SMITH BREEDEN TRUST
PRE 14A, 2000-05-23
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SMITH BREEDEN SERIES FUND
SMITH BREEDEN TRUST


	SCHEDULE 14A INFORMATION
	Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrants [x]
Filed by a Party other than the Registrant [  ]

Check the appropriate box:
[x]	Preliminary Proxy Statement
[  ]	Definitive Proxy Statement
[  ]	Definitive Additional Materials
[  ]	Soliciting Material Pursuant to ? 240.14a-11(c) or
? 240.14a-12

	SMITH BREEDEN SERIES FUND
SMITH BREEDEN TRUST
	------------------------------------
	(Name of Registrants as Specified In Their Charters)


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 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) 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:	_____________


	SMITH BREEDEN
ASSOCIATES, INC.
	100 Europa Drive, Suite 200
Chapel Hill, NC 27514


	June __, 2000

Dear Fellow Shareholder:

You are cordially invited to attend a special meeting of
shareholders (the "Meeting") of the Smith Breeden Short Duration U.S.
Government Fund, Smith Breeden Intermediate Duration U.S.
Government Fund, and Smith Breeden U.S. Equity Market Plus Fund
(the "Funds") of the Smith Breeden Series Fund or the Smith Breeden
Trust, as the case may be (the "Trusts") to be held on [DAY], July __,
2000, at  ____ a.m., Chapel Hill time, at the offices of the Trusts, 100
Europa Drive, Suite 200, Chapel Hill, NC 27514.  At the Meeting,
shareholders will be asked (i) to elect eight new members to the Trusts'
Board of Trustees to replace the current Trustees of the Trusts, (ii) to
approve the proposed management agreements between each of the
Trusts and The Managers Funds LLC ("Managers"), (iii) to approve the
proposed subadvisory agreement between Smith Breeden Associates, Inc.
("SBA") and Managers for each Fund, (iv) to amend the Trusts'
Declarations of Trust to facilitate the reorganization of the Funds into the
Managers fund complex at such time as it is administratively convenient,
and (v) to permit Managers to change the subadviser of each Fund in the
future without seeking the approval of the shareholders of the relevant
Fund.

	SBA and Managers believe that the approval of these Proposals
will be beneficial to all parties, but most importantly to the Funds'
shareholders.  With $__ billion in assets under management, Managers'
fund complex is substantially larger than the Trusts.  As a result, and
given Managers' experience in the mutual fund business, Managers is
better able to service shareholders' day-to-day operational account and
investment needs.  Through the proposed relationship with Managers,
shareholders of the Funds should have access to more extensive products
and services, as well as to a higher level of customer service and
technology.  SBA would continue to manage the assets in the Funds in its
capacity as subadviser, thus enabling SBA to focus on its strength,
portfolio management.  Managers has informed the Trustees of the Trusts
that Managers does not presently intend to increase the fees and expenses
of the Funds as a result of the Proposals and the transactions
contemplated thereby.

The Proposals have been carefully reviewed by the Trusts? Board
of Trustees, which recommends that you approve each of the Proposals.
Whether or not you plan to be present at the Meeting, your vote is
needed.  Please complete, sign, and return the enclosed proxy card(s)
promptly.  A postage-paid envelope is enclosed for this purpose.

We thank you for your attention to this matter.  We look
forward to seeing you at the Meeting or receiving your proxy card(s) so
your shares may be voted at the Meeting.  If you have any questions on
voting of proxies or the Proposals to be considered at this meeting, please
call us toll free at _______________.

Sincerely
yours,



[NAME]
[Position]


SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE
ENCLOSED PROXY CARD(S) IN THE ENCLOSED ENVELOPE SO
AS TO BE REPRESENTED AT THE MEETING.

SMITH BREEDEN SERIES FUND
SMITH BREEDEN TRUST

Smith Breeden
Short Duration
U.S. Government
Fund
Smith Breeden
Intermediate
Duration U.S.
Government
Fund Smith
Breeden U.S.
Equity Market
Plus Fund
	___________

	NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

	To Be Held July __, 2000
	___________

A special meeting of shareholders (the "Meeting") of Smith
Breeden Series Fund (the "Series Trust") and Smith Breeden Trust (the
"SB Trust," and together with the Series Trust, the "Trusts") will be
held at the offices of the Trusts, 100 Europa Drive, Suite 200, Chapel
Hill, NC 27514, on [DAY], July __, 2000 at ___ a.m., Chapel Hill time,
for the following purposes:

1.	Proposal 1 - Election of Trustees.  For the shareholders
of each Trust, to elect eight new members to the Board
of Trustees of that Trust to replace the current Trustees
of the Trust.

2.	Proposal 2 - Proposed Management Agreements.  For
the shareholders of each of the Smith Breeden Short
Duration U.S. Government Fund, Smith Breeden
Intermediate Duration U.S. Government Fund, and
Smith Breeden U.S. Equity Market Plus Fund (the
"Funds"), to approve the proposed management
agreements between each Trust, on behalf of each
Fund, and The Managers Funds LLC ("Managers"), as
described in the attached Proxy Statement.

3.	Proposal 3 - Proposed Subadvisory Agreements.  For
the shareholders of each Fund, to approve the proposed
subadvisory agreement between Managers and Smith
Breeden Associates, Inc., as described in the attached
Proxy Statement.

4.	Proposal 4 - Amendment to the Trusts' Declarations of
Trust.  For the shareholders of each Trust (with the
shareholders of both Funds of the Series Trust voting
together as a single class), to approve the proposed
amendment to the Trusts' Declarations of Trust to
facilitate the future merger of the Funds into the
Managers fund complex, as described in the attached
Proxy Statement.

5.	Proposal 5 - Future Subadviser Changes Without
Shareholder Approval.  For the shareholders of each
Fund, to approve a proposal with respect to the future
operations of each Fund whereby each Fund may, from
time to time, to the extent permitted by an exemption
granted by the Securities and Exchange Commission,
permit the adviser to enter into new or amended
management agreement(s) with subadviser(s) with
respect to each Fund without obtaining shareholder
approval of such agreement(s), and to permit such
subadviser(s) to manage the assets of each Fund
pursuant to such management agreement(s), as
described in the attached Proxy Statement.

6.	Other Business.  For all shareholders to consider and
act upon such other matters as may properly come
before the Meeting.

Shareholders of record as of the close of business on
__________, 2000 will be entitled to notice of and to vote at the Meeting
or any adjournment thereof.  If you attend the Meeting, you may vote
your shares in person.  EVEN IF YOU EXPECT TO ATTEND THE
MEETING, PLEASE COMPLETE, DATE, SIGN, AND RETURN
THE ENCLOSED PROXY CARD(S) IN THE ENCLOSED POSTAGE-
PAID ENVELOPE.  Any shareholder present at the Meeting may vote
personally on all matters brought before the Meeting and, in that event,
such shareholder?s proxy will not be used.

__________
__________
_
Secretary
June __, 200


Smith Breeden
Short Duration
U.S. Government
Fund
Smith Breeden
Intermediate
Duration U.S.
Government
Fund Smith
Breeden U.S.
Equity Market
Plus Fund




	SMITH BREEDEN SERIES FUND
	SMITH BREEDEN TRUST
	100 Europa Drive, Suite 200
Chapel Hill, NC 27514




	____________________

	PROXY STATEMENT
	____________________



The enclosed proxies are solicited by the Board of
Trustees (the "Board") of Smith Breeden Series Fund (the
"Series Trust") and Smith Breeden Trust (the "SB Trust,"
and together with the Series Trust, the "Trusts") for use at
the special meeting of shareholders (the "Meeting") to be
held at the offices of the Trusts, 100 Europa Drive, Suite
200, Chapel Hill, NC 27514, at _____ a.m. (Chapel Hill
time) on [DAY], July __, 2000, and at any adjournment
thereof.  Shareholders of record at the close of business
on __________, 2000 (the "Record Date") are entitled to
vote at the Meeting or any adjourned session.  These
proxy materials are being mailed, or otherwise being
made available, to shareholders on or about June __,
2000.

The Trusts are open-end management investment
companies organized in 1991 as business trusts under the
laws of Massachusetts.  The shares of the Series Trust are
divided into two series of shares, each of which represents
interests in one of the following funds:  Smith Breeden
Short Duration U.S. Government Fund and Smith Breeden
Intermediate Duration U.S. Government Fund.  The
shares of the SB Trust are represented by one series of
shares, which represents interests in the Smith Breeden
U.S. Equity Market Plus Fund.  These funds are referred
to herein as the "Funds."

As of the Record Date, each Fund had the total
number of outstanding shares reflected in Appendix A.
Each shareholder is entitled to one vote for each full share
and a fractional vote for each fractional share outstanding
on the books of the Funds in the name of the shareholder
or his or her nominee on the Record Date.  If you own
shares of more than one Fund, you should sign and return
a proxy card for each Fund of which you are a
shareholder; for example, if you own shares of the Smith
Breeden Short Duration U.S. Government Fund and
shares of the Smith Breeden Intermediate Duration U.S.
Government Fund, you should sign and return the
enclosed proxy cards for each of those Funds.  A different
proxy card is enclosed for each Fund in which you are a
shareholder.  You should sign and return each of the
cards.

Timely, properly executed proxies will be voted as
you instruct.  If no specification is made with respect to a
proposal, shares will be voted in accordance with the
recommendation of the Trustees.  At any time before it
has been voted, the enclosed proxy may be revoked by the
signer by a written revocation received by the Secretary of
the relevant Trust, by properly executing a later-dated
proxy, or by attending the Meeting and voting in person.

Solicitation of proxies by personal interview, mail,
and telephone may be made by officers and Trustees of
the Trusts and officers and employees of Smith Breeden
Associates, Inc., a Kansas corporation that is registered as
an investment adviser under the Investment Advisers Act
of 1940, as amended ("SBA"), its affiliates and other
representatives of the Trusts.  The Trusts have retained
[NAME OF FIRM] ("FIRM"), [ADDRESS OF FIRM],
to aid in the solicitation of proxies.  The costs of retaining
[FIRM] and other expenses incurred in connection with
the solicitation of proxies, the costs of holding the
Meeting, and other expenses associated with obtaining the
approval of the Funds and their shareholders, will not be
borne by any of the Funds, but rather will be borne in
equal amounts by SBA and The Managers Funds LLC
("Managers").

