========================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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<Table>
[ ]Pre-Effective Amendment No. ______ [ ]Post-Effective Amendment No. ______
</Table>
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THE MANAGERS FUNDS
==================
(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
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(Registrant's Telephone Number, Including Area Code
and Telephone Number)
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Donald S. Rumery
THe Managers Funds
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
__________, 2004 pursuant to Rule 488.
<Page>
==================
THE MANAGERS FUNDS
==================
CONTENTS OF REGISTRATION STATEMENT ON FORM N-14
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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
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================================================================
NOTICE: PLEASE COMPLETE THE
ENCLOSED PROXY BALLOT AND RETURN IT AS SOON AS 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].
================================================================
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FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, SUITE 2600
SAN FRANCISCO, CALIFORNIA 94105
===============================
____________, 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 Large Cap Growth
Fund and Fremont Large Cap Value Fund (throughout this
letter and the related proxy materials we refer to the
Fremont Large Cap Growth Fund and the Fremont Large Cap
Value Fund as the "Existing Funds"). We are seeking
your approval to reorganize the Existing Funds into the
Managers Capital Appreciation Fund and Managers Value Fund
(throughout this letter and the related proxy materials
we refer to the Managers Capital Appreciation Fund and
the Managers Value Fund as the "Acquiring Funds"),
respectively, two funds within the family of mutual funds
advised by Managers (the "Managers Funds"). Information
regarding each of these proposed reorganizations (the
"Reorganizations") is contained in the enclosed proxy
materials. The proposed reorganizations of the other
ten series of the Fremont Funds into new 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
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.
<Page>
In the Reorganizations, each Existing Fund will transfer
all of its assets to a corresponding Acquiring Fund. In exchange
for these assets, the Acquiring Fund will assume the stated
liabilities of the Existing Fund and deliver to shareholders of
the Existing Fund shares of the Acquiring 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.
2
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===============================================================
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.
3
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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 Acquiring Fund (see
below) pursuant to an Agreement and Plan of Reorganization between
Fremont Mutual Funds, Inc. ("FMF") and The Managers Funds ("TMF").
In connection with each Reorganization, the Existing Fund will
transfer all of its assets to the Acquiring Fund, the Acquiring
Fund will assume all of the stated liabilities of the Existing
Fund, and you will receive shares of the Acquiring Fund (the
"Acquiring 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 Acquiring Fund.
EXISTING FUNDS OF FMF ACQUIRING FUNDS OF TMF
- --------------------- ----------------------
Fremont Large Cap Growth Fund Managers Capital Appreciation Fund
Fremont Large Cap Value Fund Managers Value Fund
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
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 existing FIA team.
4
<Page>
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 Acquiring Funds performed by FIA
for the Existing Funds. Managers Value Fund is subadvised by
Armstrong Shaw Associates Inc. and Osprey Partners Investment
Management, LLC. Managers Capital Appreciation Fund is subadvised
by Essex Investment Management Company, LLC and Bramwell Capital
Management, Inc. Information regarding Managers and each of these
subadvisors is included in the proxy materials.
Q: Will the Fund expenses that I bear indirectly as a shareholder
of an Acquiring Fund be higher than the expenses I currently
bear as a shareholder the Existing Fund?
A: No. In fact, it is anticipated that each Acquiring Fund will
operate with a lower total expense ratio than each Existing Fund,
which means that the expenses you will bear as a shareholder of the
Acquiring Fund will be less than the expenses you currently bear as
a shareholder of the Existing Fund.
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 Acquiring Funds for U.S. federal income tax purposes.
Q: How do the investment objectives and policies of the Existing
Funds and the Aquiring Funds compare?
A: The investment objectives and policies of each Aquiring Fund are
substantially the same as those of its corresponding Existing Fund.
Q: Will the Reorganizations impact the Acquiring Funds' ability to
use any capital loss carryforwards and unrealized capital losses
of the corresponding Existing Fund?
A: It is expected that the Fremont Large Cap Growth Fund and the
Fremont Large Cap Value Fund will have losses that will be subject
to an annual limitation, such that the losses in excess of the
limitation
5
<Page>
cannot be used in the taxable year and must be carried
forward. Due to a variety of factors and because capital loss
carryforwards generally expire eight taxable years following
realization, including the short taxable year resulting from the
Reorganizations, it is expected that substantially all of the
Existing Funds' losses will become permanently unavailable. As a
result, a shareholder of the Existing Funds may pay more taxes, or
pay taxes sooner, than such shareholder otherwise would if the
Reorganizations did not occur.
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 Acquiring 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 Acquiring 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 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 TMF 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?
Shareholders of ten other series of the Fremont Funds will also be
voting on a reorganization of those Funds into newly-created 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 ten other series. If a Reorganization
is not approved with respect to any Fremont Fund, including the ten
other series not discussed in these proxy materials, then either
TMF 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 the
proposals or how to vote your shares, please call the Fremont
Funds' proxy solicitation firm, [_________________] at [telephone].
6
<Page>
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FREMONT LARGE CAP VALUE FUND
FREMONT LARGE CAP GROWTH FUND
=============================
SERIES OF
================================
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, SUITE 2600
SAN FRANCISCO, CALIFORNIA 94105
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR ____________, 2004
- ------------------------------------------------------------
This is the formal notice and agenda for the special
shareholder meeting of Fremont Large Cap Value Fund and
Fremont Large Cap Growth 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
Capital Appreciation Fund and Managers Value Fund
as the "Acquiring Funds", each a series of The Managers
Funds ("TMF")." We refer to the Existing Funds and the
Acquiring Funds together as the "Funds."
- ------------------------------------------------------------
To the Shareholders of the Fremont Funds:
A special meeting of shareholders of Fremont
Large Cap Value Fund and Fremont Large Cap Growth 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 reorganizarion
of each Existing Fund in which you own
shares into a corresponding Acquiring Fund in
exchange for shares of the Acquiring Fund
(the "Reorganization").
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.
7
<Page>
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.
===================================================
8
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===================================================
___________________, 2004
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, SUITE 2600
SAN FRANCISCO, CALIFORNIA 94105
[telephone]
THE MANAGERS FUNDS
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
two Existing Funds listed below and a prospectus for the
two Acquiring 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 Acquiring Fund in exchange
for the assumption by the Acquiring Fund of stated
liabilities of the Existing Fund and the delivery
to the Existing Fund of shares of the corresponding
Acquiring Fund with a value equal to the value of
the assets transferred by the Existing Fund, net of
the liabilities assumed by the Acquiring Fund (all
as determined immediately prior to the transaction);
(2) the pro rata distribution of the same or comparable
class of shares of the Acquiring 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
Acquiring Fund, as identified in the chart below. The total
value of the Acquiring 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.
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9
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FMF EXISTING FUNDS TMF ACQUIRING FUNDS
- ------------------ -------------------
Fremont Large Cap Growth Fund Managers Capital Appreciation Fund
Fremont Large Cap Value Fund Managers Value Fund
IS ADDITIONAL INFORMATION ABOUT THE FUNDS AVAILABLE?
Yes, additional information about the Funds is available in the:
* Prospectuses for the Existing Funds and the Acquiring
Funds;
* Annual and Semi-Annual Reports to shareholders of the
Existing Funds and the Acquiring Funds; and
* Statements of Additional Information, or "SAIs," for the
Existing Funds and for the Acquiring 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
Acquiring Funds, and Management's Discussion of Fund Performance
included in the Existing Funds' and the Acquiring 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 TMF 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 Acquiring Fund accompanies this Proxy
Statement/Prospectus. Each Existing Fund was previously advised by
Fremont Investment Advisors, Inc., which we refer to as "FIA."
Each Acquiring 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 Acquiring Fund, which is advised by Managers. Each
Acquiring Fund is also subadvised by other subadvisers supervised
and paid by Managers, all as described later in this Proxy
Statement/Prospectus. 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.
Copies of all of these documents are available upon request
without charge by writing to or calling:
10
<Page>
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
(The Managers Funds for information
on the Acquiring 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 Acquiring 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.
11
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TABLE OF CONTENTS
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Page
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I. SYNOPSIS 1
The Reorganizations 1
Federal Income Tax Consequences 1
Investment Objectives and Policies 1
Principal Risk Factors 5
Comparison of Fees and Expenses 8
Distribution and Purchase Procedures,
Exchange Rights and Redemption Procedures 11
II. THE REORGANIZATIONS 12
Description of the Reorganizations 12
Reasons for the Reorganizations 12
Terms of the Reorganizations 12
Board Consideration of the Reorganizations 13
Federal Income Tax Consequences 15
Fees and Expenses of the Reorganizations 17
III. SUMMARY OF DIFFERENCES BETWEEN THE
TARGET AND ACQUIRING FUNDS 17
Comparison of Investment Advisers and
Investment Advisory Fees 17
Other Principal Service Providers 22
Comparison of Business Structure 23
Comparative Information on Fundamental
Investment Restrictions 26
Comparison of Performance 26
Existing and Pro Forma Capitalizations 26
IV. INFORMATION ON VOTING 27
Proxy Solicitation 27
Revocability of Proxies 27
Voting Procedures 27
Outstanding Shares 28
Interest of Certain Persons in the
Transactions 28
Annual Meetings and Shareholder Meetings 29
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 Acquiring Funds (each a series
of TMF) (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 TMF 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 Acquiring 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 Acquiring 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 Acquiring Funds, is a condition to the
closing of the Reorganizations. See "The Reorganizations --
Federal Income Tax Consequences."
Investment Objectives and Policies
----------------------------------
Each Existing Fund and its corresponding Acquiring Fund
pursue substantially similar investment objectives and would hold
substantially similar securities. As a result, the proposed
Reorganizations are not expected to cause significant portfolio
turnover or transaction expenses from the sale of securities that
are incompatible with the investment objective of the Acquiring
Fund.
The following charts compare the investment objectives and
principal investment strategies of each Existing Fund and the
corresponding Acquiring Fund, and describe the key differences
between the Funds. You also can find additional information about
a specific Fund's investment objective, principal investment
strategies and investment policies in its prospectus and SAI.
<Page>
<Table>
FUND NAMES OBJECTIVES PRINCIPAL STRATEGIES KEY DIFFERENCES
- ---------- ---------- -------------------- ---------------
Fremont
Large Cap Long-term * The Fund normally invests Diversification:
Growth Fund capital at least 80% of its assets * The Fremont
appreciation. in a concentrated selection Large Cap
of common stocks of large Growth Fund
U.S. companies. This policy is structured
may be changed only upon as a non-
60 days written notice to diversified Fund
shareholders. * The Managers
* The Fund's subadvisor uses Capital Appreciation
a fundamental and analytical Fund is structured as
approach to select securities. a diversified fund.
* The Fund's subadvisor seeks to
identify companies that Investments:
demonstrate most or all of the * The Fremont Large Cap
following characteristics: Growth Fund
(i) A history of above-average normally invests at
earnings growth. least 80%o f its assets
(ii) Higher than average in common stocks
projected earnings growth. of large U.S. companies.
(iii) Relatively attractive * The Managers Capital
valuations. Appreciation Fund normally
(iv) Higher than average return invests its assets
on equity. primarily in common and
* After identifying companies preferred
with the above fundamentals, stocks of
the Fund's subadvisor focuses medium and
on investment intangibles such large U.S.
as quality of products companies.
and services, marketing
prowess and management Stock Selection:
strength.
* The Fund's subadvisor forms * The Fremont Large Cap
portfolios of 25 to 35 stocks Growth Fund's
from companies that possess a subadvisor selects stocks
high number of the subjective believed to have a history
factors above. of above-average earnings
* The Fund's subadvisor normally growth, projected above-
sells a security when the average earnings
company's fundamentals begin growth, relatively
to deteriorate or superior attractive
opportunities arise in an valuations and above-
alternative security. average return on
investment. After
identifying
Managers Capital Long-term * The Fund normally invests primarily fundamental requirements,
Appreciation Fund capital in common and preferred stocks of the subadvisor
appreciation. large and medium U.S. companies focuses on
Income is the (companies with capitalizations investment
Fund's within the range of intangibles
secondary capitalizations of companies such as
objective. represented in the quality of
S&P 500 Index). products and
* The Fund may invest in cash or high services,
quality short-term investments without marketing
limit for temporary defensive purposes, prowess and
which will result in the Fund not management
pursuing its investment strength.
objective while invested * The Managers
in such instruments. Capital
* The Fund's assets are Appreciation
allocated between two Fund has two
independent subadvisors. subadvisors.
