INTERNATIONAL EQUITY FUND
EMERGING MARKET FUND
Annual Report
December 31, 1999
We pick the talent. You reap the results
INTERNATIONAL EQUITY FUND
EMERGING MARKET FUND
Annual Report
December 31, 1999
TABLE OF CONTENTS
Begins
on Page
Letter to Shareholders............. 1
The Managers Funds Performance..........3
Complete performance table for all of The Managers Funds
As of December 31, 1999
Investment Manager's Comments..........4
Discussion of investment results during the year and
cumulative total return graphs versus relevant indices
Summary of Industry Weightings and Top Ten Holdings..14
Side by side comparison of the Funds' sector breakdown
and top ten holdings
Summary of country Allocations..15
Side by side comparison of the Funds' country breakdown
Schedules of Portfolio Investments..16
Detailed portfolio listings by security trpe and
industry sector, as valued at December 31, 1999
Financial Statements
Statements of Assets and Liabilities..24
Fund balance sheets, Net Asset Value (NAV) per share
computation and Cumulative undistributed amounts
Statements of Operations..25
Detail of sources of income, fund expenses, and realized
and unrealized gains (losses) during the year
Statements of Changes in Net Assets..26
Detail of changes in funds assets and distributions to
shareholders for the past two years
Financial Highlights..27
Historical net assets values, distributions, total
returns, expense ratios, turnover ratios and net assets
Notes to Financial Statements..29
Accounting and distribution policies, details of
agreements and transactions with fund management and
description of certain investment risks
Report of Independent Accountants..33
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.
Dear Fellow Shareholder:
From an investment standpoint, 1999 was
among the most diverse years of the century.
While the NASDAQ Composite Index returned more
than 86% for the year, the largest ever
calendar year return for any broad U.S. stock
index, there were significant portions of the
financial markets that actually diminished in
value during the year. For example, the S&P
500 and the Russell 2000 indices soared to
record highs despite the fact that roughly half
of the stocks in those indices lost value
during the year. Medium and long-term domestic
and international developed markets bonds also
went down in price in 1999 due to a steady rise
in interest rates. Meanwhile, emerging markets
stocks and bonds soared as investors'
confidence in the recovery of these markets
improved.
The performance of the various funds
within The Managers Funds family reflects the
wide divergence of opportunities during 1999
and affirmed that we are indeed providing a
diversified offering of investments. I am
pleased to report that the vast majority of our
Funds met or exceeded our expectations of real
returns and performance relative to our
competitors. In addition, our Funds, when
viewed as a balanced portfolio, provided
exceptional returns this past year; in fact
better than any year in our fifteen-year
history.
We are living in a truly extraordinary
period of economic prosperity. The U.S.
economy continued to grow in 1999, on its way
to becoming the longest and strongest economic
expansion in United States history. This
expansion, like many in the past, is a result
of a virtuous cycle of inter-related factors
such as improvements in productivity, a high
employment rate, low interest rates, a low rate
of inflation, high consumer confidence, a high
rate of consumer spending, a high rate of
business investment and, importantly, a
relatively peaceful planet. What set this
expansion apart are technological and capital
market advances that have enabled businesses to
improve their decision-making and reduce their
risk. Improvements in all aspects of
production have enabled businesses to shorten
the time it takes to bring new ideas to market
and reduce inventories to a fraction of what
was previously necessary. Many businesses have
been able to implement just-in-time inventory
management practices that virtually eliminate
inventory. The obvious advantage to this is
the cost savings, but the more profound effect
on the economy is the reduction of risk.
Business managers do not need to predict the
demand for their products as far into the
future as before. They do not have to purchase
raw materials and begin production schedules
months in advance of expected demand. Thus,
they are much less apt to over-produce or
under-produce, which has typically been a
significant factor in causing boom and bust
economic cycles.
In cases where technology alone cannot
reduce risk, the development of the capital
markets has enabled business managers to
diversify and hedge some of the risks inherent
in their businesses. Global and international
businesses can hedge against the possibility of
currency movements wiping out profits. Farmers
can insure themselves against adverse price
changes in their crops or even adverse weather
conditions. With futures contracts and other
financial instruments, transportation companies
can create for themselves more stable energy
prices. The development of mortgage and asset-
backed securities has enabled financial
institutions to offer more loans without having
to take on more risk. All these developments
have effectively lowered the cost of doing
business, enabled businesses to expand further
and faster than ever before and increased the
available supply of goods and services. Thus,
despite growing demand, prices have remained
somewhat stable and our standard of living has
improved.
Because the virtuous cycle currently
remains in place, most indicators point to
continued prosperity for the U.S. economy.
While the aforementioned developments have
smoothed the business cycle and enabled
businesses to diversify risk, they have also
enabled some participants to take on more risk.
In addition, most of these factors have been
instrumental in increasing competition. While
increased competition is generally good for
consumers and the economy as a whole, it is an
added challenge for business leaders and
investors. It increases the cost of bad
decisions and inefficient operations. As
businesses have become more competitive and
information has become more available,
intelligence and sound judgement has become
more important.
Business leaders and investors are forced
to make quicker, more complex decisions every
day. Investment results in 1999 proved that
despite a broadly healthy economy there can be
a wide disparity between the top tier and the
also-rans. For these reasons, we at The
Managers Funds continue to believe that the
best investment strategy is to identify and
hire experienced investment managers who focus
their energy and demonstrate intelligence,
sound judgment and discipline. Although we
cannot expect to match the exceptional returns
we achieved in 1999 every year, we will always
seek to capitalize on opportunities as they arise.
The following report contains discussions
of each Fund's 1999 performance along with a
listing of the investment portfolios, financial
statements, and the report of independent
accountants. On the following page you'll find
a performance summary for all of The Managers
Funds as of December 31, 1999.
Should you have any questions about this
report, or if you'd like to receive a
Prospectus and additional information,
including fees and expenses, for any of the
other Funds in our family, please feel free to
contact us at 1-800-835-3879, or visit our
website at www.managersfunds.com. As always,
please read the Prospectus carefully before you
invest or send money. The Managers Funds are
distributed by The Managers Funds LLC.
We thank you for your continued
investment in The Managers Funds.
Sincerely,
Peter M. Lebovitz
President
The Managers Funds Performance (unaudited)
All periods ending December 31, 1999
Average Annual Total Returns*
Since Inception
Morningstar
Equity Funds: 1 Year
3 Years 5 Years 10
Years Inception Date
Rating**
Income Equity 4.15% 0.00%
13.96% 0.00% 18.41% 0.00%
12.61% 0.00% 14.45% Oct.
'84 PPP
Capital Appreciation 103.02%
0.00% 53.28% 0.00% 40.43% 0.00%
24.65% 0.00% 21.98% Jun.
'84 PPPPP
Special Equity 54.11% 0.00%
24.33% 0.00% 26.28% 0.00%
18.39% 0.00% 18.02% Jun.
'84 PPPP
International Equity 25.28%
0.00% 16.72% 0.00% 15.83% 0.00% 12.57%
0.00% 14.81% Dec. '85 PPPP
Emerging Markets
Equity 90.06% __
__ __ 22.60%
Feb. '98 N/A
Income Funds:
Short & Intermediate
Bond 2.21% 0.00% 4.45% 0.00% 6.53%
0.00% 6.28% 0.00% 7.79% Jun. '84
PPPP
Bond 3.66% 0.00% 5.74% 0.00%
10.19% 0.00% 8.79% 0.00% 10.28%
Jun. '84 PPPP
Global Bond (9.97)% 2.46%
0.00% 5.97% __ 4.89%
Mar. '94 P
Money Market 4.89% 0.00% 5.16%
0.00% 5.28% 0.00% 4.81% 0.00% 5.82%
Jun. '84 N/A
Past performance is not a guarantee of future
results. Investment returns and principal
value of mutual fund shares will fluctuate so
that the redemption price may be more or less
than the original purchase price. For a
prospectus including fees and expenses, please
visit our website at www.managersfunds.com, or
call The Managers Funds at (800) 835-3879 or
your investment adviser. Read the prospectus
carefully before you invest.
* Total return equals income yield plus
share price change and assumes reinvestment of
all dividends and capital gain distributions.
Returns are net of fees and may reflect fee
waivers or the reimbursement of fund expenses
as described in the prospectus. No adjustment
has been made for taxes payable by shareholders
on their reinvested dividends and capital gain
distributions.
Returns for periods greater than one year
are annualized.
** Morningstar proprietary ratings reflect
risk-adjusted performance through 12/31/99 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 Treasury bill
returns. For the three-, five- and ten-year
periods, respectively, each of the Equity Funds
rated, other than the International Equity
Fund, was rated against 3,487, 2,198 and 788
equity funds, the International Equity Fund was
rated against 1,114, 648 and 133 international
equity funds, and each of the Income Funds was
rated against 1,628, 1,232 and 397 taxable
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.
