Managers Intermediate Mortgage Fund
Schedule of Portfolio Investments
June 30, 1999(unaudited)
Shares Value
U.S. Government and Agency Obligations - 99.4%
FNMA, 6.500%, 04/01/28 1,229,409 $1,185,986
FNMA, 6.500%, 04/01/29 721,481 695,998
FNMA, 6.000%, 03/01/29 225,022 211,378
FNMA, 6.500%, 09/01/10 271,222 268,084
FNMA, 7.000%, 11/01/23 19,432 19,238
GNMA, 6.500%, 07/15/28 145,304 139,718
GNMA, 7.000%, 06/15/29 149,985 147,969
GNMA, 7.000%, 11/15/27 1,465,618 1,445,920
GNMA, 7.000%, 11/15/28 281,711 277,925
GNMA, 7.000%, 12/15/27 62,659 61,817
GNMA, 8.000%, 02/15/27 395,186 406,421
GNMA, 8.000%, 04/15/27 398,858 410,198
GNMA, 8.000%, 05/15/26 18,852 19,388
GNMA, 8.000%, 06/15/26 16,857 17,336
GNMA, 8.000%, 07/15/26 19,701 20,261
GNMA, 8.000%, 07/15/27 435,740 448,128
GNMA, 8.000%, 10/15/26 235,817 242,521
GNMA, 8.000%, 10/15/26 400,655 412,046
____________
Total U.S. Government and Agency
(cost $6,572,871) 6,430,332
____________
Other Investment Companies - 0.1%
JPM Prime Money Market Fund, 4.62%*
(cost $380) 380 380
____________
Total Investments - 99.5%
(cost $6,573,251) 6,430,712
Other Assets, less Liabilities - 0.5% 31,745
____________
Net Assets - 100.0% $6,462,457
____________ ____________
Note: Based on the cost of investments of $6,573,251 for federal income tax
purposes
at June 30, 1999, the aggregate gross unrealized appreciation and depreciation
was
$2,710 and $145,249, respectively, resulting in net unrealized depreciation of
investments of $142,539.
* Yield shown for this investment company represents the June 30, 1999,
seven-day
average yield, which refers to the sum of the previous seven days' dividends
paid,
expressed as an annual percentage.
Managers
The Managers Funds Intermediate
Statements of Assets and Liabilities Mortgage
June 30, 1999 (unaudited) Fund
Assets:
Investments at value* $ 6,430,712
Cash 55,230
Receivable for Fund shares sold 46
Interest receivable 38,314
Total assets 6,524,302
Liabilities:
Payable for Fund shares repurchased 42,535
Accrued expenses:
Investment advisory and management fees 1,445
Administrative fees 5,000
Other 12,865
Total liabilities 61,845
Net Assets $ 6,462,457
Shares outstanding 425,444
Net asset value, offering and redemption
price per share $15.19
Net Assets Represent:
Paid-in capital $ 86,434,302
Undistributed net investment income 53,632
Accumulated net realized loss from investments and
futures contracts (79,882,938)
Net unrealized appreciation of investments and (142,539)
Net Assets $ 6,462,457
* Investments at cost $ 6,573,251
The accompanying notes are an integral part of these financial statements.
Managers
The Managers Funds Intermediate
Statements of Operations Mortgage
For the six months ended June 30, 1999 (unaudited) Fund
Interest Income: $ 346,549
Expenses:
Investment advisory and management fees 25,165
Administrative fees 18,981
Custodian fees 7,364
Audit fees 2,505
Transfer agent fees 10,152
Registration fees 10,014
Reports to shareholders 6,613
Insurance 1,839
Legal fees 2,167
Trustee fees 277
Miscellaneous expenses 684
Total expenses before reduction/waiver 85,761
Less: fee waiver (27,961)
Expense reduction (269)
Net expenses 57,531
Net investment income 289,018
Net Realized and Unrealized Loss:
Net realized loss on investment transactions (129,918)
Net unrealized depreciation of investments and (258,333)
Net realized and unrealized loss (388,251)
Net Decrease in Net Assets Resulting
from Operations $ (99,233)
The accompanying notes are an integral part of these financial statements.
