SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-
11(c) or Section 240.14a-12
_____________THE MANAGERS FUNDS_________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________
(Name of Person(s) Filing Proxy Statement, if other
than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) 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 is 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:
_______________________________________________________
<PAGE>
[The Managers Funds Logo]
40 RICHARDS AVENUE
NORWALK, CONNECTICUT 06854
- ------------------------------------------------------------
MANAGERS INCOME EQUITY FUND
MANAGERS CAPITAL APPRECIATION FUND
MANAGERS SPECIAL EQUITY FUND
MANAGERS INTERNATIONAL EQUITY FUND
MANAGERS EMERGING MARKETS EQUITY FUND
MANAGERS BOND FUND
MANAGERS SHORT AND INTERMEDIATE BOND FUND
MANAGERS INTERMEDIATE MORTGAGE FUND
MANAGERS GLOBAL BOND FUND
MANAGERS MONEY MARKET FUND
February 12, 1999
Dear Shareholder of The Managers Funds:
Enclosed you will find proxy materials with important
proposals regarding your Funds. The Managers Funds, L.P.,
the investment manager of the above Funds and the
administrator of Managers Money Market Fund and its
partners have entered into an agreement with Affiliated
Managers Group, Inc. ("AMG"). The bottom line is that
The Managers Funds will be virtually wholly owned by AMG.
The details are explained in the attached proxy.
Consummation of the Transaction will terminate the
Funds' investment management arrangements with The Managers
Funds, L.P. To continue the current arrangements, it is
necessary for the shareholders of each Fund other than
Managers Money Market Fund to approve a new Fund Management
Agreement.
<PAGE>
It is also necessary for the shareholders of Managers
Capital Appreciation Fund to approve a new Sub-Advisory
Agreement with Essex Investment Management Company, LLC ("Essex").
In addition, you are also being asked to vote on
approving the expansion of the size of the Board of Trustees
and to vote on the election of various individuals to the
Board of Trustees of The Managers Funds.
We believe this Transaction is in the best interest of
our shareholders for the following reasons: First, it
establishes a formalized succession plan for the Funds'
manager, in order to retain capable personnel to serve the
Funds. Second, it increases the base of resources on which
the Manager can draw in providing services to the Funds.
Third, it adds a vibrant, potential new dimension to the
Manager's business, and thus to the Funds. And fourth, it
positions the Funds well to better serve you, our
shareholders, in the future.
At a meeting held on January 13, 1999, the Trustees of
your Funds considered and approved each of the proposals
included herein. The Trustees have recommended that the
shareholders of each Fund vote FOR each of the Proposals
listed in the enclosed Proxy Statement. Shareholders of
Managers Money Market Fund may vote only on the expansion of
the Board and election of Trustees. Furthermore, only the
shareholders of Managers Capital Appreciation Fund can vote
on the new Sub-Advisory Agreement with Essex Capital
Management Company, LLC.
Since shareholders of all ten Funds in The Managers
Funds are permitted to vote on one or more of the proposals
in the attached Proxy Statement, we have prepared one Proxy
Statement to reduce costs. If you own shares in more than
one Fund, you will receive one statement and proxy card for
each of the Funds that you own. Please sign and return your
proxy card(s).
Your vote is important. Please take a moment now to
sign and return your proxy card(s) in the enclosed, postage-
paid return envelope. You may also vote your proxy by
phone, by fax or over the Internet. If we do not receive
your executed proxy card(s) after a reasonable amount of
time, you may receive a telephone call from a proxy
solicitor reminding you to vote. If you have questions
about the Transaction, you may call us at 1-800-835-3879.
Thank you for your cooperation and continued support.
Sincerely,
Robert P. Watson Peter M. Lebovitz
President Vice President
<PAGE>
[THE MANAGERS FUNDS LOGO]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
FEBRUARY 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- ----
<S> <C>
1 Questions & Answers Summary
7 Introduction
9 Proposal One: To Consider a New Fund
Management Agreement between The
Managers Funds, on behalf of each
series, and The Managers Funds, LLC
15 Proposal Two: To Approve a new Sub-
Advisory Agreement between The Managers
Funds, LLC and Essex Investment
Management Co., LLC with respect to
Managers Capital Appreciation Fund
17 Proposal Three: To Amend the Decla
ration of Trust to expand the size of
the Board of Trustees
18 Proposal Four: To elect the Trustees
22 Additional Information
23 Other Matters to Come Before the Meeting
24 Exhibit A: Fund Management Agreement
33 Exhibit B: Sub-Advisory Agreement
40 Exhibit C: Shares of Beneficial Ownership
</TABLE>
<PAGE>
IMPORTANT INFORMATION FOR SHAREHOLDERS OF
THE MANAGERS FUNDS
Although we encourage you to read the full text of the
enclosed Proxy Statement, here is a brief overview of some
matters affecting your Fund that will be the subject of a
shareholder vote.
QUESTIONS AND ANSWERS
Q. WHEN WILL THE SPECIAL MEETING BE HELD?
A. The meeting will be held on March 31, 1999, at 10:30
a.m. Eastern Standard Time at the offices of The
Managers Funds, L.P., 40 Richards Avenue, Norwalk,
Connecticut 06854. This meeting will only cover those
issues listed in this Proxy Statement, as well as any
other matters properly brought before the meeting. The
record date for determining which shareholders are
eligible to vote on those issues has been set at the
close of business on February 2, 1999. Only those
shareholders that owned shares at that time are
entitled to vote at the Special Meeting.
Q. WHAT ARE THE ISSUES CONTAINED IN THIS PROXY?
A. Your Trustees are recommending that shareholders
consider the following Proposals:
<TABLE>
<CAPTION>
PROPOSAL FUNDS AFFECTED
- --------- -------------
<S> <C>
1. To consider a new Fund Management Agreement between ALL FUNDS EXCEPT
The Managers Funds, on behalf of each investment MANAGERS MONEY
portfolio (each a "Fund"), and The Managers Funds, LLC MARKET FUND
to take effect upon the closing of the acquisition of
a 95% interest in the profits and a 100% interest in
the capital of The Managers Funds, L.P. by Affiliated
Managers Group, Inc.;
2. To consider a new Sub-Advisory Agreement between The MANAGERS CAPITAL
Managers Funds, LLC and Essex Investment Management APPRECIATION FUND
Company, LLC with respect to Managers Capital ONLY
Appreciation Fund to take effect upon the closing of
the acquisition of a 95% interest in the profits and a
100% interest in the capital of The Managers Funds, L.P.
by Affiliated Managers Group, Inc.;
3. To Amend the Declaration of Trust to expand the size ALL FUNDS
of the Board of Trustees;
4. To elect Trustees; ALL FUNDS
5. To transact any other business properly presented at ALL FUNDS
the meeting
</TABLE>
Q. WHAT IS HAPPENING IN THE TRANSACTION?
A. The Managers Funds, L.P. (the investment manager to the
Funds, not the Funds themselves) and its partners have
entered into an agreement with
1
<PAGE>
Affiliated Managers
Group, Inc. ("AMG"). At the closing of the transaction
contemplated by that agreement, The Managers Funds,
L.P. will convert into a Delaware limited liability
company and AMG will acquire a 95% interest in its
profits and a 100% interest in its capital. This
Transaction is not intended to affect your Funds or
your account. Importantly,
* the shares you own in the Funds and the investment
advisory fees charged to the Funds will not change
* the investment objectives of each Fund will remain the
same
* the sub-advisers to each Fund will continue to manage
that Fund's investments
Q. WHY AM I BEING ASKED TO APPROVE A NEW MANAGEMENT
AGREEMENT?
A. Although this Transaction is not intended to have any
effect on the operations of your Funds, the Investment
Company Act of 1940, as amended, which regulates
investment companies such as your Fund, requires that
Fund shareholders approve a new Fund Management
Agreement when, as here, there is a change of control
of a Fund's investment manager.
Q. HOW WILL THIS TRANSACTION AFFECT ME AS A FUND
SHAREHOLDER?
A. We do not expect that this Transaction will affect you
as a Fund shareholder. Your Fund and your Fund's
investment objectives will not change as a result of
this Transaction. You will still own the same shares
in the same Fund. You will continue to be able to buy
and sell shares without any sales charge or 12b-1 fees.
The new Fund Management Agreement is substantially
identical to the current Fund Management Agreement,
except for the effective date and the identity of the
manager.
Q. WILL THE INVESTMENT MANAGEMENT FEES BE THE SAME?
A. Yes, the rates and methods used in calculating the fees
for investment management services paid by your Fund to
the LLC under the new Fund Management Agreement will
remain the same as the rates and methods used in
calculating the fees charged by The Managers Funds,
L.P. under the current Fund Management Agreement.
2
<PAGE>
Q. WHY ARE MANAGERS CAPITAL APPRECIATION FUND SHAREHOLDERS
BEING ASKED TO APPROVE A NEW SUB-ADVISORY AGREEMENT?
A. The Managers Funds has received an Exemptive Order from
the Securities and Exchange Commission, which generally
permits the Trustees to approve new Sub-Advisory
Agreements with sub-advisers to the Funds without
seeking shareholder approval when it otherwise would be
required. That order, however, requires shareholder
approval for sub-advisers who have certain affiliations
to The Managers Funds, L.P. or the LLC. Because Essex
is a majority-owned subsidiary of AMG, upon completion
of the Transaction it also becomes affiliated with the
LLC for purposes of that order. Thus, the shareholders
of Managers Capital Appreciation Fund must approve a
new Sub-Advisory Agreement between the LLC and Essex if
Essex is to continue to serve as sub-adviser for that
Fund.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I
VOTE?
A. After careful consideration, the Board of Trustees of
the Funds recommends that you vote FOR all of the
Proposals on the enclosed proxy card(s).
Q. HOW DO I CONTACT YOU FOR MORE INFORMATION OR TO PLACE
MY VOTE?
A. If you have any questions, please call The Managers
Funds at (800) 835-3879 for additional information.
Use the enclosed proxy card(s) to record your vote for
each Proposal, then return the card(s) in the postage-
paid envelope. You can also vote your proxy card(s) by
faxing it to us at (203) 857-5316 or by calling (800)
690-6903 and record your vote by telephone or on the
internet at http://www.proxyvote.com.
