<PAGE>
MONEY MARKET FUND
- ------------------------------------
SEMI-ANNUAL REPORT
May 31, 1998
- --------------------------------
WHERE LEADING MONEY MANAGERS CONVERGE
<PAGE>
MANAGERS MONEY MARKET FUND
SEMI-ANNUAL REPORT
MAY 31, 1998
(UNAUDITED)
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 JUNE
30, 1998
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
The Prime Money Market Portfolio (The commingled investment pool which
holds all investable assets of the Fund)
Schedule of Investments............................................... 10
DETAILED PORTFOLIO LISTINGS BY SECURITY TYPE, AS VALUED AT MAY 31,
1998, OF WHICH MANAGERS MONEY MARKET FUND OWNS A PRO RATA SHARE
Statement of Assets and Liabilities................................... 15
PORTFOLIO'S BALANCE SHEET
Statement of Operations............................................... 15
DETAIL OF THE PORTFOLIO'S SOURCES OF INCOME, EXPENSES, AND REALIZED
GAINS (LOSSES) DURING THE PERIOD
Statement of Changes in Net Assets.................................... 16
DETAIL OF CHANGES IN THE PORTFOLIO'S ASSETS DURING THE PAST TWO
PERIODS
Supplementary Data.................................................... 16
HISTORICAL RATIOS OF THE PORTFOLIO'S EXPENSES, NET INVESTMENT
INCOME AND IMPACT OF EXPENSE REIMBURSEMENTS ON THE EXPENSE RATIOS
Notes to Financial Statements......................................... 17
THE PORTFOLIO'S ACCOUNTING POLICIES AND DETAILS OF AGREEMENTS AND
TRANSACTIONS WITH PORTFOLIO MANAGEMENT
</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
- -----------------------------------------------
<TABLE>
<S> <C>
</TABLE>
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.
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.
Because inflation has remained extremely moderate, and there is no hard
evidence to indicate any acceleration going forward, interest rates have
gradually fallen over the past six months. While short-term interest rates have
dropped slightly, which obviously has an effect on the portfolio of this fund,
long-term interest rates have fallen even more, causing what financial
practitioners refer to as a flattening of the yield curve. What this means is
that the difference (spread) in income yield between long-term bonds, which
generally pay a higher income yield than do short-term securities, is much less
than it has been in the recent past. In fact, on May 31, 1998 the yield on
10-year Treasury bonds was only 0.11% higher than the yield on one-year Treasury
bills. For comparison, the difference between
1
<PAGE>
- -----------------------------------------------
10-year and one-year Treasury yields in May 1997 was 0.85%, and in May 1994 the
spread was 1.80%. The extremely flat yield curve is the result of investors'
expectations that the rate of inflation will remain stable.
While low, declining interest rates are very good for the economy, it has been
a challenging environment in which to maintain a stable yield in a short-term
investment portfolio. Given this Fund's primary goal of protecting capital while
seeking a competitive yield in excess of inflation, we believe that the Fund's
portfolio management team led by Robert Johnson at J.P. Morgan has done an
excellent job. During the six-month period ending May 31, 1998, the yield on
short-term Treasury securities has fallen in the range of 12 basis points
(0.12%). Meanwhile, over the same period, the Managers Money Market Fund has
provided a yield which rose in the early months of the year and has recently
pulled back to finish virtually unchanged from its November level. As of May 31,
1998 the 30-day average annualized yield for the Fund was 5.14%. For comparison,
the 30-day average yield for the IBC All Taxable Money Fund Average (an index
compiled by IBC Financial Data Corp. which serves as an appropriate benchmark
for the Fund) for the same period was 5.00%.
Changes in the portfolio's maturity positioning along with the manager's
changes in asset mix added marginally to the overall performance during the
period. The average maturity was typically managed to within 45 to 55 days
throughout the six-month period. However, during January and into February, the
maturity was managed down to a low of 30 days in anticipation of a rise in
rates, after which the manager quickly added longer-term securities to take
advantage of the rise and bring the average maturity back to the 50-day range.
Again toward the end of May, the portfolio manager was taking the maturity down
in order to provide more liquidity for buying opportunities during June. At the
end of the period, the average maturity for the portfolio was 38 days which was
considerably shorter than the IBC All Taxable Money Fund Average Maturity of 56
days.
