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. 46 x
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 x
Amendment No. 48 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):
__ 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)
x 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
SMALL COMPANY FUND
_____________________
PROSPECTUS
DATED MAY 1, 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
Page
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<S> <C>
RISK/RETURN SUMMARY
KEY INFORMATION ABOUT THE SMALL COMPANY FUND 1
Summary of the Goals, Principal Strategies and Principal Risk
Factors of the Fund 1
PERFORMANCE SUMMARY 1
FEES AND EXPENSES OF THE FUND 2
Fees and Expenses 2
THE MANAGERS FUNDS 3
SUMMARY OF THE FUND
SMALL COMPANY FUND 3
Objective 3
Principal Investment Strategies 3
Should I Invest in this Fund? 4
Portfolio Management of the Fund 4
ADDITIONAL RISKS OF INVESTING
OTHER SECURITIES AND INVESTMENT PRACTICES 4
A FEW WORDS ABOUT RISK 5
INFORMATION ABOUT YOUR INVESTMENT
YOUR ACCOUNT 7
Minimum Investments in the Fund 7
HOW TO PURCHASE SHARES 9
HOW TO SELL SHARES 10
INVESTOR SERVICES 10
THE FUND AND ITS POLICIES 11
ACCOUNT STATEMENTS 11
DIVIDENDS AND DISTRIBUTIONS 12
TAX INFORMATION 12
</TABLE>
<PAGE>
RISK/RETURN SUMMARY
KEY INFORMATION ABOUT MANAGERS SMALL COMPANY FUND
This Prospectus contains important information for anyone
interested in investing in MANAGERS SMALL COMPANY 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. All investments involve
some type and level of risk. 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.
<TABLE>
<CAPTION>
Goals Principal Strategies Principal Risk Factors
----- -------------------- ----------------------
<S> <C> <C>
Long-term capital Invests principally in Market Risk
appreciation the equity securities of Small Company
U.S. companies with the Stock Risk
potential for long-term Liquidity Risk
growth and undervalued Price Risk
investments
Invests primarily in
small companies
</TABLE>
_______________________________________________________________________
PRINCIPAL RISK FACTORS
MARKET RISK
Market Risk is also called systematic risk. It typically
refers to the basic variability that stocks exhibit as a result
of stock market fluctuations. Despite the unique influences on
individual companies, stock prices generally rise and fall as a
result of investors' perceptions of the market as a whole. The
consequences of market risk are that if the stock market drops in
value, the value of the Fund's portfolio of investments will also
likely decrease in value. The increase or decrease in the value
of the Fund's investments, in percentage terms, may be more or
less than the increase or decrease in the value of the market.
Most international markets do not move together with U.S.
markets, or with other international markets.
SMALL-COMPANY STOCK RISK
Small companies often have greater price volatility, lower
trading volume, and less liquidity than larger, more-established
companies. These companies tend to have smaller revenues,
narrower product lines, less management depth and experience,
smaller shares of their product or service markets, fewer
financial resources, and less competitive strength than larger
companies. For these and other reasons, the Fund may
underperform other stock funds (such as large-company stock
funds) when stocks of small-sized companies are out of favor.
LIQUIDITY RISK
Liquidity Risk is the risk that the Fund cannot sell a
security at a reasonable price within a reasonable time frame
when it wants to or needs to due to a lack of buyers for the
security. This risk applies to all assets. However, it is
higher for small-capitalization stocks and stocks of foreign
companies than it typically is for larger-capitalization domestic
stocks.
<PAGE>
PRICE RISK
As investors perceive and forecast good business prospects,
they are willing to pay higher prices for securities. Higher
prices therefore reflect higher expectations. If expectations
are not met, or if expectations are lowered, the prices of the
securities will drop. This happens with individual securities or
the financial markets overall.
FEES AND EXPENSES OF THE FUND
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY
IF YOU BUY AND HOLD SHARES OF THE FUND.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<S> <C>
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%)
</TABLE>
FEES AND EXPENSES
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
<S> <C>
Management Fee 0.90%
Distribution (12b-1) Fees 0.00%
Other Expenses(a) 0.40%
-----
Total Annual Fund Operating Expenses(b) 1.30%
=====
<FN>
(a) Because the Fund has not commenced operations as of the
date of this prospectus, the "Other Expenses" of the Fund are
based on annualized projected expenses and average net assets for
the fiscal year ending December 31, 2000.
(b) The Managers Funds LLC has contractually agreed, for a
period of no less than __ months, to limit Total Annual Fund
Operating Expenses to 1.30% subject to later reimbursement by the
Fund in certain circumstances.
</FN>
</TABLE>
__________________________________________________________________
WHAT IS THE MANAGEMENT FEE? It is a fee paid to The Managers
Funds LLC for managing the Fund. A portion of this fee is paid
to the asset managers who manage the Fund's portfolio.
WHAT IS THE DISTRIBUTION (12b-1) FEE? It is an expense charged
by some mutual funds for the cost of marketing and advertising.
The Managers Funds does not have any Distribution (12b-1) Fees.
__________________________________________________________________
EXAMPLE+
The following 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:
<PAGE>
1 YEAR 3 YEARS
------ -------
$ $
+ The Example should not be considered a representation of
past or future expenses, as actual expenses may be greater or
lower than those shown.
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 (the "Investment Manager"), a
subsidiary of Affiliated Managers Group, Inc., serves as
investment manager to the Fund and is responsible for the Fund's
overall administration and distribution. The Investment Manager
selects and recommends, subject to approval by the Board of
Trustees, one or more asset managers to manage each Fund's
investment portfolio. The Investment Manager also allocates
assets to the asset managers based on certain evolving targets,
monitors the performance, security holdings and investment
strategies of these external asset managers and, when
appropriate, researches any potential new asset managers for the
Fund family. The Securities and Exchange Commission has given
the Funds an order permitting them to change asset managers
without the need for shareholder approval.
SUMMARY OF THE FUND
SMALL COMPANY FUND
OBJECTIVE
The Fund's objective is to achieve long-term capital
appreciation by investing in the equity securities of small
companies.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests at least
65% of its total assets in the equity securities of U.S.
companies with the potential for long-term growth. The Fund
tends to invest in stocks of small companies, that is, companies
with market capitalizations of $1.5 billion or less at the time
of purchase. The Fund may retain securities that it already has
purchased even if the specific company outgrows the Fund's
captitalization limitations.
The assets of the Fund are allocated between two asset
managers, each of which acts independently of the other and uses
its own methodology to select portfolio investments. One of the
asset managers emphasizes a value approach to investing, that is,
it selects stocks which it believes are trading below the stock's
real value. Generally, this asset manager compares a company's
stock price to the company's earnings, or its potential to
generate strong, sustainable earnings, as well as its potential
for long-term profitability and the quality of its management. A
security is sold when the asset manager believes that these
characteristics of a company do not support its current stock
price.
The other asset manager emphasizes a growth approach to
investing, that is, it selects stocks that it believes can
generate and maintain strong earnings growth. Generally, this
asset manager looks for companies with quality management, strong
finances and established market positions. A stock is sold when
the asset manager does not believe that the current stock price
is supported by its expectation regarding the company's future
growth potential.
For temporary and defensive purposes, the Fund may invest,
without limit, in cash or quality short-term debt securities
including repurchase agreements. To the extent that the Fund is
invested in these instruments, the Fund will not be pursuing its
investment objective.
3
<PAGE>
SHOULD I INVEST IN THIS FUND?
