MANAGERS FUNDS, 497, 1999-04-19

MANAGERS FUNDS
497, 1999-04-19

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

The Managers Funds
40 Richards Avenue
Norwalk, CT 06854

April 19, 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(c) under the Securities and Exchange Act
of 1933 is a supplement to the Equity Funds Prospectus and the Statement of
Additional Information for all of the funds of The Managers Funds with the
exception of the Money Market Fund. This reflects an address change for one
of our sub-advisers, as well as two minor omissions of a Fund name in our
list of Funds in our recent 485BPOS filing on April 1, 1999. In accordance
with paragraph (g) of Rule 497, the file number of the registration statement
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
- --------------------------------
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, Pilgrim 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 paying
dividends. 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. Assets 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 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.

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 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. 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
Business day of each month. If the 25th business day is a Sunday 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 business 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 SEC

* 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.
<PAGE>

THE MANAGERS FUNDS

MANAGERS INCOME EQUITY FUND
MANAGERS CAPITAL APPRECIATION FUND
MANAGERS SPECIAL EQUITY FUND
MANAGERS INTERNATIONAL EQUITY FUND
MANAGERS EMERGING MARKETS EQUITY FUND
MANAGERS SHORT AND INTERMEDIATE BOND FUND
MANAGERS INTERMEDIATE MORTGAGE FUND
MANAGERS BOND FUND
MANAGERS GLOBAL BOND FUND

STATEMENT OF ADDITIONAL INFORMATION

APRIL 1, 1999

You can obtain a free copy of the Prospectus for any of these
Funds by calling The Managers Funds at (800) 835-3879. The
Prospectus provides the basic information about investing in
the Funds.

This Statement of Additional Information is not a Prospectus.
It contains additional information regarding the activities
and operations of the Funds. It should be read in conjunction
with each Fund's Prospectus.

The Financial Statements of the Funds, including the report of
independent accountant, for the fiscal year ended December 31,
1998 are included in each Fund's Annual Report and are
available without charge by calling the Fund at (800) 835-
3879. They are incorporated by reference to this document.
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1 GENERAL INFORMATION

1 INVESTMENT OBJECTIVES AND POLICIES
2 Investment Techniques and Associated Risks
11 Quality and Diversification Requirements for the Funds
12 Fundamental Investment Restrictions
15 Non-Fundamental Investment Restrictions
15 Temporary Defensive Position
15 Portfolio Turnover

16 BOARD OF TRUSTEES AND OFFICERS OF THE FUNDS
17 Trustees' Compensation

18 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
18 Control Persons
19 Management Ownership

19 MANAGEMENT OF THE FUNDS
19 Investment Advisor
20 Sub-Advisors
24 Voluntary Fee Waivers and Expense Limitations
25 Compensation of Manager and Sub-Advisers
26 Fund Management Agreement
27 Administrative Services; Distribution Arrangements
28 Custodian
28 Transfer Agent
28 Independent Public Accountants

28 BROKERAGE ALLOCATION AND OTHER PRACTICES

30 PURCHASE, REDEMPTION AND PRICING OF SHARES
30 Purchasing Shares
31 Redeeming Shares
32 Exchange of Shares
32 Net Asset Value
33 Dividends and Distributions

33 TAXATION OF THE FUNDS

36 PERFORMANCE DATA
36 Yield
37 Total Return
37 Performance Comparisons
38 Massachusetts Trust
39 Description of Shares
41 Additional Information

41 FINANCIAL STATEMENTS

Appendix A DESCRIPTION OF SECURITY RATINGS
</TABLE>

<PAGE>
GENERAL INFORMATION

This Statement of Additional Information relates only to
Managers Income Equity Fund, Managers Capital Appreciation
Fund, Managers Special Equity Fund, Managers International
Equity Fund, Managers Emerging Markets Equity Fund, Managers
Short and Intermediate Bond Fund, Managers Intermediate
Mortgage Fund, Managers Bond Fund and
Managers Global Bond Fund. Each Fund is a series of shares of
beneficial interest of The Managers Funds, a no-load mutual
fund family, formed as a Massachusetts business trust (the
"Trust"). A separate Statement of Additional Information
covers Managers Money Market Fund, a separate series of the
Trust.

This Statement of Additional Information describes the
financial history, management and operation of each of the
Funds, as well as each Fund's investment objectives and
policies. It should be read in conjunction with each Fund's
current Prospectus. The Trust's executive office is located
at 40 Richards Avenue, Norwalk, Connecticut 06854.

Unlike other mutual funds which directly acquire and
manage their own portfolios, the Trust employs a multi-manager
investment approach to these Funds which achieves added
diversification within each of their portfolios. See
"Management of the Funds."

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, an
independent asset manager, or a team of independent asset
managers ("Sub-Adviser" or "Sub-Advisers"), to manage each
Fund's investment portfolio. The Managers Funds, L.P. also
monitors the performance, security holdings and investment
strategies of these external Sub-Advisers and researches any
potential new Sub-Advisers for the Fund family. See
"Management of the Funds."

Investments in the Fund are not:
* Deposits or obligations of any bank
* Guaranteed or endorsed by any bank
* Federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other federal
agency

INVESTMENT OBJECTIVES AND POLICIES

The following is additional information regarding the
investment objectives and policies used by each Fund in an
attempt to achieve its objective as stated in its Prospectus.
Each Fund in the Trust is an open-end management investment
company. Each Fund, with the exception of Managers Global
Bond Fund, is diversified.

Managers Income Equity Fund (the "Income Equity Fund") is
designed for investors who seek a high level of current income
from investing in a diversified portfolio of equity
securities. The Income Equity Fund seeks to achieve this
objective by investing at least 65% of its total assets in the
equity securities of U.S. companies.

Managers Capital Appreciation Fund (the "Capital
Appreciation Fund") is designed for investors who seek long-
term capital appreciation by investing in a diversified
portfolio of equity securities. Income is the Fund's
secondary objective. The Capital Appreciation Fund seeks to
achieve this objective by investing its assets in equity
securities in U.S. companies with mid- to large-
capitalizations.

Managers Special Equity Fund (the "Special Equity Fund")
is designed for investors who seek capital
appreciation by investing in a diversified portfolio of equity
securities of small- and medium-capitalization companies.
The Special Equity Fund seeks to achieve this
objective by investing at least 65% of its total assets in the
equity securities of U.S. companies whose shares have a market
capitalization of under $1.5 billion.

Managers International Equity Fund (the "International
Equity Fund") is designed for investors who seek long-term
capital appreciation by investing in a diversified portfolio
of equity securities of companies domiciled outside the U.S.
The International Equity Fund seeks to achieve this objective
by investing at least 65% of its total assets in the equity
securities of non-U.S. companies whose shares have a market
capitalization of over $1 billion.

Managers Emerging Markets Equity Fund (the "Emerging
Markets Equity Fund") is designed for investors who seek long-
term capital appreciation by investing in a diversified
portfolio of equity securities of companies in emerging or
developing markets. The Emerging Markets Equity Fund seeks to
achieve this objective by investing at least 65% of its total
assets in the equity securities of companies considered to be
emerging or developing by the World Bank or the United
Nations.

Managers Short and Intermediate Bond Fund (the "Short and
Intermediate Bond Fund") is designed for investors who seek
high current income by investing in a diversified portfolio of
fixed-income securities with an average maturity of one to
five years. The Short and Intermediate Bond Fund seeks to
achieve this objective by investing at least 65% of its total
assets in bonds.

Managers Intermediate Mortgage Fund (the "Intermediate
Mortgage Fund") is designed for investors who seek high
current income by investing primarily in a diversified
portfolio of mortgage-related securities. The Intermediate
Mortgage Fund seeks to achieve this objective by investing at
least 65% of its total assets in mortgage-related securities
issued by the government, government-related organizations and
private organizations.

Managers Bond Fund (the "Bond Fund") is designed for
investors who seek income by investing in a diversified
portfolio of primarily fixed-income securities. The Bond Fund
seeks to achieve this objective by investing at least 65% of
its total assets in bonds having a maturity of less than 40
years from the date of purchase by the Fund.

Managers Global Bond Fund (the "Global Bond Fund") is
designed for investors who seek high total return, through
both income and capital appreciation, by investing in
primarily domestic and foreign fixed-income securities. The
Global Bond Fund is a nondiversified fund. It seeks to
achieve this objective by investing at least 65% of its total
assets in a portfolio of domestic and foreign bonds issued by
governments, corporations and supranatural organizations with
an average maturity of ten years or less. All securities will
be denominated in U.S. dollars.

Investment Techniques and Associated Risks

The following are descriptions of the types of securities
that may be purchased by the Funds. Also see "Quality and
Diversification Requirements of the Funds."

(1) Asset-Backed Securities. Each Fund may invest in
securities referred to as asset-backed securities. These
securities directly or indirectly represent a participation
interest in, or are secured by and are payable from, a stream
of payments generated from particular assets, such as
automobile and credit card receivables and home equity loans
or other asset-backed securities collateralized by those
assets. Asset-backed securities provide periodic payments
that generally consist of both principal and interest payments
that must be guaranteed by a letter of credit from an
unaffiliated bank for a specified amount and time.

Asset-Backed securities are subject to additional risks.
These risks are limited to the security interest in the
collateral. For example, credit card receivables are generally
unsecured and the debtors are entitled to a number of
protections from the state and through federal consumer laws,
many of which give the debtor the right to offset certain
amounts of the credit card debts and thereby reducing the
amounts due. In general, these types of loans have a shorter
life than mortgage loans and are less likely to have
substantial prepayments.

Because asset-backed securities are relatively new, the
market experience in these securities is limited, and the
market's ability to sustain liquidity has not been tested.

(2) Cash Equivalents. Each of the Funds may invest in cash
equivalents. Cash equivalents include certificates of
deposit, bankers acceptances, commercial paper, short-term
corporate debt securities and repurchase agreements.

Bankers Acceptances. Each of the Funds may invest in
bankers acceptances. Bankers acceptances are short-term
credit instruments used to finance the import, export,
transfer or storage of goods. These instruments become
"accepted" when a bank guarantees their payment upon maturity.

Eurodollar bankers acceptances are bankers acceptances
denominated in U.S. Dollars and are "accepted" by foreign
branches of major U.S. commercial banks.

Certificates of Deposit. Each of the Funds may invest in
certificates of deposit. Certificates of deposit are issues
against money deposited into a bank (including eligible
foreign branches of U.S. banks) for a definite period of time.
They earn a specified rate of return and are normally
negotiable.

Commercial Paper. Each of the Funds may invest in
commercial paper. Commercial Paper refers to promissory notes
that represent an unsecured debt of a corporation or finance
company. They have a maturity of less than 9 months.

Eurodollar commercial paper refers to promissory notes
payable in U.S. Dollars by European issuers.

Repurchase Agreements. Each of the Funds may enter into
repurchase agreements with brokers, dealers or banks that meet
with the credit guidelines which have been approved by the
Fund's Board of Trustees. In a repurchase agreement, the Fund
buys a security from a bank or a broker-dealer that has agreed
to repurchase the same security at a mutually agreed upon date
and price. The resale price normally is the purchase price
plus a mutually agreed upon interest rate. This interest rate
is effective for the period of time the Fund is invested in
the agreement and is not related to the coupon rate on the
underlying security. The period of these repurchase
agreements will be short, as short as overnight, and at no
time will any Fund enter into repurchase agreements for more
than seven days.

Repurchase agreements could have certain risks that may
adversely affect a Fund. If a seller defaults, a Fund
may incur a loss if the value of the collateral securing
the repurchase agreement declines and may incur
disposition costs in connection with liquidating the
collateral. In addition, if bankruptcy proceedings are
commenced with respect to a seller of the security,
realization of disposition of the collateral by a Fund
may be delayed or limited.

Reverse Repurchase Agreements. Each of the Funds may
enter into reverse repurchase agreements. In a reverse
repurchase agreement, a Fund sells a security and agrees to
repurchase the same security at a mutually agreed upon date
and price. The price reflects the interest rates in effect
for the term of the agreement. For the purposes of the
Investment Company Act of 1940, as amended, (the "1940 Act"),
a reverse repurchase agreement is also considered as the
borrowing of money by a Fund and, therefore, a form of
leverage which may cause any gains or losses for a Fund to
become magnified.

The Funds will invest the proceeds of borrowings under
reverse repurchase agreements. In addition, a Fund will
enter into reverse repurchase agreements only when the
interest income to be earned from the investment of the
proceeds is more than the interest expense of the
transaction. A Fund will not invest the proceeds of a
reverse repurchase agreement for a period that is longer
than the reverse repurchase agreement itself. Each Fund
will establish and maintain a separate account with the
Custodian that contains a segregated portfolio of
securities in an amount which is at least equal to the
amount of its purchase obligations under the reverse
repurchase agreement.

(3) Eurodollar Bonds. Eurodollar bonds are bonds issued
outside of the United States which are denominated in U.S.
Dollars.

