THE MANAGERS FUNDS
INCOME EQUITY FUND
CAPITAL APPRECIATION FUND
SPECIAL EQUITY FUND
INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
- ------------------------
PROSPECTUS
DATED May 1, 1998,
as supplemented May 1, 1998
- ------------------------
WHERE LEADING MONEY MANAGERS CONVERGE
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Illustrative Expense Information ....................................... 2
Summary ................................................................ 3
Financial Highlights ................................................... 4
Investment Objectives, Policies and Restrictions ....................... 11
Certain Investment Techniques and Associated Risks ..................... 14
GENERAL INFORMATION ON THE FUNDS
Purchase and Redemption of Fund Shares ............................ A1
Description of Shares, Voting Rights and Liabilities .............. A6
Tax Information ................................................... A7
Shareholder Reports ............................................... A8
Additional Information ............................................ A8
Management of the Funds ................................................ 18
Portfolio Turnover ..................................................... 23
Portfolio Transactions and Brokerage ................................... 23
Performance Information ................................................ 24
</TABLE>
<PAGE>
THE MANAGERS FUNDS
PROSPECTUS
DATED MAY 1, 1998,
AS SUPPLEMENTED DECEMBER 1, 1998
EQUITY FUNDS
The Managers Funds (the "Trust") is a no-load, open-end, management
investment company with 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.
MANAGERS EMERGING MARKETS EQUITY FUND--(the "Emerging Markets Equity Fund")
seeks long-term capital appreciation by investing primarily in companies in
countries considered to be emerging or developing by the World Bank or the
United Nations.
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 May 1, 1998, 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.
The Securities and Exchange Commission maintains a website (http://www.sec.gov)
that contains the SAI, material incorporated by reference and other information
regarding the Trust.
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 NOR HAS THE 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
annual operating expenses of the Equity Funds.
<TABLE>
Caption>
SHAREHOLDER TRANSACTION EXPENSES
(applicable to each Fund)
<S> <C>
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Charges on Redemptions None
Redemption Fees None
Exchange Fees None
</TABLE>
EQUITY FUNDS' ANNUAL OPERATING EXPENSES: (based on average daily net
assets during fiscal 1997)
<TABLE>
<CAPTION>
INCOME EQUITY CAPITAL SPECIAL EQUITY INTERNATIONAL EMERGING MARKETS
FUND APPRECIATION FUND FUND EQUITY FUND EQUITY FUND2
- ---------------- ----------- ----------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Management Fees 0.75% 0.80% 0.90% 0.90% 1.15%
Rule 12b-1 Fees None None None None None
Other Expenses1 0.61% 0.47% 0.49% 0.57% 0.77%
--------- ------- -------- ------- ------
Total Operating
Expenses1 1.36% 1.27% 1.39% 1.47% 1.92
</TABLE>
- ------------------------
[FN]
(1)Other Expenses reflect the expenses actually incurred by each Fund during
the year ended December 31, 1997, restated to reflect a new transfer agent
arrangements in effect. The expenses shown do not reflect current asset levels
for the Funds or the Fund family, and are not indicative of current expense
ratios. See "Management of the Funds--Administration and Shareholder
Servicing; Distributor; Transfer Agent." A portion of the brokerage commissions
that each of the Funds pays is used to reduce Fund expenses. These reductions
are not reflected in the expense information presented above. The reductions
had a de
minimis impact on the expenses of Managers International Equity Fund; However,
in the case of Managers Income Equity, Managers Capital Appreciation and
Managers Special Equity Funds, after giving effect to such expense reductions,
Other Expenses would have been 0.65%, 0.54% and 0.50%, respectively, and Total
Operating Expenses would have been 1.40%, 1.34% and 1.40%, respectively.
(2)Other Expenses are estimated based on estimated average net assets for the
current fiscal year ending December 31, 1998 of $30,000,000. To the extent that
actual average net assets are greater than or less than the estimate of
$30,000,000, actual Other Expenses and Total Operating Expenses will be less
than or greater than, respectively, the estimated amounts shown.
</FN>
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, and (2) redemption at the end of each time period. 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.
2
<PAGE>
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Income Equity Fund ......................... $14 $43 $74 $164
Capital Appreciation Fund .................. 13 40 70 153
Special Equity Fund ........................ 14 44 76 167
International Equity Fund .................. 15 46 80 176
Emerging Markets Equity Fund ............... 20 60 -- ---
- -------------
</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.