This Fund MAY be suitable if you:
* Are seeking an opportunity for some small company
equity returns in your investment portfolio
* Are willing to accept a higher degree of risk for the
opportunity of higher potential returns
* Have an investment time horizon of five years or more
This Fund MAY NOT be suitable if you:
* Are seeking stability of principal
* Are investing with a shorter time horizon in mind
* Are uncomfortable with stock market risk
* Are seeking current income
__________________________________________________________________
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
___________________ are the two asset managers who manage
the Fund. [Describe assets/corporate structure of firm and
biography of portfolio managers].
The Fund pays an annual management fee to The Managers Funds
LLC of 0.90% of the average daily net assets of the Fund. In
turn, The Managers Funds LLC, under a Sub-Advisory Agreement,
pays a portion of this fee to ___________.
ADDITIONAL RISKS OF INVESTING
OTHER SECURITIES AND INVESTMENT PRACTICES
The Fund may also invest in certain other securities and
engage in certain other practices, including the following.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may purchase restricted or illiquid securities.
Any securities that are thinly traded or whose resale is
restricted can be difficult to sell at a desired time and price.
Some of these securities are new and complex, and trade only
among institutions; the markets for these securities are still
developing, and may not function as efficiently as established
markets. Owning a large percentage of restricted or illiquid
securities could hamper a Fund's ability to raise cash or meet
redemptions. Also, because there may not be an established
market price for these securities, the Fund may have to estimate
their value. This means that their valuation (and, to a much
smaller extent, the valuation of the Fund) may have a subjective
element.
REPURCHASE AGREEMENTS
The Fund may buy securities with the understanding that the
seller will buy them back with interest at a later date. If the
seller is unable to honor its commitment to repurchase the
securities, the Fund could lose money.
4
<PAGE>
FOREIGN SECURITIES
The Fund may invest in foreign securities either directly or
indirectly in the form of American Depositary Receipts or other
similar instruments. Investments in foreign securities are
generally more volatile than their U.S. counterparts, in part
because of higher political and economic risks, lack of reliable
information and fluctuations in currency exchange rates. These
risks are usually higher in less developed countries.
In addition, foreign securities may be more difficult to
resell and the markets for them less efficient than for
comparable U.S. securities. Even where a foreign security
increases in price in its local currency, the appreciation may be
diluted by the negative effect of exchange rates when the
security's value is converted to U.S. Dollars. Foreign
withholding taxes also may apply and errors and delays may occur
in the settlement process for foreign securities.
INITIAL PUBLIC OFFERINGS
The Fund may invest in initial public offerings. To the
extent that it does so, the performance of the Fund may be
significantly affected by such investments.
A Few Words About Risk
In the normal course of every day 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.
If 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.
The 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, there 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.
_________________________________________________________________
The RISK PREMIUM for any investment is the extra return, over
the available RISK-FREE RETURN, that an investor expects for
the risk that he or she takes. The risk-free return is a
return that one could expect with absolute certainty.
_________________________________________________________________
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.
5
<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.
The following are descriptions of many of the risks that
asset managers of our Funds take to earn investment returns.
Investors should keep in mind that each of the Equity Funds is
subject to the following risks. This is not a comprehensive list
and the risks discussed below are only some of the primary risks
to which your investments are exposed.
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 which 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.
ECONOMIC RISK
Obviously, the prevailing economic environment is important
to the health of all businesses, however, some companies are more
sensitive to changes in the domestic and/or global economy than
others. These types of companies are often referred to as
cyclical businesses. Countries in which a large portion of
businesses are in cyclical industries are thus also very
economically sensitive, and carry a higher amount of economic
risk.
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 asset managers to invest assets. Asset
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. The Managers Funds LLC believes that
intelligence risk can be reduced through diversification of
investment managers from differing organizations and with
differing investment philosophies.
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 the sheer number of estimates involved
would compound to make the final life expectancy estimate very
imprecise. Instead, estimates about the life expectancy of people
and then adjust them based on some other broad measures such as
sex, general health, heredity, and lifestyle factors such as
smoking and flying. 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.
6
<PAGE>
INFORMATION ON YOUR INVESTMENT
YOUR ACCOUNT
As an investor, you pay no sales charges to invest in the
Fund. Furthermore, you pay no charges to transfer within the
Fund family or to redeem out of the Fund. The price at which you
purchase and redeem your shares is equal to the net asset value
per share (NAV) next determined after your purchase or redemption
order is received on each day the New York Stock Exchange (NYSE)
is open for trading. The NAV is equal to the Fund's net worth
(assets minus liabilities) divided by the number of shares
outstanding. The Fund's NAV is calculated at the close of regular
business of the NYSE, usually 4:00 p.m. New York Time.
Securities traded in foreign markets may trade when the NYSE
is closed. Those securities are generally valued at the closing
of the exchange where they are primarily traded. THEREFORE, A
FUND'S NAV MAY CHANGE ON DAYS WHEN INVESTORS MAY NOT BE ABLE TO
PURCHASE OR REDEEM FUND SHARES.
The Fund's investments are valued based on market values.
If market quotations are not readily available for any security,
the value of the security will be based on an evaluation of its
fair value, pursuant to procedures established by the Board of
Trustees.
MINIMUM INVESTMENTS IN THE FUND
Cash investments in the Fund must be in U.S. Dollars.
Third-party checks which are payable to an existing shareholder
who is a natural person (as opposed to a corporation or
partnership) and endorsed over to the Fund or State Street Bank
and Trust Company will be accepted.
The following provides the minimum initial and additional
investments in the Fund:
<TABLE>
<CAPTION>
INITIAL INVESTMENT ADDITIONAL INVESTMENT
------------------ ---------------------
<S> <C> <C>
Regular accounts $2,000 $ 100
Traditional IRA 500 100
Roth IRA 500 100
Education IRA 500 N/A
SEP IRA 500 100
SIMPLE IRA 500 100
</TABLE>
The Fund may, in its discretion, waive the minimum and
initial investment amounts at any time.
____________________________________________________________________
A TRADITIONAL IRA is an individual retirement account.
Contributions may be deductible at certain income levels and
earnings are tax-deferred while your withdrawals and
distributions are taxable in the year that they are made.
A ROTH IRA is an IRA with non-deductible contributions and
tax-free growth of assets and distributions. The account must
be held for five years and certain other conditions must be met
in order to qualify.
An EDUCATION IRA is an IRA with non-deductible contributions
and tax-free growth of assets and distributions. The account
must be used to pay qualified educational expenses.
A SEP IRA is an IRA that allows employers or the self-employed
to make contributions to an employee's account.
<PAGE>
A SIMPLE IRA is an employer plan and a series of IRAs that
allows contributions by or for employees.
___________________________________________________________________
YOU SHOULD CONSULT YOUR TAX PROFESSIONAL FOR MORE INFORMATION ON
IRA ACCOUNTS.
8
<PAGE>
<TABLE>
<CAPTION>
HOW TO PURCHASE SHARES
<S> <C> <C>
INITIAL PURCHASE* ADDITIONAL PURCHASES*
_______________________________________________________________________
THROUGH YOUR Contact your Send any additional
INVESTMENT ADVISOR investment Advisor monies to your
or other investment investment
professional. professional at the
address appearing on
your account
statement.
_______________________________________________________________________
INVESTMENT Call (800) 358-7668 Call (800) 358-7668
ADVISORS, BANK for further for further
TRUST AND 401(k) instructions. instructions.
AGENTS ONLY
_______________________________________________________________________
DIRECT SHAREHOLDERS:
Complete the account Write a letter of
*BY MAIL application. instruction (or
complete your
Mail the application investment stub) and
and a check payable a check payable to
to The Managers The Managers Funds
Funds to: to:
The Managers Funds The Managers Funds
c/o Boston Financial c/o Boston Financial
Data Services, Inc. Data Services, Inc.
P.O. Box 8517 P.O. Box 8517
Boston, MA 02266- Boston, MA 02266-
8517 8517
Include your account
# and Fund name on
your check.
