========================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
=========
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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<Table>
[ ]Pre-Effective Amendment No. ______ [ ]Post-Effective Amendment No. ______
</Table>
================
MANAGERS TRUST I
================
(Exact Name of Registrant as Specified in Charter)
800 Connecticut Avenue, Norwalk, Connecticut 06854
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(Address of Principal Executive Offices)
(800) 252-0682
--------------
(Registrant's Telephone Number, Including Area Code
and Telephone Number)
===================================================
Donald S. Rumery
Managers Trust I
800 Connecticut Avenue, Norwalk, Connecticut 06854
(Name and Address of Agent for Service)
===================================================
Copy to: Philip H. Newman, P.C.
Goodwin Procter LLP
Exchange Place, Boston, Massachusetts 02109
__________________________________________________________________
Title of securities being registered: shares of beneficial
interest, no par value per share.
Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement becomes effective.
No filing fee is required because an indefinite number of
shares of the Registrant have previously been registered pursuant to
Section 24(f) of the Investment Company Act of 1940, as amended.
It is proposed that this filing become effective on
October 12, 2004 pursuant to Rule 488.
<Page>
================
MANAGERS TRUST I
================
CONTENTS OF REGISTRATION STATEMENT ON FORM N-14
-----------------------------------------------
This Registration Statement consists of the following documents:
Cover Sheet
Notice of Meeting
Table of Contents
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
2
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NOTICE: PLEASE COMPLETE THE
ENCLOSED PROXY BALLOT AND RETURN IT AS SOON
POSSIBLE.
FOR YOUR CONVENIENCE YOU MAY VOTE BY MAIL, BY
cALLING THE TOLL-FREE TELEPHONE NUMBER PRINTED ON
YOUR PROXY BALLOT, OR VIA THE INTERNET AT
WWW.______________.COM
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET
SAN FRANCISCO,CALIFORNIA 94105
__________, 2004
=====================================================
Fremont Global Fund
Fremont International Growth Fund
Fremont Structured Core Fund
Fremont U.S. Small Cap Fund
Fremont U.S. Micro-Cap Fund
Fremont Institutional U.S. Micro-Cap Fund
Fremont Real Estate Securities Fund
Fremont Bond Fund
Fremont California Intermediate Tax-Free Fund
Fremont Money Market Fund
=====================================================
Notice of Meeting of Shareholders
To Be Held on [DATE], 2004
Dear Valued Shareholder:
On July 14, 2004, Fremont Investment Advisors, Inc. ("FIA")
entered into an agreement with The Managers Funds LLC ("Managers"),
pursuant to which Managers will acquire the mutual fund business of
FIA, which includes twelve series of Fremont Mutual Funds, Inc.
(the "Fremont Funds"),advised by FIA, including the Fremont Global
Fund, Fremont International Growth Fund, Fremont Structured Core Fund,
Fremont U.S. Small Cap Fund, Fremont U.S. Micro-Cap Fund, Fremont
Institutional U.S. Micro-Cap Fund, Fremont Real Estate Securities
Fund, Fremont Bond Fund, Fremont California Intermediate Tax-Free
Fund and Fremont Money Market Fund (throughout this letter and the
related proxy materials we refer to these Funds as the "Existing
Funds"). In preparation for this transaction, Managers is creating
a Fund with substantially similar investment objectives, strategies
and policies as each Existing Fund, (except for certain changes in
the investment objectives, strategies and policies of the Fremont
CaliforniaIntermediate Tax-Free Fund as described in the enclosed
proxy materials), called the Managers Fremont Global Fund, Managers
International Growth Fund, Managers Structured Core Fund, Managers
Small Cap Fund, Managers Fremont Micro-Cap Fund,Managers Fremont
Institutional Micro-Cap Fund, Managers Real Estate Securities Fund,
Managers Fremont Bond Fund, Managers California Intermediate Tax-Free
Fund and Managers Fremont Money Market Fund (throughout
this letter and the related proxy materials we refer to these Funds
as the "New Funds", and to avoid confusion, we refer to the Fremont
Money Market Fund advised by Managers as "Managers Fremont Money
Market Fund"),respectively, ten funds within the family of mutual
funds advised by Managers (the "Managers Funds"). We are seeking
your approval to reorganize each Existing Fund into a corresponding
New Fund. Information regarding each of these proposed
reorganizations (the "Reorganizations") is contained in the enclosed
proxy materials. The proposed reorganizations of the other two
series of the Fremont Funds into existing series within the Managers
Funds are discussed in separate proxy materials, and will be
considered by shareholders of the Fremont Funds at the same meeting
at which the Reorganizations will be considered.
As you may recall, in January 2003, FIA announced its
intention to sell substantially all of its investment advisory
business. Following the announcement, FIA and your Board of
Directors undertook a search to find a buyer of FIA's business that
would be able to provide the shareholders of the Fremont Funds with
high quality management and shareholder services, consistent with
the standards of excellence that you have come to expect as a
shareholder of the Fremont Funds.
Managers and the Managers Funds emerged from this search
as an ideal selection. Managers is currently the investment adviser
to a family of 27 mutual funds, all of which are managed through
<Page>
subadvisors as "manager-of-managers" funds, similar to the Fremont
Funds. Managers' philosophy of selecting the "best of breed"
subadvisors for its Funds is entirely consistent with the way
we and FIA have sought to operate the Fremont Funds. Managers
is committed to providing investors with access to a complete
array of investment products and state-of-the-art shareholder
services. Consistent with this commitment and as part of its
offer to provide the same high quality products and services
to shareholders of the Fremont Funds, Managers (which is based
in Norwalk, Connecticut) will open an office in San Francisco
and will retain many key employees of FIA who are currently
responsible for providing a variety of investment management
and shareholder services to the Fremont Funds. As a
result, if the Reorganizations are approved, you and other
shareholders of the Fremont Funds, as shareholders of the Managers
Funds, will continue to be served by many members of your existing
FIA team.
In the Reorganizations, each Existing Fund will transfer all
of its assets to a corresponding New Fund. In exchange for these
assets, the New Fund will assume the stated liabilities of the
Existing Fund and deliver to shareholders of the Existing Fund
shares of the New Fund with a value equal to the value of the
Existing Fund shares immediately prior to the Reorganizations.
Each of the Reorganizations will qualify as a tax-free transaction.
Managers and FIA have agreed to share the expenses of the
Reorganizations, including proxy solicitation costs, so that
shareholders of the Fremont Funds and Managers Funds will not bear
any of these costs.
===================================================================
The Board of Directors of the Fremont Funds has unanimously
approved the Reorganizations and believes that the Reorganizations
are in the best interests of shareholders. Accordingly, your Board
recommends that you vote in favor of the Reorganizations.
===================================================================
Please read the enclosed proxy materials and consider the
information provided carefully. Your vote is very important to us.
We encourage you to complete and mail your proxy ballot promptly.
No postage is necessary if you mail it in the United States.
Alternatively, you may vote by calling the toll-free number printed
on your proxy ballot, or via the Internet at [www._____________.com].
If you have any questions about the proxy materials, or the proposed
Fund Reorganizations, please call your investment professional, or
[firm name], the Fremont Funds' proxy solicitation firm, at
_________________.
Very truly yours,
Deborah L. Duncan
Chairman & President
Fremont Mutual Funds, Inc.
<Page>
=================================
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, SUITE 2600
SAN FRANCISCO, CALIFORNIA 94105
=================================
QUESTIONS AND ANSWERS
---------------------
YOUR VOTE IS IMPORTANT!
-----------------------
Q: What is the proposal that I am being asked to vote on?
A: As a shareholder of an Existing Fund, you are being asked to
vote to approve the Reorganization of each Existing Fund of which you
are a shareholder into the corresponding New Fund (see below) pursuant
to an Agreement and Plan of Reorganization between Fremont Mutual Funds,
Inc. ("FMF") and Managers Trust I ("MTI"). In connection with each
Reorganization, the Existing Fund will transfer all of its assets to
the New Fund, the New Fund will assume all of the stated liabilities of
the Existing Fund, and you will receive shares of the New Fund (the
"New Fund Shares") with a value equal to the value of your shares of
the Existing Fund immediately prior to the Reorganization. Upon
completion of each Reorganization, you will become a shareholder of
the corresponding New Fund.
<Table>
EXISTING FUNDS OF FMF NEW FUNDS OF MTI
===================== ================
Fremont Global Fund Managers Fremont Global Fund
Fremont International Growth Fund Managers International Growth Fund
Fremont Structured Core Fund Managers Structured Core Fund
Fremont U.S. Small Cap Fund Managers Small Cap Fund
Fremont U.S. Micro-Cap Fund Managers Fremont Micro-Cap Fund
Fremont Institutional U.S. Micro-Cap Fund Managers Fremont Institutional Micro-Cap Fund
Fremont Real Estate Securities Fund Managers Real Estate Securities Fund
Fremont Bond Fund Managers Fremont Bond Fund
Fremont California Intermediate Tax-Free Fund Managers California Intermediate Tax-Free Fund
Fremont Money Market Fund Managers Fremont Money Market Fund
</Table>
Q: Has my Fund's Board of Directors approved the Reorganization?
A: Yes. The Board of Directors of FMF unanimously approved the
Reorganizations on July 7, 2004 and recommends that you vote to
approve the Reorganizations.
Q: Why is the Board recommending the Reorganizations?
A: In January 2003, FIA announced that it intended to sell
substantially all of its investment advisory business. FIA and
your Board of Directors immediately undertook a search to find a
buyer of FIA's business that would be able to provide the
shareholders of the Fremont Funds with high quality management
and shareholder services, consistent with the standards of
excellence that you have come to expect as a shareholder of the
Fremont Funds. In that search, Managers emerged as an ideal
selection. Managers is currently the adviser to a family of 27
mutual funds, all of which are managed through subadvisors in
the form of "manager-of-managers" mutual funds. Managers'
philosophy of selecting the "best of breed" subadvisors for
the Managers Funds is entirely consistent with the way FMF and
FIA have sought to operate the Fremont Funds. In addition,
Managers is committed to providing shareholders of the Managers
Funds with access to a complete array of investment products
and state-of-the-art shareholder services. Consistent with
this commitment, Managers (which is based in
6
<Page>
Norwalk, Connecticut)will open an office in San Francisco and
will retain many members of the existing FIA team, including
key individuals in the investment, manager research and
client service areas. As a result, if the Reorganizations
are approved by shareholders, you will continue to be served
by many members of your existingFIA team.
Q: Who will manage my Fund once the merger is completed?
A: Managers, as investment advisor and administrator will perform the
management function for the New Funds performed by FIA for the Existing
Funds. Each New Fund is expected to be managed in the same manner and
by the same subadvisory organization, if applicable, as its
corresponding Existing Fund. In the case of Fremont Money Market Fund
and a portion of the Managers Fremont Global Fund, Managers has agreed
to hire the personnel responsible for management of that Fund to assist
in the management of Managers Fremont Money Market Fund and a portion of
the Managers Fremont Global Fund. Information regarding Managers and
each of the subadvisors is included in the proxy materials.
Q: Will the Fund expenses that I bear indirectly as a shareholder
of an New Fund be higher than the expenses I currently bear as
a shareholder the Existing Fund?
A: Generally, no. However, the total expense ratio of Managers
Fremont Institutional Micro-Cap Fund IS anticipated to be slightly
higher than that of the corresponding Existing Fund; it is
anticipated that each other New Fund will operate with a total
expense ratio that is lower than or equal to its corresponding
Existing Fund. With this exception, this means that the expenses
you will bear as a shareholder of the New Fund will be less than
or equal to the expenses you currently bear as a shareholder of the
Existing Fund.
7
<Page>
Q: Will I, or my Fund, need to pay fees or taxes as a result
of the Reorganizations?
A: No. The Reorganizations will not trigger any sales commission
or other fees for shareholders. Also, the Reorganizations are
expected to be tax-free transactions for shareholders, the Existing
Funds and the New Funds for U.S. federal income tax purposes.
Q: How do the investment objectives and policies of the Existing
Funds and the New Funds compare?
A: The investment objectives and policies of each New Fund are
substantially the same as those of its corresponding Existing Fund.
Q: What happens if I do not wish to participate in the
Reorganization of the Existing Fund in which I own shares,
or what if I do not wish to own shares of the New Fund?
A: You may redeem your shares of the Existing Fund at any time
before the last business day prior to the closing date of the
Reorganization. After that closing date, you may also redeem your
shares of the New Fund on any day in accordance with the procedures
described in the prospectus of the Managers Funds.
Q: When will the Shareholder Meeting be held?
A: A Shareholder Meeting is scheduled to be held on _______________,
2004.
Q: When will the Reorganizations occur?
A: The approval of the Reorganization by each Existing Fund will
require the affirmative vote of a majority of the outstanding shares
of the Existing Fund. If approved, we expect the Reorganizations to
be completed by December 31, 2004, or sooner, provided all of the other
closing conditions have been satisfied.
Q: What happens if shareholders of an Existing Fund do not approve
the Reorganization?
A: In that event, the Existing Fund will not participate in the
Reorganizations, and either FMF or MTI may elect not to close any of
the Reorganizations. The Board of Directors of FMF will determine what
further action is appropriate, including the possible liquidation of
the Fund.
Q: Are any other Fremont Funds participating in a Reorganization?
A: Shareholders of two other series of the Fremont Funds will also be
voting on a reorganization of those Funds into two existing series of
the Managers Funds. Those reorganizations are discussed in separate
proxy materials, which you will also receive if you are a shareholder
of one of those two other series. If a Reorganization is not approved
with respect to any Fremont Fund, including the two other series not
discussed in these proxy materials, then either MTI or FMF may elect
not to close any of the Reorganizations.
Q: How do I vote my shares?
A: You can vote your shares by completing and signing the enclosed
proxy card(s), and mailing them in the enclosed postage paid envelope.
You may also vote your shares by calling the toll-free number on
your ballot card or via the Internet at [www._____________.com]. If
you have any questions regarding
8
<Page>
the proposals or how to vote your shares, please call the
Fremont Funds' proxy solicitation firm,[_________________]
at [telephone].
9
<Page>
======================================================
Fremont Global Fund
Fremont International Growth Fund
Fremont Structured Core Fund
Fremont U.S. Small Cap Fund
Fremont U.S. Micro-Cap Fund
Fremont Institutional U.S. Micro-Cap Fund
Fremont Real Estate Securities Fund
Fremont Bond Fund
Fremont California Intermediate Tax-Free Fund
Fremont Money Market Fund
======================================================
SERIES OF
==================================
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, SUITE 2600
SAN FRANCISCO, CALIFORNIA 94105
==================================
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR ____________, 2004
- ------------------------------------------------------------------
This is the formal notice and agenda for the special shareholder
meeting of Fremont Global Fund, Fremont International Growth Fund,
Fremont Structured Core Fund, Fremont U.S. Small Cap Fund,
Fremont U.S. Micro-Cap Fund, Fremont Institutional U.S. Micro-Cap
Fund, Fremont Real Estate Securities Fund, Fremont Bond Fund,
Fremont California Intermediate Tax-Free Fund and Fremont Money
Market Fund (collectively, the "Existing Funds"), each a series
of Fremont Mutual Funds, Inc. ("FMF"). This notice tells the
shareholders of the Existing Funds what proposals will be voted
on and the time and place of the meeting. We refer in this
notice (and the proxy materials included with the notice) to
the Managers Fremont Global Fund, Managers International Growth
Fund, Managers Structured Core Fund, Managers Small Cap Fund,
Managers Fremont Micro-Cap Fund, Managers Fremont Institutional
Micro-Cap Fund, Managers Real Estate Securities Fund, Managers
Fremont Bond Fund, Managers California Intermediate Tax-Free
Fund and Managers Fremont Money Market Fund as the "New Funds",
each a series of Managers Trust I ("MTI"). We refer to the Existing
Funds and the New Funds together as the "Funds."
- -----------------------------------------------------------------
To the Shareholders of the Fremont Funds:
A special meeting of shareholders of Fremont Global Fund,
Fremont International Growth Fund, Fremont Structured Core Fund,
Fremont U.S. Small Cap Fund, Fremont U.S. Micro-Cap Fund, Fremont
Institutional U.S. Micro-Cap Fund, Fremont Real Estate Securities
Fund, Fremont Bond Fund, Fremont California Intermediate Tax-Free
Fund and Fremont Money Market Fund will be held on [date], at
10:00 a.m. (Pacific Time) at 333 Market Street, Suite 2600, San
Francisco, California 94105 (the "Meeting").
At the Meeting, we will ask you to vote on:
1. A proposal to approve the reorganization of each Existing
Fund in which you own shares into a corresponding New Fund
in exchange for shares of the New Fund (the Reorganization")
10
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2. Any other business that properly comes before the Meeting.
Only shareholders of record of the Existing Funds as of
the close of business on ___________, 2004 are entitled to
receive this notice and vote at the Meeting. Whether or
not you expect to attend the meeting, please complete and
return the enclosed proxy ballot (voting instruction card).
By Order of the Board of Directors of
Fremont Mutual Funds, Inc.
Deborah L. Duncan
Chairman & President
__________________, 2004
=============================================================
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF
SHARES THAT YOU ARE ENTITLED TO VOTE.
=============================================================
11
<Page>
___________________, 2004
===========================================
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, SUITE 2600
SAN FRANCISCO, CALIFORNIA 94105
[telephone]
MANAGERS TRUST I
800 CONNECTICUT AVENUE
NORWALK, CONNECTICUT 06854
1-800-835-3879
=============================================
WHAT IS THIS DOCUMENT AND WHY WE ARE SENDING IT TO YOU?
- -------------------------------------------------------
This document is both the proxy statement of the ten
Existing Funds listed below and a prospectus for the ten New
Funds, and we refer to this document as the "Proxy
Statement/Prospectus." It contains the information that
shareholders of the Existing Funds should know before voting
on the proposals before them, and should be retained for
future reference. At the Meeting, holders of shares of
each Existing Fund will vote shares with respect to each
Existing Fund separately. Any Existing Fund whose
shareholders do not approve its Reorganization will not
participate in the Reorganizations. Any such Existing Fund
will continue its operations beyond the date of the
Reorganizations, and the Board of Directors of FMF will consider
what further action is appropriate. If the Reorganizations are
approved, we expect them to be completed by December 31, 2004,
or sooner, provided all of the other closing conditions have been
satisfied.
HOW WILL THE REORGANIZATIONS WORK?
- ----------------------------------
The Reorganization of each Existing Fund will involve
three steps:
(1) the transfer of all of the assets of the Existing
Fund to its corresponding New Fund in exchange for
the assumption by the New Fund of stated
liabilities of the Existing Fund and the delivery
to the Existing Fund of shares of the corresponding
New Fund with a value equal to the value of the
assets transferred by the Existing Fund, net of the
liabilities assumed by the New Fund (all as
determined immediately prior to the transaction);
(2) the pro rata distribution of the same or comparable
class of shares of the New Fund to the shareholders
of record of the Existing Fund as of the effective
date of the Reorganizations in full redemption of
all shares of the Existing Fund; and
(3) the liquidation and termination of the Existing
Funds.
As a result of the Reorganizations, shareholders of each
Existing Fund will receive shares of the corresponding New Fund,
as identified in the chart below. The total value of the New Fund
shares that you receive in a Reorganization will be the same as
the total value of the shares of the Existing Fund that you held
immediately before the Reorganization.
=======================================================
The Securities and Exchange Commission has not approved
or disapproved of these securities or passed upon the
adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
=======================================================
12
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<Table>
FMF EXISTING FUNDS MTI NEW FUNDS
- ------------------ -------------
Fremont Global Fund Managers Fremont Global Fund
Fremont International Growth Fund Managers International Growth Fund
Fremont Structured Core Fund Managers Structured Core Fund
Fremont U.S. Small Cap Fund Managers Small Cap Fund
Fremont U.S. Micro-Cap Fund Managers Fremont Micro-Cap Fund
Fremont Institutional U.S. Micro-Cap Fund Managers Fremont Institutional Micro-Cap Fund
Fremont Real Estate Securities Fund Managers Real Estate Securities Fund
Fremont Bond Fund Managers Fremont Bond Fund
Fremont California Intermediate Tax-Free Fund Managers California Intermediate Tax-Free Fund
Fremont Money Market Fund Managers Fremont Money Market Fund
</Table>
IS ADDITIONAL INFORMATION ABOUT THE FUNDS AVAILABLE?
- ----------------------------------------------------
Yes, additional information about the Funds is available in the:
* Prospectuses for the Existing Funds and the New
Funds;
* Annual and Semi-Annual Reports to shareholders
of the Existing Funds; and
* Statements of Additional Information, or "SAIs,"
for the Existing Funds and for the New Funds.
These documents are on file with the Securities and Exchange
Commission, which we refer to in the Proxy Statement/Prospectus as
the "SEC."
The effective prospectuses of the Existing Funds and the
New Funds, and Management's Discussion of Fund Performance
included in the Existing Funds' most recent Annual Report, are
incorporated by reference (meaning such documents are legally
considered to be part of this Proxy Statement/Prospectus). The
SAI relating to this Proxy Statement/Prospectus dated _______________,
2004 also is incorporated by reference and is legally considered
to be part of this document. There is also an Agreement and Plan
of Reorganization (the "Plan") between FMF and MTI that describes
the technical details of how the Reorganization will be
accomplished. A copy of the Plan is attached as Appendix A.
A prospectus for each New Fund accompanies this Proxy
Statement/Prospectus. The New Funds will not commence operations
until the Reorganizations are completed. The prospectus and the
most recent annual report to shareholders of the Existing Funds,
containing audited financial statements for the most recent
fiscal year, have been previously mailed to shareholders. Each
Existing Fund was previously advised by Fremont Investment
Advisors, Inc., which we refer to as "FIA." Each New Fund is
advised by The Managers Funds LLC, which we refer to as
"Managers." Thus, if the Reorganizations are approved,
shareholders of each Existing Fund will own shares of the
corresponding New Fund, which is advised by Managers. However,
each New Fund is expected to be managed in the same manner and
by the same advisory organization as its corresponding Existing
Fund. Certain personnel of FIA will be retained by Managers
after the Reorganizations. Armstrong Shaw Associates, Inc.,
First Quadrant, L.P., Jarislowsky, Fraser Limited, Kern Capital
Management LLC, and Northstar Capital Management, Inc., the
subadvisors to Fremont Global Fund, Jarislowsky, Fraser Limited,
the subadvisor to Fremont International Growth Fund, First
Quadrant, L.P., the subadvisor to Fremont Structured Core Fund,
13
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TimesSquare Capital Management, Inc., the subadvisor to Fremont
U.S. Small Cap Fund, Kern Capital Management LLC, the subadvisor
to Fremont U.S. Micro-Cap Fund and Fremont Institutional U.S.
Micro-Cap Fund, Urdang Securities Management, Inc., the
subadvisor to Fremont Real Estate Securities Fund and Pacific
Investment Management Company, LLC, the subadvisor to Fremont
Bond Fund, will also continue to have day-to-day portfolio
management responsibility as subadvisor for the corresponding
New Funds.
Copies of all of these documents are available upon
request without charge by writing to or calling:
The Managers Funds LLC Fremont Mutual Funds, Inc.
800 Connecticut Avenue 333 Market Street, Suite 2600
Norwalk, Connecticut 06854 San Francisco, California 94105
Attention: Operations Attention: Operations
You also may view or obtain copies of these documents
from the SEC:
In Person: At the SEC's Public Reference Room
in Washington, D.C.
By Phone: 1-800-SEC-0330
By Mail: Public Reference Section
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549-6009
(duplicating fee required)
By Email: publicinfo@sec.gov
(duplicating fee required)
By Internet: www.sec.gov
(Managers Trust I for information
on the New Funds)
(Fremont Mutual Funds, Inc. for
information on the Existing Funds)
www.managersfunds.com
www.fremontfunds.com
OTHER IMPORTANT THINGS TO NOTE:
- -------------------------------
* An investment in the New Funds is not a deposit
in a bank and is not insured or guaranteed by
the FDIC or any other government agency.
* You may lose money by investing in the Funds.
14
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TABLE OF CONTENTS
-----------------
Page
I. SYNOPSIS 1
== ======== ==
The Reorganizations 1
Federal Income Tax Consequences 1
Investment Objectives and Policies 1
Principal Risk Factors 7
Comparison of Fees and Expenses 12
Distribution and Purchase Procedures,
Exchange Rights and Redemption Procedures 38
II. THE REORGANIZATIONS 39
=== =================== ==
Description of the Reorganizations 39
Reasons for the Reorganizations 39
Terms of the Reorganizations 39
Board Consideration of the Reorganizations 41
Federal Income Tax Consequences 43
Fees and Expenses of the Reorganizatons 44
III. SUMMARY OF DIFFERENCES BETWEEN THE
EXISTING AND NEW FUNDS 45
==== ================================== ==
Comparison of Business Structure 45
Comparative Information on Fundamental
Investment Restrictions 48
Existing and Pro Forma Capitalizations 48
Comparison of Investment Advisers and
Investment Advisory Fees 52
Other Principal Service Providers 62
IV. INFORMATION ON VOTING 63
=== ===================== ==
Proxy Solicitation 63
Revocability of Proxies 63
Voting Procedures 63
Annual Meetings and Shareholder Meetings 64
Interest of Certain Persons in the
Transactions 64
i
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I. SYNOPSIS
================
The Reorganizations
-------------------
Under a Purchase Agreement dated July 14, 2004 among
Managers, FIA and Fremont Investors, Inc., the parent company
of FIA, Managers agreed to purchase a substantial part of the
investment advisory business of FIA, the investment adviser to
the Existing Funds. We refer to this purchase as the "Acquisition."
As part of the Acquisition, FIA agreed to use commercially
reasonable efforts to obtain the Existing Funds' Board's approval
of the reorganization of the Existing Funds (each a series of FMF)
into the New Funds (each a series of MTI) (the "Reorganizations").
FIA also agreed to use commercially reasonable efforts to help
prepare these proxy solicitation materials, process them through
the SEC and obtain the necessary shareholder approvals.
In connection with the Acquisition, the Board of FMF and
the Board of MTI approved the Reorganizations. The Existing Funds
called this special shareholders' meeting to allow the shareholders
of each Existing Fund to vote on the proposed Reorganizations of
the Existing Funds into the New Funds.
Federal Income Tax Consequences
-------------------------------
The Reorganizations are not intended to result in the
recognition of income, gain or loss for U.S. federal income tax
purposes. The receipt by the New Funds and the Existing Funds
of an opinion of counsel to the effect that each Reorganization
will be treated as a tax-free transaction for U.S. federal
income tax purposes to the Existing Funds and their shareholders
and the New Funds is a condition to the closing of the
Reorganizations. See "The Reorganizations -- Federal Income Tax
Consequences."
Investment Objectives and Policies
----------------------------------
As shown below, the investment objectives and policies of
each New Fund are substantially the same as those of its
corresponding Existing Fund, except as described below with
respect to the Fremont California Intermediate Tax-Free Fund.
Fremont Global Fund and Managers Fremont Global Fund
- ----------------------------------------------------
The investment objective of Fremont Global Fund is to
maximize total return while reducing risk by investing in U.S.
and international stocks, bonds, and short-term securities (cash),
while the investment objective of Managers Fremont Global Fund
is to maximize total return. Managers Fremont Global Fund seeks
to achieve its objective while reducing risk by investing in U.S.
and international stocks, bonds and short-term securities.
Both Funds have substantially similar investment policies and
strategies. Each Fund's investment objective is a fundamental
policy and may not be changed without shareholder approval.