The Trusts will furnish to you upon request,
without charge, a copy of the annual report for any Fund
for that Fund's most recent fiscal year and a copy of any
Fund's semi-annual report for any subsequent semi-annual
period.  Please direct any such requests by telephone to
the Trusts at 800-221-3137 or by writing to the Trusts at
100 Europa Drive, Suite 200, Chapel Hill, NC 27514.


I.	OVERVIEW - THE SBA/MANAGERS TRANSACTION

The matters presented for approval at the Meeting have arisen
in connection with the transactions (collectively, the
"SBA/Managers Transaction") contemplated by an asset purchase
agreement (together with related documents, the
"Purchase Agreement") among SBA, Managers, and
Affiliated Managers Group, Inc., the indirect parent of
Managers ("AMG"), pursuant to which Managers has
agreed to purchase certain assets of SBA related to its
management of the Funds and assume stated contractual
liabilities.

As contemplated by the Purchase Agreement, SBA has agreed
to cooperate with Managers to obtain the approvals necessary:
(1) to cause Managers to be appointed as investment adviser
to each Fund (Proposal 2); (2) to cause SBA to
be appointed as the subadviser (the "Subadviser") to each
Fund (Proposal 3); (3) to cause Managers to be appointed
as distributor to each Fund; (4) to cause certain other
third-party service providers to be appointed with respect
to each Fund; (5) to cause the shareholders of each Fund
to elect as trustees certain individuals mutually agreeable
to the parties (the "Nominees") (Proposal 1); (6) to cause
the respective Agreement and Declarations of Trust of the
Trusts to be amended so that the name of each Fund and
each Trust is changed to reflect its proposed relationship
with Managers; and (7) to cause the shareholders of each
Trust to approve certain changes to its Declaration of
Trust to permit the Trustees of the Trusts to cause each
Fund to merge without shareholder approval into an
Acquiring Fund (as defined below) if certain conditions
are satisfied (Proposals 4 and 5).  The matters listed in the
foregoing clauses (1) to (7) are sometimes referred to
herein as the "Restructuring Matters."

After the consummation of the SBA/Managers
Transaction and the implementation of the Restructuring
Matters, it is expected that each Fund will be merged at an
administratively convenient time into one of three newly
established series (each, an "Acquiring Fund") of a no-
load mutual fund family sponsored by Managers.  Each
such merger (a "Future Merger") would be accomplished
by contributing the assets and liabilities of the relevant
Fund to the corresponding Acquiring Fund in exchange
for shares of the Acquiring Fund.  The Future Mergers
would be accomplished pursuant to the power of the
relevant Trustees afforded by the proposed amendment to
the Declarations of Trust and without further shareholder
approval.  Such Future Mergers, however, would be
subject to a number of conditions, including requirements
that (i) each Acquiring Fund would have investment
policies that do not differ materially from those of the
Fund merging into it, (ii) Managers would be the adviser
of the Acquiring Funds, (iii) SBA would be the
Subadviser of the Acquiring Funds, pursuant to the
subadvisory agreements between SBA and Managers
relating to each Fund, and would be responsible for the
day-to-day portfolio management of the Acquiring Funds,
(iv) the trustees of the Acquiring Funds would be the same
as the Trustees of the corresponding Fund immediately
prior to the Future Merger, and (v) the management fees
and expense limits of each Acquiring Fund would be the
same as those of the corresponding Fund.

As consideration for the assets acquired and
covenants of SBA described above, Managers has agreed
to pay SBA up to $3 million in cash at the closing of the
SBA/Managers Transaction, subject to a downward
adjustment of up to $3 million depending on the amount of
net assets in the Funds as of the consummation of the
SBA/Managers Transaction.  In the event of a downward
adjustment, the amount of the downward adjustment may
be recouped by SBA on the third anniversary of the
closing of the SBA/Managers Transaction if the net assets
of the Funds (or the Acquiring Funds, as the case may be)
have increased in accordance with a specified schedule.
The Purchase Agreement also provides that additional
consideration would be paid in the future, which
additional consideration could be as much as $4 million if
assets grow to certain target levels.  Accordingly, the
maximum consideration payable to SBA is $7 million and
is subject to the growth of assets in the future.

In addition, the Purchase Agreement provides that
if SBA is approved as Subadviser of the Funds pursuant to
the subadvisory agreements for each Fund described in
Proposal 3 (the "Proposed Subadvisory Agreements"),
and if SBA is terminated during the term of the Proposed
Subadvisory Agreements by Managers without cause (as
defined in the Purchase Agreement), then Managers'
obligation to pay a portion of the additional consideration
described above would become fixed.  As a result,
Managers would have to pay such portion of the additional
consideration if it terminates SBA without cause (as
defined in the Purchase Agreement).  For these purposes,
the Purchase Agreement defines "cause" to include,
among other things, unsatisfactory investment
performance and departure of key personnel.

The consummation of the SBA/Managers
Transaction is contingent upon receiving approval of the
Restructuring Matters from the Board and/or shareholders
of the Funds, as the case may be, and on the annualized
gross run-rate revenues (not taking into account any
waivers) of the transferred business being at least a
specified level as of the closing date.  Other conditions
precedent to the closing of the SBA/Managers Transaction
include, among other things, that all regulatory filings,
applications, and notifications have been duly and
properly made or obtained and the absence of any material
adverse changes to SBA or the Funds.  The Future
Mergers are not a condition precedent to the
consummation of the SBA/Managers Transaction.

Both Managers and SBA have covenanted to use
their reasonable best efforts to cause the SBA/Managers
Transaction to fit within the safe harbor provided by
Section 15(f) of the Investment Company Act of 1940, as
amended (the "1940 Act"), which permits an investment
adviser to receive a benefit in connection with the
assignment of an investment advisory contract if the
conditions specified in such statutory provisions are
satisfied.  The conditions specified by Section 15(f)
include (i) that the SBA/Managers Transaction cannot
place an "unfair burden" on shareholders of the Funds
and (ii) that 75% of the Board of Trustees of the Trusts
(or of the Board of Trustees of Managers Trust if the
Future Mergers are effected) must be Trustees who are
not considered interested persons of SBA or Managers
under the 1940 Act for a period of three years from the
consummation of the SBA/Managers Transaction.

	If the SBA/Managers Transaction is not
consummated for certain specified reasons, SBA is
prohibited from directly or indirectly soliciting,
negotiating, or entering into an agreement with any person
other than Managers relating to the possible acquisition of
any direct or indirect interest in SBA or its assets for a
period of three months after the termination of the
Purchase Agreement.

	The closing of the SBA/Managers Transaction is
expected to take place promptly after the Meeting.


II.	PROPOSAL 1:  ELECTION OF NOMINEES
AS TRUSTEES OF THE TRUSTS

The Board of the Trusts has nominated the
Nominees for election to the Board of the Trusts and,
under this Proposal, shareholders of the Funds are being
asked to elect each of these Nominees, such election to be
effective on the resignation of the current trustees of the
Trusts, Douglas T. Breeden, Michael J. Giarla, Stephen
M. Schaefer, Myron S. Scholes, and William F. Sharpe
(the "Current Trustees").  Pertinent information about
each Nominee, which information was provided by
Managers, is set forth below.  Each Nominee has
indicated a willingness to serve if elected.  If elected, each
Nominee will hold office until his or her successor is
elected and qualified.  Each of the Current Trustees will
resign their positions on the Board of the Trusts upon
consummation of the SBA/Managers Transaction if the
Nominees are elected by the shareholders and the
SBA/Managers Transaction is consummated.  If the
Nominees are elected and the SBA/Managers Transaction
is consummated, the Nominees will constitute the "New
Board."

Information Regarding Nominees

In evaluating the Nominees, the Current Trustees
took into account the Nominees' background and
experience with The Managers Funds, a Massachusetts
business trust ("Managers Trust"), and, as applicable,
their experience with Managers AMG Funds.  Below are
the names, ages, business experience during the past five
years, and other directorships of the Nominees (as
furnished to the Trusts).  Each of the Nominees is a
current member of the Board of Managers Trust.  An
asterisk (*) has been placed next to the name of the only
Nominee who would be considered an "interested
person," as defined in the 1940 Act, by virtue of that
person's affiliation with any of the Funds or Managers.




NAME AND AGE


ADDRESS, PRINCIPAL OCCUPATION
AND OTHER INFORMATION
SHARES OWNED
BENEFICIALLY
AND % OF FUNDS [(1)]

Jack W. Aber  (62)
595 Commonwealth Ave., Boston,
MA  02215.
Professor of Finance, Boston
University School
of Management since 1972.
[none]
William E. Chapman, II  (58)
380 Gulf of Mexico Drive, Longboat
Key, FL  34228.	[none]
President & Owner, Longboat
Retirement Planning
Solutions.  From 1990 to 1998,
variety of positions
with Kemper Funds, most recently
President of the Retirement Plans
Group.

Sean M. Healey* (39)
Two International Place, 23rd Floor,
Boston, MA  02110.
President and Chief Operating Officer
of AMG since 1999.
Executive Vice President of AMG
from 1995 to 1999.
[none]
Edward J. Kaier  (54)
1100 One Penn Center, Philadelphia,
PA  19103.
Partner, Hepburn Willcox Hamilton
& Putnam since 1977.
[none]
Madeline H. McWhinney  (78)
24 Blossom Cove Road, Red Bank,
New Jersey  07701.
From 1977 to 1994, President of
Dale, Elliott &
Company, Inc.  Member of the
Investment Committee,
New Jersey Supreme Court since
1990.
[none]
Steven J. Paggioli  (50)
915 Broadway, Suite 1605, New
York, NY  10010.
Executive Vice President and Director
of
The Wadsworth Group since 1986.
Vice President,
Secretary, and Director of First Fund
Distributors, Inc.,
since 1991.  Executive Vice
President, Secretary, and Director
of Investment Company
Administration, LLC since 1990.
Trustee of Professionally Managed
Portfolios since 1991.
[none]
Eric Rakowski  (41)
1535 Delaware Street, Berkeley, CA
94703-1281.		[none]
Professor, University of California at
Berkeley
School of Law since 1990.

Thomas R. Schneeweis  (53)
10 Cortland Drive, Amherst, MA
01002.
Professor of Finance, University of
Massachusetts since
1985.  Managing Director of CISDM
at the University
of Massachusetts since 1994.
[none]
[(1) Except as otherwise indicated, shares beneficially
owned by the person constitute less than 1% of the
outstanding shares of each Fund.]

For comparable biographical information regarding
the Current Trustees and principal executive officer of the
Trusts, see Appendix B of this Proxy Statement.

