N-CSRS 1 ncsr0604.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-3752 THE MANAGERS FUNDS -------------------------------------------------- (Exact name of registrant as specified in charter) 800 Connecticut Avenue, Norwalk, Connecticut 06854 -------------------------------------------------- (Address of principal executive offices) (Zip code) The Managers Funds LLC 800 Connecticut Avenue, Norwalk, Connecticut 06854 --------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (203) 299-3500 Date of fiscal year end: DECEMBER 31 Date of reporting period: JANUARY 1, 2004 - JUNE 30, 2004 (Semi-Annual Shareholder Report) Item 1. REPORT TO SHAREHOLDERS. ======================================================================== ========== [Logo:] Managers ========== SEMI-ANNUAL REPORT The Managers Funds: Value Fund * Capital Appreciation Fund * Small Company Fund * Special Equity Fund * International Equity Fund * Emerging Markets * Equity Fund Bond Fund * Global Bond Fund Dated June 30, 2004 ==================== access to excellence ==================== Table of Contents Letter to Shareholders .................................1 The Managers Funds Performance .........................3 Complete performance table for The Managers Funds and Managers AMG Funds as of June 30, 2004 Fund Snapshots..........................................5 Equity funds' top ten holdings, industry weightings and country breakdown at June 30, 2004 Schedules of Portfolio Investments .....................8 Detailed portfolio listings by security type and industry sector, as valued at June 30, 2004 Financial Statements Statements of Assets and Liabilities ................29 Funds' balance sheet, net asset value (NAV) per share computation and composition of net assets Statements of Operations ..............................31 Detail of sources of income, Fund expenses, and realized and unrealized gains (losses) during the period Statements of Changes in Net Assets ...................33 Detail of changes in Fund assets for the past two periods Financial Highlights ..................................37 Historical net asset values per share, distributions, total returns, expense ratios, turnover ratios and net assets for each Fund Notes to Financial Statements .........................42 Accounting and distribution policies, details of agreements and transactions with Fund management and description of certain investment risks Nothing contained herein is to be considered an offer or sale or a solicitation of an offer to buy shares of The Managers Funds. Such offering is made only by Prospectus, which includes details as to offer-ing price and other material information. Founded in 1983, The Managers Funds offers individual and institutional investors the experience and discipline of some of the world's most highly regarded investment professionals. Letter to Shareholders ---------------------- Dear Fellow Shareholder: Throughout the six months ending June 2004, the financial markets transitioned from a strong rally which had begun in mid-2003 into a volatile trading range for stocks, and a relatively significant correction for bonds. The equity rally was a welcome reprieve from a three-year bear market and was the result of both a strengthening economy and investors' collec-tive perception that risks were diminishing. Although the economy continues to strengthen and corporate profits appear to be healthy, the stock market corrected in mid-March and has remained directionless since. One explanation is merely that stock valuations had overreached reasonable levels. However, we think the reasons are a bit more specific. Continued turmoil in Iraq, which has included mounting American casualties, and increased terrorist activity around the globe has re-awakened investors' awareness of risk. In addition, a combination of strong global growth and instability in the middle-east has driven the price of oil to an all-time high. This, along with other inflationary pressures typically associated with strong growth has convinced most investors that higher interest rates are inevitable. Even before the Fed began what will likely be an extended period of gradual tightening investors had driven interest rates higher by 30 to 90 basis points between Decem-ber and June. Thus, while the stock market has vacillated between celebrating strong earnings growth and regretting higher risks and higher costs, the bond market reversed in April, suffering its worst returns in a decade. The result was that most stock indices rose modestly for the six-month period, while bond indices were mixed. In general, small- and mid-cap stocks outperformed large-cap stocks and value styles outperformed growth, although in all of these cases the differences were much more moderate than they have been in the recent past. For example, the Russell 1000 in-dex rose 3.33% for the six-month period, while the Russell 1000 Value rose 3.94% and the Russell 1000 Growth rose 2.74%. Meanwhile, the Russell 2000 index (small caps) returned 6.76% while the value and growth counterparts rose 7.83% and 5.68%, respectively. With a few exceptions, credit yield spreads remained basically stable from December to June so that investment grade corporate bonds performed as poorly as treasuries did for the six months. Mortgage-backed securities, however, bucked the trend and finished with a positive return, as did high yield securities which outperformed primarily due to their higher yields. The Lehman Brothers Government/Credit Index returned -0.19% while the Lehman Brothers Ag-gregate Index, which is similar except that it also includes mortgage-backed and asset-backed securities, returned +0.15%. The Funds included within this report provided equally mixed returns. On a nominal basis, each of the equity Funds provided a positive return for the six months ended June 30, 2004, while both of the bond Funds fell slightly. Managers Small Company Fund provided the highest return, rising 6.09% although this was slightly behind its primary benchmark, the Russell 2000 index, which rose 6.76%. From a relative perspective, Managers Value performed well by returning 4.76%, while its benchmark, the S&P 500, returned 3.44%. Similarly, Managers Emerging Markets Equity returned 1.06% while its benchmark fell by 0.76%. Each of the other Funds within the report lagged its respective benchmark for the period. While we would prefer to always beat our benchmarks during every measurable period, short-term and long-term, this is unrealis-tic in the short-term, yet it remains our primary focus in the long-term. In each of these cases we believe that the six-month performance is within reasonable expectations relative to the benchmark. The majority of these Funds are beating their benchmarks over longer periods of time. The table on page 3 lists each of the Funds' returns over various trailing periods. We are also pleased to relate a few notable happenings at Managers this spring. In April, we were awarded, by share-holders, the contracts to manage several mutual funds formerly managed by Conseco Funds Group. As a result, we have changed the names of these Funds to be consistent with The Managers Funds family. As is typical for us, these are all sub-advised by one or more independent investment management firms. Due to personnel changes within one of these organi-zations, we have already made subadvisor changes. For more detail on these Funds, please visit our website. Beginning in May we instituted expense caps on several of our Funds which have effectively lowered their respective costs to shareholders. These include Managers Value, now capped at 1.19% per year, Managers Capital Appreciation, now capped at 1.29% per year, Managers International Equity, now capped at 1.55% per year, Managers Emerging Markets Equi-ty, now capped at 1.79% per year, and Managers Global Bond, now capped at 1.19% per year. In a similar effort to reduce costs, we have commenced operation of a new share class of Managers Special Equity (I-Class) which by virtue of a high minimum investment ($250,000) will be lower cost than the original share class. In July, we announced our agreement to acquire assets managed by Fremont Investment Advisors, and with shareholder approval we expect to integrate this $2.8 billion family of Funds into our family before the end of 2004. These Funds also utilize a subadvisor structure. We believe that a key advantage to shareholders of both families of funds will be a broader array of asset classes, investment styles and intelligence diversification available within one group of funds. Offerings either recently added or expected to be added as a result of acquisitions include, high yield bonds, convertible securities, mid-cap equities, micro-cap equities, real estate securities and municipal bonds. Finally, we are very pleased to note that the Managers family of Funds celebrated its 20th anniversary in June as Managers Capital Appreciation, Managers Special Equity and Managers Bond Funds eclipsed their 20th year since inception. Both 1 Letter to Shareholders (continued) ---------------------------------- Special Equity and Bond have outperformed their benchmarks over the 20- year period. We wish to thank all of our share-holders, some of whom have been investing with us since inception, for their confidence in us. We hope we have served you well, and we will endeavor to continue to do so going forward. As always, we post any news or other pertinent information about the Funds as soon as applicable on our website at www.managersfunds.com. Should you have any questions about any of our Funds or this report, please feel free to contact us at 1-800-835-3879, or visit the website. We thank you for your investment in The Managers Funds. Sincerely, Peter M. Lebovitz Thomas G. Hoffman, CFA President & CEO Director of Research The Managers Funds LLC The Managers Funds LLC 2 The Managers Funds and Managers AMG Funds Performance (unaudited) All periods ended June 30, 2004 ========================================== Average Annual Total Returns (1) ================================ Six 1 3 5 10 Since Inception Months Year Years Years Years Inception Date ----------------------------------------------------------------- The Managers Funds: Equity Funds: Value(2) 4.76% 20.68% (0.41)% 1.51% 10.65% 11.76% Oct. '84 Capital Appreciation(2) 0.43% 12.79% (6.84)%(5.75)% 10.18% 12.21% Jun. '84 Small Company(2) 6.09% 33.20% 3.67% - - (0.63)% Jun. '00 Special Equity 4.94% 32.30% 2.18% 7.57% 13.45% 13.89% Jun. '84 Special Equity - I Class - - - - - 4.42% May '04 International Equity(2) 1.46% 25.96% 0.19% (1.40)% 5.33% 9.61% Dec. '85 Emerging Markets Equity(2) 1.06% 32.48% 11.29% 7.29% - 6.64% Feb. '98 Income Funds: Money Market(2) 0.28% 0.53% 1.22% 2.95% 4.03% 5.09% Jun. '84 Bond (2) (0.67)% 1.31% 8.33% 7.76% 8.95% 9.91% Jun. '84 Global Bond (2) (1.26)% 5.58% 13.22% 5.87% 5.78% 5.66% Mar. '94 Intermediate Duration Government(2) 0.33% 1.66% 5.60% 6.21% 6.87% 7.09% Mar. '92 Short Duration Government(2) 0.31% 1.22% 3.36% 4.34% 5.03% 4.92% Mar. '92 Total Return Bond(2) (0.26)% (0.78)% - - - 2.06% Dec. '02 Managers AMG Funds: Essex Aggressive Growth Institutional Class (0.75)% 12.00% - - - 4.66% Mar. '02 Essex Aggressive Growth Investor Class(2) (0.76)% 11.83% (6.28)% - - (1.84)% Nov. '99 Essex Large Cap Growth(2) 1.25% 13.71% - - - 13.71% Jun. '03 Rorer Large-Cap(2) (0.10)% 11.69% - - - (1.26)% Dec. '01 Rorer Mid-Cap(2) 9.83% 22.62% - - - 10.04% Dec. '01 Systematic Value(2) 3.45% 20.54% - - - 6.82% Apr. '02 Burridge Small Cap Growth(2,3) 9.07% 44.48% 14.28% - - 16.81% Sep. '00 First Quadrant Tax-Managed Equity(2,4) Before Taxes (0.81)% 14.30% (0.38)% - - (0.38)% Dec. '00 After Taxes on Distributions (0.81)% 14.12% (0.54)% - - (0.51)% After Taxes on Distributions and Sale of Fund Shares (0.53)% 9.29% (0.42)% - - (0.41)%
The performance data shown represents past performance, which is not a guarantee of future results. From time to time the Funds' advisor has waived fees or reimbursed expenses, which may have resulted in higher returns. Current performance may be higher or lower than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. For performance information through the most recent month end please call (800) 835-3879 or visit our web site at www.managersfunds.com. In choosing a Fund, investors should consider the amount they plan to invest, their investment objectives, the Fund's investment objectives, risks, charges and expenses carefully before investing, and how long they intend to keep their money invested in the Fund. Each Fund's prospectus contains information concerning the Fund's investment objective, risks, charges and expenses and other information. An investment in Managers Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although Managers Money Market Fund seeks to preserve the value of your investmentat $1.00 per share, it is possible to lose money by investing in the Fund. Additional risks are associated with investing in internationaland emerging markets, and such securities may be considered speculative. There are also risks are associated with investing in small-cap companies, such as increased volatility, and bonds, such as rising interest rates. More specifically, the value of debt instruments held in bond funds declines when interest rates rise and longer-term bonds are more vulnerable to interest rate risk. To obtain aprospectus, please call (800) 835-3879 or visit our website at www.managersfunds.com. Please read the prospectus carefully before you invest in a Fund or send money. Distributed by Managers Distributors, Inc., member NASD. 3 The Managers Funds and Managers AMG Funds Performance (unaudited) Notes to the Performance Table =========================================== (1)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 offsets 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. Year to date total returns are based on calendar year. (2)Fund for which, from time to time, the Fund's advisor has waived its fees and/or absorbed Fund expenses, which has resulted in higher returns. (3)The "Since Inception" return, and returns for all periods beginning prior to 6/25/02, for the Burridge Small Cap Growth Fund reflect performance linked with a "Predecessor Account" which began operations on September 28, 2000. The Predecessor Account's objectives, policies, guidelines and restrictions were, in all material respects, the same as the Fund's. The PredecessorAccount was not registered as a mutual fund and therefore was not subject to certain investment restrictions that are imposed upon mutual funds. If the Predecessor Account had been registered as a mutual fund, the Account's performance may have been adversely affected. The performance of the Predecessor Account was calculated according to the standardized SEC method. (4)After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown,and after-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)plans or individual retirement accounts. 4 Fund Snapshots (unaudited) As of June 30, 2004 ========================== Managers Value Fund ------------------- Top Ten Holdings (out of 77 securities) % Fund Industry Weightings ------------------------------------------------------------------------------------------- Citigroup, Inc.* 4.2% Financials 34.8% ChevronTexaco Corp.* 2.2 Consumer Discretionary 16.8 Fannie Mae 1.9 Health Care 15.9 Hewlett-Packard Co. 1.9 Energy 9.8 ConocoPhillips Co.* 1.9 Industrials 9.7 Comcast Corp., Special Class A 1.8 Consumer Staples 4.5 Merck & Co., Inc.* 1.8 Information Technology 3.0 Bank of America Corp. 1.7 Utilities 2.8 WellPoint Health Networks, Inc.* 1.7 Telecommunication Services 2.4 CVS Corp. 1.7 Materials 1.5 --- --- Top Ten as a Group 20.8% ===== Managers Capital Appreciation Fund ---------------------------------- Top Ten Holdings (out of 113 securities)% Fund Industry Weightings -------------------------------------------------------------------------------------------- Schlumberger, Ltd.* 2.0% Information Technology 24.0% Teva Pharmaceutical Industries, Ltd., Sponsored ADR 1.8 Health Care 18.3 3M Co.* 1.7 Industrials 13.7 Forest Laboratories, Inc.* 1.7 Consumer Discretionary 12.2 Wal-Mart Stores, Inc.* 1.6 Consumer Staples 9.0 Microsoft Corp.* 1.6 Financials 8.5 Dell, Inc.* 1.6 Energy 8.2 Best Buy Co., Inc. 1.5 Materials 2.0 Intel Corp.* 1.5 Other 4.1 Resmed, Inc. 1.5 --- Top Ten as a Group 16.5% ===== Managers Small Company Fund --------------------------- Top Ten Holdings (out of 82 securities)% Fund Industry Weightings ----------------------------------------------------------------------------------- Pentair, Inc.* 3.1% Information Technology 28.3% Ultra Petroleum Corp. 2.5 Industrials 25.1 Acxiom Corp. 2.4 Consumer Discretionary 22.0 Aeroflex, Inc. 2.2 Health Care 10.9 Avocent Corp.* 2.2 Energy 6.4 Insight Enterprises, Inc.* 2.2 Materials 1.7 Covance, Inc. 2.2 Financials 1.0 Rogers Corp. 2.1 Other 4.6 Respironics, Inc. 2.1 PEP Boys- Manny Moe & Jack, Inc. 2.0 --- Top Ten as a Group 23.0% =====