Each Fund intends to meet its investment objective by
prudent asset allocation among stocks, bonds (including inflation-
linked bonds) and cash (including stock and bond index futures),
and through global diversification. Each Fund invests in growth
and value stocks of all market capitalizations and bonds rated
investment grade (Baa/BBB or better) with an average duration
between four and seven years (duration measures how bond prices
change in response to interest rate changes). Normally, each
Fund will invest in at least three countries, including the
United States. To determine the allocation to each asset class,
management of each Fund: (i) develops global economic and
financial forecasts; and (ii) examines financial market
valuations to determine the most advantageous mix of stocks,
bonds, and cash.
<Page>
The portfolio manager of each Fund selects individual
securities based on intensive quantitative and
fundamental analysis. Management of each Fund will normally
sell a security when it no longer represents good value, when
greater risk/return potential exists in an alternative position,
or when the security no longer fits with the strategy of the
portfolio. From time to time, each Fund may invest a portion
of its assets in money market securities as a temporary
defensive measure. When each Fund invests in the foregoing,
it may not achieve its investment objective.
Fremont International Growth Fund and
Managers International Growth Fund
- -------------------------------------
The investment objective of both Fremont International
Growth Fund and Managers International Growth Fund is long-term
capital appreciation. Both Funds have substantially similar
investment policies and strategies. Each Fund's investment
objective is a fundamental policy and may not be changed without
shareholder approval.
Each Fund intends to meet its investment objective by
investing primarily in international stocks. Management of each
Fund focuses its investments on stocks of international companies
that possess superior growth prospects and are reasonably priced
at the time of purchase. Although each Fund invests primarily in
developed countries, the Funds may invest to some extent in
emerging markets. Normally, management of Fremont International
Growth Fund will invest at least 90% of the Fund's total assets in
securities of issuers based outside the U.S., while management of
Managers International Growth Fund will invest at least 80% of the
Fund's total assets in such securities. This difference is intended
to provide Managers International Growth Fund with additional
flexibility. Each Fund invests primarily in mid to large
capitalization foreign stocks and will generally include investments
in at least three countries outside the U.S. As of December 31, 2003,
the median market cap of the companies held by Fremont International
Growth Fund was $31.9 billion. Management of each Fund uses a
fundamental, bottom-up stock selection process that focuses on the
following four criteria: (i) the company's industry should be
growing faster than the global GDP; (ii) the company should have
sound financials, a clear business plan, and offer products or
services that will allow the Fund management team to forecast
earnings for three to five years; (iii) the company should have
proven leaders with successful track records; and (iv) the company's
stock should be selling at acceptable valuation relative to current
and historical growth rates, industry growth rate, and its peer
group. Management of each Fund will normally sell a security when
the company's growth rate is threatened, current valuation levels
cannot be justified by future growth, or valuation exceeds short-term
prospects. From time to time, each Fund may invest a portion of its
assets in money market securities as a temporary defensive measure.
When each Fund invests in the foregoing, it may not achieve its
investment objective.
Fremont Structured Core Fund and Managers Structured Core Fund
- --------------------------------------------------------------
The investment objective of both Fremont Structured Core Fund
and Managers Structured Core Fund is long-term capital appreciation.
Both Funds have substantially similar investment policies and
strategies. Each Fund's investment objective is a fundamental
policy and may not be changed without shareholder approval.
Each Fund intends to meet its investment objective by
investing primarily in the stocks of large U.S. companies. As of
December 31, 2003, the median market capitalization of the companies
held by the Fremont Structured Core Fund was $52.3 billion.
Normally, each Fund will invest at least 65% of its total assets in
these large cap stocks. With the help of quantitative analysis,
management of each Fund seeks "growth at a reasonable price,"
meaning management looks for companies with superior growth
prospects that are also good values. The goal is to provide
investors with a core holding through a diversified portfolio with
both growth potential and minimal risk. When implementing this
2
<Page>
structured investment strategy, management of each Fund: (i) uses
a sophisticated computer model to evaluate a broad universe of
3,000 of the largest stocks, representing approximately 98% of the
U.S. market; (ii) identifies stocks that are relatively inexpensive
and have rising earnings expectations and are well positioned to
benefit from the current market and economic environment; and
(iii) aims to keep the portfolio turnover rate below the industry
average over the long-term. Management of each Fund will normally
sell a security when: (i) it is no longer reasonably priced, (ii)
the market and economic environment are no longer attractive, or
(iii) the stock substantially increases portfolio risk relative to
the market. From time to time, each Fund may invest a portion of
its assets in money market securities as a temporary defensive
measure. When each Fund invests in the foregoing, it may not
achieve its investment objective.
Fremont U.S. Small Cap Fund and Managers Small Cap Fund
- -------------------------------------------------------
The investment objective of both Fremont U.S. Small Cap Fund
and Managers Small Cap Fund is long-term capital appreciation. Both
Funds have substantially similar investment policies and strategies.
Each Fund's investment objective is a fundamental policy and may not
be changed without shareholder approval.
Each Fund intends to meet its investment objective by
investing primarily in the common and preferred stocks of U.S. small
cap companies. These companies generally have market capitalizations
of between $50 million and $1.5 billion at the time of initial
purchase. Normally, each Fund will invest at least 80% of its
assets in the stocks of U.S. small cap companies. Each Fund's
policy of investing 80% of its assets in U.S. small cap companies
may be changed only upon 60 days' written notice to shareholders.
Each Fund generally focuses on growing companies that are selling
at attractive valuations. Management of each Fund is committed to
keeping a small cap focus for the overall portfolio, but is not
obligated to sell a security that has appreciated beyond the small
capitalization range. Management of each Fund utilizes a fundamental,
bottom-up process to identify companies: (i) which demonstrate
consistent and sustainable revenue and earnings growth and offer
distinct, sustainable competitive advantages; (ii) that have strong,
experienced management teams; (iii) whose stock is selling at
reasonable valuations that Fund management believes have the
potential to appreciate in price by 25%-50% within the next 12 to
18 months. Management of each Fund diversifies the portfolio by
applying sector and security weighting limitations. Generally,
each Fund will not invest more than 5% of assets in any one
security. Each Fund's management will normally sell a security
when: (i) it no longer meets the Fund's investment criteria;
(ii) management believes the company issuing the security is
unable to sustain a competitive advantage; (iii) management
anticipates a deterioration in the company's fundamentals; or
(iv) management determines that the security is overvalued. From
time to time, each Fund may invest a portion of its assets in
money market securities as a temporary defensive measure. When
each Fund invests in the foregoing, it may not achieve its
investment objective.
Fremont U.S. Micro-Cap Fund and Managers Fremont Micro-Cap Fund
- ---------------------------------------------------------------
The investment objective of both Fremont U.S. Micro-Cap
Fund and Managers Fremont Micro-Cap Fund is long-term capital
appreciation. Both Funds have substantially similar investment
policies and strategies. Each Fund's investment objective is a
fundamental policy and may not be changed without shareholder
approval.
Each Fund intends to meet its investment objective by
investing in stocks of U.S. micro-cap companies. These companies
have market capitalizations that, at the time of initial purchase,
place them among the smallest 5% of companies listed on U.S.
exchanges or over-the-counter. Normally, each Fund will invest
at least 80% of its assets in U.S. micro-cap stocks. Each Fund's
policy of investing 80% of its assets
3
<Page>
in U.S. micro-cap companies may be changed only upon 60 days'
written notice to shareholders. Management of each Fund is
committed to keeping a micro-cap focus for the overall portfolio,
but is not obligated to sell a security that has appreciated
beyond the micro-cap capitalization range. Management of each
Fund seeks to identify companies early in their growth cycle.
Emphasis is placed on those companies possessing a
variety of characteristics, such as a leading market position, an
entrepreneurial management team, and a focused business plan.
Management of each Fund may also consider companies whose growth
potential has been enhanced by products, market opportunities, or
new management. To select stocks, management of each Fund:
(i) focuses on business sectors where they believe the level of
innovation is greatest, such as technology, health care, consumer,
and services; (ii) uses fundamental analysis to identify small,
relatively unknown companies that exhibit the potential to become
much larger and more successful; and (iii) meets with corporate
managers to discuss business plans and strategies.
Management of each Fund will normally sell a security when the
company's fundamentals begin to deteriorate or its stock has
become overvalued. Based on their judgment, they may sell some
or all of a position to adjust a stock's overall weighting in the
portfolio. From time to time, each Fund may invest a portion of
its assets in money market securities as a temporary defensive
measure. When each Fund invests in the foregoing, it may not
achieve its investment objective.
Fremont Institutional U.S. Micro-Cap Fund and
Managers Fremont Institutional Micro-Cap Fund
- ---------------------------------------------
The investment objective of both Fremont Institutional U.S.
Micro-Cap Fund and Managers Fremont Institutional Micro-Cap Fund is
long-term capital appreciation. Both Funds have substantially
similar investment policies and strategies. Each Fund's
investment objective is a fundamental policy and
may not be changed without shareholder approval.
Each Fund intends to meet its investment objective by
investing in stocks of U.S. micro-cap companies. These companies
have market capitalizations that, at the time of initial purchase,
place them among the smallest 5% of companies listed on U.S.
exchanges or over-the-counter. Normally, each Fund will invest
at least 80% of its assets in U.S. micro-cap stocks. Each Fund's
policy of investing 80% of its assets in U.S. micro-cap companies
may be changed only upon 60 days' written notice to shareholders.
Management of each Fund is committed to keeping a micro-cap focus
for the overall portfolio, but is not obligated to sell a security
that has appreciated beyond the micro-cap capitalization range.
Management of each Fund seeks to identify companies early in their
growth cycle. Emphasis is placed on those companies possessing a
variety of characteristics, such as a leading market position, an
entrepreneurial management team, and a focused business plan.
Management of each Fund may also consider companies whose growth
potential has been enhanced by products, market opportunities, or
new management. To select stocks, management of each Fund:
(i) focuses on business sectors where they believe the level of
innovation is greatest, such as technology, health care, consumer,
and services; (ii) uses fundamental analysis to identify small,
relatively unknown companies that exhibit the potential to become
much larger and more successful; and (iii) meets with corporate
managers to discuss business plans and strategies. Management of
each Fund will normally sell a security when the company's
fundamentals begin to deteriorate or its stock has become
overvalued. Based on their judgment, they may sell some or all
of a position to adjust a stock's overall weighting in the portfolio.
From time to time, each Fund may invest a portion of its assets in
money market securities as a temporary defensive measure. When each
Fund invests in the foregoing, it may not achieve its investment
objective.
Fremont Real Estate Securities Fund and
Managers Real Estate Securities Fund
- ---------------------------------------
The investment objective of both Fremont Real Estate
Securities Fund and Managers Real Estate Securities Fund is a
combination of income and long-term capital appreciation. Both
4
<Page>
Funds have substantially similar investment policies and
strategies. Each Fund's investment objective is a fundamental
policy and may not be changed without shareholder approval.
Each Fund intends to meet its investment objective by
investing in stocks of companies principally engaged (derive at
least 50% of their revenue or have at least 50% of their assets)
in the real estate industry, including real estate investment
trusts (REITs). Normally, each Fund will invest at least 80% of
its assets in these types of companies of all sizes. Each Fund's
policy of investing 80% of its assets in companies principally
engaged in the real estate industry may be changed only upon 60
days' written notice to shareholders. Management of each Fund
believes that the commercial real estate industry is in the early
stages of a major transformation. Many privately held real estate
empires are being replaced by financially strong, well managed,
publicly traded companies which own and operate commercial
property throughout the U.S. Management of each Fund carefully:
(i) monitors factors such as real estate trends and industry
fundamentals of the different real estate sectors including
office, apartment, retail, hotel, and industrial; and (ii) selects
stocks by evaluating each company's real estate value, quality of
its assets, and management record for improving earnings and
increasing asset value relative to other publicly traded real
estate companies. Management of each Fund will normally sell a
stock when it appreciates to a premium to the underlying real
estate value, or the anticipated return is not sufficient compared
to the risk of continued ownership. From time to time, each Fund
may invest a portion of its assets in money market securities as a
temporary defensive measure. When each Fund invests in the
foregoing, it may not achieve its investment objective.
Fremont Bond Fund and Managers Fremont Bond Fund
- ------------------------------------------------
The investment objective of both Fremont Bond Fund and
Managers Fremont Bond Fund is to maximize total return consistent
with the preservation of capital. Both Funds have substantially
similar investment policies and strategies. Each Fund's
investment objective is a fundamental policy and may not be
changed without shareholder approval.
Each Fund intends to meet its investment objective by
investing in fixed income instruments such as corporate,
mortgage-backed, international, and government bonds. Normally,
each Fund will invest at least 80% of its net assets (including
borrowing for investment purposes) in these types of instruments.
Each Fund's policy of investing 80% of its net assets in these types
of instruments may be changed only upon 60 days' written notice to
shareholders. Each Fund may also invest in derivatives such as
options, futures, contracts, or swap agreements. In an effort to
provide consistently attractive returns, management of each Fund:
(i) focuses on three to five-year economic, demographic, and
political forecasts to identify long-term interest rate trends;
(ii) annually updates its long-term outlook by determining a general
maturity/duration range for the portfolio in relation to the market;
(iii) manages duration to help control risk (each Fund seeks to
maintain an average duration of three to six years); and
(iv) invests primarily in securities rated investment grade
(Baa/BBB or better) by Moody's or Standard & Poor's, or those of
comparable quality. Management of each Fund will normally sell a
security when it no longer represents good value, when more
attractive risk/return potential exists in an alternative
position, or when the security no longer fits with the strategy of
the portfolio. From time to time, each Fund may invest a portion
of its assets in money market securities as a temporary defensive
measure. When each Fund invests in the foregoing, it may not
achieve its investment objective.
Fremont California Intermediate Tax-Free Fund and
Managers California Intermediate Tax-Free Fund
- -------------------------------------------------
The investment objective of both Fremont California Intermediate
Tax-Free Fund and Managers Fund is to provide income that
is free from both federal income taxes and California state
income taxes. Both Funds have substantially similar investment
policies and strategies.
5
<Page>
Each Fund's investment objective is a fundamental policy and may
not be changed without shareholder approval.
Each Fund intends to meet its investment objective by investing at
least 80% of its assets in intermediate-term California municipal
bonds that are free from both federal and California state income
taxes. Each Fund is intended for investment by California residents.
Each Fund's securities will have a quality rating comparable to the
four highest ratings categories of Moody's or Standard & Poor's. The
average maturity of these intermediate-term securities is normally
3 to 10 years. Management of each Fund seeks to achieve its objective
by: (i) identifying interest rate trends and shortening duration when
interest rates are rising, and lengthening it when interest rates are
coming down; and (ii) focusing on those market sectors and individual
securities believed to be undervalued. Management of each Fund may
sell a security when they determine the security is overvalued, or to
change the structure of the portfolio. From time to time, each Fund
may invest a portion of its assets in money market securities as a
temporary defensive measure. When each Fund invests in the foregoing,
it may not achieve its investment objective.
Fremont Money Market Fund and Managers Fremont Money Market Fund
- ----------------------------------------------------------------
The investment objective of both Fremont Money Market Fund
and Managers Fremont Money Market Fund is to maximize current income
consistent with preservation of capital and liquidity. Both Funds
have substantially similar investment policies and strategies.
Each Fund's investment objective is a fundamental policy and may
not be changed without shareholder approval.
Each Fund intends to meet its investment objective by
investing primarily in high quality short-term money market
instruments with maturities of 397 days or less and which are rated
in the top rating category by at least two nationally recognized
statistical rating organizations. Management of each Fund believes
it can deliver consistently superior performance by: (i) conducting
independent research; (ii) managing maturities; and (iii) careful
trading. As the it seeks to meet the Fund's objective, management
of each Fund attempts to: (i) determine short-term interest rate
trends; (ii) adjust average portfolio maturity to take advantage of
interest rate forecasts (generally, average maturity is shortened if
interest rates are projected to trend higher, and lengthened if
interest rates are projected to fall); and (iii) identify
opportunities presented by companies offering higher yields than
similarly rated firms. Management of each Fund bases purchase
decisions on maturity relative to portfolio target and current yield,
and will sell a security if more attractive alternatives are
identified.
6
<Page>
Principal Risk Factors
----------------------
The chart below lists the principal risk factors associated
with investing in the Existing Funds and the New Funds. The risk
factors associated with an investment in an Existing Fund are
identical to those associated with the corresponding New Fund.
These risk factors are discussed in detail in the
section immediately following this chart.
<Table>
Principal Risk Factors- Principal Risk Factors-
Funds Existing Fund New Fund
- ----- ---------------------- -----------------------
Fremont Global Fund Credit Risk Credit Risk
Currency Risk Currency Risk
Managers Fremont Global Fund Economic Risk Economic Risk
Foreign Securities Risk Foreign Securities Risk
Interest Rate Risk Interest Rate Risk
Market Risk Market Risk
Political Risk Political Risk
Price Risk Price Risk
Fremont International Growth Fund Currency Risk Currency Risk
Economic Risk Economic Risk
Managers International Growth Fund Emerging Markets Risk Emerging Markets Risk
Foreign Securities Risk Foreign Securities Risk
Market Risk Market Risk
Political Risk Political Risk
Price Risk Price Risk
Fremont Structured Core Fund Price Risk Price Risk
Market Risk Market Risk
Managers Structured Core Fund
Fremont U.S. Small Cap Fund Liquidity Risk Liquidity Risk
Market Risk Market Risk
Managers Small Cap Fund Price Risk Price Risk
Small Capitalization Stock Small Capitalization Stock
Risk RisK
Fremont U.S. Micro-Cap Fund Liquidity Risk Liquidity Risk
Market Risk Market Risk
Managers Fremont Micro-Cap Fund Micro-Capitalization Micro-Capitalization
Stock Risk Stock Risk
Price Risk Price Risk
Fremont Institutional U.S. Micro-Cap Liquidity Risk Liquidity Risk
Fund Market Risk Market Risk
Micro-Capitalization Micro-Capitalization
Managers Fremont Institutional Stock Risk Stock Risk
Micro-Cap Fund Price Risk Price Risk
Fremont Real Estate Securities Interest Rate Risk Interest Rate Risk
Fund Market Risk Market Risk
Non-Diversified Fund Non-Diversified Fund Risk
Risk Sector Risk
Managers Real Estate Securities Sector Risk
Fund
Fremont Bond Fund Credit Risk Credit Risk
Interest Rate Risk Interest Rate Risk
7
<Page>
Principal Risk Factors- Principal Risk Factors-
Funds Existing Fund New Fund
- ----- ---------------------- -----------------------
Managers Fremont Bond Fund Foreign Securities Risk Foreign Securities Risk
Fremont California Intermediate Credit Risk Credit Risk
Tax-Free Fund Interest Rate Risk Interest Rate Risk
Market Risk Market Risk
Managers California Intermediate Non-Diversified Fund Non-Diversified Fund
Tax-Free Fund Risk Risk
Fremont Money Market Fund Market Risk Market Risk
Managers Fremont Money Market
Fund
</Table>
The following is a detailed discussion of the principal risk factors
of each of the Existing and New Funds as listed above.
Credit Risk The likelihood that a debtor will be unable to pay
interest or principal payments as planned is typically
referred to as default risk. Default risk for most
debt securities is constantly monitored by several
nationally recognized statistical rating agencies
such as Moody's Investors Services, Inc. and Standard
& Poor's Corporation. Even if the likelihood of
default is remote, changes in the perception of an
institution's financial health will affect the
valuation of its debt securities. This extension of
default risk is typically known as credit risk.
Bonds rated BBB/Baa, although investment grade, may
have speculative characteristics because their
issuers are more vulnerable to financial setbacks
and economic pressures than issuers with higher
ratings.
Currency Risk The value of foreign securities in an investor's
home currency depends both upon the price of the
securities and the exchange rate of the currency.
Thus, the value of an investment in a foreign
security will drop if the price for the foreign
currency drops in relation to the U.S. dollar.
Adverse currency fluctuations are an added risk
to foreign investments. Currency risk can be
reduced through diversification among currencies
or through hedging with the use of foreign currency
contracts.
Economic Risk The prevailing economic environment is important
to the health of all businesses. However, some
companies are more sensitive to changes in the
domestic 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.
8
<Page>
Emerging
Markets Risk Investments in emerging markets securities involve
all of the risks of investments in foreign
securities (see below), and also have additional
risks. The markets of developing countries have
been more volatile than the markets of developed
countries with more mature economies. Many
emerging markets companies in the early stages of
development are dependent on a small number of
products and lack substantial capital reserves.
In addition, emerging markets often have less
developed legal and financial systems. These
markets often have provided significantly higher
or lower rates of return than developed markets
and usually carry higher risks to investors than
securities of companies in developed countries.
Foreign
Securities Risk Investments in securities of foreign issuers,
whether directly or indirectly in the form of
American Depositary Receipts or similar
instruments involve additional risks different
from those associated with investing in
securities of U.S. issuers. There may be
limited information available to investors and
foreign issuers are not generally subject to
uniform accounting, auditing and financial
standards and requirements like those
applicable to U.S. issuers. The value of
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. Foreign securities
trade with less frequency and volume than
domestic securities and therefore may have
greater price volatility. In addition, just
as foreign markets may respond to events
differently from U.S. markets, foreign
securities can perform differently from U.S.
securities.
Interest Rate
Risk Changes in interest rates can impact bond
prices in several ways. As interest rates rise,
the fixed coupon payments (cash flows) of debt
securities become less competitive with the
market and thus the price of the securities will
fall. The longer into the future that these
cash flows are expected, the greater the effect
on the price of the security. Interest rate
risk is thus measured by analyzing the length
of time or duration over which the return on the
investment is expected. The longer the maturity
or duration, the higher the interest rate risk.
Duration is the weighted average time (typically
quoted in years) to the receipt of cash flows
(principal + interest) for a bond or portfolio.
It is used to evaluate such bond or portfolio's
interest rate sensitivity.
Liquidity Risk This is the risk that the Fund cannot sell a
security at a reasonable price within a reasonable
time frame when necessary due to a lack of buyers
for the security. This risk applies to all assets.
For example, an asset such as a house has
reasonably high liquidity risk because it is
unique and has a limited number of potential
buyers. Thus, it often takes a significant effort
to market, and it takes at least a few days and
often months to sell. On the other hand, a U.S.
Treasury note is one of thousands of identical
notes with virtually unlimited potential buyers
and can thus be sold very quickly and easily.
The liquidity of financial securities in orderly
markets can be measured by observing the amount of
daily or weekly trading in the security, the
prices at which the security trades and the
9
<Page>
difference between the price buyers offer to pay
and the price sellers want to get. However,
estimating the liquidity of securities during
market upheavals is very difficult.
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 in general
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 a
Fund's portfolio of investments is also likely
to decrease in value. The decrease in the
value of a Fund's investments, in percentage
terms, may be more or less than the decrease
in the value of the market. Since foreign
securities trade on different markets, which
have different supply and demand
characteristics, their prices are not as
closely linked to the U.S. markets. Foreign
securities markets have their own market risks,
and they may be more or less volatile than U.S.
markets and may move in different directions.
Micro-
Capitalization
Stock Risk Micro-capitalization companies are companies
that have market capitalizations that, at the
time of initial purchase, place them among the
smallest 5% of companies on U.S. exchanges or
in the over-the-counter market. Such companies
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, a Fund with investments in
micro-capitalization companies carries more
risk than a Fund with investments in large-
capitalization companies.
Non-Diversified
Fund Risk A Fund which is "non-diversified" can invest
more of its assets in a single issuer than that
of a diversified fund. To the extent that a
Fund invests significant portions of the
portfolio in securities of a single issuer,
such as a corporate or government entity, the
Fund is subject to specific risk. Specific
risk is the risk that a particular security
will drop in price due to adverse effects on a
specific issuer. 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 risks that these
issuers face.
Political Risk Changes in the political status of any country
can have profound effects on the value of
securities within that country. Related risk
factors are the regulatory environment within
any country or industry and the sovereign
health of the country. These risks can only
be reduced by carefully monitoring the economic,
political and regulatory atmosphere within
countries and diversifying across countries.
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. For stocks, price risk is often
10
<Page>
measured by comparing the price of any security
or portfolio to the book value, earnings or
cash flow of the underlying company or companies.
A higher ratio denotes higher expectations and
higher risk that the expectations will not be
sustained.
Sector Risk Companies that are in similar businesses may be
similarly affected by particular economic or
market events, which may, in certain
circumstances, cause the value of securities of
all companies in a particular sector of the
market to decrease. Although a Fund may not
concentrate in any one industry, each Fund
may invest without limitation in any one
sector. To the extent a Fund has substantial
holdings within a particular sector, the risks
associated with that sector increase.
Small
Capitalization
Stock Risk Small capitalization 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, a
Fund with investments in small capitalization
companies carries more risk than a Fund with
investments in large-capitalization companies.
11
<page>
Comparison of Fees and Expenses
-------------------------------
Fremont Global Fund and Managers Fremont Global Fund
- ----------------------------------------------------
This table discloses the fees and expenses that you may pay if
you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Managers
Fremont Fremont
Global Fund Global Fund
----------- -----------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None (1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.60% 0.60%
Other Expenses 0.46%(2) 0.44%(2)
Total Annual Fund Operating Expenses 1.06% 1.04%
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by
wire are currently charged a $10 fee. Shareholders of
the New Fund will not be charged a wire fee.
(2) Other Expenses fpr both the Existing Fund and the New FUnd
have been restated to reflect estimated
amounts for the current fiscal year. The amount of other
Expenses for the New Fund reflects (i) a decrease
in the fees of Trustees, (ii) expenses to be incurred
by the New Fund under a new Transfer Agency Services
Agreement with PFPC, Inc., (iii) expenses to be
incurred by the New Fund under a new Administrative
Services Agreement with Managers and (iv) a decrease
in shareholder servicing fee reimbursements by the
Funds under a plan that has been approved by the New Funds'
Board of Trustees, all of which will be effective as of the
close of the Reorganizations. Other Expenses also include
reduced expenses under a new Custody/Fund Accounting
agreement with State Street Bank & Trust, effective as of
the close of the Reorganization.
12
<Page>
Example
To illustrate the effect of operating expenses, assume that
each Fund's annual return is 5% and that it had total
operating expenses described in the table above. For every
$10,000 invested in each Fund, the following amounts of
total expenses would have been paid if an investor closed
his or her account at the end of each of the following time
periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont Global Fund $108 $337 $585 $1,294
Pro Forma-Managers
Fremont Global Fund $106 $331 $574 $1,271
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that an
investor in the combined Fund will bear, whether directly or
indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to all
mutual funds. The information in the previous tables should
not be considered a representation of past or future expenses
or rates of return. Actual expenses or returns may be greater
or less than those shown and may change.
13
<Page>
Fremont International Growth Fund and
Managers International Growth Fund
- -------------------------------------
This table discloses the fees and expenses that you may pay if
you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Fremont Managers
International International
Growth Fund Growth Fund
------------- -------------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees 2%(1) 2%(1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 1.00% 1.00%
Other Expenses 0.51% 0.62%(2)
Total Annual Fund Operating Expenses 1.51%(2) 1.62%
Fee Waiver and Reimbursement (0.01%)(3) (0.12%)(4)
Net Annual Fund Operating Expenses 1.50%(3) 1.50%(4)
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of the Existing
Fund who redeem shares within 30 days after purchase will be
charged a redemption fee of 2%. Shareholders of the New Fund
will not be charged a wire fee. Shareholders of the New Fund
who redeem shares within 30 days after purchase will be charged
a redemption fee of 2%.