Information Regarding the Current Trustees of the
Trusts

Each Current Trustee who is not an officer or
affiliate of the Trusts or SBA receives an aggregate annual
fee of $38,750 for services rendered as a Trustee, as well
as a fee of $_____ for each meeting attended in person
and a fee of $_____ for _____________.  Each Trustee is
also reimbursed for out-of-pocket expenses incurred as a
Trustee.  The following table sets forth information
concerning fees paid during the Trusts? fiscal year ended
__________ to each Current Trustee during such fiscal
year.  An asterisk (*) has been placed next to the name of
each Trustee who would be considered an "interested
person," as defined in the 1940 Act, by virtue of that
person's affiliation with any of the Funds or SBA.





Name
Aggregate Compensation
from Trusts
Pension or Retirement Benefits Accrued as Part of Trust Expenses
Estimated Annual Benefits Upon Retirement

Total Compensation from Trusts Paid to Trustee

Douglas T. Breeden*

$0

None

N/A

$0

Michael J. Giarla*

$0

None

N/A

$0

Stephen M. Schaefer

$70,000

None

N/A

$70,000

Myron S. Scholes

$70,000

None

N/A

$70,000

William F. Sharpe

$70,000

None

N/A

$70,000

As of the Record Date, the Trusts believe that the
officers, Current Trustees, and Nominees as a group
owned less than 1% of the outstanding shares of each
Fund.

During the fiscal year ended March 31, 2000, the
Trusts had __________ Board meetings.  With respect to
such fiscal year, each Current Trustee attended [100%] of
the meetings of the Board and committees on which the
Current Trustee served during his tenure [, with the
exception of __________, who attended _____% of such
meetings.]  [any committees?]

Managers has advised the Trusts that if the
Nominees are elected, the annual fees for the New Board
are anticipated to be reduced and will represent a pro-rata
share of the New Board's fees paid by each of the Funds,
based on each Fund's average net assets as a percentage of
the average net assets of all the funds encompassing the
Trusts and Managers Trust.  On this basis, annual fees are
expected to be $_________ per Trustee.  Trustees would
continue to be reimbursed for any expenses incurred in
attending meetings of the Trusts and for other incidental
expenses.  The Trustees' fees are subject to the approval
of the Board upon its election; shareholders are not being
asked to vote on these fees.  Thereafter, Board fees may
be reviewed periodically and changed by the Board.

In the event that the SBA/Managers Transaction is
not consummated, the Current Trustees are expected to
remain in office, and the Nominees would not become
Trustees of the Trusts even if elected by the shareholders.

Vote Required

For the election of each Nominee for the Board of
each Trust, the affirmative vote of a plurality of votes cast
at the Meeting, in person or by proxy, and with all series
of a Trust voting together as a single class, is necessary.

THE BOARD OF THE TRUSTS, INCLUDING
ITS TRUSTEES WHO ARE NOT CONSIDERED
INTERESTED PESONS UNDER THE 1940 ACT
("INDEPENDENT TRUSTEES"), HAS
CONSIDERED THE NOMINEES AND
RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ALL OF THE NOMINEES UNDER
PROPOSAL 1.


III.	PROPOSAL 2:  APPROVAL OR DISAPPROVAL OF THE PROPOSED
MANAGEMENT AGREEMENTS

The Board is proposing to replace SBA,
100 Europa Drive, Suite 200, Chapel Hill, NC 27514,
with Managers, 40 Richards Avenue, Norwalk, CT
06854, as the investment adviser (the "Adviser") of the
Funds, with SBA serving as Subadviser of the Funds.

On May 9, 2000, the Board, including a majority
of the Independent Trustees, voted to approve a new
management agreement between the relevant Trust, on
behalf of each Fund, and Managers (the "Proposed
Management Agreements") subject to the approval of the
shareholders of the Funds sought herein.  The Proposed
Management Agreements would supersede the current
investment advisory agreements, each dated August 1,
1994, between SBA and the relevant Trust on behalf of
each of the Funds (the "Current Management
Agreements"), effective upon the date the SBA/Managers
Transaction is consummated.  The description of the
Proposed Management Agreements set forth below is
qualified in its entirety by reference to the form of
Proposed Management Agreement, which is attached
hereto as Exhibit 1.

The Current Management Agreements were last
submitted to a vote of shareholders of each Fund on June
20, 1994, for the purpose of raising the management fees
of the Funds. Under the Current Management
Agreements, the advisory fees paid by each Fund during
the past fiscal year are presented in the table below.



Fund	Total Advisory Fee
Paid By Fund During Past Fiscal Year

Smith Breeden Short Duration U.S. Government Fund

Smith Breeden Intermediate Duration U.S. Government Fund

Smith Breeden U.S. Equity Market Plus Fund


In approving the Proposed Management
Agreements, the Board took into account the fact that
Managers informed the Trusts that it intends to make the
same undertaking that SBA has made with respect to the
expenses of each Fund, as described in footnote 3 on
pages 4 and 8 of the Funds' Prospectus dated
February 2, 2000.  Such undertaking would be for the
period ending March 31, 2001 and would be voluntary.
In addition, during the course of the Trustees' evaluation
of the proposals, Managers agreed that for the two-year
period following Managers' appointment as adviser,
Managers would waive its fees and/or bear expenses of
each Fund to the extent necessary to cause the daily
accrual of total expenses of that Fund to be at the annual
rates of 0.88% for the Smith Breeden Intermediate
Duration U.S. Government Fund, 0.78% for the Smith
Breeden Short Duration U.S. Government Fund, and
0.88% for the Smith Breeden U.S. Equity Market Plus
Fund (the "Expense Commitment").  The Expense
Commitment for any given Fund would not apply,
however, on any day that the total assets of that Fund are
below $50 million or if the shareholders of that Fund
approve a new investment advisory agreement or a merger
of that Fund into another mutual fund.  The assets of the
Funds as of May __, 2000 are [$188.1 million], [$28.1
million], and [$34.6 million] for the Smith Breeden U.S.
Equity Market Plus Fund, the Smith Breeden Intermediate
Duration U.S. Government Fund, and the Smith Breeden
Short Duration U.S. Government Fund, respectively.

In reviewing the Proposed Management
Agreements, the Board considered a number of factors,
including (i) the experience of Managers and its personnel
with the Managers fund complex, (ii) the fact that the
management fees under the Proposed Management
Agreements are identical to those imposed by the Current
Management Agreements, (iii) the Expense Commitment,
(iv) the fact that SBA will, assuming shareholder approval
of Proposal 3, continue to serve the Funds in an
investment advisory capacity pursuant to the Proposed
Subadvisory Agreements, (v) the benefits to the Funds of
the economies of scale and the greater marketing
resources offered by Managers, (vi) the resources and
experience of Managers in providing service to
shareholders of the existing funds in the Managers fund
complex, (vii) the reduced economic incentives for SBA,
given the proposed level of fees for SBA under the
Proposed Subadvisory Agreements, (viii) the economic
disincentives for Managers to terminate SBA other than
for "cause" during the first five years that SBA serves as
Subadviser to each Fund, (ix) the possible incentives for
SBA afforded by the potential for payments of deferred
purchase price if the assets of the Funds grow during such
period, (x) the ability of Managers and SBA to retain and
attract qualified personnel, (xi) Managers' experience in
connection with inspections by relevant regulatory
authorities, and (xii) results of financial audits of
Managers Trust.

Description of the Proposed Management Agreements

The Proposed Management Agreements, together
with the Proposed Subadvisory Agreements described
below and the Administrative Services Agreement
approved by the Trustees of the Trusts, provide for
substantially similar services and fees as those provided
under the Current Management Agreements.  The
Proposed Management Agreements provide that, subject
to the general supervision of the Trustees, Managers will
provide a continuous investment program for the Funds
and determine the composition of the assets of the Funds,
including the determination of the purchase, retention, or
sale of securities, cash, and other investments for the
Funds.  During the term of the Proposed Management
Agreements, Managers will pay all expenses incurred by
it in connection with its activities under the Proposed
Management Agreements, including fees payable to
subadvisers, salaries and expenses of the officers and
trustees of the Funds who are employees of Managers or
its affiliates, and office rent of the Funds; but each Fund
will be responsible for all other expenses of its operation,
including among others brokerage commissions, interest,
legal fees and expenses of attorneys, and fees of auditors,
transfer agents, dividend disbursement agents, custodians,
and shareholder servicing agents.  Managers will provide
such services in accordance with the Funds' investment
objectives, investment policies, and investment restrictions
as stated in the registration statement of the Trusts filed
with the Securities and Exchange Commission (the
"SEC"), as supplemented and amended from time to time.
 The provision of investment advisory services by
Managers to the Funds will not be exclusive under the
terms of the Proposed Management Agreements, and
Managers will be free to, and will, render investment
advisory services to others.

The Proposed Management Agreements provide
that they will, unless sooner terminated as described
below, continue in effect for a period of two years from
their effective date and will continue from year to year
thereafter with respect to each Fund, so long as such
continuance is approved at least annually (i) by the vote of
a majority of the Board of Trustees of the relevant Trust
or (ii) by the vote of a majority of the outstanding voting
securities of the relevant Fund (as defined in the 1940
Act), and provided that in either event they are also
approved by the vote of a majority of the Independent
Trustees of the relevant Trust.  Each Proposed
Management Agreement provides that it may be amended
only in accordance with the 1940 Act and that it
terminates automatically in the event of its assignment (as
defined in the 1940 Act).

The Proposed Management Agreements may be
terminated at any time, without the payment of any
penalty, (i) by the relevant Trust by vote of a majority of
its Board of Trustees, (ii) by vote of a majority of the
outstanding voting securities of the relevant Trust, or (iii)
with respect to any Fund, by vote of a majority of the
outstanding securities of such Fund, upon 60 days? written
notice to Managers.  The Proposed Management
Agreements may be terminated by Managers upon 60
days? written notice to the Trust.

The Proposed Management Agreements provide
that, except as may otherwise be required by the 1940 Act
or the rules thereunder, Managers shall not be subject to
any liability for any act or omission connected with
services rendered under the Proposed Management
Agreements or for any losses that may be sustained in the
purchase, holding, or sale of any security, except by
reason of Managers? willful misfeasance, bad faith, or
gross negligence in the performance of its duties, or by
reason of Managers' reckless disregard of its obligations
and duties under the Proposed Management Agreements.

