MONEY MARKET FUND
ANNUAL REPORT
November 30, 1996
W'here Leading Money Managers Converge
MANAGERS MONEY MARKET
ANNUAL REPORT
NOVEMBER 30, 1996
TABLE OF CONTENTS
Page
President's Message 1
The Managers Funds Performance 4
Managers Money Market Fund
Statement of Assets and Liabilities
5
Statement of Operations 5
Statement of Changes in Net Assets 6
Financial Highlights 7
Notes to Financial Statements 8
Report of Independent Accountants 11
The Money Market Portfolio
Schedule of Investments 12
Statement of Assets and Liabilities
15
Statement of Operations 15
Statement of Changes in Net Assets 16
Supplementary Data 16
Notes to Financial Statements 17
Report of Independent Accountants 21
Investments in Managers Money Market Fund are not
deposits or obligation
of, or guaranteed or endorsed by, Morgan Guaranty Trust
Company of New York or
any other bank. Shares of the Fund are not federally
insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any
other governmental agency.
Although the Fund seeks to maintain a stable net asset
value of $1.00 per share, there
can be no assurance that it will be able to continue to do
so.
PRESIDENT'S MESSAGE
DEAR FELLOW SHAREHOLDER:
Although 1996 was a very prosperous year for equity
investments, it was less so for fixed-income securities.
Two factors influencing the exceptional performance of the
stock market over the past two years have been low inflation
and low interest rates. While low inflation is indeed good
for the financial markets in general and fixed-income
securities in particular, the low level of interest rates
merely means that available bond yields, and thus
prospective bond returns, are meager. In addition, when
viewed in a total return context, even a slight rise in
rates from low levels can reduce the prices of fixed-income
securities and mitigate some or all of the return garnered
from the yield, especially for longer term securities.
This is exactly what happened in the first half of 1996.
As signs that the inflation rate might have been rising gave
the market reason to believe that the Federal Reserve might
tighten, interest rates for most maturity horizons rose by
more than one full percentage point. The total returns of
intermediate and long term securities were negative for the
first six months of the year. Shorter term securities,
however, including those we own in this portfolio, performed
well. The benefit of the increased rates was that income
could be reinvested in higher yielding securities. During
the second half of the year, as it became clear that the
inflation rate was not rising, and that the Fed was not
taking action, interest rates moved lower, although not back
to their earlier levels, and bond prices rebounded.
Managers Money Market Fund performed well in this
environment, both from a nominal and relative standpoint,
for its fiscal year ended November 30, 1996. For the twelve
months ended November 30, 1996, Managers Money Market Fund
provided a total return of +5.53@o. For the same period, the
average return for all taxable money market funds, as
reported by IBC Financial Data Inc. (the "IBC Average
Fund"), was
+4.98%. The average rate of inflation during the period
was +3.26%, as measured by the change in the Consumer Price
Index. Thus, the Fund provided a return of +2.27% over the
inflation rate, while the IBC Average Fund returned +1.72%
over inflation. As of November 30, 1996, the 30-day average
yield for the Fund was 5.22%, while the yield for the same
period for the IBC Average Fund was 4.84%.
The Fund's good relative performance was a result of
maintaining a low relative expense ratio, partially achieved
by expense reimbursements, along with timely investment
decisions. Early in the year, the portfolio's manager, Skip
Johnson of Morgan Guaranty Trust Company (J.P. Morgan),
maintained an average maturity similar to that of the
average for money market funds which was between 50 and 55
days. Later in the year, as yields were dropping, Johnson
extended the average maturity of the portfolio. At fiscal
year end, the average maturity for the portfolio was 66
days, while the average maturity for the IBC Average Fund
was 55 days. In addition, throughout the year, Johnson
took advantage of high relative yields available from high
quality foreign banks. Japanese bank obligations in
particular, offered attractive yield advantages at the
beginning of the year. When these spreads tightened around
mid-year, Johnson took profits, but again increased his
position late in the year as the spreads widened again. At
year end, 42% of the portfolio was invested in foreign bank
obligations, and 32% was invested in first tier (highest
credit quality) commercial paper. In comparison, the
average allocation for similar funds (taxable money funds
investing in first tier or better securities) to foreign
bank obligations was 7%, and the average allocation in
commercial paper was 59%. For the Fund, the remainder of
assets were spread across U.S. Government-backed securities,
repurchase agreements, time deposits and domestic bank
obligations (see chart).
Looking forward, Johnson and his team of analysts at J.P.
Morgan will be closely monitoring inventories, which have
been rising recently, consumption and labor rates as keys to
determining the strength of the economy, likely Fed actions,
and, thus, the direction of interest rates. While he is
generally satisfied that the economic pace is stable, he is
concerned that tightness in the labor markets could induce
the Fed to tighten in 1997. With this in mind he is
trimming the average maturity of the portfolio, and expects
to maintain it between 50 and 60 days for the near future.
As of January 7, 1997,
2
the average maturity for the portfolio was 62 days, while
the 7-day average and 7-day effective yields for the Fund
were 5.29% and 5.43%, respectively. For comparison, the
average maturity, 7-day average yield and 7-day effective
yield for the IBC Average Fund were 52 days, 4.89% and
5.01%, respectively.
As always, please feel free to contact us, at 800-835-3879,
should you have any questions on this report or the Fund.
