MANAGERS INCOME EQUITY FUND
MANAGERS CAPITAL APPRECIATION FUND
MANAGERS SPECIAL EQUITY FUND
- -------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1998
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WHERE LEADING MONEY MANAGERS CONVERGE
<PAGE>
MANAGERS INCOME EQUITY FUND
MANAGERS CAPITAL APPRECIATION FUND
MANAGERS SPECIAL EQUITY FUND
SEMI-ANNUAL REPORT
JULY 31, 1998
(UNAUDITED)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
BEGINS
ON PAGE
<S> <C>
-------
President's Message.................................. 1
The Managers Funds Performance....................... 4
Complete performance table for all of
The Managers Funds as of June 30, 1998
Schedules of Portfolio Investments................... 5
Detailed portfolio listings by security type
and industry sector, as valued at June 30, 1998
Statements of Assets and Liabilities................. 18
Fund balance sheets, Net Asset Value (NAV)
per share computation and cumulative
undistributed amounts
Statements of Operations............................. 19
Detail of sources of income, fund expenses,
and realized and unrealized gains (losses)
during the period
Statements of Changes in Net Assets.................. 20
Detail of changes in fund assets and
distributions to shareholders for the past
two periods
Financial Highlights................................. 22
Historical net asset values, distributions,
total returns, expense ratios, turnover
ratios and net assets
Notes to Financial Statements........................ 25
Accounting and distribution policies, details
of agreements and transactions with fund
management and description of certain
investment risks
</TABLE>
[FN]
Investments in The Managers Funds are not deposits or obligations of, or
guaranteed or endorsed by, any bank. Shares of the funds are not federally
insured by the Federal Deposit Insurance Corp., the Federal Reserve Board,
or any governmental agency.
</FN>
<PAGE>
PRESIDENT'S MESSAGE
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<PHOTO OF PRESIDENT>
DEAR FELLOW SHAREHOLDER:
The first half of 1998 was again a prosperous period for the U.S.
economy and most financial assets. Despite continuing economic and
financial upheaval in the Far East, the U.S. economy has continued to grow
and has even accelerated in 1998. Gross domestic product (GDP) grew at an
annual rate of 5.5% in the first quarter, having accelerated from a 3.7%
rate of growth during the fourth quarter of 1997. Statistics indicate that
second quarter growth may be stronger. Consumer spending, which makes up
approximately two thirds of the nation's economic activity and is thus an
important driver of GDP, grew at an annual rate of 6% during the first
quarter and continued increasing through May. Although the Far Eastern
economic crisis has and will continue to have a negative effect on U.S.
companies which are exporting to the region, a coincident effect has been
a significant drop in commodities prices which in turn has reduced
inflationary pressures.
Unemployment remains extremely low at 4.3%, the annual rate of
inflation is holding steady below 2% and personal income continues to rise.
In his testimony to U.S. Congress, Federal Reserve Chairman Alan Greenspan
declared that "the current economic performance is as impressive as any I
have witnessed in my near half-century of daily observation of the American
Economy." Thus, it is not surprising that the Conference Board's Consumer
Confidence Index has risen to its highest level since 1969.
Although widely dispersed, domestic and European stock markets
performed very well during the first half of the year. Domestic stocks
traded down sharply in early January continuing a trend begun in mid-October
which was based on falling expectations for first quarter earnings. From
mid-January onward, however, investors looked past the first quarter to
lower but still positive earnings growth along with lower interest rates.
Investors moved steadily into stocks sending all the broad averages to
double digit gains for the quarter. Many of the stocks that performed most
poorly during the fourth quarter of 1997 rebounded and were the best
performers during the first quarter. High price-to-earnings stocks with
low or no dividend yields performed considerably better than low P/E and/or
high relative yield securities, a complete reverse from the previous
quarter. Stocks of technology companies, which lost 10% in value during the
fourth quarter rebounded sharply, rising 18% on average according to the
Dow Jones Industry averages. However, there were exceptions, especially
in the case of capitalization. Large capitalization companies held
1
<PAGE>
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up extremely well during the turbulent fourth quarter and continued to
outperform throughout the first quarter. Through most of the second
quarter, while large capitalization stocks vacillated, small capitalization
company stocks lost value as investors seemed to shun the less predictable,
less liquid small-caps in favor of larger well known stocks. In mid-June a
small portion of the market rallied while many groups remained flat. The
performance difference between industry groups was significant. Boosted by
strong revenue gains and some merger activity, technology sectors,
particularly internet, software and communications related issues, surged
ahead sharply. Consumer-cyclical stocks such as retailers also appreciated,
benefiting from the acceleration of consumer spending. Conversely, energy,
basic materials and industrial manufacturing businesses dropped in value as
overseas demand for their products waned as a result of the economic
distress in the Far East.
Given the significant differences between each of the Funds presented
in this report, their performances varied greatly. We are pleased to report
that in all cases the Funds' returns relative to appropriate benchmarks and
peers were within our expectations.
The Managers Income Equity Fund returned 11.0% for the six months
ended June 30, 1998. Although we are disappointed that it underperformed
the S&P 500, which returned 17.7% for the period, we believe that the Fund
underperformed due to the managers' central philosophies of holding
securities with relatively high dividend yields. As previously mentioned,
an analysis of the market shows that stocks with above average dividend
yields significantly underperformed stocks with very low or no dividends
during the period. In addition, the S&P/BARRA Growth Index, which
represents the stocks in the S&P 500 with above median price/book ratios,
outperformed the S&P/BARRA Value Index (S&P 500 stocks with below median
price/book ratios) by more than 12 percentage points during the period.
For further comparison, the Lipper Equity Income Fund Index returned only
9.6% for the six-month period, suggesting that the Fund outperformed many
of its peers on average. Since we are confident that the short-term
performance of various investment styles will continue to oscillate, and
that the investment style which the Managers Income Equity Fund managers
employ will be successful in the long run, we can be satisfied with our
managers performance so far this year.
These analyses do suggest, however, that we should expect that the
Managers Capital Appreciation Fund, in which both managers employ a relatively
aggressive growth style, should have significantly outperformed the broad
averages. Indeed, the Managers Capital Appreciation Fund returned 33.4% for
the six-month period, outperforming not only the broad indices, but also the
style and capitalization skewed indices. Specifically, the S&P 500 Index
returned 17.7% for the period, while the S&P/BARRA Growth Index returned
23.0% and the S&P 400 Index returned 8.6%.
2
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Much of the Fund's outperformance can be attributed to the managers'
heavy emphasis on internet related businesses, which have grown rapidly over
the past year. This was particularly evident in June, when many internet
related stocks rose sharply as a result of some of the large media
businesses buying up emerging internet businesses in order to establish
dominant presence in internet commerce. Although the managers have both
trimmed their positions as they have appreciated, they both remain optimistic
about the future of internet commerce, and thus remain heavily invested in
internet related businesses.
The Managers Special Equity Fund returned 5.9% during the six-month
period ending June 30, 1998. Meanwhile the Russell 2000 Index, which tracks
the performance of small capitalization stocks returned 5.3% for the period.
Although small capitalization stocks did not perform nearly as well as did
large capitalization stocks, the underlying businesses continued to perform
well, with earnings growth of more than 10% on average. Thus, looking
forward, the portfolio managers are optimistic about their holdings from the
standpoint of both earnings growth and relative valuation.
As always, should you have any questions on this report, please feel
free to contact us at 1-800-835-3879.
We thank you for your continued investment in The Managers Funds.