(2) Other Expenses for both the Existing Fund and the New Fund
have been restated to reflect estimated
amounts for the current fiscal year. The amount of Other
Expenses for the New Fund reflects (i) a decrease in the
fees of Trustees, (ii) expenses to be incurred by the New Fund
under a new Transfer Agency Services Agreement with PFPC, Inc.,
(iii) expenses to be incurred by the New Fund under a new
Administrative Services Agreement with Managers and (iv) a
decrease in shareholder servicing fee reimbursements by the
Funds under a plan that has been approved by the New Funds'
Board of Trustees, all of which will be effective as of the
close of the Reorganizations.
(3) FIA has contractually agreed to indefinitely waive a portion
of its fees and/or pay a portion of the Existing Fund's
expenses to ensure that the Existing Fund's Annual Fund
Operating Expenses do not exceed 1.50%. This arrangement
does not cover interest, taxes, brokerage commissions or
extraordinary expenses.
(4) Managers has contractually agreed, through at least March 1,
2006, to limit "Total Annual Fund Operating Expenses"
(exclusive of taxes, interest, brokerage commissions and
extraordinary items) to 1.50%, subject to later reimbursement
by the New
14
<Page>
Funds in certain circumstances. In general, for a period
of up to three years from the time of any waiver or
payment pursuant to a New Fund's contractual expense
limitation, Managers may recover from the New Fund fees
waived and expenses paid to the extent that the New Fund's
Total Annual Fund Operating Expenses do not exceed that
New Fund's contractual expense limitation amount.
15
<Page>
Example
To illustrate the effect of operating expenses, assume that each
Fund's annual return is 5% and that it had total operating expenses
described in the table above. For every $10,000 invested in each
Fund, the following amounts of total expenses would have been paid
if an investor closed his or her account at the end of each of the
following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont International
Growth Fund $153 $474 $818 $1,791
Pro Forma-Managers
International Growth
Fund $153 $497 $868 $1,910
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that
an investor in the combined Fund will bear, whether directly
or indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to
all mutual funds. The information in the previous tables
should not be considered a representation of past or future
expenses or rates of return. Actual expenses or returns may
be greater or less than those shown and may change.
16
<Page>
Fremont Structured Core Fund and
Managers Structured Core Fund
- --------------------------------
This table discloses the fees and expenses that you may pay
if you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Fremont Managers
Structured Structured
Core Fund Core Fund
------------- -------------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None (1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.35% 0.35%
Other Expenses 0.46%(2) 0.46%(2)
Total Annual Fund Operating Expenses 0.81% 0.81%
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares
by wire are currently charged a $10 fee. Shareholders
of the New Fund will not be charged a wire fee.
(2) Other Expenses for both the Existing Fund and the New Fund
have been restated to reflect estimated
amounts for the current fiscal year. The amount of Other
Expenses for the New Fund reflects (i) a decrease in
the fees of Trustees, (ii) expenses to be incurred by
the New Fund under a new Transfer Agency Services
Agreement with PFPC, Inc., (iii) expenses to be incurred
by the New Fund under a new Administrative Services
Agreement with Managers and (iv) a decrease in shareholder
servicing fee reimbursements by the Funds under a plan
that has been approved by the New Funds' Board of
Trustees, all of which will be effective as of the
close of the Reorganizations.
17
<Page>
Example
To illustrate the effect of operating expenses, assume that
each Fund's annual return is 5% and that it had total
operating expenses described in the table above. For every
$10,000 invested in each Fund, the following amounts of total
expenses would have been paid if an investor closed his or her
account at the end of each of the following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont Structured Core
Fund $83 $259 $450 $1,002
Pro Forma-Managers Structured
Core Fund $83 $259 $450 $1,002
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that an
investor in the combined Fund will bear, whether directly or
indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to all
mutual funds. The information in the previous tables should
not be considered a representation of past or future expenses
or rates of return. Actual expenses or returns may be greater
or less than those shown and may change.
18
<Page>
Fremont U.S. Small Cap Fund and
Managers Small Cap Fund
- --------------------------------
This table discloses the fees and expenses that you may pay if
you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Fremont U.S. Managers
Small Cap Small Cap
Fund Fund
------------ -----------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None (1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 1.00% 1.00%
Other Expenses 0.61%(2) 0.65%(2)
Total Annual Fund Operating Expenses 1.61% 1.65%
Fee Waiver and Expense Reimbursement (0.01%)(3) (0.05%)(4)
Net Annual Fund Operating Expenses 1.60%(3) 1.60%(4)
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of
the New Fund will not be charged a wire fee.
(2) Other Expenses for both the Existing Fund and the New Fund
have been restated to reflect estimated
amounts for the current fiscal year.The amount of Other
Expenses for the New FUnd reflects (i) a decrease in
the fees of Trustees, (ii) expenses to be incurred by
the New Fund under a new Transfer Agency Services
Agreement with PFPC, Inc., (iii) expenses to be incurred
by the New Fund under a new Administrative Services
Agreement with Managers and (iv) a decrease in shareholder
servicing fee reimbursements by the Funds under a plan
that has been approved by the New Funds' Board of Trustees,
all of which will be effective as of the close of the
Reorganizations.
(3) FIA has contractually agreed to indefinitely waive a
portion of its fees and/or pay a portion of the Existing
Fund's expenses to ensure that the Existing Fund's Annual
Fund Operating Expenses do not exceed 1.60%. This
arrangement does not cover interest, taxes, brokerage
commissions or extraordinary expenses.
(4) Managers has contractually agreed,through at least
March 1, 2006, to limit "Total Annual Fund Operating
Expenses" (exclusive of taxes, interest, brokerage
commissions and extraordinary items) to 1.60%, subject
to later reimbursement by the New Funds
in certain circumstances. In general, for a period of up
to three years from the time of any waiver or payment
pursuant to a New Fund's contractual expense limitation,
Managers may recover from the New Funds fees waived and
expenses paid to the extent that the New Fund's Total
Annual Fund Operating Expenses do not exceed that New
Fund's contractual expense limitation amount.
19
<Page>
Example
To illustrate the effect of operating expenses, assume that each
Fund's annual return is 5% and that it had total operating expenses
described in the table above. For every $10,000 invested in each
Fund, the following amounts of total expenses would have been paid
if an investor closed his or her account at the end of each of the
following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont U.S. Small
Cap Fund $163 $505 $871 $1,900
Pro Forma-Managers Small
Cap Fund $163 $515 $891 $1,950
</Table>
The purpose of these tables is to assist an investor in understanding
the various types of costs and expenses that an investor in the
combined Fund will bear, whether directly or indirectly. The
assumption in this example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. The
information in the previous tables should not be considered a
representation of past or future expenses or rates of return.
Actual expenses or returns may be greater or less than those
shown and may change.
20
<Page>
Fremont U.S. Micro-Cap Fund and
Managers Fremont Micro-Cap Fund
- -------------------------------
This table discloses the fees and expenses that you may pay if
you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Managers
Fremont U.S. Fremont
Micro-Cap Micro-Cap
Fund Fund
------------ -----------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None (1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 1.61% 1.00%
Other Expenses None 0.51%(2)
Total Annual Fund Operating Expenses 1.61%(3) 1.51%(4)
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of the New
Fund will not be charged a wire fee.
(2) Other Expenses have been restated to reflect estimated
amounts for the current fiscal year.The amount of Other
Expenses also reflects (i) a decrease in the
fees of Trustees, (ii) expenses to be incurred by the New
Fund under a new Transfer Agency Services Agreement with
PFPC, Inc., (iii) expenses to be incurred by the New Fund
under a new Administrative Services Agreement with Managers
and (iv) a decrease in shareholder servicing fee
reimbursements by the Funds under a plan that has been
approved by the New Funds' Board of Trustees, all of which
will be effective as of the close of the Reorganizations.
(3) FIA has contractually agreed to indefinitely waive a
portion of its fees and/or pay a portion of the Existing
Fund's expenses to ensure that the Existing Fund's Annual
Fund Operating Expenses do not exceed 1.98%. This
arrangement does not cover interest, taxes, brokerage
commissions or extraordinary expenses.
(4) Managers has contractually agreed, through at least
March 1, 2006, to limit "Total Annual Fund Operating
Expenses" (exclusive of taxes, interest, brokerage
commissions and extraordinary items) to 1.98%, subject to
later reimbursement by the New Funds in certain circumstances.
In general, for a period of up to three years from the time
of any waiver or payment pursuant to a New Fund's contractual
expense limitation, Managers may recover from the New Funds
fees waived and expenses paid to the extent that the New
Fund's Total Annual Fund Operating Expenses do do not exceed
that New Fund's contractual expense limitation amount.
21
<Page>
Example
To illustrate the effect of operating expenses, assume that
each Fund's annual return is 5% and that it had total operating
expenses described in the table above. For every $10,000 invested
in each Fund, the following amounts of total expenses would have
been paid if an investor closed his or her account at the
end of each of the following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont U.S. Micro-Cap Fund $164 $508 $876 $1,911
Pro Forma-Managers Fremont
Micro-Cap Fund $157 $477 $824 $1,802
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that
an investor in the combined Fund will bear, whether directly
or indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to all
mutual funds. The information in the previous tables should
not be considered a representation of past or future expenses
or rates of return. Actual expenses or returns may be greater
or less than those shown and may change.
22
<Page>
Fremont Institutional U.S. Micro-Cap Fund and
Managers Fremont Institutional Micro-Cap Fund
- ---------------------------------------------
This table discloses the fees and expenses that you may pay
if you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Managers
Fremont Fremont
Institutional Institutional
U.S. Micro-Cap Micro-Cap
Fund Fund
------------ -----------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None(1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 1.00% 1.00%
Other Expenses 0.28%(2) 0.33%(2)
Total Annual Fund Operating Expenses 1.28% 1.33%(4)
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of the New
Fund will not be charged a wire fee.
(2) Other Expenses for both the Existing Fund and the New Fund
have been restated to reflect estimated
amounts for the current fiscal year. The amount of Other
Expenses for the new Fund reflects (i) a decrease in the
fees of Trustees, (ii) expenses to be incurred by the New
Fund under a new Transfer Agency Services Agreement with
PFPC, Inc., (iii) expenses to be incurred by the New Fund
under a new Administrative Services Agreement with Managers
and (iv) a decrease in shareholder servicing fee
reimbursements by the Funds under a plan that has been
approved by the New Funds' Board of Trustees, all of which
will be effective as of the close of the Reorganizations.
(3) FIA has contractually agreed to indefinitely waive a portion
of its fees and/or pay a portion of the Existing Fund's
expenses to ensure that the Existing Fund's Annual Fund
Operating Expenses do not exceed 1.35%. This arrangement
does not cover interest, taxes, brokerage commissions or
extraordinary expenses.
(4) Managers has contractually agreed, through at least
March 1, 2006, to limit "Total Annual Fund Operating
Expenses" (exclusive of taxes, interest, brokerage
commissions and extraordinary items) to 1.35%, subject to
later reimbursement by the New Funds in certain
circumstances. In general, for a period
23
<Page>
of up to three years from the time of any waiver or payment
pursuant to a New Fund's contractual expense limitation,
Managers may recover from the New Fund fees waived and
expenses paid to the extent that the New Fund's Total Annual
Fund Operating Expenses do not exceed that New Fund's
contractual expense limitation amount.
24
<Page>
Example
To illustrate the effect of operating expenses, assume that each
Fund's annual return is 5% and that it had total operating expenses
described in the table above. For every $10,000 invested in each
Fund, the following amounts of total expenses would have been paid
if an investor closed his or her account at the end of each of the
following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont Institutional U.S.
Micro-Cap Fund $130 $406 $702 $1,545
Pro Forma-Managers Fremont
Institutional
Micro-Cap Fund $135 $421 $729 $1,601
</Table>
25
<Page>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that an
investor in the combined Fund will bear, whether directly or
indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to all
mutual funds. The information in the previous tables should
not be considered a representation of past or future expenses
or rates of return. Actual expenses or returns may be greater
or less than those shown and may change.
Fremont Real Estate Securities Fund and
Managers Real Estate Securities Fund
- ---------------------------------------
This table discloses the fees and expenses that you may pay if
you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Managers
Fremont Fremont
Real Estate Real Estate
Securities Securities
Fund Fund
----------- -----------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None(1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.85% 0.85%
Other Expenses 0.71%(2) 0.72%(2)
Total Annual Fund Operating Expenses 1.56% 1.57%
Fee Waiver and Reimbursement (0.06%)(3) (0.07%)(4)
Net Annual Fund Operating Expenses 1.50%(3) 1.50%(4)
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of the New
Fund will not be charged a wire fee.
(2) Other Expenses for both the Existing Fund and the New Fund
have been restated to reflect estimated
amounts for the current fiscal year.The amount of Other
Expenses for the New Fund reflects (i) a decrease in the
fees of Trustees, (ii) expenses to be incurred by the New
Fund under a new Transfer Agency Services Agreement with
PFPC, Inc., (iii) expenses to be incurred by the New Fund
under a new Administrative Services Agreement with Managers
and (iv) a decrease in shareholder servicing fee
reimbursements by the Funds under a plan that has been
approved by the New Funds' Board of Trustees, all of which
will be effective as of the close of the Reorganizations.
(3) FIA has contractually agreed to indefinitely waive a
portion of its fees and/or pay a portion of the Existing
Fund's expenses to ensure that the Existing Fund's Annual
Fund Operating Expenses do not exceed 1.50%. This
arrangement does not cover interest, taxes, brokerage
commissions or extraordinary expenses.
(4) Managers has contractually agreed, through at least
March 1, 2006, to limit "Total Annual Fund Operating
Expenses" (exclusive of taxes, interest, brokerage
commissions and extraordinary items) to 1.50%, subject
to later reimbursement by the New Funds in certain
circumstances. In general, for a period of up to three
years from the time of any waiver or payment
pursuant to a New Fund's contractual expense limitation,
Managers may recover from the New Fund fees waived and
expenses paid to the extent
26
<Page>
that the New Fund's Total Annual Fund Operating Expenses
do not exceed that New Fund's contractual expense
limitation amount.
27
<Page>
Example
To illustrate the effect of operating expenses, assume that each
Fund's annual return is 5% and that it had total operating expenses
described in the table above. For every $10,000 invested in each
Fund, the following amounts of total expenses would have been paid
if an investor closed his or her account at the end of each of the
following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont Real Estate
Securities Fund $153 $474 $818 $1,791
Pro Forma-Managers Real
Estate Securities Fund $153 $488 $847 $1,860
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that an
investor in the combined Fund will bear, whether directly or
indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to
all mutual funds. The information in the previous tables
should not be considered a representation of past or
future expenses or rates of return. Actual expenses or
returns may be greater or less than those shown and may
change.
28
<Page>
Fremont Bond Fund and Managers Fremont Bond Fund
- ------------------------------------------------
This table discloses the fees and expenses that you may
pay if you buy and hold shares of either Fund. Only pro
forma information has been presented with respect to the
New Fund because the New Fund will not commence operations
until the Reorganization is completed. There will not be
any shareholder fees payable in connection with the
Reorganization.
<Table>
Pro Forma-
Managers
Fremont Fremont
Bond Bond
Fund Fund
------- ---------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None (1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.40% 0.40%
Other Expenses 0.29%(2) 0.31%(2)
Total Annual Fund Operating Expenses 0.69% 0.71%
Fee Waiver and Reimbursement (0.09%)(3) (0.11%)(4)
Net Annual Fund Operating Expenses 0.60%(3) 0.60%(4)
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of the New Fund
will not be charged a wire fee.
(2) Other Expenses for both the Existing Fund and the New Fund
have been restated to reflect estimated
amounts for the current fiscal year. The amount of Other
Expenses for the New Fund reflects (i) a decrease in the fees
of Trustees, (ii) expenses to be incurred by the New Fund under
a new Transfer Agency Services Agreement with PFPC, Inc., (iii)
expenses to be incurred by the New Fund under a new
Administrative Services Agreement with Managers and (iv) a
decrease in shareholder servicing fee reimbursements by the
Funds under a plan that has been approved by the New Funds'
Board of Trustees, all of which will be effective as of the
close of the Reorganizations.
(3) FIA has voluntarily agreed to indefinitely waive a portion of
its fees and/or pay a portion of the Existing Fund's expenses
to ensure that the Existing Fund's Annual Fund Operating
Expenses do not exceed 0.60%. This arrangement does not cover
interest, taxes, brokerage commissions or extraordinary
expenses, and may be terminated by FIA at any time. FIA is
contractually obligated to waive 0.05% of its 0.15%
administrative fee for an indefinite period of time.
29
<Page>
(4) Managers has contractually agreed, through at least
March 1, 2006, to limit "Total Annual Fund Operating
Expenses" (exclusive of taxes, interest, brokerage
commissions and extraordinary items) to 0.60%, subject
to later reimbursement by the New Funds in certain
circumstances. In general, for a period
of up to three years from the time of any waiver or payment
pursuant to a New Fund's contractual expense limitation,
Managers may recover from the New Funds fees waived and
expenses paid to the extent that the New Fund's Total
Annual Fund Operating Expenses do not exceed that New
Fund's contractual expense limitation amount.
30
<Page>
Example
To illustrate the effect of operating expenses, assume that each
Fund's annual return is 5% and that it had total operating expenses
described in the table above. For every $10,000 invested in each
Fund, the following amounts of total expenses would have been paid
if an investor closed his or her account at the end of each of the
following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont Bond Fund $61 $192 $335 $750
Pro Forma-Managers Fremont
Bond Fund $61 $214 $382 $870
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that an
investor in the combined Fund will bear, whether directly or
indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to all
mutual funds. The information in the previous tables should
not be considered a representation of past or future expenses
or rates of return. Actual expenses or returns may be greater
or less than those shown and may change.
31
<Page>
Fremont California Intermediate Tax-Free Fund and
Managers California Intermediate Tax-Free Fund
- -------------------------------------------------
This table discloses the fees and expenses that you may
pay if you buy and hold shares of either Fund. Only pro
forma information has been presented with respect to the
New Fund because the New Fund will not commence operations
until the Reorganization is completed. There will not be
any shareholder fees payable in connection with the
Reorganization.
<Table>
Pro Forma-
Managers
Fremont Fremont
California California
Intermediate Intermediate
Tax-Free Tax-Free
Fund Fund
-------- ---------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None (1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.37%(2) 0.37%(2)
Other Expenses 0.35%(3) 0.40%(3)
Total Annual Fund Operating Expenses 0.72% 0.77%
Fee Waiver and Reimbursement (0.17%)(4) (0.22%)(4)(5)
Net Annual Fund Operating Expenses 0.55%(4) 0.55%(5)
_________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of the New Fund
will not be charged a wire fee.
(2) The management fees of the Existing Fund are based on a formula:
(i) 0.40% on the first $25 million, (ii) 0.35% on the next
$25 million, (iii) 0.30% on the next $50 million, (iv) 0.25% on
the next $50 million and 0.20% on average daily net
assets over $150 million.
The management fees of the New Fund are also based on a
formula: (i) 0.40% on the first $25 million, (ii) 0.35% on
the next $25 milliion, (iii) 0.30% on the next $50 million,
and (iv) 0.25% on the next $50 million and 0.20% on average daily
net assets over $150 million.
(3) Other Expenses for both the Existing Fund and the New Fund
have been restated to reflect estimated amounts for the current
fiscal year.The amount of Other Expenses for the New Fund
reflects (i) a decrease in the fees of Trustees, (ii) expenses
to be incurred by the New Fund under a new Transfer Agency
Services Agreement with PFPC, Inc., (iii) expenses to be incurred
by the New Fund under a new Administrative Services Agreement
with Managers and (iv) a decrease in shareholder servicing fee
reimbursements by the Funds under a plan that has been
approved by the New Funds' Board of Trustees, all of which
will be effective as of the close of the Reorganizations.
(4) FIA has contractually agreed indefinitely to waive a
portion of its fees and/or pay a portion of the Existing
Fund's expenses to ensure that the Existing Fund's Annual
Fund Operating Expenses do not exceed 0.55%. This
arrangement does not cover interest, taxes, brokerage
commissions or extraordinary expenses.
32
<Page>
(5) Managers has contractually agreed, through at least
March 1, 2006, to limit "Total Annual Fund Operating
Expenses" (exclusive of taxes, interest, brokerage
commissions and extraordinary items) to 0.55%, subject
to later reimbursement by the NewFunds in certain
circumstances. In general, for a period
of up to three years from the time of any waiver or
payment pursuant to a New Fund's contractual expense
limitation, Managers may recover from the New Fund fees
aived and expenses paid to the extent that the New Fund's
Total Annual Fund Operating Expenses do not exceed that
New Fund's contractual expense limitation amount.
33
<Page>
Example
To illustrate the effect of operating expenses, assume that each
Fund's annual return is 5% and that it had total operating expenses
described in the table above. For every $10,000 invested in each
Fund, the following amounts of total expenses would have been paid
if an investor closed his or her account at the end of each of the
following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont California Intermediate
Tax-Free Fund $56 $176 $307 $689
Pro Forma-Managers California
Intermediate Tax-Free Fund $56 $220 $402 $930
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that an
investor in the combined Fund will bear, whether directly or
indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to all
mutual funds. The information in the previous tables should
not be considered a representation of past or future expenses
or rates of return. Actual expenses or returns may be greater
or less than those shown and may change.
34
<Page>
Fremont Money Market Fund and
Managers Fremont Money Market Fund
- ----------------------------------
This table discloses the fees and expenses that you may
pay if you buy and hold shares of either Fund. Only pro forma
information has been presented with respect to the New Fund
because the New Fund will not commence operations until the
Reorganization is completed. There will not be any shareholder
fees payable in connection with the Reorganization.
<Table>
Pro Forma-
Managers
Fremont Fremont
Money Market Money Market
Fund Fund
-------- ---------
Shareholder Fees (fees paid
directly from your investment)
- ------------------------------
Maximum sales charge (load) imposed
on purchases (as a percentage of
the offering price) None None
Maximum deferred sales charge
(load) None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None
Redemption fees None(1) None(1)
Exchange fees None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.21%(2) 0.21%(2)
Other Expenses 0.22% (3) 0.22%(3)
Total Annual Fund Operating Expenses 0.43% 0.43%
________________
</Table>
(1) Shareholders of the Existing Fund who redeem shares by wire
are currently charged a $10 fee. Shareholders of the New Fund
will not be charged a wire fee.
(2) The management fees of the Existing Fund are based on a formula:
(i) 0.30% on the first $50 million and (ii) 0.20% on average
daily net assets over $50 million. The management fees of the
New Fund are also based on a formula: (i) 0.30% on the first $50
million and (ii) 0.20% on average daily net assets over $50
million.
(3) Other Expenses for both the Existing Fund and the New Fund have
been restated to reflect estimated amounts for the current
fiscal year.The amount of Other Expenses for the NEw Fund
reflects (i) a decrease in the fees
of Trustees, (ii) expenses to be incurred by the New Fund under
a new Transfer Agency Services Agreement with PFPC, Inc.,
(iii) expenses to be incurred by the New Fund under a new
Administrative Services Agreement with Managers and (iv) a
decrease in shareholder servicing fee reimbursements by the Funds
under a plan that has been approved by the New Funds' Board of
Trustees, all of which will be effective as of the close of the
Reorganizations.
35
<Page>
Example
To illustrate the effect of operating expenses, assume that each
Fund's annual return is 5% and that it had total operating expenses
described in the table above. For every $10,000 invested in each
Fund, the following amounts of total expenses would have been paid
if an investor closed his or her account at the end of each of the
following time periods:
<Table>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
Fremont Money Market Fund $44 $138 $241 $542
Pro Forma-Managers Fremont $44 $138 $241 $542
Money Market Fund
</Table>
The purpose of these tables is to assist an investor in
understanding the various types of costs and expenses that an
investor in the combined Fund will bear, whether directly or
indirectly. The assumption in this example of a 5% annual
return is required by regulations of the SEC applicable to all
mutual funds. The information in the previous tables should
not be considered a representation of past or future expenses
or rates of return. Actual expenses or returns may be greater
or less than those shown and may change.
36
<Page>
Distribution and Purchase Procedures, Exchange Rights
and Redemption Procedures
-----------------------------------------------------
The purchase, redemption and exchange features of the
Existing Funds are substantially similar to those of the New
Funds, as discussed below. More detailed explanations of the
services available through the New Funds can be found in the
Prospectus that accompanies this Proxy Statement/Prospectus.
Both the Existing Funds and the New Funds offer
investors regular accounts, Individual Retirement Accounts
(traditional IRAs, Roth IRAs and Simple IRAs) and Education
Savings Plans or Accounts. The Existing Funds and the New
Funds have the same minimum initial investment requirements
($2,000 for individual accounts and $1,000 for IRAs and
Education Savings Plans or Accounts) and additional investment
requirements ($100), but the Existing Funds waive the minimum
additional investment requirement for automatic investment plans.
The New Funds (or their distributor) may, in their discretion,
waive the minimum initial or additional investment amounts at
any time. Additionally, the New Funds (or their distributor)
may, in their discretion, request reimbursement from
shareholder accounts that are involved in excessive trading.
Shareholders of the Existing Funds may purchase shares
by mail, telephone, wire, the internet or through the Automatic
Investment Plan ($50 minimum applies to the Automatic Investment
Plan). Similarly, shareholders of the New Funds may purchase
shares by mail, telephone, wire, the internet and through the
Automatic Investment feature or the Systematic Purchase Plan.
Shareholders of the Existing Funds and the New Funds may also
purchase or redeem shares of the Funds through authorized
intermediaries, such as broker-dealers, banks or other financial
institutions. Shareholders of the Existing Fund may redeem
shares by mail, telephone, the internet or through the
Automatic Withdrawal Plan. Shareholders of the New Funds may
redeem shares by mail, telephone or the internet or through
the Automatic Redemption feature. Shareholders of the Existing
Funds may exchange into other Existing Funds by telephone or
the internet, while shareholders of the New Funds may exchange
into certain other funds in the Managers Funds Family of Funds
by mail, telephone, the internet or through an investment
advisor, bank or investment professional.
Distribution of the New Funds
- -----------------------------
Managers Distributors, Inc. ("MDI"), a wholly-owned
subsidiary of Managers, serves as distributor of the New
Funds. Managers or MDI may make direct or indirect payments
to third parties in connection with the sale of New Fund
shares or the servicing of shareholder accouns.
37
<Page>
II. THE REORGANIZATIONS
============================
Description of the Reorganizations
----------------------------------
On July 7, 2004, the Existing Funds' Board unanimously
voted to approve the Reorganizations, subject to approval by
shareholders of the respective Existing Funds. In the
Reorganizations, each Existing Fund will transfer its assets
to its corresponding New Fund, which will assume the accrued
and unpaid liabilities of the Existing Fund set forth in the
statement of assets and liabilities of the Existing Fund as of
the closing date of the Reorganization. Upon this transfer of
assets and assumption of liabilities, the New Fund will issue
shares to the Existing Fund, which shares will be distributed
to shareholders in liquidation of the Existing Fund. Any
shares you own of an Existing Fund at the time of the
Reorganizations will be cancelled and you will receive shares
in the same or a comparable class of the corresponding New
Fund having a value equal to the value of your shares of the
Existing Fund. The Reorganizations are expected to be tax-free
transactions for U.S. federal income tax purposes. If
approved by shareholders, the Reorganizations are expected to
occur on or about December 31, 2004, or sooner, provided all
of the other closings conditions have been satisfied.
Reasons for the Reorganizations
-------------------------------
The Reorganizations are taking place as a result of
FIA's decision to sell its investment advisory business.
