<PAGE>
MONEY MARKET FUND
- ------------------------------------
ANNUAL REPORT
November 30, 1997
- --------------------------------
WHERE LEADING MONEY MANAGERS CONVERGE
<PAGE>
MANAGERS MONEY MARKET FUND
ANNUAL REPORT
NOVEMBER 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
----
President's Message....................................................... 1
The Managers Funds Performance............................................ 4
COMPLETE PERFORMANCE TABLE FOR ALL OF THE MANAGERS FUNDS AS OF
DECEMBER 31, 1997
Managers Money Market Fund
Statement of Assets and Liabilities................................... 5
FUND'S BALANCE SHEET AND NET ASSET VALUE (NAV) PER SHARE
COMPUTATION
Statement of Operations............................................... 5
DETAIL OF SOURCES OF INCOME AND FUND LEVEL EXPENSES
Statement of Changes in Net Assets.................................... 6
DETAIL OF CHANGES IN FUND ASSETS AND DISTRIBUTIONS TO SHAREHOLDERS
FOR THE LAST TWO PERIODS
Financial Highlights.................................................. 7
HISTORICAL NET ASSET VALUES, DISTRIBUTIONS, TOTAL RETURNS, EXPENSE
RATIOS AND NET ASSETS
Notes to Financial Statements......................................... 8
ACCOUNTING AND DISTRIBUTION POLICIES, DETAILS OF AGREEMENTS AND
TRANSACTIONS WITH FUND MANAGEMENT AND DESCRIPTION OF CERTAIN
INVESTMENT RISKS
Report of Independent Accountants..................................... 11
The Prime Money Market Portfolio (The commingled investment pool which
holds all investable assets of the Fund)
Schedule of Investments............................................... 12
DETAILED PORTFOLIO LISTINGS BY SECURITY TYPE, AS VALUED AT NOVEMBER
30, 1997, OF WHICH MANAGERS MONEY MARKET FUND OWNS A PRO RATA SHARE
Statement of Assets and Liabilities................................... 16
PORTFOLIO'S BALANCE SHEET
Statement of Operations............................................... 16
DETAIL OF THE PORTFOLIO'S SOURCES OF INCOME, EXPENSES, AND REALIZED
GAINS (LOSSES) DURING THE PERIOD
Statement of Changes in Net Assets.................................... 17
DETAIL OF CHANGES IN THE PORTFOLIO'S ASSETS DURING THE PAST TWO
PERIODS
Supplementary Data.................................................... 17
HISTORICAL RATIOS OF THE PORTFOLIO'S EXPENSES, NET INVESTMENT
INCOME AND IMPACT OF EXPENSE REIMBURSEMENTS ON THE EXPENSE RATIOS
Notes to Financial Statements......................................... 18
THE PORTFOLIO'S ACCOUNTING POLICIES AND DETAILS OF AGREEMENTS AND
TRANSACTIONS WITH PORTFOLIO MANAGEMENT
Report of Independent Accountants..................................... 21
</TABLE>
INVESTMENTS IN MANAGERS MONEY MARKET FUND ARE NOT DEPOSITS OR OBLIGATIONS
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.
<PAGE>
PRESIDENT'S MESSAGE
- -----------------------------------------------
DEAR FELLOW SHAREHOLDER:
The past year was again a prosperous one for most financial assets,
particularly when compared to the rate of inflation. Despite economic and
financial upheaval in the Far East, the U.S. economy continued to grow at a
moderate pace throughout 1997. Corporate profits and personal income rose while
unemployment and the rate of inflation reached historic lows.
Early in the year, both long and short-term interest rates rose as the economy
picked up speed and investors expressed concern about rising inflation. In late
March, the Federal Reserve Board raised the Fed Funds rate by 0.25%. Inflation,
however remained subdued. In fact, the producer price index, which tracks
wholesale price levels, fell for seven consecutive months (ending July) for the
first time ever. The consumer price index, which tracks retail prices continued
to rise, although at an extremely low rate. Thus, interest rates moved lower
again and by early summer were nearing the levels at which they started the
year.
