14
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
_____________The Managers Funds______________
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-
5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-
5(g) and 0-11.
1) Title of each class of securities to which transaction
applies:
_____________________________________________________________
2) Aggregate number of securities to which transaction
applies:
_____________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined):
_____________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
5) Total fee paid:
_____________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
____________________________________________________________
2) Form, Schedule or Registration Statement No.:
____________________________________________________________
3) Filing Party:
____________________________________________________________
4) Date Filed:
____________________________________________________________
[X] Filing fee no longer applicable.
THE MANAGERS FUNDS
Managers Special Equity Fund
40 Richards Avenue
Norwalk, Connecticut 06854
____________________
INFORMATION STATEMENT
____________________
This information statement is being provided to the
shareholders of Managers Special Equity Fund in lieu of a proxy
statement, pursuant to the terms of an exemptive order the Trust
has received from the Securities and Exchange Commission which
permits the Fund's manager to hire new sub-advisors and to make
changes to existing sub-adviser contracts with the approval of
the Trustees, but without obtaining shareholder approval.
Liberty Investment Management, a division of Goldman Sachs
Asset Management, one of the Fund's sub-advisers, has agreed to
bear the costs associated with preparing and distributing this
information statement, which will be mailed on or about March 2,
1996.
The Trust
Managers Special Equity Fund (the "Special Equity Fund" or
the "Fund") is an investment portfolio of The Managers Funds, a
Massachusetts business trust (the "Trust"). The Trust has
entered into an investment management agreement with The Managers
Funds, L.P. (the "Manager"), dated August 17, 1990 (the
"Management Agreement"). Under the Management Agreement, it is
the responsibility of the Manager to select, subject to review
and approval by the Trustees, one or more sub-advisers (the "Sub-
Advisers") to manage the portfolio of each investment portfolio
of the Trust (each a "Fund"), to review and monitor the
performance of these Sub-Advisers on an ongoing basis and to
recommend changes in the roster of Sub-Advisers to the Trustees
as appropriate. The Manager is responsible for allocating the
Funds' assets among the Sub-Advisers for each Fund that has more
than one Sub-Adviser. The portion of a Fund's assets managed by
a Sub-Adviser may be adjusted from time to time in the sole
discretion of the Manager, and it is possible that an approved
Sub-Adviser may not manage any portion of the Fund's assets. The
Manager is also responsible for conducting all business
operations of the Trust, except those operations contracted to
the custodian or transfer agent. As compensation for its
services, the Manager receives a fee from each Fund, out of which
the Manager pays all fees payable to the Sub-Advisers of that
Fund. The Funds, therefore, pay no fees to the Sub-Advisers.
The Manager recommends Sub-Advisers for the Funds to the
Trustees based upon its continuing quantitative and qualitative
evaluation of the Sub-Advisers' skills in managing assets
pursuant to specific investment styles and strategies. Short-
term investment performance, by itself, is not a significant
factor in selecting or terminating a Sub-Adviser and the Manager
does not expect to recommend frequent changes of Sub-Advisers.
The Sub-Advisers do not provide any services to the Funds
except portfolio investment management and related record-keeping
services. However, in accordance with procedures adopted by the
Trustees, a Sub-Adviser or its affiliated broker-dealer may
execute portfolio transactions for a Fund and receive brokerage
commissions in connection therewith as permitted by Section 17(e)
of the Investment Company Act of 1940, as amended (the "1940
Act"), and the rules thereunder.
The Sub-Advisory Agreement
Liberty Investment Management, Inc. ("Liberty") has served
as one of the Fund's Sub-Adviser pursuant to the most recent Sub-
Advisory Agreement dated January 3, 1995 (the "Previous
Agreement"). The Previous Agreement provided for its automatic
termination in the event of its "assignment," as that term is
defined in the 1940 Act. On January 2, 1997, Liberty and
Goldman Sachs and Co. ("Goldman Sachs") consummated the first
stage of the transaction (the "Transaction") whereby Goldman
Sachs purchased approximately 82% of the assets of Liberty. The
Liberty assets purchased by Goldman Sachs, along with the key
personnel described below, will operate as a division ("New
Liberty") of Goldman Sachs Asset Management, which in turn is a
separate operating division of Goldman Sachs. New Liberty may
operate under the name Liberty Investment Management or under the
name Goldman Sachs Asset Management ("GSAM"). This transaction
represents an ownership change which is a legal "assignment",
and, as such, had the effect of terminating the Previous
Agreement. At a meeting held on December 9, 1996, the Trustees,
including a majority of the non-interested Trustees (those
Trustees who are not parties to the New Agreement or interested
persons of such parties), approved a new Sub-Advisory Agreement
with Liberty (the "New Agreement").
