THE MANAGERS FUNDS
PROSPECTUS
Dated April 1, 1997, as
-----
supplemented September 11, 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.
TABLE OF CONTENTS
Page
Illustrative Expense Information 3
Summary 4
Financial Highlights 5
Investment Objectives, Policies and Restrictions 10
Certain Investment Techniques and Associated Risks 12
Portfolio Turnover 16
----
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
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
Management Other Operating
Fee Expenses Expenses
<S> <C * <C>
<C
Income Equity Fund** 0.75% 0.70% 1.45%
----- -----
Capital Appreciation Fund** 0.80% 0.51% 1.31%
----- -----
Special Equity Fund 0.90% 0.53% 1.43%
International Equity Fund 0.90% 0.61% 1.51%
----- -----
</TABLE>
_____
Other expenses reflect the expenses actually incurred by each Fund
during the year ended December 31, 1996, restated for a new transfer
-------------------------------
agent fee arrangement in effect beginning October 1, 1997. 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 0.56%
------
and Total Operating Expenses would have been 1.36%
------
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>
1 3 yea 5 yea 10 yea
Fund year rs rs rs
<S> <C> <C> <C> <C>
Income Equity Fund $15 $46 $79 $174
----
Capital Appreciation Fund 13 42 72 158
--- --- ---
Special Equity Fund 15 45 78 171
International Equity Fund 15 48 82 180
--- --- ---
</TABLE>
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."
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.
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 (loss) on
investments 3.97 7.47 (0.50) 2.54 1.72
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 assets (c) 1.44% (b) 1.45% 1.33% 1.32% 1.20%
Ratio of net investment
income to average net
assets (c) 2.63% 2.85% 3.06% 2.75% 3.52%
Portfolio turnover 33% 36% 46% 41% 41%
Average commission rate (a)
$0.06 - - - -
Net assets at end of period
(000's omitted) $53,063 $37,807 $48,875 $40,965 $49,648
</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 (loss)
on investments 3.66 7.62 (0.49) 3.80 2.39
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 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 assets (c) 1.33%(b) 1.36% 1.29% 1.18% 1.05%
Ratio of net investment
income to average net
assets (c) 0.34% 0.31% 0.53% 0.74% 0.33%
Portfolio turnover 172% 134% 122% 131% 175%
Average commission rate
(a) $0.06 - - - -
Net assets at end of
period (000's omitted) $101,282 $83,353 $86,042 $69,358 $56,196
</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.
Financial Highlights
(For a share of beneficial interest outstanding throughout each period)
Managers Special 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
$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 investments
10.68 12.28 (0.76) 6.12 5.35
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 net assets (c)
(0.10)% (0.16)% (0.06)% 0.07% 0.14%
Portfolio turnover 56% 65% 66% 45% 54%
Average commission rate (a)
$0.05 - - - -
Net assets at end of period (000's
omitted) $271,433 $118,362 $111,584 $99,032 $53,641
</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 investments
4.76 5.59 0.56 9.88 0.85
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) ---
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 assets (c)
0.97% 0.80% 0.60% 0.78% 0.97%
Portfolio turnover 30% 73% 22% 46% 51%
Average commission rate (a)
$0.03 - - - -
Net assets at end of period (000's
omitted) $269,568 $140,488 $86,924 $62,273 $23,129
</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.