Managers International Equity Fund (the "Fund"),
managed by The Managers Funds LLC since its
inception in 1985, seeks long-term capital
appreciation through investment in non-U.S.
equity securities. The Managers Funds currently
utilizes two independent sub-advisors who each
manage approximately half of the total portfolio:
William Holzer of Scudder Kemper Investments,
Inc., (formerly Scudder, Stevens & Clark, Inc.)
("Scudder"), hired in December 1989, and John
Reinsberg, of Lazard Asset Management ("Lazard"),
who was hired in January 1995.
The Portfolio Managers
William ("Willie") Holzer can be described as a
"top down" thematic investor. He views the world
as a single global economy as opposed to a
collection of separate country economies. Willie
focuses his efforts by first developing global
investment themes which target the fastest
growing or most profitable segments of the global
economy. Themes are typically long lived, three
or more years, and are developed through the
course of business; discussions with company
managements or government officials, fundamental
and economic analysis, and the tracking of
economic, financial and demographic trends.
Willie then works with the large group of global
securities analysts at Scudder to identify the
companies which will potentially benefit from the
effects of the themes. These companies will
necessarily have attractive fundamentals and
reasonable valuations, along with strong company
management.
Willie also believes that it is important to
distinguish between three types of companies:
Domestic companies are those which produce, sell
and raise capital all in their home country;
International companies are those which produce
at home, but sell their products and raise
capital anywhere in the world; Global companies
are those which produce, sell and raise capital
anywhere. Willie will invest in any of these
types in order to capitalize on a theme, however,
he prefers global companies which generally have
the flexibility and resources to exploit global
trends. Thus, his portfolio tends to be heavily
weighted in large capitalization, multi-national
companies. In addition, his portfolio will tend
to be concentrated in the developed markets, with
only a small portion invested in companies
domiciled in less developed or "emerging"
markets. However, companies in the portfolio,
while domiciled in developed markets, may have
operations or distribution in the emerging
markets. Given the long-term nature of the
themes, his rate of turnover is relatively low
and typically in the 40% to 50% annual range.
John Reinsberg, of Lazard, pursues what is
referred to as a "bottom up" value approach. The
portfolio managers and analysts at Lazard focus
on individual stocks that they believe are
financially productive and inexpensively priced.
In order to correctly determine what is
inexpensive, they analyze the financial
statements in the local language, and refigure
the accounting in order to make comparisons
across countries and industries. This rigorous
accounting validation, performed by a large staff
of multi-lingual analysts is one of the keys to
Lazard's approach.
John and his team visit and analyze the
management and operations of the worthwhile
candidates. In purchasing undervalued securities
it's important to distinguish companies which
will improve their valuation from those which are
likely to stay at low valuations. John's goal is
to find and invest in companies which are
creating value. Value creation can come from
improving operations or distribution channels,
restructuring management, acquisitions,
divestitures, or exploiting new markets.
Country and industry allocation are the result of
stock selection, although John manages the
structure in order to maintain a reasonable
diversification. Given his preference for full
and accurate financial disclosure, John tends to
have only minimal investments in emerging
markets. Although it is improving, financial
recording and accounting practices in less
developed countries are erratic. As is typical
of a value oriented investor, John's portfolio
turnover rate is also relatively low and tends to
be in a range of 20% to 30% annually.
Some thoughts about currencies.
One of the additional risks of investing in
foreign companies is the risk that foreign
currency devaluations will decrease the value of
your investment when translated back to U.S.
Dollars. This risk can also work in reverse and
increase the value of your investment. Currency
movements are no less difficult to predict than
the direction of interest rates; in fact they are
related. One of the benefits of international
investing is the diversification benefit gained
from the difference in return patterns (lower
correlation of returns) that foreign stock
markets have with U.S. stocks. Much of this
differentiation comes from currency movements.
This is a long way of saying that much of the
diversification benefit of international
investing is a result of currency fluctuations.
For this reason, the portfolio managers of the
Fund do not, as a policy, hedge all foreign
currency exposure in the portfolio back to U.S.
Dollars. In fact, both managers use currency
hedges sparingly. Here's why: First, as
previously mentioned, it is difficult to predict
currency movements, and neither manager believes
he can consistently add value by timing
currencies. Secondly, the currency exposure of
the portfolio is not necessarily reflected in the
country allocation. Most of the companies in the
portfolio are global companies that may have
assets in, and certainly derive revenues from a
variety of countries in a variety of currencies.
Hence, determining the appropriate hedge ratio
would be extremely difficult. We and the
managers together believe that the portfolio is
well diversified in currencies, and would not
benefit from a policy of active hedging or
currency management. That said, there are
periods when, if the managers believe there is
particular risk of volatility in a certain
currency, they will use forward foreign exchange
contracts to hedge all or a portion of the
currency exposure.
The Year in Review
The Fund provided a total return of 25.3% during
1999 while the Morgan Stanley Capital
International - Europe Australasia Far East Index
(EAFE) returned 27.0%.
Foreign stocks performed very well in 1999, and
the strength was geographically broad, with
almost all countries participating. Although the
newly created European Currency (Euro) fell in
value by more than 14% relative to the U.S.
Dollar, it can be argued that the unification of
currencies was a success. First of all, there
were no major financial disruptions as a result
of the conversion, and secondly it seems to be
creating a more economically united Europe, as
evidenced by the increasing number of cross-
border mergers during the year. Far Eastern
markets were particularly strong, as they
benefited from a recovery in Japan and stable to
rising currencies. Much of the rise in foreign
stock prices took place in the fourth quarter as
investors began to anticipate few Y2K problems
and celebrate the loose monetary policies leading
up to the year-end. As in the U.S., investors
were especially drawn to technology and
communications companies' stocks during the
fourth quarter.
The Fund performed satisfactorily during the
year, but failed to fully capitalize on the
fourth quarter rally due to a conservative stance
with regards to the highly valued technology and
telecommunications stocks. In a continuation from
1998, the managers added to the portfolio's
positions in Japan throughout the year while
trimming the European holdings. This was
beneficial as Japanese stocks improved during the
first half while the European markets and
currencies were comparatively sluggish. Most of
the added Japanese positions were in sectors
other than technology and communications although
a few of the Fund's best performing positions
were from those sectors. Both managers, for
instance, purchased selective Japanese financial
stocks which benefited from a strengthening yen
and some increased, albeit still-cautious,
investor confidence. Although the banking
institutions performed well, the most profitable
of the financial positions were the securities
companies such as Daiwa Securities and Nikko
Securities, which rose more than 350% during the
year.
While the developed international markets
struggled during the second quarter, the
portfolio's positions in basic materials
producers performed well, as they were buoyed by
a strong recovery of the emerging markets.
Because the Fund is primarily oriented toward
developed markets, its direct exposure to
emerging markets companies is limited.
Approximately half of the Fund's gain for the
year, and most of the benchmark's gain was
accomplished during the fourth quarter as markets
around the globe moved higher in response to
improving economic performance, an increase in
merger activity and strong expectations for
growth in technology and communications
businesses. Thus, the best performing stocks
were high tech and telecom shares such as Japan's
Sony and NTT Mobile Communications, which jumped
98% and 95%, respectively, in the fourth quarter
alone. Likewise, Spain's Telefonica appreciated
58%, and Finland's Sonera Oyj returned a hefty
135% during the fourth quarter. Despite these
gains, the Fund actually underperformed the
benchmark due to a relatively low allocation in
these sectors. Most notably, the Fund did not
own any Nokia shares during the quarter, which
not only surged 100%, but also became Europe's
largest stock by market value during the quarter.
As in the U.S., the international markets
experienced a wide divergence of performance
between growth and value stocks in 1999. While
both of our managers are clearly seeking
companies whose earnings are likely to grow in
the future, their valuation conscious investment
philosophies cause them to be skeptical of the
sky high expectations that are imbedded in the
prices of many growth stocks today. This is not
to suggest that they have or will avoid all of
these stocks, but rather that they have and will
be selective and diversify into undervalued and
low expectations holdings.
Looking Forward
Among the reasons that traditional companies may
have underperformed the "new economy" companies
over the past year and a half could be, as Willie
Holzer notes, that these companies are "caught
between the pincers of technology driven
deflation from above, and from below, the higher
commodity prices that result from both
consolidation amongst raw materials producers and
higher global GDP growth." Thus, he has
positioned his portfolio in somewhat of a
barbell. "At one end, our barbell is predicated
on growth in the technology sector and the
rollout of the internet. At the other end, we
focus on restructuring and consolidation amongst
commodity producers such as oil and mining
companies. We have avoided those sectors and
industries caught in the squeeze described
above."
Going forward, the team at Scudder will seek to
focus the portfolio upon three principal themes.
"The Empowered Consumer," theme seeks to
capitalize on the increasing benefits of
technology to consumers that results in price
arbitrage and more efficient ordering and
delivery systems. Canal Plus, Sony, and recently
added Sonera Oyj are examples of companies within
this theme.
