MANAGERS FUNDS, 485APOS, 1997-01-30

MANAGERS FUNDS
485APOS, 1997-01-30

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As filed with the Securities and Exchange Commission on January
30, 1997
File
Nos. 2-84012; 811-3752

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
________________
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
__

Pre-Effective Amendment No.
__

Post-Effective Amendment No. 38
X

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 40
X

________________________
THE MANAGERS FUNDS
(Exact name of Registrant as Specified in Charter)

40 Richards Avenue, Norwalk, Connecticut 06854
(Address of Principal Executive Offices) (Zip
Code)

Registrant's Telephone Number, including Area Code: (203) 857-
5321

copy to:

Donald S. Rumery Joel H.
Goldberg, Esq.
The Managers Funds, L.P. Shereff, Friedman, Hoffman &
Goodman, LLP
40 Richards Avenue 919 Third
Avenue
Norwalk, Connecticut 06854 New York, New York
10022

(Name and Address of Agent for Service of Process)

It is proposed that this filing will become effective (check
appropriate box)
_ immediately upon filing pursuant to paragraph (b)
_ on (date) pursuant to paragraph (b)
_ 60 days after filing pursuant to paragraph (a)(1)
X on April 1, 1997 pursuant to paragraph (a)(1)
_ 75 days after filing pursuant to paragraph (a)(2)
_ on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:
_ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment

Pursuant to Rule 24f-2 under the Investment Company Act of
1940, Registrant has previously elected to register an indefinite
number of its shares of beneficial interest. The Registrant
filed a notice under such Rule for its Money Market Fund series
for that series' fiscal year ended November 30, 1996 on January
24, 1997, and will file a notice under such Rule for its other
nine series for their fiscal year ended December 31, 1996 on or
before February 28, 1997.

THE MANAGERS FUNDS
POST-EFFECTIVE AMENDMENT NO. 38
CROSS REFERENCE SHEET
(as required by Rule 481(a))

Form N-1A Item Location

PART A -- Prospectus

Item 1. Cover Page Cover Page

Item 2. Synopsis....................... Illustrative Expense
Information;
Summary

Item 3. Condensed Financial
Information.................... Illustrative Expense
Information;
Financial Highlights

Item 4. General Description of
Registrant..................... Summary; Investment
Objectives,
Policies and Restrictions (Equity
Funds, Income Funds); Investment
Objectives and Policies (Money Market Fund); Certain
Investment Techniques and
Associated Risks; Additional
Investment Information and
Risk Factors (Money Maket Fund);
Investment Restrictions (Money Market Fund); Portfolio
Turnover

Item 5. Management of the Fund......... Management of the Funds
(Equity Funds and Income Funds);
Management of the Fund and Portfolio
(Money Market Fund);
Portfolio Transactions and
Brokerage; Special Information Concerning Hub and Spoke
(Money Market Fund)

Item 5A. Management's Discussion of
Fund Performance............... Not Applicable

Item 6. Capital Stock and
Other Securities............... Purchase and Redemption
of Fund
Shares; Description of Shares,
Voting Rights and Liabilities; Tax
Information

Item 7. Purchase of Securities
Being Offered.................. Purchase and Redemption
of Fund
Shares

Item 8. Redemption or Repurchase....... Purchase and Redemption
of Fund
Shares

Item 9. Pending Legal Proceedings...... Description of Shares,
Voting Rights and Liabilities
Form N-1A Item Location

PART B -- Statement of Additional Information

Item 10. Cover Page..................... Cover Page

Item 11. Table of Contents.............. Table of Contents

Item 12. General Information and
History........................ Other Information

Item 13. Investment Objectives
and Policies................... Investment Restrictions;
Investment Objectives and Policies (Money Market Fund);
Portfolio
Turnover; Other Information

Item 14. Management of the Fund......... Trustees and Officers

Item 15. Control Persons and
Principal Holders
of Securities.................. Trustees and Officers;
Control
Persons and Principal Holders of
Securities

Item 16. Investment Advisory
and Other Services............. Management of the Funds;
Fund Management
Agreement; Asset Manager Profiles;
Investment Advisor
(Money Market Fund)

Item 17. Brokerage Allocation and
Other Practices................ Portfolio Securities
Transactions

Item 18. Capital Stock and
Other Securities............... Control Persons and
Principal
Holders of Securities

Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered.................. Net Asset Value

Item 20. Tax Status..................... Tax Information

Item 21. Underwriters................... Administrative Services;
Distribution
Agreements; Portfolio Administrator
and Distributor
(Money Market Fund)

Item 22. Calculation of Performance
Data........................... Performance Information;
Performance Data (Money
Market Fund)

Item 23. Financial Statements........... Financial Statements

PART C -- Other Information

Information required to be included in Part C of the
registration statement is set forth under the appropriate Item, so
numbered, in Part C to this Post-Effective Amendment.

THE MANAGERS FUNDS

PROSPECTUS
dated April 1, 1997,
EQUITY FUNDS

The Managers Funds (the "Trust") is a no-load, open-end,
management investment company with ten different series (each, a
"Fund" and collectively, the "Funds"). Each Fund has distinct
investment objectives and strategies. The Funds' investment
portfolios are managed by asset managers selected, subject to the
review and approval of the Trustees of the Trust, by The Managers
Funds, L.P. (the "Manager"). The Manager is also responsible for
administering the Trust and the Funds. This Prospectus describes
the following Funds (the "Equity Funds"):

Managers Income Equity Fund_(the "Income Equity Fund") seeks
a high level of current income by investing primarily in income
producing equity securities.

Managers Capital Appreciation Fund_(the "Capital
Appreciation Fund") seeks long-term capital appreciation as its
primary objective and income as its secondary objective.

Managers Special Equity Fund_(the "Special Equity Fund")
seeks capital appreciation by investing primarily in the
securities of small to medium capitalization companies expected
to have superior earnings growth potential.

Managers International Equity Fund_(the "International
Equity Fund") seeks long-term capital appreciation as its primary
objective and income as its secondary objective by investing
primarily in non-U.S. equity securities.

This Prospectus sets forth concisely the information
concerning the Trust and the Equity Funds that a prospective
investor ought to know before investing. It should be retained
for future reference. The Trust has filed with the Securities and
Exchange Commission a Statement of Additional Information
("SAI"), dated April 1, 1997, which contains more detailed
information about the Trust and the Funds and is incorporated
into this Prospectus by reference. A copy of the SAI may be
obtained without charge by contacting the Trust at 40 Richards
Avenue, Norwalk, Connecticut 06854, (800) 835-3879 or (203)
857-5321.

Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and shares of the Trust are
not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> Pag
e
<C>
Illustrative Expense Information
Summary
Financial Highlights
Investment Objectives, Policies and Restrictions
Certain Investment Techniques and Associated Risks
Portfolio Turnover
Purchase and Redemption of Fund Shares
Management of the Funds
Portfolio Transactions and Brokerage
Performance Information
Description of Shares, Voting Rights and Liabilities
Tax Information
Shareholder Reports
</TABLE>

ILLUSTRATIVE EXPENSE INFORMATION

The following tables provide the investor with information
concerning annual operating expenses of the Equity Funds. The
Funds impose no sales load on purchases of shares or on
reinvested dividends and distributions, nor any deferred sales
load upon redemption. There are no redemption fees or Rule 12b-1
fees.

<TABLE>
<CAPTION>
Equity Funds' Annual Operating Expenses: (based on average
daily net assets during fiscal 1996)

Fund Managemen Other Total
<S> t Fee Expenses Operatin
<C> * g
<C> Expenses
<C>
Income Equity Fund 0.75% % %
Capital Appreciation Fund 0.80% % %
Special Equity Fund 0.90% % %
International Equity Fund 0.90% % %
</TABLE>
_____

* Other expenses reflect the expenses actually incurred by
each Fund during the year ended December 31, 1996. See
"Management of the Funds_Administration and Shareholder
Servicing; Distributor."

Examples

An investor would pay the following expenses on a $1,000
investment in the respective Equity Funds over various time
periods assuming (1) a 5% annual rate of return, (2) redemption
at the end of each time period, and (3) continuation of any
currently applicable waivers of management fees. As noted above,
the Funds do not charge any redemption fees or deferred sales
loads of any kind.

The examples should not be considered a representation of
past or future expenses. Actual expenses may be greater or less
than those shown.

Fund 1 3 yea 5 yea 10 yea
<S> year rs rs rs
<C> <C> <C> <C>
Income Equity Fund
Capital Appreciation Fund $ $ $ $
Special Equity Fund
International Equity Fund
</TABLE>

SUMMARY
General Description of the Trust and the Funds

The Trust is a no-load, open-end, management investment
company organized as a Massachusetts business trust, composed of
the following ten separate series:

Managers Income Equity Fund Managers Short and Intermediate Bond
Managers Capital Appreciation Fund Fund
Managers Special Equity Fund Managers Intermediate Mortgage Fund
Managers International Equity Fund Managers Bond Fund
Managers Short Government Fund Managers Global Bond Fund
Managers Money Market Fund.

This Prospectus relates to the Equity Funds. A Prospectus
for the other Funds (the "Income Funds" and the Money Market
Fund) can be obtained by calling (800) 835-3879 or (203)
857-5321.

Each of the Funds has distinct investment objectives and
strategies. There is, of course, no assurance that a Fund will
achieve its investment objectives.

Management

The Trust is governed by the Trustees, who provide broad
supervision over the affairs of the Trust and the Funds. The
Manager provides investment management and administrative
services for the Trust and the Funds. The assets of each Fund are
managed by one or more asset managers (each, an "Asset Manager"
and collectively, the "Asset Managers") selected, subject to the
review and approval of the Trustees, by the Manager. The assets
of each Fund are allocated by the Manager among the Asset
Managers selected for that Fund. Each Asset Manager has
discretion, subject to oversight by the Manager and the Trustees,
to purchase and sell portfolio assets, consistent with each
Fund's investment objectives, policies and restrictions and the
specific investment strategies developed by the Manager. For its
services, the Manager receives a management fee from each Fund. A
portion of the fee paid to the Manager is used by the Manager to
pay the advisory fees of the Asset Managers. See "Management of
the Funds" for more detailed information.

Special Risks

There are certain risks associated with the investment
policies of each of the Equity Funds. For instance, to the extent
that a Fund invests in the securities of small to medium sized
(by market capitalization) companies, or financial instruments
related to such securities, the Fund may be exposed to a higher
degree of risk and price volatility because such investments may
lack sufficient liquidity to enable the Fund to effect sales at
an advantageous time or without a substantial drop in price. To
the extent that a Fund invests in securities of non-U.S. issuers
or securities denominated or quoted in foreign currencies, the
Fund may face risks that are different from those associated with
investment in domestic U.S. dollar denominated or quoted
securities, including the effects of changes in currency exchange
rates, political and economic developments, the possible
imposition of exchange controls, governmental confiscation or
restrictions, less availability of data on companies and a less
well developed securities industry as well as less regulation of
stock exchanges, brokers and issuers. In general, the value of
fixed-income securities will rise when interest rates fall, and
fall when interest rates rise, affecting the net asset value of a
Fund. For more details on the risks associated with certain
investment techniques see "Certain Investment Techniques and
Associated Risks." Certain Funds experience high annual portfolio
turnover which may involve correspondingly greater brokerage
commissions and other transaction costs, and certain adverse tax
consequences to shareholders. See "Portfolio Turnover."

Purchase and Redemption of Shares

The minimum initial investment in the Trust is $2,000 per
Fund ($500 for IRA and IRA rollovers). For information on
eligible investors, arrangements for lower minimum investments
and how to purchase and redeem shares of the Fund, see "Purchase
and Redemption of Fund Shares."

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS TO BE UPDATED IN SUBSEQUENT B-FILING

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

The investment objectives of a Fund may not be changed
without approval of a majority of the outstanding voting
securities of that Fund, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). There is no assurance that
these objectives will be achieved. Investors should refer to the
prospectus section entitled "Certain Investment Techniques and
Associated Risks" and to the "Other Information" section in the
SAI for additional portfolio management discussions and for a
description of the ratings mentioned below that are assigned by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Ratings Group ("Standard & Poor's"). Each Fund is subject to
certain investment restrictions which may not be changed without
the approval of the holders of a majority of that Fund's
outstanding voting securities.

The Equity Funds pursue their investment objectives
primarily by investing in "equity securities," which for this
purpose consist of common stock, securities convertible into
common stock, such as bonds and preferred stocks, American
Depositary Receipts and securities such as rights and warrants
which permit the holder to purchase equity securities.

To the extent consistent with their investment objectives
and policies, the Equity Funds may also invest in fixed-income
securities for current income and capital preservation. Such
fixed-income securities will have a maximum remaining maturity of
fifteen years. The Equity Funds will invest in fixed-income
securities issued by the U.S. government and its agencies and
instrumentalities, or corporate bonds or debentures that are
rated not less than Aa by Moody's or AA by Standard & Poor's, or,
in the case of debt securities not rated by Moody's or Standard &
Poor's, of comparable quality as determined by the Asset Manager.
Any Equity Fund may from time to time invest a portion of its
cash balances in shares of unaffiliated money market mutual
funds, when the Manager determines that such investments offer
higher net yields (after considering all direct and indirect fees
and expenses) than direct investments in cash equivalent
securities. The Equity Funds may also invest in fixed-income
securities for capital appreciation. Fixed-income securities may
have a fixed or variable rate. Any or all of the Funds may at
times for defensive purposes temporarily place all or a portion
of their assets in cash, short-term commercial paper, U.S.
government securities, high quality debt securities, including
Eurodollar and Yankee Dollar obligations, and obligations of
banks when, in the judgment of the Fund's Asset Manager, such
investments are appropriate in light of economic or market
conditions. See "Other Information_Cash Equivalents" in the SAI.
In addition to these strategies, the International Equity Fund,
as a temporary defensive position policy, may invest in cash
equivalents of foreign issuers or denominated in foreign
currencies and foreign government bonds.

Managers Income Equity Fund

The Fund's investment objective is to seek a high level of
current income from a diversified portfolio of income-producing
equity securities. The Fund ordinarily invests at least 65% of
its total assets in income-producing equity securities. The Fund
does not intend to invest in securities of companies without
proven earnings.

Managers Capital Appreciation Fund

The Fund's primary investment objective is to seek long-term
capital appreciation and its secondary objective is to seek
income by investing in a diversified portfolio of equity
securities.

Managers Special Equity Fund

The Fund's investment objective is to seek capital
appreciation by investing primarily in the equity securities of a
diversified group of companies expected to have superior earnings
growth potential. The Fund's investments will tend to be in the
securities of companies having small to medium market
capitalizations. The Fund ordinarily invests at least 65% of its
total assets in such equity securities. In selecting securities
for the Fund, the Asset Manager may purchase securities of
companies which are in the early stages of their corporate life
cycle or not yet well recognized, or in more established firms
which are experiencing accelerated earnings growth.

Managers International Equity Fund

The Fund's primary investment objective is to seek long-term
capital appreciation and its secondary objective is to seek
income by investing primarily in non-U.S. equity securities. The
Fund ordinarily invests at least 65% of its total assets in
equity securities of companies domiciled outside the United
States, but up to a combined total of 35% of its total assets may
be invested in equity and fixed-income securities of U.S.
companies when, in the estimation of the Asset Manager, expected
returns from such securities exceed those of non-U.S. equity
securities. The Fund may invest in fixed-income securities
denominated in foreign currencies.

The Fund intends to diversify investments among countries
and normally intends to hold securities of non-U.S. companies in
at least three countries. Investments may be made in companies in
developing as well as developed countries. Currently, the Fund
may invest in securities of foreign issuers located in countries
approved by the Fund's Board of Trustees. The Fund intends to
invest in non-U.S. companies whose securities are traded on
exchanges located in the countries in which the issuers are
principally based. For a discussion of the risks associated with
investing in foreign securities, see "Certain Investment
Techniques and Associated Risks_Other Securities_Foreign
Securities."

CERTAIN INVESTMENT TECHNIQUES AND ASSOCIATED RISKS

The following are descriptions of types of securities
invested in by the Equity Funds, certain investment techniques
employed by the Funds and risks associated with utilizing either
the securities or the investment techniques. Unless otherwise
indicated, all of the Funds may invest in the indicated
securities and use the indicated investment techniques.

General Risks Associated with Equity Funds

The Equity Funds are subject to normal market risks. In an
attempt to reduce risk of loss of principal due to changes in the
value of individual stocks, each of the Equity Funds invests in a
diversified portfolio of common stocks. Such diversification does
not eliminate all risks and investors should expect the net asset
value of their Equity Fund shares to fluctuate based on market
conditions.

The securities of small to medium sized (by market
capitalization) companies, or financial instruments related to
such securities, may have a more limited market than the
securities of larger companies. Accordingly, it may be more
difficult to effect sales of such securities at an advantageous
time or without a substantial drop in price than securities of a
company with a large market capitalization and broad trading
market. In addition, securities of small to medium sized
companies may have greater price volatility as they are generally
more vulnerable to adverse market factors such as unfavorable
economic reports.

Other Securities

Foreign Securities. Investments in foreign securities involve
risks that differ from investments in securities of domestic
issuers. Such risks may include political and economic
developments, the possible imposition of withholding taxes,
possible seizure or nationalization of assets, the possible
establishment of exchange controls or the adoption of other
foreign governmental restrictions which might adversely affect
the Fund's investments. In addition, foreign countries may have
less well developed securities markets, as well as less
regulation of stock exchanges and brokers and different auditing
and financial reporting standards. Not all foreign branches of
United States banks are supervised or examined by regulatory
authorities as are United States banks, and such branches may not
be subject to reserve requirements. For additional information
regarding the risks associated with foreign branch issues, see
"Other Information_Obligations of Domestic and Foreign Banks" in
the SAI. Investing in the fixed-income markets of developing
countries involves exposure to economies that are generally less
diverse and mature, and to political systems which may be less
stable, than those of developed countries. Foreign securities
often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility.
Changes in foreign exchange rates will affect the value of those
securities which are denominated or quoted in currencies other
than the U.S. dollar.

Illiquid Securities. Each Fund may invest up to 15% of its net
assets in securities that are not readily marketable ("illiquid
securities"). These securities, which may be subject to legal or
contractual restrictions on their resale, may involve a greater
risk of loss to those Funds that purchase them. Securities that
are not registered for sale under the Securities Act of 1933, as
amended (the "1933 Act"), but are eligible for resale pursuant to
Rule 144A under the 1933 Act, will not be considered illiquid for
purposes of this restriction if the Asset Manager determines,
subject to the review of the Trustees, that such securities have
a readily available market.

Repurchase Agreements. In a repurchase transaction, a Fund
purchases a security from a bank or a broker-dealer and
simultaneously agrees to resell that security to the bank or
broker-dealer at an agreed upon price on an agreed-upon date. The
resale price reflects the purchase price plus an agreed upon rate
of interest. In effect, the obligation of the seller to repay the
agreed-upon price is secured by the value of the underlying
security, which must at least equal the repurchase price.
Repurchase agreements could involve certain risks in the event of
default or insolvency of the other party, including possible
delays or restrictions upon a Fund's ability to dispose of the
underlying securities. No Fund may invest in repurchase
agreements with a maturity of more than seven days if the
aggregate of such investments, along with other illiquid
securities, exceeds the Fund's limits on investments in illiquid
securities. For more information concerning repurchase
agreements, see "Other Information_Repurchase Agreements" in the
SAI.

Securities Lending. Consistent with its investment objective
and policies, each Fund may lend its portfolio securities in
order to realize additional income. Any such loan will be
continuously secured by collateral at least equal in value to the
value of the securities loaned. The risk of loss on such
transactions is mitigated because, if a borrower were to default,
the collateral should satisfy the obligation. However, as with
other extensions of secured credit, loans of portfolio securities
involve some risk of loss of rights in the collateral should the
borrower fail financially.

Segregated Accounts. When a Fund has entered into transactions
such as reverse repurchase agreements or certain options, futures
and forward transactions, the Fund will establish a segregated
account with its Custodian in which it will maintain or other
liquid securities equal in value to its obligations in respect to
such transaction.

Hedging Techniques

Unless otherwise indicated, the Funds' portfolio managers
may engage in the following hedging techniques to seek to hedge
all or a portion of a Fund's assets against market value changes
resulting from changes in market values, interest rates or
currency fluctuations. Hedging is a means of offsetting, or
neutralizing, the price movement of an investment by making
another investment, the price of which should tend to move in the
opposite direction from the original investment. The imperfect
correlation in price movement between a hedging instrument and
the underlying security, currency, index, futures contract or
other investment may limit the effectiveness of a particular
hedging strategy.

A Fund's ability to establish and close out positions in
futures contracts and options on futures contracts will be
subject to the existence of a liquid secondary market. Although a
Fund generally will purchase or sell only those futures contracts
and options thereon for which there appears to be an active
secondary market, there is no assurance that a liquid secondary
market on an exchange will exist for any particular futures
contract or option or at any particular time.

Options. Each Fund may write ("sell") covered put and covered
call options covering the types of financial instruments in which
the Fund may invest (including individual stocks, stock indices,
futures contracts, forward foreign currency exchange contracts
and when-issued securities) to provide protection against the
adverse effects of anticipated changes in securities prices. A
Fund may also write covered put options and covered call options
as a means of enhancing its return through the receipt of
premiums when the Fund's portfolio manager determines that the
underlying securities, indices or futures contracts have achieved
their potential for appreciation. By writing covered call
options, the Fund foregoes the opportunity to profit from an
increase in the market price of the underlying security, index or
futures contract above the exercise price except insofar as the
premium represents such a profit. The risk involved in writing
covered put options is that there could be a decrease in the
market value of the underlying security, index or futures
contract. If this occurred, the option could be exercised and the
underlying security, index or futures contract would then be sold
to the Fund at a higher price than its then current market value.
A Fund will write only "covered" options.

When writing call options, a Fund will be required to own
the underlying financial instrument, index or futures contract or
own financial instruments or indices whose returns are closely
correlated with the returns of the financial instrument, index or
futures contract underlying the option. When writing put options
a Fund will be required to segregate with its custodian bank cash
and/or other liquid securities to meet its obligations under the
put. By covering a put or call option, the Fund's ability to meet
current obligations, to honor redemptions or to achieve its
investment objectives may be impaired.

The Fund may also purchase put and call options to provide
protection against adverse price effects from anticipated changes
in prevailing securities prices. The purchase of a put option
protects the value or portfolio holdings in a falling market,
while the purchase of a call option protects cash reserves from a
failure to participate in a rising market. In purchasing a call
option, the Fund would be in a position to realize a gain if,
during the option period, the price of the security, index or
futures contract increased over the strike price by an amount
greater than the premium paid. It would realize a loss if the
price of the security, index or futures contract decreased,
remained the same or did not increase over the strike price
during the option period by more than the amount of the premium.
If a put or call option purchased by the Fund were permitted to
expire without being sold or exercised, its premium would
represent a realized loss to the Fund.

The staff of the Securities and Exchange Commission has
taken the position that purchased OTC options and the assets used
as "cover" for written OTC options are illiquid securities.
However, a Fund may treat the securities it uses as cover for
written OTC options as liquid provided it follows a specified
procedure. A Fund may sell OTC options only to qualified dealers
who agree that the Fund may repurchase any OTC options it writes
for a maximum price to be calculated by a predetermined formula.
In such cases, the OTC option would be considered illiquid only
to the extent that the maximum repurchase price under the formula
exceeds the amount that the option is "in-the-money" (i.e.,
current market value of the underlying security minus the
option's strike price). For more information concerning options
transactions, see "Other Information_Covered Put Options_Covered
Call Options," and "_Puts and Calls" in the SAI.

Futures Contracts. A Fund may buy and sell futures contracts as
a hedge to protect the value of the Fund's portfolio against
changes in prices of the financial instruments in which it may
invest. There are several risks in using futures contracts. One
risk is that futures prices could correlate imperfectly with the
behavior of cash market prices of the instrument being hedged so
that even a correct forecast of general price trends may not
result in a successful transaction. Another risk is that the
Fund's portfolio manager may be incorrect in its expectation of
future prices. There is also a risk that a secondary market in
the instruments that the Fund holds may not exist or may not be
adequately liquid to permit the Fund to close out positions when
it desires to do so. When buying or selling futures contracts the
Fund will be required to segregate cash and/or liquid high-grade
debt obligations to meet its obligations under these types of
financial instruments. By so doing, the Fund's ability to meet
current obligations, to honor redemptions or to operate in a
manner consistent with its investment objectives may be impaired.
See "Other Information_Equity Index Futures Contracts" and
"_Interest Rate Futures Contracts" in the SAI.

Forward Foreign Currency Exchange Contracts. A Fund's Asset
Manager may attempt to hedge the risk that a particular foreign
currency may suffer a substantial decline against the U.S. dollar
by entering into a forward contract to sell an amount of foreign
currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. It may
also enter into such contracts to protect against losses
resulting from changes in foreign currency exchange rates between
trade and settlement date. Such contracts will have the effect of
limiting any gains to the Fund resulting from changes in such
rates. Losses may also arise due to changes in the value of the
foreign currency or if the counterparty does not perform under
the contract. See "Other Information_Forward Foreign Currency
Exchange Contracts" in the SAI.

PORTFOLIO TURNOVER

In carrying out the investment policies described in this
Prospectus, each Fund expects to engage in a substantial number
of securities portfolio transactions, and the rate of portfolio
turnover will not be a limiting factor when an Asset Manager
deems it appropriate to purchase or sell securities for a Fund.
High portfolio turnover involves correspondingly greater
brokerage commissions for a Fund investing in Equity Securities
and other transaction costs which are borne directly by a Fund.
In addition, high portfolio turnover may also result in increased
short-term capital gains which, when distributed to shareholders,
are treated for federal income tax purposes as ordinary income.
See "Portfolio Transactions and Brokerage" and "Tax Information."
For the Equity Funds' portfolio turnover rates, see "Financial
Highlights."

PURCHASE AND REDEMPTION OF FUND SHARES
How to Purchase Fund Shares

Initial purchases of shares of the Funds, may be made in a
minimum amount of $2,000 per Fund ($500 for IRAs and IRA
rollovers). Arrangements can also be made to open accounts with a
$500 or $250 initial investment and an agreement to invest $50 or
$100, respectively, per month until the minimum is attained. Call
(800)835-3879 for more information on these arrangements. There
is no minimum for additional investments, except for telephone
Automated Clearing House ("ACH") purchases.

Investors may purchase shares of the Trust through their
financial planner or other investment professional who is (or who
is associated with) an investment adviser registered with the
Securities and Exchange Commission (a "Registered Investment
Adviser") or directly from the Trust as indicated below. Shares
may also be purchased by bank trust departments on behalf of
their clients, other institutional investors such as
corporations, endowment funds and charitable foundations, and
tax-exempt employee welfare, pension and profit-sharing plans.

The following shows the various methods for purchasing the
Trust's shares. For more complete instructions, see the account
application.

