Registration Nos. 2-84012
811-3752
Securities and Exchange Commission
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 x
Pre-Effective Amendment No. ____ ___
Post-Effective Amendment No. 47 x
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 x
Amendment No. 49 x
(Check appropriate box or boxes)
THE MANAGERS FUNDS
_______________________________________________________________
(Exact Name of Registrant as Specified in Charter)
40 Richards Avenue, Norwalk, Connecticut 06854
_______________________________________________________________
(Address of Principal Executive Offices)
Donald S. Rumery, Secretary
The Managers Funds
40 Richards Avenue
Norwalk, CT 06854
Copy To: Joel Goldberg, Esq.
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
_______________________________________________________________
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
x Immediately upon filing pursuant to ___ On (date) pursuant to
paragraph (b) paragraph (b)
__60 days after filing pursuant to ___ On (date) pursuant to paragraph
paragraph (a)(1) (a)(1)
__75 days after filing pursuant to ___ On (date) pursuant to paragraph
paragraph (a)(2) of Rule 485 (a)(2) of Rule 485
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
THE MANAGERS FUNDS
MONEY MARKET FUND
_____________________
PROSPECTUS
DATED APRIL 3, 2000
We pick the talent. You reap the results.
The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RISK/RETURN SUMMARY
KEY INFORMATION 1
PERFORMANCE SUMMARY 3
FEES AND EXPENSES 4
SUMMARY OF THE FUND
THE MANAGERS FUNDS 7
MASTER/FEEDER STRUCTURE 7
MONEY MARKET FUND 8
ADDITIONAL RISKS
A FEW WORDS ABOUT RISK 11
ABOUT YOUR INVESTMENT
FINANCIAL HIGHLIGHTS 16
YOUR ACCOUNT 18
HOW TO PURCHASE SHARES 19
HOW TO REDEEM SHARES 20
INVESTOR SERVICES 21
THE FUND AND ITS POLICIES 22
ACCOUNT STATEMENTS 23
DIVIDENDS AND DISTRIBUTIONS 23
TAX INFORMATION 23
FOR MORE INFORMATION
RISK/RETURN SUMMARY
</TABLE>
<PAGE>
KEY INFORMATION
This Prospectus contains important information for anyone
interested in investing in Managers Money Market Fund (the
"Fund"), a series of The Managers Funds no-load mutual fund
family. Please read this document carefully before you invest
and keep it for future reference. You should base your purchase
of shares of the Fund on your own goals, risk preferences and
investment time horizons.
SUMMARY OF THE GOALS, PRINCIPAL STRATEGIES AND PRINCIPAL RISK
FACTORS OF THE FUND
The following is a summary of the goals, principal strategies
and principal risk factors of the Fund.
Goals Principal Strategies Principal Risk Factors
----------- -------------------- ------------------------
Maximize current Invests in a broad Credit Risk
income and maintain a spectrum of money market Inflation Risk
high level of securities, such as U.S. Interest Rate
liquidity Government securities, Risk
commercial paper and
corporate debt
Invests all of its assets
in a master portfolio
Principal Risk Factors
An investment in the Fund is not a deposit in a bank and is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
Risk is the possibility that you will lose money or not make any
additional money by investing in the Fund. Before you invest,
please make sure that you have read, and understand, the risk
factors that apply to the Fund.
<PAGE>
The following is a discussion of the principal risk factors
of investing in the Fund.
CREDIT RISK
The likelihood that a debtor will be unable to pay interest
or principal payments as planned is typically referred to as
default risk. Default risk for most debt securities is
constantly monitored by several nationally recognized statistical
rating agencies such as Moody's Investors Services, Inc. and
Standard & Poor's Corporation. Even if the likelihood of default
is remote, changes in the perception of an institution's
financial health will affect the valuation of its debt
securities. The extension of default risk is typically known as
credit risk.
INFLATION RISK
Inflation risk is the risk that the price of an asset, or
the income generated by the asset, will not keep up with the cost
of living. Almost all financial assets have some inflation risk.
INTEREST RATE RISK
Changes in interest rates can impact stock and bond prices
in several ways. As interest rates rise, the fixed coupon
payments of debt securities become less competitive with the
market and thus the price of the securities will fall.
Similarly, the expected earnings and dividend payments for equity
securities become relatively less competitive as interest rates
rise. Conversely, prices will rise as available interest rates
fall. The longer into the future that these cash flows are
expected, the greater the effect on the price of the security.
Interest rate risk is thus measured by analyzing the length of
time or duration over which the return on the investment is
expected. The longer the duration, the higher the interest rate
risk.
PERFORMANCE SUMMARY
The following bar chart illustrates the Fund's year-by-year
total return and how performance of the Fund has varied over the
past ten years. The chart assumes that all dividend and capital
gain distributions have been reinvested. Past performance does
not guarantee future results.
<TABLE>
<CAPTION>
ANNUAL RETURNS - LAST TEN CALANDER YEARS
<S> <C>
1990 7.7%
1991 5.3%
1992 3.1%
1993 2.5%
1994 3.2%
1995 5.4%
1996 5.5%
1997 5.4%
1998 5.2%
1999 4.9%
</TABLE>
[FN]
For the Money Market Fund over this period, the highest quaterly
return was 1.90% (1stQ.'90) and the lowest quarterly return was
0.55% (4th Q'93)
</FN>
The following table compares the Fund's performance to that
of a 3-month Treasury Bill. Again, the table assumes that
dividends and capital gains distributions have been reinvested
for both the Fund and the security. As always, the past
performance of the Fund is not an indication of how the Fund will
perform in the future.
Average Annual Total Return
(as a percentage) as of 12/31/99
1 Year 5 Years 10 Years
Money Market 4.89% 5.28% 4.81%
Fund*
3-Month 4.81% 5.35% 5.28%
Treasury Bill
* For information on the current yields of the Fund, please call
(800) 835-3879. Fund returns are net of expenses.
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of the offering price) None (0%)
Maximum Deferred Sales Charge (Load) None (0%)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and Other Distributions None (0%)
Redemption Fee None (0%)
Exchange Fee None (0%)
Maximum Account Fee None (0%)
The following table shows the expenses for both the Fund and
its share of the expenses of the master portfolio in which it
invests, The Prime Money Market Portfolio, for the fiscal year
ended November 30, 1999.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
Management Fee 0.12%
Distribution (12b-1) Fees 0.00%
Other Expenses(a) 0.41%
Total Annual Fund Operating Expenses 0.53%
(a) The Fund's Other Expenses reflect a modification in the
contractual Administration Fee received by The Managers Funds
LLC. The above expenses have been restated as if such fee had
been in effect throughout fiscal year 1999.
The Management Fee is the fee paid to J.P. Morgan Investment
Management Inc. which manages the master portfolio in which the
Fund invests, The Prime Money Market Portfolio.
Distribution (12b-1) Fees are those expenses charged by some
mutual funds for the cost of marketing and advertising. This
Fund does not have any Distribution (12b-1) Fees.
Example+
The Example shows the expenses for both the Fund and its
share of the expenses of the master portfolio in which it
invests, The Prime Money Market Portfolio, for the fiscal year
ended November 30, 1999. This Example will help you compare the
cost of investing in the Fund to the cost of investing in other
mutual funds. The Example makes certain assumptions. It assumes
that you invest $10,000 as an initial investment in the Fund for
the time periods indicated and then redeem all of your shares at
the end of those periods. It also assumes that your investment
has a 5% total return each year and the Fund's operating expenses
remain the same. Although your actual costs may be higher or
lower, based on the above assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
Money Market $54 $170 $296 $665
Fund(a)
(a) The Example reflects a modification in the contractual
Administration Fee received by The Managers Funds LLC. The above
expenses have been restated as if such fee had been in effect
throughout fiscal year 1999.
+The Example should not be considered a representation of past or
future expenses, as actual expenses may be greater or lower than
those shown.
SUMMARY OF THE FUND
FUND FACTS
Objective: Maximize current income; maintain liquidity
Investment Focus: U.S. dollar-denominated money market securities
Benchmark: 3-month Treasury bill
Ticker: MGMEX
THE MANAGERS FUNDS
The Managers Funds is a no-load mutual fund family comprised
of different funds, each having distinct investment management
objectives, strategies, risks and policies. Many of the Funds
employ a multi-manager investment approach which can provide
added diversification within each portfolio.
The Managers Funds LLC, a subsidiary of Affiliated Managers
Group, Inc., serves as the administrator and distributor of the
shares of the Fund. The Fund invests all of its assets in The
Prime Money Market Portfolio. The investment manager of the
Portfolio is J.P. Morgan Investment Management, Inc. ("JPMIM"),
formerly Morgan Guaranty Trust Company of New York. JPMIM,
subject to the supervision of the Trustees of the Portfolio,
makes the Portfolio's day-to-day investment decisions, arranges
for the execution of the Portfolio transactions, and generally
manages the Portfolio's investments. The Fund has invested in
this Portfolio through a master/feeder arrangement since December
1, 1995.
MASTER/FEEDER STRUCTURE
As noted earlier, the Fund is a "feeder" fund that invests in
a master portfolio (the "Portfolio"). (Except where indicated,
this Prospectus uses the term "the Fund" to mean the feeder fund
and the Portfolio taken together.)
The Portfolio accepts investments from other feeder funds,
and the feeder funds bear the Portfolio's expenses in proportion
to their assets. However, each feeder can set up its own
transaction minimums, fund-specific expenses and other
conditions. This means that one feeder could offer access to the
same Portfolio on more attractive terms, or could experience
better performance, than another feeder. Generally when a master
portfolio seeks a vote, its feeder fund will hold a shareholder
meeting and cast its vote proportionately, as instructed by its
shareholders. Fund shareholders are entitled to one vote per
Fund share. The Fund and The Prime Money Market Portfolio expect
to maintain consistent objectives. If they do not, the Fund will
withdraw from the Portfolio, receiving its assets either in cash
or securities. The Board of Trustees of the Fund would then
consider whether the Fund should hire its own investment manager,
invest in a different master portfolio, or take other appropriate
action.
MONEY MARKET FUND
Objective
The Fund's objective is to maximize current income and
maintain a high level of liquidity.
Principal Investment Strategies
The Fund looks for investments across a broad spectrum of
U.S. dollar-denominated money market securities. It typically
emphasizes different types of securities at different times in
order to take advantage of changing yield differentials. The
Fund's investments may include obligations issued by the U.S.
Treasury, government agencies, domestic and foreign banks and
corporations, foreign governments, repurchase agreements, as well
as asset-backed securities, taxable municipal obligations, and
other money market instruments. Some of these investments may be
purchased on a when-issued or delayed delivery basis.
This Fund, like other money market funds, is subject to a
range of federal regulations that are designed to promote
stability. For example, it must maintain a weighted average
maturity of no more than 90 days, and generally may not invest in
any securities with a remaining maturity of more than 13 months.
Although keeping the weighted average maturity this short helps
the Fund in its pursuit of a stable $1.00 share price, it is
possible to lose money by investing in this Fund.
Additionally, money market funds take steps to protect
investors against credit risk. Under its investment guidelines,
the Fund maintains stricter credit risk standards than federal
law requires.
Should I Invest in this Fund?
This Fund may be suitable if you:
* Are seeking an opportunity to preserve capital in your
investment portfolio
* Are uncomfortable with risk
* Are investing with a shorter time horizon in mind
This Fund may not be suitable if you:
* Are investing for high current income
* Are seeking a moderate or high risk investment
* Are investing with a longer time horizon in mind
What am I investing in? You are buying shares of a pooled
investment known as a mutual fund. It is professionally managed
and gives you the opportunity to invest in a variety of
companies, industries and markets. This Fund is not a complete
investment program, and there is no guarantee that the Fund will
reach its stated goals.
PORTFOLIO MANAGEMENT OF THE FUND
J.P. Morgan Investment Management Inc. ("JPMIM"), formerly
Morgan Guaranty Trust Company of New York ("Morgan"), is the
investment manager to The Prime Money Market Portfolio, the
portfolio in which the Fund invests all of its assets. JPMIM has
managed the Portfolio since October 1, 1998. Prior to that date,
Morgan was the investment manager. JPMIM, located at 522 Fifth
Avenue, New York, New York 10036, was founded in 1913. As of
December 31, 1999, JPMIM had assets under management of $ 349
billion. Mark Settles, Vice President, and John Donohue, Vice
President, lead the portfolio management team. Mr. Settles and
Mr. Donohue have each held various positions with JPMIM since
1994 and 1997, respectively. Prior to joining JPMIM, Mr. Donohue
was an Institutional Money Market Portfolio Manager at Goldman,
Sachs & Co.
The Fund pays an annual management fee to JPMIM indirectly
through its investment in the Portfolio. The Portfolio pays a
management fee of 0.20% of the first $1 billion of the average
daily net assets of the Portfolio and 0.10% of the average daily
net assets in excess of $1 billion.
ADDITIONAL RISKS
A FEW WORDS ABOUT RISK
In the normal course of everyday life, each of us takes
risk. What is risk? Risk can be thought of as the likelihood of
an event turning out differently than planned and the
consequences of that outcome.
f you drive to work each day, you do so with the plan of
arriving safely with time to accomplish your tasks. There is a
possibility, however, that some unforeseen factor such as bad
weather or a careless driver will disrupt your plan. The
likelihood of your being delayed or even injured will depend upon
a number of factors including the route you take, your driving
ability, the type and condition of your vehicle, the geographic
location or the time of day.
he consequences of something going wrong can range from a
short delay to serious injury or death. If you wanted, you could
try to quantitatively estimate the risk of driving to work,
which, along with your expectations about the benefits of getting
to work, will help you determine whether or not you will be
willing to drive each day. A person who works in a city may find
the risk of driving very high and the relative rewards minimal in
that he or she could more easily walk or ride a train.
Conversely, a person who works in the country may find the risk
of driving minimal and the reward great in that it is the only
way he or she could get to work. Fortunately, most people do not
need to quantitatively analyze most of their everyday actions.
The point is that everyone takes risks, and subconsciously
or otherwise, everyone compares the benefit that they expect from
taking risk with the cost of not taking risk, to determine their
actions. In addition, here are a few principles from this
example, which are applicable to investing as well.
* Despite statistics, the risks of any action are
different for every person and may change as a
person's circumstances change
* Everybody's perception of reward is different
* High risk does not in itself imply high reward
While higher risk does not imply higher reward, proficient
investors demand a higher return when they take higher risks.
This is often referred to as the risk premium.
<PAGE>
U.S. investors often consider the yield for short-term U.S.
Treasury securities to be as close as they can get to a risk-free
return since the principal and interest are guaranteed by the
U.S. Government. Investors get paid only for taking risks, and
successful investors are those who have been able to correctly
estimate and diversify the risks to which they expose their
portfolios along with the risk premium they expect to earn.
In order to better understand and quantify the risks
investors take versus the rewards they expect, investors separate
and estimate the individual risks to their portfolio. By
diversifying the risks in an investment portfolio, an investor
can often lower the overall risk, while maintaining a reasonable
return expectation.
In "Principal Risks Factors", the principal risks of
investing in the Fund are detailed. The following are
descriptions of some of the additional risks that the investment
manager of the Fund may take to earn investment returns. This is
not a comprehensive list and the risks discussed below are only
certain of the risks to which your investments are exposed.
Intelligence Risk
Intelligence risk is a term created by The Managers Funds
LLC to describe the risks taken by mutual fund investors in
hiring professional investment managers to invest assets.
Investment managers evaluate investments relative to all of the
above risks, among others, and allocate accordingly. To the
extent that they are intelligent and make accurate projections
about the future of individual businesses and markets, they will
make money for investors. While most managers diversify many of
these risks, their portfolios are constructed based upon central
underlying assumptions and investment philosophies, which
proliferate through their management organizations and are
reflected in their portfolios. Intelligence risk can be defined
as the risk that investment managers may make poor decisions or
use investment philosophies that turn out to be wrong.
