MANAGERS INTERNATIONAL EQUITY FUND
MANAGERS EMERGING MARKETS EQUITY FUND
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SEMI-ANNUAL REPORT
JUNE 30, 1998
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WHERE LEADING MONEY MANAGERS CONVERGE
<PAGE>
MANAGERS INTERNATIONAL EQUITY FUND
MANAGERS EMERGING MARKETS EQUITY FUND
Semi-Annual Report
June 30, 1998
(unaudited)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Begins
on Page
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<S> <C>
President's Message.................................. 1
The Managers Funds Performance....................... 5
Complete performance table for all of The
Managers Funds as of June 30, 1998
Summary of Industry Weightings and Country
Allocations.................................... 6
Side by side comparison of the Funds'
industry breakdown
Schedules of Portfolio Investments................... 8
Detailed portfolio listings by security type
and industry sector, as valued at June 30, 1998
Statements of Assets and Liabilities................. 17
Fund balance sheets, Net Asset Value (NAV) per
share computation and cumulative undistributed
amounts
Statements of Operations............................. 18
Detail of sources of income, fund expenses, and
realized and unrealized gains (losses)
during the period
Statements of Changes in Net Assets.................. 19
Detail of changes in fund assets and
distributions to shareholders for the past
two periods
Financial Highlights................................. 20
Historical net asset values, distributions,
total returns, expense ratios, turnover
ratios and net assets
Notes to Financial Statements........................ 22
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
[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
1
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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 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.
During the first quarter of 1998, most foreign equity markets
appreciated, rebounding sharply from the later half of 1997, as a result of
the perceived stabilization of the crisis in the Far East along with low
interest rates, low inflation and easy monetary policies in Japan and Europe.
The smaller Far Eastern markets such as Thailand, South Korea,
Philippines and Malaysia, which crashed during the second half of 1997,
bounced back in mid-January, rising 59%, 54%, 30% and 28%, respectively, in
U.S. Dollars. The Indonesian market also rebounded, however, because its
currency continued to deteriorate, the net return was negative. In the
developed markets, European stocks charged to their best quarterly returns
of the Nineties. Given relatively mild depreciation of European currencies,
the returns for European market averages were virtually all firmly in double
digits for the first quarter. The developed Far Eastern markets moved
higher on average but only slightly. The Japanese and Hong Kong markets
rose only 3% in U.S. Dollar terms, while Australian stocks rose 6% on
average.
During the second quarter, however, foreign equities' performances
were sharply divided along continental lines. European stocks continued
to rise as the economies in the region exhibited moderate growth with low
inflation and the individual companies benefited from restructuring and
technology based productivity increases. In addition, most European
currencies rose slightly versus the U.S. Dollar during the second quarter,
thus adding to returns for U.S. based investors. Finnish stocks led the
way, rising almost 60% in both local and U.S. Dollar terms for the six-month
period. The Morgan Stanley Capital International (MSCI) Europe Index
finished with a return of 26.5% in U.S. Dollars for the first half of 1998.
2
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Far Eastern markets reversed and deteriorated in the second quarter as
investors have come to realize that there are no quick or painless remedies
to the economic problems in the region. At the heart of the problem is
Japan which, with its gross domestic product declining for two consecutive
quarters, officially slipped into recession in the first quarter. The
smaller Pacific markets, which obviously have their own serious problems,
cannot export their way out of trouble because their chief trading partner,
Japan, cannot generate demand. Additionally, the severe drop in the price
of Yen is forcing the price of Japanese exports down, making it very
difficult for the smaller Far Eastern markets to compete without devaluing
their own currencies. It has become a vicious cycle. The MSCI Far East
Index returned -8.9% in U.S. Dollars for the second quarter and -6.4% for
the six month period.
Given the significant differences between the performance of developed
and emerging markets during the first half of 1998 the performance of each
of the Funds presented in this report varied greatly. Consistent
performance relative to defined benchmarks and comparable peers is one of
foremost goals of our investment strategy. We are pleased to report that
both Funds' returns relative to appropriate benchmarks and peers were within
our expectations.
The Managers International Equity Fund returned 17.4% during the six
months ended June 30, 1998, slightly outperforming the MSCI - Europe
Australia Far East Index (MSCI-EAFE). During the first quarter, when most
all markets rose, the Fund underperformed slightly. However, during the
second quarter the Fund's heavy emphasis on large, multinational companies
with improving operational efficiencies was beneficial, and the Fund mildly
outperformed.
On February 9, 1998 we launched the Managers Emerging Markets Equity
Fund. Although this has been an extremely difficult period for investment
in the emerging markets, we are certain that there are legitimate and
profitable investment opportunities in these markets. The Fund combines
two complementary approaches to investment in the emerging markets executed
by individuals with extensive experience analyzing developing markets
economies and companies.
From the inception date through June 30, 1998, the Fund returned
- -15.5%. During the same period the MSCI - Emerging Markets Free Index
(MSCI-EMF) returned -17.6%. At the end of the period, the portfolio was
allocated with roughly one third of the investments in Latin America, one
third in Asian markets and the remaining third in Europe and Africa.
Because of a large cash inflow to the Fund on the final day of the period,
the schedule of investments shows a large portion of the Fund in cash.
This is not a tactical allocation, but rather a temporary aberration. It
is our intent to maintain a reasonably full equity exposure in the
emerging markets.
3
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Due to its increased assets and number of shareholders, the Managers
Emerging Markets Equity Fund now has an NASD ticker symbol, which is MEMEX.