We thank you for your continued investment in The Managers
Funds.
Sincerely,
/s/Robert P. Watson
Robert P. Watson
President
3
THE MANGERS FUNDS
THE MANAGERS FUNDS PERFORMANCE (UNAUDITED)
All periods ending December 31, 1996
AVERAGE ANNUAL TOTAL RETURNS*
Since Inception
Morningstar
1 Year 3 Years 5 Years 10 Years Inception
Date Rating**
Equity Funds:
Income Equity 17.08% 16.67% 14.45% 12.46% 14.57%
Oct. '84 ****
Capital Appreciation Fund 13.69% 14.30% 14.03% 14.65%
15.48% Jun. '84 ****
Special Equity Fund 24.75% 17.87% 17.42% 17.60% 16.47%
Jun. '84 *****
International Equity Fund 12.77% 10.17% 14.02% 10.62%
14.30% Dec. '85 ****
Income Funds:
Short Government Fund 3.89% 2.27% 2.90% - 5.21%
Oct. '87 **
Short & Intermediate
Bond Fund 4.21% 3.33% 5.95% 6.98% 8.56%
Jun. '84 ***
Intermediate
Mortgage Fund 3.33% -3.15% 2.27% 6.36% 7.13%
May '86 *
Bond Fund 4.97% 8.42% 8.94% 9.36% 11.37%
Jun. '84 ****
Global Bond Fund 4.39% ---- ---- ---- 7.48% Mar.
'94 NA
Money Market Fund 5.47% 4.70% 3.93% 5.48% 5.91%
Jun. '84 NA
Past performance is no guarantee of future results.
Investment returns and share price will fluctuate. The
redemption price of a mutual fund may be more or less than
the purchase price. For additional or more recent
information on Managers Money Market Fund, or for a
prospectus for the Equity Funds or the Income Funds, please
call The Managers Funds at (800) 835-3879, or your
investment adviser.
Total return equals income yield plus share price change
and assumes reinvestment of all dividends and capital
gain distributions. No adjustment has been made for
taxes payable by shareholders on their reinvested
dividends and capital gain distributions. Returns for
periods greater than one year are annualized.
Morningstar proprietary ratings reflect risk-adjusted
performance through 12/31/96 and are subject to change
every month. The ratings are by asset class and are
calculated from the funds' three-, five- and ten-year
returns (with fee adjustments) in excess of 90-day
Treasury bill returns, and a risk factor that reflects
fund performance below 90-day T-bill returns. For the
three-, five- and tenyear periods, respectively, each of
the Equity Funds other than the International Equity Fund
was rated against 1,826, 1,058 and 598 equity funds, the
International Equity Fund was rated against 383, 185 and
60 international equity funds, and each of the Income
Funds was rated against 1,104, 597 and 242 fixed-income
funds. Ten percent of the funds in each asset class
receive five stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5@o receive 2 stars and 10% receive 1 star.
4
MANAGERS MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1996
ASSETS:
Investment in The Money Market Portfolio ("Portfolio")
$36,108,151
Receivable from Administrator
16,183
Prepaid expenses
18,181
---------------
Total assets
36,142,515
---------------
LIABILITIES:
Dividends payable to shareholders
25,876
Other accrued expenses
25,695
Total liabilities
51,571
---------------
NET ASSETS:
$36,090,944
=========
Shares outstanding
36,090,944
=========
Net asset value, offering and redemption price per
share $1.00
====
NET ASSETS REPRESENT:
Paid-in capital
$36,090,944
=========
STATEMENT OF OPERATIONS
For the year ended November 30, 1996
INVESTMENT INCOME FROM PORTFOLIO:
Interest income
$1,561,249
EXPENSES:
Administration fees $ 71,401
Transfer agent fees 35,924
Registration fees 22,648
Audit fees 8,322
Reports to shareholders 7,099
Custodian fees 6,359
Legal fees 3,155
Trustee fees 2,135
Miscellaneous expenses 3,866
Allocated Portfolio expenses, net
54,035
---------
Total expenses
214,944
Less: Waiver of administration fees
(71,401)
Reimbursement of expenses
(109,603)
------------
Net expenses
33,940
--------------
NET INVESTMENT INCOME $1,527,309
========
The accompanying notes are an integral part of these
financial statements.
5
MANAGERS MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the
For the
year ended eleven
months ended
November 30, 1996 November
30, 1995
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $1,527,309
$582,501
------------- -----
- ------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,527,309)
(582,501)
------------- -----
- ------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 113,145,027
45,741,592
Net asset value of shares issued in
connection with reinvestment of
dividends 999,707
541,365
Cost of shares repurchased
(89,126,200) (52,479,096)
Net increase (decrease) from capital
share transactions 25,018,534
(6,196,139)
--------------
- -------------
Total increase (decrease) in net assets
25,018,534 (6,196,139)
--------------
- -------------
NET ASSETS:
Beginning of period 11,072,410
17,268,549
End of period $36,090,944
$11,072,410
The accompanying notes are an integral part of these
financial statements.
