SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
x | Preliminary Proxy Statement | |||
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
¨ | Definitive Proxy Statement | |||
¨ | Definitive Additional Materials | |||
¨ | Soliciting Material Pursuant to 240.14a-12 | |||
MANAGERS AMG FUNDS | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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x | No fee required. | |||
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies:
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(2) | Aggregate number of securities to which transaction applies:
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) | Proposed maximum aggregate value of transaction:
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¨ | Fee paid previously with preliminary materials. | |||
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
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(4) | Date Filed:
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Managers AMG Funds
Essex Small/Micro Cap Growth Fund
800 Connecticut Avenue
Norwalk, CT 06854
1-800-835-3879
www.managersinvest.com
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 12, 2013
To Shareholders of the Essex Small/Micro Cap Growth Fund:
Beginning at 2:00 p.m. Eastern Time on February 12, 2013, Managers AMG Funds will hold a special meeting of the shareholders of Essex Small/Micro Cap Growth Fund (the “Fund”) at the offices of Managers Investment Group LLC (“Managers” or the “Manager”), 800 Connecticut Avenue, Norwalk, Connecticut 06854.
The special meeting and any adjournment thereof (the “Meeting”) will be held to consider the following proposals:
1. | To approve a new subadvisory agreement between the Manager and Essex Investment Management Company, LLC with respect to the Fund. |
2. | To transact such other business as may properly come before the Meeting and any adjournment thereof. |
Only those shareholders that owned shares in the Fund at the close of business on December 3, 2012, the record date with respect to the Meeting, can vote at the Meeting or any adjournments thereof.
Your vote is important regardless of the size of your holdings in the Fund. Please take a moment after reviewing the enclosed materials to sign and return your proxy card in the enclosed postage paid return envelope. Shareholders who do not return their proxies may receive a telephone call from our proxy solicitor, D.F. King & Co., Inc., asking you to vote your shares.
By Order of the Board of Trustees, |
Lewis Collins |
Secretary |
Norwalk, Connecticut
December 3, 2012
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for signing proxy cards may be of assistance to you and may help to avoid the time and expense involved in validating your vote if you fail to sign your proxy card properly.
1. | Individual Accounts: Sign your name exactly as it appears on the proxy card. |
2. | Joint Accounts: Either party may sign, but the name of the party signing should conform exactly to a name shown on the proxy card. |
3. | All Other Accounts: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the name of the proxy card. For example: |
Registration | Valid Signature | |
Corporate Accounts | ||
(1) ABC Corp. | (1) ABC Corp. John Doe, Treasurer | |
(2) ABC Corp. c/o John Doe, Treasurer | (2) John Doe, Treasurer | |
(3) ABC Corp. Profit Sharing Plan | (3) John Doe, Trustee | |
Trust Accounts | ||
(1) ABC Trust | (1) Jane Doe, Trustee | |
(2) Jane Doe, Trustee u/t/d 12/28/78 | (2) Jane Doe | |
Custodial Accounts | ||
(1) John Smith, Custodian f/b/o John Smith, Jr. UGMA | (1) John Smith | |
(2) John Smith | (2) John Smith, Executor |
Managers AMG Funds
Essex Small/Micro Cap Growth Fund
800 Connecticut Avenue
Norwalk, Connecticut 06854
1-800-835-3879
www.managersinvest.com
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 12, 2013
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of
Shareholders to be held on February 12, 2013.
The proxy statement is available at
http://investor.managersinvest.com/investment/essex_small_micro_cap_growth_fund.html
Introduction
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Trustees (the “Board” or the “Trustees”) of Managers AMG Funds (the “Trust”), for use at a special meeting and any adjournment thereof (the “Meeting”) of the shareholders of the Essex Small/Micro Cap Growth Fund (the “Fund”) to be held at the offices of Managers Investment Group LLC (“Managers” or the “Manager”), 800 Connecticut Avenue, Norwalk, Connecticut 06854, and commencing on February 12, 2013 at 2:00 p.m., Eastern Time.
The Trust is currently comprised of fifteen mutual funds, but only the Fund is the subject of this proxy statement. The Trust is a registered management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), and is organized as a Massachusetts business trust. The Manager is a subsidiary of Affiliated Managers Group, Inc. (“AMG”), located at 600 Hale Street, Prides Crossing, Massachusetts 01965. The Manager serves as investment manager of the Fund and is responsible for the Fund’s overall administration and management. Managers Distributors, Inc., a wholly owned subsidiary of the Manager, located at 800 Connecticut Avenue, Norwalk, Connecticut 06854, serves as the Fund’s distributor.
The principal executive offices of the Trust are located at 800 Connecticut Avenue, Norwalk, Connecticut 06854. The enclosed proxy and this proxy statement are being sent to shareholders on or about December 7, 2012.