In July, news of the precarious economic situation in Southeast Asia began to
emanate, further diminishing inflationary fears and sending interest rates
lower. While the Malaysian, Indonesian and Thai governments devalued their
currencies in late August and early September, investors fled to quality in the
form of U.S. Treasury bonds. Throughout the fourth quarter, the economic crisis
intensified and spread to other Far Eastern countries. Although the flight to
U.S. Treasuries continued, the prospect of deflation lured investors toward
longer term securities, where they could lock in to current rates. Thus, while
long-term interest rates dropped sharply, short-term yields rose, leaving the
yield curve relatively flat. At the Fund's fiscal year end, 30-year Treasury
bonds provided a yield of only 0.86% more than the yield on 3-month Treasury
bills. At the end of March 1997, when long-term rates peaked, the same yield
spread was 1.79%.
1
<PAGE>
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Throughout the year, the Managers Money Market Fund benefited from the
portfolio manager's timely maturity positioning as well as security selection.
For the year ended November 30, 1997, the Fund provided a total return of 5.35%.
During the same period, the IBC All Taxable Money Fund Average (an index
compiled by IBC Financial Data Corp. which serves as an appropriate benchmark
for the Fund) returned 5.18%, and the IBC First Tier Money Fund Average returned
5.02%. The annual rate of inflation during the period was 1.8%, as measured by
the Consumer Price Index.
While interest rates were falling from the end of March through the summer,
the portfolio management team led by Robert Johnson at J.P. Morgan, the Fund's
sub-advisor, had the portfolio well positioned in longer than average maturity
investments. From August into mid-September, the team reduced the
average maturity from 60 days (in July) down to a low of 30 days, well below the
average maturity of the benchmark, which remained in the low to mid-50 day range
throughout the year. Thus, the portfolio was well positioned to take advantage
of rising short-term rates in the fourth quarter as the yield curve flattened.
Investments in high grade foreign commercial paper also added to the return.
Because of the financial difficulties in the Far East, commercial paper from
that region traded at premium yields. The management team selectively purchased
commercial paper from a few of the strongest issuers in the region to receive
yields in excess of those available domestically. Combined with a diversified
portfolio of domestic debt, the portfolio was well positioned with a competitive
yield.
The accompanying chart provides a breakdown of the portfolio as of November
30, 1997.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C>
PORTFOLIO COMPOSITION
Taxable Municipals 1.5%
Domestic Time Deposits 2.5%
Foreign Time Deposits 6.3%
U.S. Government Agency Obligations 0.3%
Repurchase Agreements 2.5%
Other 0.4%
Foreign Bankers Acceptance 1.1%
Domestic Certificates of Deposit 1.5%
Foreign Certificates of Deposit 17.6%
Domestic Commercial Paper 14.1%
Foreign Commercial Paper 16.1%
Floating Rate Notes 36.1%
</TABLE>
2
<PAGE>
- ----------------------------------------------------------------------
At year-end, the management team was forecasting slower growth and lower
profit margins for 1998. The team was thus locking in higher yields by
purchasing longer term securities. While only 34 days at the Fund's fiscal year
end, the average maturity continued to expand into the mid-40 day range at the
time of this printing, and should be expected to extend somewhat into the 50 day
range. The average maturity for the benchmark remains in the mid-50 day range.
The average seven-day simple yield for the IBC All Taxable Money Fund Average
was 5.12% on December 31, 1997, and the seven-day compound yield was 5.25%. The
simple and compound yields for the Managers Money Market Fund for the same
period were 5.38%, and 5.52%, respectively.
At mid-year, the name of the Fund's hub portfolio was changed to THE PRIME
MONEY MARKET PORTFOLIO in an attempt to better describe the types of high
quality money market instruments in which it invests. In conjunction with this,
the Portfolio received the highest ratings by Moody's Investor's Service (Aaa),
Standard & Poor's Rating Group (AAAm), and Duff & Phelps (AAA).
Regarding the operations of the Fund, the daily deadlines for accepting
certain trades has been extended so that requests for wire redemptions received
by the Fund prior to 4:00 p.m. Eastern time can be wired out that day. In
addition, good funds received for purchases prior to 4:00 p.m. will receive that
day's income dividend. We hope that these expanded trading times are beneficial
to you. This report provides you with a listing of the investment portfolio,
financial statements, and the report of independent accountants. On the
following page you'll find a performance summary for all of The Managers Funds
as of December 31, 1997. Please contact us at (800) 835-3879 if you'd like to
receive a prospectus and additional information on any of the other funds in our
family, and remember you have the option of making free exchanges into any of
our other funds. As always, should you have any questions on this report, please
feel free to contact us.