*Top Ten Holding at December 31, 2003 5 Managers Special Equity Fund ---------------------------- Top Ten Holdings (out of 343 securities) % Fund Industry Weightings -------------------------------------------------------------------------------------- Reliant Resources, Inc.* 1.9% Consumer Discretionary 22.4% Visteon Corp.* 1.5 Information Technology 16.8 United States Steel Corp.* 1.4 Industrials 15.6 Toys "R" Us, Inc.* 1.4 Financials 12.7 Dillard's, Inc., Class A* 1.4 Health Care 10.2 ITT Educational Services, Inc.* 1.3 Materials 5.9 FelCor Lodging Trust, Inc.* 1.0 Energy 3.8 Kerzner International, Ltd. 1.0 Utilities 3.5 Meristar Hospitality Corp.* 1.0 Consumer Staples 1.1 AK Steel Holding Corp. 0.9 Telecommunication Services 0.3 --- Other 7.7 Top Ten as a Group 12.8% ===== Managers International Equity Fund ---------------------------------- Top Ten Holdings (out of 194 securities) % Fund Industry Weightings -------------------------------------------------------------------------------------- Nissan Motor Co., Ltd.* 1.8% Financials 20.3% Canon, Inc.* 1.6 Consumer Discretionary 18.9 Assurances Generales de France* 1.5 Materials 14.9 Talisman Energy, Inc. 1.4 Information Technology 9.4 Honda Motor Co., Ltd. 1.4 Energy 9.0 Arcelor* 1.4 Industrials 8.6 Tesco PLC 1.4 Consumer Staples 6.7 GlaxoSmithKline PLC* 1.2 Health Care 5.7 Continental AG 1.2 Telecommunication Services 3.5 British Sky Broadcasting PLC 1.2 Utilities 1.9 --- Other 1.1 Top Ten as a Group 14.1% ===== Managers Emerging Markets Equity Fund ------------------------------------- Top Ten Holdings (out of 50 securities) % Fund Industry Weightings --------------------------------------------------------------------------------------- Samsung Electronics, Ltd., GDR representing 1/2 voting shares * 3.4% Telecommunication Services 25.6% Sanlam, Ltd.* 3.0 Financials 18.1 Hankook Tire Co., Ltd. 2.9 Consumer Discretionary 12.1 China Telecom Corp., Ltd., Class H 2.8 Materials 10.5 Hyundai Motor Co., Ltd.* 2.7 Information Technology 9.4 China Oilfield Services, Ltd.* 2.7 Energy 6.6 Terkcell Iletisim Hizmetleri A.S. 2.6 Consumer Staples 6.2 Anglo American PLC 2.6 Industrials 6.2 China Mobile Ltd. 2.5 Health Care 3.6 Kookman Bank, ADR 2.5 Other 1.7 --- Top Ten as a Group 27.7% =====
*Top Ten Holding at December 31, 2003 6 Fund Snapshots (continued) ========================== Summary of Investments by Country Summary of Investments by Country Country Managers International MSCI EAFE Country Managers International MSCI EAFE Equity Fund* Index Equity Fund* Index ---------------------------------------------------------------------------------------------------------- Japan 25.1% 24.0% South Korea 15.0% 18.9% United Kingdom 18.9 24.8 Taiwan 13.6 12.0 France 10.0 9.4 Mexico 10.0 6.3 Germany 7.9 6.8 Malaysia 8.5 4.6 Canada 5.9 0.0 Russia 5.5 4.5 Switzerland 4.6 7.1 China 5.4 8.5 South Korea 3.3 0.0 Turkey 4.9 1.5 Hong Kong 3.0 1.6 Brazil 4.3 8.1 Sweden 2.8 2.4 India 4.2 5.0 Netherlands 2.7 4.8 Indonesia 4.1 1.7 United States 2.2 0.0 Thailand 3.3 2.8 Spain 1.6 3.6 South Africa 2.9 14.4 South Africa 1.4 0.0 United States 2.7 0.0 Italy 1.4 3.8 United Kingdom 2.6 0.0 Singapore 1.4 0.8 Hong Kong 2.5 0.0 Taiwan 1.0 0.0 Hungary 2.4 1.3 Brazil 0.9 0.0 Venezuela 2.2 0.2 Belgium 0.7 1.2 Poland 2.1 1.4 Peru 0.6 0.0 Argentina 1.9 0.5 Russia 0.6 0.0 Supranational&Other1.9 0.0 Mexico 0.4 0.0 Chile 0.0 1.9 Finland 0.4 1.4 Colombia 0.0 0.1 Ireland 0.4 0.8 Czech Republic 0.0 0.7 China 0.3 0.0 Egypt 0.0 0.3 Australia 0.3 4.8 Israel 0.0 3.7 Norway 0.3 0.5 Jordan 0.0 0.2 Portugal 0.2 0.4 Morocco 0.0 0.2 Denmark 0.1 0.8 Pakistan 0.0 0.2 Austria 0.0 0.3 Peru 0.0 0.5 Greece 0.0 0.5 Philippines 0.0 0.5 New Zealand 0.0 0.2 Cash 1.6 0.0
* As a percent of total market value of common stocks on June 30, 2004. 7 Managers Value Fund June 30, 2004 =================== Value ===== Schedule of Portfolio Investments(unaudited) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Common Stocks - 101.2% Consumer Discretionary - 16.8% Brinker International, Inc.* 26,500(2) $ 904,180 Clear Channel Communications, Inc.38,100(2) 1,407,795 Comcast Corp., Special Class A* 73,400(2) 2,026,574 Darden Restaurants, Inc. 62,800(2) 1,290,540 Dollar Tree Stores, Inc.* 44,300(2) 1,215,149 Gannett Co., Inc. 16,650 1,412,753 Jones Apparel Group, Inc. 31,500 1,243,620 Liberty Media Corp.* 145,400 1,307,146 Mattel, Inc. 84,400 1,540,300 Office Depot, Inc.* 100,700(2) 1,803,537 Rent-A Center, Inc.* 25,500 763,215 Time Warner Co., Inc.* 96,300(2) 1,692,954 Whirlpool Corp. 7,440(2) 510,384 Yum! Brands, Inc.* 46,600 1,734,452 Total Consumer Discretionary 18,852,599 Consumer Staples - 4.5% Constellation Brands, Inc.* 31,900(2) 1,184,447 CVS Corp. 44,900 1,886,698 Pepsi Bottling Group, Inc. 18,700 571,098 Supervalu, Inc. 19,100(2) 584,651 Unilever NV 11,400(2) 781,014 Total Consumer Staples 5,007,907 Energy - 9.8% BP, PLC. Sponsored ADR 25,900(2) 1,387,463 ChevronTexaco Corp. 37,800 3,557,358 ConocoPhillips Co. 27,498 2,097,822 Devon Energy Corp. 21,900 1,445,400 Kerr-McGee Corp. 21,400(2) 1,150,678 Transocean, Inc.* 45,100(2) 1,305,194 Total Energy 10,943,915 Financials - 34.8% ACE, Ltd. 35,300(2) 1,492,484 Allstate Corp., The 51,600 2,401,980 American Express Co. 32,500(2) 1,669,850 American International Group, Inc. 20,200 1,439,856 Bank of America Corp. 36,754 3,110,123 Chubb Corp. 25,400(2) 1,731,772 Citigroup, Inc. 100,868 4,690,362 Fannie Mae Co. 54,600 3,896,256 Goldman Sachs Group, Inc. 16,900 1,591,304 Hartford Financial Services Group, Inc. 26,800(2) 1,842,232 MBIA, Inc. 28,500(2) 1,627,920 MBNA Corp. 60,307 1,555,318 Merrill Lynch & Co., Inc. 46,200(2) 2,493,876 MGIC Investment Corp. 15,400(2) 1,168,244 Morgan Stanley Co. 28,000(2) 1,477,560 Regions Financial Corp. 48,300(2) 1,765,365 St. Paul Travelers Companies, Inc., The 21,378(2) 866,664 Washington Mutual, Inc. 33,800(2) 1,306,032 Wells Fargo & Co. 30,449 1,742,596 XL Capital, Ltd. 15,300(2) 1,154,538 Total Financials 39,024,332 Health Care - 15.9% Abbott Laboratories Co. 41,300 1,683,388 AmerisourceBergen Corp. 18,500(2) 1,105,930 Anthem, Inc.* 20,100(2) 1,800,156 GlaxoSmithKline PLC, Sponsored ADR 42,400(2) 1,757,904 HCA, Inc. 36,500(2) 1,518,035 Laboratory Corp. of America Holdings* 21,200(2) 841,640 McKesson Corp. 33,400(2) 1,146,622 Merck & Co., Inc. 66,000 3,135,000 Pfizer, Inc. 52,400 1,796,272 Quest Diagnostics, Inc.* 13,600(2) 1,155,320 WellPoint Health Networks, Inc.* 16,900 1,892,969 Total Health Care 17,833,236 Industrials - 9.7% Cendant Corp.* 73,430(2) 1,797,566 Emerson Electric Co. 28,600 1,817,530 General Dynamics Corp. 12,200(2) 1,211,460 General Electric Co. 52,200 1,691,280 Honeywell International, Inc. 30,900 1,131,867 Pitney Bowes, Inc. 39,200 1,734,600 United Technologies Corp. 16,400 1,500,272 Total Industrials 10,884,575 Information Technology - 3.0% Hewlett-Packard Co. 101,526 2,142,199 Xerox Corp.* 83,100(2) 1,204,950 Total Information Technology 3,347,149 Materials - 1.5% E.I. du Pont de Nemours & Co., Inc. 39,250 1,743,485 Telecommunication Services - 2.4% Centurytel, Inc. 10,500(2) 315,420 Nextel Communications, Inc.* 32,800 874,448 Verizon Communications, Inc. 42,685 1,544,770 Total Telecommunication Services 2,734,638 Utilities - 2.8% Exelon Corp. 52,100 1,734,409 FirstEnergy Corp. 38,000(2) 1,421,580 Total Utilities 3,155,989 Total Common Stocks (cost $95,630,443) 113,527,826 Other Investment Companies - 33.5% Bank of New York Institutional Cash Reserves Fund, 1.25%(1,3) 32,988,445 32,998,445 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03%(1) 4,529,687 4,529,687 Total Other Investment Companies (cost $37,528,132) 37,528,132 Total Investments - 134.7% (cost $133,158,575) 151,055,958 Other Assets, less Liabilities - (34.7)% (38,902,166) Net Assets - 100.0% $112,153,792
The accompanying notes are an integral part of these financial statements. 8 Managers Capital Appreciation Fund June 30, 2004 ================================== Capital Appreciation ==================== Schedule of Portfolio Investments(unaudited) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Common Stocks - 95.9% Consumer Discretionary - 12.2% Applebee's International, Inc. 22,500 $ 517,950 Bed Bath & Beyond, Inc.* 26,500 1,018,925 Best Buy Co., Inc. 49,900(2) 2,531,926 Cheesecake Factory, Inc., The* 11,000(2) 437,690 Coach, Inc.* 4,000 180,760 eBay, Inc.* 11,400(2) 1,048,230 Harley-Davidson, Inc. 4,000 247,760 JC Penney Co., Inc., Holding Co. 23,000(2) 868,480 Lowe's Co., Inc. 8,000(2) 420,400 McDonald's Corp. 40,000 1,040,000 PETsMART, Inc. 5,000(2) 162,250 Staples, Inc.* 50,000(2) 1,465,500 The Walt Disney Co. 54,200(2) 1,381,558 Tiffany & Co. 13,000 479,050 TJX Cos., Inc. 29,500(2) 712,130 Total Consumer Discretionary 12,512,609 Consumer Staples - 9.0% Coca-Cola Co., The 22,600 1,140,848 Colgate-Palmolive Co. 26,200 1,531,390 Estee Lauder Co., Class A 3,500 170,730 Procter & Gamble Co. 20,000 1,088,800 Sysco Corp. 21,000 753,270 Walgreen Co. 15,000(2) 543,150 Wal-Mart Stores, Inc. 51,300(2) 2,706,588 Wrigley, Wm. Jr. Co. 19,300(2) 1,216,865 Total Consumer Staples 9,151,641 Energy - 8.2% Anadarko Petroleum Corp. 10,200 597,720 Apache Corp. 20,190 879,275 BJ Services Co.* 28,400(2) 1,301,856 Devon Energy Corp. 10,000(2) 660,000 EOG Resources, Inc. 9,700(2) 579,187 Nabors Industries, Ltd.* 24,400(2) 1,103,368 Patterson-UTI Energy, Inc.* 17,500 584,675 Schlumberger, Ltd. 42,500(2) 2,699,175 Total Energy 8,405,256 Financials - 8.5% American Express Co. 12,000(2) 616,560 American International Group, Inc.25,200 1,796,256 Citigroup, Inc. 42,300 1,966,950 Goldman Sachs Group, Inc. 10,700(2) 1,007,512 JPMorgan Chase & Co. 15,000 581,550 Merrill Lynch & Co., Inc. 19,400 1,047,212 U.S. Bancorp 20,000 551,200 Wells Fargo & Co. 19,400 1,110,262 Total Financials 8,677,502 Health Care - 18.3% Amgen, Inc.* 19,000 1,036,830 Anthem, Inc.* 6,000(2) 537,360 Caremark Rx, Inc.* 15,800 520,452 Forest Laboratories, Inc.* 31,400(2) 1,778,182 Genentech, Inc.* 24,800(2) 1,393,760 Gilead Sciences, Inc.* 19,100 1,279,700 Kyphon, Inc.* 10,000 281,800 Martek Biosciences Corp.* 8,500(2) 477,445 Medtronic, Inc. 45,900 2,236,248 Novartis AG 31,700 1,410,650 Pfizer, Inc. 30,000 1,028,400 Resmed, Inc.* 29,400(2) 1,498,224 Stryker Corp. 12,000(2) 660,000 Teva Pharmaceutical Industries, Ltd., Sponsored ADR 28,000(2) 1,884,120 UnitedHealth Group, Inc. 14,000(2) 871,500 WellPoint Health Networks, Inc.* 4,500 504,045 Zimmer Holdings, Inc.* 15,000 1,323,000 Total Health Care 18,721,716 Industrials - 13.7% 3M Co. 33,400 3,006,334 Apollo Group Inc* 5,600(2) 494,424 Caterpillar, Inc. 10,000(2) 794,400 Cintas Corp. 11,000 524,370 Cummins, Inc. 21,600(2) 1,350,000 Deere & Co. 4,000(2) 280,560 Emerson Electric Co. 15,000 953,250 FedEx Corp. 16,200 1,323,378 General Electric Co. 35,000 1,134,000 Illinois Tool Works 10,000(2) 958,900 J.B. Hunt Transport Services, Inc.* 21,500 829,470 Robert Half International, Inc.* 18,000(2) 535,860 United Parcel Service, Inc., Class B 23,700(2) 1,781,529 Total Industrials 13,966,475 Information Technology - 24.0% Analog Devices, Inc.* 20,000(2) 941,600 Applied Materials, Inc.* 35,000 686,700 Autodesk, Inc. 7,000(2) 299,670 Broadcom Corp., Class A* 12,000 561,240 Cisco Systems, Inc.* 75,000 1,777,500 Dell, Inc.* 73,100 2,618,442 Diebold, Inc. 14,000(2) 740,180 EMC Corp.* 97,400 1,110,360 Flextronics International, Ltd.* 30,000(2) 478,500 Intel Corp. 93,000 2,566,800 International Business Machines Corp. 12,000 1,057,800 Kla-Tencor Corp.* 16,000(2) 790,080 Lexmark International, Inc.* 10,900 1,052,177 Linear Technology Corp. 15,000(2) 592,050 Maxim Integrated Products, Inc. 22,000(2) 1,153,240 Microsoft Corp. 75,200 2,147,712 Molex, Inc. 27,000(2) 736,560 Novell, Inc.* 102,700 861,653 SAP-AG (Systeme Anwendungen Produkte in der Datenverarbeitung) 15,000 627,150 Taiwan Semiconductor Manufacturing Co., Ltd.* 62,747 521,427 Texas Instruments, Inc. 32,000 773,760
The accompanying notes are an integral part of these financial statements. 9 Managers Capital Appreciation Fund June 30, 2004 ================================== Capital Appreciation ==================== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Information Technology(continued) Yahoo!, Inc.* 32,800(2) $ 1,191,624 Zebra Technologies, Corp.* 15,000(2) 1,305,000 Total Information Technology 24,591,225 Materials - 2.0% Freeport McMoran Copper & Gold, Inc., Class B 12,000(2) 397,800 Inco, Ltd.* 14,000(2) 483,840 Phelps Dodge Corp.* 6,000 465,060 Praxair, Inc. 18,000 718,380 Total Materials 2,065,080 Total Common Stocks (cost $85,120,191) 98,091,504 Other Investment Companies - 32.2% Bank of New York Institutional Cash Reserves Fund, 1.24%(1,3) 29,309,016 29,309,016 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03%(1) 3,591,345 3,591,345 Total Other Investment Companies (cost $32,900,361) 32,900,361 Total Investments - 128.1% (cost $118,020,552) 130,991,865 Other Assets, less Liabilities - (28.1)% (28,709,348) Net Assets - 100.0% $102,282,517
The accompanying notes are an integral part of these financial statements. 10 Managers Small Company Fund June 30, 2004 =========================== Small Company ============= Schedule of Portfolio Investments(unaudited) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Common Stocks - 95.4% Consumer Discretionary - 22.0% Christopher & Banks Corp. 12,737(2) $ 225,572 Coldwater Creek, Inc.* 7,900 209,113 Cost Plus, Inc.* 6,750(2) 219,038 Fred's, Inc. 10,645(2) 235,148 GameStop Corp.* 19,100 290,702 Gentex Corp. 9,150(2) 363,072 Getty Images, Inc.* 3,050(2) 183,000 Harman International Industries, Inc. 2,150 195,650 Insight Enterprises, Inc.* 27,275 484,403 Michaels Stores, Inc. 4,375(2) 240,625 O'Reilly Automotive, Inc.* 3,300 149,160 PEP Boys-Manny Moe & Jack, Inc. 16,925(2) 429,049 PETsMART, Inc. 12,725 412,926 Radio One, Inc.* 13,000(2) 208,130 Red Robin Gourmet Burgers, Inc.* 7,550 206,644 Ruby Tuesday, Inc. 11,200 307,440 Select Comfort Corp.* 6,550 186,020 TBC Corp.* 11,150 265,370 Total Consumer Discretionary 4,811,062 Energy - 6.4% Delta Petroleum Corp.* 9,600(2) 129,120 Evergreen Resources, Inc.* 5,050 204,020 Niko Resources, Ltd. 5,325 153,307 Ultra Petroleum Corp.* 14,450(2) 539,418 Whiting Petroleum Corp.* 5,450 137,068 XTO Energy, Inc. 7,695(2) 229,234 Total Energy 1,392,167 Financials - 1.0% Asta Funding, Inc. 7,000 121,800 Boston Private Financial Holdings, Inc. 3,975(2) 92,061 Total Financials 213,861 Health Care - 10.9% America Service Group, Inc.* 3,150 109,463 Barr Laboratories, Inc.* 9,862 332,349 Community Health Systems, Inc.* 5,900 157,943 Covance, Inc.* 12,150 468,747 Luminex Corp.* 10,775(2) 108,397 PSS World Medical, Inc.* 13,450(2) 150,640 Resmed, Inc.* 5,650 287,924 Respironics, Inc.* 7,675 450,905 Select Medical Corp. 11,700 157,014 Sonosite, Inc.* 6,750 161,393 Total Health Care 2,384,775 Industrials - 25.1% Actuant Corp., Class A* 6,585 256,749 Aeroflex, Inc. * 34,100 488,653 Carlisle Co., Inc. 3,675 228,769 CDI Corp. 6,850 237,010 Chicago Bridge & Iron Co. N.V. 7,625 212,356 ChoicePoint, Inc.* 8,625 393,818 DeVry, Inc.* 15,075(2) 413,357 Donaldson Co., Inc. 6,100(2) 178,730 ElkCorp. 10,675 255,560 Hewitt Associates, Inc., Class A* 10,450 287,375 Laureate Education, Inc.* 9,900 378,576 Mobile Mini, Inc.* 8,300 235,803 MSC Industrial Direct Co., Class A 12,825 421,173 Navigant Consulting, Inc.* 12,150 260,496 NCI Building Systems, Inc.* 9,700(2) 315,735 Pentair, Inc. 19,825 666,912 Providence Service Corp.* 3,175 59,658 UTI Worldwide, Inc. 3,625 191,001 Total Industrials 5,481,731 Information Technology - 28.3% Acxiom Corp. 20,800(2) 516,464 Alliance Data Systems Corp.* 7,800 329,550 ATMI, Inc.* 7,700(2) 210,287 Avocent Corp.* 13,275 487,723 Benchmark Electronics, Inc.* 12,150 353,565 Ceridian Corp.* 18,650 419,625 Digitas, Inc.* 16,900(2) 186,407 Emulex Corp.* 10,600(2) 151,686 Excel Technology, Inc.* 6,700 222,775 Fair Isaac Corp. 10,368(2) 346,084 FEI Co.* 9,900(2) 236,709 International Rectifier Corp.* 6,500 269,230 Lionbridge Technologies, Inc.* 14,000 107,100 MAXIMUS, Inc.* 5,150 182,619 Modem Media, Inc.* 11,275 59,307 MPS Group, Inc.* 20,475 248,157 OPNET Technologies, Inc.* 6,550 85,805 Pinnacle Systems, Inc.* 16,700 119,405 Polycom, Inc.* 6,050 135,581 Progress Software Corp.* 9,475 205,323 Radisys Corp.* 4,450(2) 82,637 Rogers Corp.* 6,650(2) 464,834 StarTek, Inc. 3,125 111,875 Symantec Corp.* 1,750(2) 76,615 Technitrol, Inc.* 8,250 180,675 Tekelec* 14,950(2) 271,642 Tollgrade Communications, Inc.* 10,300 109,386 Total Information Technology 6,171,066 Materials - 1.7% MacDermid, Inc. 10,850(2) 367,273 Total Common Stocks (cost $15,056,239) 20,821,935 Other Investment Companies - 28.9% Bank of New York Institutional Cash Reserves Fund, 1.25%(1,3) 4,918,110 4,918,110 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03%(1) 1,398,184 1,398,184 Total Other Investment Companies (cost $6,316,294) 6,316,294 Total Investments - 124.3% (cost $21,372,533) 27,138,229 Other Assets, less Liabilities - (24.3)% (5,308,870) Net Assets - 100.0% $21,829,359