*BY TELEPHONE If your account has
already been
established, call
the Transfer Agent
at (800) 252-0682.
The minimum
additional
investment is $100.
_______________________________________________________________________
{Need to add Internet Purchase Option}
</TABLE>
*ALL PURCHASES BY CHECK ARE SUBJECT TO A 15-DAY HOLDING PERIOD.
FOR BANK WIRES: Please call and notify the Fund at (800) 358-
7668. Then instruct your bank to wire the money to State
Street Bank and Trust Company, Boston, MA 02101; ABA
#011000028; BFN The Managers Funds A/C 9905-001-5, FBO
Shareholder name, account number and Fund name. Please be
aware that your bank may charge you a fee for this service.
It is important to keep in mind that if you invest through a
third party such as a bank, broker-dealer or other fund
distribution organizations rather than directly with us, the
policies and fees may be different than those described in this
material.
9
<PAGE>
HOW TO SELL SHARES
You may sell your shares at any time. Your shares will be
sold at the NAV calculated after the Fund's Transfer Agent
receives your order. Orders received after the close of regular
business of the NYSE (usually 4:00 p.m. New York Time) will
receive the NAV per share determined at the close of trading on
the next NYSE trading day.
<TABLE>
<CAPTION>
INSTRUCTIONS
______________________________________________________________________
<S> <C>
THROUGH YOUR INVESTMENT Contact your investment
ADVISOR advisor or other investment
professional.
_______________________________________________________________________
INVESTMENT ADVISORS, BANK Call (800) 358-7668 for
TRUST AND 401(k) AGENTS ONLY further instructions.
_______________________________________________________________________
DIRECT SHAREHOLDERS:
*BY MAIL Write a letter of instruction
containing:
*the name of the Fund
*dollar amount or number of
shares to be sold
*your name
*your account number
*signatures of all owners on
account
Mail letter to:
The Managers Funds
c/o Boston Financial Data
Services, Inc.
P.O. Box 8517
Boston, MA 02266-8517
*BY TELEPHONE If you elected telephone
redemption privileges on your
account application, call us
at (800)252-0682.
_______________________________________________________________________
</TABLE>
_______________________________________________________________________
Redemptions of $25,000 and over require a signature guarantee.
A signature guarantee helps to protect against fraud. You can
obtain one from most banks and securities dealers. A notary
public cannot provide a signature guarantee. In joint accounts,
both signatures must be guaranteed.
Telephone redemptions are available only for redemptions which
are below $25,000.
________________________________________________________________________
INVESTOR SERVICES
AUTOMATIC REINVESTMENT PLAN allows your dividends and capital
gain distributions to be reinvested in additional shares of the
Fund or another Fund in the Fund family. You can elect to
receive cash.
AUTOMATIC INVESTMENTS allows you to make automatic deductions
from a designated bank account.
10
<PAGE>
SYSTEMATIC WITHDRAWALS allows you to make automatic monthly
withdrawals of $100 or more per Fund. Withdrawals by check are
normally completed on the 25th day of each month. If the 25th
day of any month is a weekend or a holiday, the withdrawal will
be completed on the next business day.
INDIVIDUAL RETIREMENT ACCOUNTS are available to you at no
additional cost. Call us at (800) 835-3879 for more information
and an IRA kit.
EXCHANGE PRIVILEGE which allows you to exchange your shares
of the Fund for shares of another of our Funds. There is no fee
associated with this privilege. Be sure to read the Prospectus
of any Fund that you wish to exchange into. You can request your
exchange in writing, by telephone (if elected on the application)
or through your investment advisor, bank or investment
professional.
DOLLAR COST AVERAGING allows you to make automatic monthly
exchanges from the Fund to another of our Funds. Exchanges are
completed on the 15th day of each month. Be sure to read the
current Prospectus for any Fund that you are exchanging into.
There is no fee associated with this service. If the 15th day of
any month is a weekend or holiday, the exchange will be completed
on the next business day.
{INTERNET OPTION}
THE FUND AND ITS POLICIES
The Fund is a series of a "Massachusetts business trust."
The Board of Trustees may, without the approval of the
shareholders, create additional series at any time. Also at any
time, the Board of Trustees may, without shareholder approval,
divide this series or any other series into two or more classes
of shares with different preferences, privileges, and expenses.
The Fund reserves the right to:
* redeem an account if the value of the account falls below
$500 due to redemptions;
* suspend redemptions or postpone payments when the NYSE is
closed for any reason other than its usual weekend or
holiday closings or when trading is restricted by the
Securities and Exchange Commission;
* change our minimum investment amounts;
* delay sending out redemption proceeds for up to seven
days (this usually applies to very large redemptions
without notice, excessive trading or during unusual
market conditions);
* make a redemption-in-kind (a payment in portfolio
securities instead of in cash) if we determine that a
redemption is too large and/or may cause harm to the Fund
and its shareholders;
* refuse any purchase or exchange request if we determine
that such request could adversely affect the Fund's NAV,
including if such person or group has engaged in
excessive trading (to be determined in our discretion);
and
* after prior warning and notification, close an account
due to excessive trading.
ACCOUNT STATEMENTS
You will receive quarterly and yearly statements detailing
your account activity. All investors (other than IRA accounts)
will also receive a Form 1099-DIV in their annual statement,
detailing the tax characteristics of any dividends and
distributions that you have received in your account. You will
also receive confirmations after each trade executed in your
account.
11
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Income dividends and net capital gain distributions, if any,
are normally declared and paid annually in December.
We will automatically reinvest your distributions of
dividends and capital gains unless you tell us otherwise. You
may change your election by writing to us at least 10 days prior
to the scheduled payment date.
TAX INFORMATION
Please be aware that the following tax information is general
and refers to the provisions of the Internal Revenue Code of
1986, as amended, which are in effect as of the date of this
Prospectus. You should consult a tax adviser about the status of
your distributions from the Fund.
All dividends and short-term capital gains distributions are
generally taxable to you as ordinary income, whether you receive
the distribution in cash or reinvest it for additional shares.
An exchange of the Fund's shares for shares of another Fund will
be treated as a sale of the Fund's shares and any gain on the
transaction may be subject to federal income tax.
Keep in mind that distributions may be taxable to you at
different rates depending on the length of time the Fund held the
applicable investment and not the length of time that you held
your Fund shares. When you do sell your Fund shares, a capital
gain may be realized, except for certain tax-deferred accounts,
such as IRA accounts.
Federal law requires the Fund to withhold taxes on
distributions paid to shareholders who:
* fail to provide a social security number or taxpayer
identification number;
* fail to certify that their social security number or
taxpayer identification number is correct; or
* fail to certify that they are exempt from withholding.
12
<PAGE>
[THE MANAGERS FUNDS LOGO]
WE PICK THE TALENT. YOU REAP THE RESULTS.
INVESTMENT MANAGER AND FUND DISTRIBUTOR
The Managers Funds LLC
40 Richards Avenue
Norwalk, Connecticut 06854-2325
(203) 857-5321 or (800) 835-3879
CUSTODIAN
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
LEGAL COUNSEL
Swidler Berlin Shereff Friedman LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
TRANSFER AGENT
Boston Financial Data Services, Inc.
