fund to distribute to
shareholders paper gains that have not yet been realized in order
to avoid federal income tax liability.
<PAGE>
Certain Funds may invest in obligations (such as zero coupon
bonds) which are issued with original issue discount ("OID").
Under the code, OID is accrued as investment income over the life
of the investment even in the absence of cash payments.
Accordingly, such Funds may be required to sell some of their
assets in order to satisfy the distribution requirements
applicable to RICs.
Foreign currency gains or losses on non-U.S. dollar
denominated bonds and other similar debt instruments and on any
non-U.S. dollar denominated forward contracts generally will be
treated as ordinary income or loss. Any non-U.S. dollar
denominated futures or options contract may be treated as either
ordinary income or capital gain of it meets the requirements of
Section 1256.
Certain hedging transactions undertaken by a Fund may result
in "straddles" for federal income tax purposes. The straddle
rules may affect the character of gains (or losses) realized by
the Fund. In addition, losses realized by the Fund on positions
that are part of a straddle may be deferred, rather than being
taken into account in calculating taxable income for the taxable
year in which such losses are realized. Because only a few
regulations implementing the straddle rules have been
promulgated, the tax consequences of hedging transactions to the
Fund are not entirely clear. The hedging transactions may
increase the amount of capital gain realized by the Fund which,
depending on its character, may be a long-term capital gain taxed
as ordinary income when distributed to shareholders. The Fund
may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the
elections, the amount, character and timing of the recognition of
gains or losses from the affected straddle positions will be
determined under rules that vary according to the elections made.
The rules applicable under certain of the elections operate to
accelerate the recognition of gains or losses from the affected
straddle positions. Because application of the straddle rules
may affect the character of gains or losses, defer losses and/or
accelerate the recognition of gains or losses from the affected
straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain in any year, may be increased or
decreased substantially as compared to a fund that did not engage
in such hedging transactions.
The 30% limit on gains from the sale of certain assets held
for less than three months and the diversification requirements
applicable to each Fund's assets may limit the extent to which
each Fund will be able to engage in transactions in options,
futures contracts or options on futures contracts.
The International Equity, Global Bond, Bond, Short and
Intermediate Bond and Short Government Funds may be subject to a
tax on dividend or interest income received from securities of a
non-U.S. issuer withheld by a foreign country at the source. The
United States has entered into tax treaties with many foreign
countries which entitle the Funds to a reduced rate of tax or
exemption from tax on such income. It is impossible to determine
the effective rate of foreign tax in advance since the amount of
each Fund's assets to be invested within various countries is not
known. If more than 50% of such a Fund's total assets at the
close of a taxable year consists of stock or securities in
foreign corporations, the Fund may elect to pass through to its
shareholders the foreign income taxes paid thereby. In such
case, the shareholders would be treated as receiving, in addition
to the distributions actually received by the shareholders, their
proportionate share of foreign income taxes paid by the Fund, and
will be treated as having paid such foreign taxes. The
shareholders will be entitled to deduct or, subject to certain
limitations, claim a foreign tax credit with respect to, such
foreign income taxes. It should be noted that only shareholders
who itemize deductions may deduct foreign income taxes paid by
them.
Shareholders of each Fund will be notified each year of the
amounts and tax status of dividends and distributions from their
Fund. The notification will contain information for corporate
shareholders of the Funds that are subject to federal income
taxation of the extent to which, if any, the dividends paid by
each Fund qualify for a deduction for dividends received. Despite
such notification, the dividends-received deduction will not be
available if the corporate shareholder has held shares of a Fund
for less than 46 days and will be reduced to the extent that the
acquisition of the shares was financed with indebtedness.
<PAGE>
Under the federal income tax law, each Fund will be required
to report to the Internal Revenue Service all distributions of
taxable income and capital gains as well as gross proceeds from
all redemptions of shares except in the case of certain exempt
shareholders. Under the backup withholding provisions of the
Code, such distributions and redemption proceeds may be subject
to withholding of federal income tax at the rate of 31% in the
case of non-exempt shareholders who fail to furnish the Fund with
their correct taxpayer identification numbers and with required
certifications regarding their status under the federal income
tax law, or with respect to those shareholders whom the Internal
Revenue Service notifies the Funds of certain other non-
compliance. If these withholding provisions are applicable, any
distributions to, and proceeds received by, shareholders, whether
taken in cash or reinvested in shares, will be reduced by the
amounts required to be withheld.
The Code imposes a four percent nondeductible excise tax on
each regulated investment company with respect to the amount, if
any, by which such company does not meet distribution
requirements specified under such tax law. Each Fund intends to
comply with such distribution requirements and thus does not
expect to incur the four percent nondeductible excise tax
although it may not be possible for the Funds to avoid this tax
in all instances.
The foregoing discussion relates solely to U.S. federal
income tax law. Non-U.S. investors should consult their tax
advisers concerning the tax consequences of ownership of shares
of a Fund, including the possibility that distributions may be
subject to a 30% United States withholding tax (or a reduced rate
of withholding provided by treaty).
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and Treasury Regulations
currently in effect. For the complete provisions, reference
should be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The above discussion covers
only Federal income tax considerations with respect to the Funds
and their shareholders. Foreign, state and local tax laws vary
greatly, especially with regard to the treatment of exempt-
interest dividends. Shareholders should consult their own tax
advisers for more information regarding the Federal, foreign,
state, and local tax treatment of each Fund's shareholders and
with respect to their own tax situation.
XI. CUSTODIAN, TRANSFER AGENT AND INDEPENDENT PUBLIC ACCOUNTANT
State Street Bank and Trust Company ("State Street" or the
"Custodian"), 1776 Heritage Drive, North Quincy, Massachusetts,
as Custodian for all the Funds, is responsible for holding all
cash assets and all portfolio securities of the Funds, releasing
and delivering such securities as directed by the Funds,
maintaining bank accounts in the names of the Funds, receiving
for deposit into such accounts payments for shares of the Funds,
collecting income and other payments due the Funds with respect
to portfolio securities and paying out monies of the Funds. In
addition, when any of the Funds trade in futures contracts and
those trades would require the deposit of initial margin with a
futures commission merchant ("FCM"), the Fund will enter into a
separate special custodian agreement with a custodian in the name
of the FCM which agreement will provide that the FCM will be
permitted access to the account only upon the Fund's default
under the contract.
The Custodian is authorized to deposit securities in
securities depositories or to use the services of sub-custodians,
including foreign sub-custodians, to the extent permitted by and
subject to the regulations of the Securities and Exchange
Commission.
Boston Financial Data Services, Inc., P.O. Box 8517, Boston,
Massachusetts 02266-8517, serves as the Transfer Agent for each
of the Funds.
Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts 02109, is the independent public accountant for
each of the Funds.
<PAGE>
XII. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 11, 1997, Resource Bank "controlled" (within the
meaning of the 1940 Act i.e., owned in excess of 25% of the
shares of) the Capital Appreciation Fund and Charles Schwab & Co.
"controlled" the Special Equity Fund. An entity which "controls"
a particular Fund could have effective voting control over the
operations of that Fund.
The following chart identifies those shareholders of record
on March 10, 1997 holding 5% or more of the outstanding shares of
any of the Funds. Certain of these shareholders are omnibus
processing organizations.
Income Equity Fund
Huntington National Bank, Columbus, Ohio (18%)
Charles Schwab & Co., Inc., San Francisco, California (17%)
Capital Appreciation Fund
Resource Bank, Minneapolis, Minnesota (30%)
Special Equity Fund
Huntington National Bank, Columbus, Ohio (11%)
Resource Bank, Minneapolis, Minnesota (10%)
Charles Schwab & Co., Inc., San Francisco, California (31%)
International Equity Fund
Huntington National Bank, Columbus, Ohio (7%)
Resource Bank, Minneapolis, Minnesota (11%)
Charles Schwab & Co., Inc., San Francisco, California (22%)
Short Government Fund
C.E. Broom, New London, New Hampshire (7%)
Short and Intermediate Bond Fund
Huntington National Bank, Columbus, Ohio (6%)
Intermediate Mortgage Fund
Roman Catholic Diocese, Syracuse, New York (8%)
Huntington National Bank, Columbus, Ohio (5%)
Bond Fund
Charles Schwab & Co., Inc., San Francisco, California (11%)
All shareholders are entitled to one vote for each share
held. There is no cumulative voting. Accordingly, the holder or
holders of more than 50% of the shares of the Trust would be able
to elect all the Trustees. With respect to the election of
Trustees and ratification of accountants the shareholders of
separate Funds vote together; they generally vote separately by
Fund on other matters.
<PAGE>
XIII. OTHER INFORMATION
Following is a description of various financial instruments
and other terms referred to in the prospectus and statement of
additional information.
Asset-Backed Securities -- Through the use of trusts and
special purpose corporations, various types of assets, primarily
automobile and credit card receivables and home equity loans,
have been securitized in pass-through structures similar to
mortgage pass-through structures or in a pay-through structure
similar to the CMO structure. A Fund may invest in these and
other types of asset-backed securities that may be developed in
the future. Asset-backed securities present certain risks that
are not presented by mortgage-backed securities. Primarily,
these securities do not have the benefit of a security interest
in the related collateral. Credit card receivables are generally
unsecured and the debtors are entitled to the protection of a
number of states and federal consumer credit laws, some of which
may reduce the ability to obtain full payment. In the case of
automobile receivables, the security interests in the underlying
automobiles are often not transferred when the pool is created,
with the resulting possibility that the collateral could be
resold. In general, these types of loans are of shorter average
life than mortgage loans and are less likely to have substantial
prepayments.
Bankers Acceptances -- Bankers acceptances are short-term
credit instruments used to finance the import, export, transfer
or storage of goods. They are termed "accepted" when a bank
guarantees their payment at maturity. Eurodollar bankers
acceptances are U.S. dollar denominated bankers acceptances
"accepted" by foreign branches of major U.S. commercial banks.
Cash Equivalents -- Cash equivalents include certificates of
deposit, bankers acceptances, government obligations, commercial
paper, short-term corporate debt securities and repurchase
agreements.
Certificates of Deposit -- Certificates of deposit are
issued against funds deposited in a bank (including eligible
foreign branches of U.S. banks), are for a definite period of
time, earn a specified rate of return and are normally
negotiable.
Commercial Paper -- Commercial paper refers to promissory
notes representing an unsecured debt of a corporation or finance
company which matures in less than nine (9) months. Eurodollar
commercial paper refers to notes payable by European issuers in
U.S. dollars.
Covered Call Options -- The Equity Funds, other than the
International Equity Fund each may write covered call options on
individual stocks, equity indices and futures contracts,
including equity index futures contracts. The Income Funds each
may write covered call options on individuals bonds and on
interest rate futures contracts. With the exception of the Short
Government Fund and the Intermediate Mortgage Fund, all written
call options must be listed on a national securities exchange or
futures exchange. The Short Government Fund and the Intermediate
Mortgage Fund may write unlisted options in negotiated
transactions. (See "Dealer Options and "Puts and Calls".) The
Funds will not change these policies until this Statement of
Additional Information has been appropriately supplemented, and
existing shareholders will be notified of such a change in the
next regular report to them.
A call option is a short-term contract (ordinarily having a
duration of nine months or less) which gives the purchaser of the
option, in return for a premium paid, the right to buy, and the
writer the obligation to sell, the underlying security, financial
instrument, index or futures contract at the exercise price at
any time prior to the expiration of the option, regardless of the
market price of the security, financial instrument, index or
futures contract during the option period. A call option is
"covered" if the Fund writing the option owns, (or has the
immediate right to acquire without the payment of additional
consideration), the underlying security or financial instrument,
owns financial instruments whose returns are closely correlated
with the financial instruments on which the option is written or
segregates with the Custodian sufficient cash and/or short-term
high quality securities to meet its obligations under the call.
<PAGE>
In order to terminate its obligation under an outstanding
option which it has written, a Fund may make a "closing purchase
transaction" i.e., purchase a call option on the same financial
instrument, index or futures contract with the same exercise
price and the same expiration date. The Fund will realize a gain
or loss from a closing purchase transaction if the amount paid to
purchase a call option is less or more, respectively, than the
amount received from the sale thereof. A Fund may not effect a
closing purchase transaction with respect to a written option
after it has been notified of the exercise of the option. When a
security, financial instrument, index or futures contract
underlying a covered call option is sold from a Fund's portfolio,
the Fund must effect a closing purchase transaction so as to
close out any existing covered call option on that security,
financial instrument, index or futures contract. A closing
purchase transaction may be made only on an exchange which
provides a secondary market for an option with the same exercise
price and expiration date. There is no assurance that a liquid
secondary market on an exchange will exist for any particular
option, or at any particular time, and for some options no
secondary market on an exchange may exist. If a Fund is unable
to effect a closing purchase transaction, the Fund will not be
able to sell the underlying security, financial instrument, index
or futures contract until the option expires.
The writing of option contracts is a highly specialized
activity which involves investment techniques and risks different
than those ordinarily associated with investment companies. A
Fund pays brokerage commissions in connection with writing
covered call options (or covered put options as discussed below)
and effecting closing purchase transactions, as well as for
purchases and sales of the underlying security, financial
instrument, index or futures contract. The writing of covered
call options could result in significant increases in a Fund's
portfolio turnover rate, especially during periods when market
prices of the underlying security, financial instrument, index or
futures contract appreciate. See "Portfolio Turnover."
Covered Put Options -- The Equity Funds, except for the
International Equity Fund, may write covered put options on
individual stocks, equity indices and equity index futures
contracts. The Income Funds, may write covered put options on
individual bonds and on interest rate futures contracts.
A put option is a short-term contract (ordinarily having a
duration of nine months or less) which gives the purchaser of the
option, in return for a premium paid, the right to sell, and the
writer the obligation to buy, the underlying security, financial
instrument, index or futures contract at the exercise price at
any time prior to the expiration of the option, regardless of the
market price of the financial instrument, index or futures
contract during the option period. A put option is "covered" if
the Fund writing the option segregates with the Custodian
sufficient cash and/or short-term high quality securities to meet
its obligations under the put (or holds a put option on the same
underlying security or financial instrument at an equal or
greater exercise price with the same expiration date). The
writer of a put option assumes the risk of a decrease in the
value of the underlying security, financial instrument, index or
futures contract. If such a decrease occurred, the option could
be exercised and the underlying security, financial instrument,
index or futures contract would then be sold to the writer at a
price higher than its then current market value.
A Fund may enter into closing purchase transactions on put
options i.e., purchase a put option on the same financial
instrument, index or futures contract with the same exercise
price and the same expiration date. The Fund will realize a gain
or loss from a closing purchase transaction if the amount paid to
purchase a put option is less or more than the amount received
from the sale thereof. A Fund may not effect a closing purchase
transaction with respect to a written option after it has been
notified of the exercise of the option. When the security,
financial instrument, index, or futures contract underlying a
covered put option is sold from the Fund's portfolio, the Fund
must effect a closing purchase transaction to close out any
existing put option on that security or other instrument. A
closing purchase transaction may be made only on an exchange
which provides a secondary market for an option with the same
exercise price and expiration date. There is no assurance that a
liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some
options no secondary market on an exchange may exist.
<PAGE>
Dealer Options -- Also known as OTC options, these are puts
and calls for which the strike price, expiration and premium are
privately negotiated. See "Other Information -- Puts and Calls."
The Short Government Fund and the Intermediate Mortgage Fund may
engage in dealer options, but only with major financial
institutions who are member banks of the Federal Reserve System
and approved as primary dealers in United States government
securities by the Federal Reserve Bank of New York, and whose
creditworthiness and financial strength are judged by the Asset
Manager to be at least as good as that of financial institutions
to which the Fund may loan portfolio securities. See "Other
Information -- Loan Transactions."
Equity Index Futures Contracts -- The Capital Appreciation
Fund, Income Equity Fund and Special Equity Fund may enter into
equity index futures contracts. An equity index futures contract
is an agreement by the Fund to buy or sell an index relating to
equity securities at a specified date and price. No payment is
made when the Fund buys a futures contract and neither the index
nor any securities are delivered when the Fund sells a futures
contract. Instead, the Fund makes a deposit called an "initial
margin" equal to a percentage of the contract's value. Payment is
made when the contract expires unless an offsetting transaction
has been entered into. Equity index futures contracts will be
used only as a hedge against anticipated changes in the level of
stock prices or otherwise to the extent transactions permitted to
entities exempt from the definition of the term commodity pool
operator. See "Investment Restrictions."
Eurodollar Bonds -- U.S. dollar-denominated bonds or
debentures issued outside the United States.
European Currency Unit Bonds -- The European Currency Unit
("ECU") is a basket of European currencies consisting of
specified amounts of the currencies of ten members of the
European community. The ECU is used by members as their
budgetary currency to determine official claims and debts. It
fluctuates with the daily exchange rate changes of the
constituent currencies. The ECU is now defined by the following
ten currencies: German Deutschmark, British Pound, French Franc,
Italian Lira, Dutch Guilder, Belgian Franc, Luxembourg Franc,
Finish Kroner, Irish Pound, and Greek Drachma. ECU bonds are
bonds or debentures denominated in ECUs.
Forward Foreign Currency Exchange Transactions -- The value
of the assets of the International Equity Fund, Global Bond Fund,
and the value of any foreign securities of other Funds, will be
affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and such Funds
may incur costs in connection with conversions between various
currencies.
The Funds will not hold foreign currency except in
connection with the purchase and sale of foreign portfolio
securities. Each Fund may enter into currency exchange
transactions at the time of purchase or sale of a security by
buying or selling a currency on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market.
Alternatively, when a Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency,
it may desire to fix the expected cost or proceeds of the
transaction relative to another currency through forward
contracts to purchase or sell foreign currencies ("forward
contracts").
A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the
contract agreed upon the parties, at a price set at the time of
the contract. The forward contract may be denominated in U.S.
dollars or may be a "cross-currency" contract where the forward
contract is denominated in a currency other than U.S. dollars.
These contracts are traded directly between currency traders
(usually large commercial banks) and their customers. The
Custodian will segregate cash or marketable securities in an
amount not less than the value of each Fund's total assets
committed to forward contracts. If the value of the securities
segregated declines, additional cash or securities will be added
on a daily basis, i.e, "marked-to-market," so that the segregated
amount will not be less than the amount of each Fund's
commitments with respect to such contracts. Generally, the Funds
will not enter into forward contracts with a term of greater than
90 days.
<PAGE>
At the maturity of a forward contract, a Fund may either
accept or deliver the foreign currency or may terminate the
obligation under the forward contract by purchasing an
"offsetting" forward contract with the same currency trader
obligating the Fund to sell or purchase, on the same maturity
date, the same amount of the foreign currency. If a Fund engages
in an offsetting transaction, the Fund will incur a gain or a
loss to the extent that there has been movement in forward
contract prices. For example, should currency prices decline
during the period between entering into a forward contract for
the sale of a foreign currency and the date the Fund enters into
an offsetting contract for the purchase of the foreign currency,
the Fund will realize a gain to the extent the price of the
currency the Fund has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should currency prices
increase, the Fund will suffer a loss to the extent the price of
the currency the Fund has agreed to purchase exceeds the price of
the currency the Fund has agreed to sell. If a Fund engages in
an offsetting transaction, it may subsequently enter into a new
forward contract with respect to the foreign currency.