Under the Proposed Management Agreements, an
advisory fee based on the average daily net assets of each
Fund is payable by such Fund to Managers on a monthly
basis as compensation for all services rendered, facilities
furnished, and expenses borne by Managers, at the annual
rates set forth in the table below, which are the same as
the annual advisory fee rates for the Funds under the
Current Management Agreements.



Fund

Annual Advisory Fee Rate	Total Advisory Fee
Paid By Fund During Past Fiscal Year

Smith Breeden Short Duration U.S. Government Fund
 .70%

Smith Breeden Intermediate Duration U.S. Government Fund
 .70%

Smith Breeden U.S. Equity Market Plus Fund
 .70%


As indicated above, if the SBA/Managers
Transaction is consummated, Managers and Managers
Trust will enter into the Expense Commitment.  Under the
Expense Commitment, for a period of two years after such
consummation, Managers would waive its fees and/or
bear expenses of each Fund (including administrative fees
and distribution expenses for the Fund, but excluding
interest, taxes, brokerage commissions, and other costs
incurred in connection with portfolio securities
transactions, organizational expenses, and other
capitalized expenditures and extraordinary expenses) to
the extent necessary to cause the daily accrual of total
expenses of that Fund to be at the annual rates of 0.88%
for the Smith Breeden Intermediate Duration U.S.
Government Fund, 0.78% for the Smith Breeden Short
Duration U.S. Government Fund, and 0.88% for the
Smith Breeden U.S. Equity Market Plus Fund.  The
Expense Commitment for any given Fund would not
apply, however, on any day that the total assets of that
Fund are below $50 million or if the shareholders of that
Fund approve a new investment advisory agreement or a
merger of that Fund into another mutual fund.

Information about Managers (as furnished to the
Trusts by Managers)

 Managers is organized as a Delaware limited
liability company.  As of May 19, 2000, Managers
managed and/or administered 10 open-end investment
companies with combined assets of approximately $3.5
billion.  Managers does not serve as investment adviser or
subadviser to any investment company that has investment
objectives similar to those of the Funds.

Certain information regarding the principal
executive officers of Managers is set forth below.  The
address of each person is 40 Richards Avenue, Norwalk,
CT 06854.



NAME AND AGE	POSITION WITH
MANAGERS	PRINCIPAL
OCCUPATION FOR LAST 5 YEARS

Peter M. Lebovitz  (45)




Donald S. Rumery  (41)





Thomas G. Hoffman (37)

President




Chief Financial Officer





Director of Research
President of Managers since [April 1999].  From September 1994 to
April 1999, Vice President and Managing Director of Managers.

Director of Operations of Managers since April 1999.  From
December 1994 to April 1999, Chief Financial Officer of Managers.

Director of Research of Managers since April 1999.  From
September 1994 to April 1999, Senior Investment Analyst of
Managers.

	No persons currently act as both officers or Trustees of the
        Trusts and officers or directors of Managers.

The effectiveness of this Proposal is conditioned
on the consummation of the SBA/Managers Transaction.
Accordingly, in the event that the SBA/Managers
Transaction is not consummated, the Current Management
Agreements would remain in effect, and SBA would
continue to serve as adviser of the Funds, even if the
Proposed Management Agreements are approved by
shareholders.

Vote Required

Shareholders of each Fund will vote on the
approval or disapproval of the Proposed Management
Agreements only with respect to that Fund.  Adoption of
this Proposal 2 for each Fund will require the approval of
a "vote of a majority of the outstanding voting securities"
of the Fund, as defined in the 1940 Act.  Under the 1940
Act, a "vote of a majority of the outstanding voting
securities" of each Fund is defined as the lesser of (i) 67%
of the Fund?s outstanding shares represented at a meeting
at which more than 50% of the outstanding shares are
present in person or represented by proxy or (ii) more
than 50% of the Fund?s outstanding shares.

THE BOARD, INCLUDING ITS
INDEPENDENT TRUSTEES, HAS CAREFULLY
REVIEWED PROPOSAL 2 AND BELIEVES THAT
IT IS IN THE BEST INTERESTS OF THE
SHAREHOLDERS OF THE FUNDS.  THEREFORE,
THE BOARD UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS OF THE FUNDS
VOTE TO APPROVE PROPOSAL 2.


IV.	PROPOSAL 3:  APPROVAL OR
DISAPPROVAL OF SUBADVISORY
AGREEMENTS

In connection with the replacement of SBA by
Managers as Adviser of the Funds, the Trustees
recommend that SBA be appointed as Subadviser for each
of the Funds.  Accordingly, this Proposal seeks the
approval of the shareholders of the Funds for the
Proposed Subadvisory Agreements.  SBA currently serves
as investment adviser to the Funds, so the Proposed
Subadvisory Agreements will allow SBA to continue to
provide investment advisory services to the Funds
pursuant to the terms of the Proposed Subadvisory
Agreements. The description of the Proposed Subadvisory
Agreements set forth below is qualified in its entirety by
reference to the form of Proposed Subadvisory
Agreement, which is attached hereto as Exhibit 2.

The Proposed Subadvisory Agreements provide
that, subject to the general supervision of the Board of the
relevant Trust and Managers, SBA shall manage the
composition of each of the Funds, including the
determination of the purchase, retention, or sale of
securities, cash, and other investments for the Funds.
Under the Proposed Subadvisory Agreements, SBA is
required to provide such services in accordance with each
Fund?s investment objectives, investment policies, and
investment restrictions as stated in the relevant registration
statement filed with the SEC, as supplemented and
amended from time to time.  The provision of investment
advisory services by SBA to the Funds will not be
exclusive under the terms of the Proposed Subadvisory
Agreements, and SBA will be free to, and will, render
investment advisory services to others.

The Proposed Subadvisory Agreements provide
that they will, unless sooner terminated as described
below, continue in effect for a period of two years from
their effective date and will continue thereafter with
respect to each Fund, so long as such continuance is
approved at least annually (i) by the vote of a majority of
the Board of the relevant Trust or (ii) by the vote of a
majority of the outstanding voting securities of the
relevant Fund (as defined in the 1940 Act).  The Proposed
Subadvisory Agreements provide that they may be
amended only in accordance with the 1940 Act and that
they terminate automatically in the event of their
assignment (as defined in the 1940 Act).

The Proposed Subadvisory Agreements may be
terminated:  (i) by Managers at any time, without payment
of a penalty, upon notice to SBA and the relevant Trust,
(ii) at any time, without payment of a penalty, by the
relevant Trust or a majority of the outstanding voting
securities of the Fund, or (iii) by SBA at any time,
without payment of a penalty, upon 30 days? notice to
Managers and the relevant Trust.  As noted previously,
certain economic disincentives for Managers exist should
Managers terminate SBA other than for "cause" during
the first five years that SBA serves as Subadviser to each
Fund.

The Proposed Subadvisory Agreements provide
that SBA shall not be subject to any liability for any act or
omission, error of judgment, or mistake of law or for any
loss suffered by Managers or the relevant Trust in
connection with the Proposed Subadvisory Agreements,
except by reason of SBA's willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or by
reason of SBA's reckless disregard of its obligations and
duties under the Proposed Subadvisory Agreements.

Under the Proposed Subadvisory Agreements, a
subadvisory fee is calculated daily based on the daily net
assets of each Fund and is payable by Managers to SBA
on a monthly basis as compensation for all services
rendered and expenses borne by SBA, at the annual
subadvisory fee rates set forth in the table below.


Fund

Annual Subadvisory Fee Rate

Smith Breeden Short Duration Fund

0.05% through the first anniversary of the Proposed Subadvisory
Agreement for the Fund and 0.10% thereafter; provided, however,
that if on any date after the first anniversary of the Proposed
Subadvisory Agreement for the Fund, the gross annualized fee
received by Managers under the Proposed Management Agreement is
less than $403,200, then such annual fee rate shall be reduced to
0.05% of the Fund?s daily net assets for that day.

Smith Breeden Intermediate Duration Fund

0.05% through the first anniversary of the Proposed Subadvisory
Agreement for the Fund and 0.10% thereafter; provided, however,
that if on any date after the first anniversary of the Proposed
Subadvisory Agreement for the Fund, the gross annualized fee
received by Managers under the Proposed Management Agreement is
less than $325,800, then such annual fee rate shall be reduced to
0.05% of the Fund?s daily net assets for that day.

Smith Breeden U.S. Equity Market Plus Fund

0.05% through the first anniversary of the Proposed Subadvisory
Agreement for the Fund and 0.20% thereafter; provided, however,
that if on any date after the first anniversary of the Proposed
Subadvisory Agreement for the Fund, the gross annualized fee
received by Managers under the Proposed Management Agreement is
less than $1,365,300, then such annual fee rate shall be reduced to
0.15% of the Fund?s daily net assets for that day.

Pursuant to the Proposed Subadvisory Agreements,
SBA agrees that if Managers has waived all or a portion
of the advisory fee payable by Managers Trust with
respect to a Fund, or if Managers has agreed to pay or
reimburse the relevant Trust for expenses of a Fund above
a certain level, SBA will, upon request by Managers,
waive a pro-rata share of the subadvisory fee payable to
SBA pursuant to the Proposed Subadvisory Agreements,
or reimburse the relevant Trust for a pro-rata share of
such expenses, so that the amount of expenses waived or
borne by SBA will bear the same ratio to the total amount
of the subadvisory fees payable pursuant to the Proposed
Subadvisory Agreement with respect to such Fund as the
amount waived or borne by Managers bears to all fees
payable to the Adviser pursuant to the Proposed
Management Agreement relating to such Fund.

The effectiveness of this Proposal 3 is conditioned
on the approval of the Proposed Management Agreements
pursuant to Proposal 2 and the consummation of the
SBA/Managers Transaction.  Accordingly, in the event
that the SBA/Managers Transaction is not consummated,
SBA will remain as Adviser of the Funds pursuant to the
Current Management Agreements, even if the Proposed
Subadvisory Agreements are approved by the
shareholders.

Vote Required

Shareholders of each Fund will vote only on the
approval or disapproval of the Proposed Subadvisory
Agreement with respect to that Fund.  Adoption of this
Proposal 3 for each Fund will require the approval of a
"vote of a majority of the outstanding voting securities" of
the Fund, as defined in the 1940 Act.  Under the 1940
Act, a "vote of a majority of the outstanding voting
securities" of each Fund is defined as the lesser of (i) 67%
of the Fund's outstanding shares represented at a meeting
at which more than 50% of the outstanding shares are
present in person or represented by proxy or (ii) more
than 50% of the Fund?s outstanding shares.