Sincerely,
/s/Robert P. Watson
Robert P. Watson
President
<TABLE>
<CAPTION>
THE MANAGERS FUNDS
TOP 10 HOLDINGS - DOMESTIC EQUITY FUNDS
MANAGERS MANAGERS MANAGERS
INCOME EQUITY CAPITAL APPRECIATION SPECIAL EQUITY
FUND FUND FUND
------------- --------------------- ----------------
% OF % OF % OF
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C> <C> <C>
1.Xerox* 3.6 HBO & Company* 3.9 Xtra 1.7
2.American
Home Products* 3.5 CNET 3.8 Airborne Freight 1.6
3.Bristol-Myers Emmis
Squibb* 3.3 American Online* 3.8 Broadcasting* 1.2
4.FNMA 2.4 Amazon.com* 3.6 Downey Financial 1.0
5.Pitney Bowes 2.3 Dell Computer* 3.2 Allied Capital 0.9
6.Ford Motor American Disposal
Company 2.3 TMP Worldwide 2.7 Services* 0.9
7.Sprint* 2.2 Viacom 2.7 Pittson Brinks
Group* 0.9
8.U.S. Bancorp* 2.1 Household Consolidated
International 2.3 Graphics 0.9
9.Imperial Chem. Policy Management
Industries* 1.9 PeopleSoft* 2.2 Systems 0.9
10.McGraw-Hill U.S. Airways
Companies 1.9 Group 2.2 JLG Industries 0.9
*denotes security held by multiple managers
</TABLE>
3
<PAGE>
THE MANAGERS FUNS PERFORMANCE (unaudited)
All periods ending June 30, 1998
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<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
----------------------------
MORNING-
SIX 1 3 5 10 SINCE INCEPTION STAR
MONTHS YEAR YEARS YEARS YEARS INCEPTION DATE RATING
------ ----- ----- ----- ----- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Funds:
Income Equity Fund 10.99% 22.39% 24.03% 18.87% 15.20% 15.76% Oct. '84 ****
Capital
Appreciation Fund 33.40% 43.11% 24.19% 20.02% 16.85% 17.07% Jun. '84 ****
Special
Equity Fund 5.85% 19.85% 24.91% 18.90% 17.94% 16.86% Jun. '84 ****
International
Equity Fund 17.38% 15.33% 16.54% 16.18% 12.86% 14.87% Dec. '85 ****
Emerging Markets
Equity Fund -- -- -- -- -- (15.50%)Feb. '98 NA
Income Funds:
Short
Government Fund 2.40% 5.62% 5.16% 3.29% 5.15% 5.23% Oct. '87 **
Short & Intermediate
Bond Fund 2.49% 6.02% 6.23% 4.34% 6.97% 8.24% Jun. '84 ***
Intermediate
Mortgage Fund 2.81% 7.94% 6.55% 0.39% 6.60% 7.16% May '86 *
Bond Fund 4.83% 11.34% 9.82% 9.04% 10.18% 11.25% Jun. '84 ****
Global Bond Fund 2.68% 4.55% 2.90% -- -- 5.47% Mar. '94 *
Money Market Fund 2.60% 5.33% 5.31% 4.66% 5.31% 5.85% 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 ANY OF THE MANAGERS FUNDS, PLEASE CALL (800) 835-3879, OR
YOUR INVESTMENT ADVISOR. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
* Total returns 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 6/30/98 and are subject to change every month. The ratings are
by asset class and are calculated rom 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 againt 2,564, 1,481 and 726 equity funds, the
International Equity Fund was rated against 788, 348 and 110
international equity funds, and each of the Income Funds was rated
against 1,478, 900 and 347 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
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MANAGERS INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1998 (unaudited)
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<TABLE>
<CAPTION>
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SHARES VALUE
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<S> <C> <C>
COMMON STOCKS - 94.9%
BASIC MATERIALS - 9.5%
Allegheny Teledyne, Inc. 23,517** $ 537,951
Betzdearborn, Inc. 5,500** 227,562
Dow Chemical Co. 7,000 676,813
E.I. duPont de Nemours & Co., Inc. 13,245 988,408
Georgia Pacific Corp. 7,700 453,819
Georgia Pacific Corp., Timber Group 5,600 129,150
Imperial Chemical Industries PLC,
Sponsored ADR 21,460 1,384,170
Lyondell Petrochemical Co. 17,000** 517,437
Olin Corp. 8,700 362,681
Oregon Steel Mills, Inc. 13,300 247,713
Temple-Inland, Inc. 5,300 285,537
Westvaco Corp. 12,200 344,650
Weyerhaeuser Co. 12,200 563,488
Witco Corp. 9,800** 286,650
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TOTAL BASIC MATERIALS 7,006,029
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CAPITAL GOODS - 7.2%
Browning-Ferris Industries, Inc. 10,600** 368,350
Caterpillar, Inc. 3,000 158,625
Corning, Inc. 15,100 524,725
Gencorp, Inc. 32,275 814,944
Minnesota Mining & Manufacturing Co. 11,875 975,977
PACCAR, Inc. 5,800 301,962
Pitney Bowes, Inc. 35,720 1,719,025
Rockwell International Corp. 8,800 422,950
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TOTAL CAPITAL GOODS 5,286,558
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COMMUNICATION SERVICE - 7.2%
ALLTEL Corp. 8,600** 399,900
AT & T Corp. 11,950** 682,644
Bell Atlantic Corp. 18,784** 857,020
BellSouth Corp. 9,000 604,125
Frontier Corp. 14,000** 441,000
GTE Corp. 13,800 767,625
Sprint Corp. 22,585 1,592,242
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TOTAL COMMUNICATION SERVICE 5,344,556
----------
CONSUMER CYCLICALS - 11.1%
Abercrombie & Fitch, Class A* 385 16,940
Dana Corp. 12,100 647,350
Ford Motor Co. 28,200 1,663,800
Goodyear Tire & Rubber Co. 7,100 457,506
J.C. Penney Co., Inc. 9,900 715,894
Limited Inc., The 28,205** 934,291
LucasVarity PLC, ADR 11,095 441,720
McGraw-Hill Companies 16,755 1,366,580
Sears, Roebuck & Co. 10,900 665,581
ServiceMaster Co., The 13,495 513,653
True North Communications, Inc. 27,745 811,541
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TOTAL CONSUMER CYCLICALS 8,234,856
----------
CONSUMER STAPLES - 4.5%
Avon Products, Inc. 6,100 472,750
Flowers Industires, Inc. 38,230 781,326
Heinz (H.J.) Co. 17,400 976,575
Unilever NV, N.Y. registered shares 8,000 631,500
Universal Foods Corp. 21,000 465,937
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TOTAL CONSUMER STAPLES 3,328,088
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</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
5
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MANAGERS INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (unaudited)
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<TABLE>
<CAPTION>
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SHARES VALUE
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<S> <C> <C>
ENERGY - 7.1%
Compagnie Francaise de Petroleum
Total, Sponsored ADR 7,100 464,162
Dresser Industries, Inc. 15,695 691,561
Elf Aquitaine, Sponsored ADR 8,541 606,411
Murphy Oil Corp. 7,640 387,253
Royal Dutch Petroleum Co.,
NY registered shares 6,100 334,356
Texaco, Inc. 9,800 584,938
USX-Marathon Group 30,810 1,057,168
YPF Sociedad Anonima, Class D,
Sponsored ADR 36,690** 1,102,993
----------
TOTAL ENERGY 5,228,842
----------
FINANCIALS - 25.2%
American General Corp. 13,660 972,421
Arden Realty, Inc. 6,100 157,837
Associates First Capital Corp.,
Class A 4,927 378,763
Banc One Corp. 8,140 454,314
BankBoston Corp. 9,100 506,187
Bankers Trust New York Corp. 4,000 464,250
Boston Properties, Inc. 4,500 155,250
Chase Manhattan Corp. 15,000 1,132,500
Compass Bancshares, Inc. 12,490** 560,489
Crestar Financial Corp. 10,490 572,361
Equity Office Properties Trust 7,400 209,975
Equity Residential Properties Trust 3,700 175,519
EXEL Ltd. 7,200** 560,250
Federal National Mortgage Association 29,202 1,774,021
First American Corp. 10,030 482,694
First Chicago NBD Corp. 5,920 524,660
First Union Corp. 16,082** 936,776
Firstar Corp. 7,490 284,620
Fleet Financial Group, Inc. 8,300 693,050
Hartford Financial Services Group, Inc. 6,650 760,594
J.P. Morgan & Co., Inc. 3,300 386,513
KeyCorp 25,300 901,313
Lincoln National Corp. 8,200 749,275
Mellon Bank Corp. 9,575 666,659
NationsBank Corp. 6,600** 504,900
Prologis Trust 14,458 361,450
Safeco Corp. 7,800 353,925
Security Capital Group Inc., Warrants 449 154
Starwood Hotels & Resorts Trust 13,130** 634,343
Summit Bancorp 15,625 742,188
U.S. Bancorp 36,300** 1,560,900
----------
TOTAL FINANCIALS 18,618,151
----------
HEALTH CARE - 13.3%
American Home Products Corp. 49,470** 2,560,072
Baxter International, Inc. 21,100 1,135,444
Bristol-Myers Squibb Co. 21,380 2,457,363
Glaxo Wellcome PLC, Sponsored ADR 16,860** 1,008,440
Pharmacia & Upjohn, Inc. 13,110 604,699
SmithKline Beecham Unit PLC,
Sponsored ADR 15,010 908,105
Zeneca Group PLC, Sponsored ADR 26,570** 1,165,759
-----------
TOTAL HEALTH CARE 9,839,881
-----------
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
6
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MANAGERS INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (concluded)
June 30, 1998 (unaudited)
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<TABLE>
<CAPTION>
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SHARES VALUE
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<S> <C> <C>
TECHNOLOGY - 3.6%
Xerox Corp. 26,345** 2,677,310
---------
TRANSPORTATION - 0.4%
CSX Corp. 7,000 318,500
---------
UTILITIES - 5.8%
Cinergy Corp. 11,500 402,500
Duke Power Co. 11,190 663,007
Enron Corp. 17,560 949,338
Pacificorp 17,000 384,625
PG&E Corp. 1,200** 37,875
Southern Co. 12,500** 346,094
Williams Companies, Inc., The 29,420** 992,925
Wisconsin Energy Corp. 15,500 470,812
---------
TOTAL UTILITIES 4,247,176
---------
TOTAL COMMON STOCKS
(cost $56,020,721) 70,129,948
----------
SHORT-TERM INVESTMENTS - 4.9%
OTHER INVESTMENT COMPANIES - 1.5%
JPM Prime Money Market Fund, 5.47%*** 1,073,142 1,073,142
---------
<CAPTION>
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Principal
Amount
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REPURCHASE AGREEMENT - 3.4%
State Street Bank & Trust Co., dated
06/30/98, due 07/01/98,
5.000%, total to be received
$2,512,349 (secured by
$1,160,000 FNMA 5.650%, due
04/28/00 and $1,375,000 FHLB
5.705%, due 03/23/00 market
value $2,563,919), at cost $2,512,000 2,512,000
---------
TOTAL SHORT-TERM INVESTMENTS
(cost $3,585,142) 3,585,142
---------
TOTAL INVESTMENTS - 99.8%
(cost $59,605,863) 73,715,090
OTHER ASSETS, LESS LIABILITIES - 0.2% 154,040
-----------
NET ASSETS - 100.0% $73,869,130
===========
</TABLE>
[FN]
Note: Based on the cost of investments of $59,662,798 for federal
income tax purposes at June 30, 1998, the aggregate gross
unrealized appreciation and depreciation was $14,754,040 and
$701,748, respectively, resulting in net unrealized appreciation
of investments of $14,052,292.