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 -- International Equity Funds
MANAGERS MANAGERS
INTERNATIONAL EQUITY EMERGING MARKETS EQUITY
FUND FUND
-------------------- -----------------------
% OF % OF
FUND FUND
---- ----
<S> <C> <C> <C>
1. Credit Suisse Telecomm
Group 2.1 Brasileiras SA* 3.3
2. Viag AG* 2.1 National Bank of
Greece SA 2.9
3. Axa* 2.0 Bank Leumi Le-Israel 2.7
4. Hoeschst AG* 1.9 JCI Limited 2.7
5. Nestle SA* 1.7 Companhia Energetica 2.3
6. Allianz AG* 1.5 Efes Sinai Yatrim
Hldg AS 1.9
7. Elf Aquitaine SA 1.5 BEC World Public Co. 1.9
8. Unilever PLC* 1.4 Aksigorta AS 1.8
9. SAP AG 1.4 Cemex SA 1.8
10. Nippon Tele + YPF Sociedad
Tele Corp* 1.3 Anonima 1.8
</TABLE>
[FN]
*denotes security held by both managers
</FN>
<TABLE>
<CAPTION>
REGIONAL EQUITY ALLOCATION*
MANAGERS MANAGERS
INTERNATIONAL EMERGING MARKETS
EQUITY FUND EQUITY FUND
------------- ----------------
<S> <C> <C> <C>
Europe 76.0% Latin America 32.5%
Pacific (Developed) 16.6% Asia 33.3%
North America 5.3% Europe 20.9%
Emerging Markets 2.1% Africa 13.3%
</TABLE>
[FN]
*percentage of equity investments
</FN>
4
<PAGE>
THE MANAGERS FUNDS 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 Fun 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>
5
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THE MANAGERS FUNDS
SUMMARY OF INDUSTRY WEIGHTINGS (unaudited)
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<TABLE>
<CAPTION>
MANAGERS MANAGERS
INTERNATIONAL EMERGING MARKETS
MAJOR SECTORS EQUITY FUND* EQUITY FUND*
- ------------- ------------- --------------
<S> <C> <C>
Basic Materials 12.0% 4.1%
Capital Goods 4.9 1.4
Communication Services 5.0 13.3
Conglomerates 1.4 1.9
Consumer Cyclicals 13.1 0.9
Consumer Staples 8.8 17.8
Energy 7.3 9.4
Financials 26.0 21.1
Health Care 4.5 2.1
Technology 1.9 7.2
Transportation 2.2 -
Utilities 5.4 15.3
Other 7.5 5.5
</TABLE>
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[FN]
* As a percent of total investments.
</FN>
6
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THE MANAGERS FUNDS
SUMMARY OF COUNTRY ALLOCATIONS RELATIVE TO MSCI INDEXES (unaudited)
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<TABLE>
<CAPTION>
MANAGERS
MANAGERS EMERGING MSCI
INTERNATIONAL MSCI MARKETS EM
COUNTRY EQUITY EAFE COUNTRY EQUITY FREE
ALLOCATION FUND* INDEX ALLOCATION FUND INDEX
- ------------------------------- ----- ------------------------------
<S> <C> <C> <C> <C> <C>
United Kingdom 17.7% 22.4% Brazil 19.6% 16.6%
Germany 17.7 11.5 South Africa 11.5 11.9
France 12.8 9.6 Turkey 9.6 3.3
Japan 11.2 20.6 Mexico 7.2 12.1
Switzerland 10.5 7.9 Korea 5.0 2.0
Sweden 5.7 3.2 Thailand 4.9 1.3
Netherlands 4.3 5.8 Greece 4.4 5.0
U.S. 3.2 0.0 Israel 4.1 3.6
Italy 3.2 4.6 India 3.8 6.5
Australia 2.6 2.3 Philippines 3.5 1.6
Hong Kong 2.3 1.7 Taiwan 3.3 9.4
Spain 2.2 3.3 Argentina 2.6 5.0
Canada 2.1 0.0 Hungary 2.2 1.8
Brazil 0.9 0.0 Russia 2.2 2.9
Denmark 0.7 1.0 Chile 2.2 4.6
Finland 0.6 1.0 Indonesia 1.8 0.9
Argentina 0.5 0.0 Egypt 1.8 0.0
Austria 0.3 0.4 Malaysia 1.5 5.0
Malaysia 0.3 0.5 Poland 1.4 0.7
South Africa 0.3 0.0 Czech Republic 1.1 1.3
Chile 0.3 0.0 Venezuela 0.8 1.0
Singapore 0.2 0.5 Pakistan 0.0 0.4
Ghana 0.2 0.0 Jordan 0.0 0.2
China 0.1 0.0 Peru 0.0 1.3
Korea 0.1 0.0 China 0.0 0.7
Panama 0.0 0.0 Colombia 0.0 0.8
Norway 0.0 0.6 Sri Lanka 0.0 0.1
New Zealand 0.0 0.2 United States 5.5 0.0
Belgium 0.0 1.8
Indonesia 0.0 0.0
Ireland 0.0 0.5
Portugal 0.0 0.6
</TABLE>
[FN]
* - numbers reported are the percentage of total investments
</FN>
7
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MANAGERS INTERNATIONAL 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 STOCK - 91.5%
BASIC MATERIALS - 11.9%
AGA AB, Series B, Switzerland Certificate (Sweden) 220,900 $3,378,862
Alcan Aluminium Ltd. (Canada) 63 1,720
Anglo American Platinum Corp. Ltd, ADR (USA)* 58,676 642,543
Aracruz Celulose SA, Sponsored ADR (Brazil) 87,400 999,637
Ashanti Goldfields Co. Ltd. Sponsored GDR (Ghana) 116,513 946,668
BASF AG (Germany) 97,737 4,647,175
Bayer AG (Germany) 80,660 4,177,351
BOC Group PLC (UK) 178,234 2,429,882
Ciba Specialty Chemicals AG, Registered
(Switzerland) 23,696 3,047,478
Clariant AG, Registered (Switzerland) 5,732 3,781,462
Compagnie De Saint-Gobain (France) 25,170 4,667,048
Companhia Vale do Rio Doce, Sponsored ADR (Brazil) 86,200 1,751,412
Hoechst AG (Germany) 200,267 10,077,479
Holderbank Financiere Glaris AG, Bearer Shares
(Switzerland) 2,628 3,349,429
Impala Platinum Holdings, ADR (South Africa) 30,200 258,929
Imperial Chemical Industries PLC (UK) 197,400 3,170,740
Kymmene OY (Finland) 37,140 1,023,187
Quimica Minera Chile S.A., Sponsored ADR (Chile)* 43,100 1,443,850
Rhodia SA (France)* 6,092 169,891
<CAPTION>
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SHARES VALUE
- -----------------------------------------------------------------------------
BASIC MATERIALS (continued)
Rhone Poulenc SA, Class A (France) 108,982 6,146,991
RTZ Corp. PLC (UK) 75,190 847,427
Stillwater Mining Co. (USA)* 45,500 1,234,187
Sumitomo Metal Mining Co. (Japan) 224,000 912,071
Thyssen AG (Germany) 10,400 2,646,927
Usinas Siderurgicas de Minas Gerais,
Sponsored ADR (a) 69,400 349,214
WMC Ltd. (Australia) 36,500 110,115
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TOTAL BASIC MATERIALS 62,211,675
----------
CAPITAL GOODS - 4.9%
ABB AG, Class A (Sweden) 252,100 3,571,627
Alcatel Alsthom (France) 28,700 5,843,773
General Electric Co. PLC (UK) 571,700 4,930,341
Heidelberger Druckmaschinen AG (Germany)* 7,691 637,558