3
<PAGE>
PLEASE VOTE
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
[The Managers Funds Logo]
40 RICHARDS AVENUE
NORWALK, CONNECTICUT 06854
- ------------------------------------------------------------
MANAGERS INCOME EQUITY FUND
MANAGERS CAPITAL APPRECIATION FUND
MANAGERS SPECIAL EQUITY FUND
MANAGERS INTERNATIONAL EQUITY FUND
MANAGERS EMERGING MARKETS EQUITY FUND
MANAGERS BOND FUND
MANAGERS SHORT AND INTERMEDIATE BOND FUND
MANAGERS INTERMEDIATE MORTGAGE FUND
MANAGERS GLOBAL BOND FUND
MANAGERS MONEY MARKET FUND
February 12, 1999
____________________________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
____________________________________________________
TO BE HELD ON MARCH 31, 1999
TO THE SHAREHOLDERS OF THE MANAGERS FUNDS:
On March 31, 1999, The Managers Funds will hold a
Special Meeting of the Funds' shareholders at the offices of
The Managers Funds, L.P. (the "Manager"), 40 Richards
Avenue, Norwalk, Connecticut 06854. The meeting will begin
at 10:30 a.m.
The meeting will be held for the following purposes:
1 .To consider and act upon the approval of a new Fund
Management Agreement between The Managers Funds, on behalf
of each of its investment portfolios (each a "Fund") other
than Managers Money Market Fund, and The Managers Funds, LLC
to take effect upon the closing of the acquisition of a 95%
interest in its profits and a 100% interest in its capital
by AMG;
4
<PAGE>
2. To consider and act upon the approval of a new Sub-
Advisory Agreement between The Managers Funds, LLC and Essex
Investment Management Company, LLC with respect to Managers
Capital Appreciation Fund to take effect upon the closing of
the acquisition of a 95% interest in its profits and a 100%
interest in its capital by AMG;
3. To consider and act upon the approval of an
amendment to the Declaration of
Trust to expand the size of the Board of
Trustees;
4. To consider and act upon the election of Trustees
of The Managers Funds, each to serve until the next
shareholder meeting of all shareholders of all Funds
or until their successors are elected and qualified;
and
5. To transact any other business properly presented
at the meeting.
Only those shareholders that owned shares at the close
of business on February 2, 1999 can vote at this meeting or
any adjournments that may take place.
By Order of the Board of Trustees,
/s/Donald S. Rumery
Donald S. Rumery
Secretary
Norwalk, Connecticut
February 12, 1999
- ------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE
MEETING IN PERSON OR BY PROXY. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD(S) IN THE POSTAGE-PAID ENVELOPE OR
BY FAX. YOU CAN ALSO VOTE YOUR PROXY BY TELEPHONE OR ON THE
INTERNET.
- ------------------------------------------------------------
5
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for signing proxy cards may
be of assistance to you and may help to avoid the time and
expense involved in validating your vote if you fail to sign
your proxy card properly.
1. Individual Accounts: Sign your name exactly as it
appears on the proxy card.
2. Joint Accounts: Either party may sign, but the name of
the party signing should conform exactly to a name shown on
the proxy card.
3. All Other Accounts: The capacity of the individual
signing the proxy card should be indicated unless it is
reflected in the name of the proxy card. For example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
- ------------ ---------------
<S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp. (1) ABC Corp.
John Doe, Treasurer
(2) ABC Corp. (2) John Doe, Treasurer
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan (3) John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust (1) Jane Doe, Trustee
(2) Jane Doe, Trustee (2) Jane Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John Smith, Cust. (1) John Smith
f/b/o John Smith, Jr. UGMA
(2) John Smith Jr. (2) John Smith Jr., Executor
6
<PAGE>
THE MANAGERS FUNDS
MANAGERS INCOME EQUITY FUND
MANAGERS CAPITAL APPRECIATION FUND
MANAGERS SPECIAL EQUITY FUND
MANAGERS INTERNATIONAL EQUITY FUND
MANAGERS EMERGING MARKETS EQUITY FUND
MANAGERS BOND FUND
MANAGERS SHORT AND INTERMEDIATE BOND FUND
MANAGERS INTERMEDIATE MORTGAGE FUND
MANAGERS GLOBAL BOND FUND
MANAGERS MONEY MARKET FUND
_____________________
PROXY STATEMENT
_____________________
FOR A MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 31, 1999
1-800-835-3879
INTRODUCTION
This Proxy Statement is furnished in connection with
the solicitation of proxies by the Board of Trustees (the
"Trustees") of The Managers Funds (the "Trust"), for use at
a Special Meeting and any adjournment (the "Meeting") of the
shareholders of Managers Income Equity Fund, Managers
Capital Appreciation Fund, Managers Special Equity Fund,
Managers International Equity Fund, Managers Emerging
Markets Equity Fund, Managers Bond Fund, Managers Short and
Intermediate Bond Fund, Managers Intermediate Mortgage Fund,
Managers Global Bond Fund and Managers Money Market Fund
(each a "Fund" and collectively the "Funds") to be held at
the offices of The Managers Funds, L.P. (the "Manager"), 40
Richards Avenue, Norwalk Connecticut, on March 31, 1999 at
10:30 a.m., Eastern Standard Time.
The Trust is composed of ten Funds, each a separate
series of the Trust. The Trust is a registered management
investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), and is organized as a
Massachusetts business trust. The Manager serves as the
Distributor of each of
7
<PAGE>
the Funds and the Investment Manager of each Fund other
than Managers Money Market Fund, for which it serves as
administrator.
The principal executive offices of each of the Funds
are located at 40 Richards Avenue, Norwalk, Connecticut
06854. The enclosed proxy and this Proxy Statement are
first being sent to each of the Fund's shareholders on or
about February 12, 1999.
All properly executed proxies received prior to the
Meeting will be voted at the Meeting in accordance with the
marked instructions. Unless instructions are marked to the
contrary, shares represented by the proxies will be voted
FOR all the proposals. Any shareholder may revoke his or
her proxy card(s) at any time prior to the Meeting by
sending written notice of revocation to the Secretary of the
Trust or by attending the Meeting and voting in person.
Holders of record of the shares of each Fund at the
close of business on February 2, 1999 (the "Record Date"),
as to any matter on which they are entitled to vote, will be
entitled to one vote per share and a fractional vote on each
fractional share on all business presented at the Special
Meeting.
The following table sets forth the number of shares of
beneficial interest outstanding of each Fund as of the
Record Date:
</TABLE>
<TABLE>
<CAPTION>
FUND SHARES OUTSTANDING
- ---- -----------------
<S> <C>
Income Equity Fund 2,082,452
Capital Appreciation Fund 2,710,210
Special Equity Fund 15,654,282
International Equity Fund 11,512,341
Emerging Markets Equity Fund 555,491
Bond Fund 1,589,350
Short and Intermediate Bond Fund 942,423
Intermediate Mortgage Fund 730,518
Global Bond Fund 987,929
Money Market Fund 48,766
</TABLE>
Under the By-Laws of the Trust, shares held by two or
more persons (whether as joint tenants, co-fiduciaries or
otherwise) will be voted as follows: (1) if only one person
votes, his or her vote will bind all others; (2) if more
than one person votes and such persons disagree as to any
vote to be cast, the proxy will not be voted as to that item
of business.
In the event that the necessary quorum to transact
business or the vote required to approve any Proposal is not
obtained at the Meeting with respect to one or more Funds,
the individuals named as proxies may propose one or more
adjournments of the Meeting in accordance with the
applicable law to permit further solicitation of proxies.
No adjournment will be for a period ending later than
December 31, 1999.
8
<PAGE>
Approval of Proposals No. 1 and 2 with respect to each
Fund requires the affirmative vote of the lesser of (i) 67%
of the voting securities of that Fund present in person at
the Meeting or represented by proxy, if holders of more than
50% of the shares of such Fund outstanding on the record
date are present, in person or by proxy, or (ii) more than
50% of the outstanding shares of the Fund on the record
date. Approval of Proposal 3 requires the affirmative vote
of a majority of the outstanding shares of the Trust
entitled to vote at the Meeting, present in person or by
proxy, with shareholders of all Funds voting together.
Approval of Proposal 4 requires the affirmative vote of a
plurality of the shares of the Trust outstanding and
entitled to vote at the Meeting, present in person or by
proxy, with shareholders of all Funds voting together.
Abstentions and broker non-votes (i.e., proxies sent in
by brokers and other nominees which cannot be voted on the
proposal(s) because the beneficial owners have not given
instructions) will be considered to be shares present at the
Meeting, but not voting in favor of Proposal 1, 2 and 3, and
will therefore have the effect of a "no" vote. For Proposal
4, abstentions and broker non-votes will not have any effect
on the outcome of the vote.
Set forth is a summary of the proposals on which the
shareholders of the Funds will vote.
SUMMARY OF PROPOSALS REQUIRING A SHAREHOLDER VOTE
PROPOSAL 1: Consider the approval of New Fund Management Agreement
------------------------------------------------------
All Funds except Managers Money Market Fund
PROPOSAL 2: Consider the approval of new Sub-Advisory Agreement
---------------------------------------------------
Managers Capital Appreciation Fund only
PROPOSAL 3: Amendment to Declaration of Trust to expand the
Board of Trustees
------------------------------------------------
All Funds
PROPOSAL 4: Election of the Board of Trustees
---------------------------------
All Funds
PROPOSAL NO. 1: TO CONSIDER A NEW FUND MANAGEMENT AGREEMENT
BETWEEN THE MANAGERS FUNDS, ON BEHALF OF EACH INVESTMENT
PORTFOLIO (EACH A "FUND") AND THE MANAGERS FUNDS, LLC
It is proposed that the shareholders of each of the
Funds (except Managers Money Market Fund) consider the
approval of a new Fund Management
9
<PAGE>
Agreement between the Trust, on behalf of such Fund and
the LLC (the "New Management Agreement").
Currently, The Managers Funds, L.P. (the "Manager")
acts as the investment manager to each Fund (except Managers
Money Market Fund) pursuant to a Fund Management Agreement
entered into between the Trust and the Manager (the "Current
Management Agreement").
If this proposal is approved, the New Management
Agreement will become effective upon consummation of the
Transaction (described below). The terms of the New
Management Agreement are substantially identical to the
terms of the Current Management Agreement, except for the
effective date and the identity of the manager. A COPY OF
THE NEW MANAGEMENT AGREEMENT IS ATTACHED AS EXHIBIT A
(MARKED TO SHOW CHANGES FROM THE CURRENT MANAGEMENT
AGREEMENT). For each Fund, the contractual rate chargeable
for investment management services under the New Management
Agreement will remain the same under as under the Current
Management Agreement.