Management of FIA reviewed the product offerings of the
Existing Funds and the asset size of the Funds to determine
whether the Funds remained economically viable and whether
shareholders of the Existing Funds would be better served
if the Funds were reorganized into another fund family with
a greater long-term commitment to the mutual fund business
and potentially better distribution capabilities throughout
its affiliated organizations. Managers and the New Funds
emerged from this search as an ideal selection. Managers is
currently the investment adviser to a family of 27 mutual
funds, all of which are managed through subadvisors as
"manager-of-managers" funds, similar to the Existing Funds.
Managers' philosophy of selecting the "best of breed"
subadvisors for its Funds is entirely consistent with the
way FMF and FIA have sought to operate the Existing Funds.
In addition, Managers is committed to providing investors
with access to a complete array of investment products and
state-of-the-art shareholder services. Consistent with
this commitment and as part of its offer to provide the
same high quality products and services to shareholders of
the Existing Funds, Managers (which is based in Norwalk,
Connecticut) will open an office in San Francisco and will
retain many key employees of FIA that are currently
responsible for providing a variety of investment management
and shareholders services to the Existing Funds. As a result,
if the Reorganizations are approved shareholders, you and
other shareholders of the Existing Funds, as shareholders of
the New Funds, will continue to be served by many members of
your existing FIA team.
Terms of the Reorganizations
----------------------------
At the effective time of the Reorganizations, each
New Fund will acquire all of the assets and assume all of
the stated liabilities of the corresponding Existing Fund
shown in the table below in exchange for shares of the
corresponding class of the New Fund.
<Page>
38
<Table>
EXISTING FUNDS NEW FUNDS
---------------- -----------
Fremont Global Fund Managers Fremont Global Fund
Fremont International Growth Fund Managers International Growth Fund
Fremont Structured Core Fund Managers Structured Core Fund
Fremont U.S. Small Cap Fund Managers Small Cap Fund
Fremont U.S. Micro-Cap Fund Managers Fremont Micro-Cap Fund
Fremont Institutional U.S. Micro-Cap Fund Managers Fremont Institutional Micro-Cap Fund
Fremont Real Estate Securities Fund Managers Real Estate Securities Fund
Fremont Bond Fund Managers Fremont Bond Fund
Fremont California Intermediate Tax-Free Fund Managers California Intermediate Tax-Free Fund
Fremont Money Market Fund Managers Fremont Money Market Fund
</Table>
The terms and conditions under which the Reorganization
for each Existing Fund will be implemented are set forth in
the Plan. Significant provisions of the Plan are summarized
below; however, this summary is qualified in its entirety by
reference to the Plan, which is attached as Appendix A to this
Proxy Statement/Prospectus. The Plan contemplates (i) each
New Fund's New all of the assets of the corresponding Existing
Fund in exchange solely for shares of the New Fund and the
assumption by the New Fund of those accrued and unpaid
liabilities of the Existing Fund set forth in the statement of
assets and liabilities of the Existing Fund as of the closing
date for the Reorganization (the "Stated Liabilities"), and
(ii) the distribution of those shares to the shareholders of
the Existing Fund as soon as reasonably practicable after the
closing. Each Existing Fund will distribute pro rata to its
shareholders of record the shares of the corresponding New Fund
it receives in the Reorganization, so that each shareholder of
an Existing Fund will receive a number of full and fractional
shares of the corresponding New Fund equal in value to the
number of full and fractional shares of the Existing Fund
held by such shareholder as of the closing date. Each
Existing Fund will be dissolved soon thereafter.
Accordingly, immediately after the Reorganization, each former
shareholder of an Existing Fund will
own shares of the corresponding New Fund that will be equal in
number and value to the shares of the Existing Fund held by that
shareholder immediately prior to the Reorganization. The Plan
provides the time for and method of determining the net value of
each Existing Fund's assets and the net asset value of a share of
each New Fund. The valuation will be done immediately after the
close of business, as described in the Plan, on the closing date
of the Reorganizations. The value of the assets of Fremont Large
Cap Growth Fund and Fremont Large Cap Value Fund and the value of
the assets of the corresponding New Funds will be the value of
such assets computed as of immediately after the close of regular
trading of the New York Stock Exchange and after the declaration
of any dividends on the closing date, using the valuation procedures
set forth in the New Fund's Declaration of Trust and the New Fund's
then-current prospectus and statement of additional information,
together with any other valuation procedures established by the
Trustees of the New Fund. Any special options (for example,
automatic investment plans on current Existing Fund shareholder
accounts) will automatically transfer to the new accounts.
The Board of Directors of the Existing Funds and the
Board of Trustees of the New Funds determined that it would be in
the interests of shareholders for one of the independent Directors
of the Existing Funds to serve as a Trustee of the New Funds,
effective as of the closing of the Reorganizations. Subject to
all of the conditions to closing of the Reorganizations being
satisfied, the Trustees of the New Funds have appointed Richard
E. Holmes, currently an independent Director of the Existing
Funds, to serve as an independent Trustee of the New Funds and
Mr. Holmes has agreed to serve as a Trustee of the New Funds,
for at least one year, effective as of the closing of the
Reorganizations.
The Plan provides that FIA and Managers will bear all costs
and expenses of each Reorganization, including the costs and expenses
incurred in the preparation and mailing of this Proxy
39
<Page>
Statement/Prospectus, as agreed between them. The closing date
is expected to be on or about December 31, 2004, or sooner,
provided all of the other closing conditions have been satisfied.
The implementation of each Reorganization is subject to a number
of conditions set forth in the Plan, including the approval of the
Reorganization by shareholders of each Existing Fund, as well as
the approval by shareholders of reorganizations of two other
series of FMF into existing series of the Managers Funds family of
funds. Another important condition to closing is that the
Existing Funds receive a tax opinion to the effect that the
Reorganizations will each qualify as a "reorganization" for
U.S. federal income tax purposes. As such, the Reorganizations
will not be taxable for such purposes to the Existing Funds, the
New Funds or the Existing Funds' shareholders. The Plan may be
terminated and the Reorganizations abandoned at any time prior
to the closing date by mutual agreement of the parties or
by either party if the closing shall not have occurred on or
before April 15, 2005, unless such date is extended by
mutual agreement of the parties. The parties might decide to
terminate the Plan and abandon the Reorganizations if the
closing under the purchase agreement between Managers amd FIA
does not occur. This might happen as a result of failure to
satisfy conditions at closing contained in the purchase
agreement, which include, among other things, a requirement
that FIA settle pending regulatory investigations by the SEC
and the New York Attorney General. See "Certain Legal Matters"
in the Existing Funds prospectus.
Board Consideration of the Reorganizations
------------------------------------------
The Existing Funds' Board of Directors considered the
proposed Reorganizations of the Existing Funds into the New Funds
at meetings in November 4 and December 15, 2003 and January 14,
February 25, April 30, May 16, and May 25, 2004, as well as on
other occasions. Managers provided materials on the proposed
Reorganizations to the Board of Directors. Those materials
included information on the investment objectives and the
strategies of the New Funds, comparative operating expense
ratios and performance information, and an analysis of the
projected benefits to Existing Fund shareholders from the proposed
Reorganizations. At a special meeting on July 7, 2004, the
Existing Funds' Board of Directors considered and unanimously
approved the proposed Reorganizations of the Existing Funds into
the New Funds after concluding that participation in the proposed
Reorganizations is in the best interests of each Existing Fund and
its shareholders. The Board further determined that the interests
of existing shareholders of each Existing Fund would not be diluted
upon the Reorganizations, because the number of New Fund shares to
be issued to Existing Fund shareholders will be calculated based on
the respective net asset values of the Funds.
In determining whether to recommend approval of the
Reorganizations to shareholders of the Existing Funds, the Board of
Directors (including the Independent Directors) made inquiries into
a number of matters and considered the following factors, among
others:
Services
--------
(a) The nature, extent, and quality of the services
provided by FIA and to be provided by Managers;
(b) The service features and investment options
available to shareholders of the Existing Funds
and the New Funds;
(c) The decision by Managers to employ certain key
investment management professionals who previously
managed the Existing Funds;
Investment Performance and Compatibility
----------------------------------------
(d) The investment performance of each Existing Fund
and each corresponding New Fund, if operational,
and the investment performance of FIA and Managers
generally;
40
<Page>
(e) The compatibility of the investment objectives,
policies and restrictions of the Existing Funds
and the corresponding New Funds, many of which
will be new series organized to substantially
match the Existing Funds' objectives, policies
and restrictions;
(f) The past changes in asset levels of the Existing
Funds, and the potential benefits to Existing Funds'
shareholders from the Existing Funds' access to the
potentially larger distribution network and
capability of the New Funds;
Expenses
--------
(g) The costs of the services to be provided by
Managers and its affiliates from their
relationship with each Existing Fund;
(h) The extent to which economies of scale may be
realized as each Existing Fund grows;
(i) Whether fee levels may reflect any economies of
scale for the benefit of a Existing Fund's
investors;
(j) The anticipated effect of the Reorganizations
on per-share expenses, both before and after
waivers, of the Existing Funds;
(k) The expense ratios and available information
regarding the fees and expenses of the New
Funds;
(l) That the expense of the Reorganizations would
not be borne by the Existing Funds' shareholders;
Benefits to FIA and Managers
----------------------------
(m) Any benefits derived by FIA or to be derived by
Managers from its relationship with each Existing
Fund;
No Dilution and Tax-Free Transaction
------------------------------------
(n) The terms and conditions of the Reorganizations
and that no dilution of shareholder interests
is expected;
(o) The favorable U.S. federal tax consequences of
the Reorganizations;
(p) The absence of unfavorable other indirect tax
consequences of the Reorganizations;
Managers' Reputation and Possible Alternatives
----------------------------------------------
(q) The reputation, financial strength and resources
of Managers and its affiliates, and its expressed
plans for the Existing Funds after the proposed
Reorganizations;
41
<Page>
(r) FIA's publicly announced desire to leave the
mutual fund and investment advisory business
through the sale of that business, and the
realistic alternatives of either a sale of
that advisory business or the liquidation
of the Existing Funds in the absence of a
sale to Managers;
(s) The future prospects of the Existing Funds'
if the proposed Reorganizations were not
effected, which are limited because of the
need to negotiate a new transaction with
another party, and the effects on the Existing
Funds of the resulting delay;
41
<Page>
(t) FIA's pending regulatory investigations and the
uncertainties typically associated with these
types of investigations; and
Business Consultants
--------------------
(u) Advice from certain business consultants
experienced in sales of mutual fund operations.
Federal Income Tax Consequences
-------------------------------
The following discussion summarizes the material U.S. federal
income tax consequences of the Reorganizations that are applicable
to you as an Existing Fund shareholder. It is based on the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury
regulations, judicial authority, and administrative rulings and
practice, all as of the date of this Proxy Statement/Prospectus
and all of which are subject to change, including changes with
retroactive effect. The discussion below does not address all
of the federal income tax considerations that may be relevant
to you nor does it address any state, local or foreign tax
consequences of the Reorganizations. Your tax treatment may
vary depending upon your particular situation.
You also may be subject to special rules not discussed below if you
are a certain kind of Existing Fund shareholder, including, but not
limited to: an insurance company; a tax-exempt organization; a
financial institution or broker-dealer; a person who is neither a
citizen nor resident of the United States or entity that is not
organized under the laws of the United States or political
subdivision thereof; a holder of Existing Fund shares as part of a
hedge, straddle or conversion transaction; a person that does not
hold Existing Fund shares as a capital asset at the time of the
Reorganizations; or an entity taxable as a partnership for U.S.
federal income tax purposes.
The Reorganizations are not intended to result in the
recognition of income, gain or loss for United States federal
income tax purposes. As a condition to the Reorganizations,
MTI and FMF will receive a legal opinion from Goodwin Procter LLP,
to the effect that, subject to customary assumptions and
representations, on the basis of the existing provisions of the
Code,
<Page>
the Treasury Regulations promulgated thereunder and current
administrative and judicial interpretations thereof, for federal
income tax purposes:
* the transfer by the Existing Fund of all of its assets
to the corresponding New Fund, in exchange solely for
shares of the New Fund, the assumption by such New Fund
of the Stated Liabilities of the Existing Fund, and the
distribution of the shares of the New Fund to the
shareholders of the Existing Fund in complete liquidation
of the Existing Fund will constitute a reorganization
within the meaning of Section 368(a) of the Code;
* the Existing Fund and the New Fund will each be a
"party to a reorganization" within the meaning of
Section 368(b) of the Code;
* the Existing Fund will recognize no gain or loss on
(i) the transfer of its assets to the corresponding
New Fund in exchange solely for shares of the New Fund
and the New Fund's assumption of the Existing Fund's
Stated Liabilities or (ii) the subsequent distribution
of those shares to the Existing Fund's shareholders in
exchange for their Existing Fund shares;
* the New Fund will recognize no gain or loss on its
receipt of the corresponding Existing Fund's assets in
exchange solely for shares of the New Fund and the New
Fund's assumption of the Existing Fund's Stated
Liabilities;
43
<Page>
* the New Fund's basis in the corresponding Existing
Fund's assets will, in each instance, be the same
as the corresponding Existing Fund's basis therein
immediately before the Reorganization, and the
New Fund's holding period for the corresponding
Existing Fund's assets will, in each instance,
include the Existing Fund's holding period
therefor;
* a shareholder of the Existing Fund will recognize no
gain or loss on the exchange of all the Existing
Fund shares held by such shareholder solely for
shares of the corresponding New Fund pursuant to
the Reorganization; and
* an Existing Fund shareholder's aggregate basis in the
shares of the New Fund received by such shareholder in
the Reorganization will be the same as the Existing Fund
shareholder's aggregate basis in the Existing Fund shares
surrendered in exchange for those shares of the New Fund,
and the Existing Fund shareholder's holding period for
those shares of the New Fund will include, in each
instance, the shareholder's holding period for those
Existing Fund shares, provided the shareholder holds
them as capital assets on the closing date of the
Reorganization.
The receipt of such an opinion is a condition to the
consummation of the Reorganizations. MTI has not obtained an
Internal Revenue Service ("IRS") private letter ruling regarding
the federal income tax consequences of the Reorganizations,
and the IRS is not bound by advice of counsel. If the transfer
of the assets of an Existing Fund in exchange for its
corresponding New Fund's shares and the assumption by the New
Fund of the Stated Liabilities of the Existing Fund do not
constitute a tax-free reorganization, Existing Fund shareholders
generally will recognize gain or loss equal to the difference
between the value of the New Fund shares the shareholder acquires
and the tax basis of the shareholder's Existing Fund shares.
Shareholders of the Existing Funds should consult their
tax advisors regarding the effect, if any, of the proposed
Reorganizations in light of their individual circumstances.
Since the foregoing discussion relates only to certain federal
income tax consequences of the Reorganizations, each shareholder
of an Existing Fund should also consult such shareholder's tax
advisors as to the federal, state and local tax consequences,
if any, of the Reorganizations based upon the shareholder's
particular circumstances.
Fees and Expenses of the Reorganizations
----------------------------------------
All fees and expenses, including accounting expenses,
legal expenses, proxy expenses, portfolio transfer taxes (if any)
or other similar expenses incurred in connection with the
completion of the Reorganizations, will be paid by Managers
and FIA.
44
<Page>
III. SUMMARY OF DIFFERENCES BETWEEN THE EXISTING AND NEW FUNDS
==================================================================
The following summary highlights certain differences between
each Existing Fund and its corresponding New Fund. This summary is
not complete and does not contain all of the information that you
should consider before voting on the Reorganizations. For more
complete information, please read this entire document and the
enclosed prospectus of the New Funds.
Comparison of Business Structure
--------------------------------
Form of Organization
- --------------------
Each Existing Fund is a series of FMF, a Maryland
corporation formed on July 13, 1988 pursuant to Amended Articles
of Incorporation dated October 5, 1988, as amended. Each New
Fund is a series of MTI, a Massachusetts business trust which is
an unincorporated voluntary association organized under the laws
of the Commonwealth of Massachusetts pursuant to a Declaration of
Trust dated December 17, 1991. The Declaration of Trust and Bylaws
of MTI are designed to make MTI similar in most respects to a
Massachusetts business corporation. The operations of the Existing
Funds are governed by FMF's Articles of Incorporation and Bylaws
and by Maryland law. The operations of the New Funds are governed
by MTI's Declaration of Trust and Bylaws and by Massachusetts law.
The Existing Funds and the New Funds are registered with the SEC as
open-end management investment companies and are subject to the
provisions of the 1940 Act and the rules and regulations thereunder.
Shares
- ------
The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares (no 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 any New Fund or assets
of another series, if applicable. Each share of each New Fund
represents an equal proportional interest in an New Fund with
each other share. Upon liquidation of an New Fund, shareholders
are entitled to share pro rata in the net assets of an New Fund
available for distribution to such shareholders. Shares of the
New Funds have no preemptive or conversion rights and are fully
paid and nonassessable.
The Articles of Incorporation of FMF authorize the Directors
to create an unlimited number of series. Shares of the Existing
Funds are also fully paid and nonassessable, have no preference,
preemptive or similar rights unless designated by the Directors
and are freely transferable. The assets and proceeds received
by MTI or FMF from the issue or sale of shares of a series are
allocated to that series and constitute the rights of that series,
subject only to the rights of creditors. Any underlying assets
of a series are required to be segregated on the books and
accounts of MTI or FMF. These assets are to be used to pay the
expenses of the series as well as a share of the general expenses.
Meetings
- --------
Neither the Existing Funds nor the New Funds hold regular
or annual shareholder meetings. The Directors of the Existing
Funds may call shareholder meetings as necessary. The Trustees
of the New Funds may also call shareholder meetings as necessary.
Special meetings of shareholders of the Existing Funds shall be
called upon the written request of holders of at least 10% of the
outstanding shares entitled to vote. Under the Declaration of
Trust, special meetings of shareholders of MTI or of any New
Fund shall be called subject to certain conditions, upon the
written request of shareholders owning shares representing at
least two-thirds of the votes entitled to be cast at such meeting.
To the extent required by the 1940 Act, meetings held for the
purpose of voting on the removal of any Director of the Existing
45
<Page>
Funds or any Trustee of the New Funds shall be called by
Directors or Trustees, as applicable, upon written request by
shareholders holding at least 25% of the outstanding shares
entitled to vote. A majority of the issued and outstanding
shares of the Existing Funds entitled to vote and represented
in person or by proxy constitutes a quorum at a shareholder
meeting. Ten percent of the shares of a New Fund entitled
to vote constitutes a quorum at a shareholder meeting, except
when a larger quorum is required by law.
Shareholder Liability
- ---------------------
Under Maryland law, shareholders have no personal
liability for acts or obligations of the corporation. Under
Massachusetts law, shareholders of a trust may under certain
circumstances be held personally liable as partners for the
obligations of the trust. However, the Declaration of Trust
of MTI provides that the shareholders shall not be subject
to any personal liability for the acts or obligations of
any of the New Funds and that every written agreement,
obligation, instrument or undertaking made on behalf of the
New Funds 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 MTI.
However, upon payment of such liability, the shareholder will
be entitled to reimbursement from the general assets of MTI.
The Trustees of MTI intend to conduct the operations of
MTI in a way as to avoid, as far as possible, ultimate
liability of the shareholders of the New Funds.
Liability of Directors and Trustees
- -----------------------------------
FMF's Articles of Incorporation provide that FMF
shall indemnify its Directors and officers to the full
extent permitted by Maryland law and the 1940 Act.
The Declaration of Trust of MTI provides that the
name of MTI refers to the Trustees collectively as Trustees,
not as individuals or personally, and that no Trustee, officer,
employee or agent of MTI is liable to any third persons in
connection with the affairs of the New Funds, 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
MTI for any satisfaction of claims arising in connection with
the affairs of MTI. With the exceptions stated, MTI'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 MTI.
46
<Page>
Rights of Inspection
- --------------------
Maryland law permits any shareholder of the Existing
Funds or any agent of such shareholder to inspect and copy,
during usual business hours, the Bylaws, minutes of shareholder
proceedings, annual statements of the affairs and voting trust
agreements of an Existing Fund on file at its principal offices.
Massachusetts business trust law does not have such provisions.
However, MTI's Declaration of Trust provides that the records
of the New Funds shall be open to inspection by shareholders to
the same extent as is permitted to stockholders of a corporation
under the Massachusetts business corporation statute.
Voting Requirements
- -------------------
Under Maryland law and FMF's Articles of Incorporation
and Bylaws, shareholder voting power is generally limited to
electing directors, approving investment management or sub-
investment management agreements ratifying the selection of
independent public accountants, approving plans of distribution
adopted pursuant to Rule 12b-1, approving amendments to FMF's
Articles of Incorporation and authorizing certain extraordinary
corporate action, such as a merger or liquidation. Shareholders
are entitled to one vote for each full share of capital stock
and a fractional vote for each fractional share of capital
stock. FMF's Articles of Incorporation provide that capital
stock of FMF that is issued, outstanding and entitled to vote
shall be voted in the aggregate, and not by series or class,
except when otherwise required by law or if FMF's Board of
Directors has determined that only one or more series or
classes are affected by the matter under consideration, in
which case only the affected series or classes vote.
Maryland law provides that a corporation's charter may require
a lesser proportion of votes of shareholders on matters than
otherwise required by Maryland law, but not less than a
majority. Under FMF's Articles of Incorporation and Bylaws,
most corporate action to be taken by a shareholder vote
may be authorized by a majority of votes cast on the matter
(although a plurality may elect a Director), subject to
applicable laws, regulations, or rules or orders of the
SEC. The merger or liquidation of a series or class must
be approved by a majority of the outstanding shares of that
series or class.
The shareholders of the New Funds are entitled to one
vote for each whole share held (or a proportionate fractional
vote in respect of a fractional share), on matters on which
shares of the New Funds 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
MTI. 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.
Liquidation or Dissolution
- --------------------------
In the event of the liquidation or dissolution of a series
of MTI, the Trustees shall distribute the assets of
the respective series to the shareholders, according
to their respective rights, after accounting for fund
liabilities of that series. In the event of the
liquidation of FMF or a series of FMF, shareholders
of a series shall be entitled to receive their respective
portion of the assets belonging to such series.
Derivative Actions
- ------------------
Under Massachusetts law and the Declaration of
Trust, a shareholder of a New Fund may bring a
derivative action on behalf of MTI only if the
following conditions are met. In general, the
shareholder must make a pre-suit demand upon the
Trustees to bring the subject action unless a
majority of the Board
47
<Page>
of Trustees, or a majority of any committee established
to consider the merits of such action, has a personal
financial interest in the transaction. A Trustee shall
not be disqualified from ruling on the merits of a
shareholder demand by virtue of the fact that such
Trustee receives remuneration for his service on
the Board of Trustees of MTI or on the boards of
other funds that are affiliated with MTI. Unless a
demand upon the Trustees is not required, shareholders
who hold at least 10% of the outstanding shares of
MTI must generally join in the demand upon the
Trustees.
Under Maryland law, shareholders of an Existing
Fund may not bring a derivative action unless they have
first made a demand upon the corporation to sue in its own
name and the demand was refused. If the Directors
improperly refuse to bring a derivative suit or if the
demand upon the Directors is excused, then a plaintiff
generally must then make the demand upon the corporation's
other shareholders before commencing suit.
The foregoing is only a summary of certain
characteristics of the operations of the Declaration of
Trust of MTI, Articles of Incorporation of FMF, their
respective Bylaws and Massachusetts and Maryland law and
is not a complete description of those documents or law.
Shareholders should refer to the provisions of such
Declaration of Trust, Articles of Incorporation, Bylaws
and Massachusetts and Maryland law directly for more
complete information.
Comparative Information on Fundamental
Investment Restrictions
--------------------------------------
The Existing Funds and the New Funds are each subject
to certain fundamental investment restrictions regarding their
investments. A fundamental investment restriction may not be
changed without the affirmative vote of the holders of a
majority of the Fund's outstanding securities (as defined
in the 1940 Act). However, investment restrictions that are
not fundamental may be changed by a Fund's Trustees without
shareholder approval. The tables in Appendix B compare the
fundamental investment restrictions of the Existing Funds
and the New Funds. Differences in fundamental investment
restrictions between an Existing Fund and its corresponding
New Fund are not expected to result in any material difference
between the manner in which the New Fund is managed as compared
to the Existing Fund.
Existing and Pro Forma Capitalizations
--------------------------------------
Each New Fund will be the accounting successor to
the corresponding Existing Fund after consummation of the
Reorganization. No capitalization information is shown for
the New Funds because the New Funds will not commence
operations until the completion of the Reorganizations.
Accordingly, the pro forma capitalization of the combined
Funds will be identical to the capitalization of the
corresponding Existing Fund, shown in the tables below as
of June 30, 2004.
Fremont Global Fund and
Managers Fremont Global Fund
- ----------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont Global Fund $243,623,524 $12.06 20,207,948
Pro Forma Combined-
Managers Fremont Global Fund $243,623,524 $12.06 20,207,948
</Table>
48
<Page>
Fremont International Growth Fund and
Managers International Growth Fund
- -------------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont International Growth Fund $51,508,275 $8.22 6,269,502
Pro Forma Combined-
Managers International Growth Fund $51,508,275 $8.22 6,269,502
</Table>
Fremont Structured Core Fund and
Managers Structured Core Fund
- --------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont Structured Core Fund $74,644,128 $11.48 6,502,045
Pro Forma Combined-
Managers Structured Core Fund $74,644,128 $11.48 6,502,045
</Table>
Fremont U.S. Small Cap Fund and
Managers Small Cap Fund
- -------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont U.S. Small Cap Fund $57,419,297 $11.51 4,986,710
Pro Forma Combined-
Managers Small-Cap Fund $57,419,297 $11.51 4,986,710
</Table>
Fremont U.S. Micro-Cap Fund and
Managers Fremont Micro-Cap Fund
- -------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont U.S. Micro-Cap Fund $554,851,498 $29.23 18,982,143
Pro Forma Combined-
Managers Fremont Micro-Cap Fund $554,851,498 $29.23 18,982,143
</Table>
49
<Page>
Fremont Institutional U.S. Micro-Cap Fund and
Managers Fremont Institutional Micro-Cap Fund
- ---------------------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont Institutional U.S.
Micro-Cap Fund $395,764,255 $15.14 26,148,606
Pro Forma Combined-Managers
Fremont Institutional
Micro-Cap Fund $395,764,255 $15.14 26,148,606
</Table>
Fremont Real Estate Securities Fund and
Managers Real Estate Securities Fund
- ---------------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont Real Estate Securities Fund $25,501,923 $11.36 2,244,815
Pro Forma Combined-
Managers Real Estate Securities Fund $25,501,923 $11.36 2,244,815
</Table>
Fremont Bond Fund and Managers Fremont Bond Fund
- ------------------------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont Bond Fund $806,679,057 $10.40 77,572,444
Pro Forma Combined-Managers Fremont
Bond Fund $806,679,057 $10.40 77,572,444
</Table>
Fremont California Intermediate Tax-Free Fund and
Managers California Intermediate Tax-Free Fund
- -------------------------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont California Intermediate
Tax-Free Fund $49,134,046 $10.70 4,592,079
Pro Forma Combined-Managers
California Intermediate Tax-Free
Income Fund $49,134,046 $10.70 4,592,079
</Table>
50
<Page>
Fremont Money Market Fund and
Managers Fremont Money Market Fund
- -----------------------------------
<Table>
Net Asset Value
Net Assets per Share Shares Outstanding
---------- --------------- ------------------
Fremont Money Market Fund $632,683,634 $1.00 632,706,488
Pro Forma Combined-Managers
Fremont Money Market Fund $632,683,634 $1.00 632,706,488
</Table>
51
<Page>
Comparison of Investment Advisers and
Investment Advisory Fees
-------------------------------------
Investment Advisor-the New Funds
- --------------------------------
Managers is the investment advisor to each
New Fund. Managers has overall supervisory
responsibility for the investment program of each
New Fund. Managers selects and recommends, subject
to the approval of the Board of Trustees of MTI,
one or more subadvisors to manage each New Fund's
investment portfolio. It 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 New Funds. The SEC has given MTI an exemptive
order permitting Managers to change subadvisors
without prior shareholder approval, but subject to
shareholder notification within 90 days of any such
changes. The SEC has also given the Existing Funds
an exemptive order that permits FIA, without
shareholder approval but subject to certain
conditions, to employ new subadvisors or terminate
subadvisors for the Existing Funds and modify the
terms of particular subadvisory agreements, subject
to the approval of the Board of Directors. Managers
also furnishes certain administrative, compliance
and accounting services for MTI and each New Fund.