(4) European Currency Unit Bonds. European Currency Unit
Bonds are bonds denominated in European Currency Units
("ECU"). An ECU is a basket of European currencies which
contains the currencies of ten members of the European
Community. It is used by members of the European Community to
determine their official claims and debts. The ECU may
fluctuate in relation to the daily exchange rates of its
member's currencies. The ECU is comprised of the following
ten currencies: German Deutschmark, British Pound, French
Franc, Italian Lira, Dutch Guilder, Belgian Franc, Luxembourg
Franc, Finish Kroner, Irish Pound and Greek Drachma.

(5) Emerging Market Securities. The nature of the Emerging
Markets Equity Fund is to invest most of its total assets in
the securities of emerging market countries. The
International Equity Fund may also invest some of its assets
in the securities of emerging market countries. Investments
in securities in emerging market countries may be considered
to be speculative and may have additional risks from those
associated with investing in the securities of U.S. issuers.
There may be limited information available to investors which
is publicly-available, and generally emerging market issuers
are not subject to uniform accounting, auditing and financial
standards and requirements like those required by U.S.
issuers.

Investors should be aware that the value of a Fund's
investments in emerging markets securities may be adversely
affected by changes in the political, economic or social
conditions, expropriation, nationalization, limitation on the
removal of funds or assets, controls, tax regulations and
other foreign restrictions in emerging market countries.
These risks may be more severe than those experienced in
foreign countries. Emerging market securities trade with less
frequency and volume than domestic securities and therefore
may have greater price volatility and lack liquidity.
Furthermore, there is often no legal structure governing
private or foreign investment or private property in some
emerging market countries. This may adversely affect the
Fund's operations and the ability to obtain a judgement
against an issuer in an emerging market country.

(6) Foreign Securities. The International Equity Fund and
the Emerging Markets Equity Fund may invest in certain foreign
securities. The Global Bond Fund may invest in foreign bonds.
Investments in securities of
foreign issuers and in obligations of domestic banks involve
different and additional risks from those associated with
investing in securities of U.S. issuers. There may be limited
information available to investors which is publicly-
available, and generally foreign issuers are not subject to
uniform accounting, auditing and financial standards and
requirements like those applicable to U.S. issuers. Any
foreign commercial paper must not be subject to foreign
withholding tax at the time of purchase.

Investors should be aware that the value of a Fund's
investments in foreign securities may be adversely affected by
changes in the political or social conditions, confiscatory
taxation, diplomatic relations, expropriation,
nationalization, limitation on the removal of funds or assets,
or the establishment of exchange controls or other foreign
restrictions and tax regulations in foreign countries. In
addition, due to the differences in the economy of these
foreign countries compared to the U.S. economy, whether
favorably or unfavorably, portfolio securities may appreciate
or depreciate and could therefore adversely affect a Fund's
operations. It may also be difficult to obtain a judgement
against a foreign creditor. Foreign securities trade with
less frequency and volume than domestic securities and
therefore may have greater price volatility. Furthermore,
changes in foreign exchange rates will have an affect on those
securities that are denominated in currencies other than the
U.S. Dollar.

Forward Foreign Currency Exchange Contracts. The
International Equity Fund, the Emerging Markets Equity Fund
and the Global Bond Fund may purchase or sell equity
securities of foreign countries. Therefore, substantially all
of the Fund's income may be derived from foreign currency. A
forward foreign currency exchange contract is an obligation to
purchase or sell a specific currency at a mutually agreed upon
date and price. The contract is usually between a bank and
its customers. The contract may be denominated in U.S.
Dollars or may be referred to as a "cross-currency" contract.
A cross-currency contract is a contract which is denominated
in another currency other than in U.S. Dollars.

In such a contract, the Fund's custodian will segregate
cash or marketable securities in an amount not less than
the value of the Fund's total assets committed to these
contracts. Generally, the Funds will not enter into
contracts that are greater than ninety days.

Forward foreign currency contracts have additional risks.
It may be difficult to determine the market movements of
the currency. The value of the Fund's assets may be
adversely affected by changes in foreign currency
exchange rates and regulations and controls on currency
exchange. Therefore, the Funds may incur costs in
converting foreign currency.

If a Fund engages in an offsetting transaction, the Fund
will experience a gain or a loss determined by the
movement in the contract prices. An "offsetting
transaction" is one where the Fund enters into a
transaction with the bank upon maturity of the original
contract. The Fund must sell or purchase on the same
maturity date as the original contract the same amount of
foreign currency as the original contract.

Foreign Currency Considerations. The Emerging Markets
Equity Fund will invest substantially all of its total assets
in securities denominated in foreign currencies. The Fund
will compute and distribute the income earned by the Fund at
the foreign exchange rate in effect on that date. If the
value of the foreign currency declines in relation to the U.S.
Dollar between the time that the Fund earns the income and the
time that the income is converted into U.S. Dollars, the Fund
may be required to sell its securities in order to make its
distributions in U.S. dollars. As a result, the liquidity of
the Fund's securities may have an adverse affect on the Fund's
performance.

The Sub-Advisers of the Fund will not routinely hedge the
Fund's foreign currency exposure unless the Fund has to
be protected from currency risk.

(7) Futures Contracts. Each of the Funds may buy and sell
futures contracts to protect the value of the Fund's portfolio
against changes in the prices of the securities that it
invests. When a Fund buys or sells a futures contact, the
Fund must segregate cash and/or liquid securities for the
value of the contract.

There are additional risks associated with futures
contracts. It may be impossible to determine the future price
of the securities, and securities may not be marketable enough
to close out the contract when the Fund desires to do so.

Equity Index Futures Contracts. The Income Equity Fund,
the Capital Appreciation Fund and the Special Equity Fund may
enter into equity index futures contracts. An equity index
future contract is an agreement for the Fund to buy or sell an
index relating to equity securities at a mutually agreed upon
date and price. Equity index futures contracts are often used
to hedge against anticipated changes in the level of stock
prices. When the Fund enters into this type of contract, the
Fund makes a deposit called an "initial margin." This initial
margin must be equal to a specified percentage of the value of
the contract. The rest of the payment is made when the
contract expires.

Interest Rate Futures Contracts. The Short and
Intermediate Bond Fund, the Intermediate Mortgage Fund, the
Bond Fund and the Global Bond Fund may enter into interest
rate futures contracts. An interest rate futures contract is
an agreement for a Fund to buy or sell fixed-income securities
at a mutually agreed upon date and price. Interest rate
futures contracts are often used to hedge against anticipated
changes in the level of stock prices. When the Fund enters
into this type of contract, the Fund makes a deposit called an
"initial margin." This initial margin must be equal to a
specified percentage of the value of the contract. The rest
of the payment is made when the contract expires.

(8) Illiquid Securities, Private Placements and Certain
Unregistered Securities. Each of the Funds may invest in
privately placed, restricted, Rule 144A or other unregistered
securities. No Fund may acquire illiquid holdings if, as a
result, more than 15% of the Fund's total assets would be
in illiquid investments. Subject to this Fundamental policy
limitation, the Fund may acquire investments that are illiquid
or have limited liquidity, such as private placements or
investments that are not registered under the Securities Act
of 1933, as amended (the "1933 Act") and cannot be offered for
public sale in the United States without first being
registered under the 1933 Act. An investment is considered
"illiquid" if it cannot be disposed of within seven (7) days
in the normal course of business at approximately the same
amount in which it was valued in the Fund's portfolio. The
price the Fund's portfolio may pay for illiquid securities or
receives upon resale may be lower than the price paid or
received for similar securities with a more liquid market.
Accordingly, the valuations of these securities will reflect
any limitations on their liquidity.

The Funds' may purchase Rule 144A securities eligible for
sale without registration under the 1933 Act. These
securities may be determined to be illiquid in accordance with
the guidelines established by The Managers Funds LLC and
approved by the Trustees. The Trustees will monitor these
guidelines on a periodic basis.

Investors should be aware that a Fund may be subject to a
risk if the Fund should decide to sell these securities when a
buyer is not readily available and at a price which the Fund
believes represents the security's value. In the case where
an illiquid security must be registered under the 1933 Act
before it may be sold, a Fund may be obligated to pay all or
part of the registration expenses. Therefore, a considerable
time may elapse between the time of the decision to sell and
the time the Fund may be permitted to sell a security under an
effective registration statement. If, during such a period,
adverse market conditions develop, a Fund may obtain a less
favorable price than was available when it had first decided
to sell the security.

(8) Inverse Floating Obligations. The Short and Intermediate
Bond Fund, the Intermediate Mortgage Fund, the Bond Fund and
the Global Bond Fund may invest up to 25% of each Fund's total
assets in inverse floating obligations. Inverse floating
obligations, also referred to as residual interest bonds, are
variable rate securities which have interest rates that
decline when market rates increase and vice versa. They are
typically purchased directly from the issuing agency.

There are additional risks associated with these
obligations. They may be more volatile than fixed-rate
securities, especially in periods where interest rates are
fluctuating. In order to limit this risk, the Sub-Adviser may
purchase inverse floaters that have a shorter maturity or
contain limitations on their interest rate.

(9) Mortgage-Related Securities. The Short and Intermediate
Bond Fund, the Intermediate Mortgage Fund, the Bond Fund and
the Global Bond Fund may invest in mortgage-related
securities. Mortgage-related securities, also known as "pass-
throughs," are certificates that are issued by governmental,
government-related or private organizations. They are backed
by pools of mortgage loans and provide investors with monthly
payments.

There are additional risks associated with mortgage-
related securities such as prepayment risk. See "Other Risk
Factors" in the Fund's Prospectus for more information on
prepayment risk. Pools that are created by non-government
issuers generally have a higher rate of interest than those
pools that are issued by the government. This is because
there is no guarantee of payment associated with non-
government issuers. Although there is generally a liquid
market for these investments, those certificates issued by
private organizations may not be readily marketable. The
value of mortgage-related securities depends on the level of
interest rates, the coupon rates of the certificates and the
payment history of the underlying mortgages of the pools. The
following are types of mortgage-related securities.

Collateralized Mortgage Obligations ("CMOs"). CMOs are
obligations that are fully collateralized by a portfolio of
mortgages or mortgage-related securities. There are different
classes of CMOs, and certain classes have priority over others
with respect to prepayment on the mortgages. Therefore, a
Fund may be subject to greater or lesser prepayment risk
depending on the type of CMOs in which the Fund invests.

Some mortgage-related securities have "Interest Only" or
"IOs" where the interest goes to one class of holders and
"Principal Only" or "POs" where the principal goes to a
second class of holders. In general, the Funds treat IOs
and POs as subject to the restrictions that are placed on
illiquid investments, except if the IOs or POs are issued
by the U.S. government.

GNMA Mortgage Pass-Through Certificates ("Ginnie Maes").
Ginnie Maes are undivided interests in a pool of mortgages
insured by the Federal Housing Administration, the Farmers
Home Administration or the Veterans Administration. They
entitle the holder to receive all payments of principal and
interest, net of fees due to GNMA and the issuer. Payments
are made to holders of Ginnie Maes whether payments are
actually received on the underlying mortgages. This is
because Ginnie Maes are guaranteed by the full faith and
credit of the United States. GNMA has the unlimited authority
to borrow funds from the U.S. Treasury to make payments to
these holders. Ginnie Maes are highly liquid and the market
for these certificates is very large.

FNMA Guaranteed Mortgage Pass-Through Certificates
("Fannie Maes"). Fannie Maes are undivided interests in a
pool of conventional mortgages. They are secured by the first
mortgages or deeds of trust on residential properties. There
is no obligation to distribute monthly payments of principal
and interest on the mortgages in the pool. They are
guaranteed only by FNMA and do not receive the full faith and
credit of the United States.

(10) Municipal Bonds. The Funds may invest in three types of
municipal bonds: General Obligation Bonds, Revenue Bonds and
Industrial Development Bonds. General obligation bonds are
bonds issued by states, counties, cities towns and regional
districts. The proceeds from these bonds are used to fund
municipal projects. Revenue bonds are bonds that receive net
revenues from a particular facility or other specific source.
Industrial development bonds are considered to be municipal
bonds if the interest paid on these bonds is exempt from
federal taxes. They are issued by public authorities and are
used to raise money to finance public and privately owned
facilities for business, manufacturing and housing.

(11) Obligations of Domestic and Foreign Banks. Banks are
subject to extensive governmental regulations. These
regulations place limitations on the amounts and types of
loans and other financial commitments which may be made by the
bank and the interest rates and fees which may be charged on
these loans and commitments. The profitability of the banking
industry depends on the availability and costs of capital
funds for the purpose of financing loans under prevailing
money market conditions. General economic conditions also
play a key role in the operations of the banking industry.
Exposure to credit losses arising from potential financial
difficulties of borrowers may affect the ability of the bank
to meet its obligations under a letter of credit.

(12) Option Contracts.

Covered Call Options. The Income Equity Fund, the
Capital Appreciation Fund and the Special Equity Fund may
write ("sell") covered call options on individual stocks,
equity indices and futures contracts, including equity index
futures contracts. The Short and Intermediate Bond Fund, the
Intermediate Mortgage Fund, the Bond Fund and the Global Bond
Fund may write ("sell") covered call options on individual
bonds and on interest rate futures contracts. Except for
those written call options by the Intermediate Mortgage Fund,
all other Funds' written call options must be listed on a
national securities exchange or a futures exchange.