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.
This Prospectus relates to the Equity Funds. For more complete information
about any of the other Funds in the Trust call (800) 835-3879 or (203) 857-5321.
Read the prospectus carefully before you invest.
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
3
<PAGE>
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. Investments in securities of issuers in
emerging market countries may involve a heightened degree of risk and many
may be considered speculative. 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 years through December 31, 1997, or since the commencement of
operations, if applicable. The information for each Equity Fund except Managers
Emerging Markets Equity Fund 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, 1997, and by other accountants for the years prior to 1993,
and should be read in conjunction with such financial statements. The
financial highlights for Managers Emerging Markets Equity Fund for the period
February 9, 1998 (commencement of operations) to march 31, 1998 is unaudited.
See "Financial Statements" in the SAI.
4
<PAGE>
[This page is left intentionally blank]
5
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share of beneficial interest outstanding throughout each year)
- --------------------------------------------------------------------------------
MANAGERS INCOME EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $30.49 $28.43 $24.90 $27.89 $27.38 $28.62
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (d) 0.67 0.76 0.87 0.80 0.81 0.99
Net realized and unrealized gain (loss)
on investments 7.27 3.97 7.47 (0.50) 2.54 1.72
------ ------ ------ ------ ------ ------ ------
Total from investment operations 7.94 4.73 8.34 0.30 3.35 2.71
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.69) (0.76) (0.86) (0.83) (0.76) (0.98)
From net realized gain on investments (6.68) (1.91) (3.95) (2.46) (2.08) (2.97)
------ ------ ------ ------ ------ ------ ------
Total distributions to shareholders (7.37) (2.67) (4.81) (3.29) (2.84) (3.95)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $31.06 $30.49 $28.43 $24.90 $27.89 $27.38
====== ====== ====== ====== ====== ====== ======
- --------------------------------------------------------------------------------------------------------------------------
Total Return 27.19% 17.08% 34.36% 0.99% 12.40% 9.80%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.32%(c) 1.44%(c) 1.45% 1.33% 1.32% 1.20%
Ratio of net investment income to average
net assets(d) 1.97% 2.63% 2.85% 3.06% 2.75% 3.52%
Portfolio turnover 96% 33% 36% 46% 41% 41%
Average commission rate(a) $0.06 $0.06 -- -- -- --
Net assets at end of year (000's omitted) $64,946 $53,063 $37,807 $48,875 $40,965 $49,648
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1991 1990 1989 1988
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $24.06 $30.23 $28.17 $23.59
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net net investment income (d) 1.11 1.48 1.68 1.45
Net realized and unrealized gain (loss)
on investments 5.82 (5.30) 4.77 4.84
------ ------ ------ ------
Total from investment operations 6.93 (3.82) 6.45 6.29
------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From investment income (1.20) (1.45) (1.66) (1.43)
From net realized gain on investments (1.17) (0.90) (2.73) (0.28)
------ ------ ------ ------
Total distributions to shareholders (2.37) (2.35) (4.39) (1.71)
------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $28.62 $24.06 $30.23 $28.17
====== ====== ====== ======
- -------------------------------------------------------------------------------------------
Total Return 29.33% (13.04)% 22.24% 26.10%
- -------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.16% 0.80% 0.15% 0.17%
Ratio of net investment income to average
net assets(d) 4.00% 5.40% 5.34% 5.47%
Portfolio turnover 64% 57% 23% 26%
Average commission rate(a) -- -- -- --
Net assets at end of year (000's omitted) $70,077 $80,297 $116,103 $108,149
===========================================================================================
</TABLE>
MANAGERS CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1997(b) 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $26.34 $27.14 $23.25 $25.17 $24.67 $23.46
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(d) (0.13) 0.09 0.09 0.12 0.19 0.08
Net realized and unrealized gain (loss)
on investments 3.15 3.66 7.62 (0.49) 3.80 2.39
------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.02 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 (5.12) (4.45) (3.74) (1.39) (3.30) (1.19)
In excess of net realized gain
on investments -- -- -- (0.04) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions to shareholders (5.12) (4.55) (3.82) (1.55) (3.49) (1.26)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $24.24 $26.34 $27.14 $23.25 $25.17 $24.67
====== ====== ====== ====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 12.74% 13.73% 33.39% (1.50)% 16.38% 10.50%
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.26%(c) 1.33%(c) 1.36% 1.29% 1.18% 1.05%
Ratio of net investment income (loss) to average
