Smith Breeden Sticker
Pursuant to an asset purchase agreement (the
"Agreement") among Smith Breeden Associates, Inc.
("SBA"), The Managers Funds LLC ("Managers"), and
Affiliated Managers Group, Inc., the indirect parent of
Managers ("AMG"), Managers has agreed to purchase
certain assets of SBA related to its management of the
Smith Breeden Short Duration U.S. Government Fund,
the Smith Breeden Intermediate Duration U.S.
Government Fund, and the Smith Breeden U.S. Equity
Market Plus Fund (the "Funds") and assume stated
contractual liabilities.
In a process culminating on May 18, 2000, the
Boards of Trustees of the Smith Breeden Series Fund and
the Smith Breeden Trust (the "Trusts") have approved
certain matters relating to the transactions contemplated
by the Agreement (collectively, the "SBA/Managers
Transaction"), which matters include (1) the appointment
of Managers as adviser of the Funds, (2) the appointment of
SBA as subadviser of the Funds, (3) the election of new
Trustees of the Trusts to replace the current Trustees of the
Trusts, (4) the approval of a proposed amendment to the
Trusts' Declarations of Trust to facilitate the future merger
of the Funds into the Managers fund complex, and (5) the
approval of a proposal allowing Managers to make
subsequent changes to the subadvisers of the Funds without
shareholder approval. Each of these five proposals is also
subject to the approval of the Funds' shareholders.
As a result of the Agreement and the
SBA/Managers Transaction, Smith Breeden would remain
involved in the day-to-day management of the Funds as
subadviser of the Funds. Furthermore, the investment
objectives and policies of the Funds would not change.
Managers has informed the Trusts that it intends to
make the same undertaking that SBA has made with
respect to the expenses of each Fund, as described in
footnote 3 on pages 4 and 8 of the Funds' Prospectus dated
February 2, 2000. Such undertaking would be for the
period ending March 31, 2001 and would be voluntary. In
addition, during the course of the Trustees' evaluation of
the proposals, Managers agreed that for the two-year period
following Managers' appointment as adviser, Managers
would waive its fees and/or bear expenses of each Fund to
the extent necessary to cause the daily accrual of total
expenses of that Fund to be at the annual rates of 0.88% for
the Smith Breeden Intermediate Duration U.S. Government
Fund, 0.78% for the Smith Breeden Short Duration U.S.
Government Fund, and 0.88% for the Smith Breeden U.S.
Equity Market Plus Fund (the "Expense Agreement"). The
Expense Agreement for any given Fund would not apply,
however, on any day that the total assets of that Fund are
below $50 million or if the shareholders of that Fund
approve a new investment advisory agreement or a merger
of that Fund into another mutual fund. The assets of the
Funds as of May 23, 2000 are $176.7 million, $28.0
million, and $34.5 million for the Smith Breeden U.S.
Equity Market Plus Fund, the Smith Breeden Intermediate
Duration U.S. Government Fund, and the Smith Breeden
Short Duration U.S. Government Fund, respectively.
SB sticker2.DOC