Mannesmann AG (Germany) 32,300 3,322,327
Matsushita Electric Works, Ltd. (Japan) 176,000 1,425,617
Minebea Co., Ltd. (Japan) 199,000 1,987,553
Omron Corp. (Japan) 90,000 1,379,909
Schneider SA (France) 30,678 2,446,344
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TOTAL CAPITAL GOODS 25,545,049
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COMMUNICATION SERVICE - 5.0%
BCE, Inc. (Canada) 65,300 2,800,061
British Telecommunications PLC (UK) 226,000 2,792,406
Deutsche Telekom AG (Germany) 40,904 1,120,440
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
8
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MANAGERS INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (unaudited)
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<TABLE>
<CAPTION>
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SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
Deutsche Telekom AG, Sponsored ADR (Germany) 38,073 1,047,008
Koninklijke KPN NV (Netherlands) 51,100 1,968,334
Nippon Telegraph & Telephone Corp. (Japan) 793 6,595,429
Telecom Italia SpA (Italy) 727,200 3,521,911
Telefonica De Espana (Spain) 135,927 6,284,463
----------
TOTAL COMMUNICATION SERVICE 26,130,052
----------
CONGLOMERATES - 1.4%
Citic Pacific Ltd. (Hong Kong) 466,000 823,980
Hutchison Whampoa Ltd. (Hong Kong) 351,000 1,852,852
Suez Lyonnaise des Eaux (France) 20,900 3,439,718
Sumitomo Corp. (Japan) 15,000 72,359
Swire Pacific Ltd. (Hong Kong) 270,800 1,022,315
----------
TOTAL CONGLOMERATES 7,211,224
----------
CONSUMER CYCLICALS - 13.0%
Daimler-Benz AG (Germany) 38,400 3,779,423
Electrolux AB, Series B (Sweden) 179,700 3,086,622
Fiat SpA (Italy) 394,350 1,726,773
Flughafen Wien AG (Austria) 35,255 1,692,240
Genting Berhad (Malaysia) 707,900 1,279,260
Granada Group PLC (UK) 193,700 3,564,098
Honda Motor Co. (Japan) 67,000 2,393,722
Ito-Yokado Co., Ltd. (Japan) 13,000 613,944
<CAPTION>
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SHARES VALUE
- ---------------------------------------------------------------------------
CONSUMER CYCLICALS (continued)
LucasVarity PLC (UK) 794,000 3,155,266
Matsushita Electric Industries (Japan) 400,000 6,451,146
Metro AG (Germany) 59,870 3,618,526
Michelin, Class B, Registered (France) 83,253 4,805,944
Mirror Group PLC (UK) 268,700 1,013,945
Neuenburger, Schweizerische Allgemeine
Versicherungs, Gesellschaft (Switzerland) 1,570 1,215,109
Nintendo Corp. Ltd. (Japan) 45,400 4,219,209
Philips Electronics N.V. (Netherlands) 46,900 3,945,345
PSA Peugeot Citroen (France) 14,837 3,190,383
SAP AG (Germany) 10,488 7,124,012
Societe Generale de Surveillance
Holding SA (Switzerland) 1,521 2,582,375
Sony Corp. (Japan) 74,800 6,464,598
Volvo AB, Series B (Sweden) 67,900 2,021,847
----------
TOTAL CONSUMER CYCLICALS 67,943,787
----------
CONSUMER STAPLES - 8.7%
Asahi Breweries Ltd. (Japan) 76,000 961,886
Cadbury Schweppes PLC (UK) 171,793 2,660,466
Canal Plus (France) 7,181 3,211,296
Carlton Communications PLC (UK) 338,800 3,026,465
Companhia Cervejaria Brahma (Brazil) 104,600 1,307,500
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
9
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MANAGERS INTERNATIONAL 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>
CONSUMER STAPLES (continued)
Diageo PLC (UK) 356,777 4,229,541
EMI Group PLC (UK) 212,800 1,861,836
Fosters Brewing Group Ltd. (Australia) 1,024,960 2,417,726
Heineken NV (Netherlands) 94,050 3,696,763
Molson Cos. Ltd. (Canada) 128,900 2,343,158
Nestle SA, Registered (Switerzland) 4,197 8,996,541
Reuters Group PLC (UK) 297,834 3,406,460
Unilever PLC (UK) 693,600 7,388,703
----------
TOTAL CONSUMER STAPLES 45,508,341
----------
ENERGY - 7.2%
British Petroleum Company PLC (UK) 401,000 5,851,864
Broken Hill Proprietary Co. Ltd. (Australia) 559,067 4,737,106
Elf Aquitaine SA (France) 54,900 7,718,709
Ente Nazionale Idrocarburi SpA (Italy) 488,100 3,200,430
RWE AG (Germany) 106,100 6,283,224
Sasol Ltd., Sponsored ADR (South Africa) 93,634 550,100
Shell Transport & Trading Co., Registered (UK) 482,489 3,399,682
Woodside Petroleum Ltd. (Australia) 682,350 3,413,963
YPF Sociedad Anonima, Class D,
Sponsored ADR (Argentina) 90,700 2,726,669
----------
TOTAL ENERGY 37,881,747
----------
<CAPTION>
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SHARES VALUE
- ---------------------------------------------------------------------------
FINANCIALS - 25.7%
Aegon NV (Netherlands) 59,864 5,212,608
Allianz AG (Germany)* 412 136,271
Allianz AG, (Vinkuliert) (Germany) 23,373 7,795,536
Allianz AG, warrants (Germany)* 22,989 133,659
Argentaria SA (Spain) 217,200 4,872,305
Assurances Generales de France (France) 22,989 1,300,848
AXA-UAP (France) 94,168 10,591,700
Banque Nationale de Paris (France) 56,800 4,641,183
Bayerische Vereinsbank AG (Germany) 53,809 4,565,015
BHF-Bank AG (Germany) 29,377 1,119,077
Cheung Kong (Holdings) Ltd. (Hong Kong) 175,000 860,545
Commerzbank AG (Germany) 35,309 1,345,049
Credito Italiano (Italy) 374,500 1,961,290
CS Holding AG (Switerland) 49,292 10,985,967
Daiwa Securities Co., Ltd. (Japan) 384,000 1,657,973
Dresdner Bank AG (Germany) 63,300 3,422,191
EXEL Ltd. (USA) 41,200 3,205,875
HSBC Holding PLC, registered (Hong Kong) 205,861 5,034,933
ING Groep N.V. (Netherlands)* 53,760 3,522,731
Istituto Bancario San Paolo di Torino (Italy) 255,800 3,692,849
Istituto Nazionale delle Assicurazioni (Italy) 614,600 1,746,858
Kerry Properties Ltd. (Hong Kong) 784,479 577,121
Merita Ltd., Class A (Finland) 270,700 1,787,858