On July 6, 2012, Essex Investment Management Company, LLC (“Essex” or the “Subadvisor”), subadvisor to the Fund, entered into a purchase agreement with AMG pursuant to
which AMG agreed to sell its entire ownership interest in Essex to the management team of Essex (the “Transaction”). The Transaction closed on October 2, 2012, and did not result in any change in the services being provided by Essex to the Fund. As a result of the Transaction, the management of Essex owns approximately 80% of Essex, with an unaffiliated company owning the remaining interests in the firm. Prior to the closing of the Transaction, the Board of the Trust was informed that the Transaction would be deemed a change of control of Essex. A change of control of Essex would constitute an assignment of the Fund’s subadvisory agreement with Essex, which would terminate the subadvisory agreement in accordance with its terms and the 1940 Act. At a meeting on September 20-21, 2012, the Board of the Trust approved on behalf of the Fund the continuation of Essex as the Subadvisor to the Fund, and approved a new subadvisory agreement and the submission of the new subadvisory agreement to Fund shareholders for approval. The Board also approved an interim subadvisory agreement with Essex which became effective upon the closing of the Transaction, and pursuant to which Essex serves as Subadvisor to the Fund, responsible for management of the Fund’s portfolio, pending shareholder approval of the new subadvisory agreement. The terms of the interim and new subadvisory agreements approved by the Board are substantially similar to the previous subadvisory agreement with Essex with respect to the Fund (except as discussed below).
If the shareholders of the Fund approve the new subadvisory agreement between the Manager and Essex (the “Proposal”), Essex will continue to serve as Subadvisor to the Fund under the terms of the new subadvisory agreement.
All properly executed proxy cards received prior to the Meeting will be voted at the Meeting in accordance with the marked instructions.Unless instructions are marked to the contrary, shares represented by the proxies will be voted FOR the Proposal. A shareholder may revoke his or her proxy card(s) at any time prior to the Meeting by (i) sending written notice of revocation to the Secretary of the Trust, (ii) executing and returning a subsequent proxy, (iii) submitting a subsequent telephone vote or (iv) submitting a subsequent internet vote. A shareholder may also revoke his or her proxy card by being present and voting in person at the Meeting and giving oral notice of revocation to the Chairman of the Meeting. The persons designated as proxies, in their discretion, may vote upon such other matters as may properly come before the Meeting. The Board is not currently aware of any other matters to come before the Meeting.
Holders of record of the shares of the Fund at the close of business on December 3, 2012 (the “Record Date”), as to any matter on which they are entitled to vote, will be entitled to one vote per share and a fractional vote on each fractional share on all business presented at the Meeting. The Fund offers one class of shares: Investor Class (formerly Class A shares of the Fund, which were renamed Investor Class shares as of November 30, 2012). As of the Record Date, there were [ ] Investor Class shares of the Fund issued and outstanding. The class listed above is the only class of shares currently authorized by the Fund.
Under the Master Trust Agreement of the Trust, a proxy with respect to shares held by two or more persons will be valid if executed or otherwise given by or on behalf of any one of them, unless the Trust receives written notice to the contrary from any one of them at or prior to the exercise of the proxy.
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A quorum of shareholders must be present or represented by proxy at the Meeting to transact business. For these purposes, a quorum is 30% of the shares of the Fund entitled to vote on the Record Date. If (i) a quorum is not present at the Meeting, (ii) a quorum is present, but sufficient votes to approve the Proposal are not received by the time scheduled for the Meeting, or (iii) the persons named as proxies judge that it is advisable to defer action on the Proposal, then the persons named as proxies may propose one or more adjournments of the Meeting (including adjournments with respect to the Proposal not having received sufficient votes in favor of approval) to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of the votes cast in person or by proxy at the Meeting on the proposal of adjournment, whether or not a quorum is present. If the Proposal has received sufficient votes in favor of approval at the time scheduled for the Meeting, it will be considered approved at such time and will not be considered at any such adjourned meeting. The persons named as proxies will vote in favor of such adjournments those proxies that they are entitled to vote in favor of the Proposal. They will vote against any such adjournments those proxies required to be voted against the Proposal. Abstentions and “broker non-votes” will not be counted as having been voted for or against any such adjournment. The costs of preparing, printing and mailing the enclosed proxy card and proxy statement and all other costs incurred in connection with the solicitation of proxies, including any additional solicitation made by letter, telephone or facsimile (including with respect to any adjourned meeting) will be paid by the Manager and Essex in equal parts and not by the Fund. At any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the Meeting as originally called.
Abstentions and broker non-votes (i.e., proxies sent in by brokers and other nominees which cannot be voted on the Proposal because the beneficial owners have not given instructions) will be considered to be shares present at the Meeting, but will not be counted as having been voted on the matter in question. Accordingly, assuming that a quorum would otherwise be present, abstentions and broker non-votes will have the effect of a negative vote.
