MANAGERS FUNDS, 497, 1999-05-14

MANAGERS FUNDS
497, 1999-05-14

Previous: MANAGERS FUNDS, 497, 1999-05-14

Next: ANGELES PARTNERS XII, SC 14D9, 1999-05-14

File No. 2-84012
811-3752
Rule 497-c

The Managers Funds
40 Richards Avenue
Norwalk, CT 06854

May 14, 1999

VIA EDGAR
- ---------
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549-1004

Re: The Managers Funds
File Nos. 2-84012 and 811-3752
------------------------------

Commissioners:

Enclosed for filing pursuant to 497(e) under the Securities and Exchange Act
of 1933 is a supplement to the Equity Funds Prospectus of The Managers Funds.
This reflects the removal of a sticker which indicated some minor language
changes in the printed text of the document. In accordance with paragraph (g)
of Rule 497, the file number of registration number for The Managers Funds and
the paragraph under which the filing is made are indicated in the upper right-
hand corner of the filing.

Sincerely,
/s/Donald S. Rumery
Treasurer, Secretary

<PAGE>

THE MANAGERS FUNDS
- --------------------------------
INCOME EQUITY FUND
CAPITAL APPRECIATION FUND
SPECIAL EQUITY FUND
INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
- --------------------------------

PROSPECTUS
DATED APRIL 1, 1999, as
supplemented May 14, 1999

- --------------------------------
WHERE LEADING MONEY MANAGERS CONVERGE

The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

<PAGE>
TABLE OF CONTENTS
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
KEY INFORMATION ABOUT THE EQUITY FUNDS
Risk/Return Goals, Principal Strategies and Principal
Summary Risks of the Funds 1
Risk Summary 3
Performance Summary 5
Fees and Expenses of the Funds 8

THE MANAGERS FUNDS
The Management Team 11
The Year 2000 Issue 11
____________________________________________________________________
Summary of INCOME EQUITY FUND
the Objective 12
Principal Investment Strategies 12
Funds Principal Risk Factors 12
Should I Invest In This Fund? 13
Fees and Expenses 13
Portfolio Management of the Fund 14

CAPITAL APPRECIATION FUND
Objective 15
Principal Investment Strategies 15
Principal Risk Factors 15
Should I Invest In This Fund? 16
Fees and Expenses 16
Portfolio Management of the Fund 17

SPECIAL EQUITY FUND
Objective 18
Principal Investment Strategies 18
Principal Risk Factors 19
Should I Invest In This Fund? 20
Fees and Expenses 20
Portfolio Management of the Fund 20

INTERNATIONAL EQUITY FUND
Objective 22
Principal Investment Strategies 22
Principal Risk Factors 22
Should I Invest In This Fund? 23
Fees and Expenses 24
Portfolio Management of the Fund 24

EMERGING MARKETS EQUITY FUND
Objective 26
Principal Investment Strategies 26
Principal Risk Factors 26
Should I Invest In This Fund? 27
Fees and Expenses 28
Portfolio Management of the Fund 28
____________________________________________________________________
OTHER SECURITIES AND INVESTMENT PRACTICES 30
Additional OTHER RISK FACTORS
Risks of A Few Words About Risk 32
Investing
____________________________________________________________________
Information FINANCIAL HIGHLIGHTS
About your Financial Information for the Funds 39
Investment
YOUR ACCOUNT
Minimum Investments in Our Funds 45
How to Purchase Shares 46
How to Sell Shares 47

INVESTOR SERVICES
General Fund Policies 49

ACCOUNT POLICIES, DIVIDENDS AND TAXES
Account Statements 50
Dividends and Distributions 50
Tax Information 50

____________________________________________________________________
FOR MORE INFORMATION Back Cover
</TABLE>
<PAGE>

KEY INFORMATION ABOUT THE EQUITY FUNDS
- -------------------------------------------------------------------

This Prospectus contains important information for anyone interested
in investing in any of the Equity Funds of The Managers Funds
no-load mutual fund family. Please read this document carefully
before you invest and keep it for future reference.

You should base your purchase of these Funds on your own goals, risk
preferences and investment time horizons.

GOALS, PRINCIPAL STRATEGIES AND PRINCIPAL RISKS
OF THE FUNDS

Fund/Principal Risk Factors Goal Principal Strategies
- ----------------------------------------------------------------------------
<S> <C> <C>
* Income Equity Fund High current income -Invests principally in
fom income-producing income-producing equity securities of madeium- and
* Principal Risk Factors: equity securities large-sized U.S. companies
Market Risk -Seeks undervalued investments
Econmic Risk
Sector (Industry) Risk

* Capital Appreciation Fund Long-term capital -Invests principally in equity securities
appreciation from of medium- and large-sized
*Principal Risk Factors: equity securities; U.S. companies
Market Risk income is the -Seeks investments in companies
Price Risk secondary objective with the potential for long-term growth
Sector (Industry) Risk

* Special Equity Fund Long-term capital -Invests principally in equity securities of
appreciation from small- to medium-sized U.S. companies
*Principal Risk Factors: equity securities of -Seeks investments in companies with the
Market Risk small- and medium- potential for long-term growth as
Liquidity Risk sized companies well as undervalued investments
Price Risk

- --------------------------------------------------------------------------------
*A more complete description of the Principal Risk Factors is found on the following
pages.

1
<PAGE>
Risk/Return Summary
- ------------------------------------------------------------------------------

* International Equity Long-term capital -Invests principally in equity securities of
Fund appreciation from medium- to large-sized non-U.S. companies
*Principal Risk Factors: foreign equity securities;-Seeks to achieve returns from capital
Market Risk income is the secondary appreciation due to price multiple
Currency Risk objective expansion and earnings growth
Political Risk
Economic Risk
Liquidity Risk

* Emerging Markets Equity Long-term capital -Invests principally in equity securities of
Fund appreciation from companies in emerging market and developing countries
emerging market -Seeks to achieve returns from capital
*Principal Risk Factors: equity securities appreciation through price multiple
Market Risk expansion and earnings growth
Liquidity Risk -Investments may be in companies of any size
Currency Risk
Political Risk

</TABLE>

- ------------------------------------------------------------------------------
*A more complete description of the Principal Risk Factors is found on the
following pages.

2
<PAGE>

Risk/Return Summary
- ----------------------------------------------------------------------------
RISK SUMMARY

[GRAPHIC]
All investments involve some type and level of risk. Risk is the
possibility that you will lose money or not make any additional money
by investing in these Funds.

Before you invest, please make sure that you have read, and
understand, the risk factors that apply to the specific Fund in which
you are investing. As with any mutual fund, you could lose money.

Please keep in mind that shares of these Funds:
* Are not deposits or obligations of any bank
* Are not guaranteed or endorsed by any bank
* Are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other federal agency

The following are the Principal Risk Factors associated with the
Equity Funds. For more information regarding these and other risk
factors, see OTHER RISK FACTORS.

MARKET RISK (ALL FUNDS)
[GRAPHIC]

Market risk is also called systematic risk. It typically refers to
the basic variability that stocks exhibit as a result of stock
market fluctuations. Despite the unique influences on individual
companies, stock prices in general rise and fall as a result of
investors' perceptions of the market as a whole. The consequences of
market risk are that if the stock market drops in value, the value
of each Fund's portfolio of investments are also likely to decrease
in value. The increase or decrease in the value of a Fund's
investments, in percentage terms, may be more or less than the
increase or decrease in the value of the market. Most international
markets do not move together with U.S. markets, or with other
international markets.

Price Risk (Capital Appreciation Fund; Special Equity Fund)
As investors perceive and forecast good business prospects, they are
willing to pay higher prices for securities. Higher prices therefore
reflect higher expectations. If expectations are not met, or if
expectations are lowered, the prices of the

3
<PAGE>

Risk/Return Summary
- ------------------------------------------------------------------------

securities will drop. This happens with individual securities or the
financial markets overall.

[GRAPHIC]
Sector (Industry) Risk (Income Equity Fund; Capital Appreciation
Fund)

Companies that are in similar businesses may be similarly affected
by particular economic or market events, which may in certain
circumstances cause the value of securities in all companies in that
sector or industry to decrease. To the extent a Fund has substantial
holdings within a particular sector or industry, the risks
associated with that sector or industry increase. Diversification
among groups may reduce sector (industry) risk but may also dilute
potential returns.

Liquidity Risk (Special Equity Fund; International Equity Fund;
Emerging Markets Equity Fund)

Liquidity Risk is the risk that the Fund cannot sell a security at a
reasonable price within a reasonable time frame when it wants or
needs to due to a lack of buyers for the security. This risk applies
to all assets. However, it is higher for small-capitalization stocks
and stocks of foreign companies than it typically is for
large-capitalization domestic stocks.

Economic Risk (Income Equity Fund; International Equity Fund)

The prevailing economic environment is important to the health of
all businesses. However, some companies are more sensitive to
changes in the domestic and/or global economy than others. These
types of companies are often referred to as cyclical businesses.
Countries in which a large portion of businesses are in cyclical
industries are thus also very economically sensitive and carry a
higher amount of economic risk.

[GRAPHIC]
Currency Risk (International Equity Fund; Emerging Markets Equity
Fund)

The value of foreign securities in an investor's home currency
depends both upon the price of the securities and the

4
<PAGE>

Risk/Return Summary
- --------------------------------------------------------------------

exchange rate of the currency. Adverse currency fluctuations are an
additional risk of foreign investing. Currency risk may be reduced
through diversification among currencies or hedging with the use of
foreign currency contracts.

[GRAPHIC]
* Euro Conversion. The introduction of a new single European
currency, known as the "euro," may result in uncertainties for
securities in European companies, European markets and the operation
of the Funds. The euro was introduced on January 1, 1999 by 11
European Union member countries who are participating in the
European Monetary Unit. The introduction of the euro results in the
redenomination of certain European debt and equity securities over a
period of time, which may bring differences in various tax,
accounting and legal treatments that would not otherwise occur. Any
market disruptions due to the euro could have an adverse effect on
the Funds. At this stage, no one knows what degree of impact the
introduction of the euro will have on the Funds. To the extent that
the impact adversely affects a particular holding in a Fund's
portfolio, the Fund's performance may be affected.

[GRAPHIC]
Political Risk (International Equity Fund; Emerging Markets Equity
Fund)

Changes in the political status of any country can have profound
effects on the values of securities within that country as well as
the credit quality of the securities. Related risk factors are the
regulatory environment within any country or industry and the
sovereign health of the country. These risks may be reduced only by
carefully monitoring the economic, political and regulatory
atmosphere within countries and diversifying across countries.