A call option is a short-term contract that is generally
for no more than nine months. This contract gives a
buyer of the option, in return for a paid premium, the
right to buy the underlying security or contract at an
agreed upon price prior to the expiration of the option.
The buyer can purchase the underlying security or
contract regardless of its market price. A call option
is considered "covered" if the Fund that is writing the
option owns or has a right to immediately acquire the
underlying security or contract.

A Fund may terminate an obligation to sell an outstanding
option by making a "closing purchase transaction." A
Fund makes a closing purchase transaction when it buys a
call option on the same security or contract with has the
same price and expiration date. As a result, the Fund
will realize a loss if the amount paid is less than the
amount received from the sale. A closing purchase
transaction may only be made on an exchange that has a
secondary market for the option with the same price and
expiration date. There is no guarantee that the
secondary market will have liquidity for the option.

There are risks associated with writing covered call
options. A Fund is required to pay brokerage fees in
order to write covered call options as well as fees for
the purchases and sales of the underlying securities or
contracts. The portfolio turnover rate of the Fund may
increase due to the Fund writing a covered call option.

Covered Put Options. The Income Equity Fund, the Capital
Appreciation Fund and the Special Equity Fund may write
("sell") covered put options on individual stocks, equity
indices and futures contracts, including equity index futures
contracts. The Short and Intermediate Bond Fund, the
Intermediate Mortgage Fund, the Bond Fund and the Global Bond
Fund may write ("sell") covered put options on individual
bonds and on interest rate futures contracts.

A put option is a short-term contract that is generally
for no more than nine months. This contract gives a
buyer of the option, in return for a paid premium, the
right to sell the underlying security or contract at an
agreed upon price prior to the expiration of the option.
The buyer can sell the underlying security or contract at
the option price regardless of its market price. A put
option is considered "covered" if the Fund which is
writing the option owns or has a right to immediately
acquire the underlying security or contract. The seller
of a put option assumes the risk of the decrease of the
value of the underlying security. If the underlying
security decreases, the buyer could exercise the option
and the underlying security or contract could be sold to
the seller at a price that is higher than its current
market value.

A Fund may terminate an obligation to sell an outstanding
option by making a "closing purchase transaction." A
Fund makes a closing purchase transaction when it buys a
put option on the same security or contract with the same
price and expiration date. As a result, the Fund will
realize a loss if the amount paid is less than the amount
received from the sale. A closing purchase transaction
may only be made on an exchange that has a secondary
market for the option with the same price and expiration
date. There is no guarantee that the secondary market
will have liquidity for the option.

There are risks associated with writing covered put
options. A Fund is required to pay brokerage fees in
order to write covered put options as well as fees for
the purchases and sales of the underlying securities or
contracts. The portfolio turnover rate of the Fund may
increase due to the Fund writing a covered put option.

Dealer Options. Dealer Options are also known as Over-
the-Counter options ("OTC"). Dealer options are puts and
calls where the strike price, the expiration date and the
premium payment are privately negotiated. The Intermediate
Mortgage Fund may use dealer options if the options are with
major banks who are members of the Federal Reserve System and
are approved as primary dealers in U.S. government securities
by the Federal Reserve Bank of New York. The bank's
creditworthiness and financial strength are judged by the Sub-
Adviser and must be determined to be as good as the
creditworthiness and strength of the banks to whom the Fund
lends its portfolio securities.

Puts and Calls. The Income Equity Fund, the Capital
Appreciation Fund and the Special Equity Fund may buy options
on individual stocks, equity indices and equity futures
contracts. The Short and Intermediate Bond Fund, the
Intermediate Mortgage Fund, the Bond Fund and the Global Bond
Fund may buy puts and calls on individual bonds and on
interest rate futures contracts. A Fund's purpose in buying
these puts and calls is to protect itself against an adverse
affect in changes of the general level of market prices in
which the Fund operates. A put option gives the buyer the
right upon payment to deliver a security or contract at an
agreed upon date and price. A call option gives the buyer the
right upon payment to ask the seller of the option to deliver
the security or contract at an agreed upon date and price.

(13) Rights and Warrants. Each Fund may purchase rights and
warrants. Rights are short-term obligations issued in
conjunction with new stock issues. Warrants give the holder
the right to buy an issuer's securities at a stated price for
a stated time.

(14) Securities Lending. Each of the Funds may lend its
portfolio securities in order to realize additional income.
This lending is subject to the Fund's investment policies and
restrictions. Any loan of portfolio securities must be
secured at all times by collateral that is equal to or greater
than the value of the loan. If a seller defaults, a Fund may
use the collateral to satisfy the loan. However, if the buyer
defaults, the buyer may lose some rights to the collateral
securing the loans of portfolio securities.

(15) Segregated Accounts. Each Fund will establish a
segregated account with its Custodian after it has entered
into either a repurchase agreement or certain options, futures
and forward contracts. The segregated account will maintain
cash and/or liquid securities that are equal in value to the
obligations in the agreement.

(16) Short Sales. Each Fund may enter into short sales.
A Fund enters into a short sale when it sells a security that
it does not own in anticipation of a decrease in the market
price of that security. A broker retains the proceeds of the
sales until the Fund replaces the sold security. The Fund
arranges with the broker to borrow the security. The Fund
must replace the security at its market price at the time of
the replacement. As a result, the Fund may have to pay a
premium to borrow the security and the Fund may, but will not
necessarily, receive any interest on the proceeds of the sale.
The Fund must pay to the broker any dividends or interest
payable on the security until the security is replaced.
Collateral, consisting of cash, or marketable securities, is
used to secure the Fund's obligation to replace the security.
The collateral is deposited with the broker.

If the price of the security sold increases between the
time of the sale and the time the Fund replaces the security,
the Fund will incur a loss. If the price declines during that
period, the Fund will realize a capital gain. The capital
gain will be decreased by the amount of transaction costs and
any premiums, dividends or interest the Fund will have to pay
in connection with the short sale. The loss will be increased
by the amount of transaction costs and any premiums, dividends
or interest the Fund will have to pay in connection with the
short sale.

(17) U.S. Treasury Securities. The Short and Intermediate
Bond Fund, the Intermediate Mortgage Fund, the Bond Fund and
the Global Bond Fund may invest in direct obligations of the
U.S. Treasury. These obligations include Treasury bills,
notes and bonds, all of which have their principal and
interest payments backed by the full faith and credit of the
United States government.

Additional U.S. Government Securities. The Short and
Intermediate Bond Fund, the Intermediate Mortgage Fund, the
Bond Fund and the Global Bond Fund may invest in obligations
issued by the agencies or instrumentalities of the United
States Government. These obligations may or may not be backed
by the "full faith and credit" of the United States.
Securities which are backed by the full faith and credit of
the United States include obligations of the Government
National Mortgage Association, the Farmers Home Administration
and the Export-Import Bank. For those securities which are
not backed by the full faith and credit of the United States,
the Fund must principally look to the federal agency
guaranteeing or issuing the obligation for ultimate repayment
and therefore may not be able to assert a claim against the
United States itself for repayment in the event that the
issuer does not meet its commitments. The securities which
the Funds may invest that are not backed by the full faith and
credit of the United States include, but are not limited to:
(a) obligations of the Tennessee Valley Authority, the Federal
Home Loan Mortgage Corporation, the Federal Home Loan Banks
and the U.S. Postal Service, each of which has the right to
borrow from the U.S. Treasury to meet its obligations; (b)
securities issued by the Federal National Mortgage
Association, which are supported by the discretionary
authority of the U.S. Government to purchase the agency's
obligations; and (c) obligations of the Federal Farm Credit
System and the Student Loan Marketing Association, each of
whose obligations may be satisfied only by the individual
credits of the issuing agency.

(18) Variable Rate Securities. The Short and Intermediate
Bond Fund, the Intermediate Mortgage Fund, the Bond Fund and
the Global Bond Fund may invest in variable rate securities.
Variable rate securities are debt securities which do not have
a fixed coupon rate. The amount of interest to be paid to the
holder is typically contingent on another rate ("contingent
security") such as the yield on 90-day Treasury bills.
Variable rate securities may also include debt securities
which have an interest rate which resets in the opposite
direction of the rate of the contingent security.

(19) When-Issued Securities. Each of the Funds may purchase
securities on a when-issued basis. The purchase price and the
interest rate payable, if any, on the securities are fixed on
the purchase commitment date or at the time the settlement
date is fixed. The value of these securities is subject to
market fluctuation. For fixed-income securities, no interest
accrues to a Fund until a settlement takes place. At the time
a Fund makes a commitment to purchase securities on a when-
issued basis, the Fund will record the transaction, reflect
the daily value of the securities when determining the net
asset value of the Fund, and if applicable, calculate the
maturity for the purposes of determining the average maturity
from the date of the Transaction. At the time of settlement,
a when-issued security may be valued below the amount of the
purchase price.

To facilitate these transactions, the Fund will maintain
a segregated account with the Custodian that will include
cash, or marketable securities, in an amount which is at least
equal to the commitments. On the delivery dates of the
transactions, the Fund will meet its obligations from
maturities or sales of the securities held in the segregated
account and/or from cash flow. If the Fund chooses to dispose
of the right to acquire a when-issued security prior to its
acquisition, it could incur a loss or a gain due to market
fluctuation. Furthermore, the Fund may be at a disadvantage
if the other party to the transaction defaults. When-issued
transactions may allow the Fund to hedge against unanticipated
changes in interest rates.

Quality and Diversification Requirements for the Funds

Each Fund, with the exception of the Global Bond Fund,
intends to meet the diversification requirements of the1940
Act as currently in effect. Investments not subject to the
diversification requirements could involve an increased risk
to an investor should an issuer, or a state or its related
entities, be unable to make interest or principal payments or
should the market value of such securities decline. See
"Appendix A" for a description of Security Ratings.

Ratings Requirements of Commercial Paper. At the time
any of the Funds invest in taxable commercial paper, the
issuer must have an outstanding debt rated A-1 or higher by
Standard & Poor's Ratings Group ("S&P") or the issuer's parent
corporation, if any, must have outstanding commercial paper
rated Prime-1 by Moody's Investors Services, Inc. ("Moody's").
If no such ratings are available, the investment must be of
comparable quality in the opinion of The Managers Funds LLC
or the Sub-Adviser.

Rating of Debt Instruments. The Short and Intermediate
Bond Fund and the Bond Fund may each invest
in debt securities that are rated Bb by S&P or Ba by Moody's.
Such securities are frequently referred to as "junk bonds."
Junk bonds are more likely to react to market developments
affecting market and credit risk than more highly rated debt
securities.

For the last fiscal year ended December 31, 1998, the
weighted average ratings of the debt obligations held by the
Short and Intermediate Bond Fund and the Bond Fund, expressed
as a percentage of each of the Fund's total investments, were
as follows:

Ratings Short and Bond Fund
Intermediate Bond
Fund

Government and 44% 9%
AAA/Aaa
AA/Aa 5% 5%
BBB/Baa 28% 51%
BB/Ba 4% 0%
Not Rated 8% 14%

Fundamental Investment Restrictions

The following investment restrictions have been adopted
by the Trust with respect to each of the Funds contained in
this Statement of Additional Information. Except if otherwise
stated, these investment restrictions are "fundamental"
policies which is defined in the 1940 Act to mean that the
restrictions cannot be changed without the vote of a "majority
of the outstanding voting securities" of a Fund. A majority
of the outstanding voting securities is defined in the 1940
Act as the lesser of (a) 67% or more of the voting securities
present at a meeting if the holders of more than 50% of the
outstanding voting securities are present or represented by
proxy, or (b) more than 50% of the outstanding voting
securities.

Each of the Funds of the Trust may not:

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

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

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

(4) Borrow money, except from banks for temporary or
extraordinary or emergency purposes and then only in
amounts up to 10% of the value of the Fund's total assets,
taken at cost, at the time of such borrowing (and provided
such borrowings do not exceed in the aggregate one-third
of the market value of the Fund's total assets less
liabilities other than the obligations represented by the
bank borrowings). It will not mortgage, pledge or in any
other manner transfer any of its assets as security for
any indebtedness, except in connection with any such
borrowing and in amounts up to 10% of the value of the
Fund's net assets at the time of such borrowing.

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

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

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

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

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

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

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

(12) Make loans to any person or firm; provided, however, that
the making of a loan shall not be construed to include (i)
the acquisition for investment of bonds, debentures, notes
or other evidences of indebtedness of any corporation or
government entity which are publicly distributed or of a
type customarily purchased by institutional investors
(which are debt securities, generally rated not less than
Baa by Moody's or BBB by Standard & Poor's, privately
issued and purchased by such entities as banks, insurance
companies and investment companies), or (ii) the entry
into "repurchase agreements." It may lend its portfolio
securities to broker-dealers or other institutional
investors if, as a result thereof, the aggregate value of
all securities loaned does not exceed 33-l/3% of its total
assets. See "Other Information -- Loan Transactions."

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

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

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

(16) Issue senior securities.