net assets(d) (0.45)% 0.34% 0.31% 0.53% 0.74% 0.33%
Portfolio turnover 235% 172% 134% 122% 131% 175%
Average commission rate(a) $0.06 $0.06 -- -- -- --
Net assets at end of year (000's omitted) $73,860 $101,282 $83,353 $86,042 $69,358 $56,196
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1991 1990 1989 1988
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $19.99 $21.84 $20.10 $17.38
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(d) 0.25 0.60 0.91 0.75
Net realized and unrealized gain (loss)
on investments 6.10 (0.98) 3.47 2.72
------ ------ ------ ------
Total from investment operations 6.35 (0.38) 4.38 3.47
------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.27) (0.61) (0.91) (0.75)
From net realized gain on investments (2.61) (0.86) (1.73) --
In excess of net realized gain
on investments -- -- -- --
------ ------ ------ ------
Total distributions to shareholders (2.88) (1.47) (2.64) (0.75)
------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $23.46 $19.99 $21.84 $20.10
====== ====== ====== ======
- --------------------------------------------------------------------------------------------
Total Return 31.97% (1.98)% 21.05% 19.23%
- --------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.31% 1.09% 0.38% 0.33%
Ratio of net investment income (loss) to average
net assets(d) 1.07% 2.80% 4.04% 3.90%
Portfolio turnover 259% 124% 120% 95%
Average commission rate(a) -- -- -- --
Net assets at end of year (000's omitted) $53,246 $45,801 $52,724 $60,540
============================================================================================
</TABLE>
[FN]
(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 average shares outstanding during the year.
(c) The Funds have entered into arrangements with one or more third-party
broker-dealers who have paid a portion of each Fund's respective
custodian expenses. Absent these expense reductions, the ratio of expenses
to average net assets for the years ended December 31, 1997 and 1996, would
have been 1.35% and 1.44%, respectively, for Managers Income Equity
Fund and 1.32% and 1.38%, respectively, for Managers Capital
Appreciation Fund. Such payments were primarily used to reduce the
custodian expense.
(d) Does not reflect investment advisory and management fees paid by
shareholders directly to the Manager prior to May 1990.
</FN>
6-7
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share of beneficial interest outstanding throughout each year)
- --------------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995(b) 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $50.95 $43.34 $36.79 $38.90 $36.14 $34.49
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(d) 0.08 (0.00) (0.07) (0.01) 0.02 0.05
Net realized and unrealized gain (loss)
on investments 12.29 10.68 12.28 (0.76) 6.12 5.35
------ ------ ------ ------ ------ ------ ------
Total from investment operations 12.37 10.68 12.21 (0.77) 6.14 5.40
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.07) -- -- -- (0.01) (0.05)
From net realized gain on investments (2.07) (3.07) (5.66) (1.34) (3.37) (3.70)
------ ------ ------ ------ ------ ------ ------
Total distributions to shareholders (2.14) (3.07) (5.66) (1.34) (3.38) (3.75)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $61.18 $50.95 $43.34 $36.79 $38.90 $36.14
====== ====== ====== ====== ====== ====== ======
- ----------------------------------------------------------------------------------------------------------------------------
Total Return 24.45% 24.75% 33.94% (1.99)% 17.05% 15.64%
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.35%(c) 1.43% 1.44% 1.37% 1.26% 1.29%
Ratio of net investment income (loss) to
average net assets(d) 0.17% (0.10)% (0.16)% (0.06)% 0.07% 0.14%
Portfolio turnover 49% 56% 65% 66% 45% 54%
Average commission rate(a) $0.05 $0.05 -- -- -- --
Net assets at end of year (000's omitted) $719,707 $271,433 $118,362 $111,584 $99,032 $53,641
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $24.46 $32.45 $27.04 $22.97
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(d) 0.22 0.33 0.54 0.51
Net realized and unrealized gain (loss)
on investments 11.78 (5.44) 8.57 5.43
------ ------ ------ ------
Total from investment operations 12.00 (5.11) 9.11 5.94
------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.23) (0.36) (0.64) (0.40)
From net realized gain on investments (1.74) (2.52) (3.06) (1.47)
------ ------ ------ ------
Total distributions to shareholders (1.97) (2.88) (3.70) (1.87)
------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $34.49 $24.46 $32.45 $27.04
====== ====== ====== ======
- ---------------------------------------------------------------------------------------------
Total Return 49.26% (16.05)% 32.76% 25.26%
- ---------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.30% 1.19% 0.40% 0.60%
Ratio of net investment income (loss) to
average net assets(d) 0.73% 1.22% 1.65% 1.20%
Portfolio turnover 70% 67% 48% 62%
Average commission rate(a) -- -- -- --
Net assets at end of year (000's omitted) $40,616 $24,429 $37,316 $28,824
=============================================================================================