* Both of the Fund's subadvisors Each subadvisor
emphasize a growth approach to selects stocks
investing by selecting stocks of believed to
companies it believes can generate be able to
strong growth in earnings and/or generate
cash flow. * One subadvisor typically strong
seeks to identify companies expected growth in earnings
to exhibit explosive earnings and/or cash
growth in the near term, and expects flow. One
to generate returns almost subadvisor seeks to
identify companies
expected to exhibit
explosive earnings growth
in the near term. The
2
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exclusively from capital other
appreciation due to subadvisor
earnings growth. seeks to
identify
* The other subadvisor companies
typically seeks to identify with above-
companies with above-average average
products and services and the products and
ability to generate and services and
sustain growth in earning the ability
and/or cash flow over to generate
longer periods, and and sustain growth in
expects to generate earnings and/or cash
returns from capital flow over
appreciation due to longer periods.
both earnings growth Both subadvisors
and an improvement examine the underlying
in the market's businesses, financial
valuation of that stock. statements,
* Both subadvisors competitive, environment
examine the underlying and company managements.
businesses, financial
statements, competitive Stock Sales:
environment and *The Fremont
company managements Large Cap
in order to assess the Growth Fund's
future profitability subadvisor normally
of each company. sells a stock
* The subadvisors do when the company's
not normally trade fundamentals begin to
securities for deteriorate or superior
short-term profits, opportunities
but they may sell a arise in an alternative
security when believed best, security.
which may result in * The Managers
short-term trading, Capital Appreciation
thereby increasing Fund subadvisors
the Fund's transaction normally sell a stock if it
costs, which may have an is believed that the current
adverse effect on stock price is not supported
the Fund's performance. by its expectations
* A stock is typically sold if regarding the company's
the subadvisor believes that the future growth potential.
current stock price
is not supported by its expectations
regarding the company's future
growth potential.
3
<Page>
FUND NAMES OBJECTIVES PRINCIPAL STRATEGIES KEY DIFFERENCES
- ---------- ---------- -------------------- ---------------
Fremont Long-term * The Fund normally * Diversification:
Large capital invests at least 80% * The Fremont Large
Cap appreciation. of its assets in Cap Value Fund
Value undervalued stocks of is structured
Fund large U.S. corporations. as a non-diversified
This policy may be changed Fund.
only upon 60 days written * The Managers Value
notice to shareholders. Fund is structured as
* The Fund normally holds a diversified fund.
approximately 60 to 80 stocks. Investments:
* The Fund's subadvisor * The Fremont Large
selects stocks using the Cap Value Fund normally
Relative Value Strategy: invests at least
(i) First, the subadvisor 80% of its assets in
applies a quantitative undervalued stocks of
model to identify undervalued large U.S. companies.
stocks with positive earnings * The Managers Value Fund
revisions. normally invests
(ii) Next, the subadvisor in stocks of
conducts qualitative due medium and large
diligence on stocks that ranked U.S. companies.
highly in the quantitative model. Stock Selection:
* The Fund's subadvisor normally * The Fremont
sells stocks when the model ranks Large Cap Value
a stock poorly or the subadvisor Fund's
loses conviction in a company's subadvisor uses
fundamentals. the Relative
* The Fund is structured as a non- Value Strategy
diversified Fund, but it is likely to select stocks
that most of the time the portfolio by first
will be diversified. applying a
Managers Long-term capital * The Fund normally invests primarily quantitative
Value appreciation. in common and preferred stocks of model to identify
Fund Income is large and medium U.S. companies undervalued stocks with
the Fund's (companies with capitalizations positive earnings
secondary within the range of capitalizations revisions and then
objective. of companies represented in the conducting
S&P 500 Index). qualitative due
* The Fund may invest in cash or diligence on stocks
high quality short-term that ranked well based
investments without limit for on the quantitative model.
temporary defensive purposes, * The Managers
which will result in the Fund Value Fund has
not pursuing its investment two subadvisors.
objective while invested in One subadvisor
such instruments. uses a dividend
* The Fund's assets are allocated yield oriented
between two independent subadvisors. value approach
* One subadvisor uses a dividend by selecting
yield oriented value approach by securities from
principally selecting among those that
securities from among those yield more than
that yield more than the the S&P 500
S&P 500 Index. Index. The
* The other subadvisor invests other subadvisor
in stocks with low price-to- invests in
earnings and price-to-cash flow stocks with low
ratios while using in- price-to-earnings
depth bottom-up analysis and price-to-cash
to identify financially flow ratios while
strong, well-managed companies using in-depth bottom-up
and examining the underlying analysis to
businesses, financial identify financially
statements, competitive strong, well-managed
environment and company companies, examining
managements to assess future the underlying
profitability. businesses, financial
* Both subadvisors expect to statements, competitive
generate returns from dividend environment
income and capital
4
<Page>
appreciation as a result
of improvements to stock and company management.
valuations. Stock Sales:
* The subadvisors do not * The Fremont
normally trade securities Large Cap Growth
for short-term profits, Fund's subadvisor
but they may sell a normally sells a
security when believed stock when the
best, which may result model ranks a
in short-term trading, stock poorly or
thereby increasing the when the subadvisor
Fund's transaction costs, loses conviction
which may have an adverse in a company's
effect on the Fund's fundamentals.
performance and may
increase the shareholders' * The Managers
tax liabilities. Capital
* A stock is typically Appreciation
sold if the subadvisor Fund's subadvisors
believes the future normally sell a
profitability of a company stock if it is
does not support its current believed that
stock price. future profitability of
a company does not
support its
current stock price.
</Table>
Principal Risk Factors
----------------------
The chart below lists the principal risk factors associated
with investing in the Existing Funds and the Acquiring Funds. The
risk factors associated with an investment in an Existing Fund are
similar to those associated with the corresponding Acquiring Fund.
However, the Acquiring Funds may invest in mid-capitalization
companies and are subject to the risks associated with such stocks,
and the Fremont Large Cap Growth Fund, as a non-diversified fund,
is subject to risks that Managers Capital Appreciation Fund, as a
diversified fund, is not. These risk factors are discussed in
detail in the section immediately following this chart.
<Table>
Principal Risk Factors- Principal Risk Factors-
Funds Existing Fund Acquiring Fund
- ----- ----------------------- -----------------------
Fremont Large Cap Economic Risk Economic Risk
Growth Fund Market Risk Market Risk
Non-Diversification Risk Mid-Capitalization Stock Risk
Managers Capital Price Risk Price Risk
Appreciation Fund Sector Risk
Fremont Large Cap Active Management Risk Economic Risk
Value Fund Economic Risk Market Risk
Market Risk Mid-Capitalization Stock Risk
Managers Value Fund Non-Diversification Risk Price Risk
Price Risk Sector Risk
</Table>
5
<Page>
The following is a detailed discussion of the principal
risk factors of each of the Existing Funds and Acquiring Funds
as listed above.
Active Management Risk
- ----------------------
Because the Fund's portfolio managers actively
buy and sell securities of the Fund, investors
are subject to the risk that the investment
decisions may increase the potential for a loss,
especially over short periods.
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
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.
Mid-
Capitalization
Stock Risk
- --------------
Mid-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 mid-capitalization
companies carries more risk than a Fund with
investments in large-capitalization companies.
Non-
Diversification
Risk
- ---------------
As a nondiversified fund, the Fund may make
larger investments in individual companies and,
as each stock carries a higher weighting within
the portfolio, the value of the portfolio as a
whole can be greatly affected by declines in the
value of a single stock. Therefore, the Fund's
share price may fluctuate more than the share
price of a diversified fund. Also, the value of
an individual security or particular type of
security can be more volatile than the market as
a whole and can perform differently from the
value of the market as a whole.
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
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
6
<Page>
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.
7
<Page>
Comparison of Fees and Expenses
-------------------------------
Fremont Large Cap Growth Fund and Managers Capital
Appreciation Fund
--------------------------------------------------
This table discloses the fees and expenses that you may pay
if you buy and hold shares of either Fund. The table also
discloses pro forma information for the combined Fund assuming the
Reorganization took place on April 30, 2004. The expense
information for the Existing Fund and the Acquiring Fund is based
upon expenses for the fiscal year ended October 31, 2003 and the
fiscal year ended December 31, 2003, respectively. There will not
be any shareholder fees payable in connection with the
Reorganization.
<Table>
Pro Forma-
Managers Managers
Fremont Capital Capital
Large Cap Appreciation Appreciation
Growth Fund 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 None
Maximum deferred sales charge
(load) None None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None None
Redemption fees None(1) None(1) None(1)
Exchange fees None None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.95% 0.80% 0.80%
Other Expenses 1.30% 0.72% 0.76%
Total Annual Fund Operating Expenses 2.25% 1.52%(2) 1.56%(2)
Fee Waiver and Reimbursement (0.85)%(3) (0.23)%(4) (0.27)%(4)
Net Annual Fund Operating Expenses 1.40%(3) 1.29%(4) 1.29%(4)
_________________
</Table>
(1) The Transfer Agent of the Existing Fund currently charges
a $10 service fee on wire redemptions. Shareholders of
the Aquiring Fund will not be charged a wire fee.
(2) The Acquiring Fund has entered into arrangements with
unaffiliated broker-dealers to pay a portion of the
Acquiring Fund's expenses. In addition, the Acquiring
Fund may receive credits against its custodian expenses
for uninvested overnight cash balances. Due to these
expense offsets, the Acquiring Fund incurred actual
net gross operating expenses in amounts less than the
amounts shown above. After giving effect to these
expense offsets, the gross operating expenses were
1.40%.
(3) FIA is indefinitely obligated by contract to limit the
Existing Fund's operating expenses to 1.40%. However,
this limit may be changed with the approval of the
Existing Fund's Board of Directors.
(4) The Managers Funds LLC has contractually agreed through
May 1, 2005 to waive management fees as may be necessary
to limit "Total Annual Fund Operating Expenses"
(exclusive of taxes, interest, brokerage and extraordinary
items) to 1.29% of the Fund's net asset value subject to
later reimbursement by the Fund in certain circumstances
(as discussed under the heading "The Managers Funds"),
provided that the amount of management fees waived will
not exceed 0.25% of the Fund's average net assets.
Because The Managers Funds LLC's obligation to waive
its management fees is limited to 0.25% of the Fund's
average net assets, it is possible the Fund's total
expenses could exceed 1.29% in certain circumstances.
8
<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 Large Cap Growth Fund $143 $443 $766 $1,680
Managers Capital Appreciation Fund $131 $458 $807 $1,793
Pro Forma-- Managers Capital
Appreciation Fund $131 $459 $818 $1,828
</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.
9
<Page>
Fremont Large Cap Value Fund and Managers Capital Appreciation Fund
- -------------------------------------------------------------------
This table discloses the fees and expenses that you may pay
if you buy and hold shares of either Fund. The table also
discloses pro forma information for the combined Fund assuming the
Reorganization took place on April 30, 2004. The expense
information for the Existing Fund and the Acquiring Fund is based
upon expenses for the fiscal year ended October 31, 2003 and the
fiscal year ended December 31, 2004, respectively. There will not
be any shareholder fees payable in connection with the
Reorganization.
<Table>
Fremont Pro Forma-
Large Cap Managers Managers
Value Fund Value Fund Value 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 None
Maximum deferred sales charge
(load) None None None
Maximum sales charge (load) imposed on
reinvested dividends and distributions None None None
Redemption fees None(1) None(1) None(1)
Exchange fees None None None
Annual Fund Operating Expenses
- ------------------------------
Management Fees 0.75% 0.75% 0.75%
Other Expenses 1.16% 0.67% 0.73%
Total Annual Fund Operating Expenses 1.91% 1.42%(2) 1.48%(2)
Fee Waiver and Reimbursement (0.71)%(3) (0.23)%(4) (0.29)%(4)
Net Annual Fund Operating Expenses 1.20%(3) 1.19%(4) 1.19%(4)
_________________
</Table>
(1) The Transfer Agent of the Existing Fund currently charges
a $10 service fee on wire redemptions. Shareholders of
the Aquiring Fund will not be charged a wire fee.
(2) The Acquiring Fund has entered into arrangements with
unaffiliated broker-dealers to pay a portion of the
Acquiring Fund's expenses. In addition, the Acquiring
Fund may receive credits against its custodian expenses
for uninvested overnight cash balances. Due to these
expense offsets, the Acquiring Fund incurred actual
net gross operating expenses in amounts less than the
amounts shown above. After giving effect to these
expense offsets, the gross operating expenses were 1.37%.