<TABLE>
<CAPTION>
Method
<S>
Initial Investment Additional Investments
<C> <C>
Minimums:
Regular accounts $2,000 (or lower, as No minimum
described above)
IRAs, IRA rollovers, SEP 500 No minimum
IRAs
<CAPTION>
Method <C> <C>
<S>
Through your investment Contact your investment Send additional funds to
professional advisor, bank or other your investment
investment professional professional at the
address appearing on
your account statement

Direct by mail Send your account Send letter of
application and check instruction and check
(payable to The Managers (payable to The Managers
Funds) to the address Funds) to The Managers
indicated on the Funds
application c/o Boston Financial
Data Service, Inc.
P.O. Box 8517
Boston, MA 02266-8517
Please include your
account # on your check

Direct Federal Funds or Call (800) 252-0682 to Call the Transfer Agent
Bank Wire notify the Transfer at (800) 252-0682 prior
Agent, and instruct your to wiring additional
bank to wire funds to: funds
ABA #011000028
State Street Bank &
Trust Company
Boston, MA 02101
BFN_The Managers
Funds
AC 9905-001-5
FBO_Shareholder
Name
By telephone Only for established Call the Transfer Agent
accounts with ACH at (800) 252-0682.
privileges. Call Minimum investment:
(800) 252-0682 with $100.
instructions for the
Transfer Agent. Minimum
investment: $100.

</TABLE>

The employees and their families of The Managers Funds, L.P.
and selected dealers and their authorized representatives who are
engaged in the sale of Fund shares, may purchase shares of the
Fund without regard to a minimum initial investment.

Certain states may require Registered Investment Advisers
that purchase Fund shares for customers in those states to
register as broker-dealers. From time to time the Trust's
distributor may supply materials to Registered Investment
Advisers to assist them in formulating an investment program
using the Trust for their clients. Such materials are designed to
be used and evaluated by investment professionals, do not contain
investment advice and are not available for distribution to the
general public.

Certain investors may purchase or sell Fund shares through
broker-dealers or through other processing organizations who may
impose transaction fees or other charges in connection with
providing this service. Shares purchased in this fashion may be
treated as a single account for purposes of the minimum initial
investment. Investors who do not wish to receive the services of
a broker-dealer or processing organization may consider investing
directly with the Trust. Shares held through a broker-dealer or
processing organization may be transferred into the investor's
name by contacting the broker-dealer or processing organization
and the Trust's transfer agent. Certain processing organizations
may receive compensation from the Trust's Manager, Administrator
and/or an Asset Manager.

Trust shares are offered and orders accepted on each
business day (a day on which the New York Stock Exchange ("NYSE")
is open for trading). The Trust may limit or suspend the offering
of shares of any or all of the Funds at any time and may refuse,
in whole or in part, any order for the purchase of shares.

Purchase orders received by the Trust, c/o Boston Financial
Data Services at the address listed on the back cover of this
prospectus, prior to 4:00 p.m., Eastern Standard Time, on any
business day will receive the offering price computed that day.
Orders received prior to 4:00 p.m. by certain processing
organizations which have entered into special arrangements with
the Manager will receive that day's offering price. The
broker-dealer, omnibus processor or investment professional, is
responsible for promptly transmitting orders to the Trust. The
Trust cannot accept orders transmitted to it at the address
indicated on the cover page of this prospectus, but will use its
best efforts to promptly forward such orders to the Transfer
Agent for receipt the next business day.

Federal Funds or Bank Wires used to pay for purchase orders
must be received by 3:00 p.m. the following business day, except
for certain processing organizations which have entered into
special arrangements with the Trust.

Purchases made by check are effected when the check is
received, but are accepted subject to collection at full face
value in U.S. funds and must be drawn in U.S. dollars on a U.S.
bank. Third party checks which are payable to an existing
shareholder who is a natural person (as opposed to a corporation
or partnership) and endorsed over to a Fund or State Street Bank
and Trust Company will be accepted. To ensure that checks are
collected by the Trust, redemptions of shares purchased by check,
or exchanges from such shares, are not effected until 15 days
after the date of purchase.

If the check accompanying any purchase order does not clear,
or if there are insufficient funds in your bank account to enable
an ACH, the transaction will be canceled and you will be
responsible for any loss the Trust incurs. For current
shareholders, each Fund can redeem shares from any identically
registered account in such Fund or any other Fund in the Trust as
reimbursement for any loss incurred. The Trust may prohibit or
restrict all future purchases in the Trust in the event of any
nonpayment for shares.

In the interest of economy and convenience, share
certificates will not be issued. All share purchases are
confirmed to the record holder and credited to such holder's
account on the Trust's books maintained by the Transfer Agent.

Share Price and Valuation of Shares. The net asset value of
shares of each Fund is computed each business day, at the close
of trading on the NYSE, and is the net worth of the Fund (assets
minus liabilities) divided by the number of shares outstanding.
Fund securities listed on an exchange are valued on the basis of
the last quoted sale price on the exchange where such securities
principally are traded on the valuation date, prior to the close
of trading on the NYSE, or, lacking any sales, on the basis of
the last quoted bid price on such principal exchange prior to the
close of trading on the NYSE. Over-the-counter securities for
which market quotations are readily available are valued on the
basis of the last sale price or, lacking any sales, at the last
quoted bid price on that date prior to the close of trading on
the NYSE. Securities and other instruments for which market
quotations are not readily available are valued at fair value, as
determined in good faith and pursuant to procedures established
by the Trustees. For further information, see "Net Asset Value"
in the SAI.

Redeeming Shares

Any redemption orders received by the Trust as indicated
below before 4:00 p.m. New York time on any business day will
receive the net asset value determined at the close of trading on
the NYSE on that day. Redemption orders received after 4:00 p.m.
will be redeemed at the net asset value determined at the close
of trading on the next business day. The Trust cannot accept
redemption orders transmitted to it at the address indicated on
the cover page of the prospectus, but will use its best efforts
to promptly forward such orders to the Transfer Agent for receipt
by the next business day. If you are trading through a
broker-dealer or investment adviser, such investment professional
is responsible for promptly transmitting orders. There is no
redemption charge. The Fund reserves the right to redeem
shareholder accounts (after 60 days notice) when the value of the
Fund shares in the account falls below $500 due to redemptions.
Whether a Fund will exercise its right to redeem shareholder
accounts will be determined by the Manager on a case-by-case
basis.
<TABLE>
<CAPTION>
Method Instructions
<S> <C>
By mail_write to The Managers Send a letter of instruction which
Funds, specifies the name of the Fund,
c/o Boston Financial Data Services, dollar amount or number of shares to
Inc. be sold, your name and account
P.O. Box 8517 number. This letter must be signed
Boston, MA 02266-8517 by all owners of the shares in the
exact manner in which they appear on
the account.
In the case of estates, trusts,
guardianships, custodianships,
corporations and pension and profit
sharing plans, other supporting
legal documentation is required.
By telephone For shareholders who have elected
telephone redemption privileges on
their applications, telephone the
Trust at (800) 252-0682.
By contacting your investment
professional
By writing a check (Managers Money For shareholders who have elected
Market Fund shareholders only) the checkwriting option with State
Street Bank and Trust Company, as
discussed under "Investor
Services_Checkwriting Privilege."

</TABLE>
Investor Services

Automatic Reinvestment Plan allows dividends or capital
gains distributions to be reinvested in additional shares, unless
you elect to receive cash.

Automatic Investments of preauthorized amounts from private
checking accounts can be made monthly, quarterly or annually. The
amount you specify will automatically be deducted from your
checking account and invested on the day you specify.

Systematic Withdrawals of $100 or more per Fund can be made
monthly by shareholders.

Dollar Cost Averaging allows for regular automatic exchanges
from any Fund to one or more other Funds, or can also be done
through the Automatic Investment service above. Before investing
in the Trust's Income Funds, shareholders must obtain a
prospectus from the Trust describing those Funds.

Individual Retirement Accounts, including SEP/IRAs and IRA
rollovers, are available to shareholders at no additional cost.

Checkwriting Privilege is available only to shareholders of
the Trust's Money Market Fund. Before investing in the Trust's
Money Market Fund, shareholders must obtain a prospectus from the
Trust describing the Money Market Fund and the conditions and
limitations pertaining to this privilege. Participating
shareholders must return a completed signature card and
authorization form, and will be provided a supply of checks.
Checks may be drawn on State Street Bank for amounts between $500
and $500,000. When such a check is presented to State Street Bank
for payment, a sufficient number of full and fractional shares
will be redeemed from the shareholder's account to cover the
amount of the check.

The check redemption privilege for withdrawal enables a
shareholder to receive dividends declared on the shares to be
redeemed (up to and including the day of redemption) until such
time as the check is processed. Because of this, the check
redemption privilege is not appropriate for a complete
liquidation of a shareholder's account. If the amount of a
withdrawal check is greater than the value of the shares held in
the shareholder's account the check will be returned unpaid, and
the shareholder will be subject to additional charges.

Managers Money Market Fund and State Street Bank each
reserve the right at any time to suspend or limit the procedure
permitting withdrawals by check.

Direct Deposit Purchase Plan allows for Social Security or
payroll checks, as well as any other preauthorized recurring
payment, to be automatically invested in your account.

Exchange Privilege. The exchange privilege permits shareholders
of any of the Funds to exchange their shares for shares of any of
the other Funds at the relative net asset value per share.
Exchange transactions may be made by writing to the Fund (see
"Redeeming Shares"), by contacting your investment professional,
via the Telephone Exchange Privilege (unless you have declined
this option) or on your signed account application. Call
Investors Services at (800) 252-0682 to utilize the Telephone
Exchange Privilege. Shareholders must receive a prospectus
describing the Income Funds of the Trust before requesting an
exchange into one or more of those Funds. By requesting an
exchange into one of those Funds, shareholders are deemed to
confirm receipt of the prospectus describing the Trust's Income
Funds.

The exchange privilege is offered to shareholders for their
convenience and use consistent with their investment objectives.
It is not offered as a short-term market timing service. The
Trust reserves the right to refuse exchange orders from
shareholders who have previously been advised that their frequent
use of the exchange privilege is, in the opinion of the Manager,
inconsistent with the orderly management of the Funds'
portfolios.

The Trust and its Transfer Agent will employ reasonable
procedures to verify the genuineness of telephonic redemption or
exchange requests. If such procedures are not followed, the Trust
or its Transfer Agent may be liable for any losses due to
unauthorized or fraudulent instructions. These procedures involve
requiring certain personal identification information.

The above services are available only in states where the
Funds may be legally offered, and may be terminated or modified
by one or more Funds at any time upon 60 days written notice to
shareholders. None of the Funds, the Distributor, the Trust's
Custodian, or Transfer Agent, nor their respective officers and
employees, will be liable for any loss, expense or cost arising
out of a transaction effected in accordance with the terms and
conditions set forth in this Prospectus even if such transaction
results from any fraudulent or unauthorized instructions.

Income Dividends and Capital Gain Distributions

Income dividends will normally be paid on the Equity Funds
at the frequency noted in the following table. Income dividends
will normally be declared on the fourth business day prior to the
end of the dividend period, payable on the following business
day, to shareholders of record on the day prior to the
declaration date. Distributions of any capital gains will
normally be paid annually in December.
<TABLE>
<CAPTION>
Frequency Fund
<S> <C>
Monthly Income Equity
Annually Capital Appreciation, Special
Equity, International Equity

</TABLE>

All dividends and distributions declared by a Fund will be
reinvested in additional shares of the Fund at the net asset
value on the "Ex-dividend" date(unless the shareholder has
elected to receive dividends or distributions in cash or invest
them in shares of the Money Market Fund). An election may be
changed by delivering written notice to the Fund at least ten
business days prior to the payment date.

MANAGEMENT OF THE FUNDS
Trustees

Information concerning the Trustees, including their names,
positions, terms of office and principal occupations during the
past five years, is contained in the SAI.

Investment Manager

It is the Manager's responsibility to select, subject to
review and approval by the Trustees, the Asset Managers who have
distinguished themselves by able performance in their respective
areas of expertise in asset management and to continuously
monitor their performance. The Manager and its corporate
predecessors have had over 20 years of experience in evaluating
investment advisers for individuals and institutional investors.
In addition, the Manager employs the services of a consultant
specializing in appraisal and comparison of investment managers
to assist in evaluating asset managers. The Manager is also
responsible for conducting all operations of the Funds except
those operations contracted to the Custodian and to the Transfer
Agent.

The Trust has received an exemptive order from the
Securities and Exchange Commission (the "SEC") permitting the
Manager, subject to certain conditions, to enter into
sub-advisory agreements with Asset Managers approved by the
Trustees without obtaining shareholder approval. At meetings held
on December 5, 1994 and December 15, 1994, the shareholders of
the Funds approved the operation of the Trust in this manner. The
order also permits the Manager, subject to the approval of the
Trustees but without shareholder approval, to employ new Asset
Managers for new or existing Funds, change the terms of
particular sub-advisory agreements or continue the employment of
existing Asset Managers after events that would cause an
automatic termination of a sub-advisory agreement. Although
shareholder approval is not required for the termination of
sub-advisory agreements, shareholders of a Fund will continue to
have the right to terminate such agreements for the Fund at any
time by a vote of the majority of the outstanding shares of the
Fund. Shareholders will continue to be notified of any Asset
Manager changes.

The following table sets forth the annual management fee
rates currently paid by each Equity Fund, the annual asset
management fee rates paid by the Manager to each Asset Manager
for a particular Fund during fiscal 1996, each expressed as a
percentage of the Fund's average daily net assets.

<TABLE>
<CAPTION>
Name of Fund Total Asset
<S> Managemen Managemen
t Fee t
<C> Fee
<C>
Income Equity Fund 0.75% *
Capital Appreciation Fund 0.80% 0.40%
Special Equity Fund 0.90% 0.50%
International Equity Fund 0.90% 0.50%
_</TABLE>_________

* The asset management fee paid to Scudder, Stevens & Clark,
Inc. is 0.35% and to Spare, Kaplan, Bischel & Associates is
0.40%.

Asset Managers

The following sets forth certain information about each of
the Asset Managers:

Income Equity Fund

Scudder, Stevens & Clark, Inc. ("Scudder")_The investment
adviser was founded in 1919, and was reorganized as a privately
held corporation in 1985. As of December 31, 1996, assets under
management totaled $__ billion. Its address is 345 Park Avenue,
New York, NY 10154.

Robert T. Hoffman is the portfolio manager of the portion of
the Income Equity Fund managed by Scudder. He is a Managing
Director of Scudder, and has been with the firm since 1989.

Spare, Kaplan, Bischel & Associates ("SKB")_The firm was
formed in August 1989 by a group of investment professionals who
were formerly associated with Merus Capital_The Bank of
California, a wholly-owned subsidiary of Mitsubishi Bank Ltd. As
of December 31, 1996, assets under management totaled
$__ billion. Its address is 44 Montgomery Street, San Francisco,
CA 94104.

Anthony E. Spare is the portfolio manager of the portion of
the Income Equity Fund managed by SKB. He is Chief Investment
Officer of SKB, and one of the founders of the firm.

Capital Appreciation Fund

Dietche & Field Advisers, Inc. ("Dietche")_The firm was
formed in November 1984 and is owned by employees of the firm. As
of December 31, 1996, assets under management totaled
$__ billion. Its address is 437 Madison Avenue, New York, NY
10022.

Lincoln P. Field is the portfolio manager for the portion of
the Capital Appreciation Fund managed by Dietche. He is President
of Dietche and one of the founders of the firm.

Husic Capital Management ("Husic")_Husic commenced
operations in 1986. The firm is a limited partnership which is
100% owned by Frank J. Husic. As of December 31, 1996, assets
under management totaled approximately $_ billion. Its address is
555 California Street, Suite 2900, San Francisco, CA 94104.

Frank J. Husic is the portfolio manager of the portion of
the Capital Appreciation Fund managed by Husic. He has been
President and Chief Investment Officer of Husic since the firm's
inception.

Special Equity Fund

Liberty Investment Management ("Liberty")_The firm was
originally formed in January 1976 and is currently wholly-owned
by Herbert E. Ehlers. As of December 31, 1996, assets under
management totaled $__ billion. Its address is 2502 Rocky Point
Drive, Suite 500, Tampa, FL 33607.

Timothy G. Ebright is the portfolio manager of the portion
of the Special Equity Fund managed by Liberty. He is a Senior
Vice President of Liberty, a position he has held since 1988.

Pilgrim Baxter & Associates ("PBA")_The firm was formed in
1982 and is owned by United Asset Management, a public company.
As of December 31, 1996, assets under management totaled over
$__ billion. Its address is 1255 Drummers Lane, Wayne, PA 19087.

Gary L. Pilgrim is the portfolio manager of the portion of
the Special Equity Fund managed by PBA. He is President and Chief
Investment Officer of PBA, and one of the founders of the
original firm.

Westport Asset Management, Inc. ("Westport")_The firm was
formed in July 1983 and is owned by Andrew J. Knuth and Ronald H.
Oliver. As of December 31, 1996, assets under management totaled
$__ million. Its address is 253 Riverside Avenue, Westport, CT
06880.

Andrew J. Knuth is the portfolio manager of the portion of
the Special Equity Fund managed by Westport. He is the Chairman
of Westport, and one of the founders of the firm.

International Equity Fund

Scudder, Stevens & Clark, Inc._See Income Equity Fund for a
description.

William E. Holzer is the portfolio manager of the portion of
the International Equity Fund managed by Scudder. He is a
Managing Director of Scudder, a position he has held since 1980.

Lazard, Freres & Co. ("Lazard")_The firm is a New York
limited partnership founded in 1848. As of December 31, 1996, the
firm had $__ billion under management. Its address is One
Rockefeller Plaza, New York, NY 10020.

John R. Reinsberg is the portfolio manager of the portion of
the International Equity Fund managed by Lazard. He is a General
Partner of Lazard, a position he has held since 1992. Prior to
joining Lazard, he served in a similar portfolio management
capacity with General Electric Investment Co.

Administration and Shareholder Servicing; Distributor; Transfer
Agent

Administrator. The Managers Funds, L.P. serves as the Trust's
administrator (the "Administrator") and has overall
responsibility, subject to the review of the Trustees, for all
aspects of managing the Trust's operations, including
administration and shareholder services to the Trust, its
shareholders and certain institutions, such as bank trust
departments, dealers and registered investment advisers, that
advise or act as an intermediary with the Trust's shareholders
("Shareholder Representatives"). The Administrator is paid at the
rate of 0.25% per annum of each Equity Fund's average daily net
assets.

Administrative services include (i) preparation of Fund
performance information; (ii) responding to telephone and
in-person inquiries from shareholders and Shareholder
Representatives regarding matters such as account or transaction
status, net asset value of Fund shares, Fund performance, Fund
services, plans and options, Fund investment policies and
portfolio holdings and Fund distributions and the taxation
thereof; (iii) preparing, soliciting and gathering shareholder
proxies and otherwise communicating with shareholders in
connection with shareholder meetings; (iv) maintaining the
Trust's registration with Federal and state securities
regulators; (v) dealing with complaints and correspondence from
shareholders directed to or brought to the attention of the
Administrator; (vi) supervising the operations of the Trust's
Transfer Agent; and (vii) such other administrative, shareholder
and shareholder related services as the parties may from time to
time agree in writing.

Distributor. The Managers Funds, L.P. serves as distributor of
the shares of the Trust. Its address is 40 Richards Avenue,
Norwalk, Connecticut 06854.

Transfer Agent. State Street Bank and Trust Co. serves as the
Trust's Transfer Agent.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Each Asset Manager is responsible for decisions to buy and
sell securities for each Fund or component of a Fund that it
manages, as well as for broker-dealer selection in connection
with such portfolio transactions. In the case of securities
traded on a principal basis, transactions are effected on a "net"
basis, rather than a transaction charge basis, with dealers
acting as principal for their own accounts without a stated
transaction charge. Accordingly, the price of the security may
reflect an increase or decrease from the price paid by the dealer
together with a spread between the bid and asked prices, which
provides the opportunity for a profit or loss to the dealer.
Transactions in other securities are effected on a transaction
charge basis where the broker acts as agent and receives a
commission in connection with the trade. In effecting securities
transactions, each Asset Manager is responsible for obtaining
best price and execution of orders, provided that the Asset
Manager may cause a Fund to pay a commission for brokerage and
research services which is in excess of the commission another
broker would have charged for the same transaction if the Asset
Manager determined in good faith that the commission was
reasonable in relation to the value of the brokerage and research
services provided, viewed in terms of the particular transaction
or in terms of all of the accounts over which the Asset Manager
has investment discretion. The dealer spread or broker's
commission charged in connection with a transaction is a
component of price and is considered together with other relevant
factors. Any of the Funds may effect securities transactions on a
transaction charge basis through a broker-dealer that is an
affiliate of the Manager or of one of that Fund's Asset Managers
in accordance with procedures approved by the Trustees. However,
no Asset Manager for a Fund or its affiliated broker-dealer may
act as principal in any portfolio transaction for any Fund with
which it is an affiliate, and no affiliate of the Manager may act
as principal in a portfolio transaction for any of the Funds.

PERFORMANCE INFORMATION

From time to time the Funds may advertise "yield" and/or
"total return." These figures are based on historical earnings
and are not intended to indicate future performance.

Yield

The Income Equity Fund may advertise "yield." Yield refers
to income generated by an investment in the Fund during a 30-day
(or one month) period. This income is then annualized. That is,
the amount of income generated during the period is assumed to be
generated during each 30-day (or one month) period over a
one-year period and is shown as a percentage of the investment.

Total Return

Each of the Funds may include total return figures in its
advertisements. In calculating total return, the net asset value
per share at the beginning of the period is subtracted from the
net asset value per share at the end of the period (after
assuming and adjusting for the reinvestment of any income
dividends and capital gains distributions), and the result is
divided by the net asset value per share at the beginning of the
period to ascertain the total return percentage.

A Fund also may include comparative performance information
in advertising or marketing the Fund's shares. Such performance
information may include data from industry publications, business
periodicals, rating services and market indices. For more
detailed information on performance calculations and comparisons,
see "Performance Information" in the SAI.

The Funds' annual reports contain additional performance
information and are available upon request without charge.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES

The Trust offers a single class of shares of beneficial
interest, without par value, and currently offers ten series of
its shares as described in the Trust's Prospectus. The Trustees
have the authority to create new series of shares in addition to
the existing ten series without the requirement of a vote of
shareholders of the Trust.

Shares of each Fund are entitled to one vote per share.
Shareholders have the right to vote on the election of the
Trustees and on all other matters on which, by law or the
provisions of the Trust's Declaration of Trust or by-laws, they
may be entitled to vote. On matters relating to all Funds and
affecting all Funds in the same manner, shareholders of all Funds
are entitled to vote. On any matters affecting only one Fund,
only the shareholders of that Fund are entitled to vote. On
matters relating to all the Funds but affecting the Funds
differently, separate votes by Fund are required.

The Trust and its Funds are not required, and do not intend,
to hold annual meetings of shareholders, under normal
circumstances. The Trustees or the shareholders may call special
meetings of the shareholders for action by shareholder vote,
including the removal of any or all of the Trustees. The Trustees
will call a special meeting of shareholders of a Fund upon
written request of the holders of at least 10% of that Fund's
shares.

Under Massachusetts law, the shareholders and trustees of a
business trust may, in certain circumstances, be personally
liable for the trust's obligations to third parties. However, the
Declaration of Trust provides, in substance, that no shareholder
or Trustee shall be personally liable for the Trust's obligations
to third parties, and that every written contract made by the
Trust shall contain a provision to that effect. The Declaration
of Trust also requires the Fund to indemnify shareholders and
Trustees against such liabilities and any related claims and
expenses. The Trust will not indemnify a Trustee when the loss is
due to willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
Trustee's office.

Two lawsuits seeking class action status have been filed
against Managers Intermediate Mortgage Fund, Managers Short
Government Fund, the Investment Manager and the Trust, among
other defendants. In both of these cases, the plaintiffs seek
unspecified damages based upon losses alleged in the two funds
named above. After plaintiff amended the complaint, a second
motion to dismiss was filed in the suit relating to Managers
Short Government Fund. In that action, the parties have now
entered into a preliminary agreement to settle all claims by the
purported class. However, the parties have not finalized their
settlement nor have they obtained the required court approvals.
For these and other reasons, there can be no assurance that the
settlement will be consummated. In addition, a non-class action
lawsuit based on similar allegations has been filed by a customer
against certain of the defendants named in the class action
lawsuits, as well as Managers Short and Intermediate Bond Fund.
Certain other customers, who are potentially members of the
plaintiff class in each of the two class action lawsuits referred
to above, have asserted that they may file similar lawsuits based
on similar claims, but have not done so. Management continues to
believe that it has meritorious defenses and, if the cases are
not settled, Management intends to defend vigorously against
these actions.

As of January 28, 1997, Resource Bank and Trust Company
owned more than 25% of the shares of Managers Capital
Appreciation Fund and Charles Schwab & Co. owned more than 25% of
the shares of Managers Special Equity Fund.

TAX INFORMATION
The Funds

Each Fund has qualified and intends to continue to qualify
as a regulated investment company under the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), under
which each Fund is regarded as a separate regulated investment
company.

All dividends and distributions designated as capital gains
are generally taxable to shareholders whether received in cash or
additional shares. If for any taxable year a Fund complies with
certain requirements, then some or all of the dividends
(excluding capital gain dividends) payable out of income of the
Fund that are attributable to dividends received from domestic
corporations, may qualify for the 70% dividends-received
deduction available to corporations.

Although distributions are generally taxable to a
shareholder in the taxable year in which the distribution is
made, dividends declared in October, November or December of a
taxable year with a record date in such a month and actually
received during the following January, will be taxed as though
received by the shareholder on December 31 of such year.

Generally, each Fund is required to back-up withhold 31% of
distributions paid to a shareholder who fails to provide a social
security or taxpayer identification number and certify that such
number is correct and that such shareholder is not subject to, or
is otherwise exempt from, back-up withholding.

Shareholders should consult their own tax advisers for more
information regarding the Federal, foreign, state, and local tax
treatment with respect to their own tax situation. For more
information concerning taxes, see "Tax Information" in the SAI.

SHAREHOLDER REPORTS

Shareholders will receive annual and semi-annual reports
which include financial statements showing the results of
operations, investment portfolio and other information of the
Funds in which they have invested. Shareholders will also receive
annual tax statements indicating the tax status of distributions
made during the year. Confirmations of transactions will be sent
to shareholders following purchases, redemptions or exchanges by
the shareholder, and quarterly statements of account will be sent
to all shareholders.

THE MANAGERS FUNDS
PROSPECTUS
Dated April 1, 1997,

INCOME FUNDS

Managers Short Government Fund_(the "Short Government Fund")
seeks high current income while preserving capital by investing
primarily in U.S. government securities with an average maturity
not exceeding three years.

Managers Short and Intermediate Bond Fund_(the "Short and
Intermediate Bond Fund") seeks high current income by investing
in a portfolio of fixed-income securities with an average
portfolio maturity between one and five years.

Managers Intermediate Mortgage Fund_(the "Intermediate
Mortgage Fund") seeks high current income by investing primarily
in mortgage-related securities.

Managers Bond Fund_(the "Bond Fund") seeks income by
investing primarily in fixed-income securities.