Liquidity Risk
This is the risk that the Fund cannot sell a security at a
reasonable price within a reasonable time frame when it wants or
needs to due to a lack of buyers for the security. This risk
applies to all assets. For example, an asset such as a house has
reasonably high liquidity risk because it is unique and has a
limited number of potential buyers. Thus, it often takes a
significant effort to market, and it takes at least a few days
and often a few months to sell.
On the other hand, a U.S. Treasury note is one of thousands
of identical notes with virtually unlimited potential buyers and
can thus be sold very quickly and easily. The liquidity of
financial securities in orderly markets can be measured by
observing the amount of daily or weekly trading in the security,
the prices at which the security trades and the difference
between the price buyers offer to pay and the price sellers want
to get. However, estimating the liquidity of securities during
market upheavals is very difficult.
Reinvestment Risk
As debtors pay interest or return capital to investors,
there is no guarantee that investors will be able to reinvest
these payments and receive rates equal to or better than their
original investment. If interest rates fall, the rate of return
available to reinvested money will also fall. Purchasers of a 30-
year, 8% coupon bond can be reasonably assured that they will
receive an 8% return on their original capital, but unless they
can reinvest all of the interest receipts at or above 8%, the
total return over 30 years will be below 8%. The higher the
coupon and prepayment risk, the higher the reinvestment risk.
Here is a good example of how consequences differ for
various investors. An investor who plans on spending (as opposed
to reinvesting) the income generated by his portfolio is less
likely to be concerned with reinvestment risk and more likely to
be concerned with inflation and interest rate risk than is an
investor who will be reinvesting all income.
Specific Risk
This is the risk that any particular security will drop in
price due to adverse effects on a specific business. Specific
risk can be reduced through diversification. It can be measured
by calculating how much of a portfolio is concentrated into the
few largest holdings and by estimating the individual business
risks that these companies face.
An extension of specific risk is Sector (Industry) Risk.
Companies that are in similar businesses may be similarly
affected by particular economic or market events. To measure
sector (industry) risk, one would group the holdings of a
portfolio into sectors or industries and observe the amounts
invested in each. Again, diversification among industry groups
will reduce sector (industry) risk but may also dilute potential
returns.
There are many ways of summarizing these risks, but keep in
mind that summarization can lead one to overlook some important
factors. Life insurance companies do not attempt to estimate the
individual risks that each of its policy holders intends to take
throughout life. Not only would this be impossible from a data
collection standpoint, but also sheer number of estimates
involved would compound to make the final life expectancy
estimate very imprecise. Instead, a life insurance company makes
certain estimates about the life expectancy of people and then
adjusts them based on some other broad measures such as sex,
general health, heredity, and lifestyle factors. The circumstance
in which this model falters is when any significant factor, which
is not represented in the historical results, becomes relevant.
Nuclear war, plague or climactic shifts could detrimentally
affect the life insurers' results, while a cure for cancer and
improving health habits could incrementally affect life
expectancies.
<PAGE>
ABOUT YOUR INVESTMENT
FINANCIAL HIGHLIGHTS
The following Financial Highlights table is intended to help you understand
the Fund's financial performance for the past five fiscal years. Certain
informat;ion reflects financial results for a single Fund share. The total
returns in the table
represent the rate that an investor would have earned or lost on an investment
in the
Fund. It assumes reinvestment of all dividends and distributions. This
information,
derived from the Fund's financial statements, has been audited by
PricewaterhouseCoopers
LLp, whose report is included in the Fund's Annual Report, which is availabl
e upon request.
<Page
>
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 3, 2000
________________________________________________________________
___________________
You can obtain a free copy of the Prospectus of Managers
Money Market Fund (the "Fund") by calling The Managers Funds at
(800) 835-3879. The Prospectus provides the basic information
about investing in the Fund.
This Statement of Additional Information is not a Prospectus.
It contains additional information regarding the activities and
operations of the Fund. It should be read in conjunction with
the Fund's Prospectus.
The Financial Statements of the Fund, including the Report of
Independent Accountant, for the fiscal year ended November 30,
1999 are included in the Fund's Annual Report and are available
without charge by calling the Fund at (800) 835-3879. They are
incorporated by reference to this document.
TABLE OF CONTENTS
Page
GENERAL INFORMATION 1
INVESTMENT OBJECTIVES AND POLICIES 1
Investment Techniques and Associated Risks 4
Quality and Diversification Requirements for the Fund 9
Fundamental Investment Restrictions 9
Non-Fundamental Investment Restrictions 11
BOARD OF TRUSTEES AND OFFICERS OF THE TRUST 12
Trustees' Compensation 12
TRUSTEES OF THE PORTFOLIO 12
Trustees' Compensation 12
Officers of the Portfolio 14
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 14
Control Persons 14
Management Ownership 14
MANAGEMENT OF THE FUND AND THE PORTFOLIO 14
Investment Advisor 14
Compensation of Investment Advisor 15
Investment Advisory Agreement 15
Fee Waivers and Expense Limitations 15
Administrative Services; Distribution Arrangements 17
Portfolio Co-Administrator 17
Custodian 17
Transfer Agent 18
Financial Professionals 18
Independent Accountants 18
PURCHASE, REDEMPTION AND PRICING OF SHARES 19
Purchasing Shares 19
Redeeming Shares 19
Exchange of Shares 20
Net Asset Value 20
Dividends and Distributions 21
CERTAIN TAX MATTERS 21
Federal Income Taxation of Fund-in General 21
Taxation of the Fund's Investments 22
Federal Income Taxation of Shareholders 22
Foreign Shareholders 22
State and Local Taxes 23
Other Taxation 23
PERFORMANCE DATA 23
Total Return 23
Performance Comparisons 24
Massachusetts Business Trust 24
Description of Shares 26
Master-Feeder Investment Structure
Additional Information 26
FINANCIAL STATEMENTS 26
DESCRIPTION OF SECURITY RATINGS 26
GENERAL INFORMATION
This Statement of Additional Information relates only to
Managers Money Market Fund (the "Fund"). The Fund is a series of
shares of beneficial interest of The Managers Funds, a no-load
mutual fund family, formed as a Massachusetts business trust (the
"Trust").
This Statement of Additional Information describes the
financial history, management and operation of the Fund, as well
as the Fund's investment objectives and policies. It should be
read in conjunction with the Fund's current Prospectus. The
Trust's executive office is located at 40 Richards Avenue,
Norwalk, Connecticut 06854.
Since December 1, 1995, the Fund has operated through a two-
tiered master-feeder investment fund structure. Historical
information for the Fund contained in this Statement of
Additional Information may include information prior to December
1, 1995.
The Fund invests all of its investable assets in The Prime
Money Market Portfolio (the "Portfolio"). The investment advisor
of the Portfolio is J.P. Morgan Investment Management Inc.
("JPMIM" or the "Advisor"), formerly, Morgan Guaranty Trust
Company of New York ("Morgan").
Investments in the Fund are not:
* Deposits or obligations of any bank
* Guaranteed or endorsed by any bank
* Federally insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other
federal agency
INVESTMENT OBJECTIVES AND POLICIES
The following is additional information regarding the
investment objectives and policies used by the Fund in an attempt
to achieve the objective as stated in its current Prospectus.
The Portfolio is an open-end, diversified management investment
company having the same objective as the Fund.
The Fund is designed for investors who seek to maximize of
current income consistent with the preservation of capital and
same-day liquidity. The Fund seeks to achieve this objective by
investing all of its investable assets in the Portfolio.
The Portfolio attempts to achieve its investment objective
by maintaining a dollar-weighted average portfolio maturity of
not more than 90 days and by investing in U.S. dollar-denominated
securities that meet certain rating criteria, present minimal
credit risk and have effective maturities of not more than
thirteen months.
Investment Techniques and Associated Risks
The following are descriptions of the types of money market
instruments that may be purchased by the Portfolio. Also see
"Quality and Diversification Requirements of the Fund."
(1) U.S. Treasury Securities. The Portfolio may invest in
direct obligations of the U.S. Treasury. These obligations
include Treasury bills, notes and bonds, all of which have their
principal and interest payments backed by the full faith and
credit of the United States.
Additional U.S. Government Securities. The Portfolio may
invest in obligations issued or guaranteed by the agencies or
instrumentalities of the United States Government. These
obligations may or may not be backed by the "full faith and
credit" of the United States. Securities which are backed by the
full faith and credit of the United States include obligations of
the Government National Mortgage Association, the Farmers Home
Administration and the Export-Import Bank. For those securities
which are not backed by the full faith and credit of the United
States, the Portfolio must look principally to the federal agency
guaranteeing or issuing the obligation for ultimate repayment and
therefore may not be able to assert a claim against the United
States itself for repayment in the event that the issuer does not
meet its commitments. The securities which the Portfolio may
invest that are not backed by the full faith and credit of the
United States include, but are not limited to: (a) obligations
of the Tennessee Valley Authority, the Federal Home Loan Mortgage
Corporation, the Federal Home Loan Bank and the U.S. Postal
Service, each of which has the right to borrow from the U.S.
Treasury to meet its obligations; (b) securities issued by the
Federal National Mortgage Association, which are supported by the
discretionary authority of the U.S. Government to purchase the
agency's obligations; and (c) obligations of the Federal Farm
Credit System and the Student Loan Marketing Association, each of
whose obligations may be satisfied only by the individual credits
of the issuing agency.
(2) Foreign Government Obligations. The Portfolio, subject
to its applicable investment policies, may invest in short-term
obligations of foreign sovereign governments or of their
agencies, instrumentalities, authorities or political
subdivisions. These securities must be denominated in U.S.
Dollars.
(3) Bank Obligations. The Portfolio, unless otherwise
noted, may invest in negotiable certificates of deposits, time
deposits and bankers' acceptances of (i) banks, savings and loan
associations and savings banks which have more than $2 billion in
total assets and are organized under laws of the United States or
any state; (ii) foreign branches of these banks or of foreign
banks of equivalent size (Euros); and (iii) U.S. branches of
foreign banks of equivalent size (Yankees). The Portfolio will
not invest in obligations for which the Advisor, or any of its
affiliated persons, is the ultimate obligor or accepting bank.
The Portfolio may also invest in obligations of international
banking institutions designated or supported by national
governments to promote economic reconstruction, development or
trade between nations (e.g., the European Investment Bank, the
Inter-American Development Bank, or the World Bank).
Commercial Paper. The Portfolio may invest in commercial
paper, including master demand obligations. Master demand
obligations are obligations that provide for a periodic
adjustment in the interest rate paid and permit daily changes in
the amount borrowed. Master demand obligations are governed by
agreements between the issuer and Morgan acting as agent, for no
additional fee. The monies loaned to the borrower come from
accounts managed by Morgan or its affiliates, pursuant to
arrangements with such accounts. Interest and principal payments
are credited to such accounts. Morgan, an affiliate of the
Advisor, has the right to increase or decrease the amount
provided to the borrower under an obligation. The borrower has
the right to pay without penalty all or any part of the principal
amount then outstanding on an obligation together with interest
to the date of payment. Since these obligations typically
provide that the interest rate is tied to the Federal Reserve
commercial paper composite rate, the rate on master demand
obligations is subject to change. Repayment of a master demand
obligation to participating accounts depends on the ability of
the borrower to pay the accrued interest and principal of the
obligation on demand which is continuously monitored by Morgan.
Since master demand obligations typically are not rated by credit
rating agencies, the Portfolio may invest in such unrated
obligations only if at the time of an investment the obligation
is determined by the Advisor to have a credit quality which
satisfies the Portfolio's quality restrictions. Although there
is no secondary market for master demand obligations, such
obligations are considered by the Portfolio to be liquid because
they are payable upon demand. The Portfolio does not have any
specific percentage limitation on investments in master demand
obligations. It is possible that the issuer of a master demand
obligation could be a client of Morgan to whom Morgan, in its
capacity as a commercial bank, has made a loan.
Asset-Backed Securities. The Portfolio may also invest in
securities generally referred to as asset-backed securities,
which directly or indirectly represent a participation interest
in, or are secured by and payable from, a stream of payments
generated by particular assets, such as motor vehicle or credit
card receivables or other asset-backed securities collateralized
by such assets. Asset-backed securities provide periodic
payments that generally consist of both interest and principal
payments. Consequently, the life of an asset-backed security
varies with the prepayment experience of the underlying
obligations. Payments of principal and interest may be
guaranteed up to certain amounts and for a certain time period
by a letter of credit issued by a financial institution
unaffiliated with the entities issuing the securities. The asset-
backed securities in which the Portfolio may invest are subject
to the Portfolio's overall credit requirements. However, asset-
backed securities, in general, are subject to certain risks.
Most of these risks are related to limited interests in
applicable collateral. For example, credit card debt receivables
are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws,
many of which give such debtors the right to set off certain
amounts on credit card debt thereby reducing the balance due.
Additionally, if the letter of credit is exhausted, holders of
asset-backed securities may also experience delays in payments or
losses if the full amounts due on underlying sales contracts are
not realized. Because asset-backed securities are relatively
new, the market experience in these securities is limited and the
market's ability to sustain liquidity through all phases of the
market cycle has not been tested.
Repurchase Agreements. The Portfolio may enter into
repurchase agreements with brokers, dealers or banks that meet
the credit guidelines approved by the Portfolio's Trustees. In a
repurchase agreement, the Portfolio buys a security from a seller
that has agreed to repurchase the same security at a mutually
agreed upon date and price. The resale price normally is in
excess of the purchase price, reflecting an agreed upon interest
rate. This interest rate is effective for the period of time the
Portfolio is invested in the agreement and is not related to the
coupon rate on the underlying security. A repurchase agreement
may also be viewed as a fully collateralized loan of money by the
Portfolio to the seller. The period of these repurchase
agreements will usually be short, from overnight to one week, and
at no time will the Portfolio invest in repurchase agreements for
more than thirteen months. The securities which are subject to
repurchase agreements, however, may have maturity dates in excess
of thirteen months from the effective date of the repurchase
agreement.
The Portfolio will always receive securities as collateral
whose market value is, and during the entire term of the
agreement remains, at least equal to 100% of the dollar amount
invested by the Portfolio in the agreement plus accrued interest,
and the Portfolio will make payment for such securities only upon
the physical delivery or upon evidence of book entry transfer to
the account of the Custodian. The Portfolio will be fully
collateralized within the meaning of paragraph (a) (4) of Rule 2a-
7 under the Investment Company Act of 1940, as amended (the "1940
Act"). If the seller defaults, the Portfolio might incur a loss
if the value of the collateral securing the repurchase agreement
declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the
security, realization upon disposal of the collateral by the
Portfolio may be delayed or limited.
(4) Foreign Securities. The Portfolio may invest in
foreign securities either directly or indirectly in the form of
American Depositary Receipts or similar instruments. Investments
in securities of foreign issuers and in obligations of domestic
banks involve different and additional risks from those
associated with investing in securities of U.S. issuers. There
may be limited information available to investors which is
publicly available, and generally foreign issuers are not subject
to uniform accounting, auditing and financial standards and
requirements like those applicable to U.S. issuers. Any foreign
commercial paper must not be subject to foreign withholding tax
at the time of purchase.
