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: 811-06431
MANAGERS TRUST II
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(Exact name of registrant as specified in charter)
800 Connecticut Avenue, Norwalk, Connecticut 06854
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(Address of principal executive offices) (Zip code)
The Managers Funds LLC
800 Connecticut Avenue, Norwalk, Connecticut 06854
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(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)
<Page>
Item 1. REPORT TO SHAREHOLDERS.
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[Logo:] Managers
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SEMI-ANNUAL REPORT
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The Managers Funds:
Science & Technology Fund * 20 Fund * Mid-Cap Fund
Large-Cap Fund * Balanced Fund * Convertible Securities Fund
High Yield Fund * Fixed Income Fund
Dated June 30, 2004
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access to excellence
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<Page>
Table of Contents
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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 .........................................6
Equity Funds' top ten holdings, industry weightings and
country breakdown at June 30, 2004
Schedules of Portfolio Investments .....................7
Detailed portfolio listings by security type and industry
sector, as valued at June 30, 2004
Financial Statements
Statements of Assets and Liabilities ................28
Funds' balance sheet, net asset value (NAV) per
share computation and composition of net assets
Statements of Operations ............................30
Detail of sources of income, Fund expenses, and real-
ized and unrealized gains (losses) during the
period
Statements of Changes in Net Assets .................32
Detail of changes in Fund assets for the past two
periods
Financial Highlights .................................36
Historical net asset values per share, distributions,
total returns, expense ratios, turnover ratios
and net assets for each fund
Notes to Financial Statements ........................45
Accounting and distribution policies, details of
agreements and transactions with Fund management and
description of certain investment risks
Supplemental Data ................................... 51
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.
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
offering price and other material information
<Page>
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' collective 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 December 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 investment 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 index 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
Aggregate Index, which is similar except that it also includes
mortgage-backed and asset-backed securities, returned +0.15%.
From a shareholder's perspective, one of the most notable events of the
period was that upon completion of an af-firmative shareholder vote in
March, The Managers Funds, LLC was awarded the contracts to manage all
of the Funds covered in this report beginning in April. We are pleased
to welcome all former Conseco Funds shareholders to our family of
funds, and we sincerely appreciate your vote of confidence. As you may
know, we have been managing mutual funds for more than 20 years
utilizing outside independent subadvisors for portfolio management. It
is our be-lief that this is the most efficient and flexible way to
manage assets and deliver broad intelligence diversification to our
clients. The efficiency arises out of the subadvisors' abilities to
focus their energies on specific areas of the investment universe, and
our ability to employ economies of scale in mutual fund operations and
administration. The flexibility arises out of our ability to utilize
only investment managers who we believe to be best in class and to
change subadvi-sors when necessary.
At the time of the shareholder vote, our initial intention was to
continue to employ the services of the current subadvi-sors (40|86
Advisors, Chicago Equity Partners and Oak Associates) for all of the
Funds. We had undertaken consider-able due diligence to substantiate
our conviction in these organizations' ability to manage assets.
However, major personnel departures within 40|86 Advisors, which in our
view significantly affected its credit research effort, induced us to
reevaluate the subadvisor's suitability for each of the portfolios it
managed. The Funds' Trustees elected to replace the subadvisor of the
Fixed Income Fund, the High Yield Fund and the fixed income portion of
the Balanced Fund and hired Loomis Sayles & Company, L.P. as
replacement. We have retained 40|86 Advisors as subadvisor to the
Convertible Securities Fund. Having utilized Loomis Sayles as a
subadvisor in one or more of our funds for the past twenty years we are
very confident that Loomis Sayles is a best in class fixed-income
manager. Subsequently, the Trustees approved our recommendation to hire
J.P. Morgan Investment Management to subadvise the High Yield Fund.
This action, which took effect on July 26th, effectively reinstates the
previous co-portfolio managers, Robert
1
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Letter to Shareholders (continued)
==================================
Cook and Thomas Hauser, who had been at 40|86 Advisors and had moved to
J.P.Morgan, as managers of the portfolio. These individuals, along with
a team of credit analysts that also moved to J.P.Morgan, are
predominantly responsible for the High Yield Fund's highly ranked
returns over the past several years. We are very appreciative of Loomis
Sayles ability and willingness to manage this portfolio on a temporary
basis until the J.P. Morgan team was operational. We are also very
pleased to note that it is our intention to continue to retain Loomis
Sayles as subadvisor for the Fixed Income and Balanced Funds.
Although this sequence of events may seem complex, we believe that it
is an excellent example of the benefits and flexibility of the
subadvisor structure combined with Managers' research and monitoring
process. Despite significant turmoil within the subadvisors'
organizations and the capital markets, the portfolios remained well
tended with high quality individuals at the helms. As a result, there
was minimal turnover in the High Yield Fund's portfolio, and all four
share classes of the High Yield Fund outperformed their benchmark for
the quarter, as did the A and Y class shares for the six-month period
ended June 30, 2004. In addition, pages 3 through 5 of this report
contain a table with the performance of all the Funds within the
Managers Funds family over the trailing time period. For more
information or details on the current subadvisors for these Funds
please visit our website and/or read the prospectus which is available
on the website.
In our continuing effort to expand the types of Funds and services we
provide to our clients we are pleased to note that we have recently
agreed 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 and, similar to our incorporation
of the Conseco Funds family, 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.
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.
Again, welcome to The Managers Funds, we appreciate your investment.
Sincerely,
Peter M. Lebovitz Thomas G. Hoffman, CFA
President & CEO Director of Research
The Managers Funds LLC The Managers Funds LLC
2
<Page>
The Managers Funds and
Managers AMG Funds Performance (unaudited)
All periods ended June 30, 2004
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Average Annual Total Returns (1)
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<Table>
Six 1 3 5 10 Since Inception
Months Year Years Years Years Inception Date
------ ---- ----- ----- ----- -------- ---------
The Managers Funds:
Equity Funds:
Value No Load 4.76% 20.68% (0.41)% 1.51% 10.65% 11.76% Oct-84
Capital Appreciation No Load 0.43% 12.79% (6.84)%(5.75)% 10.18% 12.21% Jun-84
Large-Cap(3) -Class A No Load(4) 2.49% 15.11% (4.88)% - - (11.39)% Jul-00
-Class A With Load (3.44)% 8.44% (6.75)% - - (12.70)% Jul-00
-Class B No Load(4) 2.20% 14.61% (5.38)% - - (11.87)% Jul-00
-Class B With Load (2.80)% 9.61% (6.34)% - - (12.54)% Jul-00
-Class C No Load(4) 2.20% 14.58% (5.37)% - - (11.83)% Jul-00
-Class C With Load 0.18% 12.52% (5.68)% - - (12.05)% Jul-00
-Class Y No Load 2.78% 15.65% (4.45)% - - (11.00)% Jul-00
20 Fund(3) -Class A No Load(4) (3.28)% 20.45% (11.78)% (13.86)% - (4.69)% Jan-98
-Class A With Load (8.78)% 13.49% (13.50)% (14.87)% - (5.56)% Jan-98
-Class B No Load(4) (3.42)% 20.05% (12.24)% (14.29)% - (6.97)% Feb-98
-Class B With Load (8.24)% 15.05% (13.12)%(14.53)% - (6.97)% Feb-98
-Class C No Load(4) (3.40)% 19.95% (12.24)%(14.28)% - (7.76)% Mar-98
-Class C With Load (5.26)% 17.85% (12.55)%(14.44)% - (7.91)% Mar-98
-Class Y No Load (2.89)% 21.44% (11.30)%(13.39)% - (7.72)% Apr-98
Science & Technology(3)
-Class A No Load(4) (2.36)% 17.61% (19.31)% - - (32.60)% Jul-00
-Class A With Load (8.00)% 10.70% (20.88)% - - (33.60)% Jul-00
-Class B No Load(4) (2.39)% 17.24% (19.56)% - - (32.85)% Jul-00
-Class B With Load (7.27)% 12.24% (20.38)% - - (33.36)% Jul-00
-Class C No Load(4) (2.86)% 17.24% (19.50)% - - (32.85)% Jul-00
-Class C With Load (4.74)% 14.92% (19.77)% - - (33.02)% Jul-00
-Class Y No Load (2.30)% 18.44% (18.80)% - - (32.20)% Jul-00
Mid-Cap(3) -Class A No Load(4) 5.50% 25.63% 6.03% 10.54% - 13.60% Jan-97
-Class A With Load (0.55)% 18.42% 3.96% 9.25% - 12.70% Jan-97
-Class B No Load(4) 5.11% 24.88% 5.48% 10.02% - 11.79% Jan-97
-Class B With Load 0.11% 19.88% 4.58% 9.81% - 11.79% Jan-97
-Class C No Load(4) 5.11% 24.85% 5.52% 10.05% - 10.66% Feb-98
-Class C With Load 3.07% 22.68% 5.16% 9.83% - 10.49% Feb-98
-Class Y No Load 5.73% 26.15% 6.57% 11.13% - 14.20% Jan-97
Special Equity No Load 4.94% 32.30% 2.18% 7.57% 13.45% 13.89% Jun-84
Special Equity-Class I No Load - - - - - 4.42% May-04
Small Company(2) No Load 6.09% 33.20% 3.67% - (0.63)% Jun-00
International Equity No Load 1.46% 25.96% 0.19% (1.40)% 5.33% 9.61% Dec-85
Emerging Markets
Equity(2) No Load 1.06% 32.48% 11.29% 7.29% - 6.64% Feb-98
Hybrid:
Balanced(3) -Class A No Load(4) 2.66% 13.81% 2.26% 6.19% - 9.00% Jan-97
-Class A With Load (3.28)% 7.26% 0.26% 4.94% - 8.15% Jan-97
-Class B No Load(4) 2.36% 13.17% 1.81% 5.70% - 6.63% Feb-98
-Class B With Load (2.64)% 8.17% 0.84% 5.43% - 6.63% Feb-98
-Class C No Load(4) 2.32% 13.13% 1.78% 5.69% - 6.53% Feb-98
-Class C With Load 0.35% 10.95% 1.43% 5.47% - 6.37% Feb-98
-Class Y No Load 2.91% 14.27% 2.78% 6.74% - 9.55% Jan-97
</Table>
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3
The Managers Funds and
Managers AMG Funds Performance (unaudited)
All periods ended June 30, 2004
==========================================
Average Annual Total Returns (1)
--------------------------------
<Table>
Six 1 3 5 10 Since Inception
Months Year Years Years Years Inception Date
------ ---- ----- ----- ----- -------- ---------
THe Managers Funds:
Income Funds:
Money Market(2) No Load 0.28% 0.53% 1.22% 2.95% 4.03% 5.09% Jun-84
Short Duration
Government(2) No Load 0.31% 1.22% 3.36% 4.34% 5.03% 4.92% Mar-92
Intermediate Duration
Government(2) No Load 0.33% 1.66% 5.60% 6.21% 6.87% 7.09% Mar-92
Total Return Bond (2) No Load (0.26)% (0.78)% - - - 2.06% Dec-02
Bond (2) No Load (0.67)% 1.31% 8.33% 7.76% 8.95% 9.91% Jun-84
Global Bond No Load (1.26)% 5.58% 13.22% 5.87% 5.78% 5.66% Mar-94
Fixed Income(3)-Class A No Load(4) (0.11)% 2.51% 6.15% 7.02% - 6.68% Jan-97
-Class A With Load (5.14)% (2.65)% 4.34% 5.93% - 5.95% Jan-97
-Class B No Load(4) (0.31)% 2.00% 5.62% 6.53% - 5.79% Mar-98
-Class B With Load (5.19)% (2.88)% 4.71% 6.22% - 5.79% Mar-98
-Class C No Load(4) (0.42)% 1.96% 5.64% 6.55% - 5.99% Mar-98
-Class C With Load (2.41)% (0.06)% 5.29% 6.34% - 5.82% Mar-98
-Class Y No Load 0.19% 3.08% 6.71% 7.62% - 7.29% Jan-97
High Yield(3) -Class A No Load(4) 1.53% 10.96% 10.91% 5.41% - 5.97% Jan-98
-Class A With Load (4.35)% 4.61% 8.74% 4.17% - 5.01% Jan-98
-Class B No Load(4) 1.21% 10.29% 10.37% 4.85% - 4.76% Feb-98
-Class B With Load (3.65)% 5.29% 9.54% 4.58% - 4.76% Feb-98
-Class C No Load(4) 1.21% 10.29% 10.37% 4.88% - 4.75% Feb-98
-Class C With Load (0.71)% 8.21% 10.01% 4.67% - 4.58% Feb-98
-Class Y No Load 1.82% 11.48% 11.50% 5.99% - 5.81% Mar-98
Convertible
Securities(3) -Class A No Load(4) 1.58% 12.13% 5.20% 4.41% - 8.60% Sep-98
-Class A With Load (4.28)% 5.65% 3.15% 3.18% - 7.49% Sep-98
-Class B No Load(4) 1.40% 11.62% 4.71% 3.88% - 8.07% Sep-98
-Class B With Load (3.44)% 6.62% 3.83% 3.60% - 7.94% Sep-98
-Class C No Load(4) 1.39% 11.68% 4.72% 3.90% - 8.09% Sep-98
-Class C With Load (0.61)% 9.55% 4.36% 3.69% - 7.90% Sep-98
-Class Y No Load 1.85% 12.80% 5.75% 4.94% - 9.16% Sep-98
Managers AMG Funds:
Essex Aggressive Growth
Institutional Class No Load (0.75)% 12.00% - - - 4.66% Mar-02
Essex Aggressive Growth
Investor Class(2) No Load (0.76)% 11.83% (6.28)% - - (1.84)% Nov-99
Essex Large Cap
Growth (2) No Load 1.25% 13.71% - - 13.71% Jun-03
Rorer Large-Cap(2) No Load (0.10)% 11.69% - - - (1.26)% Dec-01
Rorer Mid-Cap(2) No Load 9.83% 22.62% - - - 10.04% Dec-01
Systematic Value(2) No Load 3.45% 20.54% - - - 6.82% Apr-02
Burridge Small Cap
Growth(2,5) No Load 9.07% 44.48% 14.28% - - 16.81% Sep-00
First Quadrant
Tax-Managed Equity(2,6)
Before Taxes No Load (0.81)% 14.30% (0.38)% - - (0.38)% Dec-00
After Taxes on
Distributions No Load (0.81)% 14.12% (0.54)% - - (0.51)% Dec-00
After Taxes on
Distributions and
Sale of Fund Shares No Load (0.53)% 9.29% (0.42)% - - (0.41)% Dec-00
</Table>
See the Notes to the Performance Table on the following page.
<Page>
4
The Managers Funds and
Managers AMG Funds Performance (unaudited)
All periods ended June 30, 2004
==========================================
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.
Performance differences among the share classes are due to differences
in sales charge structures and class expenses. Returns shown reflect
maximum sales charge of 5.75% on Class A (5.00% maximum for Managers
Fixed Income Fund), 1% on Class C as well as the applicable contingent
deferred sales charge (CDSC) on both Class B and C shares. The Class B
shares' CDSC declines annually between years 1 through 6 according to
the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge is assessed
after year six. Class C shares held for less than one year are subject
to a 1% CDSC.
The Fund share classes differ with regard to sales charges and Fund
expenses. In choosing a Fund and class(es), 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 and class(es). Each Fund's prospectus contains information
concerning the Fund's investment objective, risk, 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 the Money Market Fund seeks
to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. Additional risks are
associated with investing in international and emerging markets, and
such securities may be considered speculative.
There are also risks 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 interst rate risk. To obtain a prospectus, 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.
Investors should discuss their goals and choices with a registered
financial professional in order to determine which share class is
appropriate for them. Distributed by Managers Distributors, Inc.,
member NASD.
(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) Formerly part of the Conseco Funds Group.
(4) Performance does not reflect the deduction of a sales load,
which, if reflected, would reduce the performance reported.
(5) 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
Predecessor Account 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.
(6) After-tax returns are calculated by Lipper 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.
5
<Page>
Fund Snapshots (unaudited)
As of June 30, 2004
=========================
Managers Science & Technology Fund
----------------------------------
<Table>
Top Ten Holdings (out of 23 securities) % Fund Industry Weightings % Fund
- --------------------------------------- --------- -------------------- -------
Cisco Systems, Inc. 8.0% Information Technology 80.8%
Qualcomm, Inc. 6.3 Consumer Discretionary 7.5
eBay, Inc. 6.3 Industrials 5.7
Flextronics International, Ltd. 6.3 Health Care 5.2
Zebra Technologies Corp. 6.0 Other 0.8
University of Phoenix Online 5.7
Cognizant Technology Solutions Corp. 5.7
Ustarcom, Inc. 5.3
Affmetrix, Inc. 5.2
Symbol Technolgies, Inc. 5.1
---
Top Ten as a Group 59.9%
=====
Managers 20 Fund
----------------
Top Ten Holdings (out of 21 securities) % Fund Industry Weightings % Fund
- --------------------------------------- ----- -------------------- ------
Cisco Systems, Inc. 8.5% Information Technology 63.9%
Medtronic, Inc. 6.2 Financials 18.2
Applied Materials, Inc. 6.1 Health Care 11.6
eBay, Inc. 5.9 Consumer Discretionary 5.9
Xilinx, Inc. 5.8 Other 0.4
Maxim Integrated Products, Inc. 5.8
American International Group, Inc. 5.6
Dell, Inc. 5.4
Pfizer, Inc. 5.2
Intel Corp. 5.2
---
Top Ten as a Group 59.7%
=====
Managers Mid-Cap Fund
---------------------
Top Ten Holdings (out of 110 securities) % Fund Industry Weightings % Fund
- ----------------------------------------- ------ -------------------- ------
Graco, Inc. 2.6% Consumer Discretionary 22.1%
Tyson Foods, Inc., Class A 2.6 Financials 18.8
Brink's Co., The 2.5 Information Technology 13.1
Rent-A-Center, I 2.2 Industrials 10.5
Smith International, Inc. 2.2 Utilities 6.7
NVR Inc. 1.9 Energy 6.6
J.B. Hunt Transport Services, Inc. 1.7 Consumer Staples 4.8
Louisana-Pacific Corp. 1.5 Materials 4.2
Oneok, Inc. 1.4 Telecommunication
--- Services 0.5
Top Ten as a Group 20.8% Other 1.9
=====
Managers Large-Cap Fund
-----------------------
Top Ten Holdings (out of 100 securities) % Fund Industry Weightings % Fund
- ---------------------------------------- ------ -------------------- ------
Pfizer, Inc. 3.3% Financials 21.5%
Johnson & Johnson Co. 2.6 Information Technology 15.6
Microsoft Corp. 2.5 Consumer Discretionary 14.8
Intel Corp. 2.4 Health Care 13.5
Wachovia Corp. 2.4 Industrials 9.9
Countrywide Financial Corp. 2.4 Consumer Staples 8.0
Allstate Corp. 2.3 Energy 6.3
Bank of America Corp. 2.2 Utilities 3.3
Home Depot, Inc. 2.2 Telecommunication
3M Co. 2.1 Services 2.9
--- Materials 2.8
Top Ten as a Group 24.4% Other 1.4
=====
</Table>
6
<Page>
Managers Science & Technology Fund
June 30, 2004
==================================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Common Stocks - 99.2%
Consumer Discretionary - 7.5%
eBay, Inc.* 1,900 $ 174,705
Garmin, Ltd. 900(2) 33,336
Total Consumer Discretionary 208,041
Health Care - 5.2%
Affmetrix, Inc.* 4,400(2) 144,012
Industrials - 5.7%
University of Phoenix Online* 1,800 157,662
Information Technology - 80.8%
Applied Materials, Inc.* 5,100 100,062
Cisco Systems, Inc.* 9,350 221,595
Cognex Corp. 1,000(2) 38,480
Cognizant Technology
Solutions Corp.* 6,200 157,542
EMC Corp.* 11,300 128,820
Emulex Corp.* 970(2) 13,881
Flextronics International, Ltd.* 10,900(2) 173,855
Intersil Corp., Class A 4,000(2) 86,640
Intuit, Inc.* 2,500 96,450
Juniper Networks Inc.* 4,335 106,510
Maxim Integrated Products, Inc. 1,200 62,904
Microsoft Corp. 4,800 137,088
QLogic Corp.* 500 13,295
Qualcomm Inc 2,400 175,152
Symantec Corp.* 3,200 140,096
Symbol Technologies, Inc. 9,600 141,504
Utstarcom, Inc.* 4,900(2) 148,225
Veritas Software Corp.* 4,930 136,561
Zebra Technologies, Corp.* 1,900(2) 165,300
Total Information Technology 2,243,960
Total Common Stocks
(cost $1,977,850) 2,753,675
Other Investment Companies - 29.0%
Bank of New York Institutional
Cash Reserves Fund, 1.24%(1,3) 780,176 780,176
JPMorgan Prime Money Market
Fund, Institutional Class
Shares, 1.03%(1) 25,478 25,478
Total Other Investment Companies
(cost $805,654) 805,654
Total Investments - 128.2%
(cost $2,783,504) 3,559,329
Other Assets, less Liabilities - (28.2)% (783,470)
Net Assets - 100.0% $2,775,859
The accompanying notes are an integral part of these financial
statements.