(17) Invest up to 10% of its total assets in shares of
other investment companies investing exclusively in
securities in which it may otherwise invest. Because of
restrictions on direct investment made by U.S. entities in
certain countries, other investment companies may provide
the most practical or only way for the Emerging Markets
Equity Fund to invest in certain markets. Such
investments may involve the payment of substantial
premiums above the net asset value of those investment
companies' portfolio securities and are subject to
limitations under the Investment Company Act. The
Emerging Markets Equity Fund may also incur tax liability
to the extent they invest in the stock of a foreign issuer
that is a "passive foreign investment company" regardless
of whether such "passive foreign investment company" makes
distributions to the Funds.

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

Unless otherwise provided, for purposes of investment
restriction (1) above, the Global Bond Fund may invest more
than 5% of its total assets in the securities of any one
foreign government, so long as the aggregate amount of such
greater than 5% holdings does not exceed 50% of the value of
its total assets, and no more than 25% of the value of its
total assets may be invested in the securities of a single
foreign government.

Non-Fundamental Investment Restrictions

Each of the Funds of the Trust may not:

(1) Invest in real estate limited partnership interests.

(2) Invest in oil, gas or mineral leases.

(3) Invest more than 10% of its net assets in warrants or
rights, valued at the lower of cost or market, nor more
than 5% of its net assets in warrants or rights (valued on
the same basis) which are not listed on the New York or
American Stock Exchanges.

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

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

(6) Effect short sales of securities.

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

Temporary Defensive Position

Each of the Funds may, at the discretion of its Sub-
Advisers, invest up to 100% of its assets in cash for
temporary defensive purposes. This strategy may be
inconsistent with the Fund's principal investment strategies
and may be used in an attempt to respond to adverse market,
economic, political or other conditions. During such a
period, a Fund may not achieve its investment objective.

Portfolio Turnover

Generally, each of the Funds purchase securities for
investment purposes and not for short-term trading profits.
However, a Fund may sell securities without regard to the
length of time that the security is held in the portfolio if
such sale is consistent with the Fund's investment objectives.
A higher degree of portfolio activity may increase brokerage
costs to a Fund.

The portfolio turnover rate is computed by dividing the
dollar amount of the securities which are purchased or sold
(whichever amount is smaller) by the average value of the
securities owned during the year. Short-term investments such
as commercial paper, short-term U.S. Government securities and
variable rate securities (those securities with intervals of
less than one-year) are not considered when computing the
portfolio turnover rate.

For the last two fiscal years, each of the Fund's
portfolio turnover rates were as follows:
<TABLE>
<CAPTION>
Fund 1997 1998
<S> <C> <C>
Income Equity Fund 96% 84%
Capital Appreciation Fund 235% 252%
Special Equity Fund 49% 64%
International Equity Fund 37% 56%
Emerging Markets Equity Fund ----* 89%
Short and Intermediate Bond 91% 115%
Fund
Intermediate Mortgage Fund 317% 652%
Bond Fund 35% 55%
Global Bond Fund 197% 232%
<FN>
*The Emerging Markets Equity Fund commenced operations on
February 9, 1998.
</FN>
</TABLE>

BOARD OF TRUSTEES AND OFFICERS OF THE FUNDS

The Board of Trustees and Officers of the Funds, their
business addresses, principal occupations and dates of birth
are listed below. The Board of Trustees provides broad
supervision over the affairs of the Trust and the Funds. The
Board of Trustees and Officers of the Funds, their business
addresses, principal occupations and dates of birth are listed
below. Unless otherwise noted, the address of the Trustees
and Officers is the address of the Trust: 40 Richards Avenue,
Norwalk, Connecticut 06854.

ROBERT P. WATSON*--Chief Executive Officer, President and
Trustee of The Managers Funds; President and Partner of The
Managers Funds, L.P. Prior to June 1988 and from August 1989
to August 1990, he was the Chairman and Chief Executive
Officer of Evaluation Associates Investment Management
Company, the predecessor to The Managers Funds, L.P. His date
of birth is January 21, 1934.

MADELINE H. MCWHINNEY-Trustee; President of Dale, Elliott
& Company since 1977. Trustee and Treasurer of the Institute
of International Education since 1975. Member of the Advisory
Committee on Professional Ethics for the New Jersey Supreme
Court since March of 1983. Her address is 24 Blossom Cove
Road, Red Bank, New Jersey 07701. Her date of birth is March
11, 1922.

STEVEN J. PAGGIOLI-Trustee; Executive Vice President and
Director of Wadsworth Group since 1986. Executive Vice President,
Secretary and Director of First Fund Distributors, Inc. since
1991. Vice President, Secretary and Director of
Investment Company Administration, LLC since 1990.
Trustee of Professionally Managed Portfolios since 1991. His
address is 915 Broadway, Suite 1605, New York, New York 10010.
His date of birth is April 3, 1950.

<TABLE>
<S> <C>
THOMAS R. SCHNEEWEIS-Trustee; Professor of Finance, University of Massachusetts
since 1985. He also serves as the Managing Director of CISDM at the University
of Massachusetts,
a position he has held since 1994. His address is 10 Cortland Drive, Amherst, Massachusetts 01002.
His date of birth is May 10, 1947.

SEAN M. HEALEY*-Trustee; Executive Vice President for Affiliated Managers Group,
Inc. since April 1995. From August 1987 through March 1995, he served in a variety of roles in the
Mergers and Acquisitions Department of Goldman, Sachs & Co., the last of which was as Vice
President. His address is Two International Place, 23rd Floor, Boston, Massachusetts 02110. His
date of birth is May 9, 1961.

JACK W. ABER-Trustee; Professor of Finance, Boston University School of Management
since 1972. His address is 595 Commonwealth Avenue, Boston, Massachusetts 02215. His date of
birth is September 9, 1937.

WILLIAM E. CHAPMAN, II-Trustee; President and Owner, Longboat Retirement
Planning Solutions. From 1990 to 1998, he served in a variety of roles with Kemper Funds, the last
of which was President of the Retirement Plans Group. Prior to joining Kemper, he spent 24 years
with CIGNA in investment sales, marketing and general management roles. His address is 380 Gulf
of Mexico Drive, Longboat Key, Florida 34228. His date of birth is September 23, 1941.

EDWARD J. KAIER-Trustee; Partner, Hepburn Willcox Hamilton & Putnam since 1977.
His address is 1100 One Penn Center, Philadelphia, Pennsylvania 19103. His date of birth is
September 23, 1945.

ERIC RAKOWSKI-Trustee; Professor, University of California at Berkeley School of
Law since 1990. Visiting Professor, Harvard Law School 1998-1999. His address is 1535 Delaware
Street, Berkeley, California 94703-1281.

PETER M. LEBOVITZ-President; ; President of The Managers Funds LLC. From
September 1994 to April 1999, he was Vice President of The Managers Funds and Managing
Director of The Managers Funds, L.P. From June 1993 to June 1994, he was the Director of
Marketing for Hyperion Capital Management, Inc. From April 1989 to June 1993, he was Senior
Vice President and Chief Investment Officer for Greenwich Asset Management, Inc. His date of
birth is January 18, 1955.

DONALD S. RUMERY-Secretary, Treasurer; Chief Financial Officer of The Managers
Funds LLC (formerly The Managers Funds, L.P.) since December 1994. From March 1990 to
December 1994, he was a Vice President of Signature Financial Group. From August 1980 to March
1990, he was Vice President of The Putnam Companies. His date of birth is May 29, 1958.

GIANCARLO (JOHN) E. ROSATI-Assistant Treasurer; Vice President of The Managers
Funds LLC (formerly The Managers Funds, L.P.) since July 1992. From July 1986 to June 1992, he
was an Assistant Vice President of The Managers Funds, L.P.

PETER M. MCCABE-Assistant Treasurer; Portfolio Administrator of The Managers
Funds LLC (The Managers Funds, L.P.) since August 1995. From July 1994 to August 1995, he was
a Portfolio Administrator withat Oppenheimer Capital, L.P. From September 1990 to June 1994, he
was a college student. His date of birth is September 8, 1972.

LAURA A. DESALVO-Assistant Secretary; Legal/Compliance Officer of The Managers
Funds LLC (formerly The Managers Funds, L.P.) since September 1997. From August 1994 to June
1997, she was a law student and from 1990 to June 1994 she was a college student. Her date of birth
is November 10, 1970.
- --------------------------------------------------
*Mr. Watson and Mr. Healey are "interested persons" (as defined in the 1940 Act) of the Funds.

</TABLE>

Trustees' Compensation

Each Trustee is currently paid an annual fee of $10,000
for serving as Trustee of the Trust and the Funds. Each
Trustee also receives an additional fee of $750 for each in-
person meeting attended and $200 for each telephonic meeting.
The Trustees may serve as directors of other corporations that
are unrelated to these Funds.

The following table sets forth each Trustee's
compensation expenses paid by the Trust for the calendar year
ended December 31, 1998.
<TABLE>
<CAPTION>
Pension Estimat Total
or ed Compensati
Aggregate Retiremen Annual on from
Compensat t benefit Trust
Name & Position ion from benefits s upon
Trust accrued Retirem Complex
as part ent Paid to
of Trust Trustees
expenses
<S> <C> <C> <C> <C>
William W. $ ---- ---- $
Graulty* 8,650.00 8,650.00
Madeline H. 13,950.00 ---- ---- 13,950.00
McWhinney
Steven J. 13,950.00 ---- ---- 13,950.00
Paggioli
Thomas R. 13,200.00 ---- ---- 13,200.00
Schneeweis
Robert P. Watson 0.00 ---- ---- 0.00
<FN>
*Mr. Graulty resigned as Trustee of The Managers Funds on
September 14, 1998.
</FN>
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

Control Persons

As of March 11, 1999, Charles Schwab & Co. "controlled"
(within the meaning of the 1940 Act) the Special Equity Fund,
the International Equity Fund and the Emerging Markets Equity
Fund. As of March 11, 1999, National Financial "controlled"
the Global Bond Fund. An entity or person which "controls" a
particular Fund could have effective voting control over that
Fund. Certain of these shareholders are omnibus processing
organizations.

As of March 11, 1999, the following persons or entities
owned more than 5% of the outstanding shares of a Fund.
Certain of these shareholders are omnibus processing
organizations.

Income Equity Fund
Charles Schwab & Co., Inc., San Francisco, California
21%
Huntington National Bank, Columbus, Ohio 14%
National Financial Services Corp., New York, New York
7%
Huntington Trust Company, Columbus, Ohio 6%

Capital Appreciation Fund
Charles Schwab & Co., Inc., San Francisco, California
12%
National Financial Services Corp., New York, New York
8%
Huntington National Bank, Columbus, Ohio 6%

Special Equity Fund
Charles Schwab & Co., Inc., San Francisco, California
36%
National Financial Services Corp., New York, New York
9%

International Equity Fund
Charles Schwab & Co., Inc., San Francisco, California
27%
National Financial Services Corp., New York, New York
8%
Resource Bank, Minneapolis, Minnesota 5%
Merrill Lynch Trust Company, Somerset, New Jersey 5%

Emerging Markets Equity Fund
Charles Schwab & Co., Inc., San Francisco, California
34%
Resource Bank, Minneapolis, Minnesota 8%
National Financial Services Corp., New York, New York
7%

Short and Intermediate Bond Fund
Crotched Mountain Foundation, Greenfield, New Hampshire
6%
Huntington Trust Company, Columbus, Ohio 5%

Intermediate Mortgage Fund
National Financial Services Corp., New York, New York
20%
Roman Catholic Diocese, Syracuse, New York18%
Huntington Trust Company, Columbus, Ohio 5%

Bond Fund
National Financial Services Corp., New York, New York
13%
Charles Schwab & Co., Inc., San Francisco, California
17%

Global Bond Fund
National Financial Services Corp., New York, New York
30%
Charles Schwab & Co., Inc. 6%

Management Ownership

As of March 11, 1999, all management personnel (i.e.,
Fund officers, Trustees and advisory board members) as a group
owned beneficially less than 1% of the outstanding shares of
the Funds.

MANAGEMENT OF THE FUNDS

Investment Advisor

The Trustees provide broad supervision over the operations
and affairs of the Trust and the Funds. The Managers Funds,
LLLC (the "Manager") serves as investment manager and
administrator to each of the Funds. The Managers Funds LLC is a subsidiary of
Affiliated Managers Group, Inc. ("AMG"), and AMG serves as the Managing Member
of
the LLC. AMG is located at Two International Place, 23rd Floor, Boston,
Massachusetts 02110.

The assets of the Funds
are managed by a Sub-Adviser or a team of Sub-Advisers which
are selected by the Manager, subject to the review and approval
of the Trustees. The Manager also serves as administrator of
the Funds and carries out the daily administration of the Trust
and the Funds. The Manager and its corporate predecessor have
had over 20 years of experience in evaluating Sub-Advisers for
individuals and institutional investors.

The Manager recommends Sub-Advisers for each Fund to the
Trustees based upon its continuing quantitative and qualitative
evaluation of the Sub-Advisers' skills in managing assets
subject to specific investment styles and strategies. Unlike
many other mutual funds, the Funds are not associated with any
one portfolio manager and benefit from independent specialists
carefully selected from the investment management industry.
Short-term investment performance, by itself, is not a
significant factor in selecting or terminating a Sub-Adviser,
and the Manager does not expect to recommend frequent changes
of Sub-Advisers.