Liberty will continue to operate as a separate entity after
January 2, 1997 until such time as Liberty transfers its
remaining assets to New Liberty in one or more subsequent stages
of the Transaction, or otherwise disposes of any remaining
assets.
Under the Management Agreement, the Fund pays the Manager a
fee equal to 0.90% of the Fund's average daily net assets. From
this amount, the Manager has paid (under the Previous Agreement),
and will continue to pay (under the New Agreement) Liberty a fee
of 0.50% on the portion of the Fund's average daily net assets
under Liberty's management. For the fiscal year ended December
31, 1996, the Fund paid the Manager $_____ of which the Manager
paid $_____ to Liberty.
Except for the different effective and termination dates,
the terms of the New Agreement are substantially the same as the
terms of the Previous Agreement. However, there are certain non-
material differences between the two agreements. Specifically,
the New Agreement has additional provisions regarding the Sub-
Adviser's responsibilities to assist in compliance monitoring and
to carry certain insurance coverage. The New Agreement also
makes a clarifying change to the fee schedule. This change does
not affect fees payable to Liberty, but is intended to avoid the
possibility of future confusion. The form of the New Agreement,
marked to show changes from the Previous Agreement, is attached
to this information statement as Exhibit A.
Information on Liberty and Goldman Sachs
Following is a description of Liberty and Goldman Sachs,
which is based on information provided by the Sub-Adviser. The
Sub-Adviser is not affiliated with the Manager.
LIBERTY INVESTMENT MANAGEMENT, a division of Goldman Sachs Asset
Management
2502 Rocky Point Drive, Suite 500
Tampa, Florida 33607
Liberty, a Florida corporation organized on August 30, 1994,
is registered as an investment adviser under the 1940 Act.
Liberty provides investment advisory services to institutional
clients, including employee benefit plans, endowments,
foundations, other tax-exempt funds and registered investment
companies.
On October 27, 1994, Liberty entered into an agreement with
Eagle Asset Management, Inc. ("Eagle") and Raymond James
Financial, Inc. ("RJF"). RJF is the parent company of, among
other companies, Eagle. Under this agreement, Liberty assumed as
of January 1, 1995 portfolio management duties for substantially
all equity institutional accounts previously managed by Eagle,
including the portion of the Fund which Eagle had managed since
December 1985. These accounts represented approximately $4.3
billion of the $8.7 billion managed by RJF subsidiaries as of
September 30, 1994. In return, RJF was to receive, for a period
of five years, 50% of the fee revenues generated by previous
Eagle accounts which became clients of Liberty during this
period. In addition, after five years and at certain other
designated times, RJF would have the option to acquire 20%
ownership interest in Liberty at a favorable price. RJF's right
to receive a portion of Liberty's revenues and its option to
acquire 20% of Liberty have been extinguished with the completion
of the acquisition of Liberty by Goldman Sachs.
Herbert E. Ehlers is the sole director, Chief Executive
Officer and Chief Investment Officer of Liberty. He also owns
all of the outstanding capital stock issued by Liberty. Lincoln
Kinnicutt is Liberty's President and Chief Operating Officer.
The address of Messrs. Ehlers and Kinnicutt is 2502 Rocky Point
Drive, Suite 500, Tampa, Florida 33607.
A list of the other registered investment companies for
which Liberty serves as an investment adviser or sub-adviser,
showing the approximate net assets of each company as of _______
and the rate of Liberty's advisory compensation for each company
is as follows:
Approximate Advisory Fee
Investment Company Net Assets at (as a
percentage of average net assets)
Liberty is now a wholly-owned subsidiary of Goldman Sachs.
GSAM, which has its principal business address at One New York
Plaza, New York, New York 10004, is a separate operating division
of Goldman Sachs. Goldman Sachs is a worldwide investment
banking firm and has its principal business address at 85 Broad
Street, New York, New York 10004. The principal executive
officers of Goldman Sachs are Jon S. Corzine and Henry M.