"Virtuality" is a theme targeted to identifying
companies that gain competitive advantage by
retaining their highest value added operations
and outsourcing all other activities. Similar to
these companies are the "Ultimate
Subcontractors," which are companies that are the
lowest cost producers and are thus able to retain
profitability and market share in both expanding
and declining pricing environments.
In addition, the "Darkside Restructuring" theme
remains significant in the portfolio and relevant
as tax reform in Germany and corporate
restructuring in Japan continue to improve global
competitiveness.
At Lazard, John Reinsberg will continue to
concentrate on finding value within individual
stocks with a particular eye toward identifying
corporate change. Given the increased level of
cross border corporate merger and restructuring
activity across all industries, there is plenty
of potential. However, not all restructurings
are good restructurings. As John Reinsberg
recently noted, "for M&A, restructuring and
divestitures to make a difference, they must
ultimately lead to higher sustainable
profitability. Rather than fawning excitement
over the last publicity generating corporate
action, a thorough examination of the individual
companies and agreements is crucial to
determining which actions will produce real
financial productivity."
The Managers International Equity Fund's
cumulative total return is based on the
daily change in net asset value (NAV), and
assumes that all distributions
were reinvested.
The MSCI EAFE Index ("EAFE") is compiled by
Morgan Stanley Capital International. It
consists of over 1000 large, publicly traded
stocks from 20 countries of Europe
Australia and the Far East. The Index assumes
reinvestment of dividends.
This chart compares a hypothetical $10,000
investment made in Managers
International Equity Fund on December 31, 1989,
to a $10,000 investment made in
the EAFE for the same period. Past performance is
not indicative of future
results.
[Line Graph comparing hypothetical $10,000 investment for the past ten years
between the International Equity Fund and the MSCI EAFE Index]
This table shows the average annual total returns
for Managers International
Equity Fund and the MSCI EAFE Index for the one-
year, five-year and ten-
year periods through
December 31, 1999.
AVERAGE ANNUAL TOTAL RETURNS
ANNUALIZED
- ----------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
-------- ----------- ---------
Managers International Equity Fund 25.28%
15.83% 12.57%
EAFE Index 26.96% 12.83% 7.01%
Managers Emerging Markets Equity Fund
Managers Emerging Markets Equity Fund (the
"Fund"), managed by The Managers Funds LLC since
its inception in February 1998, seeks long-term
capital appreciation through investment in
companies within countries considered to be
emerging or developing by the World Bank or the
United Nations. The Managers Funds utilizes an
independent sub-advisor to manage the assets of
the portfolio. Ken King of Rexiter Capital
Management ("Rexiter"), hired at the Funds
inception, currently manages the entire
portfolio.
The Portfolio Manager
Ken King's investment strategy is to earn
investment return and manage investment risk by
analyzing and actively managing country and
industry exposure in the portfolio, and investing
in companies within the targeted country and
industry ranges which demonstrate strong but,
most importantly, profitable earnings growth.
Country Allocation
Through years of experience analyzing and
investing in emerging markets, Ken King has come
to the belief that the political, economic and
financial health of countries within the emerging
markets is essential to the success of the
companies domiciled within them. In addition,
King believes that emerging markets are
inefficient in the technical sense that past
behavior contains information about future
behavior. Individually, they are highly
volatile. They regularly and predictably
overshoot fair value and then, in relatively
short periods, revert towards the mean. Market
capitalization weighted indices fail to recognize
this; the markets that have risen most take on a
larger index weight just as it becomes
increasingly likely that they will underperform.
Poorly performing markets will have a reduced
index weight just as the chance of relative
outperformance increases. Market capitalization
weighted indices thus encourage managers to chase
markets and expose portfolios to the risk of
being "whipsawed." This reduces returns and
increases volatility.
Because of this, Rexiter uses a fixed-weight
index to define its neutral position. Rexiter
splits the markets into two groups: Top tier are
the twelve most liquid markets (countries) and
bottom tier are all other eligible markets.
Within each tier, all markets are given an equal
weight: Top tier markets have a weight of 5.6% so
that the neutral allocation in top tier markets
is 67% of the portfolio. Bottom tier markets
have a weight of 2.6% and make up 33% of the
portfolio.
The investment team at Rexiter analyzes
political, economic and market factors for each
country and ranks them into favorable, neutral
and unfavorable rankings that determine the
target allocations within the portfolio. A
"favorable" rating means exposure to a country in
the portfolio should match the neutral weight at
a minimum. "Unfavorable" should match the
neutral weight only at a maximum. A "neutral"
ranking implies a band which ranges by 1%-2% on
either side of the fixed weight depending on the
market's tier. Among the market factors that
Rexiter analyzes are the recent performance of
each country along with an assessment of the
availability of attractively valued stocks.
Stock Selection
The portfolio managers at Rexiter are great
believers in stock selection. They believe that
the quality of company research in the emerging
markets is poor. Many companies in the emerging
markets have been very successful at destroying
shareholder wealth. Rexiter's research centers
on avoiding companies that generate "profitless
growth."
After screening the emerging markets universe for
minimum capitalization and liquidity parameters,
the Rexiter investment team analyzes roughly 300
companies in detail.
In order to identify companies which can and will
undergo profitable growth, King Street's research
entails:
Studying published accounts and accounting
policies for the underlying development of
earnings;
Performing a "duPont Analysis" of return on
equity;
Analyzing the return on invested capital
and the economic value added; and
Analyzing the cash flow, capital spending
and capital requirements of each company.
The portfolio is thus constructed from both a top
down and a bottom up perspective. It will
typically have 40 to 60 stocks of companies
exhibiting profitable growth, and will typically
be very diversified across emerging market
countries. Because of the fixed weight benchmark
allocation method described above, the portfolio
will typically be underweighted relative to the
weightings of the largest three or four emerging
countries in the capitalization weighted index.
The benchmark for the Fund is the Morgan Stanley
Capital International - Emerging Markets Free
Index ("EMF").
The Year in Review
The Fund provided a total return of 90.1% in
1999, compared with the 66.4% return for the EMF.
After declining in four of the previous five
years, emerging markets stocks rebounded to their
best annual performance since 1993. Much of this
can be attributed to the surprising resurgence in
economic activity and the related surge in
foreign capital attracted to those regions.
While a little over a year ago, most economists
were forecasting at best a long, drawn out
recovery for the emerging nations, offering
little return on investments for the next few
years, the actual recovery so far appears more
"V" shaped and investors have acted accordingly.
The year started in a difficult manner as the
emerging markets traded lower in January, led by
Brazil, which declined 28% in U.S. Dollar terms,
as it devalued its currency by 43%. A continued
drop in oil prices also hurt the energy producing
countries. Brazil's actions, however, almost
immediately achieved their desired effect.
Brazilian exporters posted big gains and the
market recovered strongly in February and March.
In addition, a sharp rise in oil prices in March
reflated the prospects for many of the oil
producing emerging markets.
Although the Fund underperformed its benchmark
during the first quarter, the portfolio manager
was able to do a significant amount of portfolio
restructuring in the volatility, which positioned
the Fund well for the rest of the year.
Emerging markets surged during the second quarter
as economic reforms in countries such as Korea
and Indonesia continued to show positive results.
This unexpectedly quick turnaround buoyed
investors' confidence in those and other
countries in the Far East.
The Fund's broad country diversification, which
led to relatively lower allocations in larger
markets such as Brazil, South Africa and Mexico,
helped during the second quarter, as these
markets underperformed. In addition, the Fund's
heavy investment in economically sensitive
sectors such as capital goods, energy and basic
materials was beneficial.
The third quarter was difficult for both the
markets and the Fund. A variety of factors
including the impact of the rising yen on
emerging Asian nations, earthquakes in Turkey,
and concerns about the emerging nations readiness
for Y2K sent most emerging markets shares lower.
The Fund outperformed its benchmark during the
period, despite a significant underweighting in
Greece and India, which both performed well.
Holdings such as Siderca, an Argentine producer
of steel, and Samsung, the Korean consumer
electronics and computer chip manufacturer,
contributed significantly.
As in the developed markets, stocks rose sharply
in the emerging markets during the fourth
quarter. Gains were broad from a geographical
perspective, yet focused from an industry
perspective. Technology and telecommunications
companies dominated during the fourth quarter,
and the Fund's heavy emphasis on
telecommunications companies throughout the year,
helped it to significantly outperform the
benchmark and many of its peers. In addition,
the rebound in Turkish shares, which had
previously declined due to the earthquakes also
contributed. The Fund's top five performing
positions during the fourth quarter were either
Turkish, or communications companies, and they
all appreciated more than 100% during the
quarter. As a group, the portfolio's
communications stocks returned 36% in the fourth
quarter. Financial holdings also performed well,
rising 43%, led by the Turkish bank, Yapi ve
Kredi Bankasi and Housing & Commercial Bank of
Korea.