6
MANAGERS MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each
period
For the year Eleven months
ended ended
Year ended December 31,
November 30, November 30,---------
- ----------------------------------------
1996 1995 1994 1993 1992*
1991*
---------------- ---------------
- - ----- ------ ------- --------
Net Asset Value, Beginning
of Period $1.000 $1.000
$1.000 $1.000 $1.000 $1.000
-------- --------
- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.054 0.044
0.035 0.022 0.030 0.054
Net realized and unrealized gain
on investments - - - - -
0.003
------ ------- ------
- ------- ------- -------
Total from investment operations 0.054
0.044 0.035 0.022 0.030 0.057
------ ------- ------
- ------- ------- -------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.054)
(0.044) (0.035) (0.022) (0.030) (0.054)
Net realized gain on investments - - -
- - - (0.003)
------ ------- ------
- ------- ------- -------
Total distributions to
shareholders (0.054)
(0.044) (0.035) (0.022) (0.030) (0.057)
------ ------- ------
- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD $1.000 $1.000 $1.000
$1.000 $1.000 $1.000
Total Return (c) 5.53% 4.51 %(b)
3.61% 2.48% 3.12% 5.35%
Ratio of net expenses to average net
assets 0.12% 1.13%(b) 0.73%
0.74% 0.67% 0.57%
Ratio of net investment income to
average net assets 5.35% 4.85%(b) 3.84%
2.48% 3.05% 5.69%
Net assets at end of period (000's
omitted) $36,091 $11,072
$17,269 $7,368 $9,320 $4,868
Expense Waiver (a)
Ratio of total expenses to average
net assets 0.7570 1.18%(b)
1.037@ 0.99% 0.98% 1.06%
Ratio of total investment income
to average net assets 4.71% 4.80%(b)
3.54% 2.23% 2.74% 5.21%
(a) Ratio information assuming no waiver of investment
advisory and management fees and/or administrative fees
in effect for the period presented, if applicable. (See
Note 2).
(b) Annualized
(c) The total returns would have been lower had certain
expenses not been reduced during the periods shown.
* Audited by prior auditors.
7
MANAGERS MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1996
Managers Money Market Fund (the "Fund") is a series of The
Managers Funds (the "Trust"), a no-load, diversified, open-
end, management investment company, organized as a
Massachusetts business trust, and registered under the
Investment d Company Act of 1940, as amende (the "1940
Act"). Currently the Trust is comprised of 10 investment
series (collectively the "Funds").
The Fund invests all of its investable assets in The Money
Market Portfolio (the "Portfolio"), a diversified, open-end
management investment company having the same investment
objectives as the Fund. The value of such investment
reflects the Fund's proportionate interest in the net assets
of the Portfolio (0.94% at November 30, 1996). The
performance of the Fund is directly affected by the
performance of the Portfolio. The financial statements of
the Portfolio, including the schedule of investments, are
included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance
with generally accepted accounting principles, which require
the use of management's estimates. The following is a
summary of significant accounting policies followed by the
Fund:
(a) VALUATION OF INVESTMENTS
Valuation of securities by the Portfolio is discussed in
Note 1 of the Portfolio's Notes to Financial Statements
which are included elsewhere in this report.
(b) SECURITY TRANSACTIONS
The Fund records its share of interest income, expenses, and
realized gains and losses and adjusts its investment in the
Portfolio each day.
(c) INVESTMENT INCOME AND EXPENSES
All the net investment income and realized gains and losses
of the Portfolio are allocated pro rata among the Fund and
other investors in the Portfolio at the time of such
determination. Expenses incurred by the Trust with respect
to one or more funds in the Trust are allocated in
proportion to the net assets of each fund in the Trust,
except where allocations of direct expenses to each fund can
otherwise be made fairly Expenses directly attributable to a
fund are charged to that fund.
(d) DIVIDENDS AND DISTRIBUTIONS
Dividends resulting from net investment income normally will
be declared daily, payable on the third to the last business
day of the month.
Distributions classified as capital gains for federal income
tax purposes, if any, will be made on an annual basis and
when required for federal excise tax purposes. Income and
capital gain distributions are determined in accordance with
income tax regulations which may differ from generally
accepted accounting principles. Permanent book and tax
differences, if any, relating to shareholder distributions
will result in reclassifications to capital stock.
(e) FEDERAL TAXES
The Fund intends to comply with the requirements under
Subchapter M of the Internal Revenue Code of 1986, as
amended, and to distribute substantially all of its taxable
income and gains, if any, to its shareholders and to meet
certain diversification and income requirements with respect
to investment companies. Therefore, no federal income or
excise tax provision is included in the accompanying
financial statements.
(f) CAPITAL STOCK
The Trust's Declaration of Trust authorizes the issuance of
an unlimited number of shares of beneficial interest,
without par value. The Fund records sales and repurchases
of its capital stock on the trade date. Dividends and
distributions to shareholders are recorded as of the ex-
dividend date.
At November 30, 1996, one unaffiliated shareholder, which is
an omnibus account, held 16@o of the outstanding shares of
the Fund.
(2) AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
The Trust has adopted an Administrative and Shareholder
Servicing Agreement under which The Managers Funds, L.P
serves as the Fund's administrator (the "Administrator") and
is responsible for all aspects of managing the Fund's
operations, including administration and shareholder
services to the Fund, its shareholders, and certain
institutions, such as bank trust departments, dealers and
registered investment advisers, that advise or act as an
intermediary with the Fund's shareholders.