Paulson. The principal occupation of each of Messrs. Corzine and
Paulson is the management of Goldman Sachs. The general partners
of Goldman Sachs are The Goldman Sachs Group, L.P. (a Delaware
limited partnership) ("GSGLP") and The Goldman Sachs & Co. L.L.C.
(a Delaware limited liability company) ("GSCLLC"). The principal
business address of the principal executive officers and general
partners of Goldman Sachs is 85 Broad Street, New York, New York
10004. The Goldman Sachs Corporation ("GSC") is the parent
company of both GSGLP and GSCLLC. GSC owns 0.2% of the voting
securities of GSCLLC. GSC is the sole general partner of GSGLP
and owns 0.2% of the voting securities if GSGLP. GSGLP is also a
parent of GSCLLC and GSGLP owns 99.8% of the voting securities of
GSCLLC.
The Transaction
The following information regarding the terms under which
Goldman Sachs has acquired Liberty has been provided to the Trust
by the Sub-Adviser. In connection with the Transaction, certain
key personnel of Liberty have entered into employment agreements
with Goldman Sachs. The Sub-Adviser has advised the Trust that
this assures that New Liberty will continue to operate with its
same investment personnel and officers, and that the same persons
who had historically been responsible for the investment policies
of Liberty will continue to direct the investment policies of the
firm. No changes in Liberty's method of operation, or the
location where it conducts its business have been made, or are
contemplated, as a result of the acquisition.
On October 23, 1996, Liberty entered into a definitive
agreement for the sales of its assets to Goldman Sachs. In
connection with the sale, Goldman Sachs has provided incentives
for certain key personnel to remain employed with New Liberty.
In connection with the acquisition, Messrs. Ehlers and
Kinnicutt and Timothy G. Ebright, Senior Vice President of
Liberty, have each entered into separate employment agreements
with Goldman Sachs. These agreements provide that upon
completion of the first stage of the Transaction, Mr. Ehlers will
serve as a Managing Director of Goldman Sachs, Mr. Kinnicutt will
continue to exercise his current sales, marketing and client
liason functions with New Liberty, and Mr. Ebright will continue
to exercise his current portfolio management functions with New
Liberty. Messrs. Ehlers, Kinnicutt and Ebright will also retain
their current titles and functions with Liberty until all the
remaining assets of Liberty are subsequently transferred to New
Liberty or otherwise disposed of, and Liberty is dissolved.
All key personnel and investment research and management
professionals of Liberty, except for John Carlson, who is no
longer employed by Liberty, have signed long-term employment
contracts with Goldman Sachs. With the exception of Mr. Carlson,
it is expected that all of the current portfolio managers will
continue to be responsible for the day-to-day investment
management of their existing client assignments. The same
individuals who currently provide portfolio management services
to the Fund will continue to do so. New Liberty will continue to
be staffed by the current personnel of Liberty, including, in
addition to management and research team members, traders as well
as the institutional administrative, operations and client
services personnel.
The first stage of the Transaction which was subject to
various approvals and consents, closed on January 2, 1997 with
respect to 82% of the assets of Liberty. After completion of the
Transaction, New Liberty will maintain its principal business
office in Tampa, as well as an office in Yardley, Pennsylvania
with respect to Mr. Ebright's portfolio management functions.
New Liberty will operate as a division of GSAM. No fundamental
changes in investment philosophy or processes are anticipated.
In approving the New Agreement, the Trustees, at an in-
person meeting called for the purpose held on December 9, 1996,
considered a number of factors, including (i) the nature and
quality of the services rendered by Liberty to the Fund since it
was hired, (ii) the representations by Liberty to the Trustees
regarding the terms of its acquisition, including that Liberty
expects that it will continue to operate with its same investment
personnel and officers, and that the same persons who had
historically been responsible for the investment polices of
Liberty will continue to direct the investment policies of the
firm and that there will be no dilution in the scope and quality
of advisory services provided to the Fund as a result of the
acquisition, (iii) that the fees payable under the New Agreement
will be identical to those payable under the Previous Agreement,
and that the terms of the two agreements are substantially the
same and (iv) the commitment of Liberty to pay or reimburse the
Fund for the expenses of the Fund incurred in connection with the
preparation and distribution of this information statement.
In light of the fact that the assets of the Fund represent
less than 1% of the assets under management by Liberty, and sub-
advisory fees paid by the Manager to Liberty with respect to the
Fund represent less than 1% of Liberty 's gross revenues, the
Trustees did not consider whether Liberty would receive any
"benefit" within the meaning of Section 15(f) of the 1940 Act
from the transaction.
