SHORT AND INTERMEDIATE BOND FUND
BOND FUND
GLOBAL BOND FUND
Annual Report
December 31, 1999
We pick the talent. You reap the results
SHORT AND INTERMEDIATE BOND FUND
BOND FUND
GLOBAL BOND 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
Schedules of Portfolio Investments..14
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..28
Historical net assets values, distributions, total
returns, expense ratios, turnover ratios and net assets
Notes to Financial Statements..31
Accounting and distribution policies, details of
agreements and transactions with fund management and
description of certain investment risks
Report of Independent Accountants..37
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 Short and Intermediate Bond Fund, (the
"Fund") managed by The Managers Funds LLC since
its inception in 1984, seeks high current income
by investing in fixed-income securities while
maintaining an average portfolio maturity between
one and five years. The Managers Funds currently
utilizes a single independent sub-advisor, Howard
Rubin of Standish, Ayer & Wood ("Standish"), who
has managed a portion of the portfolio since
August 1991, and the entire portfolio since
December 1995.
The Portfolio Manager
Howard Rubin's investment philosophy involves
constructing a portfolio using active sector
positioning and credit analysis. Howard does not
attempt to forecast interest rates or make shifts
in duration* in an attempt to add value, rather,
he manages the portfolio's duration to within 85%
and 115% of the Fund's benchmark, which is the
Merrill Lynch 1-4.99 Year Government/Corporate
Index (ML 1-5 yr G/C). Howard typically
constructs a diverse portfolio, using investment
grade bonds including bonds from a variety of
corporate sectors, asset-backed securities,
private and government agency mortgage-backed
securities, Treasury securities and a small
portion of foreign corporate and government
bonds.
The Year in Review
The Fund returned +2.21% in 1999 compared with a
return of +2.19% for the ML 1-5 yr G/C.
The year turned out to be extremely difficult for
domestic bond managers, as concerns regarding an
overheating economy, expectations of higher
inflation and the impact of current (and
expected) Federal Open Market Committee rate
hikes pushed rates higher throughout the year.
U.S. Treasuries posted their worst annual return
since 1994, but investment-grade corporates,
despite continued liquidity concerns, did
somewhat better on a relative basis in response
to the strong economic environment. On a
relative basis, the Fund performed well during
the year, slightly outperforming its benchmark
net of all expenses and outperforming a majority
of its competitors.
During the first quarter of 1999 there were many
different crosscurrents in the U.S. bond market.
In general, rates rose and the yield curve
steepened in response to continued signs of
strength in the U.S. economy. Bonds, in general,
fell in value. However, there was a wide range
of returns for particular sectors. U.S.
Treasuries fell sharply in value while U.S.
corporate high yield bonds and mortgage-backed
securities offered strong returns as a stronger
economy gave corporate bond investors more
confidence and the higher rates implied lower
prepayment risk during the quarter.
On a relative basis, the Fund performed very well
in the first quarter, more than doubling the
return for the benchmark. Such outperformance
was attributable to being underweight in
Treasuries and overweight in mortgage-related
securities.
In the second quarter, bonds in general again
declined in value as continued economic strength
in the U.S., combined with some signs of a
resurgence abroad, resulted in an increase in
interest rates in the U.S. The Federal Reserve
Board (the Fed) voted at the end of June to
increase short-term rates by 25 basis points
(0.25%). The Fund's performance tracked closely
to its benchmark throughout the quarter, as the
Fund continued to maintain an index-like duration
and thus was similarly impacted by the increase
in interest rates.
In the third quarter, interest rates increased by
about 10 basis points on average in the 1-5 year
maturity range. The Fed, still concerned about
not only the strength of the domestic economy but
also the resurgence of several foreign economies,
again hiked short-term rates by 25 basis points
in August. Faced with poor liquidity conditions
and an excess of supply, many fixed-income
investors remained frustrated. The Fund's
credits lagged behind the market in general
during the quarter. Indeed, eight of the bottom
nine performing bonds in the portfolio were some
form of corporate credit. Despite what would seem
to be an abundance of value in the fixed-income
market, spread sectors continued to underperform.
Interest rates also rose in the fourth quarter.
The Fund's relatively large weighting toward
corporate bonds moderately helped its overall
performance. For example, the Qwest
Communications note appreciated 6.5% in the
quarter. That position was also the Fund's best
performing bond for the whole year. On the other
hand, the Fund's somewhat higher credit quality
detracted from relative performance in the fourth
quarter. The Fund held less than 5% of its assets
in bonds rated BB+ and below (including the
above-mentioned Qwest note), and lower quality
credits were among the best performing bonds in
the quarter.
Looking Ahead
Despite the difficult rate environment,
Standish's Howard Rubin remains optimistic that
his credit-quality oriented approach to investing
will be rewarded. In November he noted, "For the
most part, high quality bond portfolios have
relatively few individual issue related problems.
The volatility of returns has risen significantly
among medium grade bonds and this trend has
spilled over into the BBB range as well. While we
believe much of this recent volatility is largely
a function of technical market conditions
including reduced liquidity, supply and Y2K
related avoidance, the achievement of excess
returns will probably remain challenging."
At year end, the Fund had 73% of its assets
invested in corporate bonds, 25% in mortgage-
related securities, and 13% in U.S. Treasury
Notes. The Fund's duration* at year-end was 2.3
years, the same as the benchmark. The
portfolio's average yield to maturity was 6.6%
and its 30-day SEC yield was 5.7%.
* Duration is the weighted average time
(typically quoted in years) to the receipt of
cash flows (principle + interest) for a bond or
portfolio. It is used to evaluate the interest
rate sensitivity of a bond or portfolio. The
longer the duration, the more sensitive the price
of the bond is to movements in interest rates.
THE MANAGERS SHORT AND INTERMEDIATE BOND FUND'S
cumulative total return
is based on the daily change in net asset value
(NAV), and assumes that
all distributions were reinvested.
The Merril Lynch 1-5 Year Government/Corporate
Index consists of over
1,800 government and investment grade corporate
bonds with maturities
between one and five years. The index is heavily
weighted in U.S.
Treasury issues, which make up over 75% of the
index. The index assumes
reinvestment of dividends.
This chart compares a hypothetical $10,000 investment made in Managers
Short and Intermediate Bond Fund on December 31, 1989, to a $10,000
investment made in the Merrill Lynch 1-5 Year Government/Corporate
Index for the same time period. Past performance is not indicative of
future results.
[Line Graph comparing hypothetical $10,000 investment for the past ten years
between the Short and Intermediate Bond Fund and the Merrill Lynch 1-5 Yr.
Government/Corporate Index]
This table shows the average annual total returns for Managers Short and
Intermediate Bond Fund for the one-year, five-year and ten-year periods
through December 31, 1999, and comparable returns for the Merrill Lynch
1-5 Year Government/Corporate Index.
AVERAGE ANNUAL TOTAL RETURNS
ANNUALIZED
- -----------------
ONE YEAR FIVE YEARS TEN YEARS
- ---- ----------- ---------
Managers Short and Intermediate
Bond Fund 2.21% 6.53% 6.28%
Merrill Lynch 1-5 Year
Government/Corporate Index 2.19% 6.86% 7.00%
Managers Bond Fund (the "Fund") seeks current income by investing in
fixed-income securities. The Fund is currently managed by Daniel Fuss
of Loomis Sayles & Company ("Loomis"), who has been managing a
portion of the Fund since its inception in 1984. Prior to April 1993,
the Fund utilized a dual investment manager structure.