* Non-income-producing security.
** Some or all of these shares, amounting to $3,295,937, or 4.5%
of net assets, were out on loan to various brokers as of
June 30, 1998.
*** Yield shown for this investment company represents the June 30,
1998 seven-day average yield, which refers to the sum of the
previous seven days' dividends paid, expressed as an annual
percentage.
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INVESTMENT ABBREVIATIONS:
ADR/GDR: Securities whose value is determined or significantly
influenced by trading on exchanges not located in the
United States or Canada. ADR after the name of a holding
stands for American Depositary Receipt, representing
ownership of foreign securities on deposit with a domestic
custodian bank; a GDR (Global Depositary Receipt) is
comparable, but foreign securities are held on deposit
in a non-U.S. Bank.
New York registered shares: Shares of foreign companies registered
on the New York Stock Exchange.
The accompanying notes are an integral part of these financial statments.
</FN>
7
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MANAGERS CAPITAL APPRECIATION FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1998 (Unaudited)
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<TABLE>
<CAPTION>
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SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 89.8%
COMMUNICATION SERVICES - 7.0%
AT & T Corp. 6,000 $342,750
Global TeleSystems Group, Inc.* 23,400** 1,134,900
Nextel Communications Inc., Class A* 65,300 1,620,256
Qwest Communications International, Inc.* 23,900 823,056
RSL Communications, Ltd.* 33,300 990,675
WorldCom, Inc.* 24,000 1,159,500
---------
TOTAL COMMUNICATION SERVICES 6,071,137
---------
CONSUMER CYCLICALS - 15.3%
Amazon.com, Inc,* 31,200** 3,110,250
Amdocs Ltd.* 64,800 980,100
Brylane, Inc.* 8,900 409,400
Cendant Corp.* 21,200 442,550
Costco Cos., Inc.* 12,600 794,588
DeVry, Inc.* 27,800 610,744
Dollar Tree Stores, Inc.* 13,350 540,675
Excite, Inc.* 19,100 1,785,850
Home Depot, Inc. 10,800 897,075
Linens 'n Things, Inc.* 20,300 620,419
McGraw-Hill Companies 4,800 391,500
Stage Stores, Inc.* 7,100 321,275
TMP Worldwide, Inc.* 67,800 2,360,287
---------
TOTAL CONSUMER CYCLICALS 13,264,713
---------
CONSUMER STAPLES - 11.7%
Cardinal Health, Inc. 7,300 684,375
CBS Corp. 21,500 682,625
Clear Channel Communications, Inc.* 7,200 785,700
CVS Corp. 22,800 887,775
Tele-Communications, Inc. TCI, Class A* 31,400 1,204,975
Time Warner, Inc. 18,900 1,614,768
USA Networks, Inc.* 41,200 1,035,150
Viacom, Inc., Class B* 40,000 2,330,000
Walgreen Co. 21,500 888,219
---------
TOTAL CONSUMER STAPLES 10,113,587
---------
FINANCIALS - 10.3%
American Express Co. 12,900 1,470,600
BankAmerica Corp. 10,300 890,307
Household International, Inc. 39,600 1,970,100
Imperial Bancorp* 30,250 907,500
LandAmerica Financial Group, Inc. 10,300 589,675
Lehman Brothers Holdings, Inc. 19,800 1,535,738
Mutual Risk Management Ltd. 20,800 757,900
Travelers Group, Inc. 14,000 848,750
---------
TOTAL FINANCIALS 8,970,569
---------
HEALTH CARE - 4.5%
Arterial Vascular Engineer, Inc.* 30,200 1,077,762
Bristol-Myers Squibb Co. 6,300 724,106
Pfizer, Inc. 9,300 1,010,794
Quintiles Transnational Corp.* 7,600 373,350
Schering-Plough Corp. 7,800 714,675
---------
TOTAL HEALTH CARE 3,900,687
---------
TECHNOLOGY - 37.3%
Advanced Fibre Communications* 23,200 929,450
America Online, Inc.* 31,200 3,307,200
Ascend Communications, Inc.* 17,400 861,300
At Home Corp., Series A* 37,300 1,762,425
BMC Software, Inc.* 11,600 602,475
CBT Group PLC, Sponsored ADR* 16,200 866,700
CIENA Corp.* 12,900 896,550
Cisco Systems, Inc.* 10,000 920,625
CNET, Inc.* 48,700** 3,317,688
Compaq Computer Corp. 30,700 871,112
Compuware Corp.* 22,500 1,148,906
Dell Computer Corp.* 29,900 2,773,225
HBO & Company 95,400 3,362,850
Keane, Inc.* 14,900 834,400
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements
</FN>
8
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MANAGERS CAPITAL APPRECIATION FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (concluded)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
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SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Lucent Technologies, Inc. 7,300 607,269
Parametric Technology Corp.* 22,100 598,081
Paychex, Inc. 18,900 767,813
PeopleSoft, Inc.* 40,800 1,915,050
Policy Management Systems Corp.* 13,800 541,650
RELTEC Corp.* 20,900 940,500
Saville Systems Ireland PLC, Sponsored ADR* 7,000 349,125
Siebel Systems, Inc.* 52,000 1,670,500
Sterling Commerce, Inc.* 18,600 902,100
Symantec Corp.* 15,600 405,600
Uniphase Corp.* 10,300 627,063
VERITAS Software Corp.* 12,400 512,275
---------
TOTAL TECHNOLOGY 32,291,932
---------
TRANSPORTATION - 3.2%
America West Airlines, Inc., Warrants 55,000 880,000
US Airways Group Inc.* 23,900 1,894,075
---------
TOTAL TRANSPORTATION 2,774,075
---------
UTILITIES - 0.5%
Williams Companies, Inc., The 13,300 448,875
---------
TOTAL COMMON STOCKS
(cost $57,349,610) 77,835,575
---------
SHORT-TERM INVESTMENTS - 7.9%
OTHER INVESTMENT COMPANIES - 3.6%
JPM Prime Money Market Fund, 5.47%*** 3,126,812 3,126,812
---------
<CAPTION>
- ---------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT - 4.3%
State Street Bank & Trust Co., dated
06/30/98, due 07/01/98, 5.000%,
total to be received $3,708,515
(secured by $3,740,000 FNMAs 5.860%,
due 11/07/00 market value $3,782,232),
at cost $ 3,708,000 $ 3,708,000
---------
TOTAL SHORT-TERM INVESTMENTS
(cost $6,834,812) 6,834,812
---------
TOTAL INVESTMENTS - 97.7%
(cost $64,184,422) 84,670,387
OTHER ASSETS, LESS LIABILITIES - 2.3% 2,022,795
---------
NET ASSETS - 100.0% $86,693,182
=========
</TABLE>
[FN]
Note: Based on the cost of investments of $64,243, 852 for federal income
tax purposes at June 30, 1998, the aggregate gross unrealized
appreciation and depreciation was $21,656,891 and $1,230,356,
respectively, resulting in net unrealized appreciation of investments
of $20,426,535.
* Non-income-producing security.
** Some or all of these shares, amounting to $5,197,083, or 6.0% of net
assets, were out on loan to various brokers as of June 30, 1998.
*** Yield shown for this investment company represents the June 30, 1998
seven-day average yield, which refers to the sum of the previous
seven days' dividends paid, expressed as an annual percentage.