Attn: The Managers Funds
P.O. Box 8517
Boston, Massachusetts 02266-8517
(800) 252-0682
TRUSTEES
Jack W. Aber
William E. Chapman, II
Sean M. Healey
Edward J. Kaier
Madeline H. McWhinney
Steven J. Paggioli
Eric Rakowski
Thomas R. Schneeweis
ASSET MANAGERS
[tbd]
WWW.MANAGERSFUNDS.COM
<PAGE>
FOR MORE INFORMATION
Additional information for the Fund, including the Statement
of Additional Information and the Annual and Semi-Annual Reports,
are available to you without charge and may be requested as
follows:
By Telephone: Call 1-800-835-3879
By Mail: The Managers Funds
40 Richards Avenue
Norwalk, CT 06854
On the Internet:Electronic copies are available
on our website at http://www.managersfunds.com
Current Fund documents are on file with the Securities and
Exchange Commission and are incorporated by reference (is legally
part of this prospectus). Text-only copies are also available on
the SEC's website at http://www.sec.gov, by sending a request and
a duplication fee to the SEC's Public Reference Section,
Washington, D.C. 20549-6009, or by visiting the SEC's Public
Reference Room in Washington, DC (1-800-SEC-0330).
INVESTMENT COMPANY ACT REGISRTRATION NUMBER 811-3752
<PAGE>
THE MANAGERS FUNDS
SMALL COMPANY FUND
____________________________
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 2000
________________________________________________________________
You can obtain a free copy of the Prospectus of MANAGERS
SMALL COMPANY 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.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
GENERAL INFORMATION 4
INVESTMENT OBJECTIVES AND POLICIES 4
Investment Techniques and Associated Risks 4
Diversification Requirements for the Fund 9
Fundamental Investment Restrictions 9
Non-Fundamental Investment Restrictions 11
Temporary Defensive Position 12
Portfolio Turnover 12
BOARD OF TRUSTEES AND OFFICERS OF THE TRUST 12
Trustees' Compensation 14
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 14
Control Persons 14
Management Ownership 14
MANAGEMENT OF THE FUND 14
Investment Manager and Sub-Adviser 14
Compensation of Investment Adviser and Sub-Adviser 15
Fee Waivers and Expense Limitations 15
Fund Management and Sub-Advisory Agreements 16
Code of Ethics 17
Administrative Services; Distribution Arrangements 17
Custodian 17
Transfer Agent 18
Independent Public Accountants 18
BROKERAGE ALLOCATION AND OTHER PRACTICES 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
Additional Information 26
REPORT OF INDEPENDENT ACCOUNTANTS 26
</TABLE>
<PAGE>
GENERAL INFORMATION
This Statement of Additional Information relates only to
MANAGERS SMALL COMPANY 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, CT 06854.
Unlike other mutual funds which directly acquire and manage
their own portfolios, the Fund employs a multi-manager investment
approach which achieves added diversification within the Fund's
portfolio.
The Managers Funds LLC, a subsidiary of Affiliated Managers
Group, Inc., serves as investment manager to the Fund and is
responsible for the Fund's overall administration and
distribution. It selects and recommends, subject to the approval
of the Board of Trustees (the "Trustees"), an independent asset
manager, or a team of independent asset managers (the "Sub-
Adviser" or "Sub-Advisers") to manage the Fund's investment
portfolio. The Managers Funds LLC (the "Investment Manager") also
monitors the performance, security holdings and investment
strategies of these independent, external Sub-Advisers and
researches any potential new Sub-Advisers for the Fund family.
See "Management of the Fund."
Investments in the Fund are not:
* Deposits or obligations of any bank
* Guaranteed or endorsed by any bank
* Federally insured 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 its objective as stated in its current Prospectus.
The Fund is a diversified open-end management investment company.
The Fund is designed for investors who seek capital
appreciation by investing in a diversified portfolio of equity
securities of small and medium-sized companies. The Fund seeks
to achieve this objective by investing at least 65% of its total
assets in the equity securities of U.S. companies whose shares
have a market capitalization of under $1.5 billion.
INVESTMENT TECHNIQUES AND ASSOCIATED RISKS
The following are descriptions of the types of securities
that may be purchased by the Fund. Also see "Diversification
Requirements of the Fund."
(1) Cash Equivalents. The Fund may invest in cash
equivalents. Cash equivalents include certificates of deposit,
bankers acceptances, commercial paper, short-term corporate debt
securities and repurchase agreements.
BANKERS ACCEPTANCES. The Fund may invest in bankers
acceptances. Bankers acceptances are short-term credit
instruments used to finance the import, export, transfer or
storage of goods. These instruments become "accepted" when a
bank guarantees their payment upon maturity.
Eurodollar bankers acceptances are bankers acceptances
denominated in U.S. Dollars and are "accepted" by foreign
branches of major U.S. commercial banks.
<PAGE>
CERTIFICATES OF DEPOSIT. The Fund may invest in certificates
of deposit. Certificates of deposit are issues against money
deposited into a bank (including eligible foreign branches of
U.S. banks) for a definite period of time. They earn a specified
rate of return and are normally negotiable.
COMMERCIAL PAPER. The Fund may invest in commercial paper.
Commercial Paper refers to promissory notes that represent an
unsecured debt of a corporation or finance company. They have a
maturity of less than 9 months. Eurodollar commercial paper
refers to promissory notes payable in U.S. Dollars by European
issuers.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements with brokers, dealers or banks that meet the credit
guidelines which have been approved by the Investment Manager.
In a repurchase agreement, the Fund buys a security from a bank
or a broker-dealer that has agreed to repurchase the same
security at a mutually agreed upon date and price. The resale
price normally is the purchase price plus a mutually agreed upon
interest rate. This interest rate is effective for the period of
time the Fund is invested in the agreement and is not related to
the coupon rate on the underlying security. The period of these
repurchase agreements will be short, and at no time will the Fund
enter into repurchase agreements for more than seven days.
Repurchase agreements could have certain risks that may
adversely affect the Fund. If a seller defaults, the Fund may
incur a loss if the value of the collateral securing the
repurchase agreement declines and may incur disposition costs in
connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to a seller of
the security, realization of disposition of the collateral by the
Fund may be delayed or limited.
(2) Reverse Repurchase Agreements. The Fund may enter into
reverse repurchase agreements. In a reverse repurchase
agreement, the Fund sells a security and agrees to repurchase the
same security at a mutually agreed upon date and price. The
price reflects the interest rates in effect for the term of the
agreement. For the purposes of the Investment Company Act of
1940, as amended (the "1940 Act"), a reverse repurchase agreement
is also considered as the borrowing of money by the Fund and,
therefore, a form of leverage which may cause any gains or losses
for the Fund to become magnified.
The Fund will invest the proceeds of borrowings under reverse
repurchase agreements. In addition, the Fund will enter into
reverse repurchase agreements only when the interest income to be
earned from the investment of the proceeds is more than the
interest expense of the transaction. The Fund will not invest
the proceeds of a reverse repurchase agreement for a period that
is longer than the reverse repurchase agreement itself. The Fund
will establish and maintain a separate account with the custodian
that contains a segregated portfolio of securities in an amount
which is at least equal to the amount of its purchase obligations
under the reverse repurchase agreement.
(3) Foreign Securities. The Fund 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 Fund'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 Fund'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.
<PAGE>
(4) Futures Contracts. The Fund may buy and sell futures
contracts to protect the value of the Fund's portfolio against
changes in the prices of the securities in which it invests.
When the Fund buys or sells a futures contact, the Fund must
segregate cash and/or liquid securities equivalent to the value
of the contract.
There are additional risks associated with futures contracts.
It may be impossible to determine the future price of the
securities, and securities may not be marketable enough to close
out the contract when the Fund desires to do so.
EQUITY INDEX FUTURES CONTRACTS. The Fund may enter into
equity index futures contracts. An equity index future contract
is an agreement for the Fund to buy or sell an index relating to
equity securities at a mutually agreed upon date and price.
Equity index futures contracts are often used to hedge against
anticipated changes in the level of stock prices. When the Fund
enters into this type of contract, the Fund makes a deposit
called an "initial margin." This initial margin must be equal to
a specified percentage of the value of the contract. The rest of
the payment is made when the contract expires.