The Portfolio Manager
Dan Fuss is a contrarian bond investor who focuses on individual issues
that will provide the highest return over long periods of time. Dan and
his team of credit analysts at Loomis research debt offerings in the same
way equity analysts research stocks, looking for undervalued bonds
where they see a yield premium, the potential for price appreciation, or
both. They analyze the company's financial condition in detail, as well
as the terms of specific bond offerings. Price appreciation can come
from a variety of catalysts including improving company fundamentals,
which would lead to credit upgrades, changing market supply and
demand forces, and improving sector or economic trends.
Given the typical shape of the yield curve, longer-term bonds generally
yield more than shorter-term bonds, and Dan is willing to take the
added interest rate risk in order to gain higher yields. In addition, price
improvements as a result of credit upgrades are more meaningful for
longer-term bonds, thus Dan's portfolios tend to be relatively long in
duration. In order to mitigate some of the interest rate risk, Dan
structures his portfolio with counter cyclical elements. In doing so,
Dan will utilize convertible bonds, municipal bonds, preferred stocks
and foreign corporate and government bonds, in addition to the
domestic corporate bonds which make up the majority of the portfolio.
In addition, Dan seeks bonds with call protection, either through the
terms of the bond structure or through deep price discounts relative to
the call price.
The Year in Review
The Fund provided a total return of +3.66%, considerably better than
the return of -2.15% for the Lehman Brothers Government/Corporate
Bond Index ("LB G/C").
The year turned out to be extremely difficult for domestic bond
managers, as concerns regarding an overheating economy, expectations
of higher inflation and the impact of current (and expected) FOMC
rate hikes pushed rates higher throughout the year. U.S. Treasuries
posted their worst annual return since 1994, but investment-grade
corporates, despite continued liquidity concerns, did somewhat better
on a relative basis in response to the strong economic environment.
The Fund's relative outperformance in 1999 was primarily due to its
heavy weighting in lower quality credits and foreign bonds as well as its
underweighting in U.S. Treasury Bonds. The Fund's long duration
might have detracted from performance, since interest rates rose, were
it not for the robust gains in these other sectors.
The Fund's strong relative performance in the first quarter was
specifically due to its lack of U.S. Treasuries and the quality
distribution among its corporate holdings. The Fund's allocation to
U.S. Treasuries was about 4% throughout the quarter, compared with a
roughly 25% weighting in the LB G/C. This sector was one of the
worst performers for the bond market during the first quarter as the
yield curve steepened in response to continued signs that the U.S.
economy is roaring ahead as well as ominous comments in February by
Fed Chairman Alan Greenspan.
Meanwhile, the Fund was heavily weighted in the lower tier (BBB)
investment grade securities. During the quarter, there was a sharp
return distribution bias favoring lower quality to higher quality credits.
Indeed, the LB Corporate High Yield Index posted a return of +1.9%
in the quarter compared with -0.7% for investment grade corporates.
The Fund's foreign bonds also performed extremely well, with a few
emerging market bonds appreciating in price by more than 25% in the
quarter.
It was more of the same in the second quarter as the Fund's 1.0%
increase came despite the sharp increase in interest rates and the Fund's
long duration structure. The source of the performance was again a
combination of the Fund's significant yield advantage combined with a
continued tightening of credit yield spreads as the rebound in emerging
Asia continued. Several of the Fund's Thai corporate notes soared
between 25%-50% in the quarter.
Domestic interest rates rose slightly in the third quarter in response to
the persistent economic strength of the United States. That strength,
combined with indications of a continued resurgence abroad prompted
the Fed to adopt a tightening stance and raise the federal funds and
discount rates by 25 basis points on August 24. Subsequently, investors
began to anticipate that the Fed would not need to raise rates further
and September's return was the best month of the year for the Lehman
Brothers U.S. Aggregate Index.
From a quality perspective, however, the market was a reversal of the
first half spread tightening. The Fund's relative underperformance
during the third quarter was partly because of its allocation to the
somewhat lower-grade corporate market. There was a very clear inverse
relationship between credit quality and performance during the third
quarter, with high yield bonds being among the worst performing
sectors of the bond market. As a sector, these bonds were the worst
performing for the Fund. This time, the Fund's foreign holdings were
not able to save the day: a large position in Venezuelan Cerro Negro
Finance plunged 13% in price and two Malaysian bonds depreciated by
about 6%.
During the fourth quarter, interest rates rose around the globe in
response to continued economic strength and fears of rising inflation.
With the exception of corporate bonds at the lower end of the credit
spectrum and emerging markets bonds, virtually all sectors of the bond
market posted negative total returns in the fourth quarter.
The Fund's good relative performance was again almost entirely a
result of Loomis' overweighting in foreign bonds, particularly several
emerging markets securities. Bonds such as Malaysia's Tenaga Nasional
Berhad 7.5%, Thailand's Banpu Public Co. 2.75%, and a 8.5% South
African Government bond all posted extremely strong returns in the
quarter.
Except for the foreign bond exposure, the Fund's performance was
actually pretty mediocre in the fourth quarter. The Fund held several
REIT bonds, including Trinet and Highwood Realty, which
depreciated during the quarter after Moody's cut the debt outlook for
that whole sector to negative. Additionally, the Fund's positions in
several electric company preferreds also fell despite being "good values"
due largely to technical factors, i.e., liquidity.
Looking Ahead
The Fund's outlook and allocations did not change dramatically during
1999. Loomis currently believes that the bonds held by the Fund are
attractively valued and also expects liquidity to continue to improve.
The Fund continues to hold more than 40% of its assets in domestic
corporate bonds with a heavy emphasis on long duration and call
protection. In addition the portfolio is 31% invested in foreign bonds.
Many of the foreign bonds in the portfolio are "Yankee" bonds
meaning that the issuers are foreign but that they are denominated in
U.S. Dollars and traded in the U.S. These bonds are providing
extremely good yields and offer some economic diversification. The
primary risks to these bonds are liquidity, which manifests itself in
price volatility, and credit, on which Dan Fuss and the analysts at
Loomis constantly focus.
As of year end, the average maturity of the portfolio was 17.7 years,
and the duration was 10.6 years. For comparison, the Lehman
Brothers Government/ Corporate Bond Index has an average maturity
and duration of 9.7 years and 5.3 years, respectively. The yield to
maturity of the portfolio is 8.5%, while the yield to maturity of the
index is 7.0%. At year end, the annualized 30-day SEC yield on the
Fund was 7.31%.
* Duration is the weighted average time (typically quoted in years) to
the receipt of cash flows (principal + interest) for a bond or portfolio.
It is used to evaluate the interest rate sensitivity of a bond or portfolio.
The longer the duration, the more sensitive the price of the bond is to
movements in interest rates.
THE MANAGERS BOND FUND Fund's cumulative total
return is based on the
daily change in net asset value (NAV), and
assumes that all distributions
were reinvested.
The Lehman Brothers Government/Corporate Bond
Index is comprised of 4,688
Government securities and investment grade
corporate securities. The index
Assumes reinvestment of all income.
This chart below compares a hypothetical $10,000
invested in Managers
Bond Fund on December 31, 1989, to a $10,000
investment made in the
Lehman Brothers Government/Corporate Bond Index
for the same time period.
Past performance is not indicative of future
results.
[Line Graph comparing hypothetical $10,000
investment for the past ten years
between the Bond Fund and the Lehman Brothers
Government/Corporate Bond Index]
This table shows the average annual total returns
for Managers Bond Fund
for the one-year, five-year and ten-year periods
through December 31, 1999,
and comparable returns for the Lehman Brothers
Government/Corporate Bond
Index.