Throughout the period, the portfolio manager added to the holdings in
commercial paper and time deposits while reducing holdings in certificates of
deposit and repurchase agreements. The allocation to high-grade foreign
commercial paper was maintained, however, the portfolio manager has shifted the
holdings from Japanese banking issuers to European issuers.
2
<PAGE>
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The accompanying chart provides a breakdown of the portfolio as of May 31,
1998.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
<S> <C>
Floating Rate Notes 38%
Commercial Paper 32%
Certificates of
Deposit 12%
Time Deposits 18%
</TABLE>
For the six months ended May 31, 1998, the Fund provided a total return of
2.63%. During the same period, the IBC All Taxable Money Fund Average returned
2.51%. The annual rate of inflation during the period was 1.4%, as measured by
the Consumer Price Index. The average seven-day simple yield for the IBC All
Taxable Money Fund Average was 5.04% on June 30, 1998, and the seven-day
compound yield was 5.16%. The simple and compound yields for the Managers Money
Market Fund for the same period were 5.13%, and 5.26%, respectively.
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,
Robert P. Watson
President
3
<PAGE>
(LOGO)
THE MANAGERS FUNDS PERFORMANCE (UNAUDITED)
All periods ending June 30, 1998
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
----------------------------------------------------------
SIX SINCE INCEPTION MORNINGSTAR
MONTHS 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION DATE RATING**
------ ------ ------- ------- -------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Funds:
Income Equity Fund 10.99% 22.69% 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 N/A
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 N/A
</TABLE>
- --------------------------------------------------------------------------------
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 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
6/30/98 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 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.
4
<PAGE>
MANAGERS MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in The Prime Money Market Portfolio ("Portfolio") $26,614,275
Prepaid expenses 15,752
-----------
Total assets 26,630,027
-----------
LIABILITIES:
Dividends payable to shareholders 19,120
Other accrued expenses 26,811
-----------
Total liabilities 45,931
-----------
NET ASSETS $26,584,096
-----------
-----------
Shares outstanding 26,584,096
-----------
-----------
Net asset value, offering and redemption price per share $1.00
----
----
NET ASSETS REPRESENT:
Paid-in capital $26,584,096
-----------
-----------
</TABLE>
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the six months ended May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME FROM PORTFOLIO:
Interest income $977,140
EXPENSES:
Administration fees $ 42,345
Transfer agent fees 22,699
Registration fees 11,511
Reports to shareholders 5,965
Audit fees 5,209
Accounting fees 2,995
Trustee fees 585
Legal fees 964
Miscellaneous expenses 3,454
Allocated Portfolio expenses 28,908
---------
Total expenses 124,635
Less: Waiver of administration fees (33,876)
---------
Net expenses 90,759
--------
NET INVESTMENT INCOME $886,381
--------
--------
</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 SIX
MONTHS ENDED FOR THE
MAY 31, 1998 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1997
---------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 886,381 $ 2,150,158
---------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (886,381) (2,150,158)
---------------- -------------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 265,774,295 317,466,320
Net asset value of shares issued in
connection with reinvestment of
dividends 803,482 1,762,742
Cost of shares repurchased (276,537,852) (318,775,835)
---------------- -------------------
Net increase (decrease) from capital
share transactions (9,960,075) 453,227
---------------- -------------------
Total increase (decrease) in net assets (9,960,075) 453,227
---------------- -------------------
NET ASSETS:
Beginning of period 36,544,171 36,090,944
---------------- -------------------
End of period $26,584,096 $36,544,171
---------------- -------------------
---------------- -------------------
</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>
SIX MONTHS YEAR ENDED ELEVEN MONTHS YEAR ENDED
ENDED NOVEMBER 30, ENDED DECEMBER 31,
MAY 31, 1998 ------------------- NOVEMBER 30, -------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------ -------- -------- ------------- -------- --------
<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 0.026 0.052 0.054 0.044 0.035 0.022
LESS DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income (0.026) (0.052) (0.054) (0.044) (0.035) (0.022)
--------- ------- ------- ----------- ------- -------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
--------- ------- ------- ----------- ------- -------
--------- ------- ------- ----------- ------- -------
- ------------------------------------------------------------------------------------------------------------
Total Return (c) 5.25%(b) 5.35% 5.53% 4.51%(b) 3.61% 2.48%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average
net assets 0.54%(b) 0.40% 0.12% 1.13%(b) 0.73% 0.74%
Ratio of net investment income to
average net assets 5.23%(b) 5.22% 5.35% 4.85%(b) 3.84% 2.48%
Net assets at end of period (000's
omitted) $26,584 $36,544 $36,091 $11,072 $17,269 $7,368
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Expense Waiver/Reimbursement (a)
Ratio of total expenses to
average net assets 0.74%(b) 0.74% 0.75% 1.18%(b) 1.03% 0.99%
Ratio of net investment income
to average net assets 5.03%(b) 4.88% 4.71% 4.80%(b) 3.54% 2.23%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(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.