</TABLE>
MANAGERS INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995(b) 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $43.69 $39.97 $36.35 $35.92 $26.52 $25.66
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(d) 0.42 0.32 0.31 0.16 0.22 0.23
Net realized and unrealized gain (loss)
on investments 4.27 4.76 5.59 0.56 9.88 0.85
------ ------ ------ ------ ------ ------ ------
Total from investment operations 4.69 5.08 5.90 0.72 10.10 1.08
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (loss) (0.65) (0.33) (0.13) (0.08) (0.29) (0.22)
In excess of net investment income -- -- -- -- (0.11) -- --
From net realized gain on investments (2.15) (1.03) (2.15) -- (0.30) --
In excess of net realized gain
on investments -- -- -- -- (0.21) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions to shareholders (2.80) (1.36) (2.28) (0.29) (0.70) (0.22)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $45.58 $43.69 $39.97 $36.35 $35.92 $26.52
====== ====== ====== ====== ====== ====== ======
- ----------------------------------------------------------------------------------------------------------------------------
Total Return 10.83% 12.77% 16.24% 2.00% 38.20% 4.25%
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.45%(c) 1.53% 1.58% 1.49% 1.47% 1.45%
Ratio of net investment income to
average net assets(d) 0.75% 0.97% 0.80% 0.60% 0.78% 0.97%
Portfolio turnover 37% 30% 73% 22% 46% 51%
Average commission rate(a) $0.03 $0.03 -- -- -- --
Net assets at end of year (000's omitted) $386,624 $269,568 $140,488 $86,924 $62,273 $23,129
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $22.09 $26.12 $23.80 $21.74
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(d) 0.36 0.34 (0.15) 0.02
Net realized and unrealized gain (loss)
on investments 3.64 (2.85) 3.76 2.12
------ ------ ------ ------
Total from investment operations 4.00 (2.51) 3.61 2.14
------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (loss) (0.36) (0.13) -- (0.08)
In excess of net investment income -- -- -- --
From net realized gain on investments (0.07) (1.39) (1.29) --
In excess of net realized gain
on investments -- -- -- --
------ ------ ------ ------
Total distributions to shareholders (0.43) (1.52) (1.29) (0.08)
------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $25.66 $22.09 $26.12 $23.80
====== ====== ====== ======
- ----------------------------------------------------------------------------------------------
Total Return 18.14% (9.68)% 15.10% 8.89%
- ----------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(d) 1.69% 2.33% 2.77% 1.68%
Ratio of net investment income to
average net assets(d) 1.50% 1.12% (0.73)% 0.12%
Portfolio turnover 158% 78% 117% 88%
Average commission rate(a) -- -- -- --
Net assets at end of year (000's omitted) $14,222 $9,871 $8,974 $7,337
==============================================================================================
</TABLE>
[FN]
(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 average shares outstanding during the year.
(c) The Funds have entered into arrangements with one or more third-party
broker-dealers who have paid a portion of each Fund's respective custodian
expenses. Absent these expense reductions, the ratio of expenses to average
net assets for the year ended December 31, 1997, would have been 1.36% and
1.45%, respectively, for Managers Special Equity and Managers International
Equity. Such payments were primarily used to reduce the custodian expense.
(d) Does not reflect investment advisory and management fees paid by
shareholders directly to the Manager prior to May 1990.
</FN>
8&9
<PAGE>
FINANCIAL HIGHLIGHTS
(For a shre of beneficial interest outstanding throughout the period)
- -------------------------------------------------------------------------------
MANAGERS EMERGING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FEBRUARY 9, 1998
(COMMENCEMENT OF OPERATIONS) TO
MARCH 31, 1998 (unaudited)
----------------------------------
--------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01
Net realized and unrealized gain (loss)
on investments 0.40
-----
Total from investment operations 10.41
------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ---
------
From net realized gain on investments ---
------
Total distributions to shareholders ---
------
NET ASSET VALUE, END OF PERIOD $10.41
-------
- -----------------------------------------------------------
Total Return 4.10%(c)(d)
- -----------------------------------------------------------
Ratio of net expenses to average net assets 1.83%(b)
Ratio of net investment income to
average net assets 1.47%(b)
Portfolio turnover 7%(c)
Net assets at end of period(000's omitted) $3,568
- ------------------------------------------------------------------------------------
Expense Waiver (a)
- ------------------
Ratio of total expenses to average net assets 2.98%(b)
Ratio of net investment income to average net
assets 0.27%(b)
=============================================================
</TABLE>
[FN]
(a) Ratio information assuming no waiver of investment advisory and management
fees in effect for the period.