DESCRIPTION OF THE MANAGER
The Manager is a Delaware limited partnership, which
together with its predecessor entity, has served as the
investment manager to the Trust since the Trust's inception. The
sole general partner of the Manager is EAIMC Holdings Corp., of
which Robert P. Watson, President and a Trustee of the Trust, is
the sole shareholder. The Manager has no other general partners.
The following chart lists those officers and Trustees of the
Trust who are also affiliated with the Manager, and sets forth
the nature of those affiliations:
Name Position with the Trust Position with
the Manager
Robert P. Watson President and Trustee Chief Executive
Officer
Peter M. Lebovitz Vice President Managing Director
Donald S. Rumery Treasurer Director of
Operations
Kathleen Wood Secretary Vice President
Giancarlo (John) E. Rosati Assistant
Treasurer Vice President
Peter M. McCabe Assistant Treasurer Portfolio
Administrator
The principal occupation of each person listed above is his
or her occupation with the Manager. The address of each and of
the Manager is 40 Richards Avenue, Norwalk, Connecticut 06854.
The Trustees and Officers of the Trust, both individually and as
a group, own less than 1% of any FundOs outstanding shares.
The Trust has entered into an Administration and Shareholder
Servicing Agreement with the Manager whereby the Manager has
agreed to provide administration and shareholder services to the
Trust, its shareholders and certain institutions, such as bank
trust departments and registered investment advisers, that advise
or act as an intermediary with the Trust's shareholders. The
Fund currently pays 0.25% of its average daily net assets to the
Manager under the Administration Agreement.
The Trust has also entered into a Distribution Agreement
with the Manager whereby the Manager has agreed to provide
services with respect to the distribution of the Trust's shares.
No compensation is payable to the Manager for its services under
the Distribution Agreement.
The fees paid by the Fund to the Manager under the Management
Agreement and under the Administration Agreement during the
fiscal year ended December 31, 1996 were $______ and $_______,
respectively.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 18, 1997, three omnibus accounts, Charles
Schwab (San Francisco, California)., Huntington Trust Company
(Columbus, Ohio) and Resource Bank and Trust (Minneapolis,
Minnesota) owned 29%, 12% and 10%, respectively, of the
outstanding shares of the Fund.
ADDITIONAL INFORMATION
Other Matters
The Trust is not required to hold annual meetings of
shareholders and, therefore, it cannot be determined when the
next meeting of shareholders will be held. Shareholder proposals
to be considered for inclusion in the proxy statement for the
next meeting of shareholders must be submitted a reasonable time
before the proxy statement is mailed. Whether a proposal
submitted will be included in the proxy statement will be
determined in accordance with applicable state and federal law.
Copies of the most recent annual and semi-annual reports are
available without charge. To obtain a copy, call or write the
Manager, 40 Richards Avenue, Norwalk, CT 06854, (800) 835-3879
By Order of the Trustees,
KATHLEEN WOOD
Secretary
Dated: March 2, 1997
EXHIBIT A
FORM OF SUB-ADVISORY AGREEMENT
Marked to show changes from Previous Agreement
Attention: Lincoln Kinnicutt
Liberty Investment Management, a division of Goldman
Sachs Asset Management
RE: Sub-Advisory Agreement
To whom it may concern:
The Managers Special Equity Fund (the "Fund") is a series of a
Massachusetts business trust (the "Trust") that is registered as
an investment company under the Investment Company Act of 1940,
as amended, (the "Act"), and subject to the rules and regulations
promulgated thereunder.
The Managers Funds, L.P. (the "Manager") acts as the manager and
administrator of the Trust pursuant to the terms of a Management
Agreement with the Trust. The Manager is responsible for the day-
to-day management and administration of the Fund and the
coordination of investment of the FundOs assets. However,
pursuant to the terms of the Management Agreement, specific
portfolio purchases and sales for the FundOs investment
portfolios or a portion thereof, are to be made by advisory
organizations recommended by the Manager and approved by the
Trustees of the Trust.
1. Appointment as a Sub-Adviser. The Manager, being duly
authorized, hereby appoints and employs Liberty Investment
Management, a division of Goldman Sachs Asset Management ("Sub-
Adviser") as a discretionary asset manager, on the terms and
conditions set forth herein, of those assets of the Fund which
the Manager determines to allocate to the Sub-Adviser (those
assets being referred to as the "Fund Account"). The Manager
may, from time to time, with the consent of the Sub-Adviser, make
additions to the Fund Account and may, from time to time, make
withdrawals of any or all of the assets in the Fund Account.