The Managers Funds Managers Intermediate
Statements of Changes in Net Assets Mortgage Fund
For the six
months ended For the
June 30, 1999 year ended
(unaudited) December 31, 1998
Increase (Decrease) in Net Assets
From Operations:
Net investment income 289,018 809,075
Net realized gain (loss) on investments (129,918)
386,983
Net unrealized (depreciation) of investments
(258,333) (257,335)
Net increase (decrease) in net assets
resulting from operations (99,233)
938,723
Distributions to Shareholders:
From net investment income (235,385)
(824,004)
From Capital Share Transactions:
Proceeds from sale of shares 1,407,900
1,407,921
Net asset value of shares issued in connection
with reinvestment of dividends 172,382
616,249
Cost of shares repurchased (6,332,670)
(12,189,755)
Net decrease from capital
share transactions (4,752,388)
(10,165,585)
Total decrease in net assets (5,087,006)
(10,050,866)
Net Assets:
Beginning of period 11,549,463 21,600,329
End of period 6,462,457 11,549,463
End of period undistributed
net investment income 53,632 --
Share Transactions:
Sale of shares 90,315 90,308
Shares issued in connection with reinvestment
of dividends 11,109 39,630
Shares repurchased (415,729) (782,433)
Net decrease in shares (314,305)
(652,495)
Managers Intermediate Mortgage Fund
Financial Highlights
For a share of capital stock outstanding thruoghout each period
For the
six months
ended
June 30, 1999 Year ended December 31,
(unaudited) 1998 1997
1996 1995 1994
Net Asset Value,
Beginning of Period $15.61 $15.51 $15.17
$15.54 $14.20 $20.65
Income from
Investment Operations:
Net investment income 0.44 0.81 0.87 0.87 0.93 1.52
Net realized and unrealized
gain (loss) on investments (0.55) 0.11 0.33 (0.38)
1.45 (6.56)
Total from investment
operations (0.11) 0.92 1.20 0.49
2.38 (5.04)
Less Distributions to
Shareholders from:
Net investment income (0.31) (0.82) (0.86)
(0.86) (1.03) (1.41)
In excess of net investment
income -- --
-- -- (0.01)
--
Total distributions to
shareholders (0.31)
(0.82) (0.86) (0.86)
(1.04) (1.41)
Net Asset Value,
End of Period $15.19 $15.61
$15.51 $15.17 $15.54
$14.20
Total Return (0.73)%(c)(d)
6.08%(d) 8.23% 3.33%
17.27% (25.00)%(d)
Ratio of net expenses
to average net assets 1.03%(b)
1.05% 1.20% 1.19% 1.17%
0.85%
Ratio of net investment income
to average net assets 5.17%(b)
5.06% 5.76% 5.78% 6.33%
8.37%
Portfolio turnover 229%(c) 652%
317% 232% 506% 240%
Net assets at end of period
(000's omitted) $6,462
$11,549 $21,600 $24,846
$40,022 $55,986
Expense Waiver/Reduction (a)
Ratio of total expenses to
average net assets 1.53%(b)
1.24% N/A N/A N/A
0.92%
Ratio of net investment
income to average net assets 4.66%(b) 4.86% N/A N/A
N/A 8.30%
(a) Ratio information assuming no waiver of investment
advisory and management fees and/or administrative fees and no
reduction of custodian expenses in effect for the periods
presented, if applicable. (See Note 1c and 2 of Notes to
Financial Statements.)
(b) Annualized.
(c) Not annualized.
(d) The total return would have been lower had certain
expenses not been reduced during the periods shown.
(1) Summary of Significant
Accounting Policies
The Managers Funds (the "Trust") is a no-load, open-
end, management investment company, organized as a
Massachusetts business trust, and registered under
the Investment Company Act of 1940 (the "1940 Act"),
as amended. Currently the Trust is comprised of 10
investment series. Included in this report is
Managers Intermediate Mortgage Fund ("Intermediate
Mortgage"),
Intermediate Mortgage's financial statements are
prepared in accordance with generally accepted
accounting principles, which require management to
make estimates and assumptions that affect the
reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at
the date of the financial statements and the reported
amounts of income and expenses during the reporting
periods. Actual results could differ from those
estimates. The following is a summary of significant
accounting policies followed by the Funds in the
preparation of their financial statements:
(a) Valuation of Investments
Fixed-income securities are valued based upon
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. 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. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized
cost which approximates market. Securities for which
market quotations are not readily available are
valued at fair value, as determined in good faith and
pursuant to procedures adopted by the Board of
Trustees.
Investments in certain mortgage-backed, stripped
mortgage-backed, preferred stocks, convertible
securities and other debt securities not traded on an
organized market, are valued on the basis of
valuations provided by dealers or by a pricing
service which uses information with respect to
transactions in such securities, various
relationships between securities and yield to
maturity in determining value.
(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
Interest income is determined on the basis of
interest accrued. Discounts and premiums are
amortized using the effective interest method when
required for Federal income tax purposes. Dividend
income is recorded on the ex-dividend date. Non-cash
dividends included in dividend income, if any, are
recorded 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 relative net
assets or number of shareholders.
Intermediate Mortgage 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, 1999,
Intermediate Mortgage's custody expenses were reduced
by $269, under these arrangements.
(d) Dividends and Distributions
Dividends resulting from net investment income
normally will be declared monthly for Intermediate
Mortgage. These dividends normally will be payable on
the third to the last business day of the month.
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
income tax regulations which may differ from
generally accepted accounting principles. These
differences are primarily due to differing treatments
for mortgage-backed securities, option transactions,
market discount and foreign currency transactions.
Permanent book and tax basis differences, if any,
relating to shareholder distributions will result in
reclassifications to paid-in capital.
(e) Repurchase Agreements
Intermediate Mortgage 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.
(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 federal income or excise tax provision
is included in the accompanying financial statements.