Subadvisors-the New Funds
- -------------------------
Managers has contracted with Kern Capital
Management LLC ("Kern"), Jarislowsky, Fraser
Limited ("JFL"), Northstar Capital Management, Inc.
("Northstar"), First Quadrant, L.P. ("First
Quadrant") and Armstrong Shaw Associates, Inc.
("Armstrong") to act as subadvisors for Managers
Fremont Global Fund. Managers has also contracted
with JFL to act as subadvisor for Managers
International Growth Fund, First Quadrant, L.P.
to act as subadvisor for Managers Structured
Core Fund, TimesSquare Capital Management, Inc.
("TimesSquare") to act as subadvisor for Managers
Small Cap Fund, Kern to act as subadvisor for
Managers Fremont Micro-Cap Fund and Managers
Fremont Institutional Micro-Cap Fund, Urdang
Securities Management, Inc. ("Urdang") to act as
subadvisor for Managers Real Estate Securities Fund,
Pacific Investment Management Company LLC ("PIMCO")
to act as subadvisor for Managers Fremont Bond Fund
and Evergreen Investment Management Company, LLC
("Evergreen") to act as subadvisor for Managers
California Intermediate Tax-Free Fund (each of
Kern, JFL, Northstar, First Quadrant, Armstrong,
TimesSquare, Urdang, PIMCO and Evergreen a "Successor
Subadvisor" and together, the "Successor Subadvisors").
Managers Fremont Global Fund
- ----------------------------
The day-to-day management of the investment
operations of Managers Fremont Global Fund is
provided by five subadvisors, each of which has a
particular investment focus. Kern, located at 114
West 47th Street, Suite 1926, New York, NY 10036-1510,
managed over $1.8 billion in assets as of December 31,
2003. JFL, located at 140 4th Avenue,S.W. Suite 1640,
Calgary, Alberta T2P 3N3 Canada, managed over $33.6
billion in assets as of December 31, 2003.
Northstar, located at 440 PGA Blvd, Suite 600,Palm
Beach Gardens, FL 33410 managed over $508 million
in assets as of December 31, 2003. First Quadrant,
which is affliated with Managers,located at 800
E. Colorado Blvd. Suite 900, Pasadena, CA 91101, held
approximately $5.7 billion in assets under
management as of December 31, 2003. Armstrong,
located at 45 Grove Street, New Canaan, CT 06840,
managed over $6.2 billion as of December 31, 2003.
52
<Page>
Managers International Growth Fund
- ----------------------------------
The day-to-day management of the investment
operations of Managers International Growth Fund is
provided by JFL. For more information about JFL, see
"Managers Fremont Global Fund" above.
<Page>
Managers Structured Core Fund
- -----------------------------
The day-to-day management of the investment
operations of Managers Structured Core Fund is
provided by First Quadrant. For more information
about First Quadrant, see "Managers Fremont Global
Fund" above.
Managers Small Cap Fund
- -----------------------
The day-to-day management of the investment
operations of Managers Small Cap Fund is
provided by TimesSquare. For more information
about TimesSquare, see "Managers Fremont Global
Fund" above.
Managers Fremont Micro-Cap Fund
- -------------------------------
The day-to-day management of the investment
operations of Managers Fremont Micro-Cap Fund is
provided by Kern. For more information about
Kern, see "Managers Fremont Global Fund" above.
Managers Fremont Institutional Micro-Cap Fund
- ---------------------------------------------
The day-to-day management of the investment
operations of Managers Fremont Institutional
Micro-Cap Fund is provided by Kern. For more
information about Kern, see "Managers Fremont
Global Fund" above.
Managers Real Estate Securities Fund
- ------------------------------------
The day-to-day management of the investment
operations of Managers Real Estate Securities
Fund is provided by Urdang. Urdang, located
at 630 West Germantown Pike, Suite 300, Plymouth
Meeting, PA 19642, managed $700 million in public
real estate securities in separate accounts
as of December 31, 2003.
Managers Fremont Bond Fund
- --------------------------
The day-to-day management of the investment
operations of Managers Fremont Bond Fund is
provided by PIMCO. PIMCO, located at 840
Newport Center Drive, Newport Beach, CA 92660,
managed over $373 billion in fixed-
income investments for institutional clients as
of December 31, 2003.
Managers California Intermediate Tax-Free Fund
- ----------------------------------------------
The day-to-day management of the investment
operations of Managers California Intermediate
Tax-Free Fund is provided by Evergreen. Evergreen,
located at 12 E. 49th Street, 21st Floor, New York,
NY 10017, managed more than $247 billion in
assets as of December 31, 2003.
The day-to-day management of the investment
operations of each Existing Fund, with the exceptions
of the Fremont Global Fund, the Fremont Structured
Core Fund, the Fremont Real Estate Securities Fund
and the Fremont Money Market Fund, is provided by
one or more of the Successor Subadvisors. If the
53
<Page>
Reorganization is approved by shareholders, the
day-to-day management of the investment operations of
each New Fund will continue to be provided by the
same Successor Subadvisor(s) that currently provides
such management to the Existing Fund with which the
New Fund will be reorganized.
Portfolio Managers
- ------------------
[The Managers Fremont Global Fund is managed
utilizing a team responsible for the overall
management of the Fund including determining the
portion of assets allocated to each portfolio of
the Fund. Five subadvisors also manage portions
of the Fund, each with a specific investment focus.]
Robert E. Kern, Jr. has served as lead portfolio
manager of the Fremont U.S. Micro-Cap Fund since its
inception in 1994. He is co-manager of the Managers
Fremont Micro-Cap Fund and Managers Fremont
Institutional Micro-Cap Fund and will continue in
these capacities following the Reorganizations.
David Kern, CFA, co-founded Kern in 1997 and has
served as its president. He is co-manager of the
Managers Fremont Micro-Cap Fund and Managers Fremont
Institutional Micro-Cap Fund and will continue in
these capacities following the Reorganizations.
JFL utilizes a team approach to manage Managers
International Growth Fund and will continue with this
approach following the Reorganizations.
Northstar utilizes a team approach to manage its
respective portion of the Managers Fremont Global
Fund and will continue this approach following the
Reorganizations.
Christopher C. Luck, CFA, a partner in First Quadrant
joined First Quadrant, in 1995 as Director of Equity
Management of its predecessor, First Quadrant
Corporation. He isco-manager of the Managers
Structured Core Fund and will continue in this
capacity following the Reorganizations.
R. Max Darnell joined First Quadrant in 1991 and has
served as Partner, Chief Investment Officer and
portfolio manager for the firm. He is co-manager of
the Managers Structured Core Fund and will
continue in this capacity following the Reorganizations.
Yvette C. Bockstein is a managing director and
portfolio manager with over 37 years of investment
experience. Prior to joining TimesSquare as Managing
Director and Portfolio Manager in 2000, Ms. Bockstein
served as a portfolio manager of Fiduciary Trust Company
International, which she joined in 1978. Ms. Bockstein
is co-manager of the Managers Small Cap Fund and will
continue in this capacity following the Reorganizations.
Grant R. Babyak is a managing director and portfolio
manager with over 15 years of investment experience.
Prior to joining TimesSquare in 2000, Mr. Babyak served
as a portfolio manager of Fiduciary Trust Company
International, which he joined in 1996. Mr. Babyak is
co-manager of the Managers Small Cap Fund and will
continue in this capacity following the Reorganizations.
Todd Briddell, CFA,is Managing Director of Urdang,
co-founded Urdang in 1995 and has 13 years of real
estate industry experience. Mr. Briddell is co-manager
of the Managers Real Estate Securities Fund and will
continue in this capacity following the Reorganizations.
Dean Frankel, CFA, joined Urdang in 1997 and is a
vice president and senior securities analyst. Mr.
Frankel is co-manager of the Managers Real Estate
Securities Fund and will continue in this capacity
following the Reorganizations.
54
<Page>
Peter Zabierek joined Urdang in 2003 and is a vice
president and senior research analyst. Prior to
joining Urdang, he was employed by Morgan Stanley
as a senior equity research associate from 2002.
From 1998 through 2001, Mr. Zabierek was an associate
for Salomon Smith Barney in its Real Estate
Investment Banking division. Mr. Zabierek is co-
manager of the Managers Real Estate Securities Fund
and will continue in this capacity following the
Reorganizations.
William H. Gross, a founder and managing director of
PIMCO, has been portfolio manager of the Fremont Bond
Fund since March 1994. He has over 30 years of
professional fixed-income investment experience.
Mr. Gross is manager of the Managers Fremont Bond
Fund and will continue in this capacity following
the Reorganizations.
Michael Pietronico is a managing director and senior
portfolio manager at Evergreen. He is a member of the
Evergreen Municipal Team and has 18 years of investment
management experience. From 1995 through 2002, Mr.
Pietronico was a portfolio manager of OFFITBANK.
Effective January 1, 2003, OFFITBANK was merged into
Wachovia Bank and the Offit Investment Group became
part of Evergreen. Mr. Pietronico is manager of
the Managers California Intermediate Tax-Free Fund
and will continue in this capacity following the
Reorganizations.
Investment Management Agreement--Existing Funds.
-----------------------------------------------
FIA, in addition to providing investment management
services, furnishes the services and pays the
compensation and travel expenses of persons who
perform the executive, administrative, clerical, and
bookkeeping functions of the Fremont Funds,
provides suitable office space, necessary small office
equipment and utilities, and general purpose accounting
forms, supplies, and postage used at the offices of the
Fremont Funds. FIA is responsible to pay transfer
agency fees when such entities are engaged in
connection with share holdings in the Existing Funds
acquired by certain retirement plans. Each Existing
Fund (except Fremont U.S. Micro-Cap Fund) will pay all
of its own expenses not assumed by FIA, including, but
not limited to, the following: custodian, stock
transfer, and dividend disbursing fees and expenses;
taxes and insurance; expenses of the issuance and
redemption of shares of the Existing Fund (including
stock certificates, registration or qualification
fees and expenses); legal and auditing expenses; and
the costs of stationery and forms prepared exclusively
for the Existing Funds.
With respect to Fremont U.S. Micro-Cap Fund
FIA hasagreed to bear all of the Funds' ordinary operating
expenses in return for receiving a monthly fee of 2.5%
per annum of the Funds' average daily net assets with
respect to the first $30 million of assets in each Fund,
2.0% with respect to the next $70 million of assets in
each Fund, and 1.5% thereafter.
Each Existing Fund will bear all expenses relating
to interest, brokerage commissions, other transaction
charges relative to investing activities of the Existing
Fund, and extraordinary expenses (including for example,
litigation expenses, if any). The allocation of general
Fremont Funds expenses among the Existing Funds is made
on a basis that the directors deem fair and equitable,
which may be based on the relative net assets of each
Existing Fund or the nature of the services performed
and relative applicability to each Existing Fund.
For Fremont International Growth Fund, Fremont U.S.
Small Cap Fund, Fremont Real Estate Securities Fund,
Fremont Bond Fund, and Fremont California Intermediate
Tax-Free Fund, to the extent management fees are waived
and/or other expenses are reimbursed by FIA, an Existing
Fund may reimburse FIA for any reductions in the Existing
Fund's expenses during the three years following that
55
<Page>
reduction if such reimbursement is requested by FIA, if
such reimbursement can be achieved within the foregoing
expense limit, and if the Board of Directors approves the
reimbursement at the time of the request as not
inconsistent with the best interest of the Existing Fund.
The obligation of the Funds to reimburse FIA with respect
to the foregoing will terminate upon the closing of the
Reorganizations.
The Investment Advisory Agreements (the "Existing
Advisory Agreements") with respect to each Existing Fund
may be renewed annually, provided that any such renewal
has been specifically approved by (i) the Board of
Directors, or by the vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of an
Existing Fund, and (ii) the vote of a majority of directors
who are not parties to the respective Existing Advisory
Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person, at a meeting
called for the purpose of voting on such approval. Each
Existing Advisory Agreement provides that either party
thereto has the right with respect to the
respective Existing Fund to terminate it without penalty
upon sixty (60) days' written notice to the other
party, and that the Existing Advisory Agreement
terminates automatically in the event of its assignment
(as defined in the 1940 Act).
Under the Existing Advisory Agreement, FIA is paid
a fee by the Existing Fund at an annual rate of the
average daily net assets of each Existing Fund as
described below.
<Table>
Fund Annual Investment Management Fee
- ---- ------------------------------
Fremont Global Fund 0.60%
Fremont International Growth Fund 1.00%
Fremont Structured Core Fund 0.35%
Fremont U.S. Small Cap Fund 1.00%
Fremont U.S. Micro-Cap Fund 2.5% on the first $30 million,
2.00% on the next $70 million,
1.5% on average daily net assets
over $100 million
Fremont Institutional U.S.
Micro-Cap Fund 1.00%
Fremont Real Estate Securities Fund 0.85%
Fremont Bond Fund 0.40%
Fremont California Intermediate
Tax-Free Fund 0.40% on the first $25 million,
0.35% on the next $25 million,
0.30% on the next $50 million,
0.25% on the next $50 million
0.20% on average daily net assets
over $150 million
Fremont Money Market Fund 0.30% on the first $50 million,
0.20% on average daily net assets
over $50 million
</Table>
56
<Page>
The Existing Funds' Board of Directors have approved
an Operating Expense Agreement which contractually
obligates FIA to limit the expenses of certain funds
(as a percentage of average net assets)
for an indefinite period as described below.
<Table>
Fund Expense Limitation
- ---- ------------------
Fremont International Growth Fund 1.50%
Fremont U.S. Small Cap Fund 1.60%
Fremont Real Estate Securities Fund 1.50%
Fremont California Intermediate
Tax-Free Fund 0.55%
Fremont Institutional U.S. Micro-
Cap Fund 1.35%
Fremont U.S. Micro-Cap Fund 1.98%
</Table>
<Page>
Also, under the Operating Expense Agreement, FIA is
obligated to waive 0.05% of the 0.15% administrative fee
for Fremont Bond Fund. Also, effective November 1, 2003,
FIA voluntarily agreed to reimburse Existing Fund operating
expenses that exceed 0.60% of the Bond Fund's average
net assets. FIA may remove this waiver at any time
in the future.
The Administration Agreements with respect to
Fremont International Growth Fund, Fremont Institutional
U.S. Micro-Cap Fund, Fremont U.S. Small Cap Fund,
Fremont Money Market Fund, Fremont Bond Fund,
Fremont Real Estate Securities Fund, Fremont Global Fund,
Fremont Structured Core Fund, and Fremont California
Intermediate Tax-Free Fund, also provide for the payment
of an administrative fee to FIA at an annual
rate of 0.15% of average net assets.
Investment Management Agreement--New Funds.
The terms of the investment management agreement
between Managers and the New Funds (the "Successor
Management Agreement") provide for Managers to have
overall supervisory responsibility for each New Fund's
general investments and management of its assets in
accordance with the New Fund's investment objectives,
policies and restrictions subject to such direction
as it may receive from MTI's Board of Trustees from
time to time. Managers is responsible for
(a) selecting and recommending to the Trustees of
MTI one or more subadvisors for each New Fund and
for monitoring and evaluating the performance of
each subadvisor on an ongoing basis and
(b) exercising investment discretion and making
all determinations with respect to any portion of
an New Fund's assets not assigned to a subadvisor,
including determinations regarding the purchase
and sale of portfolio securities.
The Successor Management Agreement has an
initial two year term and then continues in effect,
unless terminated as described below, for
successive one year periods, so long as its
continuance is approved at least annually (a) by
thevote of a majority of the outstanding voting
securities of each New Fund (as defined in the
1940 Act) or (b) by the vote of a majority of
MTI's Board of Trustees, provided that in either
event the continuance is also approved by the
vote of a majority of the Independent Trustees
cast in person at a meeting called for the
purpose of voting on the continuance. The
Successor Management Agreement terminates
automatically in the event of its assignment
(as defined in the 1940 Act) and may be
terminated at any time, without the payment of
any penalty, (i) by the vote of a majority
of MTI's Board of Trustees, (ii) by vote of a
majority of the outstanding voting securities of
MTI, or (iii) with respect to a New Fund, by vote
of a majority of the outstanding shares of the
New Fund, in each case upon sixty (60) days' written
notice to Managers. The Successor Management
Agreement may be terminated by Managers upon sixty
(60) days' written notice to MTI. The Successor
Management Agreement provides that, in the absence
of willful misfeasance, bad faith, gross
negligence, or reckless
57
<Page>
disregard of its obligations or duties, Managers
is not subject to liability to an New Fund or any
New Fund shareholder for any act or omission in the
course of, or connected with, services rendered under
the agreement or for any losses that may be sustained
in the purchase, holding, or sale of any security,
provided that these provisions shall not protect
Managers from liability in violation of the 1940
Act.
Under the Successor Management Agreement,
for both the services provided to, and the
expenses assumed for each New Fund, Managers is
paid a fee by the New Fund. This fee is computed
daily and paid monthly, at an annual rate of a
certain percentage of the average daily net
assets of each Existing Fund. The annual
investment advisory fee rate of each New Fund
is as follows:
<Page>
<Table>
Fund Annual Investment Management Fee
- ---- ------------------------------
Managers Fremont Global Fund 0.60%
Managers International Growth Fund 1.00%
Managers Structured Core Fund 0.35%
Managers Small Cap Fund 1.00%
Managers Fremont Micro-Cap Fund 1.00%
Managers Fremont Institutional Micro-Cap Fund 1.00%
Managers Real Estate Securities Fund 0.85%
Managers Fremont Bond Fund 0.40%
Fremont California Intermediate
Tax-Free Fund 0.40% on the first $25 million,
0.35% on the next $25 million,
0.30% on the next $50 million,
0.25% on the next $50 million
0.20% on average daily net assets
over $150 million
Fremont Money Market Fund 0.30% on the first $50 million,
0.20% on average daily net assets
over $50 million
</Table>
If each Reorganization is approved, Managers
will contractually agree to continue for each New
Fund the current expense limitation currently being
maintained by FIA with respect to the corresponding
Existing Fund for at least the next year, as applicable.
Consequently, until at least March 1, 2006, provided
that Managers remains investment advisor to the New
Funds, Managers has agreed to waive fees and pay or
reimburse each New Fund to the extent total expenses
(exclusive of brokerage, interest, taxes and
extraordinary expenses) of the New Fund exceed
certain specified percentages of the average daily
net assets for each New Fund. Each New Fund is
obligated to repay Managers the amounts waived,
paid or reimbursed in future years provided that
the repayment occurs within three (3) years after
the waiver or reimbursement and that repayment
would not cause the New Fund's expenses in any such
future year to exceed the percentage limitation
established for the corresponding Existing Fund as
set forth above.
Managers also serves as the administrator
to the New Funds and receives compensation from
MTI pursuant to an Administration and Shareholder
Services Agreement. Under that agreement, Managers
supervises the overall administration of and
certain shareholder services for each New Fund.
The administrative services include supervising
the preparation and filing of all documents
required for compliance by each New Fund with
applicable laws and regulations, supervising the
maintenance of books and records, and other
general and administrative responsibilities.
The shareholder services include processing
and/or coordinating New Fund share purchases
and redemption, responding to inquiries from
shareholders and providing omnibus level
support for financial intermediaries who
perform sub-accounting for shares held of
record by financial intermediaries for the
benefit of other
58
<Page>
beneficial owners. For providing these services,
Managers receives a fee from each New Fund of
0.25% per annum of its average daily net assets,
except for Managers Fremont Money Market Fund,
which pays 0.15% per annum of its average daily
net assets.
Subadvisory Agreements--Existing Funds.
---------------------------------------
The Existing Advisory Agreements authorize FIA, at
its option and at its sole expense, to appoint a
Subadvisor, which may assume all or a portion of the
responsibilities and obligations of FIA pursuant to
the Existing Advisory Agreement as shall be delegated
to the Subadvisor. Any appointment of a Subadvisor
and assumption of responsibilities and obligations
of FIA by such Subadvisor is subject to approval by
the Board of Directors and, as required by law, the
shareholders of the affected Existing Fund. FIA has
entered into subadvisory agreements (the "Existing
Subadvisory Agreements") with Armstrong Shaw
Associates, Inc., Jarislowsky, Fraser Limited,
Kern Capital Management LLC and Northstar
Capital Management, Inc. to serve as subadvisors
to Fremont Global Fund, with Jarislowsky, Fraser
Limited to serve as subadvisor to Fremont
International Growth Fund, with TimesSquare
Capital Management, Inc. to serve
as subadvisor to Fremont U.S. Small Cap Fund, and
with Kern Capital Management LLC to serve as
subadvisor to Fremont U.S. Micro-Cap Fund and
Fremont Institutional U.S. Micro-Cap Fund. FIA
has also entered into Existing Subadvisory
Agreements with Urdang Securities Management to
serve as subadvisor to
<Page>
Fremont Real Estate Securities Fund, with Pacific
Investment Management Company, LLC to serve as
subadvisor to Fremont Bond Fund and with Evergreen
Investment Management Company, LLC to serve as
subadvisor to Fremont California Intermediate
Tax-Free Fund.
Each Existing Subadvisory Agreement
continues for successive one year periods, so
long as its continuance is approved at least
annually (a) by the vote of a majority of the
outstanding voting securities of the Existing
Fund (as defined in the 1940 Act) or (b) by the
vote of a majority of the Fremont Funds' Board of
Directors, provided that in either event the
continuance is also approved by the vote of a
majority of FMF's Independent Directors cast in
person at a meeting called for the purpose of
voting on the continuance. Each Existing
Subadvisory Agreement will terminate
automatically in the event of its assignment
(as defined in the 1940 Act). Each Existing
Subadvisory Agreement also provides that an
Existing Fund, by the vote of a majority of
FMF's Board of Trustees or a majority of its
outstanding voting securities, may terminate an
agreement, without penalty, on sixty (60) days
written notice to the Existing Subadvisor and
the Existing Subadvisor may terminate an
agreement, without penalty, on one-hundred and
twenty (120) days written notice to FIA. FIA may
terminate an agreement, without penalty, on one-
hundred and twenty (120) days written notice to the
Existing Subadvisor.
The Existing Subadvisory Agreements provide
that the Existing Subadvisors agree to manage the
investment of the applicable Existing Fund's
assets, subject to the applicable provisions of
the Fremont Funds' Articles of Incorporation, Bylaws
and current registration statement (including, but not
limited to, the investment objective, policies, and
restrictions delineated in the Existing Funds' current
Prospectus and Statement of Additional Information),
as interpreted from time to time by the Board of
Directors.
For their services under the Existing Subadvisory
Agreements, FIA (not the Funds) has agreed to pay the
Existing Subadvisors an annual fee equal to the percentages
set forth below of the value of the applicable Existing
Fund's average net assets allocated to the Subadvisor,
payable monthly, as follows:
59
<Page>
<Table>
Fund Annual Investment Subadvisory Fee
- ---- ---------------------------------
Fremont Global Fund To Kern: 0.50%
To Jarislowsky Fraser*:
0.60% on first $25 million,
0.50% on the next $25 million,
0.40% on the next $25 million,
0.30% on the next $25 million,
0.20% in excess of $100 million
To Northstar*:
0.50% on the first $50 million
0.40% on the next $150 million
0.35% on the next $800 million
0.25% on the amount in excess of $1 billion
To First Quadant LP: 0.35%
To Armstrong:
0.75% on the first $25 million
0.50% on the next $50 million
0.40% on the next $50 million
0.30% on the amount in excess of $125 million
Fremont International Growth Fund 0.60% on first $25 million,
0.50% on the next $25 million,
0.40% on the next $25 million,
0.30% on the next $25 million,
0.20% in excess of $100 million
Fremont Structured Core Fund 0.35%
Fremont U.S. Small Cap Fund 0.85% on first $50 million,
0.70% on the next $50 million,
0.65% in excess of $100 million
Fremont U.S. Micro-Cap Fund 1.25% on first $25 million,
1.00% on the next $75 million,
0.75% in excess of $100 million
Fremont Institutional
U.S. Micro-Cap Fund 0.75%
Fremont Real Estate Securities Fund 0.65%
Fremont Bond Fund 0.25%
Fremont California Intermediate
Tax-Free Fund 0.25% on first $25 million,
0.20% in excess of $25 million
</Table>
* Fee aggregation applies to all accounts managed by
Jarislowsky Fraser Limited, and Northstar Capital Management,
Inc. for FMF. Each Existing Fund or portfolio managed by the subadvisor
pays its pro-rata share of the aggregated fee.
Subadvisory Agreements--New Funds.
----------------------------------
Under the subadvisory agreements between Managers
and each Successor Subadvisor (the "Successor
Subadvisory Agreements"), each Successor Subadvisor
manages all or a portion of a New Fund's portfolio,
including the determination of the purchase,
retention, or sale of securities, cash, and other
investments for the New Fund in accordance with
the New Fund's investment objectives, policies,
and investment restrictions. The Successor
Subadvisor provides these services subject to
the general supervision of Managers and MTI's Board
of Trustees.
60
<Page>
Each Successor Subadvisory Agreement has an
initial term of two years and then continues in
effect, unless terminated as described below, for
successive one year periods, so long as its
continuance is approved at least annually (a) by
the vote of a majority of the outstanding voting
securities of the New Fund (as defined in the 1940
Act) or (b) by the vote of a majority of MTI's Board
of Trustees, provided that in either event the
continuance is also approved by the vote of a majority
of MTI's Independent Trustees cast in person at a
meeting called for the purpose of voting on the
continuance. Each Successor Subadvisory Agreement
will terminate automatically in the event of its
assignment (as defined in the 1940 Act). Under the
terms of each Successor Subadvisory Agreement, the
agreement may be terminated: (i) by Managers at any
time, without payment of a penalty, upon notice to the
Successor Subadvisor and MTI, (ii) with respect to a
New Fund, at any time, without payment of a penalty,
by MTI or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of
the New Fund upon notice to the Successor Subadvisor,
or (iii) by the Successor Subadvisor at any time, without
payment of a penalty, upon thirty (30) days' written
notice to Managers and MTI. Each Successor Subadvisory
Agreement provides that the Successor Subadvisor shall
not be subject to any liability for any act or omission,
error of judgment, or mistake of law or for any loss
suffered by Managers or MTI in connection with the
Successor Subadvisory Agreement, except by reason of
the Subadvisor's willful misfeasance, bad faith, or
gross negligence in the performance of its duties,
or by reason of the Successor Subadvisor's reckless
disregard of its obligations and duties under the
Successor Subadvisory Agreement.