2. Portfolio Management Duties.
(a) Subject to the supervision of the Manager and of
the Trustees of the Trust, the Sub-Adviser shall manage
the composition of the Fund Account, including the
purchase, retention and disposition thereof, in
accordance with the FundOs investment objectives,
policies and restrictions as stated in the Prospectus
(such Prospectus and Statement of Additional
Information for the Fund as currently in effect and as
amended or supplemented from time to time, being herein
called the OProspectusO).
(b) The Sub-Adviser shall maintain such books and
records pursuant to Rule 31a-1 under the Act and Rule
204-2 under the Investment Advisers Act of 1940, as
amended (the OAdvisers ActO), with respect to the Fund
Account as shall be specified by the Manager from time
to time, and shall maintain such books and records for
the periods specified in the rules under the Act or the
Advisers Act. In accordance with Rule 31a-3 under the
Act, the Sub-Adviser agrees that all records under the
Act shall be the property of the Trust.
(c) The Sub-Adviser shall provide the TrustOs
Custodian, and the Manager on each business day with
information relating to all transactions concerning the
Fund Account. In addition, the Sub-Advisor shall be
responsive to requests from the Manager or the Trust's
Custodian for assistance in obtaining price sources for
securities held in the Fund Account, as well as for
periodically reviewing the prices of the securities
assigned by the Manager or the Trust's Custodian for
reasonableness and advising the Manager should any such
prices appear to be incorrect.
(d) The Sub-Adviser agrees to maintain adequate
compliance procedures to ensure its compliance with the
1940 Act, the Advisers Act and other applicable federal
and state regulations, and review information provided
by the Manager to assist the Manager in its compliance
review program.
(e) The Sub-Advisor agrees to maintain an appropriate
level of errors and omissions or professional liability
insurance coverage.
3. Allocation of Brokerage. The Sub-Adviser shall have
authority and discretion to select brokers, dealers and futures
commission merchants to execute portfolio transactions initiated
by the Sub-Adviser, and for the selection of the markets on or in
which the transactions will be executed.
(a). In doing so, the Sub-AdviserOs primary
responsibility shall be to obtain the best net price
and execution for the Fund. However, this
responsibility shall not be deemed to obligate the Sub-
Adviser to solicit competitive bids for each
transaction, and the Sub-Adviser shall have no
obligation to seek the lowest available commission cost
to the Fund, so long as the Sub-Adviser determines that
the broker, dealer or futures commission merchant is
able to obtain the best net price and execution for the
particular transaction taking into account all factors
the Sub-Adviser deems relevant, including, but not
limited to, the breadth of the market in the security
or commodity, the price, the financial condition and
execution capability of the broker, dealer or futures
commission merchant and the reasonableness of any
commission for the specific transaction and on a
continuing basis. The Sub-Adviser may consider the
brokerage and research services (as defined in Section
28(e) of the Securities Exchange Act of 1934, as
amended) made available by the broker to the Sub-
Adviser viewed in terms of either that particular
transaction or of the Sub-AdviserOs overall
responsibilities with respect to its clients, including
the Fund, as to which the Sub-Adviser exercises
investment discretion, notwithstanding that the Fund
may not be the direct or exclusive beneficiary of any
such services or that another broker may be willing to
charge the Fund a lower commission on the particular
transaction.
(b). The Manager shall have the right to request that
specified transactions giving rise to brokerage
commissions, in an amount to be agreed upon by the
Manager and the Sub-Adviser, shall be executed by
brokers and dealers that provide brokerage or research
services to the Fund or the Manager, or as to which an
on-going relationship will be of value to the Fund in
the management of its assets, which services and
relationship may, but need not, be of direct benefit to
the Fund Account, so long as (i) the Manager determines
that the broker or dealer is able to obtain the best
net price and execution on a particular transaction and
(ii) the Manager determines that the commission cost is
reasonable in relation to the total quality and
reliability of the brokerage and research services made
available to the Fund or to the Manager for the benefit
of its clients for which it exercises investment
discretion, notwithstanding that the Fund Account may
not be the direct or exclusive beneficiary of any such
service or that another broker may be willing to charge
the Fund a lower commission on the particular
transaction.