THE BOARD, INCLUDING ITS
INDEPENDENT TRUSTEES, HAS CAREFULLY
REVIEWED PROPOSAL 3 AND BELIEVES THAT
IT IS IN THE BEST INTERESTS OF THE
SHAREHOLDERS OF THE FUNDS.  THEREFORE,
THE BOARD UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS OF EACH FUND
VOTE TO APPROVE PROPOSAL 3.


V.	PROPOSAL 4:  APPROVAL OR DISAPPROVAL OF AN AMENDMENT
TO THE TRUSTS' DECLARATIONS OF TRUST

In connection with the SBA/Managers Transaction
and the Future Mergers, the Board of the Trusts
recommends that shareholders approve the following
amendment to the Trusts' Declarations of Trust:

That Section 5 of Article IX of the Smith
Breeden Trust's Agreement and Declaration
of Trust (as amended) and Section 8.4 of
the Smith Breeden Series Fund's
Agreement and Declaration of Trust (as
amended and restated) are each further
amended by adding the following at the end
of each such Section:

In addition to the foregoing, any Series of
the Trust (the "Relevant Series") may
merge or consolidate with or into, and may
transfer substantially all of its assets and
liabilities to, another series of any other
registered investment company (the
"Surviving Fund") upon the approval of a
majority of the Trustees (such a transaction
being referred to herein as a "Merger"),
subject however to the following
conditions:  (1) the investment advisory and
subadvisory arrangements, including any
commitments by the Surviving Fund's
investment adviser(s) with respect to total
expenses, are identical to those of the
Relevant Series, except that such
arrangements may allow the appointment of
additional subadviser(s) for a portion of the
Surviving Fund's assets; (2) the board of
directors or trustees of the Surviving Fund
is the same as the Trustees of the Trust; (3)
the directors/trustees of the Surviving Fund
make a finding that the levels of service
provided by the Surviving Fund are as high
or higher than the levels of service for the
Relevant Series; (4) the Merger is effected
as a tax-free reorganization to the Fund and
its shareholders under the Internal Revenue
Code; (5) the Merger is effected in
conformity with the requirements of Rule
17a-8 under the 1940 Act that the Merger
be in the best interests of the Relevant
Series' shareholders and that it not result in
any dilution of those shareholders'
interests; (6) in approving the Merger, the
Trustees who are not "interested persons"
of the Trust (within the meaning of the
1940 Act) consult with counsel who is not
representing the Relevant Series'
investment adviser(s) with respect to the
Merger (although such counsel may belong
to the same firm that represents such
investment adviser(s)); (7) the costs of the
Merger are borne by parties other than the
Relevant Series or the Surviving Fund;
(8) that the Surviving Fund commits that
for at least three years from the date of any
transaction (i) occurring prior to the
Merger, (ii) involving the Relevant Series'
investment adviser, and (iii) described in
Section 15(f) of the 1940 Act, at least 75%
of its directors/trustees will not be
"interested persons" of the Surviving Fund
as contemplated by said Section 15(f); and
(9) that the investment policies of each
Surviving Fund shall not differ materially
from those of the Relevant Series.

The purpose of this Proposal is to facilitate the
SBA/Managers Transaction and the Future Mergers, the
effect of which will be to reorganize the Funds into the
Managers fund complex at an administratively convenient
time.  The Amendment to the Trusts' Declarations of
Trust provides certain conditions that must be met before
the SBA/Managers Transaction and the Future Mergers
may be consummated.  These conditions are designed to
ensure that the Future Mergers result in changes in form,
not in substance, and that any Future Merger is conducted
within parameters that are designed to protect the
shareholders of the Fund.  For example, as previously
described, Managers will waive its fees and absorb other
expenses of each Acquiring Fund pursuant to the terms of
the Expense Commitment to ensure that each Fund's
operating expenses do not exceed its current levels for a
period of two years from the SBA/Managers Transaction.
 The reference to "any transaction" in clause (8) above is
intended to refer to the SBA/Managers Transaction.  The
exception in clause (1) above is intended to allow the
Surviving Funds' subadvisory agreements to track the
language currently found in the subadvisory agreements
for Managers Trust.

If the SBA/Managers Transaction and the Future
Mergers are consummated, the Funds will be merged into
the Acquiring Funds.  As a result, Fund shareholders
would then be subject to the Declaration of Trust of
Managers Trust.  A comparison of the Declarations of
Trust of the Trusts and Managers Trust is presented
below.

Comparison of Declarations of Trust

Each of the Series Trust, SB Trust, and Managers
Trust is organized as a Massachusetts business trust.  The
Declarations of Trust of the Series Trust, the SB Trust,
and Managers Trust are similar in certain respects, but
differ in other instances.  Certain provisions of these
Declarations of Trust are described below.

Shareholder Vote.  The Series Trust and Managers
Trust each require a 66-2/3% shareholder vote to approve
a merger, sale of assets, or similar consolidation, unless
the transaction is recommended by the Trustees, in which
case the approval of a majority of the outstanding shares is
required.  The SB Trust, on the other hand, allows the
Trustees to effect a merger of the Trust if such merger is
approved by a majority of the outstanding shares (as
defined in the 1940 Act).  In addition, the SB Trust
provides that it may be terminated by vote of at least 50%
of the shares of each series entitled to vote and voting
separately by series.  The Series Trust, on the other hand,
provides that it may be terminated (i) by at least 66-2/3%
of the shares of each series entitled to vote and voting
separately by series or (ii) by a majority of such shares if
such termination is recommended by the Trustees.  The
corresponding provision of the Declaration of Trust of
Managers Trust provides that it may be terminated by vote
of at least 66-2/3% of the shares of each series entitled to
vote and voting separately by series (regardless of whether
the Trustees approve such termination).

Liability and Indemnification.  Each of the Trusts
provides that it will indemnify shareholders and former
shareholders for losses and expenses arising from liability
by reason of having been a shareholder.  Each of the
Trusts also provides that its respective Trustees and
officers shall not be liable and shall be indemnified in the
absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duties.  Managers
Trust further provides that each of its Trustees shall not be
liable for monetary damages for breach of fiduciary duty,
except in certain enumerated circumstances.

The effectiveness of this Proposal is conditioned
on the consummation of the SBA/Managers Transaction.
Accordingly, in the event that the SBA/Managers
Transaction is not consummated, this proposed
Amendment to the Declarations of Trust will not become
effective, even if it is approved by the shareholders.

Vote Required

Adoption of this Proposal will require the approval
of a vote of a majority of the outstanding shares of each
Trust, with all series voting as a single class.  This means
that in the case of the Series Trust, the Smith Breeden
Short Duration U.S. Government Fund and the Smith
Breeden Intermediate Duration U.S. Government Fund
will vote together as a single class.

THE BOARD HAS CAREFULLY REVIEWED
THIS PROPOSAL AND BELIEVES THAT IT IS IN
THE BEST INTERESTS OF THE SHAREHOLDERS
OF THE FUNDS.  THEREFORE, THE BOARD
UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE TO
APPROVE THIS PROPOSAL.


VI.	PROPOSAL 5:  APPROVAL OR DISAPPROVAL OF A
PROPOSAL ALLOWING THE ADVISER TO CHANGE THE SUBADVISER OF
THE FUNDS WITHOUT SHAREHOLDER APPROVAL

With respect to each Fund, the Board is proposing
that shareholders grant approval to permit Managers to
enter into new or amended subadvisory agreements with a
subadviser(s) with respect to each Fund without obtaining
shareholder approval of such subadvisory agreements, and
to permit such subadviser(s) to manage the assets of each
Fund pursuant to such agreements.  If shareholders
approve this Proposal, Managers expects that it would be
able to take these actions only to the extent permitted by
an exemption granted to Managers and Managers Trust
(the "SEC Exemption Order"), by any similar exemption
granted by the SEC, or by any applicable SEC rule.

The 1940 Act generally provides that an
investment adviser or subadviser to a mutual fund may act
as such only pursuant to a written agreement that has been
approved by a vote of a majority of the outstanding voting
securities of the fund, as well as by a vote of a majority of
the trustees of the fund who are not parties to such
agreement or interested persons of any party to such
agreement.  Managers, however, has received the SEC
Exemption Order, which permits Managers, under
specified conditions, to enter into new and amended
subadvisory agreements for each fund in Managers Trust,
including agreements with new subadvisers and
agreements with existing subadvisers if there is a material
change in the terms of the subadvisory agreement or if
there is an "assignment," as defined in the 1940 Act, or
other event causing termination of the existing
subadvisory agreement, without obtaining the approval of
the fund's shareholders of such new or amended
subadvisory agreements.  Such subadvisory agreements
must nevertheless be approved by the trustees in
accordance with the requirements of the 1940 Act.  The
conditions of the SEC Exemption Order include the
requirement that within 60 days after entering into a new
or amended subadvisory agreement without shareholder
approval, each fund must provide to shareholders an
information statement setting forth substantially the
information that would be required in a proxy statement
for a meeting of shareholders to vote on the approval of
the agreement.  If the SEC Exemption Order becomes
applicable to the Funds by virtue of Future Mergers into
Managers Trust, shareholder approval would still be
required to amend the management agreement (including
the Proposed Management Agreements) with respect to
each Fund (including any amendment to raise the
management fee or alter the Expense Commitment) or to
enter into a new management agreement with Managers or
any other adviser or to enter into a new subadvisory
agreement with an affiliate of Managers.

The Trusts are requesting shareholder approval of
this Proposal for several reasons.  First, one of the
premises of the funds sponsored by Managers is that
Managers, as Adviser, is responsible for selecting
subadvisers for each of the funds in the complex that, in
Managers' view, suit the investment goals and objectives
of each fund.  Managers has indicated that it monitors the
performance, personnel, and techniques of each of its
subadvisers, and if Managers determines that a subadviser
no longer satisfies the needs of the fund that it subadvises,
Managers may (except as described above with respect to
an affiliate of Managers) recommend replacement of that
subadviser, subject only to the concurrence of the Trustees
of Managers Trust.  The Trusts believe that this situation
is analogous to a situation where an investment adviser of
a mutual fund replaces an employee who manages the
fund's investment portfolio with a different portfolio
manager, which action does not require shareholder
approval under the 1940 Act.