Shareholders can vote in any of four ways:
(1) | Through the Internet, by going to the website listed on your proxy card; |
(2) | By telephone, with a toll-free call to the number listed on your proxy card; |
(3) | By mail, by sending the enclosed proxy card, signed and dated, to us in the enclosed envelope; or |
(4) | In person, by attending the Meeting. |
Please see “Additional Information” below for more information regarding solicitation of proxies. If you plan to vote in person by attending the Meeting, please contact the Fund in writing at Managers AMG Funds, 800 Connecticut Avenue, Norwalk, Connecticut 06854, or by telephone at 1-800-835-3879 for directions.
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Information About Essex
The following is a description of Essex, based solely on information provided to the Manager by Essex.
Essex has served as Subadvisor to the Fund since January 1, 2005. Essex, located at 125 High Street, 29th Floor, Boston, Massachusetts 02110, is an investment management firm formed in 1976 as a limited liability company. Essex had approximately $687 million in assets under management as of September 30, 2012, including the Fund.
Prior to October 2, 2012, AMG, located at 600 Hale Street, Prides Crossing, Massachusetts 01965, indirectly owned a majority interest in Essex. Essex’s principals and Alpha Dynamics LLC, an unaffiliated investment management firm based in Cambridge, Massachusetts, held the remaining equity interests in Essex. Executive decisions for Essex were made by the management team.
As of October 2, 2012, as a result of the Transaction, the management of Essex owns approximately 80% of the equity in the business and continues to direct its day-to-day investment management operations. Alpha Dynamics LLC continues to hold the remaining equity interests in the firm. The Transaction did not result in any change in the services being provided by Essex to the Fund. As a result of the Transaction, Essex is no longer an indirect, majority-owned affiliate of AMG. AMG is the indirect parent company of the Manager.
Information about the principal executive officers and directors of Essex is provided below. The business address for each principal executive officer and director listed below is 125 High Street, 29th Floor, Boston, Massachusetts 02110.
Principal Executive Officers/Directors | Principal Occupation | |||
Stephen D. Cutler | President; Managing Principal, Portfolio Manager | |||
Michael McCarthy | Chief Compliance Officer, Director of Operations | |||
Joseph C. McNay | Chief Executive Officer, Chief Investment Officer; Managing Principal | |||
Nancy B. Prial | Managing Principal; Portfolio Manager |
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PROPOSAL: TO APPROVE THE NEW SUBADVISORY AGREEMENT BETWEEN
THE MANAGER AND ESSEX WITH RESPECT TO ESSEX SMALL/MICRO CAP
GROWTH FUND
Background
At the Meeting, the shareholders of the Fund will consider the approval of a new subadvisory agreement between the Manager and Essex with respect to the Fund (the “New Subadvisory Agreement”). Effective July 6, 2012, AMG entered into a purchase agreement with Essex, the subadvisor to the Fund, to sell its entire ownership interest in Essex to the management team of Essex. The decision to have the management of Essex purchase AMG’s ownership interest was mutually agreed upon by AMG and Essex’s management and is expected to help Essex attract and retain investment talent and allow the principals to enjoy the full benefit of growth the business achieves going forward. The Transaction closed on October 2, 2012. Essex has served as Subadvisor to the Fund since 2005. Essex currently serves as Subadvisor to the Fund on an interim basis as permitted by Rule 15a-4 under the 1940 Act. A form of the proposed New Subadvisory Agreement, which is substantially similar to the old subadvisory agreement, is attached as Exhibit A.
The Transaction and the Interim Subadvisory Agreement
Essex currently serves as sole Subadvisor to the Fund. Prior to the Transaction, under the terms of the former subadvisory agreement between the Manager and Essex (the “Former Subadvisory Agreement”), Essex received a subadvisory fee equal to 1.00% of the Fund’s average daily net assets.
As a result of the Transaction, which was construed as a change of control of Essex, the Former Subadvisory Agreement terminated in accordance with its terms as well as with the terms of the 1940 Act. In anticipation of the closing of the Transaction, the Board discussed the Transaction and its impact upon the Fund at its meeting on September 20-21, 2012. At such meeting, the Board determined that it would be in Fund shareholders’ best interests to have Essex continue to provide subadvisory services to the Fund after the closing of the Transaction. Accordingly, the Board, including a majority of the Trustees who are not “interested persons” (as such term is defined in the 1940 Act) of the Trust (“Independent Trustees”), unanimously approved the adoption of an interim subadvisory agreement with Essex with respect to the Fund (the “Interim Subadvisory Agreement”), to take effect as of the closing of the Transaction, and to have a term not to exceed 150 days. The Board, including a majority of the Independent Trustees, also approved the adoption of the New Subadvisory Agreement, subject to shareholder approval, which is described below. The terms of the Interim Subadvisory Agreement are the same, in all material respects (including with respect to subadvisory fees), as the terms of the Former Subadvisory Agreement, other than as required by law.