Going Forward
As the year came to a close, Rexiter began to
trim its positions in the best performing sectors
and countries, such as telecommunications and
Turkey. That said, Rexiter continues to have a
positive outlook and meaningful allocations in
those areas. Specifically, positions in Yapi ve
Kredi Bankasi, PT Indosat, and Embratel have been
reduced.
To serve as an example of what Rexiter looks for
in its investments, we asked Ken King to review
the thesis behind one of his largest holdings.
With respect to his position in Aksigorta, Ken
King notes the following:
Aksigorta is the largest non-life insurance
company in Turkey. That isn't saying much since
the insurance market is still under-developed and
fragmented. They have a market share of just
under 10% and premium income of only about
$150m.. As financial sophistication and wealth
increase we expect the underlying market to grow
strongly. Aksigorta are well placed to benefit
from such a trend due to its relatively strong
management, its existing market share and, not
least, its position within the Sabanci group,
which is one of Turkey's most powerful and
influential conglomerates.
The company can also be looked upon as a
conglomerate. It owns stakes in other Sabanci
companies (mostly a stake in Akbank, one of the
biggest banks in Turkey) and has a substantial
property portfolio. The value of its stakes in
other quoted companies are roughly equal to its
current market capitalization, leaving its
unquoted portfolio, its property and its
insurance business "thrown in for nothing."
The stock has been a stunning success over the
last year, appreciating by 10 times in US dollar
terms. Hence, despite the fact that we took
profits during 1999 the stock is still one of the
largest in the portfolio. It fits all our
important criteria: healthy market position, good
management, reasonable valuation and good growth
prospects.
In general, Ken King and the investment team at
Rexiter are optimistic about the continued
improvement in the emerging economies. Barring a
significant setback in the developed markets or
other unforeseen event, they believe that the
emerging markets are well valued and positioned
to perform well in 2000. The portfolio remains
well diversified from a geographical standpoint,
while it is focused on industries that are the
basic building blocks of emerging economies. The
portfolio is more than 60% invested in companies
within the finance, basic industry, capital goods
and communications industries, with meaningful
allocations in energy and technology companies.
The Managers Emerging Markets Equity Fund's
cumulative total return is based
on the daily change in net asset value (NAV),
and assumes that all distributions were
reinvested.
The MSCI EMF Index ("EMF")is compiled
by Morgan Stanley Capital International ("MCSI").
It is a market capitalization-weighted index
covering over 1,000 stocks in 25
emerging nations in the Asia/Far East, South
American, Eastern European and
African regions. MSCI designates nations based
upon several factors,
most importantly per capita GDP. In cases where
restrictions on foreign
investment exist the EMF index limits
its coverage to the opportunity set generally
available to foreign investors.
This chart below compares a hypothetical $10,000
invested in Managers
Emerging Markets Equity Fund on February 9, 1998,
to a $10,000 investment
in the MSCI EMF Index for the same period. Past
performance is not
indicative of future results.
[Line Graph comparing hypothetical $10,000
investment for the past ten months
between the Emerging Markets Equity Fund and the
MSCI EMF Index]
This table shows the average annual total returns
for Managers Emerging Markets
Equity Fund and the MSCI EMF Index for periods
of one-year and since the Fund's inception, ending December 31, 1999.
AVERAGE ANNUAL TOTAL RETURNS
ANNUALIZED
- --------------------------------------
ONE YEAR SINCE INCEPTION
-------- ---------
Managers Emerging Markets Equity Fund 90.06%
22.60%
MSCI EMF Index 66.41% 13.03%
The Managers Funds
Summary of Industry Weighting as of December 31,
1999 (unaudited)
Managers Managers
International Emerging Markets
Major Sectors Equity Fund
Equity Fund
Basic Industries 13.3 % 13.3 %
Capital Goods 6.5 12.8
Communication Services 12.2 22.1
Computer Software 0.0 0.4
Consumer Basics 4.6 4.5
Consumer Durable Goods 9.1 -
Consumer Non-Durables 1.5 1.2
Consumer Services 0.4 -
Energy 4.1 5.7
Entertainment & Leisure 3.4 2.4
Finance 19.8 16.4
General Business 4.9 1.6
Health Care 5.3 3.2
Real Estate 0.5 0.8
Technology 4.9 8.7
Transportation 2.2 -
Utilities 2.0 1.5
Other 5.3 5.4
Managers International Equity Fund
Managers Emerging Markets Equity Fund
% Fund % Fund
682150008 868861204 Sony Corp. 3.8%
Surgutneftegaz Jsc 3.0%
612927905 78440P108 NTT Mobile Communication
SK Telecom Co., Ltd.,
401207907 Network, Inc. 2.2%
Sponsored ADR 2.9%
Nippon Telegraph & Aksigorta AS
2.8%
664137007 614697902 Telephone Corp.
1.9% Orascom Construction Inds. 2.6%
614469005 680887908 Broken Hill Proprietary
Co., Ltd. 1.7% Siliconware Precision
Industries Co. 2.6%
572797900 498674001 Siemens AG 1.7%
Yapi ve Kredi Bankasi AS 2.5%
680060001 29081N100 Sharp Corp. 1.7%
Embratel Participacoes SA,
686930009 796050888 TDK Corp. 1.6%
Sponsored ADR 2.4%
573252905 680597002 Telefonica SA 1.6%
Samsung Electronics Ltd., GDR
666114004 90458E107 Orix Corp., Ltd. 1.4%
representing 1/2 voting Shares* 2.3%
421682006 Alcatel Alsthom 1.3%
Shin Corp.s Public Co., Ltd. 2.2%
Uniao de Bancos Brasileiros SA,
(Unibanco), Sponsored GDR 2.1%
*Top Ten Holding at December 31, 1998
The Managers Funds
Summary of Country Allocations Relative to MSCE
Indices (unaudited)
Managers MSCI
International EAFE
Country Equity Fund* Index
Japan 28.6 27.4
United Kingdom 19.3 19.2
France 10.5 10.3
Germany 9.6 10.5
Switzerland 4.3 5.7
Australia 3.4 2.5
Netherlands 2.9 5.2
Canada 2.5 0.0
Spain 2.3 2.7
Singapore 2.0 1.1
Sweden 1.5 2.7
Finland 1.4 3.0
Italy 1.3 4.2
Hong Kong 1.0 2.3
South Africa 1.0 0.0
Denmark 0.8 0.8
Brazil 0.7 0.0
Portugal 0.5 0.5
U.S. 0.5 0.0
Belgium 0.0 0.9
Ireland 0.0 0.4
Norway 0.0 0.4
Austria 0.0 0.1
New Zealand 0.0 0.1
Cash 5.9 0.0
Managers
Emerging MSCI
Markets EAFE
Country Equity Fund* Index
Brazil 10.4 9.9
Taiwan 9.3 11.0
Korea 9.2 13.9
Mexico 7.0 11.6
Turkey 5.8 4.1
Hong Kong 5.2 0.0
Hungary 5.0 1.2
India 4.0 8.4
South Africa 3.7 10.8
Argentina 3.6 2.1
Poland 3.4 1.3
Greece 3.4 6.5
Israel 3.3 4.1
Philippines 3.2 1.2
Russia 3.0 2.5
Egypt 2.6 0.0
Indonesia 2.3 1.7
Thailand 2.2 3.0
Malaysia 1.9 0.0
Chile 1.8 3.5
Peru 1.4 0.7
Croatia 1.3 0.0
Venezuela 0.9 0.6
Czech Republic 0.0 0.6
China 0.0 0.4
Colombia 0.0 0.4
Pakistan 0.0 0.4
Jordan 0.0 0.1
Cash 6.1 0.0
Managers International Equity Fund
Schedule of Portfolio Investments
Common Stocks - 94.7%
Basic Industries - 13.3%
Anglo American Platinum Corp., Ltd.,
ADR (South Africa) 120,476
3,658,772
Aracruz Celulose SA, Sponsored ADR (Brazil)
87,400 2,294,250
Asahi Chemical Ind. Co., Ltd. (Japan) 277,000
1,423,363
Aventis SA (France) 89,482
5,201,058
Barrick Gold Corp. (Canada) 178,400
3,182,404
BASF AG (Germany) 105,688 5,429,703
Bayer AG (Germany) 87,326
4,134,487
BOC Group PLC (United Kingdom) 234,853 5,064,430
Broken Hill Proprietary Co., Ltd. (Australia)
901,667 11,839,482
Clariant AG, registered shares (Switzerland)
7,575 3,610,767
Compagnie De Saint-Gobain (France) 48,020
9,031,226
Companhia Vale do Rio Doce,
Sponsored ADR (Brazil) 93,300
2,601,045
Impala Platinum Holdings, ADR (South Africa)