(b) Annualized.
(c) Not annualized.
(d) The total return would have been lower had certain expenses not been
reduced during the period.
</FN>
10
<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 Depository Receipts, securities such as rights and warrants which
permit the holder to purchase equity securities, and securities which enable the
Fund to own a group of equities, for example Standard & Poor's Depository
Receipts (SPDRs).
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 engage in securities lending, and may invest the
collateral for such loans in unaffiliated money market funds. 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 judgement 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 and the Emerging
Markets 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.
11
<PAGE>
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 emerging markets as well as developed
countries. 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--Emerging
Markets."
12
<PAGE>
MANAGERS EMERGING MARKETS EQUITY FUND
The Fund's investment objective is to seek long term capital appreciation
by investing primarily in equity securities of companies in emerging markets.
The Fund ordinarily invests at least 65% of its total assets in equity
securities of companies considered to be in emerging markets, but up to a
combined total of 35% of its total assets may be invested in equity and fixed
- -income securities of companies that are not in emerging markets, including
U.S. companies, when, in the estimation of an Asset Manager, expected
returns from such securities exceed those of emerging market securities. The
Fund may invest in fixed-income securities denominated in foreign
currencies. The Fund is designed for long-term investors who want exposure
to the potential for rapid growth associated with emerging markets and can
tolerate the increased risk associated with investing in these markets.
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 emerging markets as well as developed
countries. THE FUND DOES NOT REPRESENT A COMPLETE INVESTMENT PROGRAM NOR IS THE
FUND SUITABLE FOR ALL INVESTORS. For a discussion of the risks associated with
investing in foreign securities, see "Certain Investment Techniques and
Associated Risks-Other Securities-Foreign Securities -Emerging Markets."
The Manager considers an emerging market to be any country which is
generally considered to be an emerging or developing country by the World Bank,
the International Finance Corporation, the United Nations or its authorities.
These countries can generally include every country in the world except
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland,
United Kingdom and the United States. The Fund seeks to invest in those emerging
market countries in which the economies are developing strongly and in
which the markets are becoming more sophisticated. The Fund does not intend
to invest in any emerging market country where the foreign currency is not
freely convertible into U.S. dollars, unless the Fund has obtained the
necessary governmental licensing to convert such currency or if the Fund
has received a sanctioned contractual guarantee to protect such investment
against loss of the currency's external value. See "Other Information--
Foreign Currency Considerations" in the SAI.
A company in an emerging market country is one that: (i) has its
principal securities trading market in an emerging market country; (ii) is
organized under the laws of an emerging market country; (iii) derives 50%
or more of its total revenue from either goods produced, sales made or
services performed in an emerging markets country; or (iv) has at least 50%
of its assets located in an emerging markets country.
The Asset Managers of the Fund will not routinely attempt to hedge the
Fund's foreign currency exposure. However, the Asset Managers may from time
13
<PAGE>
to time engage in foreign currency exchange transactions if, based on
fundamental research, technical factors, and their experience and judgment,
they believe the transactions would be in the Fund's best interest.
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
14
<PAGE>
GENERAL INFORMATION ON THE FUNDS
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 or
an applicable state securities 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>
INITIAL INVESTMENT ADDITIONAL INVESTMENTS
------------------ ----------------------
<S> <C> <C>
Minimums:
Regular accounts $2,000 (or lower, as No minimum
described above)
Education IRA Minimum/Maximum $500 N/A
IRAs, IRA rollovers,
SEP, ROTH and SIMPLE IRAs $500 No minimum
<CAPTION>
METHOD
------------
Through your Contact Send additional funds
investment professional your investment advi- to your investment pro-
sor, bank or other fessional at the address
investment professional appearing on your
account statement
A1
<PAGE>
Direct by mail Send your account *Send letter of instruc-
application and check tion
(payable to The and check (payable to
Managers Funds) to the The Managers Funds)
address indicated on to:
the application The Managers Funds
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 Fund, at (800) 358-7668 prior
and instruct to wiring additional
your 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
Fund & Account #
By telephone Only for established Call the Transfer Agent
accounts with ACH priv- at (800) 252-0682
ileges. Call (800) 252- Minimum investment
0682 with instructions $100
for the Transfer Agent
- ---------------------------------
<FN>
*For shareholders that invest directly with the Fund only. For Adviser and
Bank Trust accounts, please call (800) 358-7668 for further instructions.