PERFORMANCE SUMMARY

The following bar charts illustrate each Fund's year-by-year total
return and how performance of each of the Funds has varied over the
past ten years (with the exception of the Emerging Markets Equity
Fund).* Each chart assumes that all dividend and capital gain
distributions have been reinvested. Past performance does not
guarantee future results.

- -------------------------------------------------------------------
*The Fund commenced operations on February 9, 1998.

5
<PAGE>

Risk/Return Summary
- --------------------------------------------------------------------

MANAGERS EQUITY FUNDS
ANNUAL RETURNS - LAST TEN CALANDER YEARS
Fund 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -------- ----- ----- ---- ----- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Equity Fund 22.2% -13.0 29.7 10.0 12.4 1.0 34.4 17.1 27.2 11.8
Capital Appreciation Fund 21.0 - 1.9 32.9 10.5 16.7 -1.5 33.4 13.7 12.7 57.4
Special Equity Fund 32.8 -15.8 49.8 16.1 17.4 -2.0 33.9 24.8 24.4 0.2
International Equity Fund 15.1 - 9.5 18.2 4.3 38.2 2.0 16.2 12.8 10.8 14.5
- --------------

<FN>
*For the Income Equity Fund over this period, the highest quarterly return
was 14.40% and the lowest quarterly return was -16.52%.
*For the Capital Appreciation Fund over this period, the highest quarterly
return was 31.25% and the lowest quarterly return was -14.17%.
*For the Special Equity Fund over this period, the highest quarterly return
was 21.64% and the lowest quarterly return was -20.97%.
*For the International Equity Fund over this period, the highest quarterly
return was 13.86% and the lowest quarterly return was -16.18%.
*For the Emerging Markets Equity Fund over this period, the highest
quarterly return was 15.35% and the lowest quarterly return was -20.59%.
</FN>
</TABLE>
5-7

Risk/Return Summary
- -------------------------------------------------------------------------

The following table compares each Fund's performance to that of a
broadly based securities market index. Again, the table assumes that
dividends and capital gains distributions have been reinvested for
both the Fund and the applicable Index (with the exception of the
MSCI EAFE Index, as noted). As always, the past performance of the
Fund is not an indication of how the Fund will perform in the
future.

AVERAGE ANNUAL TOTAL RETURN (AS A PERCENTAGE) AS OF 12/31/98*

1 YEAR 5 YEARS 10 YEARS
------ ------- -------
<S> <C> <C> <C>
Income Equity Fund 11.77% 17.68% 14.43%
S&P 500 Index 28.57% 24.05% 19.18%

Capital Appreciation
Fund 57.45% 21.52% 18.37%
S&P 500 Index 28.57% 24.05% 19.18%

Special Equity Fund 0.18% 15.35% 16.64%
Russell 2000 Index -2.26% 11.92% 12.95%

International Equity
Fund 14.54% 11.16% 11.62%
MSCI EAFE** 19.99% 9.19% 5.70%
- --------------------------
<FN>
*All returns for the Funds are after expenses.
**Net dividends have been reinvested.
</FN>
</TABLE>

[TEXT BOX]
Total Return is used by all mutual funds to calculate the hypothetical
change in the value of a share over a specified period of time,
assuming reinvestment of all dividends and distributions.

FEES AND EXPENSES OF THE FUND

As an investor, you pay certain fees and expenses in connection with
buying and holding shares of the Funds. The following table illustrates
those fees and expenses. Keep in mind that each of these Funds has no
sales charge (load).

SHAREHOLDER FEES (fees paid directly from your investment)
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of the offering price)............. None
Maximum Deferred Sales Charge (Load).................. None
Meximum Sales Charge (Load) Imposed on Reinvested
Dividends and Other Distributions................... None
Redemption Fee........................................ None
Exchange Fee.......................................... None
Maximum Account Fee................................... None
</TABLE>

8
<PAGE>

ANNUAL FUND OPERATION EXPENSES (expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>

Income Capital Special International Emerging Markets
Equity Appreciation Equity Equity Equity
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Management Fee 0.75% 0.80% 0.90% 0.90% 1.15%(a)
Distribution (12b-1)
Fees 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses 0.57% 0.56% 0.44% 0.52% 2.17% (b)
Total Annual Fund
Operating Expenses 1.28% 1.29% 1.34% 1.41% 3.18%(e)
- ---------------------
<FN>
(a) The Management Fee currently being charged is 0.75%, which
reflects a voluntary waiver by The Managers Funds LLC. The waiver is
expected to continue throughout fiscal 1999, but may be modified or
terminated at the sole discretion of the investment manager.

(b) The Fund's Other Expenses are 1.79%, which reflects a voluntary
waiver of the administration fee by The Managers Funds LLC. The
waiver is expected to continue throughout fiscal 1999, but may be
modified or terminated at the sole discretion of the investment
manager.

(c) The Funds have entered into arrangements with one or more
third-party broker/dealers who have paid a portion of the Funds'
custodian expenses. Absent these expense reductions, the ratio of
expenses to average net assets would have been 1.32%, 1.36%, 1.34%,
1.42% and 3.32% for the Income Equity, Capital Appreciation, Special
Equity, International Equity and Emerging Markets Equity Funds,
respectively.

(d) The Total Annual Fund Operating Expenses are currently 2.54%,
which reflects all waivers in effect.
</FN>
</TABLE>

[TEXT BOX]
The Management Fee is the fee paid to The Managers Funds LLC of which a portion
is paid to the asset managers who manage the Fund's portfolios.

Distribution (12b-1) Fees are those expenses charged by some mutual funds
for the cost of marketing and advertising. THE FUNDS DO NOT HAVE ANY 12B-1
FEES.

Example

The following Example will help you compare the costs of investing
in the Funds to the cost of investing in other mutual funds. The
Example makes certain assumptions. It assumes that you invest
$10,000 as an initial investment in each Fund for the time periods
indicated and then redeem all of your shares at the end of those
periods. It also assumes that your investment has a 5% total return
each year and each of the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on the
above assumptions, your costs would be:

9
<PAGE>

Risk/Return Summary
- ---------------------------------------------------------------------------

Fund 1 Year 3 Years 5 Years 10 Years
- ------------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Income Equity Fund $130 $406 $702 $1545
Capital Appreciation Fund 131 409 708 1556
Special Equity Fund 136 425 734 1613
International Equity
Fund 144 446 771 1691
Emerging Markets Equity
Fund(a) 321 983 1664 3485
</TABLE>
[FN]
(a) Your costs for the Fund, including all waivers currently in
effect, would be $257, $791, $1350 and $2875, for 1 year, 3 years, 5
years and 10 years, respectively.
</FN>

10
<PAGE>

The Managers Funds
- -----------------------------------------------------------------

THE MANAGEMENT TEAM
[GRAPHIC]

The Managers Funds (referred to in this Prospectus as "We" and "Us")
is a no-load mutual fund family currently comprised of ten different
Funds, each having distinct investment management objectives,
strategies, risks and policies. Many of our Funds employ a
multi-manager investment approach which can provide added
diversification within each portfolio.

The Managers Funds LLC, a subsidiary of Affiliated Managers Group,
Inc., serves as investment manager to each Fund and is responsible
for the Fund's overall administration and distribution. It selects
and recommends, subject to the approval of the Board of Trustees and
in some cases the shareholders of the Funds, one or more asset
managers to manage each Fund's investment portfolio. The Managers
Funds LLC also allocates assets to the asset managers based on
certain evolving targets, monitors the performance, security
holdings and investment strategies of these external asset managers
and when appropriate, researches any potential new asset managers
for our Fund family.

THE YEAR 2000 ISSUE
[GRAPHIC]

The "Year 2000 problem," a date-related computer issue, could have
an adverse impact on the nature and quality of the services provided
to the Funds and their shareholders. In addition to verifying that
all internal systems are able to handle dates past 1999 (otherwise
known as "Year 2000 compliant"), we are taking steps to address the
problem by working with all of our sub-advisers and outside vendors.
We have obtained assurances from each of our key service providers
that they are taking steps within their organizations to make their
systems and products Year 2000 compliant. However, we cannot be
completely certain that all sub-advisers and vendors will be fully
Year 2000 compliant. We are unable to predict the impact of this
problem on the portfolio companies in which the Funds invest. We
will continue to monitor developments relating to this issue.

11
<PAGE>

Managers Income Equity Fund Ticker Symbol: MGIEX
- -----------------------------------------------------------------

Objective

The Fund's objective is to achieve a high level of current income
from a diversified portfolio of income-producing equity securities.

[GRPHIC]
Principal Investment Strategies

Under normal market conditions, the Income Equity Fund invests at
least 65% of its total assets in income-producing equity securities
of U.S. companies, such as common and preferred stocks that pay
regular dividends. The Fund generally invests in medium- and
large-sized companies, that is, companies with capitalizations that
are at least the size of companies whose securities are represented
in the S&P 400.

The assets of the Income Equity Fund are allocated among two asset
managers, each of which acts independently of the other and uses its
own methodology in selecting portfolio investments. Both asset
managers emphasize a value approach to investing, that is, each
selects stocks that it believes are trading below their real value.

Generally, the asset managers compare a company's stock price to the
company's earnings, or its potential to generate strong, sustainable
earnings, as well as its potential for long-term profitability and
the quality of its management. A stock is sold if the asset managers
believe that these characteristics of a company do not support its
current stock price.

Principal Risk Factors
[GRAPHIC]

The principal risks of the Income Equity Fund are the risks
generally of investing in stocks. They include the risk of sudden
and unpredictable drops in the value of the market as a whole and
periods of lackluster performance. The success of the Fund's
investment strategy depends significantly on each asset manager's
skill in assessing the potential of the securities in which the Fund
invests.

The primary risk of value stocks is that they may not appreciate to
the extent expected by the asset managers because the underlying
circumstances causing the market to

[TEXT BOX: Capitalization is the market value of the company. It is equal to
the per share price of the company's stock times the number of
shares outstanding.]

12
<PAGE>

Ticker Symbol: MGIEX
- ---------------------------------------------------------------------

[TEXT BOX: More information on the Fund's investment strategies and holdings
can be found in our current Annual and Semi-Annual Reports or on our
Internet website at www.managersfunds.com]

com. undervalue them do not change. To the extent that the Fund
invests in those kinds of stocks, it will be exposed to the risks
associated with those kinds of investments. For these and other
reasons, the Fund may underperform other stock funds (such as
international, small-company stock funds and growth funds) when
stocks of medium- and large-sized domestic companies are out of
favor.

Shares of the Income Equity Fund will rise and fall in value, and
there is a risk that you could lose money by investing in the Fund.
The Fund cannot be certain that it will achieve its goal. The Fund
shares are not bank deposits and are not guaranteed, endorsed or
insured by any financial institution, government entity or the FDIC.