7
<Page>
Managers 20 Fund
June 30, 2004
================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Common Stocks - 99.7%
Consumer Discretionary - 5.9%
eBay, Inc.* 30,000 $ 2,758,500
Financials - 18.3%
American International
Group, Inc. 36,500 2,601,720
Citigroup, Inc. 38,000 1,767,000
MBNA Corp. 83,500 2,153,465
Morgan Stanley Co. 20,000(2) 1,055,400
Schwab (Charles) Corp 90,000 864,900
Total Financials 8,442,485
Health Care - 11.6%
Eli Lilly & Co. 1,200(2) 83,892
Medtronic, Inc. 59,000 2,874,480
Pfizer, Inc. 71,000 2,433,880
Total Health Care 5,392,252
Information Technology - 63.9%
Applied Materials, Inc.* 145,000 2,844,900
Cisco Systems, Inc.* 167,000 3,957,900
Dell, Inc.* 69,500 2,489,490
EMC Corp.* 195,000 2,223,000
Intel Corp. 87,000 2,401,200
Juniper Networks Inc.* 91,000(2) 2,235,870
Linear Technology Corp. 45,000 1,776,150
Maxim Integrated Products, Inc. 51,000 2,673,420
Microsoft Corp. 60,000 1,713,600
PMC - Sierra, Inc.* 160,000(2) 2,296,000
Veritas Software Corp.* 86,000 2,382,200
Xilinx, Inc.* 80,500(2) 2,681,455
Total Information Technology 29,675,185
Total Common Stocks
(cost $79,830,425) 46,268,422
Other Investment Company - 13.9%
Bank of New York Institutional
Cash Reserves Fund, 1.24%(1,3)
(cost $6,428,451) 6,428,451 6,428,451
Total Investments - 113.6%
(cost $86,258,876) 52,696,873
Other Assets, less Liabilities - (13.6)% (6,288,497)
Net Assets - 100.0% $46,408,376
The accompanying notes are an integral part of these financial
statements.
8
<Page>
Managers Mid-Cap Fund
June 30, 2004
=====================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Common Stocks - 98.1%
Consumer Discretionary - 22.1%
Abercrombie & Fitch Co.* 35,500(2) $ 1,375,625
American Greetings Corp.,
Class A* 46,300 1,073,234
AnnTaylor Stores Corp.* 30,100 872,298
Applebee's International, Inc. 27,900(2) 642,258
Black & Decker Corp. 14,000 869,820
Borg Warner, Inc. 12,700 555,879
Brunswick Corp. 16,000 652,800
Caesars Entertainment, Inc.* 78,900 1,183,500
Chico's FAS Inc.* 22,400(2) 1,011,584
Claire's Stores, Inc. 64,300 1,395,310
Coach, Inc.* 8,600 388,634
Dana Corp. 10,000 196,000
Darden Restaurants, Inc. 27,000 554,850
DR Horton, Inc. 40,475 1,149,490
Federated Department Stores, Inc. 16,600 815,060
Harte Hanks, Inc. 26,600 649,306
Lear Corp. 12,000 707,880
McClatchy Co., Class A 15,400 1,080,310
NVR Inc.* 4,000(2) 1,936,800
Polaris Industries, Inc. 18,600(2) 892,800
Rent-A-Center, Inc.* 76,600 2,292,638
Saks, Inc.* 65,500 982,500
Stanley Works (The) 15,000 683,700
Timberland Co.* 12,500 807,375
Total Consumer Discretionary 22,769,651
Consumer Staples - 4.8%
Energizer Holdings, Inc.* 20,000 900,000
PepsiAmericas, Inc. 35,200 747,648
Supervalu, Inc. 22,000 673,420
Tyson Foods, Inc., Class A 127,800 2,677,410
Total Consumer Staples 4,998,478
Energy - 6.6%
BJ Services Co.* 12,600 577,584
FMC Technologies Inc.* 30,100 866,880
Newfield Exploration Co.* 22,900 1,276,446
Pogo Producing Co. 23,700 1,170,780
Smith International, Inc.* 40,000 2,230,400
Valero Energy Corp. 8,800 649,088
Total Energy 6,771,178
Financials - 18.8%
Allmerica Finance Corp.* 41,800 1,412,840
American Financial Group, Inc. 29,000 886,530
AmeriCredit Corp.* 60,800 1,187,424
Associates Bank Corp. 40,050 1,186,682
Astoria Financial Corp. 37,800 1,382,724
Bear Stearns Co., Inc., (The) 3,600 303,516
City National Corp. 15,500 1,018,350
Countrywide Financial Corp. 7,800 547,950
Fidelity National Financial, Inc. 15,042 561,668
General Growth Properties, Inc. 35,500(2) 1,049,735
Hibernia Corp., Class A 19,900 483,570
Huntington Bancshares, Inc. 49,500(2) 1,133,550
Independence Community Bank 36,500 1,328,600
Indymac Mortgage Holdings, Inc. 26,100 824,760
Mack-Cali Realty Corp. 22,600 935,188
Moody's Corp. 8,700(2) 562,542
PMI Group, Inc. 28,000(2) 1,218,560
Protective Life Corp. 17,300 668,991
Regions Financial Corp. 20,500(2) 749,275
SEI Investments Co. 12,000 348,480
Torchmark Corp. 21,000 1,129,800
Unionbancal Corp. 8,000 451,200
Total Financials 19,371,935
Health Care - 10.8%
Aetna Inc. 8,900 756,500
Apria Healthcare Group, Inc.* 26,500(2) 760,550
Beckman Coulter, Inc. 9,200 561,200
Becton, Dickinson & Co. 20,600 1,067,080
C.R. Bard, Inc. 12,400 702,460
Charles River Laboratories
International, Inc.* 26,000(2) 1,270,620
Coventry Health Care, Inc.* 22,850(2) 1,117,365
Cytyc Corp.* 31,500 799,155
IMS Health, Inc. 12,500 293,000
Invitrogen Corp.* 12,600 907,074
Mylan Laboratories, Inc. 24,200(2) 490,050
PacifiCare Health Systems, Inc.* 29,100 1,125,006
Perrigo Co. 41,500 787,255
Renal Care Group Inc.* 14,850 491,981
Total Health Care 11,129,296
Industrials - 10.5%
Brink's Co., (The) 74,300 2,544,775
Corinthian Colleges, Inc.* 26,900(2) 665,506
Dun & Bradstreet Corp.* 9,400 506,754
Graco, Inc. 87,100 2,704,455
J.B. Hunt Transport Services,
Inc.* 46,100 1,778,538
Precision Castparts Corp. 25,200 1,378,188
Ryder System, Inc. 22,200 889,554
Valassis Communications, Inc.* 13,400 408,298
Total Industrials 10,876,068
Information Technology - 13.1%
Activision, Inc.* 68,200 1,084,380
Acxiom Corp. 21,800(2) 541,294
Adobe Systems, Inc. 21,500 999,750
Atmel Corp.* 93,900(2) 555,888
Avnet, Inc. * 44,500 1,010,150
Computer Sciences Corp.* 14,000(2) 650,020
Compuware Corp.* 105,000 693,000
Cree, Inc.* 33,600(2) 782,208
Cypress Semiconductor Corp.* 31,500(2) 446,985
Factset Research Systems, Inc. 11,300(2) 534,151
Harris Corp. 17,300 877,975
Imation Corp. 11,600 494,276
Lam Research Corp.* 18,900(2) 506,520
The accompanying notes are an integral part of these financial
statements.
9
<Page>
Managers Mid-Cap Fund
June 30, 2004
=====================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Lexmark International, Inc.* 4,400 $ 424,732
National Semiconductor Corp.* 44,200 971,958
Polycom, Inc.* 43,800 981,559
Silicon Laboratories, Inc.* 10,700(2) 495,945
Storage Technology Corp.* 32,500 942,500
Vishay Intertechnology, Inc.* 26,500 492,370
Total Information Technology 13,485,661
Materials - 4.2%
Cytec Industries, Inc.* 18,600 845,370
Engelhard Corp. 22,500 726,975
Louisana-Pacific Corp.* 65,300 1,544,345
Lubrizol Corp. 18,000 659,160
Sigma-Aldrich Corp. 8,700(2) 518,607
Total Materials 4,294,457
Telecommunication Services - 0.5%
Western Wireless Corp.* 18,100 523,271
Utilities - 6.7%
Alliant Energy Corp. 36,500 951,920
Centerpoint Energy, Inc. 36,000(2) 414,000
MDU Resources Group, Inc. 33,900 814,616
Northeast Utilities 54,300 1,057,221
Oneok, Inc. 65,000 1,429,350
Questar Corp. 58,300 2,252,712
Total Utilities 6,919,819
Total Common Stocks
(cost $87,526,884) 101,139,814
Other Investment Companies - 21.0%
Bank of New York Institutional
Cash Reserves Fund,
1.25%(1,3) 16,644,756 16,644,756
JPMorgan Prime Money Market
Fund, Institutional Class
Shares, 1.03%(1) 4,973,347 4,973,347
Total Other Investment Companies
(cost $21,618,103) 21,618,103
Total Investments - 119.1%
(cost $109,144,987) 122,757,917
Other Assets, less Liabilities - (19.1)% (19,689,978)
Net Assets - 100.0% $ 103,067,939
The accompanying notes are an integral part of these financial
statements.
10
<Page>
Managers Large-Cap Fund
June 30, 2004
=====================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Common Stocks - 98.6%
Consumer Discretionary - 14.8%
Applebee's International, Inc. 1,200 $ 27,624
Claire's Stores, Inc. 800 17,360
Eastman Kodak Co. 1,200(2) 32,376
Federated Department Stores, Inc. 1,100 54,010
Ford Motor Co. 1,000(2) 15,650
Fortune Brands, Inc. 200 15,086
General Motors Corp. 300 13,977
Harte Hanks, Inc. 400 9,764
Home Depot, Inc. 2,360 83,072
McDonald's Corp. 1,200 31,200
McGraw-Hill Companies, Inc. (The) 400 30,628
NVR Inc* 100 48,420
Rent-A Center, Inc.* 600 17,958
Sears Roebuck & Co. 1,000(2) 37,760
Timberland Co.* 200 12,918
Time Warner Co., Inc.* 2,500 43,950
Viacom, Inc., Class B 800 28,576
Walt Disney Co. (The) 1,900 48,431
Total Consumer Discretionary 568,760
Consumer Staples - 8.0%
Altria Group, Inc. 900 45,045
Avon Products, Inc. 200 9,228
Coca-Cola Co. (The) 720 36,345
CVS Corp. 900 37,818
Gillette Co. (The) 900 38,160
Hershey Foods Corp 500 23,135
Kimberly-Clark Corp. 400 26,352
PepsiCo, Inc. 600 32,328
Procter & Gamble Co. 400 21,776
Tyson Foods, Inc., Class A 1,700 35,615
Total Consumer Staples 305,802
Energy - 6.3%
Amerada Hess Corp. 600 47,514
ChevronTexaco Corp. 600 56,466
Devon Energy Corp. 300 19,800
Exxon Mobil Corp. 1,500 66,615
Newfield Exploration Co.* 400 22,296
Smith International, Inc.* 500 27,880
Total Energy 240,571
Financials - 21.5%
Allstate Corp. (The) 1,900 88,445
Bank of America Corp. 1,000 84,620
BankOne Corp 1,200 61,200
Bear Stearns Co., Inc. (The) 500 42,155
Capital One Financial Corp. 400 27,352
Citigroup, Inc. 1,600 74,400
Countrywide Financial Corp. 1,299 91,255
General Growth Properties Inc 1,400 41,398
Goldman Sachs Group, Inc. 300 28,248
Huntington Bancshares, Inc. 1,100(2) 25,190
JPMorgan Chase & Co. 600 23,262
Lincoln National Corp. 600(2) 28,350
Moody's Corp. 300 19,398
New Plan Excel Realty Trust, Inc. 700 16,352
Prudential Financial, Inc. 500 23,235
Torchmark Corp. 500 26,900
Wachovia Corp. 2,100 93,450
Washington Mutual, Inc. 300 11,592
Wells Fargo & Co. 300 17,169
Total Financials 823,971
Health Care - 13.5%
Amgen, Inc.* 500 27,285
Becton, Dickinson & Co. 700 36,260
C.R. Bard, Inc. 300 16,995
Coventry Health Care, Inc.* 700 34,230
Genentech, Inc.* 400(2) 22,480
Invitrogen Corp.* 200(2) 14,398
Johnson & Johnson Co. 1,800 100,260
Merck & Co., Inc. 1,700 80,750
Mylan Laboratories, Inc. 400 8,100
Pfizer, Inc. 3,700 126,836
UnitedHealth Group, Inc. 400 24,900
Varian Medical Systems Inc* 200 15,870
WellPoint Health Networks, Inc.* 100 11,201
Total Health Care 519,565
Industrials - 9.9%
3M Co. 900 81,009
Cendant Corp.* 1,300 31,824
Cummins, Inc. 500(2) 31,250
General Dynamics Corp. 300 29,790
Ingersoll-Rand Co., Class A 300 20,493
J.B. Hunt Transport Services, Inc.* 600 23,148
Northrop Grumman Corp. 400 21,480
Rockwell Collins, Inc. 500 16,660
Ryder System, Inc. 800 32,056
Tyco International, Ltd. 2,200(2) 72,908
University of Phoenix Online* 200 17,518
Total Industrials 378,136
Information Technology - 15.6%
Adobe Systems, Inc. 700(2) 32,550
Applied Materials, Inc.* 1,000 19,620
Avnet, Inc.* 600 13,620
Cisco Systems, Inc.* 3,200 75,840
Computer Sciences Corp.* 800 37,144
Dell, Inc.* 1,300 46,566
Harris Corp. 300 15,225
Hewlett-Packard Co. 1,800 37,980
Intel Corp. 3,400 93,840
International Business
Machines Corp. 200 17,630
Lexmark International, Inc.* 200 19,306
Maxim Integrated Products, Inc. 700 36,694
Microsoft Corp. 3,400 97,104
Oracle Corp.* 2,700 32,211
The accompanying notes are an integral part of these financial
statements.
11
<Page>
Managers Large-Cap Fund
June 30, 2004
=====================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Scientific-Atlanta Inc. 300 $ 10,350
Texas Instruments, Inc. 600 14,508
Total Information Technology 600,188
Materials - 2.8%
Cytec Industries, Inc.* 400 18,180
Louisana-Pacific Corp.* 2,200 52,030
Sigma-Aldrich Corp. 600 35,766
Total Materials 105,976
Telecommunication Services - 2.9%
BellSouth Corp. 2,500(2) 65,550
Nextel Communications, Inc.* 1,700 45,322
Total Telecommunication Services 110,872
Utilities - 3.3%
PG&E Corp.* 1,800 50,292
TXU Corp. 1,900 76,969
Total Utilities 127,261
Total Common Stocks
(cost $3,389,731) 3,781,102
Other Investment Companies - 9.2%
Bank of New York
Institutional Cash
Reserves Fund, 1.24%(1,3) 296,067 296,067
JPMorgan Prime Money Market
Fund, Institutional Class
Shares, 1.03%(1) 55,435 55,435
Total Other Investment Companies
(cost $351,502) 351,502
Total Investments - 107.8%
(cost $3,741,233) 4,132,604
Other Assets, less Liabilities - (7.8)% (297,343)
Net Assets - 100.0% $ 3,835,261
The accompanying notes are an integral part of these financial
statements.
12
<Page>
Managers Balanced Fund
June 30, 2004
=====================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Common Stocks - 72.4%
Consumer Discretionary - 10.6%
Applebee's International, Inc. 8,550 196,821
Claire's Stores, Inc. 4,300 93,310
Eastman Kodak Co. 6,400 172,672
Federated Department Stores, Inc. 6,000 294,600
Ford Motor Co. 5,800 90,770
Fortune Brands, Inc. 1,200 90,516
General Motors Corp. 1,600 74,544
Home Depot, Inc. 10,670 375,584
McDonald's Corp. 4,600 119,600
McGraw-Hill Companies, Inc. (The) 2,500 191,425
NVR, Inc.* 500 242,100
Rent-A Center, Inc.* 3,150 94,280
Sears Roebuck & Co. 5,600 211,456
Timberland Co.* 1,600 103,344
Time Warner Co., Inc.* 14,960 262,997
Viacom, Inc., Class B 4,700 167,884
Walt Disney Co. (The) 11,200 285,488
Total Consumer Discretionary 3,067,391
Consumer Staples - 5.8%
Altria Group, Inc. 4,720 236,236
Avon Products, Inc. 2,400 110,736
Coca-Cola Co., (The) 4,150 209,492
CVS Corp. 2,700 113,454
Gillette Co. (The) 4,200 178,080
Hershey Foods Corp. 2,800 129,556
Kimberly-Clark Corp. 1,400 92,232
PepsiCo, Inc. 3,230 174,032
Procter & Gamble Co. 2,200 119,768
Supervalu, Inc. 2,900 88,769
Tyson Foods, Inc. Class A 11,000 230,450
Total Consumer Staples 1,682,805
Energy - 4.7%
Amerada Hess Corp. 3,100 245,489
Burlington Resources, Inc. 4,400 159,192
ChevronTexaco Corp. 3,510 330,326
Devon Energy Corp. 1,300 85,800
Exxon Mobil Corp. 8,620 382,814
Smith International, Inc.* 2,600 144,976
Total Energy 1,348,597
Financials - 15.7%
Allstate Corp., (The) 10,200 474,810
Bank of America Corp. 5,600 473,872
BankOne Corp. 6,400 326,400
Bear Stearns Co., Inc., (The) 2,500 210,775
Capital One Financial Corp. 2,300 157,274
Citigroup, Inc. 8,732 406,038
Countrywide Financial Corp. 6,949 488,167
General Growth Properties, Inc. 7,500 221,775
Goldman Sachs Group, Inc. 1,800 169,488
Huntington Bancshares, Inc. 6,200 141,980
JPMorgan Chase & Co. 2,800 108,556
Lincoln National Corp. 3,100 146,475
Moody's Corp. 1,500 96,990
New Plan Excel Realty Trust 4,400 102,784
Prudential Financial, Inc. 3,000 139,410
Torchmark Corp. 3,000 161,400
Wachovia Corp. 11,600 516,200
Washington Mutual, Inc. 1,850 71,484
Wells Fargo & Co. 1,500 85,845
Total Financials 4,499,723
Health Care - 10.1%
Amgen, Inc.* 2,800 152,796
Becton, Dickinson & Co. 3,700 191,660
C.R. Bard, Inc. 1,800 101,970
Coventry Health Care, Inc.* 2,650 129,585
Genentech, Inc.* 2,000 112,400
IMS Health, Inc. 2,800 65,632
Invitrogen Corp.* 800 57,592
Johnson & Johnson Co. 9,880 550,316
Merck & Co., Inc. 9,770 464,075
Mylan Laboratories, Inc. 2,450 49,613
Pfizer, Inc. 20,340 697,292
UnitedHealth Group, Inc. 2,200 136,950
Varian Medical Systems Inc* 1,200 95,220
WellPoint Health Networks, Inc.* 800 89,608
Total Health Care 2,894,709
Industrials - 7.2%
3M Co. 5,100 459,052
Cendant Corp.* 7,300 178,704
Cummins, Inc. 2,600 162,500
General Dynamics Corp. 1,800 178,740
Ingersoll-Rand Co., Class A 1,600 109,296
J.B. Hunt Transport
Services, Inc.* 3,100 119,598
Northrop Grumman Corp. 2,000 107,400
Ryder System, Inc. 4,500 180,315
Textron, Inc. 3,100 183,985
Tyco International, Ltd. 8,900 294,946
University of Phoenix Online* 1,100 96,349
Total Industrials 2,070,885
Information Technology - 11.4%
Adobe Systems, Inc. 3,900 181,350
Applied Materials, Inc.* 5,600 109,872
Avnet, Inc.* 3,200 72,640
Cisco Systems, Inc.* 17,640 418,068
Computer Sciences Corp.* 4,200 195,006
Dell, Inc. * 7,200 257,904
Harris Corp. 1,300 65,975
Hewlett-Packard Co. 10,143 214,017
Intel Corp. 19,060 526,056
IBM Corp. 980 86,388
Lexmark International, Inc.* 900 86,878
Maxim Integrated Products, Inc. 3,900 204,438
Microsoft Corp. 18,500 528,360
Oracle Corp.* 15,000 178,950
The accompanying notes are an integral part of these financial
statements.