Effective December 1, 1995, the Trustees approved a fee for
these services, payable to the Administrator, of 0.25% per
annum, all of which has been voluntarily waived for the
fiscal year ended November 30,1996. In addition, from
December 1, 1995 to November 30, 1996, the Administrator
voluntarily limited total expenses to between 0.00% and
0.24% of average daily net assets by reimbursing the Fund
for varying amounts of Fund and Portfolio level expenses.
These waivers and expense limitations may be modified or
terminated at any time at the sole discretion of the
Administrator.
An aggregate annual fee of $10,000 is paid to each outside
Trustee for serving as a Trustee of the Trust. In addition,
these Trustees receive meeting fees of $750 for each
inperson meeting attended, and $200 for participation in any
telephonic meetings. The Trustee fee expense shown in the
financial statements represents the Fund's allocated portion
of the total fees.
(3) CONTINGENCY
Two lawsuits seeking class action status have been filed
against Managers Intermediate Mortgage Fund, Managers Short
Government Fund, the Investment Manager and the Trust, among
other defendants. In both of these cases, the plaintiffs
seek unspecified damages based upon losses alleged in the
two funds named above. After plaintiff amended the
complaint, a second motion to dismiss was filed in the suit
relating to Managers Short Government Fund. In that action,
the parties have now entered into a preliminary agreement to
settle all claims by the purported class. However, the
parties have not finalized their settlement nor have they
obtained the required court approvals. For these and other
reasons, there can be no assurance that the settlement will
be consummated. In addition, a non-class action lawsuit
based on similar allegations has been filed by a customer
against certain of the defendants named in the class action
lawsuits, as well as Managers Short and Intermediate Bond
Fund. Certain other customers, who are potentially members
of the plaintiff class in each of the two class action
lawsuits referred to above, have asserted that they may file
similar lawsuits based on similar claims, but have not done
so. Management continues to believe that it has meritorious
defenses and, if the cases are not settled, Management
intends to defend vigorously against these actions.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of The Managers
Funds and the Shareholders of
Managers Money Market Fund:
We have audited the accompanying statement of assets and
liabilities of Managers Money Market Fund as of November 30,
1996 and the related statement of operations for the year
then ended, the statement of changes in net assets for the
year then ended and for the eleven month period ended
November 30, 1995, and the financial highlights for the year
ended November 30, 1996, the eleven month period ended
November 30, 1995, and for each of the two years in the
period ended December 31, 1994. These financial statements
and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an
opinion on these financial statements and financial
highlights based on our audits. The financial highlights
for the years ended December 31, 1991 and 1992, presented
herein, were audited by other auditors whose report dated
February 26, 1993, expressed an unqualified opinion on such
financial highlights.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Managers Money Market
Fund as of November 30, 1996, the results of its operations
for the year then ended, the changes in its net assets for
the year then ended and for the eleven month period ended
November 30, 1995, and the financial highlights for the year
ended November 30, 1996, the eleven month period ended
November 30, 1995, and for each of the two years in the
period ended December 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P
Boston, Massachusetts
January 23, 1997
THE MONEY MARKET PORTFOLIO
Schedule of Investments
November 30, 1996
Principal Yield to
Amount Maturity/
(in tlhousands) Security Description
Maturity Dates Rate Value
------------------- --------------------------
- ------------------ -------------- -------
CERTIFICATES OF DEPOSIT - DOMESTIC (5.0-7.)
$33,500 Bank of America, Chicago 11/07/97
5.570% $33,484,726
25,000 Bank of America National Trust &
Savings Association O2/12/97 4.900
24,997,587
15,000 Bank of New York 04/01/97
5.550 14,996,536
25,000 Chase Manhattan 12/30/96
5.750 25,000,000
42,825 First Union Bank of North Carolina O2/18/97
5.360 42,825,000
50,000 National Bank of Detroit 01/03/97
5.200 49,995,615
Total Certificates of Deposit -
- ---------------
Domestic
191,299,464
----------
- -----
CERTIFICATES OF DEPOSIT - FOREIGN (34.5%)
32,000 Bank of Montreal, Chicago 01/10/97
5.360 32,000,000
158,500 Banque Nationale de Paris Ltd., New
York 12/03/96-04/11/97 5.330-
5.750 158,496,834
30,300 Bayerische Landesbank, New York 12/09/96-
11/21/97 5.310-5.500 30,286,461
51,150 Bayerische Vereinsbank AG, New York
10/28/97 5.680 51,127,776
88,500 Canadian Imperial Bank of Commerce 12/19/96
5.270 88,500,000
50,000 Commerzbank U.S. Finance, Inc 12/13/96
5.290 50,000,166
38,500 Credit Agricole, Chicago 12,/30/96
5.420 38,500,182
11,500 Deutsche Bank 11/10/97 5.550
11,494,350
175,000 Landesbank Hessen Thuringen 07/18/97
6.010 175,331,454
35,000 Rabobank Nederland N. V 12/27/96
5.540 35,000,249
59,000 Royal Bank of Canada, New York05/13/97-
05/15/97 5.745-5.810 59,005,348
150,000 Sanwa Bank Ltd. Yankee CD 12/09/96-
01/15/97 5.360-5.500 150,000,186
196,000 Societe Generale, New York 12/05/96-
10/06/97 5.2,80-5.840 195,982,211
130,000 Sumitomo Bank Yankee CD 12/03/96-01/21/97
5.500-5.520 130,000,000
48,400 Swiss Bank Corp., New York 12/18/96
5.530 48,400,226
50,000 Union Bank of Switzerland 12/13/96
5.500 50,000,000
25,000 Westpac Banking Corp. Yankee CD 12/27/96
5.570 25,000,356
Total Certificates of Deposit -
- --------------
Foreign
1,329,125,799
----------
- --------
COMMERCIAL PAPER - DOMESTIC (17.1%)
20,976 A I Credit Corp 12/03/96-l2/17/96
5.240 20,961,791
40,000 American Express Co 12/16/96
5.260 39,912,333
73,000 American Express Credit Corp 01/02/97
5.250 72,659,334
25,000 Bank of New York 12/12/96
5.270 24,959,743
25,000 Bankers Trust 12/27/96 5.600
24,898,889
7,000 Bellsouth Capital Funding Corp
12/02/96 5.300 6,998,969
22,458 Campbell Soup Co 12/20/96
5.270 22,395,536
24,024 CIT Group Holdings Inc 12/19/96
5.250 23,960,937
25,000 Deere & Co 01/24/97 5.330
24,800,125
116,000 Ford Motor Credit Corp 12/05/96-l2/20/96
5.250 115,780,083
5,600 General Electric Capital Corp 12/04/96
5.250 5,597,550
25,000 H.J. Heinz Co 12/09/96 5.230
24,970,944
The accompanying notes are an integral part of these
financial statements.