79,100 3,198,662
Imperial Chemical Industries
PLC (United Kingdom) 410,000
4,331,266
Kymmene OY (Finland) 99,740
4,018,922
Noranda, Inc. (Canada) 84,800
1,139,674
Rio Tinto PLC (United Kingdom) 229,290
5,503,730
Shin-Etsu Chemical Co., Ltd. (Japan) 43,000
1,851,816
Stillwater Mining Co. (United States)* 114,100
3,636,938
Sumitomo Metal Mining Co. (Japan)* 242,000
540,041
Teijin, Ltd. (Japan) 1,165,000
4,298,767
Usinor SA (France)* 88,000
1,653,262
Viag AG (Germany) 74,136 1,359,192
WMC, Ltd. (Australia) 797,600
4,398,446
Total Basic Industries 93,401,703
Capital Goods - 6.5%
Alcatel Alsthom (France) 40,500
9,301,866
Heidelberger Druckmaschinen AG (Germany) 9,229
487,154
Holderbank Financiere Glarus AG,
bearer shares (Switzerland) 2,827
3,870,414
Ivensys PLC (United Kingdom) 772,000
4,081,594
National Grid Group PLC (United Kingdom) 400,368
3,046,025
Siemens AG (Germany) 92,504
11,769,123
Thyssen Krupp AG (Germany) 234,435
7,143,780
Toshiba Corp. (Japan) 807,000
6,160,908
Total Capital Goods 45,860,864
Communication Services - 12.2%
BCE, Inc. (Canada) 70,300
6,387,146
British Telecommunications
PLC (United Kingdom) 276,583
6,701,468
DDI Corp. (Japan) 321 4,398,552
Deutsche Telekom AG (Germany) 37,138
2,644,954
Marconi PLC (United Kingdom) 241,133
4,253,364
Nippon Telegraph & Telephone Corp. (Japan)
773 13,240,188
NTT Mobile Communication
Network, Inc. (Japan) 402 15,463,052
Portugal Telecom SA (Portugal) 242,600
2,661,331
Portugal Telecom SA (Portugal) 93,700
1,027,893
Sonera Oyj (Finland) 65,400
4,483,179
Swisscom AG (Switzerland) 8,268
3,343,963
Tele Danmark A/S (Denmark) 77,000
5,721,149
Telecom Italia SpA (Italy)* 310,400
1,891,722
Telefonica SA (Spain)* 439,263
10,973,787
United Pan-Europe Communications
NV (Netherlands) 22,000 2,814,535
Total Communication Services 86,006,283
Consumer Basics - 4.6%
Asahi Breweries, Ltd. (Japan) 378,000
4,136,283
Cadbury Schweppes PLC (United Kingdom) 389,386
2,346,078
Diageo PLC (United Kingdom) 411,776
3,285,801
Gallaher Group PLC (United Kingdom) 259,754
1,090,910
Heineken NV (Netherlands) 88,150
4,299,593
Kao Corp. (Japan) 189,000 5,392,336
Roche Holdings AG (Switzerland) 623
7,394,775
Tesco PLC (United Kingdom) 513,700
1,559,985
Unilever PLC (United Kingdom) 375,228
2,757,781
Total Consumer Basics 32,263,542
Consumer Durable Goods - 9.1%
DaimlerChrysler AG (Germany) 55,792
4,338,798
Electrolux AB, Series B (Sweden) 192,800
4,848,889
GKN PLC (United Kingdom) 108,100
1,770,585
Matsushita Electric Ind. (Japan) 147,000
4,071,743
Michelin, Class B, registered shares (France)
44,500 1,748,255
Nissan Motor Co., Ltd. (Japan)* 1,174,000
4,619,243
Pacific Dunlop, Ltd. (Australia) 1,971,500
2,790,489
Sharp Corp. (Japan) 455,000
11,645,542
Sony Corp. (Japan) 90,500
26,839,092
Volvo AB, Series B (Sweden) 57,300
1,481,491
Total Consumer Durable Goods 64,154,127
Consumer Non-Durables - 1.5%
Daiei, Inc.,The (Japan)* 47,000
186,307
Great Universal Stores PLC (United Kingdom)
881,501 5,125,999
Metro AG (Germany) 77,604
4,174,511
Toray Ind., Inc. (Japan) 321,000
1,244,162
Total Consumer Non-Durables 10,730,979
Consumer Services - 0.4%
Shimano, Inc. (Japan) 158,000
2,783,596
Energy - 4.1%
BP Amoco PLC (United Kingdom) 588,400
5,939,506
Ente Nazionale Idrocarburi SpA (Italy) 754,200
4,148,197
Enterprise Oil PLC (United Kingdom) 198,918
1,349,512
LASMO PLC (United Kingdom) 197,110
382,070
Shell Transport & Trading Co.,
registered shares (United Kingdom) 585,247
4,863,823
Total Fina SA (France) 51,148
6,826,919
Woodside Petroleum Ltd. (Australia) 729,350
5,386,707
Total Energy 28,896,734
Entertainment & Leisure - 3.4%
Canal Plus (France) 53,720
7,819,592
Carlton Communications PLC (United Kingdom)
476,559 4,641,808
Club Mediterranee SA (France)* 26,548
3,070,110
Nintendo Corp., Ltd. (Japan) 18,000
2,991,485
Reuters Group PLC (United Kingdom) 377,795
5,248,170
Total Entertainment & Leisure 23,771,165
Finance - 19.8%
Allianz AG, (Vinkuliert) (Germany) 18,216
6,119,685
Allied Zurich AG (United Kingdom) 224,200
2,643,697
AXA-UAP (France) 37,100 5,172,378
Banque Nationale de Paris (France) 59,200
5,462,575
Bayerische Vereinsbank AG (Germany) 41,993
2,868,051
Commerzbank AG (Germany) 34,205
1,255,936
Daiwa Securities Co., Ltd. (Japan) 466,000
7,293,080
DBS Group Holdings, Ltd. (Singapore) 53,498
876,911
Fuji Bank, Ltd.,The (Japan) 527,000
5,121,963
Halifax Group PLC (United Kingdom) 352,700
3,851,283
HSBC Holdings PLC (United Kingdom) 401,583
5,630,996
Industrial Bank of Japan, Ltd. (Japan) 381,000
3,673,143
ING Groep NV (Netherlands) 90,500
5,464,439
Istituto Bancario San Paolo di Torino (Italy)
240,900 3,273,625
Li & Fung, Ltd. (Hong Kong) 2,082,000
5,222,744
Manulife Financial Corp (Canada) 287,600
3,675,940
Merita Ltd., Class A (Finland) 270,700
1,595,234
Munchener Rueckvericherungs-Gesellschaft,
registered shares (Germany) 13,620
3,454,722
National Westminster Bank PLC (United Kingdom)
162,000 3,480,326
Nikko Securities Co., Ltd., The (Japan) 539,000
6,821,249
Nomura Securities Co., Ltd., The (Japan) 55,000
993,198
Nordbanken Holding AB (Sweden) 246,800
1,450,229
O/Seas Union Bank (Singapore) 670,811
3,926,993
Orix Corp., Ltd. (Japan) 43,600
9,823,549
Oversea-Chinese Banking Corp., Ltd. (Singapore)
484,300 4,448,988
Promise Co. (Japan) 42,080
2,141,685
Prudential Corp. PLC (United Kingdom) 400,445
7,813,813
Royal & Sun Alliance Insurance Group PLC
(United Kingdom) 529,818 3,970,982
Sakura Bank (Japan) 488,000
2,827,601
Standard Chartered PLC (United Kingdom) 207,001
3,293,532
Sumitomo Trust and Banking Co. (Japan) 736,000
4,970,539
Svenska Handelsbanken, Series A (Sweden) 237,400
2,985,286
United Overseas Bank, Ltd. (Singapore) 520,608
4,594,979
Zurich Allied AG (Switzerland) 6,115
3,487,044
Total Finance 139,686,395
General Business - 4.9%
ABB AG (Switzerland) 47,477
5,806,786
Canon Inc. (Japan) 192,000
7,629,637
Citic Pacific, Ltd. (Hong Kong) 475,000
1,784,267
Granada Group (United Kingdom) 578,600
5,841,329
Nichii Gakkan Co. (Japan) 4,000 782,617
Nichii Gakkan Co., Restricted
Bonus Shares (Japan) 2,000 361,750
Reed International (United Kingdom) 497,600
3,737,546
Suez Lyonnaise des Eaux (France) 20,900
3,349,629
Vivendi (France) 60,481 5,461,973
Total General Business 34,755,534
Health Care - 5.3%
AstraZeneca Group PLC (United Kingdom) 120,369
5,000,793
Aventis SA (France) 146,548
8,503,204
Chugai Pharmaceutical Co., Ltd. (Japan) 300,000
3,244,592
Novartis AG, registered shares (Switzerland)
1,799 2,641,501
Sankyo Co., Ltd. (Japan) 149,000
3,062,543
Schering AG (Germany) 24,162
2,920,750
SmithKline Beecham Unit PLC (United Kingdom)
528,709 6,704,086
Yamanouchi Pharmaceutical Co., Ltd. (Japan)
147,000 5,136,439
Total Health Care 37,213,908
Real Estate - 0.5%
Mitsubishi Estate Co., Ltd. (Japan) 217,000
2,117,539
Mitsui Fudosan Co., Ltd. (Japan) 231,000
1,564,569
New World China Land, Ltd. (Hong Kong) 1,988
736
Total Real Estate 3,682,844
Technology - 4.9%
British Aerospace PLC (United Kingdom) 827,276
5,438,737
Fujitsu Ltd. (Japan) 66,000
3,010,277
Nec Corp. (Japan) 265,000 6,315,699
Philips Electronics NV (Netherlands) 39,932
5,430,440
STMicroelectronics NV (Netherlands)* 17,978
2,767,228
TDK Corp. (Japan) 83,000 11,462,564
Total Technology 34,424,945
Transportation - 2.2%
Canadian National Railway Co. (Canada) 133,400
3,510,088
Deutsche Lufthansa AG (Germany)* 180,900
4,209,503
East Japan Railway Co. (Japan) 531
2,863,668
Eurotunnel SA (France)* 1,855,931
2,187,399
Railtrack Group PLC (United Kingdom) 145,172
2,438,761
Total Transportation 15,209,419