Rule 15a-4 under the 1940 Act and the Interim Subadvisory Agreement provide that subadvisory fees due Essex since the effective date of the Interim Subadvisory Agreement are to be held in an interest-bearing escrow account. If the New Subadvisory Agreement is subsequently approved by shareholders of the Fund, Essex will continue as Subadvisor to the Fund, and the escrowed funds, including interest, will be paid to Essex. If the New Subadvisory
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Agreement is not approved, Essex will be entitled to an amount equal to the lesser of (a) the costs of performing its services during the interim period plus interest and (b) the amount in the escrow account plus interest. In accordance with Rule 15a-4 under the 1940 Act, Fund shareholders must approve the New Subadvisory Agreement before March 1, 2013 in order for Essex to serve as subadvisor to the Fund on an uninterrupted basis following that date.
Terms of the New Subadvisory Agreement
Services
The Transaction is not expected to result in any change in the services provided by Essex to the Fund, and the same investment team will continue to manage the Fund under the terms of the New Subadvisory Agreement in the same manner as previously managed under the terms of the Former Subadvisory Agreement. Essex will manage the composition of the assets of the Fund, including the purchase, retention and disposition of assets, in accordance with the Fund’s investment objectives, policies and restrictions. Essex will have authority and discretion to select brokers, dealers and futures commission merchants to execute portfolio transactions initiated by Essex and for the selection of the markets on or in which the transactions will be executed. As Subadvisor to the Fund, Essex will be required to provide information to the Manager and the Trust with respect to its investment records and ledgers to assist the Manager and Trust in monitoring compliance with the relevant laws and regulations and will be required to provide information for other oversight purposes.
Compensation
The Transaction and the New Subadvisory Agreement do not change the compensation paid by the Fund to the Manager or the compensation paid by the Manager to Essex. Under an investment management agreement between the Trust and the Manager dated October 19, 1999, as amended, (the “Management Agreement”), the Fund pays the Manager a fee equal to 1.00% of the Fund’s average daily net assets. Under the Former Subadvisory Agreement, dated January 1, 2005, the Manager paid Essex a fee equal to 1.00% of the Fund’s average daily net assets. The New Subadvisory Agreement provides that the Manager will pay Essex a fee equal to 1.00% of the Fund’s average daily net assets. Under the Former Subadvisory Agreement, for the fiscal year ended May 31, 2012, the Manager paid Essex $1,218,246.
Comparison with terms of the Former Subadvisory Agreement
The terms of the New Subadvisory Agreement are not materially different from the terms of the Former Subadvisory Agreement. The Former Subadvisory Agreement was last submitted to the Fund’s shareholders for approval on May 25, 2005 in connection with the approval of Essex as the Fund’s subadvisor. The Board, including a majority of the Independent Trustees, last approved the continuation of the Former Subadvisory Agreement on June 21-22, 2012.
Portfolio Managers
If shareholders approve the New Subadvisory Agreement, it is expected that the Fund’s current portfolio management team will continue to manage the Fund’s assets.
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Nancy Prial is primarily responsible for the day-to-day management of the Fund. Ms. Prial came to Essex in January 2005, and has managed the Fund since its inception in 2002. She is a Managing Principal and Portfolio Manager at Essex and has served in those positions since January 2005. Prior to joining Essex, she was Chief Investment Officer with The Burridge Group, the former subadvisor of the Fund, from 1998 through 2004.
Board of Trustees Recommendation
On September 20-21, 2012, the Board of the Trust, including a majority of the Independent Trustees, approved the Interim Subadvisory Agreement between Managers and Essex with respect to the Fund, the New Subadvisory Agreement between Managers and Essex with respect to the Fund, and the presentation of the New Subadvisory Agreement for shareholder approval at the Meeting. The Interim Subadvisory Agreement and New Subadvisory Agreement were presented for approval because the Former Subadvisory Agreement between Managers and Essex with respect to the Fund was expected to terminate in connection with the Transaction.
The Independent Trustees were separately represented by independent counsel in connection with their consideration of the approval of the New Subadvisory Agreement. In considering the New Subadvisory Agreement, the Trustees considered the information relating to the Fund and the Subadvisor provided to them in connection with their September 20-21, 2012 meeting, and also considered generally the information relating to the Fund and the Subadvisor provided to them in connection with their meeting on June 21-22, 2012, which was the meeting in which the Trustees considered and approved the renewal of the Former Subadvisory Agreement for an additional one year period. In connection with the June 21-22, 2012 meeting, the information provided to the Trustees included comparative performance, fee and expense information for an appropriate peer group of similar mutual funds (the “Peer Group”), performance information for the Russell® 2000 Growth Index (the “Fund Benchmark”) and, with respect to the Subadvisor, comparative performance information for an appropriate peer group of managed accounts. The Trustees also considered the other information provided to them on a periodic basis throughout the year, including at their meeting on June 21-22, 2012, regarding the nature, extent and quality of services provided by the Subadvisor under the Former Subadvisory Agreement. Prior to voting, the Independent Trustees met with their independent legal counsel in a private session at which no representatives of management were present.