<TABLE>
<CAPTION>
Managers Income Equity Fund
Year Ended December 31,
Seven
months
ended Year
Decembe ended
r 31, May 31,
1991 1990 1989 1988 1987 1987
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $24.06 $30.23 $28.17 $23.59 $30.82 $28.25
Income from
Investment
Operations:
Net investment
income (c 1.11 1.48 1.68 1.45 0.82 1.49
Net realized and
unrealized gain
(loss) on
investments 5.82 (5.30) 4.77 4.84 (5.16) 3.31
Total from
investment
operations 6.93 (3.82) 6.45 6.29 (4.34) 4.80
Less
Distributions to
Shareholders:
From investment
income (1.20) (1.45) (1.66) (1.43) (0.87) (1.54)
From net realized
gain on
investments (1.17) (0.90) (2.73) (0.28) (2.02) (0.69)
Total
distributions to
shareholders (2.37) (2.35) (4.39) (1.71) (2.89) (2.23)
Net Asset Value,
End of Period $28.62 $24.06 $30.23 $28.17 $23.59 $30.82
Total Return (d)
29.33% (13.04)% 22.24% 26.10% (15.85)% 16.95%
-------
Ratio of expenses
to average net
assets (c 1.16% 0.80% 0.15% 0.17% 0.14%(e) 0.14%
Ratio of net
investment income
to average net
assets (c 4.00% 5.40% 5.34% 5.47% 4.89%(e) 5.18%
Portfolio 64% 57% 23% 26% 35%(e) 36%
turnover
Average
commission rate - - - - - -
(a)
Net assets at end
of period (000's
omitted) $70,077 $80,297 $116,103 $108,149 $108,58 $145,146
1
</TABLE>
<TABLE>
<CAPTION>Managers Capital Appreciation Fund
Year Ended December 31,
Seven
months
ended Year
December ended
31, May 31,
1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $19.99 $21.84 $20.10 $17.38 $30.89 $30.55
Income from
Investment
Operations:
Net investment income
(c 0.25 0.60 0.91 0.75 0.45 0.81
Net realized and
unrealized gain
(loss) on investments 6.10 (0.98) 3.47 2.72 (2.37) 2.47
Total from investment
operations
6.35 (0.38) 4.38 3.47 (1.92) 3.28
Less Distributions to
Shareholders:
From net investment
income (0.27) (0.61) (0.91) (0.75) (0.47) (0.82)
From net realized
gain on investments (2.61) (0.86) (1.73) - (11.12) (2.12)
In excess of net
realized gain on
investments --- --- --- --- --- ---
Total distributions
to shareholders (2.88) (1.47) (2.64) (0.75) (11.59) (2.94)
Net Asset Value, End
of Period $23.46 $19.99 $21.84 $20.10 $17.38 $30.89
Total Return (d) 31.97% (1.98)% 21.05% 19.23% (9.41)% 10.89%
Ratio of expenses to
average net assets (c 1.31% 1.09% 0.38% 0.33% 0.24%(e) 0.17%
Ratio of net
investment income to
average net assets (c 1.07% 2.80% 4.04% 3.90% 3.22%(e) 2.85%
Portfolio turnover 259% 124% 120% 95% 190%(e) 160%
Average commission
rate (a) -- - - - - -
Net assets at end of
period (000's $53,246 $45,801 $52,724 $60,551 $74,245 $135,764
omitted)
</TABLE>
<TABLE>
<CAPTION>Managers Special Equity Fund
Year Ended December 31,
Seven
months
ended Year
December ended
31, May 31,
1991 1990 1989 1988 1987 1987
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period
$24.46 $32.45 $27.04 $22.97 $29.11 $29.56
Income from Investment
Operations:
Net investment income
(loss) (c 0.22 0.33 0.54 0.51 0.25 0.42
Net realized and
unrealized gain (loss)
on investments
11.78 (5.44) 8.57 5.43 (3.67) 2.03
Total from investment
operations
12.00 (5.11) 9.11 5.94 (3.42) 2.45
Less Distributions to
Shareholders:
From net investment
(0.23) (0.36) (0.64) (0.40) (0.25) (0.44)
From net realized gain
on investments
(1.74) (2.52) (3.06) (1.47) (2.47) (2.46)
Total distributions to
shareholders
(1.97) (2.88) (3.70) (1.87) (2.72) (2.90)
Net Asset Value, End
of Period $34.49 $24.46 $32.45 $27.04 $22.97 $29.11
Total return (d)
49.26% (16.05)% 32.76% 25.26% (12.03)% 7.92%
Ratio of expenses to
average net assets (c
1.30% 1.19% 0.40% 0.60% 0.41%(e) 0.38%
Ratio of net
investment income
(loss) to average net
assets (c 0.73% 1.22% 1.65% 1.20% 1.54%(e) 1.58%
Portfolio turnover 70% 67% 48% 62% 38%(e) 38%
Average commission
rate (a) - - - - - -
Net assets at end of
period (000's omitted)
$40,616 $24,429 $37,316 $28,824 $21,769 $30,441
</TABLE>
<TABLE>
<CAPTION>Managers International Equity Fund
Year Ended December 31,
Seven
months
ended Year
December ended
31, May 31,
1991 1990 1989 1988 1987 1987
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of Period $22.09 $26.12 $23.80 $21.74 $35.32 $26.53
Income from
Investment
Operations:
Net investment income
(loss) (c 0.36 0.34 (0.16) 0.02 0.03 0.17
Net realized and
unrealized gain
(loss) on
investments 3.64 (2.85) 3.77 2.12 (3.17) 10.97
Total from investment
operations