(5) Illiquid Securities, Private Placements and Certain
Unregistered Securities. The Fund may invest in privately
placed, restricted, Rule 144A or other unregistered securities.
The Fund may not acquire illiquid holdings if, as a result, more
than 15% of the Fund's total assets would be in illiquid
investments. Subject to this limitation, the Fund 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 investment is
considered "illiquid" if it cannot be disposed of within seven
(7) days in the normal course of business at approximately the
same amount at which it was valued in the Fund's portfolio. The
price the Fund's portfolio may pay 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 valuations of these securities will reflect any limitations
on their liquidity.
The Fund may purchase Rule 144A securities eligible for sale
without registration under the 1933 Act. These securities may be
determined to be illiquid in accordance with the guidelines
established by the Investment Manager and approved by the
Trustees. The Trustees will monitor these guidelines on a
periodic basis.
Investors should be aware that the Fund may be subject to a
risk if the Fund should decide to sell these securities when a
buyer is not readily available and at a price which the Fund
believes represents the security's value. In the case where an
illiquid security must be registered under the 1933 Act before it
may be sold, the Fund may be obligated to pay all or part of the
registration expenses. Therefore, a considerable time may elapse
between the time of the decision to sell and the time the Fund
may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market
conditions develop, the Fund may obtain a less favorable price
than was available when it had first decided to sell the
security.
(6) Obligations of Domestic and Foreign Banks. Banks are
subject to extensive governmental regulations. These regulations
place limitations on the amounts and types of loans and other
financial commitments which may be made by the bank and the
interest rates and fees which may be charged on these loans and
commitments. The profitability of the banking industry depends
on the availability and costs of capital funds for the purpose of
financing loans under prevailing money market conditions.
General economic conditions also play a key role in the
operations of the banking industry. Exposure to credit losses
arising from potential financial difficulties of borrowers may
affect the ability of the bank to meet its obligations under a
letter of credit.
(7) Option Contracts.
COVERED CALL OPTIONS. The Fund may write ("sell") covered
call options on individual stocks, equity indices and futures
contracts, including equity index futures contracts. Written
call options must be listed on a national securities exchange or
a futures exchange.
A call option is a short-term contract that is generally for
no more than nine (9) months. This contract gives a buyer of the
option, in return for a paid premium, the right to buy the
underlying security or contract at an agreed upon price prior to
the expiration of the option. The buyer can purchase the
underlying security or contract regardless of its market price.
A call option is considered "covered" if the Fund that is writing
the option owns or has a right to immediately acquire the
underlying security or contract.
6
<PAGE>
The Fund may terminate an obligation to sell an outstanding
option by making a "closing purchase transaction." The Fund makes
a closing purchase transaction when it buys a call option on the
same security or contract with has the same price and expiration
date. As a result, the Fund will realize a loss if the amount
paid is less than the amount received from the sale. A closing
purchase transaction may only be made on an exchange that has a
secondary market for the option with the same price and
expiration date. There is no guarantee that the secondary market
will have liquidity for the option.
There are risks associated with writing covered call options.
The Fund is required to pay brokerage fees in order to write
covered call options as well as fees for the purchases and sales
of the underlying securities or contracts. The portfolio
turnover rate of the Fund may increase due to the Fund writing a
covered call option.
COVERED PUT OPTIONS. The Fund may write ("sell") covered put
options on individual stocks, equity indices and futures
contracts, including equity index futures contracts.
A put option is a short-term contract that is generally for
no more than nine (9) months. This contract gives a buyer of the
option, in return for a paid premium, the right to sell the
underlying security or contract at an agreed upon price prior to
the expiration of the option. The buyer can sell the underlying
security or contract at the option price regardless of its market
price. A put option is considered "covered" if the Fund which is
writing the option owns or has a right to immediately acquire the
underlying security or contract. The seller of a put option
assumes the risk of the decrease of the value of the underlying
security. If the underlying security decreases, the buyer could
exercise the option and the underlying security or contract could
be sold to the seller at a price that is higher than its current
market value.
The Fund may terminate an obligation to sell an outstanding
option by making a "closing purchase transaction." The Fund makes
a closing purchase transaction when it buys a put option on the
same security or contract with the same price and expiration
date. As a result, the Fund will realize a loss if the amount
paid is less than the amount received from the sale. A closing
purchase transaction may only be made on an exchange that has a
secondary market for the option with the same price and
expiration date. There is no guarantee that the secondary market
will have liquidity for the option.
There are risks associated with writing covered put options.
The Fund is required to pay brokerage fees in order to write
covered put options as well as fees for the purchases and sales
of the underlying securities or contracts. The portfolio
turnover rate of the Fund may increase due to the Fund writing a
covered put option.
DEALER OPTIONS. Dealer Options are also known as
Over-the-Counter options ("OTC"). Dealer options are puts and
calls where the strike price, the expiration date and the premium
payment are privately negotiated. The bank's creditworthiness
and financial strength are judged by the Sub-Adviser and must be
determined to be as good as the creditworthiness and strength of
the banks to whom the Fund lends its portfolio securities.
PUTS AND CALLS. The Fund may buy options on individual
stocks, equity indices and equity futures contracts. The Fund's
purpose in buying these puts and calls is to protect itself
against an adverse affect in changes of the general level of
market prices in which the Fund operates. A put option gives the
buyer the right upon payment to deliver a security or contract at
an agreed upon date and price. A call option gives the buyer the
right upon payment to ask the seller of the option to deliver the
security or contract at an agreed upon date and price.
(8) Rights and Warrants. The Fund may purchase rights and
warrants. Rights are short-term obligations issued in
conjunction with new stock issues. Warrants give the holder the
right to buy an issuer's securities at a stated price for a
stated time.
(9) Securities Lending. The Fund may lend its portfolio
securities in order to realize additional income. This lending
is subject to the Fund's investment policies and restrictions.
Any loan of portfolio securities must be secured at all times by
collateral that is equal to or greater than the value of the
loan. If a seller defaults, the Fund may use the collateral to
satisfy the loan. However, if the buyer defaults, the buyer may
lose some rights to the collateral securing the loans of
portfolio securities.
7
<PAGE>
(10) Segregated Accounts. The Fund will establish a
segregated account with its custodian after it has entered into
either a repurchase agreement or certain options, futures and
forward contracts. The segregated account will maintain cash
and/or liquid securities that are equal in value to the
obligations in the agreement.
(11) Short Sales. The Fund may enter into short sales.
The Fund enters into a short sale when it sells a security that
it does not own. A broker retains the proceeds of the sales
until the Fund replaces the sold security. The Fund arranges
with the broker to borrow the security. The Fund must replace
the security at its market price at the time of the replacement.
As a result, the Fund may have to pay a premium to borrow the
security and the Fund may, but will not necessarily, receive any
interest on the proceeds of the sale. The Fund must pay to the
broker any dividends or interest payable on the security until
the security is replaced. Collateral, consisting of cash, or
marketable securities, is used to secure the Fund's obligation to
replace the security. The collateral is deposited with the
broker. If the price of the security sold increases between the
time of the sale and the time the Fund replaces the security, the
Fund will incur a loss. If the price declines during that
period, the Fund will realize a capital gain. The capital gain
will be decreased by the amount of transaction costs and any
premiums, dividends or interest the Fund will have to pay in
connection with the short sale. The loss will be increased by
the amount of transaction costs and any premiums, dividends or
interest the Fund will have to pay in connection with the short
sale. For tax planning reasons, the Fund may also engage in
short sales with respect to a security that the Fund currently
holds or has a right to acquire, commonly referred to as a "short
against the box."