13
<Page>
Managers Balanced Fund
June 30, 2004
=====================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
Security Descripition Shares Value
- --------------------- ------ -----
Scientific-Atlanta, Inc. 2,300 $ 79,350
Texas Instruments, Inc. 3,200 77,376
Total Information Technology 3,282,628
Materials - 2.2%
Air Products & Chemicals, Inc. 2,600 136,370
Louisana-Pacific Corp.* 12,300 290,895
Sigma-Aldrich Corp. 3,400 202,674
Total Materials 629,939
Telecommunication Services - 2.2%
BellSouth Corp. 13,800 361,836
Nextel Communications, Inc.* 9,700 258,602
Total Telecommunication Services 620,438
Utilities - 2.5%
PG&E Corp* 9,400 262,636
TXU Corp. 11,400 461,814
Total Utilities 724,450
Total Common Stocks
(cost $18,083,308) 20,821,565
Preferred Stock - 0.6%
Centaur Funding Corp.,
9.080%, 04/21/20 (a)
(cost $159,265) 135 168,286
Corporate Bonds - 21.2%
Asset-Backed Security - 0.7%
First Union National Bank
Commercial Mortgage, Principal Amount
Series 1999-C4, Class A1, ----------------
7.184%, 12/15/31 $ 185,066 192,456
Finance - 4.5%
Boeing Capital Corp.,
4.750%, 08/25/08 25,000 25,487
Carramerica Realty Corp.
3.625%, 04/01/09 165,000 156,443
Health Care Reit, Inc.,
7.500%, 08/15/07 150,000 165,287
Hospitality Properties Trust,
6.750%, 02/15/13 150,000 155,980
iSTAR Financial, Inc.,
8.750%, 08/15/08 95,000 105,547
Korea Development Bank,
3.875%, 03/02/09 170,000 162,959
PLC Trust 2003-1
2.709%, 03/31/06 (a) 87,683 87,782
RenaissanceRe Holdings Ltd.,
7.000%, 07/15/08 250,000 271,012
Senior Housing Trust,
8.625%, 01/15/12 125,000 136,545
Union Planters Bank,
6.500%, 03/15/08 30,000 31,514
Total Finance 1,298,556
Industrials - 16.0%
Albertson's Inc.,
7.750%, 06/15/26 75,000 81,834
Allied Waste North
America, Inc.,
8.875%, 04/01/08 120,000 132,000
AmerisourceBergen Corp.,
7.250%, 11/15/12 30,000 30,900
AT&T Wireless Services, Inc.,
8.750%, 03/01/31 105,000 128,385
Boise Cascde Co.,
6.500%, 11/01/10 15,000 15,338
Celestica, Inc.,
0.000%, 08/01/204 270,000 149,850
Direct TV Holdings,
8.375%, 03/15/13 65,000 72,231
Dow Chemical Co.,
7.375%, 11/01/29 75,000 81,850
Dynegy-Roseton Danskamme,
Series B, 7.670%, 11/08/16 100,000 87,063
Eastman Kodak Co.,
Series MTNA,
7.250%, 06/15/05 30,000 31,032
EchoStar DBS Corp.,
10.375%, 10/01/07 75,000 80,531
General Motors Corp.,
7.125%, 07/15/13 260,000 267,475
Georgia-Pacific Corp.,
7.700%, 06/15/15 125,000 132,813
Guidant Corp.,
6.150%, 02/15/06 105,000 110,151
Hyatt Equities LLC,
6.875%, 06/15/07 (a) 200,000 212,777
Kraft Foods, Inc.,
5.250%, 10/01/13 195,000 190,318
Kroger Co.,
7.000%, 05/01/18 140,000 150,887
Lyondell Chemical Co.,
11.125%, 07/15/12 50,000 55,625
News America, Inc.,
7.280%, 06/30/28 75,000 81,432
Nextel Communications, Inc.,
9.375%, 11/15/09 175,000 187,906
Nortel Networks Ltd.,
6.125%, 02/15/06 60,000 60,600
Owens-Brockway Glass, Inc.
8.875%, 02/15/09 475,000 515,375
Park Place Entertainment,
8.875%, 09/15/08 95,000 103,313
Penney (JC) Co.,
8.000%, 03/01/10 50,000 56,125
Polyone Corp.,
10.625%, 05/15/10 40,000 42,600
Quebecor Media, Inc.,
11.125%, 07/15/11 135,000 154,744
The accompanying notes are an integral part of these financial
statements.
14
<Page>
Managers Balanced Fund
June 30, 2004
=====================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
Principal
Security Descripition Amount Value
- --------------------- --------- -----
R.H. Donnelley Financial Corp.,
10.875%, 12/15/12 (a) 75,000 $ 87,375
R.H. Donnelley Financial Corp.,
8.875%, 12/15/10 (a) 30,000 33,075
Service Corp. International,
6.875%, 10/01/07 95,000 97,375
Six Flags, Inc.,
8.875%, 02/01/10 80,000 79,600
Southern Natural Gas Co.,
8.875%, 03/15/10 70,000 76,825
Sprint Capital Corp.,
6.875%, 11/15/28 135,000 130,142
TCI Communications, Inc.,
6.875% 02/15/06 190,000 200,749
Terra Capital, Inc.,
12.875%, 10/15/08 190,000 227,050
Tyco International Group SA,
6.000%, 11/15/13 145,000 149,328
Tyco International Group SA,
6.875%, 01/15/29 135,000 141,760
Union Carbide Corp.,
6.790%, 06/01/25 75,000 76,125
Walt Disney Co., (The)
7.000%, 03/01/32 75,000 80,637
Total Industrials 4,593,196
Total Corporate Bonds
(cost $5,743,393) 6,084,208
Foreign Government - 0.5%
Mexico Government, 9.875%,
02/01/10 (cost $166,548) 130,000 156,520
U.S. Treasury Bonds
and Notes - 3.2%
USTB, 3.875%, 05/15/09 60,000 60,220
USTN, 2.375%, 08/15/06 855,000 847,950
Total U.S. Treasury Bonds
and Notes (cost $905,270) 908,173
Other Investment Company - 2.6%
JPMorgan Prime Money Market
Fund, Institutional Class
Shares, 1.03%1 (cost $735,536) 735,536 735,536
Total Investments - 100.5%
(cost $25,793,320) 28,874,288
Other Assets, less Liabilities - (0.5)% (145,257)
Net Assets - 100.0% $ 28,729,031
The accompanying notes are an integral part of these financial
statements.
15
<Page>
Managers Convertible Securities Fund
June 30, 2004
====================================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Corporate Bonds - Convertible - 72.3%
Finance - 20.3%
AON Corp., 3.500%, 11/15/12 (a) $ 100,000 $ 140,250
Countrywide Credit Financial Corp.,
0.000%, 02/08/31 (a)(4) 250,000 410,624
ExpressJet Holdings, Inc.,
4.250%, 08/01/23 (a) 200,000(2) 195,750
Extreme Networks, Inc., 3.500%, 12/01/06 200,000 193,250
Fisher Scientific International, Inc.,
3.250%, 03/01/24 250,000(2) 260,624
Flextronics International Co. Ltd.,
1.000%, 08/01/10 (a) 250,000(2) 311,250
IVAX Corp., 1.500%, 03/01/24 (a) 250,000(2) 256,875
PMI Group, Inc. (The), 2.500%, 07/15/21 250,000 287,188
Primus Telecommunications Group Co.,
3.750%, 09/15/10 (a) 50,000(2) 46,500
Providian Financial Corp., 4.000%, 05/15/08 100,000(2) 127,625
Radian Group, 2.250%, 01/01/22 (a) 250,000 255,625
Regal Entertainment Group, 3.750%, 05/15/08 100,000 120,750
Serologicals Corp., 4.750%, 08/15/33 (a) 100,000 156,750
TRAC-X North America, 7.375%, 03/25/09 250,000(2) 244,688
XL Capital Ltd., 3.500%, 05/23/21 300,000 191,625
Total Finance 3,199,374
Industrials - 51.3%
AGCO Corp., 1.750%, 12/31/33 (a) 250,000 276,562
American Axle and Manufacturing,
2.000%, 02/15/24 (a) 200,000(2) 188,250
Amgen, Inc., 0.000%, 03/01/324 200,000 148,000
Apogent Technologies, Inc., 0.000%,
12/15/33 (a)(4) 250,000 304,810
Axcan Pharmaceuticals, Inc., 4.250%, 04/15/08 250,000 398,124
BEA Systems, Inc., 4.000%, 12/15/06 250,000(2) 247,187
Best Buy Co., Inc., 2.250%, 01/15/22 300,000(2) 312,375
Cendant Corp., 3.875%, 11/27/11 (a) 250,000 270,938
CKE Restaurants, Inc., 4.000%, 10/01/23 (a) 200,000 340,500
Commonwealth Telephone Enterprises, Inc.,
3.250%, 07/15/23 (a) 250,000 255,000
Computer Associates International, Inc.,
5.000%, 03/15/07 250,000 310,000
Devon Energy Corp., 4.950%, 08/15/08 200,000 206,000
Fairchild Semiconductor, 5.000%, 11/01/08 150,000 149,438
Juniper Networks Inc., 0.000%, 06/15/084 160,000(2) 219,600
Keane, Inc., 2.00%, 06/15/13 (a) 250,000 252,188
King Pharmaceuticals, Inc.,
2.750%, 11/15/21 (a) 125,000 116,563
Leucadia National Corp., 3.750%, 04/15/14 250,000 248,125
Liberty Media Corp., 3.250%, 03/15/31 (a) 125,000(2) 112,500
Lifepoint Hospitals Holdings, 4.500%, 06/01/09 250,000 259,688
Lowes Co., Inc., 0.000%, 02/16/214 300,000 262,125
LSI Logic Corp., 4.000%, 11/01/06 (a) 250,000 245,625
McData Corp., 2.250%, 02/15/10 (a) 100,000 88,500
Medtronic, Inc., 1.125%, 09/15/21 (a) 250,000 255,000
Nextel Communications Inc., 5.250%, 01/15/10 250,000 244,375
</Table>
The accompanying notes are an integral part of these financial
statements.
16
<Page>
Managers Convertible Securities Fund
June 30, 2004
====================================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Nortel Networks Ltd., 4.250%, 09/01/08 250,000(2) 240,625
Teva Pharmaceuticals Financial BV,
Series B, 0.250%, 02/01/24 250,000(2) 266,875
Time Warner, Inc., 0.000%, 12/06/194 250,000(2) 159,687
TJX Companies, Inc., 0.000%, 02/13/214 400,000(2) 344,000
Tyco International Group, 2.750%, 01/15/18 (a) 200,000 301,500
Tyco International Group, 3.125%, 01/15/23 (a) 300,000 487,125
Universal Health Services, Inc.,
0.426%, 06/23/20 400,000(2) 239,500
Watson Pharmaceuticals, Inc., 1.750%,
03/15/23 (a) 250,000 237,188
Young & Rubicam, Inc., 3.000%, 01/15/05 50,000 50,500
Total Industrials 8,038,473
Utility - 0.7% SHARES
--------
TXU Corp., 0.000%, 07/15/33 75,000 103,082
T otal Corporate Bonds (cost $9,939,689) 11,340,929
Common Stock - 6.5%
Consumer Staples - 1.1%
Altria Group, Inc. 3,300 165,165
Energy - 1.0%
Gulfterra Energy Partners L.P. 2,600(2) 100,620
Plains All American Pipeline L.P. 1,800 60,084
Total Energy 160,704
Financials - 1.2%
First American Corp. 7,142 184,906
Health Care - 0.4%
Hillenbrand Industries, Inc. 1,025 61,961
Information Technology - 1.4%
Advanced Micro Devices, Inc. 6,250(2) 99,375
First Data Corp. 1,300 57,876
NCR Corp. 1,300(2) 64,467
Total Information Technology 221,718
Telecommunication Services - 1.4%
Verizon Communications, Inc. 6,000 217,140
Total Common Stock (cost $878,001) 1,011,594
Convertible Preferred Stock - 16.1%
Allied Waste Industries, Inc.,
6.250%, 04/01/06 500 35,640
American Electric Power Co., Inc.,
9.250%, 08/16/05 4,800(2) 211,440
Capital One Financial Corp., 6.250%, 05/17/05 6,000 302,640
Chesapeake Energy Corp., 6.000%, 12/31/49 (a) 2,000 155,250
Constellation Brands, Inc., Series A,
5.750%, 09/01/06 10,000 330,000
Host Marriott Financial Trust 6.750%, 12/02/26 3,000 154,125
Oneok, Inc., 8.500%, 02/16/06 12,500 362,375
Saturns-Dpl, Series 2002-7, 7.875%, 09/01/31 2,100 49,560
Sempra Energy, 8.500%, 05/17/05 3,300 100,650
State Street Corp., 6.750%, 02/15/06 1,250 286,563
</Table>
The accompanying notes are an integral part of these financial
statements.
17
<Page>
Managers Convertible Securities Fund
June 30, 2004
====================================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Travelers Property Casualty Corp.,
4.500%, 04/15/32 10,500 249,900
Washington Mutual, Inc., 5.375%, 05/03/41 5,500 296,285
Total Convertible Preferred Stock
(cost $2,284,174) 2,534,428
Other Investment Companies - 29.2%
JPMorgan Prime Money Market,
Institutional Class Shares, 1.03% 923,645 923,645
Bank of New York Institutional
Cash Reserves Fund, 1.24%3 3,648,823 3,648,823
Total Other Investment Companies
(cost $4,572,468) 4,572,468
Total Investments - 124.1%
(cost $17,674,332) 19,459,419
Other Assets, less Liabilities - (24.1)% (3,784,526)
Net Assets - 100.0% $ 15,674,893
</Table>
The accompanying notes are an integral part of these financial
statements.
18
<Page>
Managers High Yield Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Corporate Bonds - 89.5%
Finance - 63.9%
Alamosa Delaware, Inc., 0.000%/11.000%, 07/31/105 $ 487,000 $ 533,265
Alamosa Delaware, Inc., 0.000%/12.000%, 07/31/095 940,000 911,800
Allied Waste North America, Inc., 6.125%, 02/15/14 (a) 15,000 13,800
Allied Waste North America, Inc., 5.750%, 02/15/11 (a) 515,000 490,538
American Tower Corp., 6.500%, 08/01/08 500,000 367,500
Buckeye Technologies, Inc., 8.500%, 10/01/13 370,000 375,550
Cablevision Systems Corp., 8.000%, 04/15/12 (a) 500,000(2) 495,000
Charter Communication Holdings, 13.500%, 01/15/11 505,000(2) 372,438
Cincinnati Bell, Inc., 7.250%, 07/15/13 400,000(2) 376,000
Cincinnati Bell, Inc., 8.375%, 01/15/14 390,000(2) 349,050
Crown Castle International Corp., 7.500%, 12/01/13 650,000 650,000
Cummins Engine, Inc., 5.650%, 03/01/98 870,000 574,200
Dana Corp., 9.000%, 08/15/11 480,000(2) 564,000
DEX Media East, LLC, 12.125%, 11/15/12 805,000 943,863
Dimon, Inc., 7.750%, 06/01/13 700,000(2) 654,500
DRS Technologies, Inc., 6.875%, 11/01/13 720,000 705,600
Dynegy Holdings, Inc., 10.125%, 07/15/13 (a) 355,000(2) 386,063
El Paso Production Holding, 7.750%, 06/01/13 440,000 405,900
Elizabeth Arden, Inc., 7.750%, 01/15/14 (a) 345,000(2) 352,763
Evergreen Resources, Inc., 5.875%, 03/15/12 (a) 315,000(2) 319,725
Fairpoint Communications, Inc., 12.500%, 05/01/10 630,000 674,100
Flextronics International Ltd., 6.500%, 05/15/13 330,000(2) 323,400
Graphic Packaging International, 9.500%, 08/15/13 460,000 501,400
HCA, Inc., 6.750%, 07/15/13 445,000 456,615
HealthSouth Corp., 10.750%, 10/01/08 1,150,000(2) 1,190,250
HealthSouth Corp., 8.500%, 02/01/08 310,000(2) 306,513
HMP Equity Holdings Corp., 0.000%, 05/15/084 644,000 499,100
Houston Exploration Co., 7.000%, 06/15/13 500,000 505,000
Hudson Respiratory Care, Inc., 9.125%, 04/15/08 490,000 502,250
iSTAR Financial, Inc., 8.750%, 08/15/08 280,000 311,087
ITT Corp., 7.375%, 11/15/15 500,000 502,500
Jacuzzi Brands, Inc., 9.625%, 07/01/10 500,000 537,500
Lyondell Chemical Co., 10.875%, 05/01/09 225,000 236,250
Madison River, 13.250%, 03/01/10 565,000 597,488
Mail-Well Corp., 9.625%, 03/15/12 635,000 685,800
MGM Mirage, Inc., 9.750%, 06/01/07 485,000 532,288
Nalco Co., 7.750%, 11/15/11 (a) 175,000(2) 184,188
Nalco Co., 8.875%, 11/15/13 (a) 355,000 373,638
Norske Skog Canada Ltd., 7.375%, 03/01/14 (a) 380,000 369,550
Park Place Entertainment, 8.125%, 05/15/11 500,000(2) 533,125
Pinnacle Entertainment, 8.250%, 03/15/12 (a) 605,000 582,313
</Table>
The accompanying notes are an integral part of these financial
statements.