</FN>
</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.
A2
<PAGE>
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,
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. 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. HOWEVER, THE TIME
UNTIL WHICH ORDERS ARE ACCEPTED MAY BE CHANGED IN CASE OF AN EMERGENCY OR IF
THE NYSE CLOSES AT A TIME OTHER THAN 4:00 P.M. NEW YORK TIME. 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 in advance, 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
A3
<PAGE>
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. HOWEVER, THE TIME AT WHICH
TRANSACTIONS AND SHARES ARE PRICED MAY BE CHANGED IN CASE OF AN EMERGENCY OR IF
THE NYSE CLOSES AT A TIME OTHER THAN 4:00 P.M. NEW YORK TIME. 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. No interest will accrue on amounts represented by uncashed
redemption (or distribution) checks.
A4
<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, dol-
c/o Boston Financial Data Services, lar amount or number of shares to be
Inc. sold, your name and account number.
P.O. Box 8517 This letter must be signed by all
Boston, MA 02266-8517 owners of the shares in the exact
manner in which they appear on the
account. For redemptions over $25,000,
signature(s) must be guaranteed.
In the case of estates, trusts,
guardianships, custodianships, cor-
porations 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
</TABLE>
- -------------------------------------------
[FN]
*Telephone redemptions are available only for redemptions under $25,000.
</FN>
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 checking
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. Withdrawals can be made via check on the 25th day of each month,
or the next Business Day in the event the 25th is a weekend or holiday, unless
a date other than the 25th is specified on the application for ACH accounts.
DOLLAR COST AVERAGING allows for regular automatic exchanges from any Fund
to one or more other Funds on the 15th Business Day of each month, or can be
done through the Automatic Investment service above. Before investing in the
Trust's Funds, shareholders must obtain a prospectus from the Trust describing
those Funds.
A5
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNTS, including SEP, ROTH 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.
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 such Fund(s) 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 such
Fund(s).
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 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.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust offers a single class of shares of beneficial interest, without
par value. The Trustees have the authority to create new series of
shares in addition to the existing series of the Trust without the
requirement of a vote of shareholders of the Trust.
A6
<PAGE>
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.
YEAR 2000. Like other mutual funds, financial and business organizations
and individuals around the world, the Trust could be adversely affected if
computer systems used by the manager, sub-advisers and other service providers
do not
properly process and calculate date-related information from January 1, 2000 and
after. The Managers Funds is taking steps that it believes are reasonably
designed to address this "Year 2000" problem with respect to the computer
systems that are used and to obtain satisfactory assurances that comparable
steps are being taken by each of the Trust's major service providers. At this
time, however, there can be no assurance that these steps will be sufficient
to avoid any adverse impact on the Trust. Companies or governmental entities
in which the Funds invest could be affected by the "Year 2000" problem, but
at this time, the Funds cannot predict the degree of impact on the Funds.
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,
A7
<PAGE>
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.
ADDITIONAL INFORMATION
Any shareholder inquiries may be directed to the Trust at the address or
telephone number listed on the cover page of this Prospectus. This Prospectus,
including the SAI which has been incorporated by reference herein, does not
contain all the information set forth in the Registration Statement filed
with the Securities and Exchange Commission under the Securities Act of 1933.
Copies of the Registration Statement may be obtained at a reasonable charge
from the Securities and Exchange Commission or may be examined, without charge,
at the website maintained by the Securities and Exchange Commission
(http://www.sec.gov).
A8
<PAGE>
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. Since the Fund's investments in foreign securities involve foreign
currencies, the value of its assets as measured in U.S. dollars may be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations, including currency blockage.
Moreover, the settlement periods of foreign securities, which are often
longer than those for securities of U.S. issuers, may affect portfolio
liquidity. In buying and selling securities on foreign exchanges, purchasers
normally pay fixed commissions that are generally higher than the negotiated
commissions charged in the United States. In addition, there is generally less
government supervision and regulation of securities exchanges, brokers and
issuers located in foreign countries than in the United States.