The accompanying notes are an integral part of these financial statements. 11 Managers Special Equity Fund June 30, 2004 ============================ Special Equity ============== Schedule of Portfolio Investments(unaudited) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Common Stocks - 92.3% Consumer Discretionary - 22.4% Action Performance Companies, Inc. 321,300(2) $ 4,841,991 Applebee's International, Inc. 388,125(2) 8,934,638 Beasley Broadcasting Group, Inc.* 237,000 3,545,520 Big Lots, Inc.* 757,152(2) 10,948,418 Borders Group, Inc. 483,500(2) 11,333,240 CBRL Group, Inc. 450,530(2) 13,898,851 Coldwater Creek, Inc.* 152,400(2) 4,034,028 Copart, Inc.* 3 18,100(2) 8,493,270 COX Radio, Inc., Class A* 368,600(2) 6,406,268 Cumulus Media, Inc., Class A* 446,900(2) 7,512,389 Design Within Reach, Inc. 39,120 469,440 Dillard's, Inc., Class A 2,101,200 46,856,760 Duckwall-ALCO Stores, Inc.* 247,800 4,160,314 Electronics Boutique Holdings Corp.* 128,000(2) 3,371,520 Emmis Communications Corp., Class A* 1,203,600(2) 25,251,528 Furniture Brands International, Inc. 1,012,600(2) 25,365,630 GameStop Corp.* 727,300(2) 11,069,506 Gaylord Entertainment Co., Class A* 226,233(2) 7,101,454 Getty Images, Inc.* 243,200(2) 14,592,000 Gildan Activewear, Inc., Class A* 234,100(2) 6,718,670 Goody's Family Clothing, Inc. 304,900(2) 3,161,813 Gymboree Corp.* 755,500 11,604,480 Hartmarx Corp.* 49,400 311,220 Hughes Supply, Inc. 191,600(2) 11,290,988 IMPCO Technologies, Inc.* 100,800(2) 638,064 Insight Communications Co., Inc., Class A* 698,400(2) 6,467,184 Insight Enterprises, Inc.* 488,980 8,684,285 International Speedway Corp., Class A 213,000(2) 10,360,320 J. Jill Group, Inc., The* 572,700(2) 13,509,993 Journal Communications, Inc. 361,500 6,807,045 Kerzner International, Ltd.* 727,300(2) 34,590,388 La Quinta Corp.* 845,000 7,098,000 La-Z-Boy, Inc. 732,500(2) 13,170,350 Leapfrog Enterprises, Inc.* 1,060,800(2) 21,099,312 Linens 'N Things, Inc.* 369,800(2) 10,838,838 M. D. C. Holdings, Inc. 116,400(2) 7,404,204 Nautilus Group, Inc. 504,200(2) 9,836,942 NetFlix, Inc.* 220,500(2) 7,926,975 P.F. Chang's China Bistro, Inc.* 135,300(2) 5,567,595 Panera Bread Co., Class A* 636,800(2) 22,848,384 Pier 1 Imports, Inc. 436,300 7,718,147 Polaris Industries, Inc. 184,600(2) 8,860,800 Priceline.com, Inc.* 365,600(2) 9,845,608 Prime Hospitality Corp.* 1,017,300 10,803,726 Proquest Co.* 3 48,000(2) 9,483,000 Quiksilver, Inc.* 307,000 7,309,670 Rare Hospitality International, Inc.* 300,400 7,479,960 Ross Stores, Inc. 780,000(2) 20,872,800 Ruby Tuesday, Inc. 735,000(2) 20,175,750 Saks, Inc.* 1,023,000(2) 15,345,000 Salem Communications Corp., Class A* 482,900 13,101,077 School Specialty, Inc.* 323,565(2) 11,748,645 Source Interlink Companies, Inc.* 433,700 4,822,744 Stage Stores, Inc.* 79,100(2) 2,978,906 Standard-Pacific Corp. 178,000 8,775,400 Talbots, Inc. 379,100 14,841,765 TJX Cos., Inc. 160,000(2) 3,862,400 Too, Inc.* 671,000(2) 11,205,700 Toro Co. 144,700(2) 10,139,129 Toys "R"Us, Inc.* 3,100,000(2) 49,383,000 Tweeter Home Entertainment Group, Inc.* 618,800(2) 3,341,520 United Rentals, Inc.* 664,400(2) 11,886,116 Urban Outfitters, Inc.* 130,800(2) 7,967,028 Visteon Corp. 4,395,300(2) 51,293,150 WMS Industries, Inc.* 293,900(2) 8,758,220 Young Broadcasting, Inc.* 230,000 3,024,500 Total Consumer Discretionary 773,145,576 Consumer Staples - 1.1% Central Garden & Pet Co.* 230,700 8,252,139 Del Monte Foods Co.* 824,300 8,374,888 Duane Reade, Inc.* 589,200(2) 9,621,636 NBTY, Inc.* 3 81,400 11,209,346 Total Consumer Staples 37,458,009 Energy - 3.8% Global Industries, Ltd.* 1,320,400 7,552,688 Grant Prideco, Inc.* 326,900(2) 6,034,574 Houston Exploration Co.* 189,400(2) 9,818,496 Key Energy Services, Inc.* 648,300(2) 6,119,952 Maverick Tube Corp.* 260,000(2) 6,827,600 Newfield Exploration Co.* 186,700 10,406,658 OMI Corp.* 499,000(2) 5,938,100 Overseas Shipholding Group, Inc. 469,800 20,732,274 Pogo Producing Co. 484,200 23,919,480 Stone Energy Corp.* 184,800 8,441,664 Veritas DGC, Inc.* 1,140,800(2) 26,409,520 Total Energy 132,201,006 Financials - 12.7% Alabama National Bancorp 64,400(2) 3,572,268 American Financial Group, Inc. 155,300(2) 4,747,521 American National Insurance Co. 68,950(2) 6,366,154 AmerUs Group, Co. 213,300(2) 8,830,620 Assured Guaranty, Ltd. 464,300 7,869,885 Banknorth Group, Inc. 355,482 11,546,055 Banner Corp. 217,740 6,327,524 Brown & Brown, Inc. 265,100(2) 11,425,810 Charter One Financial, Inc. 227,946 10,072,934 Chittenden Corp. 396,500(2) 13,936,975 Clark, Inc.* 285,400 5,294,170 Commerce Bancshares, Inc. 289,315(2) 13,292,578 Conseco, Inc.* 361,600(2) 7,195,840
The accompanying notes are an integral part of these financial statements. 12 Managers Special Equity Fund June 30, 2004 ============================ Special Equity ============== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Delphi Financial Group, Inc., Class A 334,100(2) $ 14,867,450 Direct General Corp. 229,400 7,400,444 Downey Financial Corp. 393,380(2) 20,947,485 Equity Inns, Inc. 572,800 5,321,312 F.N.B. Corp. 116,000 2,366,400 FelCor Lodging Trust, Inc.* 2,900,000(2) 35,090,000 First National Bankshares of Florida* 647,870(2) 12,277,137 Harbor Florida Bancshares, Inc. 224,900 6,186,999 HCC Insurance Holdings, Inc. 250,100(2) 8,355,841 Hibernia Corp., Class A 866,500 21,055,950 Hilb, Rogal & Hamilton Co. 305,500(2) 10,900,240 Infinity Property & Casualty Corp. 277,300 9,150,900 Investment Technology Group, Inc.* 620,200(2) 7,932,358 Investors Financial Services Corp. 124,300(2) 5,416,994 iStar Financial, Inc. 303,300 12,132,000 MCG Capital Corp. 537,478 8,266,412 Meristar Hospitality Corp.* 5,024,600 34,368,264 National Western Life Insurance Co., Class A* 12,000 1,842,600 Net Bank, Inc. 547,300(2) 5,981,989 Prime Group Realty Trust* 786,800(2) 4,154,304 Reinsurance Group of America 171,700 6,979,605 Scottish Annuity & Life Holdings, Ltd. 418,000(2) 9,718,500 Seacoast Financial Services Corp.327,500 11,331,500 Selective Insurance Group, Inc. 182,396 7,273,952 St. Joe Co., The 111,500(2) 4,426,550 Sterling Financial Corp.* 432,551(2) 13,785,400 Triad Guaranty, Inc.* 97,082(2) 5,650,172 U.S.I. Holdings Corp.* 536,701(2) 8,479,876 Webster Financial Corp. 279,800(2) 13,156,196 Westcorp 236,600 10,753,470 Wrigley, Wm. Jr. Co. 128,300 3,242,141 Total Financials 439,290,775 Health Care - 10.2% Adolor Corporation* 223,875(2) 2,838,735 Advanced Neuromodulation Systems, Inc.* 99,450(2) 3,261,960 American Healthways, Inc.* 365,300(2) 9,724,286 American Medical Systems Holdings, Inc.* 192,300(2) 6,480,510 Apria Healthcare Group, Inc.* 259,000(2) 7,433,300 Arthrocare Corp.* 627,200(2) 18,238,976 Atherogenics, Inc.* 180,400(2) 3,433,012 Centene Corp.* 217,900(2) 8,400,045 Charles River Laboratories International, Inc.* 302,900(2) 14,802,723 CTI Molecular Imaging, Inc.* 242,500(2) 3,438,650 CV Therapeutics, Inc.* 324,300(2) 5,435,268 Cytyc Corp.* 361,000 9,158,570 DaVita, Inc.* 528,600 16,296,738 Dendreon Corp.* 265,100(2) 3,247,475 Digene Corp.* 178,600(2) 6,524,258 Digirad Corp. 108,600(2) 1,080,570 Discovery Laboratories, Inc.* 348,600(2) 3,343,074 DJ Orthopedics, Inc.* 169,100 3,889,300 Dyax Corp.* 275,000 3,231,250 Eclipsys Corp.* 950,200(2) 14,500,052 Endocardial Solutions, Inc.* 167,300(2) 1,731,555 EPIX Medical, Inc.* 353,500(2) 7,458,850 Eresearch Technology, Inc.* 271,350(2) 7,597,800 Exact Sciences Corp.* 371,900 2,287,185 Exelixis, Inc.* 822,400(2) 8,298,016 Genesis HealthCare Corp. 357,200 10,373,088 Gen-Probe, Inc.* 359,000 16,987,880 Harvard Bioscience, Inc.* 915,200 4,100,096 I-Flow Corp.* 260,900(2) 3,094,274 IMS Health, Inc. 820,081(2) 19,222,699 Inveresk Research Group, Inc.* 199,200(2) 6,143,328 Lincare Holdings, Inc.* 212,100(2) 6,969,606 Martek Biosciences Corp.* 104,300(2) 5,858,531 Medicines Co.* 213,660(2) 6,518,767 NeoPharm, Inc.* 380,000(2) 3,925,400 Nuvelo, Inc.* 329,900 3,173,638 Owens & Minor, Inc. 213,300 5,524,470 Par Pharmaceutical Co., Inc. * 241,100(2) 8,489,131 Penwest Pharmaceuticals Co.* 440,700 5,645,367 Priority Healthcare Corp., Class B* 229,122(2) 5,258,350 Protein Design Labs, Inc.* 384,900(2) 7,363,137 PSS World Medical, Inc.* 292,100(2) 3,271,520 Quidel Corp.* 488,300(2) 2,876,087 Rigel Pharmaceuticals, Inc. * 209,100(2) 2,971,311 Santarus, Inc.* 315,900(2) 4,659,525 Symbion, Inc. 341,520(2) 5,962,939 Telik, Inc.* 320,900 7,659,883 Triad Hospitals, Inc.* 711,364(2) 26,484,081 Universal Health Services, Inc., Class B 170,000(2) 7,801,300 Total Health Care 352,466,566 Industrials - 15.6% AAR Corp. 259,200(2) 2,941,920 Acuity Brands, Inc. 274,600(2) 7,414,200 Administaff Inc.* 425,200(2) 7,058,320 Aeroflex, Inc.* 637,700 9,138,241 Air France 948,178 15,938,872 Airtran Holdings, Inc.* 938,200(2) 13,266,148 Alaska Airgroup, Inc.* 615,000(2) 14,680,050 Albany International Corp. 275,000(2) 9,229,000 Ametek, Inc. 321,500(2) 9,934,350 Asset Acceptance Capital Corp.* 437,700(2) 7,440,900 Axsys Technologies, Inc.* 452,900 10,013,619 BHA Group Holdings, Inc., Class A 154,900 5,862,965 Brink's Co., The 420,241 14,393,254 CDI Corp. 182,000 6,297,200 CNF, Inc. 105,600 4,388,736 Corinthian Colleges, Inc.* 795,500(2) 19,680,670 Corporate Executive Board Co.* 270,700 15,643,753
The accompanying notes are an integral part of these financial statements. 13 Managers Special Equity Fund June 30, 2004 ============================ Special Equity ============== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- CoStar Group, Inc.* 465,200 $ 21,366,636 Crane Co. 337,000(2) 10,578,430 Curtiss-Wright Corp. 187,200(2) 10,518,768 DeVry, Inc.* 658,200(2) 18,047,844 EGL, Inc.* 163,500(2) 4,349,100 Flowserve Corp.* 381,500(2) 9,514,610 IDEX Corp. 340,650(2) 11,701,328 Interpool, Inc. 340,600(2) 5,705,050 Ionics, Inc.* 368,800(2) 10,418,600 ITT Educational Services, Inc.* 1,139,700(2) 43,331,393 Jacuzzi Brands, Inc.* 746,600 6,017,596 J.B. Hunt Transport Services, Inc.* 357,200 13,780,776 JLG Industries, Inc. 388,600(2) 5,397,654 Kennametal, Inc. 170,700(2) 7,818,060 Laidlaw International, Inc.* 559,200(2) 7,247,232 Lydall, Inc.* 234,000 2,286,180 MSC Industrial Direct Co., Class A 222,900(2) 7,320,036 Old Dominion Freight Line, Inc.* 152,500 4,495,700 Orbital Sciences Corp.* 546,200(2) 7,543,022 Overnite Corp.* 216,850 6,375,390 Pentair, Inc. 419,200 14,101,888 Precision Castparts Corp. 47,100 2,575,899 RemedyTemp, Inc., Class A* 86,600 1,060,850 Ryder System, Inc. 200,300 8,026,021 Sea Containers, Ltd., Class A 795,900(2) 13,952,127 Sea Containers, Ltd., Class B* 13,890 245,575 Sequa Corp., Class A* 99,600 5,823,612 Sequa Corp., Class B* 38,300 2,288,425 Shaw Group Inc., The* 797,300(2) 8,076,649 Sirva, Inc.* 379,200(2) 8,721,600 Stewart & Stevenson Services, Inc. 537,400 9,630,208 Tecumseh Products Co., Class B 101,000 4,285,430 Thomas & Betts Corp. 653,500 17,794,805 United Stationers, Inc.* 206,300(2) 8,194,236 Volt Information Sciences, Inc.* 69,350 2,185,219 Wabash National Corp.* 267,100(2) 7,358,605 Waste Connections, Inc.* 374,250(2) 11,100,255 Watson Wyatt & Co.* 306,900 8,178,885 Werner Enterprises, Inc. 356,047 7,512,592 York International Corp. 272,300 11,183,361 Total Industrials 539,431,845 Information Technology - 16.8% ADC Telecommunications, Inc.* 1,385,500(2) 3,934,820 Advanced Micro Devices, Inc.* 1,000,000(2) 15,900,000 Alliance Data Systems Corp.* 342,400(2) 14,466,400 Alvarion, Ltd.* 231,800 3,078,304 Anaren Microwave, Inc.* 1,057,900(2) 17,286,086 Applied Films Corp.* 202,800(2) 5,885,256 aQuantive, Inc.* 249,500(2) 2,465,060 Ascential Software Corp.* 186,000 2,974,140 ATMI, Inc.* 568,000(2) 15,512,080 Audiovox Corp., Class A* 175,700 2,965,816 Avid Technology, Inc.* 3 34,400 18,248,208 BearingPoint, Inc.* 1,104,500(2) 9,796,915 Benchmark Electronics, Inc.* 293,300 8,535,030 Blue Coat Systems, Inc. * 227,200(2) 7,608,928 Captiva Software Corp. * 313,085 3,033,794 Centra Software, Inc.* 548,300 1,233,675 Ceridian Corp.* 266,800 6,003,000 CheckFree Corp.* 80,700(2) 2,421,000 Checkpoint Systems, Inc.* 401,200 7,193,516 Citadel Security Software, Inc.* 959,500(2) 2,955,260 Cognex Corp. 175,900(2) 6,768,632 Cognizant Technology Solutions Corp.* 406,986 10,341,514 CSG Systems International, Inc.* 171,400(2) 3,547,980 CTS Corp. 972,600(2) 11,729,556 Dot Hill Systems Corp.* 853,700 9,569,977 Dupont Photomasks, Inc.* 270,794(2) 5,505,242 eFunds Corp.* 421,126 7,369,705 Electronics for Imaging, Inc.* 239,581(2) 6,770,559 Equinix, Inc.* 297,500(2) 10,097,150 Exfo Electro-Optical Engineering, Inc.* 1,488,400(2) 7,650,376 Fairchild Semiconductor International, Inc.* 492,000 8,054,040 FLIR Systems, Inc.* 123,600(2) 6,785,640 Formfactor, Inc.* 294,400 6,609,280 Helix Technology Corp. 270,700 5,774,031 Hi/Fn, Inc.* 570,300(2) 6,815,085 Hyperion Solutions Corp.* 501,400(2) 21,921,208 Identix, Inc.* 1,379,900(2) 10,307,853 IKON Office Solutions, Inc. 838,800(2) 9,621,036 Infocrossing, Inc.* 137,200(2) 1,852,200 Intevac, Inc.* 724,300 6,424,541 Intrado, Inc.* 406,700 6,543,803 Ixia, Inc.* 1,166,800 11,481,312 Keithley Instruments, Inc. 536,600 11,885,690 Kemet Corp.* 556,100 6,795,542 Lionbridge Technologies, Inc.* 741,400 5,671,710 Magma Design Automation, Inc.* 264,100(2) 5,078,643 McData Corp., Class A* 764,700(2) 4,114,086 Measurement Specialties, Inc.* 145,700 3,147,120 Mentor Graphics Corp.* 283,600(2) 4,387,292 Micromuse, Inc.* 970,900(2) 6,495,321 Microsemi Corp.* 735,500(2) 10,451,455 Mindspeed Technologies, Inc.* 1,431,100 7,098,256 Netscout Systems, Inc.* 768,500 5,064,415 Open Solutions, Inc. 255,900 6,392,382 Orbotech Ltd.* 240,200 4,888,070 Parametric Technology Corp.* 1,100,200 5,501,000 Park Electrochemical Corp. 264,300(2) 6,673,575 Pemstar, Inc.* 332,800(2) 772,096 Photon Dynamics, Inc.* 122,500 4,296,075 Photronics, Inc.* 428,200(2) 8,110,108 Reynolds & Reynolds Co., The, Class A 115,000 2,659,950
The accompanying notes are an integral part of these financial statements. 14 Managers Special Equity Fund June 30, 2004 ============================ Special Equity ============== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Rogers Corp.* 153,400(2) $ 10,722,660 Roper Industries, Inc. 220,300(2) 12,535,070 Secure Computing Corp.* 285,700 3,328,405 Silicon Laboratories, Inc.* 421,200(2) 19,522,620 Skyworks Solutions, Inc.* 681,500(2) 5,949,495 SupportSoft, Inc.* 483,875(2) 4,200,035 SYNNEX Corp.* 290,900 4,567,130 Synopsys, Inc.* 430,000(2) 12,224,900 Tech Data Corp.* 245,400 9,602,502 Tessera Technologies, Inc. 229,800 4,140,996 Tier Technologies, Inc.* 394,200 3,839,508 Trident Microsystems, Inc. * 299,800 3,360,758 Ultratech Stepper, Inc.* 337,300 5,491,244 Verint Systems, Inc.* 105,400(2) 3,606,788 Verity, Inc.* 508,700 6,872,537 Vishay Intertechnology, Inc.* 713,900(2) 13,264,262 Woodhead Industries, Inc. 548,900 8,485,994 X-Rite, Inc. 395,500 5,750,570 Total Information Technology 579,986,268 Materials - 5.9% Airgas, Inc. 778,800(2) 18,621,108 AK Steel Holding Corp.* 6,085,200(2) 32,069,004 Cytec Industries, Inc. * 164,100 7,458,345 Landec Corp.* 427,100 2,917,093 Longview Fibre Co. 878,800 12,944,724 Massey Energy Co. 400,000(2) 11,284,000 Minerals Technologies, Inc. 173,400 10,057,200 RTI International Metals, Inc.* 409,030 6,524,029 Scotts Co., The, Class A* 131,900(2) 8,425,772 Spartech Corp. 506,200 13,130,828 Stillwater Mining Co.* 789,262 11,846,823 Symyx Technologies, Inc.* 70,400 1,698,048 United States Steel Corp. 1,413,300(2) 49,635,095 USEC, Inc. 1,915,600(2) 16,799,812 Total Materials 203,411,881 Telecommunication Services - 0.3% Alamosa Holdings, Inc.* 456,100(2) 3,352,335 General Communication, Inc., Class A* 878,100 6,972,114 Total Telecommunication Services 10,324,449 Utilities - 3.5% Avista Corp. 1,202,200 22,144,524 Reliant Resources, Inc. * 5,991,000(2) 64,882,530 Sierra Pacific Resources Corp.* 2,346,800(2) 18,093,828 Texas Genco Holdings, Inc. 369,900(2) 16,678,791 Total Utilities 121,799,673 Total Common Stocks (cost $2,479,552,731) 3,189,516,048 Warrants - 0.03% Air France, ADR warrant 861,980(2) 1,034,376 Short-Term Investments - 36.0%1 Other Investment Companies - 35.9% AIM Liquid Assets, 1.08% 20,031,825 20,031,825 Bank of New York Institutional Cash Reserves Fund, 1.25%(3) 981,141,430 981,141,430 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03% 238,430,186 238,430,186 Total Other Investment Companies 1,239,603,441 Other Short-Term Investments - 0.1%(3) Atlantis One Funding Corp., due 07/19/04, 1.25% 4,997,275 4,997,275 Total Short-Term Investments (cost $1,244,600,716) 1,244,600,716 Total Investments - 128.3% (cost $3,725,515,375) 4,435,151,140 Other Assets, less Liabilities - (28.3)% (978,316,396) Net Assets - 100.0% $ 3,456,834,744
The accompanying notes are an integral part of these financial statements. 15 Managers International Equity Fund June 30, 2004 ================================== International Equity ==================== Schedule of Portfolio Investments(unaudited) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Common Stocks - 98.9% Consumer Discretionary - 18.9% Antena 3 de Television SA (Spain)* 10,300 $ 545,119 British Sky Broadcasting PLC (United Kingdom)* 319,665 3,615,245 Continental AG (Germany)* 60,500 2,936,863 Enterprise Inns PLC. (United Kingdom) 244,700 2,558,329 Fast Retailing Co., Ltd. (Japan) 20,700 1,687,009 George Wimpey PLC (United Kingdom)* 154,000 1,033,243 Hennes & Mauritz AB (Sweden) 14,400 372,912 HIS Co., Ltd. (Japan) 2,300 69,981 Honda Motor Co., Ltd. (Japan)* 70,000 3,400,492 Hyundai Motor Co., Ltd. (South Korea)* 15,800 610,973 Intercontinental Hotels Group PLC (United Kingdom)* 229,835 2,437,262 Isetan Co., Ltd. (Japan) 67,000 970,471 JC Decaux International (France)* 21,500 461,801 Koninklijke (Royal) Phillips Electronics N.V. (Netherlands) 67,200 1,827,634 Lagardere S.C.A. (France) 22,900(2) 1,436,732 Marui Co., Ltd. (Japan) 74,800 1,016,241 Nissan Motor Co., Ltd. (Japan)* 382,000 4,273,386 Pearson PLC (United Kingdom)* 82,653 1,009,255 Persimmon PLC (United Kingdom)* 94,800 1,092,853 Pioneer Corp. (Japan)* 19,100 498,050 PT Multimedia-Servicos de Telecomunicacoes e Multimedia, SGPS, SA (Portugal) 21,300 466,407 Resorttrust, Inc. (Japan) 1,700 48,609 Sekisui Chemical Co., Ltd. (Japan) 287,600 2,441,089 Singapore Press Holdings Ltd. (Singapore) 182,325 440,844 Societe Television Francaise 1 (France) 46,300 1,465,506 Takashimaya Co., Ltd. (Japan) 107,500(2) 1,249,219 Toyota Motor Corp. (Japan)* 12,000 488,801 United Business Media PLC (United Kingdom) 82,200 761,656 Volkswagen AG (Germany)* 29,200 1,240,590 Whitbread PLC (United Kingdom)* 168,800 2,527,119 Wolters Kluwer NV (Netherlands)* 40,200 731,441 WPP Group PLC (United Kingdom) 118,100 1,204,782 Total Consumer Discretionary 44,919,914 Consumer Staples - 6.7% Ajinomoto Co., Inc. (Japan) 66,000 796,577 British American Tobacco PLC (United Kingdom)* 53,400 829,452 Cadbury Schweppes PLC (United Kingdom) 192,900 1,668,061 Delhaize Le Lion (Belgium) 8,900 457,219 Diageo PLC (United Kingdom)* 83,646 1,130,697 Foster's Group, Ltd. (Australia)* 200,700 662,858 Groupe Danone (France) 8,200 717,468 Koninklijke Ahold N.V. (Netherlands)* 112,400 886,932 Nestle SA, Registered (Switzerland)* 3,700 988,174 Nippon Meat Packers, Inc. (Japan)* 67,000 827,563 Seven-Eleven Japan Co., Ltd. (Japan)* 39,000 1,281,043 Tesco PLC (United Kingdom) 772,700 3,746,818 Unilever PLC (United Kingdom)* 140,626 1,384,514 Yamazaki Baking Co., Ltd. (Japan)* 47,000 463,253 Total Consumer Staples 15,840,629 Energy - 9.0% BP PLC (United Kingdom)* 479,200 4,238,123 China Petroleum and Chemical Corp., Class H (Hong Kong)* 924,000 341,082 EnCana Corp. (Canada) 38,634 1,660,333 Eni SpA (Italy) 143,400(2) 2,867,418 IHC Caland NV (Netherlands) 9,266 431,845 Oao Gazprom-Sponsored ADR (Russia) 31,500(2) 901,845 Petroleo Brasileiro SA, Sponsored ADR (Brazil) 39,000(2) 982,800 Repsol YPF, S.A. (Spain)* 81,900(2) 1,794,429 Royal Dutch Petroleum Co. (Netherlands)* 22,600 1,167,110 Saipem SpA (Italy) 51,200 467,027 Statoil ASA (Norway) 60,500 768,687 Talisman Energy, Inc. (Canada) 156,900 3,405,400 Total SA (France)* 10,988 2,107,203 YUKOS, ADR (Russia) 9,500(2) 302,100 Total Energy 21,435,402 Financials - 20.3% Aiful Corp. (Japan)* 2,850 299,694 Assurances Generales de France (France)* 56,600(2) 3,451,344 Aviva PLC (United Kingdom)* 129,000 1,338,470 Bank of East Asia, Ltd. (Hong Kong)* 302,000 867,458 Bank of Nova Scotia (Canada) 69,128(2) 1,846,851 BNP Paribas SA (France) 35,900(2) 2,220,594 Credit Suisse Group (Switzerland)* 49,700 1,775,230 Daiwa Securities Group, Inc. (Japan)* 104,000 754,596 DBS Group Holdings, Ltd. (Singapore)* 122,000 1,023,147 Depfa Bank PLC. (Ireland)* 58,000 846,209 Deutsche Boerse AG (Germany)* 21,636(2) 1,111,142 Hang Seng Bank Ltd. (Hong Kong)* 75,800 973,581 Hannover Rueckversicherungs AG (Germany) 1,500 50,627 Henderson Land Development Co., Ltd. (Hong Kong)* 144,000 623,458 Hong Kong Exchanges & Clearing Ltd. (Hong Kong)* 100,000 205,750
