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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 10
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<PAGE> PAGE 12
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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072 R000400 3
072 S000400 7
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072 X000400 1389
072 Y000400 85
072 Z000400 6803
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072BB000400 1
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072CC020400 0
072DD010400 6803
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073 A010400 0.0316
073 A020400 0.0000
073 B000400 0.0000
073 C000400 0.0000
074 A000400 815
074 B000400 0
074 C000400 251614
074 D000400 0
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<PAGE> PAGE 21
074 G000400 0
074 H000400 0
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074 L000400 1870
074 M000400 3
074 N000400 254303
074 O000400 1209
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074 S000400 0
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074 U010400 252669
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075 A000400 215859
075 B000400 0
076 000400 0.00
008 A000501 THE PORTFOLIO GROUP, INC.
008 B000501 A
008 C000501 801-19502
008 D010501 NEW YORK
008 D020501 NY
008 D030501 10020
028 A010500 866080
028 A020500 3324
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028 A040500 713379
028 B010500 693999
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028 C020500 3599
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028 D010500 615167
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028 D040500 617529
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028 E020500 3892
<PAGE> PAGE 22
028 E030500 0
028 E040500 476952
028 F010500 615844
028 F020500 7819
028 F030500 0
028 F040500 568538
028 G010500 4116052
028 G020500 26383
028 G030500 0
028 G040500 3773931
028 H000500 0
045 000500 Y
046 000500 N
047 000500 Y
048 000500 0.150
048 A010500 0
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048 B010500 0
048 B020500 0.000
048 C010500 0
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048 D010500 0
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048 E010500 0
048 E020500 0.000
048 F010500 0
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048 G010500 0
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048 H010500 0
048 H020500 0.000
048 I010500 0
048 I020500 0.000
048 J010500 0
048 J020500 0.000
048 K010500 0
048 K020500 0.000
058 A000500 N
059 000500 Y
060 A000500 Y
060 B000500 Y
061 000500 0
062 A000500 Y
062 B000500 100.0
062 C000500 0.0
062 D000500 0.0
062 E000500 0.0
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062 G000500 0.0
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<PAGE> PAGE 23
062 J000500 0.0
062 K000500 0.0
062 L000500 0.0
062 M000500 0.0
062 N000500 0.0
062 O000500 0.0
062 P000500 0.0
062 Q000500 0.0
062 R000500 0.0
063 A000500 34
063 B000500 0.0
064 A000500 N
064 B000500 N
070 A010500 N
070 A020500 N
070 B010500 N
070 B020500 N
070 C010500 N
070 C020500 N
070 D010500 N
070 D020500 N
070 E010500 N
070 E020500 N
070 F010500 N
070 F020500 N
070 G010500 N
070 G020500 N
070 H010500 N
070 H020500 N
070 I010500 N
070 I020500 N
070 J010500 N
070 J020500 N
070 K010500 N
070 K020500 N
070 L010500 N
070 L020500 N
070 M010500 N
070 M020500 N
070 N010500 Y
070 N020500 N
070 O010500 Y
070 O020500 N
070 P010500 Y
070 P020500 N
070 Q010500 N
070 Q020500 N
070 R010500 N
070 R020500 N
071 A000500 0
071 B000500 0
<PAGE> PAGE 24
071 C000500 0
071 D000500 0
072 A000500 12
072 B000500 59142
072 C000500 0
072 D000500 0
072 E000500 0
072 F000500 1591
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072 H000500 0
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072 J000500 81
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072 N000500 177
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072 R000500 11
072 S000500 31
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072 X000500 6519
072 Y000500 342
072 Z000500 52965
072AA000500 900
072BB000500 613
072CC010500 0
072CC020500 0
072DD010500 52965
072DD020500 0
072EE000500 288
073 A010500 0.0504
073 A020500 0.0000
073 B000500 0.0002
073 C000500 0.0000
074 A000500 92
074 B000500 0
074 C000500 1337369
074 D000500 0
074 E000500 0
074 F000500 0
074 G000500 0
074 H000500 0
074 I000500 0
074 J000500 0
074 K000500 0
074 L000500 1896
<PAGE> PAGE 25
074 M000500 22
074 N000500 1339379
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074 R040500 1247
074 S000500 0
074 T000500 1337549
074 U010500 1337563
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074 Y000500 0
075 A000500 1060489
075 B000500 0
076 000500 0.00
008 A000601 THE PORTFOLIO GROUP, INC.
008 B000601 A
008 C000601 801-19502
008 D010601 NEW YORK
008 D020601 NY
008 D030601 10020
028 A010600 1134237
028 A020600 3571
028 A030600 0
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028 C020600 3816
028 C030600 0
028 C040600 1305440
028 D010600 1111722
028 D020600 4075
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028 F010600 1232791
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028 F040600 1216008
<PAGE> PAGE 26
028 G010600 7108086
028 G020600 27229
028 G030600 0
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045 000600 Y
046 000600 N
047 000600 Y
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048 I020600 0.000
048 J010600 0
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048 K010600 0
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058 A000600 N
059 000600 Y
060 A000600 Y
060 B000600 Y
061 000600 0
062 A000600 Y
062 B000600 69.4
062 C000600 0.0
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062 E000600 0.0
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062 I000600 0.0
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062 K000600 0.0
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<PAGE> PAGE 27
062 P000600 0.0
062 Q000600 0.0
062 R000600 0.0
063 A000600 29
063 B000600 0.0