We thank you for your continued investment in The Managers Funds.
Sincerely,
/s/Robert P. Watson
Robert P. Watson
President
3
<PAGE>
THE MANAGERS FUNDS PERFORMANCE (UNAUDITED)
All periods ending December 31, 1997
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
-------------------------------------------------------------
SINCE INCEPTION MORNINGSTAR
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE RATING**
------ ------- ------- -------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity Funds:
Income Equity Fund 27.19% 26.01% 17.83% 15.82% 15.49% Oct. '84 ####
Capital Appreciation Fund 12.74% 19.58% 14.46% 15.13% 15.27% Jun. '84 ###
Special Equity Fund 24.45% 27.64% 19.05% 19.27% 17.04% Jun. '84 ####
International Equity Fund 10.83% 13.26% 15.42% 11.05% 14.00% Dec. '85 ####
Income Funds:
Short Government Fund 5.55% 6.35% 3.23% 5.22% 5.24% Oct. '87 ##
Short & Intermediate Bond Fund 5.87% 8.43% 4.84% 7.18% 8.36% Jun. '84 ###
Intermediate Mortgage Fund 8.23% 9.46% 1.85% 6.86% 7.22% May '86 ##
Bond Fund 10.42% 14.91% 9.44% 10.24% 11.30% Jun. '84 ####
Global Bond Fund 0.16% 7.58% -- -- 5.48% Mar. '94 #
Money Market Fund 5.36% 5.29% 4.38% 5.39% 5.87% Jun. '84 NA
</TABLE>
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[FN]
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.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
* Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. Returns are net
of fees and may reflect fee waivers or the reimbursement of fund expenses as
described in the prospectus. 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
12/31/97 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 ten-year periods, respectively, each of the Equity Funds
other than the International Equity Fund was rated against 1,834, 1,076 and
585 equity funds, the International Equity Fund was rated against 566, 240
and 72 international equity funds, and each of the Income Funds was rated
against 2,581, 1,435 and 651 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% receive 2 stars and 10% receive 1 star.
</FN>
4
<PAGE>
MANAGERS MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1997
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<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in The Prime Money Market Portfolio ("Portfolio") $36,596,383
Prepaid expenses 10,643
-----------
Total assets 36,607,026
-----------
LIABILITIES:
Dividends payable to shareholders 30,954
Other accrued expenses 31,901
-----------
Total liabilities 62,855
-----------
NET ASSETS $36,544,171
-----------
-----------
Shares outstanding 36,544,171
-----------
-----------
Net asset value, offering and redemption price per share $1.00
----
----
NET ASSETS REPRESENT:
Paid-in capital $36,544,171
-----------
-----------
</TABLE>
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STATEMENT OF OPERATIONS
For the year ended November 30, 1997
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME FROM PORTFOLIO:
Interest income $2,313,223
EXPENSES:
Administration fees $ 102,919
Transfer agent fees 38,752
Registration fees 34,615
Reports to shareholders 17,761
Audit fees 14,160
Accounting fees 6,000
Trustee fees 1,967
Legal fees 1,768
Miscellaneous expenses 9,832
Allocated Portfolio expenses 75,430
---------
Total expenses 303,204
Less: Waiver of administration fees (102,919)
Reimbursement of expenses (37,220)
---------
Net expenses 163,065
--------
NET INVESTMENT INCOME $2,150,158
--------
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
MANAGERS MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED FOR THE
NOVEMBER 30, YEAR ENDED
1997 NOVEMBER 30, 1996
<S> <C> <C>
---------------- -------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 2,150,158 $ 1,527,309
---------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,150,158) (1,527,309)
---------------- -------------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 317,466,320 113,145,027
Net asset value of shares issued in
connection with reinvestment of
dividends 1,762,742 999,707
Cost of shares repurchased (318,775,835) (89,126,200)
---------------- -------------------
Net increase from capital share
transactions 453,227 25,018,534
---------------- -------------------
Total increase in net assets 453,227 25,018,534
---------------- -------------------
NET ASSETS:
Beginning of year 36,090,944 11,072,410
---------------- -------------------
End of year $36,544,171 $36,090,944