(12) When-Issued Securities. The Fund may purchase
securities on a when-issued basis. The purchase price and the
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 these securities is subject to market
fluctuation. For fixed-income securities, no interest accrues to
the Fund until a settlement takes place. At the time the Fund
makes a commitment to purchase securities on a when-issued basis,
the Fund will record the transaction, reflect the daily value of
the securities when determining the net asset value of the Fund,
and if applicable, calculate the maturity for the purposes of
determining the average maturity from the date of the
Transaction. At the time of settlement, a when-issued security
may be valued below the amount of the purchase price.
To facilitate these transactions, the Fund will maintain a
segregated account with the custodian that will include cash, or
marketable securities, in an amount which is at least equal to
the commitments. On the delivery dates of the transactions, the
Fund will meet its obligations from maturities or sales of the
securities held in the segregated account and/or from cash flow.
If the Fund chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it could incur a
loss or a gain due to market fluctuation. Furthermore, the Fund
may be at a disadvantage if the other party to the transaction
defaults. When-issued transactions may allow the Fund to hedge
against unanticipated changes in interest rates.
DIVERSIFICATION REQUIREMENTS FOR THE FUND
The Fund 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.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by
the Trust with respect to the Fund. 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. 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.
8
<PAGE>
The Fund may NOT:
(1) Issue senior securities. For purposes of this
restriction, borrowing money, making loans, the issuance of
shares of beneficial interest in multiple classes or series, the
deferral of Trustees' fees, the purchase or sale of options,
futures contracts, forward commitments and repurchase agreements
entered into in accordance with the Fund's investment policies,
are not deemed to be senior securities.
(2) Borrow money, except (i) in amounts not to exceed 33 1/3%
of the value of the Fund's total assets (including the amount
borrowed) taken at market value from banks or through reverse
repurchase agreements or forward roll transactions, (ii) up to an
additional 5% of its total assets for temporary purposes, (iii)
in connection with short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities and (iv)
the Fund may purchase securities on margin to the extent
permitted by applicable law. For purposes of this investment
restriction, investments in short sales, roll transactions,
futures contracts, options on futures contracts, securities or
indices and forward commitments, entered into in accordance with
the Fund's investment policies, shall not constitute borrowing.
(3) Underwrite the securities of other issuers, except to the
extent that, in connection with the disposition of portfolio
securities, the Fund may be deemed to be an underwriter under the
Securities Act of 1933.
(4) Purchase or sell real estate, except that the Fund may
(i) acquire or lease office space for its own use, (ii) invest in
securities of issuers that invest in real estate or interests
therein, (iii) invest in securities that are secured by real
estate or interests therein, (iv) purchase and sell mortgage-
related securities and (v) hold and sell real estate acquired by
the Fund as a result of the ownership of securities.
(5) Purchase or sell commodities or commodity contracts,
except the Fund may purchase and sell options on securities,
securities indices and currency, futures contracts on securities,
securities indices and currency and options on such futures,
forward foreign currency exchange contracts, forward commitments,
securities index put or call warrants and repurchase agreements
entered into in accordance with the Fund's investment policies.
(6) Make loans, except that the Fund may (i) lend portfolio
securities in accordance with the Fund's investment policies up
to 33 1/3% of the Fund's total assets taken at market value, (ii)
enter into repurchase agreements, (iii) purchase all or a portion
of an issue of debt securities, bank loan participation
interests, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is
made upon the original issuance of the securities and (iv) lend
portfolio securities and participate in an interfund lending
program with other series of the Trust provided that no such loan
may be made if, as a result, the aggregate of such loans would
exceed 33 1/3% of the value of the Fund's total assets.
(7) With respect to 75% of its total assets, purchase
securities of an issuer (other than the U.S. Government, its
agencies, instrumentalities or authorities or repurchase
agreements collateralized by U.S. Government securities and other
investment companies), if: (a) such purchase would cause more
than 5% of the Fund's total assets taken at market value to be
invested in the securities of such issuer; or (b) such purchase
would at the time result in more than 10% of the outstanding
voting securities of such issuer being held by the Fund.
(8) Invest more than 25% of its total assets in the
securities of one or more issuers conducting their principal
business activities in the same industry (excluding the U.S.
Government or its agencies or instrumentalities).
If any percentage restriction described above for the Fund is
adhered to at the time of investment, a subsequent increase or
decrease in the percentage resulting from a change in the value
of the Fund's assets will not constitute a violation of the
restriction.
Unless otherwise provided, for purposes of investment
restriction (8) above, the term "industry" shall be defined by
reference to the SEC Industry Codes set forth in the Directory of
Companies Required to File Annual Reports with the Securities and
Exchange Commission.
9
<PAGE>
TEMPORARY DEFENSIVE POSITION
The Fund may, at the discretion of its Sub-Adviser, invest up
to 100% of its assets in cash for temporary defensive purposes.
This strategy may be inconsistent with the Fund's principal
investment strategies and may be used in an attempt to respond to
adverse market, economic, political or other conditions. During
such a period, the Fund may not achieve its investment objective.
PORTFOLIO TURNOVER
Generally, the Fund purchases securities for investment
purposes and not for short-term trading profits. However, the
Fund may sell securities without regard to the length of time
that the security is held in the portfolio if such sale is
consistent with the Fund's investment objectives. A higher
degree of portfolio activity may increase brokerage costs to the
Fund.
The portfolio turnover rate is computed by dividing the
dollar amount of the securities which are purchased or sold
(whichever amount is smaller) by the average value of the
securities owned during the year. Short-term investments such as
commercial paper, short-term U.S. Government securities and
variable rate securities (those securities with intervals of less
than one-year) are not considered when computing the portfolio
turnover rate.
BOARD OF TRUSTEES AND OFFICERS OF THE TRUST
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, CT 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 1988, 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.
___________________________________
1 Mr. Healey is an "interested person" (as defined in the 1940 Act) of
the Trust.
10
<PAGE>
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.
11
<PAGE>
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:
<TABLE>
<CAPTION>
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)
_________________________________________________________________________
<S> <C> <C> <C>
Jack W. Aber $ $ $
William E. Chapman, II $ $ $
Sean M. Healey none none none
Edward K. Kaier $ $ $
Madeline H. McWhinney $ $ $
Steven J. Paggioli $ $ $
Eric Rakowski $ $ $
Thomas R. Schneeweis $ $ $
____________________
<FN>
(a) Compensation is calculated for the Fund's fiscal year ending
December 31, 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 December 31, 1999.
(c) Total compensation includes compensation paid during the 12-
month period ending December 31, 1999 for services as
Trustees of The Managers Funds and other Funds in The
Managers Funds LLC complex.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
CONTROL PERSONS
As of ___________, 2000, ______________ "controlled" (within
the meaning of the 1940 Act) the Fund. An entity or person which
"controls" a particular Fund could have effective voting control
over that Fund.
No other person or entity owned shares of the Fund.
MANAGEMENT OWNERSHIP
As of __________, 2000, all management personnel (i.e.,
Trustees and Officers) as a group owned beneficially less than 1%
of the outstanding shares of the Fund.
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<PAGE>
MANAGEMENT OF THE FUND
INVESTMENT MANAGER AND SUB-ADVISER
The Trustees provide broad supervision over the operations
and affairs of the Trust and the Fund. The Managers Funds LLC
serves as investment manager to and distributor of the Fund. 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 assets of the Fund are managed by two Sub-Advisers which
are selected by the Investment Manager, subject to the review and
approval of the Trustees. The Investment Manager also serves as
administrator of the Fund and carries out the daily
administration of the Trust and the Fund. The Investment Manager
and its corporate predecessors have over 20 years of experience
in evaluating Sub-Advisers for individuals and institutional
investors.