12
THE MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
November 30, 1996
Principal Yield to
Amount Maturity/
(in tlhousands) Security Description
Maturity Dates Rate Value
------------------- --------------------------
- ------------------ -------------- -------
COMMERCIAL PAPER - DOMESTIC (continued)
$45,300 J.C. Penny Funding Corp 12/11/96-I2/16/96
5.250-5.270% $45,230,987
51,000 Koch Industries Inc 12/02/96
5.350 50,992,421
10,000 PACCAR Financial Corp 12/06/96
5.300 9,992,639
2,732 PepsiCo Inc 12/13/96 5.270
2,727,201
65,000 Raytheon Co 12/20/96 5.270
64,819,210
26,000 Republic Bank of New York 12/10/96
5.250 25,965,875
7,000 Southern Co 12/09/96 5.250
6,991,833
20,800 Unilever Capital Corp 12/13/96
5.250 20,763,600
18,930 Warner Lambert Co 12/02/96
5.230 18,927,250
3,365 Xerox Credit Corp 12/09/96-12/18/96
5.240-5.270 3,358,434
----------
- -----
Total Commercial Paper - Domestic.
657,665,684
----------
- -----
COMMERCIAL PAPER - FOREIGN (15.2%)
57,165 Bayerische Vereinsbank 12/04/96-12./17/96
5.250-5.430 57,069,542
90,000 Caisse D'Amortissement 06/06/97
5.290 87,526,925
40,000 Canadian Imperial Holding Inc 12./10/96
5.444 39,945,560
37,000 Commonwealth Bank of Australia 12/30/96
5.320 36,841,434
78,561 Creditanstalt Finance Inc 12/04/96-
12/12/96 5.250 78,482,808
21,900 Deutsche Bank Finance Inc 12/03/96
5.270 21,893,588
22,020 Dresdner Bank U.S. Finance Inc
12/05/96 5.250 22,007,155
18,000 Claxo Wellcome PLC 12/09/96
5.420 17,978,320
50,000 National Australia Funding 12/02/96
5.290 49,992,653
55,000 Ontario Hydro 12/04/96-l2/30/96
5.240-5.370 54,862,179
26,300 Seagram, Joseph E. & Sons Inc 12/11/96
5.250 26,261,646
24,000 Swiss Bank Corp., New York 12/27/96
5.300 23,905,013
69,000 UBS Finance Delaware Inc 12/04/96
5.340 68,969,295
----------
- ----
Total Commercial Paper - Foreign
585,736,118
----------
- ------
CORPORATE OBLIGATIONS (3.2%)
75,000 Abbey National Treasury Services,
PLC 11/03/97-11/21/97 5.500-
5.640 74,953,304
15,000 General Electric Capital Corp 01/31/97
5.080 14,999,699
25,000 John Deere Capital Corp 07/03/97
5.850 24,989,740
9,000 Old Kent Bank & Trust Co 01/15/97
5.125 9,000,000
----------
- -----
Total Corporate Obligations
123,942,743
----------
- ------
FLOATING RATE NOTES (7.3%) (a)
53,000 Abbey National Treasury Services,
PLC, (resets monthly to one month
LIBOR - 12.5 basis points, due
05/16/97) 12/18/96(b) 5.250
52,982,004
72,500 Asset Backed Securities Investment
Trust, Series 1996-M, (resets monthly
to one month LIBOR, due 10/15/97)
(144A) 12/15/96(b) 5.375
72,500,000
The accompanying notes are an integral part of these
financial statements.