(c) The Sub-Adviser agrees that it will not execute
any portfolio transactions with a broker, dealer or
futures commission merchant which is an "affiliated
person" (as defined in the Act) of the Trust or of the
Manager or of any sub-adviser for the Trust except in
accordance with procedures adopted by the Trustees.
The Manager agrees that it will provide the Asset
Manager with a list of brokers and dealers which are
"affiliated persons" of the Trust, the Manager or the
Trust's sub-advisers.
4. Information Provided to the Manager and the Trust
(a) The Sub-Adviser agrees that it will make available
to the Manager and the Trust promptly upon their
request copies of all of its investment records and
ledgers with respect to the Fund Account to assist the
Manager and the Trust in monitoring compliance with the
Act, the Advisers Act, and other applicable laws. The
Sub-Adviser will furnish the TrustOs Board of Trustees
with such periodic and special reports with respect to
the Fund Account as the Manager or the Board of
Trustees may reasonably request.
(b) The Sub-Adviser agrees that it will notify the
Manager and the Trust in the event that the Sub-Adviser
or any of its affiliates: (i) becomes subject to a
statutory disqualification that prevents the Sub-
Adviser from serving as investment adviser pursuant to
this Agreement; or (ii) is or expects to become the
subject of an administrative proceeding or enforcement
action by the Securities and Exchange Commission or
other regulatory authority. Notification of an event
within (i) shall be given immediately; notification of
an event within (ii) shall be given promptly. The Sub-
Adviser has provided the information about itself set
forth in the Registration Statement and has reviewed
the description of its operations, duties and
responsibilities as stated therein and acknowledges
that they are true and correct and contain no material
misstatement or omission, and it further agrees to
notify the Manager immediately of any fact known to the
Sub-Adviser respecting or relating to the Sub-Adviser
that causes any statement in the Prospectus to become
untrue or misleading in any material respect or that
causes the Prospectus to omit to state a material fact.
(c) The Sub-Adviser represents that it is an
investment adviser registered under the Advisers Act
and other applicable laws and that the statements
contained in the Sub-AdviserOs registration under the
Advisers Act on Form ADV as of the date hereof, are
true and correct and do not omit to state any material
fact required to be stated therein or necessary in
order to make the statements therein not misleading.
The Sub-Adviser agrees to maintain the completeness and
accuracy of its registration on Form ADV in accordance
with all legal requirements relating to that Form. The
Sub-Adviser acknowledges that it is an Oinvestment
adviserO to the Fund within the meaning of the Act and
the Advisers Act.
5. Compensation. The compensation of the Sub-Adviser for its
services under this Agreement shall be calculated and paid by the
Manager in accordance with the attached Schedule A. Pursuant to
the provisions of the Management Agreement between the Trust and
the Manager, the Manager is solely responsible for the payment of
fees to the Sub-Adviser, and the Sub-Adviser agrees to seek
payment of its fees solely from the Manager and not from the
Trust or the Fund.
6. Other Investment Activities of the Sub-Adviser. The Manager
acknowledges that the Sub-Adviser or one or more of its
affiliates may have investment responsibilities or render
investment advice to or perform other investment advisory
services for other individuals or entities ("Affiliated
Accounts"). The Manager agrees that the Sub-Adviser or its
affiliates may give advice or exercise investment responsibility
and take such other action with respect to other Affiliated
Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund Account, provided
that the Sub-Adviser acts in good faith and provided further,
that it is the Sub-Adviser's policy to allocate, within its
reasonable discretion, investment opportunities to the Fund
Account over a period of time on a fair and equitable basis
relative to the Affiliated Accounts, taking into account the
investment objectives and policies of the Fund and any specific
investment restrictions applicable thereto. The Manager
acknowledges that one or more of the Affiliated Accounts may at
any time hold, acquire, increase, decrease, dispose or otherwise
deal with positions in investments in which the Fund Account may
have an interest from time to time, whether in transactions which
involve the Fund Account or otherwise. The Sub-Adviser shall
have no obligation to acquire for the Fund Account a position in
any investment which any Affiliated Account may acquire, and the
Fund shall have no first refusal, co-investment or other rights
in respect of any such investment, either for the Fund Account or
otherwise.