Investors should be aware that the value of the Portfolio's
investments in foreign securities may be adversely affected by
changes in the political or social conditions, confiscatory
taxation, diplomatic relations, expropriation, nationalization,
limitation on the removal of funds or assets, or the
establishment of exchange controls or other foreign restrictions
and tax regulations in foreign countries. In addition, due to
the differences in the economy of these foreign countries
compared to the U.S. economy, whether favorably or unfavorably,
portfolio securities may appreciate or depreciate and could
therefore adversely affect the Portfolio's operations. It may
also be difficult to obtain a judgment against a foreign
creditor. Foreign securities trade with less frequency and
volume than domestic securities and therefore may have greater
price volatility. Furthermore, changes in foreign exchange rates
will have an affect on those securities that are denominated in
currencies other than the U.S. Dollar.
(5) Municipal Bonds. The Portfolio may invest in municipal
bonds issued by or on behalf of states, territories or
possessions of the United States and the District of Columbia and
their political subdivisions, agencies, authorities and
instrumentalities. The Portfolio may also invest in municipal
notes of various types, including notes issued in anticipation of
receipt of taxes, the proceeds of the sale of bonds, other
revenues or grant proceeds, as well as municipal commercial paper
and municipal demand obligations. These municipal bonds and
notes will be taxable securities; income generated from these
instruments will be subject to federal, state and local taxes.
(6) When-Issued and Delayed Delivery Securities. The
Portfolio may purchase securities on a when-issued or delayed
delivery basis. For example, delivery of and payment for these
securities can take place a month or more after the date of the
purchase commitment. The purchase price and interest rate
payable, if any, on the securities are fixed on the purchase
commitment date or at the time the settlement date is fixed. The
value of such securities is subject to market fluctuation and for
money market instruments and other fixed-income securities, no
interest accrues to the Portfolio until settlement takes place.
At the time the Portfolio makes the commitment to purchase
securities on a when-issued or delayed delivery basis, it will
record the transaction, reflect the value each day of the
securities in determining its net asset value, if applicable, and
calculate the maturity for the purposes of average maturity from
that date. At the time of settlement, a when-issued security may
be valued at less than the purchase price. To facilitate such
acquisitions, the Portfolio will maintain with the Custodian a
segregated account with liquid assets consisting of cash, U.S.
Government securities or other appropriate securities, in an
amount at least equal to such commitments. On delivery dates for
such transactions, the Portfolio will meet its obligations from
maturities or sales of the securities held in the segregated
account and/or from cash flow. If the Portfolio chooses to
dispose of the right to acquire a when-issued security prior to
its acquisition, it could, as with the disposition of any other
portfolio obligation, incur a gain or loss due to market
fluctuation.
(7) Investment Company Securities. Securities of other
investment companies may be acquired by the Fund and the
Portfolio to the extent permitted under the 1940 Act. These
limits require that, as determined immediately after a purchase
is made, (i) not more than 5% of the value of the Portfolio's
total assets will be invested in the securities of any one
investment company, (ii) not more than 10% of the value of its
total assets will be invested in the aggregate in securities of
investment companies as a group, and (iii) not more than 3% of
the outstanding voting stock of any one investment company will
be owned by the Portfolio, provided however, that the Fund may
invest all of its investable assets in an open-end investment
company that has the same investment objective as the Fund (e.g.,
the Portfolio). As a shareholder of another investment company,
the Fund or the Portfolio would bear, along with other
shareholders, its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that the
Fund or the Portfolio bears directly in connection with its
operations.
(8) Reverse Repurchase Agreements. The Portfolio may enter
into reverse repurchase agreements. In a reverse repurchase
agreement, the Portfolio sells a security and agrees to
repurchase the same security at a mutually agreed upon date and
price. For purposes of the 1940 Act, a reverse repurchase
agreement is also considered as the borrowing of money by the
Portfolio, and, therefore, a form of leverage. The Portfolio
will invest the proceeds of the borrowings under reverse
repurchase agreements. In addition, the Portfolio will enter
into a reverse repurchase agreement only when the interest income
to be earned from the investment of the proceeds is greater than
the interest expense of the transaction. The Portfolio will not
invest the proceeds of a reverse repurchase agreement for a
period which exceeds the duration of the reverse repurchase
agreement. The Portfolio will establish and maintain with the
Custodian a separate account with a segregated portfolio of
securities in an amount at least equal to its purchase
obligations under its reverse repurchase agreements. If interest
rates rise during the term of a reverse repurchase agreement,
entering into the reverse repurchase agreement may have a
negative impact on the Money Market Fund's ability to maintain a
net asset value of $1.00 per share.
(9) Securities Lending. Subject to applicable investment
restrictions, the Portfolio is permitted to lend its securities
in an amount up to 33 1/3% of the value of its net assets. The
Portfolio may lend its securities if such loans are secured
continuously by cash or equivalent collateral or by a letter of
credit in favor of the Portfolio at least equal at all times to
100% of the market value of the securities loaned, plus accrued
interest. While such securities are on loan, the borrower will
pay the Portfolio any income accruing thereon. Loans will be
subject to termination by the Portfolio in the normal settlement
time, generally three business days after notice, or by the
borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the
market price of the borrowed securities which occurs during the
term of the loan inures to the Portfolio and its respective
investors. The Portfolio may pay reasonable finders' and
custodial fees in connection with a loan. In addition, the
Portfolio will consider all facts and circumstances, including
the creditworthiness of the borrowing financial institution, and
the Portfolio will not make any loans in excess of one year.
Loans of Portfolio securities may be considered extensions of
credit by the Portfolio. The risks to the Portfolio with respect
to borrowers of its Portfolio securities are similar to the risks
to the Portfolio with respect to sellers in repurchase agreement
transactions. See "Repurchase Agreements." The Portfolio will
not lend its securities to any officer, Trustee, Member of the
Advisory Board, Director, employee, or other affiliate of the
Portfolio, the Advisor or Funds Distributor, Inc. unless
otherwise permitted by applicable law.
(10) Illiquid Investments, Privately Placed and Certain
Unregistered Securities. The Portfolio may invest in privately
placed, restricted, Rule 144A or other unregistered securities as
described in the Prospectus. The Portfolio may not acquire
illiquid holdings if, as a result thereof, more than 10% of the
Portfolio's nettotal assets would be in illiquid investments.
Subject to this fundamental policy limitation, the Portfolio may
acquire investments that are illiquid or have limited liquidity,
such as private placements or investments that are not registered
under the Securities Act of 1933, as amended (the "1933 Act") and
cannot be offered for public sale in the United States without
first being registered under the 1933 Act. An illiquid
investment is any investment that cannot be disposed of within 7
days in the normal course of business at approximately the amount
at which it is valued by the Portfolio. The price the Portfolio
pays for illiquid securities or receives upon resale may be lower
than the price paid or received for similar securities with a
more liquid market. Accordingly the valuation of these
securities will reflect any limitations on their liquidity.
The Portfolio may also purchase Rule 144A securities sold to
institutional investors without registration under the 1933 Act.
These securities may be determined to be liquid in accordance
with guidelines established by the Advisor and approved by the
Portfolio's Trustees. The Portfolio's Trustees will monitor the
Advisor's implementation of these guidelines on a periodic basis.
As to illiquid investments, the Portfolio is subject to a
risk that should the Portfolio decide to sell them when a ready
buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net
assets could be adversely affected. Where an illiquid security
must be registered under the 1933 Act, before it may be sold, the
Portfolio may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of
the decision to sell and the time the Portfolio may be permitted
to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to
develop, the Portfolio might obtain a less favorable price than
prevailed when it decided to sell.
(11) Synthetic Instruments. The Portfolio may invest in
certain synthetic instruments. Such instruments generally
involve the deposit of asset-backed securities in a trust
arrangement and the issuance of certificates evidencing interests
in the trust. The certificates are generally sold in private
placements in reliance on Rule 144A. The Advisor will review the
structure of Synthetic Instruments to identify credit and
liquidity risks and will monitor those risks. See "Illiquid
Investments, Privately Placed and Certain Unregistered
Securities."
Quality and Diversification Requirements for the Fund
The Portfolio intends to meet the diversification
requirements of the 1940 Act as currently in effect. Investments
not subject to the diversification requirements could involve an
increased risk to an investor should an issuer, or a state or its
related entities, be unable to make interest or principal
payments or should the market value of such securities decline.
At the time the Portfolio invests in any taxable commercial
paper, master demand obligations, bank obligation or repurchase
agreement, the issuer must have outstanding debt rated A or
higher by Moody's Investors Services or Standard & Poor's
Corporation. The issuer's parent corporation, if any, must have
outstanding commercial paper rated Prime-1 by Moody's or A-1 by
Standard & Poor's, or if no such ratings are available, the
investment must be of comparable quality in Morgan's opinion.
In order to achieve its investment objective and maintain a
stable asset value, the Portfolio will (i) with respect to 75% of
the Portfolio's assets, limit its investment in the securities
(other than U.S. Government securities) of any one issuer to no
more than 5% of its assets, measured at the time of purchase,
except for investments held for not more than three business
days; and (ii) limit investments to securities that present
minimal credit risks and securities (other than U.S. Government
securities) that are rated within the highest short-term rating
category by at least two nationally recognized statistical rating
organizations ("NRSROs") or by the only NRSRO that has rated the
security. Securities which originally had a maturity of over one
year are subject to more complicated, but generally similar
rating requirements. A description of illustrative credit
ratings is set forth in "Appendix A." The Portfolio may also
purchase unrated securities that are of comparable quality to the
rated securities described above. Additionally, if the issuer of
a particular security has issued other securities of comparable
priority and security and which have been rated in accordance
with (ii) above, that security will be deemed to have the same
rating as such other rated securities.
In addition, the Board of Trustees of the Portfolio has
adopted procedures which (i) require the Board of Trustees to
approve or ratify purchases by the Portfolio of securities (other
than U.S. Government securities) that are unrated; (ii) require
the Portfolio to maintain a dollar-weighted average portfolio
maturity of not more than 90 days and to invest only in
securities with a remaining maturity of not more than thirteen
months; and (iii) require the Portfolio, in the event of certain
downgradings of or defaults on portfolio holdings, to dispose of
the holding, subject in certain circumstances to a finding by the
Trustees that disposing of the holding would not be in the
Portfolio's best interest.
Fundamental Investment Restrictions
The following investment restrictions have been adopted by
the Trust with respect to the Fund and by the Portfolio. Except
as otherwise stated, these investment restrictions are
"fundamental" policies. A "fundamental" policy is defined in the
1940 Act to mean that the restriction cannot be changed without
the vote of a "majority of the outstanding voting securities" of
the Fund or Portfolio, as the case may be. A "majority of the
outstanding voting securities" is defined in the 1940 Act as the
lesser of (a) 67% or more of the voting securities present at a
meeting if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, or (b) more than
50% of the outstanding voting securities.
The investment restrictions of the Fund and the Portfolio
are substantially identical, unless as otherwise specified.
Accordingly, references below to the Fund also include the
Portfolio unless the context requires other wise; similarly,
references to the Portfolio also include the Fund unless the
context requires otherwise.
The Fund and the Portfolio:
(1) May not make any investment inconsistent with the Fund's
classification as a diversified investment company under the
Investment Company Act of 1940;
(2) May not purchase any security which could cause the Fund to
concentrate its investments in the securities of issuers
primarily engaged in any particular industry except as permitted
by the SEC. This restriction does not apply to instruments
considered to be domestic bank money market instruments;
(3) May not issue senior securities, except as permitted under
the Investment Company Act of 1940 or any rule, order or
interpretation thereunder;
(4) May not borrow money, except to the extent permitted by
applicable law;
(5) May not underwrite securities of other issuers, except to
the extent that the Portfolio, in disposing of portfolio
securities, may be deemed an underwriter within the meaning of
the 1933 Act;
(6) May not purchase or sell real estate, except that, to the
extent permitted by applicable law, the Portfolio may (a) invest
in securities or other instruments directly or indirectly secured
by real estate, and (b) invest in securities or other instruments
issued by issuers that invest in real estate;
(7) May not purchase or sell commodities or commodity contracts
unless acquired as a result of ownership of securities or other
instruments issued by persons that purchase or sell commodities
or commodities contracts; but this shall not prevent the
Portfolio from purchasing, selling or entering into financial
futures contracts (including futures contracts on indices of
securities, interest rates and currencies), options on financial
futures contracts (including futures contracts on indices of
securities, interest rates and currencies), warrants, swaps,
forward contracts, foreign currency spot and forward contracts or
other derivative instruments that are not related to physical
commodities; and
(8) May make loans to other persons, in accordance with the
Portfolio's investment objective and policies and to the extent
permitted by applicable law.
Non-Fundamental Investment Restrictions
The following investment restrictions are not "fundamental"
policies of the Funds and the Portfolio and may be changed
without shareholder approval.
The Fund and the Portfolio:
(1) May not acquire any illiquid securities, such as repurchase
agreements with more than seven days to maturity or fixed time
deposits with a duration of over seven calendar days, if as a
result thereof, more than 10% of the market value of the
Portfolio's total assets would be in investments which are
illiquid;
(2) May not purchase securities on margin, make short sales of
securities, or maintain a short position, provided that this
restriction shall not be deemed to be applicable to the purchase
or sale of when-issued or delayed delivery securities;
(3) May not acquire securities of other investment companies,
except as permitted by the 1940 Act or any order pursuant thereto;
(4) May not borrow money, except from banks for extraordinary or
emergency purposes and then only in amounts not to exceed 10% of
the value of the Portfolio's total assets, taken at cost, at the
time of such borrowing; or mortgage, pledge, or hypothecate any
assets except in connection with any such borrowing and in amounts
not to exceed 10% of the value of the Portfolio's net assets at
the time of such borrowing. The Portfolio will not purchase
securities while borrowings exceed 5% of the Portfolio's total
assets; provided, however, that the Portfolio may increase its
interest in an open-end management investment company with the
same investment objective and restrictions as the Portfolio while
such borrowings are outstanding. This borrowing provision is
included to facilitate the orderly sale of portfolio securities,
for example, in the event of abnormally heavy redemption requests,
and is not for investment purposes and shall not apply to reverse
repurchase agreements.
BOARD OF TRUSTEES AND OFFICERS OF THE TRUSTS
The Trust and the Portfolio are governed by two separate
Boards of Trustees. The Trustees and Officers of the Trust,
their business addresses, principal occupations and dates of
birth are listed below. The Trustees provide broad supervision
over the affairs of the Trust and the Fund. Unless otherwise
noted, the address of the Trustees and Officers is the address of
the Trust: 40 Richards Avenue, Norwalk, Connecticut 06854.
JACK W. ABER - Trustee; Professor of Finance, Boston University
School of Management since 1972. He has served as a Trustee of
the Trust since March 1999. He also serves as a Trustee of
Managers AMG Funds. His date of birth is September 9, 1937.
WILLIAM E. CHAPMAN, II - Trustee; President and Owner, Longboat
Retirement Planning Solutions since 1998. From 1990 to 1998, he
served in a variety of roles with Kemper Funds, the last of which
was President of the Retirement Plans Group. Prior to joining
Kemper, he spent 24 years with CIGNA in investment sales,
marketing and general management roles. He has served as a
Trustee of the Trust since March 1999. He also serves as a
Trustee of Managers AMG Funds. His date of birth is September
23, 1941.
SEAN M. HEALEY* - Trustee; President of Affiliated Managers
Group, Inc. since October 1999. From April 1995 to October 1999,
he was Executive Vice President of Affiliated Managers Group,
Inc. From August 1987 through March 1995, he served in a variety
of roles in the Mergers and Acquisitions Department of Goldman,
Sachs & Co., the last of which was as Vice President. He has
served as a Trustee of the Trust since March 1999. He also
serves as a Trustee of Managers AMG Funds. His date of birth is
May 9, 1961.
EDWARD J. KAIER - Trustee; Partner, Hepburn Willcox Hamilton &
Putnam since 1977. He has served as a Trustee of the Trust since
March 1999. He also serves as a Trustee of Managers AMG Funds.