19
<Page>
Managers High Yield Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Playtex Products, Inc., 8.000%, 03/01/11 (a) $ 320,000(2) $ 334,800
Playtex Products, Inc., 9.375%, 06/01/11 535,000(2) 522,963
Qwest Communications International, Inc.,
7.250%, 02/15/11 (a) 875,000(2) 820,313
Rayovac Corp., 8.500%, 10/01/13 355,000 374,525
Reddy Ice Group, Inc., 8.875%, 08/01/11 715,000 757,900
Res-Care, Inc., 10.625%, 11/15/08 355,000 376,300
Riverside Forest Products, Ltd., 7.875%, 03/01/14 (a) 310,000 317,750
Rogers Wireless, Inc., 9.625%, 05/01/11 370,000 417,175
Royal Caribbean Cruises, Ltd., 8.000%, 05/15/10 540,000 584,550
Rural Cellular Corp., 8.250%, 03/15/12 (a) 460,000(2) 472,650
Russell Corp., 9.250%, 05/01/10 705,000 752,588
Senior Housing Trust, 8.625%, 01/15/12 525,000 573,486
Sinclair Broadcast Group, 8.000%, 03/15/12 385,000 395,588
Spectrasite, Inc., 8.250%, 05/15/10 705,000 729,675
Standard Commercial Corp., 8.000%, 04/15/12 (a) 305,000 300,425
Sun Media Corp., 7.625%, 02/15/13 525,000 538,125
Tekni-Plex, Inc., 8.750%, 11/15/13 (a) 465,000(2) 446,400
Terex Corp., Series B, 10.375%, 04/01/11 410,000(2) 459,200
Terra Capital, Inc., 11.500%, 06/01/10 305,000(2) 335,500
Transcontinental Gas Pipe Corp., 7.000%, 08/15/11 500,000 515,000
Triton PCS, Inc., 8.500%, 06/01/13 505,000(2) 479,750
Triton PCS, Inc., 8.750%, 11/15/11 295,000(2) 244,850
TRW Automotive, Inc., 9.375%, 02/15/13 540,000 611,550
Unova, Inc., 7.000%, 03/15/08 250,000 251,250
Venetian Casino Resort, LLC, 11.000%, 06/15/10 460,000 533,600
VWR International, Inc., 6.875%, 04/15/12 (a) 300,000 302,625
Warner Music Group, 7.375%, 04/15/14 (a) 300,000 291,000
Total Finance 32,985,440
Industrials - 25.6%
Ainsworth Lumber Co., Ltd., 6.750%, 03/15/14 (a) 300,000(2) 282,750
Charter Communications Holdings, 11.125%, 01/15/11 60,000 50,700
Corning, Inc., 5.900%, 03/15/14 550,000 517,000
Dex Media Finance/West, 9.875%, 08/15/13 330,000 363,825
Direct TV Holdings, 8.375%, 03/15/13 460,000 511,175
Georgia-Pacific Corp., 7.700%, 06/15/15 665,000 706,563
Innova S. de R.L., 9.375%, 09/19/13 490,000(2) 515,725
Insight Communications, Inc., 0.000%/12.250%, 02/15/115 750,000(2) 678,750
Lyondell Chemical Co., 11.125%, 07/15/12 480,000(2) 534,000
MCI Inc., 6.688%, 05/01/09 198,000(2) 183,645
MCI Inc., 7.735%, 05/01/14 170,000(2) 152,575
Nextel Communications, Inc., 7.375%, 08/01/15 750,000 761,250
Owens-Brockway Glass, Inc., 8.250%, 05/15/13 565,000 586,188
Phillips Van-Heusen Corp., 7.250, 02/15/11 390,000 393,900
</Table>
The accompanying notes are an integral part of these financial
statements.
20
<Page>
Managers High Yield Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Pliant Corp., 11.125%, 06/15/09 $ 645,000(2) $ 546,638
Polypore Inc., 8.750%, 05/15/12 (a) 260,000 272,350
Quebecor Media, Inc., 11.125%, 07/15/11 580,000 664,825
R.H. Donnelley Financial Corp., 10.875%, 12/15/12 (a) 290,000 337,850
Service Corp. International, 7.700%, 04/15/09 380,000 391,400
Six Flags, Inc., 8.875%, 02/01/10 530,000(2) 527,350
Southern Natural Gas Co., 8.875%, 03/15/10 620,000(2) 680,450
Superior Essex Communications LLC/Essex Group, Inc.,
9.000%, 04/15/12 265,000 254,400
Tenet Healthcare Corp., 6.500%, 06/01/12 700,000 612,500
Terra Capital, Inc., 12.875%, 10/15/08 570,000 681,150
United Components, Inc., 9.375%, 06/15/13 500,000 512,500
Universal Hospital Services, Inc., 10.125%, 11/01/11 460,000 469,200
US Airways, Inc., Series 89A2, 9.820%, 01/01/13 1,343,987(2) 393,419
Vail Resorts, Inc., 6.750%, 02/15/14 685,000 652,463
Total Industrials 13,234,538
Total Corporate Bonds (cost $44,640,271) 46,219,978
Foreign Government Obligations - 0.7%
Federated Republic of Brazil, 9.250%, 10/22/10
(cost $346,472) 350,000(2) 333,375
Municipal Bonds - 0.8%
Tobacco Settlement Funding Corp.,
6.360%, 05/15/25 (cost $ 435,429) 437,617 427,224
Warrants - 0.1% Warrants
Dictaphone Corp., 03/28/06 (a) ---------
(cost $0) 48,274 36,543
Common Stock - 1.6%
Finance - 1.3% Shares
------
Tommy Hilfiger USA, Inc. 25,875 668,093
Telecommunication Services - 0.3%
Airgate PCS, Inc. 8,528 156,062
Total Common Stock (cost $695,264) 824,155
Preferred Stock - 0.6%
Alamosa Holdings, Inc., Series B,
7.500%, 07/31/13 (cost $125,421) 531 307,515
Other Investment Companies - 30.1%
JPMorgan Prime Money Market Fund,
Institutional Class Shares, 1.03% 2,729,888 2,729,888
Bank of New York Institutional Cash
Reserves Fund, 1.24%3 12,800,889 12,800,889
Total Other Investment Companies
(cost $15,530,777) 15,530,777
Total Investments - 123.4%
(cost $61,773,634) 63,679,567
Other Assets, less Liabilities - (23.4)% (12,281,196)
Net Assets - 100.0% $ 51,598,371
</Table>
The accompanying notes are an integral part of these financial
statements.
21
<Page>
Managers Fixed Income Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (unaudited)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Corporate Bonds - 84.3%
Asset-Backed Security - 17.6%
Centex Home Equity, Series 2001-A,
Class A6, 6.250%, 04/25/31 $ 765,150 $ 789,730
Centex Home Equity, Series 2004-A,
Class AF6, 4.270%, 01/25/34 265,000 252,776
Chase Funding Mortgage Loan, Series 2001-3,
Class 1A4, 5.602%, 05/25/27 233,388 234,351
Commercial Mortgage Asset Trust, Series 1999-C1,
Class A1, 6.250%, 01/17/32 623,051 644,033
Community Program Loan Trust, Series 87-A,
Class A4, 4.500%, 10/01/18 43,558 43,516
Countrywide Home Loans, Series 2001-1,
Class AF6, 6.434%, 07/25/31 832,191 855,091
Countrywide Home Loans, Series 2002-S1,
Class A5, 5.960%, 11/25/16 1,485,000 1,497,966
CS First Boston Mortgage Securities Corp.,
Series 2002-19, Class 2A3, 6.020%, 06/25/32 21,734 22,298
CS First Boston Mortgage Securities Corp.,
Series 2001-CKN5, Class A3, 5.107%, 09/15/34 200,000 206,060
Deutsche Mortgage and Asset Receiving Corp.,
Series 1998-C1, Class A2, 6.538%, 06/15/31 685,000 733,930
First Union National Bank Commercial Mortgage,
Series 2001-C3,
Class A2, 6.180%, 08/15/33 1,100,000 1,169,887
GMAC Mortgage Corp. Loan Trust, Series 2001-HE4,
Class A5, 5.680%, 04/25/27 165,882 166,709
GMAC Commercial Mortgage Securities, Inc.,
Series 1999-C2, Class A1, 6.570%, 09/15/33 127,813 131,119
JPMorgan Chase Commercial Mortgage Security ,
Series 2001-CIB3,
Class A2, 6.044%, 11/15/35 743,000 788,613
LB-UBS Commercial Mortgage Trust, Series 2001-C3,
Class A2, 6.365%, 12/15/28 320,000 346,200
Morgan Stanley Dean Witter Capital Inc.,
Series 2001-TOPS3, Class A3, 6.200%, 07/15/33 225,000 240,316
Morgan Stanley Dean Witter Capital Inc.,
Series 2001-PPM,
Class A2, 6.400%, 02/15/31 1,480,475 1,576,576
Mortgage Capital Funding, Inc., Series 1998-MC2,
Class A1, 6.325%, 06/18/30 87,552 88,550
Residential Asset Mortgage Products, Inc.,
Series 2001-RZ4,
Class A4, 5.200%, 03/25/30 108,588 108,654
Residential Asset Mortgage Products, Inc.,
Series 2002-RZ3,
Class A4, 4.730%, 12/25/31 165,000 167,598
Residential Asset Securities Corp., Series 1999-KS4,
Class AI4, 7.220%, 06/25/28 751,324 780,211
Residential Asset Securities Corp., Series 2001-KS2,
Class AI4, 6.417%, 02/25/29 319,157 324,743
Salomon Brothers Mortgage Securities, Series 2001-C2,
Class A2, 6.168%, 02/13/10 640,000 682,738
Total Asset-Backed Security 11,851,665
Finance - 38.2%
ASIF Global Financial, 2.380%, 02/26/09 SGD 1,000,000 571,036
Boeing Capital Corp., 4.750%, 08/25/08 230,000 234,481
Cardinal Health, Inc., 4.000%, 06/15/15 320,000 281,521
Cendant Corp., 7.375%, 01/15/13 565,000 631,221
Chancellor Media Corp., 8.000%, 11/01/08 414,000 470,447
Clear Channel Communications, Inc., 6.625%, 06/15/08 191,000 204,691
Coca-Cola HBC Finance BV, 5.125%, 09/17/13 265,000 261,731
Comcast Corp., 7.050%, 03/15/33 505,000 524,756
Cox Enterprises, Inc., 4.375%, 05/01/08 410,000 408,898
Developers Divers Realty Corp., 3.875%, 01/30/09 200,000 191,293
Dimon, Inc., Series B, 9.625%, 10/15/11 350,000 355,250
Duke Realty LP, 3.500%, 11/01/07 400,000 396,648
Equity One, Inc., 3.875%, 04/15/09 400,000 379,144
Export-Import Bank of Korea, 4.125%, 02/10/09 (a) 485,000(2) 471,062
Ford Motor Credit Corp., 7.000%, 10/01/13 125,000(2) 126,396
</Table>
The accompanying notes are an integral part of these financial
statements.
22
<Page>
Managers Fixed Income Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Ford Motor Credit Corp., 7.200%, 06/15/07 $ 460,000(2) $ 489,460
Gemstone Investors Ltd., 7.710%, 10/31/04 695,000(2) 703,688
GMAC, 6.125%, 08/28/07 450,000(2) 469,890
Harrahs Operating Co., Inc., 7.500%, 01/15/09 100,000 109,651
HCA, Inc., 8.750%, 09/01/10 625,000 714,528
Health Care Properties, 6.875%, 06/08/05 435,000 449,822
Health Care, Inc., 7.500%, 08/15/07 230,000 253,441
Hospitality Properties, 6.750%, 02/15/13 465,000 483,539
Insight Midwest LLP, 10.500%, 11/01/10 200,000 219,000
International Bank Recon and Development,
6.500%, 08/20/07 NZD 3,900,000 2,028,999
iSTAR Financial, Inc., 8.750%, 08/15/08 215,000 238,870
JDN Realty Corp., 6.800%, 08/01/04 590,000 591,448
John Hancock Financial Services, Inc., 5.625%, 12/01/08 500,000 526,190
Korea Development Bank, 3.875%, 03/02/09 425,000 407,398
Lear Corp., Series B, 8.110%, 05/15/09 250,000 285,052
Lehman Brothers Holdings, 3.600%, 03/13/09 150,000(2) 144,275
Liberty Media Corp., 3.500%, 9/25/06 280,000 279,640
Liberty Media Corp., 5.700%, 05/15/13 190,000 187,494
Mack-Cali Realty L.P., 7.250%, 03/15/09 250,000 276,138
Medco Health Solutions, 7.250%, 08/15/13 420,000 450,454
NCR Corp., 7.125%, 06/15/09 180,000 197,093
New Plan Excel Realty Trust, 5.875%, 06/15/07 555,000 586,900
News America, Inc., 7.625%, 11/30/28 460,000 518,870
Petroleos Mexicanos, 6.500%, 02/01/05 540,000 552,690
PLC Trust 2003-1, 2.709%, 3/31/06 (a) 214,336 214,579
Post Apartment Homes LP, 6.850%, 03/16/05 535,000 545,316
Protective Life U.S. Funding Trust, 5.875%, 8/15/06 (a) 375,000 395,676
Qwest Capital Funding, Inc., 7.250%, 02/15/11 490,000(2) 421,400
Qwest Communications International, Inc.,
7.500%, 11/01/08 1,000,000 925,000
Ras Laffan Liquified National Gas Co.,
3.437%, 09/15/09 (a) 325,000 317,898
RenaissanceRe Holdings Ltd., 7.000%, 07/15/08 750,000 813,036
Rubbermaid, Inc., 6.600%, 11/15/06 152,000 162,931
Senior Housing Trust, 8.625%, 01/15/12 330,000 360,477
Service Corp. International, 7.700%, 04/15/09 395,000 406,850
Sovereign Bank, 5.125%, 03/15/13 335,000 319,000
Standard Chartered Bank, 6.750%, 04/27/09 GBP 350,000 659,568
Tele-Communications, Inc., 9.800%, 02/01/12 350,000 439,411
Telecorp PCS, Inc., 10.625%, 07/15/10 312,000 352,310
Texas Eastern Transmission, 7.000%, 07/15/32 255,000 267,439
TGT Pipeline LLC, 5.200%, 06/01/18 465,000 422,265
The Ryland Group, Inc., 5.375%, 06/01/08 440,000 445,500
Time Warner, Inc., 7.700%, 05/01/32 635,000(2) 695,778
</Table>
The accompanying notes are an integral part of these financial
statements.
23
<Page>
Managers Fixed Income Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Transamerica Corp., 6.750%, 11/15/06 $ 85,000 $ 90,891
Union Planters Bank, 6.500%, 03/15/08 375,000 393,920
Universal Corp., Series MTNC, 5.200%, 10/15/13 430,000 417,171
XL Capital (Europe) PLC, 6.500%, 01/15/12 105,000 112,476
Total Finance 25,851,997
Industrials - 16.8%
Albertson's Inc., 7.750%, 06/15/26 175,000 190,945
Allied Waste North America, Inc., 8.875%, 04/01/08 410,000 451,000
AmerisourceBergen Corp., 7.250%, 11/15/12 260,000 267,800
AT&T Wireless Services, Inc., 8.750%, 03/01/31 310,000 379,041
Boise Cascade Co., 6.500%, 11/01/10 135,000 138,037
Celestica, Inc., 0.000%, 08/01/204 825,000 457,875
Charter Communications, Inc., 8.000%, 04/30/12 245,000 238,263
Continental Airlines Inc., Series 991A, 6.545%, 02/02/19 422,096 395,233
DirecTV Holdings, 8.375%, 03/15/13 165,000 183,356
Dynegy-Roseton Danskamme, Series B, 7.670%, 11/08/16 245,000 213,303
Eastman Kodak Co., Series MTNA, 7.250%, 06/15/05 265,000(2) 274,119
EchoStar DBS Corp., 10.375%, 10/01/07 175,000 187,906
General Motors, 7.125%, 07/15/13 400,000 411,500
Georgia-Pacific Corp., 7.700%, 06/15/15 315,000 334,688
Guidant Corp., 6.150%, 02/15/06 305,000 319,963
Hyatt Equities LLC, 6.875%, 06/15/07 495,000 526,623
Kraft Foods, Inc., 5.250%, 10/01/13 1,175,000 1,146,789
Kroger Co., 7.000%, 05/01/18 460,000 495,771
News America, Inc., 7.280%, 06/30/28 225,000 244,296
Nextel Communications, Inc., 9.375%, 11/15/09 400,000(2) 429,500
Nortel Networks Ltd., 6.125%, 02/15/06 140,000 141,400
Park Place Entertainment, 8.875%, 09/15/08 150,000 163,125
Penney (JC) Co., 8.000%, 03/01/10 125,000 140,313
Polyone Corp., 10.625%, 05/15/10 120,000(2) 127,800
Quebecor Media, Inc., 11.125%, 07/15/11 350,000 401,188
R.H. Donnelley Financial Corp., 10.875%, 12/15/12 (a) 210,000 244,650
R.H. Donnelley Financial Corp., 8.875%, 12/15/10 (a) 115,000 126,788
Six Flags, Inc., 8.875%, 02/01/10 235,000(2) 233,825
Southern Natural Gas, 8.875%, 03/15/10 175,000(2) 192,063
Sprint Capital Corp., 6.875%, 11/15/28 440,000 424,167
Telus Corp., 8.000%, 06/01/11 1,065,000 1,212,071
Terra Capital, Inc., 12.875%, 10/15/08 215,000 256,925
Union Carbide Corp., 6.790%, 06/01/25 185,000(2) 187,775
Walt Disney Co. (The), 7.000%, 03/01/32 190,000 204,282
Total Industrials 11,342,380
</Table>
The accompanying notes are an integral part of these financial
statements.
24
<Page>
Managers Fixed Income Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Utility - 11.7%
Amerenenergy Generating Co., 7.750%, 11/01/05 $ 800,000 $ 849,361
Cilcorp, Inc., 8.700%, 10/15/09 315,000 368,751
Cinergy Corp., 6.250%, 09/01/04 355,000 357,405
Detroit Edison Co., 5.050%, 10/01/05 500,000 512,600
Dominion Resources, Inc., 4.125%, 02/15/08 450,000 449,700
Empresa Nacional de Electricidad, Yankee, 7.875%, 02/01/27 500,000 469,561
FirstEnergy Corp., Series C, 7.375%, 11/15/31 715,000 747,470
Gulf States Utilities, 6.770%, 08/01/05 215,000 223,472
Kansas City Power & Light Co., 7.125%, 12/15/05 510,000 540,278
Niagara Mohawk Power Corp., 5.375%, 10/01/04 745,000 751,374
Nisource Finance Corp., 7.875%, 11/15/10 350,000 401,748
Pacific Gas and Electric Co., 6.050%, 03/01/34 500,000 471,840
Pinnacle West Capital Corp., 6.400%, 4/01/06 575,000 604,588
PSI Energy, Inc., 6.650%, 6/15/06 350,000 371,916
Southwestern Public Service Co., 5.125%, 11/01/06 770,000 794,913
Total Utility 7,914,977
Total Corporate Bonds (cost $55,593,676) 56,961,019
Foreign Government Obligations - 2.6%
Canadian Government, 4.500%, 09/01/07 CAD 1,800,000 1,369,853
Mexico Government, 9.875%, 02/01/10 315,000(2) 379,260
Total Foreign Government Obligations
(cost $1,733,187) 1,749,113
U.S. Government and Agency Obligations - 8.2%
U.S. Government Agency Obligations - 4.1%
FNMA, 2.290%, 02/19/09 700,000 398,452
FNMA, 2.750%, 08/11/06 70,000 69,443
FNMA, 7.000%, 04/25/24 100,000 107,600
FNMA, 7.000%, 11/01/26 6,008 6,343
FNMA, 7.500%, 07/01/25 7,918 8,479
FNMA, 7.500%, 01/19/39 311,346 333,820
FGLMC, 6.500%, 07/01/29 11,212 11,714
FGLMC, 9.000%, 04/01/25 79,737 89,688
FHLMC, 2.850%, 01/05/07 630,000 624,082
FHLMC, 3.000%, 02/15/15 510,000 511,346
FHLMC, 3.500%, 12/15/10 590,843 595,529
Total U.S. Government Agency Obligations 2,756,496
U.S. Treasury Bonds - 4.1%
USTB, 2.000%, 01/15/14 445,790 443,283
USTB, 4.750%, 05/15/14 1,435,000(2) 1,450,416
USTB, 5.375%, 02/15/31 870,000(2) 877,715
Total U.S. Treasury Bonds 2,771,414
Total U.S. Government and Agency Obligations
(cost $5,545,411) 5,527,910
</Table>
The accompanying notes are an integral part of these financial
statements.