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

Generally, the Sub-Adviser(s) only provides the Fund with
asset management and related recordkeeping services. However,
a Sub-Adviser or its affiliated broker-dealer may execute
portfolio transactions for a Fund and receive brokerage
commissions, or markups, in connection with the transaction as
permitted by Sections 17(a) and 17(e) of the 1940 Act, and the
terms of any exemptive order issued by the Securities and
Exchange Commission.

A Sub-Adviser may also serve as a discretionary or non-
discretionary investment adviser to management or advisory
accounts which are unrelated in any manner to the Manager or
its affiliates. The Manager enters into an advisory agreement
with each Sub-Adviser known as an "Asset Management
Agreement." This Agreement requires the Sub-Adviser of a Fund
to provide fair and equitable treatment to the Fund in the
selection of portfolio investments and the allocation of
investment opportunities. However, it does not obligate the
Sub-Adviser to acquire for the Fund a position in any
investment which any of the Sub-Adviser's other clients may
acquire. The Fund shall have no first refusal, co-investment
or other rights in respect of any such investment, either for
the Fund or otherwise.

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

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

Sub-Advisers

The Sub-Adviser(s) for each Fund are set forth below. The
Income Equity Fund, the Capital Appreciation Fund, the Special
Equity Fund and the International Equity Fund currently
allocate the Fund's assets among more than one Sub-Adviser to
provide diversification among investment strategies. However,
not all Sub-Advisers that have Asset Management Agreements in
effect will be funded at all times. As of the date of this
Statement of Additional Information, the following are the Sub-
Advisers for each of the Funds. The information has been
supplied by each of the Sub-Advisers. None of these Sub-
Advisers are currently affiliated with the Manager or the
Funds.

Income Equity Fund

Chartwell Investment Partners, L.P. ("Chartwell")

Chartwell is a limited partnership founded in 1997. It is
75% controlled by the employees of Chartwell and 25%
controlled by Maverick Partners, L.P. ("Maverick"). Maverick
is controlled by John McNiff and Michael Kennedy. As of
December 31, 1998, Chartwell's assets under management
totaled approximately $2.7 billion. Chartwell's address is
1235 Westlakes Drive, Suite 330, Berwyn, PA 19312.

Chartwell uses a team approach to managing its portion of the
Income Equity Fund.

Scudder Kemper Investments, Inc. ("Scudder")

Scudder was founded in 1919 and is owned and controlled by
the Zurich Group ("Zurich"). It is managed by a Board of
Directors chaired by Rolf Hueppi, Chairman and CEO of Zurich.
The members include members of Zurich's Corporate Executive
Board, Laurence W. Cheng, William H. Bolinder, Gunther
Gose, and Edmond D. Villani, as well as Cornelia Small,
Director of Global Equity Investments of Scudder and Lynn S.
Birdsong, Director of Scudder's Institutional Group. As of
December 31, 1998, Scudder's assets under management totaled
approximately $281.2. Scudder's address is 345 Park
Avenue, New York, NY 10154.

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

Capital Appreciation Fund

Essex Investment Management Company, LLC ("Essex")

Essex was founded in 1976 and is owned jointly by the
employees of Essex and an institutional partner, Affiliated
Managers Group, Inc. As of December 31, 1998, Essex's assets
under management totaled approximately $5.6 billion. Essex's
address is 125 High Street, Boston, MA 02110.

Joseph C. McNay, Chairman and Chief Investment Officer, and
Daniel Beckham, Principal and Vice President, are the
portfolio managers for the portion of the Capital
Appreciation Fund which is managed by Essex.

Roxbury Capital Management, LLC ("Roxbury")

Roxbury Capital Management is a California corporation
founded in 1986. Roxbury Capital Management
transferred all of its assets in 1998 to Roxbury which
is jointly owned by employees and WT Investments, Inc.
a subsidiary of Wilmington Trust Company. As of December 31,
1998, Roxbury's assets under management totaled approximately
$6.0 billion. Roxbury's address is 100 Wilshire
Boulevard, Suite 600, Santa Monica, CA 90401.

Kevin P. Riley is the portfolio manager of the portion of the
Capital Appreciation Fund which is managed by Roxbury. He is
a Senior Managing Director, Senior Portfolio Manager and
Chief Investment Officer of Roxbury.

Special Equity Fund

Liberty Investment Management ("Liberty")

Liberty was originally formed in 1976 and is a division of
Goldman Sachs Asset Management. Goldman Sachs Asset
Management is a separate operating division of Goldman, Sachs
& Co.
As of December 31, 1998, Liberty's
assets under management totaled approximately $10.9 billion.
Liberty's address is 2502 Rocky Point Drive, Suite 500,
Tampa, FL 33607.

Timothy G. Ebright is the portfolio manager of the portion of
the Special Equity Fund managed by Liberty. He has been a
Vice President of Liberty since 1988.

Pilgrim Baxter & Associates, Ltd. ("Pilgrim")

Pilgrim was formed in 1982 and is owned by United Asset
Management, a public company. As of December 31, 1998,
Pilgrim's assets under management totaled approximately $13.9
billion. Pilgrim's address is 825 Duportail Road, Wayne, PA
19087.

Gary L. Pilgrim is the lead portfolio manager and Jeffrey
Wrona is the co-portfolio manager of the portion of
the Special Equity Fund which is managed by Pilgrim. Mr.
Wrona is responsible for managing small capitalization and
technology portfolios. Mr. Pilgrim is the Chief Investment
Officer and one of the founding members of the firm.

Westport Asset Management, Inc. ("Westport")

Westport was formed in 1983 and is 51%-owned by Andrew J.
Knuth and 49%-owned by Ronald H. Oliver. Each is active as a
portfolio manager/analyst of the firm. As of December 31,
1998, Westport's assets under management totaled
approximately $2.0 billion. Westport's address is 253
Riverside Avenue, Westport, CT 06880.

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

Kern Capital Management LLC ("KCM")
KCM is a Delaware limited liability company founded in 1997
by Robert E. Kern, Jr. and David G. Kern. As of December 31,
1998, KCM's assets under management totaled approximately
$405.9 million. KCM's address is 14 West 47th Street, Suite
1926, New York, NY 10036.

Robert E. Kern, Jr. is the portfolio manager of the portion
of the Special Equity Fund which is managed by KCM. He has
been the Managing Member, Chairman and Chief Executive
Officer of KCM since the firm's inception.

International Equity Fund

Scudder Kemper Investments, Inc. ("Scudder")

See description above for Income Equity Fund

William E. Holzer is the portfolio manager of the portion of
the International Equity Fund which is managed by Scudder.
He is a Managing Director of Scudder.

Lazard Asset Management ("Lazard")

Lazard is a division of Lazard Freres & Co., LLC, a New York
liability company founded in
1848. The managing
directors are Eileen D. Alexanderson, Thomas F. Dunn, Norman
Eig, Herbert W. Gullquist, Larry A. Kohn, Robert P.
Morgenthau, John R. Reinsberg, Michael S. Rome, Michael P.
Triguboff, Ina Handler and Alexander E. Zagoreos. As of
December 31, 1998, Lazard's assets under management, including
its global affiliates, totaled approximately $60 billion.
Lazard's address is 30 Rockefeller Plaza, New York, NY 10112.

John R. Reinsberg, Managing Director, and Herbert W. Gullquist,
Managing Director and Chief Investment Officer, are the portfolio managers
of the portion of
the International Equity Fund managed by Lazard.

Emerging Markets Equity Fund

King Street Advisors, Limited ("King Street")

King Street was founded in 1997 and is 75% owned by State
Street Corporation through two subsidiaries. As of December
31, 1998, King Street's assets under management totaled
approximately $361.64 million. King Street's address is
Almack House, 28 King Street, London, England SW1Y 6QW.

Murray Davey and Ken King are the portfolio managers the
Emerging Markets Equity Fund managed by King Street.

Short and Intermediate Bond Fund

Standish, Ayer & Wood, Inc. ("Standish")

Standish was founded in 1933 and is a privately owned
corporation with 24 directors. Edward H. Ladd, Chairmanand
Managing Director, and George W. Noyes, CEO, President and
Managing Directort, each own more than 10% of the outstanding
voting securities of Standish. Caleb F. Aldrich, Managing
Director and Vice President, Davis B. Clayson, Director and
Vice President, Dolores S. Driscoll, Managing Director and
Vice President, Richard C. Doll, Director and Vice President,
Maria D. Furman, Managing Director and Vice President, and
Richard S. Wood, Managing Director, Vice President and
Secretary, each own more than 5% of the outstanding voting
securities of Standish. Nicholas S. Battelle, David H.
Cameron, Karen K. Chandor, James E. Hollis, III, Laurence A.
Manchester, Arthur H. Parker, Howard B. Rubin, Austin C.
Smith, W. Charles Cook, Joseph M. Corrado, Mark A. Flaherty,
Raymond J. Kubiak, Thomas P. Sorbo, David C. Stuehr and
Michael W. Thompson are each a Director and Vice President of
Standish. Ralph S. Tate is Managing Director and Vice
President of Standish. Each owns less than 5% of the
outstanding voting securities of Standish. As of December
31, 1998, Standish's assets under management totaled
approximately $46,218.7 billion. Standish's address is One
Financial Center, Suite 26, Boston, MA 02111.

Howard B. Rubin is the portfolio manager for the Short and
Intermediate Bond Fund which is managed by Standish. He is a
Director and Vice President of Standish and has been with the
firm since 1984.

Intermediate Mortgage Fund

Standish, Ayer & Wood, Inc.

See description above for Short and Intermediate Bond FUnd

Bond Fund

Loomis, Sayles & Company, L.P. ("Loomis")

Loomis was founded in 1926. Its sole general partner,
Loomis, Sayles & Company, Inc., is a special purpose
corporation that is an indirect wholly-owned subsidiary of
Nvest Companies, L.P. ("Nvest Companies"). Nvest Companies'
managing general partner, Nvest Corporation, is a direct
wholly-owned subsidiary of Metropolitan Life Insurance
Company ("Met Life"), a mutual life insurance company. Nvest
Companies' advising general partner, Nvest L.P., is a
publicly-traded company listed on the New York Stock
Exchange. Nvest Corporation is the sole general partner of
Nvest L.P. As of December 31, 1998, Loomis' assets under
management totaled approximately $70.7 billion. Loomis'
address is One Financial Center, Boston, MA 02111.

Daniel J. Fuss, CFA, is the portfolio manager of the Bond
Fund which is managed by Loomis. He has been a Managing
Director of Loomis since 1976.

Global Bond Fund

Rogge Global Partners, plc. ("Rogge")

Rogge was founded in 1984 and is owned by United Asset
Management, a public company. As of December 31, 1998,
Rogge's assets under management totaled approximately $5.6
billion. Rogge's address is Sion Hill, 56 Victoria Embankment,
London, England EC4Y-0DZ.

Olaf Rogge is the portfolio manager of the Global Bond Fund
which is managed by Rogge. He is the Managing Director and
Principal Executive of Rogge, which he founded in 1984.

Voluntary Fee Waivers and Expense Limitations

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

Compensation of Manager and Sub-Advisers

As compensation for the services rendered and related
expenses under the Fund Management Agreement, the Funds have
agreed to pay the Manager a fee, which is computed daily and
may be paid monthly. Furthermore, as compensation for the
services rendered and related expenses under the Asset
Management Agreement, the Manager has agreed to pay each of the
Sub-Advisers a fee for managing their respective portfolios,
which is also computed daily and paid monthly. The fee paid to
each Sub-Adviser is paid out from the Manager's fee received
from the Funds.

During the last three fiscal years ended December 31,
1996, 1997 and 1998, the Manager was paid the following fees by
the Funds under the Fund Management Agreement.
<TABLE>
<CAPTION>

Fund 1996 1997 1998
<S> <C> <C> <C>
Income Equity Fund $ 349,821$ 465,345 $
513,862
Capital Appreciation Fund $ 761,925$ 797,930
$ 590,610
Special Equity Fund $1,572,135$4,477,844
$7,575,757
International Equity Fund $1,856,193$3,010,430
$4,490,305
Emerging Markets Equity Fund*----- -----$ 40,849 (a)
Short and Intermediate Bond Fund$ 116,037$ 88,839 $
84,177
Intermediate Mortgage Fund $ 143,803$ 101,414 $
72,020 (b)
Bond Fund $ 180,197$ 221,232$ 281,699
Global Bond Fund $ 126,043$ 115,996 $
132,587
<FN>
*The Emerging Markets Equity Fund commenced operations on
February 9, 1998.
(a) The fee paid to the Manager for the Fund, restated to
reflect a waiver of a portion of the fee in effect, would have
been $18,312.
(b) The fee paid to the Manager for the Fund, restated to
reflect a partial waiver in effect, would have been $56,907.
</FN>
</TABLE>
During the last three fiscal years ended December 31,
1996, 1997 and 1998, the Sub-Advisers were paid the following
fees by the Manager under the Asset Management Agreement.
<TABLE>
<CAPTION>
Fund 1996 1997 1998
<S> <C> <C> <C>
Income Equity Fund
Scudder Kemper Investments, Inc.$ 86,220$ 120,096 $114,374
Chartwell Investment Partners, L.P.-----$ 29,408 $125,429
Capital Appreciation Fund
Essex Investment Mgmt. Co., LLC -----$ 156,464 $143,597
Roxbury Capital Management, LLC ----- ----- $29,210
Special Equity Fund
Liberty Investment Management$ 266,030$ 746,314 $945,730
Pilgrim, Baxter & Associates, Ltd.$ 305,198$ 790,994 $1,337,508
Westport Asset Management $ 302,171$ 873,573 $1,422,275
Kern Capital Management LLC-----$ 59,856 $441,940
International Equity Fund
Scudder Kemper Investments, Inc.$ 515,262$ 833,438 $1,237,987
Lazard Asset Management $ 516,157$ 838,470 $1,254,650
Emerging Markets Equity Fund*
King Street Advisors, Limited $18,312
Short and Intermediate Bond Fund
Standish, Ayer & Wood, Inc. $ 58,019$ 44,419 $42,089
Intermediate Mortgage Fund
Jennison Associates LLC $ 63,913$ 45,073 $$32,009
Bond Fund
Loomis, Sayles & Co., L.P. $ 71,957$ 88,443 $112,679
Global Bond Fund
Rogge Global Partners plc $ 64,019$ 57,998 $65,556
</TABLE>

Fund Management Agreement

The Trust has entered into a Fund Management Agreement
with the Manager. The Manager, in turn, has entered into Asset
Management Agreements with each of the Sub-Advisers selected
for the Funds.