His date of birth is September 23, 1945.
MADELINE H. MCWHINNEY - Trustee; Member of the Investment
Committee, New Jersey Supreme Court since 1990. From 1977 to
1994, she was the President of Dale, Elliott & Company, Inc.,
Management Consultants. From 1983 to 1998, she was a Member of
the Advisory Board on Professional Ethics, New Jersey Supreme
Court. She has served as a Trustee of the Trust since 1987. Her
date of birth is March 11, 1922.
STEVEN J. PAGGIOLI - Trustee; Executive Vice President and
Director, The Wadsworth Group since 1986. Vice President,
Secretary and Director of First Fund Distributors, Inc. since
1991. Executive Vice President, Secretary and Director of
Investment Company Administration, LLC since 1990. Trustee of
Professionally Managed Portfolios since 1991. He has served as a
Trustee of the Trust since 1993. His date of birth is April 3,
1950.
ERIC RAKOWSKI - Trustee; Professor, University of California at
Berkeley School of Law since 1990. Visiting Professor, Harvard
Law School 1998-1999. He has served as a Trustee of The Managers
Funds since March 1999. He also serves as a Trustee of Managers
AMG Funds. His date of birth is June 5, 1958.
THOMAS R. SCHNEEWEIS - Trustee; Professor of Finance, University
of Massachusetts since 1985. Managing Director, CISDM at the
University of Massachusetts since 1994. He has served as a
Trustee of The Managers Funds since 1987. His date of birth is
May 10, 1947.
PETER M. LEBOVITZ - President; President of The Managers Funds
LLC. From September 1994 to April 1999, he was Managing Director
of The Managers Funds, L.P. (the predecessor to The Managers
Funds LLC). From June 1993 to June 1994, he was the Director of
Marketing for Hyperion Capital Management, Inc. From April 1989
to June 1993, he was Senior Vice President for Greenwich Asset
Management, Inc. His date of birth is January 18, 1955.
DONALD S. RUMERY - Treasurer and Secretary; Chief Financial
Officer, Secretary and Treasurer of The Managers Funds LLC
(formerly The Managers Funds, L.P.) since December 1994. From
March 1990 to December 1994, he was a Vice President of Signature
Financial Group. From August 1980 to March 1990, he held various
positions with The Putnam Companies, the last of which was Vice
President. His date of birth is May 29, 1958.
GIANCARLO (JOHN) E. ROSATI - Assistant Treasurer; Vice President
and Assistant Treasurer of The Managers Funds LLC (formerly The
Managers Funds, L.P.) since July 1992. From July 1986 to June
1992, he was an Assistant Vice President at The Managers Funds,
L.P. His date of birth is March 31, 1956.
PETER M. MCCABE - Assistant Treasurer; Portfolio Administrator
and Assistant Treasurer of The Managers Funds LLC (formerly The
Managers Funds, L.P.) since August 1995. From July 1994 to
August 1995, he was a Portfolio Administrator at Oppenheimer
Capital, L.P. His date of birth is September 8, 1972.
LAURA A. DESALVO - Assistant Secretary; Legal/Compliance Officer
and Assistant Secretary of The Managers Funds LLC (formerly The
Managers Funds, L.P.) since September 1997. From August 1994 to
June 1997, she was a law student. Her date of birth is November
10, 1970.
Trustees' Compensation
For their services as Trustees of The Managers Funds and
other Funds in The Managers Funds LLC complex, the Trustees are
compensated as follows:
Compensation Table:
Total Compensation
From the
Aggregate Aggregate Compensation
Fund and the
Name of Compensation From Other Funds Fund Complex
Trustee From the Fund(a) in Complex(b)
Paid to Trustees(c)
Jack W. Aber $402 $15,598
$16,000
William E. Chapman, II $402 $15,598
$16,000
Sean M. Healey none none
Edward K. Kaier $402 $15,598
$16,000
Madeline H. McWhinney $505 $18,495
$19,000
Steven J. Paggioli $505 $18,495
$19,000
Eric Rakowski $402 $15,598
$16,000
Thomas R. Schneeweis $487 $17,763
$18,250
____________________
(a) Compensation is calculated for the Fund's fiscal year ending
November 30, 1999. The Trust does not provide any pension or
retirement benefits for the Trustees.
(b) Compensation is calculated from the Fund's fiscal year
ending November 30, 1999.
(c) Total compensation includes compensation paid
during the 12-month period ending November 30, 1999 for
services as Trustees of Managers Money Market Fund and 11
other Funds in The Managers Funds LLC complex.
TRUSTEES OF THE PORTFOLIO
Their names, principal occupations and dates of birth are
listed below. The mailing address of the Trustees of the
Portfolio is c/o Pierpont Group Inc., 461 Fifth Avenue, New York,
NY 10017.
FREDERICK S. ADDY-Trustee; Retired; Former Executive Vice
President and Chief Financial Officer, Amoco Corporation. His
date of birth is January 1, 1932.
WILLIAM G. BURNS-Trustee; Retired; Former Vice Chairman and Chief
Financial Officer, NYNEX. His date of birth is November 2, 1932.
ARTHUR C. ESCHENLAUER-Trustee; Retired; Former Senior Vice
President, Morgan Guaranty Trust Company of New York. His date
of birth is May 23, 1934.
MATTHEW HEALEY*-Trustee, Chairman and Chief Executive Officer;
Chairman, Pierpont Group, Inc., since prior to 1993. His date of
birth is August 23, 1937.
MICHAEL P. MALLARDI-Trustee; Retired; Prior to April 1996, Senior
Vice President, Capital Cities/ABC, Inc. and President, Broadcast
Group. His date of birth is March 17, 1934.
*Mr. Healey is an "interested person" (as defined in the 1940
Act) of the Portfolio. Mr. Healey is also an "interested person"
(as defined in the 1940 Act) of the Adviseor due to his son's
affiliation with JPMIM.
Trustees' Compensation
Each Trustee of the Portfolio is currently paid an annual
fee of $75,000 for serving as Trustee of the Portfolio as well as
18 other investment companies which are affiliated with the
Advisor and is reimbursed for expenses incurred in connection
with service as a Trustee. The Trustees may hold various other
directorships which are unrelated to these funds.
Trustee compensation expenses paid by the Portfolio for the
calendar year ended December 31, 1999 are set forth below.
Total Trustee
Compensation
Accrued by
the
Aggregate Master
Portfolios*,
Trustee The
J.P. Morgan
Compensation
Funds and J.P.
Paid by the
Morgan Institutional
Portfolio
Funds and J.P. Morgan
Name of Trustee during 1999
Series Trust during 1999***
- ----------------------- ---------------------
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Frederick S. Addy, Trustee $17,793 $75,000.00
William G. Burns, Trustee 17,793 75,000.00
Arthur C. Eschenlauer, Trustee 17,793 75,000.00
Matthew Healey, Trustee, 17,793
Chairman and Chief Executive 17,793
Officer** 75,000.00
Michael P. Mallardi, Trustee 17,793 75,000.00
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*Includes the Portfolio and 18 other Portfolios (collectively the
"Master Portfolios") for which JPMIM acts as investment advisor.
**During 1999, Pierpont Group, Inc. paid Mr. Healey, in his role
as Chairman of Pierpont Group, Inc., compensation in the amount
of $153,800 contributed $23,100 to a defined contribution plan on
his behalf and paid $17,300 in insurance premiums for his
benefit.
***No investment company within the Portfolio's fund complex has
a pension or retirement plan. Currently, there are 178
investment companies (145 investment companies comprising the
Master Portfolios, the J.P. Morgan Funds, the J.P. Morgan
Institutional Funds and J.P. Morgan Series Trust) in the
Portfolio's fund complex.
The Trustees of the Portfolio decide upon general policies
and are responsible for overseeing the Portfolio's various
business affairs. The Portfolio has entered into a Fund Services
Agreement with Pierpont Group, Inc. to assist the Trustees in
exercising their overall supervisory responsibilities over the
affairs of the Portfolio. Pierpont Group, Inc. was organized in
July 1989 to provide services for The Pierpont Family of Funds
(now the J.P. Morgan Family of Funds), and the Trustees of the
Portfolio are the equal and sole shareholders of Pierpont Group,
Inc. The Portfolio has agreed to pay Pierpont Group, Inc. a fee
in an amount approximating its reasonable costs in performing
these services to the Portfolio and certain other registered
investment companies subject to similar agreements with Pierpont
Group, Inc. These costs are periodically reviewed by the
Trustees. The principal offices of Pierpont Group, Inc. are
located at 461 Fifth Avenue, New York, New York 10017.
The aggregate fees paid to Pierpont Group, Inc. by the
Portfolio during the fiscal year ended November 30, 1997,
November 30, 1998 and November 30, 1999 were $143,027, $173,032
and $228,328 respectively.
Advisory Board
The Trustees of the Portfolio determined as of January 26,
2000, to establish an advisory board and appoint four members
("Members of the Advisory Board") thereto. Each member serves at
the pleasure of the Trustees of the Portfolio. The advisory
board is distinct from the Trustees of the Portfolio and provides
advice to them as to investment, management and operations of the
Portfolio; but has no power to vote upon any matter put to a vote
of the Trustees of the Portfolio. The advisory board and the
members thereof also serve each of the 18 other investment
companies affiliated with the Advisor. It is also the current
intention of the Trustees of the Portfolio that the Members of
the Advisory Board will be proposed at the next shareholders'
meeting, expected to be held within a year from the date hereof,
for election as Trustees of Portfolio and each of the 18 other
investment companies affiliated with the Advisor. The creation
of the Advisory Board and the appointment of the members thereof
was designed so that the Board of Trustees of the Portfolio will
continuously consists of persons able to assume the duties of
Trustees and be fully familiar with the business and affairs of
the Portfolio and each of the 18 other investment companies
affiliated with the Advisor, in anticipation of the current
Trustees of the Portfolio reaching the mandatory retirement age
of seventy. Each member of the Advisory Board is paid an annual
fee of $75,000 for serving in this capacity for the Portfolio and
each of the 18 other investment companies affiliated with the
Advisor and is reimbursed for expenses incurred in connection for
such service. The members of the Advisory Board may hold various
other directorships unrelated to the Portfolio. The mailing
address of the Members of the Advisory Board is c/o Pierpont
Group, Inc., 461 Fifth Avenue, New York, New York 10017. Their
names, principal occupations during the past five years and dates
of birth are set forth below.
ANN MAYNARD GRAY; President, Diversified Publishing Group and
Vice President, Capital Cities/ABC, Inc. Her date of birth is
August 22, 1945.
JOHN R. LAIRD; Retired; Former Chief Executive Officer, Shearson
Lehman Brothers and The Boston Company. His date of birth is
June 21, 1942.
GERARD P. LYNCH; Retired; Former Managing Director, Morgan
Stanley Group; President and Chief Operating Officer, Morgan
Stanley Services, Inc. His date of birth is October 5, 1936.
JAMES J. SCHONBACHLER; Retired; Prior to September 1998, Managing
Director, Bankers Trust Company and Chief Executive Officer and
Director, Bankers Trust A.G., Zurich and BT Brokerage Corp. His
date of birth is January 26, 1943.
OFFICERS OF THE PORTFOLIO
The Portfolio's executive officers as listed below, other
than the Chief Executive Officer and the officers who are
employees of the Advisor, are provided and compensated by Funds
Distributor, Inc. ("FDI"), a wholly-owned indirect subsidiary of
Boston Institutional Group, Inc. The Portfolio's officers
conduct and supervise the business operations of the Portfolio.
The Portfolio has no employees.
The officers of the Portfolio, their principal occupations
during the past five years and dates of birth are set forth
below. The business address of each of the officers unless
otherwise noted is Funds Distributor, Inc., 60 State Street,
Suite 1300, Boston, Massachusetts 02109.
MATTHEW HEALEY; Chief Executive Officer; Chairman, Pierpont
Group, since prior to 1993. His address is Pine Tree Country
Club Estates, 10286 Saint Andrews Road, Boynton Beach, FL 33436.
His date of birth is August 23, 1937.
MARGARET W. CHAMBERS; Vice President and Secretary. Senior Vice
President and General Counsel of FDI since April, 1998. From
August 1996 to March 1998, Ms. Chambers was Vice President and
Assistant General Counsel for Loomis, Sayles & Company, L.P.
From January 1986 to July 1996, she was an associate with the law
firm of Ropes & Gray. Her date of birth is October 12, 1959.
MARIE E. CONNOLLY; Vice President and Assistant Treasurer.
President, Chief Executive Officer, Chief Compliance Officer and
Director of FDI and Premier Mutual Fund Services, Inc., an
affiliate of FDI ("Premier Mutual") and an officer of certain
investment companies distributed or administered by FDI. Her
date of birth is August 1, 1957.
DOUGLAS C. CONROY; Vice President and Assistant Treasurer.
Assistant Vice President and Assistant Department Manager of
Treasury Services and Administration of FDI and an officer of
certain investment companies distributed or administered by FDI.
Prior to April 1997, Mr. Conroy was Supervisor of Treasury
Services and Administration of FDI. His date of birth is March
31, 1969.
JOHN P. COVINO; Vice President and Assistant Treasurer. Vice
President and Treasury Group Manager of Treasury Servicing and
Administration of FDI. Prior to November 1998, Mr. Covino was
employed by Fidelity Investments where he held multiple positions
in their Institutional Brokerage Group. Prior to joining
Fidelity, Mr. Covino was employed by SunGard Brokerage systems
where he was responsible for the technology and development of
the accounting product group. His date of birth is October 8,
1963.
JACQUELINE HENNING; Assistant Secretary and Assistant Treasurer
of the Portfolio only. Managing Director, State Street Cayman
Trust Company, Ltd. since October 1994. Her address is P.O. Box
2508 GT, Elizabethan Square, 2nd Floor, Shedden Road, George
Town, Grand Cayman, Cayman Islands, BWI. Her date of birth is
March 27, 1942.
KAREN JACOPPO-WOOD; Vice President and Assistant Secretary. Vice
President and Senior Counsel of FDI and an officer of certain
investment companies distributed or administered by FDI. From
June 1994 to January 1996, Ms. Jacoppo-Wood was a Manager of SEC
Registration at Scudder, Stevens & Clark, Inc. Her date of birth
is December 29, 1966.
CHRISTOPHER J. KELLEY; Vice President and Assistant Secretary.
Vice President and Senior Associate General Counsel of FDI and
Premier Mutual and an officer of certain investment companies
distributed or administered by FDI. From April 1994 to July
1996, Mr. Kelley was Assistant Counsel at Forum Financial Group.
His date of birth is December 24, 1964.
KATHLEEN K. MORRISEY; Vice President and Assistant Secretary.
Vice President and Assistant Secretary of FDI. Manager of
Treasury Services Administration and an officer of certain
investment companies advised or administered by Montgomery Asset
Management, L.P. and Dresdner RCM Global Investors, Inc., and
their respective affiliates. From July 1994 to November 1995,
Ms. Morrisey was a Fund Accountant II for Investors Bank & Trust
Company. Her date of birth is July 5, 1972.
MARY A. NELSON; Vice President and Assistant Treasurer. Vice
President and Manager of Treasury Services and Administration of
FDI and Premier Mutual and an officer of certain investment
companies distributed or administered by FDI. Her date of birth
is April 22, 1964.
MARY JO PACE; Assistant Treasurer. Vice President, Morgan
Guaranty Trust Company of New York. Ms. Pace serves in the Funds
Administration group as a Manager for the Budgeting and Expense
Processing Group. Prior to September 1995, Ms. Pace served as a
Fund Administrator for Morgan Guaranty Trust Company of New York.
Her address is 60 Wall Street, New York, New York 10260. Her
date of birth is March 13, 1966.