- ---------------------------------------------------------------------------
INVESTMENT ABBREVIATIONS:
ADR: Securities whose value is determined or significantly influenced by
trading on exchanges not located in the United States or Canada. ADR
after the name of a holding stands for American Depositary Receipt,
representing ownership of foreign securities on deposit with a
domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</FN>
9
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 91.7%
BASIC MATERIALS - 1.9%
Allegheny Teledyne, Inc. 71,539** $ 1,636,455
Cable Design Technologies Corp.* 197,475 4,072,922
Mail-Well, Inc.* 253,500 5,497,781
NuCo2, Inc.* 93,300 956,325
Rock of Ages Corp., Class A* 103,200 1,599,600
Rogers Corp.* 68,700 2,267,100
Sylvan, Inc.* 110,400 1,738,800
-----------
TOTAL BASIC MATERIALS 17,768,983
-----------
CAPITAL GOODS - 11.7%
AAR Corp. 259,200 7,662,600
Able Telcom Holding Corp.* 50,000 900,000
American Disposal Services, Inc.* 177,100 8,301,562
AmeriLink Corp.* 138,600 1,923,075
Anaren Microwave, Inc.* 95,900 1,438,500
Applied Power, Inc., Class A 44,500 1,529,688
ATMI, Inc.* 179,500 2,692,500
AVTEAM, Inc., Class A* 132,300 1,422,225
Baker, Michael Corp.* 223,000 2,020,937
BHA Group, Inc. 22,770 358,628
Blyth Industries, Inc.* 102,749 3,416,404
Chase Industries, Inc.* 113,700 2,245,575
Checkpoint Systems, Inc.* 309,900** 4,377,337
C&D Technologies, Inc. 108,800 6,310,400
DT Industries, Inc. 86,700 2,102,475
Eastern Environmental Services, Inc.* 111,800 3,780,238
Furon Co. 114,800 2,080,750
Hospitality Worldwide Services* 134,900 1,214,100
Integrated Process Equipment Corp.* 150,800** 1,677,650
Jabil Circuit, Inc.* 20,800** 687,700
JLG Industries, Inc. 388,600 7,869,150
Kellstrom Industries, Inc.* 92,100 2,693,925
LCC International, Inc., Class A* 117,500 2,151,719
LSI Industries, Inc. 50,100 1,002,000
Lumen Technologies, Inc.* 166,637 1,478,903
Lydall, Inc.* 100,000** 1,456,250
Met-Pro Corp. 92,600 1,383,212
Miller Industries, Inc.* 150,000 1,162,500
Motorcar Parts & Accesories, Inc.* 99,900 1,473,525
Newpark Resources, Inc.* 93,100 1,035,738
Scotsman Industries, Inc. 76,400 2,120,100
Sensormatic Electronics Corp.* 222,300** 3,112,200
Sequa Corp, Class A* 99,600 6,648,300
Superior Services, Inc.* 223,500 6,718,969
Tetra Tech, Inc.* 97,947 2,375,215
URS Corp.* 117,100 1,990,700
Wabash National Corp. 34,700 893,525
Waste Industries, Inc.* 119,000 2,469,250
Wolverine Tube, Inc.* 48,100 1,827,800
World Fuel Services Corp. 68,150 1,179,847
-----------
TOTAL CAPITAL GOODS 107,185,172
-----------
COMMUNICATION SERVICE - 1.8%
CFW Communications Co. 73,500 1,708,875
IDT Corp.* 59,600 1,791,725
Qwest Communications
International, Inc.* 61,895 2,154,720
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
10
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATION SERVICE (CONTINUED)
Star Telecommunications, Inc. 37,400 834,487
Vanguard Cellular Systems,
Inc., Class A* 265,300 4,990,956
American Tower Corp., Class A* 217,500** 5,423,906
-----------
TOTAL COMMUNICATION SERVICES 16,904,669
-----------
CONSUMER CYCLICALS - 17.6%
Aaron Rents, Inc., Class B 110,000 2,200,000
Alliance Gaming Corp.* 123,100 484,706
American Business Information,
Inc., Class A* 104,000 1,586,000
American Business Information,
Inc., Class B* 45,700 725,487
AnswerThink Consulting Group, Inc.* 20,600 440,325
Applied Graphics Technologies, Inc.* 83,500 3,804,469
Borg-Warner Security Corp.* 88,400 2,000,050
CapStar Hotel Co.* 63,800 1,786,400
Carriage Services, Inc., Class A* 262,400 6,592,800
CB Richard Ellis Services, Inc. 67,000 2,240,312
Cone Mills Corp.* 52,900 456,263
Consolidated Capital Corp.* 125,000 2,804,687
Consolidated Stores Corp.* 165,252** 5,990,385
Diamond Technology Partner, Inc.* 92,400 2,748,900
Duckwall-ALCO Stores, Inc.* 77,000 1,328,250
Eagle Hardware & Garden, Inc.* 45,000 988,151
Elder-Beerman Stores Corp., The* 59,600 1,590,575
Electro Rent Corp.* 140,700 3,130,575
Fingerhut Cos., Inc. 125,000 4,125,000
Freds, Inc., Class A 63,350 1,611,466
F.Y.I., Inc.* 93,000 2,650,500
Garden Ridge Corp.* 21,000 406,875
Glacier Water Services, Inc.* 45,200 1,305,150
go2net, Inc.* 45,800** 1,333,925
HA-LO Industries, Inc.* 77,600 2,415,300
Hanover Compressor Co.* 156,300 4,229,869
Happy Kids, Inc.* 104,500 1,410,750
Harveys Casino Resorts 82,200 2,229,675
Helen of Troy Ltd.* 168,000 3,654,000
Henry Schein, Inc.* 15,000 686,250
Home Choice Holdings, Inc.* 57,100 685,200
Hot Topic, Inc.* 75,000** 1,781,250
Houghton Mifflin Co. 86,400 2,743,200
Hughes Supply, Inc. 65,150 2,386,119
IMPCO Technologies, Inc.* 91,200 1,482,000
ITT Educational Services, Inc.* 200,000 6,450,000
Metzler Group, Inc. The* 122,700 4,493,887
Michael Anthony Jewelers, Inc.* 177,100 453,819
M/A/R/C, Inc. 59,300 919,150
NOVA Corp.* 45,500 1,626,625
OrthAlliance, Inc., Class A* 90,200 1,268,437
Pameco Corp.* 49,900 998,000
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
11
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
Party City Corp.* 40,000 1,155,000
Pentacon, Inc.* 120,000 1,425,000
Pittston Brink's Group 219,100 8,079,313
PMT Sevices, Inc.* 211,300 5,361,737
Premier Parks, Inc.* 52,500 3,497,813
Protection One, Inc.* 307,300** 3,341,887
Rental Service Corp.* 214,700 7,219,288
Silverleaf Resorts, Inc.* 38,000 579,500
Sunrise Assisted Living, Inc.* 98,200 3,375,625
Tefron Ltd.* 60,300 1,326,600
TeleTech Holdings, Inc.* 203,700** 2,508,056
TJX Companies, Inc. 80,000** 1,930,000
Tractor Supply Co.* 27,500 684,062
Trammell Crow Co.* 66,200 2,213,563
United Rentals, Inc.* 99,900 4,195,800
Urban Outfitters, Inc.* 17,500 319,375
Warrantech Corp.* 154,000 644,875
Watsco, Inc. 92,400 3,251,325
Whittman-Hart, Inc.* 30,700 1,485,112
World of Science, Inc.* 211,300 607,488
Xtra Corp. 263,000 15,911,500
-----------
TOTAL CONSUMER CYCLICALS 161,357,701
-----------
CONSUMER STAPLES - 10.9%
ABM Industries, Inc. 105,900 2,951,962
Alternative Resources Corp.* 75,300** 931,838
Balance Bar Co.* 33,900 474,600
Benihana, Inc., Class A* 153,300 1,647,975
Channell Commercial Corp.* 120,000 1,267,500
Cinar Films Inc., Class B* 135,500 2,506,750
Computer Horizons Corp.* 104,100** 3,858,206
Consolidated Graphics, Inc.* 136,600 8,059,400
Cox Radio, Inc., Class A* 106,200 4,593,150
Dave & Buster's, Inc.* 46,200 1,149,225
Duane Reade, Inc.* 189,200 5,676,000
Emmis Broadcasting Corp., Class A* 231,500 11,068,594
Gaylord Entertainment Co., Class A 131,400 4,237,650
Granite Broadcasting Corp.* 181,800** 2,136,150
Gray Communications System, Inc. 45,000 1,456,875
Jones Intercable, Inc.* 15,100 373,725
Jones Intercable, Inc., Class A* 189,000 4,725,000
Landry's Seafood Restaurants, Inc.* 127,300 2,299,356
Manpower, Inc. 46,500** 1,333,969
Media Arts Group, Inc.* 91,200 1,755,600
Metamor Worldwide, Inc.* 59,000 2,076,062
Morrison Health Care, Inc. 98,852 1,878,188
NBTY, Inc.* 249,800 4,558,850
NCS HealthCare, Inc., Class A* 123,500 3,519,750
Owens & Minor, Inc. Holding Co. 213,300** 2,133,000
PSS World Medical, Inc.* 113,275 1,649,567
Rare Hospitality International, Inc.* 40,500 594,844
Ruby Tuesday, Inc. 222,000 3,441,000
Saga Communications, Inc., Class A* 148,500 2,366,719
Showbiz Pizza Time, Inc.* 33,100 1,328,137
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
12
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES (CONTINUED)
Star Buffet, Inc.* 54,500 449,625
Suiza Foods Corp.* 58,420 3,486,944
Uni-Marts, Inc.* 33,000 129,938
VDI Media* 85,600 813,200
Vitalink Pharmacy Services, Inc.* 90,400** 1,994,450
Volt Information Sciences, Inc.* 61,350 1,664,119
Whole Foods Market, Inc.* 91,500 5,535,750
-----------
TOTAL CONSUMER STAPLES 100,123,668
-----------
ENERGY - 2.4%
Atwood Oceanics, Inc.* 32,700 1,301,869
Berry Petroleum Co., Class A 118,900 1,545,700
Cliffs Drilling Co.* 33,100 1,086,094
Friede Goldman International, Inc.* 248,400 7,157,025