---------------- -------------------
---------------- -------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
MANAGERS MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each period
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NO- ELEVEN MONTHS
VEMBER 30, ENDED YEAR ENDED DECEMBER 31,
------------------- NOVEMBER 30, ------------------------------
1997 1996 1995 1994 1993 1992*
-------- -------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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 0.052 0.054 0.044 0.035 0.022 0.030
LESS DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income (0.052) (0.054) (0.044) (0.035) (0.022) (0.030)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
- ------------------------------------------------------------------------------------------------------------
Total Return (c) 5.35% 5.53% 4.51%(b) 3.61% 2.48% 3.12%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net
assets 0.40% 0.12% 1.13%(b) 0.73% 0.74% 0.67%
Ratio of net investment income to
average net assets 5.22% 5.35% 4.85%(b) 3.84% 2.48% 3.05%
Net assets at end of period (000's
omitted) $36,544 $36,091 $11,072 $17,269 $7,368 $9,320
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Expense Waiver/Reimbursement (a)
Ratio of total expenses to average
net assets 0.74% 0.75% 1.18%(b) 1.03% 0.99% 0.98%
Ratio of net investment income to
average net assets 4.88% 4.71% 4.80%(b) 3.54% 2.23% 2.74%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
(a) Ratio information assuming no waiver or reimbursement of investment
advisory and management fees and/or administrative fees in effect for the
periods 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.
</FN>
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7
<PAGE>
MANAGERS MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1997
- ----------------------------------------------------------------------
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
Company Act of 1940, as amended (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 Prime 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 (0.85% at November 30, 1997). 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 requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reported
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Fund in the
preparation of its financial statements:
(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 interest income, expenses 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.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ----------------------------------------------------------------------
(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.
(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.
As amended on 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, 1997. In addition, for
the fiscal year ended November 30, 1997, the Administrator voluntarily
reimbursed expenses of the Fund in an amount equal to $37,220, or 0.09% of
average daily net assets.
This waiver and expense reimbursement 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
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ----------------------------------------------------------------------
meeting fees of $750 for each in-person 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
A lawsuit seeking class action status has been filed against Managers
Intermediate Mortgage Fund, The Managers Funds, L.P. and the Trust, among other
defendants in the United States District Court for the District of Connecticut
in September, 1994. The plaintiffs seek unspecified damages based upon losses
alleged in the fund named above. The parties have now entered into an agreement
to settle all claims by the purported class. However, the settlement is subject
to court approval and certain other conditions, such as the minimum percentage
of class members agreeing to participate in the settlement.
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 lawsuit, as well as Managers Short Government Fund and
Managers Short and Intermediate Bond Fund. The parties have now entered into an
agreement to settle all claims by this customer and the settlement is
conditional on, among other things, the settlement of the class action lawsuit.
Certain other customers, who are potentially members of the plaintiff class in
the class action lawsuit 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.