MICHAEL S. PETRUCELLI; Vice President and Assistant
Secretary. Senior Vice President and Director of Strategic
Client Initiatives for FDI since December 1996. From December
1989 through November 1996, Mr. Petrucelli was employed with GE
Investments where he held various financial, business development
and compliance positions. He also served as Treasurer of the GE
Funds and as Director of GE Investment Services. His address is
200 Park Avenue, New York, New York, 10166. His date of birth is
May 18, 1961.
STEPHANIE D. PIERCE; Vice President and Assistant Secretary.
Vice President and Client Development Manager for FDI since April
1998. From April 1997 to March 1998, Ms. Pierce was employed by
Citibank, NA as an officer of Citibank and Relationship Manager
on the Business and Professional Banking team handling over
22,000 clients. Address: 200 Park Avenue, New York, New York
10166. Her date of birth is August 18, 1968.
GEORGE A. RIO; President and Treasurer. Executive Vice President
and Client Service Director of FDI since April 1998. From June
1995 to March 1998, Mr. Rio was Senior Vice President and Senior
Key Account Manager for Putnam Mutual Funds. From May 1994 to
June 1995, Mr. Rio was Director of Business Development for First
Data Corporation. His date of birth is January 2, 1955.
CHRISTINE ROTUNDO; Assistant Treasurer. Vice President, Morgan
Guaranty Trust Company of New York. Ms. Rotundo serves in the
Funds Administration group as a Manager of the Tax Group and is
responsible for U.S. mutual fund tax matters. Prior to September
1995, Ms. Rotundo served as a Senior Tax Manager in the
Investment Company Services Group of Deloitte & Touche LLP. Her
address is 60 Wall Street, New York, New York 10260. Her date of
birth is September 26, 1965.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Control Persons
As of March 31, 2000, no entity or person "controlled"
(within the meaning of the 1940 Act) the Fund. An entity or
person which "controls" the Fund could have effective voting
control over the Fund.
As of March 31, 2000, the following persons or entities
owned more than 5% of the outstanding shares of the Fund:
Katherine and Robert P. Watson 8%
The Managers Funds LLC 8%
Benefits Resource Inc. 7%
Management Ownership
As of March 31, 2000, all management personnel (i.e.,
Trustees and Officers) as a group owned beneficially less than 1%
of the outstanding shares of the Fund.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
Investment Advisor
Subject to the supervision of the Portfolio's Trustees, the
Advisor makes the Portfolio's day-to-day investment decisions,
arranges for the execution of Portfolio transactions and
generally manages the Portfolio's investments. Effective October
1, 1998, the Portfolio's investment advisor is JPMIM. Prior to
that date, Morgan was the investment advisor. JPMIM, a wholly-
owned subsidiary of J.P. Morgan & Co. Incorporated ("J.P.
Morgan"), is a registered investment advisor under the Investment
Advisers Act of 1940, as amended, which manages employee benefit
funds of corporations, labor unions and state and local
governments and the accounts of other institutional investors,
including governments and the accounts of other institutional
investors, including investment companies. Certain of the assets
of employee benefit accounts under its management are invested in
commingled pension trust funds for which Morgan serves as a
Trustee.
J. P. Morgan, through the Advisor and other subsidiaries,
acts as investment advisor to individuals, governments,
corporations, employee benefit plans, mutual funds and other
institutional investors with combined assets under management of
approximately $34908 billion.
J.P. Morgan has a long history of service as advisor,
underwriter and lender to an extensive roster of major companies
and as financial advisor to national governments. The firm,
through its predecessor firms, has been in business for over a
century and has been managing investments since 1913.
The investment advisory services the Advisor provides to the
Portfolio are not exclusive under the terms of the Advisory
Agreement. The Advisor is free to and does render similar
investment advisory services to others. The Advisor serves as
investment advisor to personal investors and other investment
companies and acts as fiduciary for trusts, estates and employee
benefit plans. Certain of the assets of trusts and estates under
management are invested in common trust funds for which the
Advisor serves as trustee. The accounts which are managed or
advised by the Advisor have varying investment objectives and the
Advisor invests assets of certain of such accounts in investments
substantially similar to, or the same as, those which are
expected to constitute the principal investments of the
Portfolio. Such accounts are supervised by officers and
employees of the Advisor who may also be acting in similar
capacities for the Portfolio.
Morgan, also a wholly-owned subsidiary of J. P. Morgan, is a
bank holding company organized under the laws of the State of
Delaware. Morgan, whose principal offices are at 60 Wall Street,
New York, New York 10260, is a New York trust company which
conducts a general banking and trust business. Morgan is subject
to regulation by the New York State Banking Department and is a
member bank of the Federal Reserve System. Through offices in
New York City and abroad, Morgan offers a wide range of services,
primarily to governmental, institutional, corporate and high net
worth individual customers in the United States and throughout
the world.
The Portfolio is managed by employees of the Advisor who, in
acting for their customers, including the Portfolio, do not
discuss their investment decisions with any personnel of J. P.
Morgan or any personnel of other divisions of the Advisor or with
any of its affiliated persons, with the exception of certain
other investment management affiliates of J.P. Morgan.
Compensation of Investment Advisor
As compensation for the services rendered and related
expenses such as salaries of advisory personnel borne by the
Advisor under the Investment Advisory Agreement, the Portfolio
has agreed to pay the Advisor a fee, which is computed daily and
may be paid monthly, equal to the annual rate of 0.20% of the
Portfolio's average daily net assets up to $1 billion and 0.10%
of average daily net assets in excess of $1 billion.
The advisory fees paid by the Portfolio to the Advisor are
as follows: For the fiscal year ended November 30, 1997:
$5,063,662. For the fiscal year ended November 30, 1998:
$7,199,733. For the fiscal year ended November 30, 1999:
$13,226,942.
Investment Advisory Agreement
The Investment Advisory Agreement provides that it will
continue in effect for a period of two years after execution only
if specifically approved thereafter annually. The Investment
Advisory Agreement will terminate automatically if assigned and
is terminable at any time without penalty by a vote of a majority
of the Portfolio's Trustees, or by a vote of the holders of a
majority of the Portfolio's outstanding voting securities, on 60
days' written notice to the Advisor and by the Advisor on 90
days' written notice to the Portfolio.
If the Advisor were prohibited from acting as investment
advisor to the Portfolio, it is expected that the Trustees of the
Portfolio would recommend to investors that they approve the
Portfolio entering into a new investment advisory agreement with
another qualified investment advisor selected by the Trustees.
Under separate agreements, Morgan provides certain
financial, fund accounting and administrative services to the
Portfolio.
Fee Waivers and Expense Limitations
From time to time, the Fund Administrator may agree
voluntarily to waive all or a portion of the fee it would
otherwise be entitled to receive from the Fund. The Fund
Administrator may decide to waive all or a portion of its fees
from the Fund for such reasons as attempting to make the Fund's
performance more competitive as compared to similar funds. The
effect of the fee waivers in effect at the date of this Statement
of Additional Information on the fees payable by the Fund is
reflected in the Fees and Expense Information located in the
front of the Fund's Prospectus. Existing voluntary fee waivers
by the Fund Administrator may be terminated or reduced in amount
at any time, and solely at the discretion of the Fund
Administrator. Shareholders will be notified of any change at
the time that it becomes effective.
In addition to the fees payable to Pierpont Group, Inc.,
JPMIM, Morgan and FDI under the various agreements discussed
above and below, the Portfolio is responsible for usual and
customary expenses associated with its operations. Such expenses
include organization expenses, legal fees, accounting and audit
expenses, insurance costs, the compensation and expenses of the
Portfolio's Trustees and Members of the Advisory Board,
registration fees under federal and foreign securities laws,
extraordinary expenses, custodian fees and brokerage expenses.
Administrative Services; Distribution Arrangements
Under an Administration and Shareholder Servicing Agreement
between the Trust and the Investment Manager, The Managers Funds
LLC serves as Administrator (the "Fund Administrator") of the
Trust. The Portfolio has entered into Administrative Services
Agreement (the "Services Agreement") with Morgan, pursuant to
which Morgan is responsible for certain administrative and
related services provided to the Portfolio. The Services
Agreement may be terminated at any time, without penalty, by the
Portfolio's Trustees or Morgan, in each case on not more than 60
days' nor less than 30 days' written notice to the other party.
Under the Services Agreement, effective August 1, 1996, the
Portfolio has agreed to pay Morgan fees equal to the Portfolio's
allocable share of an annual complex-wide charge. This charge is
calculated daily based on the aggregate net assets of the Master
Portfolios and J.P. Morgan Series Trust in accordance with the
following annual schedule: 0.09% of the first $7 billion of
their aggregate average daily net assets and 0.04% of their
aggregate average daily net assets in excess of $7 billion, less
the complex-wide fees payable to FDI. The portion of this charge
payable the Portfolio is determined by the proportionate share
that its net assets bear to the total net assets of the J.P.
Morgan Funds, the J.P. Morgan Institutional Funds, the Master
Portfolios, the other investors in the Master Portfolios for
which Morgan provides similar services and J.P. Morgan Series
Trust.
The services fees paid by the Portfolio to Morgan are as
follows: For the fiscal year ended November 30, 1995: $373,077.
For the fiscal year ended November 30, 1997: $1,256,131. For
the fiscal year ended November 30, 1998: $1,788,454. For the
fiscal year ended November 30, 1999: $3,127,566.
The Managers Funds LLC is a subsidiary of Affiliated
Managers Group, Inc. ("AMG"), and AMG serves as the Managing
Member of the Investment Manager. AMG is located at Two
International Place, 23rd Floor, Boston, Massachusetts 02110.
The Managers Funds, L.P.The Managers Funds LLC also
serves as distributor (the "Distributor") in connection with the
offering of Fund shares on a no-load basis. The Distributor
bears certain expenses associated with the distribution and sale
of shares of the Fund. The Distributor acts as agent in
arranging for the sale of the Fund's shares without sales
commission or other compensation and bears all advertising and
promotional expenses incurred in the sale of such shares.
The Distribution Agreement between the Trust and the
Distributor may be terminated by either party under certain
specified circumstances and will automatically terminate on
assignment in the same manner as the Fund Management Agreement.
The Distribution Agreement may be continued annually so long as
such continuation is specifically approved at least annually by
either the Trustees of the Trust or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the
Trust cast in person at a meeting called for the purpose of
voting on such approval.
Portfolio Co-Administrator
FDI serves as the Portfolio's exclusive placement agent.
Under a Co-Administration Agreement dated August 1, 1996, FDI
also serves as the Portfolio's Co-Administrator. The Co-
Administration Agreement may be renewed or amended by the
Portfolio's Trustees without a shareholder vote. The Co-
Administration Agreement is terminable at any time without
penalty by a vote of a majority of the Portfolio's Trustees on
not more than 60 days' written notice nor less than 30 days'
written notice to the other party. The Co-Administrator may
subcontract for the performance of its obligations, provided,
however, that unless the Portfolio expressly agrees in writing,
the Co-Administrator shall be fully responsible for the acts and
omissions of any subcontractor as it would for its own acts or
omissions. See "Services Agent" below.
FDI (i) provides office space, equipment and clerical
personnel for maintaining the organization and books and records
of the Portfolio; (ii) provides officers for the Portfolio; (iii)
prepares and files documents required for notification of state
securities administrators; (iv) reviews and files marketing and
sales literature; (v) files Portfolio regulatory documents and
mails Portfolio communications to Trustees, Members of the
Advisory Board and investors; and (vi) maintains related books
and records.
For its services under the Co-Administration Agreement, the
Portfolio has agreed to pay FDI fees equal to its allocable share
of an annual complex-wide charge of $425,000 plus FDI's out-of-
pocket expenses. The amount allocable to the Portfolio is based
on the ratio of its net assets to the aggregate net assets of the
Master Portfolios and certain other investment companies subject
to similar agreements with FDI.
The administrative fees paid to FDI by the Portfolio for the
fiscal periods indicated are as follows: For the fiscal year
ended November 30, 1997: $96,662. For the fiscal year ended
November 30, 1998: $115,137. For the fiscal year ended November
30, 1999: $147,749.
Custodian
State Street Bank and Trust Company ("State Street"), 225
Franklin Street, Boston1776 Heritage Drive, North Quincy,
Massachusetts 02110, serves as the Trust's custodian and fund
accounting agent, and the Trust's dividend disbursing agent. As
transfer agent and dividend disbursing agent, State Street is
responsible for maintaining account records detailing the
ownership of the shares of the Portfolio and for crediting
income, capital gains and other changes in share ownership to
shareholder accounts.
The Bank of New York ("BONY"), One Wall Street, New York,
New York 10286, serves as the Portfolio's custodian and fund
accounting agent. Pursuant to the Custodian Contract, BONY is
responsible for holding portfolio securities and cash and
maintaining the books of account and records of portfolio
transactions.
Transfer Agent
Boston Financial Data Services, Inc., P.O. Box 8517, Boston,
Massachusetts 02266-8517, is the transfer agent (the "Transfer
Agent") for the Fund.
Financial Professionals
The services provided by financial professionals may include
establishing and maintaining shareholder accounts, processing
purchase and redemption transactions, arranging for bank wires,
performing shareholder sub-accounting, answering client inquiries
regarding the Portfolio, assisting clients in changing dividend
options, account designations and addresses, providing periodic
statements showing the client's account balance and integrating
these statements with those of other transactions and balances in
the client's other accounts services by the financial
professional, transmitting proxy statements, periodic reports,
updated prospectuses and other communications to shareholders
and, with respect to meetings of shareholders, collecting,
tabulating and forwarding executed proxies and obtaining such
other services as Morgan or the financial professional clients
may reasonably request and agree upon with the financial
professional.
Although there is no sales charge levied directly by the
Portfolio, financial professionals may establish their own terms
and conditions for providing their services and may charge
investors a transaction-based or other fee for their services.
Such charges may vary among financial professionals but in all
cases will be retained by the financial professional and will not
be remitted to the Portfolio or J.P. Morgan.
Independent Accountants
The Independent Accountants of the Portfolio are
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New
York, New York 10036. They are also at PricewaterhouseCoopers
LLP,160 Federal Street, Boston, Massachusetts 02110.
PricewaterhouseCoopers LLP conducts an annual audit of the
financial statements of the Fund and the Portfolio, assists in
the preparation and/or review of the Fund's and the Portfolio's
federal and state income tax returns and consults with the Fund
and the Portfolio as to matters of accounting and federal and
state income taxation.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Purchasing Shares
Investors may open accounts with the Fund through their
financial planners or investment professionals, or by the Trust
in circumstances as described in the Prospectus. Shares may also
be purchased through bank trust departments on behalf of their
clients and tax-exempt employee welfare, pension and
profit-sharing plans. The Trust reserves the right to determine
which customers and which purchase orders the Trust will accept.
Certain investors may purchase or sell Fund shares through
broker-dealers or through other processing organizations that may
impose transaction fees or other charges in connection with this
service. Shares purchased in this way may be treated as a single
account for purposes of the minimum initial investment. The Fund
may from time to time make payments to such broker-dealers or
processing organizations for certain recordkeeping services.
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
or the Transfer Agent. Certain processing organizations may
receive compensation from the Trust's Investment Manager.
Purchase orders received by the Fund before the close of
business of the New York Stock Exchange (usually 4:00 p.m. New
York Time), c/o Boston Financial Data Services, Inc. at the
address listed in the Prospectus on any Business Day will receive
the net asset value computed that day. Orders received after
that time from certain processing organizations, which have
entered into special arrangements with the Investment Manager,
will also receive that day's offering price. The broker-dealer,
omnibus processor or investment professional is responsible for
promptly transmitting orders to the Trust. Orders transmitted to
the Trust at the address indicated in the Prospectus will be
promptly forwarded to the Transfer Agent.