SHOULD I INVEST IN THIS FUND?

This Fund may be suitable if you:
o Are seeking an opportunity for medium- to large-capitalization
equity returns in your investment portfolio
o Are seeking additional return from current dividends
o Are willing to accept a moderate risk investment
o Have an investment time horizon of five years or more

This Fund may not be suitable if you:
o Are seeking stability of principal
o Are investing with a shorter time horizon in mind
o Are uncomfortable with stock market risk

FEES AND EXPENSES

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C>
Management Fee........................................... 0.75%
Distribution (12b-1) Fees................................ 0.00%
Other Expenses........................................... 0.57%
Total Expenses before Expense Reductions................. 1.32%
Expense Reductions (a)...................................(0.04)%
Total Annual Fund Operating Expenses..................... 1.28%
- -----------------
</TABLE>
[TEXT BOX: What am I investing in?
You are buying shares of a pooled investment known as a mutual fund.

It is professionally managed and gives you the opportunity to
invest
in a wide variety of companies, industries and markets.
This Fund is not a complete investment program and there is no
guarantee that the Fund will reach its stated goals.]

13
<PAGE>

Ticker Symbol: MGIEX
- -----------------------------------------------------------------------------

[FN]
(a) Includes earnings on overnight cash balances and Fund expenses
paid by certain brokers to whom the Fund has directed business.
</FN>

PORTFOLIO MANAGEMENT OF THE FUND

[GRAPHIC]
Scudder Kemper Investments, Inc. and Chartwell Investment Partners,
L.P. each manage a portion of the Fund.

Scudder has managed a portion of the Fund since August 1991.
Scudder, located at 345 Park Avenue, New York, New York 10154, was
founded in 1919. As of December 31, 1998, Scudder had assets under
management of over $281 billion. Robert T. Hoffman is the portfolio
manager for the portion of the Fund managed by Scudder. He is a
Managing Director of Scudder, and has been with that firm in various
capacities since 1989.

Chartwell has managed a portion of the Fund since September 1997.
Chartwell, located at 1235 Westlakes Drive, Suite 330, Berwyn,
Pennsylvania 19312, was formed in 1997. As of December 31, 1998,
Chartwell had assets under management of $2.7 billion. Harold Ofstie
leads a team of portfolio managers for the portion of the Fund
managed by Chartwell. Mr. Ofstie has been a Partner at Chartwell
since its formation. Prior to that time, he was a Portfolio Manager
with Delaware Investment Advisers.

The Fund is obligated by its investment management contract to pay
an annual management fee to The Managers Funds LLC of 0.75% of the
average daily net assets of the Fund. The Managers Funds LLC, in
turn, pays a portion of this fee to Scudder and Chartwell.

14
<PAGE>

Managers Capital Appreciation Fund Ticker Symbol: MGCAX
- --------------------------------------------------------------------------

OBJECTIVE

The Fund's objective is to achieve long-term capital appreciation
through a diversified portfolio of equity securities. Income is the
Fund's secondary objective.

Principal Investment Strategies
[GRAPHIC]

Under normal market conditions, the Capital Appreciation Fund
invests at least 65% of its total assets in equity securities of
U.S. companies, such as common and preferred stocks. The Fund
generally invests in medium- and large-sized companies, that is,
companies with capitalizations that are at least the size of
companies whose securities are represented in the S&P 400.

The assets of the Capital Appreciation Fund are allocated among two
asset managers, each of which acts independently of the other and
uses its own methodology to select portfolio investments. Both asset
managers emphasize a growth approach to investing, that is, each
selects stocks that it believes can generate and maintain strong
earnings growth. Generally, the asset managers look for companies
with quality management, strong finances and established market
positions. A stock is sold if the asset managers believe that the
current stock price is not supported by their expectations regarding
the company's future growth potential.

Principal Risk Factors
[GRAPHIC]

The principal risks of the Capital Appreciation Fund are the risks
generally of investing in stocks. They include the risk of sudden
and unpredictable drops in value of the market as a whole and
periods of lackluster performance. The success of the Fund's
investment strategy depends significantly on each asset manager's
skill in assessing the potential of the securities in which the Fund
invests.

[TEXT BOX: Capitalization is the market value of the company. It is equal to
the per share price of the company's stock times the number of
shares outstanding.]

15
<PAGE>

Ticker Symbol: MGCAX

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

[TEXT BOX: More information on the Fund's investment strategies and holdings
can be found in our current Annual and Semi-Annual Reports or on our
Internet website at www.managersfunds.com.]

pectations are lowered, the prices of the securities will drop.
To the extent that the Fund invests in those kinds of stocks, it
will be exposed to the risks associated with those kinds of
investments. For these and other reasons, the Fund may underperform
other stock funds (such as international and small-company stock
funds or value funds) when stocks of medium- and large-sized
domestic growth companies are out of favor.

Shares of the Capital Appreciation Fund will rise and fall in value
and there is a risk that you could lose money by investing in the
Fund. The Fund cannot be certain that it will achieve its goal. The
Fund shares are not bank deposits and are not guaranteed, endorsed
or insured by any financial institution, government entity or the
FDIC.

SHOULD I INVEST IN THIS FUND?

This Fund may be suitable if you:
o Are seeking an opportunity for some equity returns in your
investment portfolio
o Are willing to accept a higher degree of risk for the opportunity
of higher potential returns
o Have an investment time horizon of five years or more

This Fund may not be suitable if you:
o Are seeking stability of principal
o Are investing with a shorter time horizon in mind
o Are uncomfortable with stock market risk

[TEXT BOX: What am I investing in?
You are buying shares of a pooled investment known as a mutual fund.
It is professionally managed and gives you the opportunity to invest

in a wide variety of companies, industries and markets.
This Fund is not a complete investment program and there is no
guarantee that the Fund will reach its stated goals.]

FEES AND EXPENSES

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C>
Management Fee........................................... 0.80%
Distribution (12b-1) Fees................................ 0.00%
Other Expenses........................................... 0.56%
Total Expenses before Reductions......................... 1.36%
Expense Reductions (a) ..................................(0.07)%
Total Annual Fund Operating Expenses..................... 1.29%
</TABLE>

16
<PAGE>

Ticker Symbol: MGCAX
- ------------------------------------------------------------------------
[FN]
(a) Includes earnings on overnight cash balances and Fund expenses
paid by certain brokers to whom the Fund has directed business.
</FN>

PORTFOLIO MANAGEMENT OF THE FUND
[GRAPHIC]

Essex Investment Management Company, LLC and Roxbury Capital
Management, LLC each manage a portion of the Fund.

Essex has managed a portion of the Fund since March 1997. Essex,
located at 125 High Street, Boston, Massachusetts 02110, was formed
in 1976. Affiliated Managers Group, Inc. owns a majority interest in
Essex. As of December 31, 1998, Essex had assets under management of
$5.6 billion. Joseph C. McNay and Daniel Beckham are the portfolio
managers for the portion of the Fund managed by Essex. Mr. McNay is
the Chairman and CIO of Essex, a position he has held since that
firm's formation. Mr. Beckham is the Principal Vice President of
Essex, a position he has held since 1995.

Roxbury has managed a portion of the Fund since October 1998.
Roxbury, located at 100 Wilshire Boulevard, Suite 600, Santa Monica,
California 90401, was formed in 1986. As of December 31, 1998,
Roxbury had assets under management of $6 billion. Kevin P. Riley is
the portfolio manager for the portion of the Fund managed by
Roxbury. Mr. Riley is currently a Senior Managing Director, Senior
Portfolio Manager and Investment Officer, and has held various other
positions with Roxbury since 1987.

The Fund is obligated by its investment management contract to pay
an annual management fee to The Managers Funds LLC of 0.80% of the
average daily net assets of the Fund. The Managers Funds LLC, in
turn, pays a portion of this fee to Essex and Roxbury.

17
<PAGE>

Managers Special Equity Fund Ticker Symbol: MGSEX
- ----------------------------------------------------------------------

Objective

The Fund's objective is to achieve long-term capital appreciation
through a diversified portfolio of equity securities of small- and
medium-capitalization companies.

Principal Investment Strategies
[GRAPHIC]

Under normal market conditions, the Special Equity Fund invests at
least 65% of its total assets in equity securities of U.S.
companies, such as common and preferred stocks. The Fund generally
invests in small- and medium-sized companies, that is, companies
with capitalizations of $1.5 billion or less. The Fund may retain
securities that it already has purchased even if the company
outgrows the Fund's capitalization limitations.

The assets of the Special Equity Fund are allocated among four asset
managers, each of which acts independently of the others and uses
its own methodology to select portfolio investments. Two asset
managers emphasize a value approach to investing, that is, each
selects stocks which it believes are trading below their real value.
Generally, those asset managers compare a company's stock price to
the company's earnings, or its potential to generate strong,
sustainable earnings, as well as its potential for long-term
profitability and the quality of its management. A stock is sold
when the asset managers believe that these characteristics of a
company do not support its current stock price.

The other two asset managers emphasize a growth approach to
investing, that is, each selects stocks that it believes can
generate and maintain strong earnings growth. Generally, those asset
managers look for companies with quality management, strong finances
and established market positions. A stock is sold when the asset
managers do not believe that the current stock price is supported by
their expectations regarding the company's future growth potential.

[TEXT BOX: Capitalization is the market value of the company. It is equal to
the per share price of the company's stock times the number of
shares outstanding.]

18
<PAGE>

Ticker Symbol: MGSEX
- ---------------------------------------------------------------------

Principal Risk Factors
[GRAPHIC]

The principal risks of the Special Equity Fund are the risks
generally of investing in stocks. They include the risk of sudden
and unpredictable drops in value of the market as a whole and
periods of lackluster performance. The success of the Fund's
investment strategy depends significantly on each asset manager's
skill in assessing the potential of the securities in which it
invests.

Smaller companies may have more limited product lines, markets or
financial resources than larger companies. The securities of smaller
companies may trade less frequently and in more limited volume than
those of larger, more mature companies. As a result, small-cap
stocks, and the Fund, may fluctuate significantly more in value than
larger-cap stocks and the funds that focus on larger-cap stocks.

The primary risk of growth stocks is that they may be more sensitive
to market movements because their prices tend to reflect more of
future investor expectations rather than just current profits. If
such expectations are not met, or if expectations are lowered, the
prices of the securities will drop. The primary risk of value stocks
is that they may never appreciate to the extent expected by the
asset managers because the underlying circumstances causing the
market to undervalue them do not change. To the extent that the
Special Equity Fund invests in those kinds of stocks, it will be
exposed to the risks associated with those kinds of investments. For
these and other reasons, the Fund may underperform other stock funds
(such as international and large-company stock funds) when stocks of
small- and medium-sized domestic companies are out of favor.