4.00 (2.51) 3.61 2.14 (3.14) 11.14
Less Distributions to
Shareholders
From net investment
income (0.36) (0.13) --- (0.08) (0.08) (0.13)
In excess of net
investment income --- --- --- --- --- ---
From net realized
gain on investments
(0.07) (1.39) (1.29) --- (10.36) (2.22)
In excess of net
realized gain on
investments --- --- --- --- --- ---
Total distributions
to shareholders (0.43) (1.52) (1.29) (0.08) (10.44) (2.35)
Net Asset Value, End
of Period $25.66 $22.09 $26.12 23.80 $21.74 $35.32
Total Return (d) 18.14% (9.68)% 15.10% 8.89% (11.63)% 44.10%
Ratio of expenses to
average net assets
(c 1.69% 2.33% 2.77% 1.68% 1.20%(e) 0.99%
Ratio of net
investment income
to average net
assets (c 1.50% 1.12% (0.73%) 0.12% 0.28%(e) 0.59%
Portfolio turnover 158% 78% 117% 88% 159%(e) 188%
Average commission
rate (a) --- --- --- --- --- ---
Net assets at end of
period (000's
omitted) $14,222 $9,871 $8,974 $7,337 $8,265 $11,613
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.
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.
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.
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."
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>
<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>
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.
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.
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.
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> Management Management
Fee Fee
<C> <C>
Income Equity Fund 0.75% 0.35%
--------
Capital Appreciation Fund 0.80% 0.40%
Special Equity Fund 0.90% 0.50%
International Equity Fund 0.90% 0.50%
</TABLE>
___________
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.
Chartwell Investment Partners, L.P. ("Chartwell") -The firm, a
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limited partnership controlled by Bobcat Partners, L.P., was formed in
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1997. Bobcat Partners, L.P. is controlled by John McNiff, James Croney,
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Jr., and Michael Kennedy. As of September 1997, assets under management
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totaled approximately $819 million. The firm's address is 1235
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Westlakes Drive, Suite 330, Berwyn, PA 19312.
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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.
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.
Kern Capital Management LLC ("KCM") -The firm was founded in 1997,
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and is a Delaware limited liability company which is controlled by
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Robert E. Kern, David G. Kern, and Fremont Investment Advisors, Inc., a
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subsidiary of Fremont Investments, Inc. and affiliated with The Fremont
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Group. As of September 1997, assets under management totaled
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approximately $200 million. The firm's address is 114 West 47th
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Street, Suite 1926, New York, NY 10036.
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Robert E. Kern is the portfolio manager of the portion of the
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Special Equity Fund managed by KCM. He has been the Managing Member,
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Chairman, and Chief Executive Officer since the firm's inception. Prior
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to KCM's formation, he served as Senior Vice President with Fremont
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Investment Advisors from April to August 1997, and as a Director with
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Morgan Grenfell Capital Management, Inc. from September 1986 to April
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1997.
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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.
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.
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.