13
THE MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
November 30, 1996
Principal Yield to
Amount Maturity/
(in tlhousands) Security Description
Maturity Dates Rate Value
------------------- --------------------------
- ------------------ -------------- -------
FLOATING RATE NOTES (continued)
$ 20,000 Federal National Mortgage
Association, (resets weekly to six
month Treasury Bill rate +10 basis
points, due 06/11/97) 12/10/96(b)
5.370% $ 19,991,850
94,622 Natwest Asset Trust Securities, Series
R-13/14A, (resets monthly to one
month LIBOR + 2 basis points, due
09/15/03) (144A) 12/15/96(b) 5.395
94,622,000
40,000 Society National Bank of Cleveland,
(resets daily to the Fed Funds rate +
8 basis points, due 07/08/97) 12/04/96(b)
5.500 39,983,656
----------
- ----
Total Floating Rate Notes
280,079,510
----------
- -----
TIME DEPOSITS - FOREIGN (0.3%)
13,203 Banque Nationale de Paris, Grand
Cayman 12/02/96 5.375
13,203,000
----------
- ----
U.S. GOVERNMENT AGENCY OBLIGATIONS (4.8%)
30,000 Federal Farm Credit Bank 12/02/96
5.400 29,999,868
1,060 Federal Home Loan Banks 06/27/97
5.875 1,059,245
73,430 Federal Home Loan Mortgage Corp 12/02/96
5.330-5.700 73,418,679
79,500 Federal National Mortgage
Association 12/04/96-12/18/96
5.370-5.410 79,497,955
Total U.S. Government Agency
- --------------
Obligations
183,975,747
----------
- -----
U.S. TREASURY OBLIGATIONS (2.6%)
97,500 United States Treasury Notes 01/31/97
7.500 97,874,271
----------
- ----
REPURCHASE AGREEMENTS (9.3%)
357,587 Goldman Sachs Repurchase
Agreements, dated 11/29/96,
proceeds $357,827,145
(collateralized by $263,308,000
U.S. Treasury Notes
6.25%-7.50%, due O@/97-11/15/01
valued at $270,636,657, $95,642,000
U.S. Treasury Bills 0.00'7@, due
03/06/97-04/24/97 valued at
$94,102,422) (cost $357,587,000) 12/02/96
5.350-5.660 357,587,000
----------
- -------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE (99.3%)
3,820,489,336
OTHER ASSETS IN EXCESS OF LIABILITIES (0.7%)
27,760,581
----------
- -------
NET ASSETS (100.0%)
$3,848,249,917
===========
(a) The coupon rate shown on floating or adjustable rate
securities represents the rate at the end of the
reporting period. The due date in the security
description reflects the final maturity date.
(b) Reflects the next interest rate reset date.
144A-Securities restricted for resale to Qualified
Institutional Buyers.
The accompanying notes are an integral part of these
financial statements.
14
THE MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1996
ASSETS:
Investments at amortized cost and value
$3,820,489,336
Cash 2,198
Interest receivable
28,466,958
Prepaid trustees' fees
6,237
Prepaid expenses and other assets
13,201
---------------
- ----
Total assets
3,848,977,930
---------------
- --
LIABILITIES:
Advisory fee payable
409,662
Custody fee payable 119,011
Administrative services fee payable
102,973
Administration fee payable
56,064
Fund services fee payable
5,425
Accrued expenses 34,878
---------------
- --
Total liabilities
728,013
---------------
- --
NET ASSETS:
Applicable to investors' beneficial interests
$3,848,249,917
===========
STATEMENT OF OPERATIONS
For the fiscal year ended November 30, 1996
INVESTMENT INCOME:
Interest income
$191,789,557
EXPENSES:
Advisory fee $4,503,793
Administrative services fee 891,730
Custodian fees and expenses 588,354
Administration fee 306,001
Fund services fee 157,428
Trustees' fees and expenses 63,351
Professional fees and expenses 48,407
Miscellaneous 30,508
------------
Total expenses 6,589,572
Less: reimbursement of expenses (9,993)
-------------
Net expenses 6,579,579
------------
Net Investment Income
185,209,978
Net Realized Gain on Investments
267,432
---------------
Net Increase in Net Assets Resulting from Operations
$185,477,410
==========
The accompanying notes are an integral part of these
financial statements.
15
THE MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal For the
Fiscal
Year Ended Year Ended
November 30, 1996 November
30, 1995
------------------------ -----
- -------------------
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income $185,209,978
$168,180,713
Net realized gain on investments 267,432
1,573,477
---------------- -----
- ------------
Net increase in net assets resulting
from operations 185,477,410
169,754,190
-------------- ----------
- -----
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Contributions 18,847,392,256
17,654,676,133
Withdrawals (18,519,575,165)
(17,137,148,786)
Net increase from investors' --------------------
- ---------------------
transactions 327,817,091
517,527,347
------------------- -----
- -----------------
Total increase in net assets 513,294,501
687,281,537
NET ASSETS:
Beginning of fiscal year 3,334,955,416
2,647,673,879
------------------- -----
- -----------------
End of fiscal year $3,848,249,917
$3,334,955,416
------------------- -----
- -----------------
SUPPLEMENTARY DATA
For the period
For the Fiscal Year Ended
July 12, 1993
November 30,
(commencement
--------------------------------
of operations) to
1996 1995 1994 November 30,
1993
------ ------ ------
- ------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.19% 0.19% 0.20%
0.19%(a)
Net investment income 5.29% 5.77% 3.90%
2.98%(a)
Decrease reflected in expense
ratio due to expense
reimbursements 0.00%(b) - 0.00%(b) -
(a) Annualized
(b) Less than 0.01%
The accompanying notes are an integral part of these
financial statements.