AVERAGE ANNUAL TOTAL RETURNS
ANNUALIZED
- -----------------------------
ONE YEAR FIVE YEARS TEN YEARS
-------- ----------- ---------
Managers Bond Fund 3.66% 10.19% 8.79%
Lehman Brothers Government/
Corporate Bond Index (2.15)% 7.61% 7.65%
Managers Global Bond Fund
Managers Global Bond Fund (the "Fund") seeks both
income and capital appreciation by investing in
domestic and foreign fixed-income securities.
The Managers Funds has utilized a single
independent sub-advisor, Olaf Rogge of Rogge
Global Partners ("Rogge Global"), to manage the
portfolio since the Fund's inception in 1994.
The Portfolio Manager
Olaf's investment strategy begins with an
assessment of each country's economic outlook and
currency strength. His investment philosophy is
that healthy countries with sound finances
produce the highest bond and currency returns.
In analyzing the financial health of a country,
Olaf and the investment team at Rogge Global
evaluate the fiscal policy, savings rates and
money growth in each country along with assessing
the credibility of the monetary authorities in
each country. In addition to making country
allocation decisions, Rogge Global analyzes the
yield curve and expected interest rate movements
within each economy to determine how to position
the portfolio from a duration* and maturity
perspective. At the same time, Rogge Global
recognizes that short-term volatility in the
currency market can significantly impact
portfolio performance. Thus, Rogge Global will
sometimes hedge (usually toward an index-like
exposure) when he expects such short-term
currency swings to go against the expected trend
for that country's bond market. His portfolio
consists primarily of highly liquid government
issues of developed market countries, with no
more than 10% in AAA-rated corporate bonds.
The Year in Review
The Fund returned -9.97% in 1999, compared with
- -4.27% for the Salomon Brothers World Government
Bond Index ("SBWGBI").
The year was a difficult one for the global bond
markets, and for Rogge Global in particular. The
Fund's weak relative performance stemmed from
several sources, but most importantly from its
country and currency allocations. In particular,
the Fund's most significant underweight position
was in Japan. Actually, the only Japanese bond
the Fund owned was a small position in a Japanese
utility purchased in the second quarter. Rogge
Global has felt that the fundamentals for the
Japanese bond market were unattractive.
Unfortunately, the Japanese bond market was the
only developed bond market to offer a positive
total return in 1999.
Currency hedges, through their cost and some
mistiming on the part of Rogge Global, also
detracted from relative performance in the year.
Despite owning barely any Japanese securities,
Rogge Global has believed for some time that the
outlook for the Japanese economy suggests an
inherent strength in the yen. He has therefore,
through currency forwards, futures, and some non-
Japanese yen-priced bonds, taken a long position
on the yen that results in essentially a neutral-
weight on that currency relative to the
benchmark. Put more concisely, the Fund's net
yen position was about the same as the yen
position in the SBWGBI even though the Fund did
not own any Japanese bonds.
In the first quarter, the Japanese government
bond market offered some of the best returns of
any developed nation, but a strong U.S. economy
fueled a sharp rise in the dollar against most
international currencies, including the yen. Thus
the Fund's net position in the Japanese market
fared very poorly.
In the second quarter, despite continued easing
from the central banks across Europe and Asia,
interest rates moved higher across the globe.
Combined with the strength of the U.S. Dollar,
these made for poor dollar-based returns in
global bonds. Most European government bonds fell
between 1.5%-2.0% in local currency in the second
quarter. Since the euro declined by 4.6% versus
the U.S. Dollar, those same bonds resulted in
losses of between 5.0%-6.0% for U.S. investors.
Given that the types of bonds that Rogge Global
will typically own are longer-maturity government
issues, the Fund was negatively impacted by the
higher rates.
One important note from the second quarter was
that we (The Managers Funds) began to allow a
limited (up to 10%) amount of emerging markets
exposure into the portfolio. At that time,
however, the Fund had not yet invested in those
markets.
Global interest rates continued higher in the
third quarter in response to continued strength
in the U.S. economy, signs of a recovery in
Europe and Asia, a U.S. Fed rate hike, and a
rising yen. The only region in which yields
declined, and bond prices rose, was in developed
Asia where Japanese bonds returned 1.9% in local
currency. Currency exposure was therefore
critical to returns in the third quarter. The yen
rose 13% versus the U.S. Dollar during the
quarter, suggesting that the largest risk was
being underweight in that currency. The Fund had
maintained its long position on Japanese yen,
although its net currency position was very
slightly below that of its benchmark. The net
result was that not owning any Japanese bonds
(the only market that rose in value during the
quarter) and holding a slightly below-market
weight in yen hurt relative performance during
the third quarter.
In the fourth quarter, the Fund moved to a long
position on the euro, which depreciated by more
than 5%. Additionally, Japanese interest rates
fell and emerging market debt offered extremely
strong returns. Thus, the Fund's meager
investments in both those markets held back
performance. It should also be noted that as the
year ended, the Fund began to step up its
investments in certain emerging countries, such
as Mexico and the Philippines.
Looking Ahead
At the end of 1999, Rogge Global had reduced its
average duration to a little over 5 years from
about 6 years at the end of 1998. This shorter-
duration stance reflects Rogge Global's belief
that the interest rate environment in general has
become even less attractive.
From a country/currency perspective, Rogge Global
has taken an increasingly optimistic view on the
European markets (and the euro). He recently
highlighted numerous reasons for this: the
acceleration in European economic growth, the
nascent state of the technology revolution in
Europe, restructuring/deregulation, low
inflation, and the emergence of the ECB as a
strong and credible central bank. On the other
hand, Rogge Global continues to believe that "the
dire picture for (Japanese) government debt
remains in place," arguing that demand for
Japanese bonds should taper off. At the same
time, he has maintained his long position on the
yen in response to some uncertainty about the
future direction in the currency. Rogge Global
is maintaining his underweight duration in U.S.
bonds, a strategy that was successful in 1999,
and is short the U.S. Dollar. Finally, Rogge
Global is optimistic that there are opportunities
in the emerging markets that they hope to exploit
to the extent that they can.
* Duration is the weighted average time
(typically quoted in years) to the receipt of
cash flows (principal + interest) for a bond or
portfolio. It is used to evaluate the interest
rate sensitivity of a bond or portfolio. The
longer the duration, the more sensitive the price
of the bond is to movements in interest rates.
THE MANAGERS GLOBAL BOND FUND'S cumulative total
return is based on the
daily change in net asset value (NAV), and
assumes that all distributions
were reinvested.
The Salomon Brothers World Government Bond Index
is priced in U.S. dollars,
and includes 14 international government bond
markets. The index assumes
reinvestment of all dividends.
This chart below compares a hypothetical $10,000
invested in Managers
Global Bond Fund at its inception on March 25,
1994, to a $10,000 investment
made in the Salomon Brothers World Government
Bond Index for the same period.
Past performance is not indicative of future
results.