Shares of the Special Equity Fund will rise and fall in value and
there is a risk that you could lose money by investing in the Fund.
The Fund cannot be certain that it will achieve its goal. The Fund
shares are not bank deposits and are not guaranteed, endorsed or
insured by any financial institution, government entity or the FDIC.

[TEXT BOX: More information on the Fund's investment strategies and holdings
can be found in our current Annual and Semi-Annual Reports or on our
Internet website at www.managersfunds.com.]

19
<PAGE>
Ticker Symbol: MGSEX
- ----------------------------------------------------------------------------

[TEXT BOX: What am I
investing in?
You are buying shares of a pooled investment known as a mutual fund.

It is professionally managed and gives you the opportunity to invest

in a wide variety of companies, industries and markets.

The Fund is not a complete investment program and there is no
guarantee that the Fund will reach its stated goals.]

SHOULD I INVEST IN THIS FUND?

This Fund may be suitable if you:
o Are seeking an opportunity for small company equity returns in
your investment portfolio
o Are willing to accept a higher risk investment for the
opportunity of higher potential returns
o Have an investment time horizon of 5 years or more

This Fund may not be suitable if you:
o Are seeking stability of principal
o Are investing with a shorter time horizon in mind
o Are uncomfortable with stock market risk
o Are seeking current income

FEES AND EXPENSES

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C>
Management Fee........................................... 0.90%
Distribution (12b-1) Fees................................ 0.00%
Other Expenses........................................... 0.44%
Total Expenses before Reductions..........................1.34%
Expense Reductions(a).....................................0.00%(b)
Total Annual Fund Operating Expenses..................... 1.34%
<FN>
(a) Includes earnings on overnight cash balances and Fund expenses
paid by certain brokers to whom the Fund has directed business.
(b) Less than 0.01%.
</FN>
</TABLE>

PORTFOLIO MANAGEMENT OF THE FUND
[GRAPHIC]

Liberty Investment Management, Pilgrim Baxter & Associates, Ltd.,
Westport Asset Management, Inc. and Kern Capital Management LLC each
manage a portion of the Fund.

Liberty has managed a portion of the Fund since December 1985.
Liberty, located at 2502 Rocky Point Drive, Suite 500, Tampa,
Florida 33607, was formed in 1976 and is a

20
<PAGE>

Ticker Symbol: MGSEX
________________________________________________________________________

division of Goldman Sachs Asset Management. As of December 31, 1998,
Liberty had assets under management of $10.9 billion. Timothy G.
Ebright is the portfolio manager for the portion of the Fund managed
by Liberty. He is a Senior Vice President of Liberty, a position he
has held with that firm since 1988.

Pilgrim has managed a portion of the Fund since October 1994.
Pilgrim, located at 1255 Drummers Lane, Wayne, Pennsylvania 19087,
was formed in 1982. As of December 31, 1998, Pilgrim had assets
under management of $13.9 billion. Gary L. Pilgrim and Jeffrey Wrona
are the portfolio managers for the portion of the Fund managed by
Pilgrim. Mr. Pilgrim is President and CIO of Pilgrim and has been
with that firm since its formation. Mr. Wrona is a Portfolio Manager
of Pilgrim and has been with that firm since 1997. Prior to that, he
was a Senior Portfolio Manager with Munder Capital Management for
seven years.

Westport has managed a portion of the Fund since December 1985.
Westport, located at 253 Riverside Avenue, Westport, Connecticut
06880, was formed in 1983. As of December 31, 1998, Westport had
assets under management of $2 billion. Andrew J. Knuth is the
portfolio manager for the portion of the Fund managed by Westport.
Mr. Knuth is Chairman of Westport and has been with that firm since
its formation.

Kern has managed a portion of the Fund since September 1997. Kern,
located at 114 West 47th Street, Suite 1926, New York, New York
10036, was formed in 1997. As of December 31, 1998, Kern had assets
under management of over $405 million. Robert E. Kern, Jr. is the
portfolio manager for the portion of the Fund managed by Kern. Mr.
Kern has been the Managing Member, Chairman and CEO of Kern since
its formation. Prior to that time, he was Senior Vice President of
Freemont Investments Advisers in 1997 and a Director of Morgan
Grenfell Capital Management from 1986 to 1997.

The Fund is obligated by its investment management contract to pay
an annual management fee to The Managers Funds LLC of 0.90% of the
average daily net assets of the Fund. The Managers Funds LLC, in
turn, pays a portion of this fee to Liberty, Pilgrim, Westport and
Kern.

21
<PAGE>

Managers International Equity Fund Ticker Symbol: MGITX
- ----------------------------------------------------------------------------

Objective

The Fund's objective is to achieve long-term capital appreciation
through a diversified portfolio of equity securities of non-U.S.
companies. Income is the Fund's secondary objective.

Principal Investment Strategies
[GRAPHIC]

Under normal market conditions, the International Equity Fund
invests at least 65% of its total assets in equity securities of
non-U.S. companies, such as common and preferred stocks.
The Fund generally invests in medium- and large-sized
companies, that is, companies with capitalizations that are at least
$1 billion, and in issuers located in at least three countries other
than the U.S.

The assets of the International Equity Fund are allocated among two
asset managers, each of which acts independently of the other and
uses its own methodology in selecting portfolio investments. One
asset manager emphasizes a value approach to investing, that is, it
selects stocks that it believes are trading below their real value.
That manager generally causes a stock to be sold when it believes
that the characteristics of a company do not support its current
stock price. The other asset manager generally seeks to identify
long-term investment themes involving, among other things, the
growth of particular regions or countries, and looks for companies
that it believes can capitalize on those investment themes. A stock
is sold when the asset manager believes that the current stock price
is not supported by the opportunities currently available to the
company in such situations or if the investment theme has matured or
the manager's expectations are not met.

Principal Risk Factors
[GRAPHIC]

The principal risks of the International Equity Fund are the risks
generally of investing in stocks. They include the risk of sudden
and unpredictable drops in value of the market as a whole and
periods of lackluster performance. The success of the Fund's
investment strategy depends significantly on each asset manager's
skill in assessing the potential of the securities in which it
invests.

[TEXT BOX: Capitalization is the market value of the company. It is equal to
the per share price times the number of shares outstanding.]

22
<PAGE>

Ticker Symbol: MGITX
- -------------------------------------------------------------------------

Stocks of foreign companies present additional risks for U.S.
investors. They tend to be less liquid and more volatile than their
U.S. counterparts, in part because accounting standards and market
regulations tend to be less standardized and economic and political
climates less stable. Since the value of foreign securities in an
investor's home currency depends on the price of the securities and
the exchange rate of the currency, fluctuations in the exchange rate
of such currencies may reduce or eliminate gains or create losses.
These risks are usually higher in developing countries and emerging
markets, such as most countries in Africa, Asia, Latin America and
the Middle East. To the extent that the International Equity Fund
invests in those kinds of stocks, it will be exposed to the risks
associated with those kinds of investments. For these and other
reasons, the Fund may underperform other stock funds (such as U.S.
and small-company stock funds and growth funds) when stocks of
medium- and large-sized foreign companies are out of favor.

Shares of the International Equity Fund will rise and fall in value
and there is a risk that you could lose money by investing in the
Fund. The Fund cannot be certain that it will achieve its goal. The
Fund shares are not bank deposits and are not guaranteed, endorsed
or insured by any financial institution, government entity or the
FDIC.

[TEXT BOX: More information on the Fund's investment strategies and holdings
can
be found in our current Annual and Semi-Annual Reports or on our
Internet website at www.managersfunds.com.]

SHOULD I INVEST IN THIS FUND?

This Fund may be suitable if you:
o Are seeking an opportunity for some international market equity
returns in your investment portfolio
o Are willing to accept a moderate risk investment

[TEXT BOX: What am I investing in?
You are buying shares of a pooled investment known as a mutual fund.

It is professionally

23
<PAGE>

Ticker Symbol: MGITX
- ---------------------------------------------------------------------

managed and gives you the opportunity to invest in a wide variety
of
companies, industries and markets.

This Fund is not a complete investment program and there is no
guarantee that the Fund will reach its stated goals.]

Have an investment time horizon of five years or more

This Fund may not be suitable if you:
o Are seeking stability of principal
o Are investing with a shorter time horizon in mind
o Are uncomfortable with risk
o Are seeking current income

FEES AND EXPENSES

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C>
Management Fee........................................... 0.90%
Distribution (12b-1) Fees................................ 0.00%
Other Expenses........................................... 0.52%
Total Expenses before Expense Reductions................. 1.42%
Expense Reductions (a)...................................(0.01)%
Total Annual Fund Operating Expenses..................... 1.41%
</FN>
(a) Includes earnings on overnight cash balances and Fund expenses paid
by certain brokers to whom the Fund has directed business.
</FN>
</TABLE>

PORTFOLIO MANAGEMENT OF THE FUND
[GRAPHIC]

Scudder Kemper Investments, Inc. and Lazard Asset Management each
manage a portion of the Fund.

Scudder has managed a portion of the Fund since December 1989.
Scudder, located at 345 Park Avenue, New York, New York 10154, was
founded in 1919. As of December 31, 1998, Scudder had assets under
management of $281.2 billion. William E. Holzer is the portfolio
manager for the portion of the Fund managed by Scudder. Mr. Holzer
is a Managing Director of Scudder, a position he has held with that
firm since 1980.

Lazard has managed a portion of the Fund since January 1995. Lazard,
located at 30 Rockefeller Plaza, New York, New York 10112, was first
organized in 1848. As of December 31, 1998, Lazard had assets under
management of $60 billion. Herbert

24
<PAGE>
Ticker Symbol: MGITX
- ------------------------------------------------------------------------

W. Gullquist and John R. Reinsberg are the portfolio managers for
the portion of the Fund managed by Lazard. Mr. Gullquist is a
General Member, Vice President and CIO of Lazard. He joined Lazard
in 1982. Mr. Reinsberg is a Managing Director of Lazard, a position
he has held since 1992.

25
<PAGE>

Managers Emerging Markets Equity Fund Ticker Symbol: MEMEX
- -------------------------------------------------------------------------

Objective

The Fund's objective is to achieve long-term capital appreciation
through a diversified portfolio of equity securities of companies
located in countries designated by the World Bank or the United
Nations to be a developing country or emerging market.