Managers Global Bond Fund_(the "Global Bond Fund") seeks
high total return, through both income and capital appreciation,
by investing primarily in domestic and foreign fixed-income
securities.

This Prospectus sets forth concisely the information
concerning the Trust and the Income Funds that a prospective
investor ought to know before investing. It should be retained
for future reference. The Trust has filed with the Securities and
Exchange Commission a Statement of Additional Information
("SAI"), dated April 1, 1997, which contains more detailed
information about the Trust and the Funds and is incorporated
into this Prospectus by reference. A copy of the SAI may be
obtained without charge by contacting the Trust at 40 Richards
Avenue, Norwalk, Connecticut 06854, (800) 835-3879 or
(203) 857-5321.

<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S>

Pag
e
<C>
Illustrative Expense Information
Summary
Financial Highlights
Investment Objectives, Policies and Restrictions
Certain Investment Techniques and Associated Risks
Portfolio Turnover
Purchase and Redemption of Fund Shares
Management of the Funds
Portfolio Transactions and Brokerage
Performance Information
Description of Shares, Voting Rights and Liabilities
Tax Information
Shareholder Reports

</TABLE>

ILLUSTRATIVE EXPENSE INFORMATION

The following tables provide the investor with information
concerning annual operating expenses of the Income Funds. The
Funds impose no sales load on purchases of shares or on
reinvested dividends and distributions, nor any deferred sales
load upon redemption. There are no redemption fees or Rule 12b-1
fees.

Income Funds' Annual Operating Expenses: (based on average
daily net assets during fiscal 1996, after expense
reimbursements)
<TABLE>
<CAPTION>
Fund Managemen Other Total
<S> t Fee* Expenses* Operating
<C> * Expenses*
<C> *
<C>
Short Government Fund 0.20% % %
Short and Intermediate Bond Fund 0.50% % %
Intermediate Mortgage Fund 0.45% % %
Bond Fund 0.625% % %
Global Bond Fund 0.70% % %
</TABLE>

_____

* The management fees reflect the fees payable by each Fund
under the current investment advisory agreements, except
that in the case of the Short Government Fund, the
management fee also reflects a voluntary fee waiver by the
Manager. In the absence of such waiver, the management fee
for this Fund would be 0.45%.

** Other operating expenses reflect the expenses actually
incurred by each Fund during the year ended December 31,
1996. With respect to the Short Government Fund, where no
administrative fee is currently being charged, such expenses
reflect voluntary fee waivers of administrative fees by the
Manager. In the absence of such waivers, other expenses
would be __% and the total operating expenses would be __%.
See "Management of the Funds-Administration and Shareholder
Servicing; Distributor."

These fee waivers may be modified or terminated at anytime
at the sole discretion of the Manager. Shareholders will be
notified of any such modification or termination at the time it
becomes effective.

Examples

An investor would pay the following expenses on a $1,000
investment in the respective Income Funds over various time
periods assuming (1) a 5% annual rate of return, (2) redemption
at the end of each time period, and (3) continuation of any
currently applicable waivers of management fees. As noted above,
the Funds do not charge any redemption fees or deferred sales
loads of any kind.

The examples should not be considered a representation of
past or future expenses. Actual expenses may be greater or less
than those shown.

<TABLE>
<CAPTION>
Fund 1 3 5 10
<S> year years years years
<C> <C> <C> <C>
Short Government Fund $ $ $ $
Short and Intermediate Bond Fund
Intermediate Mortgage Fund
Bond Fund
Global Bond Fund
</TABLE>

SUMMARY
General Description of the Trust and the Funds

The Trust is a no-load, open-end, management investment
company organized as a Massachusetts business trust, composed of
the following ten separate series:

This Prospectus relates to the Income Funds. A Prospectus
for the other Funds (the "Equity Funds" and the Money Market
Fund) can be obtained by calling (800) 835-3879 or (203)
857-5321.

Each of the Funds has distinct investment objectives and
strategies. There is, of course, no assurance that a Fund will
achieve its investment objectives.

Management

Special Risks

There are certain risks associated with the investment
policies of each of the Income Funds. For instance, to the extent
that a Fund invests in securities of non-U.S. issuers or
denominated or quoted in foreign currencies, the Fund may face
risks that are different from those associated with investment in
domestic U.S. dollar denominated or quoted securities, including
the effects of changes in currency exchange rates, political and
economic developments, the possible imposition of exchange
controls, governmental confiscation or restrictions, less
availability of data on companies and a less well developed
securities industry as well as less regulation of stock
exchanges, brokers and issuers. To the extent that a Fund invests
in municipal obligations, the Fund is vulnerable to the economic,
business or political developments that might affect particular
municipal issuers or municipal obligations of a particular type.
To the extent that a Fund invests in mortgage-related or
asset-backed securities, a loss could be incurred if the payments
or prepayments on those securities are made at rates other than
those anticipated at the time of purchase, or if the collateral
backing the securities is insufficient. In general, the value of
fixed-income securities, and consequently the Funds' net asset
values, will rise when interest rates fall, and fall when
interest rates rise, affecting the net asset value of a Fund. For
more details on the risks associated with certain securities and
investment techniques see "Certain Securities and Investment
Techniques and Associated Risks." Certain Funds experience high
annual portfolio turnover which may involve correspondingly
greater brokerage commissions and other transaction costs, and
certain adverse tax consequences to shareholders. See "Portfolio
Turnover."

Purchase and Redemption of Shares

The minimum initial investment is $2,000 per Fund ($500 for
IRAs and IRA rollovers). For information on eligible investors,
arrangements for lower minimum investments and how to purchase
and redeem shares of the Fund, see "Purchase and Redemption of
Fund Shares."

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS TO BE UPDATED IN SUBSEQUENT B-FILING

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

The investment objectives of a Fund may not be changed
without approval of a majority of the outstanding voting
securities of that Fund, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). There is no assurance that
these objectives will be achieved. Investors should refer to the
prospectus section entitled "Certain Securities and Investment
Techniques and Associated Risks" and to the "Other Information"
section in the SAI for additional portfolio management
discussions and for a description of the ratings mentioned below
that are assigned by Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's Ratings Group ("Standard & Poor's").

Each Fund is subject to certain investment restrictions
which may not be changed without the approval of the holders of a
majority of that Fund's outstanding voting securities.

The Income Funds pursue their investment objectives
primarily by investing in various types of debt securities. Each
Income Fund may purchase securities on a when-issued basis, and,
unless otherwise indicated, may engage in options and futures
transactions. The Short Government Fund, Short and Intermediate
Bond Fund and Bond Fund may invest, and the Intermediate Mortgage
Fund will primarily invest, in mortgage-related securities,
including collateralized mortgage obligations ("CMOs"), Interest
Only ("IOs") and Principal Only ("POs") mortgage-related
securities. Such Funds may also purchase asset-backed securities.
The Funds will not purchase asset-backed or privately issued
mortgage-related securities rated less than AA by Standard and
Poor's or the equivalent. The Short Government Fund, Short and
Intermediate Bond Fund, Intermediate Mortgage Fund, Bond Fund and
Global Bond Fund may enter into dollar rolls. See "Certain
Securities and Investment Techniques and Associated Risks_Other
Securities," "_Special Risks Associated with Asset-Backed and
Mortgage-Related Securities," "_When-Issued Securities," and
"_Hedging Techniques." Any Income Fund may from time to time
invest a portion of its cash balances in shares of unaffiliated
money market mutual funds, when the Manager determines that such
investments offer higher net yields (after considering all direct
and indirect fees and expenses) than direct investments in cash
equivalent securities.

As described below, certain Income Funds may invest in
securities denominated in currencies other than the U.S. dollar
("foreign securities") including those denominated in European
Currency Units (ECUs).

For the purposes of portfolio maturity limitations, a
security which has an interest rate that adjusts or re-sets
periodically ("variable rate securities") will be considered to
have a maturity equal to the period of time remaining until the
next readjustment of the interest rate, and a mortgage-related
security will be deemed to have an average maturity equal to its
average life as determined by the Asset Manager based on the
prepayment experience of the underlying mortgage pools. The
maturity of a security with a demand feature may be deemed to be
the period of time remaining until the demand feature is
exercisable unless the Asset Manager believes that the demand
feature will probably not be exercised. If the rating of any
security held by any Fund is changed so that the instrument would
no longer qualify for investment by the Fund, the Fund will seek
to dispose of the instrument as soon as is reasonably
practicable, in light of the circumstances and consistent with
the interests of the Fund.

Any or all of the Funds may at times for defensive purposes
temporarily place all or a portion of their assets in cash,
short-term commercial paper, U.S. government securities, high
quality debt securities, including Eurodollar and Yankee Dollar
obligations, and obligations of banks when, in the judgment of
the Fund's Asset Manager, such investments are appropriate in
light of economic or market conditions. See "Other
Information_Cash Equivalents" in the SAI. The following
discussions of the individual Income Funds' objectives and
policies is modified by the above.

Managers Short Government Fund

The Fund's investment objective is to seek high current
income consistent with the preservation of capital by investing
in debt securities.

The Fund will maintain an overall maximum dollar-weighted
average maturity of three years or less. The Fund is not a money
market fund and does not seek to maintain a stable price per
share. As a matter of operating policy, under normal
circumstances, the Fund will at all times have at least 65% of
its total assets invested in securities issued or guaranteed as
to principal or interest by the U.S. government, its agencies or
instrumentalities. Up to 35% of the Fund's total assets may be
invested in corporate bonds and notes, debentures,
non-convertible fixed-income preferred stocks, eurodollar
certificates of deposit and eurodollar bonds. The Fund may invest
a substantial portion of its assets in mortgage-related
securities (including CMOs, IOs and POs) that are issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities. In addition, the Fund may invest in privately
issued mortgage-related securities (including CMOs, IOs and POs)
and asset-backed securities. The Fund may also invest in variable
rate securities including inverse floating obligations. See
"Certain Securities and Investment Techniques and Associated
Risks_General Risks Associated with Income Funds" and "_Special
Risks Associated with Asset-Backed and Mortgage-Related
Securities."

The Fund may invest up to 10% of its assets in foreign
securities, including those issued by foreign governments.
Investing in foreign securities may subject the Fund to certain
additional risks. The Fund may purchase options on securities and
futures contracts, write options on securities and futures
contracts it holds, buy and sell futures contracts on securities
and securities indices and foreign currencies, buy and sell
interest rate futures contracts, and enter into forward foreign
currency exchange contracts. See "Certain Securities and
Investment Techniques and Associated Risks_Hedging Techniques"
and "_Other Securities_Foreign Securities."

The Fund will not purchase debt instruments, including cash
equivalents, that have been rated lower than A or the equivalent
by Standard & Poor's or by Moody's. In addition, the Fund's
investments in privately issued mortgage-backed securities and
asset-backed securities will be limited to those rated AA or Aa,
respectively, by those agencies. Instruments denominated in
currencies other than the U.S. dollar will also be limited to
those rated AAA or Aaa. The Fund may purchase unrated securities
in any of the above categories, provided that such securities are
of comparable quality to such rated instruments, as determined by
the Asset Manager.

Managers Short and Intermediate Bond Fund

The Fund's investment objective is to seek high current
income by investing in fixed-income securities having an average
dollar-weighted portfolio maturity between one and five years.

The Fund invests in obligations of the U.S. government, its
agencies and instrumentalities and corporate bonds, debentures,
non-convertible fixed-income preferred stocks, eurodollar
certificates of deposit and eurodollar bonds. The Fund may invest
a substantial portion of its assets in mortgage-related
securities (including CMOs, IOs and POs) that are issued or
guaranteed by the United States government, its agencies or
instrumentalities. In addition, the Fund may invest in privately
issued mortgage-related securities (including CMOs, IOs and POs)
and asset-backed securities. For a discussion of mortgage-related
and asset-backed securities and related risks, see "Certain
Securities and Investment Techniques and Associated Risks_Special
Risks Associated with Asset-Backed and Mortgage-Related
Securities." Ordinarily, at least 65% of the Fund's total assets
will be invested in bonds.

The Fund may invest up to 10% of its assets in foreign
securities. Investing in foreign securities may subject the Fund
to certain additional risks. See "Certain Securities and
Investment Techniques and Associated Risks_Other
Securities-Foreign Securities" and "General Risks Associated with
Income Funds." The Fund may actively trade in the securities in
which it invests. See "Portfolio Turnover." The Fund may invest
in securities that have a fixed or variable rate interest,
including inverse floaters. The Fund invests primarily in
securities rated investment grade by Moody's or Standard & Poor's
(or, if unrated, of comparable quality as determined by the Asset
Manager), including securities rated in the lowest investment
grade category. Securities rated in the lowest investment grade
category have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a
weakened capacity to pay principal or interest on such securities
than on higher grade securities. In addition, the Fund may invest
in securities rated below investment grade, but rated at least Ba
by Moody's or BB by Standard & Poor's (or, if unrated, of
comparable quality as determined by the Asset Manager). The Fund
does not expect to invest more than 5% of its net assets in
securities rated (or, if unrated, of comparable quality as
determined by the Asset Manager) lower than investment grade
(sometimes referred to as "junk bonds"). However, the rating of
an issue of securities may be reduced subsequent to the purchase
of the securities by the Fund, and this may cause the amount of
below investment grade securities held by the Fund to exceed 5%
of the Fund's net assets. The downgrade will not require sale of
the securities by the Fund, but the Asset Manager will consider
this event in its determination of whether the Fund should
continue to hold the securities. Investing in below investment
grade securities may subject the Fund to additional risks. See
"Certain Securities and Investment Techniques and Associated
Risks_Special Risks Associated with Lower-Rated Securities" in
the Prospectus, and "Other Information_Ratings of Debt
Instruments" in the SAI.

Managers Intermediate Mortgage Fund

The Fund's investment objective is to seek high current
income by investing primarily in mortgage-related securities.

Under normal circumstances, the Fund will invest at least
65% of the value of its total assets in mortgage-related
securities (including CMOs, IOs and POs) issued by governments
and government-related and private organizations, and the Fund
will invest more than 25% of its assets in the mortgage and
mortgage finance industry even during temporary defensive
periods. Due to this concentration, the Fund will be subject to
certain risks peculiar to the mortgage and mortgage finance
industry. See "Certain Securities and Investment Techniques and
Associated Risks_Special Risks Associated with Asset-Backed and
Mortgage-Related Securities" in the Prospectus and "Other
Information_Mortgage-Related Securities" in the SAI.

The Fund may invest up to 35% of the value of its total
assets in (i) non-mortgage-related securities issued or
guaranteed by the United States government, its agencies and
instrumentalities, (ii) certificates of deposit, bankers'
acceptances and interest-bearing savings deposits of banks having
total assets of more than $1 billion and which are members of the
Federal Deposit Insurance Corporation, and (iii) commercial paper
rated A-1 by Standard & Poor's or P-1 by Moody's or, if not
rated, issued by companies which have an outstanding debt issue
rated AAA by Standard & Poor's or Aaa by Moody's. It is currently
the operating policy of the Asset Manager to invest 100% of the
Fund's assets in securities issued by governments and
government-related organizations and securities rated AAA by
Standard & Poor's or Aaa by Moody's or, if not rated, that are of
comparable quality as determined by the Asset Manager. In
addition, at any given time a portion of the Fund's assets may be
in cash or may be invested in repurchase agreements due to
portfolio purchases and sales, and to otherwise manage cash
flows. The Fund may invest in securities that have a fixed rate
of interest and in variable rate securities, including inverse
floaters. The Fund may also enter into dollar rolls. In addition,
the Fund may write options on the securities held in its
portfolio. See "Certain Securities and Investment Techniques and
Associated Risks_General Risks Associated with Income Funds" and
"_Other Securities_When-Issued Securities and Dollar Rolls," and
"_Hedging Techniques."

The Fund will maintain a dollar-weighted average portfolio
maturity of more than three years but no more than ten years. In
order to maintain a dollar-weighted average portfolio maturity of
from three to ten years, the Asset Manager will monitor the
prepayment experience of the underlying mortgage pools of the
Fund's mortgage-related securities and will purchase and sell
securities in order to shorten or lengthen the average maturity
of the Fund's portfolio, as appropriate.

Managers Bond Fund

The Fund's investment objective is to seek income by
investing in fixed-income securities having a remaining maturity
not greater than forty years from the date of purchase by the
Fund. The Fund invests in a diversified portfolio of obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities as well as in corporate bonds, debentures,
preferred stocks, mortgage-related securities (including CMOs,
IOs and POs), asset-backed securities, eurodollar certificates of
deposit and eurodollar bonds. The Fund may invest up to 10% of
its total assets in foreign securities. Investing in foreign
securities may subject the Fund to certain additional risks.
Ordinarily, at least 65% of the Fund's total assets will be
invested in bonds. The Fund may invest in both fixed and variable
rate securities, including inverse floating obligations. See
"Certain Securities and Investment Techniques and Associated
Risks_General Risks Associated with Income Funds," "_Special
Risks Associated with Asset-Backed and Mortgage-Related
Securities," and "_Foreign Securities." Although the Fund expects
to invest in bonds with a full range of maturities, the average
maturity of the Fund may be adjusted in response to market
conditions. The Fund will actively trade in the securities in
which it invests. See "Portfolio Turnover."

The Fund invests primarily in securities rated investment
grade by Moody's or Standard & Poor's (or, if unrated, of
comparable quality as determined by the Asset Manager), including
securities rated in the lowest investment grade category.
Securities rated in the lowest investment grade category have
speculative characteristics and changes in economic conditions or
other circumstances are more likely to lead to a weakened
capacity to pay principal or interest on such securities than on
higher grade securities. In addition, the Fund may invest in
securities rated below investment grade, but rated at least Ba by
Moody's or BB by Standard & Poor's (or, if unrated, of comparable
quality as determined by the Asset Manager). The Fund does not
expect to invest more than 5% of its net assets in securities
rated (or, if unrated, of comparable quality as determined by the
Asset Manager) lower than investment grade (sometimes referred to
as "junk bonds"). However, the rating of an issue of securities
may be reduced subsequent to the purchase of the securities by
the Fund, and this may cause the amount of below investment grade
securities held by the Fund to exceed 5% of the Fund's net
assets. The downgrade will not require sale of the securities by
the Fund, but the Asset Manager will consider this event in its
determination of whether the Fund should continue to hold the
securities. Investing in below investment grade securities may
subject the Fund to additional risks. See "Certain Securities and
Investment Techniques and Associated Risks_Special Risks
Associated with Lower-Rated Securities" in the Prospectus, and
"Other Information_Ratings of Debt Instruments" in the SAI.

Managers Global Bond Fund

The Fund's primary objective is to seek a high total return
through both income and capital appreciation by investing in a
portfolio of domestic and foreign fixed-income securities.

The Fund ordinarily invests at least 65% of its total assets
in an actively managed portfolio of domestic and foreign bonds
issued by governments, corporations and supranational
organizations such as the World Bank, Asian Development Bank,
European Investment Bank and European Economic Community, all of
which will be rated investment grade as determined by Moody's or
Standard & Poor's, or, if unrated, of comparable quality as
determined by the Asset Manager. The Fund will invest in
securities denominated in currencies other than the U.S. dollar.
Normally, investments will be made in a minimum of three
countries, one of which may be the United States. The Fund's
weighted average maturity will vary, but is generally expected to
be ten years or less. The Fund may engage in currency hedging
strategies through the use of forward currency exchange
contracts, options and futures contracts. See "Certain Securities
and Investment Techniques and Associated Risks_Other
Securities_Foreign Securities" and "_Hedging Techniques."

The Global Bond Fund is "non-diversified," as that term is
defined in the 1940 Act, but intends to qualify as a "regulated
investment company" for federal income tax purposes. This means,
in general, that although more than 5% of the Fund's total assets
may be invested in the securities of any one issuer (including a
foreign government), at the close of each quarter of the Fund's
taxable year the aggregate amount of such holdings may not exceed
50% of the value of its total assets, and no more than 25% of the
value of its total assets may be invested in the securities of a
single issuer. To the extent that the Fund holds the securities
of a smaller number of issuers than if it were "diversified" (as
defined in the 1940 Act), the Fund will be subject to greater
risk than a fund that invests in a large number of securities,
because changes in the financial condition or market assessment
of particular issuers may cause greater fluctuations in the
Fund's net asset value or adversely affect its total return.

CERTAIN SECURITIES AND INVESTMENT TECHNIQUES AND
ASSOCIATED RISKS

The following are descriptions of types of securities
invested in by the Funds, certain investment techniques employed
by the Funds and risks associated with utilizing either the
securities or the investment techniques. Unless otherwise
indicated, all of the Funds may invest in the indicated
securities and use the indicated investment techniques.

General Risks Associated with Income Funds

The Income Funds are subject to normal interest rate, credit
and market risks. Market prices of fixed-income securities will
fluctuate and will tend to vary inversely with changes in
prevailing interest rates. If interest rates increase from the
time a security is purchased, such security, if sold, might be
sold at a price less than its purchase cost. Conversely, if
interest rates decline from the time a security is purchased,
such security, if sold, might be sold at a price greater than its
purchase cost. Generally, the longer an instrument's maturity,
the more sensitive the instrument's price will be to interest
rate changes. In an attempt to reduce market risks resulting from
fluctuations in the principal value of debt obligations due to
changes in prevailing interest rates the Funds carefully monitor
and seek to adjust the maturities of their investments and may
invest in variable rate securities. Such investment techniques do
not eliminate all risks and investors should expect the value of
their Fund shares to fluctuate based on interest rate, credit and
market conditions.

Duration measures the timing of a Fund's cash flow (i.e.,
principal and interest payments) and is essentially a weighted
average term-to-maturity where cash flows are expressed in terms
of their present value. Accordingly, duration takes into account
the time value of money in addition to the amount and timing of
all interim and final payments. Duration incorporates the size of
the coupon payments, the time to maturity, and the portfolio's
yield to maturity into a single composite index. The longer a
Fund's duration, the more its price will fluctuate, in percentage
terms, in response to a given change in interest rates and the
greater the market risk. From time to time, the Income Funds may
advertise the duration of their portfolios.

Special Risks Associated with Asset-Backed and
Mortgage-Related Securities

Mortgage-Related Securities. The Funds will be subject to
prepayment risk on mortgage-related securities. Prepayments of
principal by mortgagors or mortgage foreclosures may shorten the
average life of the mortgage-related securities remaining in a
Fund's portfolio. Reinvestment of prepayments could occur at
lower interest rates than the original investment, thus
decreasing the yield of the Fund. In periods of rising interest
rates, the rate of prepayment tends to decrease, thereby
lengthening the average life of a pool of mortgage-related
securities. Conversely, in periods of falling interest rates the
rate of prepayment tends to increase, thereby shortening the
average life of a pool. See "Other Information_Mortgage-Related
Securities" in the SAI.

CMOs are obligations fully collateralized by a portfolio of
mortgages or mortgage-related securities. Payments of principal
and interest on the mortgages are passed through to the holders
of the CMOs on the same schedule as they are received. Certain
classes of CMOs have priority over others with respect to the
receipt of prepayments on the mortgages. Therefore, depending on
the type of CMOs in which a Fund invests, the investment may be
subject to a greater or lesser risk of prepayment than other
types of mortgage-related securities. In other mortgage-related
securities, all interest payments go to one class of holders
"Interest Only" or "IO"-and all of the principal goes to a second
class of holders-"Principal Only" or "PO." The yield to maturity
on an IO class is extremely sensitive to the rate of principal
prepayments on the related underlying mortgage assets, and a
rapid rate of principal payments will have a material adverse
effect on yield to maturity. If the underlying mortgage assets
experience greater than anticipated prepayments of principal, the
Fund may fail to fully recoup its initial investment in these
securities, even when the securities are rated AA or the
equivalent. Conversely, if the underlying mortgage assets
experience less than anticipated prepayments of principal, the
yield on a PO class would be materially adversely affected. As
interest rates rise and fall, the value of IOs tends to move in
the same direction as interest rates. The value of the other
mortgage-related securities described herein (including POs),
like other debt instruments, will tend to move in the opposite
direction from interest rates. In general, the Funds treat IOs
and POs as subject to the restriction on investments in illiquid
instruments except that IOs and POs issued by the U.S.
government, its agencies and instrumentalities and backed by
fixed-rate mortgages may be excluded from this limit if, in the
judgment of the Asset Manager (subject to the oversight of the
Trustees) such IOs and POs are readily marketable.

Asset-Backed Securities. Asset-backed securities, in which
certain Funds may invest, involve the passing through of payments
on debt obligations including automobile loans, credit card
loans, home equity loans, computer leases and other types of
consumer loans. Generally, the obligations underlying most
asset-backed securities are unsecured. In the case of auto loans,
the underlying security interests in the automobiles are not
transferred to the entity issuing the asset-backed security. In
addition, like mortgage-related securities, asset-backed
securities may be subject to the risk of prepayments of the
underlying obligations.

Special Risks Associated with Lower-Rated Securities

Generally, lower-rated debt securities and unrated
securities of comparable quality offer a higher current yield
than is offered by higher-rated securities. However, lower-rated
debt securities involve greater risks, in that they are
especially subject to adverse changes in general conditions and
in the industries in which the issuers are engaged, to changes in
the financial condition of the issuers and to price fluctuation
in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged
issuers may experience financial stress which could adversely
affect their ability to make payments of principal and interest
and increase the possibility of default. The market for
lower-rated securities may be thinner and less active than that
for higher quality securities, which may limit a Fund's ability
to sell such securities at fair value in response to changes in
the economy or the financial markets. Adverse publicity and
investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of
lower-rated securities, especially in a thinly traded market. In
addition, the prices for lower-rated debt securities may be
affected by legislative and regulatory developments.

Other Securities

Inverse Floating Obligations. The Income Funds may invest up to
25% of their assets in "inverse floating obligations" or
"residual interest bonds" (some of which are known as "support
floaters"). These are variable rate securities on which the
interest rates typically decline as market rates increase and
increase as market rates decline. Such instruments can be
expected to be more volatile than fixed rate or other variable
rate securities. For example, in periods of rising interest
rates, the interest rate on an inverse floating obligation will
decline, accentuating the decrease in the market value of the
obligation. This has a similar effect on a Fund's net asset value
as if the Fund had created a degree of leverage in its portfolio.
The net asset value of a Fund which has invested a large
percentage of its assets in inverse floaters will tend to be more
volatile in periods of fluctuating interest rates than that of a
Fund holding other types of variable rate and/or fixed-rate
securities. To seek to limit a Fund's volatility, the Asset
Managers may purchase inverse floaters with shorter term
maturities or which contain limitations on the extent to which
the interest rate may vary. The Asset Managers may also seek to
limit volatility by diversifying the inverse floaters in a Fund's
portfolio by the type of underlying security and by the type of
index to which they are linked. See "Other Information_Inverse
Floating Obligations" in the SAI.