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
10
<PAGE>
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MANAGERS INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (unaudited)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
FINANCIALS (continued)
Munchener Rueckvericherungs-Gesellschaft,
Registered (Germany) 10,635 5,283,740
National Westminster Bank PLC (UK) 278,100 4,973,120
New World Development Co., Ltd. (Hong Kong) 367,504 711,482
Nichiei Co. (Japan) 13,000 887,539
Nomura Securities Co. Ltd. (Japan) 168,000 1,962,248
Nordbanken Holding AB (Sweden) 179,900 1,319,477
Orix Corp. Ltd. (Japan) 57,800 3,916,873
Promise Co. (Japan) 70,580 2,914,673
Prudential Corp. PLC (UK) 219,400 2,892,192
Schweizerische Rueckversicherungs,
Registered (Switzerland) 1,507 3,817,508
Shohkoh Fund (Japan) 4,300 1,060,461
Skandia Forsakrings AB (Sweden) 225,350 3,220,900
Sumitomo Trust and Banking Co. (Japan) 713,000 3,197,078
Svenska Handelsbanken, Class A (Sweden) 98,200 4,555,416
Unidanmark A/S, Class A (Denmark) 40,400 3,634,500
United OverSeas Bank Ltd. (Singapore) 350,000 1,090,504
Westpac Banking Corporation Ltd. (Australia) 345,000 2,109,463
Wharf (Holdings) Ltd. (Hong Kong) 872,000 860,971
Zurich Versicherun, Registered (Switerland) 10,025 6,408,374
----------
TOTAL FINANCIALS 134,985,961
----------
<CAPTION>
- ---------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------
HEALTH CARE - 4.4%
Astra AB, Series A (Sweden) 132,146 2,700,577
Astra AB, Series B (Sweden) 238,000 4,744,483
Novartis AG, Bearer (Switzerland) 1,428 2,382,043
Novartis AG, Registered (Switzerland) 3,249 5,415,358
Ono Pharmaceutical Co., Ltd. (Japan) 45,000 1,080,495
Schering AG (Germany) 16,719 1,969,995
SmithKline Beecham Unit PLC (UK) 215,988 2,638,046
Yamanouchi Pharmaceutical Co., Ltd. (Japan) 104,000 2,173,718
----------
TOTAL HEALTH CARE 23,104,715
----------
TECHNOLOGY - 1.8%
British Aerospace PLC (UK) 809,404 6,203,210
Canon Inc. (Japan) 52,000 1,184,639
Ricoh Company Ltd. (Japan) 204,000 2,155,522
Samsung Display Devices Co. (South Korea) 1,525 41,096
Samsung Electronics Ltd., GDR representing
1/2 non-voting shares (a) (South Korea)* 30,381 258,239
Samsung Electronics Ltd., GDR representing
1/2 voting shares (a) (South Korea)* 1,422 22,574
----------
TOTAL TECHNOLOGY 9,865,280
----------
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
11
<PAGE>
- ---------------------------------------------------------------------------
MANAGERS INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (unaudited)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 2.2%
Canadian National Railway Co. (Canada) 62,000 3,293,750
Canadian Pacific, Ltd. (Canada) 75,400 2,121,273
Konink Nedlloyd Groep NV (Netherlands) 80,500 1,635,543
Railtrack Group PLC (UK) 133,625 3,277,540
TNT Post Group NV (Netherlands)* 51,100 1,307,195
----------
TOTAL TRANSPORTATION 11,635,301
----------
UTILITIES - 5.3%
CIE Generale Des Eaux (France) 28,700 6,128,604
Huaneng Power International, Inc., ADR
(China)* 50,300 675,906
National Grid Group PLC (UK) 536,738 3,620,613
National Power PLC (UK) 305,400 2,875,985
Veba AG (Germany) 56,168 3,779,415
Viag AG (Germany) 15,618 10,755,805
----------
TOTAL UTILITIES 27,836,328
----------
TOTAL COMMON STOCKS
(cost $371,974,561) 479,859,460
-----------
<CAPTION>
- ---------------------------------------------------------------------------
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------------------
CONVERTIBLE BONDS - 0.1%
National Grid Co.,
4.250%, 2/17/08 (UK)
(cost $172,027)GBP 106,000 201,988
----------
<CAPTION>
- --------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------
U.S. TREASURY OBLIGATION - 2.2%
U. S. Treasury Bond,
6.125%, 08/15/07
(cost $11,432,960) $ 11,065,000 $11,512,801
----------
FOREIGN GOVERNMENT/AGENCY
OBLIGATIONS - 1.6%
United Kingdom Treasury,
8.500%, 07/16/07 (UK)
(cost $8,148,542) GBP 4,275,000 8,398,265
----------
<CAPTION>
- ---------------------------------------------------------------------------
SHARES
- ---------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 3.6%
OTHER INVESTMENT COMPANIES - 1.1%
Calvert Cash Reserves
Institutional Prime Fund, 5.59%*** 3,065,130 3,065,130
JPM Prime Money Market Fund, 5.47%*** 2,659,848 2,659,848
----------
TOTAL OTHER INVESTMENT COMPANIES 5,724,978
----------
<CAPTION>
- ---------------------------------------------------------------------------
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.5%
State Street Bank & Trust Co., dated
06/30/98, due 07/01/98, 5.750%,
total to be received $13,137,098
(secured by $13,150,000 USTN 5.375%,
due 01/31/00 market value $13,113,022),
at cost $13,135,000 13,135,000
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $18,859,978) 18,859,978
----------
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
12
<PAGE>
- ---------------------------------------------------------------------------
MANAGERS INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (concluded)
June 30, 1998 (unaudited)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS - 99.0%
(cost $410,588,068) 518,832,492
OTHER ASSETS, LESS LIABILITIES - 1.0% 5,391,612
----------
NET ASSETS - 100.0% $524,224,104
============
</TABLE>
[FN]
Note: Based on the cost of investments of $413,249,755 for federal income
tax purposes at June 30, 1998, the aggregate gross unrealized
appreciation and depreciation was $129,266,499 and $23,683,762,
respectively, resulting in net unrealized appreciation of
investments of $105,582,737.