EMERGING MARKETS SECURITIES. The Emerging Markets Equity Fund invests, and
the International Equity Fund invests to a lesser extent, in equity securities
of companies in emerging markets. Such securities may involve a high degree of
risk and many may be considered speculative. These investments carry all of the
risks, including currency fluctuations, of investing in securities of foreign
issuers described in this Prospectus to a heightened degree. These heightened
risks include (i) greater risk of expropriation, confiscatory taxation,
nationalization, and social, political and economic stability; (ii) the small
current size of the markets for securities of emerging markets issuers and the
currently low or non-existent volume of trading, resulting in lack of liquidity
and in price volatility; (iii) certain national policies which may restrict a
Fund's investment opportunities including restrictions on investing in issuers
or industries deemed sensitive to relevant national interests; and (iv) the
absence of developed legal structures governing private or foreign investment
and private property.
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
15
<PAGE>
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 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
16
<PAGE>
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.
17
<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.
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
18
<PAGE>
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. 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 be notified of any Asset Manager changes.
The following table sets forth the annual management fee rates currently
paid by each Equity Fund, and the annual asset management fee rates paid by
the Manager to each Asset Manager for a particular Fund each expressed
as a percentage of the Fund's average daily net assets.
<TABLE>
<CAPTION>
TOTAL ASSET
MANAGEMENT MANAGEMENT
NAME OF FUND FEE FEE
------------ ---------- ----------
<S> <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%
Emerging Markets Equity Fund ....................... 1.15% 0.75%
- ----------------
</TABLE>
ASSET MANAGERS
The following sets forth certain information about each of the Asset
Managers:
INCOME EQUITY FUND
Scudder Kemper Investments, Inc. ("Scudder")--The investment adviser was
founded in 1919. As of December 31, 1997, Scudder is owned by the Zurich Group
and is the core of Zurich's global investment management services. As of
December 31, 1997, assets under management totaled $218 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.
19
<PAGE>
Chartwell Investment Partners, L.P. ("Chartwell")--The firm was founded
in 1997, and is a limited partnership which is 75% controlled by the employees
of the firm. Chartwell is 25% controlled by Maverick Partners, L.P. which is
controlled by John McNiff and Michael Kennedy. As of December 1997, assets
under management totaled approximately $1.3 billion. Its address is 1235
Westlakes Drive, Suite 330, Berwyn, PA 19312.
Chartwell employs a team approach to manage their portion of the Income
Equity Fund.
CAPITAL APPRECIATION FUND
Essex Investment Management Company, LLC ("Essex")--The firm was formed in
1976 and is owned jointly by employees of the firm and an institutional partner,
Affiliated Managers Group, Inc. As of December 31, 1997, assets
under management totaled $4.3 billion. Its address is 125 High Street, Boston,
MA 02110.
Joseph C. McNay serves as the portfolio manager 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.
Roxbury Capital Management, LLC ("Roxbury")--The firm is a Delaware limited
liability company founded in 1986. As of September 30, 1998, assets under
management totaled approximately $4.5 billion. Its address is 200 Wilshire
Boulevard, Suite 600, Santa Monica, CA 90401.
Kevin P. Riley serves as the portfolio manager of the portion of the
Capital Appreciation Fund managed by Roxbury. Mr. Riley has been a Senior
Managing Director and Senior Portfolio Manager of Roxbury since inception and
was named Chief Investment Officer in 1997.
SPECIAL EQUITY FUND
Liberty Investment Management ("Liberty")--The firm was originally formed
in 1976 and is a division of Goldman Sachs Asset Management. As of December 31,
1997, assets under management totaled $8 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 Vice President of Liberty, a
position he has held since 1988.
Pilgrim Baxter & Associates, Ltd. ("PBA")--The firm was formed in 1982
and is owned by United Asset Management, a public company. As of December
31, 1997, assets under management for PBA and its subsidiaries totaled over
$16 billion. Its address is 825 Duportail Road, Wayne, PA 19087.
Jeffrey Wrona is the lead portfolio manager and Gary L. Pilgrim, CFA,
is the co-portfolio manager of the portion of the Special Equity Fund
managed by PBA. Mr. Wrona is responsible for managing small capitalization and
technology
20
<PAGE>
portfolios. Mr. Pilgrim is the Chief Investment Officer and one of the
founders of the 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, 1997, assets under management totaled $1.6 billion.