Utilities - 2.0%
British Energy PLC (United Kingdom) 387,762
2,228,247
Endesa SA (Spain) 256,600 5,094,757
National Power PLC (United Kingdom) 213,224
1,229,582
Veba AG (Germany) 117,807 5,725,965
Total Utilities 14,278,551
Total Common Stocks
(cost $480,534,724) 667,120,589
Corporate Bonds - 0.1%
Transportation - 0.1%
British Aerospace PLC, 7.450%,
11/30/03 (United Kingdom)
(cost $36,063) 51,757 81,513
Short-Term Investments - 5.9%
Other Investment Companies - 1.3%**
Calvert Cash Reserves Institutional
Prime Fund, 6.06% 7,663,068
7,663,068
JPM Prime Money Market Fund, 5.50% 1,856,685
1,856,685
Total Other Investment Companies
9,519,753
Repurchase Agreement - 4.6%
State Street Bank & Trust Co., dated 12/31/99,
due 01/03/00, 2.800%, total to be received
$32,189,509 (secured by $32,545,000 FNMAs
6.00%, due 09/24/00 market value
$28,783,469), at cost 32,182,000
32,182,000
Total Short-Term Investments
(cost $41,701,753)
41,701,753
Total Investments - 100.7%
(cost $522,272,540)
708,903,855
Other Assets, less Liabilities - (0.7)%
(4,694,912)
Net Assets - 100.0% 704,208,943
Note: Based on the cost of investments of
$530,167,413 for federal income tax purposes at
December 31, 1999, the aggregate gross unrealized
appreciation and depreciation was $198,946,740 and
$20,210,298, respectively, resulting in net
unrealized appreciation of investments of
$178,736,442.
* Non-income-producing securities.
company represents the December 31, 1999, seven-
day average yield, which refers to the sum of the
previous seven days' dividends paid, expressed as
an annual percentage.
Investments Abbreviations:
ADR: Securities whose value is determined or
significantly influenced by trading on exchanges
not located in the United States or Canada. ADR
after the name of a holding stands for American
Depositary Receipt, representing ownership of
foreign securities on deposit with a domestic
custodian bank. Sponsored ADRs are initiated by
the underlying foreign company.
Registered shares: A security whose owner has been
recorded with its issuer or issuer's registrar.
Bearer shares: A security owned by a holder who is
not registered upon the issuer's books.
FNMA: Federal National Mortgage Association
Managers Emerging Markets Equity Fund
Schedule of Portfolio Investments
December 31, 1999
Common Stocks - 94.6%
Basic Industries - 13.3%
Aksigorta AS (Turkey) 5,700,000 346,792
Alfa SA, Series A (Mexico)* 25,000
117,414
Antofagasta PLC (United Kingdom) 2,638
18,323
BorsodChem Rt. (Hungary)* 4,000 163,921
Companhia Vale do Rio Doce,
Sponsored ADR (Brazil) 7,600 211,875
Hindalco Industries, Ltd.,
Sponsored GDR (India)(a) 7,500 174,375
KGHM Polska Miedz SA (Poland) 35,000
220,073
Pohang Iron & Steel Co., Ltd. (South Korea)
1,350 148,613
PT Indah Kiat Pulp & Paper Corp. (Indonesia)*
250,000 98,390
Siderca S.A.I.C. (Argentina) 75,000
157,523
Total Basic Industries 1,657,299
Capital Goods - 12.8%
Barlow, Ltd. (South Africa) 24,000
172,738
Benpres Holdings Corp. (Philippines)*
1,300,000 196,774
Gujarat Ambuja Cements, Ltd.,
Sponsored GDR (India) 24,000 180,000
Hon Hai Precision Ind. (Taiwan)* 28,000
208,762
Orascom Construction Inds. (Egypt) 16,000
329,752
Phoenixtec Power Co., Ltd. (Taiwan) 115,000
221,682
Samsung Electronics Ltd., GDR
representing 1/2 voting Shares (South Korea)(a)
2,386 289,303
Total Capital Goods 1,599,011
Communication Services - 22.1%
Asia Satellite Telecommunications
Holdings, Ltd. (Hong Kong) 68,000
214,755
China Telecom Ltd., Sponsored ADR (Hong Kong)*
2,000 257,125
Grupo Televisa SA, Sponsored GDR (Mexico)*
3,500 238,875
Hellenic Telecommunications
Organization SA (Greece) 10,000
236,802
Philippine Long Distance Telephone Co.,
Sponsored ADR (Philippines) 8,100 209,588
PT Indosat (Persero) TBK,
Sponsored ADR (Indonesia) 9,000 194,625
SK Telecom Co., Ltd.,
Sponsored ADR (South Korea) 9,000 345,375
Telecomunicacoes Brasileiras SA,
Preferred Sponsored ADR (Brazil) 850 13
Telecomunicacoes Brasileiras SA,
Telebras, Sponsored ADR (Brazil) 2,050
263,425
Telefonica de Argentina SA,
Sponsored ADR (Argentina) 2,400 74,100
Telefonica del Peru SA, Sponsored ADR (Peru)
13,000 173,875
Telefonos de Mexico SA, Sponsored ADR (Mexico)
2,000 225,000
Telekomunidacja Polksa SA, GDR (Poland)(a)
25,000 161,250
Videsh Sanchar Nigam, Ltd.,
Sponsored GDR (India)(a) 5,800 141,810
Total Communication Services 2,736,618
Computer Software - 0.4%
Prokom Software, GDR (Poland)(a) 3,000
46,200
Consumer Basics - 4.5%
Efes Sinai Yatirim Holdings AS,
Sponsored GDR (Turkey) 46,410 64,974
Fomento Economico Mexica, UBD (Mexico) 29,000
129,467
Fomento Economico Mexicano SA,
Sponsored ADR (Mexico) 1,600 71,200
Illovo Sugar, Ltd. (South Africa) 150,000
179,123
Mavesa, SA (Venezuela) 36,000 110,250
Total Consumer Basics 555,014
Consumer Non-Durables - 1.2%
Shinsegae Department Store Co. (South Korea)
2,600 131,431
Shinsegae Department Store Co.,
Preferred (South Korea) 454 23,790
Total Consumer Non-Durables 155,221
Energy - 5.7%
Perez Companc SA, Sponsored ADR (Argentina)
7,000 71,688
Petroleo Brasileiro SA, Sponsored ADR (Brazil)
10,300 264,174
Surgutneftegaz Jsc (Russia) 22,000
374,000
Total Energy 709,862
Entertainment & Leisure - 2.4%
Embratel Participacoes SA,
Sponsored ADR (Brazil)* 10,850
295,663
Finance - 16.4%
Banco Frances SA, Sponsored ADR (Argentina)
6,400 151,605
Bank Leumi Le-Israel (Israel) 92,000
193,540
Chinatrust Commmercial Bank (Taiwan)* 119,480
138,952
Commercial Bank of Greece (Greece) 2,470
188,510
Housing & Commercial Bank, Korea,
Sponsored GDR (South Korea)(a) 7,000
205,450
Liberty Life Association of
Africa, Ltd. (South Africa) 10,000
115,353
OTP Bank Rt. (Hungary) 4,000 234,321
Public Bank Berhard (Malaysia) 228,000
236,400
Uniao de Bancos Brasileiros SA, (Unibanco),
Sponsored GDR (Brazil) 8,800 265,100
Yapi ve Kredi Bankasi AS (Turkey) 10,000,000
308,813
Total Finance 2,038,044
General Business - 1.6%
Chilectra SA, Sponsored ADR (Chile)(a) 10,000
204,100
Health Care - 3.2%
Pliva d.d., registered shares GDR (Croatia)
13,000 166,400
Richter Gedeon Rt., Sponsored GDR (Hungary)
3,500 228,375
Total Health Care 394,775
Real Estate - 0.8%
Corporacion GEO, SA de CV (Mexico) 25,000
94,195
Technology - 8.7%
Orckit Communications, Ltd. (Israel)* 6,500
223,031
Shin Corp.s Public Co., Ltd. (Thailand) 29,000
274,101
Siliconware Precision Industries Co. (Taiwan)*
129,350 329,712
Taiwan Semiconductor Manufacturing Co. (Taiwan)*
49,200 261,794
Total Technology 1,088,638
Utilities - 1.5%
Huaneng Power International, Inc. (Hong Kong)
764,000 181,823
Total Common Stocks
(cost $8,482,596) 11,756,463
Short-Term Investments - 6.4%
Other Investment Companies - 4.5%**
Calvert Cash Reserves Institutional
Prime Fund, 6.06%*** 400,067 400,067
JPM Prime Money Market Fund, 5.50% 164,575
164,575
Total Other Investment Companies 564,642
Repurchase Agreement - 1.9%
State Street Bank & Trust Co., dated 12/31/99,
due 01/03/00, 2.500%, total to be received
$239,050 (secured by $245,000 FNMAs 5.86%,
due 11/07/00 market value $245,919), at cost
239,000 239,000
Total Short-Term Investments
(cost $803,642) 803,642
Total Investments - 101.0%
(cost $9,286,238) 12,560,105
Other Assets, less Liabilities - (1.0)%
(126,129)
Net Assets - 100.0% 12,433,976
Note: Based on the cost of investments of
$9,286,238 for federal income tax purposes at
December 31, 1999, the aggregate gross unrealized
appreciation and depreciation was $3,603,835 and
$329,968, respectively, resulting in net
unrealized appreciation of investments of
$3,273,867.