SUMMARY OF THE TRANSACTION
On January 29, 1999 the Manager and its partners
entered into an agreement (the "Purchase Agreement") with
Affiliated Managers Group, Inc. ("AMG"). Under the terms of
the Purchase Agreement, at the closing the Manager will
convert into a Delaware limited liability company (the
"LLC"); and AMG will acquire a 95% interest in the profits
and a 100% interest in the capital of the Manager; and the
remaining 5% interest in the profits of the Manager will be
retained by certain key employees of the Manager (the
"Transaction"). AMG will become the managing member of the
LLC. This Transaction is expected to close on or about
April 2, 1999 and is subject to various conditions,
including approval by the shareholders of each Fund (except
Managers Money Market Fund) of the New Management Agreement
described above.
As part of the Transaction, a majority of the Manager's
key employees will continue to be responsible for the daily
management and operational affairs of the LLC.
AMG is a Boston-based holding company which makes
equity investments in investment management firms. The
existing management personnel of the investment management
firms normally retain a significant interest in the profits
of the business. As of the date of this Proxy Statement,
AMG served as general partner or manager member of twelve
registered investment advisers (and had a minority interest
in another), which in the aggregate managed approximately
$62 billion in assets as of December 31, 1998. Each of
these registered investment advisers is independently
managed by its respective principals, and AMG generally does
not participate in the day-to-day management or the
10
<PAGE>
investment process of these firms. AMG will serve as
managing member pursuant to the LLC's organizational
documents, but it does not intend to participate in the
investment process with respect to the Funds.
AMG is a Delaware corporation which has executive
offices at Two International
Place, Boston, MA 02110.
As required by the Investment Company Act of 1940, as
amended (the "1940 Act"), the Current Management Agreement
terminates automatically upon its "assignment," which term
includes any transfer of a controlling interest in the
Manager. The 1940 Act also prohibits any person from
serving as an investment adviser to a registered investment
company except pursuant to a written contract that has been
approved by shareholders. Therefore, in order for the LLC
to provide investment management services to each Fund
(except Managers Money Market Fund) after the closing of the
Transaction, the shareholders of such Funds must approve the
New Management Agreement.
The Transaction contemplates that the LLC, AMG and
other persons will comply with the requirements of Section
15(f) of the 1940 Act after the closing of the Transaction.
Section 15(f) provides, in pertinent part, that the partners
of the Manager may receive any amount or benefit in
connection with a sale of securities of, or a sale of any
other interest in, the Manager which results in an
assignment of the Current Management Agreement if (1) for a
period of three years after such event, at least 75% of the
members of the Board of Trustees of the Trust are not
"interested persons" (as defined in the 1940 Act) of the new
or old investment adviser (that is, the LLC and the Manager,
respectively); and (2) for a two-year period after such
event there is no "unfair burden" imposed on the Trust as a
result of the Transaction. In the Purchase Agreement, AMG,
the LLC, the Manager and its partners have agreed to use
commercially reasonable efforts to prevent the Trust from
having less than 75% of its trustees as interested persons
of the Manager or the LLC and they have agreed not to take
or cause any action, practice or arrangement that would
impose an unfair burden on the Trust or any of the Funds.
The shareholders of a Fund (except Managers Money
Market Fund) must approve the New Management Agreement if it
is to take effect with respect to such Fund. Disapproval by
one Fund's shareholders will not affect approval by another
Fund's shareholders. . The New Management Agreement, if
approved, will remain in effect for an initial two-year term
and will continue in effect if approved annually by (a) the
Board of Trustees or (b) the Fund's shareholders, provided
that in either event, the continuance is also approved by a
majority of the Trustees who are not "interested persons" of
the Trust, as that term is defined in the 1940 Act (the "Non-
Interested Trustees") by vote cast in person at a meeting
called for the purpose of voting on such approval. "Non-
Interested" Trustees are generally those that do not have
11
<PAGE>
any close business or family ties to the Funds, the Manager,
the Funds' distributor, or to any registered broker-dealer,
whether or not affiliated with the Funds.
THE INVESTMENT ADVISER
The Managers Funds, L.P. currently serves as investment
manager for each Fund other than Managers Money Market Fund.
(The Money Market Fund invests through another fund managed
by an unrelated party in a "master/feeder" arrangement.
This allows that Fund to realize certain cost reductions
through economies of scale.) The Manager is located at 40
Richards Avenue, Norwalk, Connecticut 06854. Under the
Current Management Agreement, the Manager reviews and
monitors the performance of the Fund's sub-advisers on an on-
going basis and recommends changes in the roster of the
Fund's sub-advisers to the Trustees as appropriate. The
Manager is also responsible for conducting all business
operations of the Trust, except those operations contracted
to the custodian or transfer agent. The Manager is owned
substantially and controlled by its general partner, EAIMC
Holdings Corporation, 40 Richards Avenue, Norwalk,
Connecticut 06854. Robert P. Watson is the sole shareholder
of the general partner. Mr. Watson intends to retire from
the day-to-day management of the Funds and the Manager upon
completion of the Transaction, although, if elected, he
intends to remain as a Trustee of the Trust.
Under a separate agreement, the Manager also acts as a
distributor of Fund shares and a shareholder servicing agent
for each Fund, and as administrator for Managers Money
Market Fund. After the closing of the Transaction, the LLC
will act as the distributor and shareholder servicing agent
for each Fund and as administrator for Managers Money Market
Fund.
THE NEW MANAGEMENT AGREEMENT
As stated above, the Current Management Agreement and
the New Management Agreement are substantially identical.
Under each of the Current Management Agreement and the New
Management Agreement, the Manager reviews and monitors the
performance of the Fund's sub-advisers on an on-going basis
and recommends changes in the roster of the Fund's sub-
advisers to the Trustees as appropriate. The Manager is
also responsible for conducting all business operations of
the Trust, except those operations contracted to the
custodian or transfer agent.
The Current Management Agreement, dated August 17,
1990, was last continued by the Trustees on June 8, 1998.
The last shareholder meeting of the Trust at which the
Current Management Agreement was approved took place on
August 17, 1990. The Current Management Agreement and New
Management Agreement provide that the Manager and the LLC,
respectively, will receive a fee for its services equal to a
12
<PAGE>
percentage per year of each Fund's average daily net asset
value.
The following table describes such fees paid to the
Manager during each Fund's fiscal year ended December 31,
1998, as well as the net fees earned by the Manager under
the Current Management Agreement and any fee waivers, if
applicable.
<TABLE>
<CAPTION>
FUND FEE RATE AMOUNT PAID AFTER WAIVER
- ---- --------- ----------- ------------
<S> <C> <C> <C>
Income Equity Fund..... 0.75% $ 513,862 N/A
Capital Appreciation Fund..0.80% 590,610 N/A
Special Equity Fund.... 0.90% 7,575,757 N/A
International Equity Fund.. 0.90% 4,490,305 N/A
Emerging Markets Equity Fund1.15% 40,489 $18,312
Bond Fund.................. 0.625% 281,699 N/A
Short and Intermediate
Bond Fund.............. 0.50% 84,177 N/A
Intermediate Mortgage Fund..0.45% 72,020 56,907
Global Bond Fund........... 0.70% 132,588 N/A
</TABLE>
The Manager did not earn any management fees for
Managers Money Market Fund at fiscal year end November 30,
1998, as that Fund invests all of its assets through a
master fund and pays management fees to that fund's manager.
The Current Management Agreement and the New Management
Agreement each provides, among other things, that the
Manager will bear all expenses of its employees and overhead
incurred in connection with its duties, and that the Trust
will pay (or reimburse the Manager, if it has paid) all
direct and indirect costs, charges, and expenses of or
related to each Fund's business and operations, including
the compensation of the Non-Interested Trustees.
Pursuant to both the Current Management Agreement and
New Management Agreement, although the Manager, and the LLC,
respectively, intend to devote such time and effort to the
business of a Fund as is reasonably necessary to perform its
duties to such Fund, the services of the Manager, and the
LLC, respectively, are not exclusive and similar services
may be provided to other investment companies and other
clients that may engage in other activities.
Each of the Current Management Agreement and the New
Management Agreement further provides that the Manager or
the LLC, as the case may be, shall not be subject to
liability to the Trust, any Fund or any shareholder for any
act or omission in the course of, or connected with
rendering services thereunder or for any losses that may be
sustained in the purchase, holding or sale of any security,
in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of the Manager,
and the LLC respectively, of its obligations and duties
under such Agreement.
Each management agreement may be terminated by any
party to it without penalty upon sixty (60) days' written
notice. The Trust also may terminate either agreement with
respect to any Fund by the vote of the holders of a majority
13
<PAGE>
of the outstanding voting securities of such Fund, or by a
vote of the Trustees. As stated above, each agreement
automatically terminates in the event of its assignment.
INFORMATION ABOUT THE LLC
Affiliated Managers Group, Inc. is the general partner of
the LLC and Peter M. Lebovitz is its Principal Executive
Officer. Mr. Lebovitz's address is the address of the LLC,
40 Richards Avenue, Norwalk, Connecticut 06854.
EVALUATION BY THE BOARD
On January 13, 1999, the Trustees, including a majority
of the Non-Interested Trustees of the Trust, met and
discussed the Transaction and its possible effect on the
Manager, the Trust, each Fund and each Fund's shareholders
and evaluated the New Management Agreement. Robert P.
Watson, one of the Trustees, is also a substantial owner of
the Manager, and as such has an economic interest in the
Transaction. During the course of their deliberations, the
Trustees considered a variety of factors, based both on
information presented at the meeting and on information
regarding AMG and its plans with respect to the LLC that had
been furnished to the Trustees by senior officers of AMG at
an earlier meeting with the Board. The factors considered
by the Trustees included the nature, quality and extent of
the services furnished by the Manager to the Funds, and
expected to be furnished by the LLC, the necessity of the
Manager to provide a succession plan in order to retain
capable personnel to serve the Funds, the advantages and
possible disadvantages to the Funds of having the LLC serve
as the investment manager to the Funds when AMG, which would
control the LLC, also owns or controls other investment
firms that manages registered investment companies as well
as other accounts which compete with the Funds, the future
expenses of each Fund, and various other factors. The
Trustees considered all of these above factors with respect
to each Fund's shareholders.
The Trustees gave careful consideration to the likely
impact of the Transaction, including the related retirement
of Mr. Watson, on the Manager's organization. In this
regard, the Trustees considered, among other things, the
prior service of Peter M. Lebovitz, Donald S. Rumery and
Thomas G. Hoffman as senior executives of the Manager and
the fact that they will become officers or employees of the
LLC and continue to serve the Funds, the profit
participation and incentives for certain key employees, and
AMG's strategy for the development of its investment
management business through the LLC. Based on the
foregoing, the Trustees, including the Non-Interested
Trustees, of the Trust concluded that the New Management
Agreement would be in the best interest of each Fund and its
shareholders.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS
OF EACH FUND VOTE IN FAVOR OF PROPOSAL 1.