(3) FIA is indefinitely obligated by contract to limit the
Existing Fund's operating expenses to 1.20%. However,
this limit may be changed with the approval of the
Existing Fund's Board of Directors.
(4) The Managers Funds LLC has contractually agreed through
May 1, 2005 to waive management fees as may be necessary
to limit "Total Annual Fund Operating Expenses"
(exclusive of taxes, interest, brokerage and extraordinary
items) to 1.19% of the Fund's net asset value subject to
later reimbursement by the Fund in certain circumstances
(as discussed under the heading "The Managers Funds"),
provided that the amount of management fees waived will
not exceed 0.25% of the Fund's average net assets.
Because The Managers Funds LLC's obligation to waive
its management fees is limited to 0.25% of the Fund's
average net assets, it is possible the Fund's total
expenses could exceed 1.19% in certain circumstances.
10
<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 Large Cap Growth Fund $122 $381 $660 $1,455
Managers Value Fund $121 $427 $754 $1,682
Pro Forma-- Managers Value Fund $121 $432 $773 $1,737
</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.
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 Acquiring
Funds, as discussed below. More detailed explanations of the
services available through the Acquiring Funds can be found in the
Prospectus that accompanies this Proxy Statement/Prospectus.
Both the Existing Funds and the Acquiring 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 Acquiring 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. Higher minimum investment
requirements apply to participants in the ManagersChoice Program
($50,000 initial investment and $500 additional investment). The
Acquiring Funds (or their distributor) may, in their discretion,
waive the minimum initial or additional investment amounts at any
time. Additionally, the Acquiring 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 Acquiring 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 Acquiring 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 Acquiring 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 Acquiring Funds may exchange into certain other
11
<Page>
funds in the Managers Funds Family of Funds by mail, telephone,
the internet or through an investment advisor, bank or investment
professional.
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 Acquiring 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 Acquiring 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 Acquiring 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 by December 31, 2004.
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
Acquiring 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 Acquiring Funds, will continue to be served by
many members of your existing FIA team.
(i) Terms of the Reorganizations
----------------------------
At the effective time of the Reorganizations, each Acquiring
Fund will acquire all of the assets and assume all of the
liabilities of the corresponding Existing Fund shown in the table
below in exchange for shares of the corresponding class of the
Acquiring Fund.
EXISTING FUNDS ACQUIRING FUNDS
- -------------- ---------------
Fremont Large Cap Growth Fund Managers Capital Appreciation Fund
Fremont Large Cap Value Fund Managers Value Fund
12
<Page>
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 Acquiring Fund's acquiring all of
the assets of the corresponding Existing Fund in exchange solely
for shares of the Acquiring Fund and the assumption by the
Acquiring 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 Acquiring 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 Acquiring 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 Acquiring 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 Acquiring Fund. The valuation will be done immediately
after the close of business, as described in the Agreement and
Plan of Reorganization, 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 Acquiring 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 Acquiring Fund's Declaration of Trust and the
Acquiring Fund's then-current prospectus and statement of
additional information, together with any other valuation
procedures established by the Trustees of the Acquiring Fund. Any
special options (for example, automatic investment plans on current
Existing Fund shareholder accounts) will automatically transfer to
the new accounts.
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
Statement/Prospectus, as agreed between them. The closing date is
expected to occur by 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 ten other series of FMF into
new 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 Acquiring 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 toterminate the PlanS 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 Acquiring
Funds at meetings on November 4
13
<Page>
and December 15, 2003, and January 14, Febraury 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 Acquiring 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 intothe Acquiring 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 Acquiring 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 Acquiring 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 Acquiring Fund, if operational,
and the investment performance of FIA and Managers
generally;
(e) The compatibility of the investment objectives,
policies and restrictions of the Existing Funds
and the corresponding Acquiring 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 Acquiring 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;
14
<Page>
(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 Acquiring
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;
(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;
15
<Page>
(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;
(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
16
<Page>
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, TMF
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, 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 Acquiring Fund, in exchange solely for shares
of the Acquiring Fund, the assumption by such Acquiring Fund of the
Stated Liabilities of the Existing Fund, and the distribution of
the shares of the Acquiring 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 Acquiring 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 Acquiring Fund in
exchange solely for shares of the Acquiring Fund and the Acquiring
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 Acquiring Fund will recognize no gain or loss on
its receipt of the corresponding Existing Fund's assets in exchange
solely for shares of the Acquiring Fund and the Acquiring Fund's
assumption of the Existing Fund's Stated Liabilities;
* the Acquiring 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 Acquiring 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
Acquiring Fund pursuant to the Reorganization; and
* an Existing Fund shareholder's aggregate basis in the
shares of the Acquiring 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 Acquiring Fund, and the Existing Fund
shareholder's holding period for those shares of the Acquiring 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. TMF 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
17
<Page>
assets of an Existing Fund in exchange for its corresponding
Acquiring Fund's shares and the assumption by the Acquiring 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 Acquiring 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.
An Acquiring Fund's ability to use any capital loss
carryforwards and, potentially, any unrealized capital losses, once
realized in the hands of the Acquiring Fund, of the corresponding
Existing Fund may be subject to an annual limitation, such that
losses in excess of the limitation may not be used in the taxable
year and could have to be carried forward. The limitation
generally equals the product of the net asset value of the Existing
Fund immediately prior to the Reorganizations and the "long-term
tax-exempt rate," published by the Internal Revenue Service, in
effect at such time. The long-term tax-exempt rate that would
apply if the Reorganization occurred as of the date of this Proxy
Statement/Prospectus is 4.72%. However, no assurance can be given
as to what long-term tax exempt rate will be in effect at the time
of the Reorganizations. While the ability of an Acquiring Fund to
absorb the corresponding Existing Fund's losses in the future
depends upon a variety of factors that cannot be known in advance,
because capital loss carryforwards generally expire eight taxable
years following realization, including the short taxable year
resulting from the Reorganizations, it is expected that
substantially all of an Existing Fund's losses will become
permanently unavailable where the limitation applies.
In general, the limitation will only apply to an Existing
Fund where the net asset value of the corresponding Acquiring
Fund's assets exceeds the net asset value of the Existing Fund's
assets immediately before the Reorganizations. Accordingly, it is
expected that the limitation will apply to any losses of the
Fremont Large Cap Growth Fund and the Fremont Large Cap Value Fund.
In addition, subject to the limitations described below, an
Existing Fund's losses that remain available to the corresponding
Acquiring Fund will inure to the benefit to both the Existing Fund
and Acquiring Fund shareholders following the Reorganizations.
Therefore, an Existing Fund shareholder may pay more taxes, or pay
taxes sooner, than such shareholder otherwise would if the
Reorganizations did not occur.
If an Acquiring Fund has a net unrealized built-in gain in
its assets as of the date of the Reorganization, the Acquiring
Fund's ability to use the corresponding Existing Fund's capital
loss carry forwards against gains of the Acquiring Fund may be
limited for five years following the Reorganization unless the
Acquiring Fund establishes that the gain is not attributable to a
built-in gain of the Acquiring Fund as of the Reorganization or the
Acquiring Fund did not hold the asset generating the gain on the
date of the Reorganization.
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.
18
<Page>
III. SUMMARY OF DIFFERENCES BETWEEN THE EXISTING AND ACQUIRING FUNDS
=====================================================================
The following summary highlights certain differences between
each Existing Fund and its corresponding Acquiring 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 Acquiring Fund prospectus(es).
Comparison of Investment Advisers and
Investment Advisory Fees
--------------------------------------
Investment Advisor-the Acquiring Funds
- --------------------------------------
Managers is the investment advisor to each Acquiring Fund.
Managers has overall supervisory responsibility for the investment
program of each Acquiring Fund. Managers selects and recommends,
subject to the approval of the Board of Trustees of TMF, one or
more subadvisors to manage each Acquiring Fund's investment
portfolio. It 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 Acquiring Funds. The SEC has given TMF 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 TMF and each
Acquiring Fund.
Subadvisors-the Acquiring Funds
- -------------------------------
Armstrong Shaw Associates Inc. ("Armstrong Shaw") and Osprey
Partners Investment Management, LLC ("Osprey Partners") each manage
a portion of Managers Value Fund. Essex Investment Management
Company, LLC ("Essex") and Bramwell Capital Management, Inc.
("Bramwell") each manage a portion of Managers Capital Appreciation
Fund (each of Armstrong Shaw, Osprey Partners, Essex and Bramwell a
"Successor Subadvisor" and together, the "Successor Subadvisors").
Armstrong Shaw has managed a portion of Managers Value Fund
since March 2000. Armstrong Shaw, located at 45 Grove Street, New
Canaan, Connecticut, was founded in 1984. As of December 31, 2003
Armstrong Shaw had assets under management of approximately $474.7
million. Jeffrey Shaw is the lead portfolio manager for the
portion of Managers Value Fund managed by Armstrong Shaw. He has
been the Chairman and President of Armstrong Shaw since 1999 and
1988, respectively, and is a co-founder of the firm.
Osprey Partners has managed a portion of Managers Value Fund
since September 2001. Osprey Partners, located at 1040 Broad
Street, Shrewsbury, New Jersey, was founded in 1998. As of
December 31, 2003, Osprey Partners had assets under management of
approximately $3.1 billion. John W. Liang is the lead portfolio
manager for the portion of Managers Value Fund managed by Osprey
Partners. He is a Managing Partner and the Chief Investment
Officer and has been employed as a portfolio manager by the firm
since 1998. From 1989 to 1998, he was a Managing Director and a
portfolio manager at Fox Asset Management.
19
<Page>
Managers Value Fund is obligated by its investment management
contract to pay an annual management fee to Managers of 0.75% of
the average daily net assets of the Fund. Managers, in turn, pays
a portion of this fee to Armstrong Shaw and Osprey Partners.
Essex has managed a portion of Managers Capital Appreciation
Fund since March 1997. Essex, located at 125 High Street, Boston,
Massachusetts, was founded in 1976. Affiliated Managers Group,
Inc. owns a majority interest in Essex. As of December 31, 2003,
Essex had assets under management of approximately $5.9 billion.
Stephen D. Cutler and Malcolm MacColl are the portfolio managers
for the portion of Managers Capital Appreciation Fund managed by
Essex. Mr. Cutler is the President of, and a portfolio manager
for, Essex, positions he has held since 1989. Mr. MacColl is Co-
Chief Executive Officer of Essex and has been a portfolio manager
for Essex since 1994.
Bramwell has managed a portion of Managers Capital
Appreciation Fund since June 2003. Bramwell, located at 745 Fifth
Avenue, New York, New York, was founded in 1994. As of December
31, 2003, Bramwell had assets under management of approximately
$907 million.
Elizabeth Bramwell is the portfolio manager for the portion
of Managers Capital Appreciation Fund managed by Essex. She has
been the President of, and a portfolio manager for, Bramwell, since
1994.
Managers Capital Appreciation Fund is obligated by its
investment management contract to pay an annual management fee to
Managers of 0.80% of the average daily net assets of the Fund.
Managers, in turn, pays a portion of this fee to Essex and
Bramwell.
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 Existing Funds,
<Page>
provides suitable office space, necessary small office equipment
and utilities, and general purpose accounting forms, supplies,
and postage used at the offices of the Existing 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 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.
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 Existing 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.
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 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 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
20
<Page>
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.
Fund Annual Investment Management Fee
- ---- --------------------------------
Fremont Large Cap Growth Fund 0.95%
Fremont Large Cap Value Fund 0.75%
The Existing Funds' Board of Directors have approved an
Operating Expense Agreement which contractually obligates FIA to
limit the expenses of the Existing Funds (as a percentage of
average net assets) for an indefinite period as follows: Large Cap
Value Fund 1.20%; and Large Cap Growth Fund 1.40%.
The Administration Agreements with respect to the Existing
Funds 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--Acquiring Funds.