Since, by its terms, the SEC Exemption Order
applies only to Managers Trust, if this Proposal is
approved by shareholders, Managers would have the
ability to change the subadviser of each of the Funds
(including SBA) and/or to assign subadvisory
responsibility for a portion of the Fund without
shareholder approval if a Future Merger into Managers
Trust were to be effected pursuant to the power of the
Trustees granted by the Amendment to the Declarations of
Trust of the Trusts described in Proposal 4.  In the
alternative, further exemptive relief could be sought for
the Funds themselves, allowing Managers to change
subadvisers without shareholder approval.  In reaching its
conclusion to recommend the Proposal, the Trustees of the
Trusts took into account (1) the possible interplay between
this Proposal and the Trustees' new powers under such
proposed Amendment to the Declaration of Trust, (2) the
fact that Managers represented that it had no current
intention of changing the Funds' Proposed Subadvisory
Agreements with SBA, and (3) the fact that if SBA is
removed without cause during the term of the Proposed
Subadvisory Agreement relating to a Fund (or an
Acquiring Fund), Managers' obligation to pay SBA the
contingent portion of the purchase price pursuant to the
Purchase Agreement would become fixed.

By approving the Proposal, shareholders would be
agreeing to forgo any benefits associated with shareholder
review of proposed subadvisory agreements, such as the
ability to consider a subadviser's performance record.

In the event that this Proposal is not approved by
shareholders, the shareholder approval requirement under
the 1940 Act may cause each Fund's (or an Acquiring
Fund's) shareholders to incur unnecessary expenses, such
as the expenses involved in holding, and soliciting proxies
for, a shareholder meeting, and could hinder the prompt
implementation of subadvisory changes that the Adviser
believes are in the best interests of the shareholders, such
as prompt engagement or replacement of a subadviser if
circumstances so warrant.  The Board believes that
without the ability to retain a new subadviser and/or
replace an existing subadviser promptly, investors'
expectations may be frustrated.  For instance, a Fund (or
an Acquiring Fund) and its shareholders could be
disadvantaged under the following circumstances: (i)
where the Adviser determines to terminate a subadviser
due to unsatisfactory investment performance or for
another appropriate reason, (ii) where a Fund's (or an
Acquiring Fund's) subadviser resigns, ceases operations
or is otherwise incapable of providing management
services on behalf of the Fund (or Acquiring Fund), or
(iii) where there has been an assignment of a subadvisory
agreement with a current subadviser (for instance, due to
a change in control of the subadviser) or some other event
causing the termination of the subadvisory agreement.  In
many cases, these events are beyond the control of the
trust, the Adviser, and the applicable Fund (or Acquiring
Fund).  In such circumstances, the Adviser may determine
that the Fund (or the Acquiring Fund) should retain a new
subadviser or reinstate a terminated subadvisory
agreement with a current subadviser.  For these reasons,
the Board believes that approval of the Proposal would
benefit shareholders.

In reaching this conclusion, the Board considered,
among other matters, that the Proposal would be
beneficial to the Funds by reducing or eliminating the
costs of shareholder meetings and the possible negative
impact caused by a delay in replacing or hiring a new
subadviser.  The Board also considered that the Funds (or
the Acquiring Funds) would forgo any benefits associated
with shareholder scrutiny of proposed subadvisory
agreements.  To this end, the Board noted that, even in
the absence of shareholder scrutiny and approval, any
proposal to add or replace a subadviser, or to materially
amend a subadvisory agreement with an existing
subadviser, would nevertheless receive careful review.
First, the Adviser would assess each Fund's needs and, if
it believed that the Fund would benefit from a new
subadviser, the Adviser would review the relevant
universe of available subadvisers.  Second, any
recommendations made by the Adviser would have to be
approved by a majority of the relevant Trust's Board of
Trustees, including a majority of the Independent
Trustees.  Third, any retention of a new or replacement
subadviser would have to comply with the conditions
contained in the SEC Exemption Order.  Fourth, as
described previously, certain economic disincentives for
Managers exist should Managers terminate SBA other
than for "cause" during the first five years that SBA
serves as Subadviser to each Fund.

Vote Required

Approval of this Proposal will require the
affirmative vote of a "majority of the outstanding voting
securities" of that Fund, as defined in the 1940 Act,
which means the affirmative vote of the lesser of (i) more
than 50% of the outstanding shares of that Fund or
(ii) 67% or more of the shares of that Fund present at the
Meeting if more than 50% of the outstanding shares of
that Fund are represented at the Meeting in person or by
proxy.

THE BOARD HAS CAREFULLY REVIEWED
THIS PROPOSAL AND BELIEVES THAT IT IS IN
THE BEST INTERESTS OF THE SHAREHOLDERS
OF THE FUNDS.  THEREFORE, THE BOARD
UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUNDS VOTE TO
APPROVE THIS PROPOSAL.


VII. ADDITIONAL INFORMATION

Interests and Affiliations of Certain Trustees and
Officers of the Trust

Mr. Breeden and Mr. Giarla are both officers and
Trustees of the Trusts and officers of the Current Adviser.
 [any purchases or sales of SBA stock by Mr. Breeden or
Mr. Giarla since beginning of past fiscal year?]  By virtue
of their interest in SBA, which stands to gain from the
consummation of the SBA/Managers Transaction,
[Mr. Breeden and Mr. Giarla] may be deemed to have a
substantial interest in shareholder approval of the
Proposals because such approval is a condition to the
consummation of the SBA/Managers Transaction.

Principal Underwriter

Provident Distributors, Inc., [address, city, state
zip], is the principal underwriter and distributor for the
Funds, and in such capacity, is responsible for distributing
shares of the Funds.  [The corporate parent of Provident
Distributors, Inc. is _____________________.]  The
Trustees of the Trusts have approved a change in the
principal underwriter and distributor for the Funds
effective upon the consummation of the SBA/Managers
Transaction.  Managers, which is the distributor for each
other fund it sponsors, will become the principal
underwriter and distributor for each Fund as of such date.

Administrator

The Funds do not currently have an administrator.
 The Trustees of the Trusts have approved the
appointment of an administrator for the Funds effective
upon the consummation of the SBA/Managers
Transaction.  Managers, which is the administrator for
each other fund it sponsors, will become the administrator
for each Fund as of such date.

Other Matters

The holders of __________ of the shares of the
Funds outstanding as of the Record Date, present in
person or represented by proxy, constitute a quorum for
the transaction of business by the shareholders of the
Trusts at the Meeting, although it is necessary for more
than 50% of the shares of the Funds to be represented at
the Meeting in order for all of the Proposals to be
approved.  Votes cast by proxy or in person at the
Meeting will be counted by persons appointed by the
Trust as tellers for the Meeting.  The tellers will count the
total number of votes cast ?for? approval of each Proposal
for purposes of determining whether sufficient affirmative
votes have been cast.  The tellers will count all shares
represented by proxies that reflect abstentions and ?broker
non-votes? (i.e., shares held by brokers or nominees as to
which (a) instructions have not been received from the
beneficial owners or the persons entitled to vote and (b)
the broker or nominee does not have discretionary voting
power on a particular matter) as shares that are present
and entitled to vote for purposes of determining the
presence of a quorum.  Assuming the presence of a
quorum, abstentions and broker non-votes have the effect
of a negative vote on each Proposal.

In the event that a quorum is not present for
purposes of acting on a Proposal, or if sufficient votes in
favor of a Proposal are not received by the time of the
Meeting, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further
solicitation of proxies.  Any such adjournment will require
the affirmative vote of a majority of the shares present in
person or represented by proxy at the session of the
Meeting to be adjourned.  Any Proposals for which
sufficient favorable votes have been received by the time
of the Meeting will be acted upon and such action will be
final regardless of whether the Meeting is adjourned to
permit additional solicitation with respect to any other
Proposal.  The persons named as proxies will vote in
favor of such adjournment those proxies which they are
entitled to vote in favor of any Proposal that has not then
been adopted.  They will vote against any such
adjournment those proxies required to be voted against
each proposal that has not then been adopted and will not
vote any proxies that direct them to abstain from voting on
such Proposals.

Although the Meeting is called to transact any
other business that may properly come before it, the only
business that management intends to present or knows that
others will present are the Proposals mentioned in the
Notice of Special Meeting and described in this Proxy
Statement.

At the time of the preparation of this Proxy
Statement, management has not been informed of any
matters that will be presented for action at the Meeting
other than the Proposals listed in the Notice of Meeting.
If other matters are properly presented to the Meeting for
action, the persons named in the Proxy will vote or refrain
from voting in accordance with their best judgment on
those matters.

The Trusts are not required to hold annual or other
periodic meetings of shareholders except as required by
the 1940 Act, and do not intend to do so.  The next
meeting of shareholders will be held at such time as the
Board of Trustees of the Trusts may determine or at such
time as may be legally required.  Any shareholder
proposal intended to be presented at such meeting must be
received by the relevant Trust at its office a reasonable
time prior to the meeting, as determined by the Board of
Trustees, to be included in that Trust?s Proxy Statement
and form of proxy relating to such meeting, and must
satisfy all other federal and state legal requirements.

A Proxy may be revoked by a shareholder at any
time prior to its use by written notice to the relevant
Trust, by submission of a later dated proxy, or by voting
in person at the Meeting.



PLEASE COMPLETE, DATE, AND SIGN THE
ENCLOSED PROXY CARD(S) AND
RETURN IT/THEM PROMPTLY IN THE
ENCLOSED ENVELOPE

	APPENDIX A


5% SHAREHOLDERS BY SERIES AS OF RECORD
DATE
[TO BE SUPPLIED AT FINAL]

[include total outstanding
number of shares for each
Fund]







APPENDIX B


	CURRENT TRUSTEES AND PRINCIPAL OFFICERS OF
	SMITH BREEDEN SERIES FUND
	SMITH BREEDEN TRUST


The names and ages of the current Trustees and principal officers of the
Trusts and their positions and principal occupations during the past five
years are shown below.  Trustees whose names are followed by an
asterisk are ?interested persons of the Trusts (as defined by the 1940 Act).
The address of each Trustee and officer is the same as that of the Funds at
100 Europa Drive, Suite 200,Chapel Hill, North Carolina  27514.


 AND % OF SERIES           SHARES OWNED
NAME,ADDRESS, PRINCIPAL
BENEFICIALLY
AGE AND OCCUPATION AND OTHER INFORMAION
POSITION (1)

Douglas T. Breeden (49),* 	Chairman of the Board of SBA; 				[ ]
Trustee and Chairman of         co-founded SBA in 1982.  He has served on
the Board of Trustees		business school faculties at Duke University,
				Stanford University and the University of
				Chicago, and as a visiting professor at Yale
				University and at the Massachusetts Institute
				of Technology.  He is the Editor of The Journal
				of Fixed Income.  He serves as Chairman of
				Harrington Financial Group, the holding
				company for Harrington Bank, F.S.B., of
				Richmond, Indiana.