14
<PAGE>
PROPOSAL NO. 2: TO CONSIDER THE SUB-ADVISORY AGREEMENT
BETWEEN THE LLC AND ESSEX INVESTMENT MANAGEMENT COMPANY, LLC
WITH RESPECT TO MANAGERS CAPITAL APPRECIATION FUND
[MANAGERS CAPITAL APPRECIATION FUND SHAREHOLDERS ONLY]
It is proposed that the shareholders of Managers
Capital Appreciation Fund consider the approval of a new Sub-
Advisory Agreement (the "New Sub-Advisory Agreement")
between the LLC and Essex Investment Management Company, LLC
("Essex") as sub-adviser to Managers Capital Appreciation
Fund. Essex is located at 125 High Street, Boston,
Massachusetts 02110.
Essex acts as one of the current sub-advisers to
Managers Capital Appreciation Fund pursuant to a Sub-
Advisory Agreement entered into between the Manager and
Essex, dated March 11, 1997 and subsequently amended June 8,
1998 (the "Current Sub-Advisory Agreement").
Each Fund's existing sub-advisory agreements, including
the Current Sub-Advisory Agreement, includes a provision
whereby the agreement terminates upon its assignment.
Because the Transaction would result in a change of control
of the Manager, and because a change of control of the
Manager, a party to each sub-advisory agreement, could
constitute an assignment of that agreement, the LLC is
entering into a new sub-advisory agreement with each of the
current sub-advisers.
Under the 1940 Act, a shareholder vote is generally
required to approve a new sub-advisory agreement involving a
mutual fund. However, the Manager and the Trust have
received an Exemptive Order from the Securities and Exchange
Commission, which permits the Trustees to approve sub-
advisory agreements between the Manager or the LLC, as the
case may be, and sub-advisers without having to seek
shareholder approval when it would otherwise be required.
That order, however, requires shareholder approval for sub-
advisers who have certain affiliations to the Manager or the
LLC. Because Essex is a majority-owned subsidiary of AMG,
upon consummation of the Transaction it will also be
affiliated with the LLC for purposes of that order. Thus,
shareholders of Managers Capital Appreciation Fund must
approve the New Sub-Advisory Agreement between the LLC and
Essex if Essex is to continue to serve as a sub-adviser for
that Fund. Shareholders of other Funds do not have to
approve new sub-advisory agreements, although the sub-
advisers will have new sub-advisory agreements with the LLC.
The relationships with the sub-advisers will not change for
any Fund, including Managers Capital Appreciation Fund.
NEW SUB-ADVISORY AGREEMENT
It is proposed that the terms of the New Sub-Advisory
Agreement with Essex will be identical to the terms of the
Current Sub-Advisory Agreement with Essex, except for the
15
<PAGE>
identity of the manager and the effective date. Thus, Essex
would provide the same services with respect to investment
management of a portion of the assets of Managers Capital
Appreciation Fund, at the same fee structure. Under the
Current Sub-Advisory Agreement with Essex, and as proposed
under the New Sub-Advisory Agreement with Essex, Essex would
receive from the Manager or the LLC, as the case may be,
0.40% per year of the average daily net asset value of the
portion of the Managers Capital Appreciation Fund managed by
Essex. During the fiscal year ended December 31, 1998, the
Manager paid Essex $35,560 in fees for its services under
the Current Sub-Advisory Agreement. The Current Sub-
Advisory Agreement with Essex was last approved by the
Trustees on June 8, 1998.
INFORMATION ON ESSEX
The predecessor of Essex Investment Management Co., LLC
was formed in 1976. Essex is majority-owned by AMG, with
AMG being the managing member.
AMG is a publicly-traded Delaware corporation which
acquires interests in investment management firms.
The name and principal occupation of the principal
executive officers of Essex are set forth below. The
address of each is that of Essex.
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Joseph C. McNay Chief Investment Officer, Chairman and
Portfolio Manager
Stephen D. Cutler President and Portfolio Manager
Stephen R. Clark Executive Vice President, Treasurer and
Portfolio Manager
Colin McNay Vice President and Portfolio Manager
R. Daniel Beckham Vice President, Portfolio Manager and
Director of Marketing
Christopher P. McConnell Vice President, Chief Financial Officer
</TABLE>
Essex does not act as an investment adviser to any other
investment company which has similar objectives to Managers
Capital Appreciation Fund.
EVALUATION BY THE BOARD
On January 13, 1999, the New Sub-Advisory Agreement was
approved by the Trustees, including the Non-Interested
Trustees of the Trust, with respect to Managers Capital
Appreciation Fund and is being proposed for approval by
16
<PAGE>
shareholders of Managers Capital Appreciation Fund. In
approving the New Sub-Advisory Agreement, the Trustees
considered among other things, (i) the nature and quality of
the services that will continue to be provided by Essex to
the Fund, (ii) that the same investment personnel will
continue to manage Managers Capital Appreciation Fund, and
(iii) that the rate at which fees will be paid to Essex
under the New Sub-Advisory Agreement will not change from
those paid under the Current Sub-Advisory Agreement.
The Trustees also considered that the terms of the New
Sub-Advisory Agreement will be identical to the terms of the
Current Sub-Advisory Agreement with Essex, except for the
effective date and the identity of the parties. A COPY OF
THE NEW SUB-ADVISORY AGREEMENT IS ATTACHED AS EXHIBIT B
(MARKED TO SHOW CHANGES FROM THE CURRENT SUB-ADVISORY
AGREEMENT).
Based on the foregoing, the Trustees, including a
majority of the Non-Interested Trustees of the Trust,
concluded that the new Sub-Advisory Agreement between the
LLC and Essex is in the best interest of Managers Capital
Appreciation Fund and its shareholders and it does not
involve a conflict of interest from which the LLC or Essex
derives an inappropriate advantage.
THE TRUSTEES OF THE TRUST RECOMMEND THAT YOU VOTE IN FAVOR
OF PROPOSAL 2.
PROPOSAL NO. 3: TO AMEND THE DECLARATION
OF TRUST TO EXPAND THE SIZE OF THE BOARD OF TRUSTEES
It is proposed that the shareholders of the Trust
consider the approval of an Amendment to the Trust's
Declaration of Trust to expand the size of the Board of
Trustees.
Currently, Section 2.11 of the Declaration of Trust
provides that the number of Trustees shall be no less than
one and no more than seven.
In order to accommodate the additional nominees
reflected in Proposal No. 3 and in order to preserve
flexibility for the future, the Trustees have approved,
subject to shareholder approval, the following revised
Section 2.11 of the Declaration of Trust. To highlight the
proposed changes from the Declaration of Trust as currently
in effect, the words that would be deleted have been
indicated by score through, while the new language is
underlined:
Section 2.11. Number of Trustees. The number
of Trustees shall initially be four (4), and
thereafter shall be such number as shall be
fixed from time to time by a written
instrument signed by a majority of the
Trustees, provided, however, that the number
of Trustees shall in no event be less than one
(1) nor more than ----seven (7)-----ten (10).
17
<PAGE>
While there is some incremental cost to the Trust in
having more individuals on the Board of Trustees, in that
the Trust pays the Non-Interested Trustees for their
service, the current Trustees and the Manager believe that
the incremental benefit of the additional expertise that the
new nominees will bring to the Trust outweighs the
additional cost.
THE TRUSTEES OF THE TRUST RECOMMEND THAT YOU VOTE IN FAVOR
OF PROPOSAL 3.
PROPOSAL NO. 4: TO ELECT TRUSTEES
It is proposed that the shareholders of the Funds
consider the election of the individuals listed below (each
a "Nominee" and collectively the "Nominees") as Trustees of
the Trust. There are nine (9) nominees for election to the
Board of Trustees of the Trust. The Trustees elected will
serve until either the next meeting of all shareholders of
the Trust or until a successor is elected and qualified.
The individuals named as proxies will vote the enclosed
proxy for the election of all Nominees unless you direct
them to withhold your votes. The Trustees recommend that
you vote FOR each of the Nominees.
Below are the names and certain biographical
information of the Nominees as well as the current officers
of the Trust, and with respect to current Trustees, the
years that they became Trustees. The Trustees and nominees
who are, or would become, "interested persons" of the Trust
(as defined in the 1940 Act) are indicated in the chart
below by an asterisk(*). Each of the nominees who, if
elected, would become a Non-Interested Trustee has been
nominated by the current Non-Interested Trustees.
Four (4) of the Nominees for Trustee currently are
members of the Board of Trustees: Madeline H. McWhinney,
Thomas R. Schneeweis, Steven J. Paggioli and Robert P.
Watson. All but Mr. Watson are Non-Interested Trustees.
Each of Madeline H. McWhinney, Thomas R. Schneeweis and
Robert P. Watson was elected by the shareholders of The
Managers Funds. Steven J. Paggioli was appointed by the
Board of Trustees. Those Trustees have nominated Sean M.
Healey, the Executive Vice President of AMG, to fill the
seat on the Board left vacant by the resignation of another
Trustee. In addition, the Trustees have expanded the size of
the Board from five to nine persons (subject to the approval
of Proposal No. 3), and have nominated the remaining
nominees, Jack W. Aber, William E. Chapman, III, Edward J.
Kaier and Eric Rakowski, to fill those positions. If
elected, each of those four would become a Non-Interested
Trustee.
In the event Proposal 3 is not approved, one Trustee
who is an "interested person" and one Non-Interested Trustee
would have to step aside from the Board in order for the
Trust to meet the requirement under Section 15(f) of the
1940 Act that at least 75% of the Board must be composed of
18
<PAGE>
Non-Interested Trustees (see Proposal 1 above) and the
provision under the Trust's Declaration of Trust that the
Trust have no more than seven Trustees (see Proposal 3
above).
<TABLE>
<CAPTION>
OFFICERS AND NOMINEES FOR ELECTION TO THE BOARD OF TRUSTEES
<S> <C>
MADELINE H. Date of Birth: 3/11/22; served as
MCWHINNEY Trustee since 1987. President, Dale,
Elliott & Company (management
consultants) (1977 to present);
Assistant Vice President and Financial
Economist, Federal Reserve Bank of New
York (1943 to 1973); Trustee and
Treasurer, Institute of International
Education (since 1975); Assistant
Director, Operations, Whitney Museum
of American Art (1983 to 1986);
Member, Advisory Committee on
Professional Ethics, New Jersey
Supreme Court (March 1983 to Present).