The Manager is a Delaware limited liability company.
Affiliated Managers Group, Inc. serves as its Managing Member.

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

The Fund Management Agreement provide that it will
continue in effect for a period of one year after execution and
will be specifically approved thereafter annually by the
Trustees in the same manner as the Distribution and
Administration Agreements. See "Administrative Services;
Distribution Arrangements" below. The Fund Management Agreement
will terminate automatically if assigned and is terminable at
any time without penalty by a vote of a majority of the Trust's
Disinterested Trustees, or by a vote of the shareholders of a
majority of each Fund's outstanding voting securities, on 60
days written notice to the Manager or by the Manager on 60 days
written notice to the Fund.

The following table illustrates the annual management fee
rates currently paid by each Fund to the Manager, together with
the portion of the management fee that is retained by the
Manager as compensation for its services, each expressed as a
percentage of the Fund's average net assets. The remainder of
the management fee is paid to the Sub-Advisers.

MANAGER'S PORTION
TOTAL MANAGEMENT OF THE TOTAL
NAME OF FUND FEE MANAGEMENT FEE
<S> <C> <C>
Income Equity Fund 0.75% 0.40%
Capital Appreciation 0.80% 0.40%
Fund
Special Equity Fund 0.90% 0.40%
International Equity 0.90% 0.40%
Fund
Emerging Markets 1.15% 0.40%*
Equity Fund
Short and 0.50% 0.25%
Intermediate Bond
Fund
Intermediate 0.45% 0.25%*
Mortgage Fund
Bond Fund 0.625% 0.375%
Global Bond Fund 0.70% 0.30% up to $20
</TABLE> million
0.35% over $20
million
*Manager is waiving all of its fee as of the date of this
Statement of Additional Information.

The amount of the Fund's management fee retained by the
Manager may vary for a Fund due to changes in the allocation of
assets among its Sub-Advisers, the effect of an increase in the
Fund's net asset value on the fees payable to its Sub-Advisers,
and/or the implementation, modification or termination of
voluntary fee waivers by the Manager and/or one or more of the
Sub-Advisers.

The Trust has obtained from the SEC an order permitting
the Manager, subject to certain conditions, to enter into Asset
Management Agreements with Sub-Advisers approved by the
Trustees but without the requirement of shareholder approval.
Under the terms of the order, the Manager is to be able,
subject to the approval of the Trustees but without shareholder
approval, to employ new Sub-Advisers for new or existing Funds,
change the terms of particular sub-advisory agreements or
continue the employment of existing Sub-Advisers after events
that under the 1940 Act and the sub-advisory agreements would
be an automatic termination of the agreement. Although
shareholder approval will not be required for the termination
of sub-advisory agreements, shareholders of a Fund will
continue to have the right to terminate such agreements for the
Fund at any time by a vote of a majority of outstanding voting
securities of the Fund.

Administrative Services; Distribution Arrangements

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

The Distribution Agreement between the Trust and the
Distributor may be terminated by either party under certain
specified circumstances and will automatically terminate on
assignment in the same manner as the Fund Management Agreement.
The Distribution Agreement may be continued annually if
specifically approved by the Trustees or by a vote of the
Trust's outstanding shares, including a majority of the
Disinterested Trustees or the respective Distributor, as such
term is defined in the 1940 Act, cast in person at a meeting
called for the purpose of voting on such approval.

Custodian

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

The Custodian is affiliated with King Street Advisors,
Limited, one of the sub-advisers to Managers Emerging Markets
Equity Fund. Under certain interpretations of the staff of the
Securities and Exchange Commission, the assets of Managers
Emerging Markets Equity Fund may be deemed to be in the Fund's
custody for purposes of Rule 17f-2 under the Act. Accordingly,
the requirements of Rule 17f-2 will be followed with respect to
Managers Emerging Markets Equity Fund.

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

Transfer Agent

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

Independent Public Accountants

PricewterhouseCoopers LLP, One Post Office Square, Boston,
Massachusetts 02109, is the independent public accountant for
each of the Funds. PricewaterhouseCoopers LLP conducts an
annual audit of the financial statements of each of the Funds,
assists in the preparation and/or review of each of the Fund's
federal and state income tax returns and consults with the
Funds as to matters of accounting and federal and state income
taxation.

BROKERAGE ALLOCATION AND OTHER PRACTICES

The Management Agreements between the Manager and the Sub-
Advisers provides that the Sub-Advisers place all orders for
the purchase and sale of securities which are held in each
Fund's portfolio. In executing portfolio transactions and
selecting brokers or dealers, it is the policy and principal
objective of each Sub-Adviser to seek best price and execution.
It is expected that securities will ordinarily be purchased in
the primary markets. The Sub-Adviser shall consider all
factors that it deems relevant when assessing best price and
execution for the Fund, including the breadth of the market in
the security, the price of the security, the financial
condition and execution capability of the broker or dealer and
the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis).

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

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

The fees of the Sub-Advisers are not reduced by reason of
their receipt of such brokerage and research services.
Generally, no Sub-Adviser provides any services to any Fund
except portfolio investment management and related record-
keeping services. However, a Sub-Adviser for a particular Fund
or its affiliated broker-dealer may execute portfolio
transactions for such Fund and receive brokerage commissions,
or markups, for doing so in accordance with Sections 17(a) and
17(e) of the 1940 Act and the procedures adopted by the
Trustees in accordance with the rules thereunder, and the terms
of any exemptive order issued by the Securities and Exchange
Commission. A Sub-Adviser for a Fund or its affiliated broker-
dealers may not act as principal in any portfolio transaction
for any Fund with which it is affiliated.

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

Brokerage Commissions

During the last three fiscal years, the Funds paid the
following brokerage fees:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
<S> <C> <C> <C>
Income Equity Fund $ 44,936 $ 126,564 $118,253
Capital Appreciation Fund$ 421,852 (a) $ 371,969
$238,292
Special Equity Fund $ 278,627 $ 616,474 $937,439
International Equity Fund$ 555,519$ 657,238$984,751
Emerging Markets Equity Fund*----- ----- $31,571
- -----------------------------------------
<FN>
(a) The Emerging Markets Equity Fund commenced operations on
February 9, 1998.
(a) The Capital Appreciation Fund paid brokerage commissions
totaling $49,756 to Fahnestock & Co., an affiliated broker-
dealer of Hudson Capital Advisors which then served as an Asset
Manager.
</FN>
</TABLE>

Brokerage Recapture Arrangements

During the last three fiscal years, the Funds paid the
following fees to the following list of brokers with which the
Funds have entered into brokerage recapture arrangements:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
<S> <C> <C> <C>
Income Equity Fund
Capital Institutional Services, Inc. $ 7,866 $
19,771 $ 6,809
Salomon Smith Barney --- $ 53,306
---
Capital Appreciation Fund
Capital Institutional Services, Inc. --- --
- $ 8,016
Salomon Smith Barney $ 7,758 $ 55,771 $
6,858
Donaldson & Co., Inc. $ 13,956 --- $
4,794
Westminster Research Assoc. Inc. $ 5,170 $
9,408 $117,362
LJB Associates $ 55,224 $ 11,057
---
Special Equity Fund
Capital Institutional Services, Inc. $ 22,009 $
33,840 $ 16,680
International Equity Fund
Capital Instiutional Services, Inc. $ 5,400 $
1,188 $ 1,254

</TABLE>
PURCHASE, REDEMPTION AND PRICING OF SHARES

Purchasing Shares

Investors may open accounts with the Funds through their
financial planners or investment professionals, or by the
Trust in limited circumstances as described in the Prospectus.
Shares may also be purchased through bank trust departments on
behalf of their clients, other institutional investors such as
corporations, endowment funds and charitable foundations, and
tax-exempt employee welfare, pension and profit-sharing plans.
There are no charges by the Trust for being a customer for
this purpose. The Trust reserves the right to determine which
customers and which purchase orders the Trust will accept.

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

Purchase orders received by the Trust before 4:00 p.m.
New York Time, c/o Boston Financial Data Services, Inc. (the
"Transfer Agent") at the address listed in the prospectus on
any Business Day will receive the net asset value computed
that day. Orders received prior to 4:00 p.m. by certain
processing organizations which have entered into special
arrangements with the Manager will also receive that day's
offering price. The broker-dealer, omnibus processor or
investment professional is responsible for promptly
transmitting orders to the Trust. Orders transmitted to the
Trust at the address indicated in the Prospectus will be
promptly forwarded to the Transfer Agent.

Federal Funds or Bank Wires used to pay for purchase
orders must be in U.S. dollars and received in advance, except
for certain processing organizations which have entered into
special arrangements with the Trust. Purchases made by check
are effected when the check is received, but are accepted
subject to collection at full face value in U.S. funds and
must be drawn in U.S. dollars on a U.S. bank.

Third party checks which are payable to an existing
shareholder who is a natural person (as opposed to a
corporation or partnership) and endorsed over to a Fund or
State Street Bank and Trust Company will be accepted. To
ensure that checks are collected by the Trust, redemptions of
shares purchased by check, or exchanges from such shares, are
not effected until the clearance of the check which may take
up to 15 days after the date of purchase, unless arrangements
are made with the Administrator.

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

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

Redeeming Shares

Any redemption orders received by the Trust before 4:00
p.m. New York Time on any Business Day will receive the net
asset value determined at the close of trading on the NYSE on
that day.
Redemption orders received after 4:00 p.m. will be
redeemed at the net asset value determined at the close of
trading on the next Business Day. Redemption orders
transmitted to the Trust at the address indicated in the
Prospectus will be promptly forwarded to the Transfer Agent.
If you are trading through a broker-dealer or investment
adviser, such investment professional is responsible for
promptly transmitting orders. There is no redemption charge.
The Fund reserves the right to redeem shareholder accounts
(after 60 days notice) when the value of the Fund shares in
the account falls below $500 due to redemptions. Whether a
Fund will exercise its right to redeem shareholder accounts
will be determined by the Manager on a case-by-case basis.

If the Fund determines that it would be detrimental to
the best interest of the remaining shareholders of the Fund to
make payment wholly or partly in cash, payment of the
redemption price may be made in whole or in part by a
distribution in kind of securities from the Fund, in lieu of
cash, in conformity with the applicable rule of the SEC. If
shares are redeemed in kind, the redeeming shareholder might
incur transaction costs in converting the assets to cash. The
method of valuing portfolio securities is described under the
"Net Asset Value", and such valuation will be made as of the
same time the redemption price is determined.

Investors should be aware that redemptions from a Fund
may not be processed if a redemption request is not submitted
in proper form. To be in proper form, the request must
include the shareholder's taxpayer identification number,
account number, Fund number and signatures of all
account holders. All redemptions will be mailed to the
address of record on the shareholder's account.
In addition, if a shareholder sends a check
for the purchase of fund shares and shares are purchased
before the check has cleared, the transmittal of redemption
proceeds from the shares will occur upon clearance of the
check which may take up to 15 days. The Fund reserves the
right to suspend the right of redemption and to postpone the
date of payment upon redemption beyond seven days as follows:
(i) during periods when the New York Stock Exchange is closed
for other than weekends and holidays or when trading on such
Exchange is restricted as determined by the SEC by rule or
regulation, (ii) during periods in which an emergency, as
determined by the SEC, exists that causes disposal by the Fund
of, or evaluation of the net asset value of, portfolio
securities to be unreasonable or impracticable, or (iii) for
such other periods as the SEC may permit.