Michael J. Giarla (41),*        Chief Operating Officer,
President and Director         ______. [    ]
Trustee and President		of SBA.  He also serves as a Director of
				Harrington Financial Group, the holding company
				for Harrington Bank, F.S.B., of Richmond,
				Indiana.  He was formerly SBA's Di rector of
				Research.  He has been employed by SBA
				since 1985.





Stephen M. Schaefer (52),Tokai Bank Professor of Finance at the London
Trustee				Business School since ______.  He has served on
				the editorial board of a number of professional
				journals including, currently, The Journal of
				Fixed Income, The Review of Derivatives
				Research, and European Review of Finance.
				He consults for a number of leading financial
				institutions, including previously for SBA.




Myron S. Scholes (58), 		Frank E. Buck Professor of Finance, at the 		[    ]
Trustee				Graduate School of Business at Stanford
				University (since 1983; Emeritus since 1996).
				He was formerly a limited partner and principal
				of Long Term Capital Management (1993-1998).
				He was also a Managing Director and co-head
				of the fixed income derivatives group at Salomon
				Brothers between 1991-1993.  He received the
				Nobel Prize in Economic Science in 1997.  He
				is a past president of the American Finance
				Association (1990).





William F. Sharpe (65),         STANCO 25 Professor of Finance, at
Trustee				Stanford University?s Graduate School of
				Business (since ____; Emeritus since 1999).
				He is known as one of the developers of the
				Capital Asset Pricing Model, including the
				beta and alpha concepts used in risk analysis
				and performance measurement.  He is a past
				President of the American Finance Association.
				He is Trustee of the Barr Rosenberg Mutual
				Funds, a director of Stanford Management
				Company and the Chairman of the Board of
				Financial Engines, a company that provides
				electronic portfolio advice. He received the
				Nobel Prize in Economic Science in 1990.



EXHIBIT 1
[FORM OF MANAGEMENT AGREEMENT]

	EXHIBIT 2
[FORM OF SUBADVISORY AGREEMENT]




SMITH BREEDEN SERIES FUND
SMITH BREEDEN TRUST

Smith Breeden Short Duration U.S. Government Fund
Smith Breeden Intermediate Duration U.S. Government Fund
Smith Breeden U.S. Equity Market Plus Fund




Proxy for a Special Meeting of Shareholders, July __, 2000

The undersigned hereby appoints Michael J. Giarla and Marianthe Mewkill,
and each of them separately, as proxies, with power of substitution to
each, and hereby authorizes them to represent and to vote, as designated
below, at a Special Meeting of Shareholders of Smith Breeden Series Fund
and Smith Breeden Trust on July __, 2000, at _____ a.m. Chapel Hill time,
and at any adjournments thereof, all of the shares of Smith Breeden Series
Fund and/or Smith Breeden Trust which the undersigned would be entitled to
vote if personally present.  THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS AS SET FORTH IN THE PROXY STATEMENT.



PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON THIS
PROXY.  If the shares are registered in more than one name, each joint
owner or fiduciary should sign personally.  Only authorized persons
should sign for corporations.


					Dated:


                                       Signature

                                      Signature (if held jointly)


In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.  The Trustee recommends
a vote FOR each of the proposals.


1.  ELECTION OF NOMINEES AS TRUSTEES OF THE TRUSTS
?  FOR electing the eight Nominees, except as marked to the contrary below
?  WITHHOLD AUTHORITY to vote for all of the Nominees listed below

To withhold authority to vote for any individual Nominee(s), draw a line
through that Nominee's name below.

Nominees:

Jack W. Aber
William E. Chapman, II
Sean M. Healey
Edward J. Kaier
Madeline H. McWhinney
Steven J. Paggioli
Eric Rakowski
Thomas R. Schneeweis


2. APPROVAL OR DISAPPROVAL      ?  FOR  ?  AGAINST     ?  ABSTAIN
OF THE PROPOSED
MANAGEMENT AGREEMENTS



3. APPROVAL OR                  ?  FOR   ?  AGAINST    ?  ABSTAIN
DISAPPROVAL OF PROPOSED
SUBADVISORY
AGREEMENTS



4. APPROVAL OR DISAPPROVAL      ?  FOR   ?  AGAINST     ?  ABSTAIN
OF AN AMENDMENT TO
THE TRUSTS' DECLARATIONS
OF TRUST



5. APPROVAL OR DISAPPROVAL      ?  FOR   ?  AGAINST     ?  ABSTAIN
OF A PROPOSAL ALLOWING THE
ADVISER TO CHANGE THE
SUBADVISOR OF THE FUNDS
WITHOUT SHAREHOLDER
APPROVAL




This proxy is solicited on behalf of Smith Breeden Series Fund
or Smith Breeden Trust, as the case.
Please sign this card in the space provided.
Your signature acknowledges receipt of the Notice of
the Special Meeting and the accompanying Proxy Statement.


[use separate card for each Fund; also determine whether telephone
and/or electronic proxies may be used
and, if so, incorporate necessary language]





EDGAR Smith Breeden Proxy
EDGAR Smith Breeden Proxy

EDGAR Smith Breeden Proxy	34
EDGAR Smith Breeden Proxy
EDGAR Smith Breeden Proxy	A-1


NAME,
AGE AND
POSITION


ADDRESS, PRINCIPAL
OCCUPATION AND OTHER
INFORMATION

SHARES OWNED
BENEFICIALLY
AND % OF SERIES
(1)

EDGAR Smith Breeden Proxy	B-1
EDGAR Smith Breeden Proxy	Page 1 of Exhibit 1

Page 1 of Exhibit 2

EDGAR Smith Breeden Proxy


EDGAR Smith Breeden Proxy






FORM OF FUND MANAGEMENT AGREEMENT


THIS MANAGEMENT AGREEMENT is made
as of this ___ day of ________, 2000, between The Managers Trust
[I / II], a business trust organized under the laws of the
Commonwealth of Massachusetts ("Company") and The Managers
Funds LLC, a limited 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;

WHEREAS, the Manager is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended; and

	WHEREAS, the Manager desires to provide services
to the Company in consideration of and on the terms and conditions
hereinafter set forth;

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 of 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 provisions 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 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; shall 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,
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 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;

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
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
the second anniversary of the date first written above.
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

(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.



ATTEST	THE
MANAGE
RS TRUST
[I / II]

By:      __________________________	By:
	____________
________
Name:	Name:
	Title:


ATTEST	THE
MANAGERS FUNDS LLC

By:       __________________________	By:
	____________
_______
Name:	Name:  Peter
M. Lebovitz
	Title:
President




APPENDIX A
Series Covered by Fund Management Agreement


The Managers Trust I:

     Managers 500 Plus Fund


The Managers Trust II:

     Managers Short Duration Government Fund
     Managers Intermediate Government Fund











APPENDIX B
Annual rate of management fees, expressed as a percentage of the
average net asset value of the series:

		Annual
Percentage
	Name of Series	Rate of
Management Fee

The Managers Trust I:

     Managers 500 Plus Fund
	.70%


The Managers Trust II:

     Managers Short Duration Government Fund
	.70%
     Managers Intermediate Government Fund
	.70%





::ODMA\PCDOCS\DOCSC\875014\2
0






FORM OF SUB-ADVISORY AGREEMENT


Attention: 	Smith Breeden Associates, Inc.

RE:  Sub-Advisory Agreement


The [Managers 500 Plus / Managers Short Duration
Government / Managers Intermediate Government] Fund (the "Fund")
is a series of The Managers Trust [I / II], 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 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 Funds assets.  However, pursuant to the terms of the
Management Agreement, specific portfolio purchases and sales for the
Funds investment portfolios or a portion thereof, are to be made by
advisory organizations recommended by the Manager and approved by
the Trustees of the Trust.

1.  Appointment as a Sub-Adviser.  The Manager, being duly
authorized, hereby appoints and employs Smith Breeden Associates, Inc.
("Sub-Adviser") as a discretionary asset manager, on the terms and
conditions set forth herein, of the assets of the Fund (those assets being
referred to as the "Fund Account").

2.  Portfolio Management Duties.

(a)	Subject to the supervision of the Manager and of
the Trustees of the Trust, the Sub-Adviser shall manage
the composition of the Fund Account, including the
purchase, retention and disposition thereof, in
accordance with the Funds 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-Adviser shall maintain such books and
records pursuant to Rule 31a-1 under the Act and Rule
204-2 under the Investment Advisers Act of 1940, as
amended (the 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-Adviser agrees that all records under the
Act shall be the property of the Trust.

(c)	The Sub-Adviser shall provide the Trusts
Custodian, and the Manager on each business day with
information relating to all transactions concerning the
Fund Account.  In addition, the Sub-Adviser shall be
responsive to requests from the Manager or the Trust's
Custodian for assistance in obtaining price sources for
securities held in the Fund Account, as well as for
periodically reviewing the prices of the securities assigned
by the Manager or the Trust's Custodian for
reasonableness and advising the Manager should any such
prices appear to be incorrect.

(d)	The Sub-Adviser agrees to maintain adequate
compliance procedures to ensure its compliance with the
1940 Act, the Advisers Act and other applicable federal
and state regulations, and review information provided
by the Manager to assist the Manager in its compliance
review program.

(e)	The Sub-Adviser agrees to maintain an
appropriate level of errors and omissions or professional
liability insurance coverage.

3.  Allocation of Brokerage.  The Sub-Adviser shall have
authority and discretion to select brokers, dealers and futures
commission merchants to execute portfolio transactions initiated by the
Sub-Adviser, and for the selection of the markets on or in which the
transactions will be executed.