The accompanying notes are an integral part of these financial statements. 16 Managers International Equity Fund June 30, 2004 ================================== International Equity ==================== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Japan Retail Fund Investment Corp. (Japan) 76 $ 524,474 Kookmin Bank (South Korea)* 55,874 1,747,012 Manulife Financial Corp (Canada) 42,000 1,693,157 Mitsubishi Estate Co., Ltd. (Japan)* 156,000 1,950,350 Mitsubishi Tokyo Financial Group, Inc. (Japan) 219 2,045,284 Mitsui Fudosan Co., Ltd. (Japan)* 135,000 1,629,273 Nikko Cordial Corp. (Japan)* 122,000 597,521 Nomura Holdings, Inc. (Japan) 104,000 1,551,320 ORIX Corp. (Japan)* 9,000 1,036,248 Promise Co., Ltd. (Japan)* 31,500 2,112,634 Royal & Sun Alliance Insurance Group PLC (United Kingdom)* 954,300 1,435,040 Royal Bank of Scotland Group PLC (United Kingdom)* 23,400 677,245 SFCG Co Ltd (Japan) 6,010(2) 1,212,224 Shinhan Financial Group Co., Ltd. (South Korea)* 65,790 959,066 Shinsei Bank, Ltd. (Japan)* 81,000(2) 516,666 Societe Generale (France)* 26,300(2) 2,247,437 Standard Chartered, PLC. (United Kingdom)* 41,100 671,916 Sumitomo Mitsui Financial Group, Inc. (Japan)* 262 1,814,534 Sumitomo Realty & Development Co., Ltd. (Japan)* 279,000(2) 3,483,296 Sun Hung Kai Properties, Ltd. (Hong Kong)* 71,000 585,387 UFJ Holdings, Inc. (Japan)* 323 1,448,524 Willis Group Holdings, Ltd. (United Kingdom) 29,300(2) 1,097,285 Total Financials 48,424,044 Health Care - 5.7% Actelion, Ltd. (Switzerland)* 7,100 817,275 Aventis SA (France) 30,900 2,341,153 Fresenius AG, Preferred (Germany) 29,300 2,221,815 GlaxoSmithKline PLC (United Kingdom)* 185,300 3,776,248 Novartis AG (Switzerland)* 29,149 1,294,211 Schering AG (Germany)* 14,279 845,231 Serono SA (Switzerland) 2,290 1,445,334 Taisho Pharmaceutical Co., Ltd. (Japan)* 36,000 801,122 Total Health Care 13,542,389 Industrials - 8.6% ABB Ltd. (Switzerland)* 154,500 854,805 ACS, Actividades de Construccion y Servicios, SA (Spain) 90,810(2) 1,530,966 Autoroutes du sud de la France (France)* 29,468(2) 1,171,781 Dai Nippon Printing Co., Ltd. (Japan)* 42,000 674,629 FANUC, Ltd. (Japan)* 7,300 439,389 Goodwill Group, Inc., The (Japan) 287(2) 752,444 Heidelberger Druckmaschinen (Germany)* (a) 17,900(2) 595,340 Hutchison Whampoa, Ltd. (Hong Kong)* 163,000 1,118,932 ITOCHU Corp. (Japan)* 170,000 768,044 MAN AG (Germany) 80,000 2,953,358 Mitsubishi Corp. (Japan)* 126,000 1,230,171 Mitsui & Co., Ltd. (Japan) 143,000 1,076,995 RT Group PLC (United Kingdom) 360,539 26,154 Secom Co., Ltd. (Japan) 29,000 1,239,105 Siemens AG (Germany) 11,000 797,816 Technip-Coflexip sp ADR (France) 4,800 652,842 Tostem Inax Holding Corp. (Japan)* 32,000 691,388 Vinci SA (France)* 15,191(2) 1,536,065 West Japan Railway Co. (Japan) 250 1,010,313 Yamato Transport Co., Ltd. (Japan)* 75,000 1,229,801 Total Industrials 20,350,338 Information Technology - 9.4% Atos Origin SA (France)* 18,500 1,196,656 Canon, Inc. (Japan) 98,500 5,248,278 Compal Electronics, Inc. (Taiwan)* 278,138(2) 1,508,926 Ericsson LM, Class B (Sweden)* 1,236,700 3,697,812 Flextronics International, Ltd. (Singapore)* 64,500(2) 1,028,775 Fujitsu Ltd. (Japan)* 63,000 448,303 Hitachi Ltd (Japan)* 124,000 863,045 Nippon Electric Glass Co., Ltd., (Japan) 72,000 1,518,664 Samsung Electronics Co Ltd., (South Korea)* 6,900 2,867,508 SAP AG (Germany) 6,300 1,055,538 Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan)* 106,672(2) 886,444 TietoEnator Oyj (Finland) 16,600 505,335 Toshiba Corp. (Japan)* 179,000 726,585 United Internet Ag (Germany) 27,600 776,670 Total Information Technology 22,328,540 Materials - 14.9% Alcan, Inc. (Canada) 38,504 1,585,248 Anglo American PLC (United Kingdom)* 3,900 80,386 Aracruz Celulose SA (Brazil) 32,600(2) 1,064,716 Arcelor (Luxembourg)* 199,500(2) 3,367,666 Barrick Gold Corp. (Canada) 29,400(2) 580,650 Bayer AG (Germany)* 45,296(2) 1,318,273 BOC Group PLC (United Kingdom) 58,978 988,866 Cemex SA de CV (Mexico) 30,718(2) 893,894 Cia de Minas Buenaventura SA (Peru) 61,700 1,363,570 DSM NV (Netherlands)* 30,700 1,509,817 GMK Norilsk Nickel, Sponsored ADR (Russia) 5,900 327,450
The accompanying notes are an integral part of these financial statements. 17 Managers International Equity Fund June 30, 2004 ================================== International Equity ==================== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Gold Fields, Ltd. (South Africa)* 134,100 1,408,567 Goldcorp, Inc. (Canada) 88,700 1,030,065 Harmony Gold Mining Co., Ltd. (South Africa)* 97,800 1,030,128 HeidelbergCement AG (Germany)* 25,312 1,255,888 Impala Platinum Holdings, Ltd. (South Africa) 47,800(2) 906,025 JFE Holdings, Inc. (Japan)* 27,100 669,047 Meridian Gold, Inc. (Canada)* 62,100 799,438 Placer Dome, Inc. (Canada) 91,000 1,520,343 POSCO (South Korea)* 9,800 1,268,005 Rio Tinto PLC (United Kingdom)* 33,733 815,207 RMC Group, PLC (United Kingdom)* 40,600 448,989 Shin-Etsu Chemical Co., Ltd. (Japan)* 24,000 864,870 Sinopec Shangai Petrochemical Co., Ltd., Class H (China)* 1,936,000 646,480 Svenska Cellulosa AB (Sweden)* 71,300 2,718,807 Syngenta AG (Switzerland)* 47,540 3,993,210 Umicore (Belgium) 18,400 1,161,222 UPM-Kymmene Oyj (Finland) 28,200 536,426 Xstrata PLC (United Kingdom)* 103,090 1,384,889 Total Materials 35,538,142 Telecommunication Services - 3.5% Bouygues (France) 49,000(2) 1,648,251 Deutsche Telekom AG (Germany)* 53,500 947,001 France Telecom SA (France)* 50,600 1,328,422 Singapore Telecommunications Ltd. (Singapore)* 637,000 833,411 Sk Telecom Co., Ltd. (South Korea) 3,700 611,717 TDC A/S (Denmark)* 10,900 356,254 Vodafone Group PLC (United Kingdom) 1,227,600 2,699,193 Total Telecommunication Services 8,424,249 Utilities - 1.9% CLP Holdings Ltd. (Hong Kong) 288,000 1,578,061 E.ON AG (Germany)* 11,900 862,227 Hong Kong & China Gas Co., Ltd. (Hong Kong)* 625,000 1,032,513 National Grid Transco PLC, (United Kingdom) 126,900 982,088 Total Utilities 4,454,889 Total Common Stocks (cost $200,765,866) 235,258,535 Other Investment Companies - 17.4% Bank of New York Institutional Cash Reserves Fund, 1.24%(1,3) 36,935,336 36,935,336 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03%(1) 4,502,651 4,502,651 Total Other Investment Companies (cost $41,437,987) 41,437,987 Total Investments - 116.3% (cost $242,203,853) 276,696,521 Other Assets, less Liabilities - (16.3)% (38,694,226) Net Assets - 100.0% $238,002,295
The accompanying notes are an integral part of these financial statements. 18 Managers Emerging Markets Equity Fund June 30, 2004 ===================================== Emerging Markets ================= Schedule of Portfolio Investments(unaudited) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Common Stocks - 98.3% Consumer Discretionary - 12.1% Consorcio ARA, S.A. de C.V. (Mexico)* 330,000 949,970 Genting Berhad (Malaysia)* 189,600 764,401 Grupo Televisa S. A. (Mexico)* 20,000(2) 905,400 Hankook Tire Co., Ltd. (South Korea)* 130,000 1,141,390 Hyundai Motor Co., Ltd. (South Korea)* 55,000 1,077,686 Total Consumer Discretionary 4,838,847 Consumer Staples - 6.2% Coca-Cola Femsa, S.A. de C.V., Sponsored ADR (Mexico) 29,070(2) 645,063 IOI Corp., Berhad (Malaysia)* 416,000 892,211 IOI Oleochemical Industries Berhad(Malaysia)* 416 1,018 Natura Cosmeticos SA (Brazil) 4,700 75,561 PT Hanjaya Mandala Sampoerna Tbk (Indonesia)* 1,600,000 871,192 Total Consumer Staples 2,485,045 Energy - 6.6% China Oilfield Services, Ltd. (China)* 3,700,000 1,058,810 LUKOIL Holdings, ADR (Russia) 6,700 704,840 Petroleo Brasileiro S.A., Sponsored ADR (Brazil) 31,600(2) 887,012 Total Energy 2,650,662 Financials - 18.1% Fubon Financial Holding Co., Ltd. (Taiwan)* 590,000 516,408 Grupo Financiero Banorte S.A de C.V. (Mexico)* 206,000 728,582 Kookmin Bank, Sponsored ADR (South Korea) 31,257 980,845 Sanlam, Ltd. (South Africa)* 820,000 1,164,534 Savings Bank of The Russian Federation (Russia) 18,000 702,684 SinoPac Holdings (Taiwan)* 1,840,000 967,517 SM Prime Holdings, Inc. (Philippines)* 800 87 State Bank of India, GDR (India) 27,000(2) 505,821 Turkiye Is Bankasi (Isbank) (Turkey)* 250,000,000 909,704 Uniao de Bancos Brasileiros SA (Brazil) 38,000 751,260 Total Financials 7,227,442 Health Care - 3.6% Ranbaxy Laboratories, Ltd., GDR (India) 24,560 485,831 Richter Gedeon Rt (Hungary) 9,565 962,877 Total Health Care 1,448,708 Industrials - 6.2% Alfa, S.A. (Mexico)* 233,000 781,852 Daelim Industrial Co., Ltd. (South Korea)* 26,500 835,280 Sime Darby Berhad (Malaysia)* 600,000 878,441 Total Industrials 2,495,573 Information Technology - 9.4% Hon Hai Precision Industry Co., Ltd. (Taiwan)* 219,000 819,491 Mediatek, Inc. (Taiwan) 94,300 755,919 Samsung Electronics Co., Ltd., GDR, (South Korea) (a)* 6,670(2) 1,376,716 Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan)* 912 1,316 United Microelectronics Corp. (Taiwan)* 1,100,000 821,662 Total Information Technology 3,775,104 Materials - 10.5% Anglo American PLC (United Kingdom)* 50,000 1,030,594 China Steel Corp. (Taiwan)* 720,000 683,303 Formosa Chemicals & Fibre Corp. (Taiwan)* 620,000 972,012 Hindalco Ind., Ltd., Sponsored GDR, (India) (a)* 31,500(2) 683,783 Siam Cement Public Co., Ltd., The (Thailand)* 135,000 810,338 Total Materials 4,180,030 Telecommunication Services - 25.6% Advanced Information Services PCL (Thailand)* 350,000 762,745 Cesky Telecom a.s. (Czech Republic)* 63,300 777,826 China Mobile Ltd. (Hong Kong) 326,000 989,242 China Telecom Corp., Ltd., Class H (China)* 3,204,000 1,126,211 Compania Anonima Nacional Telefonos de Venezuela ADR 43,200 870,480 Maxis Communications Berhad (Malaysia) 370,000 858,370 PT Telekomunikasi Indonesia (Indonesia)* 1,000,000 785,535 SK Telecom Co., Ltd., Sponsored ADR (South Korea) 29,000(2) 608,710 Telecom Argentina Stet France Telecom S.A., Sponsored ADR 84,000 759,360 Telekomunikacja Polska S.A., Sponsored GDR, (Poland) 208,000 860,787 Turkcell Iletisim Hizmetleri A.S. (Turkey) 85,000,000 1,051,516 Vimpel Communication Adr (Russia)* 8,400(2) 810,180 Total Telecommunication Services 10,260,962
The accompanying notes are an integral part of these financial statements. 19 Managers Emerging Markets Equity Fund June 30, 2004 ===================================== Emerging Markets ================= Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Shares Value ----------------------------------------------------- Total Common Stocks (cost $35,520,015) $39,362,373 Other Investment Companies - 13.0% Bank of New York Institutional Cash Reserves Fund, 1.24%(1,3) 5,073,145 5,073,145 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03%(1) 116,756 116,756 Total Other Investment Companies (cost $5,189,901) 5,189,901 Total Investments - 111.3% (cost $40,709,916) 44,552,274 Other Assets, less Liabilities - (11.3)% (4,533,327) Net Assets - 100.0% $40,018,947
The accompanying notes are an integral part of these financial statements. 20 Managers Bond Fund June 30, 2004 =================== Bond ===== Schedule of Portfolio Investments(unaudited) -------------------------------------------- Security Description Principal Amount Value ------------------------------------------------------------- Corporate Bonds - 45.8% Asset-Backed Security - 2.9% Bank of America-First Union National Bank Commercial Mortgage, Series 2001-3, Class A2, 5.464%, 04/11/37 $ 1,500,000 $ 1,546,673 Community Program Loan Trust, Series 87-A, Class A4, 4.500%, 10/01/18 261,349 260,930 Community Program Loan Trust, Series 87-A, Class A5, 4.500%, 04/01/29 3,225,000 2,831,623 Continental Airlines, Inc., 6.648%, 09/15/17 1,660,894 1,550,180 Total Asset-Backed Security 6,189,406 Convertible Bonds - 2.3% Devon Energy Corp., 4.900%, 08/15/08 1,250,000 1,293,750 Devon Energy Corp., 4.950%, 08/15/08 1,692,000 1,751,220 Loews Corp., 3.125%, 09/15/07 1,920,000 1,836,000 Total Convertible Bonds 4,880,970 Finance - 12.2% AON Corp. 7.375%, 12/14/12 600,000 667,357 ASIF Global Financial, 2.380%, 02/26/09 (a) SGD 5,800,000 3,309,137 Cerro Negro Finance Ltd., 7.900%, 12/01/20 (a) 500,000(2) 447,500 EOP Operating LP, 6.750%, 02/15/12 500,000 536,863 First Industrial L.P., 7.600%, 07/15/28 1,750,000 1,823,075 First Industrial L.P., Medium Term, 7.500%, 12/01/17 1,145,000 1,249,022 Ford Motor Credit Co., 7.250%, 02/22/05 GBP 650,000 1,188,205 GMAC, 5.125%, 05/09/08 500,000(2) 501,848 GMAC, 6.125%, 01/22/08 2,000,000 2,091,944 GMAC, 6.875%, 09/15/11 250,000 256,324 GMAC, 7.000%, 12/07/05 GBP 250,000 460,992 GMAC, 7.500%, 12/01/06 NZD 1,000,000 631,874 GMAC International Finance BV, 8.000%, 03/14/07 NZD 950,000 606,314 Highwoods Properties, Inc., 7.500%, 04/15/18 2,250,000 2,294,696 Inter-American Development Bank, 0.000%, 05/11/094 BRL 6,500,000 874,152 International Bank for Reconstruction & Development, 0.000%, 08/20/074 NZD 4,800,000 2,486,296 KeyCorp Capital II, 6.875%, 03/17/29 500,000(2) 509,575 Loews Corp., 7.000%, 10/15/23 150,000 148,809 New Plan Excel Realty Trust, 5.875%, 06/15/07 1,250,000 1,320,954 NiSource Finance Corp., 6.150%, 03/01/13 1,250,000(2) 1,295,079 PDVSA Finance Ltd., Series 98-1, 7.400%, 08/15/16 300,000 288,750 PDVSA Finance Ltd., Series 98-1, 7.500%, 11/15/28 1,000,000(2) 910,000 Provident Co., Inc., 7.250%, 03/15/28 250,000(2) 233,579 Spieker Properties, Inc., 7.350%,12/01/17 250,000 276,729 UnumProvident Corp., 6.750%, 12/15/28 1,000,000 899,650 UnumProvident Corp., 7.375%, 06/15/32 450,000 420,750 Total Finance 25,729,474 Industrials - 25.9% Abitibi-Consolidated, Inc., 7.500%, 04/01/28 500,000(2) 430,898 Altria Group, Inc., 7.000%, 11/04/13 1, 500,000 1,527,484 America Movil S.A de C.V., 4.125%, 03/01/09 (a) 3,000,000(2) 2,817,687 American Airlines, Inc., Series 01-2, 6.978%, 04/01/11 2,184,993 2,158,066 American Airlines, Inc., 8.608%, 04/01/11 125,000 113,679 American President, Ltd., 8.000%, 01/15/24 250,000 237,813 Arrow Electronics, Inc., 6.875%, 07/01/13 500,000(2) 522,280 Bausch & Lomb, Inc., 7.125%, 08/01/28 500,000 500,592 Boise Cascade Co., 7.450%, 08/10/11 250,000 254,375 Bowater, Inc., 6.500%, 06/15/13 500,000(2) 470,385
The accompanying notes are an integral part of these financial statements. 21 Managers Bond Fund June 30, 2004 =================== Bond ===== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Principal Amount Value ------------------------------------------------------------- Cia Brasileira Bebidas, 8.750, 09/15/13 (a) $ 3,795,000(2) $ 4,003,725 Clear Channel Communications, 4.250%, 05/15/09 1,500,000 1,463,978 Clear Channel Communications, 5.750%, 01/15/13 500,000(2) 502,766 Continental Airlines, Inc., Series 991A, 6.545%, 02/02/19 4,389,804(2) 4,107,676 Continental Airlines, Inc., Series 01-1, 6.703%, 06/15/21 ` 433,876 404,616 Continental Airlines, Inc., 6.795%, 08/02/20 85,195 66,620 Continental Airlines, Inc., Series 99-2, 7.256%, 03/15/20 394,892(2) 384,713 Dell Computer Corp., 7.100%, 04/15/28 850,000 948,937 Delphi Corp., 7.125%, 05/01/29 1,950,000(2) 1,932,914 Delta Airlines, 8.300%, 12/15/29 500,000(2) 207,500 Dillards, Inc., 7.000%, 12/01/28 225,000(2) 205,875 Foot Locker, Inc., 8.500%, 01/15/22 570,000 602,775 Ford Motor Co., 6.375%, 02/01/29 2,500,000(2) 2,112,780 General Motors Corp., 6.750%, 05/01/28 500,000 459,101 Georgia-Pacific Corp., 7.250%, 06/01/28 500,000 460,000 Georgia-Pacific Corp., 7.750%, 11/15/29 925,000 888,000 HCA, Inc., 5.750, 03/15/14 2,500,000(2) 2,376,755 HCA, Inc., 6.250%, 02/15/13 1,940,000 1,928,391 HCA, Inc., 7.050%, 12/01/27 1,600,000 1,465,262 HCA, Inc., 7.580%, 09/15/25 125,000 122,530 Health Care Property, Inc., 6.000%, 03/01/15 1,500,000 1,506,107 Hutchison Whampoa International, LTD, 5.450%, 11/24/10 (a) 2,225,000 2,183,904 International Telecom Satellite, 7.625%, 04/15/12 1,000,000 947,471 Kellwood Co., 7.625%, 10/15/17 250,000 265,464 Lowe's Co., Inc., 6.875%, 02/15/28 500,000 546,854 Macmillan Bloedel Ltd., 7.700%, 02/15/26 1,350,000 1,476,024 Motorola, Inc., 5.800%, 10/15/08 250,000(2) 260,922 Motorola, Inc., 7.625%, 11/15/10 375,000(2) 422,197 Motorola, Inc., 8.000%, 11/01/11 1,075,000(2) 1,238,025 Penney (JC), Co., 7.125%, 11/15/23 33,000(2) 33,825 Pf Export Rec Master Trust, 6.436%, 06/01/15 (a) 898,182 885,706 Pulte Homes, Inc., 7.625%, 10/15/17 500,000 549,523 Raytheon Co., 6.400%, 12/15/18 400,000 416,537 Raytheon Co., 7.000%, 11/01/28 1,500,000 1,598,479 Raytheon Co., 7.200%, 08/15/27 800,000(2) 870,574 Samsung Electronics Co., Ltd., 7.700%, 10/01/27 (a) 1,800,000 1,938,103 Schering-Plough Corp., 5.300%, 12/01/13 1,500,000 1,473,053 Sprint Capital Corp., 6.875%, 11/15/28 2,300,000 2,210,868 Sprint Capital Corp., 6.900%, 05/01/19 500,000 502,978 Teck Cominco Ltd., 7.000%, 09/15/12 1,000,000 1,069,390 Telekom Malaysia Berhad, 7.875%, 08/01/25 (a) 250,000(2) 270,591 Weyerhaeuser Co., 6.950%, 10/01/27 250,000 257,798 Total Industrials 54,602,566 Utility - 2.5% Constellation Energy Group Inc., 4.550%, 06/15/15 1,675,000(2) 1,492,420 El Paso Corp., 6.750%, 05/15/09 250,000(2) 226,250 El Paso Corp., 6.950%, 06/01/28 300,000 222,000 El Paso Corp., 7.000%. 05/15/11 500,000(2) 437,500 Global Marine, Inc., 7.000%, 06/01/28 250,000 267,896 KN Capital Trust III, 7.630%, 04/15/28 250,000 264,651 MidAmerican Energy Holdings, 5.875%, 10/01/12 750,000 761,556 Southern Natural Gas Co., 7.350%, 02/15/31 1,000,000(2) 895,000 Tennessee Gas Pipeline Co., 7.500%, 04/01/17 250,000(2) 243,750