Pool Energy Services Co.* 64,100 945,475
Pride International, Inc.* 58,700** 994,231
Tosco Corp. 75,000** 2,203,125
Varco International, Inc.* 175,900 3,485,019
Veritas DGC, Inc.* 61,400 3,066,162
----------
TOTAL ENERGY 21,784,700
----------
FINANCIALS - 12.3%
Advance Paradiam, Inc.* 66,900 2,416,763
Alabama National Bancorporation 64,400 2,415,000
Allied Capital Corp. 340,565 8,343,843
AMRESCO, Inc.* 72,400 2,099,600
Andover Bancorp, Inc. 98,500 3,373,625
Cash America International, Inc. 148,500 2,264,625
Charter One Financial, Inc. 178,604 5,994,397
Chateau Communities, Inc. 72,429 2,082,334
Concord EFS, Inc.* 227,212 5,907,512
ContiFinancial Corp.* 137,200** 3,172,750
Downey Financial Corp. 278,580 9,106,084
Equity Inns, Inc. 143,100 1,887,131
Executive Risk, Inc. 18,000 1,327,500
First Savings Bank of Washington
Bancorp, Inc. 127,000 3,206,750
First Sierra Financial, Inc.* 122,500 3,720,937
Golden State Bancorp, Inc.* 26,400** 785,400
Golden State Bancorp, Inc., Warrants* 26,400 140,250
Health Care Property Investors, Inc. 57,400 2,069,987
Healthcare Financial Partners, Inc.* 44,200 2,707,250
Hilb, Rogal & Hamilton Co. 128,000 2,000,000
HUBCO, Inc. 66,412 2,378,380
Mercantile Bancorporation, Inc. 62,037** 3,125,114
National Health Investors, Inc. 51,400 1,702,625
National Western Life Insurance Co.,
Class A* 12,000 1,452,000
NSS Bancorp, Inc. 57,900 3,242,400
Penn Treaty American Corp.* 88,300 2,781,450
Penn-America Group, Inc. 138,550 1,835,787
RFS Hotel Investors, Inc. 98,900 1,879,100
Riverview Bancorp, Inc. 50,000 831,250
Sovran Self Storage, Inc. 65,400 1,847,550
Sterling Financial Corp.* 176,600 3,995,575
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
13
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
FINANCIALS (CONTINUED)
Timberland Bancorp, Inc.* 175,000 2,876,562
UST Corp. 295,000** 7,743,750
Vermont Financial Services Corp. 200,000 5,487,500
Washington Mutual, Inc. 33,750** 1,463,906
Webster Financial Corp. 179,800** 5,933,400
-----------
TOTAL FINANCIALS 113,598,087
-----------
HEALTH CARE - 6.3%
Advocat, Inc.* 189,000 1,299,375
Bindley Western Industries, Inc. 192,800 6,362,400
Chemed Corp. 62,400 2,125,500
Genelabs Technologies, Inc.* 363,600 1,068,075
Hologic, Inc.* 55,000 993,437
Horizon Health Corp.* 92,600 1,574,200
Lunar Corp.* 52,600 959,950
Mariner Health Group, Inc.* 119,300 1,983,363
Monarch Dental Corp.* 18,300 285,937
National Dentex Corp.* 54,300 1,282,838
National Surgery Centers, Inc.* 114,400 3,324,750
Ocular Sciences, Inc.* 109,100 3,532,112
Orthodontic Centers of America, Inc.* 240,800 5,041,750
Parexel International Corp.* 190,100 6,891,125
Perclose, Inc.* 18,500 522,625
PharMerica, Inc.* 153,700 1,844,400
Prime Medical Services, Inc.* 162,100 1,499,425
Protocol Systems, Inc.* 155,400 1,340,325
Quorum Health Group, Inc.* 105,750 2,789,156
Res-Care, Inc.* 109,200** 2,006,550
Retirement Care Associates, Inc.* 65,718 476,456
Rural/Metro Corp.* 129,900 1,688,700
Total Renal Care Holdings, Inc.* 90,547 3,123,872
Universal Health Services, Inc.,
Class B* 102,000 5,954,250
-----------
TOTAL HEALTH CARE 57,970,571
-----------
TECHNOLOGY - 20.2%
Abacus Direct Corp.* 58,100 3,017,569
ABR Information Services, Inc.* 27,300 648,375
Acclaim Entertainment, Inc.* 140,000 840,000
Affiliated Computer Services, Inc.,
Class A* 79,000 3,041,500
Alpha Industries, Inc.* 210,700 3,147,331
Amplicon, Inc. 72,100 937,300
ANADIGICS, Inc.* 439,100** 5,955,294
ANTEC Corp.* 24,500 568,094
Apex PC Solutions, Inc.* 70,700 1,961,925
Applied Micro Circuits Corp.* 76,200 1,976,437
Arch Communications Group, Inc.* 364,500** 1,412,437
Avid Technology, Inc.* 15,600 521,625
Barringer Technologies, Inc.* 84,500 786,906
BroadVision, Inc.* 57,500 1,365,625
CACI International, Inc., Class A* 99,600 2,097,825
Cambridge Technology Partners* 54,000 2,949,750
Celestica, Inc.* 103,400 1,925,566
Centennial Cellular Corp., Class A* 72,150 2,692,097
Check Point Software Techologies Ltd.* 43,800 1,434,450
Ciber, Inc.* 131,100 4,981,800
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
14
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Comdial Corp.* 139,100 1,686,587
Complete Bussines Solutions, Inc.* 25,300** 907,637
Computer Management Sciences, Inc.* 59,000 1,386,500
Cotelligent Group, Inc.* 111,300 2,601,638
Cytyc Corp.* 152,500 2,487,656
Davel Communications Group, Inc.* 119,100 2,903,062
Dendrite International, Inc.* 115,000 4,283,750
Documentum, Inc.* 92,800 4,466,000
Henry (Jack) & Associates, Inc. 57,200 1,966,250
IDX Systems Corp.* 114,700 5,290,538
Information Management Resources, Inc.* 117,650 3,978,041
Innovative Tech Systems, Inc.* 30,000 181,875
International Network Services* 64,100 2,592,044
Inter-Tel, Inc. 129,900 2,078,400
ISG International Software Group Ltd.* 152,400 1,533,525
Jaco Electronics, Inc.* 75,200 451,200
K-Tron International, Inc.* 103,800 1,933,275
Lifeline Systems, Inc.* 106,900 1,977,650
Maxwell Technologies, Inc. 6,200 144,150
MDSI Mobile Solutions, Inc.* 89,500 1,062,812
Medirisk, Inc.* 104,500** 2,076,937
MedQuist, Inc.* 161,000 4,618,688
Metrocall, Inc.* 153,180 928,654
Micrel, Inc.* 45,600 1,482,000
National Computer Systems, Inc. 63,000 1,504,125
National Data Corp. 102,300 4,475,625
NeoMagic Corp.* 51,900 801,206
Network Appliance, Inc.* 148,200 5,761,275
New Era of Networks, Inc.* 92,900** 2,833,450
OrCAD, Inc.* 185,000 1,780,625
Orckit Communications Ltd.* 238,400** 4,514,700
P-COM, Inc.* 83,300 762,716
Peerless Systems Corp.* 286,300 5,940,725
Peoples Telephone Company, Inc.* 360,800 1,127,500
Peregrine Systems, Inc.* 63,000 1,795,500
PMC-Sierra, Inc.* 32,000 1,496,000
Policy Management Systems Corp.* 204,600** 8,030,550
Pomeroy Computer Resources, Inc.* 64,000 1,652,000
Powerwave Technologies, Inc.* 42,800** 711,550
REMEC, Inc.* 127,050 1,445,194
Richardson Electronics, Ltd. 63,900 862,650
Richey Electronics, Inc.* 70,800 537,637
Rural Cellular Corp., Class A* 89,000 1,368,375
RWD Technologies, Inc.* 82,100 1,919,088
Sawtek, Inc.* 32,200 468,913
Sipex Corp.* 21,100 452,331
Software AG Systems, Inc. 26,000** 760,500
Technology Solutions Co.* 75,650 2,397,159
Tecnomatix Technologies Ltd.* 15,400 308,000
Tekelec* 143,800 6,435,050
Template Software, Inc.* 44,000 489,500
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
15
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
Tier Technologies, Inc., Class B 191,600 3,412,875
TSI International Software, Ltd.* 47,900 1,083,738
Unitrode Corp.* 240,000 2,760,000
VERITAS Software Corp.* 118,812 4,908,421
Vitesse Semiconductor Corp.* 122,500 3,782,188
V-One Corp.* 213,400** 720,225
Waters Corp.* 75,300 4,437,994
Wind River Systems* 79,800** 2,862,825
World Access, Inc.* 118,400** 3,552,000
Xylan Corp.* 62,000** 1,844,500
-----------
TOTAL TECHNOLOGY 185,277,485
-----------
Transportation - 5.8%
Air Express International Corp. 218,550 5,846,212
Airborne Freight Corp. 418,200** 14,610,863
American Classic Voyages Co.* 84,200 1,241,950
Aramex International Ltd.* 50,000 518,750
Circle International Group, Inc. 227,300 6,364,400
CNF Transportation, Inc. 68,100 2,894,250
Fritz Companies, Inc.* 293,600** 3,890,200
Gulfmark Offshore, Inc.* 25,400 574,675
Iron Mountain, Inc.* 60,500 2,662,000
MotivePower Industries, Inc.* 175,800 4,307,100
Pittston Burlington Corp. 259,700 4,041,581
Royal Olympic Cruise Lines 175,000 1,750,000
Sea Containers, Ltd., Class A 107,000 4,092,750
Sea Containers, Ltd., Class B* 13,890 533,029
-----------
TOTAL TRANSPORTATION 53,327,760
-----------
UTILITIES - 0.8%
El Paso Electric Co.* 808,900 7,431,769
----------
TOTAL COMMON STOCKS
(cost $670,047,041) 842,730,565
-----------
SHORT-TERM INVESTMENTS - 8.0%
OTHER INVESTMENT COMPANIES - 5.6%
Calvert Cash Reserves
Institutional Prime Fund, 5.59%*** 13,607,757 13,607,757
JPM Prime Money Market Fund, 5.47%*** 37,510,001 37,510,001
-----------
TOTAL OTHER INVESTMENT COMPANIES 51,117,758