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ----------------------------------------------------------------------
To the Trustees of The Managers
Funds and the Shareholders of
Managers Money Market Fund:
We have audited the accompanying statements of assets and liabilities of
Managers Money Market Fund as of November 30, 1997, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the two years in the period then ended, 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 year ended December 31, 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, 1997, 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 financial highlights for each of
the two years in the period then ended, 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 20, 1998
11
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments
November 30, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
<S> <C> <C> <C> <C>
BANKERS ACCEPTANCE -- FOREIGN (1.1%)
$ 50,000 Dai-Ichi Kangyo Bank.................... 12/29/97 5.620% $ 49,781,444
---------------
CERTIFICATES OF DEPOSIT -- DOMESTIC (1.5%)
64,000 Regions Bank............................ 12/05/97-06/25/98 5.650-6.00 63,991,878
---------------
CERTIFICATES OF DEPOSIT -- FOREIGN (17.6%)
115,000 Deutsche Bank........................... 12/17/97-02/03/98 5.570-5.760 114,999,621
45,000 Landesbank Hessen Thuringen............. 06/09/98-06/19/98 5.940-6.080 44,988,746
11,000 National Westminster Bank, PLC.......... 03/05/98-05/26/98 5.660-6.060 10,999,041
180,000 Norinchukin Bank........................ 02/13/98 6.020 180,003,645
10,000 Rabobank Nederland Inst. CTF............ 03/24/98 5.990 9,998,521
10,000 Royal Bank of Canada.................... 05/12/98 6.140 9,998,730
5,000 San Paolo Bank.......................... 12/10/97 5.820 5,000,000
125,000 Societe Generale........................ 12/02/97 5.560 125,000,000
75,000 Sumitomo Bank Yankee CD................. 12/09/97 5.600 75,000,000
150,000 Swiss Bank Corp......................... 03/19/98 5.760-5.980 149,997,172
35,000 Westpac Banking Corp.................... 03/23/98 5.970 34,991,776
---------------
TOTAL CERTIFICATES OF DEPOSIT --
FOREIGN................................ 760,977,252
---------------
COMMERCIAL PAPER -- DOMESTIC (14.1%)
40,000 Associate Corp. of North America........ 12/18/97 5.510 39,895,922
205,000 CXC Inc................................. 12/10/97-02/20/98 5.520-5.690 203,687,303
28,000 Dupont EI de Nemours & Co............... 06/05/98 5.460 27,210,120
81,399 Enterprise Funding Corp................. 12/01/97-12/05/97 5.510-5.540 81,371,204
109,400 General Electric Capital Corp........... 01/23/98-02/06/98 5.700 108,350,282
10,385 Southern Co............................. 02/23/98 5.700 10,246,879
25,000 Trident Capital Finance Inc............. 01/23/98 5.770 24,787,632
112,943 Windmill Funding Corp................... 12/05/97-02/13/98 5.520-5.800 111,908,318
---------------
TOTAL COMMERCIAL PAPER -- DOMESTIC...... 607,457,660
---------------
COMMERCIAL PAPER -- FOREIGN (16.1%)
110,000 Bank of Montreal........................ 12/04/97 5.592 109,948,740
199,000 Cregem North America Inc................ 12/18/97-02/17/98 5.515-5.700 197,958,010
6,692 Den Danske Bank......................... 12/15/97 5.520 6,677,635
175,000 Export Import Bank of Korea............. 12/17/97 6.010 174,532,556
25,000 Halifax Building Society................ 12/08/97 5.640 24,972,583
15,500 KFW International Finance, Inc.......... 12/04/97 5.520 15,492,870
28,000 Korea Development Bank.................. 12/23/97 6.000 27,897,333
35,000 Rabobank Nederland N.V.................. 04/29/98 5.550 34,196,021
47,523 UBS Finance Delaware, Inc............... 12/01/97 5.760 47,523,000
58,000 Westpac Capital Corp.................... 12/05/97 5.640 57,963,653
---------------
TOTAL COMMERCIAL PAPER -- FOREIGN....... 697,162,401
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
November 30, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
<S> <C> <C> <C> <C>
FLOATING RATE NOTES (36.1%)(A)
$ 100,000 Asset Backed Securities Investment
Trust, Series 1997-C, (resets monthly
to one month LIBOR, due 06/15/98)
(144A)................................. 12/15/97(b) 5.688% $ 100,000,000
50,000 Asset Backed Securities Investment
Trust, Series 1997-E, Class N, (resets
monthly to one month LIBOR, due
08/15/98) (144A)....................... 12/15/97(b) 5.625 50,000,000
27,800 Asset Backed Securities Investment
Trust, Series 1995-A, Class 2, (resets
monthly to one month LIBOR -3 basis
points, due 08/10/98).................. 12/10/97(b) 5.607 27,793,943
60,000 Bankers Trust, (resets daily to Prime
rate -281 basis points, due
04/23/98).............................. 12/01/97(b) 5.690 59,988,623
64,000 Bankers Trust, (resets daily to Fed Fund
rate +5 basis points, due 07/07/98).... 12/01/97(b) 5.580 63,959,367