The accompanying notes are an integral part of these financial statements. 22 Managers Bond Fund June 30, 2004 =================== Bond ===== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Principal Amount Value ------------------------------------------------------------- Transocean, Inc., 7.375%, 04/15/18 500,000 $ 563,682 Total Utility 5,374,705 Total Corporate Bonds (cost $93,996,876) 96,777,121 Foreign Corporate Obligations - 3.0% Empresa Nacional de Electricidad SA, 8.625%, 08/01/15 300,000 323,483 Empresa Nacional de Electricidad, Yankee, 7.875%, 02/01/27 2,900,000 2,715,212 Enersis SA, Yankee, 7.400%, 12/01/16 225,000 216,748 Petroleos Mexicanos, 8.625%, 12/01/23 (a) 950,000 978,500 Tenaga Nasional Berhad, 7.500%, 11/01/25 (a) 2,000,000 2,017,970 Total Foreign Corporate Obligations (cost $5,722,434) 6,251,913 Foreign Government and Agency Obligations - 4.9% British Columbia, Province of, 5.250%, 12/01/06 CAD 2,160,000 1,671,565 British Columbia, Province of, 6.000%, 06/09/08 CAD 560,000 444,316 Canadian Government, 4.500%, 09/01/07 CAD 665,000 506,084 Kommunekredit, 5.000%, 06/07/06 NOK 1,600,000 238,782 Mexico Government, 7.500%, 01/14/12 1,250,000 1,346,875 New Zealand Government, 6.000%, 11/15/11 NZD 500,000 312,038 Ontario Province, 5.900%, 03/08/06 CAD 585,000 455,067 Province of Alberta, Series CS, Sinking Fund, 5.930%, 09/16/16 CAD 213,300 168,648 Province of Manitoba, 5.750%, 06/02/08 CAD 3,000,000 2,359,836 Province of Manitoba, 6.500%, 09/22/17 CAD 1,800,000 1,477,416 Republic of South Africa, Yankee, 8.500%, 06/23/17 1,175,000 1,330,687 Total Foreign Government and Agency Obligations (cost $9,841,410) 10,311,314 U.S. Government and Agency Obligations - 38.7% U.S. Government Agency Obligations- 20.9% FHLMC, 2.875%, 09/01/05 3,500,000(2) 3,518,988 FHLMC, 3.220%, 06/20/07 SGD 500,000 299,866 FHLMC, Gold, 5.000%, 12/01/31 318,306 308,253 FHLMC, 5.250%, 01/01/06 3,300,000 3,423,212 FHLMC, 5.500%, 09/15/11 5,090,000 5,305,770 FHLMC, 6.000%, 11/15/28 171,081 171,361 FNMA, 2.290%, 02/19/09 SGD 3,800,000 2,161,141 FNMA, 2.375%, 02/15/07 7,000,000(2) 6,813,758 FNMA, 3.250%, 01/15/08 3,000,000(2) 2,948,292 FNMA, 4.000%, 10/01/18 13,068,575 12,478,157 FNMA, 5.000%, 01/15/07 3,200,000 3,326,515 FNMA, 5.250%,04/15/07 3,200,000(2) 3,347,834 FNMA, 6.000%, 07/01/29 45,082 46,252 Total U.S. Government Agency Obligations 44,149,399 U.S. Treasury Notes- 17.8% USTN, 1.625%, 09/30/05 3,500,000(2) 3,474,023 USTN, 1.625%, 10/31/05 7,000,000(2) 6,937,658 USTN, 1.625%, 02/28/06 12,000,000(2) 11,824,224 USTN, 1.875%, 12/31/05 11,000,000(2) 10,908,480 USTN, 2.375%, 08/15/06 985,000(2) 976,573 USTN, 3.500%, 11/15/06 3,400,000(2) 3,443,962 Total U.S. Treasury Notes 37,564,920 Total U.S. Government and Agency Obligations (cost $82,897,777) 81,714,319
The accompanying notes are an integral part of these financial statements. 23 Managers Bond Fund June 30, 2004 =================== Bond ===== Schedule of Portfolio Investments(continued) -------------------------------------------- Security Description Principal Amount Value ------------------------------------------------------------- Preferred Stock - 0.8% Entergy Louisiana, Inc., 4.440% 226 $ 14,944 Entergy New Orleans, Inc., 4.750% 482 33,710 Entergy New Orleans, Inc., 5.560% 100 8,188 Newell Financial Trust I, 5.250% 32,000 (2) 1,440,000 Union Electric Co., 3.500% 350 20,650 Wisconsin Electric Power Co., 3.600% 3,946 237,870 Total Preferred Stock (cost $1,649,983) 1,755,362 Short-Term Investments - 33.5% Other Investment Companies - 30.1% Bank of New York Institutional Cash Reserves Fund, 1.25%(1,3) 51,924,719 51,924,719 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03%(1) 11,680,311 11,680,311 Total Other Investment Companies 63,605,030 Other Short-Term Investments - 3.4% Due 12/31/05 to 11/15/06, 1.63% to 3.50%3 7,200,076 7,200,076 Total Short-Term Investments (cost $70,805,106) 70,805,106 Total Investments - 126.7% (cost $264,913,586) 267,615,135 Other Assets, less Liabilities - (26.7)% (56,364,776) Net Assets - 100.0% $211,250,359
The accompanying notes are an integral part of these financial statements. 24 Managers Global Bond Fund June 30, 2004 ========================= Global Bond =========== Schedule of Portfolio Investments (unaudited) --------------------------------------------- Security Description Principal Amount Value ------------------------------------------------------------- Foreign Government and Agency Obligations - 44.7% Foreign Government - 44.7% Belgium Government Bond, 3.750%, 03/28/09 EUR 760,000 $ 930,645 Brazil, Republic of, 8.000%, 04/15/14 USD 87,958 80,262 Brazil, Republic of, 8.250, 01/20/34 USD 290,000(2) 219,385 Bundes Immobil, 4.625%, 09/27/12 EUR 525,000 648,513 Canada Government, 0.700%, 03/20/06 JPY 19,000,000 175,488 Colombia, Republic of, 8.125, 05/21/24 USD 140,000(2) 113,400 European Investment Bank, 0.875%, 11/08/04 JPY 47,000,000 431,977 Irish Government, 4.600%, 04/18/16 EUR 540,000 665,291 Kingdom of Denmark, 4.000%, 08/15/08 DKK 1,465,000 243,517 Kingdom of Norway, 5.500%, 05/15/2009 NOK 930,000 143,183 Kingdom of Norway, 6.750%, 01/15/07 NOK 840,000 131,753 Kingdom of Spain, 4.750%, 03/14/05 JPY 40,000,000 378,775 Netherlands Government SA, 5.500%, 01/15/28 EUR 465,000 612,661 New Zealand Government, 6.000%, 11/15/11 NZD 85,000 53,046 Ontario Province, 5.700%, 12/01/08 CAD 555,000 435,059 Queensland Treasury Corp., 8.000%, 09/14/07 AUD 1,330,000 989,307 Republic of Austria, 4.500%, 09/28/05 JPY 20,000,000 193,113 Republic of Austria, 4.750%, 12/20/04 JPY 34,000,000 318,578 Republic of Austria, 5.500%, 03/03/05 CHF 215,000 176,930 Republic of Austria, 6.000%, 02/14/07 HUF 7,000,000 31,227 Republic of Italy, .375%, 10/10/06 JPY 116,000,000 1,062,924 Republic of Italy, 5.000%, 12/15/04 JPY 41,000,000 384,053 Republic of Panama, 8.125%, 04/28/34 USD 50,000(2) 45,000 Republic of Peru, 8.750%, 11/21/33 USD 50,000 43,900 Republic of South Africa, 5.250%, 05/16/13 EUR 350,000 414,223 Republic of South Africa, Yankee, 8.500%, 06/23/17 USD 200,000 226,500 Republic of Turkey, 9.500%, 01/15/14 USD 40,000 40,300 Saskatchewan Province, 5.750%, 03/05/29 CAD 155,000 114,768 Singapore Government, 3.625%, 07/01/11 SGD 660,000 396,476 Singapore, Government of, 2.250%, 07/01/13 SGD 1,000,000 524,646 Spain, Government of, 3.600%, 01/31/09 EUR 920,000 1,119,485 Swedish Government, 5.250%, 03/15/11 SEK 3,450,000 480,842 Swedish Government, 6.500%, 05/05/08 SEK 2,855,000 414,779 U.K. Treasury, 5.000%, 03/07/12 GBP 355,000 639,286 U.K. Treasury, 6.250%, 11/25/10 GBP 335,000 646,313 United Mexican States, 5.375%, 06/10/13 EUR 250,000 294,931 United Mexican States, 6.750%, 06/06/06 JPY 18,000,000 183,868 Total Foreign Government and Agency Obligations (cost $13,699,493) 14,004,404 Corporate Bonds - 44.6% Convertible Bonds - 0.5% Corning, Inc., 3.500%, 11/01/08 USD 45,000(2) 63,338 Nextel Communications Inc., 5.250%, 01/15/10 USD 70,000(2) 68,075 Samsung Electronics Co., Ltd., 7.700%, 10/01/27 (a) USD 25,000 26,918 Total Convertible Bonds 158,331 Finance - 25.0% Arcel Finance Ltd., 7.048%, 09/01/11 (a) USD 105,000 103,950 Bangkok Bank Public Co., Hong Kong, 9.025%, 03/15/29 (a) USD 140,000 145,669 Bank of America Corporation, 4.625, 02/18/14 EUR 90,000 108,372 Capital One Financial Corp., 6.250%, 11/15/13 USD 125,000 126,342 Depfa ACS Bank, 3.250%, 04/15/08 EUR 900,000 1,084,527
The accompanying notes are an integral part of these financial statements. 25 Managers Global Bond Fund June 30, 2004 ========================= Global Bond =========== Schedule of Portfolio Investments (continued) --------------------------------------------- Security Description Principal Amount Value ------------------------------------------------------------- Finance(continued) DEPFA Deutsche Pfandbriefbank AG, 5.000%, 02/03/05 EUR 845,000 $ 1,044,466 Eksportfinans ASA, 2.500%, 12/28/05 CHF 145,000 117,572 First Citizens St. Lucia, 5.125%, 02/14/11 USD 175,000 170,837 Ford Credit Canada, 7.163%, 04/23/07 CAD 150,000 117,753 Ford Motor Credit Co., 7.250%, 02/22/05 GBP 100,000 182,801 GMAC, 7.000%, 12/07/05 GBP 90,000 165,957 GMAC International Finance BV, 8.000%, 03/14/07 NZD 400,000 255,290 Hilton Group Finance Plc., 6.500%, 07/17/09 EUR 105,000 139,629 Household Finance Corp., 5.125%, 06/24/09 EUR 225,000 286,931 Household Financial Corp., Ltd., 4.500%, 07/02/08 CAD 100,000 74,684 Istar Financial, Inc., 4.875%, 01/15/09 USD 75,000 72,622 KFW International Finance, Inc., 1.000%, 12/20/04 JPY 97,000,000 892,580 MBNA Europe Funding, PLC., 6.500%, 03/27/07 EUR 50,000 65,419 Morgan Stanley Co., Series EMTN, 5.375%, 11/14/13 GBP 120,000 209,194 Muenchener Hypothekenbank eG, 5.000%, 01/16/12 EUR 360,000 461,106 National Rural Utilities Cooperative Finance Corp., 4.125%, 02/24/06 EUR 250,000 308,776 NGG Finance, PLC., 6.125%, 08/23/11 EUR 75,000 99,492 Nordic Investment Bank, 5.250%, 04/20/06 SEK 2,000,000 273,943 Olivetti Finance, 6.875%, 01/24/13 EUR 105,000 143,550 Permanent Financing PLC, 5.100%, 06/11/07 EUR 275,000 350,136 The International Bank for Reconstruction and Development, 4.750%, 12/20/04 JPY 59,000,000 552,745 Volkswagen International Finance, 4.875%, 05/22/13 EUR 250,000 298,994 Total Finance 7,853,337 Industrials - 17.0% AGCO Corp., 6.875%, 04/15/14 EUR 120,000 139,063 Alcan, Inc., 5.500%, 05/02/06 EUR 140,000 177,504 Allied Waste North America, 6.500%, 11/15/10 (a) USD 55,000(2) 54,450 Allied Waste North America, 8.500%, 12/01/08 USD 50,000(2) 54,688 America Movil S.A de C.V., 4.125%, 03/01/09 (a) USD 35,000(2) 32,873 American Standard, Inc., 7.125%, 06/01/06 EUR 75,000 96,268 American Standard, Inc., 8.250%, 06/01/09 GBP 50,000 95,209 ASIF Global, 2.380%, 02/26/09 (a) SGD 500,000 285,270 Bavaria S.A., 8.875%, 11/01/10 (a) USD 60,000 61,800 Bowater, Inc., 6.500%, 06/15/13 USD 145,000(2) 136,412 Canadian Pacific Railway, Ltd., 4.900%, 06/15/10 (a) CAD 50,000 36,885 Celestica, Inc., 7.875%, 07/01/11 USD 100,000 102,000 Chesapeake Energy Corp., 6.875%, 01/15/16 USD 125,000 121,875 CITGO Petroleum Corp., 11.375%, 02/01/11 USD 90,000 104,400 Corning Inc., 6.750%, 09/15/13 USD 125,000 124,418 Dana Corp., 9.000%, 08/15/11 EUR 100,000 142,956 Deutsche Telekom, 5.250, 05/20/08 EUR 100,000 127,377 Diageo Capital Beverages, 3.875%, 01/06/09 EUR 130,000 157,550 Falconbridge Ltd., 7.350%, 06/05/12 USD 150,000 155,742 Flextronics International, Ltd., 9.750%, 07/01/10 EUR 50,000 65,699 General Motors Corp., 8.250%, 07/15/23 USD 115,000 120,434 Gruma SA de CV, 7.625%, 10/15/07 USD 150,000(2) 161,250 Hasbro, Inc., 6.600%, 07/15/28 USD 140,000 135,450 HCA, Inc., 5.250%, 11/06/08 USD 150,000 149,072 HCA, Inc., 7.500%, 11/06/33 USD 150,000 147,705 HeidelbergCement AG, 4.750%, 04/09/09 EUR 50,000 60,072 Hutchison Wham International, Ltd., 7.450%, 11/24/33 (a) USD 110,000(2) 105,279 IMC Global, Inc., 10.875%, 06/01/08 USD 45,000 52,313
The accompanying notes are an integral part of these financial statements. 26 Managers Global Bond Fund June 30, 2004 ========================= Global Bond =========== Schedule of Portfolio Investments (continued) --------------------------------------------- Security Description Principal Amount Value ------------------------------------------------------------- Industrials(continued) Imperial Chem., PLC., 9.750%, 04/15/05 GBP 90,000 $ 168,250 McDonald's Corp., 3.628%, 10/10/10 SGD 250,000 145,775 News America Holdings, 8.625%, 02/07/14 AUD 350,000 254,952 Overseas Shipholding Group, 7.500, 02/15/24 USD 85,000 78,625 Pearson PLC, 6.125%, 02/01/07 EUR 35,000 45,364 Philippine Long Distance Telephone, 11.375%, 05/15/12 USD 50,000 55,250 Phillips Van-Heusen, 7.250, 02/15/11 (a) USD 70,000 70,350 Premcor Refining Group, 7.500%, 06/15/15 USD 75,000 77,813 Repsol International Finance, 5.750%, 12/04/06 EUR 100,000 128,253 Service Corp. International, 6.500%, 03/15/08 USD 70,000 70,000 Shaw Communications, Inc., 7.500%, 11/20/13 CAD 175,000 131,321 Sing Telecommunications, 6.000%, 11/21/11 EUR 50,000 66,237 Stena AB, 7.500%, 11/01/13 USD 75,000 74,156 Teck Cominco Ltd., 7.000%, 09/15/12 USD 100,000 106,939 Telefonica Europe, BV, 5.125%, 02/14/13 EUR 50,000 62,423 Telekom Malaysia Berhad, 7.875%, 08/01/25 (a) USD 70,000(2) 75,766 Vale Overseas, Ltd., 8.250, 01/17/34 USD 50,000 43,500 Volvo Treasury AB, 6.000, 02/09/07 EUR 35,000 45,306 WPP Group, PLC., 6.000%, 06/18/08 EUR 250,000 326,129 XTO Energy, Inc., 6.250%, 04/15/13 USD 85,000 88,422 Total Industrials 5,318,845 Utility - 2.1% Enersis SA, Yankee, 7.400%, 12/01/16 USD 155,000 149,315 Petroleos Mexicanos, 9.500%, 09/15/27 USD 325,000 364,000 Pioneer Natural Resources Co. USD 65,000 69,078 Tenaga Nasional Berhad, 7.500%, 11/01/25 (a) USD 70,000 70,629 Total Utility 653,022 Total Corporate Bonds (cost $13,122,985) 13,983,535 U.S. Government and Agency Obligations - 5.5% U.S. Government Agency Obligations- 3.1% FNMA, 1.750%, 03/26/08 JPY80,000,000 764,295 FNMA, 2.290%, 02/19/09 SGD 400,000 227,489 Total U.S. Government Agency Obligations 991,783 U.S. Treasury Notes - 2.4% USTN, 3.500%, 11/15/06 USD 735,000(2) 744,504 Total U.S. Government and Agency Obligations (cost $1,729,595) 1,736,287 Other Investment Companies - 7.8% SHARES Bank of New York Institutional --------- Cash Reserves Fund, 1.24%(1,3) 1,727,390 1,727,390 JPMorgan Prime Money Market Fund, Institutional Class Shares, 1.03%(1) 700,811 700,811 Total Other Investment Companies (cost $2,428,201) 2,428,201 Total Investments - 102.6% (cost $30,980,274) 32,152,427 Other Assets, less Liabilities - (2.6)% (810,589) Net Assets - 100.0% $31,341,838
The accompanying notes are an integral part of these financial statements. 27 Notes to Schedules of Portfolio Investments (unaudited) ------------------------------------------------------- The following footnotes and abbreviations should be read in conjunction with each of the Schedules of Portfolio Invest-ments previously presented in this report. At June 30, 2004, the cost of securities for Federal income tax purposes and the gross aggregate unrealized appreciation and/or depreciation based on tax cost were approximately: Fund Cost Appreciation Depreciation Net ---- ---- ------------ ------------- --- Value $ 133,158,575 $ 18,818,567 $ (921,184) $ 17,897,383 Capital Appreciation 118,020,552 14,302,160 (1,330,847) 12,971,313 Small Company 21,372,533 6,115,312 (349,616) 5,765,695 Special Equity 3,725,515,375 827,898,325 (118,262,560) 709,635,765 International Equity 242,203,853 40,488,759 (5,996,091) 34,492,668 Emerging Markets 40,709,916 5,328,310 (1,485,952) 3,842,358 Bond 264,913,586 6,083,856 (3,382,307) 2,701,549 Global Bond 30,980,274 1,414,332 (242,179) 1,172,153
* Non-income-producing security (a) Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transac-tions exempt from registration, normally to qualified buyers. At June 30, 2004, the value of these securities amounted to the following: Fund Market Value % of Net Assets ---- ------------ --------------- International Equity $ 595,340 0.3% Emerging Markets 2,060,499 5.1% Bond 18,852,823 8.9% Global Bond 1,069,838 3.4%
(1)Yield shown for each investment company represents its June 30, 2004, seven-day average yield, which refers to the sum of the previous seven days' dividends paid, expressed as an annual percentage. (2)Some or all of these shares were out on loan to various brokers as of June 30, 2004, amounting to: Fund Market Value % of Net Assets ----------- ----- --------------- Value $ 32,211,567 28.7% Capital Appreciation 29,034,381 28.4% Small Company 4,929,686 22.6% Special Equity 962,390,779 27.8% International Equity 36,943,421 15.5% Emerging Markets 5,080,456 12.7% Bond 58,975,100 27.9% Global Bond 1,727,890 5.5%
(3)Collateral received from brokers for securities lending was invested in these short-term investments. (4)Zero coupon security. (5)Affiliated Company - See Note 10 in the Notes to Financial Statements. Investments Definitions and Abbreviations: ------------------------------------------ ADR/GDR: ADR after the name of a holding stands for American Depositary Receipt, representing ownership of foreign securities on deposit with a domestic custodian bank; a GDR (Global Depositary Receipt) is comparable, but foreign securities are held on deposit in a non-U.S. bank. The value of the ADR/GDR securities is determined or significantly influenced by trading on exchanges not located in the United States or Canada. Sponsored ADR/GDRs are initiated by the underlying foreign company. FHLMC: Federal Home Loan Mortgage Corp. USTB: United States Treasury Bond FNMA: Federal National Mortgage Association USTN: United States Treasury Note GNMA: Government National Mortgage Association GMAC: General Motors Acceptance Corp.