Nature, extent and quality of services. In considering, at their June 21-22, 2012 meeting, the nature, extent and quality of the services provided by the Subadvisor, the Trustees reviewed information relating to the Subadvisor’s financial condition, operations and personnel and the investment philosophy, strategies and techniques (the “Investment Strategy”) used in managing the Fund. Among other things, the Trustees reviewed biographical information on portfolio management and other professional staff, information regarding the Subadvisor’s organizational and management structure and the Subadvisor’s brokerage policies and practices. The Trustees considered specific information provided regarding the experience of the individuals at the Subadvisor with portfolio management responsibility for the Fund, including the information set forth in the Fund’s prospectus and statement of additional information. In the course of their deliberations at such meeting, the Trustees evaluated, among other things: (a) the services rendered by the Subadvisor in the past; (b) the qualifications and experience of the Subadvisor’s
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personnel; and (c) the Subadvisor’s compliance program. The Trustees also considered the Subadvisor’s risk management processes. The Trustees also took into account, at their September 20-21, 2012 meeting, the financial condition of the Subadvisor with respect to its ability to provide the same level of services under the New Subadvisory Agreement as under the Former Subadvisory Agreement.
The Trustees, at their September 20-21, 2012 meeting, reviewed information relating to the Transaction and the role of current Essex personnel under the New Subadvisory Agreement following the Transaction and noted that the role of such personnel would be identical. The Trustees considered the investment philosophy, strategies and techniques that are intended to be used by Essex in managing the Fund. Among other things, the Trustees reviewed updated biographical information on portfolio management and other professional staff, information regarding Essex’s organizational and management structure and Essex’s brokerage policies and practices. The Trustees considered specific information provided regarding the experience of the individuals at Essex with portfolio management responsibility for the Fund, including the information set forth in the Fund’s prospectus and statement of additional information. In this regard, the Trustees observed that Essex had extensive experience managing equity assets. The Trustees noted that Essex has served as Subadvisor to the Fund since the commencement of the Fund’s operations in 2002 and that the same personnel would continue to serve as portfolio managers to the Fund.
Performance. Among other information relating to the Fund’s performance, the Trustees noted, at their June 21-22, 2012 meeting, that the Fund’s performance for Class A shares for the 1-year, 3-year, 5-year and 10-year periods ended March 31, 2012 was below, below, below and above, respectively, the median performance of the Peer Group and below, below, below and above, respectively, the performance of the Fund Benchmark. The Trustees took into account management’s discussion of the Fund’s performance, both at their June 21-22, 2012 meeting and at their September 20-21, 2012 meeting. At their June 21-22, 2012 meeting, the Trustees took into account the factors that led to the Fund’s recent underperformance. At such meeting, the Trustees also considered the Subadvisor’s performance as compared to an appropriate peer group of managed accounts and also considered the gross performance of the Fund as compared to the Subadvisor’s relevant performance composite that utilizes the same investment strategy and approach and noted that the Board reviews on a quarterly basis detailed information about both the Fund’s performance results and portfolio composition as well as the Subadvisor’s Investment Strategy. The Trustees concluded that the Fund’s performance is being addressed and that the prospects for adequate future performance supported the approval of the New Subadvisory Agreement.
Subadvisory Fees and Profitability. The Trustees noted that the Manager, and not the Fund, is responsible for paying the fees charged by the Fund’s Subadvisor. In considering the reasonableness of the subadvisory fee, the Trustees reviewed information provided by Essex regarding the cost to Essex of providing subadvisory services to the Fund and the resulting profitability from such relationships, and noted that, because Managers would no longer be an affiliate of Essex following the Transaction, such profitability would not be directly or indirectly shared with Managers. The Trustees relied on the ability of Managers to negotiate the terms of the New Subadvisory Agreement at arm’s length as part of the manager-of-managers structure.
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In addition, the Trustees considered other potential benefits of the subadvisory relationship to the Subadvisor, including, among others, the indirect benefits that the Subadvisor may receive from the Subadvisor’s relationship with the Fund, including any so-called “fallout benefits” to the Subadvisor, such as reputational value derived from the Subadvisor serving as Subadvisor to the Fund. The Trustees, however, noted that the subadvisory fees are paid by the Manager out of its advisory fee. As a consequence, the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Fund were not material factors in the Trustees’ deliberations. For similar reasons, the Trustees did not consider potential economies of scale in the management of the Fund by Essex to be a material factor in their deliberations at this time. In addition, because the subadvisory fees are paid by the Manager out of its advisory fee, the Trustees did not rely upon comparisons of the subadvisory fees with those under other investment advisory contracts. Taking into account all of the foregoing, the Trustees concluded that, in light of the nature, extent and quality of the services provided to-date by the Subadvisor, and the other considerations noted above with respect to the Subadvisor, the Fund’s subadvisory fees are reasonable.