To the extent that a Fund enters into foreign currency
futures contracts, it will be subject to similar risk
considerations. For more information concerning futures
contracts, see "Certain Securities and Investment Techniques and
Related Risks -- Hedging Techniques -- Futures Contracts" in the
Prospectuses.
The forecasting of currency movements is extremely difficult
and the successful execution of a hedging strategy is highly
uncertain. Moreover, it is impossible to forecast with absolute
precision the market value of portfolio securities at the
expiration of a hedging transaction. For example, it may be
necessary for the Fund to purchase additional foreign currency on
the spot market (and bear the expense of such purchase) if the
market value of a security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver.
Foreign currency exchange transactions do not eliminate
fluctuations in the underlying prices of the securities. They
simply establish rates of exchange for some future point in time.
Additionally, although such transactions may tend to minimize the
risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain
which might result should the value of such currency increase.
The International Equity Fund does not intend to enter into
forward contracts on a regular or continuous basis, and will not
do so if, as a result, the Fund would have more than 25% of the
value of its respective total assets committed to such contracts.
The other Funds, except for Global Bond Fund, do not intend to
enter into forward contracts on a regular or continuous basis,
and will not do so if, as a result, the Fund would have more than
5% of the value of its total assets committed to such contracts.
The Funds, except for Global Bond Fund, will also not enter into
forward contracts or maintain a net exposure in such contracts
where the Funds would be obligated to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency. The
Global Bond Fund may enter into forward contracts, unless, as a
result, more than 50% of value of the Fund's total assets would
be committed to such contracts.
Interest Rate Futures Contracts -- The Income Funds may
enter into interest rate futures contracts. An interest rate
futures contract is an agreement by the Fund to buy or sell fixed-
income securities at a specified date and price. No payment is
made when the Fund buys a futures contract and no securities are
delivered when the Fund sells a futures contract. Instead, the
Fund makes a deposit called an "initial margin" equal to a
percentage of the contract's value. Payment or delivery is made
when the contract expires unless an offsetting transaction has
been entered into. Futures contracts will be used only as a
hedge against anticipated interest rate changes or otherwise to
the extent permitted to entities exempt from the definition of
the term commodity pool operator. See "Investment Restrictions."
Inverse Floating Obligations -- These are variable rate
securities on which interest rates typically decline as market
rates increase and increase as market rates decline. The Funds
typically purchase such issues directly from the issuing agency.
The market for such obligations is liquid to the extent of the
active participation in the secondary market of securities
dealers and a variety of investors.
<PAGE>
Loan Transactions -- Loan transactions involve the lending
of securities to a broker-dealer or institutional investor for
its use in connection with short sales, arbitrages or other
securities transactions. Loans of portfolio securities of a Fund
will be made (if at all) in strictest conformity with applicable
federal and state rules and regulations. The purpose of a loan
transaction is to afford a Fund the opportunity to continue to
earn income in addition to the income on the securities loaned.
The Trustees understand that it is the current view of the
staff of the SEC that a Fund is permitted to engage in loan
transactions only if the following conditions are met: (1) the
Fund must receive 100% collateral in the form of cash or cash
equivalents, e.g., U.S. Treasury bills or notes, from the
borrower; (2) the borrower must increase the collateral whenever
the market value of the loaned securities (determined on a daily
basis) rises above the level of the collateral; (3) the Fund must
be able to terminate the loan after notice, at any time; (4) the
Fund must receive reasonable interest on the loan or a fee from
the borrower, as well as amounts equivalent to any dividends,
interest or other distributions on the securities loaned and any
increase in market value; (5) the Fund may pay only reasonable
fees in connection with the loan; (6) voting rights on the
securities loaned may pass to the borrower; however, if a
material event affecting the investment occurs, the Trustees must
be able to terminate the loan and vote proxies or enter into an
alternative arrangement with the borrower to enable the Trustees
to vote proxies. Excluding items (1) and (2), these practices
may be amended by the Trustees from time to time as regulatory
provisions permit.
While there may be delays in recovery of loaned securities
or even a loss of rights in collateral supplied should the
borrower fail financially, loans will be made only to firms
deemed by the Trustees to be of good standing and will not be
made unless, in the judgment of the Fund's Asset Manager made
pursuant to standards adopted by the Trustees, the consideration
to be earned from such loans would justify the risk. Such loan
transactions are referred to in this Statement of Additional
Information as "qualified" loan transactions.
The cash collateral acquired through loan transactions may
be invested in any obligation in which the applicable Fund is
authorized to invest in accordance with its investment
objectives. The investment of the cash collateral in other
obligations subjects that investment as well as the security
loaned to market forces, i.e., capital appreciation or
depreciation, just like any other portfolio security.
Mortgage-Related Securities -- Mortgage-related securities
or pass-throughs are certificates issued by governmental,
government-related and private organizations which are backed by
pools of mortgage loans. These mortgage loans are made by
lenders such as savings and loan institutions, mortgage bankers,
commercial banks and others to residential home buyers throughout
the United States. The securities are "pass-through" securities
because they provide investors with monthly payments which in
effect are a "pass-through" of the monthly payments of principal
and interest made by the individual borrowers on the underlying
mortgages, net of any fees paid to the issuer or guarantor of the
pass-through certificates. The principal governmental issuer of
such securities is the Government National Mortgage Association
(GNMA), which is a wholly-owned U.S. Government corporation
within the Department of Housing and Urban Development.
Government-related issuers include the Federal Home Loan Mortgage
Corporation (FHLMC), a corporate instrumentality of the United
States created pursuant to an act of Congress which is owned
entirely by Federal Home Loan Banks, and the Federal National
Mortgage Association (FNMA), a government sponsored corporation
owned entirely by private stockholders. Commercial banks,
savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers
also create pass-through pools of conventional residential
mortgage loans. Such issuers may be the originators of the
underlying mortgage loans as well as the guarantors of the
mortgage-related securities.
<PAGE>
(1) GNMA Mortgage Pass-Through Certificates ("Ginnie
Maes"). Ginnie Maes represent an undivided interest in a pool of
mortgages that are insured by the Federal Housing Administration
or the Farmers Home Administration or guaranteed by the Veterans
Administration. Ginnie Maes entitle the holder to receive all
payments (including prepayments) of principal and interest owed
by the individual mortgagors, net of fees paid to the GNMA and to
the issuer which assembles the mortgage pool and passes through
the monthly mortgage payments to the certificate holders
(typically, a mortgage banking firm), regardless of whether the
individual mortgagor actually makes the payment. Because
payments are made to certificate holders regardless of whether
payments are actually received on the underlying mortgages,
Ginnie Maes are of the "modified pass-through" mortgage
certificate type. The GNMA is authorized to guarantee the timely
payment of principal and interest on the Ginnie Maes. The GNMA
guarantee is backed by the full faith and credit of the United
States, and the GNMA has unlimited authority to borrow funds from
the U.S. Treasury to make payments under the guarantee. The
market for Ginnie Maes is highly liquid because of the size of
the market and the active participation in the secondary market
of securities dealers and a variety of investors.
(2) FHLMC Mortgage Participation Certificates ("Freddie
Macs"). Freddie Macs represent interests in groups of specified
first lien residential conventional mortgages underwritten and
owned by the FHLMC. Freddie Macs entitle the holder to timely
payment of interest, which is guaranteed by the FHLMC. The FHLMC
guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. In cases
where the FHLMC has not guaranteed timely payment of principal,
the FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an
underlying mortgage, but in no even later than one year after it
becomes payable. Freddie Macs are not guaranteed by the United
States or by any of the Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. The secondary market for Freddie Macs is
highly liquid because of the size of the market and the active
participation in the secondary market of the FHLMC, securities
dealers and a variety of investors.
(3) FNMA Guaranteed Mortgage Pass-Through Certificates
("Fannie Maes"). Fannie Maes represent an undivided interest in
a pool of conventional mortgage loans secured by first mortgages
or deeds of trust, on one family, or two to four family,
residential properties. The FNMA is obligated to distribute
scheduled monthly installments of principal and interest on the
mortgages in the pool, whether or not received, plus full
principal of any foreclosed or otherwise liquidated mortgages.
The obligation of the FNMA under its guaranty is solely the
obligation of the FNMA and is not backed by, nor entitled to, the
full faith and credit of the United States.
(4) Mortgage-related securities issued by private
organizations. Pools created by non-governmental issuers
generally offer a higher rate of interest than government and
government-related pools because there are no direct or indirect
government guarantees of payments in such pools. However, timely
payment of interest and principal of these pools is often
partially supported by various forms of insurance or guarantees,
including individual loan, title, pool and hazard insurance. The
insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will
be considered in determining whether a mortgage-related security
meets a Fund's investment quality standards. There can be no
assurance that the private insurers can meet their obligations
under the policies. Certain Funds may buy mortgage-related
securities without insurance or guarantees if through an
examination of the loan experience and practices of the poolers
the Asset Manager of the Fund determines that the securities meet
the Fund's quality standards. Although the market for such
securities is becoming increasingly liquid, securities issued by
certain private organizations may not be readily marketable.
The market value of mortgage-related securities depends on,
among other things, the level of interest rates, the
certificates' coupon rates and the payment history of the
mortgagors of the mortgages in the underlying pool of mortgages.
Municipal Bonds -- Municipal bonds are of three principal
types: General Obligation Bonds, generally issued by states,
counties, cities, towns and regional districts, the proceeds of
which are used to fund a wide range of public projects; Revenue
Bonds, the principal security for which is generally the net
revenues derived from a particular facility, group of facilities
or, in some cases, the proceeds of a special excise or other
specific revenue source; and Industrial Development Bonds, which
are considered municipal bonds if the interest paid is exempt
from federal income taxes, and which are issued by or on behalf
of public authorities to raise money to finance public facilities
and privately-operated facilities for business, manufacturing and
housing.
<PAGE>
Investments in municipal securities involve risks that
differ from other domestic securities. There could be economic,
business or political developments which might affect all
municipal obligations of a similar type.
For purposes of the investment restrictions set forth in the
section entitled "Investment Restrictions," the identification of
the "issuer" of municipal bonds which are not general obligation
bonds is made by the Asset Manager on the basis of the
characteristics of the obligation as either general obligation,
revenue or industrial development bonds, the most significant of
which is the source of the funds for the payment of principal and
interest on such securities.
Although the Funds do not currently invest more than 25% of
their assets in municipal bonds issued by public housing
authorities, state and local housing finance authorities, and
municipal utilities systems and industrial development and
pollution control bonds, they may do so at some point in the
future. Since such municipal bonds are not general obligations
of the issuer, they may be more subject to political and economic
changes which may impair their ability to make interest and
principal payments.
The liquidity of lease rental obligations will be determined
based on a variety of factors which may include, among others:
(1) the frequency of trades and quotes for the obligation;
(2) the number of dealers willing to purchase or sell the
security and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the
security; (4) the nature of the marketplace trades, including,
the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer; and (5) the
rating assigned to the obligation by an established rating agency
or the Asset Manager.
Generally, industrial development bonds are not backed by
the credit of any governmental or public authority. The Funds
may invest in uncollateralized industrial development bonds which
the Asset Manager has determined to be of a quality equivalent to
bonds rated not less than A by Moody's or Standard & Poor's. The
Funds may invest in industrial development bonds collateralized
by letters of credit issued by banks having stockholders' equity
in excess of $100 million as of the date of their most recently
published statement of financial condition. The Funds may also
invest in variable rate industrial development bonds, most of
which permit the holder thereof to receive the principal amount
on demand upon seven days notice.
Municipal notes include Tax Anticipation Notes, issued to
finance working capital needs of municipalities; Revenue
Anticipation Notes, issued in expectation of receipt of other
types of revenue; Bond Anticipation Notes, issued to provide
interim financing until long-term bond financing can be arranged;
Construction Loan Notes, sold to provide construction financing;
and Tax-Exempt Commercial Paper, a short-term obligation with a
stated maturity of 365 days or less issued by state and local
governments or their agencies to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term
financing. The Funds may invest in municipal bonds carrying a
guarantee or insured by the U.S. government as to the payment of
principal and interest, or which are fully collateralized by an
escrow of U.S. government securities. Such collateralized bonds
are commonly known as defeasance bonds.
Obligations of Domestic and Foreign Banks -- Banks are
subject to extensive governmental regulations which may limit
both the amounts and types of loans and other financial
commitments which may be made and interest rates and fees which
may be charged. The profitability of the banking industry is
largely dependent upon the availability and cost of capital funds
for the purpose of financing lending operations under prevailing
money market conditions. Also, general economic conditions play
an important part in the operations of this industry and exposure
to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations
under a letter of credit.
<PAGE>
Puts and Calls -- In addition to writing covered call
options and covered put options, and engaging in closing purchase
transactions with respect thereto as described above, the Equity
Funds, other than the International Equity Fund may purchase
options on individual stocks, equity indices and equity index
futures contracts and the Income Funds may purchase options on
individual bonds and on interest rate future contracts. A put
option (sometimes called a "standby commitment") gives the
purchaser of such option, upon payment of a premium, the right to
deliver a specified amount of a financial instrument or index or
futures contract on or before a fixed date at a predetermined
price. A call option (sometimes called a "reverse standby
commitment") gives the purchaser of the option, upon payment of a
premium, the right to call upon the writer to deliver a specified
amount of a financial instrument, index or futures contract on or
before a fixed date, at a predetermined price.
A Fund may purchase put and call options to provide
protection against the adverse affects of changes in the general
level of prices in the markets in which the Fund operates. In
purchasing a call option, the Fund would be in a position to
realize a gain if, during the option period, the price of the
financial instrument, index or futures contract increased by an
amount in excess of the premium paid. It would realize a loss if
the price of the financial instrument, index or futures contract
declined or remained the same or did not increase during the
period by more than the amount of the premium. By purchasing a
put option, the Fund would be in a position to realize a gain if,
during the option period, the price of the financial instrument,
index or futures contract declined by an amount in excess of the
premium paid. It would realize a loss if the price of the
financial instrument, index or futures contract increased or
remained the same or did not decrease during that period by more
than the amount of the premium. If a put or call option
purchased by the Fund were permitted to expire without being sold
or exercised, its premium would then represent a realized loss to
the Fund.
The Fund may dispose of an option which it has purchased by
entering into a "closing sale transaction" with the writer of the
option. A closing sale transaction terminates the obligation for
the writer of the option and does not result in the ownership of
an option. The Fund realizes a profit or loss from a closing
sale transaction if the premium received from the transaction is
more or less than the cost of the option.
Ratings of Commercial Paper -- Commercial paper rated A-1 by
Standard & Poor's Ratings Group ("S&P") has the following
characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated A or better. The
issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong
position with the industry. The reliability and quality of
management are unquestioned. Relative strength or weakness of
the above factors determines whether the issuer's commercial
paper is rated A-1, A-2 or A-3.
The rating P-1 is the highest commercial paper rating
assigned by Moody's Investors Services, Inc. ("Moody's"). Among
the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in
certain areas; (3) evaluation for the issuer's products in
relation to competition and customer acceptance; (4) liquidity;
(5) amount and quality of long-term debt; (6) trend of earning
over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and
(8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and
preparations to meet such obligations.
Ratings of Debt Instruments -- The four highest ratings of
Moody's for debt instruments: Aaa, Aa, A, and Baa are considered
to be investment grade. Debt rated Aaa is judged by Moody's to
be of the best quality. Debt rated Aa is judged to be of high
quality by all standards. Together with the Aaa group, such debt
comprises what is generally known as high-grade debt. Moody's
states that debt rated Aa is rated lower than the best debt
because margins of protection or other elements make long-term
risks appear somewhat larger than for Aaa debt. Debt which is
rated A by Moody's possesses many favorable investment attributes
and is considered "upper medium grade obligations." Factors
giving security to principal and interest of A-rated debt are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Debt that
is rated Baa is neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
debt lacks outstanding investment characteristics and, in fact,
has speculative characteristics as well. Debt that is rated Ba
is judged to have speculative elements and a future which cannot
be considered to be well assured. Often the protection of
interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this
class.
<PAGE>
The four highest ratings (investment grade) of S&P for debt
instruments are AAA, AA, A, and BBB. Debt rated AAA has the
highest rating assigned by S&P to an obligation. Capacity to pay
interest and repay principal is extremely strong. Debt rated AA
has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in a small degree.
Debt rated A has a strong capacity to pay principal and interest,
although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions. Debt rated
BBB is considered on the borderline between definitely sound
obligations and obligations where the speculative element begins
to predominate. Debt rated BB is regarded, on balance, as
predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation among
the bonds deemed to be speculative.
The Bond Fund and the Short and Intermediate Bond Fund
may each invest without limitation in debt securities that are
rated as low as BB by S&P or Ba by Moody's. Such securities are
frequently referred to as "junk bonds." Fixed-income securities
are subject to the risk of an issuer's inability to meet
principal and interest payments on the obligations ("credit
risk") and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity
("market risk"). Junk bonds are more likely to react to
developments affecting market and credit risk than are more
highly-rated securities, which react primarily to movements in
the general level of interest rates.
Lower-rated debt obligations also present risks based
on payment expectations. If an issuer calls the obligation for
redemption, a Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors.
Also, as the principal value of bonds moves inversely with
movements in interest rates, in the event of rising interest
rates the value of a Fund's portfolio may decline proportionately
more than a portfolio consisting of higher-rated securities. If
a Fund experiences unexpected net redemptions, it may be forced
to sell its higher-rated bonds, resulting in a decline in the
overall credit quality of the Fund's portfolio and increasing the
exposure of the Fund to the risks of lower-rated securities.
Investments in zero coupon bonds may be more speculative and
subject to greater fluctuations in value due to changes in
interest rates than income-bearing bonds.
During the fiscal year ended December 31, 1996, the weighted
average ratings of the debt obligations held by the Bond Fund and
the Short and Intermediate Bond Fund, expressed as a percentage
of each Fund's total investments, were as follows:
<TABLE>
<CAPTION>
Percentage of Total Investments of:
Short and
Intermediate
Ratings Bond Fund Bond Fund
<S> <C> <C>
Government and
AAA/Aaa 14% 50%
AA/Aa 3% 5%
A/A 6% 18%
BBB/Baa 61% 22%
BB/Ba 9% 5%
Not rated 7% -
</TABLE>
<PAGE>
Repurchase Agreements -- Pursuant to guidelines approved and
periodically reviewed by the Trustees, a Fund may enter into
repurchase agreements with such banking institutions and
securities dealers as have been approved by the Trustees. A Fund
may enter into repurchase agreements as a short-term investment
of its idle cash in order to earn income. A repurchase
agreement, which provides a means for the Fund to earn income on
funds for periods as short as overnight, is an arrangement under
which the purchaser (i.e., the Fund) purchases a U.S. Government
security ("Government Obligation") and the seller agrees, at the
time of sale, to repurchase the Government Obligation at a
specified time and price. The repurchase price may be higher
than the purchase price, the difference being income to the Fund,
or the purchase and repurchase prices may be the same, with
interest at a stated rate due to the Fund, together with the
repurchase price on repurchase. In either case, the income to
the Fund is unrelated to the interest rate on the Government
Obligation subject to the repurchase agreement. Government
Obligations will be held by the Custodian or in the Federal
Reserve Book Entry System. For purposes of the 1940 Act, a
repurchase agreement is deemed to be a loan from the Fund to the
seller of the Government Obligation subject to the repurchase
agreement. The Funds' investment restriction which limits
lending by the Funds specifically exempts repurchase
transactions. It is not clear whether a court would consider the
Government Obligation purchased by the Fund subject to a
repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of
the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the Government Obligation before the
repurchase of the Government Obligation under a repurchase
agreement, the Fund may encounter delay and incur costs before
being able to sell the security. Delays may involve loss of
interest or decline in price of the Government Obligation. If
the court characterizes the transaction as a loan and the Fund
has not perfected a security interest in the Government
Obligation, the Fund may be required to return the Government
Obligation to the seller's assets and be treated as an unsecured
creditor of the seller. As an unsecured creditor, the Fund would
be at risk of losing some or all of the principal and income
involved in the transaction. As with any unsecured debt
obligation purchased for a Fund, the Trustees seek to minimize
the risk of loss through repurchase agreements by analyzing the
creditworthiness of the obligor, in this case the seller of the
Government Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller
may fail to repurchase the Government Obligation, in which case
the Fund may incur a loss if the proceeds to the Fund of the sale
to a third party are less than the repurchase price. However, if
the market value of the Government Obligation subject to the
repurchase agreement becomes less than the repurchase price
(including interest), the Fund will direct the seller of the
Government Obligation to deliver additional securities so that
the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. The seller
may not be contractually bound to deliver additional securities.