(a)  In doing so, the Sub-Adviser'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-Adviser to solicit competitive bids for
each transaction, and the Sub-Adviser shall have no
obligation to seek the lowest available commission cost
to the Fund, so long as the Sub-Adviser determines that
the broker, dealer or futures commission merchant is
able to obtain the best net price and execution for the
particular transaction taking into account all factors the
Sub-Adviser deems relevant, including, but not limited
to, the breadth of the market in the security or
commodity, the price, the financial condition and
execution capability of the broker, dealer or futures
commission merchant and the reasonableness of any
commission for the specific transaction and on a
continuing basis.  The Sub-Adviser may consider the
brokerage and research services (as defined in Section
28(e) of the Securities Exchange Act of 1934, as amended)
made available by the broker to the Sub-Adviser viewed
in terms of either that particular transaction or of the
Sub-Adviser's overall responsibilities with respect to its
clients, including the Fund, as to which the Sub-Adviser
exercises investment discretion, notwithstanding that the
Fund may not be the direct or exclusive beneficiary of
any such services or that another broker may be willing
to charge the Fund a lower commission on the particular
transaction.

(b)  The Manager shall have the right to request that
specified transactions giving rise to brokerage
commissions, in an amount to be agreed upon by the
Manager and the Sub-Adviser, shall be executed by
brokers and dealers that provide brokerage or research
services to the Fund or the Manager, or as to which an
on-going relationship will be of value to the Fund in the
management of its assets, which services and relationship
may, but need not, be of direct benefit to the Fund
Account, so long as (i) the Manager determines that the
broker or dealer is able to obtain the best net price and
execution on a particular transaction and (ii) the Manager
determines that the commission cost is reasonable in
relation to the total quality and reliability of the
brokerage and research services made available to the
Fund or to the Manager for the benefit of its clients for
which it exercises investment discretion, notwithstanding
that the Fund Account may not be the direct or
exclusive beneficiary of any such service or that another
broker may be willing to charge the Fund a lower
commission on the particular transaction.

(c)  The Sub-Adviser agrees that it will not execute any
portfolio transactions with a broker, dealer or futures
commission merchant which is an "affiliated person" (as
defined in the Act) of the Trust or of the Manager or of
any Sub-Adviser for the Trust except in accordance with
procedures adopted by the Trustees.  The Manager agrees
that it will provide the Sub-Adviser with a list of brokers
and dealers, which are "affiliated persons" of the Trust,
the Manager or the Trust's Sub-Advisers.

4.  Information Provided to the Manager and the Trust and to
the Sub-Adviser

(a)  The Sub-Adviser agrees that it will make available to
the Manager and the Trust promptly upon their request
copies of all of its investment records and ledgers with
respect to the Fund Account to assist the Manager and
the Trust in monitoring compliance with the Act, the
Advisers Act, and other applicable laws.  The Sub-
Adviser will furnish the 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-Adviser agrees that it will notify the
Manager and the Trust in the event that the Sub-Adviser
or any of its affiliates: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from
serving as investment adviser pursuant to this
Agreement; or (ii) is or expects to become the subject of
an administrative proceeding or enforcement action by
the Securities and Exchange Commission or other
regulatory authority. Notification of an event within (i)
shall be given immediately; notification of an event
within (ii) shall be given promptly.  The Sub-Adviser has
provided the information about itself set forth in the
Registration Statement and has reviewed the description
of its operations, duties and responsibilities as stated
therein and acknowledges that they are true and correct
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-
Adviser respecting or relating to the Sub-Adviser that
causes any statement in the Prospectus to become untrue
or misleading in any material respect or that causes the
Prospectus to omit to state a material fact.

(c)  The Sub-Adviser represents that it is an investment
adviser registered under the Advisers Act and other
applicable laws and that the statements contained in the
Sub-Adviser'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-Adviser
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-Adviser acknowledges that it is an
investment adviser to the Fund within the meaning of
the Act and the Advisers Act.

5.  Compensation.  The compensation of the Sub-Adviser for its
services under this Agreement shall be calculated and paid by the
Manager in accordance with the attached Schedule A.  Pursuant to the
provisions of the Management Agreement between the Trust and the
Manager, the Manager is solely responsible for the payment of fees to the
Sub-Adviser, and the Sub-Adviser agrees to seek payment of its fees
solely from the Manager and not from the Trust or the Fund.

6.  Other Investment Activities of the Sub-Adviser.  The
Manager acknowledges that the Sub-Adviser or one or more of its
affiliates may have investment responsibilities or render investment
advice to or perform other investment advisory services for other
individuals or entities ("Affiliated Accounts").  The Manager agrees that
the Sub-Adviser or its affiliates may give advice or exercise investment
responsibility and take such other action with respect to other Affiliated
Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund Account, provided that
the Sub-Adviser acts in good faith and provided further, that it is the
Sub-Adviser's policy to allocate, within its reasonable discretion,
investment opportunities to the Fund Account over a period of time on
a fair and equitable basis relative to the Affiliated Accounts, taking into
account the investment objectives and policies of the Fund and any
specific investment restrictions applicable thereto.  The Manager
acknowledges that one or more of the Affiliated Accounts may at any
time hold, acquire, increase, decrease, dispose or otherwise deal with
positions in investments in which the Fund Account may have an
interest from time to time, whether in transactions which involve the
Fund Account or otherwise.  The Sub-Adviser shall have no obligation
to acquire for the Fund Account a position in any investment which any
Affiliated Account may acquire, and the Fund shall have no first refusal,
co-investment or other rights in respect of any such investment, either
for the Fund Account or otherwise.

7.  Standard of Care.  The Sub-Adviser shall exercise its best
judgment in rendering the services provided by it under this Agreement.
The Sub-Adviser shall not be liable for any act or omission, error of
judgment or mistake of law or for any loss suffered by the Manager or
the Trust in connection with the matters to which this Agreement
relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect the Sub-Adviser against any liability to the
Manager or the Trust or to holders of the Trust's shares representing
interests in the Fund to which the Sub-Adviser would otherwise be
subject by reason of willful malfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of the Sub-Adviser'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-Adviser shall notify the Trust in writing
sufficiently in advance of any proposed change of control, as defined in
Section 2(a)(9) of the Act, as will enable the Trust to consider whether an
assignment under the Act will occur, and to take the steps necessary to
enter into a new contract with the Sub-Adviser or such other steps as the
Board of Trustees may deem appropriate.

9.  Amendment.  This Agreement may be amended at any time,
but only by written agreement between the Sub-Adviser and the
Manager, which amendment is subject to the approval of the Trustees
and the shareholders of the Trust in the manner required by the Act.

10.  Effective Date; Term.  This Agreement shall become
effective on ________, 2000 and shall continue in effect for a term of
two years from that date.  Thereafter, the Agreement shall continue in
effect only so long as its continuance has been specifically approved at
least annually by the Trustees, or the shareholders of the Fund in the
manner required by the Act. The aforesaid requirement shall be
construed in a manner consistent with the Act and the rules and
regulations thereunder.

11.  Termination.  This Agreement may be terminated by (i) the
Manager at anytime without penalty, upon notice to the Sub-Adviser
and the Trust, (ii) at any time without penalty by the Trust or by vote of
a majority of the outstanding voting securities of the Fund (as defined in
the Act) on notice to the Sub-Adviser or (iii) by the Sub-Adviser at any
time without penalty, upon 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 LLC

BY:

Its:

DATE:
ACCEPTED:

SMITH BREEDEN ASSOCIATES, INC.

BY:

Its:

DATE:


ACKNOWLEDGED:

THE MANAGERS TRUST [I / II]

BY:

Its:

DATE:








SCHEDULES:	A.  Fee Schedule.

SCHEDULE A
SUB-ADVISER FEE
[Managers 500 Plus Fund:]

For services provided to the Fund Account, the Manager will
pay within five business days after the end of each calendar month the
Sub-Adviser a base monthly fee for each calendar month calculated on a
daily basis at an annual rate of .05% of daily net assets in the Fund
Account through ______, 2001 [i.e., first anniversary of closing date] and
an annual rate of .20% of daily net assets in the Fund Account thereafter;
provided, however, that if on any day after ______, 2001 [i.e., first
anniversary of closing date] the gross annualized fee received by the
Manager under the Management Agreement between the Trust and the
Manager is less than $1,365,300, then such annual fee rate shall be
reduced to .15% of daily net assets in the Fund for that day.

[Managers Short Duration Government Fund:]

For services provided to the Fund Account, the Manager will
pay within five business days after the end of each calendar month the
Sub-Adviser a base monthly fee for each calendar month calculated on a
daily basis at an annual rate of .05% of daily net assets in the Fund
Account through ______, 2001 [i.e., first anniversary of closing date] and
an annual rate of .10% of daily net assets in the Fund Account thereafter;
provided, however, that if on any day after ______, 2001 [i.e., first
anniversary of closing date] the gross annualized fee received by the
Manager under the Management Agreement between the Trust and the
Manager is less than $403,200, then such annual fee rate shall be reduced
to .05% of daily net assets in the Fund for that day.

[Managers Intermediate Government Fund:]

For services provided to the Fund Account, the Manager will
pay within five business days after the end of each calendar month the
Sub-Adviser a base monthly fee for each calendar month calculated on a
daily basis at an annual rate of .05% of daily net assets in the Fund
Account through ______, 2001 [i.e., first anniversary of closing date] and
an annual rate of .10% of daily net assets in the Fund Account thereafter;
provided, however, that if on any day after ______, 2001 [i.e., first
anniversary of closing date] the gross annualized fee received by the
Manager under the Management Agreement between the Trust and the
Manager is less than $325,800, then such annual fee rate shall be reduced
to .05% of daily net assets in the Fund for that day.

The fee shall be pro-rated for any calendar month during which
the contract is in effect for only a portion of the month.

The Sub-Adviser agrees that, during any period in which the
Manager has waived all or a portion of the management fee payable by
the Trust to the Manager under the Management Agreement with
respect to the Fund, if requested by the Manager, the Sub-Adviser will
waive a pro rata share (or such lesser share as the Manager may request)
of the sub-advisory fee payable hereunder with respect to the Fund, such
that the amount waived by the Sub-Adviser shall bear the same ratio to
the total amount of the sub-advisory fees payable hereunder with respect
to the Fund as the amount waived by the Manager bears to all fees
payable to the Manager under the Management Agreement with respect
to the Fund.  In addition, the Sub-Adviser agrees that, during any period
in which the Manager has agreed to pay or reimburse the Trust for
expenses of the Fund, if requested by the Manager, the Sub-Adviser shall
pay or reimburse the Trust for a pro rata share (or such lesser share as
the Manager may request) of such expenses, such that the amount of
such excess expenses paid by the Sub-Adviser shall bear the same ratio to
the total amount of excess expenses payable with respect to the Fund as
the sub-advisory fee hereunder bears to all fees payable to the Manager
under the Management Agreement with respect to the Fund.

::ODMA\PCDOCS\DOCSC\875025\5

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