* Non-income-producing security.
*** 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.
(a) Security exempt from registration under Rule 144Aof the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified buyers. At June 30, 1998, the
value of these securities amounted to $630,026, or 0.1% of net assets.
- ----------------------------------------------------------------------------
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.
The accompanying notes are an integral part of these financial statements.
</FN>
13
<PAGE>
- ---------------------------------------------------------------------------
MANAGERS EMERGING MARKETS EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1998 (unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 63.4%
BASIC MATERIALS - 2.9%
Cementos de Mexico, Sponsored ADR (Mexico) 315 $ 2,354
Cemex S.A., Series B, Sponsored ADR (Mexico)* 10,500 95,812
Pohang Iron & Steel Company Ltd. (South Korea) 2,000 56,519
-------
TOTAL BASIC MATERIALS 154,685
-------
CAPITAL GOODS - 1.0%
Barlow Ltd. (South Africa) 7,000 36,889
New World Infrastructure, Ltd. (Hong Kong) 15,000 17,230
-------
TOTAL CAPITAL GOODS 54,119
-------
COMMUNICATION SERVICE - 8.2%
Compania Anonima Nacional Telefonos de Venezuela,
Sponsored ADR (Venezuela) 1,100 27,362
Mahanagar Telephone Nigam, Ltd., GDR (India)* 6,200 62,930
Philippine Long Distance Telephone Co.
(Philippines) 3,700 84,293
Philippine Long Distance Telephone Co.,
Sponsored ADR (Philippines) 1,800 40,725
Telecomunicacoes Brasileiras S.A.,
Sponsored ADR (Brazil) 1,620 176,884
Videsh Sanchar Nigam, Ltd.,
Sponsored GDR (a) (India)* 3,800 38,760
-------
TOTAL COMMUNICATION SERVICE 430,954
-------
<CAPTION>
- ---------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------
CONGLOMERATES - 1.3%
Citic Pacific Ltd. (Hong Kong) 28,000 49,510
Shanghai Industrial Holdings, Ltd. (Hong Kong) 9,000 21,199
-------
TOTAL CONGLOMERATES 70,709
-------
CONSUMER CYCLICALS - 0.6%
Bajaj Auto, Ltd., Sponsored GDR (a) (India) 2,600 33,930
-------
CONSUMER STAPLES - 12.6%
Al-Ahram Beverage Co. S.A.E., GDR (a) (Egypt) 2,000 62,600
BEC World PLC (Thailand) 26,200 99,957
Ceske Radiokomunikace, Sponsored GDR (a)
(Czech Republic)* 1,775 38,029
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar, Sponsored ADR (Brazil) 4,000 89,500
Efes Sinai Yatirim Holdings A.S.,
Sponsored GDR (Turkey) 5,100 102,000
Fomento Economico Mexica, UBD (Mexico)* 2,900 90,368
Molope Foods Ltd. (South Africa)* 60,000 71,838
Panamerican Beverages, Inc., Class A (Mexico) 2,200 69,163
Standard Foods Taiwan, Ltd., GDR (a) (Taiwan)* 3,600 40,500
-------
TOTAL CONSUMER STAPLES 663,955
-------
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
14
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS EMERGING MARKETS EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
June 30, 1998 (unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
ENERGY - 6.7%
AO Tatneft, Sponsored ADR (Russia)* 2,050 15,580
Engen Ltd. (South Africa) 16,000 44,249
Gulf Indonesia Resources, Ltd. (Indonesia)* 5,500 63,250
Petroleo Brasileiro S.A., Sponsored ADR
(Brazil)* 3,100 57,592
Sasol Limited (South Africa) 13,500 78,200
YPF Sociedad Anonima, Class D,
Sponsored ADR (Argentina) 3,100 93,194
-------
TOTAL ENERGY 352,065
-------
FINANCIALS - 14.9%
Aksigorta AS (Turkey) 1,500,000 97,165
Bank Leumi Le-Israel (Israel)* 72,000 143,549
Haci Omer Sabanci Holdings AS (Turkey) 1,321,000 81,849
JCI Limited (South Africa) 27,000 140,464
Korea Fund, Closed End Fund (USA) 12,000 76,500
National Bank of Greece SA, Sponsored GDR
(Greece) 6,000 154,200
NBS Boland Group Ltd. (South Africa) 26,000 33,760
Yapi ve Kredi Bankasi AS (Turkey) 2,300,000 58,731
-------
TOTAL FINANCIALS 786,218
-------
HEALTH CARE - 1.5%
Richter Gedeon Rt., Sponsored GDR (Hungary)* 1,000 79,000
-------
TECHNOLOGY - 5.1%
China Telecom Ltd., Sponsored ADR (Hong Kong)* 1,000 34,563
<CAPTION>
- ---------------------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------------
TECHNOLOGY (continued)
China Telecom Ltd., (Hong Kong)* 38,000 65,965
Prokom Software, Sponsored GDR (a) (Poland) 3,000 51,000
Samsung Electronics Ltd., GDR representing
1/2 voting Shares, (a) (South Korea)* 2,708 42,922
Synnex Technology International Corp.,
GDR (a) (Taiwan) 2,000 33,600
Yageo Corp., GDR (a) (Taiwan) 4,900 40,670
-------
TOTAL TECHNOLOGY 268,720
-------
UTILITIES - 8.6%
Chilectra SA, Sponsored ADR (Chile)* 3,600 77,040
Companhia Energetica de Minas Gerais S.A.,
Sponsored ADR (Brazil) 3,794 119,729
Companhia Paranaense de Energia-Copel,
Sponsored ADR (Brazil) 7,000 64,750
Electricity Generating Authority (Thailand)* 47,000 72,950
Unified Energy Systems, GDR (Russia)* 3,300 42,570
Unified Energy Systems, Sponsored ADR (Russia)* 1,500 19,350
YTL Power International Berhad (Malaysia)* 100,000 54,454
-------
TOTAL UTILITIES 450,843
-------
TOTAL COMMON STOCKS
(cost $4,117,107) 3,345,198
----------
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
15
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS EMERGING MARKETS EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (concluded)
June 30, 1998 (unaudited)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCK - 3.5%
COMMUNICATION SERVICE - 1.2%