THOMAS R. SCHNEEWEIS Date of Birth: 5/10/47, served as
Trustee since 1987. Professor of
Finance (1985 to present), Associate
Professor of Finance (1980 to 1985),
Ph. D. Director (Acting) (1985 to
1986), Chairman (Acting), Department
of General Business and Finance (1977
to 1980), University of Massachusetts.
STEVEN J. PAGGIOLI Date of Birth: 4/3/50, served as
Trustee since 1993. Executive Vice
President and Director, Wadsworth
Group (1986 to present); Vice
President, Secretary and Director,
First Fund Distributors, Inc. (1991 to
present); Vice President, Secretary
and Director, Investment Company
Administration Corporation (1990 to
present); Trustee of Professionally
Managed Portfolios (1991 to present).
ROBERT P. WATSON*
Date of Birth: 1/21/34, served as
Trustee since 1987. President and
Trustee of The Managers Funds;
chairman and Chief Executive Officer,
Evaluation Associates Investment
Management Company (predecessor to The
Managers Funds, L.P.) (prior to June
1988 and from August 1989 to August
1990); President, The Managers Funds,
L.P. (since August 1990); Executive
Vice President, Evaluation Associates,
Inc. (June 1988 to August 1989).
SEAN M. HEALEY* Date of Birth: 5/9/61. The Executive
Vice President of AMG (1995 to
present); Vice President, Goldman
Sachs & Co. (1987 to 1995).
JOHN W. ABER Date of Birth: 9/9/37. Professor,
Boston University School of Management
(1972 to present); Consultant, Putnam,
Hayes & Bartlett, Inc. (1993 to
present).
19
<PAGE>
WILLIAM E. CHAPMAN, Date of Birth: 9/23/41. President
III and owner, Longboat Retirement
Planning Solutions (August 1998 to
present); President, Retirement Plan
Group, Zurich Kemper Investments, Inc.
(1990 to 1998).
EDWARD J. KAIER Date of Birth: 9/23/45. Partner,
Hepburn Wilcox Hamilton & Putnam (1977
to present).
ERIC RAKOWSKI Date of Birth: 6/5/58. Visiting
Professor, Harvard Law School (1998 to
present); Professor, University of
California at Berkeley School of Law
(1995 to present); Professor,
University of Nevada at Reno Law
School (1994 to present).
</TABLE>
<TABLE>
<CAPTION>
OFFICERS OF THE TRUST
<S> <C>
PETER M. LEBOVITZ Date of Birth: 1/18/55. Vice
President, The Managers Funds and
Director of Marketing, The Managers
Funds, L.P. (December 1994 to
present); Director of Marketing,
Hyperion Capital Management, Inc.
(June 1993 to June 1994).
DONALD S. RUMERY Date of Birth: 5/29/58. Secretary,
Treasurer, The Managers Funds and
Chief Financial Officer, The Managers
Funds, L.P. (December 1994 to
present); Vice President, Signature
Financial Group (March 1990 to
December 1994).
GIANCARLO (JOHN) E. Date of Birth: 3/31/56. Assistant
ROSATI Treasurer, The Managers Funds and Vice
President, The Managers Funds, L.P.
(July 1992 to present); Assistant Vice
President, The Managers Funds, L.P.
(July 1986 to June 1992).
PETER M. MCCABE Date of Birth: 9/8/72. Assistant
Treasurer, The Managers Funds and
Portfolio Administrator, The Managers
Funds, L.P. (August 1995 to present);
Portfolio Administrator, Oppenheimer
Capital, L.P. (July 1994 to August
1995); college student (September 1990
to June 1994).
LAURA A. DESALVO Date of Birth: 11/10/70. Assistant
Secretary, The Managers Funds and
Legal/Compliance Officer, The Managers
Funds, L.P. (September 1997 to
present); law student (August 1994 to
June 1997); college student (August
1990 to June 1994).
</TABLE>
All the Trustees and Officers as a group own less than
1% of the outstanding shares of each Fund, except for Robert
P. Watson who owns 73,043 shares of Managers Money Market
Fund, which constitutes approximately 1.7% of the Fund, as
of January 31, 1999.
Five in-person meetings, and one telephonic meeting of
the Board of Trustees of the Trust were held between January
1, 1998 and December 31, 1998. In that period, all incumbent
20
<PAGE>
Trustees attended 75% or more of the meetings held.
COMMITTEES OF THE BOARD OF TRUSTEES; MEETINGS
The Board of Trustees has one standing committee, the
Audit Committee. The current members of the committee are
Madeline H. McWhinney, Thomas R. Schneeweis and Steven J.
Paggioli. All of the committee members are Non-Interested.
Mr. Schneeweis is the Chairman of the Audit Committee.
During the last fiscal year ended December 31, 1998, there
were two (2) Audit Committee meetings.
THE AUDIT COMMITTEE
* Reviews with the independent auditors the auditors'
annual report and the scope of the next audit.
* Nominates the independent auditors for the Funds
* Reviews with external auditors the adequacy of internal
accounting and control systems
* Reviews with management and auditors the accounting and
financial reporting requirements and practices
COMPENSATION OF TRUSTEES AND OFFICERS
Only the Non-Interested Trustees receive compensation
from the Funds for acting as Trustees. During the 1998
fiscal year, each Non-Interested Trustee was paid an annual
fee of $10,000 for serving as a Trustee of the Funds. Each
Non-Interested Trustee also received $750 for each Board of
Trustees in-person meeting attended and $200 for each
telephonic meeting, and are compensated for any out-of-
pocket expenses.
Trustee compensation paid by the Trust to each of the
Nominees for the calendar year ended December 31, 1998 is
set forth below.
<TABLE>
<CAPTION>
TRUSTEE TOTAL COMPENSATION PAID TO TRUSTEES/OFFICERS
- ------- --------------------------------------------
<S> <C>
Madeline H. McWhinney $13,950.00
Thomas R. Schneeweis $13,200.00
Steven J. Paggioli $13,950.00
Robert P. Watson $ 0
</TABLE>
The Officers of the Trust received no compensation from the Trust
for the calendar year ended December 31, 1998.
21
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDER OF EACH FUND
VOTE FOR EACH OF THE NOMINEES TO THE BOARD OF TRUSTEES
ADDITIONAL INFORMATION
PAYMENT OF EXPENSES OF PROXY
The cost of preparing, printing and mailing the enclosed proxy card
and Proxy Statement and all other costs incurred in connection with the
solicitation of proxies, including any additional solicitation made by
letter, telephone or telegraph will be paid by the Manager. Representatives
of the Manager may solicit proxies by telephone, letter or personally and
will receive no additional compensation for these services.
As the Meeting date approaches, shareholders who
have not voted their proxy may receive a telephone call asking you to vote.
In all cases where a telephonic proxy is solicited, shareholders will be
asked to give your full name, social security number or employee
identification number, address, title (if applicable) and the number of
shares owned, and to confirm that you have received the proxy materials
in the mail. Within 72 hours, the shareholder will be sent a confirmation
of his or her vote and asking the shareholder to call immediately if his or
her instructions are not reflected correctly in the confirmation.
If you require additional information regarding the proxy or replacement
proxy cards, please call The Managers Funds toll free at (800) 835-3879.
Any proxy given by a shareholder, whether in writing or
by telephone, is revocable until voted at the Special Meeting.
FINANCIAL INFORMATION
The Trust's most recent annual report and semi-annual report are
available upon request, without charge, by writing to The Managers Funds,
40 Richards Avenue, Norwalk, Connecticut 06854, or by calling
(800) 835-3879, or on our Internet website at www.managersfunds.com.
BENEFICIAL OWNERSHIP
Exhibit C contains information about the beneficial ownership by
shareholders of five percent (5%) or more of each Fund's outstanding
shares, as of the record date, February 2, 1999.
The term "beneficial ownership" is defined under Section 13(d)
of the Securities and Exchange Act of 1934, as amended. The information
22
<PAGE>
as to beneficial ownership is based on statements furnished to each
Fund by the existing Trustees, officers of the Manager, and/or records of each
Fund.
SHAREHOLDER PROPOSALS
The Trust does not hold regularly scheduled meetings of the shareholders
of any Fund. Any shareholder desiring to present a proposal for inclusion
at the meeting of shareholders next following this meeting should submit such
proposal to the Trust a reasonable time before the solicitation is made.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
The Board of Trustees knows of no business other than that specifically
mentioned in the Notice of the Special Meeting of Shareholders that will be
presented or considered at the Meeting. If any other matters are properly
presented, it is the intention of the persons named in the enclosed proxy
to vote in accordance with their best judgement.
THE TRUSTEES RECOMMEND APPROVAL OF EACH PROPOSAL AND ANY UNMARKED
PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR
OF APPROVAL OF THE PROPOSALS.
February 12, 1999
By Order of the Trustees,
/s/Donald S. Rumery
Donald S. Rumery
Secretary
23
<PAGE>
(MARKED TO SHOW CHANGES)
EXHIBIT A
FUND MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made as of this 17th day
of August, 1990 _______, 1999, between The Management of
Managers Group of FundsThe Managers Funds, a business trust
organized under the laws of the Commonwealth of Massachusetts
("Company") and EAIMC Partners, L.P.The Managers Funds, LLC, a
partnershiplimited liability company organized under the laws of
the State of Delaware ("Manager"). This Agreement shall not
become effective as to any Series unless the shareholders of
such Series approve this Agreement.
WHEREAS, the Company operates as an investment company
registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act") for the purpose of investing and
reinvesting the assets of its various series (each a "Series",
each of which is listed in Appendix A hereto) in securities
pursuant to investment objectives and policies as set forth more
fully in its Declaration of Trust, its By-Laws and its
Registration Statement under the Investment Company Act and the
Securities Act of 1933, as amended, all as amended and
supplemented from time to time; and the Company desires to avail
itself of the services, information, advice, assistance and
facilities of a fund manager and to have a fund manager provide
or perform for it various administrative management,
statistical, research, portfolio manager selection and other
services; and
WHEREAS, the Company and The Managers Funds, L.P.