-----------
<CAPTION>
- ---------------------------------------------------------------------------
Principal
Amount
- ---------------------------------------------------------------------------
COMMERCIAL PAPER - 2.4%
Clipper, 5.60%, 07/02/98 $22,200,000 22,193,329
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $73,311,087) 73,311,087
------------
TOTAL INVESTMENTS - 99.7%
(cost $743,358,128) 916,041,652
OTHER ASSETS, LESS
LIABILITIES - 0.3% 2,309,036
------------
NET ASSETS - 100.0% $918,350,688
============
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
16
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (concluded)
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
[FN]
Note: Based on the cost of investments of $744,293,476 for federal income
tax purposes at June 30, 1998, the aggregate gross unrealized
appreciation and depreciation was $208,545,628 and $36,797,452,
respectively, resulting in net unrealized appreciation of
investments of $171,748,176.
* Non-income-producing security.
** Some or all of these shares, amounting to $33,661,492, or 3.7% of
net assets, were out on loan to various brokers as of June 30, 1998.
*** Yields shown for each investment company represents the June 30,
1998 seven-day average yield, which refers to the sum of the
previous seven days' dividends paid, expressed as an annual
percentage.
The accompanying notes are an integral part of these financial statements.
</FN>
17
<PAGE>
- ----------------------------------------------------------------------------
THE MANAGERS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1998 (Unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGERS MANAGERS MANAGERS
INCOME CAPITAL SPECIAL
EQUITY APPRECIATION EQUITY
FUND FUND FUND
---------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments at value* $73,715,090 $84,670,387 $916,041,652
Cash 1,430 1,286 ---
Collateral from brokers on
securities loaned 3,295,937 5,197,083 33,661,492
Receivable for investments sold 279,941 295,272 4,921,854
Receivable for Fund shares sold 137,554 6,124,889 4,567,902
Dividends, interest and other
receivables 114,374 36,543 494,258
Prepaid expenses 14,994 20,888 77,281
---------- ----------- -----------
Total assets 77,559,320 96,346,348 959,764,439
---------- ----------- -----------
LIABILITIES:
Payable for Fund shares repurchased 52,018 1,511,005 2,069,546
Payable upon return of securities
loaned 3,295,937 5,197,083 33,661,492
Payable for investments purchased 221,778 2,826,111 4,528,628
Accrued expenses:
Investment advisory and management
fees 43,630 47,174 654,637
Administrative fees 14,543 14,742 181,844
Other 62,284 57,051 317,604
---------- ----------- ----------
Total liabilities 3,690,190 9,653,166 41,413,751
---------- ----------- ----------
NET ASSETS $ 73,869,130 $ 86,693,182 $918,350,688
========== =========== ==========
Shares outstanding 2,154,398 2,679,545 14,183,222
========== =========== ==========
Net asset value, offering and
redemption price per share $34.29 $32.35 $64.75
====== ====== ======
NET ASSETS REPRESENT:
Paid-in capital $ 53,979,154 $ 55,495,495 $729,294,567
Undistributed net investment
income(loss) 77,576 (285,395) (1,311,311)
Accumulated net realized gain
from investments 5,703,173 10,997,117 17,683,908
Net unrealized appreciation of
investments 14,109,227 20,485,965 172,683,524
----------- ----------- -----------
NET ASSETS $ 73,869,130 $ 86,693,182 $918,350,688
=========== =========== ===========
* Investments at cost $ 59,605,863 $ 64,184,422 $743,358,128
=========== =========== ===========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
18
<PAGE>
- ----------------------------------------------------------------------------
THE MANAGERS FUNDS
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1998 (unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGERS MANAGERS MANAGERS
INCOME CAPITAL SPECIAL
EQUITY APPRECIATION EQUITY
FUND FUND FUND
--------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $ 845,509 $ 98,775 $ 2,064,926
Interest income 39,202 22,771 2,017,407
Foreign withholding tax (9,786) --- ---
Stock loan fees 4,231 49,080 115,734
--------- ------------ -----------
Total investment income 879,156 170,626 4,198,067
--------- ------------ -----------
EXPENSES:
Investment advisory and
management fees 258,577 284,940 3,778,991
Administrative fees 86,192 89,044 1,049,720
Custodian fees 36,454 35,133 200,917
Transfer agent fees 41,025 35,413 370,386
Audit fees 13,690 14,291 26,263
Registration fees 9,222 10,588 55,595
Insurance 2,961 4,808 23,043
Trustee fees 1,059 781 14,200
Legal fees 1,919 1,560 24,995
Miscellaneous expenses 4,783 4,158 50,290
--------- ------------ -----------
Total expenses before
reductions 455,882 480,716 5,594,400
Expense reductions (23,534) (24,695) (9,726)
--------- ------------ -----------
Net Expenses 432,348 456,021 5,584,674
--------- ------------ -----------
Net investment income (loss) 446,808 (285,395) (1,386,607)
--------- ------------ -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain on
investment transactions 3,583,391 9,996,146 18,697,526
Net unrealized appreciation
of investments 3,122,363 10,769,233 28,430,437
--------- ------------ -----------
Net realized and unrealized
gain 6,705,754 20,765,379 47,127,963
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 7,152,562 20,479,984 45,741,356
========= ============ ===========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
19
<PAGE>
- ----------------------------------------------------------------------------
THE MANAGERS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGERS INCOME
EQUITY FUND
--------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31,1997
------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) $446,808 $1,223,052
Net realized gain on investments 3,583,391 13,070,991
Net unrealized appreciation
(depreciation)of investments 3,122,363 595,116
---------- ----------
Net increase in net assets
resulting from operations 7,152,562 14,889,159
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (393,491) (1,253,740)
From net realized gain on
investments -- (11,843,315)
---------- -----------
Total distributions to
shareholders (393,491) (13,094,055)
---------- ----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 15,429,050 35,568,276
Net asset value of shares
issued in connection with
reinvestment of dividends and
distributions 352,363 11,483,738
Cost of shares repurchased (13,617,639) (36,960,862)
---------- ----------
Net increase (decrease) from
capital share transactions 2,163,774 10,091,152
---------- ----------
Total increase (decrease) in
net assets 8,922,845 11,883,256
NET ASSETS:
Beginning of period 64,946,285 53,063,029
---------- ----------
End of period $73,869,130 $64,946,285
---------- ----------
---------- ----------
End of period undistributed
(overdistributed)net
investment income $77,576 $24,259
---------- ----------
---------- ----------
- ----------------------------------------------------------------------------
SHARE TRANSACTIONS:
Sale of shares 460,855 1,061,260
Shares issued in connection
with reinvestment of dividends
and distributions 10,470 374,916
Shares repurchased (407,602) (1,085,631)
---------- ----------
Net increase (decrease)
in shares 63,723 350,545
========== ===========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
20
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGERS CAPITAL APPRECIATION FUND MANAGERS SPECIAL EQUITY FUND
- ---------------------------------- ----------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
June 30, 1998 YEAR ENDED June 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997 (UNAUDITED) DECEMBER 31, 1997
- ----------------- ----------------- ---------------- -----------------
<C> <C> <C> <C>
$ (285,395) $ (450,934) $ (1,386,607) $ 833,322
9,996,146 13,435,680 18,697,526 17,630,807