Principal Investment Strategies
[GRAPHIC]
Under normal market conditions, the Emerging Markets Equity Fund
invests at least 65% of its total assets in equity securities, such
as common and preferred stocks, of companies located in countries
designated by the United Nations or the World Bank to be a
developing country or an emerging market, such as most countries in
Africa, Asia, Latin America and the Middle East. The Emerging
Markets Equity Fund may invest in companies of any size.
The asset manager of the Emerging Markets Equity Fund seeks to keep
the Fund diversified across a variety of markets, countries and
regions. In addition, within these guidelines, the asset manager
selects stocks that it believes can generate and maintain strong
earnings growth. Generally, the asset manager looks for companies
with quality management, strong finances and established market
positions across a diversity of companies and industries. A security
will be sold when the asset manager believes that the current price
is not supported by its expectations regarding the company's future
growth potential.

Principal Risk Factors
[GRAPHIC]

The principal risks of the Emerging Markets Equity Fund are the
risks generally of investing in stocks. They include the risk of
sudden and unpredictable drops in value of the market as a whole and
periods of lackluster performance. The success of the Fund's
investment strategy depends significantly on the asset manager's
skill in assessing the potential of the securities in which it
invests.

26
<PAGE>

Ticker Symbol: MEMEX
- ----------------------------------------------------------------------

[TEXT BOX: More information on the Fund's investment strategies and holdings
can be found in our current Annual and Semi-Annual Reports or on
our
Internet website at www.managersfunds.com.]

Stocks of foreign companies, and particularly
those of companies in developing countries and emerging markets,
present significant risks for U.S. investors. They tend to be less
liquid and more volatile than their U.S. counterparts, in part
because accounting standards and market regulations tend to be less
standardized and economic and political climates less stable. Since
the value of foreign securities in an investor's home currency
depends on the price of the securities and the exchange rate of the
currency, fluctuations in the exchange rate of such currencies may
reduce or eliminate gains or create losses. As suggested above,
these risks usually are higher in developing countries and emerging
markets. To the extent that the Emerging Markets Equity Fund invests
in those kinds of stocks, it will be exposed to the risks associated
with those kinds of investments. For these and other reasons, the
Fund may underperform other stock funds (such as U.S. stock funds)
when stocks of companies located in emerging markets or developing
countries are out of favor.

Shares of the Emerging Markets Equity Fund will rise and fall in
value and there is a risk that you could lose money by investing in
the Fund. The Fund cannot be certain that it will achieve its goal.
The Fund shares are not bank deposits and are not guaranteed,
endorsed or insured by any financial institution, government entity
or the FDIC.

SHOULD I INVEST IN THIS FUND?

This Fund may be suitable if you:
o Are willing to accept a high degree of risk and volatility for
higher potential returns
o Have an investment time horizon of seven years or more

This Fund may not be suitable if you:
o Are a conservative investor
o Are investing with a shorter time horizon in mind
o Are seeking stability of principal or current income

[TEXT BOX: What am I investing in?
You are buying shares of a pooled investment known as a mutual fund.

It is professionally managed and gives you the opportunity to
invest
in a wide variety of companies, industries and markets.

This Fund is not a complete investment program and there is no
guarantee that the Fund will reach its stated goals.]

27
<PAGE>

Ticker Symbol: MGMEX
- -----------------------------------------------------------------------

FEES AND EXPENSES

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C>
Management Fee........................................... 1.15%(a)
Distribution (12b-1) Fees................................ 0.00%
Other Expenses........................................... 2.17%(b)
Total Expenses before Expense Reductions................. 3.32%
Expense Reductions (c)...................................(0.14)%
Total Annual Fund Operating Expenses..................... 3.18(d)
<FN>
(a) The Management Fee currently being charged is 0.75%, which
reflects a voluntary waiver by The Managers Funds LLC. The waiver is
expected to continue throughout fiscal 1999, but may be modified or
terminated at the sole discretion of the investment manager.
(b) The Fund's Other Expenses are 1.79%, which reflects a voluntary
waiver of the administration fee by The Managers Funds LLC. The
waiver is expected to continue throughout fiscal 1999, but may be
modified or terminated at the sole discretion of the investment
manager.
(c) Includes earnings on overnight cash balances and Fund expenses
paid by certain brokers to whom the Fund has directed business.
(d) The Total Annual Fund Operating Expenses are currently 2.54%,
which reflects all waivers in effect.
</FN>
</TABLE>

PORTFOLIO MANAGEMENT OF THE FUND
[GRAPHIC]

King Street Advisors, Limited manages the entire Fund and has
managed the Fund since its inception. King Street, located at Almack
House, 28 King Street, London, England SW1Y 6QW, was formed in 1997.
As of December 31, 1998, King Street had assets under management of
over $361 million. Kenneth King and Murray Davey are the portfolio
managers for the Fund. Mr. King is CIO of King Street, a position he
has held since the firm's inception. Mr. Davey is a Senior Portfolio
Manager of King Street, a position he has held since the firm's
inception.

28
<PAGE>

Ticker Symbol: MEMEX
- ----------------------------------------------------------------------
The Fund is obligated by its investment management contract to pay
an annual management fee to The Managers Funds LLC of 1.15% of the
average daily net assets of the Fund. The Managers Funds LLC is
currently waiving 0.40% of this fee, which makes the effective
management fee 0.75%. The Managers Funds LLC, in turn, pays a
portion of this fee to King Street.

29
<PAGE>

Other Securities and Investment Practices
- -----------------------------------------------------------------------

The Funds may also invest in certain other securities and engage in
certain other practices, including the following.

Bonds Each Fund may invest in bonds and other types of debt
securities. The value of any bonds held by a Fund is likely to
decline when interest rates rise; this risk is greater for bonds
with longer maturities. A bond issuer also could default on
principal or interest payments, possibly causing a loss for the
Fund.

Restricted and Illiquid Securities Each Fund may purchase restricted
or illiquid securities. Any securities that are thinly traded or
whose resale is restricted can be difficult to sell at a desired
time and price. Some of these securities are new and complex, and
trade only among institutions; the markets for these securities are
still developing, and may not function as efficiently as established
markets. Owning a large percentage of restricted or illiquid
securities could hamper a Fund's ability to raise cash to meet
redemptions. Also, because there may not be an established market
price for these securities, the Fund may have to estimate their
value. This means that their valuation (and, to a much smaller
extent, the valuation of the Fund) may have a subjective element.

Repurchase Agreements Each Fund may buy securities with the
understanding that the seller will buy them back with interest at a
later date. If the seller is unable to honor its commitment to
repurchase the securities, the Fund could lose money.

[GRAPHIC]
Foreign Securities Each Fund, including the International Equity
Fund and the Emerging Markets Equity Fund as discussed previously,
may purchase foreign securities. Foreign securities generally are
more volatile than their U.S. counterparts, in part because of
higher political and economic risks, lack of reliable information
and fluctuations in currency exchange rates. These risks are usually
higher in less developed countries. Each Fund may use foreign
currency transactions and related instruments to hedge its foreign
investments.

In addition, foreign securities may be more difficult to resell and
the markets for them less efficient than for comparable U.S.
securities. Even where a foreign security increases in price in its
local currency, the appreciation may be diluted by the negative
effect of exchange rates when the security's value is

30
<PAGE>

Other Securities and Investment Practices
- -----------------------------------------------------------------------

converted to U.S. dollars. Foreign withholding taxes also may apply
and errors and delays may occur in the settlement process for
foreign securities.

International Exposure Many U.S. companies in which the Funds may
invest generate significant revenues and earnings from abroad. As a
result, these companies and the prices of their securities may be
affected by weaknesses in global and regional economies and the
relative value of foreign currencies to the U.S. dollar. These
factors, taken as a whole, could adversely affect the price of Fund
shares.

Derivatives Each Fund may invest in derivatives. Derivatives, a
category that includes options and futures, are financial
instruments whose value derives from another security, an index or a
currency. Each Fund may use derivatives for hedging (attempting to
offset a potential loss in one position by establishing an interest
in an opposite position). This includes the use of currency-based
derivatives for hedging its positions in foreign securities. Each
Fund may also use derivatives for speculation (investing for
potential income or capital gain).

While hedging can guard against potential risks, it adds to the
Fund's expenses and can eliminate some opportunities for gains.
There is also a risk that a derivative intended as a hedge may not
perform as expected.

The main risk with derivatives is that some types can amplify a gain
or loss, potentially earning or losing substantially more money than
the actual cost of the derivative.

With some derivatives, whether used for hedging or speculation,
there is also the risk that the counterparty may fail to honor its
contract terms, causing a loss for the Fund.

Short-Term Trading Short-term trading can increase a Fund's
transaction costs and may increase your tax liability. The
investment strategies of the asset managers for the Capital
Appreciation Fund may at times include short-term trading. While the
other Funds ordinarily do not trade securities for short-term
profits, any of them may sell any security at any time it believes
best, which may result in short-term trading.

Defensive Investing During unusual market conditions, each Fund may
place up to 100% of its total assets in cash or quality short-term
debt securities. To the extent that a Fund does this, it is not
pursuing its objective.

31
<PAGE>

Other Risk Factors
- ---------------------------------------------------------------

A Few Words About Risk

In the normal course of every day life, each of us takes risk. What
is risk? Risk can be thought of as the likelihood of an event
turning out differently than planned and the consequences of that
outcome.

[GRAPHIC]
If you drive to work each day, you do so with the plan of arriving
safely with time to accomplish your tasks. There is a possibility,
however, that some unforeseen factor such as bad weather or a
careless driver will disrupt your plan. The likelihood of your being
delayed or even injured will depend upon a number of factors
including the route you take, your driving ability, the type and
condition of your vehicle, the geographic location, or the time of
day.

The consequences of something going wrong can range from a short
delay to serious injury or death. If you wanted, you could try to
quantitatively estimate the risk of driving to work, which, along
with your expectations about the benefits of getting to work, will
help you determine whether or not you will be willing to drive each
day. A person who works in a city may find the risk of driving very
high and the relative rewards minimal in that he or she could more
easily walk or ride a train. Conversely, a person who works in the
country may find the risk of driving minimal and the reward great in
that it is the only way he or she could get to work. Fortunately,
most people do not need to quantitatively analyze most of their
everyday actions.

[GRAPHIC]
The point is that everyone takes risks, and subconsciously or
otherwise, everyone compares the benefit that they expect from
taking risk with the cost of not taking risk, to determine their
actions. In addition, there are a few principles from this example
which are applicable to investing as well.

o Despite statistics, the risks of any action are different for
every person and may change as a person's circumstances change.
o Everybody's perception of reward is different.
o High risk does not in itself imply high reward.

32
<PAGE>

Other Risk Factors
- --------------------------------------------------------------------------

While higher risk does not imply higher reward, proficient investors
demand a higher return when they take higher risks. This is often
referred to as the risk premium.

U.S. investors often consider the yield for short-term U.S. Treasury
securities to be as close as they can get to a risk-free return
since the principal and interest are guaranteed by the U.S.
Government. Investors get paid only for taking risks, and successful
investors are those who have been able to correctly estimate and
diversify the risks to which they expose their portfolios along with
the risk premium they expect to earn.