Municipal Securities. Municipal bonds are of three principal
types: General Obligation Bonds, generally issued by states,
counties, cities, towns and regional districts, the proceeds of
which are used to fund a wide range of public projects; Revenue
Bonds, the principal security for which is generally the net
revenues derived from a particular facility, group of facilities
or, in some cases, the proceeds of a special excise or other
specific revenue source; and Industrial Development Bonds, which
are considered municipal bonds if the interest paid is exempt
from federal income taxes, and which are issued by or on behalf
of public authorities to raise money to finance public facilities
and privately-operated facilities for business, manufacturing and
housing.

Investments in municipal securities involve risks that
differ from other domestic securities. There could be economic,
business or political developments which might affect all
municipal obligations of a similar type. For more information
concerning municipal securities and related risks, see "Other
Information_Municipal Bonds" in the SAI.

Repurchase Agreements. In a repurchase transaction, a Fund
purchases a security from a bank or a broker-dealer and
simultaneously agrees to resell that security to the bank or
broker-dealer at an agreed-upon price on an agreed upon date. The
resale price reflects the purchase price plus an agreed upon rate
of interest. In effect, the obligation of the seller to repay the
agreed-upon price is secured by the value of the underlying
security, which must at least equal the repurchase price.
Repurchase agreements could involve certain risks in the event of
default or insolvency of the other party, including possible
delays or restrictions upon a Fund's ability to dispose of the
underlying securities. No Fund may invest in repurchase
agreements with a maturity of more than seven days if the
aggregate of such investments, along with other illiquid
securities, exceeds the Fund's limits on investments in illiquid
securities. For more information concerning repurchase
agreements, see "Other Information_Repurchase Agreements" in the
SAI.

When-Issued Securities and Dollar Rolls. Consistent with its
investment objectives and policies, each Fund may purchase or
sell U.S. government or municipal securities on a when-issued or
delayed delivery basis. When-issued or delayed delivery
transactions are those where securities are purchased or sold by
a Fund with payment and delivery taking place in the future in
order to secure what is considered to be an advantageous price
and yield to the Fund at the time of entering into the
transaction. During the period between purchase and settlement,
no payment is made by the Fund to the issuer and no interest
accrues to the Fund. However, the value of the Fund's assets will
fluctuate with the value of the security to be purchased.
Accordingly, these transactions may have a similar effect on a
Fund's net asset value as if the Fund had created a degree of
leverage in its portfolio. See "Segregated Accounts" below.
When-issued securities may also be known as "TBAs."

In a dollar roll, a Fund sells securities for delivery in
the current month and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a
specified future date from the same party. During the period
between the sale and forward purchase, the Fund forgoes principal
and interest paid on the securities sold, and does not list the
securities sold as an asset on the Fund's books. The Fund
realizes a capital gain on the difference between the current
sales price and the forward price for the future purchase (often
referred to as the "drop") as well as by the interest earned on
the cash proceeds of the initial sale. A "covered roll" is a
specific type of dollar roll for which there is an offsetting
cash position or a cash equivalent security position which
matures on or before the forward settlement date of the dollar
roll transaction.

Dollar rolls involve the risk that the market value of the
securities subject to the Fund's forward purchase commitment may
decline in value below the price of the securities the Fund has
sold. In the event the buyer of securities under a dollar roll
files for bankruptcy or becomes insolvent, the Fund's use of the
proceeds of the current sale portion of the agreement may be
restricted pending a determination by the other party, or its
trustee or receiver, whether to enforce the Fund's obligation to
purchase the similar securities in the forward purchase
transaction.

The Funds will engage in dollar roll transactions to enhance
return and not for the purpose of borrowing. Each dollar roll
transaction is accounted for as a sale of a portfolio security
and a subsequent purchase of a substantially similar security in
the forward market.

Segregated Accounts. Certain transactions, such as certain
options, futures and forward transactions, dollar rolls, or
purchases of when-issued or delayed delivery securities, may have
a similar effect on a Fund's net asset value as if the Fund had
created a degree of leverage in its portfolio. However, if a Fund
enters into such a transaction, the Fund will establish a
segregated account with its Custodian in which it will maintain
cash or other liquid securities equal in value to its obligations
in respect to such transaction.

Hedging Techniques

Options. Each Fund may write ("sell") covered put and covered
call options covering the types of financial instruments in which
the Fund may invest (including individual stocks, stock indices,
futures contracts, forward foreign currency exchange contracts
and when-issued securities) to provide protection against the
adverse effects of anticipated changes in securities prices. A
Fund may also write covered put options and covered call options
as a means of enhancing its return through the receipt of
premiums when the Fund portfolio manager determines that the
underlying securities, indices or futures contracts have achieved
their potential for appreciation. By writing covered call
options, the Fund foregoes the opportunity to profit from an
increase in the market price of the underlying security, index or
futures contract above the exercise price except insofar as the
premium represents such a profit. The risk involved in writing
covered put options is that there could be a decrease in the
market value of the underlying security, index or futures
contract. If this occurred, the option could be exercised and the
underlying security, index or futures contract would then be sold
to the Fund at a higher price than its then current market value.
A Fund will write only "covered" options.

The Fund may also purchase put and call options to provide
protection against adverse price effects from anticipated changes
in prevailing securities prices. The purchase of a put option
protects the value of portfolio holdings in a falling market,
while the purchase of a call option protects cash reserves from a
failure to participate in a rising market. In purchasing a call
option, the Fund would be in a position to realize a gain if,
during the option period, the price of the security, index or
futures contract increased over the strike price by an amount
greater than the premium paid. It would realize a loss if the
price of the security, index or futures contract decreased,
remained the same or did not increase over the strike price
during the option period by more than the amount of the premium
paid. If a put or call option purchased by the Fund were
permitted to expire without being sold or exercised, its premium
would represent a realized loss to the Fund.

PORTFOLIO TURNOVER

In carrying out the investment policies described in this
Prospectus, each Fund expects to engage in a substantial number
of securities portfolio transactions, and the rate of portfolio
turnover will not be a limiting factor when an Asset Manager
deems it appropriate to purchase or sell securities for a Fund.
High portfolio turnover involves correspondingly greater
transaction costs which are borne directly by a Fund. In
addition, high portfolio turnover may also result in increased
short-term capital gains which, when distributed to shareholders,
are treated for federal income tax purposes as ordinary income.
See "Portfolio Transactions and Brokerage" and "Tax Information."
For the Income Funds' portfolio turnover rates, see "Financial
Highlights."

PURCHASE AND REDEMPTION OF FUND SHARES
How to Purchase Fund Shares

Initial purchases of shares of the Funds, may be made in a
minimum amount of $2,000 per Fund ($500 for IRAs and IRA
rollovers). Arrangements can be made to open accounts with a $500
or $250 initial investment and agreement to invest $50 or $100,
respectively, per month until minimum is attained. Call (800)835-
3879 for more information on these arrangements. Lower minimum
initial investments with accompanying automatic investment plans
or letters of intent may be accepted at the discretion of the
Manager. There is no minimum for additional investments except
for telephone Automated Clearing House ("ACH") purchases.

The following shows the various methods for purchasing the
Trust's shares. For more complete instructions, see the account
application.

<TABLE>
<CAPTION>
Method
<S>

Initial Investment Additional Investments
<C> <C>

Minimums:
Regular accounts $2,000, or lower, as No minimum
described above
IRAs, IRA rollovers, SEP 500 No minimum
IRAs

Method

Through your investment Contact your investment Send additional funds
professional advisor, bank or other to your investment
investment professional professional at the
address appearing on
your account statement
Directly by mail Send your account Send letter of
application and check instruction and check
(payable to The (payable to The
Managers Funds) to the Managers Funds) to
address indicated on The Managers Funds
the application c/o Boston Financial
Data
Services, Inc.
P.O. Box 8517
Boston, MA 02266-8517
Please include your account on your
Direct Federal Funds or Call (800) 25 check
Bank Wire 682 to notify CCall (800)252-0682 to
notify
the Transfer Agent, and Call the Transfer Agent
instruct your bank to at (800) 252-0682 prior
wire funds to: to wiring additional
ABA #011000028 funds
State Street Bank &
Trust Company
Boston, MA 02101
BFN_The Managers Funds
AC 9905-001-5
FBO_Shareholder Name

By telephone Only for established Call the Transfer Agent
accounts with ACH at (800) 252-0682.
privileges. Call Minimum investment:
(800) 252-0682 with $100.
instructions for the
Transfer Agent. Minimum
investment: $100.
</TABLE>

Purchase orders received by the Trust, c/o Boston Financial
Data Services at the address listed on the back cover of this
prospectus, prior to 4:00 p.m. Eastern Standard Time, on any
business day will receive the offering price computed that day.
The broker-dealer, omnibus processor or investment professional,
is responsible for promptly transmitting orders to the Trust. The
Trust cannot accept orders transmitted to it at the address
indicated on the cover page of this prospectus, but will use its
best efforts to promptly forward such orders to the Transfer
Agent for receipt no later than the next business day.

If the check accompanying any purchase order does not clear,
or if there are insufficient funds in you bank account to enable
an ACH, the transaction will be canceled and you will be
responsible for any loss the Trust incurs. For current
shareholders, each Fund can redeem shares from any identically
registered account in such Fund or any other Fund as
reimbursement for any loss incurred. The Trust may prohibit or
restrict all future purchases in the Trust in the event of any
nonpayment for shares.

on the NYSE. Securities and other instruments for which market
quotations are not readily available are valued at fair value, as
determined in good faith and pursuant to procedures established
by the Trustees. For further information, see "Net Asset Value"
in the SAI.

Redeeming Shares

Any redemption orders received by the Trust as indicated
below before 4:00 p.m. New York time on any business day will
receive the net asset value determined at the close of trading on
the NYSE on that day. Redemption orders received after 4:00 p.m.
will be redeemed at the net asset value determined at the close
of trading on the next business day. The Trust cannot accept
redemption orders transmitted to it at the address indicated on
the cover page of the prospectus, but will use its best efforts
to promptly forward such orders to the Transfer Agent for receipt
by the next business day. If you are trading through a
broker-dealer or investment adviser, such investment professional
is responsible for promptly transmitting orders. There is no
redemption charge. The Fund reserves the right to redeem
shareholder accounts (after 60 days notice) when the value of the
Fund shares in the account falls below $500 due to redemptions.
Whether a Fund will exercise its right to redeem shareholder
accounts will be determined by the Manager on a case-by-case
basis.
<TABLE>
<CAPTION>
Method Instructions
<S> <C>
By mail_write to The Managers Funds, Send a letter of instruction which
c/o Boston Financial Data specifies the name of the Fund,
Services, Inc. dollar amount or number of shares to
P.O. Box 8517 be sold, your name and account
Boston, MA 02266-8517 number. This letter must be signed
by all owners of the shares in the
exact manner in which they appear on
the account. In the case of estates,
trusts, guardianships,
custodianships, corporations and
pension and profit sharing plans,
other supporting legal documentation
is required.

By telephone For shareholders who have elected
telephone redemption privileges on
their applications, telephone the
Trust at (800)252-0682.

By contacting your investment
professional

By writing a check (Managers Money For shareholders who have elected
Market Fund Shareholders only) the checkwriting option with State
Street Bank and Trust Company, as
discussed under "Investor
Services_Checkwriting Privilege."
</TABLE>

Investor Services

Automatic Reinvestment Plan allows dividends or capital
gains distributions to be reinvested in additional shares, unless
you elect to receive cash.

Systematic Withdrawals of $100 or more per fund can be made
monthly by shareholders.

Dollar Cost Averaging allows for regular automatic exchanges
from any Fund to one or more other Funds or can be done through
the Automatic Investment service above. Before investing in the
Trust's Equity Funds, shareholders must obtain a prospectus from
the Trust describing those Funds.

Individual Retirement Accounts, including SIMPLE and
SEP/IRAs and IRA rollovers, are available to shareholders at no
additional cost.

Checkwriting Privilege is available only to shareholders of
the Money Market Fund. Before investing in the Trust's Money
Market Fund, shareholders must obtain a prospectus from the Trust
describing the Money Market Fund and the conditions and
limitations pertaining to this privilege.

Direct Deposit Purchase Plan allows for Social Security or
payroll checks, as well as any other preauthorized recurring
payment, to be automatically invested in your account.

Exchange Privilege permits shareholders of any of the Funds
to exchange their shares for shares of any of the other Funds at
the relative net asset value per share. Exchange transactions may
be made by writing to the Fund (see "Redeeming Shares"), by
contacting your investment professional, via the Telephone
Exchange Privilege (unless you have declined this option) or on
your signed account application. Call Investors Services at (800)
252-0682 to utilize the Telephone Exchange Privilege.
Shareholders must receive a prospectus describing the Equity
Funds or Money Market Fund of the Trust before requesting an
exchange into one or more of those Funds. By requesting an
exchange into one of those Funds, shareholders are deemed to
confirm receipt of the prospectus describing the Trust's Equity
Funds or Money Market Fund, as the case may be.

Income Dividends and Capital Gain Distributions

Income dividends will normally be paid on the Income Funds
at the frequency noted in the following table. Except for Short
Government Fund, income dividends will normally be declared on
the fourth business day prior to the end of the dividend period,
payable on the following business day, to shareholders of record
on the day prior to the declaration date. Distributions of any
capital gains will normally be paid annually in December.
<TABLE>
<CAPTION>
Frequency Fund
<S> <C>
Monthly Short and Intermediate Bond,
Intermediate Mortgage, Bond
Quarterly Global Bond
Daily* Short Government
</TABLE>
_______

* Dividends declared daily and paid monthly on the third business
day prior to month end.

All dividends and distributions declared by a Fund will be
reinvested in additional shares of the Fund at net asset value on
the "Ex-Dividend" date(unless the shareholder has elected to
receive dividends or distributions in cash or invest them in
shares of the Money Market Fund). An election may be changed by
delivering written notice to the Fund at least ten business days
prior to the payment date.

MANAGEMENT OF THE FUNDS
Trustees

Information concerning the Trustees, including their names,
positions and principal occupations during the past five years,
is contained in the SAI.

Investment Manager

The Trust has received an exemptive order from the
Securities and Exchange Commission (the "SEC") permitting the
Manager, subject to certain conditions, to enter into
sub-advisory agreements with Asset Managers approved by the
Trustees without obtaining shareholder approval. At meetings held
on December 5, 1994 and December 15, 1994, the shareholders of
the Funds approved the operations of the Trust in this manner.
The order also permits the Manager, subject to the approval of
the Trustees but without shareholder approval, to employ new
Asset Managers for new or existing Funds, change the terms of
particular sub-advisory agreements or continue the employment of
existing Asset Managers after events that would cause an
automatic termination of a sub-advisory agreement. Although
shareholder approval is not required for the termination of
sub-advisory agreements, shareholders of a Fund will continue to
have the right to terminate such agreements for the Fund at any
time by a vote of the majority of the outstanding shares of the
Fund. Shareholders will continue to be notified of any Asset
Manager changes.

The following table sets forth the maximum annual management
fee rates currently paid by each Income Fund, the annual asset
management fee rates paid by the Manager to each Asset Manager
for a particular Fund and the actual management fee paid during
fiscal 1996, each expressed as a percentage of the Fund's average
daily net assets.

<TABLE>
<CAPTION>
Name of Fund Total Asset Total
<S> Managemen Management Management
t Fee Fee Fee Paid
<C> <C> During
the Year Ended
December 31,
1996
<C>
Short Government Fund 0.45% 0.20% 0.20%*
Short and Intermediate Bond 0.50% 0.25% 0.50%
Fund
Intermediate Mortgage Fund 0.45% 0.20% 0.45%
Bond Fund 0.625% 0.25% 0.625%
Global Bond Fund 0.70% 0.35% on 1st $20 0.70%
million,
0.25% thereafter
</TABLE>
* Reflects voluntary fee waivers by the Manager which may be
modified or terminated at any time in the sole discretion of
the Manager.

Asset Managers

The following sets forth certain information about each of
the Asset Managers:

Short Government Fund

Jennison Associates Capital Corp.("Jennison")_The firm was
founded in 1969 and is a wholly-owned subsidiary of The
Prudential Insurance Company of America. As of December 31, 1996,
assets under management totaled $__ billion. Its address is One
Financial Center, Boston, MA 02111

Thomas F. Doyle serves as the portfolio manager of the Short
Government Fund. He is a Director and Executive Vice President of
Jennison, responsible for fixed income portfolio management. He
has been with Jennison since 1987.

Short and Intermediate Bond Fund

Standish, Ayer & Wood, Inc. ("SAW")_The firm, founded in
1933, is a privately owned corporation with 21 directors (three
of whom each own more than 10% equity in the firm). The firm
offers equity, balanced and fixed income management. As of
December 31, 1996, the firm managed more than $__ billion in
assets. Its address is One Financial Center, Suite 26, Boston, MA
02111.

Howard B. Rubin serves as the portfolio manager of the Short
and Intermediate Bond Fund. He is a Director of SAW, responsible
for fixed income portfolio management. He has been with SAW since
1984.

Intermediate Mortgage Fund

Jennison Associates Capital Corp._See Short Government Fund
for a description.

Michael Porreca and John Feingold are the portfolio managers
of the Intermediate Mortgage Fund. They are both Directors and
Senior Vice Presidents of Jennison, responsible for fixed income
portfolio management. Mr. Porreca has served in this capacity
since November 1992; prior to that time he served in a similar
capacity with Dewey Square Investors. Mr. Feingold has been with
Jennison since January 1993. Prior to that time he served as a
Director and head of the CMO desk at Salomon Brothers.

Bond Fund

Loomis, Sayles & Company, Inc._The firm was established in
1926 and is a wholly-owned but autonomous subsidiary of New
England Investment Companies. As of December 31, 1996, assets
under management totaled $___ billion. Its address is One
Financial Center, Boston, MA 02110.

Daniel J. Fuss, C.F.A., has been the Fund's co-portfolio
manager since its inception in 1984 and has been the sole
portfolio manager since March 1993. He is a Managing Director of
Loomis, Sayles & Company, Inc., a position he has held since
1976.

Global Bond Fund

Rogge Global Partners plc._The firm was established in 1984
is owned by United Asset Management, a public company. As of
December 31, 1996, assets under management totaled $__ billion.
Its address is 5-6 St. Andrews Hill, London, England EC4V-5BY.

Olaf Rogge has been the Fund's portfolio manager since the
Fund's commencement of operations. Mr. Rogge is Managing Director
and Principal Executive of Rogge Global Partners, which he
founded in 1984.

Administration and Shareholder Servicing; Distributor; Transfer Agent

Distributor. The Managers Funds, L.P. serves as distributor of
the shares of the Trust. Its address is 40 Richards Avenue,
Norwalk, CT 06854.

Transfer Agent. State Street Bank and Trust Co. serves as the
Trust's Transfer Agent.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Each Asset Manager is responsible for decisions to buy and
sell securities for each Fund or component of a Fund that it
manages, as well as for broker-dealer selection in connection
with such portfolio transactions. In the case of securities
traded on a principal basis, transactions are effected on a "net"
basis, rather than a transaction charge basis, with dealers
acting as principal for their own accounts without a stated
transaction charge. Accordingly, the price of the security may
reflect an increase or decrease from the price paid by the dealer
together with a spread between the bid and asked prices, which
provides the opportunity for a profit or loss to the dealer.
Transactions in other securities are effected on a transaction
charge basis where the broker acts as agent and receives a
commission in connection with the trade. In effecting securities
transactions, each Asset Manager is responsible for obtaining
best price and execution of orders. The dealer spread or broker's
commission charged in connection with a transaction is a
component of price and is considered together with other relevant
factors. Any of the Funds may effect securities transactions on a
transaction charge basis through a broker-dealer that is an
affiliate of the Manager or of one of that Fund's Asset Managers
in accordance with procedures approved by the Trustees. However,
no Asset Manager for a Fund or its affiliated broker-dealer may
act as principal in any portfolio transaction for any Fund with
which it is an affiliate, and no affiliate of the Manager may act
as principal in a portfolio transaction for any of the Funds.

PERFORMANCE INFORMATION

From time to time the Funds may advertise "yield" and or
"total return." These figures are based on historical earnings
and are not intended to indicate future performance.

Yield

The Funds may advertise "yield." Yield refers to income
generated by an investment in the Fund during a 30-day (or one
month) period. This income is then annualized. That is, the
amount of income generated during the period is assumed to be
generated during each 30-day (or one month) period over a
one-year period and is shown as a percentage of the investment.

Total Return

The Trust's annual report contains additional performance
information and is available upon request without charge.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES

The Trust offers a single class of shares of beneficial
interest, without par value, and currently offers ten series of
its shares as described in the Trust's Prospectuses. The Trustees
have the authority to create new series of shares in addition to
the existing ten series without the requirement of a vote of
shareholders of the Trust.

Two lawsuits seeking class action status have been filed
against the Managers Intermediate Mortgage Fund and the Managers
Short Government Fund, the Manager and the Trust, among other
defendants. The Intermediate Mortgage Fund suit was filed in the
United States District Court for the District of Connecticut in
September, 1994, and names the Fund, the Trust, the Manager,
Robert P. Watson, Piper Capital Management, Inc., its parent
company and Worth Bruntjen as defendants. A motion has been filed
to dismiss this action and there has been no decision yet from
the court. The Short Government Fund suit was filed in the United
States District Court for the District of Minnesota in November,
1994 and names that Fund, each of the defendants in the
Intermediate Mortgage Fund suit (with the exception of the
Intermediate Mortgage Fund), the Trustees and one officer of the
Trust as defendants. On November 24, 1995, the defendants' motion
to dismiss this action was granted, in part and denied, in part,
and the defendants again moved for dismissal after the plaintiff
amended the complaint. In that action, the parties have now
entered into a preliminary agreement to settle all claims by the
purported class. However, the parties have not finalized their
settlement nor have they obtained the required court approvals.
For these and other reasons, there can be no assurance that the
settlement will be consummated. In both of these cases the
plaintiffs seek unspecified damages based upon losses alleged in
the two funds named above.

In addition, a non-class action lawsuit based on similar
allegations has been filed by a customer against certain of the
defendants named in the class action lawsuits, as well as against
Managers Short and Intermediate Bond Fund. Certain individual
customers, who are potentially members of the class of plaintiffs
in the two class action lawsuits referred to above, have asserted
that they may file similar lawsuits against certain of the
defendants based on similar claims, but have not done so.
Despite management's efforts to resolve all of the pending
lawsuits, it believes it has meritorious defenses and, of the
cases are not settled, it intends to defend the action
vigorously.

TAX INFORMATION

All dividends and distributions designated as capital gains
are generally taxable to shareholders whether received in cash or
additional shares.

SHAREHOLDER REPORTS

PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR MANAGERS
MONEY MARKET FUND ARE INCORPORATED HEREIN BY REFERENCE TO POST
EFFECTIVE AMENDMENT NO. 37. FINANCIAL INFORMATION TO BE UPDATED
IN SUBSEQUENT B-FILING TO GO EFFECTIVE ON APRIL 1, 1997.

THE MANAGERS FUNDS
STATEMENT OF ADDITIONAL INFORMATION
dated April 1, 1997

40 Richards Avenue, Norwalk, Connecticut 06854
Investor Services: (800) 835-3879

This Statement of Additional Information relates to the
Managers Income Equity Fund, Capital Appreciation Fund, Special
Equity Fund, International Equity Fund, (collectively the "Equity
Funds") and the Managers Short Government Fund, Short and
Intermediate Bond Fund, Intermediate Mortgage Fund, Bond Fund,
and Global Bond Fund (collectively the "Income Funds"), (each a
"Fund" and collectively the "Funds") of The Managers Funds, a no-
load, open-end management investment company, organized as a
Massachusetts business trust (the "Trust"). Additional
Information regarding the Managers Money Market Fund is contained
in a separate Money Market Fund Statement of Additional
Information.

This Statement of Additional Information is not a
prospectus; it should be read in conjunction with the
Prospectuses of the Funds, dated April 1, 1997, copies of which
may be obtained without charge by contacting the Trust at 40
Richards Avenue, Norwalk, CT 06854 (800) 835-3879 or (203) 857-
5321.

This Statement of Additional Information is authorized
for distribution to prospective investors only if preceded or
accompanied by effective prospectuses for the Funds.
TABLE OF CONTENTS

I. INVESTMENT RESTRICTIONS

II. PORTFOLIO TURNOVER

III. TRUSTEES AND OFFICERS

IV. MANAGEMENT OF THE FUNDS

V. FUND MANAGEMENT AGREEMENT

VI. ASSET MANAGER PROFILES

VII. ADMINISTRATIVE SERVICES; DISTRIBUTION
ARRANGEMENTS

VIII. PORTFOLIO SECURITIES TRANSACTIONS

IX. NET ASSET VALUE

X. TAX INFORMATION

XI. CUSTODIAN, TRANSFER AGENT AND
INDEPENDENT PUBLIC ACCOUNTANT

XII. CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES

XIII. OTHER INFORMATION

XIV. PERFORMANCE INFORMATION

XV. FINANCIAL STATEMENTS
I. INVESTMENT RESTRICTIONS

Except as described below, the following investment
restrictions are fundamental and may not be changed with respect
to any Fund without the approval of a majority of the outstanding
voting securities of the Fund, as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act").

Provided that nothing in the following investment restrictions
shall prevent the Trust from investing all or substantially all
of a Fund's assets in an open-end management investment company,
or a series thereof, with the same investment objective or
objectives as such Fund, no Fund may:

1. Invest in securities of any one issuer (other than
securities issued by the U.S. Government, its agencies and
instrumentalities), if immediately after and as a result of such
investment the current market value of the holdings of its
securities of such issuer exceeds 5% of its total assets; except
that up to 25% of the value of the Intermediate Mortgage Fund's
total assets may be invested without regard to this limitation.
The Global Bond Fund may invest up to 50% of its assets in bonds
issued by foreign governments which may include up to 25% of such
assets in any single government issuer.

2. Invest more than 25% of the value of its total assets
in the securities of companies primarily engaged in any one
industry (other than the United States Government, its agencies
and instrumentalities). Such concentration may occur
incidentally as a result of changes in the market value of
portfolio securities, but such concentration may not result from
investment; provided, however, that the Intermediate Mortgage
Fund will invest more than 25% of its assets in the mortgage and
mortgage-finance industry even during temporary defensive
periods. Neither finance companies as a group nor utility
companies as a group are considered a single industry for
purposes of this restriction.

3. Acquire more than 10% of the outstanding voting
securities of any one issuer.

4. Borrow amounts in excess of 5% of its total assets
taken at cost or at market value, whichever is lower. It may
borrow only from banks as a temporary measure for extraordinary
or emergency purposes. It will not mortgage, pledge or in any
other manner transfer any of its assets as security for any
indebtedness.

5. Invest in securities of an issuer which together with
any predecessor, has been in operation for less than three years
if, as a result, more than 5% of its total assets would then be
invested in such securities.

6. Invest more than 15%, of the value of its net assets in
illiquid instruments including, but not limited to, securities
for which there are no readily available market quotations,
dealer (OTC) options, assets used to cover dealer options written
by it, repurchase agreements which mature in more than 7 days,
variable rate industrial development bonds which are not
redeemable on 7 days demand and investments in time deposits
which are non-negotiable and/or which impose a penalty for early
withdrawal.