Under each Successor Subadvisory Agreement, a
Successor Subadvisor receives a subadvisory fee
from Managers (not from the New Fund), computed
daily and paid monthly, at an annual rate as follows:
61
<Page>
<Table>
Fund Annual Investment Subadvisory Fee
- ---- ---------------------------------
Managers Fremont Global Fund To Kern: 0.50%
To Jarislowsky Fraser*:
0.60% on first $25 million,
0.50% on the next $25 million,
0.40% on the next $25 million,
0.30% on the next $25 million,
0.20% in excess of $100 million
To Northstar*:
0.50% on the first $50 million
0.40% on the next $150 million
0.35% on the next $800 million
0.25% on the amount in excess of $1 billion
To First Quadant LP: 0.35%
To Armstrong:
0.75% on the first $25 million
0.50% on the next $50 million
0.40% on the next $50 million
0.30% on the amount in excess of $125 million
Managers International Growth Fund 0.60% on first $25 million,
0.50% on next $25 million,
0.40% on next $25 million,
0.30% on next $25 million,
0.20% in excess of $100 million
Managers Structured Core Fund 0.35%
Managers Small Cap Fund 0.85% on first $50 million,
0.70% on next $50 million,
0.65% in excess of $100 million
Managers Fremont Micro-Cap Fund 0.75%
Managers Fremont Institutional
Micro-Cap Fund 0.75%
Managers Real Estate Securities Fund 0.60%
Managers Fremont Bond Fund 0.25%
Managers California Intermediate
Tax-Free Fund 0.25% on first $25 million,
0.20% in excess of $25 million
</Table>
* Fee aggregation shall apply to all accounts managed by
Jarislowsky Fraser Limited, and Northstar Capital Management,
Inc. for FMF> Each Existing Fund managed by the subadvisor will
pay its pro-rata share of the aggregated fee.
Independent Public Accountants
- ------------------------------
MTI has selected PricewaterhouseCoopers LLP,
125 High Street, Boston, Massachusetts 02110,
as the independent accountants for the New Funds
for the fiscal year ending October 31, 2005.
Other Principal Service Providers
- ---------------------------------
The following table lists the principal service providers for
the Existing Funds and the New Funds. The Reorganization is
not expected to result in an increase of transfer agency or
custodial expenses for shareholders of the Existing Funds.
62
<page>
SERVICE PROVIDERS
=================
<Table>
SERVICE EXISTING FUNDS NEW FUNDS
- ------- -------------- ---------
Investment Adviser Fremont Investment Advisors, Inc. The Managers Funds LLC
333 Market Street, Suite 2600 800 Connecticut Avenue
San Francisco, California 94105 Norwalk, Connecticut 06854
Distributor Quasar Distributors LLC Managers Distributors, Inc.
615 East Michigan Street 800 Connecticut Avenue
Milwaukee, Wisconsin 53202 Norwalk, Connecticut 06854
Administrator Fremont Investment Advisors, Inc. The Managers Funds LLC
333 Market Street, Suite 2600 800 Connecticut Avenue
San Francisco, California 94105 Norwalk, Connecticut 06854
Custodian State Street Bank & Trust Company State Street Bank & Trust Company
801 Pennsylvania 801 Pennsylvania
Kansas City, Missouri 64105 Kansas City, Missouri 64105
Fund Accountant State Street Bank & Trust Company State Street Bank & Trust Company
801 Pennsylvania 801 Pennsylvania
Kansas City, Missouri 64105 Kansas City, Missouri 64105
Transfer Agent and PFPC, Inc. PFPC, Inc.
Dividend Disbursing 4400 Computer Drive 4400 Computer Drive
Agent Westborough, Massachusetts 01581-5120 Westborough, Massachusetts 01581-5120
Independent Auditors PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
333 Market Street 125 High Street
San Francisco, California 94105 Boston, Massachusetts 02110
</Table>
63
<Page>
IV. INFORMATION ON VOTING
=============================
Proxy Solicitation
------------------
This Proxy Statement/Prospectus is being
provided in connection with the solicitation of
proxies by the Boards of Directors of the Fremont
Funds to solicit your vote for the Reorganizations
at a meeting of shareholders of the Existing
Funds, which we refer to as the "Meeting." The
Meeting is scheduled to begin on ________________,
2004 at 10:00 a.m. (Pacific Time).
In addition to the solicitation of proxies
by mail or expedited delivery service, the Fremont
Funds' Directors, and employees and agents of FIA
and Fremont Funds and their affiliates may solicit
proxies by telephone. The Funds have engaged the
proxy solicitation firm of [_________________],
which will receive a fee for its solicitation
services estimated at [__________] and
reimbursement of out-of-pocket expenses
estimated at [__________]. Such fees and expenses
will be paid by FIA and Managers. The Existing
Funds and the New Funds will not pay any of the
costs associated with the preparation of this
Proxy Statement/Prospectus or the solicitation of
proxies.
Revocability of Proxies
-----------------------
You may revoke a proxy once it is given.
If you desire to revoke a proxy, you must submit a
later dated proxy or a written notice of
revocation to the appropriate Existing Fund.
You may also give written notice of revocation
in person at the Meeting (however, your presence
at the Meeting alone is not sufficient to revoke
your proxy). All properly executed proxies
received in time for the Meeting will be voted
as specified in the proxy, or, if no
specification is made, FOR each proposal.
Voting Procedures
-----------------
You may vote in one of three ways:
* complete and sign the enclosed proxy
card and mail it to us in the enclosed
prepaid return envelope
(if mailed in the United States)
* vote on the Internet at [www.____________.com]
(follow the instructions provided)
* call the toll-free number printed on your
proxy ballot
Please note, to vote via the Internet or telephone,
you will need the "control number" that appears on
your proxy card.
Only shareholders of record on ______________,
2004 are entitled to receive notice of and to
vote at the Meeting. Each share held as of the close
of business on ______________, 2004 is entitled to
one vote. For each Existing Fund, the presence in
person or by proxy of shareholders entitled to cast
more than 50% of the votes eligible to be cast at
the Meeting will constitute a quorum for the conduct
of all business. When a quorum is present, approval
of the Reorganization will require the affirmative vote
of more than 50% of the Existing Fund's outstanding
shares. The Meeting may be adjourned from time
to time by a majority of the votes properly voting
on the question of adjourning the Meeting to another
date and time, whether or not a quorum is present,
and the Meeting may be held as adjourned within a
reasonable time after the date set for the original
Meeting without further notice. The persons named as
proxies will vote those shares that they are entitled
to vote in favor of adjournment if adjournment is
necessary to obtain a quorum or to obtain a favorable
vote on any proposal. If the adjournment requires
64
<Page>
setting a new record date or the adjournment is more
for more than 60 days from the date set for the
original meeting (in which case the Board of
Directors will set a new record date), the Fremont
Funds will give notice of the adjourned meeting to
the shareholders. Business may be conducted once a
quorum is present and may continue until adjournment
of the Meeting.
All proxies voted, including abstentions and
broker non-votes (where the underlying holder has
not voted and the broker does not have discretionary
authority to vote the shares) will be counted towards
establishing a quorum. Approval of the
Reorganization will occur only if a sufficient
number of votes at the Meeting are cast FOR that
proposal. Abstentions do not constitute a vote "for"
and effectively result in a vote "against" the proposal.
Broker non-votes do not represent a vote "for" and
effectively result in a vote "against" the proposal.
The Boards know of no matters other than those
described in this Proxy/Prospectus that will be
brought before the Meeting. If, however, any other
matters properly come before the Meeting, it is the
Boards' intention that proxies will be voted on such
matters based on the judgment of the persons named
in the enclosed form of proxy.
Annual Meetings and Shareholder Meetings
----------------------------------------
The Existing Funds normally will not hold
meetings of shareholders except as required under
the 1940 Act. The New Funds do not presently
hold annual meetings of shareholders for the
election of Trustees or other business unless
otherwise required by the 1940 Act. Any
shareholder proposal for a shareholder meeting
must be presented to the Existing Funds or the
New Funds within a reasonable time before proxy
materials for the next meeting are sent to
shareholders. Because regular shareholder
meetings are not held, no anticipated date of
the next meeting can be provided.
Interest of Certain Persons in the Transactions
-----------------------------------------------
Existing Funds
- --------------
To the knowledge if the Existing Funds, the
following are the only persons who owned of record or
beneficially, five percent or more of the outstanding
shares of any class of any Existing Fund as of June
30, 2004:
<Table>
Fremont Global Fund
- -------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Fremont Group Retirement Plan 6.9% 401(k) Plan
State Street Bank & Trust Co
FBO The Fremont Group Retirement Plan
C/O Citistreet
Attn: Bonnie Seifried
3 Batterymarch Park
Quincy, MA 02169-7422
65
<Page>
Fremont International Growth Fund
- ---------------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
National Financial Services Corp 33.0% Broker/Dealer Omnibus Account
Exclusive Benefit of Customers
Liberty Street
New York, NY 10281-1003
Charles Schwab & Co, Inc. 9.9% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
Stephen D Bechtel Jr & 8.3% Independent Fiduciary as Trustee
Elizabeth Hogan Bechtel
Attn: Kien Quach
P.O. Box 193809
San Francisco, CA 94119-3809
Fremont Group Retirement Plan 5.8% 401(k) Plan
State Street Bank & Trust Co.
C/O Citistreet
Attn: Bonnie Seifried
FBO The Fremont Group Retirement Plan
3 Batterymarch Park
Quincy, MA 02169-7422
Fremont Structured Core Fund
- ----------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Fremont Sequoia Holdings LP 12.0% Partnership
Attn: Fremont Controller
Fremont Street
San Francisco, CA 94105-2245
66
<Page>
Fremont U.S. Small Cap Fund
- ---------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Charles Schwab & Co, Inc. 22.4% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
Fremont Sequoia Holdings LP 12.6% Partnership
Attn: Fremont Controller
Fremont Street
San Francisco, CA 94105-2245
National Financial Services Corp. 5.1% Broker/Dealer Omnibus Account
200 Liberty Street
New York, NY 10281-1003
Fremont US. Micro-Cap Fund
- --------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Charles Schwab & Co, Inc. 44.6% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services(Fidelity) 13.1% Broker/Dealer Omnibus Account
1 World Financial Center
New York, NY 10281-1003
Prudential Investment Mgmt Services 6.6% Broker/Dealer Omnibus Account
FBO All Mutual Fund Clients
Attn: PruChoice Unit
Mail Stop 194-201
194 Wood Avenue S
Iselin, NJ 08830-2710
Fremont Institutional U.S. Micro-Cap Fund
- -----------------------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
National Financial Services Corp. 31.8% Broker/Dealer Omnibus Account
200 Liberty Street
New York, NY 10281-1003
Charles Schwab & Co, Inc. 22.3% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
67
<Page>
68
<Page>
Fremont Real Estate Securities Fund
- -----------------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Charles Schwab & Co, Inc. 32.1% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
Fremont Group Retirement Plan 11.7% 401(k) Plan
State Street Bank & Trust Co.
C/O Citistreet
Attn: Bonnie Seifried
FBO The Fremont Group Retirement Plan
3 Batterymarch Park
Quincy, MA 02169-7422
National Financial Services Corp. 6.3% Broker/Dealer Omnibus Account
200 Liberty Street
New York, NY 10281-1003
Fremont Bond Fund
- -----------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Charles Schwab & Co, Inc. 21.3% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
Ernst & Young Master Retirement TR 17.9% Independent Fiduciary as Trustee
JP Morgan Chase TTEE
FBO Ernst & Young Master Retirement TR
Attn: Rolando Mayorga
3 Metrotech Center 6th Floor
Brooklyn, NY 11245-0002
National Financial Services(Fidelity) 13.9%
1 World Financial Center
New York, NY 10281-1003
Fremont California Intermediate
Tax- Free Fund
- -------------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
69
<Page>
Bechtel Foundation 42.2% Profit Sharing
Long Term Fund LP -
Institutional
Northern Trust Co
FBO BF Long Term Fund LP -
Institutional
801 South Canal Street
Chicago, IL 60675
Willis S & 13.6% Independent Fiduciary as Trustee
Marion B Slusser TTEES
Slusser 2002 Family Trust
200 Deer Valley Road #10
San Rafael, CA 94903
Charles Schwab & Co, Inc. 10.0% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
Fremont Money Market Fund
- -------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Bechtel Master Trust/ 61.1% 401(k) Plan
Qualified Benefit
State Street Corp TTEE
Bechtel Master Trust
for Qualified Employee
Benefit TR U/A DTD 7/1/85
Attn: Raisa Barkaloff
105 Rosemont Ave #2N
Westwood, MA 02090-2318
Fremont US Micro-Cap Fund 7.9% Bank as Trustee
State Street Bank
Attn: Tim Heili
FBO Fremont US Micro Cap Fund
801 Pennslyvania
Kansas City, MO 64105
Fremont Institutional US 6.4% Bank as Trustee
Micro-Cap Fund
State Street Bank
Attn: Tim Heili
FBO Fremont Ins US Micro Cap Fund
801 Pennslyvania
Kansas City, MO 64105
To the knowledge of the Existing Funds, the following
are the only persons who owned of record or
beneficially, 25% or more of the outstanding
shares of any class of any Existing Fund, as of
June 30, 2004:
Fremont International Growth Fund
- ---------------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
National Financial Services Corp 33.0% Broker/Dealer Omnibus Account
Exclusive Benefit of Customers
200 Liberty Street
New York, NY 10281-1003
Fremont US. Micro-Cap Fund
- --------------------------
70
<Page>
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Charles Schwab & Co, Inc. 44.6% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
71
<Page>
Fremont Institutional
U.S. Micro-Cap Fund
- ---------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
National Financial Services Corp. 31.8% Broker/Dealer Omnibus Account
101 Montgomery Street
200 Liberty Street
New York, NY 10281-1003
Fremont Real Estate Securities Fund
- -----------------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Charles Schwab & Co, Inc. 32.1% Broker/Dealer Omnibus Account
101 Montgomery Street
San Francisco, CA 94104-4122
Fremont California Intermediate Tax- Free Fund
- ----------------------------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Bechtel Foundation Long Term 42.2% Profit Sharing
Fund LP - Institutional
Northern Trust Co
FBO BF Long Term Fund LP -
Institutional
801 South Canal Street
Chicago, IL 60675
Fremont Money Market Fund
- -------------------------
Name and Address Percentage Ownership Type of Ownership
- ---------------- -------------------- -----------------
Bechtel Master Trust/Qualified Benefit 61.1% 401(k) Plan
State Street Corp TTEE
Bechtel Master Trust for Qualified
Employee Benefit TR U/A DTD 7/1/85
Attn: Raisa Barkaloff
105 Rosemont Ave #2N
Westwood, MA 02090-2318
</Table>
72
<Page>
As of June 30, 2004, the Directors and
Officers of the Existing Funds as a group owned
less than 1% of the outstanding shares of
each Existing Fund.
New Funds
- ---------
No shares of the New Funds were outstanding as
of June 30, 2004.
Annual Meetings and Shareholder Meetings
- ----------------------------------------
The Existing Funds normally will not hold meetings of
shareholders except as required under the 1940 Act.
The New Funds do not presently hold annual meetings
of shareholders for the election of Trustees or other
business unless otherwise required by the 1940 Act.
Any shareholder proposal for a shareholder meeting
must be presented to the Existing Funds or the New
Funds within a reasonable time before proxy materials
for the next meeting are sent to shareholders.
Because regular shareholder meetings are not held,
no anticipated date of the next meeting can be provided.
AVAILABLE INFORMATION
---------------------
The Existing Funds and the New Funds are each
subject to the informational requirements of the
Securities Exchange Act of 1934 and the
Investment Company Act of 1940 and in accordance
therewith file reports, proxy material and other
information with the SEC. Such reports, proxy
material and other information can be inspected
and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material
also can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C.
20549.
73
<Page>
===============================
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, SUITE 2600
SAN FRANCISCO, CALIFORNIA 94105
===============================
By my signature below, I appoint each of
[______________________], officers of Fremont Mutual
Funds, Inc. (the "Fremont Funds"), as my proxies and
attorneys to vote acting alone or together, all shares
of the Fund(s) identified below that I am entitled
to vote at the Special Meeting(s) of Shareholders of
Fremont Bond Fund, Fremont California Intermediate
Tax-Free Fund, Fremont Global Fund, Fremont Money
Market Fund, Fremont Institutional U.S. Micro-Cap
Fund, Fremont International Growth Fund, Fremont
Real Estate Securities Fund, Fremont Structured
Core Fund, Fremont U.S. Micro-Cap Fund, Fremont
U.S. Small Cap Fund, Fremont Large Cap Growth
Fund and Fremont Large Cap Value Fund (the "Existing
Funds") of Fremont Funds to be held at the offices
of Fremont Mutual Funds, Inc., 333 Market Street,
Suite 2600, San Francisco, California 94105 , on
_______________, 2004, at 10:00 a.m. (Pacific time),
and at any adjournments of the Meeting. The proxies
shall have all the powers that I would possess if
present. I hereby revoke any prior proxy, and ratify
and confirm all that the proxies, or any of them, may
lawfully do. I acknowledge receipt of the notice of
special shareholders meeting and the combined proxy
statement/prospectus, dated ________________, 2004.
These proxies shall vote my shares according
to my instructions given below with respect to the
proposal. If I do not provide an instruction below,
I understand that the proxies will vote my shares in
favor of the proposal. The proxies will vote on any
other matter that may arise in the meeting according
to their best judgment.
This Proxy is solicited by the Board of
Directors of the Fremont Funds in support of the
proposals.
PLEASE VOTE BY CHECKING THE APPROPRIATE BOX:
1. To approve the transfer all of the assets
and stated liabilities of the Existing Fund to a
corresponding New Fund advised by The
Managers Funds, LLC pursuant to an Agreement
and Plan of Reorganization.
[ ]FOR [ ]AGAINST [ ] ABSTAIN
<Page>
Name of Fund__________________________
No. of Shares_________________________
Signature of Shareholder(s):
By:__________________________________
Name:
Title, if applicable:
By:__________________________________
Name:
Title, if applicable:
Control No. _________________________
NOTE: Please make sure that you complete,
sign and date your proxy card. Please sign exactly
as your name(s) appear on your account. When signing
as a fiduciary, please give your full title as such.
Each joint owner should sign personally. Corporate
proxies should be signed in full corporate name by
an authorized officer.
For your convenience, you may vote by returning
the proxy ballot in the enclosed postage paid envelope.
You also may vote by Internet by going to
[www._______________.com] and following the instructions.
Last, you may vote by calling toll-free [telephone].
To vote by Internet or telephone, you will need the
control number printed above on this ballot card.
2
<Page>
==========
APPENDIX A
==========
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
--------------------------------------------
[To be provided]
<Page>
==========
APPENDIX B
==========
COMPARISON OF INVESTMENT RESTRICTIONS
-------------------------------------
Comparative Information on Fundamental Investment
Restrictions of Existing Funds against corresponding
New Funds
<Table>
Subject Matter
of Restriction Existing Fund New Fund
- -------------- ------------- --------
Borrowing No Fund may borrow money, except from The Fund may not borrow money, except (i)
banks for temporary or emergency in amounts not to exceed 33 1/3% of the
purposes not in excess of 30% of the value of the Fund's total assets (including the
value of the Fund's total amount borrowed) taken at market value
assets. A Fund will not purchase from banks or through reverse repurchase
securities while such borrowings are agreements or forward roll transactions, (ii)
outstanding. up to an additional 5% of its total assets fo
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.
Lending No Fund may make loans, except that a The Fund may not make loans, except that
Fund may purchase debt securities, enter the Fund may (i) lend portfolio securities in
into repurchase agreements, and make accordance with the Fund's investment
loans of portfolio securities amounting policies up to 33 1/3% of the Fund's total
to not more than 33 1/3% of its net assets taken at market value, (ii) enter into
assets calculated at the time repurchase agreements, (iii) purchase all or a
of the securities lending. 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.
Diversification No fund may change its status as either a No fundamental restriction.
diversified or a non-diversified
investment company.
C-1
<Page>
Industry No Fund may invest 25% or more of the The Fund may not invest more than 25% of
Concentration value of its total assets in the securities its total assets in the securities of one or more
of issuers conducting their principal issuers conducting their principal business
business activities in the same industry, activities in the same industry (excluding the
except that this limitation U.S. Government or its agencies or
shall not apply to securities issued or instrumentalities).
guaranteed as to principal and interest
by the U.S. Government or any of its
agencies or instrumentalities, to tax
exempt securities issued by state
governments or political subdivisions
thereof, or to investments by Fremont
Money Market Fund in securities of
domestic banks, of foreign branches of
domestic banks where the domestic bank
is unconditionally liable for the
security, and domestic branches of foreign
banks subject to the same regulation of
domestic banks, or to investments by
Fremont Real Estate Securities Fund in
companies engaged in the real estate
industry, including real estate investment
trusts.
Commodities & No Fund may buy or sell real estate The Fund may not purchase or sell physical
Commodity (including real estate limited partnerships) commodities, except that each Fund may
Contracts or commodities or commodity contracts; purchase or sell options and futures contracts
however, the Funds may invest in thereon.
securities secured by real estate,
or issued by companies which invest in
real estate or interests therein, including
real estate investment trusts, and may
purchase and sell currencies (including
forward currency exchange contracts),
gold, bullion, futures contracts, and
related options generally as
described in the Prospectus and Statement
of Additional Information.
Senior No Fund may issue senior securities, The Fund may not issue senior securities.
Securities except as permitted under the 1940 Act For purposes of this restriction, borrowing
and as described in the Prospectus and money, making loans, the issuance of shares
Statement of Additional Information, of beneficial interest in multiple classes or
and except that the Investment Company series, the deferral of Trustees' fees, the
and the Funds may issue shares of purchase or sale of options, futures contracts,
common stock in multiple series or forward commitments and repurchase
classes. agreements entered into in accordance with
the Fund's investment policies, are not
deemed to be senior securities.
Real Estate No Fund may buy or sell real estate The Fund may not purchase or sell real
(including real estate limited partnerships) estate, except that the Fund may (i) acquire or
or commodities or commodity contracts; lease office space for its own use, (ii) invest
however, the Funds may invest in securities in securities of issuers that invest in real
C-2
<Page>
secured by real estate, or issued by estate or interests therein, (iii) invest in
companies which invest in real estate or securities that are secured by real estate or
interests therein, including real estate interests therein, (iv) purchase and sell
investment trusts, and may purchase and mortgage-related securities and (v) hold and
sell currencies (including forward currency sell real estate acquired by the Fund as a
exchange contracts), gold, bullion, futures result of the ownership of securities.
contracts, and related options generally as
described in the Prospectus and Statement
of Additional Information.
Underwriting No Fund may engage in the business of The Fund may not underwrite the securities
underwriting securities of other issuers, of other issuers, except to the extent that, in
except to the extent that the disposal connection with the disposition of portfolio
of an investment position may technically securities, the Fund may be deemed to be an
cause it to be considered an underwriter underwriter under the 1933 Act.
as that term is defined under the
Securities Act of 1933.
California Tax- (The California Intermediate Tax-Free No fundamental restriction.
free Municipal Fund only) may not invest less than 80%
Securities of its assets (net assets plus borrowings
for investment purposes) in California
tax-free municipal securities.
</Table>
C-3
<Page>
Execution Copy
====================================
AGREEMENT AND PLAN OF REORGANIZATION
====================================
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made as of this 14th day of July, 2004, by and between FREMONT MUTUAL
FUNDS, INC., a Maryland corporation (the "Predecessor Corporation"),
on behalf of its series listed on Schedule A attached hereto under the
column "Predecessor Fund" (collectively, the "Predecessor Funds" and
each individually, a "Predecessor Fund"), and MANAGERS TRUST I, a
Massachusetts business trust (the "Successor Trust"), on behalf of its
series listed on Schedule A attached hereto under the column
"Corresponding Successor Fund" (collectively, the "Successor Funds"
and each individually, a "Successor Fund").
Except as otherwise specifically noted, all references in this
Agreement to action taken by the Predecessor Funds or the Successor
Funds shall be deemed to refer to action taken by the Predecessor
Corporation or the Successor Trust, respectively, on behalf of the
respective portfolio series. Reference to a "corresponding" Fund
shall mean, with respect to any Fund, the fund listed opposite of such
Fund on Schedule A attached hereto under the column "Predecessor Fund"
or "Corresponding Successor Fund," as applicable.
This Agreement is intended to be and is adopted as a plan of
reorganization for each Predecessor Fund within the meaning of the
Treasury Regulations under Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). Each
reorganization (a "Reorganization") will consist of the transfer by a
Predecessor Fund of all of its assets to the corresponding Successor
Fund identified in Schedule A, in exchange solely for shares of
beneficial interest in such Successor Fund ("New Shares"), the
assumption by each Successor Fund of the Stated Liabilities (as
defined in Section 1.3) of the corresponding Predecessor Fund, and the
distribution of the New Shares to the shareholders of each Predecessor
Fund in complete liquidation of such Predecessor Fund as provided
herein, all upon the terms and conditions hereinafter set forth in
this Agreement. The terms and conditions contained in this Agreement
shall apply separately to each Reorganization and to each Predecessor
Fund and each Successor Fund participating therein.
WHEREAS, the Predecessor Corporation and the Successor Trust are
each open-end, registered investment companies of the management type;
and
WHEREAS, the Board of Directors of the Predecessor Corporation
and the Board of Trustees of the Successor Trust have determined that
it is in the best interest of the Predecessor Funds and the Successor
Funds, respectively, that the assets of each Predecessor Fund be
acquired by the corresponding Successor Fund pursuant to this
Agreement and that the interests of shareholders of the Predecessor
Funds will not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties hereto
covenant and agree as follows:
<Page>
==============================
1. PLAN OF REORGANIZATION
==============================
1.1. Subject to the requisite approval of the Predecessor
Funds' shareholders and the other terms and conditions herein set
forth and on the basis of the representations and warranties contained
herein, the Predecessor Corporation agrees to transfer all of the
assets of each Predecessor Fund, as set forth in Section 1.2, to the
corresponding Successor Fund, and the Successor Trust agrees in
exchange therefor, on behalf of each Successor Fund, to deliver to the
corresponding Predecessor Fund the number of full and fractional
(rounded to the third decimal place) New Shares of such Successor Fund
equal to the number of shares of the corresponding Predecessor Fund
and having a net asset value equal to the net asset value of the
corresponding Predecessor Fund as of the time and date set forth in
Article 2, and to assume the Stated Liabilities of the corresponding
Predecessor Fund as described in Section 1.3. Such transactions shall
take place at the closing provided for in Section 2.1 (the "Closing")
..
1.2. The assets of each Predecessor Fund to be acquired by the
corresponding Successor Fund shall consist of all assets and property
(collectively, "Assets"), including, without limitation, all cash,
securities, commodities and futures interests, and dividends or
interest or other receivables that are owned by the Predecessor Fund,
and any deferred or prepaid expenses shown as an asset on the books of
the Predecessor Fund, on the closing date provided in Section 2.1 (the
"Closing Date").
1.3. Each Predecessor Fund will endeavor to discharge all of
its known liabilities and obligations that are due and payable prior
to the Closing Date. Each Successor Fund shall assume only those
accrued and unpaid liabilities of its corresponding Predecessor Fund
set forth in the Predecessor Fund's statement of assets and
liabilities as of the Closing Date delivered by the Predecessor
Corporation on behalf of the corresponding Predecessor Fund to the
Successor Trust on behalf of the Successor Fund pursuant to Section
4.6 hereof (the "Stated Liabilities"). Each Successor Fund shall
assume only the Stated Liabilities and shall not assume any other
debts, liabilities or obligations of its corresponding Predecessor
Fund. On or as soon as practicable prior to the Closing Date, each
Predecessor Fund will declare and pay to its shareholders of record
one or more dividends and/or other distributions so that it will have
distributed all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net
capital gain, if any, for the current taxable year through the Closing
Date.