Registered shares: A security whose owner has been recorded with its issuer or issuer's registrar. Abbreviations have been used throughout the portfolios to indicate amounts shown in currencies other than the U.S. dollar (USD): AUD: Australian Dollar SEK: Swedish Krona CAD: Canadian Dollar SGD: Singapore Dollar DKK: Danish Krone NZD: New Zealand Dollar EUR: euro NOK: Norwegian Krone GBP: British Pound ZAR: South African Rand HUF: Hungarian Forint JPY: Japanese Yen BRL: Brazilian Real CHF: Swiss Franc 28 Statements of Assets and Liabilities (unaudited) June 30, 2004 ------------------------------------------------ Managers Managers Managers Capital Small Value Appreciation Company Fund Fund Fund -------- ------------ -------- Assets: Investments at value* $ 151,045,958 $ 130,991,865 $ 27,138,228 Cash - 161,769 - Foreign currency** - - - Receivable for investments sold 931,693 1,666,980 26,369 Receivable for Fund shares sold 333,860 277,148 61,139 Receivable for open forward foreign currency contracts - - - Dividends, interest and other receivables 162,406 49,590 3,184 Prepaid expenses 20,574 12,009 12,476 Total assets 152,494,491 133,159,361 27,241,396 Liabilities: Payable to Custodian 514,551 - 33,197 Payable for Fund shares repurchased 6,396,513 813,306 101,243 Payable upon return of securities loaned 32,988,445 29,309,016 4,918,110 Payable for investments purchased 289,632 555,400 317,267 Payable for open forward foreign currency contracts - - - Payable for variation margin on futures Accrued expenses: Investment advisory and management fees 55,016 50,328 15,613 Administrative fees 23,441 21,000 4,337 Other 73,101 127,794 22,270 Total liabilities 40,340,699 30,876,844 5,412,037 Net Assets $ 112,153,792 $ 102,282,517 $ 21,829,359 Net Assets $ 112,153,792 $ 102,282,517 $ 21,829,359 Shares outstanding 4,079,582 4,000,583 2,239,423 Net asset value, offering and redemption price per share $27.49 $25.57 $9.75 I Class Shares: Net Assets Shares outstanding Net asset value, offering and redemption price per share Net Assets Represent: Paid-in capital $ 97,567,238 $ 254,126,126 $ 24,561,749 Undistributed net investment income (loss) 291,215 (294,633) (115,304) Accumulated net realized gain(loss) from investments, futures and foreign currency transactions (3,602,044) (164,520,289) (8,382,782) Net unrealized appreciation of investments, futures and foreign currency contracts and translations 17,897,383 12,971,313 5,765,696 Net Assets $112,153,792 $ 102,282,517 $ 21,829,359 * Investments at cost $133,148,575 $ 118,020,552 $ 21,372,532 **Foreign currency at cost - - -
The accompanying notes are an integral part of these financial statements. 29 Managers Managers Managers Emerging Managers Special International Markets Managers Global Equity Equity Equity Bond Bond Fund Fund Fund Fund Fund ------- ------------- -------- -------- -------- Assets: Investments at value* $4,435,151,140 $276,696,521 $44,552,274 $267,615,135 $32,152,427 Cash - 1,690,349 - 72,166 52,137 Foreign currency** - 53,337 139,087 135,378 108,531 Receivable for investments sold 37,691,894 1,420,455 1,116,093 - 1,614,236 Receivable for Fund shares sold 7,685,272 282,865 325,347 819,864 382,085 Receivable for open forward foreign currency contracts - 372,416 501,590 - 77,163 Dividends, interest and other receivables 1,248,558 623,980 64,360 2,496,366 478,849 Prepaid expenses 142,250 22,055 14,637 46,578 12,752 Total assets 4,481,919,114 281,161,978 46,713,388 271,185,487 34,878,180 Liabilities: Payable to Custodian 291,352 225,645 121,311 - 22,454 Payable for Fund shares repurchased 9,307,484 1,831,845 158,833 511,314 60,026 Payable upon return of securities loaned 986,138,705 36,935,336 5,073,145 59,124,795 1,727,390 Payable for investments purchased 25,026,969 3,299,612 766,785 66,733 1,590,146 Payable for open forward foreign currency contracts - 374,152 501,406 - 77,453 Payable for variation margin on futures - 2,555 - - - Accrued expenses: Investment advisory and management fees 2,439,323 131,884 32,998 95,632 11,335 Administrative fees 689,844 48,632 8,054 43,074 5,038 Other 1,190,693 310,022 31,909 93,580 42,500 Total liabilities 1,025,084,370 43,159,683 6,694,441 59,935,128 3,536,342 Net Assets $3,456,834,744 $238,002,295 $40,018,947 $211,250,359 $31,341,838 Net Assets $3,274,321,113 $238,002,295 $40,018,947 $211,250,359 $31,341,838 Shares outstanding 39,752,608 5,705,463 2,987,230 8,855,771 1,430,079 Net asset value, offering and redemption price per share $82.37 $41.71 $13.40 $23.85 $21.92 I Class Shares: Net Assets $182,513,631 Shares outstanding 2,215,057 Net asset value, offering and redemption price per share $82.40 Net Assets Represent: Paid-in capital $2,923,645,468 $342,438,178 $34,303,512 $206,253,808 $28,395,401 Undistributed net investment income (loss) (10,967,347) 1,079,218 152,022 (1,026,513) 557,268 Accumulated net realized gain (loss) from investments, futures and foreign currency transactions (165,479,142) (140,041,015) 1,720,797 3,320,780 1,218,098 Net unrealized appreciation of investments, futures and foreign currency contracts and translations 709,635,765 34,525,914 3,842,616 2,702,284 1,171,071 Net Assets $3,456,834,744 $238,002,295 $40,018,947 $211,250,359 $31,341,838 *Investments at cost $3,725,515,375 $242,203,853 $40,709,916 $264,913,586 $30,980,274 **Foreign currency at cost - 53,337 139,087 135,378 108,531
The accompanying notes are an integral part of these financial statements. 30 Statements of Operations (unaudited) For the six months ended June 30, 2004 -------------------------------------- Managers Managers Capital Value Appreciation Fund Fund -------- ------------ Investment Income: Dividend income $941,600 $438,408 Interest income 34,126 16,113 Foreign withholding tax (5,875) (5,840) Securities lending fees 10,072 11,803 Total investment income 979,923 460,484 Expenses: Investment advisory and management fees 405,992 425,596 Administrative fees 135,331 132,999 Transfer agent 126,082 161,608 Custodian 20,094 23,060 Professional fees 15,511 22,710 Registration fees 13,411 8,227 Trustees fees and expenses 2,729 2,743 Insurance 1,278 1,601 Reports to shareholders 5,862 9,184 Miscellaneous 187 197 Total expenses before offsets 726,477 787,925 Expense (reimbursement)/ recoupment (29,212) (32,808) Net expenses 697,265 755,117 Net investment income (loss) 282,658 (294,633) Net Realized and Unrealized Gain (Loss): Net realized gain on investment transactions 3,035,915 2,335,217 Net realized gain on futures contracts - - Net realized gain (loss) on foreign currency contracts and transactions - - Net unrealized appreciation (depreciation) of investments 1,622,094 (1,549,098) Net unrealized appreciation of futures contracts - - Net unrealized depreciation of foreign currency contracts and translations - - Net realized and unrealized gain (loss) 4,658,009 786,119 Net Increase (Decrease) in Net Assets Resulting from Operations $4,940,667 $491,486
The accompanying notes are an integral part of these financial statements. 31 Managers Managers Managers Managers Emerging Managers Small Special International Markets Managers Global Company Equity Equity Equity Bond Bond Fund Fund Fund Fund Fund Fund -------- ------- ------------- -------- -------- -------- Investment Income: Dividend income $24,040 $10,464,835 $3,606,311 $597,535 $102,499 $665,247 Interest income 5,305 1,118,630 25,435 3,655 4,557,236 - Foreign withholding tax (68) - (388,139) (52,482) - - Securities lending fees 1,883 556,169 120,021 9,103 37,420 1,661 Total investment income 31,160 12,139,634 3,363,628 557,811 4,697,155 666,908 Expenses: Investment advisory and management fees 90,909 15,205,637 1,131,711 247,303 624,355 111,012 Administrative fees 25,252 4,223,788 314,364 53,762 249,742 31,718 Transfer agent 5,782 3,748,086 395,484 14,496 60,786 38,901 Custodian 4,141 378,553 269,693 42,045 36,341 26,494 Professional fees 8,573 225,797 53,825 12,049 28,572 16,373 Registration fees 6,591 72,747 16,607 10,539 23,483 9,407 Trustees fees and expenses 1,075 90,289 7,742 1,119 5,072 901 Insurance 254 55,730 5,364 463 2,402 483 Reports to shareholders 531 150,513 16,368 3,805 13,127 1,504 Miscellaneous 182 14,499 23,575 5,593 417 547 Total expenses before offsets 143,290 24,165,639 2,234,733 391,174 1,044,297 237,340 Expense (reimbursement)/ recoupment 3,174 (275,991) (88,073) 14,615 (55,318) (12,262) Net expenses 146,464 23,889,648 2,146,660 405,789 988,979 225,078 Net investment income (loss) (115,304) (11,750,014) 1,216,968 152,022 3,708,176 441,830 Net Realized and Unrealized Gain (Loss): Net realized gain on investment transactions 697,051 239,999,525 22,297,962 4,530,393 2,771,175 1,169,200 Net realized gain on futures contracts - - 13,922 - - - Net realized gain (loss) on foreign currency contracts and transactions - - (173,158) 40,897 32,513 56,440 Net unrealized appreciation (depreciation) of investments 608,592 (69,570,746) (19,193,744) (5,208,258) (5,456,638) 241,194 Net unrealized appreciation of futures contracts - - 10,125 - - - Net unrealized depreciation of foreign currency contracts and translations - - (111,266) (2,782) (2,960,004) (2,413,869) Net realized and unrealized gain (loss) 1,305,643 170,428,779 2,843,841 (639,750) (5,612,954) (947,035) Net Increase (Decrease) in Net Assets Resulting from Operations $1,190,339 $158,678,765 $4,060,809 $(487,728) $(1,904,778) $(505,205)
The accompanying notes are an integral part of these financial statements. 32 Statements of Changes in Net Assets For the six months ended June 30,2004, (unaudited) and for the year ended December 31, 2003 ------------------------------------------------------------------- Managers Value Fund Managers Capital Appreciation Fund ------------------- ---------------------------------- 2004 2003 2004 2003 ---- ---- ---- ---- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) $282,658 $428,958 $(294,633) $(709,729) Net realized gain (loss) on investments, futures and foreign currency transactions 3,035,915 326,249 2,335,217 (12,737,985) Net unrealized appreciation (depreciation)of investments and foreign currency translations 1,622,094 19,154,237 (1,549,098) 37,420,403 Net increase (decrease) in net assets resulting from operations 4,940,667 19,909,444 491,486 23,972,689 Distributions to Shareholders: From net investment income - (438,692) - - From net realized gain on investments - - - - Total distributions to shareholders - (438,692) - - From Capital Share Transactions: Proceeds from sale of shares 30,731,758 47,708,843 13,340,793 22,460,907 Reinvestment of dividends and distributions - 425,823 - - Cost of shares repurchased (24,238,605) (14,886,224) (22,452,326) (43,075,991) Net increase (decrease) from capital share transactions 6,493,153 33,248,442 (9,111,533) (20,615,084) Total increase (decrease) in net assets 11,433,820 52,719,194 (8,620,047) 3,357,605 Net Assets: Beginning of period 100,719,972 48,000,778 110,902,564 107,544,959 End of period $112,153,792 $100,719,972 $102,282,517 $110,902,564 End of period undistributed net investment income (loss) $291,215 $8,557 $(294,633) $ - Share Transactions: Sale of shares 1,133,546 2,171,992 521,965 1,000,544 Reinvested shares - 16,473 - - Shares repurchased (892,157) (670,271) (876,750) (1,927,145) Net increase (decrease) in shares 241,389 1,518,194 (354,785) (926,601) I Class Shares: Sale of shares Reinvested shares Shares repurchased Net increase in shares
The accompanying notes are an integral part of these financial statements. 33 Statements of Changes in Net Assets For the six months ended June 30,2004, (unaudited) and for the year ended December 31, 2003 ------------------------------------------------------------------- Managers Small Company Fund Managers Special Equity Fund Managers International Equity Fund --------------------------- ---------------------------- ---------------------------------- 2004 2003 2004 2003 2004 2003 --- ---- ---- ---- ---- ---- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) $(115,304) $(178,647) $(11,750,014) $(17,687,106) $1,216,968 $2,019,127 Net realized gain (loss) on investments, futures and foreign currency transactions 697,051 652,393 239,999,525 112,083,619 22,138,726 (7,506,334) Net unrealized appreciation (depreciation)of investments and foreign currency translations 608,592 5,031,669 (69,570,746) 822,956,114 (19,294,885) 84,411,352 Net increase (decrease) in net assets resulting from operations 1,190,339 5,505,415 158,678,765 917,352,627 4,060,809 78,924,145 Distributions to Shareholders: From net investment income - - - - - (3,048,493) From net realized gain on investments - - - - - - Total distributions to shareholders - - - - - (3,048,493) From Capital Share Transactions: Proceeds from sale of shares 4,645,008 5,332,694 783,476,143 1,063,154,651 26,773,554 806,194,386 Reinvestment of dividends and distributions - - - - - 2,327,700 Cost of shares repurchased (2,755,997) (4,697,715) (764,638,434) (722,009,661)(59,442,839) (980,348,314) Net increase (decrease) from capital share transactions 1,889,011 634,979 18,837,709 341,144,990 (32,669,285) (171,826,228) Total increase (decrease) in net assets 3,079,350 6,140,394 177,516,474 1,258,497,617 (28,608,476) (95,950,576) Net Assets: Beginning of period 18,750,009 12,609,615 3,279,318,270 2,020,820,653 266,610,771 362,561,347 End of period $21,829,359 $18,750,009 $3,456,834,744 $3,279,318,270$238,002,295 $266,610,771 End of period undistributed net investment income (loss) $ (115,304) $ - $ (10,967,347) $ 782,667 $ 1,079,218 $ (137,750) Share Transactions: Sale of shares 488,962 691,683 7,306,272 16,496,840 642,963 25,132,128 Reinvested shares - - - - - 58,033 Shares repurchased (289,894) (622,350) (9,337,834) (11,400,533) (1,419,932) (30,322,340) Net increase (decrease) in shares 199,068 69,333 (2,031,562) 5,096,307 (776,969) (5,132,179) I Class Shares: Sale of shares 2,447,376 Reinvested shares - Shares repurchased (232,319) Net increase in shares 2,215,057
The accompanying notes are an integral part of these financial statements. 34 Statements of Changes in Net Assets For the six months ended June 30,2004, (unaudited) and for the year ended December 31, 2003 ------------------------------------------------------------------- Managers Emerging Markets Equity Fund Managers Bond Fund ------------------------- ------------------- 2004 2003 2004 2003 ---- ---- ---- ---- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) $ 152,022 $ 22,265 $ 3,708,176 $ 7,051,680 Net realized gain (loss) on investments, futures and foreign currency transactions 4,571,290 2,839,220 2,803,688 2,620,799 Net unrealized appreciation (depreciation) of investments and foreign currency translations (5,211,040) 9,096,605 (8,416,642) 6,488,956 Net increase (decrease) in net assets resulting from operations (487,728) 11,958,090 (1,904,778) 16,161,435 Distributions to Shareholders: From net investment income - (122,962) (4,772,371) (7,242,910) From net realized gain on investments - - - (1,652,619) Total distributions to shareholders - (122,962) (4,772,371) (8,895,529) From Capital Share Transactions: Proceeds from sale of shares 23,613,660 115,364,722 75,976,226 138,938,793 Reinvestment of dividends and distributions - 119,204 4,474,757 8,197,878 Cost of shares repurchased (19,834,647) (112,802,639) (42,164,568) (103,102,078) Net increase (decrease) from capital share transactions 3,779,013 2,681,287 38,286,415 44,034,593 Total increase (decrease) in net assets 3,291,285 14,516,415 31,609,266 51,300,499 Net Assets: Beginning of period 36,727,662 22,211,247 179,641,093 128,340,594 End of period $40,018,947 $36,727,662 $211,250,359 $179,641,093 End of period undistributed net investment income (loss) $ 152,022 $ - $ (1,026,513) $ 37,682 Share Transactions: Sale of shares 1,664,160 11,585,328 3,094,070 5,752,592 Reinvested shares - 9,141 184,121 338,265 Shares repurchased (1,446,592) (11,349,104) (1,731,810) (4,256,109) Net increase (decrease) in shares 217,568 245,365 1,546,381 1,834,748
The accompanying notes are an integral part of these financial statements. 35 Statements of Changes in Net Assets For the six months ended June 30,2004, (unaudited) and for the year ended December 31, 2003 ------------------------------------------------------------------- Managers Global Bond Fund ------------------------- 2004 2003 ---- ---- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) $441,830 $887,761 Net realized gain (loss) on investments, futures and foreign currency transactions 1,225,640 2,092,353 Net unrealized appreciation (depreciation) of investments and foreign currency translations (2,172,675) 1,888,674 Net increase (decrease) in net assets resulting from operations (505,205) 4,868,788 Distributions to Shareholders: From net investment income - (2,551,417) From net realized gain on investments - (644,990) Total distributions to shareholders - (3,196,407) From Capital Share Transactions: Proceeds from sale of shares 9,577,834 54,118,889 Reinvestment of dividends and distributions - 3,177,019 Cost of shares repurchased (10,037,887) (46,407,165) Net increase (decrease) from capital share transactions (460,053) 10,888,743 Total increase (decrease) in net assets (965,258) 12,561,124 Net Assets: Beginning of period 32,307,096 19,745,972 End of period $31,341,838 $32,307,096 End of period undistributed net investment income (loss) $557,268 $115,438 Share Transactions: Sale of shares 431,242 2,429,610 Reinvested shares - 144,148 Shares repurchased (457,041) (2,077,261) Net increase (decrease) in shares (25,799) 496,497