[Line Graph comparing hypothetical $10,000
investment since March, 31, 1994
between the Global Bond Fund and the Salomon
Brothers World Government Bond
Index]
This table shows the average annual total returns
for Managers Global
Bond Fund for the one-year, five-year and since
inception periods
through December 31, 1999, and comparable returns
for the Salomon Brothers
World Government Bond Index
AVERAGE ANNUAL TOTAL RETURNS
ANNUALIZED
- --------------------
ONE YEAR THREE YEARS Since Inception
-------- ----------- ---------
Managers Global
Bond Fund (9.97)% 5.97% 4.89%
Salomon Brothers World
Government Bond Index (4.27)% 6.42% 5.98%
Managers Short and Intermediate Bond Fund
Schedule of Portfolio Investments
December 31, 1999
Corporate Bonds - 72.8%
Asset Backed - 28.9%
Advanta Mortgage Loan Trust, Series 97-4,
Class A4, Ambac insured, 6.660%, 03/25/22
125,000 121,195
Americredit Auto Receivables, Series 99-B,
Class A4, 5.960%, 03/12/06 350,000
341,898
Chase Manhattan Credit Card, Series 1996-3,
Class A, 7.040%, 02/15/05 350,000
350,763
Chemical Master Credit Card Trust 1,
Series 95-2, Class A, 6.230%, 06/15/03 350,000
350,026
Delta Funding Home Equity Loan Trust,
Series 98-2, Class A3F, 6.240%, 05/15/25 500,000
493,580
Discover Card Master Trust I, Series 1998-2,
Class A, 5.800%, 09/16/03 350,000
346,500
EQCC Home Equity Loan Trust, Series 1997-1,
Class A7, FGIC insured, 7.120%, 05/15/28 337,000
336,380
Ford Credit Auto Owner Trust, Series 1997-B,
Class B, 6.400%, 05/15/02 500,000
495,515
Green Tree Financial Corp., Series 98-1,
Class A3, 5.950%, 11/01/29 300,000
297,186
Green Tree Financial Corp., Series 98-6,
Class A3, 5.930%, 04/01/09 200,000
198,750
IMC Home Equity Loan Trust, Series 98-1,
Class A3, 6.410%, 04/20/18 400,000
394,624
Indymac Manufactured Housing Contract,
Series 98-2, Class A2, 6.170%, 12/25/11 350,000
343,161
Oakwood Mortgage Investors Inc., Series 97-A,
Class A3, 6.650%, 05/15/27 300,000
298,473
Residential Asset Securities Corp., Series 99-KS1,
Class AI2, 6.000%, 04/25/20 355,000
347,013
UCFC Loan Trust, Series 93-B1, Class A1,
FGIC insured, 6.075%, 07/25/14 94,035
91,373
Vendee Mortgage Trust, Series 1995-1C,
Class 3H, 8.000%, 11/15/03 350,000
356,341
Total Asset Backed 5,162,778
Finance - 25.1%
American Health Properties, Inc., 7.050%, 01/15/02
350,000 338,832
AT&T Corp., Medium Term, 6.250%, 05/15/01 200,000
198,086
Avalon Bay Communities, Senior, 6.500%, 07/15/03
300,000 286,605
BankOne Corp., Medium Term, 5.625%, 02/17/04
325,000 (b) 306,073
CarrAmerica Realty Corp., 6.625%, 10/01/00
175,000 173,348
Chelsea GCA Realty Partners, 7.750%, 01/26/01
350,000 348,257
Conseco Inc., 6.400%, 02/10/03 300,000
286,800
Crescent Real Estate Equities Co.,
7.000%, 09/15/02 (e) 375,000 346,845
First Interstate Bancorp., Sub., 9.900%, 11/15/01
225,000 235,843
Florida Windstorm Underwriters,
Series 144A, 6.500%, 08/25/02 (e) 350,000
343,753
Ford Motor Credit Co., 6.700%, 07/16/04 375,000
(b) 367,031
General Electric Capital, 5.650%, 03/31/03
375,000 361,176
IBM Credit Corp., Medium Term, 6.450%, 11/12/02
350,000 344,853
Lehman Brothers Holdings, Inc., 6.000%, 02/26/01
300,000 296,573
Norwest Financial, Inc., Senior, 6.375%, 09/15/02
250,000 246,030
Total Finance 4,480,105
Industrials - 18.2%
Comdisco, Inc., 6.130%, 08/01/01 350,000
345,044
Cox Communications, Inc., 6.150%, 08/01/03
350,000 335,132
CSX Corp., 5.850%, 12/01/03 350,000
331,678
Kaufman & Broad Home Corp.,
Senior, 7.750%, 10/15/04 150,000
139,500
Qwest Communications International, Inc.,
Series B, Stepup, 0.000%, 02/01/08 225,000
176,513
Royal Caribbean Cruises, Ltd.,
Senior, 8.125%, 07/28/04 325,000
330,148
Safeway Inc., 7.000% 09/15/02 350,000
348,446
TCI Communications, Inc.,
Senior, 8.650%, 09/15/04 400,000
424,324
Tyco International Ltd., 6.500%, 11/01/01 250,000
247,931
US Bank NA Minnesota, 6.350%, 09/28/01 350,000
346,415
WMX Technologies Inc., 7.100%, 08/01/26 250,000
230,343
Total Industrials 3,255,474
Utilities - 0.6%
Niagara Mohawk Power Corp.,
Series E, 7.375%, 07/01/03 113,415
112,920
Total Corporate Bonds
(cost $13,345,255) 13,011,277
U.S. Government
and Agency Obligations - 22.3%
Federal Home Loan Bank, 5.250%, 04/25/02 500,000
484,920
FHLMC, 5.500%, 05/15/02 1,000,000 975,940
FNMA, 6.140%, 06/12/02 250,000 246,405
U.S. Treasury Notes, 5.750%, 08/15/03
2,325,000 2,277,407
Total U.S. Government
and Agency Obligations
(cost $4,034,502) 3,984,672
Foreign Corporate Obligations - 3.5%
Banco LatinoAmericano SA, 6.500%, 04/02/01
250,000 248,688
Brascan, Ltd., 7.375%, 10/01/02 225,000
220,572
St. George Bank, Ltd.,
Floating Rate, 6.126%, 11/29/01 (a) 150,000
150,044
Total Foreign Corporate Obligations
(cost $630,374) 619,304
Other Investment Companies - 3.6% (d)
JPM Prime Money Market Fund, 5.50% 29,404
29,404
Navigator Securities Lending
Prime Portfolio, 5.83% (c) 605,820
605,820
Total Other Investment Companies
(cost $635,224) 635,224
Total Investments - 102.2%
(cost $18,645,355) 18,250,477
Other Assets, less Liabilities - (2.2)% (384,760)
Net Assets - 100.0% 17,865,717
Note: Based on the cost of investments of
$18,650,809 for federal income tax purposes at
December 31, 1999, the aggregate gross unrealized
appreciation and depreciation was $589 and
$400,921, respectively, resulting in net
unrealized depreciation of investments of
$400,332.
(a) Variable rate security. Coupon rate
disclosed is that in effect at December 31, 1999.
(b) Some or all of these securities,
amounting to $589,836, or 3.3% of net assets, were
out on loan to various brokers as of December 31,
1999.
(c) Collateral received from brokers for
securities lending were invested in this short-
term investment.
(d) Yields shown for each investment
company represent 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.
(e) 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 $690,598, or 3.9% of net
assets.
Investments Abbreviations:
AMBAC: Ambac Assurance Corp.
FNMA: Federal National Mortgage Association
FGIC: Financial Guaranty Insurance Co.