("TMFLP") have previously entered into a Fund Management
Agreement dated May 1, 1990August 17, 1990 (the "Prior
Agreement") pursuant to which TMFLP has provided investment
management services to the Company; and
WHEREAS, the ManagerTMFLP has, on the date
hereof_______, 1999 converted into a limited liability company
and Affiliated Managers Group, Inc. has acquired a 95% interest
in its profits and a 100% interest in its capital, and such
transaction has effected, acquired the assets of EAIMC and has
succeeded to the investment management business of TMFLP and
such acquisition constitutes an assignment of the Prior
Agreement which causeshas caused the termination of the Prior
Agreement; and
WHEREAS, the Manager is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended,
and has entered into a Consulting Agreement with Evaluation
Associates, Inc. ("EAI"); and
WHEREAS, the Manager desires to provide services to the
Company in consideration of and on the terms and conditions
hereinafter set forth;
24
<PAGE>
NOW, THEREFORE, Company and Manager agree as follows:
1. Employment of the Manager. The Company hereby employs
the Manager to manage the investment and reinvestment of the
assets of the Company's various Series in the manner set
forth in Section 2 (B) of this Agreement and to administer
its business and administrative operations, subject to the
direction of the Trustees and the officers of the company,
for the period in the manner, and on the terms hereinafter
set forth. The Manager hereby accepts such employment and
agrees during such period to render the services and to
assume the obligations herein set forth. The Manager shall
for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or
authorized (whether herein or otherwise) have no authority
to act for or represent the Company in any way or otherwise
be deemed an agent of the Company.
2. Obligation of and Services to be Provided by the
Manager. The Manager undertakes to provide the services
hereinafter set forth and to assume the following
obligations:
A. Corporate Management and Administrative Services.
(a) The Manager shall furnish to the Company adequate
(i)office space, which may be space within the offices of the
Manager or in such other place as may be agreed upon from time to
time, (ii) office furnishings, facilities and equipment as may be
reasonably required for managing and administering the operations
and conducting the business of the Company, including complying
with the securities, tax and other reporting requirements of the
United States and the various states in,which the Company does
business, conducting correspondence and other communications with
the shareholders of the Company, and maintaining or supervising
the maintenance ot all internal bookkeeping, accounting and
auditing services and records in connection with the company to
investment and business activities. Company agrees that its
shareholder recordkeeping services, the computing of net asset
value and the preparation of certain of its records required by
Section 31 of the Investment Company Act and the Rules
promulgated thereunder are to be performed by Company's transfer
agent, custodian or portfolio managers, and that with respect to
these services Manager's obligations under this Section 2(A) are
supervisory in nature only.
(b) The Manager shall employ or provide and compensate
the executive, administrative, secretarial and clerical personnel
necessary to supervise the provision'of the services set forth in
subparagraph 2 (A) (a) above, and shall bear the expense of
providing such services, except as may otherwise be provided in
Section 4 of this Agreement. The Manager shall also compensate
25
<PAGE>
all officers and employees of the Company who are officers or
employees of the Manager.
B. Investment Management Services.
(a) The Manager shall have overall supervisory
responsibility for the general management and investment of the
assets and securities portfolio of each of the company's various
Series subject to and in accordance with the investment
objectives, policies and restrictions of each such Series, and
any directions which the Company's Trustees may issue to the
Manager from time to time.
(b) The Manager shall provide overall investment
programs and strategies for the Company, and more particularly
for each Series, shall revise such programs as necessary and
shall monitor and report periodically to the Trustees concerning
the implementation of the programs.
(c) The Company intends to appoint one or more persons or
companies ("Portfolio Managers"), and each Portfolio Manager
shall have full investment discretion and shall make all
determinations with respect to the investment of the portion of
the particular Series' assets assigned to that Portfolio Manager
and the purchase and sale of portfolio securities with those
assets, and take such steps as may be necessary to implement such
appointments. The Manager shall not be responsible or liable for
the investment merits of any decision by a Portfolio Manager to
purchase, hold or sell a security for the portfolio of the Series
for which it acts as Portfolio Manager.
(d) The Manager shall evaluate Portfolio Managers and shall
advise the Trustees of the Company of the Portfolio Managers
which the Manager believes are best suited to invest the assets
of each Series; shall monitor and evaluate the investment
performance of each Portfolio Manager employed by each Series;
shall allocate the portion of each Series' assets to be managed
by each Portfolio Manager; shail recommend changes of or
additional Portfolio Managers when appropriate; shall coordinate
the investment activities of the Portfolio Managers; and shall
compensate the Portfolio Managers.
(e)The Manager shall render regular reports to the
Company, at regular meetings of the Trustees, of, among other
things, the decisions which it has made with respect to the
allocation of assets among Portfolio Managers.
C. Provision of Information Necessary for Preparation
of Securities Registration Statements, Amendments and
Other Materials.
The Manager will make available and provide financial,
accounting and statistical information required by the
Company in the preparation of registration statements,
26
<PAGE>
reports and other documents required by federal and state
securities laws, and such information as the Company may
reasonably request for use in the preparation of
registration statements, reports and other documents
required by federal and state securities laws and such
information as the Company may reasonably request for use in
the preparation of such documents or of other materials
necessary or helpful for the underwriting and distribution
of the Company's shares.
D. Other Obligations and Services.
The Manager shall make available its officers and employees
to the Trustees and officers of the Company for consultation
and discussion regarding the administration and management
of the Company and its investment activities.
3. Execution and Allocation of Portfolio Brokerage
Commissions. Portfolio Managers, subject to and in
accordance with any directions the Company's Trustees may
issue from time to time, shall place, in the name of the
Series of the Company for which they act as Portfolio
Manager, orders for the execution of that Series' portfolio
transactions. When placing such orders, the primary
objective of the Manager and Portfolio Managers shall be to
obtain the best net price and execution for the series, but
this requirement shall not be deemed to obligate the Manager
or a Portfolio Manager to place any order solely on the
basis of obtaining the lowest commission rate if the other
standards set forth in this section have been satisfied. The
Company recognizes that there are likely to be many cases in
which different brokers are equally able to provide such
best price and execution and that, in the selection among
such brokers with respect to particular trades, it is
desirable to choose those brokers who furnish brokerage and
research services, (as defined in Section 28 (e) (3) of the
Securities Exchange Act of 1934) or statistical quotations
and other information to the Company, the Manager and/or the
Portfolio Managers in accordance with the standards set
forth below. Moreover, to the extent that it continues to
be lawful to do so and so long as the Trustees determine as
a matter of general policy that the Company will benefit,
directly or indirectly, by doing so, the Manager or a
Portfolio Manager may place orders with a broker who charges
a commission for that transaction which is in excess of the
amount of commission that another broker would have charged
for effecting that transaction, provided that the excess
commission is reasonable in relation to the value of
brokerage and research services provided by that broker.
Accordingly, the Company and the Manager agree that the
Manager and the Portfolio Managers may select brokers for
the execution of the Company's portfolio transactions from
among:
A. Those brokers and dealers who provide brokerage and
research services, or statistical quotations and other
information to the Company, specifically including the
quotations necessary to determine the value of the
27
<PAGE>
Company's Series' net assets in such amount of total
brokerage as may reasonably be required in light of
such services;
B. Those brokers and dealers who supply brokerage and
research services to the Manager or the Portfolio
Managers which relate directly to portfolio securities,
actual or potential, of the Series, or which place the
Manager or Portfolio Managers in a better position to
make decisions in connection with the management of the
Series assets and portfolio, whether or not such data
may also be useful to the Manager and its affiliates,
or the Portfolio Managers and their affiliates, in
managing other portfolios, including other Series, or
advising other clients, in such amount of total
brokerage as may reasonably be required.
The Manager shall render regular reports to the Company
of the total brokerage business placed and the manner in which
the allocation has been accomplished.
The Manager agrees and each Portfolio Manager will be
required to agree that no investment decision will be made or
influenced by a desire to provide brokerage for allocation in
accordance with the foregoing, and that the right to make such
allocation of brokerage shall not interfere with the Manager's or
Portfolio Managers' primary duty to obtain the best net price and
execution for the Company.
4. Expenses of the Company. It is understood that the
Company will pay all its expenses other than those expressly
assumed by the Manager herein, which expenses payable by the
company shall include:
A. Expenses of all audits by independent public
accountants;
B. Expenses of transfer agent, registrars dividend
disbursing agent and shareholder recordkeeping
services;
C. Expenses of custodial services including
recordkeeping services provided by the Custodian;
D. Expenses of obtaining quotations for calculating
the value of the Company's net assets;
E. Salaries and other compensation of any of its
executive officers and employees, if any, who are not
officers, directors, stockholders or employees of the
Manager;
F. Taxes levied against the Company;
G. Brokerage fees and commissions in connection with
the purchase and sale of portfolio
securities for the Company;
H. Costs, including the interest expense, of borrowing
money;
28
<PAGE>
I. Costs and/or fees incident to Trustee and
shareholder meetings of the Company, the preparation
and mailing of prospectuses and reports of the Company
to its shareholders, the filing of reports with
regulatory bodies, the maintenance of the Company's
corporate existence, and the registration of shares
with federal and state securities authorities;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the
Company's Shares for sale;
K. Costs of printing stock certificates representing
shares of the Company's various Series;
L. Trustees' fees and expenses of Trustees who are not
directors, officers, employees or stockholders of the
Manager or any of its affiliates; and
M. Its pro rata portion of the fidelity bond required
by Section 17(g) of the Investment Company Act, or
other insurance premiums.
The Manager understands that each Series will be liable
for the expenses attributable to such Series.
5. Activities and Affiliates of the Manager.
A. The services of the Manager to the Company hereunder
are not to be deemed exclusive, and the Manager and any
of its affiliates shall be free to render similar
services to others. The Manager shall use the same
skill and care in the management of the Company's
assets as it uses in the administration of other
accounts to which it provides asset management,
consulting and portfolio manager selection services,
but shall not be obligated to give the Company more
favorable or preferential treatment vis-a-vis its other
clients.
B. Subject to and in accordance with the Declaration
of Trust and By-Laws of the Company and to Section
10(a) of the Investment Company Act, it is understood
that Trustees, officers, agents and shareholders of the
Company are or may be interested in the Manager or its
affiliates as directors, officers, agents or
stockholders of the Manager or its affiliates; that
directors, officers, agents and stockholders of the
Manager or its affiliates are or may be interested in
the Company as trustees, officers, agents, shareholders
or otherwise; that the Manager or its affiliates may be
interested in the Company as shareholders or otherwise;
and that the effect of any such interests shall be
governed by said Declaration of Trust, By-Laws and the
Investment Company Act.