Exchange of Shares

An investor may exchange shares from any Fund into shares
of any other of The Managers Funds without any charge. An
exchange may be made as long as after the exchange the
investor has shares, in each Fund where he or she remains an
investor, with a value of at least that Fund's minimum
investment amount. Shareholders should read the Prospectus of
the Fund that they are exchanging into. Investors may
exchange only into accounts that are registered in the same
name with the same address and taxpayer identification number.
Shares are exchanged on the basis of the relative net asset
value per share. Exchanges are in effect purchases of one
Fund and redemptions of another Fund, and therefore, the usual
purchase and redemptions procedures and requirements apply to
each exchange. Shareholders are subject to federal income tax
and may recognize capital gains or losses on the exchange for
federal income tax purposes. Shares of the Fund to be
acquired or purchased for settlement when the proceeds from
redemption become available. The Trust reserves the right to
discontinue, alter or limit the exchange privilege at any
time.

Net Asset Value

Each of the Funds computes its Net Asset value once daily
on Monday through Friday on each day on which the New York
Stock Exchange ("NYSE") is open for trading, at the close of
business of the NYSE, usually 4:00 p.m. New York Time. The
net asset value will not be computed on the day the following
legal holidays are observed: New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day and Christmas Day. The Funds may close for
purchases and redemptions at such other times as may be
determined by the Board of Trustees to the extent permitted by
applicable law. The time at which orders are accepted and
shares are redeemed may be changed in case of an emergency or
if the NYSE closes at a time other than 4:00 p.m. New York
Time.

The net asset value of each Fund is equal to the value of
the Fund (assets minus liabilities) divided by the number
of shares outstanding. Fund securities listed on an
exchange are valued at the last quoted sale price on the
exchange where such securities are principally traded on
the valuation date, prior to the close of trading on the
NYSE, or, lacking any sales, at the last quoted bid price
on such principal exchange prior to the close of
trading on the NYSE. Over-the-counter securities for which
market quotations are readily available are valued at the
last sale price or, lacking any sales, at the last quoted
bid price on that date prior to the close of trading on the
NYSE. Securities and other instruments for which market
quotations are not readily available are valued at fair value,
as determined in good faith and pursuant to procedures
established by the Trustees.

Dividends and Distributions

Each of the Funds declares and pays dividends and
distributions as described in the Prospectus.

If a shareholder has elected to receive dividends and/or
their distributions in cash and the postal or other delivery
service is unable to deliver the checks to the shareholder's
address of record, the dividends and/or distribution will
automatically be converted to having the dividends and/or
distributions reinvested in additional shares. No interest
will accrue on amounts represented by uncashed dividend or
redemption checks.

TAXATION OF THE FUNDS

The following discussion of tax consequences is based on
U.S. Federal tax laws in effect as of the date of this SAI.
These laws and regulations are subject to change by legislative
or administrative action.

Each Fund intends to qualify and remain qualified as a
regulated investment company ("RIC") under Subchapter M of the
Code. As a RIC, a Fund must, among other things, (i) derive at
least 90% of its gross income from dividends, interest,
payments with respect to loans of certain securities, gains
from the sale of securities, certain gains from foreign
currencies, or other income (including but not limited to gains
from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities
or foreign currencies; and (ii) diversify its holdings so that,
at the end of each fiscal quarter of its taxable year, (a) at
least 50% of the value of the Fund's total assets is
represented by cash, cash items, U.S. Government securities,
investments in other regulated investment companies, and other
securities limited, in respect of any one issuer, to an amount
not greater than 5% of the Fund's total assets, and 10% of the
outstanding voting securities of such issuer, and (b) not more
than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment
companies). As a RIC, a Fund (as opposed to its shareholders)
will not be subject to federal income taxes on the net
investment income and capital gain that it distributes to its
shareholders, provided that at least 90% of its net investment
income and realized net short-term capital gain in excess of
net long-term capital loss for the taxable year is distributed
in accordance with the Code's timing requirements.

Under the Code, a Fund will be subject to a 4% excise tax
on a portion of its undistributed taxable income and capital
gains if it fails to meet certain distribution requirements a
by the end of the calendar year. The Funds intends to make
distributions in a timely manner and accordingly does not
expect to be subject to the excise tax.

For federal income tax purposes, dividends that are
declared by a Fund in October, November or December as of a
record date in such month and actually paid in January of the
following year generally will be treated as if they were paid
on December 31 of the year declared. Therefore, such dividends
will be taxable to a shareholder in the year declared rather
than the year paid.

Distributions of net investment income and realized net
short-term capital gain in excess of net long-term capital
losses (other than exempt interest dividends) are generally
taxable to shareholders of the Fund as ordinary income whether
such distributions are taken in cash or reinvested in
additional shares. Distributions to corporate shareholders of
the Fund are not eligible for the dividends received deduction.
Distributions of net long-term capital gains (i.e., net long-
term capital gain in excess of net short-term capital loss) are
taxable to shareholders of the Fund as long-term capital gains,
regardless of whether such distributions are taken in cash or
reinvested in additional shares and regardless of how long a
shareholders has held shares in the Fund. In general, long-
term capital gain of an individual shareholder will be subject
to a reduced rate of tax. Investors should consult their tax
advisors concerning the treatment of capital gains and losses.
Additionally, any loss realized on a redemption or exchange of
shares of the Fund will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning
30 days before such disposition, such as pursuant to
reinvestment of a dividend of shares in the Fund.

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

Gains and losses on the sales of portfolio
securities will be treated as long-term capital gains or losses
if the securities have been held for more than one year, except
in certain cases where, if applicable, a put is acquired or a
call option is written thereon or straddle rules are otherwise
applicable. Other gains or losses on the sale of securities
will be short-term capital gains or losses. Gains and losses
on the sale, lapse or other termination of options on
securities will be treated as gains and losses from the sale of
securities. Except as described below, if an option written by
the Funds lapse or is terminated through a closing transaction,
such as a repurchase by the Fund of the option from its holder,
the Fund will realize a short-term capital gain or loss,
depending on whether the premium income is greater or less than
the amount paid by the Fund in the closing transaction. If
securities are purchased by the Fund pursuant to the exercise
of a put option written by the Fund, the Fund will subtract the
premium received from its cost basis in the securities
purchased.

Any distribution of net investment income or capital gains
will have the effect of reducing the net asset value of the
Fund's shares held by a shareholder by the same amount as the
distribution. If the net asset value of the shares is reduced
below a shareholder's cost as a result of such a distribution,
the distribution, although constituting a return of capital to
the shareholder, will be taxable as described above.

Any gain or loss realized on the redemption or exchange of
the Fund's shares by a shareholder who is not a dealer in
securities will be treated as a long-term capital gain or loss
if the shares have been held for more than one year, and
otherwise as a short-term capital gain or loss. However, any
loss realized by a shareholder upon the redemption or exchange
of shares in the Fund held for six months or less will be
treated as a long-term capital loss to the extent of any long-
term capital gain distributions received by the shareholder
with respect to such shares.

If a correct and certified taxpayer identification number
is not on file, the Fund is required, subject to certain
exemptions, to withhold 31% of certain payments made or
distributions to non-corporate shareholders.

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

Foreign currency gains or losses on non-U.S. dollar
denominated bonds and other similar debt instruments and on any
non-U.S. dollar denominated forward contracts generally will be
treated as ordinary income or loss. Any non-U.S. dollar
denominated futures or options contract may be treated as
either ordinary income or capital gain if it meets the
requirements of Section 1256.

Newly enacted Code Section 1259 will require the
recognition of gain (but not loss) if a Fund makes a
"constructive sale" of an appreciated financial position (e.g.
stock). A Fund generally will be considered to make a
constructive sale of an appreciated financial position if it
sells the same or substantially identical property short,
enters into a futures or forward contract to deliver the same
or substantially identical property, or enters into certain
other similar transactions.

Foreign Shareholders. Dividends of net investment income
and distribution of realized net short-term gain in excess of
net long-term loss to a shareholder who, as to the United
States, is a nonresident alien individual, fiduciary of a
foreign trust or estate, foreign corporation or foreign
partnership (a "foreign shareholder") will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate)
unless the dividends are effectively connected with a U.S.
trade of business of the shareholder, in which case the
dividends will be subject to tax on a net income basis at the
graduated rates applicable to U.S. individuals or domestic
corporations. Distributions treated as long-term capital gains
to foreign shareholders will not be subject to U.S. tax unless
the distributions are effectively connected with the
shareholder's trade of business in the United States or, in the
case of a shareholder who is a nonresident alien individual,
the shareholder was present in the United States for more than
182 days during the taxable year and certain other conditions
are met.

In the case of a foreign shareholder who is a nonresident
alien individual or foreign entity, the Fund may be required to
withhold U.S. federal income tax as "backup withholding" at the
rate of 31% from distributions treated as long-term capital
gains and from the proceeds of redemptions, exchanges or other
dispositions of the Fund's shares unless IRS Form W-8 is
provided. Transfers by gift of shares of the Fund by a foreign
shareholder who is a non-resident alien individual will not be
subject to U.S. federal gift tax, but the value of shares of
the Fund held by such shareholder at his or her death will be
includible in his or her gross estate for U.S. federal estate
tax purposes.

The International Equity, Emerging Markets Equity, Global
Bond, Bond and Short and Intermediate Bond Funds may be subject
to a tax on dividend or interest income received from
securities of a non-U.S. issuer withheld by a foreign country
at the source. The United States has entered into tax treaties
with many foreign countries that entitle the Funds to a reduced
rate of tax or exemption from tax on such income. It is
impossible to determine the effective rate of foreign tax in
advance since the amount of each Fund's assets to be invested
within various countries is not known. If more than 50% of
such a Fund's total assets at the close of a taxable year
consists of stock or securities in foreign corporations, and
the Fund satisfies the holding period requirements, the Fund
may elect to pass through to its shareholders the foreign
income taxes paid thereby. In such case, the shareholders
would be treated as receiving, in addition to the distributions
actually received by the shareholders, their proportionate
share of foreign income taxes paid by the Fund, and will be
treated as having paid such foreign taxes. The shareholders
will be entitled to deduct or, subject to certain limitations,
claim a foreign tax credit with respect to such foreign income
taxes. A foreign tax credit will be allowed for shareholders
who hold the Fund for at least 16 days during the 30-day period
beginning on the date that is 15 days before the ex-dividend
date. Beginning in 1998, shareholders who have been passed
through foreign tax credits of no more than $300 ($600 in the
case of married couples filing jointly) during a tax year can
elect to claim the foreign tax credit for these amounts
directly on their federal income tax returns (IRS Forms 1040)
without having to file a separate Form 1116. It should be
noted that only shareholders that itemize deductions may deduct
foreign income taxes paid by them.

State and Local Taxes. The Funds may also be subject to
state and/or local taxes in jurisdictions in which the Funds
are deemed to be doing business. In addition, the treatment of
the Fund and its shareholders in those states, which have
income tax laws, might differ from treatment under the federal
income tax laws. Shareholders should consult with their own
tax advisers concerning the foregoing state and local tax
consequences of investing in the Funds.

Other Taxation. The Funds are series of a Massachusetts
business trust. Under current law, neither the Trust nor any
Fund in the Trust is liable for any income or franchise tax in
The Commonwealth of Massachusetts, provided that each Fund of
the Trust continues to qualify as a regulated investment
company under Subchapter M of the Code.

PERFORMANCE DATA

From time to time, the Funds may quote performance in
terms of yield, actual distributions, total return or capital
appreciation in reports, sales literature, and advertisements
published by the Funds. Current performance information for
each of the Funds may be obtained by calling the number
provided on the cover page of this Statement of Additional
Information. See the Funds' Prospectus.

Yield
The Income Equity Fund, the Short and Intermediate Bond
Fund, the Intermediate Mortgage Fund, the Bond Fund and the
Global Bond Fund may include in advertisements or sales
literature certain total return and yield information in terms
of a 30-day yield quotation. "Yield" refers to income generated
by an investment in the Fund during the previous 30-day (or one-
month) period. The 30-day yield quotation is computed by
dividing the net investment income per share on the last day of
the period, according to the following formula:

Yield = 2[((a-b) / (cd) + 1)^6 - 1]

In the above formula, a = dividends and interest earned
during the period
b = expenses accrues for the period, net of
reimbursements
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the
last day of the period

The figure is then annualized. That is, the amount of income
generated during the 30-day (or one-month) period is assumed to
be generated each month over a 12-month period and is shown as
a percentage of the investment. The Funds' yield figures are
based on historical earnings and are not intended to indicate
future performance.