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.
To ensure that checks are collected by the Trust,
redemptions of shares which were purchased by check are not
effected until the clearance of the check, which may take up to
15 days after the date of purchase unless arrangements are made
with the Investment Manager. However, during this 15-day period,
such shareholder may exchange such shares into any series of the
Trust. The 15-day holding period for redemptions would still
apply to shares received through such exchanges.
If the check accompanying any purchase order does not clear,
or if there are insufficient funds in your bank account, the
transaction will be canceled and you will be responsible for any
loss the Trust incurs. For current shareholders, the Fund can
redeem shares from any identically registered account in the Fund
as reimbursement for any loss incurred. The Trust has the right
to prohibit or restrict all future purchases in the Trust in the
event of any nonpayment for shares. Third party checks which are
payable to an existing shareholder who is a natural person (as
opposed to a corporation or partnership) and endorsed over to the
Fund or the Custodian will be accepted.
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.
Redeeming Shares
Any redemption orders received by the Trust before the close
of regular trading on the New York Stock Exchange (usually 4:00
p.m. New York Time) on any Business Day will receive the net
asset value determined at the close of regular trading on that
Business 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. Redemption orders transmitted to the Trust at
the address indicated in the Prospectus will be promptly
forwarded to the Transfer Agent. If you are trading through a
broker-dealer or investment adviser, such investment professional
is responsible for promptly transmitting orders. There is no
redemption charge. The Fund reserves the right to redeem
shareholder accounts (after 60 days notice) when the value of the
Fund shares in the account falls below $500 due to redemptions.
Whether the Fund will exercise its right to redeem shareholder
accounts will be determined by the Investment Manager on a
case-by-case basis.
If the Fund determines that it would be detrimental to the
best interest of the remaining shareholders of the Fund to make
payment wholly or partly in cash, payment of the redemption price
may be made in whole or in part by a distribution in kind of
securities from the Fund, in lieu of cash, in conformity with the
applicable rule of the Securities and Exchange Commission. If
shares are redeemed in kind, the redeeming shareholder might
incur transaction costs in converting the assets to cash. The
method of valuing portfolio securities is described under the
"Net Asset Value," and such valuation will be made as of the same
time the redemption price is determined.
Investors should be aware that redemptions from the Fund may
not be processed if a redemption request is not submitted in
proper form. To be in proper form, the request must include the
shareholder's taxpayer identification number, account number,
Fund number and signatures of all account holders. All
redemptions will be mailed to the address of record on the
shareholder's account. In addition, if a shareholder sends a
check for the purchase of shares of the Fund and shares are
purchased before the check has cleared, the transmittal of
redemption proceeds from the shares will occur upon clearance of
the check which may take up to 15 days. The Fund reserves the
right to suspend the right of redemption and to postpone the date
of payment upon redemption beyond seven days as follows: (i)
during periods when the NYSE is closed for other than weekends
and holidays or when trading on the NYSE is restricted as
determined by the SEC by rule or regulation, (ii) during periods
in which an emergency, as determined by the SEC, exists that
causes disposal by the Fund of, or evaluation of the net asset
value of, portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the SEC may
permit.
Exchange of Shares
An investor may exchange shares from the Fund into shares of
any series of the Trust without any charge. An investor may make
such an exchange if following such exchange the investor would
continue to meet the Fund's minimum investment amount.
Shareholders should read the Prospectus of the series of the
Trust they are exchanging into. Investors may exchange only into
accounts that are registered in the same name with the same
address and taxpayer identification number. Shares are exchanged
on the basis of the relative net asset value per share. Since
exchanges are purchases of a series of the Trust and redemptions
of the Fund, the usual purchase and redemption procedures and
requirements apply to each exchange. Shareholders are subject to
federal income tax and may recognize capital gains or losses on
the exchange for federal income tax purposes. Settlement on the
shares of any series of the Trust will occur when the proceeds
from redemption become available. The Trust reserves the right
to discontinue, alter or limit the exchange privilege at any
time.
Net Asset Value
The Fund computes its Net Asset Value once daily on Monday
through Friday on each day on which the NYSE is open for trading,
at the close of business of the NYSE, usually 4:00 p.m. New York
Time. The net asset value will not be computed on the day the
following legal holidays are observed: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Fund may close for purchases and redemptions at such other
times as may be determined by the Trustees to the extent
permitted by applicable law. The time at which orders are
accepted and shares are redeemed 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 net asset value per share of the Fund is equal to the
value of the Fund (assets minus liabilities) divided by the
number of shares outstanding. Fund securities listed on an
exchange are valued at the last quoted sale price on the exchange
where such securities are principally traded on the valuation
date, prior to the close of trading on the NYSE, or, lacking any
sales, at 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 at 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. Interests in the Portfolio are valued at the
value assigned by the portfolio.
Dividends and Distributions
The Fund declares and pays dividends and distributions,
usually annually, as described in the Prospectus.
If a shareholder has elected to receive dividends and/or
their distributions in cash and the postal or other delivery
service is unable to deliver the checks to the shareholder's
address of record, the dividends and/or distribution will
automatically be converted to having the dividends and/or
distributions reinvested in additional shares. No interest will
accrue on amounts represented by uncashed dividend or redemption
checks.
CERTAIN TAX MATTERS
Federal Income Taxation of Fund-in General
The Fund intends to qualify and elect to be treated each
taxable year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), although it cannot give complete assurance that it
will qualify to do so. Accordingly, the Fund must, among other
things, (a) derive at least 90% of its gross income in each
taxable year from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income
(including, but not limited to, gains from options, futures or
forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "90%
test"); and (b) satisfy certain diversification requirements on a
quarterly basis.
If the Fund should fail to qualify as a regulated investment
company in any year, it would lose the beneficial tax treatment
accorded regulated investment companies under Subchapter M of the
Code and all of its taxable income would be subject to tax at
regular corporate rates without any deduction for distributions
to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's
current or accumulated earnings and profits. Also, the
shareholders, if they received a distribution in excess of
current or accumulated earnings and profits, would receive a
return of capital that would reduce the basis of their shares of
the Fund to the extent thereof. Any distribution in excess of a
shareholder's basis in the shareholder's shares would be taxable
as gain realized from the sale of such shares.
The Fund will be liable for a nondeductible 4% excise tax on
amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement. To avoid the tax, during
each calendar year the Fund must distribute an amount equal to at
least 98% of the sum of its ordinary income (not taking into
account any capital gains or losses) for the calendar year, and
its net capital gain income for the 12-month period ending on
October 31, in addition to any undistributed portion of the
respective balances from the prior year. For that purpose, any
income or gain retained by the Fund that is subject to corporate
tax will be considered to have been distributed by year end. The
Fund intends to make sufficient distributions to avoid this 4%
excise tax.
Taxation of the Fund's Investments
Original Issue Discount; Market Discount. For federal
income tax purposes, debt securities purchased by the Fund may be
treated as having original issue discount. Original issue
discount represents interest for federal income tax purposes and
can generally be defined as the excess of the stated redemption
price at maturity of a debt obligation over the issue price.
Original issue discount is treated for federal income tax
purposes as income earned by the Fund, whether or not any income
is actually received, and therefore is subject to the
distribution requirements of the Code. Generally, the amount of
original issue discount is determined on the basis of a constant
yield to maturity which takes into account the compounding of
accrued interest. Under Section 1286 of the Code, an investment
in a stripped bond or stripped coupon may result in original
issue discount.
Debt securities may be purchased by the Fund at a discount
that exceeds the original issue discount plus previously accrued
original issue discount remaining on the securities, if any, at
the time the Fund purchases the securities. This additional
discount represents market discount for federal income tax
purposes. In the case of any debt security issued after July 18,
1984, having a fixed maturity date of more than one year from the
date of issue and having market discount, the gain realized on
disposition will be treated as interest to the extent it does not
exceed the accrued market discount on the security (unless the
Fund elects to include such accrued market discount in income in
the tax year to which it is attributable). Generally, market
discount is accrued on a daily basis. The Fund may be required
to capitalize, rather than deduct currently, part or all of any
direct interest expense incurred or continued to purchase or
carry any debt security having market discount, unless the Fund
makes the election to include market discount currently. Because
the Fund must include original issue discount in income, it will
be more difficult for the Fund to make the distributions required
for the Fund to maintain its status as a regulated investment
company under Subchapter M of the Code or to avoid the 4% excise
tax described above.
Options and Futures Transactions. Certain of the Fund's
investments may be subject to provisions of the Code that (i)
require inclusion of unrealized gains or losses in the Fund's
income for purposes of the 90% test, and require inclusion of
unrealized gains in the Fund's income for purposes of the excise
tax and the distribution requirements applicable to regulated
investment companies; (ii) defer recognition of realized losses;
and (iii) characterize both realized and unrealized gain or loss
as short-term and long-term gain, irrespective of the holding
period of the investment. Such provisions generally apply to,
among other investments, options on debt securities, indices on
securities and futures contracts. The Fund will monitor its
transactions and may make certain tax elections available to it
in order to mitigate the impact of these rules and prevent
disqualification of the Fund as a regulated investment company.
Federal Income Taxation of Shareholders
General. Dividends paid by the Fund may be eligible for the
70% dividends-received deduction for corporations. The
percentage of the Fund's dividends eligible for such tax
treatment may be less than 100% to the extent that less than 100%
of the Fund's gross income may be from qualifying dividends of
domestic corporations. Any dividend declared in October,
November or December and made payable to shareholders of record
in any such month is treated as received by such shareholder on
December 31, provided that the Fund pays the dividend during
January of the following calendar year.
Distributions by the Fund can result in a reduction in the
fair market value of the Fund's shares. Should a distribution
reduce the fair market value below a shareholder's cost basis,
such distribution nevertheless may be taxable to the shareholder
as ordinary income or capital gain, even though, from an
investment standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider
the tax implications of buying shares just prior to a taxable
distribution. The price of shares purchased at that time
includes the amount of any forthcoming distribution. Those
investors purchasing shares just prior to a taxable distribution
will then receive a return of investment upon distribution which
will nevertheless be taxable to them.
Foreign Shareholders
Dividends of net investment income and distribution of
realized net short-term gain in excess of net long-term loss to a
shareholder who is a nonresident alien individual, fiduciary of a
foreign trust or estate, foreign corporation or foreign
partnership (a "foreign shareholder") will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) unless
the dividends are effectively connected with a U.S. trade or
business of the shareholder, in which case the dividends will be
subject to tax on a net income basis at the graduated rates
applicable to U.S. individuals or domestic corporations.
Distributions treated as long-term capital gains to foreign
shareholders will not be subject to U.S. tax unless the
distributions are effectively connected with the shareholder's
trade or business in the United States or, in the case of a
shareholder who is a nonresident alien individual, the
shareholder was present in the United States for more than 182
days during the taxable year and certain other conditions are
met.
In the case of a foreign shareholder who is a nonresident
alien individual or foreign entity, the Fund may be required to
withhold U.S. federal income tax as "backup withholding" at the
rate of 31% from distributions treated as long-term capital gains
and from the proceeds of redemptions, exchanges or other
dispositions of the Fund's shares unless IRS Form W-8 is
provided. Transfers by gift of shares of the Fund by a foreign
shareholder who is a non-resident alien individual will not be
subject to U.S. federal gift tax, but the value of shares of the
Fund held by such shareholder at his or her death will be
includible in his or her gross estate for U.S. federal estate tax
purposes.
State and Local Taxes
The Fund may also be subject to state and/or local taxes in
jurisdictions in which the Fund is deemed to be doing business.
In addition, the treatment of the Fund and its shareholders in
those states, which have income tax laws, might differ from
treatment under the federal income tax laws. Shareholders should
consult with their own tax advisers concerning the foregoing
state and local tax consequences of investing in the Fund.
Other Taxation
The Fund is a series of a Massachusetts business trust.
Under current law, neither the Trust nor the Fund is liable for
any income or franchise tax in the Commonwealth of Massachusetts,
provided that the Fund continues to qualify as a regulated
investment company under Subchapter M of the Code.
Shareholders should consult their tax advisers about the
application of the provisions of tax law described in this
Statement of Additional Information in light of their particular
tax situations.
PERFORMANCE DATA
From time to time, the Fund may quote performance in terms
of yield, actual distributions, total return or capital
appreciation in reports, sales literature, and advertisements
published by the Fund. Current performance information for the
Fund may be obtained by calling the number provided on the cover
page of this Statement of Additional Information. See the
current Prospectus.
Yield Quotations. As required by the regulations of the
SEC, current yield for the Money Market Fund is computed by
determining the net change exclusive of capital changes in the
value of a hypothetical pre-existing account having a balance of
one share at the beginning of a seven day calendar period,
dividing the net change in account value of the account at the
beginning of the period, and multiplying the return over the
seven-day period by 365/7. For purposes of the calculation, net
change in account value reflects the value of additional shares
purchased with dividends from the original share and dividends
declared on both the original share and any such additional
shares, but does not reflect realized gains or losses or
unrealized appreciation or depreciation. Effective yield for the
Money Market Fund is computed by annualizing the seven-day return
with all dividends reinvested in additional Fund shares.
For the seven calendar days ended November 30, 1999, the
current yield and effective yield of the Money Market Fund were
5.29% and 5.43%, respectively. These figures reflect a fee
waiver in effect during the relevant time period. In the absence
of such waiver, these figures would have been 4.89% and 5.01%,
respectively.
Total Return Quotations. As required by the regulations of
the SEC, the annualized total return of the Fund for a period is
computed by assuming a hypothetical initial payment of $1,000.
It is then assumed that all of the dividends and distributions by
the Fund over the period are reinvested. It is then assumed that
at the end of the period, the entire amount is redeemed. The
annualized total return is then calculated by determining the
annual rate required for the initial payment to grow to the
amount that would have been received upon redemption. As of
December 31, 1999, the Money Market Fund's annualized one-, five-
and ten-year total returns were 4.89%, 5.28% and 4.81%,
respectively.
Aggregate total returns, reflecting the cumulative
percentage change over a measuring period, may also be
calculated.
General. The Fund's performance will vary from time to time
depending upon market conditions, the composition of the
Portfolio, and its total operating expenses. Consequently, any
given performance quotation should not be considered
representative of the Fund's performance for any specified period
in the future. In addition, because performance will fluctuate,
it may not provide a basis for comparing an investment in the
Fund with certain bank deposits or other investments that pay a
fixed yield or return for a stated period of time.
Comparative performance information may be used from time to
time in advertising the Fund's shares, including appropriate
market indices including the benchmarks indicated under
"Investment Advisor" above or data from Lipper, Inc., Micropal,
Inc., Ibbotson Associates, Morningstar Inc., the Dow Jones
Industrial Average and other industry publications.
Fro time to time, the Fund may, in addition to any other
permissible information, include the following types of
information in advertisements, supplemental sales literature and
reports to shareholders: (1) discussions of general economic or
financial principles (such as the effects of compounding and the
benefits of dollar-cost averaging); (2) discussions of general
economic trends, (3) presentations of statistical data to
supplement such discussions; (4) descriptions of past or
anticipated portfolio holdings for the Fund, (5) descriptions of
investment strategies for the Fund, (6) descriptions or
comparisons of various savings and investment products (including,
but not limited to, qualified retirement plans and individual
stocks and bonds), which may or may not include the Fund; (7)
comparisons of investment products (including the Fund) with
relevant markets or industry indices or other appropriate
benchmarks; (8) discussions of Fund rankings or ratings byr
recognized rating organizations; (9) discussions of various
statistical methods quantifying the Fund's volatility relative to
its benchmark or to past performance, including risk adjusted
measures. The Fund may also include calculations, such as
hypothetical compounding examples, which describe hypothetical
investment results in such communications. Such performance
examples will be based on an express set of assumptions and are
not indicative of the performance of the Fund.