The Investment Manager recommends Sub-Advisers for the Trust
to the Trustees based upon continuing quantative and qualitative
evaluation of the Sub-Adviser's skills in managing assets subject
to specific investment styles and strategies. Unlike many other
mutual funds, the Fund benefits from independent asset manager
specialists carefully selected from the investment management
industry. Short-term investment performance, by itself, is not a
significant factor in selecting or terminating a Sub-Adviser, and
the Investment Manager does not expect to make frequent changes
of Sub-Advisers.
The Investment Manager allocates the assets of each Fund of
the Trust among the Sub-Adviser(s) selected for that Fund. The
Sub-Adviser has discretion, subject to oversight by the Trustees
and the Investment Manager, to purchase and sell portfolio
assets, consistent with the Fund's investment objectives,
policies and restrictions. Generally, the services which the
Sub-Adviser provides to the Fund are limited to asset management
and related recordkeeping services. However, a Sub-Adviser or its
affiliated broker-dealer may execute portfolio transactions for
the Fund and receive brokerage commissions, or markups, in
connection with the transaction as permitted by Sections 17(a)
and 17(e) of the 1940 Act, and the terms of any exemptive order
issued by the Securities and Exchange Commission.
The Sub-Adviser may also serve as a discretionary or
non-discretionary investment adviser to management or advisory
accounts which are unrelated in any manner to the Investment
Manager or its affiliates. The Investment Manager enters into an
advisory agreement with each Sub-Adviser known as a "Sub-Advisory
Agreement."
The Sub-Adviser(s) to the Fund are set forth below. The
information has been supplied by the respective Sub-Adviser.
[Description of Sub-Advisers]
COMPENSATION OF INVESTMENT MANAGER AND SUB-ADVISER BY THE FUND
As compensation for the investment management services
rendered and related expenses under the Fund Management
Agreement, the Fund has agreed to pay the Investment Manager an
investment management fee, which is computed daily as a
percentage of the average of the value of the net assets of the
Fund and may be paid monthly. As compensation for the investment
management services rendered and related expenses under the Sub-
Advisory Agreement, the Investment Manager has agreed to pay the
Sub-Adviser a fee (net of all mutually agreed upon fee waivers
and reimbursements required by applicable law) for managing the
portfolio, which is also computed daily and paid quarterly based
on the average daily net assets that the Sub-Adviser manages.
The fee paid to the Sub-Adviser is paid out of the fee the
Investment Manager receives from the Fund and does not increase
the expenses of the Fund.
{Fee Structure for the Fund}
FEE WAIVERS AND EXPENSE LIMITATIONS
From time to time, the Investment Manager may agree to waive
all or a portion of the fee it would otherwise be entitled to
13
<PAGE>
receive from a Fund. The Investment Manager may waive all or a
portion of its fee for a number of reasons such as passing on to
the Fund and its shareholders the benefit of reduced portfolio
management fees resulting from a waiver by a Sub-Adviser of all or
a portion of the fees it would otherwise be entitled to receive
from the Investment Manager with respect to the Fund. The
Investment Manager may also waive all or a portion of its fees
from a Fund for other reasons, such as attempting to make a Fund's
performance more competitive as compared to similar funds. The
effect of the fee waivers in effect at the date of this Statement
of Additional Information on the management fees payable by the
Funds is reflected in the tables below and in the Expense
Information (including footnotes thereto) located in the front of
each of the Fund's Prospectuses. Voluntary fee waivers by the
Investment Manager or by any Sub-Adviser may be terminated or
reduced in amount at any time and solely in the discretion of the
Investment Manager or Sub-Adviser concerned. Shareholders will be
notified of any change on or about the time that it becomes
effective. Contractual fee waivers/expense limitations can only
be terminated at the end of a term, which usually coincides with
end of a fiscal year.
FUND MANAGEMENT AND SUB-ADVISORY AGREEMENTS
The Managers Funds LLC serves as investment manager to the
Fund under the Fund Management Agreement. The Fund Management
Agreement permits the Investment Manager to from time to time
engage one or more Sub-Advisers to assist in the performance of
its services. Pursuant to the Fund Management Agreement, the
Investment Manager has entered into Sub-Advisory Agreements with
each Sub-Adviser selected for the Funds of the Trust.
The Fund Management Agreement and the Sub-Advisory
Agreements provide for an initial term of two years and
thereafter shall continue in effect from year to year so long as
such continuation is specifically approved at least annually by
the Trustees of the Trust who are not parties to the agreements
or "interested persons" (as defined in the 1940 Act) of any such
party. The Fund Management Agreement and the Sub-Advisory
Agreements may be terminated, without penalty, by the Board of
Trustees, by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) by the Investment Manager
or (in the case of the Sub-Advisory Agreement) by the Sub-Adviser
on not more than 60 days' written notice to the other party and
to the Fund. The Fund Management Agreement and the Sub-Advisory
Agreements terminate automatically in the event of assignment, as
defined under the 1940 Act and regulations thereunder.
The Fund Management Agreement provides that the Investment
Manager is specifically responsible for:
* supervising the general management and investment of
the assets and securities portfolio of each Fund;
* providing overall investment programs and strategies
for each Fund;
* selecting and evaluating the performance of Sub-
Advisers for each Fund and allocating the Fund's assets
among these Sub-Advisers;
* providing financial, accounting and statistical
information required for registration statements and
reports with the Securities and Exchange Commission;
and
* providing the Trust with the office space, facilities
and personnel necessary to manage and administer the
operations and business of the Trust, including
compliance with state and federal securities and tax
laws, shareholder communications and recordkeeping.
The Fund pays all expenses not borne by its Investment
Manager or Sub-Adviser including, but not limited to, the charges
and expenses of the Fund's custodian and transfer agent,
independent auditors and legal counsel for the Fund, all
brokerage commissions and transfer taxes in connection with
portfolio transactions, all taxes and filing fees, the fees and
expenses for registration or qualification of its shares under
federal and state securities laws, all expenses of shareholders'
and Trustees' meetings and of preparing, printing and mailing
reports to shareholders and the compensation of Trustees who are
not directors, officers or employees of the Investment Manager,
Sub-Adviser or their affiliates, other than affiliated registered
investment companies.
14
<PAGE>
The Sub-Advisory Agreement requires the Sub-Adviser to
provide fair and equitable treatment to the Fund in the selection
of portfolio investments and the allocation of investment
opportunities. However, it does not obligate the Sub-Adviser to
acquire for the Fund a position in any investment which any of
the Sub-Adviser's other clients may acquire. The Fund shall have
no first refusal, co-investment or other rights in respect of any
such investment, either for the Fund or otherwise.
Although the Sub-Adviser makes investment decisions for the
Fund independent of those for its other clients, it is likely
that similar investment decisions will be made from time to time.
When the Fund and another client of a Sub-Adviser are
simultaneously engaged in the purchase or sale of the same
security, the transactions are, to the extent feasible and
practicable, averaged as to price and the amount is allocated
between the Fund and the other client(s) pursuant to a
methodology considered equitable by the Sub-Adviser. In specific
cases, this system could have an adverse affect on the price or
volume of the security to be purchased or sold by the Fund.
However, the Trustees believe, over time, that coordination and
the ability to participate in volume transactions should benefit
the Fund.
The Trust has obtained from the Securities and Exchange
Commission an exemptive order which permits the Investment
Manager, subject to certain conditions, to enter into Sub-
Advisory Agreements with Sub-Advisers approved by the Trustees
but without the requirement of shareholder approval. Under the
terms of this exemptive order, the Investment Manager is to be
able, subject to the approval of the Trustees but without
shareholder approval, to employ new Sub-Advisers for new or
existing Finds, change the terms of a particular Sub-Advisory
Agreement or continue the employment of existing Sub-Advisers
after events that under the 1940 Act and the Sub-Advisory
Agreement would be an automatic termination of the Sub-Advisory
Agreement. Although shareholder approval will not be required
for the termination of Sub-Advisory Agreements, shareholders of a
Fund will continue to have the right to terminate such Sub-
Advisory Agreements for the Fund at any time by a vote of a
majority of the outstanding voting securities of the Fund.