7. Invest in companies for the purpose of exercising
control or management.

8. Purchase or sell real estate; provided, however, that
it may invest in securities secured by real estate or interests
therein or issued by companies which invest in real estate or
interests therein.

9. Purchase or sell physical commodities, except that each
Fund may purchase or sell options and futures contracts thereon.

10. Engage in the business of underwriting securities
issued by others.

11. Participate on a joint or a joint and several basis in
any trading account in securities. The "bunching" of orders for
the sale or purchase of marketable portfolio securities with
other accounts under the management of The Managers Funds, L.P.
or any portfolio manager in order to save brokerage costs or to
average prices shall not be considered a joint securities trading
account.

12. Make loans to any person or firm; provided, however,
that the making of a loan shall not be construed to include (i)
the acquisition for investment of bonds, debentures, notes or
other evidences of indebtedness of any corporation or government
entity which are publicly distributed or of a type customarily
purchased by institutional investors (which are debt securities,
generally rated not less than Baa by Moody's or BBB by Standard &
Poor's, privately issued and purchased by such entities as banks,
insurance companies and investment companies), or (ii) the entry
into "repurchase agreements." It may lend its portfolio
securities to broker-dealers or other institutional investors if,
as a result thereof, the aggregate value of all securities loaned
does not exceed 33-l/3% of its total assets, except that there is
no such percentage limitation with respect to the Short
Government Fund. See "Other Information -- Loan Transactions."

13. Purchase the securities of other Funds or investment
companies except (i) in connection with a merger, consolidation,
acquisition of assets or other reorganization approved by its
shareholders, (ii) for shares in the Money Market Fund in
accordance with an order of exemption issued by the Securities
and Exchange Commission (the "SEC"), and (iii) each Fund, may
purchase securities of investment companies where no underwriter
or dealer's commission or profit, other than customary broker's
commission, is involved and only if immediately thereafter not
more than (a) 3% of such company's total outstanding voting stock
is owned by the Fund, (b) 5% of the Fund's total assets, taken at
market value, would be invested in any one such company or (c)
10% of the Fund's total assets, taken at market value, would be
invested in such securities.

14. Purchase from or sell portfolio securities to its
officers, trustees or other "interested persons" (as defined in
the l940 Act) of the Fund, including its portfolio managers and
their affiliates, except as permitted by the l940 Act.

15. Purchase or retain the securities of an issuer if, to
the Trust's knowledge, one or more of the directors, trustees or
officers of the Trust, or the portfolio manager responsible for
the investment of the Trust's assets or its directors or
officers, individually own beneficially more than l/2 of l% of
the securities of such issuer and together own beneficially more
than 5% of such securities.

16. Issue senior securities.

Unless otherwise provided, for purposes of investment
restriction (2) above, relating to industry concentration, the
term "industry" shall be defined by reference to the SEC Industry
Codes set forth in the Directory of Companies Required to File
Annual Reports with the Securities and Exchange Commission.

In addition to the foregoing investment restrictions
which may not be changed without shareholder approval, the Funds
are subject to the following operating policies which may be
amended by the Trust's Board of Trustees. Pursuant to these
operating policies, no Fund may:

1. Invest in real estate limited partnership interests.

2. Invest in oil, gas or mineral leases.

3. Invest more than 5% of its net assets in warrants or
rights, valued at the lower of cost or market, nor more than 2%
of its net assets in warrants or rights (valued on the same
basis) which are not listed on the New York or American Stock
Exchanges.

4. Purchase a futures contract or an option thereon if,
with respect to positions in futures or options on futures which
do not represent bona fide hedging, the aggregate initial margin
and premiums paid on such positions would exceed 5% of the Fund's
net asset value. The Money Market Fund may not purchase futures
contracts or options thereon.

5. Purchase securities on margin, except for such short-
term credits as are necessary for clearance of portfolio
transactions; provided, however, that each Fund may make margin
deposits in connection with futures contracts or other
permissible investments.

6. Effect short sales of securities.

7. Write or sell uncovered put or call options. The
security underlying any put or call purchased or sold by a Fund
must be of a type the Fund may purchase directly, and the
aggregate value of the obligations underlying the puts may not
exceed 50% of the Fund's total assets.

II. PORTFOLIO TURNOVER

Generally, securities are purchased for the Managers Income
Equity Fund, Capital Appreciation Fund, Special Equity Fund, and
International Equity Fund for investment purposes and not for
short-term trading profits. However, these Funds may dispose of
securities without regard to the time they have been held when
such action, for defensive or other purposes, appears advisable
to their portfolio managers.

For the fiscal year ended December 31, 1996, the portfolio
turnover rate for the Income Equity Fund __%, the Capital
Appreciation Fund was __%, the Special Equity Fund __%, and the
International Equity Fund __%. For the fiscal year ended
DecemberE31, 1995, the portfolio turnover rate for the Income
Equity Fund 36%, the Capital Appreciation Fund was 134%, the
Special Equity Fund 65%, and the International Equity Fund 73%.

For the fiscal year ended December 31, 1996, the portfolio
turnover rate for the Short Government Fund was __%, the Short
and Intermediate Bond Fund __%, the Bond Fund __% and the Global
Bond Fund __%. For the fiscal year ended December 31, 1995, the
annual portfolio turnover rate for the Short Government Fund was
238%, the Short and Intermediate Bond Fund 131% and the Bond Fund
46%. The higher than 100% turnover rate for the Short and
Intermediate Bond Fund was due to sales of portfolio investments
to meet shareholder redemptions.

The Intermediate Mortgage Fund generally engages in a
significant amount of trading of securities held for less than
one year. Accordingly, it can be expected that the Fund will
generally have a higher incidence of short-term capital gains,
which is taxable as ordinary income, than might be expected from
investment companies which invest substantially all of their
funds on a long-term basis. The Intermediate Mortgage Fund's
rates of portfolio turnover for the years ended December 31, 1996
and December 31, 1995 were __% and 506%, respectively.

With the exception of the Intermediate Mortgage Fund, the
higher portfolio turnover rates for the Income Funds are not
expected to result in significantly higher brokerage fees because
the securities primarily purchased and sold by these Funds are
usually traded on a principal basis with no commission paid. The
added costs from brokerage fees and the possibility of more
highly taxed short-term capital gains, which may be offset
against capital loss carryovers, with respect to the Intermediate
Mortgage Fund are weighed against the anticipated gains from
trading.

The Bond, Short and Intermediate Bond and Short Government
Funds trade more actively to realize gains through market timing
and/or to increase yields on investments by trading to take
advantage of short-term market variations. This policy generally
results in higher portfolio turnover for these Funds.

III. TRUSTEES AND OFFICERS
The Trust is governed by the Trustees who provide broad
supervision over the affairs of the Trust and the Funds. The
Trustees and officers of the Trust are listed below together with
their principal occupations during at least the past five years,
as well as Trustees' dates of birth. References to The Managers
Funds, L.P., the Manager of the Trust, should be read to apply to
Evaluation Associates Investment Management Company, the
predecessor of The Managers Funds, L.P., for periods prior to
AugustE17,E1990.

<TABLE>
<CAPTION>
Name, Address and Position with Principal Occupation During Past
Trust 5 Years
<S> <C>
ROBERT P. WATSON1 President and Trustee of The
40 Richards Avenue Managers Funds; Chairman and
Norwalk, CT 06854 Chief Executive Officer,
Chief Executive Officer, Evaluation Associates Investment
President, Trustee Management Company (predecessor
of The Managers Funds, L.P.)
Date of birth: 1/21/34 (prior to June 1988 and from
August 1989 to August 1990);
Partner, The Managers Funds,
L.P. (since August 1990);
Executive Vice President,
Evaluation Associates, Inc.
(June 1988 to August 1989).
WILLIAM W. GRAULTY Practicing Attorney (1977 to
65 LaSalle Road present); Executive Vice
West Hartford, CT 06107 President and Head of Trust
Trustee Division, The Connecticut Bank
and Trust Company, N.A. (1956 to
Date of birth: 12/30/23 1976); President, American
Bankers Association, Trust
Division (1974 to 1975);
President Connecticut Bankers
Association, Trust Division (1966
to 1968).
MADELINE H. McWHINNEY President, Dale, Elliott &
24 Blossom Cove Company (management consultants)
Middletown, NJ 07701 (1977 to present); Assistant Vice
Trustee President and Financial
Economist, Federal Reserve Bank
Date of birth: 3/11/22 of New York (1943 to 1973);
Trustee and Treasurer, Institute
of International Education (since
1975); Assistant Director,
Operations, Whitney Museum of
American Art (1983 to 1986);
Member, Advisory Committee on
Professional Ethics, New Jersey
Supreme Court (March 1983 to
present).

Name, Address and Position with Principal Occupation During Past
Trust 5 Years

STEVEN J. PAGGIOLI Executive Vice President and
479 West 22nd Street Director, Wadsworth & Associates,
New York, NY 10011 Inc. (1986 to present); Vice
Trustee President, Secretary and
Date of birth: 4/3/50 Director, First Fund
Distributors, Inc. (1991 to
present); Vice President,
Secretary and Director;
Investment Company Administration
Corporation (1990 to present);
President and Director,
Southampton Investment Management
Company, Inc. (1991 to present);
Trustee of Professionally Managed
Portfolios (1991 to present).

THOMAS R. SCHNEEWEIS Professor of Finance (1985 to
University of Massachusetts present), Associate Professor of
School of Management Finance (1980-1985), Ph.D.
Amherst, MA 01003 Director (Acting) (1985 to 1986),
Trustee Chairman (Acting) Department of
Date of birth: 5/10/47 General Business and Finance
(1981-1982), and Assistant
Professor of Finance (1977-1980),
University of Massachusetts;
Teaching Assistant, University of
Iowa Principal Occupation (1973-
1977); Financial Consultant,
Ehlers and Associates (1970-
1973).
PETER M. LEBOVITZ Director of Marketing, The
40 Richards Avenue Managers Funds, L.P. (September
Norwalk, CT 06854 1994 to present); Director of
Vice President Marketing, Hyperion Capital
Management, Inc. (June 1993 to
June 1994); Senior Vice President
and Chief Investment Officer,
Greenwich Asset Management, Inc.
(April 1989 to June 1993)

DONALD S. RUMERY Director of Operations, The
40 Richards Avenue Managers Funds, L.P. (December
Norwalk, CT 06854 1994 to present)
Treasurer (Principal Financial Vice President, Signature
and Accounting Officer) Financial Group (March 1990 to
December 1994)
Vice President, The Putnam
Companies (August 1980 to March
1990).

KATHLEEN WOOD Vice President (July 1992 to
40 Richards Avenue present) and Assistant Vice
Norwalk, CT 06854 President (August 1989 to June
Secretary 1992), The Managers Funds, L.P.;
Analyst, Evaluation Associates,
Inc. (May 1986 to August 1989).
GIANCARLO (JOHN) E. ROSATI Vice President (July 1992 to
40 Richards Avenue Present) and Assistant Vice
Norwalk, CT 06854 President (July 1986 to June
Assistant Treasurer 1992), The Managers Funds, L.P.;
Accountant, Gintel Co. (June 1980
to June 1986).
Portfolio Administrator, The
Peter M. McCabe Managers Funds, L.P. (August 1995
40 Richards Avenue to Present); Portfolio
Norwalk, CT 06854 Administrator, Oppenheimer
Assistant Treasurer Capital, L.P. (July 1995 to
August 1995); College Student
(September 1990 to June 1994).
</TABLE>

Trustees' Compensation:
The Trust's Disinterested Trustees receive an annual
retainer of $10,000, and meeting fees of $750 for each in-person
meeting attended and $200 for participating in each telephonic
meeting. There are no pension or retirement benefits provided by
the Trust or any affiliate of the Trust to the Trustees. The
Trust does not pay compensation to its officers. The following
chart sets forth the aggregate compensation paid to each
Disinterested Trustee for the year-ended December 31, 1996:

<TABLE>
<CAPTION>
Aggregate Total
Compensation from
Compensation Registrant and Fund
Complex
Name of Trustee from Trust Paid to
Trustees
<S> <C> <C>
William W. Graulty $12,250 $12,250
Madeline H. McWhinney 13,000 13,000
Steven J. Paggioli 13,000 13,000
Thomas R. Schneeweis 13,000 13,000
</TABLE>

As indicated above, certain of the Trust's officers also
hold positions with The Managers Funds, L.P., the Manager of the
Trust. All Trustees and officers as a group owned less than 1%
of the shares of any of the Funds outstanding on the date of this
Statement of Additional Information.

IV. MANAGEMENT OF THE FUNDS

The Trust is governed by the Trustees, who provide broad
supervision over the affairs of the Trust and the Funds. The
Trust has engaged the services of The Managers Funds, L.P. (the
"Manager") as investment manager and administrator to each of the
Funds. The assets of the Funds, are managed by asset managers
(each, an "Asset Manager" and collectively, the "Asset Managers")
selected by the Manager, subject to the review and approval of
the Trustees. The Trust has also retained the services of the
Manager as administrator to carry out the day-to-day
administration of the Trust and the Funds.

The Manager recommends Asset Managers for each Fund to the
Trustees based upon its continuing quantitative and qualitative
evaluation of the Asset Managers' skills in managing assets
pursuant to specific investment styles and strategies. Unlike
many other mutual funds, the Funds are not associated with any
one portfolio manager, and benefit from independent specialists
carefully selected from the investment management industry. Short-
term investment performance, by itself, is not a significant
factor in selecting or terminating an Asset Manager, and the
Manager does not expect to recommend frequent changes of Asset
Managers. The Trust has obtained from the SEC an order
permitting the Manager, subject to certain conditions, to enter
into sub-advisory agreements with Asset Managers approved by the
Trustees but without the requirement of shareholder approval. At
meetings held on December 5, 1994 and December 15, 1994, the
shareholders of the Funds approved the operation of the Trust in
this manner. Pursuant to the terms of the order, the Manager is
to be able, subject to the approval of the Trustees but without
shareholder approval, to employ new Asset Managers for new or
existing Funds, change the terms of particular sub-advisory
agreements or continue the employment of existing Asset Managers
after events that under the 1940 Act and the sub-advisory
agreements would be an automatic termination of the agreement.
Although shareholder approval will not be required for the
termination of sub-advisory agreements, shareholders of a Fund
will continue to have the right to terminate such agreements for
the Fund at any time by a vote of a majority of outstanding
voting securities of the Fund. The Manager and its corporate
predecessor have had 20 years of experience in evaluating
investment advisers for individuals and institutional investors.

The assets of each Fund are allocated by the Manager among
the Asset Managers selected for that Fund. Each Asset Manager
has discretion, subject to oversight by the Trustees, and the
Manager, to purchase and sell portfolio assets, consistent with
each Fund's investment objectives, policies and restrictions and
specific investment strategies developed by the Manager. For its
services, the Manager receives a management fee from each Fund. A
part of the fee paid to the Manager is used by the Manager to pay
the advisory fees of the Asset Managers.

Generally, no Asset Manager provides any services to any
Fund except asset management and related recordkeeping services.
However, an Asset Manager or its affiliated broker-dealer may
execute portfolio transactions for a Fund and receive brokerage
commissions in connection therewith as permitted by Section 17(e)
of the 1940 Act.

An Asset Manager may also serve as a discretionary or non-
discretionary investment adviser to management or advisory
accounts unrelated in any manner to The Managers Funds, L.P. or
its affiliates. The advisory agreement with each Asset Manager
(each, an "Asset Management Agreement") requires the Asset
Manager of a Fund to provide fair and equitable treatment to such
Fund in the selection of portfolio investments and the allocation
of investment opportunities, but does not obligate the Asset
Manager to give such Fund exclusive or preferential treatment.

Although the Asset Managers make investment decisions for
the Funds independent of those for their other clients, it is
likely that similar investment decisions will be made from time
to time. When a Fund and another client of an Asset Manager are
simultaneously engaged in the purchase or sale of the same
security, the transactions are, to the extent feasible and
practicable, averaged as to price and allocated as to amount
between the Portfolio and the other client(s) pursuant to a
formula considered equitable by the Asset Managers. In specific
cases, this system could have detrimental effect on the price or
volume of the security to be purchased or sold, as far as the
Fund is concerned. However, the Trustees believe, over time,
that coordination and the ability to participate in volume
transactions should be to the benefit of such Fund.

The Board of Trustees and the Manager have adopted a joint
Code of Ethics under Rule 17j-1 of the 1940 Act (the "Code").
The Code generally requires employees of the Manager to preclear
any personal securities investment (with limited exceptions such
as government securities). The preclearance requirement and
associated procedures are designed to identify any substantive
prohibition or limitation applicable to the proposed investment.
The substantive restrictions applicable to all employees of the
Manager include a ban on trading securities based on information
about the Funds' trading.

V. FUND MANAGEMENT AGREEMENT

The Trust has entered into a Fund Management Agreement (the
"Fund Management Agreement") with the Manager which, in turn, has
entered into Asset Management Agreements with each of the Asset
Managers selected for the Funds.

The Manager is a Delaware limited partnership. Its general
partner is a corporation that is wholly owned by Robert P.
Watson, President and a Trustee of the Trust.

Under the Fund Management Agreement, the Manager is required
to (i) supervise the general management and investment of the
assets and securities portfolio of each Fund; (ii) provide
overall investment programs and strategies for each Fund; (iii)
select and evaluate the performance of Asset Managers for each
Fund and allocate the Fund's assets among such Asset Managers;
(iv) provide financial, accounting and statistical information
required for registration statements and reports with the SEC;
and (v) provide the Trust with the office space, facilities and
personnel necessary to manage and administer the operations and
business of the Trust, including compliance with state and
federal securities and tax laws, shareholder communications and
recordkeeping.

The Fund Management Agreement runs from year to year so long
as its continuance is approved at least annually by the Trustees
or by a 1940 Act majority vote of the shareholders of each Fund
and those Trustees who are not "interested persons" of the Trust
(as defined in the 1940 Act) and who have no direct or indirect
financial interest in the agreements (the "Disinterested
Trustees"). Any amendment to the Fund Management Agreement must
be approved by a 1940 Act majority vote of the shareholders of
the relevant Fund and by the majority vote of the Trustees. The
Fund Management Agreement is subject to termination, without
penalty, by the Disinterested Trustees or by a 1940 Act majority
vote of the shareholders of each Fund on 60 days written notice
to the Manager or by the Manager on 60 days written notice to the
Fund, and terminates automatically if assigned.

The following table sets forth the annual management fee
rates currently paid by each Fund to the Manager, together with
the portion of the management fee that is retained by the Manager
as compensation for its services, each expressed as a percentage
of the Fund's average net assets. The remainder of the
management fee is paid to the Asset Managers. Individual Asset
Manager fees are set forth in the Prospectuses under the heading
"Management of the Funds - Investment Manager," and vary,
including in some cases among Asset Managers of a single Fund.
<TABLE>
<CAPTION>
Weighted Average
of the Manager's
portion of the
Total Management Total Management
Name of Fund Fee Fee
<S> <C> <C>
Income Equity Fund 0.75% 0.375%
Capital Appreciation 0.80% 0.40%
Fund
Special Equity Fund 0.90% 0.40%
International Equity 0.90% 0.40%
Fund
Short Government 0.20% 0.00%
Fund*
Short and 0.50% 0.25%
Intermediate Bond
Fund
Intermediate 0.45% 0.25%
Mortgage Fund
Bond Fund 0.625% 0.375%
Global Bond Fund 0.70% 0.35%
</TABLE>
* Reflects voluntary fee waiver by the Manager which may be
modified or terminated at any time in the sole discretion of
the Manager. In the absence of such waiver, the maximum
total management fee payable by the Short Government Fund
would be 0.45% and the weighted average of the Manager's
portion of the total management fee would be 0.25%.

The amount of each Fund's management fee that is retained by
the Manager may vary for a Fund due to changes in the allocation
of assets among its Asset Managers, the effect of an increase in
the Fund's net asset value on the fees payable to its Asset
Managers, and/or the implementation, modification or termination
of voluntary fee waivers by the Manager and/or one or more of the
Asset Managers. Given the asset management arrangements
currently in effect, the Manager's portion of the Income Equity
Fund and the Short Government Fund's total management fees would
not exceed 0.40% and 0.25%, respectively.

During the fiscal years ended December 31, 1994, 1995 and
1996, the Funds paid the following fees to the Manager under the
Fund Management Agreement and the Manager paid the following fees
to each Asset Manager under the Asset Management Agreements:

<TABLE>
<CAPTION>
January 1, 1996- January 1, 1995-
December 31, 1996 December 31, 1995

Approxi- Fee Approxi- Fee
mate Paid to mate Paid to
Fee Asset Fee Asset
Fee Retaine Manager Fee Retaine Manager
Name of Fund/Asset Paid to d by by Paid to d by by
Manager Manager Manager Manager Manager Manager Manager
<S> <C> <C> /1 <C> <C> /1 /1
<C> <C> <C>
Capital Appreciation $ $ $635,588 $318,716
Fund
Dietche & Field $156,119 $163,85
Advisers, Inc. 0
Husic Capital N/A N/A
Management/2

Income Equity Fund $299,824 $150,564

Scudder, Stevens & $74,220 $83,842
Clark, Inc.
Spare, Kaplan, Bischel $75,039 $85,108
&
Associates

Special Equity Fund $977,869 $435,343

Liberty Investment $187,691
Management
Inc.
Pilgrim Baxter & $190,981
Associates/6
Westport Asset $163,854
Management, Inc.

International Equity $948,514 $422,512
Fund
Lazard Freres & Co/7 $215,232

Scudder, Stevens & $310,770
Clark, Inc.

Short Government Fund $15,835 N/A

Jennison Associates $15,835
Capital
Corp/3

Short and Intermediate $128,25 $64,209
Bond Fund
Standish, Ayer & Wood $34,464 $84,716

Intermediate Mortgage $214,141 $118,967 $646,91 $439,61
Fund
Jennison Associates $95,174 $23,470
Capital
Corp/4

<CAPTION> January 1, 1994-December 31, 1994
---------------------------------
Fee Paid
Approximate to Asset
Fee Paid Fee Retained Manager by
Name of Fund/Asset Manager to Manager by Manager Manager/1
- -------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
CAPITAL APPRECIATION FUND $669,940 $335,074
Dietche & Field Advisers,
Inc. $163,850
Husic CapitalManagement/2 N/A

INCOME EQUITY FUND $339,061 $170,110
Scudder, Stevens & Clark, Inc. $83,842
Spare, Kaplan, Bischel &
Associates $85,108

SPECIAL EQUITY FUND $972,495 $468,413
Liberty Investment Management
Inc. $194,588
Pilgrim Baxter & Associates/6 $33,634
Westport Asset Management, Inc. $160,027

INTERNATIONAL EQUITY FUND $728,272 $323,639
Lazard Freres & Co./7 N/A
Scudder, Stevens & Clark, Inc. $404,633

SHORT GOVERNMENT FUND $197,692 $109,438
Jennison Associates Capital
Corp./3 $2,338

SHORT & INTERMEDIATE BOND FUND
$433,531 $217,375
Standish, Ayer & Wood, Inc. $84,716

INTERMEDIATE MORTGAGE FUND$646,916 $439,614
Jennison Associates Capital
Corp./4 $23,470

January 1, 1996- January 1, 1995-
December 31, 1996 Decemeber 31, 1995

Approxi- Fee Approxi- Fee
mate Paid to mate Paid to
Fee Asset Fee Asset
Fee Retaine Manager Fee Retaine Manager
Name of Fund/Asset Paid to d by by Paid to d by by
Manager Manager Manager Manager Manager Manager Manager
/1 /1
Bond Fund $ $ $162,59 $97,557
4
Loomis, Sayles & $ $65,037
Company, Inc.

Global Bond Fund $ $ $86,482 $43,466
Rogge Global $ $43,016
Partners/5

</TABLE>

1/Does not reflect payments made to asset managers whose relationship with a
Fund has been terminated.
2/ Portfolio manager hired during 1996.
3/Portfolio manager hired during 1994. Reflects waiver of a portion of
management fees by the Manager. In the absence of such waiver, the Manager
would have received an additional $29,861, $19,793 and $_____for the fiscal
years ended December 31, 1994, December 31, 1995 and December 31, 1996,
respectively.
4/Portfolio manager hired during 1994. Reflects waiver of a portion of
management fees by the Manager. In the absences of such waiver, the Manager
would have received an additional $115,723 and $130,528 for the fiscal years
ended December 31, 1994 and December 31, 1993, respectively.
5/Fund commenced operation during 1994.
6 Portfolio manager hired during 1994.
7/Portfolio manager hired during 1995.

Voluntary Fee Waivers and Expense Limitation

From time to time, the Manager may agree voluntarily to
waive all or a portion of the fee it would otherwise be entitled
to receive from a Fund. The Manager may waive all or a portion
of its fee for a number of reasons such as passing on to the Fund
and its shareholders the benefit of reduced portfolio management
fees resulting from (i)Ea reallocation of Fund assets among Asset
Managers, (ii)Enegotiation by the Manager of a lower fee payable
to an Asset Manager, or (iii)Ea voluntary waiver by an Asset
Manager of all or a portion of the fees it would otherwise be
entitled to receive from the Manager with respect to the Fund.
The Manager may also decide to waive all or a portion of its fees
from a Fund for other reasons, such as attempting to make a
Fund's performance more competitive as compared to similar funds.
The effect of the fee waivers in effect at the date of this
Statement of Additional Information on the management fees
payable by the Funds is reflected in the tables above and in the
Illustrative Expense Information located in the front of the
Prospectuses of the Equity Funds and the Income Funds. Voluntary
fee waivers by the Manager or by any Asset Manager may be
terminated or reduced in amount at any time and solely in the
discretion of the Manager or Asset Manager concerned.
Shareholders will be notified of any change on or about the time
that it becomes effective.

VI. ASSET MANAGER PROFILES

The Asset Managers for each Fund are set forth in the
respective Prospectuses. Assets of each of the Equity Funds are
currently allocated among more than one Asset Manager to provide
diversification among investment strategies. However, not all
Asset Managers with whom Asset Management Agreements are in
effect will be funded at all times. As of the date of this
Statement of Additional Information, the following are the Asset
Managers for each Fund. These Asset Managers have no affiliations
with the Funds or with the Manager.

The following information regarding the names of all
controlling persons of each Asset Manager and the basis of such
control has been supplied by such Asset Manager.

INCOME EQUITY FUND

SPARE, KAPLAN, BISCHEL & ASSOCIATES

The firm is owned 95% by the ten principals (Anthony E.
Spare, Kenneth J. Kaplan, Andrew W. Bischel, James G. McCluskey,
Mark E. McKee, Susan L. Grivas, Shelley H. Mann, Jerome J.
Paolini, Giri Bogavelli and Lesley R. Zimmer) and 5% by outside
investors.

SCUDDER, STEVENS & CLARK, INC.

Scudder, Stevens & Clark, Inc. is a privately-held Delaware
corporation. Daniel Pierce is the Chairman of the Board and
Edmond D. Villani is the President of Scudder. Stephen R.
Beckwith, Lynn Birdsong, Nicholas Bratt, Cuyler W. Findlay,
Jerard K. Hartman, Douglas M. Loudon, John T. Packard, Juris
Padegs, Cornelia M. Small, O. Robert Theurkauf, and David B.
Watts are the other members of the Board of Directors of Scudder.
The principal occupation of each of the above named individuals
is serving as a Managing Director of Scudder.