In order to better understand and quantify the risks investors take
versus the rewards they expect, investors separate and estimate the
individual risks to their portfolio. By diversifying the risks in an
investment portfolio, an investor can often lower the overall risk,
while maintaining a reasonable return expectation.

The following are descriptions of many of the risks that asset
managers of our Funds take to earn investment returns. Investors
should keep in mind that each of the Equity Funds is subject to the
following risks. This is not a comprehensive list and the risks
discussed below are only some of the primary risks to which your
investments are exposed.

[GRAPHIC]
Market Risk. This is also called systematic risk. It typically
refers to the basic variability that stocks exhibit as a result of
stock market fluctuations. Despite the unique influences on
individual companies, all stock prices rise and fall as a result of
investors' perceptions of the market as a whole. Many of the risks
described below contribute to market risk. Other types of securities
such as corporate bonds can also have some market risk; their prices
can be affected by changing perceptions of the stock market.

Since foreign securities trade on different markets, which have
differing supply and demand characteristics, their prices are not as
closely linked to the U.S. markets. Foreign securities markets have
their own market risks and they may be more or less volatile than
U.S. markets, and may move in different directions. However, as all
markets become more open to global trading, and as communications
between investors improves, international stock and bond markets
have become more closely linked with U.S. markets.

[TEXT BOX: The risk premium for any investment is the extra return, over the
available risk-free return, that an investor expects for the risk
that he or she takes. The risk-free return is a return that one
could expect with absolute certainty.]

33
<PAGE>
Other Risk Factors
- --------------------------------------------------------------------------
The consequences of market risk are that if the stock market drops
in value, the value of each Fund's portfolio of investments are also
likely to drop in value. The increase or decrease in the value of a
Fund's investments, in percentage terms, may be more or less than
the increase or decrease in the value of the market. Most
international markets do not move together with U.S. markets, or
with other international markets.

[GRAPHIC]
Specific Risk. This is the risk that any particular security will
drop in price due to adverse effects on a specific business.
Specific risk can be reduced through diversification. It can be
measured by calculating how much of a portfolio is concentrated into
the few largest holdings and by estimating the individual business
risks which these companies face.

An extension of specific risk is Sector (Industry) Risk. Companies
that are in similar businesses may be similarly affected by
particular economic or market events. To measure sector (industry)
risk, one would group the holdings of a portfolio into sectors or
industries and observe the amounts invested in each. Again,
diversification among industry groups will reduce sector (industry)
risk but may also dilute potential returns.

Price Risk. As investors perceive and forecast good business
prospects, they are willing to pay higher prices for securities.
Higher prices therefore reflect higher expectations. If expectations
are not met, or if expectations are lowered, the prices of the
securities will drop. This happens with individual securities or
with the financial markets overall. For stocks, price risk is often
measured by comparing the price of any security or portfolio to the
book value, earnings or cash flow of the underlying company or
companies. A higher ratio denotes higher expectations and higher
risk that the expectations will not be sustained. This is likely the
clearest difference between "growth" and "value" styles of
investing.

Liquidity Risk. This is the risk that a Fund cannot sell a security
at a reasonable price within a reasonable time frame when it wants
or needs to due to a lack of buyers for the security. This risk
applies to all assets. However, it is higher for
small-capitalization stocks and stocks of foreign com

[TEXT BOX: Value vs. Growth Investors

Growth investors are typically willing to take more price risk in
order to own companies which are performing well and are expected
to
continue to perform well.Value investors prefer to take less price
risk by avoiding situations where current expectations, and thus
prices, are high.]

<PAGE>

Other Risk Factors
- ----------------------------------------------------------------------

panies than it typically is for large-capitalization domestic
stocks. For example, an asset such as a house has reasonably high
liquidity risk because it is unique and has a limited number of
potential buyers. Thus, it often takes a significant effort to
market, and a takes at least a few days and often a few months to
sell.

On the other hand, a U.S. Treasury note is one of thousands of
identical notes with virtually unlimited potential buyers and can
thus be sold very quickly and easily. The liquidity of financial
securities in orderly markets can be approximated by observing the
amount of daily or weekly trading in the security, the prices at
which the security trades and the difference between the price
buyers offer to pay and the price sellers want to get. However,
estimating the liquidity of securities during market upheavals is
very difficult.

[GRAPHIC]
Credit Risk. The likelihood that a debtor will be unable to pay
interest or principal payments as planned is typically referred to
as default risk. Default risk for most debt securities is constantly
monitored by several nationally recognized statistical rating
agencies such as Moody's Investor Services, Inc. and Standard &
Poor's Corporation. Even if the likelihood of default is remote,
changes in the perception of an institution's financial health will
affect the valuation of its debt securities. This extension of
default risk is typically known as credit risk.

Inflation Risk. This is the risk that the price of an asset, or the
income generated by an asset, will not keep up with an increase in
the general cost of living. Almost all financial assets have some
inflation risk, but most particularly fixed-income securities.

Interest Rate Risk. Changes in interest rates can impact stock and
bond prices in several ways. As interest rates rise, the coupon
payments of debt securities may become less competitive with the
market and thus the price of the securities may fall. Similarly, the
expected earnings and dividend payments for equity securities become
relatively less competitive as interest rates rise. Conversely,
prices typically rise as available interest rates fall. The longer
into the future that these cash flows are expected, the greater the
effect on the price of the security. Interest rate risk is thus

<PAGE>

Other Risk Factors
- ---------------------------------------------------------------------------

[TEXT BOX: Duration is the weighted average time (typically quoted in years)
to
the receipt of cash flows (principal + interest) for a bond or
portfolio. It is used to evaluate the interest rate sensitivity.]

measured by analyzing the length of time or "duration" over which
the return on the investment is expected. The longer the duration
the higher the interest rate risk.

While this is typically measured for debt securities, it also
applies to equity securities. A company which has high current
earnings, is paying dividends and is valued based on a slower
expectation of growth has a shorter duration than a rapidly growing
company in which the bulk of its earnings are expected further into
the future.

Reinvestment Risk. As debtors pay interest or return capital to
investors, there is no guarantee that investors will be able to
reinvest these payments and receive rates equal to or better than
their original investment. If interest rates fall, the rate of
return available to reinvested money will also fall. Purchasers of
a 30-year, 8% coupon bond can be reasonably assured that they will
receive an 8% return on their original capital, but unless they can
reinvest all of the interest receipts at or above 8%, the total
return over 30 years will be below 8%. The higher the coupon and
prepayment risk, the higher the reinvestment risk.

Here is a good example of how consequences differ for various
investors. An investor who plans on spending (as opposed to
reinvesting) the income generated by his portfolio is likely less to
be concerned with reinvestment risk and more likely to be concerned
with inflation and interest rate risk than is an investor who will
be reinvesting all income.
[gr
APHIC] Political Risk. Changes in the political status of any country can
have profound effects on the value of securities within that country
as well as the credit quality of the debt securities. Related risk
factors are the regulatory environment within any country or
industry and the sovereign health of the country. These risks can
only be reduced by carefully monitoring the economic, political and
regulatory atmosphere within countries and diversifying across
countries.

[GRAPHIC] Currency Risk. The value of foreign securities in an investor's
home
currency depends both upon the price of the securities and the
exchange rate of the currency. Thus, the value of an investment in a
foreign security will drop if

36
<PAGE>

Other Risk Factors
- ---------------------------------------------------------------------------

the price for the foreign currency drops in relation to the U.S.
Dollar. Adverse currency fluctuations are an added risk to foreign
investments. Currency risk can be reduced through diversification
among currencies or through hedging with the use of foreign currency

contracts.

Economic Risk. Obviously, the prevailing economic environment is
important to the health of all businesses, however, some companies
are more sensitive to changes in the domestic and/or global economy
than others. These types of companies are often referred to as
cyclical businesses. Countries in which a large portion of
businesses are in cyclical industries are thus also very
economically sensitive, and carry a higher amount of economic risk.

[GRAPHIC] Intelligence Risk. Intelligence risk is a term created by The
Managers Funds LLC to describe the risks taken by mutual fund
investors in hiring professional asset managers to invest assets.
Asset managers evaluate investments relative to all of the above
risks, among others, and allocate accordingly. To the extent that
they are intelligent and make accurate projections about the future
of individual businesses and markets, they will make money for
investors. While most managers diversify many of these risks, their
portfolios are constructed based upon central underlying assumptions

and investment philosophies which proliferate through their
management organizations and are reflected in their portfolios.

Intelligence risk can be defined as the risk that investment
managers may make poor decisions or use investment philosophies that

turn out to be wrong. The Managers Funds LLC believes that
intelligence risk can be reduced through diversification of
investment managers from differing organizations and with differing
investment philosophies.

There are many ways of summarizing these risks, but keep in mind
that summarization can lead one to overlook some important factors.
Life insurance companies do not attempt to estimate the individual
risks that each of its policy holders intends to take throughout
life. Not only would this be impossible from a data collection
standpoint, but the sheer number of estimates involved would
compound to make the final life expectancy estimate very imprecise.
Instead,

37
<PAGE>

Other Risk Factors
- -----------------------------------------------------------------------------
life insurance companies use historical data to make broad estimates

about the life expectancy of people and then adjust them based on
some other broad measures such as sex, general health, heredity, and

lifestyle factors such as smoking and flying. The circumstance in
which this model falters is when any significant factor, which is
not represented in the historical results, becomes relevant.
Nuclear
war, plague or climactic shifts could detrimentally affect the life
insurers' results, while a cure for cancer and improving health
habits could incrementally affect life expectancies.

38
<PAGE>

Financial Highlights
- --------------------------------------------------------------------------
FINANCIAL INFORMATION FOR THE FUNDS

The following Financial Highlights tables are intended to help you
understand each Fund's financial performance for the past five
years
or since inception, if shorter. Certain information reflects
financial results for a single Fund share. The total returns in each
table represent the rate that an investor would have earned or lost
on an investment in that Fund. It assumes reinvestment of all
dividends and distributions. This information, extracted from each
Fund's Financial Statements, has been audited by
PricewaterhouseCoopers LLP, whose report is included in the Fund's
Annual Report, which is available upon request.