25
<Page>
Managers Fixed Income Fund
June 30, 2004
=============================
Schedule of Portfolio Investments (continued)
- ---------------------------------------------
<Table>
Principal
Security Descripition Amount Value
- --------------------- --------- -----
Municipal Bonds - 1.2%
Decatur Texas Hospital Authority, $
Hospital Revenue, 7.750%, 09/01/09 260,000 $ 270,400
Eufaula Alabama, Series C, 4.000%, 08/15/12 580,000 562,600
Total Municipal Bonds (cost $829,199) 833,000
Preferred Stock - 0.8%
Centaur Funding Corp., 9.080%, 04/21/20 (a)
(cost $524,985) 445 554,721
Common Stock - 0.4% Shares
------
Tommy Hilfiger USA, Inc. (cost $280,333) 11,000 284,020
Other Investment Companies - 18.9%(1)
JPMorgan Prime Money Market Fund, Institutional
Class Shares, 1.03% 5,314,363 5,314,363
Bank of New York Institutional Cash Reserves
Fund, 1.24%3 7,477,688 7,477,688
Total Other Investment Companies (cost $12,792,051) 12,792,051
Total Investments - 116.4% (cost $77,298,842) 78,701,834
Other Assets, less Liabilities - (16.4)% (11,068,181)
Net Assets - 100.0% $67,633,653
</Table>
The accompanying notes are an integral part of these financial
statements.
26
<Page>
Notes to Schedules of Portfolio Investments (unaudited)
=======================================================
The following footnotes and abbreviations should be read in conjunction
with each of the Schedules of Portfolio Investments 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:
<Table>
Fund Cost Appreciation Depreciation Net
- ---- ---- ------------ ------------- ----
Science & Technology $ 3,597,616 $ 7,213 $ (45,500) $ (38,287)
20 Fund 86,258,876 1,928,828 (35,490,831) 33,562,003
Mid-Cap 109,241,156 14,568,769 (1,052,008) 13,516,761
Large-Cap 4,057,185 118,114 (42,695) 75,419
Balanced 26,203,208 2,938,120 (267,040) 2,671,080
Convertible Securities 17,919,119 1,692,819 (152,519) 1,540,300
High Yield 61,956,459 2,845,775 (1,122,667) 1,723,108
Fixed Income 77,454,199 2,092,173 (844,538) 1,247,635
</Table>
* 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
- ---- ------------ ---------------
Balanced $ 501,513 1.7%
Convertible 5,661,123 36.1%
High Yield 7,783,034 15.1%
Fixed Income 1,770,653 2.6%
(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
- ---- ------------ ---------------
Science & Technology $ 754,134 27.2%
20 Fund 6,350,162 13.7%
Mid-Cap 16,343,899 15.9%
Large-Cap 289,661 7.6%
Convertible Securities 3,560,805 27.1%
High Yield 12,430,537 24.1%
Fixed Income 7,330,900 10.8%
(3)Collateral received from brokers for securities lending was invested
in these short-term investments.
(4)Zero coupon security.
(5)Step Bonds - Where coupon increases or steps up at the predetermined
rate.
Investments Definitions and Abbreviations:
<Table>
FHLMC: Federal Home Loan Mortgage Corp. USTB: United States Treasury Bond
FNMA: Federal National Mortgage Association USTN: United States Treasury Note
GMAC: General Motors Acceptance Corp.
</Table>
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):
CAD: Canadian Dollar SGD: Singapore Dollar
NZD: New Zealand Dollar GBP: British Pound
27
<Page>
Statements of Assets and Liabilities (unaudited)
June 30, 2004
================================================
<Table>
Managers
Science & Managers Managers
Technology 20 Mid-Cap
Fund Fund Fund
---------- -------- -------
Assets:
Investments at value* $3,559,329 $52,696,873 $122,757,917
Cash 25,478 - 4,086,303
Receivable for investments sold 28,573 381,433 2,508,678
Receivable for Fund shares sold - 6,129 3,252
Dividends, interest and other
receivables 22,906 15,394 97,339
Prepaid expenses 7,061 28,422 18,022
Total assets 3,643,347 53,128,251 129,471,511
Liabilities:
Payable to Custodian - 39,526 -
Payable for Fund shares repurchased 9,097 136,037 929,075
Payable upon return of
securities loaned 780,176 6,428,451 16,644,756
Payable for investments purchased 44,492 - 8,657,242
Accrued expenses:
Investment advisory
and management fees 2,249 26,586 58,519
Administrative fees 449 7,521 16,568
Other 31,025 81,754 97,412
Total liabilities 867,488 6,719,875 26,403,572
Net Assets $2,775,859 $46,408,376 $103,067,939
Net Assets Represent:
Paid-in capital $50,197,379 $287,865,701 $124,390,484
Undistributed net investment
income (loss) (30,015) (364,873) 34,619
Accumulated net realized loss
from investments and foreign
currency transactions (48,167,330) (207,530,449) (34,970,094)
Net unrealized appreciation
(depreciation) of investments
and foreign currency contracts
and translations 775,825 (33,562,003) 13,612,930
Net Assets $2,775,859 $46,408,376 $103,067,939
Class A Shares - Net Assets $797,434 $6,203,905 $8,966,662
Shares Outstanding 384,659 1,170,475 820,609
Net asset value, offering and
redemption price per share $2.07 $5.30 $10.93
Class B Shares - Net Assets $570,268 $16,567,697 $17,006,503
Shares Outstanding 279,463 3,254,378 1,620,378
Net asset value, offering and
redemption price per share $2.04 $5.09 $10.50
Class C Shares - Net Assets $1,253,046 $14,240,162 $15,290,988
Shares Outstanding 613,510 2,781,605 1,455,830
Net asset value, offering and
redemption price per share $2.04 $5.12 $10.50
Class Y Shares - Net Assets $155,111 $9,396,612 $61,803,786
Shares Outstanding 72,999 1,748,292 5,404,257
Net asset value, offering and
redemption price per share $2.12 $5.37 $11.44
*Investments at cost $2,783,504 $86,258,876 $109,144,987
</Table>
28
<Table>
Managers Managers
Managers Managers Convertible Managers Fixed
Large-Cap Balanced Securities High Yield Income
Fund Fund Fund Fund Fund
--------- -------- ----------- ---------- --------
Assets:
Investments at value $4,132,604 $28,874,288 $19,459,419 $63,679,567 $78,701,834
Cash 52,038 - - - -
Receivable for
investments sold - 34,215 702,412 6,201 -
Receivable for Fund
shares sold - 831 - 71,069 64,283
Dividends, interest and
other receivables 28,141 172,892 92,296 951,369 858,414
Prepaid expenses 8,978 18,620 15,531 21,819 18,358
Total assets 4,221,761 29,100,846 20,269,658 64,730,025 79,642,889
Liabilities:
Payable to Custodian - 17,305 12,620 3,180 3,695,263
Payable for Fund shares
repurchased 1,096 252,220 20,147 189,841 146,013
Payable upon return of
securities loaned 296,067 - 3,648,823 12,800,889 7,477,688
Payable for investments
purchased 52,506 25,543 855,362 3,021 561,096
Accrued expenses:
Investment advisory and
management fees 2,216 16,606 10,953 29,935 25,196
Administrative fees 633 4,702 2,197 8,443 11,199
Other 33,982 55,439 44,663 96,345 92,781
Total liabilities 386,500 371,815 4,594,765 13,131,654 12,009,236
Net Assets $3,835,261 $28,729,031 $15,674,893 $51,598,371 $67,633,653
Net Assets Represent:
Paid-in capital $19,896,718 $48,825,040 $27,195,351 $72,869,080 $70,505,005
Undistributed net
investment income
(loss) (16,335) (4,902) (167,097) (139,567) 24,064
Accumulated net realized
loss from investments and
foreign currency
transactions (16,436,493) (23,172,075) (13,138,448) (23,037,075) (4,298,408)
Net unrealized
appreciation (depreciation)
of investment and foreign
currency contracts and
translations 391,371 3,080,968 1,785,087 1,905,933 1,402,992
Net Assets $3,835,261 $28,729,031 $15,674,893 $51,598,371 $67,633,653
Class A Shares - Net Assets $529,435 $2,862,086 $1,574,643 $5,818,068 $6,366,204
Shares Outstanding 85,788 269,518 153,401 707,165 617,827
Net asset value, offering and
redemption price per share $6.17 $10.62 $10.26 $8.23 $10.30
Class B Shares - Net Assets $1,911,291 $11,301,929 $9,060,348 $29,694,080 $22,603,923
Shares Outstanding 316,264 1,081,673 887,263 3,639,563 2,200,524
Net asset value, offering and
redemption price per share $6.04 $10.45 $10.21 $8.16 $10.27
Class C Shares - Net Assets $1,053,404 $6,767,054 $3,014,037 $11,288,417 $15,301,463
Shares Outstanding 174,147 641,728 294,030 1,383,829 1,481,485
Net asset value, offering and
redemption price per share $6.05 $10.55 $10.25 $8.16 $10.33
Class Y Shares - Net Assets $341,131 $7,797,962 $2,025,865 $4,797,806 $23,362,063
Shares Outstanding 54,309 728,660 197,251 580,268 2,259,212
Net asset value, offering and
redemption price per share $6.28 $10.70 $10.27 $8.27 $10.34
*Investments at cost $3,741,233 $25,793,320 $17,674,332 $61,773,634 $77,298,842
</Table>
29
The accompanying notes are an integral part of these financial
statements.
<Page>
Statements of Operations (unaudited)
For the six months ended June 30, 2004
======================================
<Table>
Managers
Science & Managers Managers
Technology 20 Mid-Cap
Fund Fund Fund
---------- -------- -------
Investment Income:
Dividend income $1,079 $130,280 $736,270
Interest income 273 5,929 2,908
Securities lending fees 408 9,013 11,147
Total investment income 1,760 145,222 750,325
Expenses:
Investment advisory and
management fees 15,557 179,219 368,115
Administrative fees 3,111 51,205 105,176
Distribution Fees-Class A Shares 2,450 17,645 24,323
Distribution Fees-Class B Shares 6,775 90,868 84,565
Distribution Fees-Class C Shares 3,041 81,054 79,812
Transfer agent 20,178 56,050 33,986
Custodian 7,721 11,150 20,277
Professional fees 5,146 24,734 38,152
Registration fees 10,032 19,222 22,857
Trustees fees and expenses 180 4,285 7,803
Miscellaneous 1,600 13,726 23,727
Total expenses before offsets 75,791 549,158 808,793
Expense reimbursement (44,016) (39,063) (93,087)
Net expenses 31,775 510,095 715,706
Net investment income (loss) (30,015) (364,873) 34,619
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on
investment transactions 126,558 (7,236,621) 12,836,226
Net realized gain on foreign
currency contracts and
transactions - - -
Net unrealized appreciation
(depreciation) of investments (167,459) 5,980,148 (7,226,985)
Net unrealized appreciation of
foreign currency contracts and
translations - - -
Net realized and unrealized
gain (loss) (40,901) (1,256,473) 5,609,241
Net Increase (Decrease) in Net Assets
Resulting from Operations $(70,916) $(1,621,346) $5,643,860
</Table>
30
The accompanying notes are an integral part of these financial
statements.
<Page>
<Table>
Managers Managers
Managers Managers Convertible Managers Fixed
Large-Cap Balanced Securities High Yield Income
Fund Fund Fund Fund Fund
--------- -------- ----------- ---------- --------
Investment Income:
Dividend income $21,242 $175,547 $106,285 $ 72,727 $ 32,578
Interest income 177 268,192 202,279 3,200,207 2,062,792
Securities lending fees - 400 4,704 25,867 6,266
Total investment income 21,419 444,139 313,268 3,298,801 2,101,636
Expenses:
Investment advisory
and management fees 14,334 105,552 72,177 240,251 165,833
Administrative fees 4,095 30,158 16,983 68,643 73,703
Distribution Fees -
Class A Shares 1,482 7,647 4,991 38,776 17,988
Distribution Fees -
Class B Shares 9,735 58,297 47,861 164,576 127,440
Distribution Fees -
Class C Shares 5,946 37,431 16,453 63,195 87,305
Transfer agent 19,217 20,875 20,034 33,008 24,767
Custodian 9,520 16,718 10,983 16,490 18,719
Professional fees 6,480 14,566 10,747 8,088 22,073
Registration fees 9,301 18,408 13,727 22,594 21,660
Trustees fees and expenses 540 2,126 1,329 6,312 6,971
Miscellaneous 1,500 4,306 2,464 13,678 7,433
Total expenses
before offsets 82,150 316,084 217,749 675,611 573,892
Expense reimbursement (44,396) (61,694) (59,145) (96,080) (139,044)
Net expenses 37,754 254,390 158,604 579,531 434,848
Net investment income
(loss) (16,335) 189,749 154,664 2,719,270 1,666,788
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss)
on investment
transactions 254,853 1,555,126 1,164,173 4,181,305 746,537
Net realized gain on foreign
currency contracts and
transactions - - - - 4,106
Net unrealized appreciation
(depreciation)
of investments (139,132) (961,777) (1,029,450) (5,630,009) (2,476,013)
Net unrealized
appreciation of foreign
currency contracts and
translations - - - - 462
Net realized and
unrealized gain (loss) 115,721 593,349 134,723 (1,448,704) (1,724,908)
Net Increase (Decrease) in
Net Assets Resulting from
Operations $99,386 $783,098 $289,387 $1,270,566 $(58,120)
</Table>
31
The accompanying notes are an integral part of these financial
statements.
<Page>
Statements of Changes in Net Assets
For the six months ended June 30, 2004, (unaudited) and for the year
ended December 31, 2003
====================================================================
<Table>
Managers Science &
Technology Fund Managers 20 Fund
------------------ ----------------
June 30,2004 2003 June 30,2004 2003
------------ ---- ------------ ----
Increase (Decrease) in Net Assets
From Operations:
Net investment income (loss) $ (30,015) $ (78,843) $ (364,873) $ (719,336)
Net realized gain (loss) on investments
and foreign currency transactions 126,558 (1,285,782) (7,236,621) (21,960,523)
Net unrealized appreciation (depreciation)
of investments and foreign
currency translations (167,459) 3,446,364 5,980,148 45,094,541
Net increase (decrease) in net assets
resulting from operations (70,916) 2,081,739 (1,621,346) 22,414,682
Distributions to Shareholders:
From net investment income:
Class A Shares - - - -
Class B Shares - - - -
Class C Shares - - - -
Class Y Shares - - - -
From net realized gain on investments:
Class A Shares - - - -
Class B Shares - - - -
Class C Shares - - - -
Class Y Shares - - - -
Total distributions to shareholders - - - -
From Capital Share Transactions:
Proceeds from sale of shares 56,484 360,705 2,443,067 7,410,429
Reinvestment of dividends and distributions - - - -
Cost of shares repurchased (774,133) (4,748,786) (10,336,866) (2,222,726)
Net decrease from
capital share transactions (717,649) (4,388,081) (7,893,799) (14,812,297)
Total increase (decrease) in net assets (788,565) (2,306,342) (9,515,145) 7,602,385
Net Assets:
Beginning of period 3,564,424 5,870,766 55,923,521 48,321,136
End of period $2,775,859 $3,564,424 $46,408,376 $ 55,923,521
End of period undistributed
net investment income (loss) $ (30,015) $ - $ (364,873) $ -
Share Transactions:
Sale of shares:
Class A Shares 7,818 161,535 14,859 670,219
Class B Shares 6,756 5,440 20,298 112,727
Class C Shares 8,666 50,673 140,905 366,127
Class Y Shares 2,591 7,837 268,256 607,573
Reinvested shares:
Class A Shares - - - -
Class B Shares - - - -
Class C Shares - - - -
Class Y Shares - - - -
Shares repurchased:
Class A Shares (158,472) (2,501,410) (297,022) (1,721,103)
Class B Shares (49,275) (99,517) (507,502) (1,147,780)
Class C Shares (102,943) (297,791) (766,833) (1,469,379)
Class Y Shares (54,439) (118,025) (362,913) (1,030,627)
Net decrease in shares (339,298) (2,791,258) (1,489,952) (3,612,243)
</Table>
32
The accompanying notes are an integral part of these financial
statements.
<Page>
<Table>
Managers Mid-Cap Fund Managers Large-Cap Fund Managers Balanced Fund
---------------------- ----------------------- ----------------------
June 30,2004 2003 June 30,2004 2003 June 30,2004 2003
------------ ---- ------------ ---- ------------ ----
$ 34,619 $ 11,875 $ (16,335) $ (34,845) $ 189,749 $ 668,591
12,836,226 9,989,664 254,853 (300,477) 1,555,126 (86,727)
(7,226,985) 22,717,764 (139,132) 1,405,924 (961,777) 6,362,325
5,643,860 32,719,303 99,386 1,070,602 783,098 6,944,189
- - - - (107,225) (87,238)
- - - - (28,285) (233,339)
- - - - (17,020) (174,928)
- (11,903) - - (38,892) (234,379)
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- (11,903) - - (191,422) (729,884)
6,246,786 36,784,920 104,822 135,566 1,255,867 3,691,486
- 11,035 - - 99,847 328,372
(16,417,114) (64,027,170) (857,303) (2,229,322) (5,441,659) (16,195,827)
(10,170,328) (27,231,215) (752,481) (2,093,756) (4,085,945) (12,175,969)
(4,526,468) 5,476,185 (653,095) (1,023,154) (3,494,269) (5,961,664)
107,594,407 102,118,222 4,488,356 5,511,510 32,223,300 38,184,964
$103,067,939 $ 107,594,407 $ 3,835,261 $ 4,488,356 $ 28,729,031 $ 32,223,300
$ 34,619 $ - $ (16,335) $ - $ (4,902) $ (3,229)
119,797 1,694,026 23 14 3,760 268,086
143,341 142,237 16,163 17,911 37,606 379,892
69,016 189,402 1,063 7,161 25,167 518,722
251,142 2,482,591 18 597 52,355 635,419
- - - - 995 10,792
- - - - 1,284 9,300
- - - - 513 5,246
- 1,039 - - 6,594 35,638
(239,152) (1,716,029) (53,153) (58,609) (66,070) (2,041,177)
(231,672) (609,715) (39,662) (123,890) (140,357) (965,668)
(273,012) (754,860) (36,730) (191,098) (208,885) (1,879,354)
(782,834) (4,492,775) (11,457) (60,451) (101,854) (1,334,668)
(943,374) (3,064,084) (123,735) (408,365) (388,892) (4,357,772)
</Table>
33
The accompanying notes are an integral part of these financial
statements.