In addition to repurchase agreements with respect to U.S.
Government Obligations described above, the Intermediate Mortgage
Fund may also invest in repurchase agreements pertaining to the
types of securities in which it may invest.
Rights and Warrants -- Rights are short-term warrants issued
in conjunction with new stock issues. Warrants give the holder
the right to purchase an issuer's securities at a stated price
during a stated term. The Funds' ability to invest in rights and
warrants is limited by their operating policies--see "Investment
Restrictions."
Short Sales -- When a Fund makes a short sale, it sells a
security it does not own in anticipation of a decline in market
price. The proceeds from the sale are retained by the broker
until the Fund replaces the borrowed security. To deliver the
security to the buyer, the Fund must arrange through a broker to
borrow the security and, in so doing, the Fund will become
obligated to replace the security borrowed at its market price at
the time of replacement, whatever that price may be. The Fund
may have to pay a premium to borrow the security. The Fund may,
but will not necessarily, receive interest on such proceeds. The
Fund must pay to the broker any dividends or interest payable on
the security until it replaces the security. The Fund's
obligation to replace the security borrowed will be secured by
collateral deposited with the broker, consisting of cash or U.S.
government securities or liquid high-grade debt obligations
acceptable to the broker.
<PAGE>
If the price of a security sold short increases between the
time of the short sale and the time the Fund replaces the
borrowed security, the Fund will incur a loss, and if the price
declines during this period, the Fund will realize a capital
gain. Any realized capital gain will be decreased, and any
incurred loss increased, by the amount of transaction costs and
any premium, dividend, or interest which the Fund may have to pay
in connection with such short sale.
U.S. Government Securities -- Securities issued or
guaranteed by the U.S. Government include a variety of Treasury
securities that differ only with respect to their interest rates,
maturities and dates of issuance. Treasury Bills have maturities
of one year or less, Treasury Notes have maturities of one to ten
years and Treasury Bonds generally have maturities of greater
than ten years at the date of issuance.
U.S. Government agencies or instrumentalities which issue or
guarantee securities include, but are not limited to, the Federal
Housing Administration, Farmers Home Administration, Export-
Import Bank of the United States, Small Business Administration,
Governmental National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Maritime
Administration, the Tennessee Valley Authority, District of
Columbia Armory Board, the Inter-American Development Bank, the
Asian-American Development Bank, the Student Loan Marketing
Association and the International Bank for Reconstruction and
Development.
<PAGE>
Obligations of U.S. Government agencies and
instrumentalities may or may not be supported by the full faith
and credit of the United States. Some are backed by the right of
the issuer to borrow from the Treasury; others by discretionary
authority of the U.S. Government to purchase the agencies'
obligations; while still others, such as the Student Loan
Marketing Association, are supported only by the credit of the
instrumentality. In the case of securities not backed by the
full faith and credit of the United States, the investor must
look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert
or claim against the United States itself in the event the agency
or instrumentality does not meet its commitment.
Variable Rate Securities -- Variable rate securities are
debt securities which have no fixed coupon rate. The amount of
interest to be paid to the holder typically is contingent upon
another specified rate, such as the yield on 90-day Treasury
bills. Variable rate securities may also include debt with an
interest rate which resets in the opposite direction of the rate
of the index upon which it is contingent. See "Other Information
- - Inverse Floating Obligations."
"When-Issued" Securities--Certain of the Funds may, from
time to time, purchase securities on a "when-issued" basis. The
price of "when-issued" securities is fixed at the time the
commitment to purchase is made, but delivery and payment for the
"when-issued" securities take place at a later date. Normally,
the settlement date occurs within one to two months of the date
of purchase. During the period between purchase and settlement,
no payment is made by the Fund to the issuer and no interest
accrues to the Fund. Such transactions therefore involve a risk
of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition the risk
of decline in value of the Fund's other assets. While "when-
issued" securities may be sold prior to the settlement date, the
Fund intends to purchase such securities with the purpose of
actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to
purchase a security on a "when-issued" basis, it will record the
transaction and reflect the value of the security in determining
its net asset value. Each Fund will establish a segregated
account in which it will maintain cash and marketable securities
equal in value to commitments for "when-issued" securities. Such
segregated securities either will mature or, if necessary, be
sold on or before the settlement date.
Purchase and sale of securities on a "forward commitment"
basis includes purchase of "when-issued" securities and involves
a commitment by a Fund to purchase or sell particular securities
with payment and delivery to take place at some future date,
normally one to two months after the date of the transaction. As
with "when-issued" securities, these transactions involve certain
risks to a Fund, but they also enable a Fund to hedge against
anticipated changes in interest rates and prices.
XIV. PERFORMANCE INFORMATION
Total Return Computations As indicated in the Prospectus,
the Funds may include in advertisements or sales literature
certain total return and yield information computed in the manner
described in the Prospectus. The following chart sets forth the
average annual total return quotations for each of the Funds for
certain specified periods of time ending December 31, 1996.
<TABLE>
<CAPTION>
Annual
-ized
Since
Commen-
cement
Annual- Annual- of
ized ized Opera-
5 10 tions Commence-
NAME OF FUND 1 Year Years Years <C> ment Date
<S> <C> <C> <C> <C>
Income Equity Fund 17.08% 14.45% 12.46% 14.57% 10/31/84
Capital Appreciation Fund 13.73% 14.04% 14.66% 15.48% 6/30/84
Special Equity Fund 24.75% 17.42% 17.60% 16.47% 6/30/84
International Equity Fund 12.77% 14.02% 10.62% 14.30% 12/31/85
Short Government Fund 3.89% 2.90% NA 5.21% 10/31/87
Short & Int. Bond Fund 4.15% 5.94% 6.97% 8.56% 6/30/84
Intermediate Mortgage Fund 3.33% 2.27% 6.36% 7.13% 5/31/86
Bond Fund 4.97% 8.94% 9.36% 11.37% 6/30/84
Global Bond Fund 4.39% NA NA 7.48% 3/25/94
</TABLE>
* The performance figures shown are calculated beginning with
each Fund's first full month of operation, with the exception of
the Global Bond Fund which is shown as of its actual inception
dates. Rates of return for the Funds are net of all direct fees
and expenses and (except for the Global Bond Fund) have been
restated to show the effect that each Fund's present advisory fee
expenses would have had on performance.
The average annual total return ("T") is computed by using
the redeemable value of the end of a specified period ("ERV") of
a hypothetical initial investment of $1,000 ("P") over a period
of time ("n") according to the formula: P(1+T)n=ERV.
Yield Computations (Income Equity Fund and the Income
Funds). As indicated in the Prospectuses, the Equity and the
Income Funds may advertise or include in sales literature yield
quotations based on a 30-day period. "Yield" refers to income
generated by an investment in the Fund during the previous 30-day
(or one-month) period. Yield is computed by dividing the net
investment income per share earned during the period by the
maximum offering price per share on the last day of the period,
according to the following formula:
a - b 6
YIELD = 2[( c*d +1) - 1]
For these purposes, a equals dividends and interest earned during
the period; b equals expenses accrued for the period (net of
reimbursements); c equals the average daily number of shares
outstanding during the period that were entitled to receive
dividends; and d equals the maximum offering price per share on
the last day of the period.
The figure is then annualized. That is, the amount of
income generated during the 30-day (or one-month) period is
assumed to be generated each month over a 12-month period and is
shown as a percentage of the investment. The Funds' yield
figures are based on historical earnings and are not intended to
indicate future performance. For the 30-day period ended
December 31, 1996, the annualized yield of the Income Equity Fund
and each of the Income Funds, was as follows:
<TABLE>
<CAPTION> 30-Day
Annualized Yield
Fund at 12/31/96
<S> <C>
Income Equity Fund 2.67%
Short Government Fund 5.08%
Short and Intermediate
Bond Fund 5.24%
Intermediate Mortgage Fund 5.64%
Bond Fund 6.39%
Global Bond Fund 4.66%
</TABLE>
<PAGE>
Performance Comparisons
As set forth in the Prospectus, the performance of any of
the Funds may be compared to the performance of other mutual
funds having similar objectives, expressed as a ranking prepared
by independent services or publications that monitor the
performance of mutual funds such as Lipper Analytical Services,
Inc. ("Lipper"), Morningstar, Inc., and IBC Money Fund Report.
In addition, any Fund's performance may be compared to that of
various unmanaged indices such as the Standard & Poor's 500 Stock
Price Index or the Dow Jones Industrial Average.
"Lipper-Fixed Income Fund Performance Analysis" is a monthly
publication prepared by Lipper, which tracks net assets, total
return, principal return and yield on approximately 950 fixed-
income mutual funds offered in the United States. Lipper also
prepares the "Lipper Composite Index," a performance benchmark
based upon the average performance of publicly offered stock
funds, bond funds, and money market funds as reported by Lipper.
Morningstar, Inc., a widely used independent research firm,
also ranks mutual funds by overall performance, investment
objectives and assets.
From time to time, in reports and sales literature, the
Funds may compare their performance, risk quality and liquidity
characteristics to money market funds, treasury bills and notes,
GIC's and various indices of unmanaged securities. Charts may be
shown depicting the relative yield and risk relationships between
the Fund and these indices. In general, instruments with shorter
maturities or durations tend to be less risky (have lower price
volatility) than those with longer maturities or durations. Risk
and yield tend to be greater for corporate issues than for
government securities or money market funds. Money market funds
invest only in high quality instruments that are denominated in
U.S. dollars and that have relatively short periods to maturity.
Accordingly, money market funds tend to have fairly low risk and
price volatility. The indices used, and the basis for these
comparisons, may include:
The IBC Money Market Fund Index, prepared IBC Financial
Data, Inc. in "IBC's Money Market Fund Report," a weekly
publication which tracks net assets, yield, maturity and
portfolio holdings on approximately 700 money market funds
offered in the U.S. Yields quoted on the IBC index are based on
a 30-day period.
Two-year Treasury notes or one-year Treasury bills, as
quoted in the Wall Street Journal or by other financial
institutions such as T. Rowe Price Associates, Inc. Yields on
these indices are generally higher than on money market funds,
but carry higher risk due to their longer durations.
Three Year GIC index, as quoted in the Wall Street Journal
and prepared by T. Rowe Price Associates, Inc. In general, GICs
will be riskier than comparable maturity government issues or
money funds, and will have a higher yield. While GICs do carry
"guarantees" as to the repayment of principal, these guarantees
are only backed by the company which underwrites the contract,
and could possibly default. In addition, GICs can be considered
illiquid due to their contractual terms; however their price
volatility is relatively stable as a result of this.
Unmanaged government and corporate indices published by
Merrill Lynch, Pierce, Fenner & Smith, Inc. Indices which may be
compared to the Short Government Fund include the Merrill Lynch 1-
10 Year High Quality Corporate Bond Index and the Corporate
Master Index. These indices are published in the Wall Street
Journal as well as in Merrill Lynch's "Taxable Bond Indices", a
monthly publication which lists principal, coupon and total
return on over 100 different taxable indices tracked by Merrill
Lynch.
XV. FINANCIAL STATEMENTS
The audited Financial Statements and the Notes thereto for
The Managers Funds, and the auditor's reports of Coopers &
Lybrand L.L.P., independent public accountants, are herein
incorporated by reference from The Managers Funds' Annual Reports
dated December 31, 1996.
<PAGE>
THE MANAGERS FUNDS
MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
Dated April 1, 1997
40 Richards Avenue, Norwalk, Connecticut 06854
Investor Services: (800) 835-3879
This Statement of Additional Information relates to the
Managers Money Market Fund (the "Money Market Fund" or the
"Fund"), one series of The Managers Funds, a no-load, open-end
management investment company organized as a Massachusetts
business trust (the "Trust"). Information about the other nine
series of the Trust is contained in the prospectuses for the
Equity Funds and Income Funds, and in a separate Statement of
Additional Information for those Funds, copies of which may be
obtained without charge by contacting the Trust at the address or
telephone number listed above.
This Statement of Additional Information is not a
prospectus; it should be read in conjunction with the Money
Market Fund Prospectus of the Trust, dated April 1, 1997, copies
of which may be obtained without charge by contacting the Trust
as noted above.
This Statement of Additional Information is authorized
for distribution to prospective investors only if preceded or
accompanied by an effective prospectus for the Money Market Fund.
<PAGE>
TABLE OF CONTENTS
I. INVESTMENT OBJECTIVE AND POLICIES 1
II. INVESTMENT RESTRICTIONS 5
III. TRUSTEES AND OFFICERS 7
IV. MANAGEMENT OF THE FUND AND THE PORTFOLIO 12
V. CUSTODIAN, TRANSFER AGENT AND
INDEPENDENT PUBLIC ACCOUNTANTS 15
VI. EXPENSES 15
VII. CODE OF ETHICS 16
VIII. NET ASSET VALUE 16
IX. CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES 17
X. PERFORMANCE DATA 17
XI. ORGANIZATION OF THE PORTFOLIO 18
XII. PORTFOLIO TRANSACTIONS 18
XIII. TAX INFORMATION 19
XIV. FINANCIAL STATEMENTS 20
<PAGE>
This Statement of Additional Information describes the
financial history, investment objectives and policies, management
and operation of the Managers Money Market Fund. The Fund
operates through a two-tiered master-feeder investment fund
structure. Prior to December 1, 1995, the Fund operated as a
free-standing mutual fund and not through the master-feeder
structure. Where indicated in this Statement of Additional
Information, historical information for the Fund includes
information from the period prior to commencement of operations
in the master-feeder structure.
INVESTMENT OBJECTIVE AND POLICIES
The Managers Money Market Fund (the "Money Market Fund" or
the "Fund") has an investment objective of maximizing current
income and maintaining a high level of liquidity. The Fund
attempts to achieve this objective by investing all of its
investable assets in The Money Market Portfolio (the
"Portfolio"), an open-end, diversified management investment
company having the same investment objective as the Money Market
Fund. The Portfolio is advised by Morgan Guaranty Trust Company
of New York ("Morgan" or the "Advisor").
The Portfolio seeks to achieve its investment objective by
maintaining a dollar-weighted average portfolio maturity of not
more than 90 days and by investing in U.S. dollar-denominated
securities described in the Prospectus and this Statement of
Additional Information that meet certain rating criteria, present
minimal credit risk and have effective maturities of 397 calendar
days or less. The Portfolio's ability to achieve maximum current
income is affected by its high quality standards. See "Quality
and Diversification Requirements."
The following discussion supplements the information
regarding the investment objective of the Fund and the policies
to be employed to achieve this objective by the Portfolio as set
forth above and in the Prospectus. The investment objective of
the Fund and of the Portfolio are identical. Accordingly,
references below to the Fund also include the Portfolio, and
references to the Portfolio also include the Fund, unless the
context requires otherwise.
Money Market Instruments
As discussed in the Prospectus, the Fund, through the
Portfolio, invests in money market instruments to the extent
consistent with its investment objective and policies. A
description of the various types of money market instruments that
may be purchased by the Portfolio appears below. See "Quality
and Diversification Requirements."
U.S. Treasury Securities. The Portfolio may invest in
direct obligations of the U.S. Treasury, including Treasury
bills, notes and bonds, all of which are backed as to principal
and interest payments by the full faith and credit of the United
States.
Additional U.S. Government Obligations. The Portfolio may
invest in obligations issued or guaranteed by U.S. Government
agencies or instrumentalities. These obligations may or may not
be backed by the "full faith and credit" of the United States.
In the case of securities not backed by the full faith and credit
of the United States, the Portfolio must look principally to the
federal agency issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or
instrumentality does not meet its commitments. Securities in
which the Portfolio may invest that are not backed by the full
faith and credit of the United States include, but are not
limited to, obligations of the Tennessee Valley Authority, the
Federal Home Loan Mortgage Corporation and the U.S. Postal
Service, each of which has the right to borrow from the U.S.
Treasury to meet its obligations. Securities in which the
Portfolio may invest that are not backed by the full faith and
credit of the United States include obligations of the Federal
Farm Credit System and the Federal Home Loan Banks, both of whose
obligations may be satisfied only by the individual credit of
each issuing agency. Securities which are backed by the full
faith and credit of the United States include obligations of the
Government National Mortgage Association, the Farmers Home
Administration, and the Export-Import Bank.
<PAGE>
Foreign Government Obligations. The Portfolio may also
invest in U.S. dollar denominated short-term obligations of
foreign sovereign governments or of their agencies,
instrumentalities, authorities or political subdivisions.
Bank Obligations. The Portfolio may invest in negotiable
certificates of deposit, time deposits and bankers' acceptances
of (i) banks, savings and loan associations and savings banks
which have more than $2 billion in total assets (the "Asset
Limitation") and are organized under laws of the United States or
any state, (ii) foreign branches of these banks or of foreign
banks of equivalent size (Euros) and (iii) U.S. branches of
foreign banks of equivalent size (Yankees). The Portfolio will
not invest in obligations for which the Advisor, or any of its
affiliated persons, is the ultimate obligor or accepting bank.
The Portfolio may also invest in obligations of international
banking institutions designated or supported by national
governments to promote economic reconstruction, development or
trade between nations (e.g., the European Investment Bank, the
Inter-American Development Bank, or the World Bank).
Commercial Paper. The Portfolio may invest in commercial
paper, including master demand obligations. Master demand
obligations are obligations that provide for a periodic
adjustment in the interest rate paid and permit daily changes in
the amount borrowed. Master demand obligations are governed by
agreements between the issuer and Morgan acting as agent, for no
additional fee, in its capacity as investment advisor to the
Portfolio and as fiduciary for other clients for whom it
exercises investment discretion. The monies loaned to the
borrower come from accounts managed by the Advisor or its
affiliates, pursuant to arrangements with such accounts.
Interest and principal payments are credited to such accounts.