Telecomunicacoes de Rio de Janeiro S.A. (Brazil) 480,000 $36,377
Telerj Celular SA, Preferred B (Brazil)* 480,000 28,305
-------
TOTAL COMMUNICATION SERVICE 64,682
-------
UTILITIES - 2.3%
Companhia de Gas de Sao Paulo (Brazil) 1,500,000 84,951
Companhia Paranaense de Energia-Copel,
Preferred B (Brazil)* 4,000,000 37,352
-------
TOTAL UTILITIES 122,303
-------
TOTAL PREFERRED STOCKS
(cost $226,091) 186,985
-------
SHORT-TERM INVESTMENTS - 3.9%
OTHER INVESTMENT COMPANIES
JPM Prime Money Market Fund, 5.47%**
(cost $206,489) 206,489 206,489
-------
TOTAL INVESTMENTS - 70.8%
(cost $4,549,687) 3,738,672
OTHER ASSETS, LESS LIABILITIES - 29.2% 1,545,463
---------
NET ASSETS - 100.0% $5,284,135
==========
</TABLE>
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
[FN]
Note: Based on the cost of investments of $4,549,687 for federal income tax
purposes at June 30, 1998, the aggregate gross unrealized appreciation
and depreciation was $49,490 and $860,505, respectively, resulting in
net unrealized depreciation of investments of $811,015.
* Non-income-producing security.
** 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.
(a) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified buyers. At June 30, 1998,
the value of these securities amounted to $339,089, or 6.4% of net
assets.
- -------------------------------------------------------------------------
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.
The accompanying notes are an integral part of these financial statements.
</FN>
16
<PAGE>
- ---------------------------------------------------------------------------
THE MANAGERS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION> MANAGERS
MANAGERS EMERGING
INTERNATIONAL MARKETS
EQUITY EQUITY
FUND FUND
------------- ---------
<S> <C> <C>
ASSETS:
Investments at value* $518,832,492 $3,738,672
Cash 749 1,421,130
Foreign currency (cost $7,852,870 and $22,247) 7,845,656 21,945
Receivable for investments sold 6,306,318 --
Receivable for Fund shares sold 2,003,245 91,415
Receivable for open forward foreign
currency contracts 12,323,776 --
Deferred organization expense -- 9,777
Dividends, interest and other receivables 1,322,326 5,011
Foreign withholding tax receivable 677,361 --
Prepaid expenses 55,361 10,940
------------ ---------
Total assets 549,367,284 5,298,890
------------ ---------
LIABILITIES:
Payable for Fund shares repurchased 6,848,605 962
Payable for investments purchased 5,092,056 --
Payable for open forward foreign
currency contracts 12,340,287 --
Payable for closed forward foreign
currency contracts 30,141 --
Accrued expenses:
Investment advisory and management fees 385,392 3,056
Administrative fees 107,053 879
Other 339,646 9,858
----------- ---------
Total Liabilities 25,143,180 14,755
----------- ---------
NET ASSETS $524,224,104 $5,284,135
=========== =========
Shares outstanding 9,798,505 625,024
=========== =========
Net asset value, offering and redemption
price per share $53.50 $8.45
====== =====
NET ASSETS REPRESENT:
Paid-in capital $401,806,467 $6,069,801
Undistributed net investment income 2,333,409 12,654
Accumulated net realized gain from investments 11,892,190 13,262
Net unrealized appreciation (depreciation) of
investments, foreign currency contracts
and translations 108,192,038 (811,582)
----------- ---------
NET ASSETS $524,224,104 $5,284,135
=========== =========
* Investments at cost $62,469,339 $4,549,687
=========== =========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
17
<PAGE>
- ---------------------------------------------------------------------------
THE MANAGERS FUNDS
STATEMENT OF OPERATIONS
For the six months ended June 30, 1998 (unaudited)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGERS
MANAGERS EMERGING
INTERNATIONAL MARKETS
EQUITY EQUITY
FUND FUND*
------------- ---------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income $ 7,295,825 $ 33,488
Interest income 1,330,457 6,845
Foreign withholding tax (865,391) (1,391)
------------ ---------
Total investment income 7,760,891 38,942
------------ ---------
EXPENSES:
Investment advisory and management fees 2,139,013 20,473
Administrative fees 594,170 3,441
Custodian fees 328,851 4,252
Transfer agent fees 168,192 875
Audit fees 24,436 7,940
Registration fees 32,845 8,791
Insurance 15,850 --
Trustee fees 7,958 63
Legal fees 14,153 71
Amortization of organization expense -- 811
Miscellaneous expenses 28,614 232
------------ ---------
Total expenses before reduction/waiver 3,354,082 46,949
Less: Fee waiver -- (17,417)
Expense reduction (897) (3,244)
------------ ---------
Net Expenses 3,353,185 26,288
------------ ---------
Net investment income 4,407,706 12,654
------------ ---------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investment
transactions 7,500,840 21,290
Net realized gain (loss) on foreign
currency contracts and translations 255,330 (8,028)
Net unrealized appreciation (depreciation)
of investments 62,827,185 (811,316)
Net unrealized appreciation (depreciation)
from foreign currency translations 116,994 (266)
------------ ---------
Net realized and unrealized gain (loss) 70,700,349 (798,320)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 75,108,055 (785,666)
============ =========
</TABLE>
[FN]
* Commencement of operations was February 9, 1998.