<Page>
Statements of Changes in Net Assets
For the six months ended June 30, 2004, (unaudited) and for the year
ended December 31, 2003
====================================================================
<Table>
Managers Convertible
Securities Fund Managers High Yield Fund
---------------------- -----------------------
June 30,2004 2003 June 30,2004 2003
------------ ---- ------------ ----
Increase (Decrease) in Net Assets
From Operations:
Net investment income (loss) $ 154,664 $ 620,813 $ 2,719,270 $ 9,155,099
Net realized gain (loss) on investments
and foreign currency transactions 1,164,173 723,956 4,181,305 1,020,472
Net unrealized appreciation (depreciation)
of investments and foreign
currency translations (1,029,450) 3,413,709 (5,630,009) 20,021,304
Net increase (decrease) in net assets
resulting from operations 289,387 4,758,478 1,270,566 30,196,875
Distributions to Shareholders:
From net investment income:
Class A Shares (87,305) (105,991) (592,412) (3,441,977)
Class B Shares (445,909) (349,797) (1,330,297) (2,865,020)
Class C Shares (149,895) (127,704) (510,194) (1,239,756)
Class Y Shares (113,698) (168,467) (304,789) (1,688,171)
From net realized gain on investments:
Class A Shares - - - -
Class B Shares - - - -
Class C Shares - - - -
Class Y Shares - - - -
Total distributions to shareholders (796,807) (751,959) (2,737,692) (9,234,924)
From Capital Share Transactions:
Proceeds from sale of shares 705,572 7,791,989 12,730,516 149,982,558
Reinvestment of dividends and
distributions 255,524 197,677 703,658 3,277,625
Cost of shares repurchased (3,490,430) (12,400,846) (50,060,062) (190,429,528)
Net decrease from
capital share transactions (2,529,334) (4,411,180) (36,625,888) (37,169,345)
Total increase (decrease) in net assets (3,036,754) (404,661) (38,093,014) (16,207,394)
Net Assets:
Beginning of period 18,711,647 19,116,308 89,691,385 105,898,779
End of period $ 15,674,893 $ 18,711,647 $ 51,598,371 $ 89,691,385
End of period undistributed
net investment income (loss) (167,097) $ 475,046 $ (139,567) $ (121,145)
Share Transactions:
Sale of shares:
Class A Shares 7,881 137,726 616,037 11,027,197
Class B Shares 21,412 70,888 99,674 417,994
Class C Shares 19,185 13,195 69,955 494,067
Class Y Shares 19,106 586,416 713,147 7,497,362
Reinvested shares:
Class A Shares 3,761 3,564 33,870 207,031
Class B Shares 12,461 8,390 22,840 45,530
Class C Shares 2,652 2,459 9,734 27,534
Class Y Shares 5,636 6,314 17,356 135,646
Shares repurchased:
Class A Shares (112,432) (192,796) (2,860,489) (14,536,640)
Class B Shares (110,462) (215,240) (734,185) (1,274,538)
Class C Shares (66,052) (107,177) (345,423) (1,222,910)
Class Y Shares (39,631) (766,943) (1,965,741) (1,710,779)
Net decrease in shares (236,483) (453,204) (4,323,225) 1,107,494
</Table>
34
The accompanying notes are an integral part of these financial
statements.
<Page>
<Table>
Managers Fixed Income Fund
--------------------------
June 30, 2004 2003
------------- ----
From Operations:
Net investment income (loss) $ 1,666,788 $ 4,681,987
Net realized gain (loss) on investments
and foreign currency transactions 750,643 3,052,881
Net unrealized appreciation (depreciation)
of investments and foreign
currency translations (2,475,551) 1,880,216
Net increase (decrease) in net assets
resulting from operations (58,120) 9,615,084
Distributions to Shareholders:
From net investment income:
Class A Shares (161,460) (551,346)
Class B Shares (525,904) (1,534,976)
Class C Shares (354,738) (1,197,732)
Class Y Shares (609,607) (1,512,794)
From net realized gain on investments:
Class A Shares - -
Class B Shares - -
Class C Shares - -
Class Y Shares - -
Total distributions to shareholders (1,651,709) (4,796,848)
From Capital Share Transactions:
Proceeds from sale of shares 5,524,822 27,291,381
Reinvestment of dividends and distributions 650,400 1,559,667
Cost of shares repurchased (17,099,888) (70,372,516)
Net decrease from capital share transactions (10,924,666) (41,521,468)
Total increase (decrease) in net assets (12,634,495) (36,703,232)
Beginning of period 80,268,148 116,971,380
End of period $ 67,633,653 $ 80,268,148
net investment income (loss) $ 24,064 $ 8,985
Sale of shares:
Class A Shares 61,681 1,437,724
Class B Shares 56,114 248,859
Class C Shares 69,659 221,076
Class Y Shares 335,039 707,541
Reinvested shares:
Class A Shares 3,490 11,420
Class B Shares 9,212 24,832
Class C Shares 3,521 11,884
Class Y Shares 45,667 101,878
Shares repurchased:
Class A Shares (198,997) (2,234,687)
Class B Shares (581,296) (1,060,013)
Class C Shares (483,494) (1,887,607)
Class Y Shares (361,404) (1,610,215)
Net decrease in shares (1,040,808) (4,027,308)
</Table>
The accompanying notes are an integral part of these financial
statements.
35
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Science & Technology Fund Managers 20 Fund
------------------------------------ ------------------
June 30, June 30,
Class A Shares 2004 2003 2002 2001 2000 (a) 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- -------- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $2.12 $1.31 $3.01 $6.94 $10.00 $5.48 $3.51 $6.12 $11.76 $20.68 $12.80
Income from
Investment Operations:
Net investment loss (0.02) (0.03) (0.05) (0.04) (0.05) (0.04) (0.05) (0.07) (0.08) (0.28) (0.18)
Net realized and
unrealized gain (loss)
on investments (0.03) 0.84 (1.65) (3.89) (3.01) (0.14) 2.02 (2.54) (5.56) (5.22) 9.19
Total from investment
operations (0.05) 0.81 (1.70) (3.93) (3.06) (0.18) 1.97 (2.61) (5.64) (5.50) 9.01
Less Distributions
to Shareholders from:
Net realized gain
on investments - - - - - - - - - (3.42) (1.13)
Total distributions
to shareholders - - - - - - - - - (3.42) (1.13)
Net Asset Value,
End of Period $2.07 $2.12 $1.31 $3.01 $6.94 $5.30 $5.48 $3.51 $6.12 $11.76 $20.68
Total Return(1) (2.36)%(2)61.83% (56.48)% (56.63)% (30.60)%(2) (3.28)%(2) 56.13% (42.65)% (47.96)% (25.67)%70.40%
Ratio of net expenses
to average net
assets(1) 1.75%(3) 1.75% 1.75% 1.75% 1.75%(3) 1.75%(3) 1.75% 1.75% 1.67% 1.51% 1.68%
Ratio of total expenses
to average net assets(1)4.14%(3,4)3.74% 2.38% 2.18% 2.17%(3) 1.90%(3,4) 1.97% 1.82% 1.67% 1.51% 1.70%
Ratio of net investment
loss to average net
assets (1.64)%(3)(1.58)% (1.69)% (1.50)% (1.23)%(3) (1.20)%(3) (1.15)% (1.19)% (1.19)% (1.14)%(1.02)%
Portfolio turnover 11%(2) 46% 41% 39% 263%(2) 6%(2) 9% 9% 8% 449% 280%
Net assets at end
of period
(000's omitted) $797 $1,136 $3,778 $16,077 $19,850 $6,204 $7,956 $8,778 $23,948 $33,439 $53,463
</Table>
<Table>
Managers Mid-Cap Fund Managers Large-Cap Fund
---------------------- ------------------------
June 30, June 30,
Class A Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000(a)
- -------------- -------- ---- ---- ---- ----- ------- ---- ---- ---- ---- -------
Net Asset Value
Beginning of Period $10.36 $7.58 $8.79 $9.86 $16.27 $12.55 $6.02 $4.78 $6.60 $8.43 $10.00
Income from
Investment Operations:
Net investment loss (0.01) (0.01) (0.01) (0.01) (0.13) (0.14) (0.02) (0.02) (0.07) (0.06)(b)(0.00)(b)
Net realized and
unrealized gain (loss)
on investments 0.58 2.79 (1.20) (1.06) 0.40 7.18 0.17 1.26 (1.75) (1.77) (1.57)
Total from investment
operations 0.57 2.78 (1.21) (1.07) 0.27 7.04 0.15 1.24 (1.82) (1.83) (1.57)
Less Distributions
to Shareholders from:
Net realized gain
on investments - - - (0.00)(b)(6.68) (3.32) - - - - -
Total distributions
to shareholders - - - (0.00) (6.68) (3.32) - - - - -
Net Asset Value,
End of Period $10.93 $10.36 $7.58 $8.79 $9.86 $16.27 $6.17 $6.02 $4.78 $6.60 $8.43
Total Return(1) 5.50%(2) 36.68% (13.77)% (10.93)% 4.97% 56.21% 2.49%(2)25.94% (27.58)%(21.71)%(2)(15.70)%(2)
Ratio of net expenses
to average
net assets(1) 1.50%(3) 1.50% 1.50% 1.50% 1.47% 1.50% 1.50%(3) 1.50% 1.50% 1.50%(3) 1.50%(3)
Ratio of total expenses
to average
net assets(1) 2.00%(3,4) 1.63% 1.59% 1.60% 1.47% 1.66% 3.44%(3,4)3.29% 2.10% 1.96%(3) 2.06%(3)
Ratio of net investment
loss to average net
assets (0.16)%(3) (0.14)% (0.09)% (0.08)% (0.80)% (0.83)% (0.50)%(3)(0.41)%(0.64)% (0.80)%(3)(0.16)%(3)
Portfolio turnover 50%(2) 109% 108% 120% 440% 364% 59%(2) 53% 78% 85%(2) 190%(2)
Net assets at end
of period
(000's omitted) $8,967 $9,741 $7,290 $14,268 $15,210 $29,480 $529 $837 $945 $9,417 $13,737
</Table>
36
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Balanced Fund Managers Convertible Securities Fund
---------------------- -------------------------------------
June 30, June 30,
Class A Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $10.42 $8.62 $10.13 $11.08 $13.51 $11.69 $10.62 $8.63 $9.62 $11.80 $14.93 $11.00
Income from Investment
Operations:
Net investment income
(loss) 0.08 0.22 0.24 0.25 0.28 0.22 0.22 0.34 0.32 0.30 0.43 0.46
Net realized and
unrealized gain (loss)
on investments 0.20 1.81 (1.49) (0.96) 0.64 3.18 (0.05) 2.04 (1.02) (1.63) (1.08) 3.89
Total from investment
operations 0.28 2.03 (1.25) (0.71) 0.92 3.40 0.17 2.38 0.70 (1.33) (0.65) 4.35
Less Distributions
to Shareholders from:
Net investment income (0.08) (0.23) (0.26) (0.24) (0.25) (0.23)(0.53) (0.39) (0.29) (0.36) (0.36) (0.27)
Net realized gain
on investments - - - - (3.10) (1.35) - - - (0.49) (2.12) (0.15)
Total distributions
to shareholders (0.08) (0.23) (0.26) (0.24) (3.35) (1.58)(0.53) (0.39) (0.29) (0.85) (2.48) (0.42)
Net Asset Value,
End of Period $10.62 $10.42 $8.62 $10.13 $11.08 $13.51 $10.26 $10.62 $8.63 $9.62 $11.80 $14.93
Total Return(1) 2.66%(2) 23.85% (12.47)% (6.37)% 7.29% 29.44% 1.58%(2)28.14% (7.24)% (11.27)%(3.56)% 40.12%
Ratio of net expenses
to average net assets(1) 1.50%(3) 1.50% 1.50% 1.50% 1.50% 1.50% 1.55%(3)1.55% 1.55% 1.55% 1.55% 1.55%
Ratio of total expenses
to average net assets(1) 1.90%(3,4)1.73% 1.68% 1.68% 1.74% 1.96% 2.15%(3,4)2.09% 1.98% 1.90% 1.70% 1.95%
Ratio of net investment
income (loss) to average
net assets 1.38%(3) 2.21% 2.62% 2.43% 1.92% 1.87% 1.61%(3) 3.40% 3.50% 3.15% 2.49% 2.11%
Portfolio turnover 47%(2) 91% 183% 226% 386% 321% 38%(2) 146% 185% 280% 187% 115%
Net assets at end
of period
(000's omitted) $2,862 $3,448 $4,205 $22,802 $24,311 $31,932 $1,575 $2,700 $2,639 $4,482 $15,022 $22,927
</Table>
<Table>
Managers High Yield Fund Managers Fixed Income Fund
------------------------ ---------------------------
June 30, June 30,
Class A Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $8.46 $7.08 $7.76 $8.20 $10.00 $10.00 $10.56 $10.05 $10.14 $9.94 $9.60 $10.21
Income from Investment
Operations:
Net investment
income (loss) 0.18 0.64 0.80 0.79 0.81 1.00 0.24 0.52 0.56 0.55 0.62 0.63
Net realized and
unrealized
gain (loss) on
investments (0.05) 1.39 (0.70) (0.41) (1.83) (0.13) (0.26) 0.53 (0.06) 0.30 0.33 (0.65)
Total from investment
operations 0.13 2.03 0.10 0.38 (1.02) 0.87 (0.02) 1.05 0.50 0.85 0.95 (0.02)
Less Distributions
to Shareholders from:
Net investment income (0.36) (0.65) (0.78) (0.82) (0.78) (0.87) (0.24) (0.54) (0.59) (0.55)(0.61) (0.56)
Net realized gain
on investments - - - - - - - - - (0.10) - (0.03)
Total distributions
to shareholders (0.36) (0.65) (0.78) (0.82) (0.78) (0.87) (0.24) (0.54) (0.59) (0.65)(0.61) (0.59)
Net Asset Value,
End of Period $8.23 $8.46 $7.08 $7.76 $8.20 $10.00 $10.30 $10.56 $10.05 $10.14 $9.94 $9.60
Total Return(1) 1.53%(2) 29.73% 1.85% 4.78% (10.74)% 9.03% (0.11)%(2) 10.67% 5.11% 8.66% 10.30% (0.27)%
Ratio of net expenses
to average net
assets(1) 1.40%(3) 1.40% 1.40% 1.40% 1.40% 1.40% 1.03%(3) 1.10% 1.10% 1.13% 1.25% 1.25%
Ratio of total expenses
to average net
assets (1) 1.54%(3,4) 1.63% 1.61% 1.61% 1.58% 1.66% 1.39%(3,4) 1.33% 1.32% 1.33% 1.44% 1.64%
Ratio of net investment
income (loss) to average
net assets 3.41%(3) 8.10% 10.86% 9.95% 8.43% 8.93% 4.48%(3) 5.02% 5.73% 5.44% 6.42% 5.69%
Portfolio turnover 27%(2) 138% 229% 197% 256% 312% 70%(2) 315% 438% 744% 342% 361%
Net assets at end
of period
(000's omitted) $5,818 $24,693 $44,059 $27,712 $19,689 $42,591 $6,366 $7,936 $15,455 $65,303 $32,693 $30,681
</Table>
37
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Science & Technology Fund Managers 20 Fund
------------------------------------ ------------------
June 30, June 30,
Class B Shares 2004 2003 2002 2001 2000 (a) 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- -------- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $2.09 $1.30 $2.98 $6.93 $10.00 $5.27 $3.39 $5.95 $11.48 $20.40 $12.71
Income from
Investment Operations:
Net investment
income (loss) (0.02) (0.04) (0.06) (0.07) (0.05) (0.05) (0.07) (0.10) (0.13) (0.39) (0.10)
Net realized and
unrealized gain (loss)
on investments (0.03) 0.83 (1.62) (3.88) (3.02) (0.13) 1.95 (2.46) (5.40) (5.11) 8.94
Total from investment
operations (0.05) 0.79 (1.68) (3.95) (3.07) (0.18) 1.88 (2.56) (5.53) (5.50) 8.84
Less Distributions
to Shareholders from:
Net realized gain
on investments - - - - - - - - - (3.42) (1.15)
Total distributions
to shareholders - - - - - - - - - (3.42) (1.15)
Net Asset Value,
End of Period $2.04 $2.09 $1.30 $2.98 $6.93 $5.09 $5.27 $3.39 $5.95 $11.48 $20.40
Total Return 1 (2.39)%(2) 60.77% (56.38)% (57.00)% (30.70)%(2) (3.42)%(2)55.46% (43.03)% (48.17)%(25.99)%69.56%
Ratio of net expenses
to average net assets(1) 2.25%(3) 2.25% 2.25% 2.25% 2.25%(3) 2.25%(3) 2.25% 2.25% 2.17% 2.01% 2.18%
Ratio of total expenses
to average net assets(1) 5.16%(3,4)4.24% 2.88% 2.68% 2.67%(3) 2.33%(3,4)2.47% 2.32% 2.17% 2.01% 2.20%
Ratio of net investment income
(loss) to average net
assets (2.13)%(3)(2.08)% (2.19)% (2.00)% (1.73)%(3) (1.68)%(3) (1.65)% (1.69)% (1.69)% (1.64)% (1.52)%
Portfolio turnover 11%(2) 46% 41% 39% 263%(2) 6% 29% 9% 8% 449% 280%
Net assets at end
of period
(000's omitted) $570 $674 $540 $2,348 $4,699 $16,568 $19,724 $16,197 $46,136 $89,044 $71,233
</Table>
<Table>
<c>
Managers Mid-Cap Fund Managers Large-Cap Fund
---------------------- ------------------------
June 30, June 30,
Class B Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000(a)
- -------------- -------- ---- ---- ---- ----- ---- ------- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $9.98 $7.33 $8.54 $9.63 $16.13 $12.47 $5.91 $4.72 $6.55 $8.41 $10.00
Income from
Investment Operations:
Net investment
income (loss) (0.03) (0.05) (0.06) (0.05) (0.20) (0.14) (0.03) (0.05) (0.10) (0.08) (0.01)(b)
Net realized and
unrealized gain
(loss) on
investments 0.55 2.70 (1.15) (1.04) 0.38 7.07 0.16 1.24 (1.73) (1.78) (1.58)
Total from investment
operations 0.52 2.65 (1.21) (1.09) 0.18 6.93 0.13 1.19 (1.83) (1.86) (1.59)
Less Distributions
to Shareholders from:
Net realized gain
on investments - - - (0.00)(b)(6.68) (3.27) - - - - -
Total distributions
to shareholders - - - (0.00) (6.68) (3.27) - - - - -
Net Asset Value,
End of Period $10.50 $9.98 $7.33 $8.54 $9.63 $16.13 $6.04 $5.91 $4.72 $6.55 $8.41
Total Return(1) 5.21%(2) 36.15% (14.17)% (11.30)% 4.44% 55.63% 2.20%(2) 25.21% (27.94)% (22.12)%(15.90)%(2)
Ratio of net expenses
to average
net assets(1) 2.00%(3) 2.00% 2.00% 2.00% 1.97% 2.00% 2.00%(3) 2.00% 2.00% 2.00% 2.00%(3)
Ratio of total expenses
to average net
assets(1) 2.19%(3,4) 2.13% 2.09% 2.10% 1.97% 2.16% 4.17%(3,4)3.79% 2.60% 2.46% 2.56%(3)
Ratio of net investment
income (loss) to
average net assets (0.55)%(3) (0.64)% (0.59)% (0.58)% (1.30)%(1.33)% (0.90)%(3)(0.91)% (1.14) (1.30)% (0.66)%(3)
Portfolio turnover 50%(2) 109% 108% 120% 440% 364% 59%(2) 53% 78% 85% 190%(2)
Net assets at end
of period
(000's omitted) $17,007 $17,052 $15,956 $22,075 $19,621$3,489 $1,911 $2,008 $2,102 $5,439 $8,096
</Table>
38
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Balanced Fund Managers Convertible Securities Fund
---------------------- -------------------------------------
June 30, June 30,
Class B Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ---
Net Asset Value,
Beginning of Period $10.26 $8.49 $9.98 $10.92 $13.38 $11.61 $10.55 $8.58 $9.56 $11.74 $14.88 $11.00
Income from Investment
Operations:
Net investment
income (loss) 0.05 0.16 0.18 0.20 0.19 0.12 0.11 0.28 0.27 0.24 0.34 0.06
Net realized and
unrealized gain (loss)
on investments 0.19 1.79 (1.45) (0.94) 0.66 3.18 0.04 2.03 (1.00) (1.63) (1.07) 4.21
Total from investment
operations 0.24 1.95 (1.27) (0.74) 0.85 3.30 0.15 2.31 (0.73) (1.39) (0.73) 4.27
Less Distributions
to Shareholders from:
Net investment income (0.05) (0.18) (0.22) (0.20) (0.21) (0.18) (0.49) (0.34) (0.25) (0.30) (0.29) (0.24)
Net realized gain
on investments - - - - (3.10) (1.35) - - - (0.49) (2.12) (0.15)
Total distributions
to shareholders (0.05) (0.18) (0.22) (0.20) (3.31 (1.53) (0.49) (0.34) (0.25) (0.79) (2.41) (0.39)
Net Asset Value,
End of Period $10.45 $10.26 $8.49 $9.98 $10.92 $13.38 $10.21 $10.55 $8.58 $9.56 $11.74 $14.88
Total Return(1) 2.36%(2) 23.42% (12.89)% (6.79)% 6.79% 28.79% 1.40%(2) 27.46% (7.61)%(11.77)% (4.07)% 39.40%
Ratio of net
expenses to average
net assets(1) 2.00%(3) 2.00% 2.00% 2.00% 2.00% 2.00% 2.05%(3) 2.05% 2.05% 2.05% 2.05% 2.05%
Ratio of total
expenses to average
net assets(1) 2.42%(3,4)2.23% 2.18% 2.18% 2.24% 2.46% 2.78%(3,4) 2.59% 2.48% 2.40% 2.20% 2.45%
Ratio of net investment
income (loss) to average