--------------------------------------------------
The terms of the investment management agreement between Managers
and the Acquiring Funds (the "Successor Management Agreement")
provide for Managers to have overall supervisory responsibility for
each Acquiring Fund's general investments and management of its
assets in accordance with the Acquiring Fund's investment objectives,
policies and restrictions subject to such direction as it may
receive from TMF's Board of Trustees from time to time. Managers is
responsible for (a) selecting and recommending to the Trustees of
TMF one or more subadvisors for each Acquiring 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 Acquiring
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 the vote of a majority of the
outstanding voting securities of each Acquiring Fund (as defined in
the 1940 Act) or (b) by the vote of a majority of TMF'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 TMF's Board of
Trustees, (ii) by vote of a majority of the outstanding voting
securities of TMF, or (iii) with respect to an Acquiring Fund, by
vote of a majority of the outstanding shares of the Acquiring 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 TMF. The Successor Management
Agreement provides that, in the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of its obligations
or duties, Managers is not subject to liability to an Acquiring
Fund or any Acquiring Fund shareholder for any act or omission in
the course of, or connected with, services rendered under the
21
<Page>
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 Acquiring
Fund, Managers is paid a fee by the Acquiring 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 Acquiring Fund is
described below.
Fund Annual Investment Management Fee
- ---- --------------------------------
Managers Capital Appreciation
Fund 0.80%
Managers Value Fund 0.75%
Managers also serves as the administrator to the Acquiring Funds
and receives compensation from TMF pursuant to an Administration
and Shareholder Services Agreement. Under that agreement, Managers
supervises the overall administration of and certain shareholder
services for each Acquiring Fund. The administrative services
include supervising the preparation and filing of all documents
required for compliance by each Acquiring 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
Acquiring 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
beneficial owners. For providing these services, Managers receives
a fee from each Acquiring Fund of 0.25% 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 Northstar Capital Management, Inc. to serve as
subadvisor to Fremont Large Cap Growth Fund and with Alliance
Capital Management, L.P. to serve as subadvisor to Fremont Large
Cap Value Fund.
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
FMF's 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:
22
<Page>
Fund Annual Investment Subadvisory Fee
- ---- ---------------------------------
Fremont Large Cap Growth Fund 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
Fremont Large Cap Value Fund 0.60%
Subadvisory Agreements--Acquiring Funds.
----------------------------------------
Under the subadvisory agreements between Managers and each Successor
Subadvisor (the "Successor Subadvisory Agreements"), each Successor
Subadvisor manages all or a portion of an Acquiring Fund's
portfolio, including the determination of the purchase, retention,
or sale of securities, cash, and other investments for the
Acquiring Fund in accordance with the Acquiring Fund's investment
objectives, policies, and investment restrictions. The Successor
Subadvisor provides these services subject to the general
supervision of Managers and TMF's Board of Trustees.
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 Acquiring Fund
(as defined in the 1940 Act) or (b) by the vote of a majority of
TMF's Board of Trustees, provided that in either event the
continuance is also approved by the vote of a majority of TMF'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 TMF, (ii) with respect to an
Acquiring Fund, at any time, without payment of a penalty, by TMF
or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Acquiring 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 TMF. 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 TMF 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 the Successor Subadvisory Agreements, the Successor
Subadvisors receive a subadvisory fee from Managers (not from the
Acquiring Fund), computed daily and paid quarterly, at an aggregate
annual rate as follows:
Fund Annual Investment Subadvisory Fee
- ---- ---------------------------------
Managers Capital
Appreciation Fund 0.40%
Managers Value Fund 0.35%
Other Principal Service Providers
---------------------------------
The following table lists the principal service providers for
the Existing Funds and the Acquiring Funds. The Reorganization is
not expected to result in an increase of transfer agency or
custodial expenses for shareholders of the Existing Funds.
23
<Page>
SERVICE PROVIDERS
=================
<Table>
SERVICE EXISTING FUNDS ACQUIRING 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
Subadvisors (and Fremont Large Cap Growth Fund: Managers Capital Appreciation Fund:
corresponding Northstar Capital Management, Inc. Bramwell Capital Management, Inc.
Fund) 4400 PGA Blvd., Suite 600 745 Fifth Avenue
Palm Beach Gardens, FL 33410 New York, New York 10151
Essex Investment Management Company, LLC
125 High Street
Boston, Massachusetts 02110
Fremont Large Cap Value Fund: Managers Value Fund:
Alliance Capital Management LP Armstrong Shaw Associates Inc.
1345 Avenue of the Americas 45 Grove Street
16th Floor New Canaan, Connecticut 0684
New York, NY 10105
Osprey Partners Investment
Management, LLC
1040 Broad Street
Shrewsbury, New Jersey 07702
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 PFPC, Inc. PFPC, Inc.
and Dividend 4400 Computer Drive 4400 Computer Drive
Disbursing Agent Westborough, Massachusetts 01581-5120 Westborough, Massachusetts 01581-5120
Independent PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
Registered Public 333 Market Street 125 High Street
Accounting Firm San Francisco, California 94105 Boston, Massachusetts 02110
</Table>
Managers or Managers Distributors, Inc. may make direct or
indirect payments to third parties in connection with the
sale of Acquiring Fund shares or the servicing of shareholder
accounts.
24
<Page>
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 Acquiring
Fund is a series of TMF, 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 November 23, 1987. The Declaration of Trust and Bylaws
of TMF are designed to make TMF 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 Acquiring Funds are
governed by TMF's Declaration of Trust and Bylaws and by
Massachusetts law. The Existing Funds and the Acquiring 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 Acquiring Fund or
assets of another series, if applicable. Each share of each
Acquiring Fund represents an equal proportional interest in an
Acquiring Fund with each other share. Upon liquidation of an
Acquiring Fund, shareholders are entitled to share pro rata in the
net assets of an Acquiring Fund available for distribution to such
shareholders. Shares of the Acquiring 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 TMF
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 TMF 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 Acquiring Funds hold
regular or annual shareholder meetings. The Directors of the
Existing Funds may call shareholder meetings as necessary. The
Trustees of the Acquiring 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. To the
extent required by the 1940 Act, meetings held for the purpose
of voting on the removal of any Director of the Existing Funds
or any Trustee of the Acquiring Funds shall be called by
Directors or Trustees, as applicable, upon written request by
shareholders holding at least 10% 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. A majority of the outstanding shares of the
Acquiring Fund represented in person or by proxy constitutes
a quorum at a shareholder meeting.
25
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 TMF provides that the
shareholders shall not be subject to any personal liability for the
acts or obligations of any of the Acquiring 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 Acquiring Fund
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 TMF. However, upon payment
of such liability, the shareholder will be entitled to
reimbursement from the general assets of TMF. The Trustees of TMF
intend to conduct the operations of TMF in a way as to avoid, as
far as possible, ultimate liability of the shareholders of the
Acquiring 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 TMF provides that the name of TMF
refers to the Trustees collectively as Trustees, not as individuals
or personally, and that no Trustee, officer, employee or agent of
TMF is liable to any third persons in connection with the affairs
of TMF, 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 TMF for any
satisfaction of claims arising in connection with the affairs of
TMF. With the exceptions stated, TMF'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 TMF.
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, TMF's
Declaration of Trust provides that the records of the Acquiring
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
26
<Page>
entitled to one vote for each full share of capital stock and a
fractional voted 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 Acquiring 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 Acquiring 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
TMF. 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
TMF, 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 an Acquiring Fund may bring a derivative action on
behalf of the Trust 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
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 the Trust or on the boards of other funds that are
affiliated with the Trust. Unless a demand upon the Trustees is
not required, shareholders who hold at least 10% of the outstanding
shares of the Trust 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 TMF, 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
27
<Page>
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 Acquiring 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 Directors/Trustees without shareholder
approval. The table in Appendix B compares the fundamental
investment restrictions of the Existing Funds and the Acquiring
Funds. Differences in fundamental investment restrictions between
an Existing Fund and its corresponding Acquiring Fund are not
expected to result in any material difference between the manner in
which the Acquiring Fund is managed as compared to the Existing
Fund.
Comparison of Performance
-------------------------
The following table shows the average annual total returns of
the Existing Funds and Acquiring Funds for 1, 3, 5 and 10 years, as
applicable. For more information regarding the total returns
of each of the Funds, see the "Financial Highlights" in the
Acquiring Funds' prospectuses accompanying this Proxy
Statement/Prospectus or your Existing Fund's prospectus. Of
course, past performance does not predict future results. All
returns reflect the effect of any fee waivers. Without these fee
waivers, the average annual total returns for the Funds would have
been lower. Total returns presented do not include the impact of
sales charges.
<Table>
AVERAGE ANNUAL TOTAL RETURN
As of June 30, 2004 (except
as otherwise noted) 1YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------
Fremont Large Cap Value Fund 20.73% -3.38% N/A N/A
Managers Capital Appreciation
Fund (as of May 31, 2004) 12.36% -9.08% -4.69% 9.67%
Fremont Large Cap Growth Fund 20.48% N/A N/A N/A
Managers Value Fund (as of
May 31, 2004) 21.00% -1.34% 2.10% 10.37%
</Table>
Existing and Pro Forma Capitalizations
--------------------------------------
The following table sets forth as of the date specified in
the chart below, (i) the current capitalization of the Existing
Funds, (ii) the current capitalization of the Acquiring Funds, and
(iii) the pro forma capitalization of the Acquiring Funds, adjusted
to give effect to the proposed Acquisition of the assets of the
Existing Funds at net asset value.
As of June 30, 2004
<Table>
TOTAL NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
---------------- ------------------ -------------------------
Fremont Large Cap Growth Fund $ 25,427,000 2,797,000 $9.09
Managers Capital Appreciation
Fund $103,133,859 4,138,948 $24.92
Pro Forma $128,560,859 5,159,379 $24.92
========= ============ ========= ======
28
</Table>
<Page>
As of June 30, 2004
<Table>
TOTAL NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
---------------- ------------------ -------------------------
Fremont Large Cap Value Fund $10,663,000 1,300,000 $8.20
Managers Value Fund $109,415,990 4,059,461 $26.95
Pro Forma $120,078,990 4,455,071 $26.95
========= ============ =========
</Table>
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
Reorganization 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 Acquiring 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
29
<Page>
quorum for the conduct of all business. When a quorum is present,
approval of each proposal 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 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 Boards 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 each proposal 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 Statement/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.
Outstanding Shares
------------------
As of June 30, 2004, each Existing Fund and its corresponding
Acquiring Fund had the following numbers of shares outstanding:
<Table>
NUMBER OF SHARES NUMBER OF SHARES
EXISTING FUNDS OUTSTANDING ACQUIRING FUNDS OUTSTANDING
- -------------- ---------------- --------------- ----------------
Fremont Large Cap Managers Capital
Growth Fund 2,797,000 Appreciation Fund 4,138,948
Fremont Large Cap 1,300,000 Managers Value Fund 4,059,461
Value Fund
</Table>
Interest of Certain Persons in the Transactions
-----------------------------------------------
To the knowledge of the Existing Funds and the Acquiring
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 or Acquiring Fund:
As of June 30, 2004
-------------------
<Table>
Type of % of Fund
Fund Name and Address Ownership % of Fund on Closing
- ---- ---------------- --------- --------- ----------
Fremont Large Cap Charles Schwab & Co,Inc. Broker/Dealer 69.2%
Growth Fund 101 Montgomery Street Omnibus
San Francisco, CA 94104-4122 Account
Fremont Large Cap National Investor Services Broker/Dealer 5.3%
Growth Fund FBO 097-50000-19 Omnibus
55 Water Street, Account
32nd Floor
New York, NY 10041-3299
</Table>
31
<Page>
As of June 30, 2004
-------------------
<Table>
Type of % of Fund
Fund Name and Address Ownership % of Fund on Closing
- ---- ---------------- --------- --------- ----------
Fremont Large Cap Charles Schwab & Co, Inc. Broker/Dealer 69.2%
Growth Fund 101 Montgomery Street Omnibus
San Francisco, CA 94104-4122 Account
</Table>
As of June 30, 2004, the officers and Directors of FMF as
a group owned less than 1% of each Existing Fund and each Acquiring
Fund.
As of June 30, 2004, the officers and Trustees of
TMF as a group owned less than 1% of each Existing Fund and each
Acquiring Fund.
Annual Meetings and Shareholder Meetings
----------------------------------------
The Existing Funds normally will not hold meetings of
shareholders except as required under the 1940 Act. The Acquiring
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 Acquiring 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 Acquiring 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.
31
<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
Acquiring 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
==========
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 THE MANAGERS FUNDS, 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 and Successor 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 New Shares of such Successor Fund as
described 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
3.1 (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 3.1 (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
5.6 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
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'
2
<Page>
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. VALUATION
=================
2.1. The value of each Predecessor Fund's Assets shall 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 Successor Trust's Declaration of Trust and
the corresponding Successor Fund's then-current prospectus and
statement of additional information, together with any other valuation
procedures established by the Trustees of the Successor Trust.