The accompanying notes are an integral part of these financial statements.
</FN>
18
<PAGE>
- ---------------------------------------------------------------------------
THE MANAGERS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGERS
EMERGING
MANAGERS INTERNATIONAL MARKETS
EQUITY FUND EQUITY FUND
---------------------- ----------
FOR THE FOR THE PERIOD
SIX MONTHS ENDED FOR THE FEBRUARY 9, 1998*
JUNE 30,1998 YEAR ENDED TO JUNE 30,1998
(UNAUDITED) DECEMBER 31, 1997 (UNAUDITED)
--------------- ------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 4,407,706 $ 2,504,920 $ 12,654
Net realized gain on
investments and foreign
currency transactions 7,756,170 21,873,797 13,262
Net unrealized appreciation
(depreciation) of investments
and foreign currency
translations 62,944,179 7,660,345 (811,582)
---------- ------------ ----------
Net increase (decrease) in
net assets resulting from
operations 75,108,055 32,039,062 (785,666)
---------- ------------ ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (5,097,844) --
From net realized gain on
investments -- (16,879,378) --
---------- ------------ ----------
Total distributions to
shareholders -- (21,977,222) --
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 297,449,795 306,117,193 6,413,122
Net asset value of shares
issued in connection with
reinvestment of dividends
and distributions -- 17,953,124 --
Cost of shares repurchased (234,957,904) (217,076,415) (343,321)
----------- ----------- ---------
Net increase from
capital share
transactions 62,491,891 106,993,902 6,069,801
----------- ----------- ---------
Total increase in net assets 137,599,946 117,055,742 5,284,135
NET ASSETS:
Beginning of period 386,624,158 269,568,416 --
----------- ----------- ---------
End of period $524,224,104 $386,624,158 $5,284,135
=========== =========== =========
End of period undistributed
(overdistributed) net
investment income $2,333,409 ($2,074,297) $12,654
=========== =========== =========
- ----------------------------------------------------------------------------
SHARE TRANSACTIONS:
Sale of shares 5,949,488 6,507,742 662,259
Shares issued in connection
with reinvestment of
dividends and distributions -- 399,903 --
Shares repurchased (4,633,153) (4,595,434) (37,235)
----------- ----------- ---------
Net increase in shares 1,316,335 2,312,211 625,024
=========== =========== =========
</TABLE>
[FN]
* Commencement of operations.
The accompanying notes are an integral part of these financial statements.
</FN>
19
<PAGE>
- ----------------------------------------------------------------------------
MANAGERS INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each period
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
JUNE 30, 1998 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1997 1996 1995(a) 1994 1993
---------- ---- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $45.58 $43.69 $39.97 $36.35 $35.92 $26.52
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.48 0.42 0.32 0.31 0.16 0.22
Net realized and
unrealized gain
on investments 7.44 4.27 4.76 5.59 0.56 9.88
Total from investment
operations 7.92 4.69 5.08 5.90 0.72 10.10
LESS DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income --- (0.65) (0.33) (0.13) (0.08) (0.29)
In excess of net
investment income --- --- --- --- --- (0.11)
From net realized gain
on investments --- (2.15) (1.03) (2.15) --- (0.30)
In excess of net realized
gain on investments --- --- --- --- (0.21) ---
------- ------ ------ ------ ------ ------
Total distributions
to shareholders --- (2.80) (1.36) (2.28) (0.29) (0.70)
------- ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $53.50 $45.58 $43.69 $39.97 $36.35 $35.92
====== ====== ====== ====== ====== ======
- ---------------------------------------------------------------------------
Total Return 17.38%(c) 10.83% 12.77% 16.24% 2.00% 38.20%
===========================================================================
Ratio of net expenses
to average net assets 1.41%(b)(d)1.45%(b)1.53% 1.58% 1.49% 1.47%
Ratio of net investment
income to average
net assets 1.85%(d) 0.75% 0.97% 0.80% 0.60% 0.78%
Portfolio turnover 19%(c) 37% 30% 73% 22% 46%
Net assets at end of
period (000's omitted) $524,224 $386,624$269,568 $140,488 $86,924 $62,273
===========================================================================
</TABLE>
[FN]
(a) Calculated using the weighted average shares outstanding during the year.
(b) The Fund has entered into an arrangement with one or more third-par ty
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 1.41% and 1.45%,
respectively. (See Note 1c of Notes to Financial Statements).
(c) Not annualized.
(d) Annualized.
</FN>
20
<PAGE>
- ---------------------------------------------------------------------------
MANAGERS EMERGING MARKETS EQUITY FUND
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout the period
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 9, 1998*
TO JUNE 30, 1998
(UNAUDITED)
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.02
Net realized and unrealized gain
on investments (1.57)
------
Total from investment operations (1.55)
------
NET ASSET VALUE, END OF PERIOD $8.45
======
- ----------------------------------------------------------------------------
Total Return (b) (15.50)%(c)
============================================================================
Ratio of net expenses to average net assets 1.48%(d)
Ratio of net investment income to average
net assets 0.71%(d)
Portfolio turnover 39%(c)
Net assets at end of period (000's omitted) $5,284
============================================================================
Expense Waiver/Reduction(a)
- --------------------------
Ratio of total expenses to average net assets 2.64%(d)
Ratio of total investment income to average
net assets 1.87%(d)
============================================================================
</TABLE>
[FN]
(a) Ratio information assuming no waiver of investment advisory
and management fees and no reduction of custodian expenses,
due to credits received for uninvested overnight cash balances.
(See Note 1c of Notes to Financial Statements).
(b) The total return would have been lower had certain expenses
not been reduced during the period shown.
(c) Not annualized.
(d) Annualized.