* * * *
After consideration of the foregoing, the Trustees also reached the following conclusions (in addition to the conclusions discussed above) regarding the New Subadvisory Agreement: (a) the Subadvisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the New Subadvisory Agreement; (b) the Subadvisor’s Investment Strategy is appropriate for pursuing the Fund’s investment objectives; and (c) the Subadvisor maintains appropriate compliance programs.
Based on all of the above-mentioned factors and related conclusions, with no single factor or conclusion being determinative and with each Trustee not necessarily attributing the same weight to each factor, the Trustees concluded that approval of the New Subadvisory Agreement would be in the best interests of the Fund and its shareholders. Accordingly, on September 20-21, 2012, the Trustees, including a majority of the Independent Trustees, voted to approve the New Subadvisory Agreement.
Based on the same factors and conclusions, the Trustees also approved the Interim Subadvisory Agreement between Managers and Essex with respect to the Fund, such agreement to take effect upon the termination of the Former Subadvisory Agreement and to terminate no later than 150 days after its effectiveness.
Required Vote
Approval of the Proposal will require the approval of a majority of the outstanding shares of the Fund. A majority of the outstanding shares of the Fund means the affirmative vote of the lesser of (1) 67% of the shares of the Fund that are present at the Meeting, if the holders of more than 50% of the shares of the Fund outstanding at the Record Date are present or represented by proxy at the Meeting, or (2) more than 50% of the shares of the Fund outstanding at the Record Date. If the vote required to approve the Proposal is not obtained from the Fund, the New Subadvisory Agreement between the Manager and Essex will not be approved, and the Trustees will consider what other actions to take in the best interests of the Fund.
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THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF THE
FUND VOTE FOR APPROVAL OF THE PROPOSAL.
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ADDITIONAL INFORMATION
Solicitation of Proxies
Representatives of the Manager may solicit proxies by telephone, letter or personally and will receive no additional compensation for these services. The Trust may also use one or more proxy solicitation firms to assist with the mailing and tabulation effort and any special personal solicitation of proxies. Banks, brokers, fiduciaries and nominees will, upon request, be reimbursed for their reasonable expenses in sending proxy material to beneficial owners of shares of the Fund. The cost of preparing, printing and mailing the enclosed proxy card and proxy statement and all other costs incurred in connection with the solicitation of proxies, including any additional solicitation made by letter, telephone or facsimile will be paid by the Manager and Essex equally, and not by the Fund.
D.F. King & Co., Inc. (the “Solicitor”), has been engaged to assist in the solicitation of proxies, at an estimated cost of approximately $25,000, plus expenses. As the Meeting date approaches, certain shareholders of the Fund may receive a telephone call from a representative of the Solicitor if their votes have not yet been received. Proxies that are obtained telephonically will be recorded in accordance with the procedures described below. The Trustees believe that these procedures are reasonably designed to ensure that both the identity of the shareholder casting the vote and the voting instructions of the shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the Solicitor’s representative is required to ask for each shareholder’s full name and address, or the zip code or employer identification number, and to confirm that the shareholder has received the proxy materials in the mail. If the shareholder is a corporation or other entity, the Solicitor’s representative is required to ask for the person’s title and confirmation that the person is authorized to direct the voting of the shares. If the information solicited agrees with the information provided to the Solicitor, then the Solicitor’s representative has the responsibility to explain the process, read the Proposal listed on the proxy card and ask for the shareholder’s instructions on the Proposal. Although the Solicitor’s representative is permitted to answer questions about the process, he or she is not permitted to recommend to the shareholder how to vote, other than to read any recommendation set forth in this Proxy Statement. The Solicitor will record the shareholder’s instructions on the card. Within 72 hours, the shareholder will be sent a letter or mailgram to confirm his or her vote and asking the shareholder to call the Solicitor immediately if his or her instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting and does not wish to authorize the execution of a proxy by telephone, mail, facsimile or internet, the shareholder may vote at the Meeting in person.
If you require additional information regarding the proxy or replacement proxy cards, please call the Solicitor toll free at 1-800-778-1327. Any proxy given by a shareholder, whether in writing, by telephone, by facsimile or the internet, is revocable until voted at the Meeting.
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Financial Information
The Fund’s most recent Annual Report and Semi-Annual Report are available upon request, without charge, by writing to Managers Investment Group LLC, 800 Connecticut Avenue, Norwalk, Connecticut 06854, or by calling 1-800-835-3879, or on the Fund’s website atwww.managersinvest.com.
Principal Holders and Management Ownership
The total number of shares of the Fund outstanding, all of which are Investor Class shares, and information concerning the shareholders who were known to be the owners of more than 5% of the outstanding shares of the Fund, each as of the Record Date, is set forth below.