The accompanying notes are an integral part of these financial statements. 36 Financial Highlights -------------------- For a share outstanding throughout the six months ended June 30, 2004, (unaudited) and each year ended December 31, Managers Value Fund ------------------- June 30, 2004 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $26.24 $20.69 $27.45 $27.73 $27.50 $30.67 Income from Investment Operations: Net investment income 0.07 0.11 0.15 0.09 0.17 0.30 Net realized and unrealized gain (loss) on investments 1.18 5.56 (6.65) 0.70 2.45 0.91 Total from investment operations 1.25 5.67 (6.50) 0.79 2.62 1.21 Less Distributions to Shareholders from: Net investment income 0.00 (0.12) (0.16) (0.08) (0.17) (0.29) Net realized gain on investments 0.00 - (0.10) (0.99) (2.22) (4.09) Total distributions to shareholders 0.00 (0.12) (0.26) (1.07) (2.39) (4.38) Net Asset Value, End of Period $27.49 $26.24 $20.69 $27.45 $27.73 $27.50 Total Return(1) 4.76%(2) 27.39% (23.79)% 2.92% 9.80% 4.15% Ratio of net expenses to average net assets(1) 1.29%(3) 1.27% 1.28% 1.25% 1.30% 1.35% Ratio of total expenses to average net assets(1) 1.34%(3) 1.42%(5)1.35% 1.35% 1.38% 1.35% Ratio of net investment income to average net assets 0.52%(3) 0.59% 0.60% 0.43% 0.61% 0.92% Portfolio turnover 16%(2) 40% 53% 147% 153% 94% Net assets at end of period (000's omitted) $112,154 $100,720 $48,001 $63,628 $57,300 $42,471
Managers Capital Appreciation Fund ---------------------------------- June 30, 2004 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period 25.46 $20.36 $29.29 $42.79 $61.12 $33.78 Income from Investment Operations: Net investment loss (0.07) (0.16) (0.28) (0.25) (0.42) (0.27) Net realized and unrealized gain (loss) on investments 0.18 5.26 (8.65) (13.25) (13.25) 34.81 Total from investment operations 0.11 5.10 (8.93) (13.50) (13.67) 34.54 Less Distributions to Shareholders from: Net realized gain on investments - - - - (4.66) (7.20) Net Asset Value, End of Period $25.57 $25.46 $20.36 $29.29 $42.79 $61.12 Total Return(1) 0.43%(2) 25.05% (30.49)% (31.55)% (22.20)% 103.02% Ratio of net expenses to average net assets(1) 1.42%(3) 1.33% 1.39% 1.34% 1.23% 1.26% Ratio of total expenses to average net assets(1) 1.48%(3) 1.52%(5) 1.43% 1.40% 1.26% 1.30% Ratio of net investment loss to average net assets (0.55)%(3) (0.67)% (1.07)% (0.75)% (0.82)% (0.86)% Portfolio turnover 38%(2) 109% 141% 265% 306% 200% Net assets at end of period (000's omitted) $102,283 $110,903 $107,545 $186,876 $286,515 $248,487
37 Managers Small Company Fund --------------------------- June 30, 2004 2003 2002 2001 2000* ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $9.19 $6.40 $8.16 $9.29 $10.00 Income from Investment Operations: Net investment loss (0.05) (0.09) (0.13) (0.07) (0.01) Net realized and unrealized gain (loss) on investments 0.61 2.88 (1.63) (1.06) (0.70) Total from investment operations 0.56 2.79 (1.76) (1.13) (0.71) Net Asset Value, End of Period $9.75 $9.19 $6.40 $8.16 $9.29 Total Return(1) 6.09%(2) 43.59% (21.57)% (12.16)% (7.10)%(2) Ratio of net expenses to average net assets(1) 1.45%(3) 1.45% 1.40% 1.30% 1.30%(3) Ratio of total expenses to average net assets(1) 1.42%(3) 1.50%(5) 1.70% 1.71% 1.72%(3) Ratio of net investment loss to average net assets (1.14)%(3) (1.20)% (1.17)% (0.92)% (0.45)%(3) Portfolio turnover 9%(2) 48% 134% 95% 55%(2) Net assets at end of period (000's omitted) $21,829 $18,750 $12,610 $26,764 $25,705 * Commencement of operations was June 19, 2000.
Managers Special Equity Fund - I Class --------------------------------------- For the period* ended June 30, 2004 --------------------------------------- Net Asset Value, Beginning of Period $78.91 Income from Investment Operations: Net investment loss (0.07) Net realized and unrealized gain on investments 3.56 Total from investment operations 3.49 Net Asset Value, End of Period $82.40 Total Return(1) (4.42)%(2) Ratio of net expenses to average net assets(1) 1.24%(3) Ratio of total expenses to average net assets(1) 1.25%(3) Ratio of net investment loss to average net assets (0.59)%(3) Portfolio turnover 36%(2) Net assets at end of period (000's omitted) $182,514 *Commencement of operations was May 3, 2004. 38 Financial Highlights -------------------- For a share outstanding throughout the six months ended June 30, 2004, (unaudited) and each year ended December 31, ---------------------------------------------------------------------- Managers Special Equity Fund - Managers Class --------------------------------------------- June 30, 2004 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $78.48 $55.08 $70.59 $76.82 $91.42 $61.23 Income from Investment Operations: Net investment loss (0.29) (0.43) (0.34) (0.18) (0.12) (0.29) Net realized and unrealized gain (loss) on investments 4.18 23.83 (15.17) (6.05) (2.71) 33.30 Total from investment operations 3.89 23.40 (15.51) (6.23) (2.83) 33.01 Less Distributions to Shareholders from: Net realized gain on investments - - - - (11.77) (2.82) Net Asset Value, End of Period $82.37 $78.48 $55.08 $70.59 $76.82 $91.42 Total Return (1) (4.94)%(2) 42.50% (21.98)% (8.07) (2.56)% 54.11% Ratio of net expenses to average net assets(1) 1.42%(3) 1.43% 1.31% 1.29% 1.26% 1.31% Ratio of total expenses to average net assets(1) 1.43%(3) 1.46%(5) 1.32% 1.30% 1.26% 1.31% Ratio of net investment loss to average net assets (0.70)%(3) (0.72)% (0.56)% (0.27)% (0.16)% (0.47)% Portfolio turnover 36%(2) 64% 67% 62% 69% 89% Net assets at end of period (000's omitted) $3,274,321 $3,279,318 $2,020,821 $2,295,234 $2,132,376 $1,543,150
Managers International Equity Fund ------------------------------------ June 30, 2004 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- ---- $41.13 $31.22 $37.61 $49.38 $58.71 $48.85 Net investment income 0.21 0.34 0.19 0.20(4) 0.27 0.35 Net realized and unrealized gain (loss) on investments 0.37 10.04 (6.48) (11.72)(4) (5.38) 11.96 Total from investment operations 0.58 10.38 (6.29) (11.52) (5.11) 12.31 Net investment income - (0.47) (0.10) (0.25) (0.24) (0.35) Net realized gain on investments - - - - (3.98) (2.10) Total distributions to shareholders - (0.47) (0.10) (0.25) (4.22) (2.45) Net Asset Value, End of Period $41.71 $41.13 $31.22 $37.61 $49.38 $58.71 Total Return(1) 1.46%(2) 33.21% (16.71)% (23.35)% (8.46)% 25.28% Ratio of net expenses to average net assets(1) 1.71%(3) 1.72% 1.54% 1.45% 1.41% 1.40% Ratio of total expenses to average net assets(1) 1.79%(3) 1.73% 1.56% 1.46% 1.42% 1.41% Ratio of net investment income to average net assets 0.97%(3) 0.70% 0.54% 0.46%(4) 0.42% 0.66% Portfolio turnover 37%(2) 80% 132% 108% 99% 43% Net assets at end of period (000's omitted) $238,002 $266,611 $362,561 $560,602 $656,630 $704,209
39 Financial Highlights -------------------- For a share outstanding throughout the six months ended June 30, 2004, (unaudited) and each year ended December 31, ---------------------------------------------------------------------- Managers Emerging Markets Equity Fund ------------------------------------- June 30, 2004 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $13.26 $8.80 $9.56 $9.63 $14.67 $7.74 Income from Investment Operations: Net investment income (loss) 0.05 0.01 0.03 (0.01) (0.04) 0.03 Net realized and unrealized gain (loss) on investments 0.09 4.50 (0.79) (0.04) (3.90) 6.93 Total from investment operations 0.14 4.51 (0.76) (0.05) (3.94) 6.96 Less Distributions to Shareholders from: Net investment income - (0.05) - - - (0.03) Net realized gain on investments - - - (0.02) (1.10) - Total distributions to shareholders - (0.05) - (0.02) (1.10) (0.03) Net Asset Value, End of Period $13.40 $13.26 $8.80 $9.56 $9.63 $14.67 Total Return(1) 1.06%(2) 51.20% (7.95)% (0.57)% (26.69)% 90.06% Ratio of net expenses to average net assets(1) 1.89%(3) 1.99% 1.97% 1.94% 1.98% 1.85% Ratio of total expenses to average net assets(1) 1.83%(3,5) 1.97%(5) 2.18% 2.36% 2.48% 2.52% Ratio of net investment income (loss) to average net assets 0.71%(3) 0.08% 0.32% (0.09)% (0.34)% 0.37% Portfolio turnover 44%(2) 79% 68% 69% 40% 119% Net assets at end of period (000's omitted) $40,019 $36,728 $22,211 $15,202 $12,390 $12,434
Managers Bond Fund ------------------ June 30, 2004 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $24.58 $23.44 $22.32 $21.75 $21.45 $22.19 Income from Investment Operations: Net investment income 0.45 1.08 1.24 1.44 1.49 1.45 Net realized and unrealized gain (loss) on investments (0.61) 1.40 1.12 0.60 0.48 (0.65) Total from investment operations (0.16) 2.48 2.36 2.04 1.97 0.80 Less Distributions to Shareholders from: Net investment income (0.57) (1.11) (1.24) (1.45) (1.50) (1.45) Net realized gain on investments - (0.23) - (0.02) (0.17) (0.09) Total distributions to shareholders (0.57) (1.34) (1.24) (1.47) (1.67) (1.54) Net Asset Value, End of Period $23.85 $24.58 $23.44 $22.32 $21.75 $21.45 Total Return(1) (0.67)%(2) 10.77% 10.98% 9.64% 9.44% 3.66% Ratio of net expenses to average net assets(1) 0.99%(3) 0.99% 1.00% 1.18% 1.19% 1.25% Ratio of total expenses to average net assets(1) 1.04%(3,5) 1.09%(5) 1.17% 1.18% 1.20% 1.26% Ratio of net investment income to average net assets 3.71%(3) 4.50% 5.55% 6.45% 6.91% 6.52% Portfolio turnover 10%(2) 73% 24% 16% 10% 39% Net assets at end of period (000's omitted) $211,250 $179,641 $128,341 $66,817 $51,383 $33,389
40 Financial Highlights -------------------- For a share outstanding throughout the six months ended June 30, 2004, (unaudited) and each year ended December 31, ---------------------------------------------------------------------- Managers Global Bond Fund ------------------------- June 30, 2004 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $22.19 $20.58 $17.97 $18.98 $19.44 $22.38 Income from Investment Operations: Net investment income 0.31 0.80 0.81 0.57(4) 0.72 0.82 Net realized and unrealized gain (loss) on investments (0.58) 3.43 2.57 (1.33)(4) (1.06) (3.05) Total from investment operations (0.27) 4.23 3.38 (0.76) (0.34) (2.23) Less Distributions to Shareholders from: Net investment income - (2.09) (0.55) - (0.12) (0.49) Net realized gain on investments - (0.53) (0.22) (0.25) - (0.22) Total distributions to shareholders - (2.62) (0.77) (0.25) (0.12) (0.71) Net Asset Value, End of Period $21.92 $22.19 $20.58 $17.97 $18.98 $19.44 Total Return(1) (1.26)%(2) 20.69% 18.85% (4.10)% (1.62)% (9.97)% Ratio of net expenses to average net assets(1) 1.42%(3) 1.68% 1.55% 1.45% 1.47% 1.54% Ratio of total expenses to average net assets(1) 1.50%(3,5) 1.68% 1.56% 1.46% 1.50% 1.54% Ratio of net investment income to average net assets 2.79%(3) 3.48% 4.01% 2.87%(4) 4.07% 3.77% Portfolio turnover 64%(2) 152% 220% 244% 176% 171% Net assets at end of period (000's omitted) $31,342 $32,307 $19,746 $19,879 $22,723 $19,073
The following notes should be read in conjunction with the Financial Highlights of the Funds presented on the preceding pages. (1) See Note 1(c) of "Notes to Financial Statements." (2) Not Annualized. (3) Annualized. (4) Effective January 1, 2001, the Trust adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities, as required. The effect of this change during the year ended December 31, 2001 on International Equity, Intermediate Bond and Global Bond was to decrease net investment income and increase net realized and unrealized gain (loss) per share by $0.01, $0.04 and $0.04, respectively. The effect of this change on the remaining Funds was not significant. Without this change the ratio of net investment income to average net assets for the year ended December 31, 2001 for International Equity and Global Bond would have been 0.46% and 3.08%, respectively. Per share data, ratios and supplemental data for prior periods have not been restated to reflect this change. (5) Excludes the impact of expense (reimbursement)/recoupment and expense offsets such as brokerage credits, but includes non-reimbursable expenses such as interest and taxes. (See Note 1c to the Notes to Financial Statements.) 41 Notes to Financial Statements (unaudited) June 30, 2004 ----------------------------------------- (1) Summary of Significant Accounting Policies ---------------------------------------------- The Managers Funds (the "Trust") is an 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 nine investment series. Included in this report are the Managers Value Fund ("Value"), Manag-ers Capital Appreciation Fund ("Capital Appreciation"), Managers Small Company Fund ("Small Company"), Managers Special Equity Fund ("Special Equity"), Managers International Equity Fund ("International Equity"), Managers Emerg-ing Markets Equity Fund ("Emerging Markets Equity"), Managers Bond Fund ("Bond") and Managers Global Bond Fund ("Global Bond"), collectively the "Funds." The Funds' financial statements are prepared in accordance with accounting principles generally accepted in the Unit-ed States of America, 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 sale price, or, lacking any sales, at the last quoted bid price. Over-the-counter securities are valued at the Nasdaq Official Closing Price, if one is available. Lacking any sales, over-the-counter securities, are valued at the last quoted bid price. In-ternational Equity and Emerging Markets Equity invest in securities that trade in foreign markets. Because substantial time may pass between the time the local market for a security closes and the time a Fund calculates its NAV (typi-cally the close of the NYSE), intervening events may call into question the reliability of the closing local market price for that security. On behalf of International Equity and Emerging Markets Equity, the Manager monitors intervening events that may affect the value of securities held in each Fund's portfolio and, in accordance with procedures adopt-ed by the Funds' Trustees, will adjust the prices of securities traded in foreign markets, as appropriate, to reflect fair value as of the time each Fund's NAV is calculated. 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 remain-ing maturity of 60 days or less are valued at amortized cost, which approximates market value. Investments in other regulated investment companies are valued at their end of day net asset value per share except iShares, which are valued the same as equity securities. Securities (including derivatives) 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 of the Trust. 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. 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. These dividends are recorded as soon as the Trust is informed of the ex-dividend date. Dividend income on foreign securities is recorded net of any withholding tax. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. 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 that cannot be directly attributed to a fund are apportioned among the Funds in the Trust and in some cases other affiliated funds based upon their relative average net assets or number of shareholders. In addition, each of the Funds has a "balance credit" arrangement with The Bank of New York ("BNY"), the Funds' custodian, whereby each Fund is credited with an interest factor equal to 1% below the effective 90- day T-Bill rate for account balances left uninvested overnight. These credits serve to reduce custody expenses that would otherwise be charged to each Fund. For the six months ended June 30, 2004, the custodian expense was not reduced for any of the Funds. 42 Notes to Financial Statements (continued) ----------------------------------------- Effective May 1, 2004, The Managers Funds LLC (the "Investment Manager"), a subsidiary of Affiliated Managers Group, Inc. ("AMG"), has contractually agreed, through at least May 1, 2005, to waive fees and pay or reimburse ex-penses of Small Company, Emerging Markets Equity, Bond and Global Bond to the extent that the total annual operat-ing expenses (exclusive of brokerage, interest, taxes and extraordinary expenses) of the Fund exceed 1.45%, 1.99%, 0.99% and 1.19%, respectively, of each Fund's average daily net assets. Each Fund is obligated to repay the Invest-ment Manager such amounts waived, paid or reimbursed in future years provided that the repayment occurs within three (3) years after the waiver or reimbursement and that such repayment would not cause the Fund's expenses in any such year to exceed 1.45%, 1.99%, 0.99% and 1.19%, respectively, of the Fund's average daily net assets. Also, the Investment Manager has contractually agreed, through at least May 1, 2005, to waive management fees of Value, Capital Appreciation and International Equity to the extent total expenses (exclusive of brokerage, interest, taxes and extraordinary expenses) of the Fund exceed 1.19%, 1.29% and 1.55%, respectively, of each Fund's average daily net assets, provided that the amount of fees waived does not exceed 0.25% per annum of each Fund's average daily net assets. Each Fund is obligated to repay the Investment Manager such amounts waived, paid or reimbursed in future years provided that the repayment occurs within three (3) years after the waiver or reimbursement and that such repayment would not cause the Fund's expenses in any such year to exceed 1.19%, 1.29% and 1.55%, respectively, of the Fund's average daily net assets. For the six months ended June 30, 2004, Small Company and Emerging Mar-kets Equity made such repayments to the Investment Manager in the amounts of $3,174 and $22,186, respectively. At June 30, 2004, the cumulative amount of reimbursement by the Manager for Value, Capital Appreciation, International Equity, Emerging Markets Equity, Bond and Global Bond equaled $29,212, $32,808, $88,073, $7,571, $377,733 and $12,262, respectively. The Investment Manager has agreed to waive a portion of its fee or reimburse expenses of Special Equity commen-surate with the reduction in the fee paid to Essex Investment Management Company LLC ("Essex") (subadvisor to Special Equity since December 19, 2003), which is 0.10% of the average daily net assets of the portion of the Fund managed by Essex in excess of $100 million. For the six months ended June 30, 2004, the amount reimbursed equaled $275,991. Total returns and net investment income for the Funds would have been lower had certain expenses not been offset. (d) Dividends and Distributions ------------------------------- Dividends resulting from net investment income, if any, normally will be declared and paid annually for Global Bond and the Equity Funds. Dividends resulting from net investment income, if any, normally will be declared and paid monthly for Bond. Distributions of capital gains, if any, will be made on an annual basis and when required for Fed-eral 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 losses deferred due to wash sales, equalization accounting for tax purposes, foreign currency and market discount transactions. Permanent book and tax basis differences, if any, relating to shareholder distribu-tions will result in reclassifications to paid-in capital. (e) Federal Taxes ----------------- Each Fund intends to comply with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, to distribute substantially all of its taxable income and gains to its shareholders and to meet certain diversifi-cation and income requirements with respect to investment companies. Therefore, no provision for Federal income or excise tax is included in the accompanying financial statements. 