The Advisor, acting as a fiduciary on behalf of its clients, has
the right to increase or decrease the amount provided to the
borrower under an obligation. The borrower has the right to pay
without penalty all or any part of the principal amount then
outstanding on an obligation together with interest to the date
of payment. Since these obligations typically provide that the
interest rate is tied to the Federal Reserve commercial paper
composite rate, the rate on master demand obligations is subject
to change. Repayment of a master demand obligation to
participating accounts depends on the ability of the borrower to
pay the accrued interest and principal of the obligation on
demand which is continuously monitored by the Advisor. Since
master demand obligations typically are not rated by credit
rating agencies, the Portfolio may invest in such unrated
obligations only if at the time of an investment the obligation
is determined by the Advisor to have a credit quality which
satisfies the Portfolio's quality restrictions. See "Quality and
Diversification Requirements." Although there is no secondary
market for master demand obligations, such obligations are
considered by the Portfolio to be liquid because they are payable
upon demand. The Portfolio does not have any specific percentage
limitation on investments in master demand obligations. It is
possible that the issuer of a master demand obligation could be a
client of Morgan to whom Morgan, in its capacity as a commercial
bank, has made a loan.
<PAGE>
Repurchase Agreements. The Portfolio may enter into
repurchase agreements with brokers, dealers or banks that meet
the credit guidelines approved by the Portfolio's Trustees. In a
repurchase agreement, the Portfolio buys a security from a seller
that has agreed to repurchase the same security at a mutually
agreed upon date and price. The resale price normally is in
excess of the purchase price, reflecting an agreed upon interest
rate. This interest rate is effective for the period of time the
Portfolio is invested in the agreement and is not related to the
coupon rate on the underlying security. A repurchase agreement
may also be viewed as a fully collateralized loan of money by the
Portfolio to the seller. The period of these repurchase
agreements will usually be short, from overnight to one week, and
at no time will the Portfolio invest in repurchase agreements for
more than thirteen months. The securities which are subject to
repurchase agreements, however, may have maturity dates in excess
of thirteen months from the effective date of the repurchase
agreement. The Portfolio will always receive securities as
collateral whose market value is, and during the entire term of
the agreement remains, at least equal to 100% of the dollar
amount invested by the Portfolio in the agreement plus accrued
interest, and the Portfolio will make payment for such securities
only upon the physical delivery or upon evidence of book entry
transfer to the account of the Custodian. The Portfolio will be
fully collateralized within the meaning of paragraph (a) (4) of
Rule 2a-7 under the Investment Company Act of 1940, as amended
(the "1940 Act"). If the seller defaults, the Portfolio might
incur a loss if the value of the collateral securing the
repurchase agreement declines and might incur disposition costs
in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller
of the security, realization upon disposal of the collateral by
the Portfolio may be delayed or limited.
The Portfolio may make investments in other debt securities
with remaining effective maturities of not more than thirteen
months, including without limitation corporate and foreign bonds,
asset-backed securities and other obligations described in the
Prospectus or this Statement of Additional Information.
Additional Investments
When-Issued and Delayed Delivery Securities. The Portfolio
may purchase securities on a when-issued or delayed delivery
basis. For example, delivery of and payment for these securities
can take place a month or more after the date of the purchase
commitment. The purchase price and interest rate payable, if
any, on the securities are fixed on the purchase commitment date
or at the time the settlement date is fixed. The value of such
securities is subject to market fluctuation and for money market
instruments, no interest accrues to the Portfolio until
settlement takes place. At the time the Portfolio makes the
commitment to purchase securities on a when-issued or delayed
delivery basis, it will record the transaction, reflect the value
each day of the securities in determining its net asset value, if
appliacable, and calculate the maturity for the purposes of
average maturity from that date. At the time of settlement, a
when-issued security may be valued at less than the purchase
price. To facilitate such acquisitions, the Portfolio will
maintain with the Custodian a segregated account with liquid
assets consisting of cash, U.S. Government securities or other
appropriate securities, in an amount at least equal to such
commitments. On delivery dates for such transactions, the
Portfolio will meet its obligations from maturities or sales of
the securities held in the segregated account and/or from cash
flow. If the Portfolio chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation,
incur a gain or loss due to market fluctuation. It is currently
the policy of the Portfolio not to enter into when-issued
commitments exceeding in the aggregate 15% of the market value of
the Portfolio's total assets less liabilities other than the
obligations created by when-issued commitments.
<PAGE>
Investment Company Securities. Securities of other
investment companies may be acquired by the Fund and the
Portfolio to the extent permitted under the 1940 Act. These
limits require that, as determined immediately after a purchase
is made, (i) not more than 5% of the value of the Portfolio's
total assets will be invested in the securities of any one
investment company, (ii) not more than 10% of the value of its
total assets will be invested in the aggregate in securities of
investment companies as a group, and (iii) not more than 3% of
the outstanding voting stock of any one investment company will
be owned by the Portfolio, provided however, that the Fund may
invest all of its investable assets in an open-end investment
company that has the same investment objective as the Fund (e.g.,
the Portfolio). As a shareholder of another investment company,
the Portfolio would bear, along with other shareholders, its pro
rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to
the advisory and other expenses that the Portfolio bears directly
in connection with its operations. The Portfolio has applied for
exemptive relief from the Securities and Exchange Commission
("SEC") to permit the Portfolio to invest in affiliated
investment companies. If the requested relief is granted, the
Portfolio would then be permitted to invest in affiliated funds,
subject to certain conditions specified in the applicable order.
Reverse Repurchase Agreements. The Portfolio may enter into
reverse repurchase agreements. In a reverse repurchase
agreement, the Portfolio sells a security and agrees to
repurchase the same security at a mutually agreed upon date and
price. For purposes of the 1940 Act, a reverse repurchase
agreement is also considered as the borrowing of money by the
Portfolio, and, therefore, a form of leverage. The Portfolio
will invest the proceeds of the borrowings under reverse
repurchase agreements. In addition, the Portfolio will enter
into a reverse repurchase agreement only when the interest income
to be earned from the investment of the proceeds is greater than
the interest expense of the transaction. The Portfolio will not
invest the proceeds of a reverse repurchase agreement for a
period which exceeds the duration of the reverse repurchase
agreement. The Portfolio will establish and maintain with the
Custodian a separate account with a segregated portfolio of
securities in an amount at least equal to its purchase
obligations under its reverse repurchase agreements. If interest
rates rise during the term of a reverse repurchase agreement,
entering into the reverse repurchase agreement may have a
negative impact on the Money Market Fund's ability to maintain a
net asset value of $1.00 per share. See "Investment
Restrictions."
<PAGE>
Loans of Portfolio Securities. The Portfolio may lend its
securities in an amount up to 33 1/3% of the value of its net
assets if such loans are secured continuously by cash or
equivalent collateral or by a letter of credit in favor of the
Portfolio at least equal at all times to 100% of the market value
of the securities loaned, plus accrued interest. While such
securities are on loan, the borrower will pay the Portfolio any
income accruing thereon. Loans will be subject to termination by
the Portfolio in the normal settlement time, generally three
business days after notice, or by the borrower on one day's
notice. Borrowed securities must be returned when the loan is
terminated. Any gain or loss in the market price of the borrowed
securities which occurs during the term of the loan inures to the
Portfolio and its respective investors. The Portfolio may pay
reasonable finders' and custodial fees in connection with a loan.
In addition, the Portfolio will consider all facts and
circumstances, including the creditworthiness of the borrowing
financial institution, and the Portfolio will not make any loans
in excess of one year. The Portfolio will not lend its
securities to any officer, Trustee, Director, employee, or other
affiliate of the Portfolio, the Advisor or Funds Distributor,
Inc. unless otherwise permitted by applicable law.
Privately Placed and Certain Unregistered Securities. The
Portfolio may invest in privately placed, restricted, Rule 144A
or other unregistered securities as described in the Prospectus.
As to illiquid investments, the Portfolio is subject to a
risk that should the Portfolio decide to sell them when a ready
buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net
assets could be adversely affected. Where an illiquid security
must be registered under the Securities Act of 1933, as amended,
(the "1933 Act") before it may be sold, the Portfolio may be
obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision
to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the
Portfolio might obtain a less favorable price than prevailed when
it decided to sell.
Synthetic Instruments. The Portfolio may invest in certain
synthetic instruments. Such instruments generally involve the
deposit of asset-backed securities in a trust arrangement and the
issuance of certificates evidencing interests in the trust. The
certificates are generally sold in private placements in reliance
on Rule 144A.
Foreign Investments. The Portfolio may invest in certain
foreign securities. All investments of the Portfolio must,
however, be U.S. dollar denominated, and any foreign commercial
paper must not be subject to foreign withholding tax at the time
of purchase.
For a description of the risks associated with investing in
foreign securities, see "Foreign Investment Information" in the
Prospectus.
Quality and Diversification Requirements
The Portfolio intends to meet the diversification
requirements of the 1940 Act. To meet these requirements, 75% of
the assets of the Portfolio are subject to the following
fundamental limitations: (1) the Portfolio may not invest more
than 5% of its total assets in the securities of any one issuer,
except obligations of the U.S. Government, its agencies and
instrumentalities, and (2) the Portfolio may not own more than
10% of the outstanding voting securities of any one issuer. As
for the other 25% of the Portfolio's assets not subject to the
limitation described above, there is no limitation on investment
of these assets under the 1940 Act, so that all of such assets
may be invested in the securities of any one issuer, subject to
the limitation of any applicable state securities laws, or as
described below. Investments not subject to the limitations
described above could involve an increased risk to the Portfolio
should an issuer, or a state or its related entities, be unable
to make interest or principal payments or should the market value
of such securities decline.
<PAGE>
In order to attain the Fund's objective of maintaining a
stable net asset value, the Portfolio will (i) limit its
investment in the securities (other than U.S. Government
securities) of any one issuer to no more than 5% of its assets,
measured at the time of purchase, except for investments held for
not more than three business days (subject, however, to the
investment restriction No. 4 set forth under "Investment
Restrictions" below); and (ii) limit investments to securities
that present minimal credit risks and securities (other than U.S.
Government securities) that are rated within the highest short-
term rating category by at least two nationally recognized
statistical rating organizations ("NRSROs") or by the only NRSRO
that has rated the security. Securities which originally had a
maturity of over one year are subject to more complicated, but
generally similar rating requirements. A description of
illustrative credit ratings is set forth in Appendix A attached
to this Statement of Additional Information. The Portfolio may
also purchase unrated securities that are of comparable quality
to the rated securities described above. Additionally, if the
issuer of a particular security has issued other securities of
comparable priority and security and which have been rated in
accordance with (ii) above, that security will be deemed to have
the same rating as such other rated securities.
In addition, the Board of Trustees of the Portfolio has
adopted procedures which (i) require the Board of Trustees to
approve or ratify purchases by the Portfolio of securities (other
than U.S. Government securities) that are rated by only one NRSRO
or that are unrated; (ii) require the Portfolio to maintain a
dollar-weighted average portfolio maturity of not more than 90
days and to invest only in securities with a remaining maturity
of not more than thirteen months; and (iii) require the
Portfolio, in the event of certain downgradings of or defaults on
portfolio holdings, to dispose of the holding, subject in certain
circumstances to a finding by the Trustees that disposing of the
holding would not be in the Portfolio's best interest.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the
Trust with respect to the Fund and by the Portfolio. Except
where otherwise noted, these investment restrictions are
"fundamental" policies which under the 1940 Act, may not be
changed without the vote of a majority of the outstanding voting
securities of the Fund or Portfolio, respectively. A "majority
of the outstanding voting securities" is defined in the 1940 Act
as the lesser of (a) 67% or more of the voting securities present
at a meeting if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy, or (b)
more than 50% of the outstanding voting securities. The
percentage limitations contained in the restrictions below apply
at the time of the purchase of securities. If the Fund is
requested to vote on a change in the fundamental investment
restrictions of the Portfolio, the Trust will hold a meeting of
Fund shareholders and cast its votes as instructed by the
shareholders.
<PAGE>
The investment restrictions of the Fund and the Portfolio
are substantially identical, unless as otherwise specified.
Accordingly, references below to the Fund also include the
Portfolio unless the context requires otherwise.
The Fund may not:
1. Issue senior securities, except as may otherwise be
permitted by the following investment restrictions or under the
1940 Act or any rule, order or interpretation thereunder. (This
is a non-fundamental policy with respect to the Portfolio);
2. Enter into reverse repurchase agreements, which
together with any other borrowing exceeds in the aggregate one-
third of the market value of the Fund's total assets, less
liabilities other than obligations created by reverse repurchase
agreements;
3. Borrow money (not including reverse repurchase
agreements), except from banks for temporary or extraordinary or
emergency purposes and then only in amounts up to 10% of the
value of the Fund's total assets, taken at cost, at the time of
such borrowing (and provided that such borrowings and reverse
repurchase agreements do not exceed in the aggregate one-third of
the market value of the Fund's total assets less liabilities
other than the obligations represented by the bank borrowings and
reverse repurchase agreements). Mortgage, pledge, or hypothecate
any assets except in connection with any such borrowing and in
amounts up to 10% of the value of the Fund's net assets at the
time of such borrowing. The Fund will not purchase securities
while borrowings exceed 5% of the Fund's total assets; provided,
however, that the Fund may increase its interest in an open-end
management investment company with the same investment objective
and restrictions as the Fund while such borrowings are
outstanding. This borrowing provision is included to facilitate
the orderly sale of portfolio securities, for example, in the
event of abnormally heavy redemption requests, and is not for
investment purposes;
4. Purchase the securities or other obligations of any one
issuer if, immediately after such purchase, more than 5% of the
value of the Fund's total assets would be invested in securities
or other obligations of any one such issuer; provided, however,
that the Fund may invest all or part of its investable assets in
an open-end management investment company with the same
investment objective and restrictions as the Fund. This
limitation shall not apply to issues of the U.S. Government, its
agencies or instrumentalities and to permitted investments of up
to 25% of the Fund's total assets;
5. Purchase the securities or other obligations of issuers
conducting their principal business activity in the same industry
if, immediately after such purchase, the value of its investment
in such industry would exceed 25% of the value of the Fund's
total assets; provided, however, that the Fund may invest all or
part of its investable assets in an open-end management
investment company with the same investment objective and
restrictions as the Fund. For purposes of industry
concentration, there is no percentage limitation with respect to
investments in U.S. Government securities, negotiable
certificates of deposit, time deposits, and bankers' acceptances
of U.S. branches of U.S. banks;
<PAGE>
6. Make loans, except through purchasing or holding debt
obligations, or entering into repurchase agreements, or loans of
portfolio securities in accordance with the Fund's investment
objective and policies (see "Investment Objective and Policies");
7. Purchase or sell puts, calls, straddles, spreads, or
any combination thereof, real estate, commodities, or commodity
contracts or interests in oil, gas, or mineral exploration or
development programs. However, the Fund may purchase bonds or
commercial paper issued by companies which invest in real estate
or interests therein including real estate investment trusts;
8. Purchase securities on margin, make short sales of
securities, or maintain a short position, provided that this
restrictions shall not be deemed to be applicable to the purchase
or sale of when-issued securities or of securities for delivery
at a future date;
9. Acquire securities of other investment companies,
except as permitted by the 1940 Act;
10. Act as an underwriter of securities; or
11. Acquire any illiquid securities, such as repurchase
agreements with more than seven days to maturity or fixed time
deposits with a duration of over seven calendar days if, as a
result thereof, more than 10% of the market value of the Fund's
net assets would be in investments that are illiquid. (This is a
non-fundamental policy with respect to the Fund; in the case of
the Portfolio, the percentage limitation is applicable to the
Portfolio's total assets).
TRUSTEES AND OFFICERS
The Trust and the Portfolio are governed by two separate
Boards of Trustees. The Trust, which has ten separate investment
portfolios, including the Money Market Fund, is governed by the
Trustees of the Trust, who provide broad supervision over the
affairs of the Trust and the Fund. The Trustees and officers of
the Trust are listed below together with their principal
occupations during at least the past five years, as well as the
Trustees' dates of birth. References to The Managers Funds, L.P.,
the Fund Administrator, should be read to apply to Evaluation
Associates Investment Management Company, the predecessor of The
Managers Funds, L.P., for periods prior to August 17, 1990.
<PAGE>
<TABLE>
<CAPTION>
Name, Address and Position with Principal Occupation During Past
Trust 5 Years
<S> <C>
ROBERT P. WATSON2 President and Trustee of The
40 Richards Avenue Managers Funds; Chairman and
Norwalk, CT 06854 Chief Executive Officer,
Chief Executive Officer, Evaluation Associates Investment
President, Trustee Management Company (predecessor
of The Managers Funds, L.P.)
Date of birth: 1/21/34 (prior to June 1988 and from
August 1989 to August 1990);
Partner, The Managers Funds, L.P.
(since August 1990); Executive
Vice President, Evaluation
Associates, Inc. (June 1988 to
August 1989).
WILLIAM W. GRAULTY Practicing Attorney (1977 to
65 LaSalle Road present); Executive Vice
West Hartford, CT 06107 President and Head of Trust
Trustee Division, The Connecticut Bank
and Trust Company, N.A. (1956 to
Date of birth: 12/30/23 1976); President, American
Bankers Association, Trust
Division (1974 to 1975);
President Connecticut Bankers
Association, Trust Division (1966
to 1968).
Name, Address and Position with Principal Occupation During Past
Trust 5 Years
MADELINE H. McWHINNEY President, Dale, Elliott &
24 Blossom Cove Company (management consultants)
Middletown, NJ 07701 (1977 to present); Assistant Vice
Trustee President and Financial
Economist, Federal Reserve Bank
Date of birth: 3/11/22 of New York (1943 to 1973);
Trustee and Treasurer, Institute
of International Education (since
1975); Assistant Director,
Operations, Whitney Museum of
American Art (1983 to 1986);
Member, Advisory Committee on
Professional Ethics, New Jersey
Supreme Court (March 1983 to
present).
STEVEN J. PAGGIOLI Executive Vice President and
479 West 22nd Street Director, Wadsworth & Associates,
New York, NY 10011 Inc. (1986 to present); Vice
Trustee President, Secretary and
Date of birth: 4/3/50 Director, First Fund
Distributors, Inc. (1991 to
present); Vice President,
Secretary and Director;
Investment Company Administration
Corporation (1990 to present);
President and Director,
Southampton Investment Management
Company, Inc. (1991 to present);
Trustee of Professionally Managed
Portfolios (1991 to present).
THOMAS R. SCHNEEWEIS Professor of Finance (1985 to
University of Massachusetts present), Associate Professor of
School of Management Finance (1980-1985), Ph.D.
Amherst, MA 01003 Director (Acting) (1985 to 1986),
Trustee Chairman (Acting) Department of
Date of birth: 5/10/47 General Business and Finance
(1981-1982), and Assistant
Professor of Finance (1977-1980),
University of Massachusetts;
Teaching Assistant, University of
Iowa Principal Occupation (1973-
1977); Financial Consultant,
Ehlers and Associates (1970-
1973).
PETER M. LEBOVITZ Director of Marketing, The
40 Richards Avenue Managers Funds, L.P. (September
Norwalk, CT 06854 1994 to present); Director of
Vice President Marketing, Hyperion Capital
Management, Inc. (June 1993 to
June 1994); Senior Vice President
and Chief Investment Officer,
Greenwich Asset Management, Inc.