Its address is 253 River side 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 by Robert E.
Kern, Jr. and David G. Kern, and is a Delaware limited liability company. As of
December 31, 1997, assets under management totaled approximately $269 million.
The firm's address is 114 West 47th Street, Suite 1926, New York, NY 10036.
Robert E. Kern, Jr. is the portfolio manager of the portion of the Special
Equity Fund managed by KCM. He has been the Managing Member, Chairman, and
Chief
Executive Officer since the firm's inception. Prior to KCM's formation, he
served
as Senior Vice President with Fremont Investment Advisors from April to August
1997, and as a Director with Morgan Grenfell Capital Management, Inc. from
September 1986 to April 1997.
INTERNATIONAL EQUITY FUND
Scudder Kemper Investments, Inc.--See Income Equity Fund for a
description.
William E. Holzer is the lead 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 Asset Management ("Lazard")--The firm is a New York
limited liability company founded in 1848. As of December 31, 1997, the firm had
$60 billion under management. Its address is 30 Rockefeller Plaza, New York, NY
10112.
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 capacity with General Electric Investment Co.
EMERGING MARKETS EQUITY FUND
Montgomery Asset Management, LLC ("Montgomery")--The firm is a Delaware
limited liability company. As of September 30, 1997, the firm had approximately
$10 billion assets under management. The firm's address is 101 California
Street, San Francisco, California 94111.
21
<PAGE>
The portfolio managers are Josephine Jimenez, CFA, Bryan Sudweeks, Ph.D,
CFA, Frank Chiang, Jose de Gusmao Fiuza, Stuart Quint, and Jesus Isidoro Duarte.
King Street Advisors, Limited ("King Steet")--The firm is a subsidiary of
State Street Corporation. As of September, 1997, the firm had approximately
$7.1 billion assets under management. The firm's address is
Almack House, 28 King Street, London, SW1Y6QW, England.
Murray Davey and Ken King are the portfolio managers of that portion of
the Emerging Markets Equity Fund managed by King Street.
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 a
rate not to exceed 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. Boston Financial Data Services, Inc. serves as the
Trust's Transfer Agent.
INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Income dividends will normally be paid 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 most capital gains will normally be paid
annually in December.
22
<PAGE>
<TABLE>
<CAPTION>
FREQUENCY FUND
--------- ----
<S> <C>
Monthly Income Equity Fund
Annually Capital Appreciation Fund,
Special Equity Fund,
International Equity Fund,
Emerging Markets 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.
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."
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
23
<PAGE>
have charged for the same transaction if the Asset Manager determines in
good faith that the commission is 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, unless an
exemptive order is obtained from the Securities and Exchange Commission, 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.
24
<PAGE>
THE MANAGERS FUNDS
[LOGO OMITTED]
WHERE LEADING MONEY MANAGERS CONVERGE
FUND DISTRIBUTOR
THE MANAGERS FUNDS, L.P.
40 Richards Avenue
Norwalk, Connecticut 06854-2325
(203)857-5321 or (800)835-3879
CUSTODIAN
State Street Bank and Trust
Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
LEGAL COUNSEL
Swidler Berlin Shereff
Friedman, LLP
919 Third Avenue
New York, New York 10022
TRANSFER AGENT
Boston Financial Data
Services, Inc.
attn: The Managers Funds
P.O. Box 8517
Boston, Massachusetts 02266-8517
(800)252-0682
THE MANAGERS FUNDS
EQUITY FUNDS:
- ------------
INCOME EQUITY FUND
Scudder Kemper Investments, Inc.
Chartwell Investment Partners, L.P.
CAPITAL APPRECIATION FUND
Essex Investment Management
Company, LLC
Roxbury Capital Management, LLC
SPECIAL EQUITY FUND
Liberty Investment Management
Pilgrim Baxter & Associates, Ltd.
Westport Asset Management, Inc.
Kern Capital Management LLC
INTERNATIONAL EQUITY FUND
Scudder Kemper Investments, Inc.
Lazard Asset Management
EMERGING MARKETS
EQUITY FUND
Montgomery Asset Management, LLC
King Street Advisors, Limited
INCOME FUNDS:
- ------------
MONEY MARKET FUND
J.P. Morgan
SHORT AND INTERMEDIATE
BOND FUND
Standish, Ayer & Wood, Inc.
BOND FUND
Loomis, Sayles & Company, L.P.
GLOBAL BOND FUND
Rogge Global Partners