* Commencement of operations
</FN>
21
<PAGE>
- ---------------------------------------------------------------------------
THE MANAGERS FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited)
- ---------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
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 International Equity Fund ("International
Equity") and Managers Emerging Markets Equity Fund ("Emerging Markets
Equity"), collectively the "Funds."
The Funds' financial statements are prepared in accordance with
generally accepted accounting principles which require the use of
management's 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 establishedadopted 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 amortiza-
22
<PAGE>
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------------------------------------------------------------------
tion of discounts and premiums when 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.
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 International Equity and Emerging Markets Equity Funds' custody expenses
were reduced by $897 and $3,244, respectively, under these arrangements.
(D) DIVIDENDS AND DISTRIBUTIONS
Dividends resulting from net investment income, if any, normally will
be declared and paid Fund annually for Managers Managers International
Equity and Emerging Markets Equity Funds Fund. 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) ORGANIZATION COSTS (EMERGING MARKETS EQUITY FUND ONLY)
Organization and registration related costs of $10,588 have been
deferred and are being amortized over a period of time not to exceed 60
months from the commencement of operations on February 9, 1998.
(F) 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.
23
<PAGE>
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------------------------------------------------------------------
(G) FEDERAL TAXES
Each 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 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.
(H) 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: International Equity Fund- one owns __28%;
and Emerging Markets Equity - two collectively own__ 55%.
(I) 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 TRANSACTIONS 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 man-
24
<PAGE>
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------------------------------------------------------------------
agers 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 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 6June 30, 1998 (for the
period February 9, 1998, commencement of operations, to June 30, 1998 with
respect to the Emerging Markets Equity Fund), were as follows:
<TABLE>
INVESTMENT ADVISORY
FUND AND MANAGEMENT FEE
- ---- -------------------
<S> <C>
International
Equity 0.90%
Emerging
Markets Equity 1.15%*
- ----------------------------------------------------------
</TABLE>
[FN]
*For the period February 9, 1998 (commencement of operations) to
June 8, 1998, the Investment Manager voluntarily waived all of its
investment advisory and management fee, amounting to $17,417.
</FN>
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 6June 30, 1998 (for the period February 9, 1998, commencement
of operations, to June 30, 1998 with respect to the Emerging Markets Equity
Fund), 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 (for the period February 9, 1998,
commencement of operations, to June 30, 1998 with respect to the Emerging
Markets Equity Fund) were as follows:
25
<PAGE>
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM U.S. GOVERNMENT
SECURITIES SECURITIES ONLY
---------- ---------------
FUND PURCHASES SALES PURCHASES SALES
- ---- --------- ----- --------- -----
<S> <C> <C> <C> <C>
International
Equity $166,722,261 $82,874,521 $11,436,715 --
Emerging
Markets Equity 5,508,988 1,187,080 -- --
</TABLE>
(4) PORTFOLIO SECURITIES LOANED
Each 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.
(5) FORWARD FOREIGN CURRENCY CONTRACTS (INTERNATIONAL EQUITY ONLY)
During the six months ended June 30, 1998, Managers International
Equity Fund invested in forward foreign currency exchange contracts. These
investments may involve greater market risk than the amounts disclosed in
the Fund's financial statements.
A forward foreign currency exchange contract is an agreement between
the Fund and another party to buy or sell a currency at a set price at a
future date. The market value of the contract will fluctuate with changes
in currency exchange rates. The contract is marked-to-market daily, and the
change in market value is recorded as an unrealized gain or loss. Gain or
loss on the purchase or sale of contracts having the same settlement date,
amount and counterparty is realized on the date of offset, otherwise gain
or loss is realized on settlement date.
The Fund may invest in non-U.S. dollar denominated instruments subject
to limitations, and enter into forward foreign currency exchange contracts
to facilitate transactions in foreign securities and protect against a
possible loss resulting from an adverse change in the relationship between
the U.S. dollar and such foreign currency. Risks may arise upon entering
into these contracts from the potential inability of counterparties to meet
the terms of their contracts and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar.
26
<PAGE>
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------------------------------------------------------------------
Open forward foreign currency exchange contracts for International
Equity at June 30, 1998 were as follows:
<TABLE>
<CAPTION>
CURRENT UNREALIZED
SETTLEMENT VALUE (IN GAIN/LOSS (IN
FOREIGN CURRENCY DATE U.S. DOLLARS) U.S. DOLLARS)
- ---------------- --------- ------------ -------------
<S> <C> <C> <C>
BUY CONTRACTS
Italian Lira 07/06/98 $777,370 ($767)
-------- ------
TOTAL BUY CONTRACTS
(Payable Amount $778,137) $777,370 ($767)
======== ======
SELL CONTRACTS
British Pound 07/01/98 $620,517 ($744)
Japanese Yen 07/01/98 179,469 (4,935)
Austrian Schilling 07/02/98 2,652 (9)
Australian Dollar 07/02/98 39,062 (419)
British Pound 07/02/98 656,279 (1,507)
Deutsche Mark 07/02/98 128,630 103
French Franc 07/02/98 208,641 (835)
Hong Kong Dollar 07/02/98 13,624 4
Italian Lira 07/02/98 854,832 843
Japanese Yen 07/02/98 138,485 (1,194)
Netherlands Guilder 07/02/98 35,410 (143)
Swedish Krona 07/02/98 6,067 (25)
Swiss Franc 07/02/98 130,025 (742)
Deutsche Mark 07/31/98 2,246,939 18,273
French Franc 07/31/98 584,987 449
Deutsche Mark 08/17/98 5,716,531 (24,863)
---------- --------
TOTAL SELL CONTRACTS
(Receivable Amount $10,746,420) $10,762,164 ($15,744)
========== ========
</TABLE>
27
<PAGE>
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
- ---------------------------------------------------------------------------
(6) FOREIGN SECURITIES
There are certain considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Funds' investments in emerging market
countries may involve greater risks than investments in more developed
markets. These risks of investing in foreign and emerging markets may
include foreign currency exchange rate fluctuations, perceived credit risks,
adverse political and economic developments and possible adverse foreign
government intervention. Securities issued in these markets may be less
liquid, subject to government ownership controls, delayed settlements, and
their prices may be more volatile than those of comparable securities in
the United States.
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