100,000 Bayerische Landesbank, (resets monthly
to one month LIBOR -13 basis points,
due 06/26/98).......................... 12/26/97(b) 5.558 99,955,883
31,500 Corestates Bank, (resets monthly to one
month LIBOR +3 basis points, due
04/21/98).............................. 12/31/97(b) 5.598 31,500,000
10,000 Den Danske Bank, (resets monthly to one
month LIBOR -5 basis points, due
03/25/98).............................. 12/25/97(b) 5.598 9,999,900
25,000 FCC National Bank, (resets monthly to
one month LIBOR -12 basis points, due
07/02/98).............................. 12/01/97(b) 5.536 24,989,828
35,000 FCC National Bank, (resets daily to Fed
Fund rate +20 basis points, due
07/23/98).............................. 12/01/97(b) 5.770 35,017,508
25,000 First USA Bank, (resets quarterly to
three month LIBOR +28 basis points, due
02/17/98).............................. 02/17/98(b) 6.125 25,017,090
20,000 First USA Bank, (resets quarterly to
three month LIBOR +9 basis points, due
04/28/98).............................. 01/28/98(b) 5.930 20,011,181
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
November 30, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
<S> <C> <C> <C> <C>
FLOATING RATE NOTES (CONTINUED)
$ 7,000 First USA Bank, (resets monthly to one
month LIBOR +5 basis points, due
05/07/98).............................. 12/16/97(b) 5.738% $ 7,002,667
50,000 First USA Bank, (resets monthly to one
month LIBOR +7 basis points, due
05/13/98).............................. 12/15/97(b) 5.758 50,024,139
5,000 First USA Bank, (resets quarterly to
three month LIBOR +30 basis points, due
07/29/98).............................. 01/16/98(b) 6.144 5,010,816
15,000 First USA Bank, (resets quarterly to
three month LIBOR +30 basis points, due
09/03/98).............................. 12/17/97(b) 6.081 15,039,791
20,000 First Union Bank of North Carolina,
(resets monthly to one month LIBOR -3
basis points, due 12/19/97)............ 12/19/97(b) 5.720 20,000,000
44,200 Jacksonville Health Facility Hospital,
(resets monthly, due 08/15/14)......... 12/03/97(b) 5.830 44,200,000
162,500 Korea Development Bank, (resets
quarterly, due 06/16/98)............... 12/16/97(b) 5.843 162,482,994
138,689 Liquid Asset Backed Securities Trust,
Series 1997-2, (resets monthly to one
month LIBOR, due 06/30/98) (144A)...... 12/30/97(b) 5.688 138,689,231
94,622 Natwest Asset Trust Securities, Series
R-13/14A, (resets monthly to one month
LIBOR +2 basis points, due 10/15/01)
(144A)................................. 12/15/97(b) 5.708 94,622,000
66,500 Old Kent, (resets daily to Prime rate
-285 basis points, due 11/04/98)....... 12/01/97(b) 5.650 66,500,000
50,000 PNC Bank, N.A., (resets daily to Fed
Fund rate +7 basis points, due
06/04/98).............................. 12/01/97(b) 5.720 49,986,098
100,000 Racers 97-MM-8-6, (resets monthly to one
month LIBOR -2 basis points, due
08/28/98) (144A)....................... 12/28/97(b) 5.615 99,992,805
75,000 Short Term Card Account Trust, (resets
monthly to one month LIBOR +2 basis
points, due 01/15/98) (144A)........... 12/15/97(b) 5.504 75,001,364
45,000 Societe Generale, (resets daily to Fed
Fund rate +9 basis points, due
01/18/98).............................. 12/01/97(b) 5.610 44,997,802
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
November 30, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
<S> <C> <C> <C> <C>
FLOATING RATE NOTES (CONTINUED)
$ 137,000 Triangle Funding Ltd. Series 1997-1,
(resets quarterly to three month LIBOR,
due 11/15/98) (144A)................... 01/15/98(b) 5.750% $ 137,000,000
---------------
TOTAL FLOATING RATE NOTES............... 1,558,783,030
---------------
TAXABLE MUNICIPALS (1.5%)(A)
39,240 Sacramento, (resets quarterly to three
month LIBOR, due 08/15/14)............. 02/14/98(b) 5.500 39,236,875
25,000 Wake Forest University, (resets weekly,
due 07/01/17) LOC Wachovia Bank........ 12/03/97(b) 5.970 25,000,000
---------------
TOTAL TAXABLE MUNICIPALS................ 64,236,875
---------------
TIME DEPOSITS -- DOMESTIC (2.5%)
110,000 Suntrust Bank........................... 12/01/97 5.500-5.625 110,000,000
---------------
TIME DEPOSITS -- FOREIGN (6.3%)
100,000 Deutsche Bank........................... 12/01/97 5.750 100,000,000
100,000 Wachovia Bank & Trust, Grand Cayman..... 12/01/97 5.510 100,000,000
70,000 Westdeutsche Landesbank................. 12/02/97 5.594 70,000,000
---------------
TOTAL TIME DEPOSITS -- FOREIGN.......... 270,000,000
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (0.3%)
11,725 Student Loan Marketing Assoc............ 12/01/97 5.630 11,725,000
---------------
REPURCHASE AGREEMENTS (2.5%)
6,129 Goldman Sachs Repurchase Agreement, 5.50%, dated 11/28/97, due 12/01/97,
proceeds include interest $6,131,809 (collateralized by $6,027,000 U.S.