6. Compensation of the Manager. In consideration of all of
the services provided and obligations assumed by the Manager
pursuant to this Agreement, each Series shall pay the
Manager a management fee calculated as a specified
29
<PAGE>
percentage of the average daily net asset value of that
Series. Such fee, which shall be accrued daily and paid
monthly, shall be calculated at the annual percentage rate
set forth for the particular Series in Appendix B to this
Agreement. Each Series shall be solely responsible for the
payment of its management fee, and no Series shall be
responsible for the payment of a management fee calculated
for or attributable to any other Series.
7. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Manager, the
Manager shall not be subject to liability to the
Company or any Series or to any shareholder of the
Company for any act or omission in the course of, or
connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding
or sale of any security.
B. No provision of this Agreement shall be construed to
protect any Trustee or officer of the Company, or the
Manager, from liability in violation of Sections 17(h)
and (i) of the Investment Company Act.
8. Renewal and Termination.
A. This Agreement shall become effective on the date
written above and shall continue in effect until August
17, 1992_______, 2001. This Agreement may be continued
annually thereafter for successive one year periods (a)
by a vote of a majority of the outstanding shares of
beneficial interest of each Series of the Company or
(b) by a vote of a majority of the Trustees of the
Company, and in either case by a majority of the
Trustees who are not parties to the Agreement or
interested persons of any parties to the Agreement
(other than as Trustees of the Company) cast in person
at a meeting called for the purpose of voting on the
Agreement. The aforesaid provision that this Agreement
may be continued "annually" shall be construed in a
manner consistent with the Investment Company Act and
the Rules and Regulations promulgated thereunder. If
continuance of this Agreement is approved by less than
all of the Series, it shall be deemed terminated as to
those Series not giving their approval, and Appendix A
and Appendix B hereto shall be appropriately amended to
reflect that fact.
B. This Agreement
(a) may at any time be terminated without the payment of
any penalty by (1) vote of the Trustees of the Company; (ii) by
vote of a majority of the outstanding voting securities of the
Company; or (iii) as to any Series by vote of the outstanding
voting securities of such Series, on sixty (60) days written
notice to the Manager;
(b) shall immediately terminate in the event of its
assignment; and
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<PAGE>
(c) may be terminated by the Manager on sixty (60) days
written notice to the Company.
C. As used in this Section 8, the terms "assignment,"
"interested person" and "vote of a majority of the
outstanding voting securities" shall, have the meanings
set forth in the Investment Company Act.
D. Any notice under this Agreement shall be given in
writing addressed and delivered or mailed postpaid, to
the other party to this Agreement at its principal
place of business.
9. 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.
10. Governing Law. To the extent that state law has not
been 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.
11. Amendments. This Agreement, including the Appendix
hereto, may be amended by an instrument in writing signed by
the parties subject to Investment Company obtaining such
approvals as may be required by the Investment Company Act.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed, as of the day and year first written
above.
THE MANAGEMENT OF MANAGERS
GROUP OF FUNDS
THE MANAGERS FUNDS
ATTEST
By:
Name: Name:
Title: Secretary
ATTEST EAIMC PARTNERS, L.P.
THE MANAGERS FUNDS, LLC
_________________ By:
Name: Name:
Title:
31
<PAGE>
APPENDIX A
SERIES COVERED BY THE FUND MANAGEMENT AGREEMENT
Capital Appreciation Fund
Special Equity Fund
Income Equity Fund
International Equity Fund
Emerging Markets Equity Fund
Bond Fund
Intermediate Mortgage Fund
Short and Intermediate Bond Fund
Short Government Fund
Global Bond Fund
APPENDIX B
Annual rate of management fees, expressed as a
percentage of the average net asset value of the series:
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE
NAME OF SERIES RATE OF MANAGEMENT FEE
- -------------- -----------------------
<S> <C>
Capital Appreciation Fund 0.80%
Income Equity Fund 0.75%
Special Equity Fund 0.90%
International Equity Fund 0.90%
Emerging Markets Equity Fund 1.15%
Short Government Fund 0.45%
Short and Intermediate Bond Fund 0.50%
Intermediate Mortgage Fund 0.45%
Bond Fund 0.625%
Global Bond Fund 0.70%
32
<PAGE>
(MARKED TO SHOW CHANGES)
EXHIBIT B
SUB-ADVISORY AGREEMENT
ATTENTION: MALCOLM MACCOLL
ESSEX INVESTMENT MANAGEMENT COMPANY, LLC
RE: SUB-ADVISORY AGREEMENT
To whom it may concern:
The Managers Capital Appreciation 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.LLC (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 Fund's assets. However,
pursuant to the terms of the Management Agreement, specific
portfolio purchases and sales for the Fund's 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-Advisor. The Manager, being duly
authorized, hereby appoints and employs Essex Investment
Management Company, LLC ("Sub-Advisor") 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-Advisor (those assets being referred to as the "Fund
Account"). The Manager may, from time to time, with the consent
of the Sub-Advisor, 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-Advisor shall manage
the composition of the Fund Account, including the
purchase, retention and disposition thereof, in
accordance with the Fund's investment objectives,
policies and restrictions as stated in the Fund's
Prospectus and Statement of Additional Information
(such Prospectus and Statement of Additional
Information for the Fund as currently in effect and as
amended or supplemented in writing from time to time,
being herein called the "Prospectus").
(b) The Sub-Advisor 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
33
<PAGE>
amended (the "Advisers Act"), 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-Advisor agrees that all records under the
Act shall be the property of the Trust.
(c) The Sub-Advisor shall provide the Trust's
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-Advisor 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-Advisor shall have
authority and discretion to select brokers, dealers and futures
commission merchants to execute portfolio transactions initiated
by the Sub-Advisor, and for the selection of the markets on or in
which the transactions will be executed.
(a) In doing so, the Sub-Advisor's 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-
Advisor to solicit competitive bids for each
transaction, and the Sub-Advisor shall have no
obligation to seek the lowest available commission cost
to the Fund, so long as the Sub-Advisor 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-Advisor 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-Advisor 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-
Advisor viewed in terms of either that particular
transaction or of the Sub-Advisor's overall
responsibilities with respect to its clients, including
34
<PAGE>
the Fund, as to which the Sub-Advisor 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-Advisor, 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-Advisor 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-Advisor for the Trust except in
accordance with procedures adopted by the Trustees.
The Manager agrees that it will provide the Sub-Advisor
with a list of brokers and dealers which are
"affiliated persons" of the Trust, the Manager or the
Trust's Sub-Advisors.
4. Information Provided to the Manager and the Trust and to the
Sub-Advisor
(a) The Sub-Advisor 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-Advisor will furnish the Trust's 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-Advisor agrees that it will notify the
Manager and the Trust in the event that the Sub-Advisor
or any of its affiliates: (i) becomes subject to a
statutory disqualification that prevents the Sub-
Advisor from serving as investment adviser pursuant to
this Agreement; or (ii) is or expects to become the
35
<PAGE>
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-
Advisor 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 in all material respects
and contain no material misstatement or omission, and
it further agrees to notify the Manager immediately of
any fact known to the Sub-Advisor respecting or
relating to the Sub-Advisor 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-Advisor represents that it is an
investment adviser registered under the Advisers Act
and other applicable laws and that the statements
contained in the Sub-Advisor's 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-Advisor agrees to maintain the completeness and
accuracy in all material respects of its registration
on Form ADV in accordance with all legal requirements
relating to that Form. The Sub-Advisor acknowledges
that it is an "investment adviser" to the Fund within
the meaning of the Act and the Advisers Act.
(d) The Manager agrees to provide or cause to be
provided to the Sub-Advisor on an ongoing basis, such
information that is reasonably required by the Sub-
Advisor for performance by the Sub-Advisor of its
obligations under the Agreement, and the Sub-Advisor
shall not be in breach of any term of this Agreement or
be deemed to have acted negligently if the Manager
fails to provide or cause to be provided such required
information and the Sub-Advisor relies on the
information most recently furnished to the Sub-Advisor.
5. Compensation. The compensation of the Sub-Advisor 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-Advisor, and the Sub-Advisor 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-Advisor. The Manager
acknowledges that the Sub-Advisor 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
36
<PAGE>
Accounts"). The Manager agrees that the Sub-Advisor 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-Advisor acts in good faith and provided further,
that it is the Sub-Advisor'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-Advisor 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-Advisor shall exercise its best
judgment in rendering the services provided by it under this
Agreement. The Sub-Advisor 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-Advisor against any liability to the Manager or the Trust
or to holders of the Trust's shares representing interests in the
Fund to which the Sub-Advisor 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-
Advisor's 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-Advisor 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-Advisor 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-Advisor 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 ________, 19989 and shall continue in effect for a term of two
37
<PAGE>
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 any time without penalty, upon notice to the Sub-
Advisor 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-Advisor or (iii) by the Sub-Advisor at any time without
penalty, upon thirty (30) 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.LLC
BY: EAIMC HOLDINGS CORP.
General Partner
BY:
Its:
DATE:
ACCEPTED:
BY:
Its:
DATE:
38
<PAGE>
Acknowledged:
The Managers Funds
BY:
Its:
DATE:
SCHEDULES: A. Fee Schedule.
SCHEDULE A
SUB-ADVISOR FEE
For services provided to the Fund Account, The Managers Funds,
L.P.LLC will pay a base quarterly fee for each calendar quarter
at an annual rate of 0.40% 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.
39
<PAGE>
EXHIBIT C
SHARES OF BENEFICIAL OWNERSHIP FOR THE FUNDS
As of February 2, 1999, 453,080 shares in the
aggregate, or 21% of the outstanding shares of MANAGERS
INCOME EQUITY FUND were held in the name of Charles Schwab &
Co., 101 Montgomery Street, San Francisco, CA, 94104, who
may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 298,651 shares in the
aggregate, or 14% of the outstanding shares of MANAGERS
INCOME EQUITY FUND were held in the name of Huntington
National Bank, 41 South High Street, Columbus, OH, 43215,
who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership
therein.
As of February 2, 1999, 173,480 shares in the
aggregate, or 8% of the outstanding shares of MANAGERS
INCOME EQUITY FUND were held in the name of National
Financial Services Corp., 200 Liberty Street, 1 World
Financial Center, New York, NY, 10281, who may be deemed to
be the beneficial owner of certain of these shares, but
disclaims any beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of February 2, 1999, 133,638 shares in the
aggregate, or 6% of the outstanding shares of MANAGERS
INCOME EQUITY FUND were held in the name of Huntington Trust
Company, 41 South High Street, Columbus, OH, 43215, who may
be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 333,643 shares in the
aggregate, or 12% of the outstanding shares of MANAGERS
CAPITAL APPRECIATION FUND were held in the name of Charles
Schwab & Co., 101 Montgomery Street, San Francisco, CA,
94104, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial
ownership therein.