10,769,233 (1,801,245) 28,430,437 98,018,318
---------- ----------- ----------- ----------
20,479,984 11,183,501 45,741,356 116,482,447
---------- ----------- ----------- ----------
-- -- -- (788,086)
-- (12,541,907) -- (23,238,043)
---------- ---------- ----------- ----------
-- (12,541,907) -- (24,026,129)
---------- ---------- ---------- ----------
45,493,402 81,018,263 449,257,807 594,941,899
-- 11,559,522 -- 20,172,338
(53,139,896) (118,641,988) (296,355,852) (259,296,392)
---------- ---------- ---------- ----------
(7,646,494) (26,064,203) 152,901,955 355,817,845
---------- ---------- ---------- ----------
12,833,490 (27,422,609) 198,643,311 448,274,163
73,859,692 101,282,301 719,707,377 271,433,214
---------- ---------- ---------- ----------
$86,693,182 $73,859,692 $918,350,688 $719,707,377
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
$(285,395) -- $(1,311,311) $75,296
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------
1,595,223 2,797,323 7,061,703 10,692,536
-- 506,041 -- 344,679
(1,962,321) (4,101,797) (4,642,004) (4,601,047)
---------- ---------- ---------- ----------
(367,098) (798,433) 2,419,699 6,436,168
========== ========== ========== ===========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
21
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS INCOME EQUITY FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each period
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ----------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $31.06 $30.49 $28.43 $24.90 $27.89 $27.38
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.21 0.67 0.76 0.87 0.80 0.81
Net realized and
unrealized gain(loss)
on investments 3.21 7.27 3.97 7.47 (0.50) 2.54
------ ------ ------ ----- ----- -----
Total from
investment operations 3.42 7.94 4.73 8.34 0.30 3.35
------ ------ ------ ----- ----- -----
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.19) (0.69) (0.76) (0.86) (0.83) (0.76)
Net realized gain
on investments --- (6.68) (1.91) (3.95) (2.46) (2.08)
------ ------ ------ ----- ----- ------
Total distributions
to shareholders (0.19) (7.37) (2.67) (4.81) (3.29) (2.84)
NET ASSET VALUE,
END OF PERIOD $34.29 $31.06 $30.49 $28.43 $24.90 $27.89
====== ====== ====== ====== ====== ======
- ---------------------------------------------------------------------------
Total Return 10.99%(b) 27.19% 17.08% 34.36% 0.99% 12.40%
===========================================================================
Ratio of net expenses
to average net assets 1.25%(a)(c) 1.32%(a) 1.44%(a) 1.45% 1.33% 1.32%
Ratio of net investment
income to average
net assets 1.30%(c) 1.97% 2.63% 2.85% 3.06% 2.75%
Portfolio turnover 42%(b) 96% 33% 36% 46% 41%
Net assets at end of
period (000's omitted) $73,869 $64,946 $53,063 $37,807 $48,875 $40,965
============================================================================
</TABLE>
[FN]
(a) The Fund has entered into an arrangement with one or more third-party
broker-dealer(s) who have paid a portion of the Fund's expenses. In
addition, the Fund has received credits against its custodian expense for
uninvested overnight cash balances. Absent these expense reductions, the
ratio of expenses to average net assets for the periods ended June 30,
1998, December 31, 1997 and December 31, 1996 would have been 1.32%,
1.35% and 1.44%, respectively. (See Note 1c of Notes to Financial
Statements).
(b) Not annualized.
(c) Annualized.
</FN>
22
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each period
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ----------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $24.24 $26.34 $27.14 $23.25 $25.17 $24.67
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (0.11) (0.13) 0.09 0.09 0.12 0.19
Net realized and
unrealized gain(loss)
on investments 8.22 3.15 3.66 7.62 (0.49) 3.80
------ ------ ------ ------ ------ ------
Total from
investment operations 8.11 3.02 3.75 7.71 (0.37) 3.99
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income --- --- (0.10) (0.08) (0.12) (0.19)
Net realized gain
on investments --- (5.12) (4.45) (3.74) (1.39) (3.30)
In excess of net realized
gain on investments --- --- --- --- (0.04) ---
------ ------ ------ ------ ------ ------
Total distributions
to shareholders --- (5.12) (4.55) (3.82) (1.55) (3.49)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $32.35 $24.24 $26.34 $27.14 $23.25 $25.17
====== ====== ====== ====== ====== ======
- ---------------------------------------------------------------------------
Total Return 33.40%(b) 12.74% 13.73% 33.39% (1.50)% 16.38%
===========================================================================
Ratio of net expenses
to average net assets 1.28%(b)(d) 1.26%(b) 1.33%(b)1.36% 1.29% 1.18%
Ratio of net investment
income to average
net assets (0.80)%(d) (0.45)% 0.34% 0.31% 0.53% 0.74%
Portfolio turnover 73%(b) 235% 172% 134% 122% 131%
Net assets at end of
period (000's omitted) $86,693 $73,860 $101,282 $83,353 $86,042 $69,358
============================================================================
</TABLE>
[FN]
(a) Calculated using the average shares outstanding during the year.
(b) The Fund has entered into an arrangement with one or more third-party
broker-dealer(s) who have paid a portion of the Fund's expenses. In
addition, the Fund has received credits against its custodian expense for
uninvested overnight cash balances. Absent these expense reductions, the
ratio of expenses to average net assets for the periods ended June 30,
1998, December 31, 1997 and December 31, 1996 would have been 1.35%,
1.32% and 1.38%, respectively. (See Note 1c of Notes to Financial
Statements).
(c) Not annualized.
(d) Annualized.
</FN>
23
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS SPECIAL EQUITY FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each period
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ----------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $61.18 $50.95 $43.34 $36.79 $38.90 $36.14
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income (0.10) 0.08 (0.00) (0.07) (0.01) 0.02
Net realized and
unrealized gain(loss)
on investments 3.67 12.29 10.68 12.28 (0.76) 6.12
------ ------ ------ ------ ------ ------
Total from
investment operations 3.57 12.37 10.68 12.21 (0.77) 6.14
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income --- (0.07) --- --- --- (0.01)
Net realized gain
on investments --- (2.07) (3.07) (5.66) (1.34)(3.37)
------ ------ ------ ------ ------ ------
Total distributions
to shareholders --- (2.14) (3.07) (5.66) (1.34)(3.38)
NET ASSET VALUE,
END OF PERIOD $64.75 $61.18 $50.95 $43.34 $36.79 $38.90
====== ====== ====== ====== ====== ======
- ----------------------------------------------------------------------------
Total Return 5.85%(c) 24.45% 24.75% 33.94% (1.99)%17.05%
============================================================================
Ratio of net expenses
to average net assets 1.33%(b)(d) 1.35%(b) 1.43%(a)1.44% 1.37% 1.26%
Ratio of net investment
income to average
net assets (0.33)%(d) 0.17% (0.10)% (0.16)% (0.06)%0.07%
Portfolio turnover 36%(c) 49% 56% 65% 66% 45%
Net assets at end of
period (000's omitted) $918,351 $719,707 $271,433 $118,362 $111,584 $99,032
=============================================================================
</TABLE>
[FN]
(a) Calculated using the average shares outstanding during the year.
(b) The Fund has entered into an arrangement with one or more third-party
broker-dealer(s) who have paid a portion of the Fund's expenses. In
addition, the Fund has received credits against its custodian expense for
uninvested overnight cash balances. Absent these expense reductions, the
ratio of expenses to average net assets for the periods ended June 30,
1998, and December 31, 1997 would have been 1.33%, 1.36%, respectively.
(See Note 1c of Notes to Financial Statements).
(c) Not annualized.
(d) Annualized.