------------------------------------------------------------------------------
7
<PAGE>
MANAGERS MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
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 11 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 (0.37% at May 31, 1998). 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, 0.20% of which has been
voluntarily waived for the six months ended May 31, 1998.
This waiver may be modified or terminated at any time at the sole discretion of
the Administrator.
An aggregate annual fee of $10,000 is paid to each outside Trustee for serving
as a Trustee of the Trust. In addition, these Trustees receive meeting fees of
$750 for each 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.
9
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments
May 31, 1998 (unaudited)
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT -- DOMESTIC (2.1%)
$ 101,600 Nationsbank Corp........................ 09/04/98-12/28/98 5.600-5.830% $ 101,583,955
50,000 Regions Bank............................ 06/25/98 6.000 49,999,058
---------------
TOTAL CERTIFICATES OF DEPOSIT --
DOMESTIC............................... 151,583,013
---------------
CERTIFICATES OF DEPOSIT -- FOREIGN (9.5%)
26,500 Bank of Montreal........................ 07/07/98 5.580 26,501,176
67,500 Bayerische Vereinsbank AG............... 02/02/99 5.600 67,465,264
200,000 Canadian Imperial Bank of Commerce...... 06/22/98-04/01/99 5.530-5.750 199,952,152
25,000 Commerzbank AG.......................... 03/05/99 5.670 24,990,909
165,000 Deutsche Bank........................... 03/04/99-04/15/99 5.650-5.730 164,936,642
45,000 Landesbank Hessen Thuringen............. 06/09/98-06/19/98 5.940-6.080 44,999,225
20,000 Norinchukin Bank........................ 06/05/98 5.910 20,000,022
32,000 Swiss Bank Corp......................... 06/04/98 5.820 32,000,583
100,000 Westpac Banking Corp.................... 03/04/99-04/09/99 5.640-5.680 99,955,884
---------------
TOTAL CERTIFICATES OF DEPOSIT --
FOREIGN................................ 680,801,857
---------------
COMMERCIAL PAPER -- DOMESTIC (25.3%)
236,867 Alpine Securitization Corp.............. 06/02/98-06/11/98 5.500-5.530 236,609,874
145,000 Aspen Funding Corp...................... 06/08/98-06/17/98 5.530 144,747,310
14,000 Bank of New York........................ 03/26/99 5.640 13,993,426
78,955 Bavaria Trading Corp.................... 06/04/98-06/15/98 5.540-5.550 78,869,422
75,000 BBL North America Inc................... 06/15/98 5.510 74,839,292
248,750 CXC Inc................................. 06/03/98-08/12/98 5.500-5.530 247,722,486
28,000 Dupont EI de Nemours & Co............... 06/05/98 5.460 27,983,013
98,623 Enterprise Funding Corp................. 06/08/98-06/19/98 5.500-5.520 98,412,245
150,000 General Electric Capital Corp........... 08/19/98 5.380 148,229,083
69,000 General Motors Acceptance Corp.......... 06/03/98 5.500 68,978,917
73,379 Receivables Capital Corp................ 06/17/98-07/23/98 5.510-5.520 73,140,715
312,482 Trident Capital Finance Inc............. 06/03/98-08/07/98 5.520-5.530 311,964,497
290,208 Windmill Funding Corp................... 06/03/98-06/24/98 5.510-5.530 289,536,717
---------------
TOTAL COMMERCIAL PAPER -- DOMESTIC...... 1,815,026,997
---------------
COMMERCIAL PAPER -- FOREIGN (6.7%)
182,500 Banque et Caisse D' Epargne............. 06/09/98-08/12/98 5.380-5.510 180,846,206
22,500 Barclays Funding........................ 06/17/98 5.500 22,445,000
25,000 Caisse D' Amortissement................. 08/03/98 5.370 24,765,063
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
May 31, 1998 (unaudited)
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
COMMERCIAL PAPER -- FOREIGN (CONTINUED)
<C> <S> <C> <C> <C>
$ 50,000 Commonwealth Bank of Australia (Series