FHLMC: Federal National Mortgage Association
FNMA: Federal National Mortgage Association
Security Ratings (unaudited)
The composition of long-term debt holdings as a
percentage of the total value of investments in
securities is as follows:
S&P's/Moody's Ratings
Gov't/AAA 42 %
AA 10
A 12
BBB 22
BB 4
Not Rated 10
100 %
Managers Bond Fund
Schedule of Portfolio Investments
December 31, 1999
Corporate Bonds - 56.0%
Asset Backed - 1.4%
Nomura Asset Securities Corp., Series 1998-D6,
Class A3, 7.227%, 03/17/28 500,000
456,970
Convertible Bonds - 12.1%
Loews Corp., Sub., 3.125%, 09/15/07 2,210,000
1,787,338
Noram Energy, Sub., 6.000%, 03/15/12 475,000
408,500
Thermo Electron Corp., 4.250%, 01/01/03 (e)
500,000 421,875
Thermo Instrument System, 4.500%, 10/15/03 (e)
550,000 450,312
Thermo Terratech, Inc., Euro-dollar, Sub.,
4.625%, 05/01/03 450,000 375,750
Thermo Terratech, Inc., Sub., 4.625%, 05/01/03 (e)
456,000 374,490
Xerox Corp., Convertible, 0.570% 04/21/18 400,000
213,000
Total Convertible Bonds 4,031,265
Finance - 15.7%
Camden Property Trust, 7.000%, 11/15/06 250,000
233,442
First Industrial L.P., 7.600%, 07/15/28
1,750,000 1,432,795
First Industrial L.P.,
Medium Term, 7.500%, 12/01/17 645,000
545,006
Highwoods/Forsyth L.P.,
Senior, 7.500%, 04/15/18 2,250,000
1,814,288
Keycorp Capital II, 6.875%, 03/17/29 500,000
420,073
Meditrust, 7.000%, 08/15/07 500,000
375,000
U.S. West Capital Funding Inc.,
6.875%, 07/15/28 500,000 (b) 437,374
Total Finance 5,257,978
Industrials - 26.8%
APL, Ltd., 8.000%, 01/15/24 250,000
161,128
Atlas Air, Inc., Series B, 7.680%, 01/02/14
994,768 915,684
Baker Hughes Inc., 0.000%, 05/05/08 (a)
1,550,000 1,077,250
Bausch & Lomb, Inc., 7.125%, 08/01/28 500,000
429,205
Dell Computer Corp., 7.100%, 04/15/28 750,000
678,990
Ford Motor Co., 6.375%, 02/01/29 1,000,000
(b) 841,182
Kellwood Co., 7.625%, 10/15/17 250,000
211,370
Lockheed Martin Corp., 7.750%, 05/01/26 250,000
230,304
MacMillan Bloedel, Ltd., 7.700%, 02/15/26
1,350,000 1,313,780
Pennzoil-Quaker State, 7.375%, 04/01/29 250,000
221,238
Pepsi Bottling Group Inc.,
Senior, 7.000%, 03/01/29 350,000 (b)
315,932
Pioneer-Standard Electronics, Inc.,
Senior, 8.500%, 08/01/06 250,000
229,655
Pulte Corp., 7.625%, 10/15/17 500,000
426,050
Seagate Technology, Inc., 7.875%, 03/01/17
250,000 188,755
Security Capital Group, 7.700%, 06/15/28 750,000
603,113
Time Warner Inc., 6.625%, 05/15/29 250,000
212,772
Trinet Corporate Realty Trust, Inc.,
Senior, 7.700%, 07/15/17 500,000
341,455
Westvaco Corp., 7.000%, 08/15/23 250,000
211,056
Woolworth Corp., 8.500%, 01/15/22 570,000
353,400
Total Industrials 8,962,319
Total Corporate Bonds
(cost $20,914,001) 18,708,532
Foreign Corporate Obligations - 18.5%
Banpu Public Company, Ltd.,
Euro-dollar, 2.750%, 04/10/03 250,000
247,500
Cerro Negro Finance, Ltd., 7.900%, 12/1/20 (e)
500,000 331,005
Compania De Transporte Energia,
Senior, 9.250%, 04/01/08 (e) 700,000
610,750
Empresa Nacional De Electricid,
Yankee, 7.875%, 02/01/27 250,000
217,297
Korea Electric Power Corp.,
Yankee, 7.400% 04/01/16 1,002,852
923,784
Loxley Public Co., Euro-dollar, 2.500%, 04/04/01
400,000 104,000
Magna International Inc.,
Yankee, 4.875%, 02/15/05 500,000
425,000
PDVSA Finance, Ltd,
Series 98-1, 7.500%, 11/15/28 1,000,000
697,353
PDVSA Finance, Ltd.,
Series 98-1, 7.400%, 08/15/16 300,000
219,612
Pemex Finance Ltd., 8.875%, 11/15/10 500,000
494,600
Samsung Electronics Ltd.,
Sinking Fund, 7.700%, 10/01/27 (e) 500,000
372,500
Telekom Malaysia Berhad, 7.875%, 08/01/25 (e)
500,000 451,915
Telekom Malaysia Berhad,
Convertible, 4.000%, 10/03/04 300,000
254,703
Tenaga Nasional Berhad, 7.500%, 11/01/25 (e)
1,000,000 827,330
Total Foreign Corporate Obligations
(cost $6,927,614) 6,177,349
Foreign Government
and Agency Obligations - 12.5%
British Columbia Province, Generic Residual,
Canada, 0.000%, 08/23/24 (a) CAD 9,925,000
1,326,863
Government of Poland, registered Past Due
Interest Brady Stepup, 6.000%, 10/27/14 USD
250,000 221,250
Manitoba Province, Canada,
Medium Term, 6.500%, 09/22/17 CAD
1,800,000 1,217,790
Ontario Hydro, 0.000%, 10/15/21 (a) CAD
1,700,000 274,885
Province of Alberta,
Series CS, Sinking Fund, 5.930%, 09/16/16
CAD 259,000 172,137
Republic of South Africa,
Yankee, 8.500%, 06/23/17 USD 1,075,000
978,250
Total Foreign Government
and Agency Obligations
(cost $4,071,570) 4,191,175
U.S. Government
and Agency Obligations - 6.0%
FNMA, 6.000%, 7/01/29 244,973 224,072
U.S. Treasury Notes Strip, 0.000%, 8/15/23 (a)
6,200,000 1,333,186
U.S. Treasury Notes, 5.500%, 08/15/28 500,000
426,405
Total U.S. Government
and Agency Obligations
(cost $2,171,976) 1,983,663
Preferred Stock - 1.7%
Entergy Louisiana, Inc., 4.440% 226
13,885
Entergy New Orleans, Inc., 4.750% 482
30,095
EVI Inc., 5.000% 7,500 299,063
Pacific Gas & Electric Co., 5.000% 100
1,588
Union Electric Co., 3.500% 350 16,450
Wisconsin Electric Power Co., 3.600% 3,746
198,537
Total Preferred Stock
(cost $521,640) 559,618
Other Investment Companies - 6.6% (d)
JPM Prime Money Market Fund, 5.50% 1,240,961
1,240,961
Navigator Securities Lending
Prime Portfolio, 5.83% (c) 977,280
977,280
Total Other Investment Companies
(cost $2,218,241) 2,218,241
Total Investments - 101.3%
(cost $36,825,042) 33,838,578
Other Assets, less Liabilities - (1.3)%
(449,252)
Net Assets - 100.0% 33,389,326
Note: Based on the cost of investments of
$36,825,042 for federal income tax purposes at
December 31, 1999, the aggregate gross unrealized
appreciation and depreciation was $590,562 and
$3,577,026, respectively, resulting in net
unrealized depreciation of investments of
$2,986,464.
(a) Zero coupon security.
(b) Some or all of these securities,
amounting to $954,025, or 2.9% of net assets, were
out on loan to various brokers as of December 31,
1999.
(c) Collateral received from brokers for
securities lending were invested in this short-
term investment.
(d) Yields shown for each investment
company represent 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.