(h) Capital Loss Carryovers
As of December 31, 1998, Intermediate Mortgage had
accumulated net realized capital loss carryovers from
securities transactions for Federal income tax
purposes as shown in the following chart. These
amounts may be used to offset realized capital gains,
if any, through December 31, 2006.
Capital Loss
Fund Amount Expires
Intermediate Mortgage $58,714,139 2002
20,796,333 2003
224,035 2004
(i) Capital Stock
The Trust's Declaration of Trust authorizes each
series of the Trust 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 as of the
ex-dividend date.
At June 30, 1999, certain omnibus accounts held
greater than 10% of the outstanding shares of
Intermediate Mortgage - one owns 33%.
(j) Delayed Delivery Transactions
Intermediate Mortgage may purchase or sell securities
on a when-issued or forward commitment basis. Payment
and delivery may take place a month or more after the
date of the transaction. The price of the underlying
securities and the date when the securities will be
delivered and paid for are fixed at the time the
transaction is negotiated.
Intermediate Mortgage may receive compensation for
interest forgone on entering into delayed delivery
transactions. The Funds identify cash or securities
as segregated in its custodial records with a value
at least equal to the amount of the forward purchase
commitment.
(2) Agreements and Transactions
with Affiliates
Effective April 1, 1999, the Trust entered into a new
Fund Management Agreement under which The Managers
Funds LLC (the "Investment Manager"), formerly The
Managers Funds, L.P. and now a subsidiary of
Affiliated Managers Group, Inc., provides or oversees
investment advisory and management services to
Intermediate Mortgage. The Investment Manager selects
portfolio managers for Intermediate Mortgage (subject
to Trustee approval), allocates assets among
portfolio managers and monitors the portfolio
managers' investment programs and results.
Intermediate Mortgage's investment portfolio is
managed by portfolio managers who serve pursuant to
Portfolio Management Agreements with the Investment
Manager and the Fund. Certain officers of
Intermediate Mortgage are officers of the Investment
Manager.
Investment advisory and management fees are paid
directly by Intermediate Mortgage to The Managers
Funds LLC based on average daily net assets. The
annual investment advisory and management fee rates,
as a percentage of average daily net assets are as
follows:
Investment Advisory
Fund and Management Fee
____ __________________
Intermediate Mortgage 0.45%8
For the six months ended June 30, 1999, the
Investment Manager voluntarily waived a portion of
its investment advisory and management fee, amounting
to 13,981.
Effective April 1, 1999, the Trust entered into a new
Administration and Shareholder Servicing Agreement
under which The Managers Funds LLC serves as each
Fund's administrator (the "Administrator") and is
responsible for all aspects of managing Intermediate
Mortgage's 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
Intermediate Mortgage's shareholders.
For the six months ended June 30, 1999, the
Administrator voluntarily waived its fee based on
each Fund's average daily net assets of 0.25% for
Intermediate Mortgage, amounting to 13,980.
Effective April 1, 1999, the aggregate annual fee
paid to each outside Trustee for serving as a Trustee
of the Trust is $16,000. In addition, the fees that
the Trustees receive for attendance at in-person and
telephonic meetings are $1,000 and $500 per meeting,
respectively. The Trustee fee expense shown in the
financial statements represents Intermediate
Mortgage's allocated portion of the total fees paid
by the Trust.
(3) Purchases and Sales
of Securities
Portfolio purchases and sales of investments,
excluding short-term securities, and of U.S.
government securities, for the six months ended June
30, 1999, were as follows:
Long-Term Securities
Fund Purchases Sales
Intermediate Mortgage $31,281,458, $37,573,229
U.S. Government Securities Only
Fund Purchases Sales
Intermediate Mortgage --- $1,564,014
(4) Risks Associated with
Collateral Mortgage
Obligations ("CMOs")
The net asset value of Funds may be sensitive to
interest rate fluctuations because Intermediate
Mortgage may hold several instruments, including CMOs
and other derivatives, whose values can be
significantly impacted by interest rate movements.
CMOs are obligations collateralized by a portfolio of
mortgages or mortgage-related securities. Payments of
principal and interest on the mortgage are passed
through to the holder of the CMOs on the same
schedule as they are received, although certain
classes of CMOs have priority over others with
respect to the receipt of prepayments on the
mortgages.
Therefore, the investment in CMOs may be subject to a
greater or lesser risk of prepayment than other types
of mortgage-related securities. CMOs may have a
fixed or variable rate of interest.
(6) Forward Commitments
Certain transactions, such as futures and forward
transactions, dollar roll agreements, or purchases of
when-issued or delayed delivery securities may have a
similar effect on a Intermediate Mortgage's net asset
value as if the Fund had created a degree of leverage
in its portfolio. However, if Intermediate Mortgage
enters into such a transaction, the Fund will
establish a segregated account with its Custodian in
which it will maintain cash, U.S. government
securities or other liquid securities equal in value
to its obligations in respect to such transaction.
Securities and other assets held in the segregated
account may not be sold while the transaction is
outstanding, unless other suitable assets are
substituted.