CODE OF ETHICS
The Trustees have adopted a Code of Ethics under Rule 17j-1
of the 1940 Act on behalf of the Trust. The Code of Ethics of
the Trust incorporates the code of ethics of the Investment
Manager (applicable to "access persons" of the Trust that are
also employees of the Investment Manager). In combination, these
codes of ethics generally require access persons to preclear any
personal securities investment (with limited exceptions such as
government securities). The preclearance requirement and
associated procedures are designed to identify any substantive
prohibition or limitation applicable to the proposed investment.
The restrictions also include a ban on trading securities based
on information about the trading within a Fund.
ADMINISTRATIVE SERVICES; DISTRIBUTION ARRANGEMENTS
Under an Administration and Shareholder Servicing Agreement
between the Trust and the Investment Manager, the Investment
Manager also serves as Administrator (the "Administrator") of the
Trust. Under a Distribution Agreement between the Trust and the
Investment Manager, the Investment Manager 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.
15
<PAGE>
CUSTODIAN
State Street Bank and Trust Company ("State Street" or the
"Custodian"), 1776 Heritage Drive, North Quincy, Massachusetts,
is the Custodian for the Fund. It is responsible for holding all
cash assets and all portfolio securities of the Fund, releasing
and delivering such securities as directed by the Fund,
maintaining bank accounts in the names of the Fund, receiving for
deposit into such accounts payments for shares of the Fund,
collecting income and other payments due the Fund with respect to
portfolio securities and paying out monies of the Fund.
The Custodian is authorized to deposit securities in
securities depositories or to use the services of sub-
custodians, including foreign sub-custodians, to the extent
permitted by and subject to the regulations of the Securities and
Exchange Commission.
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.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, One Post Office Square, Boston,
Massachusetts 02110, is the independent public accountant for the
Fund. PricewaterhouseCoopers LLP conducts an annual audit of the
financial statements of the Fund, assists in the preparation
and/or review of each of the Fund's federal and state income tax
returns and consults with the Fund as to matters of accounting
and federal and state income taxation.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Sub-Advisory Agreements provide that the Sub-Advisers
place all orders for the purchase and sale of securities which
are held in the Fund's portfolio. In executing portfolio
transactions and selecting brokers or dealers, it is the policy
and principal objective of each Sub-Adviser to seek best price
and execution. It is expected that securities will ordinarily be
purchased in the primary markets. The Sub-Adviser shall consider
all factors that it deems relevant when assessing best price and
execution for the Fund, including the breadth of the market in
the security, the price of the security, the financial condition
and execution capability of the broker or dealer and the
reasonableness of the commission, if any (for the specific
transaction and on a continuing basis).
In addition, when selecting brokers to execute transactions
and in evaluating the best available net price and execution, the
Sub-Adviser is authorized by the Trustees to consider the
"brokerage and research services" (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as
amended), provided by the broker. The Sub-Adviser is also
authorized to cause the Fund to pay a commission to a broker who
provides such brokerage and research services for executing a
portfolio transaction which is in excess of the amount of
commission another broker would have charged for effecting that
transaction. The Sub-Adviser must determine in good faith,
however, that such commission was reasonable in relation to the
value of the brokerage and research services provided viewed in
terms of that particular transaction or in terms of all the
accounts over which the Sub-Adviser exercises investment
discretion. Brokerage and research services received from such
brokers will be in addition to, and not in lieu of, the services
required to be performed by each Sub-Adviser.
The Trustees will periodically review the total amount of
commissions paid by the Fund to determine if the commissions paid
over representative periods of time were reasonable in relation
to commissions being charged by other brokers and the benefits to
the Fund of using particular brokers or dealers. It is possible
that certain of the services received by the Sub-Adviser
attributable to a particular transaction will primarily benefit
one or more other accounts for which investment discretion is
exercised by the Sub-Adviser.
16
<PAGE>
The fees of the Sub-Adviser are not reduced by reason of
their receipt of such brokerage and research services.
Generally, the Sub-Adviser does not provide any services to the
Fund except portfolio investment management and related
recordkeeping services.
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.
17
<PAGE>
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.
18
<PAGE>
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.
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
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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
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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. Since the Fund is scheduled to commence
operations on May 1, 2000, there is no current performance
information for the Fund.
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TOTAL RETURN
The Fund may advertise performance in terms of average
annual total return for 1-, 5- and 10-year periods, or for such
lesser periods that the Fund has been in existence. Average
annual total return is computed by finding the average annual
compounded rates of return over the periods that would equate the
initial amount invested to the ending redeemable value, according
to the following formula:
P (1 + T) N = ERV
In the above formula, P = a hypothetical initial payment of
$1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of the hypothetical $1,000 payment
made at the beginning of the 1-, 5- or 10-year periods at the end
of the year or period
The figure is then annualized. The formula assumes that any
charges are deducted from the initial $1,000 payment and assumes
that all dividends and distributions by the Fund are reinvested
at the price stated in the Prospectus on the reinvestment dates
during the period.
PERFORMANCE COMPARISONS
The Fund may compare its performance to the performance of
other mutual funds having similar objectives. This comparison
must be expressed as a ranking prepared by independent services
or publications that monitor the performance of various mutual
funds such as Lipper, Inc. ("Lipper") and Morningstar, Inc.,
("Morningstar"). Lipper prepares the "Lipper Composite Index," a
performance benchmark based upon the average performance of
publicly offered stock funds, bond funds, and money market funds
as reported by Lipper. Morningstar, a widely used independent
research firm, also ranks mutual funds by overall performance,
investment objectives and assets. The Fund's performance may
also be compared to the performance of various unmanaged indices
such as the Russell 2000 Index, Standard & Poor's 500 Composite
Stock Price Index, the Standard & Poor's 400 Composite Stock
Price Index or the Dow Jones Industrial Average.
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
22
<PAGE>
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.
See "Massachusetts Business Trust" above.
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 dollar of net asset value (or a proportionate fractional
vote in respect of a fractional dollar amount), 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
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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 Fund,
to the extent required by the 1940 Act.
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.
24
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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 _______.
* j.2 Power of Attorney for the Registrant dated June 4, 1999.
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.
{ADD Details of Blue Sky Contract???}
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.
<PAGE>
Exhibit j.2
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 4th day of June, 1999.
THE MANAGERS FUNDS
By:/s/Donald S. Rumery
Donald S. Rumery
Secretary
Signature Capacity Date
Jack W. Aber* Trustee June 4, 2000
Jack W. Aber
William E. Chapman, II* Trustee June 4, 2000
William E. Chapman, II
Sean M. Healey* Trustee June 4, 2000
Sean M. Healey
Edward J. Kaier* Trustee June 4, 2000
Edward J. Kaier
Madeline H. McWhineey* Trustee June 4, 2000
Madeline H. McWhinney
Steven J. Paggioli* Trustee June 4, 2000
Steven J. Paggioli
Eric Rakowski* Trustee June 4, 2000
Eric Rakowski
Thomas R. Schneeweis* Trustee June 4, 2000
Thomas R. Schneeweis
Peter Lebovitz* President and Principal June 4, 2000
Peter Lebovitz Executive Officer
By:/s/Donald S. Rumery
*Donald S. Rumery pursuant to power of attorney dated June 4, 2000 filed
herewith.
______________________________
[FN]
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.
</FN>