16
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
November 30, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolio (the "Portfolio") is registered
under the Investment Company Act of 1940, as amended (the
'Act"), as a noload, diversified, open-end management
investment company which was organized as a trust under the
laws of the State of New York. The Portfolio's investment
objective is to maximize current income and maintain a high
level of liquidity. The Portfolio commenced operations on
July 12, 1993. The Declaration of Trust permits the
Trustees to issue an unlimited number of beneficial
interests in the Portfolio.
The preparation of financial statements in accordance with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the
significant accounting policies of the Portfolio:
a) Investments are valued at amortized cost which
approximates market value. The amortized cost method of
valuation values a security at its cost at the time of
purchase and thereafter assumes a constant amortization to
maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of
the instruments.
The Portfolio's custodian or designated subcustodians, as
the case may be under tri-party repurchase agreements, takes
possession of the collateral pledged for investments in
repurchase agreements on behalf of the Portfolio. It is the
policy of the Portfolio to value the underlying collateral
daily on a mark-tomarket basis to determine that the value,
including accrued interest, is at least equal to the
repurchase price plus accrued interest. In the event of
default of the obligation to repurchase, the Portfolio has
the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the
other party to the agreement, realization and/or retention
of the collateral or proceeds may be subject to legal
proceedings.
b) Securities transactions are recorded on a trade date
basis. Investment income consists of interest income, which
includes the amortization of premiums and discounts, is
recorded on an accrual basis. For financial and tax
reporting purposes, realized gains and losses are determined
on the basis of specific lot identification.
c) The Portfolio intends to be treated as a partnership
for federal income tax purposes. As such, each investor in
the Portfolio will be subject to taxation on its share of
the Portfolio's ordinary income and capital gains. It is
intended that the Portfolio's assets will be managed in such
a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Internal
Revenue Code. The cost of securities is substantially the
same for book and tax purposes.
2. TRANSACTIONS WITH AFFILIATES
a) The Portfolio has an Investment Advisory Agreement with
Morgan Guaranty Trust Company of New York ("Morgan"). Under
the terms of the Investment Advisory Agreement, the
Portfolio pays Morgan at an annual rate of 0.20% of the
Portfolio's average daily net assets up to $1 billion and
0.10% on any excess over $1 billion. For the fiscal year
ended November 30, 1996, this fee amounted to $4,503,793.
b) The Portfolio had retained Signature Broker-Dealer
Services, Inc. ("Signature") to serve as administrator and
exclusive placement agent. Under an Administration
Agreement, Signature provided administrative services
necessary for the operations of the Portfolio, furnished
office space and facilities required for conducting the
business of the Portfolio and paid the compensation of the
Portfolio's officers affiliated with Signature. Until
December 28, 1995, the agreement provided for a fee to be
paid to Signature at an annual fee rate determined by the
following schedule: 0.01% of the first $1 billion of the
aggregate average daily net assets of the Portfolio and the
other portfolios subject to the agreement, 0.008% of the
next $2 billion of such net assets, 0.006% of the next $2
billion of such net assets, and 0.004% of such net assets in
excess of $5 billion. The daily equivalent of the fee rate
was applied each day to the net assets of the Portfolio.
For the period from December 1, 1995 through December 28,
1995, Signature's fee for these services amounted to
$14,797.
Effective December 29, 1995, the Administration Agreement
was amended such that the fee charged was equal to the
Portfolio's proportionate share of a complex-wide fee based
on the following annual schedule: 0.03,Yo on the first $7
billion of the aggregate average daily net assets of the
Portfolio and the other portfolios (the "Master Portfolios")
in which The JPM PierPont Funds, The JPM Institutional Funds
or The JPM Advisor Funds invest and 0.01% on the aggregate
average daily net assets of the Master Portfolios in excess
of $7 billion. The portion of this charge paid by the
Portfolio was determined by the proportionate share its net
assets bore to the total net assets of The JPM Pierpont
Funds, The JPM Institutional Funds, The JPM Advisor Funds
and the Master Portfolios. For the period from December 29,
1995 through July 31, 1996, such fees for these services
amounted to $258,192. The Administration Agreement with
Signature was terminated July 31, 1996.
Effective August 1, 1996, certain administrative functions
formerly provided by Signature are provided by Funds
Distributor, Inc. ("FDI"), a registered broker-dealer, and
by Morgan. FDI also serves as the Portfolio's exclusive
placement agent. Under a Co-Administration Agreement
between FDI and the Portfolio, the Portfolio has agreed to
pay FDI fees equal to its allocable share of annual complex-
wide charge of $425,000 plus FDI's outof-pocket expenses.
The amount allocable to the Portfolio is based on the ratio
of the Portfolio's net assets to the aggregate net assets of
The JPM Pierpont Funds, The JPM Institutional Funds, The JPM
Advisor Funds and the Master Portfolios. For the period
from August 1, 1996 through November 30, 1996, the fee for
these services amounted to $33,012.
c) Until August 31, 1995, the Portfolio had a Financial
and Fund Accounting Services Agreement with Morgan which
provided that Morgan would receive a fee, based on the
percentages described below, for overseeing certain aspects
of the administration and operation of the Portfolio and
that was also designed to provide an expense limit for
certain expenses of the Portfolio. This fee was calculated
exclusive of the advisory fee, custody expenses and fund
services fee at 0.03% of the Portfolio's average daily net
assets. From September 1, 1995 until December 28, 1995, an
interim agreement between the Portfolio and Morgan provided
for the continuation of the oversight functions that were
outlined under the prior agreement and that Morgan should
bear all of its expenses incurred in connection with these
services.