(e) 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 $3,840,178, or 11.5% of net
assets.
Investments Definitions and Abbreviations:
Registered shares: A security whose owner has been
recorded with its issuer or issuer's registrar.
Yankee Bond: A foreign bond denominated in U.S.
dollars and registered with the Securities and
Exchange Commission for sale in the United States.
FNMA: Federal National Mortgage Association
CAD: Canadian Dollar
Security Ratings (unaudited)
The composition of long-term debt holdings as a
percentage of the total value of investments in
securities is as follows:
S&P's/Moody's Ratings
Gov't/AAA 5 %
AA 5
A 31
BBB 44
BB 3
Not Rated 12
100 %
Managers Global bond Fund
Schedule of Portfolio Investments
December 31, 1999
Foreign Government
and Agency Obligations - 73.5%
Australian Government, 7.500%, 07/15/05 AUD
900,000 611,583
Bundes, Series 93, 6.500%, 07/15/03 EUR 103,503
109,988
Bundes, Series 99, 3.000%, 03/16/01 EUR
1,100,000 1,096,782
Bundes, Series 99, 3.000%, 06/15/01 EUR 800,000
794,436
Bundes, Series 99, 4.500%, 07/04/09 EUR 110,000
103,938
Canadian Government, 5.125%, 01/22/02 USD
450,000 437,117
Canadian Government, 5.250%, 09/01/03 CAD
950,000 637,773
Canadian Government, 6.000%, 06/01/08 CAD
900,000 612,885
Dutch Government, 3.750%, 07/15/09 EUR 900,000
792,381
Dutch Government, 5.250%, 07/15/08 EUR 674,317
673,499
Dutch Government, 5.750%, 02/15/07 EUR 250,000
259,393
Kingdom of Denmark, 6.000%, 11/15/09 DKK
4,477,000 622,511
Kingdom of Norway, 5.500%, 05/15/09 NOK
2,200,000 262,104
Kingdom of Norway, 6.750%, 01/15/07 NOK
2,400,000 312,307
Kingdom of Spain, 5.150%, 07/30/09 EUR 900,000
882,011
Kingdom of Spain, 6.000%, 01/31/29 EUR 631,062
628,072
Kingdom of Sweden,
Series 1044, 3.500%, 04/20/06 SEK
7,000,000 732,707
Kingdom of Sweden, 5.000%, 01/28/09 SEK
4,800,000 533,450
Kingdom of Sweden,
Series 1038, 6.500%, 10/25/06 SEK
4,500,000 554,871
Mexico United States, 7.375%, 07//06/06 EUR
925,000 933,289
Republic of Chile, 6.875%, 04/28/09 USD 50,000
47,250
Republic of Italy, 3.500%, 06/20/01 JPY
30,000,000 307,855
Republic of Italy, 6.500%, 11/01/27 EUR 577,494
607,626
Republic of Philippines, 9.500%, 10/21/24 USD
680,000 686,800
United Kingdom Treasury,
6.500%, 12/07/03 GBP 475,000 773,790
Total Foreign Government
and Agency Obligations
(cost $15,267,014) 14,014,418
Foreign Corporate Obligations - 10.3%
Amoco Corp., 6.000%, 06/09/08 USD 450,000
413,618
Diageo Capital PLC, 6.625%, 06/24/04 USD
200,000 195,114
International Bank Reconstruction &
Development, 4.500%, 06/20/00 JPY
90,000,000 898,635
LCR Finance PLC, 4.750%, 12/31/10 (d) GBP
100,000 144,569
Portugal Telecom International Financial,
4.625%, 04/07/09 EUR 150,000 134,934
Public Power Corp., 4.500%, 03/12/09 EUR
90,000 79,265
Westpac Banking Floating,
Series 144A, 0.194%, 09/24/01 (b)(d) JPY
10,000,000 97,729
Total Foreign Corporate Obligations
(cost $2,014,005) 1,963,864
Corporate Bonds - 4.6%
Asset Backed - 1.0%
AT&T Universal Card Master Trust,
Series 1996-3, Class A, 6.240%, 09/17/03 USD
200,000 200,000
Finance - 2.1%
Ameritech Capital Funding Co.,
6.250%, 05/18/09 USD 50,000 45,490
General Motors Acceptance Corp.,
Floating, 0.294% 07/26/02 (b) JPY
25,000,000 244,446
National Westminster Bank,
9.450%, 05/01/01 USD 100,000 103,090
Total Finance 393,026
Industrials - 1.5%
Conoco, Inc., Senior, 5.900%, 04/15/99 USD
300,000 286,044
Total Corporate Bonds
(cost $864,463) 879,070
U.S. Treasury Obligations - 3.0%
U.S. Treasury Notes, 5.375%, 06/30/03
140,000 135,800
U.S. Treasury Notes, 5.250%, 05/15/04
250,000 239,493
U.S. Treasury Notes, 3.875%, 01/15/09
205,126 198,202
Total U.S. Treasury Obligations
(cost $592,695) 573,495
Short-Term Investments - 5.6%
FHLMC Discount Notes - 4.2%
FHLMC, 0.000%, 01/21/00 (a) 800,000
796,695
Other Investment Companies - 1.4%
JPM Prime Money Market Fund, 5.50% (c)
279,758 279,758
Total Short-Term Investments
(cost $1,076,453) 1,076,453
Total Investments - 97.0%
(cost $19,814,630) 18,507,300
Other Assets, less Liabilities - 3.0% 565,387
Net Assets - 100.0% 19,072,687
Note: Based on the cost of investments of
$19,814,630 for federal income tax purposes at
December 31, 1999, the aggregate gross unrealized
appreciation and depreciation was $94,841 and
$1,402,171, respectively, resulting in net
unrealized depreciation of investments of
$1,307,330.
(a) Zero coupon security.
(b) Variable rate security. Coupon rates
disclosed is that in effect at December 31, 1999.
(c) Yield shown for this 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.
(d) 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 $242,298, or 1.3% of net
assets.