A)..................................... 07/20/98 5.400% $ 49,631,819
157,000 Diageo PLC.............................. 07/06/98-07/24/98 5.440-5.490 156,094,217
50,000 Halifax Building Society................ 06/17/98 5.480 49,878,222
---------------
TOTAL COMMERCIAL PAPER -- FOREIGN....... 483,660,527
---------------
FLOATING RATE NOTES (37.2%)(V)
38,000 American Express Centurion Bank, (resets
monthly to one month LIBOR - 6 basis
points, due 05/07/99).................. 06/08/98(a) 5.592 38,000,000
50,000 American Express Centurion Bank, (resets
monthly to one month LIBOR - 6 basis
points, due 05/10/99).................. 06/10/98(a) 5.592 50,000,000
50,000 American Express Centurion Bank, (resets
monthly to one month LIBOR - 6 basis
points, due 06/18/99).................. 06/18/98(a) 5.596 50,000,000
25,000 American Express Centurion Bank, (resets
daily to one month LIBOR +5 basis
points, due 09/16/98).................. 06/01/98(a) 5.706 25,008,025
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).................. 06/10/98(a) 5.615 27,798,317
100,000 Asset Backed Securities Investment
Trust, Series 1997-C, (resets monthly
to one month LIBOR, due 06/15/98)
(144A)................................. 06/15/98(a) 5.656 100,000,000
50,000 Asset Backed Securities Investment
Trust, Series 1997-E, Class N, (resets
monthly to one month LIBOR, due
08/17/98) (144A)....................... 06/15/98(a) 5.656 50,000,000
100,000 BankBoston Corp., (resets daily to Fed
Funds rate +5 basis points, due
04/08/99).............................. 06/01/98(a) 5.450 99,958,420
64,000 Bankers Trust, (resets daily to Fed
Funds rate +5 basis points, due
07/07/98).............................. 06/01/98(a) 5.550 63,993,290
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
May 31, 1998 (unaudited)
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
FLOATING RATE NOTES (CONTINUED)
<C> <S> <C> <C> <C>
$ 100,000 Bayerische Landesbank, (resets monthly
to one month LIBOR
- 10 basis points, due 06/26/98)....... 06/26/98(a) 5.558% $ 99,994,672
50,000 Corestates Bank, (resets monthly to one
month LIBOR - 5.5 basis points, due
04/20/99).............................. 06/20/98(a) 5.647 50,000,000
100,000 Corestates Bank, (resets monthly to one
month LIBOR - 5.5 basis points, due
05/07/99).............................. 06/08/98(a) 5.597 100,000,000
15,000 Corestates Bank, (resets monthly to one
month LIBOR - 5.5 basis points, due
05/14/99).............................. 06/14/98(a) 5.601 15,000,000
50,000 Corestates Bank, (resets monthly to one
month LIBOR +3 basis points, due
04/21/99).............................. 06/21/98(a) 5.678 50,000,000
25,000 FCC National Bank, (resets monthly to
one month LIBOR
- 12 basis points, due 07/02/98)....... 06/02/98(a) 5.536 24,998,520
35,000 FCC National Bank, (resets daily to Fed
Funds rate +20 basis points, due
07/23/98).............................. 06/01/98(a) 5.888 35,003,891
5,000 First USA Bank, (resets quarterly to
three month LIBOR +30 basis points, due
07/29/98).............................. 07/16/98(a) 5.988 5,002,614
15,000 First USA Bank, (resets quarterly to
three month LIBOR +30 basis points, due
09/03/98).............................. 06/17/98(a) 5.984 15,013,552
16,000 Ford Motor Credit, (resets daily to Fed
Funds rate +45 basis points, due
04/19/99).............................. 06/01/98(a) 6.138 16,046,798
91,000 General Electric Capital Corp., (resets
daily to Prime rate - 289 basis points,
due 05/04/99).......................... 06/01/98(a) 5.610 91,000,000
112,592 Greentree Financial Corp., (resets
monthly to one month LIBOR +3 basis
points, due 11/15/98).................. 06/15/98(a) 5.686 112,566,639
43,000 Household Finance Corp., (resets
quarterly to three month LIBOR - 12
basis points, due 03/30/99)............ 06/30/98(a) 5.591 42,974,187