Portfolio Transactions
The Advisor places orders for the Portfolio for all
purchases and sales of portfolio securities, enters into
repurchase agreements and may enter into reverse repurchase
agreements and execute loans of portfolio securities on behalf of
the Portfolio.
Fixed income and debt securities and municipal bonds and
notes are generally traded at a net price with dealers acting as
principal for their own accounts without a stated commission.
The price of the security usually includes profit to the dealers.
In underwritten offerings, securities are purchased at a fixed
price that includes an amount of compensation to the underwriter,
generally referred to as the underwriter's concession or
discount. On occasion, certain securities may be purchased
directly from an issuer, in which case no commissions or
discounts are paid.
Portfolio transactions will be undertaken principally to
accomplish the Portfolio's objective in relation to expected
movements in the general level of interest rates. The Portfolio
may engage in short-term trading consistent with its objective.
In connection with portfolio transactions for the Portfolio,
the Advisor intends to seek best execution on a competitive basis
for both purchases and sales of securities.
The Portfolio has a policy of investing only in securities
with maturities of less than thirteen months, which policy will
result in high portfolio turnovers. Since brokerage commissions
are not normally paid on investments which the Portfolio makes,
turnover resulting from such investments should not adversely
affect the net asset value or net income of the Portfolio.
Subject to the overriding objective of obtaining best
execution of orders, the Advisor may allocate a portion of a
Portfolio's brokerage transactions to affiliates of the Advisor.
Under the 1940 Act, persons affiliated with the Portfolio and
persons who are affiliated with such persons are prohibited from
dealing with the Portfolio as principal in the purchase and sale
of securities unless a permissive order allowing such
transactions is obtained from the SEC. However, affiliated
persons of the Portfolio may serve as its broker in listed or
over-the-counter transactions conducted on an agency basis
provided that, among other things, the fee or commission received
by such affiliated broker is reasonable and fair compared to the
fee or commission received by non-affiliated brokers in
connection with comparable transactions. In addition, the
Portfolio may not purchase securities during the existence of any
underwriting syndicate for such securities of which Morgan or an
affiliate is a member or in a private placement in which Morgan
or an affiliate serves as a placement agent except pursuant to
procedures adopted by the Board of Trustees of the Portfolio that
either comply with rules adopted by the SEC or with
interpretations of the SEC's staff.
On those occasions when the Advisor deems the purchase or
sale of a security to be in the best interests of a Portfolio as
well as other customers including other Portfolios, the Advisor
to the extent permitted by applicable laws and regulations, may,
but is not obligated to, aggregate the securities to be sold or
purchased for a Portfolio with those to be sold or purchased for
other customers in order to obtain best execution, including
lower brokerage commissions if appropriate. In such event,
allocation of the securities so purchased or sold as well as any
expenses incurred in the transaction will be made by the Advisor
in the manner it considers to be most equitable and consistent
with its fiduciary obligations to a Portfolio. In some
instances, this procedure might adversely affect a Portfolio.
Massachusetts Business Trust
The Fund is a series of a "Massachusetts business trust." A
copy of the Declaration of Trust for the Trust is on file in the
office of the Secretary of the Commonwealth of Massachusetts.
The Declaration of Trust and the By-Laws of the Trust are
designed to make the Trust similar in most respects to a
Massachusetts business corporation. The principal distinction
between the two forms concerns shareholder liability and are
described below.
Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as
partners for the obligations of the trust. This is not the case
for a Massachusetts business corporation. However, the
Declaration of Trust of the Trust provides that the shareholders
shall not be subject to any personal liability for the acts or
obligations of the Fund and that every written agreement,
obligation, instrument or undertaking made on behalf of the Fund
shall contain a provision to the effect that the shareholders are
not personally liable thereunder.
No personal liability will attach to the shareholders under
any undertaking containing such provision when adequate notice of
such provision is given, except possibly in a few jurisdictions.
With respect to all types of claims in the latter jurisdictions,
(i) tort claims, (ii) contract claims where the provision
referred to is omitted from the undertaking, (iii) claims for
taxes, and (iv) certain statutory liabilities in other
jurisdictions, a shareholder may be held personally liable to the
extent that claims are not satisfied by the Fund. However, upon
payment of such liability, the shareholder will be entitled to
reimbursement from the general assets of the Fund. The Trustees
of the Trust intend to conduct the operations of the Trust in a
way as to avoid, as far as possible, ultimate liability of the
shareholders of the Fund.
The Declaration of Trust further provides that the name of
the Trust refers to the Trustees collectively as Trustees, not as
individuals or personally, that no Trustee, officer, employee or
agent of the Fund or to a shareholder, and that no Trustee,
officer, employee or agent is liable to any third persons in
connection with the affairs of the Fund, except if the liability
arises from his or its own bad faith, willful misfeasance, gross
negligence or reckless disregard of his or its duties to such
third persons. It also provides that all third persons shall
look solely to the property of the Fund for any satisfaction of
claims arising in connection with the affairs of the Fund. With
the exceptions stated, the Trust's Declaration of Trust provides
that a Trustee, officer, employee or agent is entitled to be
indemnified against all liability in connection with the affairs
of the Fund.
The Trust shall continue without limitation of time subject
to the provisions in the Declaration of Trust concerning
termination by action of the shareholders or by action of the
Trustees upon notice to the shareholders.
Description of Shares
The Trust is an open-end management investment company
organized as a Massachusetts business trust in which the Fund
represents a separate series of shares of beneficial interest.
The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares ($0.001 par
value) of one or more series and to divide or combine the
shares of any series, if applicable, without changing the
proportionate beneficial interest of each shareholder in the
Fund or assets of another series, if applicable. Each share
of the Fund represents an equal proportional interest in the
Fund with each other share. Upon liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets
of the Fund available for distribution to such shareholders.
See "Massachusetts Business Trust" above. Shares of the Fund
have no preemptive or conversion rights and are fully paid and
nonassessable. The rights of redemption and exchange are
described in the Prospectus and in this Statement of
Additional Information.
The shareholders of the Trust are entitled to one vote
for each share on matters on which shares of the Fund shall be
entitled to vote. Subject to the 1940 Act, the Trustees
themselves have the power to alter the number and the terms of
office of the Trustees, to lengthen their own terms, or to
make their terms of unlimited duration subject to certain
removal procedures, and appoint their own successors, provided
however, that immediately after such appointment the requisite
majority of the Trustees have been elected by the shareholders
of the Trust. The voting rights of shareholders are not
cumulative so that holders of more than 50% of the shares
voting can, if they choose, elect all Trustees being selected
while the shareholders of the remaining shares would be unable
to elect any Trustees. It is the intention of the Trust not
to hold meetings of shareholders annually. The Trustees may
call meetings of shareholders for action by shareholder vote
as may be required by either the 1940 Act or by the
Declaration of Trust of the Trust.
Shareholders of the Trust have the right, upon the
declaration in writing or vote of more than two-thirds of its
outstanding shares, to remove a Trustee from office. The
Trustees will call a meeting of shareholders to vote on
removal of a Trustee upon the written request of the record
holders of 10% of the shares of the Trust. In addition,
whenever ten or more shareholders of record who have been
shareholders of record for at least six months prior to the
date of the application, and who hold in the aggregate either
shares of the Fund having a net asset value of at least
$25,000 or at least 1% of the Trust's outstanding shares,
whichever is less, shall apply to the Trustees in writing,
stating that they wish to communicate with other shareholders
with a view to obtaining signatures to request a meeting for
the purpose of voting upon the question of removal of any of
the Trustees and accompanies by a form of communication and
request which they wish to transmit, the Trustees shall within
five business days after receipt of such application either:
(1) afford to such applicants access to a list of the names
and addresses of all shareholders as recorded on the books of
the Trust; or (2) inform such applicants as to the approximate
number of shareholders of record, and the approximate cost of
mailing to them the proposed shareholder communication and
form of request. If the Trustees elect to follow the latter,
the Trustees, upon the written request of such applicants
accompanied by a tender of the material to be mailed and the
reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all shareholders of record
at their addresses as recorded on the books, unless within
five business days after such tender the Trustees shall mail
to such applicants and file with the SEC, together with a copy
of the material to be mailed, a written statement signed by at
least a majority of the Trustees to the effect that in their
opinion either such material contains untrue statements of
fact or omits to state facts necessary to make the statements
contained therein not misleading, or would be in violation of
applicable law, and specifying the basis of such opinion.
After opportunity for hearing upon the objections specified in
the written statements filed, the SEC may, and if demanded by
the Trustees or by such applicants shall, enter an order
either sustaining one or more objections or refusing to
sustain any of such objections, or if, after the entry of an
order sustaining one or more objections, the SEC shall find,
after notice and opportunity for a hearing, that all
objections so sustained have been met, and shall enter an
order so declaring, the Trustees shall mail copies of such
material to all shareholders with reasonable promptness after
the entry of such order and the renewal of such tender.
The Trustees have authorized the issuance and sale to the
public of shares of series of the Trust. The Trustees may
authorize the issuance of additional series of the Trust. The
proceeds from the issuance of any additional series would be
invested in separate, independently managed portfolios with
distinct investment objectives, policies and restrictions, and
share purchase, redemption and net asset value procedures.
All consideration received by the Trust for shares of any
additional series, and all assets in which such consideration
is invested, would belong to that series, subject only to the
rights of creditors of the Trust and would be subject to the
liabilities related thereto. Shareholders of the additional
series will approve the adoption of any management contract,
distribution agreement and any changes in the investment
policies of the new series, to the extent required by the 1940
Act.
Master-Feeder Investment Structure
Unlike other mutual funds which directly acquire and
manage their own portfolio of securities, the Fund is an open-
end investment management company which seeks to achieve its
investment objective by investing all of its investable assets
in the Portfolio, also called the "Master Portfolio." The
Portfolio is a separate registered investment with the same
investment objective as the Fund, also called the "Feeder
Fund." Generally, when a Master Portfolio seeks a vote to
change any of its fundamental restrictions or policies, the
Feeder Fund will hold a shareholder meeting and cast its vote
proportionally, as instructed by its shareholders. Fund
shareholders are entitled to one vote for each dollar of net
asset value (or a proportionate fractional vote in respect of a
fractional dollar amount), of the portfolio on matters on which
the shares of the Fund shall be entitled to vote.
In additional to selling a beneficial interest to the
Fund, the Portfolio may sell beneficial interests to other
mutual funds or institutional investors. Such investors will
invest in the Portfolio on the same terms and conditions and
will bear a proportionate share of the Portfolio's exposure.
However, the other investors investing in the Portfolio may
sell shares of their own fund using a different pricing
structure than the Fund. Such different pricing structures may
result in differences in returns experienced by investors in
other funds that invest in the Portfolio. Such differences in
returns are not uncommon and are present in other mutual fund
structures. Information concerning other holders of interests
in the Portfolio is available from Morgan at (800) 521-5411.
The Trust may withdraw the investment of the Fund from the
Portfolio at any time if the Board of Trustees of the Trust
determines that it is in the best interests of the Trust to do
so. Upon any such withdrawal, the Board of Trustees of the
Trust would consider what action might be taken, including the
investment of all the assets of the Fund into another pooled
investment entity having the same investment objective and
restrictions and policies as the Fund.
Certain changes in the Portfolio's fundamental investment
policies or restrictions, or a failure by the Fund's
shareholders to approve such change in the Portfolio's
investment restrictions, may require additional withdrawal of
the Fund's interest in the Portfolio. Any such withdrawal
could result in a distribution in kind of the Portfolio's
portfolio securities, as opposed to a cash distribution, which
may or may not be readily marketable. The distribution in kind
may result in the Fund having a less diversified portfolio of
investments or may adversely affect the Fund's liquidity, and
the Fund could incur brokerage, tax or other changes in
converting the securities to cash. Notwithstanding the above,
there are other means for meeting shareholder redemption
requests, such as borrowing.
Smaller funds investing in the Portfolio may be materially
affected by the actions of larger funds investing in the
Portfolio. For example, if a large fund withdraws from the
Portfolio, the remaining funds may subsequently experience
higher pro rata operating expenses, thereby producing lower
returns.
Additionally, because the Portfolio would become smaller,
it may become less diversified, resulting in potentially
increased portfolio risk (however these possibilities also
exist for traditionally structured funds which have large or
institutional investors who may withdraw from a Fund). Also,
funds with greater pro rata ownership in the Portfolio could
have effective voting control over the operations of the
Portfolio. Whenever the Fund is requested to vote on matters
pertaining to the Portfolio (other than a vote by the Fund to
continue the operation of the Portfolio upon the withdrawal of
another investor in the Portfolio), the Trust will hold a
meeting of shareholders of the Fund and will cast all of its
votes proportionately as instructed by the Fund's shareholders.
The Trust will vote the shares held by the Fund's shareholders
who do not give voting instructions in the same proportion as
the shares of Fund shareholders who do not give voting
instructions. Shareholders of the Fund who do not vote will
have no effect on the outcome of such matters.
Additional Information
This Statement of Additional Information and the
Prospectus do not contain all of the information included in
the Trust's Registration Statement filed with the SEC under
the 1933 Act. Pursuant to the rules and regulations of the
SEC, certain portions have been omitted. The Registration
Statements, including the Exhibits filed therewith, may be
examined at the office of the SEC in Washington DC.
Statements contained in the Statement of Additional
Information and the Prospectus concerning the contents or any
contract or other document are not necessarily complete, and
in each instance, reference is made to the copy of such
contract or other document filed as an Exhibit to the
applicable Registration Statement. Each such statement is
qualified in all respects by such reference.
No dealer, salesman or any other person has been
authorized to give any information or to make any
representations, other than those contained in the Prospectus
or this Statement of Additional Information, in connection
with the offer of shares of the Fund and, if given or made,
such other representations or information must not be relied
upon as having been authorized by the Trust, the Fund or the
Distributor. The Prospectus and this Statement of Additional
Information do not constitute an offer to sell or solicit an
offer to buy any of the securities offered thereby in any
jurisdiction to any person to whom it is unlawful for the Fund
or the Distributor to make such offer in such jurisdictions.
FINANCIAL STATEMENTS
The following audited Financial Statements and the Notes
for the Fund, and the Report of Independent Accountant of
PricewaterhouseCoopers LLP are incorporated by reference to
this SAI from their respective annual report filing made with
the SEC pursuant to Section 30(b) of the 1940 Act and Rule 30b2-
1 thereunder. The following Financial Statements and reports
are available without charge by calling The Managers Funds at
(800) 835-3879, on The Managers Funds Internet website at
http://www.managersfunds.com or on the SEC's Internet website
at http://www.sec.gov.
The Annual Report dated November 30, 1999 for Managers
Money Market Fund was filed with the SEC on January 25, 2000.
The accession number for such filing was 0000720309-00-000006.
APPENDIX A
DESCRIPTION OF SECURITY RATINGS
STANDARD & POOR'S:
CORPORATE AND MUNICIPAL BONDS
AAA - Debt rated AAA has the highest ratings assigned by
Standard & Poor's to a debt obligation. Capacity to pay
interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the highest rated
issues only in a small degree.
A - Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible
to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than for debt
in higher rated categories.
BB - Debt rated BB is regarded as having less near-term
vulnerability to default than other speculative issues.
However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely
interest and principal payments.
COMMERCIAL PAPER, INCLUDING TAX EXEMPT
A - Issues assigned this highest rating are regarded as
having the greatest capacity for timely payment. Issues
in this category are further refined with the
designations 1, 2, and 3 to indicate the relative degree
of safety.
A-1 - This designation indicates that the degree of safety
regarding timely payment is very strong.