39
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------

<TABLE>
<CAPTION>
MANAGERS INCOME EQUITY FUND
- -----------------------------------------------------------
For the years ended 1998 1997 1996 1995 1994
December 31
<S> <C> <C> <C> <C> <C>
Net Asset Value, $31.06 $30.49 $28.43 $24.90 $27.89
Beginning of Year
Income From Investment
Operations
Net Investment 0.41 0.67 0.76 0.87 0.80
Income
Net Gains or Losses
on Securities (both 3.10 7.27 3.97 7.47 (0.50)
realized and
unrealized)
Total From 3.51 7.94 4.73 8.34 0.30
Investment Operations
Less Distributions
Dividends (from net (0.41) (0.69) (0.76) (0.86) (0.83)
investment income)
Distributions (from (3.49) (6.68) (1.91) (3.95) (2.46)
capital gains)
Returns of Capital ---- ---- ---- ---- ----
Total (3.90) (7.37) (2.67) (4.81) (3.29)
Distributions

Net Asset Value, End of $30.67 $31.06 $30.49 $28.43 $24.90
Year

Total Return 11.77% 27.19% 17.08% 34.36% 0.99%

Ratios/Supplemental
Data

Net Assets, End of Year $69,391 $64,946 $53,063 $37,807 $48,875
(000's omitted)

Ratio of Net Expenses 1.28%(a) 1.32%(a) 1.44%(a) 1.45% 1.33%
to Average Net Assets
Ratio of Net Income to
Average Net Assets 1.26% 1.97% 2.63% 2.85% 3.06%
Portfolio Turnover Rate 84% 96% 33% 36% 46%
<FN>
(a) The Fund has entered into arrangements with one or
more third-party broker-dealers who have paid a portion of
the Fund's custodian expenses. Absent these expense
reductions, the ratio of expenses to average net assets for
the years ended December 31, 1998, 1997 and 1996, would have
been 1.32%, 1.35% and 1.44%, respectively.
</FN>
</TABLE>

40
<PAGE>

Financial Highlights
- --------------------------------------------------------------------
MANAGERS CAPITAL APPRECIATION FUND
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>

For the years ended 1998 1997(b)1996 1995 1994
December 31
<S> <C> <C> <C> <C> <C>
Net Asset Value, $24.24 $26.34 $27.14 $23.25 $25.17
Beginning of Year
Income From Investment
Operations
Net Investment (0.23) (0.13) 0.09 0.09 0.12
Income (Loss)
Net Gains or Losses
on Securities (both 14.18 3.15 3.66 7.62 (0.49)
realized and
unrealized)
Total From 13.95 3.02 3.75 7.71 (0.37)
Investment Operations
Less Distributions
Dividends (from net --- --- (0.10) (0.08) (0.12)
investment income)
Distributions (from (4.41) (5.12) (4.45) (3.74) (1.43)
capital gains)
Returns of Capital ----- ---- ---- ---- ----
Total (4.41) (5.12) (4.55) (3.82) (1.55)
Distributions

Net Asset Value, End of $33.78 $24.24 $26.34 $27.14 $23.25
Year

Total Return 57.41% 12.74% 13.73% 33.39% (1.50)%

Ratios/Supplemental
Data

Net Assets, End of Year $88,191 $73,860 $101,282 $83,353 $86,042
(000's omitted)

Ratio of Net Expenses 1.29% 1.26%(a) 1.33%(a) 1.36% 1.29%
to Average Net Assets
Ratio of Net Income
(Loss) to Average Net (0.80%) (0.45)% 0.34% 0.31% 0.53%
Assets
Portfolio Turnover Rate 252% 235% 172% 134% 122%
<FN>
(a) The Fund has entered into arrangements with one or
more third-party broker-dealers who have paid a portion of
the Fund's custodian expenses. Absent these expense
reductions, the ratio of expenses to average net assets for
the years ended December 31, 1998, 1997 and 1996, would have
been 1.36%, 1.32% and 1.38%, respectively.
(b) Financial information was calculated by using the
average shares outstanding during the year.
</FN>
</TABLE>

41
<PAGE>

Financial Highlights
- ---------------------------------------------------------------------

MANAGERS SPECIAL EQUITY FUND
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended 1998 1997 1996 1995(b) 1994
December 31
<S> <C> <C> <C> <C> <C>
Net Asset Value, $61.18 $50.95 $43.34 $36.79 $38.90
Beginning of Year
Income From Investment
Operations
Net Investment (0.14) 0.08 (0.00) (0.07) (0.01)
Income (Loss)
Net Gains or Losses
on Securities (both 0.26 12.29 10.68 12.28 (0.76)
realized and
unrealized)
Total From 0.12 12.37 10.68 12.21 (0.77)
Investment Operations
Less Distributions
Dividends (from net ---- (0.07) --- --- ---
investment income)
Distributions (from (0.07) (2.07) (3.07) (5.66) (1.34)
capital gains)
Returns of Capital ---- ---- ---- ---- ----
Total (0.07) (2.14) (3.07) (5.66) (1.34)
Distributions

Net Asset Value, End of $61.23 $61.18 $50.95 $43.34 $36.79
Year

Total Return 0.20% 24.45% 24.75% 33.94% (1.99)%

Ratios/Supplemental
Data

Net Assets, End of Year $959,939 $719,707 $271,433 $118,362 $111,584
(000's omitted)

Ratio of Net Expenses 1.34%(a) 1.35%(a) 1.43% 1.44% 1.37%
to Average Net Assets
Ratio of Net Income
(Loss) to Average Net (0.26)% 0.17% (0.10)% (0.16)% (0.06)%
Assets
Portfolio Turnover Rate 64% 49% 56% 65% 66%
<FN>
(a) The Fund has entered into arrangements with one or
more third-party broker-dealers who have paid a portion of
the Fund's custodian expenses. Absent these expense
reductions, the ratio of expenses to average net assets for
the years ended December 31, 1998 and 1997 would have been
1.34% and 1.36%, respectively.
(b) Financial information was calculated by using the
average shares outstanding during the year.
</FN>
</TABLE>

42
<PAGE>

Financial Highlights

MANAGERS INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended 1998 1997 1996 1995(b) 1994
December 31
<S> <C> <C> <C> <C> <C>
Net Asset Value, $45.58 $43.69 $39.97 $36.35 $35.92
Beginning of Year
Income From Investment
Operations
Net Investment 0.54 0.42 0.32 0.31 0.16
Income
Net Gains or Losses
on Securities (both 6.06 4.27 4.76 5.59 0.56
realized and
unrealized)
Total From 6.60 4.69 5.08 5.90 0.72
Investment Operations
Less Distributions
Dividends (from net (0.37) (0.65) (0.33) (0.13) (0.08
investment income)
Distributions (from (2.96) (2.15) (1.03) (2.15) (0.21)
capital gains)
Returns of Capital ---- ---- ---- ---- ----
Total (3.33) (2.80) (1.36) (2.28) (0.29)
Distributions

Net Asset Value, End of $48.85 $45.58 $43.69 $39.97 $36.35
Year

Total Return 14.54% 10.83% 12.77% 16.24% 2.00%

Ratios/Supplemental
Data

Net Assets, End of Year $552,826 $386,624 $269,568 $140,488 $86,924
(000's omitted)

Ratio of Net Expenses 1.41%(a) 1.45%(a) 1.53% 1.58% 1.49%
to Average Net Assets
Ratio of Net Income to
Average Net Assets 1.05% 0.75% 0.97% 0.80% 0.60%
Portfolio Turnover Rate 56% 37% 30% 73% 22%
<FN>
(a) The Fund has entered into arrangements with one or
more third-party broker-dealers who have paid a portion of
the Fund's custodian expenses. Absent these expense
reductions, the ratio of expenses to average net assets for
the years ended December 31, 1998 and 1997 would have been
1.42% and 1.45%, respectively.
(b) Financial information was calculated by using the
average shares outstanding during the year.
</FN>
</TABLE>

43
<PAGE>

Financial Highlights
<TABLE>
<CAPTION>

MANAGERS EMERGING MARKETS EQUITY FUND
- --------------------------------------------------------------
Since
Inception
(February 9,
1998) to
December 31,
1998
<S> <C>
Net Asset Value,
Beginning of Period $10.00
Income From Investment
Operations
Net Investment (0.01)
Income
Net Gains or Losses (2.25)
on Securities (both
realized and
unrealized)
Total From
Investment Operations (2.26)
Less Distributions
Dividends (from net ---
investment income)
Distributions (from ---
capital gains)
Returns of Capital ---
Total
Distributions ---

Net Asset Value, End of $7.74
Period

Total Return(b) (22.60)%(c)

Ratios/Supplemental
Data

Net Assets, End of $4,677
Period (000's omitted)

Ratio of Net Expenses 2.54%(d)
to Average Net Assets
Ratio of Net Income to (0.09)%(d)
Average Net Assets
Portfolio Turnover Rate 89%(c)

Expense Waiver
Ratio of Total Expenses 3.57(d)
to Average Net Assets
Ratio of Net 1.11%(d)
Invvestment Income to
Average Net Assets
</TABLE>
[FN]
(a) Ratio information assuming no waiver of investment advisory and
management fees and no reduction of custodian expenses due to
credits received for uninvested overnight cash balances.
(b) The total return would have been lower had certain expenses not
been reduced during the period shown.
(c) Not annualized.
(d) Annualized.
</FN>

44
<PAGE>

Your Account
- ---------------------------------------------------------------------

As an investor, you pay no sales charges to invest in our
Funds. Furthermore, you pay no charges to transfer within the Fund
family or even to redeem out of our Funds. The price at which you
purchase and redeem your shares is equal to the net asset value per
share (NAV) next determined after your purchase or redemption order
is received on each day the New York Stock Exchange (NYSE) is open
for trading. The NAV is equal to the Fund's net worth (assets minus
liabilities) divided by the number of shares outstanding. Each
Fund's NAV is calculated at the close of regular business of the
NYSE, usually 4:00 p.m. New York Time.

Securities traded in foreign markets may trade when the NYSE is
closed. Those securities are generally valued at the closing of the
exchange where they are primarily traded. Therefore, a Fund's NAV
may change on days when investors may not be able to purchase or
redeem Fund shares.

Each Fund's investments are valued based on market values. If a
particular event would materially affect a Fund's NAV or if market
quotations are not readily available, then the Pricing Committee of
the Board of Trustees may value the Fund's investments based on an
evaluation of fair value.

MINIMUM INVESTMENTS IN OUR FUNDS

All investments in our Funds must be in U.S. Dollars. 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.

INITIAL INVESTMENT ADDITIONAL INVESTMENT
<S> <C> <C>
Regular accounts* $2,000 $100
Education IRA 500 N/A
Traditional IRA 500 100
SEP IRA 500 100
SIMPLE IRA 500 100
ROTH IRA 500 100
<FN>
*For Regular accounts, arrangements can be made to open accounts with less
than the required initial investment. Call (800) 835-3879 for more details.
</FN>
</TABLE>

[Text Box]

A Traditional IRA is an individual retirement account. Contributions may be
deductible at certain income levels and earnings are tax-
deferred while your withdrawals and distributions are taxable in the year
that they are made.