As of February 2, 1999, 224,025 shares in the
aggregate, or 8% of the outstanding shares of MANAGERS
CAPITAL APPRECIATION FUND were held in the name of National
Financial Services Corp., 200 Liberty Street, 1 World
Financial Center, New York, NY, 10281, who may be deemed to
be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of February 2, 1999, 167,427 shares in the
aggregate, or 6% of the outstanding shares of MANAGERS
CAPITAL APPRECIATION FUND were held in the name of
Huntington National Bank, 41 South High Street, Columbus,
OH, 43215, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial
ownership therein.
40
<PAGE>
As of February 2, 1999, 5,840,250 shares in the
aggregate, or 37% of the outstanding shares of MANAGERS
SPECIAL EQUITY FUND were held in the name of Charles Schwab
& Co., 101 Montgomery Street, San Francisco, CA, 94104, who
may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 1,444,718 shares in the
aggregate, or 9% of the outstanding shares of MANAGERS
SPECIAL EQUITY FUND were held in the name of National
Financial Services Corp., 200 Liberty Street, 1 World
Financial Center, New York, NY, 10281, who may be deemed to
be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of February 2, 1999, 3,259,104 shares in the
aggregate, or 28% of the outstanding shares of MANAGERS
INTERNATIONAL EQUITY FUND were held in the name of Charles
Schwab & Co., 101 Montgomery Street, San Francisco, CA,
94104, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial
ownership therein.
As of February 2, 1999, 1,011,534 shares in the
aggregate, or 8% of the outstanding shares of MANAGERS
INTERNATIONAL EQUITY FUND were held in the name of National
Financial Services Corp., 200 Liberty Street, 1 World
Financial Center, New York, NY, 10281, who may be deemed to
be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of February 2, 1999, 644,672 shares in the
aggregate, or 5% of the outstanding shares of MANAGERS
INTERNATIONAL EQUITY FUND were held in the name of Resource
Bank and Trust Co., International Centre, Suite 300,
Minneapolis, MN, 55402, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
As of February 2, 1999, 671,672 shares in the
aggregate, or 5% of the outstanding shares of MANAGERS
INTERNATIONAL EQUITY FUND were held in the name of Merrill
Lynch Trust Co., 265 Davidson Avenue, Somerset, NJ, 08873,
who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership
therein.
As of February 2, 1999, 192,098 shares in the
aggregate, or 34% of the outstanding shares of MANAGERS
EMERGING MARKETS EQUITY FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco,
CA, 94104, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial
ownership therein.
As of February 2, 1999, 47,970 shares in the aggregate,
or 8% of the outstanding shares of MANAGERS EMERGING MARKETS
EQUITY FUND were held in the name of Resource Bank and Trust
Co., International Centre, Suite 300, Minneapolis, MN,
55402, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial
ownership therein.
41
<PAGE>
As of February 2, 1999,43,152 shares in the aggregate,
or 7% of the outstanding shares of MANAGERS EMERGING MARKETS
EQUITY FUND were held in the name of National Financial
Services Corp., 200 Liberty Street, 1 World Trade Center,
New York, NY, 10281, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of February 2, 1999, 283,014 shares in the
aggregate, or 17% of the outstanding shares of MANAGERS BOND
FUND were held in the name of Charles Schwab & Co., 101
Montgomery Street, San Francisco, CA, 94104, who may be
deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 202,670 shares in the
aggregate, or 12% of the outstanding shares of MANAGERS BOND
FUND were held in the name of National Financial Services
Corp., 200 Liberty Street, 1 World Trade Center, New York,
NY, 10281, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial
ownership therein.
As of February 2, 1999, 60,816 shares in the aggregate,
or 6% of the outstanding shares of MANAGERS SHORT AND
INTERMEDIATE BOND FUND were held in the name of Crotched
Mountain Foundation, Greenfield, NH, 03047.
As of February 2, 1999, 49,969 shares in the aggregate,
or 5% of the outstanding shares of MANAGERS SHORT AND
INTERMEDIATE BOND FUND were held in the name of Huntington
Trust Company, 41 South High Street, Columbus, OH, 43215,
who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership
therein.
As of February 2, 1999, 153,043 shares in the
aggregate, or 20% of the outstanding shares of MANAGERS
INTERMEDIATE MORTGAGE FUND were held in the name of National
Financial Services Corp., 200 Liberty Street, 1 World Trade
Center, New York, NY, 10281, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
As of February 2, 1999, 138,819 shares in the
aggregate, or 19% of the outstanding shares of MANAGERS
INTERMEDIATE MORTGAGE FUND were held in the name of Roman
Catholic Diocese of Syracuse New York, 240 East Onodaga
Street, Syracuse, NY, 13202.
As of February 2, 1999, 42,236 shares in the aggregate,
or 5% of the outstanding shares of MANAGERS INTERMEDIATE
MORTGAGE FUND were held in the name of Huntington Trust
Company, 41 South High Street, Columbus, OH, 43215, who may
be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 290, 382 shares in the
aggregate, or 29% of the outstanding shares of MANAGERS
GLOBAL BOND FUND were held in the name of National Financial
Services Corp., 200 Liberty Street, 1 World Trade Center,
New York, NY, 10281, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any
beneficial ownership therein.
42
<PAGE>
As of February 2, 1999, 67,442 shares in the aggregate,
or 6% of the outstanding shares of MANAGERS GLOBAL BOND FUND
were held in the name of Charles Schwab & Co., 101
Montgomery Street, San Francisco, CA, 94104, who may be
deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 6,622,259 shares in the
aggregate, or 12% of the outstanding shares of MANAGERS
MONEY MARKET FUND were held in the name of Sanwa Bank of
California, FBO Wilshire Associates Inc., 444 Market Street,
Floor 23, San Francisco, CA, 94111.
As of February 2, 1999, 3,166,493 shares in the
aggregate, or 6% of the outstanding shares of MANAGERS MONEY
MARKET FUND were held in the name of Bear Stearns Securities
Corp., 1 Metrotech Center North, Brooklyn, NY, 11201, who
may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 3,082,785 shares in the
aggregate, or 5% of the outstanding shares of MANAGERS MONEY
MARKET FUND were held in the name of Benefits Resource Inc.,
221 Division Avenue, Shelton, CT, 06484, who may be deemed
to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of February 2, 1999, 3,142,023 shares in the
aggregate, or 5% of the outstanding shares of MANAGERS MONEY
MARKET FUND were held in the name of Donaldson Lufkin
Jenrette Securities Corp., P.O. Box 2052, Jersey City, NJ,
07303, who may be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of February 2, 1999, 2,711,091 shares in the
aggregate, or 5% of the outstanding shares of MANAGERS MONEY
MARKET FUND were held in the name of Citicorp USA Inc., c/o
Citicorp North America, Inc., One Sansone Street, 24th
Floor, San Francisco, CA, 94104, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
43
<PAGE>
The Board of Trustees recommends a vote FOR Items 1,2,3 and 4. Please mark
your vote as indicated in this example. / X /
ITEM 1-APPROVAL OF NEW FOR AGAINST ABSTAIN
FUND MANAGEMENT AGREEMENT / / / / / /
ITEM 2-APPROVAL OF SUB-ADVISORY FOR AGAINST ABSTAIN
AGREEMENT FOR ESSEX / / / / / /
ITEM 3-EXPANSION OF BOARD OF FOR AGAINST ABSTAIN
TRUSTEES / / / / / /
ITEM 4-ELECTION OF TRUSTEES
Nominees:
Madeline H. McWhinney
Steven J. Paggioli
Thomas R. Schneeweis
Robert P. Watson*
Sean M. Healey*
Jack W. Aber
William E. Chapman, III
Edward J. Kaier
Eric Rakowski
/ / FOR ALL
/ / WITHOLD FOR ALL
WITHOLD FOR:(Write that nominees name in the space provided below.)
<PAGE>
[THE MANAGERS FUNDS LOGO]
40 Richards Avenue
Norwalk, CT 06854
FUND'S NAME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Donald S. Rumery and Laura DeSalvo as
proxies, with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of The Managers Funds standing in the name of the undersigned
with all powers which the undersigned would possess if present at the
Special Meeting of Shareholders to be held March 31, 1999 or any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREBY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THE PROXIES WILL VOTE SHARES REPRESENTED BY THIS PROXY FOR ALL
TRUSTEES AND ALL OTHER PROPOSALS LISTED ON THE REVERSE SIDE AND WILL
VOTE IN THEIR DISCRETION ON SUCH OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THIS MEETING.
You can also vote your proxy by faxing it to us at (203) 857-5316, by calling
(800) 690-6903 and record your vote by telephone, or on the internet at
www.proxyvote.com.
TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
<PAGE>
[Buckslip to be included with Proxy Materials]
FOUR CONVENIENT WAYS TO VOTE YOUR PROXY
The enclosed Proxy Statement details important issues affecting your Managers
Funds investment. Help us save time and postage costs by voting online, by
telephone, or by fax. Each method is generally available 24 hours a day
and will ensure that your vote is confirmed and recorded immediately. You
may, of course, also vote by mail.
TO VOTE ONLINE:
[PICTURE OF COMPUTER]
1. Read the Proxy Statement and have your proxy card(s) at hand.
2. Go to the web site WWW.PROXYVOTE.COM.
3. Enter the 12-digit Control Number from your proxy card(s).
4. Follow the simple instructions.
TO VOTE BY FAX:
[PICTURE OF FAX MACHINE]
1. Read the Proxy Statement.
2. Simply mark, sign, and date the enclosed proxy card(s).
3. Fax your proxy card(s) to 1-203-857-5316.
TO VOTE BY TELEPHONE:
[PICTURE OF TELEPHONE]
1. Read the Proxy Statement and have your proxy card(s) at hand.
2. Call toll free 1-800-690-6903.
3. Enter the 12-digit Control Number from your proxy card(s).
4. Follow the simple recorded instructions.
TO VOTE BY MAIL:
[PICTURE OF ENVELOPE]
1. Read the Proxy Statement.
2. Simply mark, sign, and date the enclosed proxy card(s).
3. Mail the proxy card(s) in the postage-paid envelope provided.
There is no need to mail the proxy card if you are voting by internet,
telephone, or fax.
REMEMBER YOUR VOTE COUNTS. VOTE TODAY!
<PAGE>
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