Essex Small/Micro Cap Growth Fund
Total Number of Shares Outstanding: [ ]
Name and Address | Number of Shares | Percentage | ||
[ ] | [ ] | [ ] |
Except as noted above, the Trust did not know of any person who, as of the Record Date, beneficially owned more than 5% of the outstanding shares of the Fund.
As of the Record Date, all management personnel (i.e., Trustees and Officers of the Trust) as a group owned beneficially [less than 1% of the outstanding shares of the Fund].
Since the beginning of fiscal year 2012,[ no Trustee has purchased or sold securities of the Manager, Essex or any of their respective parents and subsidiaries exceeding 1% of the outstanding securities of any class of securities issued by the Manager, Essex or any of their respective parents or subsidiaries].
Shareholder Proposals
The Trust does not hold regularly scheduled meetings of the shareholders of the Fund. Any shareholder desiring to present a proposal for inclusion at the meeting of shareholders next following this Meeting should submit such proposal to the Trust at a reasonable time before the solicitation is made.
Other Matters to Come Before the Meeting
The Board of Trustees knows of no business other than that specifically mentioned in the Notice of Special Meeting of Shareholders that will be presented or considered at the Meeting. If any other matters are properly presented, it is the intention of the persons named in the enclosed proxy to vote in accordance with their judgment and discretion.
THE TRUSTEES RECOMMEND APPROVAL OF THE PROPOSAL. ANY UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF APPROVAL OF THE PROPOSAL.
December 3, 2012 |
By Order of the Trustees, |
Lewis Collins |
Secretary |
12
EXHIBIT A
The Form of New Subadvisory Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any factual information about the Fund. Accordingly, shareholders should not rely on the representations and warranties in the Form of New Subadvisory Agreement as characterizations of the actual state of facts at the time they were made or otherwise. In addition, the Form of New Subadvisory Agreement may be revised from that shown here prior to its execution, and may be amended after its execution. Should material changes be made to the Form of New Subadvisory Agreement, the Fund will take such steps as may be required by applicable law.
FORM OF NEW SUBADVISORY AGREEMENT
Attention: Essex Investment Management Company, LLC
Re: Subadvisory Agreement
TheEssex Small/Micro Cap Growth Fund(the “Fund”) is a series of a Massachusetts business trust (the “Trust”) that is registered as an investment company under the Investment Company Act of 1940, as amended, (the “Act”), and subject to the rules and regulations promulgated thereunder.
Managers Investment Group LLC (the “Manager”) acts as the manager and administrator of the Trust pursuant to the terms of a Management Agreement with the Trust. The Manager is responsible for the day-to-day management and administration of the Fund and the coordination of investment of the Fund’s assets. However, pursuant to the terms of the Management Agreement, specific portfolio purchases and sales for the Fund’s investment portfolios or a portion thereof, are to be made by advisory organizations recommended by the Manager and approved by the Trustees of the Trust.
1.Appointment as a Subadvisor. The Manager, being duly authorized, hereby appoints and employs Essex Investment Management Company, LLC(“Subadvisor”) as a discretionary asset manager, on the terms and conditions set forth herein, of those assets of the Fund which the Manager determines to allocate to the Subadvisor (those assets being referred to as the “Fund Account”). The Manager may, from time to time, with the consent of the Subadvisor, make additions to the Fund Account and may, from time to time, make withdrawals of any or all of the assets in the Fund Account.
2.Portfolio Management Duties.
(a) Subject to the supervision of the Manager and of the Trustees of the Trust, the Subadvisor shall manage the composition of the Fund Account, including the purchase, retention and disposition thereof, in accordance with the Fund’s investment objectives, policies and restrictions as stated in the Fund’s Prospectus
and Statement of Additional Information (such Prospectus and Statement of Additional Information for the Fund as currently in effect and as amended or supplemented in writing from time to time, being herein called the “Prospectus”).
(b) The Subadvisor 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 Subadvisor agrees that all records under the Act shall be the property of the Trust.
(c) The Subadvisor shall provide the Trust’s Custodian, and the Manager on each business day with information relating to all transactions concerning the Fund Account. In addition, the Subadvisor 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 Subadvisor agrees to maintain adequate compliance procedures to ensure its compliance with the 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 Subadvisor agrees to maintain an appropriate level of errors and omissions or professional liability insurance coverage.
3.Allocation of Brokerage. The Subadvisor shall have authority and discretion to select brokers, dealers and futures commission merchants to execute portfolio transactions initiated by the Subadvisor, and for the selection of the markets on or in which the transactions will be executed.
(a) In doing so, the Subadvisor’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 Subadvisor to solicit competitive bids for each transaction, and the Subadvisor shall have no obligation to seek the lowest available commission cost to the Fund, so long as the Subadvisor 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 Subadvisor 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
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basis. The Subadvisor 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 Subadvisor viewed in terms of either that particular transaction or of the Subadvisor’s overall responsibilities with respect to its clients, including the Fund, as to which the Subadvisor 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 Subadvisor, 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 Subadvisor 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 Subadvisor for the Trust except in accordance with procedures adopted by the Trustees. The Manager agrees that it will provide the Subadvisor with a list of brokers and dealers which are “affiliated persons” of the Trust, the Manager or the Trust’s Subadvisors.