Treasury Notes 6.250%, due 05/31/99 valued at $6,251,824)..................... 6,129,000
100,000 Greenwich Capital Repurchase Agreement, 5.75%, dated 11/28/97, due 12/01/97,
proceeds include interest $100,047,917 (collateralized by $128,432,714 GNMA
7.00%-8.250%, due 12/15/08-11/20/27 valued at $102,000,205)................... 100,000,000
---------------
TOTAL REPURCHASE AGREEMENTS.................................................... 106,129,000
---------------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE (99.6%).......................... 4,300,244,540
OTHER ASSETS IN EXCESS OF LIABILITIES (0.4%)................................... 19,401,267
---------------
NET ASSETS (100.0%)............................................................ $ 4,319,645,807
---------------
---------------
</TABLE>
[FN]
(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.
LOC -- Letter of Credit
</FN>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1997
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at amortized cost and value $4,300,244,540
Cash 487,430
Interest receivable 19,627,584
Prepaid trustees' fees 6,851
Prepaid expenses and other assets 22,379
--------------
Total assets 4,320,388,784
--------------
LIABILITIES
Advisory fee payable 428,293
Custody fee payable 150,688
Administrative services fee payable 104,558
Fund services fee payable 5,582
Administration fee payable 4,315
Accrued expenses 49,541
--------------
Total liabilities 742,977
--------------
NET ASSETS
Applicable to investors' beneficial interests $4,319,645,807
--------------
--------------
</TABLE>
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the fiscal year ended November 30, 1997
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Interest income $228,228,783
EXPENSES
Advisory fee $5,063,662
Administrative services fee 1,256,131
Custodian fees and expenses 686,535
Fund services fee 143,027
Administration fee 96,662
Professional fees and expenses 92,381
Trustees' fees and expenses 70,918
Miscellaneous 33,130
---------
Total expenses 7,442,446
-----------
NET INVESTMENT INCOME 220,786,337
NET REALIZED LOSS ON INVESTMENTS (105,748)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $220,680,589
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1997 NOVEMBER 30, 1996
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $ 220,786,337 $ 185,209,978
Net realized gain (loss) on investments (105,748) 267,432
----------------- -----------------
Net increase in net assets resulting from
operations 220,680,589 185,477,410
----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 22,011,079,297 18,847,392,256
Withdrawals (21,760,363,996) (18,519,575,165)
----------------- -----------------
Net increase from investors' transactions 250,715,301 327,817,091
----------------- -----------------
Total increase in net assets 471,395,890 513,294,501
NET ASSETS
Beginning of fiscal year 3,848,249,917 3,334,955,416
----------------- -----------------
End of fiscal year $ 4,319,645,807 $ 3,848,249,917
----------------- -----------------
----------------- -----------------
</TABLE>
- ----------------------------------------------------------------------
SUPPLEMENTARY DATA
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FISCAL YEAR ENDED NOVEMBER JULY 12, 1993
30, (COMMENCEMENT OF
----------------------------------- OPERATIONS) TO
1997 1996 1995 1994 NOVEMBER 30, 1993
------- ------- ---- ------- -----------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.18% 0.19% 0.19% 0.20% 0.19%(a)
Net investment income 5.43% 5.29% 5.77% 3.90% 2.98%(a)
Decrease reflected in expense ratio due to expense
reimbursement -- 0.00%(b) -- 0.00%(b) --
</TABLE>
- ------------------------
[FN]
(a) Annualized
(b) Less than 0.01%
</FN>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
November 30, 1997
- ----------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Prime Money Market Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a no-load,
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. Prior to May 12, 1997, the Portfolio's name was The Money Market
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, regard-
less 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
triparty repurchase agreements, take 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-to-
market 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. 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
18
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
November 30, 1997
- ----------------------------------------------------------------------
investor in the Portfolio will be taxed 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 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 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, 1997, this fee amounted to $5,063,662.