43 Notes to Financial Statements (continued) ----------------------------------------- (f) Capital Loss Carryovers --------------------------- As of June 30, 2004, the following Funds had accumulated net realized capital loss carryovers from securities transac-tions for Federal income tax purposes as shown in the following chart. These amounts may be used to offset realized capital gains, if any, through the expiration dates listed. Capital Loss Fund Carryover Amount Expires December 31, ---- ---------------- -------------------- Value $ 5,605,699 2010 Capital Appreciation 122,787,551 2009 30,988,593 2010 12,899,489 2011 Small Company 1,040,860 2008 6,267,133 2009 1,700,278 2010 Special Equity 143,210,597 2009 241,877,816 2010 International Equity 52,865,926 2009 92,266,533 2010 16,170,119 2011 Emerging Markets Equity 2,488,378 2010 (g) Capital Stock ----------------- The Trust's Declaration of Trust authorizes for each series the issuance of an unlimited number of shares of beneficial interest, without par value. Each Fund records sales and repurchases of its capital stock on the trade date. Dividends and distributions to shareholders are recorded on the ex-dividend date. At June 30, 2004, certain unaffiliated shareholders and specifically omnibus accounts, individually held greater than 10% of the outstanding shares of the following Funds: Value - one owns 42%; Capital Appreciation - one owns 17%; Special Equity - one owns 24%; International Equity - two own 40%; Emerging Markets Equity - two own 62%; Bond - three own 46%; Special Equity I class shares - three unaffiliated shareholders collectively own 46%. (h) Repurchase Agreements ------------------------- Each Fund may enter into repurchase agreements provided that the value of the underlying collateral, including ac-crued 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 Fed-eral 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. (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, 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 the net realized and unrealized gain or loss resulting from changes in exchange rates from the fluctuations resulting from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments. (2) Agreements and Transactions with Affiliates ----------------------------------------------- The Trust has entered into a Fund Management Agreement under which the Investment Manager 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 manag- 44 Notes to Financial Statements (continued) ----------------------------------------- ers' investment programs and results. Each Fund's investment portfolio is managed by portfolio managers who serve pursuant to Portfolio Management Agreements with the Investment Manager and the Fund. The Funds are distributed by Managers Distributors, Inc. ("MDI"), a wholly- owned subsidiary of The Managers Funds LLC. Certain Trustees and Officers of the Funds are Officers and/or Directors of the Investment Manager, AMG and/or MDI. Investment advisory and management fees are paid directly by each Fund to the Investment Manager based on aver-age daily net assets. The annual investment advisory and management fee rates, as a percentage of average daily net assets for the six months ended June 30, 2004, were as follows: Investment Advisory Fund and Management Fee ---- ------------------- Value 0.75% Capital Appreciation 0.80% Small Company 0.90% Special Equity 0.90% International Equity 0.90% Emerging Markets Equity 1.15% Bond 0.625% Global Bond 0.70% The Trust has 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 interme-diary with the Funds' shareholders. During the six months ended June 30, 2004, each of the Funds, except Global Bond, paid a fee to the Administrator at the rate of 0.25% per annum of the Fund's average daily net assets. Global Bond paid a fee to the Administrator at the rate of 0.20% per annum of the Fund's average daily net assets. The aggregate annual fee paid to each independent Trustee for serving as a Trustee of the Trust was $20,000. In addi-tion, the Trustees received in-person and telephonic per meeting fees of $1,000 and $500, respectively. Effective April 1, 2004 the aggregate annual retainer paid to each Independent Trustee became $52,000, plus $2,000 for each meeting attended. The Trustees' fees and expenses are allocated amongst of all the Funds for which The Managers Funds, LLC serves as the Advisor based on the relative net assets of such Funds. The Independent Chairman of the Trust receives an additional payment of $5,000 per year. The "Trustee fees and expenses" shown in the financial statements repre-sents the Fund's allocated portion of the total fees and expenses paid by the Fund and other affiliated funds in the Trust and in the complex. (3) Purchases and Sales of Securities ------------------------------------- Purchases and sales of securities, excluding short-term securities, for the six months ended June 30, 2003, were as follows: Long-Term Securities U.S. Government Securities Fund Purchases Sales Purchases Sales ---- --------- ----- --------- ----- Value $ 27,994,172 $ 16,466,119 N/A N/A Capital Appreciation 38,337,356 46,573,729 N/A N/A Small Company 3,567,185 1,656,173 N/A N/A Special Equity 1,145,833,131 1,123,611,892 N/A N/A International Equity 91,169,465 121,390,067 N/A N/A Emerging Markets Equity 22,614,657 17,820,677 N/A N/A Bond 48,177,216 19,012,294 $19,014,011 $1,003,828 Global Bond 20,644,119 19,096,846 1,406,634 2,488,048
(4) Portfolio Securities Loaned ------------------------------- The Funds may participate in a securities lending program offered by BNY providing for the lending of equities, cor-porate bonds and government securities to qualified brokers. Collateral on all securities loaned is accepted in cash and/or government securities. Collateral is maintained at a minimum level of 102% of the market value, plus inter-est, if applicable, of investments on loan. Collateral received in the form of cash is invested temporarily in institu- 45 Notes to Financial Statements (continued) ----------------------------------------- tional money market funds or other short-term investments by BNY. Earnings of such temporary cash investments are divided between BNY, as a fee for its services under the program, and the Fund loaning the security, according to agreed-upon rates. (5) Commitments and Contingencies --------------------------------- In the normal course of business, the Funds may enter into contracts and agreements that contain a variety of repre-sentations and warranties, which provide general indemnifications. The maximum exposure to the Funds under these arrangements is unknown, as this would involve future claims that may be against the Funds that have not yet occurred. However, based on experience, the Funds expect the risks of loss to be remote. (6) Risks Associated with Collateralized Mortgage Obligations ("CMOs") ---------------------------------------------------------------------- The net asset value of Funds may be sensitive to interest rate fluctuations because the Funds may hold several instru-ments, including CMOs and other derivatives, whose values can be significantly impacted by interest rate movements. CMOs are obligations collateralized by a portfolio of mortgages or mortgage-related securities. Payments of principal and interest on the mortgage are passed through to the holder of the CMOs on the same schedule as they are re-ceived, 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 mort-gage-related securities. CMOs may have a fixed or variable rate of interest. (7) 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. (8) Forward Foreign Currency Contracts -------------------------------------- During the six months ended June 30, 2004, International Equity, Emerging Markets Equity and 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 counter party is realized on the date of offset, otherwise gain or loss is realized on settlement date. The Funds, except Value, Capital Appreciation, Small Company and Special Equity, may invest in non-U.S. dollar de-nominated 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 rela-tionship between the U.S. dollar and such foreign currency. Risks may arise upon entering into these contracts from the potential inability of counter parties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Open forward foreign currency exchange contracts (in U.S. Dollars) at June 30, 2004 were as follows: Foreign Currency Settlement Contract Value Current Value Unrealized Date (Payable Amount) (Receivable Amount) Gain/Loss ---------- ---------------- ------------------- ---------- International Equity Swedish Krona Contracts 07/01/04 $374,152 $372,416 $(1,736) Emerging Markets Equity Thai Baht Contracts 07/02/04 501,406 501,590 184 Global Bond euro-dollar Contracts 07/02/04 77,453 77,163 (290)
46 Notes to Financial Statements (continued) ----------------------------------------- (9) Futures Contracts Held or Issued for Purposes other than Trading -------------------------------------------------------------------- International Equity uses Equity Index futures contracts to a limited extent, with the objective of maintaining exposure to equity stock markets while maintaining liquidity. The Fund may purchase or sell futures contracts to achieve a desired level of investment, whether to accommodate portfolio turnover or cash flows from capital shares transactions. There are certain risks associated with futures contracts. Prices may not move as expected or a Fund may not be able to close out the contract when it desires to do so, resulting in losses Futures are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the financial statements. Fluctuations in the value of the contracts are recorded in the Statement of Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures or forward currency contracts. The Fund had the following open futures contracts as of June 30, 2004: Long - 3-month Eurodollar, 14 contracts, expiring September 2004 with an unrealized gain of $10,125. (10) Transactions with Affiliated Companies - Special Equity ------------------------------------------------------------ An affiliated company is a company that is directly or indirectly controlled by a related party or a company in which a fund has ownership of at least 5% of the voting securities. Transactions during the six months ended June 30, 2004, with companies which are or were affiliates are as follows: Summary of Transactions with Affiliated Companies - Special Equity Purchase Sales Dividend Market Value Affiliate Cost Cost Income at June 30, 2004 --------- -------- ----- -------- ---------------- AK Steel Holding Corp. $ - $ - $ - $ 32,069,004 Axsys Technologies, Inc. 535,991 - - 10,013,619 Anaren Microwave Inc. 17,286,086 Brandywine Realty Trust 224,743 4,574,707 195,976 - Duckwall-ALCO Stores, Inc. - - - 4,160,314 Meristar Hospitality Corp. 1,162,649 - - 34,368,264 Totals 1,923,383 $ 4,574,707 $ 195,976 $ 97,897,287
47 [Logo:] Managers Investment Manager and Administrator ------------------ The Managers Funds LLC 800 Connecticut Avenue Norwalk, Connecticut 06854 (203) 299-3500 or (800) 835-3879 Distributor ----------- Managers Distributors, Inc. 800 Connecticut Avenue Norwalk, Connecticut 06854 (203) 299-3500 or (800) 835-3879 Custodian --------- The Bank of New York 2 Hanson Place, 7th Floor Brooklyn, NY 11217 Legal Counsel ------------- Goodwin Procter LLP Exchange Place Boston, Massachusetts 02109 Transfer Agent -------------- Boston Financial Data Services, Inc. Attn: The Managers Funds P.O. Box 8517 Boston, Massachusetts 02266-8517 (800) 252-0682 For ManagersChoice Only ----------------------- The Managers Funds PFPC Inc. c/o Wrap Services P.O. Box 9847 Providence, RI 02940 (800) 358-7668 The Managers Funds The Managers Funds Equity Funds: Income Funds: ================== ================== VALUE FUND MONEY MARKET FUND Armstrong Shaw Associates Inc. HIGH YIELD FUND Osprey Partners Investment Mgmt., LLC J.P. Morgan Investment ManagementInc. SHORT DURATION CAPITAL APPRECIATION FUND GOVERNMENT FUND Essex Investment Management Co., LLC Bramwell Capital Management, Inc. INTERMEDIATE DURATION GOVERNMENT FUND SMALL COMPANY FUND Smith Breeden Associates,Inc. Kalmar Investment Advisers, Inc. TOTAL RETURN BOND FUND SPECIAL EQUITY FUND Merganser Capital Management LP Donald Smith & Co., Inc. Essex Investment Management Co., LLC BOND FUND Kern Capital Management LLC GLOBAL BOND FUND Skyline Asset Management, L.P. FIXED INCOME FUND Westport Asset Management, Inc. Loomis, Sayles & Company L.P. INTERNATIONAL EQUITY FUND Lazard Asset Management, LLC CONVERTIBLE SECURITIES FUND Bernstein Investment Research 40|86 Advisors,Inc. and Management Mastholm Asset Management, L.L.C. EMERGING MARKETS EQUITY FUND Rexiter Capital Management Limited Managers AMG Funds Equity Funds FIRST QUADRANT TAX-MANAGED ================== EQUITY FUND First Quadrant, L.P. ESSEX AGGRESSIVE GROWTH FUND SCIENCE & TECHNOLOGY FUND ESSEX LARGE CAP GROWTH FUND 20 FUND Essex Investment Management Company,LLC Oak Associates, ltd. MID-CAP FUND RORER LARGE-CAP FUND LARGE-CAP FUND RORER MID-CAP FUND Chicago Equity Partners, LLC Rorer Asset Management,LLC BALANCED FUND Chicago Equity Partners, LLC SYSTEMATIC VALUE FUND Loomis, Sayles & Company L.P. Systematic Financial Management, L.P. BURRIDGE SMALL CAP GROWTH FUND The Burridge Group LLC
Nothing contained herein is to be considered an offer or sale or a solicitation of an offer to buy shares of The Managers Funds. Such offering is made only by Prospectus, which includes details as to of- fering price and other material information. This report is prepared for the Fund's shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by an effective prospectus. To receive a free copy of the prospectus or Statement of Additional Information or to request additional information about the Funds or other Managers Funds or Managers AMG Funds, please contact us by calling 1-800-835-3879 or by visiting our websites. Distributed by Managers Distributors, Inc., member NASD. www.managersfunds.com www.managersamg.com www.managerschoice.com Item 2. CODE OF ETHICS. ======================================================================== Not applicable for the semi-annual shareholder report. Item 3. AUDIT COMMITTEE FINANCIAL EXPERT. ======================================================================== Not applicable for the semi-annual shareholder report. Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. ======================================================================== Not applicable for the semi-annual shareholder report. Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. ======================================================================== Not applicable. Item 6. [RESERVED] ======================================================================== Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED- END MANAGEMENT INVESTMENT COMPANIES. ======================================================================== Not applicable. Item 8. [RESERVED] ======================================================================== Item 9. CONTROLS AND PROCEDURES. ======================================================================== (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. EXHIBITS ======================================================================== (a) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE MANAGERS FUNDS By: /s/ Peter M. Lebovitz ---------------------------- Peter M. Lebovitz, President Date: September 9, 2004 ----------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Peter M. Lebovitz ---------------------------- Peter M. Lebovitz, President Date: September 9, 2004 ----------------- By: /s/ Galan G. Daukas ---------------------------------------- Galan G. Daukas, Chief Financial Officer Date: September 9, 2004 -----------------