200,000 Key Bank, (resets daily to Prime rate -
295 basis points, due 02/24/99)........ 06/01/98(a) 5.550 199,900,142
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
May 31, 1998 (unaudited)
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
FLOATING RATE NOTES (CONTINUED)
<C> <S> <C> <C> <C>
$ 65,000 Key Bank, (resets daily to Fed Funds
rate +4.5 basis points, due
04/16/99).............................. 06/01/98(a) 6.138% $ 64,962,932
135,101 Liquid Asset Backed Securities Trust,
Series 1997-2, (resets monthly to one
month LIBOR, due 06/30/98) (144A)...... 06/30/98(a) 5.656 135,101,368
187,036 Money Store Equity Trust, Series
1997-A36, (resets monthly to one month
LIBOR +3 basis points, due 11/15/98)... 06/15/98(a) 5.686 187,028,986
94,622 Natwest Asset Trust Securities, Series
R-13/14A, (resets monthly to one month
LIBOR +2 basis points, due 10/15/01)
(144A)................................. 06/15/98(a) 5.676 94,622,000
66,500 Old Kent Bank, (resets daily to Prime
rate - 285 basis points, due
11/04/98).............................. 06/01/98(a) 5.650 66,500,000
50,000 PNC Bank, N.A., (resets daily to Fed
Funds rate +7 basis points, due
06/04/98).............................. 06/01/98(a) 5.758 49,999,775
200,000 PNC Bank, N.A., (resets daily to Prime
rate - 290 basis points, due
01/19/99).............................. 06/01/98(a) 5.600 199,968,478
100,000 Racers 97-MM-8-6, (resets monthly to one
month LIBOR
- 2 basis points, due 08/28/98)
(144A)................................. 06/28/98(a) 5.632 99,997,655
245,000 Societe Generale, (resets monthly to one
month LIBOR +8.5 basis points, due
05/26/99).............................. 06/26/98(a) 5.563 244,833,801
161,500 Triangle Funding Ltd. Series 1997-1,
(resets quarterly to three month LIBOR,
due 11/15/98) (144A)................... 07/15/98(a) 5.687 161,496,451
---------------
TOTAL FLOATING RATE NOTES............... 2,666,770,513
---------------
TAXABLE MUNICIPALS (1.3%)(V)
44,200 Jacksonville Health Facility Hospital,
(resets weekly, due 08/15/14).......... 06/03/98(a) 5.650 44,200,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
Schedule of Investments (continued)
May 31, 1998 (unaudited)
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
TAXABLE MUNICIPALS (CONTINUED)
<C> <S> <C> <C> <C>
$ 39,240 Sacramento County, (resets quarterly to
three month LIBOR, due 08/15/14)....... 08/14/98(a) 5.699% $ 39,236,968
6,200 Wake Forest University, (resets weekly,
due 07/01/17), LOC Wachovia Bank....... 06/09/98(a) 5.600% 6,200,000
---------------
TOTAL TAXABLE MUNICIPALS................ 89,636,968
---------------
TIME DEPOSITS -- DOMESTIC (3.9%)
276,343 Suntrust Bank........................... 06/01/98 5.687 276,343,000
---------------
TIME DEPOSITS -- FOREIGN (13.7%)
325,000 Bank of Montreal........................ 06/01/98 5.687-5.718 325,000,000
125,000 Bank of Nova Scotia..................... 06/01/98 5.687 125,000,000
150,000 Bayerische Vereinsbank.................. 06/01/98 5.687 150,000,000
231,848 Credit Agricole Grand Cayman............ 06/01/98 5.687 231,848,000
150,000 Westdeutsche Landesbank................. 06/01/98 5.687 150,000,000
---------------
TOTAL TIME DEPOSITS -- FOREIGN.......... 981,848,000
---------------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE (99.7%).......................... 7,145,670,875
OTHER ASSETS IN EXCESS OF LIABILITIES (0.3%)................................... 21,485,558
---------------
NET ASSETS (100.0%)............................................................ $ 7,167,156,433
---------------
---------------
</TABLE>
(a) The date listed under the heading maturity date represents an optional
tender date or the next interest rate reset date. The final maturity date
is indicated in the security description.