4.Information Provided to the Manager and the Trust and to the Subadvisor
(a) The Subadvisor 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 Subadvisor 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 Subadvisor agrees that it will notify the Manager and the Trust in the event that the Subadvisor or any of its affiliates: (i) becomes subject to a statutory disqualification that prevents the Subadvisor from serving as investment adviser
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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 Subadvisor 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 Subadvisor respecting or relating to the Subadvisor 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 Subadvisor represents that it is an investment adviser registered under the Advisers Act and other applicable laws and that the statements contained in the Subadvisor’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 Subadvisor 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 Subadvisor 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 Subadvisor 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 Subadvisor, and the Subadvisor 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 Subadvisor. The Manager acknowledges that the Subadvisor 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 Subadvisor 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 Subadvisor acts in good faith and provided further, that it is the Subadvisor’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 Subadvisor shall have no obligation to acquire for the Fund Account
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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 Subadvisor shall exercise its best judgment in rendering the services provided by it under this Agreement. The Subadvisor 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 Subadvisor 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 Subadvisor 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 Subadvisor’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 Subadvisor 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 Subadvisor 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 Subadvisor 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 [ ] and shall continue in effect until [ ]. 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 Subadvisor 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 Subadvisor or (iii) by the Subadvisor 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.
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MANAGERS INVESTMENT GROUP LLC | ||
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ACCEPTED: | ||
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Acknowledged: | ||
MANAGERS AMG FUNDS | ||
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SCHEDULES: A. Fee Schedule.
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SCHEDULE A
SUBADVISOR FEE
For services provided to the Fund Account, Managers Investment Group LLC will pay a base quarterly fee for each calendar quarter at an annual rate of 1.00% of the average net assets in the Fund Account during the quarter. Average assets shall be determined using the average daily net assets in the Fund Account during the quarter. The fee shall be pro-rated for any calendar quarter during which the contract is in effect for only a portion of the quarter.
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PROXY TABULATOR P.O. BOX 859232 BRAINTREE, MA 02185-9232 | Vote this proxy card TODAY! Your prompt response will save the expense | |||||||||||
CALL: | To vote by phone call toll-free1-800-778-1327 and follow the recorded instructions. | |||||||||||
LOG-ON: | Vote on the internet atwww.kingproxy.com/essex and follow the on-screen instructions. | |||||||||||
MAIL: | Return the signed proxy card in the enclosed envelope. |
ESSEX SMALL/MICRO CAP GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 12, 2013
This proxy is solicited on behalf of the Board of Trustees of Managers AMG Funds (the “Trust”). I (we), the undersigned holder(s) of [ ] shares, having received Notice of the Meeting and accompanying proxy statement therefor, and revoking all prior proxies, hereby appoint Michael S. Ponder and Donald S. Rumery, and each of them, my (our) attorneys (with full power of substitution in them and each of them) for and in my (our) name(s) to attend the Special Meeting of Shareholders of Essex Small/Micro Cap Growth Fund (the “Fund”) to be held on February 12, 2013 at 2:00 p.m. (Eastern time) at the offices of Managers Investment Group LLC (“Managers” or the “Manager”), 800 Connecticut Avenue, Norwalk, Connecticut 06854, and any adjourned or postponed session or sessions thereof, and to vote and act upon the following matters (as more fully described in the accompanying proxy statement) in respect of all [ ] shares of Essex Small/Micro Cap Growth Fund which I (we) will be entitled to vote or act upon, with all powers I (we) would possess if personally present.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT THEREOF. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED.
Note: In signing, please write name(s) exactly as they appear on this proxy. When signing as an attorney, executor, administrator, or other fiduciary, please give your full title as such. Joint owners should each sign personally. | ||||||||||||||||||
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Signature of joint owner, if any | Date | |||||||||||||||||
AMG01 PXC-Front 1.02 |
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH BELOW AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY ADJOURNMENTS THEREOF. |
PLEASE MARK BOX(ES) BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: n | ||||||||||||
THE BOARD OF TRUSTEES RECOMMENDS A VOTEFOR THE FOLLOWING: | FOR | AGAINST | ABSTAIN | |||||||||
1. | To approve a new subadvisory agreement between the Manager and Essex Investment Management Company, LLC with respect to the Fund. | ¨ | ¨ | ¨ | ||||||||
2. | To transact such other business as may properly come before the Meeting and any adjournment thereof. | |||||||||||
PLEASE SIGN AND DATE ON REVERSE SIDE | ||||||||||||
AMG01-PXC-Back 1.02 |