1.4. Immediately following delivery to the Predecessor Funds of
the New Shares, each Predecessor Fund will distribute pro rata to its
holders of record, determined as of immediately after the close of
business on the Closing Date (the "Current Shareholders"), the New
Shares received pursuant to Section 1.1. Such distribution will be
accomplished by the transfer of the New Shares then credited to the
accounts of each Predecessor Fund on the books of the corresponding
Successor Fund to open accounts on the share records of such Successor
Fund in the names of such Predecessor Fund's Current Shareholders and
representing the respective pro rata number of New Shares due such
shareholders. All issued and outstanding shares of the Predecessor
Funds will simultaneously be canceled on the books of the Predecessor
Corporation; any share certificates representing interests in the
Predecessor Funds will represent a number of New Shares after the
Closing Date as determined in accordance with this Section 1.4. The
2
<Page>
Successor Funds shall not issue certificates representing the New
Shares in connection with such exchange. Ownership of New Shares will
be shown on the books of the Successor Funds' transfer agent. As
soon as reasonably practicable after the Closing, the Predecessor
Corporation shall take all steps necessary to effect a complete
liquidation of the Predecessor Funds in accordance with its
governing instruments and applicable law, and shall not conduct
any business after the Closing Date, except as contemplated herein.
1.5. Any reporting responsibility of the Predecessor Funds
including, but not limited to, the responsibility for filing of
regulatory reports, tax returns, or other documents with the U.S.
Securities and Exchange Commission (the "Commission"), any state
securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Predecessor Funds.
1.6. All books and records of each Predecessor Fund, including
all books and records required to be maintained under the Investment
Company Act of 1940, as amended (the "1940 Act") and the rules and
regulations thereunder, shall be available to the corresponding
Successor Fund from and after the Closing Date and shall be turned
over to such Successor Fund as soon as practicable following the
Closing Date.
1.7. The failure to consummate the transactions contemplated
hereby with respect to any particular Reorganization shall not affect
the consummation or validity of any other Reorganization, and the
provisions of this Agreement shall be construed to effect this intent,
including, without limitation, as the context requires, construing the
terms "Successor Fund" and "Predecessor Fund" as meaning only those
series of the Successor Trust and the Predecessor Corporation,
respectively, which are involved in a Reorganization as of the Closing
Date.
================================
2. CLOSING AND CLOSING DATE
================================
2.1. The Closing Date shall be the date that is a full business
day following satisfaction (or waiver as provided herein) of all of
the conditions set forth in Articles 5, 6 and 7 of this Agreement
(other than those conditions which may by their terms be satisfied
only at the Closing), or such later date as the parties may agree in
writing. All acts taking place at the Closing shall be deemed to take
place simultaneously as of immediately after the close of business on
the Closing Date unless otherwise agreed to by the parties. The close
of business on the Closing Date shall be 4:00 p.m. New York Time. The
Closing shall be held at the offices of the Successor Funds, or at
such other time and/or place as the parties may agree.
2.2. In the event that on the Closing Date (a) the New York
Stock Exchange or another primary trading market for portfolio
securities of a Successor Fund or a Predecessor Fund shall be closed
to trading or trading thereon shall be restricted or (b) trading or
the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of
a Successor Fund or a Predecessor Fund is impracticable, the Closing
Date with respect to the Reorganization involving such Successor Fund
or Predecessor Fund shall be postponed until the first business day
after the day when trading shall have been fully resumed and reporting
shall have been restored.
3
<Page>
2.3. The Predecessor Corporation shall direct State Street Bank
& Trust Company (the "Custodian"), as custodian for the Predecessor
Funds, to deliver, at the Closing, a certificate of an authorized
officer stating that (i) Assets have been delivered in proper form to
the Successor Funds prior to or on the Closing Date, and (ii) all
necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer stamps, if
any, have been paid or provision for payment has been made. Each
Predecessor Fund's portfolio securities represented by a certificate
or other written instrument shall be presented for examination by the
Custodian to the custodian for the Successor Funds no later than five
business days preceding the Closing Date, and shall be transferred and
delivered by each Predecessor Fund as of the Closing Date for the
account of the corresponding Successor Fund duly endorsed in proper
form for transfer in such condition as to constitute good delivery
thereof. The Custodian shall deliver, as of the Closing Date, by book
entry, in accordance with the customary practices of the Custodian and
the securities depositories (as defined in Rule 17f-4 under the 1940
Act) in which each Predecessor Fund's Assets are deposited, each
Predecessor Fund's Assets deposited with such depositories. The cash
to be transferred by the Predecessor Funds shall be delivered by wire
transfer of federal funds on the Closing Date.
2.4. The Predecessor Corporation shall cause PFPC, Inc. (the
"Transfer Agent"), transfer agent of the Predecessor Funds, to deliver
at the Closing a certificate of an authorized officer stating that its
records contain the names and addresses of the Current Shareholders
and the number and percentage ownership of outstanding shares of each
Predecessor Fund owned by each such shareholder immediately prior to
the Closing. Each Successor Fund shall issue and deliver a
confirmation evidencing the New Shares to be credited on the Closing
Date to the corresponding Predecessor Fund or provide evidence
satisfactory to the Predecessor Corporation that such New Shares have
been credited to the accounts of the corresponding Predecessor Fund on
the books of the applicable Successor Fund. At the Closing, each
party shall deliver to the other such bills of sales, checks,
assignments, share certificates, if any, receipts or other documents
as such other party or its counsel may reasonably request.
2.5. Within thirty (30) days after the Closing Date, each
Predecessor Fund shall deliver to the corresponding Successor Fund a
statement of the Predecessor Fund's Assets and Stated Liabilities,
together with a list of such Predecessor Fund's Assets showing the
respective adjusted bases and holding periods thereof for income tax
purposes, as of the Closing Date, certified by an appropriate officer
of Predecessor Corporation.
======================================
3. REPRESENTATIONS AND WARRANTIES
======================================
3.1. The Predecessor Corporation, on behalf of each Predecessor
Fund, hereby represents and warrants to the Successor Trust, as
follows:
(a) The Predecessor Corporation is duly organized,
validly existing and in good standing under the laws of the State of
Maryland and has full power and authority under its Articles of
Incorporation, as amended, on behalf of each Predecessor Fund, to own
all of its Assets and to carry on its business as it is now being
conducted.
4
<Page>
(b) The Predecessor Corporation is a registered
investment company classified as a management company of the open-end
type, and its registration with the Commission as an investment
company under the 1940 Act, and the registration of its shares under
the Securities Act of 1933, as amended (the "1933 Act"), are in full
force and effect.
(c) The current prospectus and statement of additional
information of each Predecessor Fund and each prospectus and statement
of additional information of that Predecessor Fund used at all times
prior to the date of this Agreement (i) conforms or conformed, as
applicable, at the time of its use in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder and (ii) do or did not,
as applicable, include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not materially misleading.
(d) The Predecessor Corporation is not, and the
execution, delivery and performance of this Agreement by the
Predecessor Corporation on behalf of each Predecessor Fund will not
result, in a material violation of the Predecessor Corporation's
Articles of Incorporation, as amended, or By-Laws, or of any statute,
regulation, order, judgment or decree or any agreement, indenture,
instrument, contract, lease or other undertaking to which the
Predecessor Corporation on behalf of any Predecessor Fund is a party
or by which the Predecessor Corporation on behalf of any Predecessor
Fund is bound.
(e) On the Closing Date, each Predecessor Fund will have
good and marketable title to its Assets and full right, power, and
authority to sell, assign, transfer and deliver such Assets hereunder
free of any liens or other encumbrances, and upon delivery and payment
for such Assets, the corresponding Successor Fund will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise under the
1933 Act, other than as disclosed to the Successor Trust.
(f) The execution, delivery and performance of this
Agreement will not result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to which the
Predecessor Corporation on behalf of any Predecessor Fund is a party
or by which it is bound.
(g) No Predecessor Fund has any material contract or
other commitment (other than this Agreement) which will be terminated
with liability to such Predecessor Fund prior to or on the Closing
Date.
(h) Except as otherwise disclosed in writing to and
accepted by the Successor Trust, no material litigation,
administrative proceeding or investigation of or before any court or
governmental body is presently pending or to its knowledge threatened
against the Predecessor Corporation with respect to any Predecessor
Fund or any of the Assets of the Predecessor Funds. The Predecessor
Corporation knows of no facts which might form the basis for the
institution of such proceedings and is not a party to or subject to
the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business
or its ability to consummate the transactions herein contemplated.
5
<Page>
(i) The Statement of Assets and Liabilities, Statement
of Operations and Statement of Changes in Net Assets of each of the
Predecessor Funds as of October 31, 2003 audited by independent
accountants (copies of which have been furnished to the Successor
Trust) fairly and accurately reflect the financial condition of each
Predecessor Fund as of such date in accordance with generally accepted
accounting principles consistently applied, and there are no known
liabilities of the Predecessor Funds (contingent or otherwise) as of
such date not disclosed therein, except for liabilities incurred in
the ordinary course of business since October 31, 2003.
(j) Since October 31, 2003, there has not been any
material adverse change in any Predecessor Fund's financial condition,
assets, liabilities or business, other than changes occurring in the
ordinary course of business, or any incurrence by Predecessor Fund of
indebtedness maturing more than six (6) months from the date such
indebtedness was incurred, except as may arise under an agreement to
repay amounts reimbursed or fees waived in connection with a
contractual agreement designed to limit a Predecessor Fund's expenses.
For the purposes of this subparagraph (j), neither a decline in a
Predecessor Fund's net asset value per share, the discharge of a
Predecessor Fund's liabilities, nor the redemption of a Predecessor
Fund's shares by its shareholders shall, in and of itself, constitute
a material adverse change.
(k) Except as otherwise disclosed in writing to and
accepted by the Successor Trust, all federal and other tax returns and
reports of the Predecessor Funds required by law to have been filed
have been timely filed and are correct, and all federal and other
taxes due have been timely paid, and no such return is currently under
audit and no assessment has been asserted with respect to such
returns.
(l) For each taxable year of its operation (including
the taxable year ending on the Closing Date), each Predecessor Fund
has met the requirements of Subchapter M of the Code for qualification
as a regulated investment company and has elected (in the current or a
prior taxable year) to be treated as such, has been eligible to and
has computed (or will compute) its federal income tax under Section
852 of the Code, and will have distributed all of its investment
company taxable income and net capital gain (as defined in the Code)
that has accrued through the Closing Date.
(m) All issued and outstanding shares of the Predecessor
Funds are duly and validly issued and outstanding, fully paid and non-
assessable by the Predecessor Corporation on behalf of the Predecessor
Funds and have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. All of the issued and outstanding shares of
each Predecessor Fund will, at the time of Closing, be held by the
persons and in the amounts set forth in the records of the transfer
agent as provided in Section 2.3. The Predecessor Funds do not have
outstanding any options, warrants or other rights to subscribe for or
purchase any of the shares of the Predecessor Funds, nor is there
outstanding any security convertible into any of the shares of the
Predecessor Funds.
(n) The Predecessor Corporation has full power and
authority to execute, deliver and carry out the terms of this
Agreement on behalf of each Predecessor Fund.
6
<Page>
(o) The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part
of the Board of Directors of the Predecessor Corporation, and, subject
to the approval of each Predecessor Fund's shareholders, this
Agreement constitutes a valid and binding obligation of the
Predecessor Corporation on behalf of each Predecessor Fund enforceable
in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights, and to general equity
principles.
(p) No authorization, consent or approval of any
governmental or other public body or authority or any other party is
necessary for the execution and delivery of this Agreement by the
Predecessor Corporation on behalf of the Predecessor Funds or the
consummation of any transactions contemplated hereby by the
Predecessor Corporation on behalf of each Predecessor Fund, other than
as shall be obtained at or prior to the Closing.
(q) The information to be furnished by the Predecessor
Funds for use in registration statements, proxy materials (including
the Registration Statement referred to in Section 4.7) and such other
documents as may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material
respects and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable
thereto.
3.2. The Successor Trust, on behalf of each Successor Fund,
hereby represents and warrants to the Predecessor Corporation, as
follows:
(a) The Successor Trust is a voluntary association with
transferable shares of the type commonly referred to as a
Massachusetts business trust duly organized and validly existing under
the laws of the Commonwealth of Massachusetts with power under its
Declaration of Trust, as in effect at the relevant time (the
"Declaration of Trust"), to own, on behalf of each Successor Fund, all
of its property and assets. No Successor Fund has commenced
operations, and none will do so until after the Closing, provided
that, for purposes of this representation, the activities contemplated
by Section 5.3 shall not constitute the commencement of operations.
(b) The Successor Trust is a registered investment
company classified as a management company of the open-end type, and
its registration with the Commission as an investment company under
the 1940 Act, and the registration of its shares under the 1933 Act,
are in full force and effect.
(c) The Successor Trust is not, and the execution,
delivery and performance of this Agreement by the Successor Trust for
itself and on behalf of each Successor Fund will not, result in a
material violation of the Successor Trust's Declaration of Trust or
By-laws or of any statute, regulation, order, judgment or decree or
any agreement, indenture, instrument, contract, lease or other
undertaking to which the Successor Trust or any Successor Fund is a
party or by which the Successor Trust or any Successor Fund is bound.
7
<Page>
(d) No Successor Fund has any material contract or other
commitment (other than this Agreement) which will be terminated with
liability to such Successor Fund prior to or on the Closing Date.
(e) No material litigation, administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Successor Trust
with respect to any Successor Fund or any of the properties or assets
of the Successor Funds. The Successor Trust knows of no facts which
might form the basis for the institution of such proceedings and is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially adversely
affects its business or its ability to consummate the transactions
herein contemplated.
(f) Before the Closing Date, no Successor Fund will have
(1) issued and outstanding New Shares, (2) options, warrants, or other
rights to subscribe for or purchase any New Shares, (3) securities
convertible into any New Shares, or (4) other securities issued by
such Successor Fund, except as provided in Section 5.3. The New
Shares to be issued and delivered to the Predecessor Funds for the
account of the shareholders of the Predecessor Funds, when so issued
and delivered, will be duly and validly issued, and will be fully paid
and non-assessable by the Successor Trust on behalf of the Successor
Funds (recognizing that, under Massachusetts law, shareholders of the
Successor Trust could under certain circumstances be held personally
liable for its obligations).
(g) The New Shares to be issued and delivered to each
Predecessor Fund at the Closing for the account of the Current
Shareholders pursuant to the terms of this Agreement, will be duly
authorized.
(h) The Successor Trust has full power and authority to
execute, deliver and carry out the terms of this Agreement on behalf
of each Successor Fund.
(i) The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part
of the Board of Trustees of the Successor Trust and this Agreement
constitutes a valid and binding obligation of the Successor Trust on
behalf of each Successor Fund enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights, and to general equity principles.
(j) No authorization, consent or approval of any
governmental or other public body or authority or any other party is
necessary for the execution and delivery of this Agreement by the
Successor Trust on behalf of the Successor Funds or the consummation
of any transactions contemplated hereby by the Successor Trust on
behalf of each Successor Fund, other than as shall be obtained at or
prior to the Closing.
(k) The execution, delivery and performance of this
Agreement will not result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to which the Successor
Trust on behalf of any Successor Fund is a party or by which it is
bound.
8
<Page>
(l) The information to be furnished by the Successor
Funds for use in registration statements, proxy materials (including
the Registration Statement referred to in Section 4.7) and such other
documents as may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material
respects and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable
thereto.
==================================================================
4. COVENANTS OF THE SUCCESSOR TRUST AND THE PREDECESSOR TRUST
==================================================================
4.1. The Predecessor Corporation will operate the business of
the Predecessor Funds in the ordinary course between the date hereof
and the Closing Date, it being understood that such ordinary course of
business will include the declaration and payment of customary
dividends and distributions.
4.2. The Predecessor Corporation will call a meeting of each of
the Predecessor Funds' shareholders to consider and act upon this
Agreement and to take all other action necessary to obtain Predecessor
Fund shareholder approvals necessary to effect the transactions
contemplated herein.
4.3. The Predecessor Corporation covenants that the New Shares
to be issued hereunder are not being acquired for the purpose of
making any distribution thereof other than in accordance with the
terms of this Agreement.
4.4. The Predecessor Corporation will assist the Successor
Trust in obtaining such information as the Successor Trust reasonably
requests concerning the record and beneficial ownership of the shares
of each Predecessor Fund.
4.5. Subject to the provisions of this Agreement, the Successor
Trust and the Predecessor Corporation will each take, or cause to be
taken, all action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement.
4.6. The Predecessor Corporation, on behalf of each Predecessor
Fund, shall furnish to its corresponding Successor Fund on the first
business day following the Closing Date, a final statement of the
total amount of each Predecessor Fund's Assets and liabilities as of
the Closing Date, which statement shall be certified by an appropriate
officer of the Predecessor Corporation as being determined in
accordance with generally accepted accounting principles consistently
applied. As promptly as practicable, but in any case within sixty
(60) days after the Closing Date, the Predecessor Corporation, on
behalf of each Predecessor Fund, shall furnish each Predecessor Fund's
corresponding Successor Fund, in such form as reasonably satisfactory
to the Successor Trust, on behalf of each Successor Fund, a statement
certified by an officer of the Predecessor Corporation of such
Predecessor Fund's federal income tax attributes that will be carried
over to the corresponding Successor Fund in the Reorganization.
9
<Page>
4.7. The Successor Trust shall prepare on behalf of each
Successor Fund a Registration Statement on Form N-14 under the 1933
Act relating to the New Shares to be issued in each Reorganization
(the "Registration Statement"), which, without limitation, shall
include a proxy statement soliciting the Predecessor Fund shareholders
approval necessary to consummate each Reorganization.
4.8. As soon as is reasonably practicable after the Closing,
(a) the Predecessor Corporation, on behalf of each Predecessor Fund:
(i) shall prepare and file all federal and other tax returns and
reports of each Predecessor Fund required by law to be filed with
respect to all periods ending on or before the Closing but not
theretofore filed and (ii) shall pay all federal and other taxes shown
as due thereon and/or all federal and other taxes that were unpaid and
due as of the Closing; (b) the Predecessor Corporation will file any
final regulatory reports, including but not limited to any Form N-SAR,
Form N-CSR and Rule 24f-2 filings with respect to the Predecessor
Fund; and (c) the Predecessor Corporation will take all other steps as
are necessary and proper to effect the termination or declassification
of the Predecessor Fund in accordance with the laws of the State of
Maryland and other applicable requirements.
4.9. The Predecessor Corporation will provide the Successor
Trust with such information regarding the Predecessor Funds as may be
necessary to ensure compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended, and the 1940 Act in the preparation
of the Registration Statement, as reasonably requested by the
Successor Trust.
4.10. The Successor Trust and the Predecessor Corporation shall
each use their reasonable best efforts to fulfill or obtain the
fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
4.11. The Predecessor Corporation, on behalf of Predecessor
Funds, covenants that the Predecessor Corporation will, from time to
time, as and when reasonably requested by the Successor Trust, execute
and deliver or cause to be executed and delivered all such assignments
and other instruments, and will take or cause to be taken such further
action as the Successor Trust, on behalf of the Successor Funds, may
reasonably deem necessary or desirable in order to vest in and confirm
(a) the Predecessor Corporation's, on behalf of the Predecessor Funds,
title to and possession of the New Shares to be delivered hereunder,
and (b) the Successor Trust's, on behalf of the Successor Funds, title
to and possession of all the Assets of the Predecessor Funds, and
otherwise to carry out the intent and purpose of this Agreement.
4.12. The Successor Trust agrees to use all reasonable efforts
to obtain the approvals and authorizations required by the 1933 Act,
the 1940 Act, and such of the state blue sky or securities laws as may
be necessary in order to operate the Successor Funds after the Closing
Date.
4.13. Effective as of the Closing Date, Fremont Investment
Advisors, Inc. shall have entered into arrangements with the present
directors of the Predecessor Corporation who are not "interested
persons" of the Predecessor Corporation (within the meaning of the
1940 Act), providing such directors with indemnification or similar
protection with respect to acts or
10
<Page>
omissions taken prior to and including the Closing Date in their
capacity as directors of the Predecessor Corporation, in form and
amount reasonably satisfactory to the Successor Trust.
====================================================================
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PREDECESSOR TRUST
====================================================================
Except to the extent waived in writing by the Predecessor
Corporation, the obligations of the Predecessor Corporation to
consummate the transactions provided for herein with respect to a
Predecessor Fund shall be subject to the performance by the Successor
Trust on behalf of the corresponding Successor Fund of all the
obligations to be performed by it hereunder on or before the Closing
Date, and, in addition thereto, to the following further conditions:
5.1. All representations and warranties of the Successor Trust
with respect to the Successor Fund contained in this Agreement shall
be true and correct in all material respects as of the date hereof
and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
5.2. The Successor Trust, on behalf of the Successor Fund,
shall have delivered to the Predecessor Corporation on the Closing
Date a certificate executed in its name by its President or Vice
President and its Secretary or Assistant Secretary, in a form
reasonably satisfactory to the Predecessor Corporation, and dated as
of the Closing Date, certifying the satisfaction of the condition
described in Section 5.1 and as to such other matters as the
Predecessor Corporation shall reasonably request.
5.3. With respect to each Successor Fund (i) prior to the
Closing, the trustees of the Successor Trust shall have authorized the
issuance of, and such Successor Fund shall have issued, one or more
New Shares to the adviser of the Successor Fund or an affiliate
thereof to vote on an investment advisory agreement and other matters
necessary for the operation of such Successor Fund in accordance with
the Registration Statement and the Successor Trust's Declaration of
Trust and By-Laws and applicable law (collectively, "Organizational
Matters"), provided that such New Shares shall have been redeemed
prior to the Closing Date; and (ii) the Organizational Matters shall
have been approved, to the extent required by law, by the adviser of
the Successor Fund or an affiliate thereof as the sole initial
shareholder of such Successor Fund.
5.4. The Predecessor Corporation shall have received an opinion
of Goodwin Procter LLP, counsel to each Successor Fund, in a form
reasonably satisfactory to the Predecessor Corporation and its
counsel.
==================================================================
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR TRUST
==================================================================
Except to the extent waived in writing by the Successor Trust,
the obligations of the Successor Trust to complete the transactions
provided for herein with respect to a Successor Fund shall be subject
to the performance by the Predecessor Corporation on behalf of the
11
<Page>
corresponding Predecessor Fund of all of the obligations to be
performed by it hereunder on or before the Closing Date and, in
addition thereto, to the following conditions:
6.1. All representations and warranties of the Predecessor
Corporation with respect to each Predecessor Fund contained in this
Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same
force and effect as if made on and as of the Closing Date.
6.2. The Predecessor Corporation, on behalf of the Predecessor
Fund, shall have delivered to the Successor Trust on the Closing Date
a certificate executed in its name by its President or Vice President
and its Secretary or Assistant Secretary, in a form reasonably
satisfactory to the Successor Trust, and dated as of the Closing Date,
certifying the satisfaction of the condition described in Section 6.1
and as to such other matters as the Successor Trust shall reasonably
request.
6.3. The Successor Trust shall have received an opinion of
Dechert LLP, counsel to each Predecessor Fund, in a form reasonably
satisfactory to the Successor Trust and its counsel.
====================================================================
7. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR
TRUST AND THE PREDECESSOR TRUST
====================================================================
The obligations of the Predecessor Corporation, on behalf of a
Predecessor Fund, and the Successor Trust, on behalf of the
corresponding Successor Fund, to consummate a Reorganization shall be
subject, at their election, to the conditions set forth in this
Article 7; provided, that the Successor Trust shall not be required to
consummate any of the Reorganizations contemplated herein if the
conditions set forth below have, with respect to one or more of the
Reorganizations, not been satisfied.
7.1. The Agreement and the transactions contemplated herein
shall have been approved by the directors and the holders of the
outstanding shares of beneficial interest in the Predecessor Fund as
required under the Articles of Incorporation and By-Laws of the
Predecessor Corporation, as in effect at the relevant time (the
"Articles of Incorporation and By-Laws"), and certified copies of the
resolutions evidencing such approval shall have been delivered to the
Successor Trust.
7.2. On the Closing Date, no action, suit or other proceeding
shall be threatened or pending before any court or governmental agency
in which it is sought to restrain or prohibit, or to obtain damages or
other relief in connection with this Agreement or the transactions
contemplated herein.
7.3. All consents of other parties and all other consents,
orders and permits of federal, state and local regulatory authorities
reasonably deemed necessary by the Successor Trust or the Predecessor
Corporation to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except
where failure to obtain any such consent,
12
<Page>
order or permit would not involve a risk of a material adverse effect
on the assets or properties of the Successor Trust or the Predecessor
Corporation.
7.4. The Registration Statement with respect to the Successor
Fund, as amended by such amendment or amendments thereto as are
determined by the Board of Trustees of the Successor Trust to be
necessary and appropriate to effect the registration of the New
Shares, shall have been filed with the Commission and the Registration
Statement, as so amended, shall have become effective under the 1933
Act, and no stop-order suspending the effectiveness of the
Registration Statement, as so amended, shall have been issued, and to
the best of the knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been initiated or threatened by
the Commission (and not terminated or withdrawn).
7.5. The New Shares with respect to the Successor Fund shall
have been duly qualified for offering to the public in all states in
which such qualification is required for consummation of the
transactions contemplated hereunder.
7.6. The parties shall have received an opinion from the law
firm of Goodwin Procter LLP addressed to the Successor Trust, on
behalf of the Successor Fund, and the Predecessor Corporation, on
behalf of the Predecessor Fund, substantially to the effect that the
transactions contemplated by this Agreement shall constitute a tax-
free reorganization for federal income tax purposes under Section
368(a) of the Code.
With respect to such Reorganization, the tax opinion
addressed to the Successor Trust and the Predecessor Corporation shall
contain, at a minimum, the following conclusions:
(a) The transfer by the Predecessor Fund of all of
its Assets to the corresponding Successor Fund, in exchange solely for
New Shares, the assumption by such Successor Fund of the Stated
Liabilities of the Predecessor Fund, and the distribution of the New
Shares to the shareholders of the Predecessor Fund in complete
liquidation of the Predecessor Fund will constitute a reorganization
within the meaning of Section 368(a) of the Code;
(b) The Predecessor Fund and the Successor Fund
each will be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(c) The Predecessor Fund will recognize no gain
or loss on (i) the transfer of its Assets to the corresponding
Successor Fund in exchange solely for New Shares and the Successor
Fund's assumption of the Predecessor Fund's Stated Liabilities or
(ii) the subsequent distribution of those shares to the Predecessor
Fund's Current Shareholders in exchange for their Predecessor Fund
shares;
(d) The Successor Fund will recognize no gain or
loss on its receipt of the corresponding Predecessor Fund's Assets
in exchange solely for New Shares and the Successor Fund's assumption
of the Predecessor Fund's Stated Liabilities;
(e) The Successor Fund's basis in the corresponding
Predecessor Fund's Assets will, in each instance, be the same as the
corresponding Predecessor Fund's basis therein immediately before the
Reorganization, and the Successor Fund's holding period for the
13
<Page>
corresponding Predecessor Fund's Assets will, in each instance,
include the Predecessor Fund's holding period therefor;
(f) A Current Shareholder of the Predecessor Fund
will recognize no gain or loss on the exchange of all the Predecessor
Fund shares held by such Current Shareholder solely for New Shares
pursuant to the Reorganization;
(g) A Current Shareholder's aggregate basis in
the New Shares received by such Current Shareholder in the
Reorganization will be the same as the Current Shareholder's
aggregate basis in the Predecessor Fund shares surrendered in exchange
for those New Shares, and the Current Shareholder's holding period for
those New Shares will include, in each instance, the Current
Shareholder's holding period for those Predecessor Fund shares,
provided the Current Shareholder holds them as capital assets on the
Closing Date.