Effective December 29, 1995, the Portfolio entered into an
Administrative Services Agreement (the "Services Agreement")
with Morgan under which Morgan is responsible for overseeing
certain aspects of the administration and operation of the
Portfolio. Under the Services Agreement, the Portfolio had
agreed to pay Morgan a fee equal to its proportionate share
of an annual complex-wide charge. Until July 31, 1996, this
charge was calculated daily based on the aggregate net
assets of the Master Portfolios in accordance with the
following annual schedule: 0.06%, on the first $7 billion of
the Master Portfolios' aggregate average daily net assets
and 0.03% of the Master Portfolios' aggregate average daily
net assets in excess of $7 billion. The portion of this
charge paid by the Portfolio was determined by the
proportionate share its net assets bore to the net assets of
the Master Portfolios and other investors in the Master
Portfolios for which Morgan provided similar services. For
the period from December 29, 1995 through July 31, 1996, the
fee for these services amounted to $493,282.
Effective August 1, 1996, the Services Agreement was amended
such that the annual complex-wide charge is calculated daily
based on the aggregate net assets of the Master Portfolios
in accordance with the following annual schedule: 0.09,Yo on
the first $7 billion of the Master Portfolios' aggregate
average daily net assets and 0.04% of the Master Portfolios'
aggregate average daily net assets in excess of $7 billion
less the complex-wide fees payable to FDI. The allocation
of the Portfolio's portion of this charge is described
above. For the period from August 1, 1996 through November
30, 1996, the fee for these services amounted to $398,448.
In addition, Morgan has agreed to reimburse the Portfolio to
the extent necessary to maintain the total operating
expenses of the Portfolio at no more than 0.2OL7o of the
average daily net assets of the Portfolio through March 31,
1997. For the fiscal year ended November 30, 1996, Morgan
reimbursed the Portfolio $9,993 for expenses under this
agreement.
d) The Portfolio has a Fund Services Agreement with
Pierpont Group, Inc. ("Group") to assist the Trustees in
exercising their overall supervisory responsibilities for
the Portfolio's affairs. The Trustees of the Portfolio
represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing
its services amounted to $157,428 for the fiscal year ended
November 30, 1996.
e) An aggregate annual fee of $65,000 is paid to each
Trustee for serving as a Trustee of The JPM Pierpont Funds,
The JPM Institutional Funds and the Master Portfolios. The
Trustees' Fees and
Expenses shown in the financial statements represents the
Portfolio's allocated portion of the total fees and
expenses. The Portfolio's Chairman and Chief Executive
Officer also serves as Chairman of Group and received
compensation and employee benefits from Group in his role as
Group's Chairman. The allocated portion of such
compensation and benefits included in the Fund Services Fee
shown in the financial statements was $20,200.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of The
Money Market Portfolio
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and the
related statements of operations and of changes in net
assets and the supplementary data present fairly, in all
material respects, the financial position of The Money
Market Portfolio (the "Portfolio") at November 30, 1996, the
results of its operations for the year then ended, the
changes in its net assets for each of the two years in the
period then ended, and the supplementary data for each of
the three years in the period then ended, and for the period
July 12, 1993 (commencement of operations) through November
30, 1993, in conformity with generally accepted accounting
principles. These financial statements and supplementary
data (hereafter referred to as "financial statements") are
the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of
these financial statements in accordance with generally
accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of
securities at November 30, 1996 by correspondence with the
custodian and brokers, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
January 16, 1997
Where Leading Money Managers Converge
Fund Distributor
The Managers Funds, L.R 40 Richards Avenue
Norwalk, Connecticut 06854-2325 (203) 857-5321 or (800) 835-
3879
Custodian
State Street Bank and Trust
Company
1776 Heritage Drive
North Quincy, Massachusetts
02171
Legal Counsel
Shereff, Friedman, Hoffman &
Goodman, LLP
919 Third Avenue
New York, New York 10022
Transfer Agent
Boston Financial Data Services, Inc. attn: The Managers
Funds PO. Box 8517
Boston, Massachusetts 02266-8517
(800) 252-0682
This report is prepared for the information of shareholders.
It is authorized for distribution to prospective investors
only when preceded by an effective prospectus.
The Managers Funds
Equity Funds:
INCOME EQUITY FUND
Scudder, Stevens & Clark, Inc.
Spare, Kaplan, Bischel & Associates
CAPITAL APPRECIATION FUND
Dietche & Field Advisers, Inc.
Husic Capital Management
SPECIAL EQUITY FUND
Liberty Investment Management
Pilgrim Baxter & Associates
Westport Asset Management, Inc.
INTERNATIONAL EQUITY
FUND
Scudder, Stevens & Clark, Inc.
Lazard, Fr&res & Co.
Fixed Income Funds:
MONEY MARKET FUND
Morgan Guaranty Trust Company
of New York
SHORT GOVERNMENT FUND
Jennison Associates Capital Corp.
SHORT AND INTERMEDIATE
BONDFUND
Standish, Ayer & Wood, Inc.
INTERMEDIATE MORTGAGE
FUND
Jennison Associates Capital Corp.
BONDFUND
Loomis, Sayles & Company, Inc.
GLOBAL BOND FUND
Rogge Global Partners