All of the outstanding voting and non-voting securities of
Scudder are held of record by Stephen R. Beckwith, Daniel Pierce,
O. Robert Theurkauf and Edmund D. Villani in their capacity as
representatives (the "Representatives") of the beneficial owners
of such securities, pursuant to a Security Holders' Agreement
among Scudder, the beneficial owners of securities of Scudder,
and the Representatives. Pursuant to such Security Holders'
Agreement, the Representatives have the right to reallocate
shares among the beneficial owners from time to time. Such
reallocation will be at net book value in cash transactions. All
Managing Directors of Scudder own voting and non-voting stock;
all Principals own non-voting stock.

CAPITAL APPRECIATION FUND

HUSIC CAPITAL MANAGEMENT

The firm is was formed in 1986 as a limited partnership
which is 100% owned by Frank J. Husic.

DIETCHE & FIELD ADVISERS, INC.

Dietche & Field Advisers, Inc. was formed in November 1984
and is owned by employees of the firm.

SPECIAL EQUITY FUND

LIBERTY INVESTMENT MANAGEMENT, INC.

Liberty Investment Management, Inc. is a 100% owned by
Herbert E. Ehlers.

PILGRIM BAXTER & ASSOCIATES

Pilgrim Baxter & Associates is owned by United Asset
Management, a public company.

WESTPORT ASSET MANAGEMENT, INC.

Westport Asset Management, Inc. is owned by Andrew J. Knuth
(5l%) and by Ronald H. Oliver (49%), each of whom is active as a
portfolio manager/analyst.

INTERNATIONAL EQUITY FUND

SCUDDER, STEVENS & CLARK, INC.
(See INCOME EQUITY FUND)

LAZARD, FRERES & CO.

Lazard, Freres & Co. is a New York general partnership
founded in 1848. The general partners are Norman Eig, Herbert W.
Gullquist, Eduardo Haim, Robert P. Morgenthau, John R. Reese,
John R. Reinsberg and Alexander E. Zagoreos.

SHORT GOVERNMENT FUND

JENNISON ASSOCIATES CAPITAL CORP.

Jennison Associates Capital Corp. is a wholly-owned
subsidiary of The Prudential Securities Company of America.

SHORT AND INTERMEDIATE BOND FUND

STANDISH, AYER & WOOD, INC.

Edward H. Ladd, Director and Chairman, George W. Noyes,
Director and President, and Dolores S. Driscoll, Managing
Director and Vice President, each owns more than 10% of the
outstanding voting securities of Standish. Davis B. Clayson,
Managing Director and Vice President, David W. Murray, Director,
Treasurer and Vice President, Richard C. Doll, Director and Vice
President, Maria D. O'Malley, Director and Vice President, and
Richard S. Wood, Director, Vice President and Secretary, each own
more than 5% of the outstanding voting securities of Standish.
Caleb F. Aldrich, Nicholas S. Battelle, Walter M. Cabot, David H.
Cameron, Karen K. Chandor, Lawrence H. Coburn, James E. Hollis,
III, Laurence A. Manchester, Arthur H. Parker, Howard B. Rubin,
Austin C. Smith, James J. Sweeney and Ralph S. Tate are each a
Director and Vice President of Standish. Each owns less than 5%
of the outstanding voting securities of Standish.

INTERMEDIATE MORTGAGE FUND

JENNISON ASSOCIATES CAPITAL CORP.
(See SHORT GOVERNMENT FUND)

BOND FUND

LOOMIS, SAYLES & COMPANY, INC.

The New England owns 92% of Loomis, Sayles (which operates
independently) with the remaining 8% owned by about 70
professionals.

GLOBAL BOND FUND

ROGGE GLOBAL PARTNERS, INC.

Rogge Global Partners, Inc. is owned by United Asset
Management, a public company.

VII. ADMINISTRATIVE SERVICES; DISTRIBUTION ARRANGEMENTS

The Trust has also retained the services of The Managers
Funds, L.P. as administrator (the "Administrator").

The Managers Funds, L.P. also serves as distributor (the
"Distributor") in connection with the offering of each Fund's
shares on a no-load basis. The Distributor bears certain
expenses associated with the distribution and sale of shares of
the Funds. The Distributor acts as agent in arranging for the
sale of each Fund's shares without sales commission or other
compensation and bears all advertising and promotion expenses
incurred in the sale of shares.

The Distribution Agreement between the Trust and the
Distributor may be terminated by either party under certain
specified circumstances and will automatically terminate on
assignment in the same manner as the Fund Management Agreement.
The Distribution Agreement may be continued annually if
specifically approved by the Trustees or by a vote of the Trust's
outstanding shares, including a majority of the Trustees who are
not "interested persons" of the Trust or the respective
Distributor, as such term is defined in the 1940 Act, cast in
person at a meeting called for the purpose of voting on such
approval.

VIII. PORTFOLIO SECURITIES TRANSACTIONS

The Asset Management Agreements between the Manager and the
Asset Managers provide, in substance, that in executing portfolio
transactions and selecting brokers or dealers, the principal
objective of each Asset Manager is to seek best price and
execution. It is expected that securities will ordinarily be
purchased in the primary markets, and that in assessing the best
net price and execution available to the applicable Fund, the
Asset Manager shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of
the broker or dealer and the reasonableness of the commission, if
any (for the specific transaction and on a continuing basis).

In addition, the Asset Managers, in selecting brokers to
execute particular transactions and in evaluating the best net
price and execution available, are authorized by the Trustees to
consider the "brokerage and research services" (as those terms
are defined in Section 28(e) of the Securities Exchange Act of
1934), provided by the broker. The Asset Managers are also
authorized to cause a Fund to pay a commission to a broker who
provides such brokerage and research services for executing a
portfolio transaction which is in excess of the amount of
commission another broker would have charged for effecting that
transaction. The Asset Managers must determine in good faith,
however, that such commission was reasonable in relation to the
value of the brokerage and research services provided viewed in
terms of that particular transaction or in terms of all the
accounts over which the Asset Manager exercises investment
discretion. Brokerage and research services received from such
brokers will be in addition to, and not in lieu of, the services
required to be performed by each Asset Manager. The Funds may
purchase and sell portfolio securities through brokers who
provide the Fund with research services.

The Trustees will periodically review the total amount of
commissions paid by each Fund to determine if the commissions
paid over representative periods of time were reasonable in
relation to commissions being charged by other brokers and the
benefits to each Fund of using particular brokers or dealers. It
is possible that certain of the services received by the Asset
Manager attributable to a particular transaction will primarily
benefit one or more other accounts for which investment
discretion is exercised by the Asset Managers.

The fees of the Asset Managers are not reduced by reason of
their receipt of such brokerage and research services.
Generally, no Asset Manager provides any services to any Fund
except portfolio investment management and related record-keeping
services. However, an Asset Manager for a particular Fund or its
affiliated broker-dealer may execute portfolio transactions for
such Fund and receive brokerage commissions for doing so in
accordance with Section 17(e) of the 1940 Act and the procedures
adopted by the Trustees in accordance with the rules thereunder.
An Asset Manager for a Fund or its affiliated broker-dealers may
not act as principal in any portfolio transaction for any Fund
with which it is affiliated.

In allocating portfolio transactions for a Fund among
several broker-dealers, an Asset Manager may, but is not required
to, take into account any sales of shares of that Fund by the
broker-dealer or by an affiliate of the broker-dealer.

For the fiscal year ended December 31, 1996, the aggregate
brokerage commissions paid by each of the Funds incurring any
such commissions was $___ for the Income Equity Fund, $____ for
the Capital Appreciation Fund, $_____ for the Special Equity
Fund, and $___ for the International Equity Fund. For the fiscal
year ended December 31, 1995, the aggregate brokerage commissions
paid by each of the Funds incurring any such commissions were
$69,964 for the Income Equity Fund, $283,673 for the Capital
Appreciation Fund, $119,418 for the Special Equity Fund and
$421,365 for the International Equity Fund. For the fiscal year
ended December 31, 1994, the aggregate brokerage commissions paid
by each of the Funds incurring any such commissions were $73,083
for the Income Equity Fund,$276,975 for the Capital Appreciation
Fund, $117,854 for the Special Equity Fund $109,595 and for the
International Equity Fund.

During the fiscal year ended December 31, 1995, the Capital
Appreciation Fund paid brokerage commissions totaling $41,584 to
Fahnestock & Co.("Fahnestock"), an affiliated broker-dealer of
Hudson Capital Advisers which then served as an Asset Manager.
Effective September 1996, Husic Capital Management replaced
Hudson Capital Advisers as an Asset Manager for this Fund.
During the fiscal year ended December 31, 1994, the Capital
Appreciation Fund paid brokerage commissions totaling $69,584 to
Fahnestock. During the fiscal year ended December 31, 1993, the
Capital Appreciation Fund paid brokerage commissions totaling
$60,366 to Fahnestock. The brokerage commissions paid to
Fahnestock by the Capital Appreciation Fund represented 15% of
the total brokerage commissions paid by those funds during the
fiscal year ended December 31, 1995; 25% during the fiscal year
ended December 31, 1994; and 33% during the fiscal year ended
DecemberE31,E1993. Such commissions were paid in connection with
portfolio transactions the dollar amount of which represented
16%, 22% and 16%, respectively, of the aggregate dollar amount of
all portfolio transactions involving the payment of commissions
by the Fund during those fiscal years. Brokerage commissions
were paid to Fahnestock in compliance with procedures established
by the Trustees, pursuant to which the commissions were
determined to be comparable to commissions charged by other
brokers for similar transactions and by Fahnestock to similarly
situated clients.

IX. NET ASSET VALUE
;
The net asset value of the shares of each Fund is determined
each day on which the New York Stock Exchange ("NYSE") is open
for trading (a "Pricing Day"). The weekdays that the NYSE is
expected to be closed are New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.

Assets of the Funds are valued as follows:

Equity securities listed on an exchange are valued on the
basis of the last quoted sale price on the exchange where such
securities principally are traded on the valuation date, prior to
the close of trading on the NYSE, or, lacking any sales, on the
basis of the last bid price on such principal exchange prior to
the close of trading on the NYSE. A security which is listed or
traded on more than one exchange is valued at the quotation on
the exchange determined by the Asset Manager to be the primary
market for such security. Over-the-counter securities for which
market quotations are readily available are valued on the basis
of the last bid price on that date prior to the close of trading
on the NYSE. Securities and other instruments for which market
quotations are not readily available are valued at fair value, as
determined in good faith by the Asset Manager pursuant to
procedures established by the Trustees.

Fixed-income securities generally are valued at the last
quoted bid price prior to the close of trading on the NYSE.
Fixed-income securities for which quoted prices are not readily
available will be valued at fair market value, as determined in
good faith by the Asset Manager pursuant to procedures
established by the Trustees. Certain foreign fixed-income
securities are valued at the last quoted sale price

Trading of securities owned by a Fund, particularly the
International Equity Fund and Global Bond Fund, for which the
principal trading market is a foreign securities exchange may
occur on days other than Pricing Days. Accordingly, the values
of securities in a Fund's portfolio may be subject to changes on
such days, which changes would not be reflected in the Fund's net
asset value until the next Pricing Day. In addition, trading on
foreign securities exchanges may not take place on all Pricing
Days. Generally securities traded on foreign securities
exchanges will be valued for net asset value purposes at the
close of the principal exchange on which they are traded, which
may not be the same time that the Fund's net asset values are
determined. If an event occurs after the close of a principal
exchange that is likely to affect the valuation of a particular
security trading on that exchange, such security may be valued at
fair value, as determined in good faith by the Asset Manager
pursuant to procedures established by the Trustees.

For purposes of determining the net asset value of any Fund
which holds non-dollar denominated portfolio instruments, all
assets and liabilities initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean
between the bid and offered quotations of such currencies against
U.S. dollars as last quoted by any recognized dealer. If such
quotations are not available, the rate of exchange will be
determined in accordance with policies established in good faith
by the Trustees. Gains or losses between trade and settlement
dates resulting from changes in exchange rates between the U.S.
dollar and a foreign currency are borne by the Fund. To protect
against such losses, the International Equity Fund, and Global
Bond Fund may enter into forward foreign currency exchange or
futures contracts, which will also have the effect of limiting
any such gains. See "Other Information--Foreign Currency
Exchange Contracts."

X. TAX INFORMATION

Each Fund intends to qualify each year as a regulated
investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order to so
qualify, a RIC must, among other things, (i) derive at least 90%
of its gross income from dividends, interest, payments with
respect to certain securities loans, gains from the sale of
securities, certain gains from foreign currencies, or other
income (including but not limited to gains from options, futures
or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (ii) derive
less than 30% of its gross income from gains from the sale or
other disposition of securities, options, futures, forward
contracts and certain investments in foreign currencies held for
less than three months; (iii) distribute at least 90% of its
dividend, interest and certain other taxable income ("Investment
Company Taxable Income") each year, as well as 90% of its net tax-
exempt interest income; (iv) at the end of each fiscal quarter
maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment
companies, and other securities of issuers which represent, with
respect to each issuer, no more than 5% of the value of the RIC's
total assets and 10% of the outstanding voting securities of such
issuer; and (v) at the end of each fiscal quarter have no more
than 25% of its assets invested in the securities (other than
those of the U.S. government or other RICs) of any one issuer or
of two or more issuers which the RIC controls and which are
engaged in the same, similar or related trades and businesses.
In any year in which a RIC distributes 90% of its Investment
Company Taxable Income and 90% of its net tax-exempt interest
income, it will not be subject to corporate income tax on amounts
distributed to its shareholders.

If for any taxable year a Fund does not qualify as a RIC,
all of its taxable income (including its net capital gain) will
be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such
distributions will be taxable as ordinary dividends to the extent
of such Fund's current and accumulated earnings and profits. Such
distributions generally will be eligible for the dividends-
received deduction in the case of corporate shareholders.

If for any taxable year a Fund complies with certain
requirements, then some or all of the dividends (excluding
capital gain distributions) payable out of income of the Fund
that are attributable to dividends received from domestic
corporations may qualify for the 70% dividends-received deduction
available to corporations.

Ordinary income distributions and distributions of net
realized short-term capital gains to shareholders who are liable
for federal income taxes will be taxed as ordinary dividend
income to such shareholders. Distributions of net long-term
capital gains to such shareholders are taxable as long-term
capital gains regardless of how long such shareholders have held
shares of a Fund. These provisions apply whether the dividends
and distributions are received in cash or accepted in shares.
Any loss realized upon the redemption of shares within six months
from the date of their purchase will be treated as a long-term
capital loss to the extent of any distribution of net long-term
capital gains during such six-month period. No loss will be
allowed on the sale of shares of a Fund to the extent the
shareholder acquired other Fund shares within 30 days prior to
the sale of the loss shares or 30 days after such sale.

Dividends and other distributions by any Fund may also be
subject to state and/or local taxes. Shareholders should consult
with their own tax advisers concerning the foregoing state and
local tax consequences of investing in a Fund. Additionally,
shareholders who are foreign persons should consult with their
own tax advisers concerning the foreign tax consequences of
investing in a Fund.

All of the Funds except for International Equity Fund may
invest in futures contracts or options. Certain options, futures
contracts and options on futures contracts are "section 1256
contracts." Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital
gains or losses ("60/40"). Also, section 1256 contracts held by a
Fund at the end of each taxable year are treated for federal
income tax purposes as being sold on such date for their fair
market value. The resultant paper gains or losses are also
treated as 60/40 gains or losses. When the section 1256 contract
is subsequently disposed of, the actual gain or loss will be
adjusted by the amount of any preceding year-end gain or loss.
The use of section 1256 contracts may force a Fund to distribute
to shareholders paper gains that have not yet been realized in
order to avoid federal income tax liability.

Certain Funds may invest in obligations (such as zero coupon
bonds) which are issued with original issue discount ("OID").
Under the code, OID is accrued even in the absence of cash
payments. Accordingly, such Funds may be required to sell some
of their assets in order to satisfy the distribution requirements
applicable to RICs.

Foreign currency gains or losses on non-U.S. dollar
denominated bonds and other similar debt instruments and on any
non-U.S. dollar denominated futures contracts, options and
forward contracts generally will be treated as ordinary income
or loss.

Certain hedging transactions undertaken by a Fund may result
in "straddles" for federal income tax purposes. The straddle
rules may affect the character of gains (or losses) realized by
the Fund. In addition, losses realized by the Fund on positions
that are part of a straddle may be deferred, rather than being
taken into account in calculating taxable income for the taxable
year in which such losses are realized. Because only a few
regulations implementing the straddle rules have been
promulgated, the tax consequences of hedging transactions to the
Fund are not entirely clear. The hedging transactions may
increase the amount of short-term capital gain realized by the
Fund which is taxed as ordinary income when distributed to
shareholders. The Fund may make one or more of the elections
available under the Code which are applicable to straddles. If
the Fund makes any of the elections, the amount, character and
timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary
according to the elections made. The rules applicable under
certain of the elections operate to accelerate the recognition of
gains or losses from the affected straddle positions. Because
application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition
of gains or losses from the affected straddle positions, the
amount which must be distributed to shareholders, and which will
be taxed to shareholders as ordinary income or long-term capital
gain in any year, may be increased or decreased substantially as
compared to a fund that did not engage in such hedging
transactions.

The 30% limit on gains from the sale of certain assets held
for less than three months and the diversification requirements
applicable to each Fund's assets may limit the extent to which
each Fund will be able to engage in transactions in options,
futures contracts or options on futures contracts.

The International Equity, Global Bond, Bond, Short and
Intermediate Bond and Short Government Funds may be subject to a
tax on dividend or interest income received from securities of a
non-U.S. issuer withheld by a foreign country at the source. The
United States has entered into tax treaties with many foreign
countries which entitle the Funds to a reduced rate of tax or
exemption from tax on such income. It is impossible to determine
the effective rate of foreign tax in advance since the amount of
each Fund's assets to be invested within various countries is not
known. If more than 50% of such a Fund's total assets at the
close of a taxable year consists of stock or securities in
foreign corporations, the Fund may elect to pass through to its
shareholders the foreign income taxes paid thereby. In such
case, the shareholders would be treated as receiving, in addition
to the distributions actually received by the shareholders, their
proportionate share of foreign income taxes paid by the Fund, and
will be treated as having paid such foreign taxes. The
shareholders will be entitled to deduct or, subject to certain
limitations, claim a foreign tax credit with respect to, such
foreign income taxes. It should be noted that only shareholders
who itemize deductions may deduct foreign income taxes paid by
them.

Shareholders of each Fund will be notified each year of the
amounts and tax status of dividends and distributions from their
Fund. The notification will contain information for corporate
shareholders of the Funds that are subject to federal income
taxation of the extent to which, if any, the dividends paid by
each Fund qualify for a deduction for dividends received. Despite
such notification, the dividends-received deduction will not be
available if the corporate shareholder has held shares of a Fund
for less than 46 days and will be reduced to the extent that the
acquisition of the shares was financed with indebtedness.

Under the federal income tax law, each Fund will be required
to report to the Internal Revenue Service all distributions of
taxable income and capital gains as well as gross proceeds from
all redemptions of shares except in the case of certain exempt
shareholders. Under the backup withholding provisions of the
Code, such distributions and redemption proceeds may be subject
to withholding of federal income tax at the rate of 31% in the
case of non-exempt shareholders who fail to furnish the Fund with
their correct taxpayer identification numbers and with required
certifications regarding their status under the federal income
tax law, or with respect to those shareholders whom the Internal
Revenue Service notifies the Funds of certain other non-
compliance. If these withholding provisions are applicable, any
distributions to, and proceeds received by, shareholders, whether
taken in cash or reinvested in shares, will be reduced by the
amounts required to be withheld.

The Code imposes a four percent nondeductible excise tax on
each regulated investment company with respect to the amount, if
any, by which such company does not meet distribution
requirements specified under such tax law. Each Fund intends to
comply with such distribution requirements and thus does not
expect to incur the four percent nondeductible excise tax
although it may not be possible for the Funds to avoid this tax
in all instances.

The foregoing discussion relates solely to U.S. federal
income tax law. Non-U.S. investors should consult their tax
advisers concerning the tax consequences of ownership of shares
of a Fund, including the possibility that distributions may be
subject to a 30% United States withholding tax (or a reduced rate
of withholding provided by treaty).

The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and Treasury Regulations
currently in effect. For the complete provisions, reference
should be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The above discussion covers
only Federal income tax considerations with respect to the Funds
and their shareholders. Foreign, state and local tax laws vary
greatly, especially with regard to the treatment of exempt-
interest dividends. Shareholders should consult their own tax
advisers for more information regarding the Federal, foreign,
state, and local tax treatment of each Fund's shareholders and
with respect to their own tax situation.

XI. CUSTODIAN, TRANSFER AGENT AND INDEPENDENT PUBLIC ACCOUNTANT

State Street Bank and Trust Company ("State Street" or the
"Custodian"), 1776 Heritage Drive, North Quincy, Massachusetts,
as Custodian for all the Funds, is responsible for holding all
cash assets and all portfolio securities of the Funds, releasing
and delivering such securities as directed by the Funds,
maintaining bank accounts in the names of the Funds, receiving
for deposit into such accounts payments for shares of the Funds,
collecting income and other payments due the Funds with respect
to portfolio securities and paying out monies of the Funds. In
addition, when any of the Funds trade in futures contracts and
those trades would require the deposit of initial margin with a
futures commission merchant ("FCM"), the Fund will enter into a
separate special custodian agreement with a custodian in the name
of the FCM which agreement will provide that the FCM will be
permitted access to the account only upon the Fund's default
under the contract.

The Custodian is authorized to deposit securities in
securities depositories or to use the services of sub-custodians,
including foreign sub-custodians, to the extent permitted by and
subject to the regulations of the Securities and Exchange
Commission.

Boston Financial Data Services, Inc., P.O. Box 8517, Boston,
Massachusetts 02266-8517, serves as the Transfer Agent for each
of the Funds.

Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts 02109, is the independent public accountant for
each of the Funds.

XII. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of January 28, 1997, Resource Bank "controlled" (within
the meaning of the 1940 Act i.e., owned in excess of 25% of the
shares of) the Capital Appreciation Fund and Charles Schwab & Co.
"controlled" the Special Equity Fund. An entity which "controls"
a particular Fund could have effective voting control over the
operations of that Fund.

The following chart identifies those shareholders of record
on Janauary 28, 1997 holding 5% or more of the outstanding shares
of any of the Funds. Certain of these shareholders are omnibus
processing organizations.

Income Equity Fund

Huntington National Bank, Columbus, Ohio (18%)
Charles Schwab & Co., Inc., San Francisco, California (16%)

Capital Appreciation Fund

Resource Bank, Minneapolis, Minnesota (30%)

Special Equity Fund

Huntington National Bank, Columbus, Ohio (14%)
Resource Bank, Minneapolis, Minnesota (12%)
Charles Schwab & Co., Inc., San Francisco, California (27%)

International Equity Fund

Huntington National Bank, Columbus, Ohio (7%)
Resource Bank, Minneapolis, Minnesota (12%)
Charles Schwab & Co., Inc., San Francisco, California (21%)

Short Government Fund

C.E. Broom, New London, New Hampshire (7%)

Short and Intermediate Bond Fund

Huntington National Bank, Columbus, Ohio (5%)

Intermediate Mortgage Fund

Roman Catholic Diocese, Syracuse, New York (7%)
Huntington National Bank, Columbus, Ohio (5%)

Bond Fund

Charles Schwab & Co., Inc., San Francisco, California (12%)

All shareholders are entitled to one vote for each share
held. There is no cumulative voting. Accordingly, the holder or
holders of more than 50% of the shares of the Trust would be able
to elect all the Trustees. With respect to the election of
Trustees and ratification of accountants the shareholders of
separate Funds vote together; they generally vote separately by
Fund on other matters.

XIII. OTHER INFORMATION

Following is a description of various financial instruments
and other terms referred to in the prospectus and statement of
additional information.

Asset-Backed Securities -- Through the use of trusts and
special purpose corporations, various types of assets, primarily
automobile and credit card receivables and home equity loans,
have been securitized in pass-through structures similar to
mortgage pass-through structures or in a pay-through structure
similar to the CMO structure. A Fund may invest in these and
other types of asset-backed securities that may be developed in
the future. Asset-backed securities present certain risks that
are not presented by mortgage-backed securities. Primarily,
these securities do not have the benefit of a security interest
in the related collateral. Credit card receivables are generally
unsecured and the debtors are entitled to the protection of a
number of states and federal consumer credit laws, some of which
may reduce the ability to obtain full payment. In the case of
automobile receivables, the security interests in the underlying
automobiles are often not transferred when the pool is created,
with the resulting possibility that the collateral could be
resold. In general, these types of loans are of shorter average
life than mortgage loans and are less likely to have substantial
prepayments.

Bankers Acceptances -- Bankers acceptances are short-term
credit instruments used to finance the import, export, transfer
or storage of goods. They are termed "accepted" when a bank
guarantees their payment at maturity. Eurodollar bankers
acceptances are U.S. dollar denominated bankers acceptances
"accepted" by foreign branches of major U.S. commercial banks.

Cash Equivalents -- Cash equivalents include certificates of
deposit, bankers acceptances, government obligations, commercial
paper, short-term corporate debt securities and repurchase
agreements.

Certificates of Deposit -- Certificates of deposit are
issued against funds deposited in a bank (including eligible
foreign branches of U.S. banks), are for a definite period of
time, earn a specified rate of return and are normally
negotiable.

Commercial Paper -- Commercial paper refers to promissory
notes representing an unsecured debt of a corporation or finance
company which matures in less than nine (9) months. Eurodollar
commercial paper refers to notes payable by European issuers in
U.S. dollars.

Covered Call Options -- The Equity Funds, other than the
International Equity Fund each may write covered call options on
individual stocks, equity indices and futures contracts,
including equity index futures contracts. The Income Funds each
may write covered call options on individuals bonds and on
interest rate futures contracts. With the exception of the Short
Government Fund and the Intermediate Mortgage Fund, all written
call options must be listed on a national securities exchange or
futures exchange. The Short Government Fund and the Intermediate
Mortgage Fund may write unlisted options in negotiated
transactions. (See "Dealer Options and "Puts and Calls".) The
Funds will not change these policies until this Statement of
Additional Information has been appropriately supplemented, and
existing shareholders will be notified of such a change in the
next regular report to them.

A call option is a short-term contract (ordinarily having a
duration of nine months or less) which gives the purchaser of the
option, in return for a premium paid, the right to buy, and the
writer the obligation to sell, the underlying security, financial
instrument, index or futures contract at the exercise price at
any time prior to the expiration of the option, regardless of the
market price of the security, financial instrument, index or
futures contract during the option period. A call option is
"covered" if the Fund writing the option owns, (or has the
immediate right to acquire without the payment of additional
consideration), the underlying security or financial instrument,
owns financial instruments whose returns are closely correlated
with the financial instruments on which the option is written or
segregates with the Custodian sufficient cash and/or short-term
high quality securities to meet its obligations under the call.