b) The Portfolio has retained Funds Distributor ("FDI"), a registered
broker-dealer, to serve as the co-administrator and exclusive placement agent.
Under a Co-Administration Agreement between FDI and the Portfolio, FDI provides
administrative services necessary for the operations of the Portfolio, furnishes
office space and facilities required for conducting the business of the
Portfolio and pays the compensation of the officers affiliated with FDI. The
Portfolio has agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-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 Portfolio and certain other investment
companies subject to similar agreements with FDI. For the fiscal year ended
November 30, 1997, the fee for these services amounted to $96,662.
c) The Portfolio has 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 allocable
share of an annual complex-wide charge. This charge is calculated based on the
aggregate average daily net assets of the Portfolio and certain other portfolios
for which Morgan acts as investment advisor (the "Master Portfolios") and J.P.
Morgan Series Trust in accordance with the following annual schedule: 0.09% on
the first $7 billion of their aggregate average daily net assets and 0.04% of
their aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The portion of this charge payable by the
Portfolio is determined by the proportionate share that its net assets bear to
the net assets of the Master Portfolios, other investors in the Master
Portfolios for which Morgan provides similar services, and J.P. Morgan Series
Trust. For
19
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
November 30, 1997
- ----------------------------------------------------------------------
the fiscal year ended November 30, 1997, the fee for these services amounted to
$1,256,131.
Morgan has agreed to reimburse the Portfolio to the extent necessary to maintain
the total operating expenses of the Portfolio at no more than 0.20% of the
average daily net assets of the Portfolio through March 31, 1998. For the fiscal
year ended November 30, 1997, there was no reimbursement 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 ser-
vices amounted to $143,027 for the fiscal year ended November 30, 1997.
e) An aggregate annual fee of $75,000 is paid to each Trustee for serving as a
Trustee of the J.P. Morgan Funds, the J.P. Morgan Institutional Funds, the
Master Portfolios and J.P. Morgan Series Trust. 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 receives 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 $28,900.
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ----------------------------------------------------------------------
To the Trustees and Investors of The Prime 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 Prime Money Market Portfolio
(the "Portfolio") at November 30, 1997, 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 four 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, 1997, by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
January 20, 1998
21
<PAGE>
WHERE LEADING MONEY MANAGERS CONVERGE
FUND DISTRIBUTOR
THE MANAGERS FUNDS, L.P.
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
P.O. 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, Kemper Investments, Inc.
Chartwell Investment Partners, L.P.
CAPITAL APPRECIATION FUND
Essex Investment Management Co.,
Inc.
Husic Capital Management
SPECIAL EQUITY FUND
Liberty Investment Management
Pilgrim Baxter & Associates
Westport Asset Management, Inc.
Kern Capital Management LLC
INTERNATIONAL EQUITY
FUND
Scudder, Kemper Investments, Inc.
Lazard Asset Management Co.
FIXED INCOME FUNDS:
MONEY MARKET FUND
J.P. Morgan
SHORT GOVERNMENT FUND
Jennison Associates Capital Corp.
SHORT AND INTERMEDIATE
BOND FUND
Standish, Ayer & Wood, Inc.
INTERMEDIATE MORTGAGE
FUND
Jennison Associates Capital Corp.
BOND FUND
Loomis, Sayles & Company, Inc.
GLOBAL BOND FUND
Rogge Global Partners