The delivery of such opinion is conditioned upon receipt
by the law firm of Goodwin Procter LLP of representations with respect
to certain factual matters it shall reasonably request of the
Predecessor Corporation, on behalf of itself and the Predecessor Fund,
and the Successor Trust, on behalf of itself and the corresponding
Successor Fund. Notwithstanding anything herein to the contrary,
neither the Successor Trust nor the Predecessor Corporation may waive
the condition set forth in this Section 7.6.
7.7. At or immediately prior to the Closing, the Predecessor
Fund shall have declared and paid a dividend or dividends which,
together with all previous such dividends, shall have the effect of
distributing to the Predecessor Fund's shareholders all of the
Predecessor Fund's investment company taxable income for taxable years
ending at or prior to the Closing and all of its net capital gain, if
any, realized in taxable years ending at or prior to the Closing
(after reduction for any capital loss carry-forward).
===================================
8. BROKERAGE FEES AND EXPENSES
===================================
8.1. The Successor Trust and the Predecessor Corporation each
represents and warrants to the other that there are no brokers or
finders entitled to receive any payments from them in connection with
the transactions provided for herein.
8.2. All of the expenses and costs of the Reorganizations and
the transactions contemplated thereby shall be borne by Fremont
Investment Advisors, Inc. and The Managers Funds LLC as agreed between
them, provided that neither the Predecessor Fund nor the Successor
Fund will be reimbursed for any expenses incurred by it or on its
behalf in connection with the Reorganization, unless those expenses
are solely and directly related to the Reorganization (determined in
accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1
C.B. 187).
14
<Page>
========================
9. ENTIRE AGREEMENT
========================
The Successor Trust and the Predecessor Corporation agree that
neither party has made any representation, warranty or covenant not
set forth herein and that this Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof.
================================
10. TERMINATION; NO SURVIVAL
================================
This Agreement and the transactions contemplated hereby may be
terminated and abandoned: (i) by mutual agreement of the parties, (ii)
by either party if the Closing shall not have occurred on or before
April 14, 2005, unless such date is extended by mutual agreement of
the parties, or (iii) by either party if the other party shall have
materially breached its obligations under this Agreement or made a
material and intentional misrepresentation herein or in connection
herewith. In the event of any such termination, there shall be no
liability for damages on the part of either the Successor Trust or the
Predecessor Corporation, or their respective trustees, directors or
officers, to the other party. The representations and warranties
contained herein or in any document delivered pursuant hereto or in
connection herewith shall not survive the Closing.
==================
11. AMENDMENTS
==================
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the Predecessor
Corporation and the Successor Trust; provided that, after a
Predecessor Fund's shareholders approve this Agreement, no such
amendment, modification or supplement shall have a material adverse
effect on their interests.
===============
12. NOTICES
===============
Any notice, report, statement or demand required or permitted by
any provisions of this Agreement shall be in writing and shall be
given by prepaid facsimile, overnight courier, personal delivery or
certified mail addressed to the parties hereto at their principal
place of business.
========================================================================
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY; DISCLOSURE
========================================================================
13.1. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
13.2. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original.
15
<Page>
13.3. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts;
provided that, in the case of any conflict between those laws and the
federal securities laws, the latter shall govern.
13.4. This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of
the other party. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
13.5. It is expressly agreed that the obligations of the
Successor Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the
Successor Trust personally, but shall bind only the trust property of
the Successor Trust, as provided in the Declaration of Trust. The
execution and delivery of this Agreement by such officers of the
Successor Trust shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Successor Trust as provided
in the Declaration of Trust. The Successor Trust is a series company
with multiple series and has entered into this Agreement on behalf of
the Successor Funds. With respect to any obligation of the Successor
Trust arising hereunder with respect to a Successor Fund, the
Predecessor Corporation and the corresponding Predecessor Fund shall
look for payment or satisfaction of such obligations solely to the
assets and property of such Successor Fund and not to its shareholders
or any other series of the Successor Trust.
13.6. The sole remedy of a party hereto for a breach of any
representation or warranty made in this Agreement by the other party
shall be an election by the non-breaching party not to complete the
transactions contemplated herein.
[SIGNATURE PAGE FOLLOWS]
16
<Page>
IN WITNESS WHEREOF, each of Fremont Mutual Funds, Inc., on behalf of
the Predecessor Funds, and Managers Trust I, on behalf of the Successor
Funds, has caused this Agreement to be executed by an authorized officer:
ATTEST: FREMONT MUTUAL FUNDS, INC., on
behalf of the Predecessor Funds
_________________________________ By:______________________________
Name: Deborah L. Duncan
Title: Chairman, President
ATTEST: MANAGERS TRUST I, on behalf of the
Successor Funds
_________________________________ By:_____________________________
Name: Peter Lebovitz
Title: President
For purposes of Sections 4.13 and 8.2 only, the undersigned executes this
Agreement:
FREMONT INVESTMENT ADVISORS, INC.
By:_______________________________________
Name: E. Douglas Taylor
Title: President & Chief Executive Officer
For purposes of Section 8.2 only, the undersigned executes this
Agreement:
THE MANAGERS FUNDS LLC
By: TMF Corp.,
its Manager Member
By:______________________________________
Name: Nathaniel Dalton
Title: President
<Page>
Schedule A
----------
<Table>
Predecessor Fund Corresponding Successor Fund
- ---------------- ----------------------------
Fremont Global Fund Managers Fremont Global Fund
Fremont International Growth Fund Managers International Growth Fund
Fremont U.S. Small Cap Fund Managers U.S. Small Cap Fund
Fremont U.S. Micro-Cap Fund Managers Fremont U.S. Micro-Cap Fund
Fremont Real Estate Securities Fund Managers Real Estate Fund
Fremont Bond Fund Managers Fremont Bond Fund
Fremont California Intermediate Tax-Free Fund Managers California Intermediate Tax-Free Fund
Fremont Money Market Fund Managers Fremont Money Market Fund
Fremont Institutional U.S. Micro-Cap Fund Managers Fremont Institutional U.S. Micro-Cap Fund
Fremont Structured Core Fund Managers Structured Core Fund
</Table>
<Page>
PART B
======
STATEMENT OF ADDITIONAL INFORMATION
===================================
Managers Fremont Global Fund
Managers International Growth Fund
Managers Structured Core Fund
Managers Small Cap Fund
Managers Fremont Micro-Cap Fund
Managers Fremont Institutional Micro-Cap Fund
Managers Real Estate Securities Fund
Managers Fremont Bond Fund
Managers California Intermediate Tax-Free Fund
Managers Fremont Money Market Fund
Each a series of
Managers Trust I
800 Connecticut Avenue
Norwalk, Connecticut 06854
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Proxy Statement/Prospectus dated
__________________, 2004, relating to the proposed reorganization of
certain series of Fremont Mutual Funds, Inc. into a corresponding newly
created series of Managers Trust I. A copy of the Proxy
Statement/Prospectus may be obtained without charge by contacting The
Managers Funds LLC ("Managers") at 800 Connecticut Avenue, Norwalk, CT
06854 or by telephoning Managers toll free at 1-800-835-3879.
The date of this Statement of Additional Information is
_______________, 2004.
<Page>
===================================
STATEMENT OF ADDITIONAL INFORMATION
===================================
TABLE OF CONTENTS
=================
Page
Exhibits B-3
Pro Forma Financial Statements B-3
Introduction B-3
Incorporation by Reference B-4
Additional Information about the Managers Funds B-4
About Managers Trust I B-4
Description of the Managers Funds and Their
Investments and Risks B-4
Management of the Managers Funds B-4
Control Persons and Principal Holders
of Securities B-5
Investment Advisory and Other Services B-5
Brokerage Allocation and Other Practices B-5
Capital Stock and Other Securities B-5
Purchase, Redemption and Pricing of Shares B-5
Taxation of the Managers Funds B-5
Distributor B-5
Calculation of Performance Data B-5
Financial Statements B-5
Additional Information about the Fremont Funds B-6
Fund History B-6
Description of the Funds and Their
Investments and Risks B-6
Management of the Funds B-6
Control Persons and Principal Holders
of Securities B-6
Investment Advisory and Other Services B-6
Brokerage Allocation and Other Practices B-6
Capital Stock and Other Securities B-6
Purchase, Redemption and Pricing of Shares B-6
Taxation of the Fund B-6
Distributor B-7
Calculation of Performance Data B-7
Financial Statements B-7
<Page>
EXHIBITS
========
The following documents are exhibits to this Statement of
Additional Information:
Exhibit A: Statement of Additional Information,
dated ____________, 2004, of Managers Trust I
with respect to Managers Fremont
Global Fund, Managers International Growth Fund,
Managers Structured Core Fund, Managers Small
Cap Fund, Managers Fremont Micro-Cap Fund,
Managers Fremont Institutional Micro-
Cap Fund, Managers Real Estate Securities Fund,
Managers Fremont Bond Fund, Managers California
Intermediate Tax-Free Fund and Fremont Money
Market Fund (the "Managers SAI").
Exhibit B: Statement of Additional Information, dated
March 1, 2004, as amended July 26,2004
of Fremont Mutual Funds, Inc. (the "Fremont
SAI").
Exhibit C: Annual Report, dated October 31, 2003, of
Fremont Mutual Funds, Inc., which includes
audited financial statements as of
October 31, 2003.
Exhibit D: Semi-Annual Report, dated April 30, 2004,
of Fremont Mutual Funds, Inc., which includes
unaudited financial statements for the six months
ended April 30, 2004.
PRO FORMA FINANCIAL STATEMENTS
==============================
Pro forma financial statements are not included since Fremont Global
Fund, Fremont International Growth Fund, Fremont Structured Core Fund,
Fremont U.S. Small Cap Fund, Fremont U.S. Micro-Cap Fund, Fremont
Institutional U.S. Micro-Cap Fund, Fremont Real Estate Securities Fund,
Fremont Bond Fund, Fremont California Intermediate Tax-Free Fund and
Fremont Money Market Fund are being combined with Managers Fremont
Global Fund, Managers International Growth Fund, Managers Structured
Core Fund, Managers Small Cap Fund, Managers Fremont Micro-Cap Fund,
Managers Fremont Institutional Micro-Cap Fund, Managers Real Estate
Securities Fund, Managers Fremont Bond Fund, Managers California
Intermediate Tax-Free Fund and Managers Fremont Money Market Fund,
respectively, which are newly created funds that do not have any
assets or liabilities.
INTRODUCTION
============
This Statement of Additional Information is intended to supplement the
information provided in a Proxy Statement/Prospectus dated ____________
__, 2004 (the "Proxy Statement/Prospectus") relating to the proposed
reorganization of Fremont Global Fund, Fremont International Growth
Fund, Fremont Structured Core Fund, Fremont U.S. Small Cap Fund, Fremont
U.S. Micro-Cap Fund, Fremont Institutional U.S. Micro-Cap Fund, Fremont
Real Estate Securities Fund, Fremont Bond Fund, Fremont California
Intermediate Tax-Free Fund and Fremont Money Market Fund (the "Fremont
Funds"), each a series of Fremont Mutual Funds, Inc., into Managers
Fremont Global Fund, Managers International Growth Fund, Managers
Structured Core Fund, Managers Small Cap Fund, Managers Fremont Micro-
Cap Fund, Managers Fremont Institutional Micro-Cap Fund, Managers Real
Estate Securities Fund, Managers Fremont Bond Fund, Managers
<Page>
California Intermediate Tax-Free Fund and Managers Fremont Money
Market Fund (the "Managers Funds"), each a series of Managers
Trust I. The Proxy Statement/Prospectus has been sent to the
shareholders of the Fremont Funds in connection with the
solicitation of proxies to be voted at the Meeting of
shareholders of the Fremont Funds to be held on _____________,
2004.
INCORPORATION BY REFERENCE
==========================
The following documents are incorporated by reference into this
Statement of Additional Information:
* The Fremont SAI (file no. 033-23453), filed with the
Securities and Exchange Commission on March 3, 2004
(accession number: 0001144204-04-002398), as
amended and filed on July 26,2004
* Annual Report, dated October 31, 2003, of Fremont
Mutual Funds, Inc. (file no. 811-05632) filed with
the Securities and Exchange Commission on December
30, 2003 (accession number: 0000894189-03-001963)
* Semi-Annual Report, dated April 30, 2004, of Fremont Mutual
Funds, Inc. (file no. 811-05632) filed with the Securities
and Exchange Commission on June 25, 2004 (accession number:
0000894189-04-001074)
* Managers Trust I SAI (file no. 033-44909), filed with
the Securities and Exchange Commission on July 29, 2004
(accession number: 0000882443-04-000012)
ADDITIONAL INFORMATION ABOUT MANAGERS TRUST I
=============================================
About the Managers Funds
- ------------------------
For additional information about the Managers Funds generally, see
"General Information" in the Managers SAI.
Description of the Managers Funds and Their Investments and Risks
- -----------------------------------------------------------------
For additional information about the investment objective, policies,
risks and restrictions of the Managers Funds, see "Investment
Objectives, Policies and Risk Considerations", "General Investment
Policies" and "Investment Restrictions" in the Managers SAI.
Management of the Managers Funds
- --------------------------------
For additional information regarding the management of the Managers
Funds, see "Trustees and Officers" in the Managers SAI.
Control Persons and Principal Holders of Securities
- ---------------------------------------------------
For additional information regarding ownership of shares of the Managers
Funds, see "Control Persons and Principal Holders of Securities" in the
Managers SAI.
<Page>
Investment Advisory and Other Services
- --------------------------------------
For additional information about investment advisory and other services,
see "Management of the Funds" in the Managers SAI.
Brokerage Allocation and Other Practices
- ----------------------------------------
For additional information regarding brokerage allocation practices of
the Managers Funds, see "Brokerage Allocation and Other Practices" in
the Managers SAI.
Capital Stock and Other Securities
- ----------------------------------
For additional information regarding voting rights and other aspects of
shares of the Managers Funds, see "Purchase, Redemption and Pricing of
Shares - Description of Shares" in the Managers SAI.
Purchase, Redemption and Pricing of Shares
- ------------------------------------------
For additional information about share purchase, redemption and pricing
of shares of the Managers Funds, see "Purchase, Redemption and Pricing
of Shares" in the Managers SAI.
Taxation of the Managers Funds
- ------------------------------
For additional information regarding tax matters, see "Certain Tax
Matters" in the Managers SAI.
Distributor
- -----------
For additional information about the distribution of shares of the
Managers Funds, see "Management of the Funds " Administrative Services /
Distribution Arrangements" in the Managers SAI.
Calculation of Performance Data
- -------------------------------
For additional information regarding the investment performance of
Managers Funds, see "Performance Data" in the Managers SAI.
Financial Statements
- --------------------
For additional information, see "Financial Statements" in the Managers
SAI.
ADDITIONAL INFORMATION ABOUT THE FREMONT FUNDS
==============================================
Fund History
- ------------
For additional information about the Fremont Funds generally and their
history, see "The Corporation" in the Fremont SAI.
<Page>
Description of the Funds and Their Investments and Risks
- --------------------------------------------------------
For additional information about the investment objective, policies,
risks and restrictions of each Fremont Fund, see "Investment Objectives,
Policies, And Risk Considerations", "General Investment Policies", and
"Investment Restrictions" in the Fremont SAI.
Management of the Funds
- -----------------------
For additional information regarding the management of the Fremont
Funds, see "Investment Company Directors and Officers" and "Investment
Advisory And Other Services" in the Fremont SAI.
Control Persons and Principal Holders of Securities
- ---------------------------------------------------
For additional information regarding ownership of shares of each Fremont
Fund, see "Additional Information" in the Fremont SAI.
Investment Advisory and Other Services
- --------------------------------------
For additional information about investment advisory and other services,
see "Investment Advisory And Other Services" in the Fremont SAI.
Brokerage Allocation and Other Practices
- ----------------------------------------
For additional information regarding brokerage allocation practices of
the Fremont Funds, see "Execution of Portfolio Transactions" in the
Fremont SAI.
Capital Stock and Other Securities
- ----------------------------------
For additional information regarding voting rights and other aspects of
shares of the Fremont Funds, see "Additional Information" in the Fremont
SAI.
Purchase, Redemption and Pricing of Shares
- ------------------------------------------
For additional information about share purchase, redemption and pricing
of shares of each Fremont Fund, see "How To Invest" and "Other
Investment and Redemption Services" in the Fremont SAI.
Taxation of the Fund
- --------------------
For additional information regarding tax matters, see "Taxes - Mutual
Funds" in the Fremont SAI.
Distributor
- -----------
For additional information about the distribution of shares of the
Fremont Funds, see "Investment Advisory And Other Services" in the
Fremont SAI.
<Page>
Calculation of Performance Data
- -------------------------------
For additional information regarding the investment performance of each
Fremont Fund, see "Investment Results" in the Fremont SAI.
Financial Statements
- --------------------
For additional information, see "Additional Information" in the Fremont
SAI.
<Page>
PART C
======
OTHER INFORMATION
=================
Item 15. INDEMNIFICATION
======== ===============
Reference is made to Article IV, Sections 4.2 and 4.3 of Managers Trust
I's ("MTI") Declaration of Trust (Exhibit 1) with respect to
indemnification of the Trustees and officers of MTI against liabilities
which may be incurred by them in such capacities. Insofar as
indemnification for liability arising under the Securities Act of 1933,
as amended (the "Act"), may be permitted to directors, officers and
controlling persons of MTI pursuant to the foregoing provisions, or
otherwise, MTI has been advised that, in the opinion of the Securities
and Exchange Commission ("SEC"), 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 MTI of expenses incurred or paid by a
Trustee, an officer or a controlling person of MTI 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 Trust 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.
Item 16. EXHIBITS
======== ========
EXHIBIT NUMBER EXHIBIT TITLE
- -------------- -------------
Exhibit 1 Declaration of Trust dated December 17, 1991,
is incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 033-44909; 811-6520
(filed July 31, 1998).
Exhibit 2 By-Laws, as amended, are incorporated by
reference to the Registration Statement on
Form N-1A, Registration Nos. 033-44909; 811-6520
(filed December 31, 2003).
Exhibit 3 Not applicable.
Exhibit 4 Form of Agreement and Plan of Reorganization
(filed as Appendix A to Part A of this
Registration Statement).
Exhibit 5 Not applicable.
Exhibit 6(a) Form of Investment Advisory Agreement for
Managers Fremont Global Fund, Managers
International Growth Fund, Managers
Structured Core Fund, Managers Small Cap
Fund, Managers Fremont Micro-Cap Fund,
Managers Fremont Institutional Micro-Cap
Fund, Managers Real Estate Securities
Fund, Managers Fremont Bond Fund, Managers
California Intermediate Tax-Free Fund and
Fremont Money Market Fund is
incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 033-44909; 811-6520
(filed July 29, 2004).
Exhibit 6(b) Form of Investment Subadvisory for
Armstrong Shaw Associates, Inc.,
Jarislowsky Fraser Limited, Kern
Capital Management LLC., Northstar Capital
Management, Inc., TimesSquare Capital
Management, Inc., Urdang Securities
Management, Inc., Pacific Investment
Management Company, LLC., First Quadrant,
L.P. and Evergreen Investment Management
Company, LLC. is incorporated by reference
to the Registration Statement on Form N-1A,
Registration Nos. 033-44909; 811-6520
(filed July 29, 2004).
Exhibit 7 Form of Distribution Agreement between
Managers Distributors, Inc. and Managers
Trust I with respect to Managers Fremont
Global Fund, Managers International
Growth Fund, Managers Structured Core Fund,
Managers Small Cap Fund, Managers Fremont
Micro-Cap Fund, Managers Fremont
Institutional Micro-Cap Fund, Managers
Real Estate Securities Fund, Managers
Fremont Bond Fund, Managers California
Intermediate Tax-Free Fund and Fremont
Money Market Fund is incorporated by
reference to the Registration Statement
on Form N-1A, Registration Nos. 033-44909;
811-6520 (filed July 29, 2004).
Exhibit 8 Not applicable.
Exhibit 9 Custodian Contract between The Bank of New
York and Managers Trust I dated August 5, 2002
is incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 033-44909; 811-6520
(filed May 30, 2003).
Exhibit 11 Opinion of Goodwin Procter LLP.
Exhibit 12 Opinion of Goodwin Procter LLP with respect
to tax matters.**
Exhibit 13(a) Form of Administration and Shareholder
Servicing Agreement with respect to
Managers Fremont Global Fund, Managers
International Growth Fund, Managers
Structured Core Fund, Managers Small
Cap Fund, Managers Fremont Micro-Cap Fund,
Managers Fremont Institutional Micro-
Cap Fund, Managers Real Estate Securities
Fund, Managers Fremont Bond Fund, Managers
California Intermediate Tax-Free Fund and
Fremont Money Market Fund is incorporated
by reference to the Registration Statement
on Form N-1A, Registration Nos. 033-44909;
811-6520 (filed July 29, 2004).
Exhibit 13(c) Transfer Agency and Service Agreement between
Managers Trust I and PFPC, Inc.*
<Page>
Exhibit 14 Consent of PricewaterhouseCoopers LLP,
independent accountants is filed herewith
as Exhibit 14.
Exhibit 15 Not applicable.
Exhibit 16 Powers of Attorney.
Exhibit 17 Not applicable.
* To be filed by amendment.
** The Registrant hereby undertakes to file the opinion of Goodwin
Procter LLP with respect to tax matters by post-effective amendment.
<Page>
Item 17 UNDERTAKINGS
======= ============
(1) The undersigned registrant agrees that prior to any
public reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act, the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The undersigned registrant agrees that every
prospectus that is filed under paragraph (1) above will be
filed as a part of an amendment to the registration statement
and will not be used until the amendment is effective, and
that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
<Page>
==========
EXHIBIT 11
==========
[Goodwin Procter LLP Letterhead]
August 24, 2004
Managers Trust I
800 Connecticut Avenue
Norwalk, Connecticut 06854
Ladies and Gentlemen:
Reference is made to the registration statement on Form N-14
(the "Registration Statement") filed with the Securities and
Exchange Commission with respect to shares, $0.001 par value
(the "Shares"), of Managers Trust I (the "Trust") representing
interests in Managers Fremont Global Fund, Managers International
Growth Fund, Managers Structured Core Fund, Managers Small
Cap Fund, Managers Fremont Micro-Cap Fund, Managers Fremont
Institutional Micro-Cap Fund, Managers Real Estate Securities
Fund, Managers Fremont Bond Fund, Managers California Intermediate
Tax-Free Fund and Managers Fremont Money Market Fund (each a
"Fund" and together, the "Funds") to be issued pursuant to a
certain Agreement and Plan of Reorganization (the "Reorganization
Agreement") by and between the Trust, on behalf of each Fund,
and Fremont Mutual Funds, Inc., on behalf of its separate series
Fremont Global Fund, Fremont International Growth Fund, Fremont
Structured Core Fund, Fremont U.S. Small Cap Fund, Fremont U.S.
Micro-Cap Fund, Fremont Institutional U.S. Micro-Cap Fund, Fremont
Real Estate Securities Fund, Fremont Bond Fund, Fremont California
Intermediate Tax-Free Fund and Fremont Money Market Fund, included
as an exhibit to the Registration Statement.
We have examined the Trust's Declaration of Trust dated December
17, 1991, as amended to date, the By-Laws of the Trust, certain
resolutions adopted by the Board of Trustees of the Trust and such
other documents as we deemed necessary for purposes of this opinion.
Based upon and subject to the foregoing, we are of the opinion that
the Shares, when issued in accordance with the terms of the
Reorganization Agreement, will be legally issued, fully-paid
and non-assessable by the Trust.
We also hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/s/ GOODWIN PROCTER LLP
GOODWIN PROCTER LLP
<Page>
==========
EXHIBIT 14
==========
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
========================================================
We hereby consent to the incorporation by reference in this combined
Proxy Statement and Registration Statement on Form N-14 of our report
dated December 18, 2003, relating to the financial statements and
financial highlights which appear in the October 31, 2003 Annual Report
to Shareholders of Fremont Mutual Funds, Inc. which are also
incorporated by reference into the Registration Statement on Form N-1A
dated March 1, 2004 and filed with the Securities and Exchange
Commission on March 3, 2004. We also consent to the references to us
under the headings "Financial Highlights", "Independent Auditors;
Financial Statements", and "Other Principal Service Providers" in such
Registration Statements.
PricewaterhouseCoopers LLP
San Francisco, California
August 24, 2004
<Page>
==========
EXHIBIT 16
==========
=================
POWER OF ATTORNEY
MANAGERS TRUST I
=================
KNOW ALL MEN BY THESE PRESENTS, that each of the
persons whose name appears below hereby nominates, constitutes and
appoints Peter M. Lebovitz, Galan G. Daukasand Donald S. Rumery
(with full power of each of them to act alone) his or her true
and lawful attorney-in-fact and agent, for him or her and on his
or her behalf and in his or her place and stead in any way and
all capacities, to make, execute and sign the Registration
Statement on Form N-14 under the Securities Act of 1933 of the
Managers Trust I (the "Trust") relating to shares of
the Trust proposed to be issued in connection with anticipated
reorganization transactions involving series of Fremont Mutual
Funds, Inc., a Maryland corporation, and any and all amendments and
supplements thereto, and to file the same with the Securities and
Exchange Commission, and any other regulatory authority having
jurisdiction over the offer and sale of shares of common stock of
the trust, and any and all exhibits and other documents requisite
in connection therewith, granting unto said attorneys and each of
them, full power and authority to perform each and every act and
thin requisite and necessary to be done in and about the premises
as fully to all intents and purposes as each of the undersigned
Trustees himself or herself might or could do.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of this 15th day of June, 2004.
Signature Signature
--------- ---------
/s/ Jack W. Aber /s/ William E. Chapman, II
- --------------------------------- -------------------------------
Jack W. Aber, Trustee William E. Chapman,II, Trustee
/s/ Edward J. Kaier /s/ John Kingston, III
- --------------------------------- -------------------------------
Edward J. Kaier, Trustee John Kingston, III, Trustee
/s/ Peter M. Lebovitz /s/ STeven J. Paggioli
- --------------------------------- -------------------------------
Peter M. Lebovitz, Trustee Steven J. Paggioli, Trustee
/s/ Eric Rakowski /s/ Thomas R. Schneeweis
- --------------------------------- -------------------------------
Eric Rakowski, Trustee Thomas R. Schneeweis, Trustee
<Page>
==========
SIGNATURES
==========
As required by the Securities Act of 1933, this post-effective amendment
to the registration statement has been signed on behalf of the
registrant, in the City of Norwalk and State of Connecticut, on the
24th day of August, 2004.
MANAGERS TRUST I
By:/s/ Donald S. Rumery
-------------------------
Name: Donald S. Rumery
Title: Treasurer
SIGNATURE TITLE DATE
--------- ----- ----
* Trustee August 24, 2004
Jack W. Aber
* Trustee August 24, 2004
William E. Chapman, II
* Trustee August 24, 2004
Edward J. Kaier
* Trustee August 24, 2004
Eric Rakowski
* Trustee August 24, 2004
Steven J. Paggioli
* Trustee August 24, 2004
Thomas R. Schneeweis
* Trustee, President
and Principal August 24, 2004
Peter M. Lebovitz Executive Officer
<Page>
* Principal Financial August 24, 2004
Galan G. Daukas Officer
/s/ Donald S. Rumery Treasurer and Principal August 24, 2004
--------------------
Donald S. Rumery Accounting Officer
*By Donald S. Rumery pursuant to power of attorney
<Page>