(April 1989 to June 1993)
DONALD S. RUMERY Director of Operations, The
40 Richards Avenue Managers Funds, L.P. (December
Norwalk, CT 06854 1994 to present)
Treasurer (Principal Financial Vice President, Signature
and Accounting Officer) Financial Group (March 1990 to
December 1994)
Vice President, The Putnam
Companies (August 1980 to March
1990).
KATHLEEN WOOD Vice President (July 1992 to
40 Richards Avenue present) and Assistant Vice
Norwalk, CT 06854 President (August 1989 to June
Secretary 1992), The Managers Funds, L.P.;
Analyst, Evaluation Associates,
Inc. (May 1986 to August 1989).
<PAGE>
Name, Address and Position with Principal Occupation During Past
Trust 5 Years
GIANCARLO (JOHN) E. ROSATI Vice President (July 1992 to
40 Richards Avenue Present) and Assistant Vice
Norwalk, CT 06854 President (July 1986 to June
Assistant Treasurer 1992), The Managers Funds, L.P.;
Accountant, Gintel Co. (June 1980
to June 1986).
PETER M. McCABE Portfolio Administrator, The
40 Richards Avenue Managers Funds, L.P. (August 1995
Norwalk, CT 06854 to present); Portfolio
Assistant Treasurer Administrator, Oppenheimer
Capital, L.P. (July 1994 to
August 1995); College Student
(September 1990 to June 1994).
</TABLE>
The Trust's Disinterested Trustees receive an annual
retainer of $10,000, and meeting fees of $750 for each in-person
meeting attended and $200 for participating in each telephonic
meeting. There are no pension or retirement benefits provided by
the Trust or any affiliate of the Trust to the Trustees. The
Trust does not pay compensation to its officers. The following
chart sets forth the aggregate compensation paid to each
Disinterested Trustee for the year ended December 31, 1996:
<TABLE>
<CAPTION>
Aggregate Total Compensation
from
Compensation Registrant and
Fund
Name of Trustee from Fund Complex Paid to
Trustees
<S> <C> <C>
William W. Graulty $520 $12,250
Madeline H. McWhinney 550 13,000
Steven J. Paggioli 550 13,000
Thomas R. Schneeweis 550 13,000
</TABLE>
As indicated above, certain of the Trust's officers also
hold positions with The Managers Funds, L.P., the Fund
Administrator. All Trustees and officers as a group owned less
than 1% of the shares of the Fund outstanding as of the date of
this Statement of Additional Information.
The Trustees of the Portfolio, their business addresses,
their principal occupations during the past five years and dates
of birth are set forth below.
Frederick S. Addy - Trustee; Retired; Executive Vice
President and Chief Financial Officer since prior to April 1994,
Amoco Corporation. His address is 5300 Arbutus Cove, Austin, TX
78746. Birthdate January 1, 1932.
William G. Burns - Trustee; Retired; Former Vice Chairman
and Chief Financial Officer, NYNEX. His address is 2200 Alaqua
Drive, Longwood, FL 32779. Birthdate November 2, 1932.
<PAGE>
Arthur C. Eschenlauer - Trustee; Retired: Former Senior Vice
President, Morgan Guaranty Trust Company of New York. His
address is 14 Alta Vista Drive, RD #2, Princeton, NJ 08540.
Birthdate May 23, 1934.
Matthew Healey (1) - Trustee, Chairman and Chief Executive
Officer; Chairman, Pierpont Group, Inc., since prior to 1992.
His address is Pine Tree Club Estates, 10286 Saint Andrews Road,
Boynton Beach, FL 33436. Birthdate August 23, 1937.
Michael P. Mallardi - Trustee; Retired; Senior Vice
President, Capital Cities/ABC, Inc., and President, Broadcast
Group, since prior to April 1996. His address is 10 Charnwood
Drive, Suffern, NY 10910. Birthdate March 17, 1934.
(1) Mr. Healey is an "interested person" of the Portfolio as
that term is defined in the 1940 Act.
Each Trustee of the Portfolio is currently paid an annual
fee of $65,000 for serving as Trustee of the Portfolio as well as
17 other investment companies which are affiliated with the
Advisor and is reimbursed for expenses incurred in connection
with service as a Trustee. The Trustees may hold various other
directorships unrelated to these funds. Trustee compensation
expenses accrued by the Portfolio for the calendar year ended
December 31, 1996 are set forth below.
<TABLE>
<CAPTION>
Aggregate Total
Trustee
Trustee
Compensation Accrued by
Compensation the
Master Portfolios*, The
Accrued by the JPM
Pierpont Funds and JPM
Name of Trustee Portfolio during 1996 Institutional
Funds during 1996***
<S> <C> <C>
Frederick S. Addy, Trustee$11,349 $65,000
William G. Burns, Trustee 11,349 65,000
Arthur C. Eschenlauer, Trustee11,349 65,000
Matthew Healey, Trustee, 11,349 65,000
Chairman and Chief Executive
Officer**
Michael P. Mallardi, Trustee11,349 65,000
</TABLE>
*Includes the Portfolio and 21 other portfolios (collectively,
the "Master Portfolios") for which Morgan acts as investment
advisor.
**During 1996, Pierpont Group, Inc. paid Mr. Healey, in his role
as Chairman of Pierpont Group, Inc., compensation in the amount
of $140,000, contributed $21,000 to a defined contribution plan
on his behalf and paid $21,500 in insurance premiums for his
benefit.
***No investment company within the Portfolio's fund complex has
a pension or retirement plan. Currently, there are 18 investment
companies (15 investment companies comprising the Master
Portfolios, The JPM Pierpont Funds, The JPM Institutional Funds
and JPM Series Trust) in the Portfolio's fund complex.
<PAGE>
The Trustees of the Portfolio, in addition to reviewing
actions of the Portfolio's various service providers, decide upon
matters of general policy. The Portfolio has entered into a
Portfolio Fund Services Agreement with Pierpont Group, Inc. to
assist the Trustees in exercising their overall supervisory
responsibilities over the affairs of the Portfolio. Pierpont
Group, Inc. was organized in July 1989 to provide services for
The Pierpont Family of Funds, and the Trustees of the Portfolio
are the equal and sole shareholders of Pierpont Group, Inc. The
Portfolio has agreed to pay Pierpont Group, Inc. a fee in an
amount approximating its reasonable costs in performing these
services to the Portfolio and certain other registered investment
companies subject to similar agreements with Pierpont Group, Inc.
These costs are periodically reviewed by the Trustees.
The aggregate fees paid to Pierpont Group, Inc. by the
Portfolio during the fiscal year ended November 30, 1994,
November 30, 1995 and November 30, 1996 were $246,089, $261,045
and $157,428, respectively.
The Portfolio's executive officers (listed below), other
than the Chief Executive Officer, are provided and compensated by
Funds Distributor, Inc. ("FDI"), a wholly-owned indirect
subsidiary of Boston Institutional Group, Inc. The Portfolio's
officers conduct and supervise the business operations of the
Portfolio. The Portfolio has no employees.
Officers of the Portfolio
The officers of the Portfolio, their principal occupations
during the past five years and dates of birth are set forth
below. The business address of each of the officers unless
otherwise noted is Funds Distributor, Inc., 60 State Street,
Suite 1300, Boston, Massachusetts 02109.
MATTHEW HEALEY; Chief Executive Officer; Chairman, Pierpont
Group, since prior to 1992. His address is Pine Tree Club
Estates, 10286 Saint Andrews Road, Boynton Beach, FL 33436. His
date of birth is August 23, 1937.
MARIE E. CONNOLLY; Vice President and Assistant Treasurer.
President, Chief Executive Officer and Director of FDI and
Premier Mutual Fund Services, Inc., an affiliate of FDI ("Premier
Mutual") and an officer of certain investment companies advised
or administered by the Dreyfus Corporation ("Dreyfus") or its
affiliates. From December 1991 to July 1994, Ms. Connolly was
President and Chief Compliance Officer of FDI. Her date of birth
is August 1, 1957.
DOUGLAS C. CONROY; Vice President and Assistant Treasurer.
Supervisor of Treasury Services and Administration of FDI and an
officer of certain investment companies advised or administered
by Dreyfus or its affiliates. From April 1993 to January 1995,
Mr. Conroy was a Senior Fund Accountant for Investors Bank &
Trust Company. From December 1991 to March 1993, Mr. Conroy was
employed as a fund accountant at The Boston Company, Inc. His
date of birth is March 31, 1969.
<PAGE>
JACQUELINE HENNING; Assistant Secretary and Assistant
Treasurer. Managing Director, State Street Cayman Trust Company,
Ltd. since October 1994. Prior to October 1994, Mrs. Henning was
head of mutual funds at Morgan Grenfell in Cayman and for five
years was Managing Director of Bank of Nova Scotia Trust Company
(Cayman) Limited from September 1988 to September 1993. Address:
P.O. Box 2508 GT, Elizabethan Square, 2nd Floor, Shedden Road,
George Town, Grand Cayman, Cayman Islands. Her date of birth is
March 24, 1942.
RICHARD W. INGRAM; President and Treasurer. Senior Vice
President and Director of Client Services and Treasury
Administration of FDI, Senior Vice President of Premier Mutual
and an officer of RCM Capital Funds, Inc., RCM Equity Funds, Inc.
(together "RCM"), Waterhouse Investors Cash Management Fund, Inc.
("Waterhouse") and certain investment companies advised or
administered by Dreyfus or Harris Trust and Savings Bank
("Harris") or their respective affiliates. From March 1994 to
November 1995, Mr. Ingram was Vice President and Division Manager
of First Data Investor Services Group, Inc. From 1989 to 1994,
Mr. Ingram was Vice President, Assistant Treasurer and Tax
Director - Mutual Funds of The Boston Company, Inc. His date of
birth is September 15, 1955.
KAREN JACOPPO-WOOD; Vice President and Assistant Secretary.
Assistant Vice President of FDI and an officer of RCM and Harris
or their respective affiliates. From June 1994 to January 1996,
Ms. Jacoppo-Wood was a Manager, SEC Registration, Scudder,
Stevens & Clark, Inc. From 1988 to May 1994, Ms. Jacoppo-Wood
was a senior paralegal at The Boston Company Advisors, Inc.
("TBCA"). Her date of birth is December 29, 1966.
ELIZABETH A. KEELEY; Vice President and Assistant Secretary.
Vice President and Senior Counsel of FDI and Premier Mutual and
an officer of RCM, Waterhouse and certain investment companies
advised or administered by Dreyfus or Harris or their respective
affiliates. Prior to August 1996, Ms. Keeley was Assistant Vice
President and Counsel of FDI and Premier Mutual. Prior to
September 1995, Ms. Keeley was enrolled at Fordham University
School of Law and received her JD in May 1995. Prior to
September 1992, Ms. Keeley was an assistant at the National
Association for Public Interest Law. Address: FDI, 200 Park
Avenue, New York, New York 10166. Her date of birth is September
14, 1969.
CHRISTOPHER J. KELLEY; Vice President and Assistant
Secretary. Vice President and Associate General Counsel of FDI
and Premier Mutual and an officer of Waterhouse and certain
investment companies advised or administered by Harris or its
affiliates. From April 1994 to July 1996, Mr. Kelley was
Assistant Counsel at Forum Financial Group. From 1992 to 1994,
Mr. Kelley was employed by Putnam Investments in legal and
compliance capacities. Prior to September 1992, Mr. Kelley was
enrolled at Boston College Law School and received his JD in May
1992. His date of birth is December 24, 1964.
LENORE J. MCCABE; Assistant Secretary and Assistant
Treasurer. Assistant Vice President, State Street Bank and Trust
Company since November 1994. Assigned as Operations Manager,
State Street Cayman Trust Company, Ltd. since February 1995.
Prior to November, 1994, employed by Boston Financial Data
Services, Inc. as Control Group Manager. Address: P.O. Box 2508
GT, Elizabethan Square, 2nd Floor, Shedden Road, George Town,
Grand Cayman, Cayman Islands. Her date of birth is May 31, 1961.
<PAGE>
MARY A. NELSON; Vice President and Assistant Treasurer.
Vice President and Manager of Treasury Services and
Administration of FDI, an officer of RCM, Waterhouse and certain
investment companies advised or administered by Dreyfus or Harris
or their respective affiliates. From 1989 to 1994, Ms. Nelson
was an Assistant Vice President and client manager for The Boston
Company, Inc. Her date of birth is April 22, 1964.
JOHN E. PELLETIER; Vice President and Secretary. Senior
Vice President and General Counsel of FDI and Premier Mutual and
an officer of RCM, Waterhouse and certain investment companies
advised or administered by Dreyfus or Harris or their respective
affiliates. From February 1992 to April 1994, Mr. Pelletier
served as Counsel for TBCA. From August 1990 to February 1992,
Mr. Pelletier was employed as an Associate at Ropes & Gray. His
date of birth is June 24, 1964.
JOSEPH F. TOWER III; Vice President and Assistant Treasurer.
Senior Vice President, Treasurer and Chief Financial Officer of
FDI and Premier Mutual and an officer of Waterhouse and certain
investment companies advised or administered by Dreyfus or its
affiliates. From July 1988 to November 1993, Mr. Tower was
Financial Manager of The Boston Company, Inc. His date of birth
is June 13, 1962.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
INVESTMENT ADVISOR AND ADMINISTRATIVE SERVICES AGENT
The investment advisor to the Portfolio is Morgan Guaranty
Trust Company of New York ("Morgan" or the "Advisor"), a wholly-
owned subsidiary of J.P. Morgan & Co. Incorporated ("J.P.
Morgan"), a bank holding company organized under the laws of the
State of Delaware. The Advisor, whose principal offices are at
60 Wall Street, New York, New York 10260, is a New York trust
company which conducts a general banking and trust business. The
Advisor is subject to regulation by the New York State Banking
Department and is a member bank of the Federal Reserve System.
Through offices in New York City and abroad, the Advisor offers a
wide range of services, primarily to governmental, institutional,
corporate and individual customers in the United States and
throughout the world.
The investment advisory services the Advisor provides to the
Portfolio are not exclusive under the terms of the Advisory
Agreement. The Advisor is free to and does render similar
investment advisory services to others. The Advisor serves as
investment advisor to personal investors and other investment
companies and acts as fiduciary for trusts, estates and employee
benefit plans. Certain of the assets of trusts and estates under
management are invested in common trust funds for which the
Advisor serves as trustee. The accounts which are managed or
advised by the Advisor have varying investment objectives and the
Advisor invests assets of certain of such accounts in investments
substantially similar to, or the same as, those which are
expected to constitute the principal investments of the
Portfolio. Such accounts are supervised by officers and
employees of the Advisor who may also be acting in similar
capacities for the Portfolio. See "Portfolio Transactions."
<PAGE>
J. P. Morgan, through the Advisor and other subsidiaries,
acts as investment advisor to individuals, governments,
corporations, employee benefit plans, mutual funds and other
institutional investors with combined assets under management of
$208 billion.
J.P. Morgan has a long history of service as adviser,
underwriter and lender to an extensive roster of major companies
and as financial advisor to national governments. The firm,
through its predecessor firms, has been in business for over a
century and has been managing investments since 1913.
The basis of the Advisor's investment process is fundamental
investment research, as the firm believes that fundamentals
should determine an asset's value over the long term. Morgan
currently employs 104 full-time research analysts devoted to
equity, fixed income, capital market, credit and economic
research in investment management divisions located in New York,
London, Tokyo, Frankfurt, Melbourne and Singapore to cover
countries, industries and companies on site. Morgan's fixed
income investment process is based on analysis of real rates,
sector diversification and quantitative and credit analysis.
Sector weightings are generally similar to a benchmark with
the emphasis on security selection as the method to achieve
investment performance superior to the benchmark. The benchmark
for the Portfolio in which the Fund invests is currently IBC
Financial Data, Inc.'s Tier-One Money Fund Average.
J. P. Morgan Investment Management Inc., also a wholly-owned
subsidiary of J. P. Morgan, is a registered investment adviser
under the Investment Advisers Act of 1940, as amended, which
manages employee benefit funds of corporations, labor unions and
state and local governments and the accounts of other
institutional investors, including investment companies. Certain
of the assets of employee benefit accounts under its management
are invested in commingled pension trust funds for which Morgan
serves as trustee. J. P. Morgan Investment Management Inc.
advises the Advisor on investment of the commingled pension trust
funds.
The Portfolio is managed by officers of the Advisor who, in
acting for their customers, including the Portfolio, do not
discuss their investment decisions with any personnel of J. P.
Morgan or any personnel of other divisions of the Advisor or with
any of its affiliated persons, with the exception of J. P. Morgan
Investment Management Inc.
As compensation for the services rendered and related
expenses such as salaries of advisory personnel borne by the
Advisor under the Advisory Agreement, the Portfolio has agreed to
pay the Advisor a fee, which is computed daily and may be paid
monthly, equal to the annual rate of 0.20% of the Portfolio's
average daily net assets up to $1 billion and 0.10% of net assets
in excess of $1 billion.
<PAGE>
The advisory fees paid by the Portfolio to the Advisor are
as follows: For the fiscal year ended November 30, 1994:
$3,423,576. For the fiscal year ended November 30, 1995:
$3,913,479. For the fiscal year ended November 30, 1996:
$4,503,793.
The Investment Advisory Agreement provides that it will
continue in effect for a period of two years after execution only
if specifically approved thereafter annually. The Investment
Advisory Agreement will terminate automatically if assigned and
is terminable at any time without penalty by a vote of a majority
of the Portfolio's outstanding voting securities, on 60 days'
written notice to the Advisor and by the Advisor on 90 days'
written notice to the Portfolio. See "Additional Investment
Information and Risk Factors."
Prior to December 1, 1995, the Money Market Fund invested
directly in portfolio securities and paid advisory fees to its
own investment adviser. For the eleven months ended November 30,
1995 and for the fiscal years ended December 31, 1994 and 1993,
fees paid to such adviser were $42,050, $15,126 and $6,297,
respectively.
The Glass-Steagall Act and other applicable laws generally
prohibit banks such as the Advisor from engaging in the business
of underwriting or distributing securities, and the Board of
Governors of the Federal Reserve System has issued an
interpretation to the effect that under these laws a bank holding
company registered under the federal Bank Holding Company Act or
certain subsidiaries thereof may not sponsor, organize, or
control a registered open-end investment company continuously
engaged in the issuance of its shares. The interpretation does
not prohibit a holding company or a subsidiary thereof from
acting as investment advisor and custodian to such an investment
company. The Advisor believes that it may perform the services
for the Portfolio contemplated by the Advisory Agreement without
violation of the Glass-Steagall Act or other applicable banking
laws or regulations. State laws on this issue may differ from
the interpretation of relevant federal law, and banks and
financial institutions may be required to register as dealers
pursuant to state securities laws. However, it is possible that
future changes in either federal or state statutes and
regulations concerning the permissible activities of banks or
trust companies, as well as further judicial or administrative
decisions and interpretations of present and future statutes and
regulations, might prevent the Advisor from continuing to perform
such services for the Portfolio.
If the Advisor were prohibited from acting as investment
advisor to the Portfolio, it is expected that the Trustees of the
Portfolio would recommend to investors that they approve the
Portfolio entering into a new investment advisory agreement with
another qualified investment advisor selected by the Trustees.