* Non-income-producing securities.
** Yields shown for each investment
company represents the December 31, 1999, 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.
This security may be resold in transactions exempt
from registration, normally to qualified buyers.
At December 31, 1999, the value of these
securities amounted to $1,222,488, or 9.8% of net
assets.
Investments 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. Sponsored
ADR/GDRs are initiated by the underlying foreign
company.
Registered shares: A security whose owner has been
recorded with its issuer or issuer's registrar.
FNMA: Federal National Mortgage Association
The Managers Funds
Statements of Assets and Liabilities
December 31, 1999
Managers Managers
International Emerging Markets
Equity Equity
Fund Fund
Assets:
Investments at value* 708,903,855
12,560,105
Cash 4,336 1,048
Foreign currency (cost $1,741,975 and $35,385)
1,732,190 34,362
Receivable for Fund shares sold
1,063,751 20,576
Deferred organization expenses 6,587
Dividends, interest and other receivables
512,994 113
Foreign withholding tax receivable 515,617
Prepaid expenses 44,730
2,115
Total assets 712,777,473
12,624,906
Liabilities:
Payable for Fund shares repurchased
5,777,310 78,334
Payable for investments purchased
1,732,169 74,294
Accrued expenses:
Investment advisory and
management fees 520,927 7,072
Administrative fees 144,702
Other 393,422 31,230
Total liabilities 8,568,530
190,930
Net Assets 704,208,943 12,433,976
Shares outstanding
11,995,547 847,581
Net asset value, offering and redemption
price per share 58.71
14.67
Net Assets Represent:
Paid-in capital 517,044,974 8,642,891
Distribution in excess of net investment income
(5,436,587)
Accumulated net realized gain from investments
and foreign currency transactions
6,000,958 518,241
Net unrealized appreciation of investments
and foreign currency contacts and translations
186,599,598 3,272,844
Net Assets 704,208,943
12,433,976
*Investments at cost 522,272,540
9,286,238
The Managers Funds
Statements of Operations
For the year ended December 31, 1999
Managers Managers
International Emerging Markets
Equity Equity
Fund Fund
Investment Income:
Dividend income 12,110,619
175,637
Interest income 1,611,041 6,941
Foreign withholding tax (1,266,146)
(22,735)
Total investment income 12,455,514
159,843
Expenses:
Investment advisory and management fees
5,431,401 82,718
Administrative fees
1,508,722 17,982
Transfer agent 541,542
31,308
Custodian 775,785
16,741
Professional fees 75,579
17,407
Registration 49,309
10,184
Insurance 45,972
222
Trustees 41,747
515
Amortization of organization expense
2,128
Miscellaneous 66,878
1,759
Total expenses before reductions/waiver
8,536,935 180,964
Less: Fee waivers
(46,754)
Expense reductions (68,230)
(948)
Net expenses 8,468,705
133,262
Net investment income 3,986,809
26,581
Net Realized and Unrealized Gain (Loss):
Net realized gain on investment transactions
40,806,502 1,128,051
Net realized loss on foreign currency contracts
and transactions (5,489,456)
(12,545)
Net unrealized appreciation of investments
107,844,911 3,932,230
Net unrealized appreciation (depreciation) from
foreign currency contracts and translations
1,530,824 (104)
Net realized and unrealized gain
144,692,781 5,047,632
Net Increase in Net Assets
Resulting from Operations 148,679,590
5,074,213
The Managers Funds
Statements of Changes in Net Assets
Managers International Equity Fund
Managers Emerging Markets Equity Fund
For the For the
For the For the period
year ended year ended
year ended February 9, 1998* to
December 31, 1999 December 31, 1998
December 31, 1999 December 31, 1998
Increase (Decrease) in Net Assets
From Operations:
Net investment income (loss)
3,986,809 5,246,831
26,581 (3,202)
Net realized gain (loss) on
investments and foreign
currency transactions 35,317,046
31,069,730 1,115,506
(606,302)
Net unrealized appreciation
(depreciation) of
investments and foreign
currency translations 109,375,735
31,976,004 3,932,126
(659,282)
Net increase (decrease)
in net assets resulting
from operations 148,679,590
68,292,565 5,074,213
(1,268,786)
Distributions to Shareholders:
From net investment income
(4,081,802) (4,019,280)
(25,422)
From net realized gain
on investments (24,490,724)
(32,137,834)
Total distributions
to shareholders (28,572,526)
(36,157,114) (25,422)
From Capital Share Transactions:
Proceeds from sale of shares
1,092,699,983 744,729,587
7,151,953 8,313,314
Net asset value of shares issued
in connection with reinvestment
of dividends and distributions
22,987,277 31,404,010
21,982
Cost of shares repurchased (1,084,411,449)
(642,067,138) (4,466,024)
(2,367,254)
Net increase from
capital share transactions 31,275,811
134,066,459 2,707,911
5,946,060
Total increase in net assets 151,382,875
166,201,910 7,756,702
4,677,274
Net Assets:
Beginning of period
552,826,068 386,624,158
4,677,274
End of period 704,208,943
552,826,068 12,433,976
4,677,274
End of period undistributed
(overdistributed) net
investment income (5,436,587)
(1,169,364)
Share Transactions:
Sale of shares 21,214,217
15,011,971 695,855
916,005
Shares issued in connection
with reinvestment of
dividends and distributions 399,154
647,906 1,532
Shares repurchased
(20,935,298) (12,824,573)
(453,848) (311,963)
Net increase in shares 678,073
2,835,304 243,539
604,042
*Commencement of operations.
Managers International Equity Fund
Financial Highlights
For a share of capital stock outstanding
throughout the year.
Year ended December 31,
1999 1998
1997 1996 1995
Net Asset Value,
Beginning of Year $48.85
$45.58 $43.69
$39.97 $36.35
Income from
Investment Operations:
Net investment income
0.35 0.54
0.42 0.32 0.31(a)
Net realized and unrealized
gain on investments 11.96
6.06 4.27
4.76 5.59
Total from investment
operations 12.31
6.60 4.69
5.08 5.90
Less Distributions to
Shareholders from:
Net investment income
(0.35) (0.37)
(0.65) (0.33)
(0.13)
Net realized gain on
investments (2.10)
(2.96) (2.15)
(1.03) (2.15)
Total distributions to
shareholders (2.45)
(3.33) (2.80)
(1.36) (2.28)
Net Asset Value,
End of Year $58.71
$48.85 $45.58
$43.69 $39.97
Total Return
25.28% 14.54%
10.83% 12.77%
16.24%
Ratio of net expenses
to average net assets
1.40%(b) 1.41%(b)
1.45%(b) 1.53%
1.58%
Ratio of net investment income
to average net assets
0.66% 1.05%
0.75% 0.97% 0.80%
Portfolio turnover
43% 56%
37% 30% 73%
Net assets at end of year
(000's omitted) $704,209
$552,826 $386,624
$269,568 $140,488
(a) Calculated using the average shares
outstanding during the year.