Investments Abbreviations:
FHLMC: Federal National Mortgage Association
Abbreviations have been used throughout this
portfolio to indicate amounts shown in currencies
other than the U.S. Dollar (USD):
AUD: Australian Dollar
CAD: Canadian Dollar
DKK: Danish Krone
EUR: euro
GBP: British Pound
JPY: Japanese Yen
NOK: Norwegian Krone
SEK: Swedish Krona
The Managers Funds
Statement of Assets and Liabilities
December 31, 1999
Managers Managers
Short and Managers Global
Intermediate Bond Bond
Bond Fund Fund Fund
Assets:
Investments at value* 18,250,477
33,838,578 18,507,300
Foreign currency (cost $222,804)
220,185
Receivable for Fund shares sold
11,191 71,812 18,605
Receivable for open forward
foreign currency contracts 14,988,773
Receivable for closed forward
foreign currency contracts, net 7,299
Dividends, interest and other receivables 270,612 585,115 397,893
Prepaid expenses 6,161 7,135
6,252
Total assets 18,538,441
34,502,640 34,146,307
Liabilities:
Payable for Fund shares repurchased
12,249 71,966
Payable upon return of securities loaned
605,820 977,280
Payable for open forward
foreign currency contracts
14,981,867
Payable for closed forward
foreign currency contracts, net 32,834
Accrued expenses:
Investment advisory and
management fees 7,732 17,858
11,633
Administrative fees 3,866
7,143 3,324
Other 43,057 39,067
43,962
Total liabilities 672,724
1,113,314 15,073,620
Net Assets 17,865,717
33,389,326 19,072,687
Shares outstanding 945,176
1,556,428 981,076
Net asset value, offering and redemption
price per share 18.90
21.45 19.44
Net Assets Represent:
Paid-in capital 28,749,302
36,027,753 20,667,165
Undistributed net investment income
3,370 18,406 14,222
Accumulated net realized gain (loss) from
investments
and foreign currency transactions
(10,492,077) 329,132
(296,536)
Net unrealized depreciation of investments
and foreign currency translations
(394,878) (2,985,965)
(1,312,164)
Net Assets 17,865,717
33,389,326 19,072,687
*Investments at cost 18,645,355
36,825,042 19,814,630
The Managers Funds
Statements of Operations
For the year ended December 31, 1999
Managers Managers
Short and Managers Global
Intermediate Bond Bond
Bond Fund Fund Fund
Investment Income:
Interest income 1,198,003
2,544,983 1,104,554
Dividend income 46,745
Security lending fees 643
1,043
Total investment income 1,198,646
2,592,771 1,104,554
Expenses:
Investment advisory and management fees
92,398 208,465 145,706
Administrative fees 46,199
83,386 41,630
Transfer agent 29,186
49,072 43,846
Custodian 18,692 25,087
35,261
Professional fees 32,255
23,665 32,529
Registration 11,061
14,494 11,326
Insurance 2,054 3,937
1,949
Trustees 1,262 2,217
1,416
Amortization of organization expense 571
Miscellaneous 5,657
10,631 7,015
Total expenses before reductions 238,764
420,954 321,249
Expense reductions (334)
(2,580) (688)
Net expenses 238,430
418,374 320,561
Net investment income 960,216
2,174,397 783,993
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on
investment transactions (202,067)
370,972 (146,270)
Net realized loss on foreign currency
contracts and transactions
(41,416) (472,100)
Net unrealized depreciation
of investments (356,588)
(1,240,159) (2,158,267)
Net unrealized appreciation (depreciation) of
foreign currency contracts and translations
313 (231,489)
Net realized and unrealized loss
(558,655) (910,290) (3,008,126)
Net Increase (Decrease) in Net Assets
Resulting from Operations 401,561
1,264,107 (2,224,133)
The Managers Funds
Statements of Changes in Net Assets
Managers Short and Intermediate Bond Fund
For the For the
year ended year ended
December 31, 1999 December 31, 1998
Increase (Decrease) in Net Assets
From Operations:
Net investment income 960,216
879,069
Net realized gain (loss) on investments
and foreign currency transactions
(202,067) 108,007
Net unrealized appreciation (depreciation) of
investments and foreign currency translations
(356,588) (96,923)
Net increase (decrease) in net assets
resulting from operations 401,561
890,153
Distributions to Shareholders:
From net investment income
(959,010) (890,799)
From net realized gain on investments
Total distributions to shareholders
(959,010) (890,799)
From Capital Share Transactions:
Proceeds from sale of shares
7,003,243 8,396,707
Net asset value of shares issued in connection
with reinvestment of dividends and distributions
880,013 746,084
Cost of shares repurchased
(7,868,443) (5,815,760)
Net increase (decrease) from
capital share transactions 14,813
3,327,031
Total increase (decrease) in net assets
(542,636) 3,326,385
Net Assets:
Beginning of year 18,408,353
15,081,968
End of year 17,865,717
18,408,353
End of year undistributed
net investment income 3,370
2,185
Share Transactions:
Sale of shares 365,693
430,449
Shares issued in connection with reinvestment
of dividends and distributions
45,916 38,268
Shares repurchased
(410,853) (297,144)
Net increase (decrease) in shares
756 171,573
Managers Bond Fund
Managers Global Bond Fund
For the For the
For the For the
year ended year ended
year ended year ended
December 31, 1999 December 31,
1998 December 31, 1999
December 31, 1998
2,174,397 2,783,809
783,993 784,832
329,556 1,139,313
(618,370) 1,873,396
(1,239,846) (2,687,311)
(2,389,756) 822,543
1,264,107 1,235,811
(2,224,133) 3,480,771
(2,179,563) (2,769,414)
(461,005) (1,019,814)
(123,589) (1,584,234)
(212,152) (1,222,014)
(2,303,152) (4,353,648)
(673,157) (2,241,828)
16,911,450 23,693,347
10,011,840 18,174,768
2,149,195 4,017,252
649,992 2,220,753
(27,361,625) (23,161,640)
(10,758,415) (17,033,392)
(8,300,980) 4,548,959
(96,583) 3,362,129
(9,340,025) 1,431,122
(2,993,873) 4,601,072
42,729,351 41,298,229
22,066,560 17,465,488
33,389,326 42,729,351
19,072,687 22,066,560
18,406 23,147
14,222 17,058
765,241 994,509
477,018 790,567
97,204 175,879
33,384 100,486
(1,231,495) (985,827)
(515,429) (739,396)
(369,050) 184,561
(5,027) 151,657
Managers Short and Intermediate Bond Fund
Financial Highlights
For a share of capital stock outstanding
throughout each year
Year ended December 31,
1999 1998 1997
1996 1995
Net Asset Value,
Beginning of Year $19.49 $19.51 $19.45
$19.67 $18.06
Income from
Investment Operations:
Net investment income
1.00 1.02 1.08
1.03 1.28
Net realized and unrealized
gain (loss) on investments
(0.59) 0.00
0.03 (0.24)
1.45
Total from investment
operations 0.41 1.02
1.11 0.79
2.73
Less Distributions to
Shareholders from:
Net investment income
(1.00) (1.04)
(1.05) (1.01)
(1.09)
Net realized gain on
investments --- --
- - --- --
- - (0.03)
Total distributions to
shareholders (1.00)
(1.04) (1.05)
(1.01) (1.12)
Net Asset Value,
End of Year $18.90
$19.49 $19.51
$19.45 $19.67
Total Return
2.21% 5.36% 5.87%
4.15% 15.57%
Ratio of net expenses
to average net assets
1.29%(a) 1.32%(a)
1.40% 1.45%
1.50%
Ratio of net investment income
to average net assets
5.20% 5.22% 5.54%
5.43% 6.52%
Portfolio turnover
92% 115% 91%
96% 131%
Net assets at end of year
(000's omitted) $17,866
$18,408 $15,082
$22,380 $25,241
(a) The Fund has received credits against its
custodian expense for uninvested overnight cash
balances. Absent this expense reduction, the
ratio of expenses to average net assets for the
years ended December 31, 1999 and 1998 would
have been 1.29% and 1.33%, respectively. (See
Note 1c of Notes to Financial Statements.)
Managers Bond Fund
Financial Highlights
For a share of capital stock outstanding throughout each year
Year ended December 31,
1999 1998 1997
1996 1995
Net Asset Value,
Beginning of Year $22.19
$23.72 $22.83
$23.13 $18.92
Income from
Investment Operations:
Net investment income
1.45 1.46 1.39
1.35 1.44
Net realized and unrealized
gain (loss) on investments
(0.65) (0.69)
0.90 (0.29) 4.23
Total from investment
operations 0.80 0.77
2.29 1.06 5.67
Less Distributions to
Shareholders from:
From net investment income
(1.45) (1.45)
(1.40) (1.36) (1.46)
From net realized gain on
investments (0.09)
(0.85) --- ---
---
Total distributions to
shareholders (1.54)
(2.30) (1.40)
(1.36) (1.46)
Net Asset Value,
End of Year $21.45
$22.19 $23.72
$22.83 $23.13
Total Return
3.66% 3.34% 10.42%
4.97% 30.91%
Ratio of net expenses
to average net assets
1.25%(a) 1.21%(a)
1.27% 1.36% 1.34%
Ratio of net investment income
to average net assets
6.52% 6.18% 6.14%
6.13% 6.84%
Portfolio turnover
39% 55% 35%
72% 46%
Net assets at end of year
(000's omitted) $33,389
$42,730 $41,298
$31,819 $26,376
(a) The Fund has received credits against
its custodian expense for uninvested overnight
cash balances. Absent this expense reduction, the
ratio of expenses to average net assets for the
years ended December 31, 1999 and 1998 would have
been 1.26% and 1.21%, respectively. (See Note 1c
of Notes to Financial Statements.)