Morgan also provides other services to the Portfolio outside
the scope of the Advisory Agreement. The Portfolio has entered
into an Administrative Services Agreement (the "Services
Agreement") with Morgan effective December 29, 1995, as amended
effective August 1, 1996, pursuant to which Morgan is responsible
for certain administrative and related services provided to the
Portfolio. The Services Agreement may be terminated at any time,
without penalty, by the Portfolio's Trustees or Morgan, in each
case on not more than 60 days' nor less than 30 days' written
notice to the other party.
<PAGE>
Under the amended Services Agreement, the Portfolio has
agreed to pay Morgan fees equal to the Portfolio's allocable
share of an annual complex-wide charge. This charge is
calculated daily based on the aggregate net assets of the Master
Portfolios and JPM Series Trust in accordance with the following
annual schedule: 0.09% of the first $7 billion of their
aggregate average daily net assets and 0.04% of their average
daily net assets in excess of $7 billion, less the complex-wide
fees payable to FDI. The portion of this charge payable the
Portfolio is determined by the proportionate share that its net
assets bear to the total net assets of The JPM Pierpont Funds,
The JPM Institutional Funds, the Master Portfolios, the other
investors in the Master Portfolios for which Morgan provides
similar services and JPM Series Trust.
Under Administrative Services Agreements in effect from
December 29, 1995 through July 31, 1996, with Morgan, the
Portfolio paid Morgan a fee equal to its proportionate share of
an annual complex-wide charge. This charge was calculated daily
based on the aggregate net assets of the Master Portfolios in
accordance with the following schedule: 0.06% of the first $7
billion of the Master Portfolios' aggregate average daily net
assets, and 0.03% of the Master Portfolios' average daily net
assets in excess of $7 billion.
Prior to December 29, 1995, the Portfolio had entered into a
Financial and Fund Accounting Services Agreement with Morgan, the
provisions of which included certain of the activities described
above and, prior to September 1, 1995, also included
reimbursement of the Portfolio's usual and customary expenses.
The services fees paid by the Portfolio to Morgan are as follows:
For the fiscal year ended November 30, 1994: $385,012. For the
fiscal year ended November 30, 1995: $373,077. For the fiscal
year ended November 30, 1996: $891,730.
PORTFOLIO CO-ADMINISTRATOR AND EXCLUSIVE PLACEMENT AGENT
FDI serves as the Portfolio's exclusive placement agent.
Under a Co-Administration Agreement dated August 1, 1996, FDI
also serves as the Portfolio's Co-Administrator. The Co-
Administration Agreement may be renewed or amended by the
Portfolio's Trustees without a shareholder vote. The Co-
Administration Agreement is terminable at any time without
penalty by a vote of a majority of the Portfolio's Trustees on
not more than 60 days' written notice nor less than 30 days'
written notice to the other party. The Co-Administrator may
subcontract for the performance of its obligations, provided,
however, that unless the Portfolio expressly agrees in writing,
the Co-Administrator shall be fully responsible for the acts and
omissions of any subcontractor as it would for its own acts or
omissions. See "Investment Advisor and Administrative Services
Agent" above.
For its services under the Co-Administration Agreement, the
Portfolio has agreed to pay FDI fees equal to its allocable share
of an annual complex-wide charge of $425,000 plus FDI's out-of-
pocket expenses. The amount allocable to the Portfolio is based
on the ratio of its net assets to the aggregate net assets of The
JPM Pierpont Funds, The JPM Institutional Funds, the Master
Portfolios, JPM Series Trust and JPM Series Trust II.
<PAGE>
The administrative fees paid to Signature Broker-Dealer
Services, Inc. (which provided placement agent and administrative
services to the Portfolio prior to August 1, 1996) since the
Portfolio's commencement of operations are as follows: For the
period July 12, 1993 (commencement of operations) through
November 30, 1993: $32,869. For the fiscal year ended November
30, 1994: $165,519. For the fiscal year ended November 30,
1995: $176,717. For the Period December 1, 1995 through July 31,
1996: $272,989. The fees paid to FDI for the period August 1,
1996 through November 30, 1996 were $32,012.
FUND ADMINISTRATOR
The Trust has separately retained the services of The
Managers Funds, L.P. as administrator (the "Fund Administrator").
The Fund has agreed to pay the Fund Administrator and shareholder
servicing agent for the Fund a fee of 0.25% of the Fund's average
daily net assets for these services. The Fund Administrator is
currently waiving all of this fee through at least May 31, 1996.
See "Management of the Fund and the Portfolio-Fund Administrator"
in the Prospectus and "Expenses" below.
DISTRIBUTOR
The Managers Funds, L.P. also serves as distributor (the
"Distributor") in connection with the offering of the Money
Market Fund's shares on a no-load basis. The Distributor bears
certain expenses associated with the distribution and sale of
shares of the Fund. The Distributor acts as agent in arranging
for the sale of the Fund's shares without sales commission or
other compensation and bears all advertising and promotion
expenses incurred in the sale of shares.
The Distribution Agreement between the Trust, on behalf of
the Fund, and the Distributor may be terminated by either party
under certain specified circumstances and will automatically
terminate on assignment. The Distribution Agreement may be
continued annually if specifically approved by the Trust's
Trustees or by a vote of the Fund's outstanding shares, including
a majority of the Trustees who are not "interested persons" of
the Trust or the Distributor, as such term is defined in the 1940
Act, cast in person at a meeting called for the purpose of voting
such approval.
CUSTODIAN, TRANSFER AGENT AND INDEPENDENT PUBLIC ACCOUNTANTS
State Street Bank and Trust Company ("State Street"), 1776
Heritage Drive, Quincy, Massachusetts 02171, serves as the
Trust's and the Portfolio's custodian and fund accounting agent
and the Trust's dividend disbursing agent. Pursuant to the
Custodian Contract with the Portfolio, the Custodian is
responsible for maintaining the books of account and records of
portfolio transactions and holding portfolio securities and cash.
Boston Financial Data Services, Inc. serves as the Transfer
Agent for the Fund. The independent accountants of the Fund are
Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts 02109.
<PAGE>
The independent accountants of the Portfolio are Price
Waterhouse LLP, 1177 Avenue of the Americas, New York, New York
10036.
EXPENSES
From time to time, the Fund Administrator may agree
voluntarily to waive all or a portion of the fee it would
otherwise be entitled to receive from the Fund. The Fund
Administrator may decide to waive all or a portion of its fees
from the Fund for such reasons as attempting to make the Fund's
performance more competitive as compared to similar funds. The
effect of the fee waivers in effect at the date of this Statement
of Additional Information on the fees payable by the Fund is
reflected in the Illustrative Expense Information located in the
front of the Fund's Prospectus. Existing voluntary fee waivers
by the Fund Administrator may be terminated or reduced in amount
at any time, and solely at the discretion of the Fund
Administrator. Shareholders will be notified of any change at
the time that it becomes effective.
In addition to the fees payable to Pierpont Group, Inc.,
Morgan and FDI under the various agreements discussed above, the
Portfolio is responsible for usual and customary expenses
associated with its operations. Such expenses include
organization expenses, legal fees, accounting expenses, insurance
costs, the compensation and expenses of the Portfolio's Trustees,
registration fees under federal and foreign securities laws,
extraordinary expenses, custodian fees and brokerage expenses.
Under fee arrangements prior to September 1, 1995, Morgan was
responsible for reimbursements to the Portfolio for the fee of
the Portfolio's Administrator and the Portfolio's usual and
customary expenses described above (excluding organization and
extraordinary expenses, custodian fees and brokerage expenses).
CODE OF ETHICS
The Board of Trustees and the Fund Administrator have
adopted a joint Code of Ethics under Rule 17j-1 of the 1940 Act.
The Code of Ethics requires generally that all employees of the
Fund Administrator preclear any personal securities investment
(with limited exceptions such as government securities). The
preclearance requirement and associated procedures are designed
to identify any substantive prohibition or limitation applicable
to the proposed investment. The substantive restrictions
applicable to all employees of the Fund Administrator include a
ban on trading securities based on information about the Fund's
trading. Morgan's personal trading rules require its employees
to pre-clear all securities trades (with limited exceptions) for
the account of the employee and certain persons associated with
the employee and to arrange for duplicate confirmations and
statements to be sent to Morgan.
NET ASSET VALUE
It is anticipated that the net asset value of each share of
the Money Market Fund will remain constant at $1.00. Although no
assurance can be given that it will be able to maintain such
value on a continuing basis, the Portfolio will, as described
below, employ specific investment policies and procedures to
accomplish this result.
<PAGE>
The Portfolio relies on Rule 2a-7 under the 1940 Act to use
the amortized cost valuation method to value its securities,
which the Trustees of the Portfolio have determined constitutes
fair value for purposes of complying with the 1940 Act. The
amortized cost method of valuation involves valuing portfolio
securities at their cost at the time of purchase and thereafter
assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of interest rate fluctuations
on the market value of the securities. If fluctuating interest
rates cause the market value of the securities held by the
Portfolio to deviate more than 1/2 of 1% from their value
determined on the basis of amortized cost, the Trustees will
consider whether any action should be initiated to eliminate or
reduce material dilution or other unfair results to the Fund's
shareholders. Such action may include withdrawal in kind,
selling securities prior to maturity and utilizing a net asset
value as determined by using available market quotations.
Although the amortized cost method provides certainty in
valuation, it may result in periods during which the stated value
of an instrument is higher or lower than the price the Portfolio
would receive if the instrument were sold.
The Fund computes its net asset value once daily on Monday
through Friday. The net asset value will not be computed on the
day the following legal holidays are observed: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. In the event
that trading in the money markets is scheduled to end earlier
than the close of the New York Stock Exchange in observance of
these holidays, the Fund and the Portfolio would expect to close
for purchases and redemptions an hour in advance of the end of
trading in the money markets. The Fund and the Portfolio may
also close for purchases and redemptions at such other times as
may be determined by the respective Boards of Trustees to the
extent permitted by applicable law. The days on which net asset
value is determined are the Fund's business days.
The net asset value of the Fund is equal to the value of the
Fund's investment in the Portfolio (which is equal to the Fund's
pro rata share of the total investment of the Fund and of any
other investors in the Portfolio less the Fund's pro rata share
of the Portfolio's liabilities) less the Fund's liabilities.
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 10, 1997, two shareholders, Resource Bank and
Trust Company, Minneapolis, Minnesota, and B. Wright and J.
Danmaeyer, Addison, Illinois, held 19% and 5%, respectively, of
the outstanding shares of the Fund.
PERFORMANCE DATA
From time to time, the Fund may quote performance in terms
of yield, actual distributions, total return, or capital
appreciation in reports, sales literature, and advertisements
published by the Fund. Current performance information for the
Fund may be obtained by calling the number provided on the cover
page of this Statement of Additional Information. See
"Performance Information" in the Prospectus.
YIELD QUOTATIONS. As required by regulation of the SEC,
current yield for the Money Market Fund is computed by
determining the net change exclusion of capital changes in the
value of a hypothetical pre-existing account having a balance of
one share at the beginning of a seven day calendar period,
dividing the net change in account value of the account at the
beginning of the period, and multiplying the return over the
seven-day period by 365/7. For purposes of the calculation, net
change in account value reflects the value of additional shares
purchased with dividends from the original share and dividends
declared on both the original share and any such additional
shares, but does not reflect realized gains or losses or
unrealized appreciation or depreciation. Effective yield for the
Money Market Fund is computed by annualizing the seven-day return
with all dividends reinvested in additional Fund shares.
For the seven calendar days ended November 30, 1996, the
current yield and effective yield of the Money Market Fund were
5.24% and 5.38%, respectively. These figures reflect expense
reimbursements in effect during the relevant time period. In the
absence of such reimbursement, these figures would have been
5.03% and 5.16%, respectively.
TOTAL RETURN QUOTATIONS. As required by regulations of the
SEC, the annualized total return of the Fund for a period is
computed by assuming a hypothetical initial payment of $1,000.
It is then assumed that all of the dividends and distributions by
the Fund over the period are reinvested. It is then assumed that
at the end of the period, the entire amount is redeemed. The
annualized total return is then calculated by determining the
annual rate required for the initial payment to grow to the
amount which would have been received upon redemption. As of
November 30, 1996, the Money Market Fund's annualized one-, five-
and ten-
year total returns were 5.47%, 3.93% and 5.48%, respectively.
Aggregate total returns, reflecting the cumulative
percentage change over a measuring period, may also be
calculated.
GENERAL. The Fund's performance will vary from time to time
depending upon market conditions, the composition of the
Portfolio, and its total operating expenses. Consequently, any
given performance quotation should not be considered
representative of the Fund's performance for any specified period
in the future. In addition, because performance will fluctuate,
it may not provide a basis for comparing an investment in the
Fund with certain bank deposits or other investments that pay a
fixed yield or return for a stated period of time.
<PAGE>
Comparative performance information may be used from time to
time in advertising the Fund's shares, including data from Lipper
Analytical Services, Inc., Micropal, Inc., Ibbotson Associates,
IBC Financial Data, Inc. and Morningstar Inc.
ORGANIZATION OF THE PORTFOLIO
The Portfolio, in which all of the assets of the Fund are
invested, is organized as a trust under the laws of the State of
New York. The Portfolio's Declaration of Trust provides that the
Fund and other entities investing in the Portfolio (e.g., other
investment companies, insurance company separate accounts and
common and commingled trust funds) will each be liable for all
obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited
to circumstances in which both inadequate insurance existed and
the Portfolio itself was unable to meet its obligations.
PORTFOLIO TRANSACTIONS
Morgan places orders for the Portfolio for all purchases and
sales of portfolio securities, enters into repurchase agreements
and may enter into reverse repurchase agreements and execute
loans of portfolio securities on behalf of the Portfolio. See
"Investment Objective and Policies."
Fixed income and debt securities and municipal bonds and
notes are generally traded at a net price with dealers acting as
principal for their own accounts without a stated commission.
The price of the security usually includes profit to the dealers.
In underwritten offerings, securities are purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain securities may be
purchased directly from an issuer, in which case no commissions
or discounts are paid.
Portfolio transactions will be undertaken principally to
accomplish the Fund's objective in relation to expected movements
in the general level of interest rates. The Portfolio may engage
in short-term trading consistent with its objective.
In connection with portfolio transactions for the Portfolio,
Morgan intends to seek best price and execution on a competitive
basis for both purchases and sales of securities.
The Portfolio has a policy of investing only in securities
with maturities of less than thirteen months, which policy will
result in high portfolio turnovers. Since brokerage commissions
are not normally paid on investments which the Portfolio makes,
turnover resulting from such investments should not adversely
affect the net asset value or net income of the Portfolio.
<PAGE>
Portfolio securities will not be purchased from or through
or sold to or through the Portfolio's Co-Administrator or Advisor
or the Fund's Administrator or Distributor or any other
"affiliated person" as defined in the 1940 Act, of the
Administrators, Distributor or Advisor when such entities are
acting as principals, except to the extent permitted by law. In
addition, the Portfolio will not purchase securities during the
existence of any underwriting group relating thereto of which the
Advisor or an affiliate of the Advisor is a member, except to the
extent permitted by law.
On those occasions when Morgan deems the purchase or sale of
a security to be in the best interests of the Portfolio as well
as other customers including other investment companies managed
by Morgan or its affiliate, Morgan, to the extent permitted by
applicable laws and regulations, may, but is not obligated to,
aggregate the securities to be sold or purchased for the
Portfolio with those to be sold or purchased for other customers
in order to obtain best execution, including lower brokerage
commissions if appropriate. In such event, allocation of the
securities so purchased or sold, as well as any expense incurred
in the transaction, will be made by Morgan in the manner it
considers to be most equitable and consistent with Morgan's
fiduciary obligations to the Portfolio. In some instances, this
procedure might adversely affect the Portfolio.
TAX INFORMATION
The Fund intends to qualify each year as a regulated
investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order to so
qualify, a RIC must, among other things, (i) derive at least 90%
of its gross income from dividends, interest, payments with
respect to certain securities loans, gains from the sale of
securities, certain gains from foreign currencies, or other
income (including but not limited to gains from options, futures
or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (ii) derive
less than 30% of its gross income from gains from the sale or
other disposition of securities, options, futures, forward
contracts and certain investments in foreign currencies held for
less than three months; (iii) distribute at least 90% of its
dividend, interest and certain other taxable income ("Investment
Company Taxable Income") each year, (iv) at the end of each
fiscal quarter maintain at least 50% of the value of its total
assets in cash, government securities, securities of other
regulated investment companies, and other securities of issuers
which represent, with respect to each issuer, no more than 5% of
the value of the RIC's total assets and 10% of the outstanding
voting securities of such issuer; and (v) at the end of each
fiscal quarter have no more than 25% of its assets invested in
the securities (other than those of the U.S. Government or other
RICs) of any one issuer or of two or more issuers which the RIC
controls and which are engaged in the same, similar or related
trades and businesses. In any year in which a RIC distributes
90% of its Investment Company Taxable Income, it will not be
subject to corporate income tax on amounts distributed to its
shareholders.
If for any taxable year the Fund does not qualify as a RIC,
all of its taxable income (including its net capital gain) will
be subject to taxation at regular corporate rates without any
deduction for distributions to shareholders, and such
distributions will be taxable as ordinary dividend income to the
extent of the Fund's current and accumulated earnings and
profits. Such distributions generally will be eligible for the
dividends-received deduction in the case of corporate
shareholders.
<PAGE>
Ordinary income distributions and distributions of net
realized short-term capital gains to shareholders who are liable
for federal income taxes will be taxed as ordinary dividend
income to such shareholders. Distributions of net long-term
capital gains to such shareholders are taxable as long-term
capital gains regardless of how long such shareholders have held
shares of the Fund. These provisions apply whether the dividends
and distributions are received in cash or accepted in shares.
Any loss realized upon the redemption of shares within 6 months
from the date of their purchase will be treated as a long term
capital loss to the extent of any distribution of net long-term
capital gains during such 6-month period. A loss may be
disallowed on the sale of shares of the Fund to the extent the
shareholder acquired other Fund shares within 30 days prior to
the sale of the loss shares or 30 days after such sale.
Dividends and other distributions by the Fund may also be
subject to state and/or local taxes. Shareholders should consult
with their own tax advisers concerning the foregoing state and
local tax consequences of investing in the Fund. Additionally,
shareholders who are foreign persons should consult with their
own tax advisers concerning the foreign tax consequences of
investing in the Fund.
Under the federal income tax law, the Fund will be required
to report to the Internal Revenue Service all distributions of
taxable income and capital gains as well as gross proceeds from
all redemptions of the shares except in the case of certain
exempt shareholders. Under the backup withholding provisions of
the Code, such distributions and redemption proceeds may be
subject to the withholding of federal income tax at the rate of
31% in the case of non-exempt shareholders who fail to furnish
the Fund with their correct taxpayer identification numbers and
with required certifications regarding their status under the
federal income tax law, or with respect to those shareholders
whom the Internal Revenue Service notifies the Fund of certain of
the non-compliance. If these withholding provisions are
applicable, any distributions to, and proceeds received by,
shareholders, whether taken in cash or reinvested in shares, will
be reduced by the amounts required to be withheld.