net assets 0.99%(3) 1.71% 2.12% 1.93% 1.42% 1.37% 1.74%(3) 2.90% 3.00% 2.65% 1.99% 1.61%
Portfolio turnover 47%(2) 91% 183% 226% 386% 321% 38%(2) 146% 185% 280% 187% 115%
Net assets at end
of period
(000's omitted) $11,302 $12,134 $12,345 $20,279 $13,958 $2,854 $9,060 $10,173 $9,438 $17,903 $30,872 $13,690
</Table>
<Table>
Managers High Yield Fund Managers Fixed Income Fund
------------------------ ---------------------------
June 30, June 30,
Class B Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $8.40 $7.04 $7.71 $8.16 $9.97 $9.97 $10.51 $10.02 $10.10 $9.91 $9.59 $10.19
Income from Investment
Operations:
Net investment
income (loss) 0.40 0.60 0.75 0.76 0.73 0.55 0.21 0.48 0.50 0.51 0.58 0.41
Net realized and
unrealized gain (loss)
on investments (0.30) 1.38 (0.67) (0.43) (1.80) 0.28 (0.23) 0.50 (0.04) 0.29 0.32 (0.46)
Total from investment
operations 0.10 1.98 0.08 0.33 (1.07) 0.83 (0.02) 0.98 0.46 0.80 0.90 (0.05)
Less Distributions
to Shareholders from:
Net investment income(0.34) (0.62) (0.75) (0.78) (0.74)(0.83) (0.22) (0.49) (0.54) (0.51)(0.58) (0.52)
Net realized gain
on investments - - - - - - - - - (0.10) - (0.03)
Total distributions
to shareholders (0.34) (0.62) (0.75) (0.78) (0.74) (0.83) (0.22) (0.49) (0.54) (0.61) (0.58) (0.55)
Net Asset Value,
End of Period $8.16 $8.40 $7.04 $7.71 $8.16 $9.97 $10.27 $10.51 $10.02 $10.10 $9.91 $9.59
Total Return(1) 1.21%(2) 29.01% 1.49% 4.17% (11.31)% 8.57%(0.31)%(2) 10.09% 4.64% 8.16% 9.74% (0.49)%
Ratio of net expenses
to average net
assets(1) 1.90%(3) 1.90% 1.90% 1.90% 1.90% 1.90% 1.53%(3) 1.60% 1.60% 1.60% 1.60% 1.60%
Ratio of total expenses
to average net
assets(1) 2.24%(3,4) 2.13% 2.11% 2.11% 2.08% 2.16% 1.90%(3,4) 1.84% 1.82% 1.80% 1.79% 1.99%
Ratio of net
investment income 9.66%(3) 7.60% 10.36% 9.45% 7.93% 8.43% 3.99%(3) 4.52% 5.23% 4.98% 6.07% 5.34%
Portfolio turnover 27%(2) 138% 229% 197% 256% 312% 70%(2) 315% 438% 744% 342% 361%
Net assets at end
of period
(000's omitted) $29,694 $35,695 $35,654 $48,857 $41,319 $47,433 $22,604 $28,560 $35,087 $38,793 $9,340 $5,230
</Table>
39
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Science & Technology Fund Managers 20 Fund
------------------------------------ ------------------
June 30, June 30,
Class C Shares 2004 2003 2002 2001 2000 (a) 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- -------- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $2.10 $1.30 $2.99 $6.92 $10.00 $5.29 $3.40 $5.98 $11.52 $20.46 $12.75
Income from
Investment Operations:
Net investment
income (loss) (0.02) (0.04) (0.06) (0.06) (0.05) (0.05) (0.07) (0.10) (0.12) (0.39) (0.09)
Net realized and
unrealize gain (loss)
on investments (0.04) 0.84 (1.63) (3.87) (3.03) (0.12) 1.96 (2.48) (5.42) (5.13) 8.96
Total from investment
operations (0.06) 0.80 (1.69) (3.93) (3.08) (0.17) 1.89 (2.58) (5.54) (5.52) 8.87
Less Distributions
to Shareholders from:
Net realized gain
on investments - - - - - - - - - (3.42) (1.16)
Total distributions
to shareholders - - - - - - - - - (3.42) (1.16)
Net Asset Value,
End of Period $2.04 $2.10 $1.30 $2.99 $6.92 $5.12 $5.29 $3.40 $5.98 $11.52 $20.46
Total Return(1) (2.86)%(2)61.54% (56.52)% (56.79)% (30.80)%(2) (3.21)%(2) 55.13% (42.98)%(48.09)% (26.02)%69.54%
Ratio of net expenses
to average
net assets(1) 2.25%(3) 2.25% 2.25% 2.25% 2.25%(3) 2.25%(3) 2.25% 2.25% 2.17% 2.01% 2.18%
Ratio of total expenses
to average
net assets(1) 4.98%(3,4)4.24% 2.88% 2.68% 2.67%(3) 2.40%(3,4)2.47% 2.32% 2.17% 2.01% 2.20%
Ratio of net
investment income
(loss) to average
net assets (2.14)%(3)(2.08)% (2.19)% (2.00)% (1.73)%(3) (1.70)%(3)(1.65)% (1.69)% (1.69)% (1.64)%(1.52)%
Portfolio turnover 11%(2) 46% 41% 39% 263%(2) 6%(2) 9% 9% 8% 449% 280%
Net assets at end
of period
(000's omitted) $1,253 $1,483 $1,240 $4,684 $5,122 $14,240 $18,038 $15,359 $40,383 $64,272 $37,093
</Table>
<Table>
<c>
Managers Mid-Cap Fund Managers Large-Cap Fund
---------------------- ------------------------
June 30, June 30,
Class C Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000(a)
- -------------- -------- ---- ---- ---- ----- ---- ------- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $9.99 $7.34 $8.55 $9.63 $16.12 $12.54 $5.92 $4.72 $6.56 $8.42 $10.00
Income from
Investment Operations:
Net investment
income (loss) (0.03) (0.05) (0.06) (0.04) (0.20) (0.07) (0.03) (0.05) (0.10) (0.10) (0.01)(b)
Net realized and
unrealized gain (loss)
on investments 0.54 2.70 (1.15) (1.04) 0.39 7.02 0.16 1.25 (1.74) (1.76) (1.57)
Total from investment
operations 0.51 2.65 (1.21) (1.08) 0.19 6.95 0.13 1.20 (1.84) (1.86) (1.58)
Less Distributions
to Shareholders from:
Net realized gain
on investments - - - (0.00)(b)(6.68) (3.37) - - - - -
Total distributions
to shareholders - - - (0.00) (6.68) (3.37) - - - - -
Net Asset Value,
End of Period$1 0.50 $9.99 $7.34 $8.55 $9.63 $16.12 $6.05 $5.92 $4.72 $6.56 $8.42
Total Return(1) 5.11%(2)36.10% (14.15)% (11.19)% 4.51% 55.89% 2.20%(2) 25.42% (28.05)% (22.09)%(15.80)%(2)
Ratio of net expenses
to average
net assets(1) 2.00%(3) 2.00% 2.00% 2.00% 1.97% 2.00% 2.00%(3) 2.00% 2.00% 2.00% 2.00%(3)
Ratio of total expenses
to average
net assets(1) 2.18%(3,4)2.13% 2.09% 2.10% 1.97% 2.16% 3.93%(3,4)3.79% 2.60% 2.46% 2.56%(3)
Ratio of net
investment income
(loss) to average
net assets (0.62)%(3)(0.64)% (0.59)% (0.57)% (1.30)% (1.33)% (1.01)%(3)(0.91)% (1.14)% (1.30)% (0.66)%(3)
Portfolio turnover 50%(2) 109% 108% 120% 440% 364% 59%(2) 53% 78% 85% 190%(2)
Net assets at end
of period
(000's omitted) $15,291 $16,576 $16,329 $20,055 $13,793 $2,972 $1,053 $1,241 $1,858 $4,825 $7,513
</Table>
40
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Balanced Fund Managers Convertible Securities Fund
---------------------- -------------------------------------
June 30, June 30,
Class C Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $10.35 $8.56 $10.06 $11.01 $13.46 $11.66 $10.59 $8.61 $9.60 $11.78 $14.91 $11.00
Net investment
income (loss) 0.05 0.16 0.18 0.19 0.19 0.13 0.11 0.29 0.28 0.24 0.34 0.06
Net realized and
unrealized gain (loss)
on investments 0.20 1.81 (1.46) (0.94) 0.66 3.20 0.04 2.03 (1.02) (1.63) (1.06) 4.23
Total from investment
operations 0.25 1.97 (1.28) (0.75) 0.85 3.33 0.15 2.32 (0.74) (1.39) (0.72) 4.29
Net investment income (0.05) (0.18) (0.22) (0.20) (0.20) (0.18) (0.49) (0.34) (0.25) (0.30) (0.29) (0.23)
Net realized gain
on investments - - - - (3.10) (1.35) - - - (0.49) (2.12) (0.15)
Total distributions
to shareholders (0.05) (0.18) (0.22) (0.20) (3.30) (1.53) (0.49) (0.34) (0.25) (0.79) (2.41 (0.38)
Net Asset Value,
End of Period $10.55 $10.35 $8.56 $10.06 $11.01 $13.46 $10.25 $10.59 $8.61 $9.60 $11.78$14.91
Total Return(1) 2.32%(2)23.38% (12.94)% (6.77)% 6.79% 28.81% 1.39%(2) 27.47% (7.68)%(11.72)%(3.99)%39.52%
Ratio of net
expenses to
average net assets(1) 2.00%(3) 2.00% 2.00% 2.00% 2.00% 2.00% 2.05%(3) 2.05% 2.05% 2.05% 2.05% 2.05%
Ratio of total
expenses to
average net assets(1) 2.39%(3,4)2.23% 2.18% 2.18% 2.24% 2.46% 2.74%(3,4)2.59% 2.48% 2.40% 2.20% 2.45%
Ratio of net
investment income
(loss) to average
net assets 0.82%(3) 1.71% 2.12% 1.93% 1.42% 1.37% 1.62%(3) 2.90% 3.00% 2.65% 1.99% 1.61%
Portfolio turnover 47%(2) 91% 183% 226% 386% 321% 38%(2) 146% 185% 280% 187% 115%
Net assets at
end of period
(000's omitted) $6,767 $8,537 $13,026 $28,946 $8,487 $2,264 $3,014 $3,583 $3,701 $7,417 $11,919 $4,107
</Table>
<Table>
Managers High Yield Fund Managers Fixed Income Fund
------------------------ ---------------------------
June 30, June 30,
Class C Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $8.39 $7.03 $7.70 $8.15 $9.95 $9.95 $10.58 $10.07 $10.15 $9.95 $9.63 $10.23
Income from Investment
Operations:
Net investment
income (loss) 0.40 0.60 0.75 0.75 0.73 0.50 0.21 0.47 0.50 0.51 0.58 0.41
Net realized and
unrealized gain (loss)
on investments (0.29) 1.37 (0.67) (0.42) (1.79) 0.33 (0.24) 0.52 (0.04) 0.30 0.32 (0.45)
Total from investment
operations 0.11 1.97 0.08 0.33 (1.06) 0.83 (0.03) 0.99 0.46 0.81 0.90 (0.04)
Less Distributions
to Shareholders from:
Net investment income (0.34) (0.61) (0.75) (0.78) (0.74) (0.83) (0.22) (0.48) (0.54) (0.51)(0.58)(0.53)
Net realized gain
on investments - - - - - - - - - (0.10) - (0.03)
Total distributions
to shareholders (0.34) (0.61) (0.75) (0.78) (0.74) (0.83) (0.22) (0.48) (0.54) (0.61)(0.58)(0.56)
Net Asset Value,
End of Period $8.16 $8.39 $7.03 $7.70 $8.15 $9.95 $10.33 $10.58 $10.07 $10.15$9.95 $9.63
Total Return(1) 1.21%(2) 29.04% 1.49% 4.18%(11.22)% 8.60% (0.42)%(2)10.11% 4.69% 8.26% 9.69%(0.47)%
Ratio of net expenses
to average
net assets(1) 1.90%(3,4) 1.90% 1.90% 1.90% 1.90% 1.90% 1.53%(3,4) 1.60% 1.60% 1.60% 1.60% 1.60%
Ratio of total expenses
to average
net assets(1) 2.23%(3) 2.13% 2.11% 2.11% 2.08% 2.16% 1.89%(3) 1.84% 1.82% 1.80% 1.79% 1.99%
Ratio of net
investment income
(loss) to averag
net assets 9.54%(3) 7.60% 10.36% 9.45% 7.93% 8.43% 3.93%(3) 4.52% 5.23% 4.98% 6.07% 5.34%
Portfolio turnover 27%(2) 138% 229% 197% 256% 312% 70%(2) 315% 438% 744% 342% 361%
Net assets at end
of period
(000's omitted) $11,288 $13,833 $16,538 $25,532 $18,645 $18,541 $15,301 $20,009 $35,719 $57,239 $5,171 $2,655
</Table>
41
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Science & Technology Fund Managers 20 Fund
------------------------------------ ------------------
June 30, June 30,
Class Y Shares 2004 2003 2002 2001 2000 (a) 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- -------- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $2.17 $1.33 $3.03 $6.96 $10.00 $5.54 $3.53 $6.13 $11.70 $20.49 $12.68
Income from
Investment Operations:
Net investment
income (loss) (0.01) (0.02) (0.03) (0.04) (0.02) (0.02) (0.01) (0.04) (0.05) (0.16) (0.01)
Net realized and
unrealized gain (loss)
on investments (0.04) 0.86 (1.67) (3.89) (3.02) (0.15) 2.02 (2.56) (5.52) (5.21) 9.04
Total from investment
operations (0.05) 0.84 (1.70) (3.93) (3.04) (0.17) 2.01 (2.60) (5.57) (5.37) 9.03
Less Distributions
to Shareholders from:
Net realized gain
on investments - - - - - - - - - (3.42) (1.22)
Total distributions
to shareholders - - - - - - - - - (3.42) (1.22)
Net Asset Value,
End of Period $2.12 $2.17 $1.33 $3.03 $6.96 $5.37 $5.54 $3.53 $6.13 $11.70 $20.49
Total Return(1) (2.30)%(2)63.16% (56.11)% (56.47)%(30.40)%(2) (3.07)%(2) 56.94% (42.41)% (47.61)%(25.23)%71.36%
Ratio of net expenses
to average
net assets(1) 1.25%(3) 1.25% 1.25% 1.25% 1.25%(3) 1.25%(3) 1.25% 1.25% 1.17% 1.01% 1.18%
Ratio of total expenses
to average
net assets(1) 3.89%(3,4)3.24% 1.88% 1.68% 1.67%(3) 1.41%(3,4) 1.47% 1.32% 1.17% 1.01% 1.20%
Ratio of net investment income
(loss) to average
net assets (1.14)%(3)(1.08)%(1.19)% (1.00)% (0.73)%(3)(0.65)%(3) (0.65)% (0.69)% (0.69)% (0.64)%(0.52)%
Portfolio turnover 11%(2) 46% 41% 39% 263%(2) 6%(2) 9% 9% 8% 449% 280%
Net assets at end
of period
(000's omitted) $155 $271 $313 $1,080 $2,242 $9,397 $10,206 $7,988 $20,149 $30,401 $55,806
</Table>
<Table>
<c>
Managers Mid-Cap Fund Managers Large-Cap Fund
---------------------- ------------------------
June 30, June 30,
Class Y Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000(a)
- -------------- -------- ---- ---- ---- ----- ---- ------- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $10.82 $7.87 $9.09 $10.16 $16.47 $12.67 $6.11 $4.83 $6.65 $8.45 $10.00
Income from
Investment Operations:
Net investment
income (loss) 0.02 0.03 0.04 0.03 (0.05) (0.03) 0.00(b) 0.01 (0.04) (0.01) 0.00(b)
Net realized and unrealized
gain (loss) on
investments 0.60 2.92 (1.25) (1.09) 0.42 7.24 0.17 1.27 (1.78) (1.79) (1.55)
Total from investment
operations 0.62 2.95 (1.21) (1.06) 0.37 7.21 0.17 1.28 (1.82) (1.80) (1.55)
Less Distributions
to Shareholders from:
Net investment
income (loss) - - (0.01) (0.01) - - - - - - -
Net realized gain
on investments - - - (0.00)(b)(6.68) (3.41) - - - - -
Total distributions
to shareholders - - (0.01) (0.01) (6.68) (3.41) - - - - -
Net Asset Value,
End of Period $11.44 $10.82 $7.87 $9.09 $10.16 $16.47 $6.28 $6.11 $4.83 $6.65 $8.45
Total Return(1) 5.73%(2) 37.51% (13.33)% (10.38)% 5.51% 57.13% 2.78%(2)26.50% (27.37)%(21.30)% (15.50)%
Ratio of net expenses
to average
net assets(1) 1.00%(3) 1.00% 1.00% 1.00% 0.97% 1.00% 1.00%(3) 1.00% 1.00% 1.00% 1.00%(3)
Ratio of total expenses
to average
net assets(1) 1.18%(3,4)1.13% 1.09% 1.10% 0.97% 1.16% 2.99%(3,4)2.79% 1.60% 1.46% 1.56%(3)
Ratio of net investment income
(loss) to average
net assets 0.44%(3) 0.36% 0.41% 0.42% (0.30)%(0.33)% 0.02%(3) 0.09%(0.14)%(0.30)% 0.34%(3)
Portfolio turnover 50%(2) 109% 108% 120% 440% 364% 59%(2) 53% 78% 85% 190%(2)
Net assets at end
of period
(000's omitted) $61,804 $64,225 $62,544 $87,671 $106,512 $110,008 $341 $402 $606 $2,064 $1,268
</Table>
42
<Page>
Financial Highlights
For a share outstanding throughout the six months ended June 30, 2004,
(unaudited) and each year ended December 31,
======================================================================
<Table>
Managers Balanced Fund Managers Convertible Securities Fund
---------------------- -------------------------------------
June 30, June 30,
Class Y Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
Beginning of Period $10.50 $8.68 $10.22 $11.17 $13.59 $11.75 $10.63 $8.64 $9.62 $11.81 $14.94 $11.00
Income from Investment
Operations:
Net investment
income (loss) 0.11 0.27 0.28 0.31 0.34 0.24 0.15 0.37 0.36 0.35 0.51 0.04
Net realized and unrealized
gain (loss)
on investments 0.20 1.83 (1.50) (0.96) 0.66 3.24 0.05 2.05 (1.01) (1.64)(1.08) 4.38
Total from investment
operations 0.31 2.10 (1.22) (0.65) 1.00 3.48 0.20 2.42 (0.65) (1.29)(0.57) 4.42
Less Distributions
to Shareholders from:
Net investment income (0.05) (0.28) (0.32) (0.30) (0.32) (0.29) (0.56) (0.43) (0.33) (0.41) (0.44)(0.33)
Net realized gain
on investments - - - - (3.10) (1.35) - - - (0.49)(2.12) (0.15)
Total distributions
to shareholders (0.05) (0.28) (0.32) (0.30) (3.42) (1.64) (0.56) (0.43) (0.33) (0.90)(2.56) (0.48)
Net Asset Value,
End of Period $10.76 $10.50 $8.68 $10.22 $11.17 $13.59 $10.27 $10.63 $8.64 $9.62$11.81 $14.94
Total Return(1) 2.91%(2) 24.51% (12.06)% (5.83)% 7.82% 30.07% 1.85%(2) 28.73% (6.70)% (10.87)% (3.04)40.91%
Ratio of net expenses
to average
net assets(1) 1.00%(3) 1.00% 1.00% 1.00% 1.00% 1.00% 1.05%(3) 1.05% 1.05% 1.05% 1.05% 1.05%
Ratio of total expenses
to average
net assets(1) 1.42%(3,4)1.23% 1.18% 1.18% 1.24% 1.46% 1.76%(3,4)1.59% 1.48% 1.40% 1.20% 1.45%
Ratio of net investment income
(loss) to average
net assets 2.03%(3) 2.71% 3.12% 2.93% 2.42% 2.37% 2.73%(3) 3.90% 4.00% 3.65% 2.99% 2.61%
Portfolio turnover 47%(2) 91% 183% 226% 386% 321% 38%(2) 146% 185% 280% 187% 115%
Net assets at end
of period
(000's omitted) $7,798 $8,104 $8,609 $16,912 $15,784 $9,186 $2,026 $2,255 $3,338 $5,475 $9,787 $30,357
</Table>
<Table>
Managers High Yield Fund Managers Fixed Income Fund
------------------------ ---------------------------
June 30, June 30,
Class Y Shares 2004 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 1999
- -------------- -------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
Net Asset Value,
Beginning of Period $8.52 $7.13 $7.79 $8.24 $10.03 $10.02 $10.61 $10.10 $10.17 $9.98 $9.64 $10.25
Income from Investment
Operations:
Net investment
income (loss) 0.32 0.68 0.84 0.82 0.90 0.45 0.29 0.58 0.61 0.61 0.69 0.58
Net realized and unrealized
gain (loss)
on investments (0.19) 1.40 (0.68) (0.41) (1.86) 0.48 (0.29) 0.52 (0.04) 0.28 0.32 (0.54)
Total from investment
operations 0.13 2.08 0.16 0.41 (0.96) 0.93 0.00 1.10 0.57 0.89 1.01 0.04
Less Distributions
to Shareholders from:
Net investment income(0.38) (0.69) (0.82) (0.86) (0.83) (0.92) (0.27) (0.59) (0.64) (0.60)(0.67) (0.62)
Net realized gain
on investments - - - - - - - - - (0.10) - (0.03)
Total distributions
to shareholders (0.38) (0.69) (0.82) (0.86) (0.83) (0.92) (0.27) (0.59) (0.64) (0.70)(0.67) (0.65)
Net Asset Value,
End of Period $8.27 $8.52 $7.13 $7.79 $8.24 $10.03 $10.34 $10.61 $10.10 $10.17 $9.98 $9.64
Total Return(1) 1.82%(2) 30.30% 2.64% 5.15% (10.14)% 9.64% 0.19%(2)11.17% 5.75% 9.20% 10.96% 0.38%
Ratio of net expenses
to average
net assets(1) 0.90%(3) 0.90% 0.90% 0.90% 0.90% 0.90% 0.55%(3) 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of total expenses
to average
net assets(1) 1.14%(3,4) 1.13% 1.11% 1.11% 1.08% 1.16% 0.96%(3,4)0.84% 0.82% 0.80% 0.79% 0.99%
Ratio of net
investment income
(loss) to
average net assets 7.13%(3) 8.60% 11.36% 10.45% 8.93% 9.43% 5.59%0(3) 5.52% 6.23% 5.98% 7.07% 6.34%
Portfolio turnover 27%(2) 138% 229% 197% 256% 312% 70%(2) 315% 438% 744% 342% 361%
Net assets at end
of period
(000's omitted) $4,798 $15,469 $9,648 $11,913 $7,388 $24,021 $23,362 $23,763 $30,711 $48,376$27,189$27,044
</Table>
43
<Page>
Notes to Financial Highlights
=============================
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)Excludes the impact of expense reimbursement and expense
offsets such as brokerage recapture creditsbut includes
non-reimbursable expenses such as interest and taxes.