(b) The Fund has entered into arrangements
with unaffiliated broker-dealers 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 annualized
ratio of expenses to average net assets for the
years ended December 31, 1999, 1998 and 1997 would
have been 1.41%, 1.42%, and 1.45%, respectively.
(See Note 1c of Notes to Financial Statements.)
Managers Emerging Markets Equity Fund
Financial Highlights
JFor a share of capital stock outstanding
throughout each period
For the For the period
year ended February 9, 1998*
December 31, 1999 to December 31, 1998
Net Asset Value, Beginning of Period
$7.74 $10.00
Income from Investment Operations:
Net investment income (loss) 0.03 (0.01)
Net realized and unrealized gain (loss)
on investments 6.93 (2.25)
Total from investment operations
6.96 (2.26)
Less Distributions to Shareholders
from net investment income (0.03)
--
Net Asset Value, End of Period $14.67
$7.74
Total Return (b) 90.06% (22.60)%(c)
Ratio of net expenses to average net assets
1.85% 2.54%(d)
Ratio of net investment income (loss) to
average net assets 0.37% (0.09)%(d)
Portfolio turnover 119% 89%(c)
Net assets at end of period (000's omitted)
$12,434 $4,677
Expense Waiver/Reduction (a)
Ratio of total expenses to average net assets
2.52% 3.57%(d)
Ratio of net investment income (loss) to
average net assets
(0.29)%
(1.11)%(d)
(a) Ratio information assuming no waiver
of investment advisory and management fees or
administration fees and no reduction of custodian
expenses due to credits received for uninvested
cash balances. (See Notes 1c and 2 of Notes to
Financial Statements.)
(b) The total return would have been lower
had certain expenses not been reduced during the
periods shown.
(c) Not annualized.
(d) Annualized.
* Commencement of operations.
The Managers Funds
Notes to Financial Statements
December 31, 1999
(1) Summary of Significant
Accounting Policies
The Managers Funds (the "Trust") is a no-load,
open-end, management investment company, organized
as a Massachusetts business trust, and registered
under the Investment Company Act of 1940, as
amended (the "1940 Act"). Currently the Trust is
comprised of 9 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 accounting principles generally
accepted in the United States which require
management to make estimates and assumptions that
affect the reported amount of assets and
liabilities and disclosure of contingent assets
and liabilities at the date of the financial
statements and the reported amounts of income and
expenses during the reporting periods. Actual
results could differ from those estimates. The
following is a summary of significant accounting
policies followed by the Funds in the preparation
of their financial statements:
(a) Valuation of Investments
Equity securities traded on a domestic or
international securities exchange are valued at
the last quoted sales price, or, lacking any
sales, at last quoted bid price. Over-the-counter
securities for which market quotations are readily
available are valued at the last quoted sales
price, or, lacking any sales, 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.
Investments in other regulated investment
companies are valued at their end of day net asset
value per share. Securities for which market
quotations are not readily available are valued at
fair value, as determined in good faith and
pursuant to procedures adopted by the Board of
Trustees.
(b) Security Transactions
Security transactions are accounted for as of
trade date. Realized gains and losses on
securities sold are determined on the basis of
identified cost.
(c) Investment Income
and Expenses
Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign
securities where the ex-dividend date may have
passed are recorded as soon as the Trust is
informed of the ex-dividend date. Dividend income
on foreign securities is recorded net of
withholding tax. Interest income is recorded on
the accrual basis and includes amortization of
discounts and premiums when 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.
International Equity had certain portfolio trades
directed to various brokers who paid a portion of
the Fund's expenses. For the year ended December
31, 1999, International Equity's custody expenses
were reduced by $67,243 under this arrangement.
In addition, each of the Funds has a "balance
credit" arrangement with the custodian bank
whereby the 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
Fund. For the year ended December 31, 1999, the
custody expenses for International Equity and
Emerging Markets Equity were reduced by $987 and
$948, respectively, under these arrangements.
(d) Dividends and Distributions
Dividends resulting from net investment income, if
any, normally will be declared and paid annually
for the Funds. 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 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.
(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 December 31, 1999, certain unaffiliated
shareholders, specifically omnibus accounts,
individually held greater than 10% of the
outstanding shares of the following Funds:
International Equity- two own 41% combined; and
Emerging Markets Equity- one owns 30%.
(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
Effective April 1, 1999, the Trust entered into a
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. ("AMG"), provides
or oversees investment advisory and management
services to the Funds. The Investment Manager
selects portfolio managers for each Fund (subject
to Trustee approval), allocates assets among
portfolio managers and monitors the portfolio
managers' investment programs and results. Each
Fund's investment portfolio is managed by one or
more 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 and of AMG.
Investment advisory and management fees are paid
directly by each Fund 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 for are as
follows:
Investment Advisory
Fund and Management Fee
International Equity 0.90%
Emerging Markets Equity 1.15%*
*For the year ended December 31, 1999, the
Investment Manager voluntarily waived its portion
of the investment advisory and management fee,
amounting to $28,772, or 0.40% on an annualized
basis.
Effective April 1, 1999, the Trust entered into an
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 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 year ended December 31, 1999,
International Equity paid a fee to the
Administrator at the rate of 0.25% per annum of
the Fund's average daily net assets. With respect
to Emerging Markets Equity, the Administrator is
entitled to a fee at a rate of 0.25% per annum of
the Fund's average daily net assets. For the year
ended December 31, 1999, the Administrator
voluntarily waived its entire administrative fee
amounting to $17,982.
Rexiter Capital Management Ltd., the portfolio
manager for Emerging Markets Equity, is an
affiliate of the Fund's custodian and transfer
agent, and pursuant to its Portfolio Management
Agreement, is entitled to receive a fee from the
Investment Manager not to exceed 0.75% of the
average daily net assets.
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 each Fund's allocated portion of the
total fees and expenses paid by the Trust.
(3) Purchases and Sales
of Securities
Purchases and sales of securities, excluding
short-term securities, for the year ended December
31, 1999, were as follows:
Fund Purchases Sales
International Equity $243,132,360
$264,788,343
Emerging Markets
Equity 10,638,493 8,165,586
There were no purchases or sales of U.S.
Government securities by either Fund.
(4) 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.
(5) Forward Foreign
Currency Contracts
During the year ended December 31, 1999,
International Equity 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 Funds 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.
(6) Tax Information
Pursuant to Section 852 of the Internal Revenue
Code, International Equity designated $32,421,362
as 20% capital gain distributions for the year
ended December 31, 1999. Emerging Markets Equity
had no capital gain distribution for the year
ended December 31, 1999.
Report of Independent Accountants
To the Trustees of The Managers Funds and the
Shareholders of
Managers International Equity Fund
and Managers Emerging Markets Equity Fund:
In our opinion, the accompanying statements of
assets and liabilities, including the schedules of
portfolio investments, and the related statements
of operations and of changes in net assets and the
financial highlights present fairly, in all
material respects, the financial position of
Managers International Equity Fund and Managers
Emerging Markets Equity Fund (two of the series
constituting The Managers Funds, hereafter
referred to as the "Funds"), at December 31, 1999,
and the results of their operations, the changes
in their net assets and the financial highlights
for the periods indicated, in conformity with
accounting principles generally accepted in the
United States. These financial statements and
financial highlights (hereafter referred to as
"financial statements") are the responsibility of
the Funds' management; our responsibility is to
express an opinion on these financial statements
based on our audits. We conducted our audits of
these financial statements in accordance with
auditing standards generally accepted in the
United States, which require that we plan and
perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes
examining, on a test basis, evidence supporting
the amounts and disclosures in the financial
statements, assessing the accounting principles
used and significant estimates made by management,
and evaluating the overall financial statement
presentation. We believe that our audits, which
included confirmation of securities at December
31, 1999 by correspondence with the custodian and
brokers, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 22, 2000
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
Swidler Berlin Shereff
Friedman, LLP
919 Third Avenue
New York, New York 10022
TRANSFER AGENT
Boston Financial Data Services, Inc.
attn: The Managers Funds
P.O. Box 8517
Boston, Massachusetts 02266-8517
(800) 252-0682
This report is prepared for the information of
shareholders. It is authorized
for distribution to prospective investors only when
preceded by an effective
prospectus.
THE MANAGERS FUNDS
EQUITY FUNDS:
- ----------------
INCOME EQUITY FUND
Scudder Kemper Investments, Inc.
Chartwell Investment Partners, L.P.
CAPITAL APPRECIATION FUND
Essex Investment Management
Co., LLC
Roxbury Capital Management, LLC
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
Rexiter Capital Management Limited
INCOME FUNDS:
- ------------------------
MONEY MARKET FUND
J.P. Morgan Investment Management Inc.
SHORT AND INTERMEDIATE
BOND FUND
Standish, Ayer & Wood, Inc.
BOND FUND
Loomis, Sayles & Company, L.P.
GLOBAL BOND FUND
Rogge Global Partners
www.managersfunds.com