2.2. The net asset value of a New Share of a Successor Fund
shall be the net asset value per share of such Successor Fund computed
on the Closing Date, using the valuation procedures set forth in the
Successor Trust's Declaration of Trust and the corresponding Successor
Fund's then-current prospectus and statement of additional
information, together with any other valuation procedures established
by the Trustees of the Successor Trust.
2.3. The number of full and fractional (rounded to the third
decimal place) New Shares of a Successor Fund to be issued in exchange
for the corresponding Predecessor Fund's Assets shall be determined by
dividing the value of such Predecessor Fund's Assets, determined using
the valuation procedures referred to in Section 2.1 (less the Stated
Liabilities of such Predecessor Fund), by the net asset value of a New
Share of the corresponding Successor Fund, determined in accordance
with Section 2.2.
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2.4. All computations of value shall be made by or under the
direction of the fund accountants of the Successor Funds.
================================
3. CLOSING AND CLOSING DATE
================================
3.1. 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 6, 7 and 8 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.
3.2. 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.
3.3. 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.
3.4. 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
4
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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.
3.5. 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.
======================================
4. REPRESENTATIONS AND WARRANTIES
======================================
4.1. 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.
(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.
5
<Page>
(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 adversely affects its business or
its ability to consummate the transactions herein contemplated.
(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) 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
6
<Page>
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 3.3. 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.
(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 5.7) 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.
7
<Page>
4.2. 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. Each Successor Fund is in good standing
under the laws of the Commonwealth of Massachusetts and has full power
and authority under the Declaration of Trust to carry on its business
as it is now being conducted.
(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 current prospectus and statement of additional
information of each Successor Fund and each prospectus and statement
of additional information of that Successor 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) On the Closing Date, each Successor Fund will have
good and marketable title to its assets, free of any liens or other
encumbrances, other than as disclosed to the Predecessor Trust.
(e) The Successor Trust is not, and the execution,
delivery and performance of this Agreement by the Successor Trust 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 on behalf of any Successor Fund is a party or by
which the Successor Trust on behalf of any Successor Fund is bound.
(f) Neither the Successor Trust nor any Successor Fund
has any material contract or other commitment (other than this
Agreement) which will be terminated with liability to the Successor
Trust or any Successor Fund prior to or on the Closing Date.
(g) 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,
8
<Page>
decree or judgment of any court or governmental body which
materially adversely affects its business or its ability to
consummate the transactions herein contemplated.
(h) The Statement of Assets and Liabilities, Statement
of Operations and Statement of Changes in Net Assets of each of the
Successor Funds as of December 31, 2003 audited by independent
accountants (copies of which have been furnished to the Predecessor
Trust) fairly and accurately reflect the financial condition of each
Successor Fund as of such date in accordance with generally accepted
accounting principles consistently applied, and there are no known
liabilities of the Successor Funds (contingent or otherwise) as of
such date not disclosed therein.
(i) Since December 31, 2003, there has not been any
material adverse change in either Successor Fund's financial
condition, assets, liabilities or business, other than changes
occurring in the ordinary course of business, or any incurrence by a
Successor Fund of indebtedness maturing more than six 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 Successor Fund's
expenses. For the purposes of this subparagraph (i), neither a
decline in a Successor Fund's net asset value per share, the discharge
of a Successor Fund's liabilities, nor the redemption of a Successor
Fund's shares by its shareholders shall, in and of itself, constitute
a material adverse change.
(j) All federal and other tax returns and reports of the
Successor Funds required by law to have been filed have been timely
filed and are correct in all material respects, and all federal and
other taxes shown as due or required to be shown as due on said
returns and reports have been timely paid, and, to the best of the
Successor Trust's knowledge, no such return is currently under audit
and no assessment has been asserted with respect to such returns.
(k) For each taxable year of its operation (including
the taxable year that includes the Closing Date), each Successor Fund
has met (or will meet) 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 (or
will so elect), has been eligible to and has computed (or will
compute) its federal income tax under Section 852 of the Code, and has
distributed all of its investment company taxable income and net
capital gain (as defined in the Code) for periods ending prior to the
Closing Date.
(l) All issued and outstanding shares of the Successor
Funds are duly and validly issued and outstanding, fully paid and non-
assessable by the Successor Trust on behalf of the Successor 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. Neither Successor Fund has outstanding any options,
warrants or other rights to subscribe for or purchase any New Shares,
nor is there outstanding any security convertible into any New Shares
of a Successor Fund. 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).
9
<Page>
(m) 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.
(n) 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.
(o) 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.
(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
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.
(q) 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.
(r) The information to be furnished by the Successor
Funds for use in registration statements, proxy materials (including
the Registration Statement referred to in Section 5.7) 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.
==================================================================
5. COVENANTS OF THE SUCCESSOR TRUST AND THE PREDECESSOR TRUST
==================================================================
5.1. The Predecessor Corporation will operate the business of
the Predecessor Funds, and the Successor Trust will operate the
business of the Successor 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.
5.2. 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.
5.3. 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.
5.4. 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.
5.5. 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.
5.6. 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.
5.7. 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.
5.8. 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.
5.9. 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.
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5.10. 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.
5.11. 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.
5.12. 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.
5.13. 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 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.
====================================================================
6. 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:
6.1. 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.
6.2. 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
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<Page>
condition described in Section 6.1 and as to such other matters as the
Predecessor Corporation shall reasonably request.
6.3. 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.
==================================================================
7. 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
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:
7.1. 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.
7.2. 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 7.1
and as to such other matters as the Successor Trust shall reasonably
request.
7.3. 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.
====================================================================
8. 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 8; 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.
8.1. The Agreement and the transactions contemplated herein
shall have been approved by the directors and the holders of the
outstanding shares of beneficial interest of 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
13
<Page>
certified copies of the resolutions evidencing such approval shall
have been delivered to the Successor Trust.
8.2. 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.
8.3. 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, 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.
8.4. 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 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).
8.5. 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.
8.6. 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;
14
<Page>
(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
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 8.6.
8.7. 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).
===================================
9. BROKERAGE FEES AND EXPENSES
===================================
9.1. 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.
15
<Page>
9.2. 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).
========================
10. 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.
================================
11. 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.
==================
12. 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.
===============
13. 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.
16
<Page>
========================================================================
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY; DISCLOSURE
========================================================================
14.1. 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.
14.2. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original.
14.3. 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.
14.4. 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.
14.5. 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.
14.6. 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]
17
<Page>
IN WITNESS WHEREOF, each of Fremont Mutual Funds, Inc., on
behalf of the Predecessor Funds, and The Managers Funds, 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: THE MANAGERS FUNDS, on behalf
of the Successor Funds
_________________________________ By:____________________________
Name: Peter Lebovitz
Title: President
For purposes of Sections 5.13 and 9.2 only, the undersigned executes
this Agreement:
FREMONT INVESTMENT ADVISORS, INC.
By:_________________________________
Name: E. Douglas Taylor
Title: President & Chief Executive Officer
For purposes of Section 9.2 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
----------
Predecessor Fund Corresponding Successor Fund
- ---------------- ----------------------------
Fremont Large Cap Value Fund Managers Value Fund
Fremont Large Cap Growth Fund Managers Capital Appreciation Fund
<Page>
==========
APPENDIX B
==========
COMPARISON OF INVESTMENT RESTRICTIONS
-------------------------------------
Comparative Information on Fundamental Investment Restrictions
- --------------------------------------------------------------
<Table>
Subject Matter
of Restriction Existing Fund Acquiring 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
Diversification No fund may change its status as either a None.
diversified or a non-diversified
investment company.
<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). Such concentration may
guaranteed as to principal and interest occur incidentally as a result of changes
by the U.S. Government or any of its in the market value of portfolio
agencies or instrumentalities, to tax securities, but such concentration
exempt securities issued by state may not result from
governments or political
B-1
<Page>
subdivisions thereof, or to investments investment. Neither finance companies
by Fremont Money Market Fund in securities as a group nor utility companies as a
of domestic banks, of foreign branches of group are considered a single industry
domestic banks where the domestic bank for purposes of this restriction.
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
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.
</Table>
B-2
<Page>
======
PART B
======
STATEMENT OF ADDITIONAL INFORMATION
===================================
Managers Capital Appreciation Fund
Managers Value Fund
Each a series of
The Managers Funds
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 series of The Managers
Funds. 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 The Managers Funds 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 May 1, 2004, of The Managers Funds
with respect to Managers Capital
Appreciation Fund and Managers Value 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 unaudited financial statements as
of October 31, 2003.
Exhibit D: Semi-Annual Report, dated April 30, 2004,
of Fremont Mutual Funds, Inc., which
includes audited financial statements for
the six months ended April 30, 2004.
Exhibit E: Annual Report, dated December 31, 2003,
of The Managers Funds, which includes
audited financial statements as of
December 31, 2003.
<Page>
=============================
PROFORMA FINANCIAL STATEMENTS
=============================
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
- -------------------------------------------
FREMONT LARGE CAP GROWTH/MANAGERS CAPITAL APPRECIATION FUND
- -----------------------------------------------------------
April 30, 2004
UNAUDITED
<Table>
Fremont Large Cap Growth Fund Managers Capital Appreciation Fund Pro Forma Combined
============================= ================================== ==================
Security Description(a) Shares(a) Value (a) Security Description Shares Value Shares Value
======================= ========= ========= ==================== ====== ===== ====== =====
COMMON STOCK:
- -------------
3M Co. 33,400 $2,888,432 33,400 $2,888,432
Abbott Laboratories Co. 10,000 440,200 10,000 440,200
AMBAC Financial Group,
Inc. 12,000 $828,000 12,000 828,000
American Express Co. 17,800 871,000 American Express Co. 20,000 979,000 37,800 1,850,000
American International
Group, Inc. 37,100 2,658,215 37,100 2,658,215
Amgen, Inc.* 13,300 749,000 Amgen, Inc.* 19,000 1,069,130 32,300 1,818,130
Anadarko Petroleum Corp. 10,200 546,516 10,200 546,516
Analog Devices, Inc.* 20,000 852,000 20,000 852,000
Anthem, Inc.* 10,000 885,800 10,000 885,800
Apache Corp. 20,190 845,355 20,190 845,355
Apollo Group, Inc.