(See Note 1c to the Notes to Financial Statements.)
(a) Commencement of operations was July 1, 2001.
(b) Amount calculated is less than $0.005 per share.
44
<Page>
Notes to Financial Statements (unaudited)
June 30, 2004
=========================================
(1) Summary of Significant Accounting Policies
- ----------------------------------------------
Managers Trust II (the "Trust") is an open-end management investment
company organized as a Massachusetts busi-ness trust, and registered
under the Investment Company Act of 1940, as amended (the "1940 Act").
Currently, the Trust is comprised of eleven investment series. Included
in this report are; Managers Science & Technology Fund ("Science &
Technology"), formerly Conseco Science & Technology Fund, Managers 20
Fund ("20 Fund"), formerly Conseco 20 Fund, Managers Mid-Cap Fund
("Mid-Cap"), formerly Conseco Equity Fund, Managers Large-Cap Fund
("Large-Cap"), formerly Conseco Large-Cap Fund, Managers Balanced Fund
("Balanced"), formerly Conseco Balanced Fund, Managers Convertible
Securities Fund ("Convertible Securities"), formerly Conseco
Convertible Securities Fund, Managers High Yield Fund ("High Yield"),
formerly Conseco High Yield Fund and Managers Fixed Income Fund ("Fixed
Income"), formerly Conseco Fixed Income Fund, collectively the "Funds."
The former Funds will be referred to herein collectively as "the former
Conseco Funds."
The Funds each offer four classes of shares: Class A, Class B, Class C
and Class Y. Sales of Class A and Class C shares may be subject to a
front-end sales charge. Redemptions of Class B and Class C shares may
be subject to a contin-gent-deferred sales charge (as a percentage of
the offering price or net asset value at time of sale, whichever is
less). Class Y shares are available with no sales charge to certain
institutional investors and qualifying individual investors. Please
refer to a current prospectus for additional information on each share
class.
The Funds' financial statements are prepared in accordance with
accounting principles generally accepted in the United 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 prepara-tion 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. Fixed-income securities are valued based on
evaluations furnished by independent pricing services that reflect the
evaluated bid price of such securities, except that for the Balanced,
Convertible Securities, High Yield and Fixed Income Funds, fixed-income
securities are valued based on evaluations that reflect the mean
between bid and asked prices. Some of these pricing services utilize
matrix systems, which reflect such factors as security prices, yields,
maturities and rat-ings, and are supplemented by dealer and exchange
quotations. Short-term investments having a remaining maturity of 60
days or less are valued at amortized cost, which approximates market
value. Investments in other regulated investment companies are valued
at their end of day net asset value per share except iShares or other
ETFs, 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.
46
<Page>
Notes to Financial Statements (continued)
=========================================
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. Prior to April 1, 2004, the former Conseco Funds
participated in a similar program offered by BNY. For the six months
ended June 30, 2004, the custodian expense for the Funds was not
reduced under either of these arrangements.
The Managers Funds LLC (the "Investment Manager"), a subsidiary of
Affiliated Managers Group, Inc. ("AMG"), has contractually agreed,
through at least April 30, 2005, to waive fees and pay or reimburse
expenses to the extent that the total operating expenses (exclusive of
brokerage, interest, taxes and extraordinary expenses) of the Funds
exceed the following percentages of each Fund's average daily net
assets.
<Table>
Fund Class A Class B Class C Class Y
- ---- ------- ------- ------- -------
Science & Technology 1.75% 2.25% 2.25% 1.25%
20 Fund 1.75% 2.25% 2.25% 1.25%
Mid-Cap 1.50% 2.00% 2.00% 1.00%
Large-Cap 1.50% 2.00% 2.00% 1.00%
Balanced 1.50% 2.00% 2.00% 1.00%
Convertible Securities 1.55% 2.05% 2.05% 1.05%
High Yield 1.40% 1.90% 1.90% 0.90%
Fixed Income * 0.99% 1.49% 1.49% 0.49%
</Table>
* Rate change effective April 1, 2004. Prior to this date rates were
1.10%, 1.60%, 1.60% and 0.60%, respectively.
As of April 1, 2004, each Fund is obligated to repay the Investment
Manager such amounts waived, paid or reim-bursed 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 the above percentages, based
on the Fund's average daily net assets. (Prior to April 1, 2004, each
of the Funds had a similar waiver/reimbursement agreement with the
former Investment Manager, 40/86 Advisors, Inc. ("40/86 Advisors").
For the period April 1, 2004 through June 30, 2004, the cumulative
amount of reimbursement for Science & Technol-ogy, 20 Fund, Mid-Cap,
Large-Cap, Balanced, Convertible Securities, High Yield and Fixed
Income equaled $28,514, $27,723, $40,393, $30,145, $35,713, $36,187,
$64,595 and $87,825, respectively. Effective with the reorganization,
each Fund's reimbursement available for recoupment prior to April 1,
2004 has been forfeited by the investment manager 40/86 Advisors.
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 Science & Technology, 20 Fund, Mid-
Cap and Large-Cap Funds. Dividends resulting from net investment
income, if any, nor-mally will be declared and paid monthly for
Convertible Securities, High Yield and Fixed Income Funds. Dividends
resulting from net investment income, if any, normally will be declared
and paid quarterly for Balanced Fund. Distri-butions of capital gains,
if any, will be made on an annual basis and when required for Federal
excise tax purposes. Income and capital gain distributions are
determined in accordance with Federal income tax regulations, which may
differ from generally accepted accounting principles. These differences
are primarily due to differing treatments for 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 distributions 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.
46
<Page>
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.
<Table>
Capital Loss
Fund Carryover Amount Expires Dec. 31,
- ---- ---------------- -----------------
Science & Technology $ 1,075,374 2007
13,751,410 2008
26,449,050 2009
4,095,608 2010
20 Fund 77,079,380 2008
79,991,018 2009
40,035,261 2010
Mid-Cap 37,701,692 2008
9,606,046 2009
Large-Cap 146,019 2007
8,645,848 2008
6,822,200 2009
706,319 2010
Balanced 8,964,956 2008
13,683,503 2009
1,575,061 2010
Convertible Securities 7,384,078 2008
6,522,809 2009
High Yield 101,748 2005
1,841,847 2006
11,314,158 2007
6,618,233 2008
6,767,059 2009
Fixed Income 4,861,914 2009
</Table>
(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, specifically
omnibus accounts, individually held greater than 10% of the outstanding
shares of the following Funds:
<Table>
Fund Class A Class B Class C Class Y
---- ------- ------- ------- -------
Science & Technology 1 owns 60% 1 owns 73% 1 owns 85% 2 own 79%
20 Fund 1 owns 39% 1 owns 61% 1 owns 55% 2 own 57%
Mid-Cap 2 own 60% 1 owns 59% 1 owns 75% 1 owns 89%
Large-Cap 1 owns 87% 1 owns 56% 1 owns 71% 2 own 96%
Balanced 2 own 70% 1 owns 74% 1 owns 83% 2 own 96%
Convertible Securities 1 owns 54% 1 owns 64% 1 owns 75% 1 owns 55%
High Yield 2 own 46% 1 owns 69% 1 owns 75% 2 own 74%
Fixed Income 1 owns 60% 1 owns 73% 1 owns 85% 2 own 79%
</Table>
(h) Repurchase Agreements
- -------------------------
Each Fund may enter into repurchase agreements provided that the value
of the underlying collateral, including accrued interest, will be equal
to or exceed the value of the repurchase agreement during the term of
the agreement. The underlying collateral for all repurchase agreements
is held in safekeeping by the Fund's custodian or at the Federal
Reserve Bank.
47
<Page>
Notes to Financial Statements (continued)
=========================================
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 Funds have entered into a Fund Management Agreement with the
investment manager dated April 1, 2004. Under this agreement, the
Investment Manager provides or oversees investment advisory and
management services to the Funds. (Prior to April 1, 2004, each of the
Funds had a similar Fund Management Agreement with 40/86 Advisors). The
Investment Manager selects portfolio managers for each Fund (subject to
Trustee approval), allocates assets among portfolio managers and
monitors the portfolio managers' investment programs and results. Each
Fund's investment portfolio is managed by portfolio managers who serve
pursuant to Portfolio Management Agreements with the Investment Manager
and the Fund.
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
- ---- -------------------
Science & Technology 1.20%
20 Fund 0.90%
Mid-Cap 0.90%
Large-Cap 0.90%
Balanced 0.90%
Convertible Securities 1.05%
High Yield 0.90%
Fixed Income 0.65%
The Funds have entered into an Administration and Shareholder Servicing
Agreement dated April 1, 2004 with The Managers Funds LLC ("TMF").
Under this agreement TMF serves as each Fund's administrator (the
"Administrator") and is responsible for all aspects of managing the
Funds' operations, including administration and shareholder services to
each Fund, its shareholders, and certain institutions, such as bank
trust departments, broker-dealers and registered investment advisers,
that advise or act as an intermediary with the Funds' shareholders.
(Prior to April 1, 2004, each of the Funds had a similar administration
agreement with Conseco Services, LLC). During the six months ended June
30, 2004, each of the Funds paid an Administration fee at the rate of
0.20% per annum of the Fund's average daily net assets
Effective April 1, 2004 the aggregate annual retainer paid to each
Independent Trustee is $52,000, plus $2,000 per meeting attended. The
Trustees' fees and expenses are allocated to the relative net assets of
all the Funds for which The Managers Funds, LLC serves as the
Independent Advisor. The Independent chairman of the Trust receives an
additional payment of $5,000 per year. The Trustee fee and expenses
shown in the financial statements represents 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 since April 1, 2004.
Prior to April 1, 2004, 40/86 Advisors, the former investment advisor
to the Funds, compensated Trustees of the Funds directly, under the
investment advisory agreement of the Funds.
48
<Page>
Notes to Financial Statements (continued)
=========================================
Effective April 1, 2004, 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.
Managers Distributors, Inc. (the "Distributor") serves as the principal
underwriter for each Fund. The Distributor is a registered broker-
dealer and member of the National Association of Securities Dealers,
Inc. ("NASD"). Shares of each Fund will be continuously offered and
will be sold by brokers, dealers or other financial intermediaries who
have executed selling agreements with the Distributor. Subject to the
compensation arrangement discussed below, the Dis-tributor bears all
the expenses of providing services pursuant to the Underwriting
Agreement, including the payment of the expenses relating to the
distribution of Prospectuses for sales purposes and any advertising or
sales literature. (Prior to April 1, 2004, each of the Funds had a
similar distribution agreement with Conseco Equity Sales, Inc.)
The Funds have adopted distribution and service plans with respect to
the Class A, Class B and Class C shares of each Fund (the "Plans"), in
accordance with the requirements of Rule 12b-1 under the 1940 Act and
the requirements of the applicable rules of the NASD regarding asset-
based sales charges.
Pursuant to the Plans, each Fund may compensate the Distributor for its
expenditures in financing any activity primar-ily intended to result in
the sale of each such class of Fund shares and for maintenance and
personal service provided to existing shareholders of that class. The
Plans authorize payments to the Distributor up to 0.50%, 1.00% and
1.00% annually of each Fund's average daily net assets attributable to
its Class A, Class B and Class C shares, respectively.
The Plans further provide for periodic payments by the Distributor to
brokers, dealers and other financial intermediar-ies for providing
shareholder services and for promotional and other sales related costs.
The portion of payments by Class A, Class B or Class C shares of a Fund
for shareholder servicing may not exceed an annual rate of 0.25% of the
average daily net asset value of Fund shares of that class owned by
clients of such broker, dealer or financial intermediary.
The following summarizes the total fees incurred for such services for
Class A, Class B and Class C shares for the six months ended June 30,
2004:
Fund Amount
---- ------
Science & Technology $ 12,266
20 Fund 189,567
Mid-Cap 188,700
Large-Cap 17,163
Balanced 103,375
Convertible Securities 69,305
High Yield 266,547
Fixed Income 232,733
(3) Purchases and Sales of Securities
- -------------------------------------
Purchases and sales of securities, excluding short-term securities, for
the six months ended June 30, 2004, were as follows:
<Table>
Long-Term Securities U.S. Government Securities
-------------------- --------------------------
Fund Purchases Sales Purchases Sales
- ---- --------- ----- --------- -----
Science & Technology $ 310,892 $ 927,753 N/A N/A
20 Fund 2,983,458 8,947,908 N/A N/A
Mid-Cap 66,129,849 76,491,822 N/A N/A
Large-Cap 2,450,734 3,303,837 N/A N/A
Balanced 11,654,484 17,579,789 $ 3,143,957 $ 1,979,557
Convertible Securities 6,533,565 10,447,563 N/A N/A
High Yield 20,160,417 57,298,722 N/A N/A
Fixed Income 36,263,713 39,572,956 16,700,857 20,349,335
</Table>
49
<Page>
Notes to Financial Statements (continued)
=========================================
(4) Portfolio Securities Loaned
- -------------------------------
Effective April 1, 2004, the Funds may participate in a securities
lending program offered by BNY Brokerage providing for the lending of
equities, corporate 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 interest, if applicable, of investments
on loan. Collateral received in the form of cash is invested
temporarily in institutional 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. Prior to
April 1, 2004, the former Conseco Funds participated in a similar
program offered by BNY Brokerage.
(5) Commitments and Contingencies
- ---------------------------------
In the normal course of business, the Funds may enter into contracts
and agreements that contain a variety of rep-resentations 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")
- ----------------------------------------------------------------------
(Balanced and Fixed Income)
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 mortgage-related securities.
CMOs may have a fixed or variable rate of interest.
(7) Risks Associated with High Yield Securities (High Yield)
- ------------------------------------------------------------
Investing in high yield securities involves greater risks and
considerations not typically associated with U.S. Govern-ment and other
high quality/investment grade securities. High Yield securities are
generally below investment grade securities and do not have an
established retail secondary market. Economic downturns may disrupt the
high yield market and impair the issuer's ability to repay principal
and interest. Also, an increase in interest rates would likely have an
adverse impact on the value of such obligations and could cause the
securities to become less liquid.
50
<Page>
Supplemental Data
=================
Proxy Result Information (unaudited)
- ------------------------------------
At the Special Meeting of Shareholders of the Trust held on March 23,
2004, the following votes were recorded for Conseco Science &
Technology Fund ("Science & Technology"), Conseco 20 Fund ("20 Fund"),
Conseco Equity Fund ("Equity"), Conseco Large-Cap Fund ("Large-Cap"),
Conseco Balanced Fund ("Balanced"), Conseco Convertible Securi-ties
Fund ("Convertible Securities"), Conseco High Yield Fund ("High Yield")
and Conseco Fixed Income Fund ("Fixed Income"). The proposals, which
shareholders were asked to vote on, are explained in further detail in
the proxy statement dated December 4, 2003:
======================================================================
Proposal 1 - To approve an Agreement and Plan of Reorganization by and
between Conseco Fund Group and Managers Trust II on behalf of each
series of the Trust.
======================================================================
<Table>
Fund Shares For Shares Against Shares Abstained
- ---- ---------- --------------------- ---------
Science & Technology 888,098 28,298 4,141
20 Fund 5,591,461 246,454 179,735
Equity 6,719,575 74,496 47,759
Large-Cap 401,453 18,089 19,218
Balanced 1,685,618 57,050 72,440
Convertible Securities 977,072 53,465 46,179
High Yield 5,892,562 306,823 137,695
Fixed Income 4,162,379 108,934 127,504
</Table>
Pursuant to Article III, Section 1 of the By-Laws of the Trust and the
Securities Exchange Act of 1940, such total votes on each proposal
represented a quorum of the outstanding shares of the Funds.
51
<Page>
This page intentionally left blank.
52
<Page>
[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
<Page>
<Table>
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
</Table>
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
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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]
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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.
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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.
MANAGERS TRUST II
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
-----------------
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