(v) Rate shown reflects current rate on variable or floating rate instrument
or instrument with step coupon rate.
144A -- Securities restricted for resale to Qualified Institutional Buyers.
LOC -- Letter of Credit
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at amortized cost and value $7,145,670,875
Interest receivable 28,459,621
Prepaid trustees' fees 2,573
Prepaid expenses and other assets 7,425
--------------
Total assets 7,174,140,494
--------------
LIABILITIES
Payable to custodian 6,042,748
Advisory fee payable 621,913
Administrative services fee payable 155,082
Custody fee payable 108,454
Administration fee payable 13,424
Fund services fee payable 5,278
Accrued expenses 37,162
--------------
Total liabilities 6,984,061
--------------
NET ASSETS
Applicable to investors' beneficial interests $7,167,156,433
--------------
--------------
</TABLE>
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the six months ended May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest income $156,414,646
EXPENSES
Advisory fee $3,222,153
Administrative services fee 804,085
Custodian fees and expenses 363,162
Fund services fee 79,660
Administration fee 54,547
Trustees' fees and expenses 38,019
Miscellaneous 51,977
---------
Total expenses 4,613,603
-----------
NET INVESTMENT INCOME 151,801,043
NET REALIZED LOSS ON INVESTMENTS (10,308)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $151,790,735
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
MAY 31, 1998 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1997
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income $ 151,801,043 $ 220,786,337
Net realized loss on investments (10,308) (105,748)
----------------- -----------------
Net increase in net assets resulting from
operations 151,790,735 220,680,589
----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 22,499,826,610 22,011,079,297
Withdrawals (19,804,106,719) (21,760,363,996)
----------------- -----------------
Net increase from investors' transactions 2,695,719,891 250,715,301
----------------- -----------------
Total increase in net assets 2,847,510,626 471,395,890
NET ASSETS
Beginning of fiscal period 4,319,645,807 3,848,249,917
----------------- -----------------
End of fiscal period $ 7,167,156,433 $ 4,319,645,807
----------------- -----------------
----------------- -----------------
</TABLE>
- ----------------------------------------------------------------------
SUPPLEMENTARY DATA
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX
MONTHS FOR THE PERIOD
ENDED FOR THE FISCAL YEAR ENDED NOVEMBER JULY 12, 1993
MAY 31, 30, (COMMENCEMENT OF
1998 ----------------------------------- OPERATIONS) TO
(UNAUDITED) 1997 1996 1995 1994 NOVEMBER 30, 1993
------- ------- -------- ---- ------- -----------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.17%(a) 0.18% 0.19% 0.19% 0.20% 0.19%(a)
Net investment income 5.57%(a) 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>
- ------------------------
(a) Annualized
(b) Less than 0.01%
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
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 on November 4, 1992. The
Portfolio's investment objective is to maximize current income and maintain a
high level of liquidity. The Portfolio commenced operations on July 12, 1993.
The Declaration of Trust permits the Trustees to issue an unlimited number of
beneficial interests in the Portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the Portfolio:
a) Investments are valued at amortized cost which approximates market value.
The amortized cost method of valuation values a security at its cost at the time
of purchase and thereafter assumes a constant amortization to maturity of any
discount or premium, 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
17
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
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 six months ended May 31, 1998, this fee amounted to $3,222,153.
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 six months ended May
31, 1998, the fee for these services amounted to $54,547.
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
18
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
May 31, 1998 (unaudited)
- ----------------------------------------------------------------------
Master Portfolios, other investors in the Master Portfolios for which Morgan
provides similar services, and J.P. Morgan Series Trust. For the six months
ended May 31, 1998, the fee for these services amounted to $804,085.
In addition, Morgan has agreed to reimburse the Portfolio to the extent
necessary to maintain the total operating expenses of the Portfolio at no more
than 0.20% of the average daily net assets of the Portfolio through March 31,
1999. For the six months ended May 31, 1998, 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 services amounted to $79,660 for the
six months ended May 31, 1998.
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 $16,700.
19
<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