Managers Global bond Fund
Financial Highlights
For a share of capital stock outstanding throughout each year
Year ended December 31,
1999 1998 1997
1996 1995
Net Asset Value,
Beginning of Year
$22.38 $20.93
$21.40 $21.74
$19.10
Income from
Investment Operations:
Net investment income
0.82 0.92(c)
0.97(c) 1.21 0.95
Net realized and unrealized
gain (loss) on investments
(3.05) 3.08
(0.93) (0.27)
2.66
Total from investment
operations (2.23)
4.00 0.04 0.94
3.61
Less Distributions to
Shareholders from:
Net investment income
(0.49) (1.16)
(0.17) (0.87)
(0.93)
Net realized gain on
investments (0.22)
(1.39) (0.34)
(0.41) ---
In excess of net investment
income ---
--- --- --
- - (0.04)
Total distributions to
shareholders (0.71)
(2.55) (0.51)
(1.28) (0.97)
Net Asset Value,
End of Year $19.44
$22.38 $20.93
$21.40 $21.74
Total Return
(9.97)%(b) 19.27%(b)
0.16% 4.39%(b)
19.08%(b)
Ratio of net expenses
to average net assets
1.54% 1.53% 1.63%
1.57% 1.55%
Ratio of net investment income
to average net assets
3.77% 4.14% 4.75%
4.98% 5.07%
Portfolio turnover
171% 232% 197%
202% 214%
Net assets at end of year
(000's omitted) $19,073
$22,067 $17,465
$16,852 $18,823
Expense Waiver/Reduction (a)
Ratio of total expenses to
average net assets
1.54% 1.56% N/A
1.60% 1.69%
Ratio of net investment
income to average net assets
3.76% 4.11% N/A
4.95% 4.93%
(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 of Notes to Financial
Statements.)
(b) The total return would have been lower
had certain expenses not been reduced during the
period.
(c) Calculated using the average shares
outstanding during the year.
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 (the
"1940 Act"), as amended. Currently the Trust is
comprised of 9 investment series. Included in
this report are Managers Short and Intermediate
Bond Fund ("Short and Intermediate Bond"),
Managers Bond Fund ("Bond") and Managers Global
Bond Fund ("Global Bond"), collectively the
"Funds."
The Funds' financial statements are prepared in
accordance with generally accepted accounting
principles, which require management to make
estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported amounts
of income and expenses during the reporting
periods. Actual results could differ from those
estimates. The following is a summary of
significant accounting policies followed by the
Funds in the preparation of their financial
statements:
(a) Valuation of Investments
Fixed-income securities are valued based upon
valuations furnished by independent pricing
services that often 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, 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. 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.
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 average net assets.
Each of the Funds has a "balance credit"
arrangement with the custodian bank whereby each
Fund is credited with an interest factor equal to
0.75% of the nightly Fed Funds rate for account
balances left uninvested overnight. These credits
serve to reduce custody expenses that would
otherwise be charged to the Funds. For the year
ended December 31, 1999, the Short and
Intermediate, Bond and Global Bond Funds' custody
expenses were reduced by $334, $2,580 and $688,
respectively, under these arrangements.
(d) Dividends and Distributions
Dividends resulting from net investment income
normally will be declared monthly for Short and
Intermediate Bond and Bond, and annually for
Global Bond. 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) Organization Costs
(Global Bond only)
Organization and registration related costs of
$12,577 were deferred and amortized over a period
of 60 months from the commencement of operations
on March 25, 1994 until March 25, 1999.
(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 federal income or excise
tax provision is included in the accompanying
financial statements.
(h) Capital Loss Carryovers
As of December 31, 1999, Short and Intermediate
Bond and Global Bond 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, 2007.
Capital Loss
Fund Carryover Amount Expires Dec. 31,
Short and
Intermediate Bond $2,344,832 2002
7,662,253 2003
70,508 2004
179,401 2005
212,653 2007
Global Bond 151,705 2007
(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 December 31, 1999, certain unaffiliated
shareholders, specifically omnibus accounts,
individually held greater than 10% of the
outstanding shares of the following Funds: Bond -
one owns 23%; and Global Bond - one owns 27%.
(j) Delayed Delivery Transactions
The Funds 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.
The Funds 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.
(k) Foreign Currency Translation
The books and records of each Fund 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 operations 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 currently managed
by portfolio managers who serve pursuant to
Portfolio Management Agreements with the
Investment Manager and the Fund. Certain Trustees
and Officers of the Funds are Officers of the
Investment Manager 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 the
year ended December 31, 1999 were as follows:
Investment Advisory
Fund and Management Fee
Short and Intermediate Bond 0.50%
Bond 0.625%
Global Bond 0.70%
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.
For the year ended December 31, 1999, the
Administrator was paid a fee based on each Fund's
average daily net assets of 0.25% for Short and
Intermediate Bond and Bond, and 0.20% for Global
Bond.
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 $1000 and
$500 per meeting, respectively. The Trustee fee
expense shown in the financial statements
represents the Fund'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 year ended December
31, 1999, were as follows:
Long-term Securities
Fund Purchases Sales
Short and
Intermediate Bond $17,597,151 $16,624,608
Bond 12,791,386 22,666,171
Global Bond 32,282,323 30,296,697
U.S. Government Securities Only
Fund Purchases Sales
Short and
Intermediate Bond $5,880,530 $6,527,120
Bond 464,688 --
Global Bond 5,935,712 5,205,035
(4) Portfolio Securities Loaned
Each of the Funds may participate in a securities
lending program providing for the lending of
corporate bonds, equity and government securities
to qualified brokers. Collateral on all securities
loaned except for government securities loaned is
accepted only in cash. Collateral on government
securities loaned is in the form of other similar
securities. Collateral is maintained at a minimum
level of 100% of the market value, plus interest,
if applicable, of investments on loan. Collateral
received in the form of cash is temporarily
invested in money market investments by the
custodian. Earnings of such temporary cash
investments are divided between the custodian, as
a fee for its services under the program, and the
Fund, according to agreed-upon rates.
(5) Risks Associated with
Collateral Mortgage
Obligations ("CMOs")
The net asset value of Funds may be sensitive to
interest rate fluctuations because the Funds 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
assed 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 Fund's net asset value
as if the Fund had created a degree of leverage in
its portfolio. However, if a Fund 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.
(a) Forward Foreign
Currency Contracts
During the year ended December 31, 1999, only
Global Bond invested in forward foreign currency
exchange contracts to manage currency exposure.
These investments may involve greater market risk
than the amounts disclosed in the Funds' financial
statements.
A forward foreign currency exchange contract is an
agreement between a 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 to 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.
To the Trustees of The Managers Funds and the
Shareholders of
Managers Short and Intermediate
Bond Fund, Managers Bond Fund
and Managers Global Bond 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 Short and Intermediate Bond Fund,
Managers Bond Fund and Managers Global Bond Fund
(three 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 24, 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
