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LONGLEAF PARTNERS FUND
LONGLEAF PARTNERS SMALL-CAP FUND
Series of
LONGLEAF PARTNERS FUNDS TRUST
Investment Counsel
SOUTHEASTERN ASSET MANAGEMENT, INC.
6075 Poplar Ave., Suite 900
Memphis, TN 38119
(800) 488-4191 (901) 761-2474
[LOGO LONGLEAF PARTNERS]
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SUPPLEMENT TO PROSPECTUS DATED MARCH 24, 1997
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CHANGES IN DIVERSIFICATION RULES AND INVESTMENT RESTRICTIONS
At the 1997 Annual Meeting of Shareholders of Longleaf Partners Fund and
Longleaf Partners Small-Cap Fund on May 13, 1997, shareholders approved a number
of changes in the Funds' investment restrictions and policies, including the
following:
CHANGE TO NON-DIVERSIFIED FUNDS. The Funds have adopted as fundamental
investment policy the diversification standards of the Internal Revenue
Code, thereby changing the Funds from diversified funds under the Investment
Company Act of 1940 which requires that at least 75% of the portfolio be
diversified, to non-diversified funds using the I.R.C. diversification
standards which require that at least 50% of the portfolio be diversified.
In the diversified portion of the portfolio, no single investment may exceed
5% of net assets, and the Funds may not own more than 10% of the company's
voting securities. In the non-diversified portion, no single investment may
exceed 25% of assets.
CHANGES IN OTHER INVESTMENT RESTRICTIONS. There have been changes in other
investment restrictions in order to increase the Funds' investment
flexibility, to manage investment risk more effectively, and to eliminate
those restrictions no longer required by state law. Some of the most
important changes include the following:
- The Funds may invest up to 30% of total assets in foreign securities.
- The Funds may use put and call options, combinations of such options
and financial futures primarily to hedge portfolio holdings to reduce
market risk, and may hedge portfolio holdings in foreign securities
with foreign currency contracts in order to minimize the risks of
changes in foreign currency valuations.
- The Funds may borrow up to 30% of total assets for temporary or
emergency purposes to clear transactions, and for investment
purposes.
The Funds are in the process of obtaining clearance of a new Prospectus and
Statement of Additional Information which describes these changes in full.
Prospective shareholders may obtain additional information by calling the Funds
at (800) 488-4191.
CLOSING OF LONGLEAF PARTNERS FUND TO NEW INVESTORS
Longleaf Partners Fund has been closed to new investors since September 15,
1995. Investors having existing accounts may add to these accounts at any time.
Should any current investor reduce that account below the minimum initial
investment of $10,000 or close the account, no further investments can be made
until the Fund has been reopened to the public.
The Fund will accept new accounts from family members and relatives of current
investors; from affiliates of current investors, which includes individuals who
are participants in a profit sharing or other retirement plan which is invested
in Longleaf Partners Fund; and from investors having private accounts managed by
Southeastern Asset Management, Inc. and affiliates of such accounts.
Longleaf Partners Small-Cap Fund, which is also offered through this Prospectus,
is not closed to new investors and continues accepting applications for new
accounts.