In order to terminate its obligation under an outstanding
option which it has written, a Fund may make a "closing purchase
transaction" i.e., purchase a call option on the same financial
instrument, index or futures contract with the same exercise
price and the same expiration date. The Fund will realize a gain
or loss from a closing purchase transaction if the amount paid to
purchase a call option is less or more, respectively, than the
amount received from the sale thereof. A Fund may not effect a
closing purchase transaction with respect to a written option
after it has been notified of the exercise of the option. When a
security, financial instrument, index or futures contract
underlying a covered call option is sold from a Fund's portfolio,
the Fund must effect a closing purchase transaction so as to
close out any existing covered call option on that security,
financial instrument, index or futures contract. A closing
purchase transaction may be made only on an exchange which
provides a secondary market for an option with the same exercise
price and expiration date. There is no assurance that a liquid
secondary market on an exchange will exist for any particular
option, or at any particular time, and for some options no
secondary market on an exchange may exist. If a Fund is unable
to effect a closing purchase transaction, the Fund will not be
able to sell the underlying security, financial instrument, index
or futures contract until the option expires.

The writing of option contracts is a highly specialized
activity which involves investment techniques and risks different
than those ordinarily associated with investment companies. A
Fund pays brokerage commissions in connection with writing
covered call options (or covered put options as discussed below)
and effecting closing purchase transactions, as well as for
purchases and sales of the underlying security, financial
instrument, index or futures contract. The writing of covered
call options could result in significant increases in a Fund's
portfolio turnover rate, especially during periods when market
prices of the underlying security, financial instrument, index or
futures contract appreciate. See "Portfolio Turnover."

Covered Put Options -- The Equity Funds, except for the
International Equity Fund, may write covered put options on
individual stocks, equity indices and equity index futures
contracts. The Income Funds, may write covered put options on
individual bonds and on interest rate futures contracts.

A put option is a short-term contract (ordinarily having a
duration of nine months or less) which gives the purchaser of the
option, in return for a premium paid, the right to sell, and the
writer the obligation to buy, the underlying security, financial
instrument, index or futures contract at the exercise price at
any time prior to the expiration of the option, regardless of the
market price of the financial instrument, index or futures
contract during the option period. A put option is "covered" if
the Fund writing the option segregates with the Custodian
sufficient cash and/or short-term high quality securities to meet
its obligations under the put (or holds a put option on the same
underlying security or financial instrument at an equal or
greater exercise price with the same expiration date). The
writer of a put option assumes the risk of a decrease in the
value of the underlying security, financial instrument, index or
futures contract. If such a decrease occurred, the option could
be exercised and the underlying security, financial instrument,
index or futures contract would then be sold to the writer at a
price higher than its then current market value.

A Fund may enter into closing purchase transactions on put
options i.e., purchase a put option on the same financial
instrument, index or futures contract with the same exercise
price and the same expiration date. The Fund will realize a gain
or loss from a closing purchase transaction if the amount paid to
purchase a put option is less or more than the amount received
from the sale thereof. A Fund may not effect a closing purchase
transaction with respect to a written option after it has been
notified of the exercise of the option. When the security,
financial instrument, index, or futures contract underlying a
covered put option is sold from the Fund's portfolio, the Fund
must effect a closing purchase transaction to close out any
existing put option on that security or other instrument. A
closing purchase transaction may be made only on an exchange
which provides a secondary market for an option with the same
exercise price and expiration date. There is no assurance that a
liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some
options no secondary market on an exchange may exist.

Dealer Options -- Also known as OTC options, these are puts
and calls for which the strike price, expiration and premium are
privately negotiated. See "Other Information -- Puts and Calls."
The Short Government Fund and the Intermediate Mortgage Fund may
engage in dealer options, but only with major financial
institutions who are member banks of the Federal Reserve System
and approved as primary dealers in United States government
securities by the Federal Reserve Bank of New York, and whose
creditworthiness and financial strength are judged by the Asset
Manager to be at least as good as that of financial institutions
to which the Fund may loan portfolio securities. See "Other
Information -- Loan Transactions."

Equity Index Futures Contracts -- The Capital Appreciation
Fund, Income Equity Fund and Special Equity Fund may enter into
equity index futures contracts. An equity index futures contract
is an agreement by the Fund to buy or sell an index relating to
equity securities at a specified date and price. No payment is
made when the Fund buys a futures contract and neither the index
nor any securities are delivered when the Fund sells a futures
contract. Instead, the Fund makes a deposit called an "initial
margin" equal to a percentage of the contract's value. Payment is
made when the contract expires unless an offsetting transaction
has been entered into. Equity index futures contracts will be
used only as a hedge against anticipated changes in the level of
stock prices or otherwise to the extent transactions permitted to
entities exempt from the definition of the term commodity pool
operator. See "Investment Restrictions."

Eurodollar Bonds -- U.S. dollar-denominated bonds or
debentures issued outside the United States.

European Currency Unit Bonds -- The European Currency Unit
("ECU") is a basket of European currencies consisting of
specified amounts of the currencies of ten members of the
European community. The ECU is used by members as their
budgetary currency to determine official claims and debts. It
fluctuates with the daily exchange rate changes of the
constituent currencies. The ECU is now defined by the following
ten currencies: German Deutschmark, British Pound, French Franc,
Italian Lira, Dutch Guilder, Belgian Franc, Luxembourg Franc,
Finish Kroner, Irish Pound, and Greek Drachma. ECU bonds are
bonds or debentures denominated in ECUs.

Foreign Currency Exchange Transactions -- The value of the
assets of the International Equity Fund, Global Bond Fund, and
the value of any foreign securities of other Funds, will be
affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and such Funds
may incur costs in connection with conversions between various
currencies.

The Funds will not hold foreign currency except in
connection with the purchase and sale of foreign portfolio
securities. Each Fund may enter into currency exchange
transactions at the time of purchase or sale of a security by
buying or selling a currency on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market.
Alternatively, when a Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency,
it may desire to fix the expected cost or proceeds of the
transaction relative to another currency through forward
contracts to purchase or sell foreign currencies ("forward
contracts").

A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the
contract agreed upon the parties, at a price set at the time of
the contract. The forward contract may be denominated in U.S.
dollars or may be a "cross-currency" contract where the forward
contract is denominated in a currency other than U.S. dollars.
These contracts are traded directly between currency traders
(usually large commercial banks) and their customers. The
Custodian will segregate cash or marketable securities in an
amount not less than the value of each Fund's total assets
committed to forward contracts. If the value of the securities
segregated declines, additional cash or securities will be added
on a daily basis, i.e, "marked to market," so that the segregated
amount will not be less than the amount of each Fund's
commitments with respect to such contracts. Generally, the Funds
will not enter into forward contracts with a term of greater than
90 days.

At the maturity of a forward contract, a Fund may either
accept or deliver the foreign currency or may terminate the
obligation under the forward contract by purchasing an
"offsetting" forward contract with the same currency trader
obligating the Fund to sell or purchase, on the same maturity
date, the same amount of the foreign currency. If a Fund engages
in an offsetting transaction, the Fund will incur a gain or a
loss to the extent that there has been movement in forward
contract prices. For example, should currency prices decline
during the period between entering into a forward contract for
the sale of a foreign currency and the date the Fund enters into
an offsetting contract for the purchase of the foreign currency,
the Fund will realize a gain to the extent the price of the
currency the Fund has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should currency prices
increase, the Fund will suffer a loss to the extent the price of
the currency the Fund has agreed to purchase exceeds the price of
the currency the Fund has agreed to sell. If a Fund engages in
an offsetting transaction, it may subsequently enter into a new
forward contract with respect to the foreign currency.

To the extent that a Fund enters into foreign currency
futures contracts, it will be subject to similar risk
considerations. For more information concerning futures
contracts, see "Certain Securities and Investment Techniques and
Related Risks -- Hedging Techniques -- Futures Contracts" in the
Prospectuses.

The forecasting of currency movements is extremely difficult
and the successful execution of a hedging strategy is highly
uncertain. Moreover, it is impossible to forecast with absolute
precision the market value of portfolio securities at the
expiration of a hedging transaction. For example, it may be
necessary for the Fund to purchase additional foreign currency on
the spot market (and bear the expense of such purchase) if the
market value of a security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver.

Foreign currency exchange transactions do not eliminate
fluctuations in the underlying prices of the securities. They
simply establish rates of exchange for some future point in time.
Additionally, although such transactions may tend to minimize the
risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain
which might result should the value of such currency increase.

The International Equity Fund does not intend to enter into
forward contracts on a regular or continuous basis, and will not
do so if, as a result, the Fund would have more than 25% of the
value of its respective total assets committed to such contracts.
The other Funds, except for the Global Bond Fund, do not intend
to enter into forward contracts on a regular or continuous basis,
and will not do so if, as a result, the Fund would have more than
5% of the value of its total assets committed to such contracts.
The Funds, except for the Global Bond Fund, will also not enter
into forward contracts or maintain a net exposure in such
contracts where the Funds would be obligated to deliver an amount
of foreign currency in excess of the value of the Fund's
portfolio securities or other assets denominated in that
currency. The Global Bond Fund may enter into forward contracts,
unless, as a result, more than 50% of value of the Fund's total
assets would be committed to such contracts.

Interest Rate Futures Contracts -- The Income Funds may
enter into interest rate futures contracts. An interest rate
futures contract is an agreement by the Fund to buy or sell fixed-
income securities at a specified date and price. No payment is
made when the Fund buys a futures contract and no securities are
delivered when the Fund sells a futures contract. Instead, the
Fund makes a deposit called an "initial margin" equal to a
percentage of the contract's value. Payment or delivery is made
when the contract expires unless an offsetting transaction has
been entered into. Futures contracts will be used only as a
hedge against anticipated interest rate changes or otherwise to
the extent permitted to entities exempt from the definition of
the term commodity pool operator. See "Investment Restrictions."

Inverse Floating Obligations -- These are variable rate
securities on which interest rates typically decline as market
rates increase and increase as market rates decline. The Funds
typically purchase such issues directly from the issuing agency.
The market for such obligations is liquid to the extent of the
active participation in the secondary market of securities
dealers and a variety of investors.

Loan Transactions -- Loan transactions involve the lending
of securities to a broker-dealer or institutional investor for
its use in connection with short sales, arbitrages or other
securities transactions. Loans of portfolio securities of a Fund
will be made (if at all) in strictest conformity with applicable
federal and state rules and regulations. The purpose of a loan
transaction is to afford a Fund the opportunity to continue to
earn income in addition to the income on the securities loaned.

The Trustees understand that it is the current view of the
staff of the SEC that a Fund is permitted to engage in loan
transactions only if the following conditions are met: (1) the
Fund must receive 100% collateral in the form of cash or cash
equivalents, e.g., U.S. Treasury bills or notes, from the
borrower; (2) the borrower must increase the collateral whenever
the market value of the loaned securities (determined on a daily
basis) rises above the level of the collateral; (3) the Fund must
be able to terminate the loan after notice, at any time; (4) the
Fund must receive reasonable interest on the loan or a fee from
the borrower, as well as amounts equivalent to any dividends,
interest or other distributions on the securities loaned and any
increase in market value; (5) the Fund may pay only reasonable
fees in connection with the loan; (6) voting rights on the
securities loaned may pass to the borrower; however, if a
material event affecting the investment occurs, the Trustees must
be able to terminate the loan and vote proxies or enter into an
alternative arrangement with the borrower to enable the Trustees
to vote proxies. Excluding items (1) and (2), these practices
may be amended by the Trustees from time to time as regulatory
provisions permit.

While there may be delays in recovery of loaned securities
or even a loss of rights in collateral supplied should the
borrower fail financially, loans will be made only to firms
deemed by the Trustees to be of good standing and will not be
made unless, in the judgment of the Fund's Asset Manager made
pursuant to standards adopted by the Trustees, the consideration
to be earned from such loans would justify the risk. Such loan
transactions are referred to in this Statement of Additional
Information as "qualified" loan transactions.

The cash collateral acquired through loan transactions may
be invested in any obligation in which the applicable Fund is
authorized to invest in accordance with its investment
objectives. The investment of the cash collateral in other
obligations subjects that investment as well as the security
loaned to market forces, i.e., capital appreciation or
depreciation, just like any other portfolio security.

Mortgage-Related Securities -- Mortgage-related securities
or pass-throughs are certificates issued by governmental,
government-related and private organizations which are backed by
pools of mortgage loans. These mortgage loans are made by
lenders such as savings and loan institutions, mortgage bankers,
commercial banks and others to residential home buyers throughout
the United States. The securities are "pass-through" securities
because they provide investors with monthly payments which in
effect are a "pass-through" of the monthly payments of principal
and interest made by the individual borrowers on the underlying
mortgages, net of any fees paid to the issuer or guarantor of the
pass-through certificates. The principal governmental issuer of
such securities is the Government National Mortgage Association
(GNMA), which is a wholly-owned U.S. Government corporation
within the Department of Housing and Urban Development.
Government-related issuers include the Federal Home Loan Mortgage
Corporation (FHLMC), a corporate instrumentality of the United
States created pursuant to an act of Congress which is owned
entirely by Federal Home Loan Banks, and the Federal National
Mortgage Association (FNMA), a government sponsored corporation
owned entirely by private stockholders. Commercial banks,
savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers
also create pass-through pools of conventional residential
mortgage loans. Such issuers may be the originators of the
underlying mortgage loans as well as the guarantors of the
mortgage-related securities.

(1) GNMA Mortgage Pass-Through Certificates ("Ginnie
Maes"). Ginnie Maes represent an undivided interest in a pool of
mortgages that are insured by the Federal Housing Administration
or the Farmers Home Administration or guaranteed by the Veterans
Administration. Ginnie Maes entitle the holder to receive all
payments (including prepayments) of principal and interest owed
by the individual mortgagors, net of fees paid to the GNMA and to
the issuer which assembles the mortgage pool and passes through
the monthly mortgage payments to the certificate holders
(typically, a mortgage banking firm), regardless of whether the
individual mortgagor actually makes the payment. Because
payments are made to certificate holders regardless of whether
payments are actually received on the underlying mortgages,
Ginnie Maes are of the "modified pass-through" mortgage
certificate type. The GNMA is authorized to guarantee the timely
payment of principal and interest on the Ginnie Maes. The GNMA
guarantee is backed by the full faith and credit of the United
States, and the GNMA has unlimited authority to borrow funds from
the U.S. Treasury to make payments under the guarantee. The
market for Ginnie Maes is highly liquid because of the size of
the market and the active participation in the secondary market
of securities dealers and a variety of investors.

(2) FHLMC Mortgage Participation Certificates ("Freddie
Macs"). Freddie Macs represent interests in groups of specified
first lien residential conventional mortgages underwritten and
owned by the FHLMC. Freddie Macs entitle the holder to timely
payment of interest, which is guaranteed by the FHLMC. The FHLMC
guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. In cases
where the FHLMC has not guaranteed timely payment of principal,
the FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an
underlying mortgage, but in no even later than one year after it
becomes payable. Freddie Macs are not guaranteed by the United
States or by any of the Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. The secondary market for Freddie Macs is
highly liquid because of the size of the market and the active
participation in the secondary market of the FHLMC, securities
dealers and a variety of investors.

(3) FNMA Guaranteed Mortgage Pass-Through Certificates
("Fannie Maes"). Fannie Maes represent an undivided interest in
a pool of conventional mortgage loans secured by first mortgages
or deeds of trust, on one family, or two to four family,
residential properties. The FNMA is obligated to distribute
scheduled monthly installments of principal and interest on the
mortgages in the pool, whether or not received, plus full
principal of any foreclosed or otherwise liquidated mortgages.
The obligation of the FNMA under its guaranty is solely the
obligation of the FNMA and is not backed by, nor entitled to, the
full faith and credit of the United States.

(4) Mortgage-related securities issued by private
organizations. Pools created by non-governmental issuers
generally offer a higher rate of interest than government and
government-related pools because there are no direct or indirect
government guarantees of payments in such pools. However, timely
payment of interest and principal of these pools is often
partially supported by various forms of insurance or guarantees,
including individual loan, title, pool and hazard insurance. The
insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will
be considered in determining whether a mortgage-related security
meets a Fund's investment quality standards. There can be no
assurance that the private insurers can meet their obligations
under the policies. Certain Funds may buy mortgage-related
securities without insurance or guarantees if through an
examination of the loan experience and practices of the poolers
the Asset Manager of the Fund determines that the securities meet
the Fund's quality standards. Although the market for such
securities is becoming increasingly liquid, securities issued by
certain private organizations may not be readily marketable.

The market value of mortgage-related securities depends on,
among other things, the level of interest rates, the
certificates' coupon rates and the payment history of the
mortgagors of the mortgages in the underlying pool of mortgages.

Municipal Bonds -- For purposes of the investment
restrictions set forth in the section entitled "Investment
Restrictions," the identification of the "issuer" of municipal
bonds which are not general obligation bonds is made by the Asset
Manager on the basis of the characteristics of the obligation as
either general obligation, revenue or industrial development
bonds, the most significant of which is the source of the funds
for the payment of principal and interest on such securities.

Although the Funds do not currently invest more than 25% of
their assets in municipal bonds issued by public housing
authorities, state and local housing finance authorities, and
municipal utilities systems and industrial development and
pollution control bonds, they may do so at some point in the
future. Since such municipal bonds are not general obligations
of the issuer, they may be more subject to political and economic
changes which may impair their ability to make interest and
principal payments.

The liquidity of lease rental obligations will be determined
based on a variety of factors which may include, among others:
(1)Ethe frequency of trades and quotes for the obligation;
(2)Ethe number of dealers willing to purchase or sell the
security and the number of other potential buyers; (3)Ethe
willingness of dealers to undertake to make a market in the
security; (4)Ethe nature of the marketplace trades, including,
the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer; and (5)Ethe
rating assigned to the obligation by an established rating agency
or the Asset Manager.

Generally, industrial development bonds are not backed by
the credit of any governmental or public authority. The Funds
may invest in uncollateralized industrial development bonds which
the Asset Manager has determined to be of a quality equivalent to
bonds rated not less than A by Moody's or Standard & Poor's. The
Funds may invest in industrial development bonds collateralized
by letters of credit issued by banks having stockholders' equity
in excess of $100 million as of the date of their most recently
published statement of financial condition. The Funds may also
invest in variable rate industrial development bonds, most of
which permit the holder thereof to receive the principal amount
on demand upon seven days notice.

Municipal notes include Tax Anticipation Notes, issued to
finance working capital needs of municipalities; Revenue
Anticipation Notes, issued in expectation of receipt of other
types of revenue; Bond Anticipation Notes, issued to provide
interim financing until long-term bond financing can be arranged;
Construction Loan Notes, sold to provide construction financing;
and Tax-Exempt Commercial Paper, a short-term obligation with a
stated maturity of 365 days or less issued by state and local
governments or their agencies to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term
financing. The Funds may invest in municipal bonds carrying a
guarantee or insured by the U.S. government as to the payment of
principal and interest, or which are fully collateralized by an
escrow of U.S. government securities. Such collateralized bonds
are commonly known as defeasance bonds.

Obligations of Domestic and Foreign Banks -- Banks are
subject to extensive governmental regulations which may limit
both the amounts and types of loans and other financial
commitments which may be made and interest rates and fees which
may be charged. The profitability of the banking industry is
largely dependent upon the availability and cost of capital funds
for the purpose of financing lending operations under prevailing
money market conditions. Also, general economic conditions play
an important part in the operations of this industry and exposure
to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations
under a letter of credit.

Puts and Calls -- In addition to writing covered call
options and covered put options, and engaging in closing purchase
transactions with respect thereto as described above, the Equity
Funds, other than the International Equity Fund may purchase
options on individual stocks, equity indices and equity index
futures contracts and the Income Funds may purchase options on
individual bonds and on interest rate future contracts. A put
option (sometimes called a "standby commitment") gives the
purchaser of such option, upon payment of a premium, the right to
deliver a specified amount of a financial instrument or index or
futures contract on or before a fixed date at a predetermined
price. A call option (sometimes called a "reverse standby
commitment") gives the purchaser of the option, upon payment of a
premium, the right to call upon the writer to deliver a specified
amount of a financial instrument, index or futures contract on or
before a fixed date, at a predetermined price.

A Fund may purchase put and call options to provide
protection against the adverse affects of changes in the general
level of prices in the markets in which the Fund operates. In
purchasing a call option, the Fund would be in a position to
realize a gain if, during the option period, the price of the
financial instrument, index or futures contract increased by an
amount in excess of the premium paid. It would realize a loss if
the price of the financial instrument, index or futures contract
declined or remained the same or did not increase during the
period by more than the amount of the premium. By purchasing a
put option, the Fund would be in a position to realize a gain if,
during the option period, the price of the financial instrument,
index or futures contract declined by an amount in excess of the
premium paid. It would realize a loss if the price of the
financial instrument, index or futures contract increased or
remained the same or did not decrease during that period by more
than the amount of the premium. If a put or call option
purchased by the Fund were permitted to expire without being sold
or exercised, its premium would then represent a realized loss to
the Fund.

The Fund may dispose of an option which it has purchased by
entering into a "closing sale transaction" with the writer of the
option. A closing sale transaction terminates the obligation for
the writer of the option and does not result in the ownership of
an option. The Fund realizes a profit or loss from a closing
sale transaction if the premium received from the transaction is
more or less than the cost of the option.

Ratings of Commercial Paper -- Commercial paper rated A-1 by
Standard & Poor's Ratings Group ("S&P") has the following
characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated A or better. The
issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong
position with the industry. The reliability and quality of
management are unquestioned. Relative strength or weakness of
the above factors determines whether the issuer's commercial
paper is rated A-1, A-2 or A-3.

The rating P-1 is the highest commercial paper rating
assigned by Moody's Investors Services, Inc. ("Moody's"). Among
the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in
certain areas; (3) evaluation for the issuer's products in
relation to competition and customer acceptance; (4) liquidity;
(5) amount and quality of long-term debt; (6) trend of earning
over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and
(8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and
preparations to meet such obligations.

Ratings of Debt Instruments -- The four highest ratings of
Moody's for debt instruments: Aaa, Aa, A, and Baa are considered
to be investment grade. Debt rated Aaa is judged by Moody's to
be of the best quality. Debt rated Aa is judged to be of high
quality by all standards. Together with the Aaa group, such debt
comprises what is generally known as high-grade debt. Moody's
states that debt rated Aa is rated lower than the best debt
because margins of protection or other elements make long-term
risks appear somewhat larger than for Aaa debt. Debt which is
rated A by Moody's possesses many favorable investment attributes
and is considered "upper medium grade obligations." Factors
giving security to principal and interest of A-rated debt are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Debt that
is rated Baa is neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
debt lacks outstanding investment characteristics and, in fact,
has speculative characteristics as well. Debt that is rated Ba
is judged to have speculative elements and a future which cannot
be considered to be well assured. Often the protection of
interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this
class.

The four highest ratings (investment grade) of S&P for debt
instruments are AAA, AA, A, and BBB. Debt rated AAA has the
highest rating assigned by S&P to an obligation. Capacity to pay
interest and repay principal is extremely strong. Debt rated AA
has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in a small degree.
Debt rated A has a strong capacity to pay principal and interest,
although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions. Debt rated
BBB is considered on the borderline between definitely sound
obligations and obligations where the speculative element begins
to predominate. Debt rated BB is regarded, on balance, as
predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation among
the bonds deemed to be speculative.

The Bond Fund and the Short and Intermediate Bond Fund
may each invest without limitation in debt securities that are
rated as low as BB by S&P or Ba by Moody's. Such securities are
frequently referred to as "junk bonds." Fixed-income securities
are subject to the risk of an issuer's inability to meet
principal and interest payments on the obligations ("credit
risk") and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity
("market risk"). Junk bonds are more likely to react to
developments affecting market and credit risk than are more
highly-rated securities, which react primarily to movements in
the general level of interest rates.

Lower-rated debt obligations also present risks based
on payment expectations. If an issuer calls the obligation for
redemption, a Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors.
Also, as the principal value of bonds moves inversely with
movements in interest rates, in the event of rising interest
rates the value of a Fund's portfolio may decline proportionately
more than a portfolio consisting of higher-rated securities. If
a Fund experiences unexpected net redemptions, it may be forced
to sell its higher-rated bonds, resulting in a decline in the
overall credit quality of the Fund's portfolio and increasing the
exposure of the Fund to the risks of lower-rated securities.
Investments in zero coupon bonds may be more speculative and
subject to greater fluctuations in value due to changes in
interest rates than income-bearing bonds.

During the fiscal year ended December 31, 1996, the weighted
average ratings of the debt obligations held by the Bond Fund and
the Short and Intermediate Bond Fund, expressed as a percentage
of each Fund's total investments, were as follows:
<TABLE>
<CAPTION>
Percentage of Total Investments of:

Short and
Intermediate
Ratings Bond Fund Bond Fund
<S> <C> <C>
Government and
AAA/Aaa % %
AA/Aa % %
A/A % %
BBB/Baa % %
BB/Ba %
</TABLE>

Repurchase Agreements -- Pursuant to guidelines approved and
periodically reviewed by the Trustees, a Fund may enter into
repurchase agreements with such banking institutions and
securities dealers as have been approved by the Trustees. A Fund
may enter into repurchase agreements as a short-term investment
of its idle cash in order to earn income. A repurchase
agreement, which provides a means for the Fund to earn income on
funds for periods as short as overnight, is an arrangement under
which the purchaser (i.e., the Fund) purchases a U.S. Government
security ("Government Obligation") and the seller agrees, at the
time of sale, to repurchase the Government Obligation at a
specified time and price. The repurchase price may be higher
than the purchase price, the difference being income to the Fund,
or the purchase and repurchase prices may be the same, with
interest at a stated rate due to the Fund, together with the
repurchase price on repurchase. In either case, the income to
the Fund is unrelated to the interest rate on the Government
Obligation subject to the repurchase agreement. Government
Obligations will be held by the Custodian or in the Federal
Reserve Book Entry System. For purposes of the 1940 Act, a
repurchase agreement is deemed to be a loan from the Fund to the
seller of the Government Obligation subject to the repurchase
agreement. The Funds' investment restriction which limits
lending by the Funds specifically exempts repurchase
transactions. It is not clear whether a court would consider the
Government Obligation purchased by the Fund subject to a
repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of
the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the Government Obligation before the
repurchase of the Government Obligation under a repurchase
agreement, the Fund may encounter delay and incur costs before
being able to sell the security. Delays may involve loss of
interest or decline in price of the Government Obligation. If
the court characterizes the transaction as a loan and the Fund
has not perfected a security interest in the Government
Obligation, the Fund may be required to return the Government
Obligation to the seller's assets and be treated as an unsecured
creditor of the seller. As an unsecured creditor, the Fund would
be at risk of losing some or all of the principal and income
involved in the transaction. As with any unsecured debt
obligation purchased for a Fund, the Trustees seek to minimize
the risk of loss through repurchase agreements by analyzing the
creditworthiness of the obligor, in this case the seller of the
Government Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller
may fail to repurchase the Government Obligation, in which case
the Fund may incur a loss if the proceeds to the Fund of the sale
to a third party are less than the repurchase price. However, if
the market value of the Government Obligation subject to the
repurchase agreement becomes less than the repurchase price
(including interest), the Fund will direct the seller of the
Government Obligation to deliver additional securities so that
the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. The seller
may not be contractually bound to deliver additional securities.

