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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
[LONGLEAF PARTNERS LOGO]
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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 Internal Revenue Code
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 a 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. In addition, the Funds 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 FUNDS TO NEW INVESTORS
Longleaf Partners Fund and Longleaf Partners Small-Cap Fund are closed to new
investors until further notice. Shareholders who redeem their accounts below the
initial investment minimum of $10,000 may not make further investments until the
Funds re-open. The Funds remain open to the following investors or their
clients:
- Shareholders of the particular Fund on the date of its closing and
their immediate family members.
- Shareholders who had an account balance of at least $250,000 in one
of the Longleaf Funds on July 31, 1997.
- Financial advisors, consultants, or institutions having clients
invested in the particular Fund on July 31, 1997.
- Institutions or affiliates having an investment advisory relationship
with Southeastern Asset Management, Inc. of at least $2,000,000, and
employees and affiliates of Southeastern Asset Management, Inc. and
their relatives.