(Class A)* 12,100 1,100,000 12,100 1,100,000
Applebee's
International, Inc. 20,000 775,600 20,000 775,600
Applied Materials, Inc.*30,000 546,900 30,000 546,900
Bed Bath & Beyond, Inc.* 20,800 772,000 Bed Bath & Beyond, Inc.*38,500 1,429,120 59,300 2,201,120
Best Buy Co., Inc.* 49,900 2,707,075 49,900 2,707,075
BJ Services Co.* 28,400 1,263,800 28,400 1,263,800
Broadcom Corp., Class A*10,000 377,600 10,000 377,600
Capital One Financial Corp. 14,500 950,000 14,500 950,000
Carmax, Inc.* 36,400 943,488 36,400 943,488
Caterpillar, Inc. 7,000 544,110 7,000 544,110
Cheesecake Factory,
The, Inc.* 12,000 508,200 12,000 508,200
China Telecom Corp.,
Ltd.* 24,000 692,400 24,000 692,400
Cisco Systems, Inc.* 38,300 799,000 Cisco Systems, Inc.* 72,000 1,502,640 110,300 2,301,640
Citigroup, Inc. 56,300 2,707,467 56,300 2,707,467
Clear Channel
Communications, Inc. 16,000 663,840 16,000 663,840
Coach, Inc.* 11,000 469,000 11,000 469,000
Colgate-Palmolive Co. 32,700 1,892,676 32,700 1,892,676
Cummins, Inc. 21,600 1,291,896 21,600 1,291,896
Deere & Co. 10,000 680,400 10,000 680,400
Dell, Inc.* 25,300 878,000 Dell, Inc.* 90,600 3,144,726 115,900 4,022,726
Devon Energy Corp. 10,000 612,000 10,000 612,000
Dollar Tree Stores,
Inc.* 43,200 1,164,240 43,200 1,164,240
Dow Jones & Co., Inc. 15,000 691,350 15,000 691,350
E.I. du Pont de Nemours
& Co., Inc. 7,000 300,650 7,000 300,650
eBay, Inc.* 10,900 870,000 eBay Inc.* 11,400 909,948 22,300 1,779,948
EMC Corp.* 45,000 502,200 45,000 502,200
Emerson Electric Corp. 13,000 782,860 13,000 782,860
EOG Resources, Inc. 9,700 477,725 9,700 477,725
FedEx Corp. 31,500 2,265,165 31,500 2,265,165
Flextronics
International Ltd. 30,000 483,000 30,000 483,000
Forest Laboratories,
Inc.* 31,700 2,044,016 31,700 2,044,016
Freeport McMoran Copper,
Class B 13,000 396,500 13,000 396,500
Genentech, Inc. 7,400 909,000 Genentech, Inc.* 13,800 1,694,640 21,200 2,603,640
General Electric Co. 21,500 644,000 General Electric Co. 25,000 748,750 46,500 1,392,750
Gilead Sciences, Inc.* 19,100 1,161,853 19,100 1,161,853
Goldman Sachs Group,
Inc. 18,700 1,809,225 18,700 1,809,225
Guidant Corp.* 18,600 1,171,986 18,600 1,171,986
Harley-Davidson, Inc. 8,900 501,000 8,900 501,000
Harman International
Industries, Inc. 5,500 417,000 5,500 417,000
Illinois Tool Works 9,000 775,890 9,000 775,890
Inco, Ltd.* 18,000 517,500 18,000 517,500
Intel Corp. 96,900 2,493,237 96,900 2,493,237
International Business
Machines Corp. 15,000 1,322,550 15,000 1,322,550
International Game
Technology 26,400 996,000 26,400 996,000
JB Hunt Transport
Services, Inc.* 36,000 1,139,760 36,000 1,139,760
JC Penney Co. 23,000 778,780 23,000 778,780
JP Morgan Chase & Co. 25,000 940,000 25,000 940,000
Kla-Tencor Corp.* 14,000 583,380 14,000 583,380
Linear Technology Corp. 15,000 534,450 15,000 534,450
Lowe's Cos., Inc. 14,800 771,000 Lowe's Co., Inc. 9,000 468,540 23,800 1,239,540
Martek Biosciences Corp.*8,500 539,665 8,500 539,665
Marvell Technology
Group Ltd.* 14,700 569,000 14,700 569,000
Maxim Integrated
Products, Inc. 22,000 1,011,780 22,000 1,011,780
McDonald's Corp. 45,000 1,225,350 45,000 1,225,350
Medtronic, Inc. 15,900 802,000 Medtronic, Inc. 47,500 2,396,850 63,400 3,198,850
Merrill Lynch &
Co., Inc. 19,400 1,052,062 19,400 1,052,062
Microsoft Corp. 30,700 797,000 Microsoft Corp. 62,900 1,633,513 93,600 2,430,513
Molex, Inc. 23,000 592,480 23,000 592,480
Moody's Corp. 15,000 968,000 15,000 968,000
Nabors Industries, Ltd.*18,400 816,224 18,400 816,224
</Table>
<Page>
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
- -------------------------------------------
FREMONT LARGE CAP GROWTH/MANAGERS CAPITAL APPRECIATION FUND
- -----------------------------------------------------------
April 30, 2004
UNAUDITED
<Table>
Fremont Large Cap Growth Fund Managers Capital Appreciation Fund Pro Forma Combined
============================= ================================== ==================
Security Description(a) Shares(a) Value (a) Security Description Shares Value Shares Value
======================= ========= ========= ==================== ====== ===== ====== =====
Network Appliance, Inc.* 28,100 523,000 28,100 523,000
Nextel Communications, Inc.*26,000 620,000 26,000 620,000
Novartis AG 40,000 1,792,000 40,000 1,792,000
Patterson-UTI Energy,
Inc.* 14,500 524,755 14,500 524,755
Pfizer, Inc. 21,250 760,000 Pfizer, Inc. 15,300 547,128 36,550 1,307,128
Phelps Dodge Corp. 6,000 394,980 6,000 394,980
Praxair, Inc. 18,000 657,900 18,000 657,900
Procter & Gamble Co. 8,700 920,000 Procter & Gamble Co. 10,000 1,057,500 18,700 1,977,500
Resmed, Inc.* 29,400 1,448,832 29,400 1,448,832
Schlumberger, Ltd. 32,500 1,902,225 32,500 1,902,225
SLM Corp. 12,000 459,720 12,000 459,720
Staples, Inc.* 50,000 1,288,000 50,000 1,288,000
Starbucks Corp.* 27,300 1,061,000 27,300 1,061,000
Stryker Corp. 10,200 1,009,000 Stryker Corp. 6,000 593,580 16,200 1,602,580
Symantec Corp. 25,400 1,144,000 25,400 1,144,000
Sysco Corp. 21,000 803,250 21,000 803,250
Taiwan Semiconductor
Manufacturing Co.,
Ltd.* 55,000 524,150 55,000 524,150
Teva Pharmaceutical Teva Pharmaceutical
Industries, Ltd., Industries, Ltd.,
Sponsored ADR 13,900 856,000 Sponsored ADR 28,000 1,723,680 41,900 2,579,680
Texas Instruments, Inc. 28,000 702,800 28,000 702,800
The Walt Disney Company 41,300 951,139 41,300 951,139
Tiffany & Co. 13,000 507,000 13,000 507,000
TJX Cos., Inc. 29,500 724,815 29,500 724,815
U.S. Bancorp 20,000 512,800 20,000 512,800
United Parcel Service,
Inc., Class B 26,600 1,865,990 26,600 1,865,990
UnitedHealth Group, Inc.19,000 1,168,120 19,000 1,168,120
Varian Medical Systems,
Inc.* 8,500 730,000 8,500 730,000
Wachovia Corp. 18,900 865,000 18,900 865,000
Walgreen Co. 15,000 517,200 15,000 517,200
Wal-Mart Stores, Inc. 10,500 599,000 Wal-Mart Stores, Inc. 61,300 3,494,100 71,800 4,093,100
WellPoint Health
Networks, Inc.* 7,000 781,830 7,000 781,830
Wells Fargo & Co. 19,400 1,095,324 19,400 1,095,324
Wm Wrigley Jr., Co. 19,300 1,190,810 19,300 1,190,810
Yahoo! Inc. 16,400 827,544 16,400 827,544
Zebra Technologies,
Corp.* 15,000 1,099,350 15,000 1,099,350
Zimmer Holdings, Inc.* 17,000 1,357,450 17,000 1,357,450
SHORT-TERM:
- -----------
Repurchase Agreement,
State Street Bank,
0.400%, 05/03/04
(Maturity Value $392)
(Cost $392) Collateral:
FHLB 3.020%, 09/12/07
(Collateral Value $404) 392,373 392,000 392,373 392,000
JPMorgan Prime Money
Market Fund,
Institutional Class
Shares 1,930,346.00 1,930,346 1,930,346 1,930,346
Total Investments $25,139,000 $101,319,023 $126,458,023
=========== ============ ============
</Table>
*Non-income-producing security
(a) Certain securities that do not conform to the investment
strategies to be in effect after the reorganization will
be disposed of prior to the reorganization.
See accompanying notes to the pro forma financial statements.
<Page>
PRO FORMA COMBINING STATEMENTS OF ASSETS & LIABILITIES
- ------------------------------------------------------
FREMONT LARGE CAP GROWTH/MANAGERS CAPITAL APPRECIATION FUND
- -----------------------------------------------------------
April 30, 2004
UNAUDITED
<Table>
Managers
Fremont Capital Pro Pro
Large Cap Appreciation Forma Forma
Growth Fund Fund Adjustments Combined
---------- ------------ ----------- --------
ASSETS
======
Investments at cost $ 20,816,000 $ 91,256,201 $ - $112,072,201
Net unrealized appreciation 4,323,000 10,062,822 - 14,385,822
------------ ------------- ------------ ------------
Investments at value 25,139,000 101,319,023 - 126,458,023
Receivable for Fund shares sold 35,000 406,704 - 441,704
Receivables for securities sold 278,000 2,168,683 - 2,446,683
Dividends and interest receivable 6,000 122,985 - 128,985
Receivables from advisor 6,000 - - 6,000
Prepaid expenses/Other assets 9,000 13,608 - 22,608
============ ============ ============= =========== ============
TOTAL ASSETS $ 25,473,000 $104,031,003 $ - $129,504,003
============ ============ ============= =========== ============
LIABILITIES
============
Payable for securities purchased - 483,271 - 483,271
Payable for Fund shares redeemed - 55,420 - 55,420
Investment advisory and management
fee payable 25,000 70,042 - 95,042
Other accrued expenses 21,000 288,411 - 309,411
================= ============ =========== =========== ============
TOTAL LIABILITIES 46,000 897,144 - 943,144
================= ============ =========== =========== ============
NET ASSETS $ 25,427,000 $103,133,859 $ - $128,560,859
========== ============ ============ ============ ============
NET ASSETS CONSIST OF:
======================
Paid-in capital $ 22,029,000 $269,672,611 $ - $291,701,611
Undistributed net investment
income (92,000) 488,862 - 396,862
Accumulated realized loss
on investments (833,000) (177,090,436) - (177,923,436)
Net unrealized appreciation
of investments 4,323,000 10,062,822 - 14,385,822
NET ASSETS $ 25,427,000 $103,133,859 $ - $128,560,859
========== ============ ============ ============ ============
COMPUTATION OF NET ASSET VALUE:
===============================
Net assets $ 25,427,000 $103,133,859 $ - $128,560,859
============ ============ ============ ============
Shares of beneficial interest 2,797,000 4,138,948 (1,776,5690) 5,159,379
============ ============ ============ ============
Net asset value, offering and
redemption price per share $9.09 $24.92 $ - $24.92
============ ============ ============ ============
</Table>
See accompanying notes to the pro forma financial statements.
<Page>
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
- --------------------------------------------
FREMONT LARGE CAP GROWTH/MANAGERS CAPITAL APPRECIATION FUND
- -----------------------------------------------------------
For the twelve months ended April 30, 2004
UNAUDITED
<Table>
Managers
Fremont Capital Pro Pro
Large Cap Appreciation Forma Forma
Growth Fund Fund Adjustments Combined
=========== ============ =========== ========
INVESTMENT INCOME
- ----------------
Dividends $ 153,000 $ 887,926 $ - $ 1,040,926
Interest income 1,000 37,422 - 38,422
Foreign witholding tax - (24,998) - (24,998)
Security lending income - 17,440 - 17,440
154,000 917,790 - 1,071,790
-------- -------- ------- ----------
EXPENSES
- --------
Investment advisory and
management fees 211,000 865,140 (33,022)(c) 1,043,118
Administration fees 33,000 270,356 22,014 (a) 325,370
Transfer agent 71,000 323,184 - 394,184
Custodian 9,000 49,877 - 58,877
Professional fees 43,000 50,256 - 93,256
Registration fees 17,000 20,414 - 37,414
Printing fees 10,000 (2,547) - 7,453
Trustees fees and expenses 10,000 5,078 - 15,078
Insurance - 4,895 - 4,895
Miscellaneous 5,000 40,035 - 45,035
Total expenses before reductions 409,000 1,626,688 (11,008) 2,024,680
-------- --------- -------- ---------
Less reimbursement/waiver (99,000) - (46,275)(b) (145,275)
Less reductions - (202,919) (202,919)
--------- ---------- ---------- ----------
Net expenses 310,000 1,423,769 (57,283) 1,676,486
------- --------- -------- ---------
Net investment loss (156,000) (505,979) 57,283 (604,696)
-------- ---------- -------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
- ----------------------------
Net realized loss on investments (154,000) (5,346,272) - (5,500,272)
Change in unrealized appreciation
of investments 3,889,000 24,626,506 - 28,515,506
Net realized and unrealized
gain on investments 3,735,000 19,280,234 - 23,015,234
--------- ---------- ------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $3,579,000 $18,774,255 $57,283 $22,410,538
========================== ========== =========== ======= ===========
</Table>
(a) to adjust administration fee to 0.25%
(b) to adjust cap to 1.29%
(c) to adjust management fee to 0.80%
See accompanying notes to the pro forma financial statements.