In addition to repurchase agreements with respect to U.S.
Government Obligations described above, the Intermediate Mortgage
Fund may also invest in repurchase agreements pertaining to the
types of securities in which it may invest.

Rights and Warrants -- Rights are short-term warrants issued
in conjunction with new stock issues. Warrants give the holder
the right to purchase an issuer's securities at a stated price
during a stated term. The Funds' ability to invest in rights and
warrants is limited by their operating policies--see "Investment
Restrictions."

Short Sales -- When a Fund makes a short sale, it sells a
security it does not own in anticipation of a decline in market
price. The proceeds from the sale are retained by the broker
until the Fund replaces the borrowed security. To deliver the
security to the buyer, the Fund must arrange through a broker to
borrow the security and, in so doing, the Fund will become
obligated to replace the security borrowed at its market price at
the time of replacement, whatever that price may be. The Fund
may have to pay a premium to borrow the security. The Fund may,
but will not necessarily, receive interest on such proceeds. The
Fund must pay to the broker any dividends or interest payable on
the security until it replaces the security. The Fund's
obligation to replace the security borrowed will be secured by
collateral deposited with the broker, consisting of cash or U.S.
government securities or liquid high-grade debt obligations
acceptable to the broker.

If the price of a security sold short increases between the
time of the short sale and the time the Fund replaces the
borrowed security, the Fund will incur a loss, and if the price
declines during this period, the Fund will realize a capital
gain. Any realized capital gain will be decreased, and any
incurred loss increased, by the amount of transaction costs and
any premium, dividend, or interest which the Fund may have to pay
in connection with such short sale.

U.S. Government Securities -- Securities issued or
guaranteed by the U.S. Government include a variety of Treasury
securities that differ only with respect to their interest rates,
maturities and dates of issuance. Treasury Bills have maturities
of one year or less, Treasury Notes have maturities of one to ten
years and Treasury Bonds generally have maturities of greater
than ten years at the date of issuance.

U.S. Government agencies or instrumentalities which issue or
guarantee securities include, but are not limited to, the Federal
Housing Administration, Farmers Home Administration, Export-
Import Bank of the United States, Small Business Administration,
Governmental National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Maritime
Administration, the Tennessee Valley Authority, District of
Columbia Armory Board, the Inter-American Development Bank, the
Asian-American Development Bank, the Student Loan Marketing
Association and the International Bank for Reconstruction and
Development.

Obligations of U.S. Government agencies and
instrumentalities may or may not be supported by the full faith
and credit of the United States. Some are backed by the right of
the issuer to borrow from the Treasury; others by discretionary
authority of the U.S. Government to purchase the agencies'
obligations; while still others, such as the Student Loan
Marketing Association, are supported only by the credit of the
instrumentality. In the case of securities not backed by the
full faith and credit of the United States, the investor must
look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert
or claim against the United States itself in the event the agency
or instrumentality does not meet its commitment.

Variable Rate Securities -- Variable rate securities are
debt securities which have no fixed coupon rate. The amount of
interest to be paid to the holder typically is contingent upon
another specified rate, such as the yield on 90-day Treasury
bills. Variable rate securities may also include debt with an
interest rate which resets in the opposite direction of the rate
of the index upon which it is contingent. See "Other Information
- - Inverse Floating Obligations."

"When-Issued" Securities--Certain of the Funds may, from
time to time, purchase securities on a "when-issued" basis. The
price of "when-issued" securities is fixed at the time the
commitment to purchase is made, but delivery and payment for the
"when-issued" securities take place at a later date. Normally,
the settlement date occurs within one to two months of the date
of purchase. During the period between purchase and settlement,
no payment is made by the Fund to the issuer and no interest
accrues to the Fund. Such transactions therefore involve a risk
of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition the risk
of decline in value of the Fund's other assets. While "when-
issued" securities may be sold prior to the settlement date, the
Fund intends to purchase such securities with the purpose of
actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to
purchase a security on a "when-issued" basis, it will record the
transaction and reflect the value of the security in determining
its net asset value. Each Fund will establish a segregated
account in which it will maintain cash and marketable securities
equal in value to commitments for "when-issued" securities. Such
segregated securities either will mature or, if necessary, be
sold on or before the settlement date.

Purchase and sale of securities on a "forward commitment"
basis includes purchase of "when-issued" securities and involves
a commitment by a Fund to purchase or sell particular securities
with payment and delivery to take place at some future date,
normally one to two months after the date of the transaction. As
with "when-issued" securities, these transactions involve certain
risks to a Fund, but they also enable a Fund to hedge against
anticipated changes in interest rates and prices.

XIV. PERFORMANCE INFORMATION

Total Return Computations As indicated in the Prospectus,
the Funds may include in advertisements or sales literature
certain total return and yield information computed in the manner
described in the Prospectus. The following chart sets forth the
average annual total return quotations for each of the Funds for
certain specified periods of time ending December 31, 1996.
<TABLE>
Annual
-ized
Since
Commen-
cement
Annual Annual of
ized 5 ized Operat Commencem
NAME OF FUND 1 Year Years 10 ions ent Date
<S> <C> <C> Years <C> <C>
<C>
Income Equity Fund 17.08% 14.45% 12.46% 14.57% 10/31/84
Capital Appreciation Fund 13.69% 14.03% 14.65% 15.48% 6/30/84
Special Equity Fund 24.75% 17.42% 17.60% 16.47% 6/30/84
International Equity Fund 12.77% 14.02% 10.62% 14.30% 12/31/85
Short Government Fund 3.89% 2.90% NA 5.21% 10/31/87
Short & Int. Bond Fund 4.21% 5.95% 6.98% 8.56% 6/30/84
Intermediate Mortgage Fund 3.33% 2.27% 6.36% 7.13% 5/31/86
Bond Fund 4.97% 8.94% 9.36% 11.37% 6/30/84
Global Bond Fund 4.39% NA NA 7.48% 3/25/94
</TABLE>

* The performance figures shown are calculated beginning with
each Fund's first full month of operation, with the exception of
the Global Bond Fund which is shown as of its actual inception
dates. Rates of return for the Funds are net of all direct fees
and expenses and (except for the Global Bond Fund) have been
restated to show the effect that each Fund's present advisory fee
expenses would have had on performance.

The average annual total return ("T") is computed by using
the redeemable value of the end of a specified period ("ERV") of
a hypothetical initial investment of $1,000 ("P") over a period
of time ("n") according to the formula: P(1+T)n=ERV.

Yield Computations (Income Equity Fund and the Income
Funds). As indicated in the Prospectuses, the Equity and the
Income Funds may advertise or include in sales literature yield
quotations based on a 30-day period. "Yield" refers to income
generated by an investment in the Fund during the previous 30-day
(or one-month) period. Yield is computed by dividing the net
investment income per share earned during the period by the
maximum offering price per share on the last day of the period,
according to the following formula:

a - b 6
YIELD = 2[( c*d +1) - 1]

For these purposes, a equals dividends and interest earned during
the period; b equals expenses accrued for the period (net of
reimbursements); cEequals the average daily number of shares
outstanding during the period that were entitled to receive
dividends; and dEequals the maximum offering price per share on
the last day of the period.

The figure is then annualized. That is, the amount of
income generated during the 30-day (or one-month) period is
assumed to be generated each month over a 12-month period and is
shown as a percentage of the investment. The Funds' yield
figures are based on historical earnings and are not intended to
indicate future performance. For the 30-day period ended
December 31, 1996, the annualized yield of the Income Equity Fund
and each of the Income Funds, was as follows:
<TABLE>
<CAPTION>
30-Day
Annualized Yield
Fund at 12/31/96
<S> <C>

Income Equity Fund 2.67%
Short Government Fund 5.08%
Short and Intermediate
Bond Fund 5.24%
Intermediate Mortgage Fund 5.64%
Bond Fund 6.39%
Global Bond Fund 4.66%
</TABLE>

Performance Comparisons

As set forth in the Prospectus, the performance of any of
the Funds may be compared to the performance of other mutual
funds having similar objectives, expressed as a ranking prepared
by independent services or publications that monitor the
performance of mutual funds such as Lipper Analytical Services,
Inc. ("Lipper"), Morningstar, Inc., and IBC Money Fund Report.
In addition, any Fund's performance may be compared to that of
various unmanaged indices such as the Standard & Poor's 500 Stock
Price Index or the Dow Jones Industrial Average.

"Lipper-Fixed Income Fund Performance Analysis" is a monthly
publication prepared by Lipper, which tracks net assets, total
return, principal return and yield on approximately 950 fixed-
income mutual funds offered in the United States. Lipper also
prepares the "Lipper Composite Index," a performance benchmark
based upon the average performance of publicly offered stock
funds, bond funds, and money market funds as reported by Lipper.

Morningstar, Inc., a widely used independent research firm,
also ranks mutual funds by overall performance, investment
objectives and assets.

From time to time, in reports and sales literature, the
Funds may compare their performance, risk quality and liquidity
characteristics to money market funds, treasury bills and notes,
GIC's and various indices of unmanaged securities. Charts may be
shown depicting the relative yield and risk relationships between
the Fund and these indices. In general, instruments with shorter
maturities or durations tend to be less risky (have lower price
volatility) than those with longer maturities or durations. Risk
and yield tend to be greater for corporate issues than for
government securities or money market funds. Money market funds
invest only in high quality instruments that are denominated in
U.S. dollars and that have relatively short periods to maturity.
Accordingly, money market funds tend to have fairly low risk and
price volatility. The indices used, and the basis for these
comparisons, may include:

The IBC Money Market Fund Index, prepared IBC Financial
Data, Inc. in "IBC's Money Market Fund Report," a weekly
publication which tracks net assets, yield, maturity and
portfolio holdings on approximately 700 money market funds
offered in the U.S. Yields quoted on the IBC index are based on
a 30-day period.

Two-year Treasury notes or one-year Treasury bills, as
quoted in the Wall Street Journal or by other financial
institutions such as T. Rowe Price Associates, Inc. Yields on
these indices are generally higher than on money market funds,
but carry higher risk due to their longer durations.

Three Year GIC index, as quoted in the Wall Street Journal
and prepared by T. Rowe Price Associates, Inc. In general, GICs
will be riskier than comparable maturity government issues or
money funds, and will have a higher yield. While GICs do carry
"guarantees" as to the repayment of principal, these guarantees
are only backed by the company which underwrites the contract,
and could possibly default. In addition, GICs can be considered
illiquid due to their contractual terms; however their price
volatility is relatively stable as a result of this.

Unmanaged government and corporate indices published by
Merrill Lynch, Pierce, Fenner & Smith, Inc. Indices which may be
compared to the Short Government Fund include the Merrill Lynch 1-
10 Year High Quality Corporate Bond Index and the Corporate
Master Index. These indices are published in the Wall Street
Journal as well as in Merrill Lynch's "Taxable Bond Indices", a
monthly publication which lists principal, coupon and total
return on over 100 different taxable indices tracked by Merrill
Lynch.

XV. FINANCIAL STATEMENTS

FINANCIAL STATEMENTS TO BE INCLUDED IN SUBSEQUENT B-FILING

THE MANAGERS FUNDS POST-EFFECTIVE
AMENDMENT NO. 38 TO REGISTRATION STATEMENT

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits - To be filed in
subsequent (b) filing

(a) Financial Statements

Part A:

With reference to each of The Managers:

Income Equity Fund
Capital Appreciation Fund
Special Equity Fund
International Equity Fund
Short Government Fund
Short and Intermediate Bond Fund
Intermediate Mortgage Fund
Bond Fund
Global Bond Fund
Money Market Fund

Financial Highlights

For the fiscal years (or portions thereof)
(audited) from commencement of operations to
December 31, 1996 (November 30, 1996, with respect
to Managers Money Market Fund).

Part B:

With reference to each of The Managers:

At December 31, 1996 (audited) and with respect to
Managers Money Market Fund, at November 30, 1996
(audited):

Schedule of Investments

Statement of Assets and Liabilities

For the fiscal year ended December 31, 1996
(audited) and with respect to Managers Money Market
Fund, at November 30, 1996 (audited):

Statement of Changes in Net Assets

For the fiscal years ended December 31, 1996
(audited) and December 31, 1995 (audited), and with
respect to Managers Money Market Fund, for the
fiscal year ended November 30, 1996 and for the
eleven months ended November 30, 1995 (audited):

Statement of Operations

Notes to Financial Statements

For the fiscal years (or portions thereof) from
commencement of operations to December 31, 1996
(audited) and with respect to Managers Money Market
Fund, for the fiscal year ended November 30, 1996
(audited):

Financial Highlights

With respect to The Money Market Portfolio:

At November 30, 1996 (audited):

Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements

(b) Exhibits

1. (A) Declaration of Trust dated
NovemberE23, 1987.
Incorporated by reference to
PEA 20.

1. (B) Amendment to Declaration of
Trust dated May 12, 1993.

Incorporated by reference to
PEA 32.

1. (C) Amendment to Declaration of
Trust dated June 30, 1993.

Incorporated by reference to
PEA 32.

2. By-Laws of the Trust.
Incorporated by reference to
PEA 20.

3. Not Applicable.

4. Instruments Defining Rights of
Shareholders
Incorporated by reference to
PEA 34.

5.(A) Fund Management Agreement dated
August 17, 1990 between EAIMC Partners, L.P.
(now "The Managers Funds, L.P.") and the
Trust.

Incorporated by reference to PEA 32.

(B) Asset Management Agreements
between The Managers Funds, L.P. and each of
the Asset Managers identified in the
Registration Statement. Incorporated by
reference to PEA 32.

6. Form of Distribution Agreement
between The Managers Funds and The Managers
Funds, L.P. Incorporated by reference to PEA
28.

7. Not Applicable.

8. Form of Custodian Agreement
with State Street Bank and Trust.
Incorporated by reference to PEA 28.

9.(A) Transfer Agency Agreement
between The Managers Funds and State Street
Bank and Trust Company. Incorporated by
reference to PEA 33.

(B) Form of Administration and
Shareholder Servicing Agreement between the
Trust and The Managers Funds, L.P.
Incorporated by reference to PEA 28.

(C) Form of License Agreement
Relating to Use of Name between The Managers
Funds and The Managers Funds, L.P.
Incorporated by reference to PEA 28.

10. Opinion and Consent of Shereff,
Friedman, Hoffman & Goodman, L.L.P. Not
Applicable

11. Consents of Independent Accountants.
Incorporated by reference to PEA 37.
12.

(A) Consent of Coopers & Lybrand
L.L.P.
(B) Consent of Price Waterhouse LLP

12. Not Applicable.

13. Not Applicable.

14. Not Applicable.

15. Not Applicable.

16. Computation of Performance
Quotations.
Incorporated by reference to
PEAE19.

17. Financial Data Schedules

18. (1) Powers of Attorney for:
William W. Graulty
Madeline H. McWhinney
Steven J. Paggioli
Thomas R. Schneeweis
Robert P. Watson
Donald S. Rumery
Kathleen Wood
Incorporated by reference to PEA 31.

(2) Powers of Attorney for the Trustees of The
Money Market Portfolio:
Michael P. Mallardi
Frederick S. Addy
William G. Burns
Matthew Healey
Arthur C. Eschenlauer
Incorporated by reference to PEA 35.

- -------------

* Included as an exhibit to this filing.

Item 25. Persons Controlled by or under Common Control with
Registrant

None.

Item 26. Number of Holders of Securities

As of January 28, 1997, the shares of beneficial interest of
each Fund were held of record by the number of holders indicated
below:

Number of
Fund Name Record Holders

Income Equity Fund........................ 1,890
Capital Appreciation Fund................. 2,357
Special Equity Fund....................... 4,812
International Equity Fund................. 5,283
Short Government Fund..................... 804
Short and Intermediate Bond Fund.......... 1,452
Intermediate Mortgage Fund................ 1,401
Bond Fund................................. 1,527
Global Bond Fund.......................... 1,496
Money Market Fund......................... 1,364

Item 27. Indemnification

The following sections of the Registrant's Declaration of
Trust, dated November 23, 1987, which relate to indemnification
of Trustees, officers and others by the Trust and to exemption
from personal liability of Trustees, officers and others, also
relate to indemnification:

Sections 2.9(d),(f)
Sections 4.1 - 4.3
Section 8.3(b)

These Sections are reproduced below.

Section 2.9. Miscellaneous Powers. The Trustee shall have
the power to: (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, Investment Advisers, Distributors, selected
dealers or independent contractors of the Trust against all
claims arising by reason of holding any such position or by
reason of any action taken or omitted by any such Person in such
capacity, whether or not constituting negligence, or whether or
not the Trust would have the power to indemnify such Person
against such liability; . . . (f) to the extent permitted by law,
indemnify any person with whom the Trust has dealings, including
the Investment Adviser, Distributor, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine;

ARTICLE IV

LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS

Section 4.1. No Personal Liability of Shareholders,
Trustees, Etc. No Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with Trust
Property or the acts, obligations or affairs of the Trust. No
Trustee, officer, employee or agent of the Trust shall be subject
to any personal liability whatsoever to any Person, other than to
the Trust or its Shareholders, in connection with the Trust
Property or the affairs of the Trust, save only that arising from
bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties with respect to such Person, and all such
Persons shall look solely to the Trust Property for satisfaction
of claims of any nature arising in connection with the affairs of
the Trust. If any Shareholder, Trustee, officer, employee, or
agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability of the Trust or any
Series, he shall not, on account thereof, be held to any personal
liability. The Trust or Series shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities,
to which such Shareholder may become subject by reason of his
being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred
by him in connection with any such claim or liability. The
rights accruing to a Shareholder under this Section 4.1 shall not
exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right
of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided
herein.

Section 4.2. Non-liability of Trustees, Etc. No Trustee,
officer, employee or agent of the Trust shall be liable to the
Trust or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad
faith, willful misfeasance, gross negligence or reckless
disregard of the duties involved in the conduct of his office or
for his failure to act in good faith in the reasonable belief
that his action was in the best interests of the Trust.
Notwithstanding anything in this Article IV or elsewhere in this
Declaration to the contrary and without in any way increasing the
liability of the Trustees beyond that otherwise provided in this
Declaration, no Trustee shall be liable to the Trust or to any
Shareholder, Trustee, officer, employee or agent for monetary
damages for breach of fiduciary duty as a Trustee; provided that
such provision shall not eliminate or limit the liability of a
Trustee (i) for any breach of the Trustee's duty of loyalty to
the Trust or its Shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing
violation of law, or (iii) for any transaction from which the
Trustee derived an improper personal benefit.

Section 4.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:

(i) every person who is, or has been, a Trustee or
officer of the Trust shall be indemnified by the Trust
or any Series to the fullest extent permitted by law
against all liability and against all expenses
reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he became
involved as a party or otherwise by virtue of his being
or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;

(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal, or other, including
appeals), actual or threatened; the words "liability"
and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.

(b) No indemnification shall be provided hereunder
to a Trustee or officer:

(i) against any liability to the Trust or the
Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;

(ii) with respect to any matter as to which he
shall have been finally adjudicated not to have acted in
good faith in the reasonable belief that his action was
in the best interest of the Trust;

(iii) in the event of a settlement involving a
final adjudication as provided in paragraph (b)(i)
resulting in a payment by a Trustee or officer, unless
there has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office:

(A) by the court or other body approving the
settlement or other disposition; or

(B) based upon a review of readily
available facts (as opposed to a full trial-type
inquiry) by (x) vote of a majority of the
Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested
Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.

(c) The rights of indemnification herein provided may
be insured against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any Trustee
or officer may now or hereafter by entitled, shall continue as to
a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and
assigns of such a person. Nothing contained herein shall affect
any rights to indemnification to which personnel of the Trust
other than Trustees and officers may be entitled by contract or
otherwise under law.

(d) Expenses of preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 4.3 may be advanced by
the Trust or any Series prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to
repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that
either

(i) such undertaking is secured by a surety bond
or some other appropriate security provided by the
recipient, or the Trust shall be insured against losses
arising out of any such advances; or

(ii) a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the
Disinterested Trustees act on the matter), or an
independent legal counsel in a written opinion, shall
determine, based upon a review of readily available
facts (as opposed to a full trial-type inquiry), that
there is reason to believe that the recipient ultimately
will be found entitled to indemnification.

As used in this Section 4.3, a "Disinterested Trustee" is one
who is not (i) an "Interested Person" of the Trust (including
anyone who has been exempted from being an "Interested Person" by
any rule, regulation or order of the Commission), or (ii)
involved in the claim, action, suit or proceeding.

Section 8.3. Amendment Procedure. (b) No amendment may be
made under this Section 8.3 which would change any rights with
respect to any Shares of the Trust or of any Series by reducing
the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto,
except with the vote or consent of the holders of two-thirds of
the Shares outstanding and entitled to vote, or by such other
vote as may be established by the Trustees with respect to any
Series of Shares. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption
from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon
Shareholders.

Item 28. Business and Other Connections of Investment Advisers

The business and other connections of the officers and
directors of The Managers Funds, L.P. (the Registrant's Manager),
and the asset managers of the Registrant are listed in schedules
A and D of their respective ADV Forms as currently on file with
the Commission, the texts of which Schedules are hereby
incorporated herein by reference. The file numbers of said ADV
Forms are as follows:

The Managers Funds, L.P. -- 801-19215
Dietche & Field Advisers, Inc. -- 801-20033
Liberty Investment Management -- 801-21343
Husic Capital Management -- 801-27298
Jennison Associates Capital Corp. -- 801-5608
Lazard Fr?res Asset Management -- 801-6568
Loomis, Sayles & Company, Inc. -- 801-17000
Pilgrim Baxter Associates -- 801-19165RC
Rogge Global Partners, Inc. -- 801-25482
Scudder, Stevens & Clark, Inc. -- 801-252
Spare, Kaplan, Bischel & Associates -- 801-35258
Standish, Ayer & Wood Inc. -- 801-584
Westport Asset Management, Inc. -- 801-21845

Item 29. Principal Underwriter

(a) The Managers Funds, L.P. ("TMF") acts as
principal underwriter for the Registrant. TMF does
not currently act as principal underwriter for any
other investment company. TMF's address is 40
Richards Avenue, Norwalk, Connecticut 06854.

(b) The business and other connections of the officers
and directors of The Managers Funds, L.P. (formerly
EAIMC Partners, L.P.) (the Registrant's Manager),
are listed in Schedules A and D of its ADV Form as
currently on file with the Commission, the text of
which Schedules are hereby incorporated herein by
reference. The file number of said ADV Form is 801-
19215.

Item 30. Location of Accounts and Records

All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1 to
31a-3 promulgated thereunder are maintained in the following
locations:

Rule 31a-1

(a) Records forming the basis for financial statements of
Registrant are kept at the principal offices of SSB, Managers,
Adviser & AM (see legend below).

Legend: Managers -- The
Managers Funds
40 Richards
Avenue
Norwalk,
Connecticut 06854

SSB -- State
Street Bank and Trust
Company
225
Franklin Street
Boston,
Massachusetts 02110

Adviser -- The
Managers Funds, L.P.
40 Richards
Avenue
Norwalk,
Connecticut 06854

AM -- Asset Managers
(see Statement of
Additional Information
section entitled "Asset
Manager Profiles" for the
name, address and a
description of the asset
managers of each Fund)

(b) Managers Records:

(1) SSB -- Journals containing daily record
of securities transactions, receipts and
deliveries of securities and receipts and
disbursements of cash.

(2) SSB -- General and auxiliary ledgers

(3) Not Applicable

(4) Managers -- Corporate Documents

(5) AM -- Brokerage orders

(6) AM -- Other portfolio purchase orders

(7) SSB -- Contractual commitments

(8) SSB and Managers -- Trial balances

(9) AM -- Reasons for brokerage allocations

(10) AM -- Persons authorizing purchases and
sales

(11) Managers and AM -- Files of advisory
material

(d) Adviser -- Broker/dealer records, to the extent
applicable

(e) Not applicable

(f) Adviser and AM -- Investment adviser records

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

(a) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a Trustee,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(b) The Registrant shall furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

(c) If requested to do so by the holders of at least 10% of the
Registrant's outstanding shares, the Registrant will call a
meeting of shareholders for the purpose of voting upon the
removal of a trustee or trustees and the Registrant will assist
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940 the Registrant has duly caused
this Amendment to its Registration Statement has duly caused this
Amendment to its Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Norwalk, and the State of Connecticut on this 30th
day of January, 1997.

THE MANAGERS FUNDS

By:/s/Robert P. Watson
Robert P. Watson
President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.

/s/ Robert P. Watson Trustee and January 30,
Robert P. Watson President (Principal 1997
Executive Officer)

/s/ Donald S. Rumery Principal January 30, 1997
Donald S. Rumery Financial and
Accounting Officer
/s/ William W. Trustee Januar
Graulty y 30, 1997
William W. Graulty

/s/ Madeline H. Trustee Janu
McWhinney ary 30, 1997
Madeline H.
McWhinney

/s/ Steven J. Trustee Janua
Paggioli ry 30, 1997
Steven J. Paggioli

/s/ Thomas R. Trustee Jan
Schneeweis uary 30, 1997
Thomas R. Schneeweis

The Mangers
Funds
40 Richards
Avenue
Norwalk, CT
06854
(203)857-5321

January 30, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549

Re: The Managers Funds Post-Effective Amendment 38
to Registration Statement on Form N-1A
File Nos. 2-84012 and 811-3752

Commissioners:

Enclosed for filing is Post Effective Amendment No. 38 to the
Fund's Registration Statement on Form N-1A (the "Amendment")
under the Securities Act of 1933 (the "1933 Act") and the
Investment Company Act of 1940.

The Amendment is being filed pursuant to paragraph (a) of Rule
485 under the 1933 Act in order to note the addition of a new sub-
adviser in one of the Trust's series, and to note changes in
ownership of two other of the Trust's series' sub-advisers.
Information about these changes in sub-advisory arrangements have
previously been reviewed by the Staff in connection with the
Trust's filing of three separate Information Statements during
the fourth quarter of 1996.

Because of the staggered year ends for the Trust's series, the
Trust will file another Post Effective Amendment prior to April
1, 1997, which will update all financial information which has
been omitted from this filing and make other non-material changes
to the Registration Statement. Should you have any questions on
this filing, please feel free to call the undersigned at (203)857-
5322, or Judith L. Shandling, of Shereff, Friedman, Hoffman and
Goodman, at (212)891-9459.

Sincerely,

/s/ Kathleen Wood
Kathleen Wood
Vice President

cc: Judith L. Shandling, Esq.

_______________________________
1Trustee who is an "interested person" of the Trust (as defined in
Section 2(a)(19) of the 1940 Act).