The Code imposes a four percent nondeductible excise tax on
each RIC with respect to the amount, if any, by which it does not
meet distribution requirements specified under such tax law. The
Fund intends to comply with such distribution requirements and
thus does not expect to incur the four percent nondeductible
excise tax although it may not be possible for the Fund to avoid
this tax in all instances.
The foregoing discussion relates solely to U.S. federal
income tax law. Non-U.S. investors should consult their tax
advisers concerning the tax consequences of ownership of shares
of the Fund, including the possibility that distributions may be
subject to a 30% U.S. withholding tax (or a reduced rate of
withholding provided by treaty).
<PAGE>
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and Treasury Regulations
currently in effect. For the complete provisions, reference
would be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The above discussion covers
only federal income tax considerations with respect to the Fund
and its shareholders. Foreign, state and local tax laws vary
greatly. Shareholders should consult their own tax advisers for
more information regarding the federal, foreign, state, and local
tax treatment of the Fund's distributions to shareholders and
with respect to their own tax situation.
FINANCIAL STATEMENTS
The audited Financial Statements and the Notes thereto for
the Fund, and the auditor's report of Coopers & Lybrand L.L.P.,
independent public accountants, are herein incorporated by
reference from the Managers Money Market Fund Annual Report dated
November 30, 1996.
The Portfolio's audited Financial Statements and the Notes
thereto at November 30, 1996, and the report of Price Waterhouse
LLP, independent accountants, are herein incorporated by
reference from the Portfolio's filing with the SEC pursuant to
Section 30(b) of the 1940 Act and Rule 30b2-1 thereunder.
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITY RATINGS
STANDARD & POOR'S:
CORPORATE AND MUNICIPAL BONDS
AAA - Debt rated AAA has the highest ratings assigned by
Standard & Poor's to a debt obligation. Capacity to pay
interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues
only in a small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than for debt in
higher rated categories.
BB - Debt rated BB is regarded as having less near-term
vulnerability to default than other speculative issues.
However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which
could lead to inadequate capacity to meet timely interest
and principal payments.
COMMERCIAL PAPER, INCLUDING TAX EXEMPT
A - Issues assigned this highest rating are regarded as having
the greatest capacity for timely payment. Issues in this
category are further refined with the designations 1, 2, and
3 to indicate the relative degree of safety.
A-1 - This designation indicates that the degree of safety
regarding timely payment is very strong.
SHORT-TERM TAX-EXEMPT NOTES
SP-1 - The short-term tax-exempt note rating of SP-1 is the
highest rating assigned by Standard & Poor's and has a
very strong or strong capacity to pay principal and
interest. Those issues determined to possess
overwhelming safety characteristics are given a "plus"
(+) designation.
SP-2 - The short-term tax-exempt note rating of SP-2 has a
satisfactory capacity to pay principal and interest.
<PAGE>
MOODY'S:
CORPORATE AND MUNICIPAL BONDS
Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various
protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise
what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may
be other elements present which make the long term risks
appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and
interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may
be very moderate, and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
COMMERCIAL PAPER, INCLUDING TAX EXEMPT
Prime-1 - Issuers rated Prime-1 (or related supporting
institutions) have a superior capacity for repayment of
short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following
characteristics:
-- Leading market positions in well established
industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-- Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
-- Well established access to a range of financial
markets and assured sources of alternate
liquidity.
<PAGE>
SHORT-TERM TAX EXEMPT NOTES
MIG-1 - The short-term tax-exempt note rating MIG-1 is the
highest rating assigned by Moody's for notes judged to
be the best quality. Notes with this rating enjoy
strong protection from established cash flows of funds
for their servicing or from established and broad-based
access to the market for refinancing, or both.
MIG-2 - MIG-2 rated notes are of high quality but with margins
of protection not as large as MIG-1.
<PAGE>
THE MANAGERS FUNDS POST-EFFECTIVE
AMENDMENT NO. 39 TO REGISTRATION STATEMENT
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A:
With reference to each of The Managers:
Income Equity Fund
Capital Appreciation Fund
Special Equity Fund
International Equity Fund
Short Government Fund
Short and Intermediate Bond Fund
Intermediate Mortgage Fund
Bond Fund
Global Bond Fund
Money Market Fund
Financial Highlights
For the fiscal years (or portions thereof)
(audited) from commencement of operations to
December 31, 1996 (November 30, 1996, with respect
to Managers Money Market Fund).
Part B:
With reference to each of The Managers:
Income Equity Fund
Capital Appreciation Fund
Special Equity Fund
International Equity Fund
Short Government Fund
Short and Intermediate Bond Fund
Intermediate Mortgage Fund
Bond Fund
Global Bond Fund
Money Market Fund
<PAGE>
At December 31, 1996 (audited) and with respect to
Managers Money Market Fund, at November 30, 1996
(audited):
Schedule of Investments
Statement of Assets and Liabilities
For the fiscal year ended December 31, 1996
(audited) and with respect to Managers Money Market
Fund, at November 30, 1996 (audited):
Statement of Changes in Net Assets
For the fiscal years ended December 31, 1996
(audited) and December 31, 1995 (audited), and with
respect to Managers Money Market Fund, for the
fiscal year ended November 30, 1996 and for the
eleven months ended November 30, 1995 (audited):
Statement of Operations
Notes to Financial Statements
For the fiscal years (or portions thereof) from
commencement of operations to December 31, 1996
(audited) and with respect to Managers Money Market
Fund, for the fiscal year ended November 30, 1996
(audited):
Financial Highlights
With respect to The Money Market Portfolio:
At November 30, 1996 (audited):
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements
(b) Exhibits
1. (A) Declaration of Trust dated
November 23, 1987.
Incorporated by reference to
PEA 20.
1. (B) Amendment to Declaration of
Trust dated May 12, 1993.
Incorporated by reference to
PEA 32.
<PAGE>
1. (C) Amendment to Declaration of Trust dated June
30, 1993.
Incorporated by reference to
PEA 32.
2. By-Laws of the Trust.
Incorporated by reference to
PEA 20.
3. Not Applicable.
4. Instruments Defining Rights of
Shareholders
Incorporated by reference to
PEA 34.
5.(A) Fund Management Agreement dated
August 17, 1990 between EAIMC Partners, L.P.
(now "The Managers Funds, L.P.") and the
Trust.
Incorporated by reference to PEA 32.
(B) Asset Management Agreements
between The Managers Funds, L.P. and each of
the Asset Managers identified in the
Registration Statement. Incorporated by
reference to PEA 32.
6. Form of Distribution Agreement
between The Managers Funds and The Managers
Funds, L.P. Incorporated by reference to PEA
28.
7. Not Applicable.
8. Form of Custodian Agreement
with State Street Bank and Trust.
Incorporated by reference to PEA 28.
9.(A) Transfer Agency Agreement
between The Managers Funds and State Street
Bank and Trust Company. Incorporated by
reference to PEA 33.
(B) Form of Administration and
Shareholder Servicing Agreement between the
Trust and The Managers Funds, L.P.
Incorporated by reference to PEA 28.
(C) Form of License Agreement
Relating to Use of Name between The Managers
Funds and The Managers Funds, L.P.
Incorporated by reference to PEA 28.
10. Opinion and Consent of Shereff,
Friedman, Hoffman & Goodman, L.L.P. Not
Applicable
11.* Consents of Independent Accountants.
(A) Consent of Coopers & Lybrand
L.L.P.
(B) Consent of Price Waterhouse LLP
<PAGE>
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Not Applicable.
16. Computation of Performance
Quotations.
Incorporated by reference to
PEA 19.
17.* Financial Data Schedules
18. (1) Powers of Attorney for:
William W. Graulty
Madeline H. McWhinney
Steven J. Paggioli
Thomas R. Schneeweis
Robert P. Watson
Donald S. Rumery
Kathleen Wood
Incorporated by reference to PEA 31.
(2)* Powers of Attorney for the Trustees of
The Money Market Portfolio:
Michael P. Mallardi
Frederick S. Addy
William G. Burns
Matthew Healey
Arthur C. Eschenlauer
Richard W. Ingram
- -------------
* Included as an exhibit to this filing.
Item 25. Persons Controlled by or under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
As of March 18, 1997, the shares of beneficial interest of
each Fund were held of record by the number of holders indicated
below:
<PAGE>
Number of
Fund Name Record Holders
Income Equity Fund........................ 2,037
Capital Appreciation Fund................. 2,482
Special Equity Fund....................... 7,355
International Equity Fund................. 5,586
Short Government Fund..................... 797
Short and Intermediate Bond Fund.......... 1,452
Intermediate Mortgage Fund................ 1,410
Bond Fund................................. 1,635
Global Bond Fund.......................... 1,548
Money Market Fund......................... 1,437
Item 27. Indemnification
The following sections of the Registrant's Declaration of
Trust, dated November 23, 1987, which relate to indemnification
of Trustees, officers and others by the Trust and to exemption
from personal liability of Trustees, officers and others, also
relate to indemnification:
Sections 2.9(d),(f)
Sections 4.1 - 4.3
Section 8.3(b)
These Sections are reproduced below.
Section 2.9. Miscellaneous Powers. The Trustee shall have
the power to: (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, Investment Advisers, Distributors, selected
dealers or independent contractors of the Trust against all
claims arising by reason of holding any such position or by
reason of any action taken or omitted by any such Person in such
capacity, whether or not constituting negligence, or whether or
not the Trust would have the power to indemnify such Person
against such liability; . . . (f) to the extent permitted by law,
indemnify any person with whom the Trust has dealings, including
the Investment Adviser, Distributor, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine;
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders,
Trustees, Etc. No Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with Trust
Property or the acts, obligations or affairs of the Trust. No
Trustee, officer, employee or agent of the Trust shall be subject
to any personal liability whatsoever to any Person, other than to
the Trust or its Shareholders, in connection with the Trust
Property or the affairs of the Trust, save only that arising from
bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties with respect to such Person, and all such
Persons shall look solely to the Trust Property for satisfaction
of claims of any nature arising in connection with the affairs of
the Trust. If any Shareholder, Trustee, officer, employee, or
agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability of the Trust or any
Series, he shall not, on account thereof, be held to any personal
liability. The Trust or Series shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities,
to which such Shareholder may become subject by reason of his
being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred
by him in connection with any such claim or liability. The
rights accruing to a Shareholder under this Section 4.1 shall not
exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right
of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided
herein.
<PAGE>
Section 4.2. Non-liability of Trustees, Etc. No Trustee,
officer, employee or agent of the Trust shall be liable to the
Trust or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad
faith, willful misfeasance, gross negligence or reckless
disregard of the duties involved in the conduct of his office or
for his failure to act in good faith in the reasonable belief
that his action was in the best interests of the Trust.
Notwithstanding anything in this Article IV or elsewhere in this
Declaration to the contrary and without in any way increasing the
liability of the Trustees beyond that otherwise provided in this
Declaration, no Trustee shall be liable to the Trust or to any
Shareholder, Trustee, officer, employee or agent for monetary
damages for breach of fiduciary duty as a Trustee; provided that
such provision shall not eliminate or limit the liability of a
Trustee (i) for any breach of the Trustee's duty of loyalty to
the Trust or its Shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing
violation of law, or (iii) for any transaction from which the
Trustee derived an improper personal benefit.
Section 4.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or
officer of the Trust shall be indemnified by the Trust
or any Series to the fullest extent permitted by law
against all liability and against all expenses
reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he became
involved as a party or otherwise by virtue of his being
or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal, or other, including
appeals), actual or threatened; the words "liability"
and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
<PAGE>
(b) No indemnification shall be provided hereunder
to a Trustee or officer:
(i) against any liability to the Trust or the
Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he
shall have been finally adjudicated not to have acted in
good faith in the reasonable belief that his action was
in the best interest of the Trust;
(iii) in the event of a settlement involving a
final adjudication as provided in paragraph (b)(i)
resulting in a payment by a Trustee or officer, unless
there has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office:
(A) by the court or other body approving the
settlement or other disposition; or
(B) based upon a review of readily
available facts (as opposed to a full trial-type
inquiry) by (x) vote of a majority of the
Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested
Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may
be insured against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any Trustee
or officer may now or hereafter by entitled, shall continue as to
a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and
assigns of such a person. Nothing contained herein shall affect
any rights to indemnification to which personnel of the Trust
other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 4.3 may be advanced by
the Trust or any Series prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to
repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that
either
<PAGE>
(i) such undertaking is secured by a surety bond
or some other appropriate security provided by the
recipient, or the Trust shall be insured against losses
arising out of any such advances; or
(ii) a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the
Disinterested Trustees act on the matter), or an
independent legal counsel in a written opinion, shall
determine, based upon a review of readily available
facts (as opposed to a full trial-type inquiry), that
there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one
who is not (i) an "Interested Person" of the Trust (including
anyone who has been exempted from being an "Interested Person" by
any rule, regulation or order of the Commission), or (ii)
involved in the claim, action, suit or proceeding.
Section 8.3. Amendment Procedure. (b) No amendment may be
made under this Section 8.3 which would change any rights with
respect to any Shares of the Trust or of any Series by reducing
the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto,
except with the vote or consent of the holders of two-thirds of
the Shares outstanding and entitled to vote, or by such other
vote as may be established by the Trustees with respect to any
Series of Shares. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption
from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon
Shareholders.
Item 28. Business and Other Connections of Investment Advisers
The business and other connections of the officers and
directors of The Managers Funds, L.P. (the Registrant's Manager),
and the asset managers of the Registrant are listed in schedules
A and D of their respective ADV Forms as currently on file with
the Commission, the texts of which Schedules are hereby
incorporated herein by reference. The file numbers of said ADV
Forms are as follows:
<PAGE>
The Managers Funds, L.P. -- 801-19215
Husic Capital Management -- 801-27298
Essex Investment Management Company - 801-12548
Jennison Associates Capital Corp. -- 801-5608
Lazard Fr?res Asset Management -- 801-6568
Liberty Investment Management -- 801-21343
Loomis, Sayles & Company, Inc. -- 801-17000
Pilgrim Baxter Associates -- 801-19165RC
Rogge Global Partners, Inc. -- 801-25482
Scudder, Stevens & Clark, Inc. -- 801-252
Spare, Kaplan, Bischel & Associates -- 801-35258
Standish, Ayer & Wood Inc. -- 801-584
Westport Asset Management, Inc. -- 801-21845
Item 29. Principal Underwriter
(a) The Managers Funds, L.P. ("TMF") acts as
principal underwriter for the Registrant. TMF does
not currently act as principal underwriter for any
other investment company. TMF's address is 40
Richards Avenue, Norwalk, Connecticut 06854.
(b) The business and other connections of the officers
and directors of The Managers Funds, L.P. (formerly
EAIMC Partners, L.P.) (the Registrant's Manager),
are listed in Schedules A and D of its ADV Form as
currently on file with the Commission, the text of
which Schedules are hereby incorporated herein by
reference. The file number of said ADV Form is 801-
19215.
(c) Not Applicable.
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1 to
31a-3 promulgated thereunder are maintained in the following
locations:
Rule 31a-1
(a) Records forming the basis for financial statements of
Registrant are kept at the principal offices of SSB, Managers,
Adviser & AM (see legend below).
Legend: Managers -- The
Managers Funds
40 Richards
Avenue
Norwalk,
Connecticut 06854
SSB -- State
Street Bank and Trust
Company
225
Franklin Street
Boston,
Massachusetts 02110
Adviser -- The
Managers Funds, L.P.
40 Richards
Avenue
<PAGE>
Norwalk,
Connecticut 06854
AM -- Asset Managers
(see Statement of
Additional Information
section entitled "Asset
Manager Profiles" for the
name, address and a
description of the asset
managers of each Fund)
(b) Managers Records:
(1) SSB -- Journals containing daily record
of securities transactions, receipts and
deliveries of securities and receipts and
disbursements of cash.
(2) SSB -- General and auxiliary ledgers
(3) Not Applicable
(4) Managers -- Corporate Documents
(5) AM -- Brokerage orders
(6) AM -- Other portfolio purchase orders
(7) SSB -- Contractual commitments
(8) SSB and Managers -- Trial balances
(9) AM -- Reasons for brokerage allocations
(10) AM -- Persons authorizing purchases and
sales
(11) Managers and AM -- Files of advisory
material
(c) Not applicable
(d) Adviser -- Broker/dealer records, to the extent
applicable
(e) Not applicable
(f) Adviser and AM -- Investment adviser records
Item 31. Management Services
Not Applicable.
<PAGE>
Item 32. Undertakings
(a) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a Trustee,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The Registrant shall furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(c) If requested to do so by the holders of at least 10% of the
Registrant's outstanding shares, the Registrant will call a
meeting of shareholders for the purpose of voting upon the
removal of a trustee or trustees and the Registrant will assist
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940 the Registrant certifies that
it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Norwalk, and the State of Connecticut on this 27th
day of March, 1997.
THE MANAGERS FUNDS
By:/s/Robert P. Watson
Robert P. Watson
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.
/s/ Robert P. Watson Trustee and March 27,
Robert P. Watson President (Principal 1997
Executive Officer)
/s/ Donald S. Rumery Principal March 27, 1997
Donald S. Rumery Financial and
Accounting Officer
/s/ William W. Trustee March
Graulty 27, 1997
William W. Graulty
/s/ Madeline H. Trustee Marc
McWhinney h 27, 1997
Madeline H.
McWhinney
/s/ Steven J. Trustee March
Paggioli 27, 1997
Steven J. Paggioli
/s/ Thomas R. Trustee Mar
Schneeweis ch 27, 1997
Thomas R. Schneeweis
<PAGE>
SIGNATURES
The Money Market Portfolio (the "Portfolio") has duly
caused this registration statement on Form N-1A ("Registration
Statement") of The Managers Funds (the "Trust") (File No. 2-
84012) to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of George Town, Grand Cayman, on the
27th day of March, 1997.
THE MONEY MARKET PORTFOLIO
By:
/s/ Lenore J. McCabe
Lenore J. McCabe
Assistant Secretary and Assistant Treasurer
Pursuant to the requirements of the Securities Act of 1933, the
Trust's Registration Statement has been signed below by the
following persons in the capacities indicated on March 27, 1997.
Richard W. Ingram*
- -------------------------
Richard W. Ingram
President and Treasurer (Principal Financial and Accounting
Officer) of the Portfolio
Matthew Healey*
- -------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal
Executive Officer) of the Portfolio
Frederick S. Addy*
- -------------------------
Frederick S. Addy
Trustee of the Portfolio
William G. Burns*
- -------------------------
William G. Burns
Trustee of the Portfolio
Arthur C. Eschenlauer*
- ------------------------
Arthur C. Eschenlauer
Trustee of the Portfolio
Michael P. Mallardi*
- ------------------------
Michael P. Mallardi
Trustee of the Portfolio
____________________________________
*By /s/ Lenore J. McCabe
Lenore J. McCabe, as attorney-in-fact pursuant to a power of
attorney filed herewith.