</FN>
24
<PAGE>
- ----------------------------------------------------------------------------
THE MANAGERS FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited)
- ----------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Managers Funds (the "Trust") is a no-load, 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 11 investment series. Included
in this report are Managers Income Equity Fund ("Income Equity"), Managers
Capital Appreciation Fund ("Capital Appreciation") and Managers Special
Equity Fund ("Special Equity"), collectively the "Funds."
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which require 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 reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements:
(A) VALUATION OF INVESTMENTS
Equity securities traded on a domestic or international securities exchange
are valued at the last quoted sales price, or, lacking any sales, on the
basis of the last quoted bid price. Over-the-counter securities for which
market quotations are readily available are valued at the last quoted bid
price. Fixed income securities are valued based on valuations furnished by
independent pricing services that utilize matrix systems which reflect such
factors as security prices, yields, maturities, and ratings, and are
supplemented by dealer and exchange quotations. Short-term investments,
having a remaining maturity of 60 days or less, are valued at amortized cost
which approximates market. Securities for which market quotations are not
readily available are valued at fair value, as determined in good faith and
pursuant to procedures adopted by the Board of Trustees.
(B) SECURITY TRANSACTIONS
Security transactions are accounted for as of trade date. Gains and losses
on securities sold are determined on the basis of identified cost.
(C) INVESTMENT INCOME AND EXPENSES
Dividend income is recorded on the ex-dividend date, except certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Trust is informed of the ex-dividend date.
Dividend income on foreign securities is recorded net of withholding tax.
Interest income is recorded on the accrual basis and includes amortization
of discounts and premiums when
25
<PAGE>
- ----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ----------------------------------------------------------------------------
required for federal income tax purposes. Non-cash dividends included in
dividend income, if any, are reported at the fair market value of the
securities received. Other income and expenses are recorded on an accrual
basis. Expenses which cannot be directly attributed to a particular fund are
apportioned among the funds in the Trust based upon their average net assets.
Income Equity and Capital Appreciation Funds each had certain portfolio
trades directed to various brokers who paid a portion of such Fund's
expenses. For the six months ended June 30, 1998, the Income Equity and
Capital Appreciation Funds' custody expenses were reduced by $23,534 and
$20,091, respectively, under these arrangements.
In addition, each of the Funds has a "balance credit" arrangement with the
custodian bank whereby each Fund is credited with an interest factor equal
to 0.75% of the nightly Fed Funds rate for account balances left uninvested
overnight. These credits serve to reduce custody expenses that would
otherwise be charged to the Funds. For the six months ended June 30, 1998,
the Income Equity, Capital Appreciation and Special Equity Funds' custody
expenses were reduced by $917, $4,604 and $9,726, respectively, under these
arrangements.
(D) DIVIDENDS AND DISTRIBUTIONS
Dividends resulting from net investment income, if any, normally will be
declared and paid monthly for Income Equity and annually for Capital
Appreciation and Special Equity. Distributions of capital gains, 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 Federal income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for foreign currency related transactions, losses
deferred due to wash sales and equalization accounting for tax purposes.
Permanent book and tax basis differences, if any, relating to shareholder
distributions will result in reclassifications to paid-in capital.
(E) REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements provided that the value of
the underlying collateral, including accrued interest, will be equal to or
exceed the value of the repurchase agreement during the term of the
agreement. The underlying collateral for all repurchase agreements is held
in safekeeping by the Fund's custodian or at the Federal Reserve Bank.
If the seller defaults and the value of the collateral declines, or if
bankruptcy proceedings commence with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
(F) FEDERAL TAXES
Each Fund intends to comply with the requirements under Subchapter M of the
Internal Revenue Code of 1986,
26
<PAGE>
- ----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ----------------------------------------------------------------------------
as amended, and to distribute substantially all of its taxable income and
gains to its shareholders and to meet certain diversification and income
requirements with respect to investment companies. Therefore, no provision
for federal income or excise tax is included in the accompanying financial
statements.
(G) CAPITAL STOCK
The Trust's Declaration of Trust authorizes for each series the issuance of
an unlimited number of shares of beneficial interest, without par value.
Each Fund records sales and repurchases of its capital stock on the trade
date. Dividends and distributions to shareholders are recorded on the
ex-dividend date.
At June 30, 1998, certain unaffiliated shareholders, including omnibus
accounts, individually held greater than 10% of the outstanding shares of
the following Funds: Income Equity- 2 collectively own 34%; Capital
Appreciation- 1 owns 11%; and Special Equity- 1 own 38%.
(H) FOREIGN CURRENCY TRANSLATION
The books and records of the Funds are maintained in U.S. dollars. The value
of investments, assets and liabilities denominated in currencies other than
U.S. dollars are translated into U.S. dollars based upon current foreign
exchange rates. Purchases and sales of foreign investments and income and
expenses are converted into U.S. dollars based on currency exchange rates
prevailing on the respective dates of such transactions. Net realized and
unrealized gain (loss) on foreign currency transactions represent: (1)
foreign exchange gains and losses from the sale and holdings of foreign
currencies; (2) gains and losses between trade date and settlement date on
investment securities transactions and forward foreign currency exchange
contracts; and (3) gains and losses from the difference between amounts of
interest and dividends recorded and the amounts actually received.
In addition, the Funds do not isolate that portion of the results of
operation resulting from changes in exchange rates from the fluctuations
resulting from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss on investments.
(2) AGREEMENTS AND TRANSACITON WITH AFFILIATES
The Managers Funds, L.P. (the "Investment Manager") provides or oversees
investment advisory and management services to the Funds under Management
Agreements with each Fund. The Investment Manager selects portfolio managers
for each Fund (subject to Trustee approval), allocates assets among
portfolio managers and monitors the portfolio managers' investment programs
and results. Each Fund's investment portfolio is managed by portfolio
managers who serve pursuant to Portfolio Management Agreements with the
Investment Manager and the Fund. Certain trustees and officers of the
27
<PAGE>
- ----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
- ----------------------------------------------------------------------------
Funds are officers of the Investment Manager.
Investment advisory and management fees are paid directly by each Fund to
The Managers Funds, L.P. based on average daily net assets. The annual
investment advisory and management fee rates, as a percentage of average
daily net assets for the six months ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
INVESTMENT ADVISORY
FUND AND MANAGEMENT FEE
- ---- -------------------
<S> <C>
Income Equity 0.75%
Capital Appreciation 0.80%
Special Equity 0.90%
</TABLE>
The Trust has adopted an Administration and Shareholder Servicing Agreement.
The Managers Funds, L.P. serves as each Fund's administrator (the
"Administrator") and is responsible for all aspects of managing the Funds'
operations, including administration and shareholder services to each Fund,
its shareholders, and certain institutions, such as bank trust departments,
broker-dealers and registered investment advisers, that advise or act as an
intermediary with the Funds' shareholders. During the six months ended June
30, 1998, each of the Funds paid a fee to the Administrator at the rate of
0.25% per annum of the Fund's average daily net assets.
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 in-person meeting attended, and $200 for
participation in any telephonic meetings. The Trustee fee expense shown in
the financial statements represents each Fund's allocated portion of the
total fees.
(3) PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
six months ended June 30, 1998 were as follows:
<TABLE>
FUND PURCHASES SALES
---- --------- -----
<S> <C> <C>
Income Equity $28,973,231 $28,282,007
Capital Appreciation 51,574,389 66,690,265
Special Equity 420,761,805 283,091,525
</TABLE>
There were no purchases or sales of U.S. Government securities.
(4) PORTFOLIO SECURITIES LOANED
Certain of the Funds may participate in a securities lending program
providing for the lending of corporate bonds, equity and government
securities to qualified brokers. Collateral on all securities loaned except
for government securities loaned is accepted only in cash. Collateral on
government securities loaned is in the form of other similar securities.
Collateral is maintained at a minimum level of 100% of the market value,
plus interest, if applicable, of investments on loan. Collateral received
in the form of cash is invested temporarily in money market funds by the
custodian. Earnings of such temporary cash investments are divided between
the custodian, as a fee for its services under the program, and the Fund,
according to agreed-upon rates.
28
<PAGE>
[LOGO]
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
Company, LLC
Husic Capital Management
SPECIAL EQUITY FUND
Liberty Investment Management
Pilgrim Baxter & Associates, Ltd.
Westport Asset Management, Inc.
Kern Capital Management, LLC
INTERNATIONAL EQUITY FUND
Scudder, Kemper Investments, Inc.
Lazard Asset Management Co.
EMERGING MARKETS EQUITY FUND
Montgomery Asset Management LLC
King Street Advisors, Limited
FIXED INCOME FUNDS:
MONEY MARKET FUND
J.P. Morgan
SHORT AND INTERMEDIATE
BOND FUND
Standish, Ayer & Wood, Inc.
BOND FUND
Loomis, Sayles & Company, L.P.
GLOBAL BOND FUND
Rogge Global Partners
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