SHORT-TERM TAX-EXEMPT NOTES
SP-1 - The short-term tax-exempt note rating of SP-1 is the
highest rating assigned by Standard & Poor's and has a
very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming
safety characteristics are given a "plus" (+)
designation.
SP-2 - The short-term tax-exempt note rating of SP-2 has
satisfactory capacity to pay principal and interest.
MOODY'S:
CORPORATE AND MUNICIPAL BONDS
Aaa - Bonds which are rated Aaa are judged to be of the
best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.
Aa - Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they
comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present which
make the long term risks appear somewhat larger than in
Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and
interest are considered adequate but elements may be
present which suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as
well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not
well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in
this class.
COMMERCIAL PAPER, INCLUDING TAX EXEMPT
Prime-1 - Issuers rated Prime-1 (or related supporting
institutions) have a superior capacity for repayment
of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the
following characteristics:
-- Leading market positions in well-established
industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-- Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
-- Well established access to a range of financial
markets and assured sources of alternate
liquidity.
SHORT-TERM TAX EXEMPT NOTES
MIG-1 - The short-term tax-exempt note rating MIG-1 is the
highest rating assigned by Moody's for notes judged
to be the best quality. Notes with this rating enjoy
strong protection from established cash flows of
funds for their servicing or from established and
broad-based access to the market for refinancing, or
both.
MIG-2 - MIG-2 rated notes are of high quality but with
margins of protection not as large as MIG-1.
_______________________________
1Mr. Healey is an "interested person" (as defined in the
1940 Act) of the Trust.
PART C
To the Registration Statement of
The Managers Funds (the "Registrant")
Item 23. Exhibits.
Exhibit No. Description
* = Included as an Exhibit to this Registration Statement.
1. a.1 Declaration of Trust dated November 23, 1987.12
a.2 Amendment to Declaration of Trust dated May 12, 1993. 3b
a.3 Amendment to Declaration of Trust dated June 30, 1993. cb
a.4 Amendment to Declaration of Trust dated December 8, 1997.4
b. By-Laws of the Trust dated November 23, 1987. ab
c. Instruments Defining Rights of Shareholders. 5b
d.1 Fund Management Agreement between Registrant and The Managers
Funds LLC dated April 1, 1999. 6
d.2 Sub-Advisory Agreement between The Managers Funds LLC and [
] with respect to Managers Small Company Fund dated ________,
2000.
d.3 Sub-Advisory Agreement between The Managers Funds LLC and [
] with respect to Managers Small Company Fund dated ________,
2000.
d.4 Sub-Advisory Agreement between The Managers Funds LLC and
Goldman Sachs Asset Management with respect to Managers Special
Equity Fund dated January 1, 2000.
d.5 Sub-Advisory Agreement between The Managers Funds LLC and
Rexiter Capital Management Limited with respect to Managers
Emerging Markets Equity Fund dated June 1, 1999.
d.6 Sub-Advisory Agreements between The Managers Funds LLC and each
Sub-Adviser identified in the Registration Statement with respect
to each Fund of the Registrant dated April 1, 1999. f
e.1 Distribution Agreement between the Registrant and The Managers
Funds LLC dated April 1, 1999. f
f. Not Applicable.
g Custodian Agreement between the Registrant and State Street Bank
and Trust Company dated December 9, 1992. gb
h.1 Transfer Agency Agreement between the Registrant and State Street
Bank and Trust Company dated February 16, 1994. 7b
h.2 Administration and Shareholder Servicing Agreement between The
Managers Funds LLC and the Registrant dated April 1, 1999. f
h.3 License Agreement Relating to the Use of Name between the
Registrant and The Managers Funds LLC dated April 1, 1999. f
i. Opinion and Consent of Shereff, Friedman, Hoffman & Goodman, LLP
dated September 27, 1990. ab
* j.1 Consent of PricewaterhouseCoopers LLP dated March 31, 2000.
j.2 Power of Attorney for the Registrant dated June 4, 1999.
* j.3 Power of Attorney for The Prime Money Market Portfolio dated
April 3, 2000.
k. Not Applicable.
l. Not Applicable.
m. Not Applicable.
n. Not Applicable.
o. Not Applicable.
_______________________________________________________
Item 24. Persons Controlled by or Under Common Control with Registrant.
None.
Item 25. Indemnification.
Sections 2.9(d) and (f), Article IV Sections 4.1-4.3 and Section
8.3(b) of the Registrant's Declaration of Trust dated November 23, 1987
relate to the indemnification of Trustees, Officers and other persons by
the Trust and to the exemption from personal liability of such Trustees,
Officers and other persons. These aforementioned Sections are reproduced
below:
Section 2.9. Miscellaneous Powers. The Trustee shall have the
power to: .(d) purchase, and pay out of the Trust Property, insurance
policies insuring the Shareholders, Trustees, Officers, employees, agents,
Investment Advisers, Distrributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding
any such position or by reason of any action taken or omitted by any such
Pertson in such cap[acuity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person
against such liability; .(f) to the extent permitted by law, indemnify any
Person with whom the Trust has dealings, including the Investment
Adviser,
Distributor, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine;.
Article IV - Section 4.1. No Personal Liability of Shareholders,
Trustees, etc. No Shareholder shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the acts,
obligations or affairs of the Trust. No Trustee, Officer, employee or
agent of the Trust shall be subject to any personal liability whatsoever to
any person, other than the Trust or its Shareholders, in connection with
the Trust Property or the affairs of the Trust, save only that arising from
bad faith, willful misfeasance, gross negligence or reckless disregard of
his duties with respect to such Person, and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder If
any Shareholder, Trustee, officer, employee, or agent, as such, of the
Trust, is made a party to any or proceeding to enforce any such liability
of the Trust or any Series, he shall not, on account thereof, be held to
any personal liability. The Trust or Series shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities, to which
such Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 4.1
shall not exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the
Trust to indemnify or reimburse a Shareholder in any appropriate situation
even though not specifically provided herein.
Section 4.2. Non-liability of Trustees, Etc. No Trustee,
officer, employee or agent of the Trust shall be liable to the Trust or to
any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to
compel in any way any former or acting Trustee to redress any breach of
trust) except for his own bad faith, willful misfeasance, gross negligence
or reckless disregard of the duties involved in the conduct of his office
or for his failure to act in good faith in the reasonable belief that his
action was in the best interests of the Trust. Notwithstanding anything in
this Article IV or elsewhere in this Declaration to the contrary and
without in any way increasing the liability of the Trustees beyond that
otherwise provided in this Declaration, no Trustee shall be liable to the
Trust or to any Shareholder, Trustee, officer, employee or agent for
monetary damages for breach of fiduciary duty as a Trustee; provided that
such provision shall not eliminate or limit the liability of a Trustee (i)
for any breach of the Trustee's duty of loyalty to the Trust or its
Shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, or (iii) for any
transaction from which the Trustee derived an improper personal benefit.
Section 4.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer
of the Trust shall be indemnified by the Trust or any Series to
the fullest extent permitted by law against all liability and
against all expenses reasonably incurred or aid by him in
connection with any claim, action, suit or proceeding in which he
became involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, or other, including appeals), actual or threatened; the
words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee
or officer:
(i) against any liability to the Trust or the Shareholders by
reason
of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the
conduct of his office;
(ii) with respect to any matter as to which he shall have
been finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust;
(iii) in the event of a settlement involving a final
adjudication as provided in paragraph (b)(i) resulting in a
payment by a Trustee or officer, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office:
(A) by the court or other body approving the settlement
or other disposition; or
(B) based upon a review of readily available facts (as
opposed to a full trial-type inquiry) by (x) vote of a
majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then
in office act on the matter) or (y) written opinion of
independent legal counsel.
(C) The rights of indemnification herein provided may
be insured against by policies maintained by the Trust,
shall be severable, shall not affect any other rights to
which any Trustee or officer may now or hereafter by
entitled, shall continue as to a person who has ceased to be
such Trustee or officer and shall inure to the benefit of
the heirs, executors, administrators and assigns of such a
person. Nothing contained herein shall affect any rights to
indemnification to which personnel of the Trust other than
Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 4.3 may be advanced by the Trust or any
Series prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount if
it is ultimately determined that he is not entitled to indemnification
under this Section 4.3, provided that either
(i) such undertaking is secured by a surety bond or some
other
appropriate security provided
by the recipient, or the Trust shall be insured against
losses
arising out of any such advances;
or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees
act on the matter), or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily
available facts (as opposed to a full trial-type inquiry), that
there is reason to believe that the recipient ultimately will be
found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is not
(i) an "Interested Person" of the Trust (including anyone who has been
exempted from being an "Interested Person" by any rule, regulation or order
of the Commission), or (ii) involved in the claim, action, suit or
proceeding.
Section 8.3. Amendment Procedure. (b) No amendment may be
made under this Section 8.3 which would change any rights with respect to
any Shares of the Trust or of any Series by reducing the amount payable
thereon upon liquidation of the Trust or by diminishing or eliminating any
voting rights pertaining thereto, except with the vote or consent of the
holders of two-thirds of the Shares outstanding and entitled to vote, or by
such other vote as may be established by the Trustees with respect to any
Series of Shares. Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of
the Trust or to permit assessments upon Shareholders.
Item 26. Business and Other Connections of Investment Adviser.
The Managers Funds LLC, a registered investment adviser, serves
as investment adviser to the Trust. The Managers Funds LLC is a subsidiary
of Affiliated Managers Group, Inc. ("AMG") and AMG serves as its Managing
Member. The Managers Funds LLC serves exclusively as an investment adviser
to investment companies registered under the 1940 Act. The business and
other connections of the officers and directors of The Managers Funds LLC,
are listed in Schedules A and D of its ADV Form as currently on file with
the Commission, the text of which Schedules are hereby incorporated herein
by reference. The file number of said ADV Form is 801-56365.
The Managers Funds LLC hires Sub-Adviser(s) for each Fund of the
Trust. The business and other connections of the officers and directors of
each Sub-Adviser are listed in their respective Schedules A and D of its
ADV Form as currently on file with the Commission, the text of which
Schedules are hereby incorporated herein by reference. The file number of
said ADV Forms are listed below
Scudder Kemper Investments, Inc. 801-252
Chartwell Investment Partners, L.P. 801-54124
Essex Investment Management Company, LLC* 801-12548
Roxbury Capital Management, LLC 801-55521
Kern Capital Management LLC 801-54766
Goldman Sachs Asset Management 801-21343
Pilgrim, Baxter & Associates, Ltd. 801-19165RC
Westport Asset Management, Inc. 801-21854
Lazard Asset Management 801-6568
Rexiter Capital Management Limited 801-55470
Loomis, Sayles & Company, L.P. 801-17000
Standish, Ayer& Wood, Inc. 801-584
Rogge Global Partners, plc. 801-25482
___________________________________
*Essex is majority owned by AMG and is an affiliate of the
Registrant.
Item 27. Principal Underwriters.
(a) The Managers Funds LLC acts as principal underwriter for the
Registrant. The Managers Funds LLC also acts as principal underwriter
for Managers AMG Funds.
(b) The following information relates to the directors, officers
and partners of The Managers Funds LLC:
The business and other connections of the officers and directors of
The Managers Funds LLC are listed in Schedules A and D of its ADV Form as
currently on file with the Commission, the text of which Schedules are
hereby incorporated herein by reference. The file number of said ADV Form
is 801-56365.
(c) Not Applicable.
Item 28. Location of Accounts and Records.
The accounts and records of the Registrant are maintained at the
offices of the Registrant at 40 Richards Avenue, Norwalk,
Connecticut 06854 and at the offices of the Custodian, State Street Bank
and Trust Company, 225 Franklin Street, Boston, Massachusetts 02106 and
1776 Heritage Drive, North Quincy, Massachusetts 01171 and at the offices
of the Transfer Agent, Boston Financial Data Services, Inc. 1776 Heritage
Drive, North Quincy, Massachusetts 01171.
Item 29. Management Services.
There are no management-related service contracts other than the
Fund Management Agreement relating to management services described in
Parts A and B.
Item 30. Undertakings.
(a) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
(b) The Registrant shall furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(c) If requested to do so by the holders of at least 10% of the
Registrant's outstanding shares, the Registrant will call a meeting of
shareholders for the purpose of voting upon the removal of a trustee
or trustees and the Registrant will assist communications with other
shareholders as required by Section 16(c) of the Investment Company
Act of 1940.
Exhibit j.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated January 17, 2000,
relating to the financial statements and financial highlights
which appears in the November 30, 1999 Annual Report to
Shareholders of Managers Money Market Fund, which are also
incorporated by reference into the Registration Statement. We
also consent to the references to us under the heading "Financial
Highlights, "Independent Accountants" and "Financial Statements"
in such Registration Statement.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 31, 2000
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in this City of Norwalk and State of
Connecticut on the 3rd day of April, 2000.
THE MANAGERS FUNDS
By:/s/Donald S. Rumery
Donald S. Rumery
Secretary
Signature Capacity
Jack W. Aber* Trustee
Jack W. Aber
William E. Chapman, II* Trustee
William E. Chapman, II
Sean M. Healey* Trustee
Sean M. Healey
Edward J. Kaier* Trustee
Edward J. Kaier
Madeline H. McWhineey* Trustee
Madeline H. McWhinney
Steven J. Paggioli* Trustee
Steven J. Paggioli
Eric Rakowski* Trustee
Eric Rakowski
Thomas R. Schneeweis* Trustee
Thomas R. Schneeweis
Peter Lebovitz* President and Principal
Peter Lebovitz Executive Officer
By: /s/Donald S. Rumery
*Donald S. Rumery pursuant to power of attorney dated previously
filed.
Exhibit j.3.
SIGNATURES
The Prime Money Market Portfolio (the "Portfolio") has
duly caused this registration statement on Form N-1A
("Registration Statement") of The Managers Funds (the "Trust")
(File No. 2-84012) to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of George Town, Grand
Cayman, on the 3rd day of April, 2000.
THE PRIME MONEY MARKET PORTFOLIO
By: /s/ Jacqueline Henning
Jacqueline Henning
Assistant Secretary and Assistant Treasurer
Pursuant to the requirements of the Securities Act of 1933, the
Trust's Registration Statement has been signed below by the
following persons in the capacities indicated on April 3, 2000.
Richard W. Ingram*
- -------------------------
Richard W. Ingram
President and Treasurer (Principal Financial and Accounting
Officer) of the Portfolio
Matthew Healey*
- -------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal
Executive Officer) of the Portfolio
Frederick S. Addy*
- -------------------------
Frederick S. Addy
Trustee of the Portfolio
William G. Burns*
- -------------------------
William G. Burns
Trustee of the Portfolio
Arthur C. Eschenlauer*
- ------------------------
Arthur C. Eschenlauer
Trustee of the Portfolio
Michael P. Mallardi*
- ------------------------
Michael P. Mallardi
Trustee of the Portfolio
*By /s/ Jacqueline Henning
- -------------------------
Jacqueline Henning, as attorney-in-fact pursuant to a power
of attorney previously filed.
_______________________________
1 Previously filed with Post-Effective Amendment No. 20 of the Registrant
on September 28, 1990.
2 Refiled electronically with Post-Effective Amendment No. 41 of the
Registrant on October 16, 1997.
3 Previously filed with Post-Effective Amendment No. 32 of the Registrant
on November 5, 1993.
4 Previously filed with Post-Effective Amendment No. 43 of the Registrant
on April 29, 1998.
5 Previously filed with Post-Effective Amendment No. 34 of the Registrant
on March 7, 1995.
6 Previously filed with Post-Effective Amendment No. 46 of the Registrant
on April 1, 1999.
7 Previously filed with Post-Effective Amendment No. 33 of the Registrant
on April 24, 1994.