<Page>
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
- -------------------------------------------
FREMONT LARGE CAP VALUE/MANAGERS VALUE FUND
- -------------------------------------------
April 30, 2004
UNAUDITED
<Table>
Fremont Large Cap Value Fund Managers Value Fund Pro Forma Combined
============================= =================== ==================
Security Description(a) Shares(a) Value (a) Security Description Shares Value Shares Value
======================= ========= ========= ==================== ====== ===== ====== =====
COMMON STOCK:
- -------------
Abbott Laboratories Co. 36,500 $1,606,730 36,500 $1,606,730
ACE Ltd. 5,150 $226,000 ACE, Ltd. 33,300 1,459,872 38,450 1,685,872
Affiliated Computer
Services, Inc., Class A 950 46,000 950 46,000
Aflac, Inc. 1,450 61,000 1,450 61,000
Air Products & Chemicals,
Inc. 855 43,000 855 43,000
Alcoa, Inc. 1,450 45,000 1,450 45,000
Alcon, Inc. 1,575 117,000 1,575 117,000
Allstate Corp. 1,000 46,000 1,000 46,000
Allstate Corp., The 45,300 2,079,270 45,300 2,079,270
Altria Group, Inc. 4,600 255,000 4,600 255,000
American Express Co. 30,700 1,502,765 30,700 1,502,765
American International American International
Group, Inc. 6,200 444,000 Group, Inc. 18,600 1,332,690 24,800 1,776,690
American Standard Cos.,
Inc.* 1,000 105,000 1,000 105,000
AmerisourceBergen Corp. 24,700 1,429,883 24,700 1,429,883
Anheuser-Busch Cos., Inc. 2,110 108,000 2,110 108,000
Anthem, Inc.* 1,900 168,000 Anthem, Inc.* 18,200 1,612,156 20,100 1,780,156
Applied Materials, Inc.* 2,470 45,000 2,470 45,000
Avon Products, Inc. 3,000 252,000 3,000 252,000
Axis Capital Holdings Ltd. 2,460 67,000 2,460 67,000
Baker Hughes, Inc. 1,700 62,000 1,700 62,000
Bank of America Corp. 4,125 332,000 Bank of America Corp. 38,254 3,079,064 42,379 3,411,064
Bank One Corp. 7,900 390,000 7,900 390,000
Boston Scientific Corp.* 1,675 69,000 1,675 69,000
BP PLC ADR 5,900 312,000 BP PLC ADR 28,900 1,528,810 34,800 1,840,810
Brinker International,
Inc.* 22,000 846,120 22,000 846,120
Burlington Northern
Santa Fe Corp. 4,300 141,000 4,300 141,000
Caremark Rx, Inc.* 2,000 68,000 2,000 68,000
Carnival Corp. 2,000 85,000 2,000 85,000
Cendant Corp.* 73,430 1,738,822 73,430 1,738,822
CenturyTel, Inc. 10,500 303,240 10,500 303,240
ChevronTexaco Corp. 36,800 3,535,513 36,800 3,535,513
Chubb Corp. 20,900 1,442,100 20,900 1,442,100
Citigroup, Inc. 9,200 442,000 Citigroup, Inc. 82,068 3,946,650 91,268 4,388,650
Clear Channel Clear Channel
Communications, Inc.* 2,300 95,000 Communications, Inc.* 30,100 1,248,849 32,400 1,343,849
Coca-Cola Co. 800 41,000 800 41,000
Colgate Palmolive Co. 1,850 107,000 1,850 107,000
Comcast Corp., Class A* 4,300 129,000 Comcast Corp., Class A* 64,800 1,878,552 69,100 2,007,552
ConocoPhillips Co. 5,500 392,000 ConocoPhillips Co. 29,374 1,926,053 34,874 2,318,053
Constellation Brands,
Inc.* 25,400 841,502 25,400 841,502
Constellation Energy
Group, Inc. 2,000 77,000 2,000 77,000
CVS Corp. 60,300 2,329,389 60,300 2,329,389
Darden Restaurants, Inc.56,300 1,275,758 56,300 1,275,758
Dean Foods Co.* 950 32,000 950 32,000
Devon Energy Corp. 20,000 1,224,000 20,000 1,224,000
E.I. du Pont de Nemours E.I. du Pont de Nemours
& Co., Inc. 1,150 49,000 & Co., Inc. 35,150 1,509,693 36,300 1,558,693
Emerson Electric Co. 25,700 1,547,654 25,700 1,547,654
Entergy Corp. 1,300 71,000 1,300 71,000
Exelon Corp. 1,300 87,000 Exelon Corp. 24,200 1,619,948 25,500 1,706,948
Exxon Mobil Corp. 3,760 160,000 3,760 160,000
Fannie Mae 4,250 292,000 Fannie Mae 47,800 3,284,816 52,050 3,576,816
First Data Corp. 700 32,000 700 32,000
FirstEnergy Corp. 33,600 1,313,760 33,600 1,313,760
Fiserv, Inc.* 2,890 106,000 2,890 106,000
Gannett Co., Inc. 13,550 1,174,514 13,550 1,174,514
General Dynamics Corp. 11,200 1,048,544 11,200 1,048,544
General Electric Co. 6,125 183,000 General Electric Co. 47,700 1,428,615 53,825 1,611,615
GlaxoSmithKline PLC ADR 34,400 1,444,800 34,400 1,444,800
Goldman Sachs Group,
Inc. 11,900 1,151,325 11,900 1,151,325
Halliburton Co. 2,630 78,000 2,630 78,000
Harley-Davidson, Inc. 3,250 183,000 3,250 183,000
Hartford Financial
Services Group, Inc. 29,800 1,820,184 29,800 1,820,184
HCA, Inc. 3,650 148,000 HCA, Inc. 33,000 1,340,790 36,650 1,488,790
Health Management
Associates, Inc.,
Class A 2,200 51,000 2,200 51,000
Hewlett-Packard Co. 9,905 195,000 Hewlett-Packard Co. 99,526 1,960,662 109,431 2,155,662
Home Depot, Inc. 5,875 207,000 5,875 207,000
Honeywell International,
Inc. 30,900 1,068,522 30,900 1,068,522
Ingersoll-Rand Co. 800 52,000 800 52,000
Johnson & Johnson 850 46,000 850 46,000
Johnson Controls, Inc. 1,600 88,000 1,600 88,000
</Table>
<Page>
<Table>
Fremont Large Cap Value Fund Managers Value Fund Pro Forma Combined
============================= =================== ==================
Security Description(a) Shares(a) Value (a) Security Description Shares Value Shares Value
======================= ========= ========= ==================== ====== ===== ====== =====
Jones Apparel Group,
Inc.* 32,500 1,189,500 32,500 1,189,500
Kerr-McGee Corp. 1,070 52,000 Kerr-McGee Corp. 21,400 1,047,102 22,470 1,099,102
Kimberly-Clark Corp. 8,555 559,925 8,555 559,925
Laboratory Corp. of
America Holdings* 23,200 921,968 23,200 921,968
Liberty Media Corp.* 145,400 1,590,676 145,400 1,590,676
Mattel, Inc. 80,400 1,363,584 80,400 1,363,584
MBIA, Inc. 23,500 1,383,915 23,500 1,383,915
MBNA Corp. 7,100 173,000 MBNA Corp. 56,807 1,384,955 63,907 1,557,955
McKesson Corp. 62,900 2,066,894 62,900 2,066,894
Merck & Co., Inc. 63,000 2,961,000 63,000 2,961,000
Merrill Lynch & Co., Merrill Lynch & Co.,
Inc. 1,000 54,000 Inc. 39,300 2,131,239 40,300 2,185,239
Metlife, Inc. 1,920 66,000 1,920 66,000
MGIC Investment Corp. 15,400 1,133,748 15,400 1,133,748
Microsoft Corp. 9,560 248,000 9,560 248,000
Morgan Stanley, Inc. 2,700 139,000 Morgan Stanley, Inc. 24,700 1,269,333 27,400 1,408,333
Nabors Industries Ltd.* 2,625 117,000 2,625 117,000
Noble Corp.* 1,000 37,000 1,000 37,000
Noble Energy, Inc. 1,200 55,000 1,200 55,000
Northrop Grumman Corp. 650 65,000 650 65,000
Occidental Petroleum Corp.2,200 104,000 2,200 104,000
Office Depot, Inc.* 92,800 1,624,928 92,800 1,624,928
Peoplesoft, Inc.* 2,250 38,000 2,250 38,000
Pepsi Bottling Group, Inc. 18,700 547,349 18,700 547,349
PepsiCo, Inc. 1,000 55,000 1,000 55,000
Pfizer, Inc. 10,150 363,000 Pfizer, Inc. 46,900 1,677,144 57,050 2,040,144
Pitney Bowes, Inc. 37,200 1,627,500 37,200 1,627,500
PMI Group, Inc., The 1,150 50,000 1,150 50,000
Procter & Gamble Co. 1,950 206,000 1,950 206,000
Quest Diagnostics, Inc.*13,600 1,147,160 13,600 1,147,160
Regions Financial Corp. 44,300 1,537,653 44,300 1,537,653
Rent-A-Center, Inc.* 18,500 541,495 18,500 541,495
Royal Caribbean Cruises
Ltd. 2,750 112,000 2,750 112,000
SBC Communications, Inc. 3,250 81,000 3,250 81,000
Sprint Corp. 5,000 90,000 5,000 90,000
St. Paul Travelers
Companies, Inc. 30,378 1,235,473 30,378 1,235,473
Supervalu, Inc. 19,100 588,089 19,100 588,089
Time Warner, Inc.* 4,700 79,000 Time Warner, Inc.* 85,400 1,436,428 90,100 1,515,428
TJX Cos., Inc. 2,250 55,000 2,250 55,000
Transocean, Inc. 36,600 1,016,382 36,600 1,016,382
Unilever NV 15,900 1,048,287 15,900 1,048,287
Union Pacific Corp. 4,350 256,000 4,350 256,000
United Technologies United Technologies
Corp. 700 60,000 Corp. 15,100 1,302,526 15,800 1,362,526
Verizon Communications, Verizon Communications,
Inc. 2,400 91,000 Inc. 37,685 1,422,232 40,085 1,513,232
Viacom, Inc., Class B 6,550 253,000 6,550 253,000
Washington Mutual, Inc. 29,400 1,158,066 29,400 1,158,066
Wellpoint Health Networks, Wellpoint Health Networks,
Inc.* 2,200 246,000 Inc.* 19,900 2,222,631 22,100 2,468,631
Wells Fargo & Co. 28,949 1,634,461 28,949 1,634,461
Westwood One, Inc.* 1,400 41,000 1,400 41,000
Whirlpool Corp. 7,440 487,394 7,440 487,394
Wyeth 3,950 150,000 3,950 150,000
Xerox Corp.* 83,100 1,116,033 83,100 1,116,033
XL Capital, Ltd. 15,300 1,168,155 15,300 1,168,155
Yum! Brands, Inc.* 42,000 1,629,180 42,000 1,629,180
</Table>
SHORT-TERM:
- -----------
Repurchase Agreement,
State Street Bank,
0.400%, 05/03/04
(Maturity Value $484)
(Cost $484) Collateral:
FHLB 5.125%, 03/06/06
(Collateral Value
$496) 484,422 484,000 484,422 484,000
JPMorgan Prime Money
Market Fund, Institutional
Class Shares 4,620,653 4,620,653 4,620,653 4,620,653
Total Investments $10,650,000 $109,674,673 $120,324,673
=========== ============ ============
*Non-income-producing security
(a) Certain securities that do not conform to the investment
strategies to be in effect after the reorganization will
be disposed of prior to the reorganization.