<PAGE>
EXHIBIT 11(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
The Managers Funds:
We consent to the inclusion in Post-Effective Amendment No. 39 to
the Registration Statement of The Managers Funds on Form N-1A
(Securities Act of 1933 File No. 2-84012) of our reports dated
February 14, 1997 (except for Managers Money Market Fund which
report is dated January 16, 1997) on our audits of the financial
statements and the financial highlights of: Managers Income
Equity Fund, Managers Capital Appreciation Fund, Managers Special
Equity Fund, Managers International Equity Fund, Managers Short
Government Fund, Managers Short and Intermediate Bond Fund,
Managers Intermediate Mortgage Fund, Managers Bond Fund, Managers
Global Bond Fund and Managers Money Market Fund, which reports
are included in the Annual Reports to shareholders for the year
ended December 31, 1996, (except for Managers Money Market Fund
which is for the year ended November 30, 1996) and which reports
are also incorporated by reference in the Post-Effective
Amendment to the Registration Statement. We also consent to the
reference to our Firm under the captions "Financial Highlights,"
"Custodian, Transfer Agent and Independent Public Accountant,"
and "Financial Statements" in the Registration Statement.
/s/ Coopers + Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 27, 1997
<PAGE>
EXHIBIT 11(B)
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post Effective Amendment No. 39 to the registration
statement on Form N-1A (the "Registration Statement") of our
report dated January 16, 1997, relating to the financial
statements and supplementary data of The Money Market Portfolio
at November 30, 1996, which are also incorporated by reference
onto this Registration Statement. We also consent to the
references to us under the headings "Custodian, Transfer Agent
and Independent Public Accountant" and "Financial Statements" in
the Statement of Additional Information.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
March 25, 1997
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 2
[NAME] MANAGERS CAPITAL APPRECIATION FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 91493
[INVESTMENTS-AT-VALUE] 103011
[RECEIVABLES] 1739
[ASSETS-OTHER] 2626
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 107376
[PAYABLE-FOR-SECURITIES] 3297
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2797
[TOTAL-LIABILITIES] 6094
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 89154
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 610
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 11518
[NET-ASSETS] 101282
[DIVIDEND-INCOME] 1017
[INTEREST-INCOME] 575
[OTHER-INCOME] 1
[EXPENSES-NET] 1269
[NET-INVESTMENT-INCOME] 324
[REALIZED-GAINS-CURRENT] 12474
[APPREC-INCREASE-CURRENT] (240)
[NET-CHANGE-FROM-OPS] 12558
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 330
[DISTRIBUTIONS-OF-GAINS] 14706
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 47105
[NUMBER-OF-SHARES-REDEEMED] 40612
[SHARES-REINVESTED] 13915
[NET-CHANGE-IN-ASSETS] 17930
[ACCUMULATED-NII-PRIOR] 43
[ACCUMULATED-GAINS-PRIOR] 2827
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 762
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1318
[AVERAGE-NET-ASSETS] 95239
[PER-SHARE-NAV-BEGIN] 27.14
[PER-SHARE-NII] .09
[PER-SHARE-GAIN-APPREC] 3.66
[PER-SHARE-DIVIDEND] .10
[PER-SHARE-DISTRIBUTIONS] 4.45
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 26.34
[EXPENSE-RATIO] 1.33
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 3
[NAME] MANAGERS SPECIAL EQUITY FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 223330
[INVESTMENTS-AT-VALUE] 269564
[RECEIVABLES] 3588
[ASSETS-OTHER] 9291
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 282443
[PAYABLE-FOR-SECURITIES] 934
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 10076
[TOTAL-LIABILITIES] 11010
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 220575
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 4623
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 46235
[NET-ASSETS] 271433
[DIVIDEND-INCOME] 1357
[INTEREST-INCOME] 927
[OTHER-INCOME] 37
[EXPENSES-NET] 2494
[NET-INVESTMENT-INCOME] (173)
[REALIZED-GAINS-CURRENT] 16534
[APPREC-INCREASE-CURRENT] 21777
[NET-CHANGE-FROM-OPS] 38138
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 15418
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 200248
[NUMBER-OF-SHARES-REDEEMED] 81942
[SHARES-REINVESTED] 12046
[NET-CHANGE-IN-ASSETS] 153072
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 3681
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1572
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2494
[AVERAGE-NET-ASSETS] 174681
[PER-SHARE-NAV-BEGIN] 43.34
[PER-SHARE-NII] 0
[PER-SHARE-GAIN-APPREC] 10.68
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 3.07
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 50.95
[EXPENSE-RATIO] 1.43
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 4
[NAME] MANAGERS INCOME EQUITY FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 41443
[INVESTMENTS-AT-VALUE] 51835
[RECEIVABLES] 1294
[ASSETS-OTHER] 209
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 53338
[PAYABLE-FOR-SECURITIES] 3
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 272
[TOTAL-LIABILITIES] 275
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 41715
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 62
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 894
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 10392
[NET-ASSETS] 53063
[DIVIDEND-INCOME] 1721
[INTEREST-INCOME] 175
[OTHER-INCOME] 3
[EXPENSES-NET] 671
[NET-INVESTMENT-INCOME] 1228
[REALIZED-GAINS-CURRENT] 3060
[APPREC-INCREASE-CURRENT] 3402
[NET-CHANGE-FROM-OPS] 7690
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1208
[DISTRIBUTIONS-OF-GAINS] 3147
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 34882
[NUMBER-OF-SHARES-REDEEMED] 26667
[SHARES-REINVESTED] 3706
[NET-CHANGE-IN-ASSETS] 15256
[ACCUMULATED-NII-PRIOR] 42
[ACCUMULATED-GAINS-PRIOR] 982
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 350
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 673
[AVERAGE-NET-ASSETS] 46643
[PER-SHARE-NAV-BEGIN] 28.43
[PER-SHARE-NII] .76
[PER-SHARE-GAIN-APPREC] 3.97
[PER-SHARE-DIVIDEND] .76
[PER-SHARE-DISTRIBUTIONS] 1.91
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 30.49
[EXPENSE-RATIO] 1.44
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 5
[NAME] MANAGERS INTERNATIONAL EQUITY FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 236751
[INVESTMENTS-AT-VALUE] 274336
[RECEIVABLES] 5152
[ASSETS-OTHER] 268
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 279756
[PAYABLE-FOR-SECURITIES] 8676
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1512
[TOTAL-LIABILITIES] 10188
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 232321
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 99
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 241
[ACCUM-APPREC-OR-DEPREC] 37587
[NET-ASSETS] 269568
[DIVIDEND-INCOME] 3957
[INTEREST-INCOME] 1185
[OTHER-INCOME] 0
[EXPENSES-NET] 3150
[NET-INVESTMENT-INCOME] 1992
[REALIZED-GAINS-CURRENT] 5649
[APPREC-INCREASE-CURRENT] 18280
[NET-CHANGE-FROM-OPS] 25921
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1972
[DISTRIBUTIONS-OF-GAINS] 6155
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 162993
[NUMBER-OF-SHARES-REDEEMED] 58163
[SHARES-REINVESTED] 6457
[NET-CHANGE-IN-ASSETS] 129081
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 171
[OVERDISTRIB-NII-PRIOR] 26
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1856
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 3150
[AVERAGE-NET-ASSETS] 206244
[PER-SHARE-NAV-BEGIN] 39.97
[PER-SHARE-NII] .32
[PER-SHARE-GAIN-APPREC] 4.76
[PER-SHARE-DIVIDEND] .33
[PER-SHARE-DISTRIBUTIONS] 1.03
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 43.69
[EXPENSE-RATIO] 1.53
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 6
[NAME] MANAGERS BOND FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 30541
[INVESTMENTS-AT-VALUE] 31207
[RECEIVABLES] 902
[ASSETS-OTHER] 1188
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 33297
[PAYABLE-FOR-SECURITIES] 241
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1237
[TOTAL-LIABILITIES] 1478
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 31669
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 26
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 542
[ACCUM-APPREC-OR-DEPREC] 666
[NET-ASSETS] 31819
[DIVIDEND-INCOME] 153
[INTEREST-INCOME] 2007
[OTHER-INCOME] 0
[EXPENSES-NET] 392
[NET-INVESTMENT-INCOME] 1768
[REALIZED-GAINS-CURRENT] 487
[APPREC-INCREASE-CURRENT] (733)
[NET-CHANGE-FROM-OPS] 1522
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1776
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 17351
[NUMBER-OF-SHARES-REDEEMED] 13105
[SHARES-REINVESTED] 1450
[NET-CHANGE-IN-ASSETS] 5442
[ACCUMULATED-NII-PRIOR] 32
[ACCUMULATED-GAINS-PRIOR] (1026)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 180
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 392
[AVERAGE-NET-ASSETS] 28832
[PER-SHARE-NAV-BEGIN] 23.13
[PER-SHARE-NII] 1.35
[PER-SHARE-GAIN-APPREC] (0.29)
[PER-SHARE-DIVIDEND] 1.36
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 22.83
[EXPENSE-RATIO] 1.36
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 8
[NAME] MANAGERS SHORT GOVERNMENT FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 5993
[INVESTMENTS-AT-VALUE] 5960
[RECEIVABLES] 113
[ASSETS-OTHER] 67
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 6140
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 27
[TOTAL-LIABILITIES] 6113
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 19538
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 3
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (13392)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (36)
[NET-ASSETS] 6113
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 401
[OTHER-INCOME] 0
[EXPENSES-NET] 67
[NET-INVESTMENT-INCOME] 334
[REALIZED-GAINS-CURRENT] (35)
[APPREC-INCREASE-CURRENT] (80)
[NET-CHANGE-FROM-OPS] 219
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 334
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 4423
[NUMBER-OF-SHARES-REDEEMED] 4301
[SHARES-REINVESTED] 270
[NET-CHANGE-IN-ASSETS] 277
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (13354)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 26
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 93
[AVERAGE-NET-ASSETS] 5712
[PER-SHARE-NAV-BEGIN] 17.76
[PER-SHARE-NII] 1.02
[PER-SHARE-GAIN-APPREC] (0.37)
[PER-SHARE-DIVIDEND] 1.01
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 17.40
[EXPENSE-RATIO] 1.17
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 7
[NAME] MANAGERS SHORT AND INTERMEDIATE BOND FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 22270
[INVESTMENTS-AT-VALUE] 22173
[RECEIVABLES] 261
[ASSETS-OTHER] 427
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 22861
[PAYABLE-FOR-SECURITIES] 401
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 80
[TOTAL-LIABILITIES] 481
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 36705
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 12
[ACCUMULATED-NET-GAINS] (14216)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (97)
[NET-ASSETS] 22380
[DIVIDEND-INCOME] 23
[INTEREST-INCOME] 1574
[OTHER-INCOME] 0
[EXPENSES-NET] 337
[NET-INVESTMENT-INCOME] 1260
[REALIZED-GAINS-CURRENT] (122)
[APPREC-INCREASE-CURRENT] (185)
[NET-CHANGE-FROM-OPS] 953
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1196
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 8757
[NUMBER-OF-SHARES-REDEEMED] 12248
[SHARES-REINVESTED] 872
[NET-CHANGE-IN-ASSETS] (2862)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (14801)
[OVERDISTRIB-NII-PRIOR] 42
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 116
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 337
[AVERAGE-NET-ASSETS] 23207
[PER-SHARE-NAV-BEGIN] 19.67
[PER-SHARE-NII] 1.03
[PER-SHARE-GAIN-APPREC] (0.24)
[PER-SHARE-DIVIDEND] 1.01
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 19.45
[EXPENSE-RATIO] 1.45
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 9
[NAME] MANAGERS INTERMEDIATE MORTGAGE FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 33913
[INVESTMENTS-AT-VALUE] 33942
[RECEIVABLES] 1660
[ASSETS-OTHER] 20
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 35622
[PAYABLE-FOR-SECURITIES] 10374
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 402
[TOTAL-LIABILITIES] 10776
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 105109
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 3
[ACCUMULATED-NET-GAINS] (80275)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 15
[NET-ASSETS] 24846
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2228
[OTHER-INCOME] 0
[EXPENSES-NET] 381
[NET-INVESTMENT-INCOME] 1847
[REALIZED-GAINS-CURRENT] (210)
[APPREC-INCREASE-CURRENT] (884)
[NET-CHANGE-FROM-OPS] 753
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1798
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5182
[NUMBER-OF-SHARES-REDEEMED] 20415
[SHARES-REINVESTED] 1102
[NET-CHANGE-IN-ASSETS] (15176)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (80098)
[OVERDISTRIB-NII-PRIOR] 19
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 144
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 381
[AVERAGE-NET-ASSETS] 31956
[PER-SHARE-NAV-BEGIN] 15.54
[PER-SHARE-NII] .87
[PER-SHARE-GAIN-APPREC] (0.38)
[PER-SHARE-DIVIDEND] .86
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 15.17
[EXPENSE-RATIO] 1.19
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[SERIES]
[NUMBER] 13
[NAME] MANAGERS GLOBAL BOND FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 16216
[INVESTMENTS-AT-VALUE] 16477
[RECEIVABLES] 435
[ASSETS-OTHER] 226
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 17138
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 286
[TOTAL-LIABILITIES] 286
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 16381
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 148
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 196
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 127
[NET-ASSETS] 16852
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1200
[OTHER-INCOME] 0
[EXPENSES-NET] 288
[NET-INVESTMENT-INCOME] 912
[REALIZED-GAINS-CURRENT] 653
[APPREC-INCREASE-CURRENT] (821)
[NET-CHANGE-FROM-OPS] 744
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 678
[DISTRIBUTIONS-OF-GAINS] 308
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 9371
[NUMBER-OF-SHARES-REDEEMED] 12038
[SHARES-REINVESTED] 939
[NET-CHANGE-IN-ASSETS] (1970)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 132
[OVERDIST-NET-GAINS-PRIOR] 100
[GROSS-ADVISORY-FEES] 126
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 293
[AVERAGE-NET-ASSETS] 18303
[PER-SHARE-NAV-BEGIN] 21.74
[PER-SHARE-NII] 1.21
[PER-SHARE-GAIN-APPREC] (0.27)
[PER-SHARE-DIVIDEND] .87
[PER-SHARE-DISTRIBUTIONS] .41
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 21.4
[EXPENSE-RATIO] 1.57
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
Exhibit 18(2)
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Matthew
Healey, Richard W. Ingram, Marie E. Connolly, Joseph F. Tower
III, John E. Pelletier, Elizabeth A. Bachman, Karen Jacoppo-Wood,
Mary A. Nelson, Douglas C. Conroy, Christopher J. Kelley,
Jacqueline Henning and Lenore J. McCabe, and each of them, with
full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all
capacities the Registration Statements on Form N-1A, and any and
all amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust
(each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any
registered investment company in which any of the Trusts invest,
with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable
each Trust to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction,
and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any
of them, shall do or cause to be done by virtue hereof. Any one
of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 10th day of October, 1996, in Hamilton, Bermuda.
/s/ Frederick S. Addy
Frederick S. Addy
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Matthew
Healey, Richard W. Ingram, Marie E. Connolly, Joseph F. Tower
III, John E. Pelletier, Elizabeth A. Bachman, Karen Jacoppo-Wood,
Mary A. Nelson, Douglas C. Conroy, Christopher J. Kelley,
Jacqueline Henning and Lenore J. McCabe, and each of them, with
full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all
capacities the Registration Statements on Form N-1A, and any and
all amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust
(each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any
registered investment company in which any of the Trusts invest,
with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable
each Trust to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction,
and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any
of them, shall do or cause to be done by virtue hereof. Any one
of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 10th day of October, 1996, in Hamilton, Bermuda.
/s/ William G. Burns
William G. Burns
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Matthew
Healey, Richard W. Ingram, Marie E. Connolly, Joseph F. Tower
III, John E. Pelletier, Elizabeth A. Bachman, Karen Jacoppo-Wood,
Mary A. Nelson, Douglas C. Conroy, Christopher J. Kelley,
Jacqueline Henning and Lenore J. McCabe, and each of them, with
full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all
capacities the Registration Statements on Form N-1A, and any and
all amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust
(each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any
registered investment company in which any of the Trusts invest,
with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable
each Trust to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction,
and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any
of them, shall do or cause to be done by virtue hereof. Any one
of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 10th day of October, 1996, in Hamilton, Bermuda.
/s/ Arthur C. Eschenlauer
Arthur C. Eschenlauer
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Richard W.
Ingram, Marie E. Connolly, Joseph F. Tower III, John E.
Pelletier, Elizabeth A. Bachman, Karen Jacoppo-Wood, Mary A.
Nelson, Douglas C. Conroy, Christopher J. Kelley, Jacqueline
Henning and Lenore J. McCabe, and each of them, with full powers
of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities
the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust
(each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any
registered investment company in which any of the Trusts invest,
with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable
each Trust to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction,
and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any
of them, shall do or cause to be done by virtue hereof. Any one
of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 10th day of October, 1996, in Hamilton, Bermuda.
/s/ Matthew Healey
Matthew Healey
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Matthew
Healey, Richard W. Ingram, Marie E. Connolly, Joseph F. Tower
III, John E. Pelletier, Elizabeth A. Bachman, Karen Jacoppo-Wood,
Mary A. Nelson, Douglas C. Conroy, Christopher J. Kelley,
Jacqueline Henning and Lenore J. McCabe, and each of them, with
full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all
capacities the Registration Statements on Form N-1A, and any and
all amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust
(each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any
registered investment company in which any of the Trusts invest,
with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable
each Trust to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction,
and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any
of them, shall do or cause to be done by virtue hereof. Any one
of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 10th day of October, 1996, in Hamilton, Bermuda.
/s/ Michael P. Mallardi
Michael P. Mallardi
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Matthew
Healey, Marie E. Connolly, Joseph F. Tower III, John E.
Pelletier, Elizabeth A. Bachman, Karen Jacoppo-Wood, Mary A.
Nelson, Douglas C. Conroy, Christopher J. Kelley, Jacqueline
Henning and Lenore J. McCabe, and each of them, with full powers
of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities
the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust
(each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any
registered investment company in which any of the Trusts invest,
with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable
each Trust to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction,
and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any
of them, shall do or cause to be done by virtue hereof. Any one
of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 10th day of October, 1996, in Hamilton, Bermuda.
/s/ Richard W. Ingram
Richard W. Ingram
<PAGE>
The Mangers
Funds
40 Richards
Avenue
Norwalk, CT
06854
(203)857-5321
March 27, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549
Re: The Managers Funds Post-Effective Amendment 39
to Registration Statement on Form N-1A
File Nos. 2-84012 and 811-3752
Commissioners:
Enclosed for filing is Post Effective Amendment No. 39 to the
Fund's Registration Statement on Form N-1A (the "Amendment")
under the Securities Act of 1933 (the "1933 Act") and the
Investment Company Act of 1940.
The Amendment is being filed pursuant to paragraph (b) of Rule
485 under the 1933 Act in order to update certain financial
information and make other non-material changes since Post-
Effective Amendment No. 39 was filed in January. Should you have
any questions on this filing, please feel free to call the
undersigned at (203)857-5322, or Judith L. Shandling, of Shereff,
Friedman, Hoffman and Goodman, at (212)891-9459.
Sincerely,
/s/ Kathleen Wood
Kathleen Wood
Vice President
cc: Judith L. Shandling, Esq.
_______________________________
1Trustee who is an "interested person" of the Trust (as defined in
Section 2(a)(19) of the 1940 Act).
2Trustee who is an "interested person" of the Trust (as defined in
Section 2(a)(19) of the 1940 Act).