7. Standard of Care. The Sub-Adviser shall exercise its best
judgment in rendering the services provided by it under this
Agreement. The Sub-Adviser shall not be liable for any act or
omission, error of judgment or mistake of law or for any loss
suffered by the Manager or the Trust in connection with the
matters to which this Agreement relates, provided that nothing in
this Agreement shall be deemed to protect or purport to protect
the Sub-Adviser against any liability to the Manager or the Trust
or to holders of the TrustOs shares representing interests in the
Fund to which the Sub-Adviser would otherwise be subject by
reason of willful malfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of the Sub-
AdviserOs reckless disregard of its obligations and duties under
this Agreement.
8. Assignment. This Agreement shall terminate automatically in
the event of its assignment (as defined in the Act and in the
rules adopted under the Act). The Sub-Adviser shall notify the
Trust in writing sufficiently in advance of any proposed change
of control, as defined in Section 2(a)(9) of the Act, as will
enable the Trust to consider whether an assignment under the Act
will occur, and to take the steps necessary to enter into a new
contract with the Sub-Adviser or such other steps as the Board of
Trustees may deem appropriate.
9. Amendment. This Agreement may be amended at any time, but
only by written agreement between the Sub-Adviser and the
Manager, which amendment is subject to the approval of the
Trustees and the shareholders of the Trust in the manner required
by the Act.
10. Effective Date; Term. This Agreement shall become effective
on January 2, 1997 and shall continue in effect for a term of two
years from that date. Thereafter, the Agreement shall continue
in effect only so long as its continuance has been specifically
approved at least annually by the Trustees, or the shareholders
of the Fund in the manner required by the Act. The aforesaid
requirement shall be construed in a manner consistent with the
Act and the rules and regulations thereunder.
11. Termination. This Agreement may be terminated by (i) the
Manager at anytime without penalty, upon notice to the Sub-
Adviser and the Trust, (ii) at any time without penalty by the
Trust or by vote of a majority of the outstanding voting
securities of the Fund (as defined in the Act) on notice to the
Sub-Adviser or (iii) by the Sub-Adviser at any time without
penalty, upon sixty (60) days' written notice to the Manager and
the Trust.
12. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule, or
otherwise, the remainder of this Agreement shall not be affected
thereby but shall continue in full force and effect.
13. Applicable Law. The provisions of this Agreement shall be
construed in a manner consistent with the requirements of the Act
and the rules and regulations thereunder. To the extent that
state law is not preempted by the provisions of any law of the
United States heretofore or hereafter enacted, as the same may be
amended from time to time, this Agreement shall be administered,
construed, and enforced according to the laws of the State of
Connecticut.
THE MANAGERS FUNDS, L.P.
BY: EAIMC HOLDINGS CORP.
General Partner
BY:
Its:
DATE:
ACCEPTED:
BY:
Its:
DATE:
Acknowledged:
The Managers Funds
BY:
Its:
DATE:
SCHEDULES: A. Fee Schedule.
SCHEDULE A
SUB-ADVISER FEE
For services provided to the Fund Account, The Managers Funds,
L.P. will pay a base quarterly fee for each calendar quarter at
an annual rate of 0.50% of average net assets in the Fund Account
during the quarter. Average assets shall be determined using the
average daily assets in the Fund Account during the calendar
quarter. The fee shall be pro-rated for any calendar quarter
during which the contract is in effect for only a portion of the
quarter.
DRAFT
March, 1997
Dear Managers Special Equity Fund Shareholder:
The enclosed information statement explains the recent
acquisition of the Liberty Investment Management, Inc., one of
the portfolio managers of Managers Special Equity Fund, by
Goldman Sachs & Co. The first stage of this acquisition was
completed on January 2, 1997. Under federal securities
regulations, this "change in control" required the approval of a
new sub-advisory contract by the Trustees of The Managers Funds.
Your Trustees approved the new contract in advance of the
acquisition at a meeting on December 9, 1996.
This change in ownership is not expected to impact the investment
process or day to day operations of Liberty. The firm's key
employees remain on board and there have been no changes in the
management of Managers Special Equity Fund.
As a matter of regulatory compliance, we send you this
information statement which describes the management structure of
the Fund and the details of Liberty's new ownership, as well as
the terms of the new sub-advisory agreement which your Trustees
have approved.
Please feel free to call us at (800) 835-3879 should you have any
questions on the enclosed information statement. We thank you
for your continued interest in The Managers Funds.
Sincerely,
Robert P. Watson
President