An Education IRA is an IRA with a non-deductible contributions and tax-free
growth of assets and distributions. The account must be used to pay qualified
educational expenses.

A SEP IRA is an IRA that allows employers or the self-employed to make
contributions to an employee's account.

A Simple IRA is an employer plan and a series of IRAs that allows contributions
by and for amployees.

A ROTH IRA is an IRA with non-deductible contributions and tax-free growth of
assets and distributions. The account must be held for five years and
certain other consitions must be met in order to qualify.

YOU SHOULD CONSULT YOUR TAX PROFESSIONAL FOR MORE INFORMATION ON IRA
ACCOUNTS.

45
<PAGE>

- ----------------------------------------------------------------------
HOW TO PURCHASE SHARES

<TABLE>
<CAPTION>
Initial Purchase Additional Purchases
<S> <C> <C>
Through your Investment Advisor Contact your investment advisor
or other investment professional
Send any additional funds to your
investment professional at the address
appearing on your account statement

Advisors, Bank Trust and 401(k)
agents only Call (800) 358-7668 for further
instructions
Call (800) 358-7668 for further instructions

Direct Shareholders:
[GRAPHIC]By Mail Complete the account application.
Mail the application and a check
payable to The Managers Funds to:
The Managers Funds
c/o Boston Financial
Data Services, Inc.
P.O. Box 8517
Boston, MA 02266-8517

Write a letter of instruction
(including the name of the Fund and your
account number) and a check
payable to The Managers Funds to:
The Managers Funds
c/o Boston Financial
Data Services, Inc.
P.O. Box 8517
Boston, MA 02266-8517
Include your account # on your check.

[GRAPHIC} By Telephone Call (800) 358-7668 Call the Transfer Agent at (800) 252-0682.
The minimum additional investment
is $100
</TABLE>

**For Bank Wires: Please call and notify the Fund at (800) 358-7668. Then
instruct your bank to wire the money to State Street Bank and Trust Company,
Boston, MA 02101; ABA #011000028; BFN - The Managers Funds A/C 9005-001-5, FBO-
Shareholder name, account number and Fund name. Please be aware
that your bank may charge you a fee for this service.

46
<PAGE>
- ---------------------------------------------------------------------
HOW TO SELL SHARES

You may sell your shares at any time. Your shares will be sold at the NAV
calculated after the Fund's Transfer Agent accepts your order. Orders
received after 4:00 p.m. New York Time will receive the NAV per share
determined at the close of trading on the next NYSE trading day.
<TABLE>
<CAPTION>

Instructions
<S> <C>
Through your Investment Advisor Contact your investment advisor

Advisor, Bank Trust and 401(k) agents only Call (800) 358-7668 for further instructions

Direct Shareholders:
[GRAPHIC]By Mail Write a letter of instruction containing:
* the name of the Fund
* dollar amount or number of shares to be sold
* your name
* your account number
* signatures of all owners on account

Mail letter to:
The Managers Funds
c/o Boston Financial Data
Services, Inc.
P.O. Box 8517
Boston, MA 02266-8517

[GRAPHIC] By Telephone If you elected telephone redemption privileges
on your account application,
call us at (800) 252-0682

</TABLE>
It is important to keep in mind that if you invest through a third party
such as a bank, broker-dealer or financial supermarket rather than directly
with us, the policies and fees may be different than those described in this
material.
[TEXT BOX]
Redemptions $25,000 and over require a signature guarantee. A signature
guarantee
helps to protect against fraud. You can obtain one from most banks and
securities dealers. A notary public cannot provide a signature guarantee.
In joint accounts, both signatures must be guaranteed.

Telephone redemptions are available only for redemptions which are
below $25,000.
47
<PAGE>

Investor Services
- ------------------------------------------------------------------------
Automatic Reinvestment Plan allows your dividends and capital gain
distributions to be reinvested in additional shares of your Fund or another
Fund. You can elect to receive cash.

Automatic Investments allows you to make automatic deductions from a
designated bank account.

[GRAPHIC]
Systematic Withdrawals allows you to make automatic monthly withdrawals of
$100 or more per Fund. Withdrawals are normally completed on the 25th
day of each month. If the 25th day is a weekend or a
holiday, the withdrawal will be completed on the next business day.

Dollar Cost Averaging allows you to make automatic monthly exchanges from one
Fund to another. Exchanges are completed on the 15th day of each
month. Be sure to read the current Prospectus for any Fund that you are
exchanging into. There is no fee associated with this service. If the 15th
business day is a Sunday or a holiday, the exchange will be completed on the
next business day.

Individual Retirement Accounts are available to you at no additional cost.
Call us at (800) 835-3879 for more information and an IRA kit.

Exchange Privilege allows you to exchange your shares of one Fund for shares
of another of our Funds. There is no cost associated with this service. Be
sure to read the Prospectus of any Fund that you wish to exchange into. You
can request your exchange in writing, by telephone (if elected on the
application) or through your investment advisor, bank or investment
professional.
48
<PAGE>
Investor Services
- ---------------------------------------------------------------------

GENERAL FUND POLICIES

We reserve the right to:

* redeem an account if the value of the account falls below
$500 due to redemptions

* Suspend redemptions or postpone payments when the NYSE is closed for
any reason other than its usual weekend or holiday closings or when trading
is restricted by the Securities and Exchange Commission

* Change our minimum investment amounts

* Delay sending out redemption proceeds for up to seven days
(this usually applies to very large redemptions without notice, excessive
trading or during unusual market conditions)

* Make a redemption-in-kind (a payment in portfolio securities instead of in
cash) if we determine that a redemption is too large and/or may cause harm to
the Fund and its shareholders

* Refuse any purchase or exchange request if we determine that such request
could adversely affect the Fund's NAV, including if such person or group has
engaged in excessive trading (to be determined in our discretion)

* After prior warning and notification, close an account due to excessive
trading

49
<PAGE>

Account Policies, Dividends and Taxes
- -------------------------------------------------------------------------------
ACCOUNT STATEMENTS

You will receive quarterly statements detailing your account activity. All
investors will also receive a yearly statement, including a Form 1099-DIV,
detailing the tax
characteristics of any dividends and distributions that you have received in
your account. You will also receive confirmations after each trade executed
in your account.

DIVIDENDS AND DISTRIBUTIONS

Income dividends and net capital gain distributions, if any are normally
paid annually in December for each of the Equity Funds, with the exception of
the Income Equity Fund. The Income Equity Fund distributes any income
dividends monthly and normally makes capital gain distributions yearly in
August and December.

We will automatically reinvest your distributions of dividends and capital
gains unless you tell us otherwise. You may change your election by writing
to us at least 10 days prior to the scheduled payment date.

TAX INFORMATION

[GRAPHIC]
Please be aware that the following tax information is general and refers to the
provisions of the Internal Revenue Code of 1986, as amended, which are in
effect as of the date of this Prospectus. You should consult a tax adviser
about the status of your distributions from your Funds.

All dividends and short-term capital gains distributions are generally
taxable to you as ordinary income, whether you receive the distribution in
cash or reinvest it for additional shares. An exchange of one Fund's shares
for shares of another Fund will be treated as a sale of the Fund's shares and
any gain on the transaction may be subject to federal income tax.

Keep in mind that distributions may be taxable to you at different rates
depending on the length of time the Fund held the applicable investment not
the length of time that you held your Fund shares. When you do sell your
Fund shares, a capital gain may be realized, except for certain tax-
deferred accounts, such as IRA accounts.

50
<PAGE>
Account Policies, Dividends and Taxes
- ----------------------------------------------------------------------------

Federal law requires a Fund to withhold taxes on distributions paid to
shareholders who:

* fail to provide a social security number or taxpayer identification number

* fail to certify that their social security number or taxpayer
identification number is correct

* fail to certify that they are exempt from withholding

51
<PAGE>

[COMMON INSIDE BACK COVER TO ALL PROSPECTUSES]

[THE MANAGERS FUNDS LOGO]
Where Leading Money Managers Converge

Fund Distributor
The Managers Funds LLC
40 Richards Avenue
Norwalk, Connecticut 06854-2325
(203) 857-5321 or (800) 835-3879

Custodian
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171

Legal Counsel
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022

Transfer Agent
Boston Financial Data services, Inc.
attn: The Managers Funds
P.O. Box 8517
Boston, Massachusetts 02266-8517
(800) 252-0682

TRUSTEES
Jack W. Aber
William E. Chapman, II
Sean M. Healey
Edward J. Kaier
Madeline H. McWhinney
Steven J. Paggioli
Eric Rakowski
Thomas R. Schneeweis
Robert P. Watson

THE MANAGERS FUNDS

EQUITY FUNDS:
- -----------------
INCOME EQUITY FUND
Scudder Kemper Investments, Inc.
Chartwell Investment Partners, L.P.

CAPITAL APPRECIATION FUND
Essex Investment Management Company, LLC
Roxbury Capital Management LLC

SPECIAL EQUITY FUND
Liberty Investment Management
Pilgrim, Baxter & Associates, Ltd.
Westport Asset Management, Inc.
Kern Capital Management LLC

INTERNATIONAL EQUITY FUND
Scudder Kemper Investments, Inc.
Lazard Asset Management

EMERGING MARKETS EQUITY FUND
King Street Advisors, Limited

INCOME FUNDS:
- ----------------
MONEY MARKET FUND
J.P. Morgan Investment Management Inc.

SHORT AND INTERMEDIATE BOND FUND
Standish, Ayer & Wood, Inc.

INTERMEDIATE MORTGAGE FUND
Standish, Ayer & Wood, Inc.

BOND FUND
Loomis, Sayles & Co., L.P.

GLOBAL BOND FUND
Rogge Global Partners

<PAGE>

[BACK COVER OF PROSPECTUS - COMMON TO ALL]
For More Information
- ------------------------------------------------------------------
Additional Information for these Funds, including the
Statement of Additional Information and the Annual and Semi-
Annual Reports, is available to you free upon request. In
the Annual Report for each of the Funds, you will find a
discussion of the market conditions and investment
strategies that significantly affected the Fund's
performance during the last fiscal year.

[GRAPHIC]By telephone Call 1-800-835-3879

[GRAPHIC]By Mail Write to: The Managers Funds
40 Richards Avenue
Norwalk, CT 06854

[GRAPHIC]On the Internet Electronic copies are available on ur
website at http://www.managersfunds.com

Text-only copies of these documents are also available on the SEC's website
at http://www.sec.gov, by sending a request and a duplication fee to the SEC's
Public Reference Section, Washington, D.C. 20549-6009, or by visiting the SEC's
Public Reference Room in Washington, DC (1-800-SEC-0330)

Investment Company Act Registration Number 811-3752.