The 30-day yields for the period ended December 31, 1998,
were as follows:
<TABLE>
<CAPTION>
Fund 30-Day Yield at 12/31/98
<S> <C>
Income Equity Fund 1.15%
Short and Intermediate Bond 5.19%
Fund
Intermediate Mortgage Fund 6.20%
Bond Fund 6.86%
Global Bond Fund 3.61%
</TABLE>

Total Return

Each of the Funds may advertise performance in terms of
average annual total return for 1-, 5- and 10-year periods, or
for such lesser periods that a Fund has been in existence.
Average Annual return is computed by finding the average annual
compounded rates of return over the periods that would equate
the initial amount invested to the ending redeemable value,
according to the following formula:

P (1 + T) N = ERV

In the above formula, P = a hypothetical initial payment of
$1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of
the hypothetical $1,000 payment made at the
beginning of the 1-, 5- or 10-year periods at
the end of the year or period

The figure is then annualized. The formula assumes that any
charges are deducted from the initial $1,000 payment and
assumes that all dividends and distributions by the Fund are
reinvested at the price stated in the Prospectus on the
reinvestment dates during the period
<TABLE>
<CAPTION>
Average Annual Returns
NAME OF FUND 1 5 YEARS 10 SINCE
YEAR YEARS INCEPTION*
<S> <C> <C> <C> <C>
Income Equity Fund 17.68% 14.43%
11.73%
Capital Appreciation 21.51% 18.36%
Fund 57.34%
Special Equity Fund 15.35% 16.64%
0.20%
International Equity 11.16% 11.62%
Fund 14.54%
Emerging Markets --- --- --- -22.60
Equity Fund
Short & Int. Bond 4.23%
Fund 5.31% 7.13%
Intermediate 0.83%
Mortgage Fund 6.01% 6.72%
Bond Fund 7.77%
3.29% 9.75%
Global Bond Fund --- --- 8.24%
19.27%
<FN>
* Data since inception are shown for Funds that are less than
10 years old. Global Bond Fund commenced operations on
3/25/94. The Emerging Markets Equity Fund commenced operations
on 2/9/98.
</FN>
</TABLE>

Performance Comparisons

Each of the Funds may compare its performance to the
performance of other mutual funds having similar objectives.
This comparison must be expressed as a ranking prepared by
independent services or publications that monitor the
performance of various mutual funds such as Lipper, Inc.
("Lipper"), Morningstar, Inc., ("Morningstar") and IBC Money
Fund Report ("IBC"). Each Fund's performance may also be
compared to the performance of various unmanaged indices such
as the Standard & Poor's 500 Stock Price Index or the Dow Jones
Industrial Average.

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

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

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

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

Yields on two-year Treasury notes or one-year Treasury
bills are quoted in the Wall Street Journal. Yields on these
indices are generally higher than on money market funds, but
carry higher risk due to their longer durations.

Unmanaged government and corporate indices are published
by Merrill Lynch, Salomon Smith Barney and Lehman Brothers.
Indices which may be compared to the Short and Intermediate
Bond Fund, the Intermediate Mortgage Fund, the Bond Fund and
the Global Bond Fund include the Merrill Lynch 1-3 Year
Treasury Index, the Merrill Lynch 1-5 Year Government/Corporate
Index, the Salomon Smith Barney Mortgage Index, the Lehman
Brothers Government/Corporate Index and the Salomon Smith
Barney World Government Index, respectively. These indices are
all published on Bloomberg and some are published in the Wall
Street Journal, as well as in information provided by Merrill
Lynch, Salomon Smith Barney and Lehman Brothers.

Massachusetts Trust

Each of the Funds is a separate and distinct series of the
Trust which is commonly known as a "Massachusetts business
trust." A copy of the Declaration of Trust for the Trust is on
file in the office of the Secretary of The Commonwealth of
Massachusetts. The Declaration of Trust and the By-Laws of the
Trust are designed to make the Trust similar in most respects
to a Massachusetts business corporation. The principal
distinction between the two forms concerns shareholder
liability and are described below.

Under Massachusetts's law, shareholders of such a trust
may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. This is not the
case for a Massachusetts business corporation. However, the
Declaration of Trust of the Trust provides that the
shareholders shall not be subject to any personal liability for
the acts or obligations of the Fund and that every written
agreement, obligation, instrument or undertaking made on behalf
of the Fund shall contain a provision to the effect that the
shareholders are not personally liable thereunder.

No personal liability will attach to the shareholders
under any undertaking containing such provision when adequate
notice of such provision is given, except possibly in a few
jurisdictions. With respect to all types of claims in the
latter jurisdiction, (i) tort claims, (ii) contract claims
where the provision referred to is omitted from the
undertaking, (iii) claims for taxes, and (iv) certain statutory
liabilities in other jurisdictions, a shareholder may be held
personally liable to the extent that claims are not satisfied
by the Fund. However, upon payment of such liability, the
shareholder will be entitled to reimbursement from the general
assets of a Fund. The Trustees of the Trust intend to conduct
the operations of the Trust in a way as to avoid, as far as
possible, ultimate liability of the shareholders of a Fund.

The Declaration of Trust further provides that the name of
the Trust refers to the Trustees collectively as Trustees, not
as individuals or personally, that no Trustee, officer,
employee or agent of the Fund or to a shareholder, and that no
Trustee, officer, employee or agent is liable to any third
persons in connection with the affairs of the Fund, except if
the liability arises from his or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his or
its duties to such third persons. It also provides that all
third persons shall look solely to the property of the Fund for
any satisfaction of claims arising in connection with the
affairs of the Fund. With the exceptions stated, the Trust's
Declaration of Trust provides that a Trustee, officer, employee
or agent is entitled to be indemnified against all liability in
connection with the affairs of the Fund.

The Trust shall continue without limitation of time
subject to the provisions in the Declaration of Trust
concerning termination by action of the shareholders or by
action of the Trustees upon notice to the shareholders.

Description of Shares

The Trust is an open-end management investment company
organized as a Massachusetts business trust in which each of
the Funds represent a separate series of shares of beneficial
interest. See "Massachusetts Trust" above.

The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares ($0.001 par
value) of one or more series and to divide or combine the
shares of any series, if applicable without changing the
proportionate beneficial interest of each shareholder in the
Fund or assets of another series, if applicable. Each share of
the Fund represents an equal proportional interest in the Fund
with each other share. Upon liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets
of the Fund available for distribution to such shareholders.
See "Massachusetts Trust" above. Shares of the Funds have no
preemptive or conversion rights and are fully paid and
nonassessable. The rights of redemption and exchange are
described in the Prospectus and in this Statement of Additional
Information.

The shareholders of the Trust are entitled to one vote for
each dollar of net asset value (or a proportionate fractional
vote in respect of a fractional dollar amount), on matters on
which shares of the Fund shall be entitled to vote. Subject to
the 1940 Act, the Trustees themselves have the power to alter
the number and the terms of office of the Trustees, to lengthen
their own terms, or to make their terms of unlimited duration
subject to certain removal procedures, and appoint their own
successors, provided however, that immediately after such
appointment the requisite majority of the Trustees have been
elected by the shareholders of the Trust. The voting rights of
shareholders are not cumulative so that holders of more than
50% of the shares voting can, if they choose, elect all
Trustees being selected while the shareholders of the remaining
shares would be unable to elect any Trustees. It is the
intention of the Trust not to hold meetings of shareholders
annually. The Trustees may call meetings of shareholders for
action by shareholder vote as may be required by either the
1940 Act or by the Declaration of Trust of the Trust.

Shareholders of the Trust have the right, upon the
declaration in writing or vote of more than two-thirds of its
outstanding shares, to remove a Trustee from office. The
Trustees will call a meeting of shareholders to vote on removal
of a Trustee upon the written request of the record holders of
10% of the shares of the Trust. In addition, whenever ten or
more shareholders of record who have been shareholders of
record for at least six months prior to the date of the
application, and who hold in the aggregate either shares of the
Fund having a net asset value of at least $25,000 or at least
1% of the Trust's outstanding shares, whichever is less, shall
apply to the Trustees in writing, stating that they wish to
communicate with other shareholders with a view to obtaining
signatures to request a meeting for the purpose of voting upon
the question of removal of any of the Trustees and accompanies
by a form of communication and request which they wish to
transmit, the Trustees shall within five business days after
receipt of such application either: (1) afford to such
applicants access to a list of the names and addresses of all
shareholders as recorded on the books of the Trust; or (2)
inform such applicants as to the approximate number of
shareholders of record, and the approximate cost of mailing to
them the proposed shareholder communication and form of
request. If the Trustees elect to follow the latter, the
Trustees, upon the written request of such applicants
accompanies by a tender of the material to be mailed and the
reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all shareholders of record at
their addresses as recorded on the books, unless within five
business days after such tender the Trustees shall mail to such
applicants and file with the SEC, together with a copy of the
material to be mailed, a written statement signed by at least a
majority of the Trustees to the effect that in their opinion
either such material contains untrue statements of fact or
omits to state facts necessary to make the statements contained
therein not misleading, or would be in violation of applicable
law, and specifying the basis of such opinion. After
opportunity for hearing upon the objections specified in the
written statements filed, the SEC may, and if demanded by the
Trustees or by such applicants shall, enter an order either
sustaining one or more objections or refusing to sustain any of
such objections, or if, after the entry of an order sustaining
one or more objections, the SEC shall find, after notice and
opportunity for a hearing, that all objections so sustained
have been met, and shall enter an order so declaring, the
Trustees shall mail copies of such material to all shareholders
with reasonable promptness after the entry of such order and
the renewal of such tender.

The Trustees have authorized the issuance and sale to the
public of shares of ten series of the Trust. The Trustees may
authorize the issuance of additional series of the Trust. The
proceeds from the issuance of any additional series would be
invested in separate, independently managed portfolios with
distinct investment objectives, policies and restrictions, and
share purchase, redemption and net asset value procedures. All
consideration received by the Trust for shares of any
additional series, and all assets in which such consideration
is invested, would belong to that series, subject only to the
rights of creditors of the Trust and would be subject to the
liabilities related thereto. Shareholders of the additional
series will approve the adoption of any management contract,
distribution agreement and any changes in the investment
policies of the Fund, to the extent required by the 1940 Act.

Additional Information

This Statement of Additional Information and the
Prospectus do not contain all of the information included in
the Trust's Registration Statement filed with the SEC under the
1933 Act and the Portfolio's Registration Statement filed under
the 1940 Act. Pursuant to the rules and regulations of the
SEC, certain portions have been omitted. The Registration
Statements including the Exhibits filed therewith may be
examined at the office of the SEC in Washington DC.

Statements contained in the Statement of Additional
Information and the Prospectus concerning the contents or any
contract or other document are not necessarily complete, and in
each instance, reference is made to the copy of such contract
or other document filed as an Exhibit to the applicable
Registration Statement. Each such statement is qualified in
all respects by such reference.

No dealer, salesman or any other person has been
authorized to give any information or to make any
representations, other than those contained in the Prospectus
or this Statement of Additional Information, in connection with
the offer of shares of the Fund and, if given or made, such
other representations or information must not be relied upon as
having been authorized by the Trust, the Fund or the
Distributor. The Prospectus and this Statement of Additional
Information do not constitute an offer to sell or solicit an
offer to buy any of the securities offered thereby in any
jurisdiction to any person to whom it is unlawful for the Fund
or the Distributor to make such offer in such jurisdictions.

FINANCIAL STATEMENTS

The following audited Financial Statements and the Notes
for each of the Funds, and the Report of Independent
Accountants of PricewaterhouseCoopers LLP are incorporated by
reference to this SAI from their respective annual report
filings made with the SEC pursuant to Section 30(b) of the 1940
Act and Rule 30b2-1 thereunder. Any of the Financial
Statements and reports are available without charge by calling
The Managers Funds at (800) 835-3879, on The Managers Funds
Internet website at http://www.managersfunds.com or on the
SEC's Internet website at http://www.sec.gov.

APPENDIX A

DESCRIPTION OF SECURITY RATINGS

STANDARD & POOR'S:

CORPORATE AND MUNICIPAL BONDS

AAA - Debt rated AAA has the highest ratings assigned by
Standard & Poor's to a debt obligation. Capacity to pay
interest and repay principal is extremely strong.

AA - Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the highest rated
issues only in a small degree.

A - Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible
to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories.

BBB - Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than for debt
in higher rated categories.

BB - Debt rated BB is regarded as having less near-term
vulnerability to default than other speculative issues.
However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely
interest and principal payments.

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

A - Issues assigned this highest rating are regarded as
having the greatest capacity for timely payment. Issues
in this category are further refined with the
designations 1, 2, and 3 to indicate the relative degree
of safety.

A-1 - This designation indicates that the degree of safety
regarding timely payment is very strong.

SHORT-TERM TAX-EXEMPT NOTES

SP-1 - The short-term tax-exempt note rating of SP-1 is the
highest rating assigned by Standard & Poor's and has a
very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming
safety characteristics are given a "plus" (+)
designation.

SP-2 - The short-term tax-exempt note rating of SP-2 has
satisfactory capacity to pay principal and interest.

MOODY'S:

CORPORATE AND MUNICIPAL BONDS

Aaa - Bonds which are rated Aaa are judged to be of the
best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.

Aa - Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present which
make the long term risks appear somewhat larger than in
Aaa securities.

A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and
interest are considered adequate but elements may be
present which suggest a susceptibility to impairment
sometime in the future.

Baa - Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as
well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not
well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in
this class.

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

Prime-1 - Issuers rated Prime-1 (or related supporting
institutions) have a superior capacity for repayment
of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the
following characteristics:

-- Leading market positions in well established
industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-- Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
-- Well established access to a range of financial
markets and assured sources of alternate
liquidity.

SHORT-TERM TAX EXEMPT NOTES

MIG-1 - The short-term tax-exempt note rating MIG-1 is the
highest rating assigned by Moody's for notes judged
to be the best quality. Notes with this rating enjoy
strong protection from established cash flows of
funds for their servicing or from established and
broad-based access to the market for refinancing, or
both.

MIG-2 - MIG-2 rated notes are of high quality but with
margins of protection not as large as MIG-1.