See accompanying notes to the pro forma financial statements
<Page>
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES
- -----------------------------------------------------
FREMONT LARGE CAP VALUE/MANAGERS VALUE FUND
- -------------------------------------------
April 30, 2004
UNAUDITED
<Table>
Fremont Managers Pro Pro
Large Cap Value Forma Forma
Value Fund Fund Adjustments Combined
---------- -------- ----------- --------
ASSETS
======
Investments at cost $ 8,972,000 $ 93,080,546 $ - $102,052,546
Net unrealized appreciation 1,678,000 16,594,127 - 18,272,127
------------ ------------- ------------ ------------
Investments at value 10,650,000 109,674,673 - 120,324,673
Cash - 493,935 493,935
Receivable for Fund shares sold 293,000 1,306,345 - 1,599,345
Receivables for securities sold - 364,912 364,912
Receivable from advisor 10,000 - - 10,000
Dividends and interest receivable 11,000 122,549 - 133,549
Prepaid expenses/Other assets 7,000 22,063 - 29,063
============ ============ ============= =========== ============
TOTAL ASSETS $ 10,971,000 $ 111,984,477 $ - $122,955,477
============ ============ ============= =========== ============
LIABILITIES
============
Payable for securities purchased 257,000 2,343,020 - 2,600,020
Payable for Fund shares redeemed - 56,757 - 56,757
Investment advisory and management
fee payable 8,000 67,527 - 75,527
Other accrued expenses 43,000 101,183 - 144,183
================= ============ =========== =========== ============
TOTAL LIABILITIES 308,000 2,568,487 - 2,876,487
================= ============ =========== =========== ============
NET ASSETS $10,663,000 $109,415,990 $ - $120,078,990
========== ============ ============ ============ ============
NET ASSETS CONSIST OF:
======================
Paid-in capital $ 21,482,000 $ 97,057,794 $ - $118,539,794
Undistributed net investment
income 20,000 126,741 - 146,741
Accumulated realized loss
on investments (12,517,000) (4,362,672) - (16,879,672)
Net unrealized appreciation
of investments 1,678,000 16,594,127 - 18,272,127
NET ASSETS $ 10,663,000 $109,415,990 $ - $120,078,990
========== ============ ============ ============ ============
COMPUTATION OF NET ASSET VALUE:
===============================
Net assets $ 10,663,000 $109,415,990 $ - $120,078,990
============ ============ ============ ============
Shares of beneficial interest 1,300,000 4,059,461 (904,390) 4,455,071
============ ============ ============ ============
Net asset value, offering and
redemption price per share $8.20 $26.95 $ - $26.95
============ ============ ============ ============
See accompanying notes to the pro forma financial statements.
</Table>
<Page>
PRO FORMA COMBINING STATEMENTS OF OPERATIONS
- --------------------------------------------
FREMONT LARGE CAP VALUE/MANAGERS VALUE FUND
- -------------------------------------------
For the twelve months ended April 30, 2004
UNAUDITED
<Table>
Fremont Managers Pro Pro
Large Cap Value Forma Forma
Value Fund Fund Adjustments Combined
========== ======== =========== ========
INVESTMENT INCOME
- -----------------
Dividends $ 180,000 $1,591,787 $ - $1,771,787
Interest income 2,000 42,653 - 44,653
Foreign witholding tax - (10,720) - (10,720)
Security lending income - 11,621 - 11,621
182,000 1,635,341 - 1,817,341
--------- ---------- -------- -----------
EXPENSES
- --------
Investment advisory
and management fees 72,500 685,088 - 757,588
Administration fees 14,500 228,362 14,345 (a) 257,207
Transfer agent 42,000 226,736 - 268,736
Custodian 2,000 38,154 - 40,154
Professional fees 39,000 40,937 - 79,937
Registration fees 12,000 28,656 - 40,656
Printing fees 4,000 1,441 - 5,441
Trustees fees and expenses 10,000 4,440 - 14,440
Insurance - 2,926 - 2,926
Miscellaneous 5,000 17,133 - 22,133
Total expenses before reductions 201,000 1,273,873 14,345 1,489,218
-------- --------- ------ ---------
Less reimbursement/waiver (85,000) - (95,559)(b) (180,559)
Less reductions - (109,664) - (109,664)
-------- --------- -------- ---------
Net expenses 116,000 1,164,209 (81,214) 1,198,995
-------- --------- -------- ---------
Net investment income 66,000 471,132 81,214 618,346
-------- --------- -------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
- ----------------------------
Net realized loss on
investments 851,000 4,484,739 - 5,335,739
Change in unrealized
appreciation of investments 1,286,000 15,988,300 - 17,274,300
Net realized and unrealized
gain on investments 2,137,000 20,473,039 - 22,610,039
--------- ---------- ------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,203,000 $20,944,171 $81,214 $23,228,385
========================== ========== =========== ======= ===========
</Table>
(a) to adjust administration fee to 0.25%
(b) to adjust cap to 1.19%
See accompanying notes to the pro forma financial statements.
<Page>
================================================================
Managers Value Fund/Fremont Large Cap Value Fund
Managers Capital Appreciation Fund/Fremont Large Cap Growth Fund
Notes to Pro Forma Combining Financial Statements
April 30, 2004 (Unaudited)
================================================================
1. Basis of Combination
========================
The Pro Forma Statements of Assets and Liabilities, including
the Pro Forma Schedules of Investments, and the related Pro
Forma Statements of Operations ("Pro Forma Statements")
reflect the combined accounts of the Managers Value Fund
("Value Fund") and Fremont Large Cap Value Fund ("FLCV Fund")
and the Managers Capital Appreciation Fund ("Capital
Appreciation") and Fremont Large Cap Growth Fund ("FLCG
Fund"), collectively the "Funds", as if the reorganization
occurred as of and for the year ended April 30, 2004. These
statements have been derived from the books and records
utilized in calculating the daily net asset value of each Fund
at April 30, 2004 and for the year then ended.
The Pro Forma Statements give effect to the proposed transfer
of the assets and stated liabilities of FLCV and FLCG Funds in
exchange for shares of Value and Capital Appreciation Funds,
respectively. The Managers Funds LLC ("TMF" or the "Advisor")
and Fremont Investment Advisors, Inc. will together bear 100%
of the costs and expenses of the reorganization.
The Pro Forma Statements should be read in conjunction with
the historical financial statements of the Funds incorporated
by reference in the Statement of Additional Information.
Pro Forma Adjustments
- ---------------------
The Pro Forma adjustments below reflect the impact of the
merger between the Value and the FLCV, and the Capital
Appreciation and the FLCG Funds.
(a) To increase the Administration Fee to reflect The
Managers Funds' fee schedule.
(b) Adjustment to reflect the lower expense cap effective
as of the merger.
(c) To reduce the Management Fee on Capital Appreciation
Fund to 0.80%.
2. Shares of Beneficial Interest
================================
Immediately prior to the closing date, the FLCV and FLCG Funds
will effect reverse stock splits to adjust each Fund's net
asset value per share to match that of the Value and Capital
Appreciation Funds, respectively. The Pro Forma net asset
value per share reflects the effect of the reverse stock
split. Therefore, the pro forma data reflects an exchange
ratio of approximately one for one of each Value and Cap App
Fund share issued for each share of the FLCV and FLCG Funds,
respectively. The Pro Forma Statement of Assets & Liabilities
reflects the combined Pro Forma shares outstanding.
3. Pro Forma Operations
=======================
Pro Forma operating expenses include the actual expenses of
each Fund and the combined Funds, with certain expenses
adjusted to reflect the expected expenses of the combined
entity.
4. Portfolio Valuation
======================
Equity securities are valued at the last sale price, or if
there had been no sale that day, at the last bid price. Debt
securities are valued on the basis of broker quotations or
valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions
in comparable securities, quotations from dealers, and various
relationships between securities in determining value. Short-
term investments having a remaining maturity of 60 days or
less are valued at amortized cost which approximates market.
All other securities and assets are valued at fair value as
determined in good faith by or under the direction of the
Trustees.
1
<Page>
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 Large Cap Growth Fund and Fremont Large Cap
Value Fund (the "Fremont Funds"), each a series of Fremont Mutual Funds,
Inc., into Managers Capital Appreciation Fund and Managers Value Fund
(the "Managers Funds"), each a series of The Managers Funds. 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
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)
* The Managers Funds SAI (file no. 033-44909), filed with the
Securities and Exchange Commission on May 5, 2004
(accession number: 0000720309-04-000034)
ADDITIONAL INFORMATION ABOUT THE MANAGERS FUNDS
===============================================
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.
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.
<Page>
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 the
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.
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.
<Page>
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.
Calculation of Performance Data
- -------------------------------
For additional information regarding the investment performance of each
Fremont Fund, see "Investment Results" in the Fremont SAI.
<Page>
Financial Statements
- --------------------
For additional information, see "Additional Information" in the Fremont
SAI.
PART C
======
OTHER INFORMATION
=================
Item 15. INDEMNIFICATION
======== ===============
Reference is made to Article IV, Sections 4.2 and 4.3 of The Managers
Funds' ("TMF") Declaration of Trust (Exhibit 1) with respect to
indemnification of the Trustees and officers of TMF 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 TMF pursuant to the foregoing provisions, or
otherwise, TMF 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 TMF of expenses incurred or paid by a Trustee, an
officer or a controlling person of TMF 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,
TMF 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 November 23, 1987,
is incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 002-84012; 811-3752
(filed October 16, 1997).
Exhibit 2 By-Laws, dated November 23, 1987, are
incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 002-84012; 811-3752
(filed October 16, 1997).
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) Fund Management Agreement between Registrant
and The Managers Funds LLC, dated as of
April 1, 1999 is incorporated by reference
to the Registration Statement on Form N-1A,
Registration Nos. 002-84012; 811-3752
(filed April 1, 1999).
<Page>
Exhibit 6(b) Form of Subadvisory Agreement between The
Managers Funds LLC and each Subadvisor of
Managers Value Fund is incorporated by
reference to the Registration Statement
on Form N-1A, Registration Nos. 002-84012;
811-3752 (filed April 1, 1999).
Subadvisory Agreement between The Managers
Funds LLC and Bramwell Capital Management,
Inc. with respect to Managers Capital
Appreciation Fund dated June 9, 2003
is incorporated by reference to the
Registrant's Schedule 14C Information
Statement, Registration Nos. 002-84012;
811-03752 (filed July 30, 2003).
Exhibit 7 Distribution Agreement between Managers
Distributors, Inc. and The Managers Funds
dated April 1, 2001 is incorporated by
reference to the Registration Statement
on Form N-1A, Registration Nos. 002-84012;
811-3752 (filed March 28, 2001).
Exhibit 8 Not applicable.
Exhibit 9 Custodian Agreement between The Bank of
New York and The Managers Funds is
incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 002-84012; 811-3752
(filed February 28, 2003).
Exhibit 11 Opinion of Goodwin Procter LLP.
Exhibit 12 Opinion of Goodwin Procter LLP with
respect to tax matters.*
Exhibit 13(a) Administration and Shareholder Servicing
Agreement between The Managers Funds LLC and
The Managers Funds dated April 1, 1999 is
incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 002-84012; 811-3752
(filed April 1, 1999).
Exhibit 13(c) Transfer Agency Agreement between The
Managers Funds and State Street Bank and
Trust Company dated February 16, 1994 is
incorporated by reference to the
Registration Statement on Form N-1A,
Registration Nos. 002-84012; 811-3752
(filed October 16, 1997).
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.
<Page>
* 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>
========
EXHIBITS
========
==========
Exhibit 11
==========
[Goodwin Procter LLP Letterhead]
August 24, 2004
The Managers Funds
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 The Managers Funds (the "Trust")
representing interests in Managers Capital Appreciation Fund
and Managers Value 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 Large Cap
Growth Fund and Fremont Large Cap Value Fund, included as an
exhibit to the Registration Statement.
We have examined the Trust's Declaration of Trust dated
November 23, 1987, 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 25, 2004
<Page>
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 February 17, 2004, relating to the financial statements and
financial highlights which appears in the December 31, 2003 Annual
Report to Shareholders of the Managers Capital Appreciation Fund and
Managers Value Fund, which are also incorporated by reference into the
Registration Statement on Form N-1A dated May 1, 2004. We also consent
to the references to us under the headings "Financial Highlights",
"Experts", "Independent Registered Public Accounting Firm", "Financial
Statements" and "Other Principal Service Providers" in such
Registration Statements.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 25, 2004
<Page>
==========
Exhibit 16
==========
==================
POWER OF ATTORNEY
THE MANAGERS FUNDS
==================
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 Funds (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.
THE MANAGERS FUNDS
By:/s/ Donald S. Rumery
-------------------------
Name: Donald S. Rumery
Title: Treasurer
SIGNATURE TITLE DATE
--------- ----- ----
* Trustee August 25, 2004
Jack W. Aber
* Trustee August 25, 2004
William E. Chapman, II
* Trustee August 25, 2004
Edward J. Kaier
* Trustee August 25, 2004
Eric Rakowski
* Trustee August 25, 2004
Steven J. Paggioli
* Trustee August 25, 2004
Thomas R. Schneeweis
* Trustee August 25, 2004
John Kingston, III
* Trustee, President
and Principal August 25, 2004
Peter M. Lebovitz Executive Officer
<Page>
* Principal Financial August 25, 2004
Galan G. Daukas Officer
* Treasurer and Principal August 25, 2004
Donald S. Rumery Accounting Officer
*By Donald S. Rumery pursuant to power of attorney
<Page>