064 A000600 N
064 B000600 N
070 A010600 Y
070 A020600 Y
070 B010600 N
070 B020600 N
070 C010600 N
070 C020600 N
070 D010600 N
070 D020600 N
070 E010600 N
070 E020600 N
070 F010600 N
070 F020600 N
070 G010600 N
070 G020600 N
070 H010600 N
070 H020600 N
070 I010600 N
070 I020600 N
070 J010600 N
070 J020600 N
070 K010600 N
070 K020600 N
070 L010600 N
070 L020600 N
070 M010600 N
070 M020600 N
070 N010600 Y
070 N020600 N
070 O010600 Y
070 O020600 N
070 P010600 Y
070 P020600 N
070 Q010600 N
070 Q020600 N
070 R010600 N
070 R020600 N
071 A000600 0
071 B000600 0
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072 A000600 12
072 B000600 84441
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<PAGE> PAGE 28
072 E000600 0
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073 A010600 0.0515
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074 A000600 11072
074 B000600 500000
074 C000600 1154498
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074 L000600 1911
074 M000600 33
074 N000600 1667515
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<PAGE> PAGE 29
074 R020600 0
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075 B000600 0
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SIGNATURE JOHN PILEGGI
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> THE GOVERNMENT MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1664062
<INVESTMENTS-AT-VALUE> 1664062
<RECEIVABLES> 30894
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 28
<TOTAL-ASSETS> 1694984
<PAYABLE-FOR-SECURITIES> 139922
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<OTHER-ITEMS-LIABILITIES> 3064
<TOTAL-LIABILITIES> 142986
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1551998
<SHARES-COMMON-STOCK> 1551998
<SHARES-COMMON-PRIOR> 1141908
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<ACCUMULATED-NET-GAINS> 9
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1551998
<DIVIDEND-INCOME> 0
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<OTHER-INCOME> 0
<EXPENSES-NET> 8498
<NET-INVESTMENT-INCOME> 77186
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 77195
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 77186
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16830561
<NUMBER-OF-SHARES-REDEEMED> 16465316
<SHARES-REINVESTED> 44845
<NET-CHANGE-IN-ASSETS> 410090
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2162
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8979
<AVERAGE-NET-ASSETS> 1441382
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .054
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<PER-SHARE-DIVIDEND> .054
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .59
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> THE CASH MANAGEMENT FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1627921
<INVESTMENTS-AT-VALUE> 1627921
<RECEIVABLES> 26038
<ASSETS-OTHER> 10537
<OTHER-ITEMS-ASSETS> 22
<TOTAL-ASSETS> 1664518
<PAYABLE-FOR-SECURITIES> 27131
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2894
<TOTAL-LIABILITIES> 30025
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1634493
<SHARES-COMMON-STOCK> 1634493
<SHARES-COMMON-PRIOR> 990045
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1634493
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 68444
<OTHER-INCOME> 0
<EXPENSES-NET> 6734
<NET-INVESTMENT-INCOME> 61710
<REALIZED-GAINS-CURRENT> 52
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 61762
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 61710
<DISTRIBUTIONS-OF-GAINS> 52
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10290192
<NUMBER-OF-SHARES-REDEEMED> 9682066
<SHARES-REINVESTED> 36322
<NET-CHANGE-IN-ASSETS> 644448
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1731
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7109
<AVERAGE-NET-ASSETS> 1154300
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .054
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .054
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> THE TAX FREE MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 310553
<INVESTMENTS-AT-VALUE> 310553
<RECEIVABLES> 2205
<ASSETS-OTHER> 2423
<OTHER-ITEMS-ASSETS> 4
<TOTAL-ASSETS> 315185
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 719
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 314512
<SHARES-COMMON-STOCK> 314512
<SHARES-COMMON-PRIOR> 359220
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (46)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 314466
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13230
<OTHER-INCOME> 0
<EXPENSES-NET> 2086
<NET-INVESTMENT-INCOME> 11144
<REALIZED-GAINS-CURRENT> (66)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 11078
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10946
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1492967
<NUMBER-OF-SHARES-REDEEMED> 1542176
<SHARES-REINVESTED> 4501
<NET-CHANGE-IN-ASSETS> (44576)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (178)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 507
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2218
<AVERAGE-NET-ASSETS> 338245
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .032
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> THE NEW YORK TAX FREE MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 251614
<INVESTMENTS-AT-VALUE> 251614
<RECEIVABLES> 1870
<ASSETS-OTHER> 815
<OTHER-ITEMS-ASSETS> 3
<TOTAL-ASSETS> 254303
<PAYABLE-FOR-SECURITIES> 1209
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 473
<TOTAL-LIABILITIES> 1682
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 252669
<SHARES-COMMON-STOCK> 252669
<SHARES-COMMON-PRIOR> 182053
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 252621
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8107
<OTHER-INCOME> 0
<EXPENSES-NET> 1304
<NET-INVESTMENT-INCOME> 6803
<REALIZED-GAINS-CURRENT> (1)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6802
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6802
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 650156
<NUMBER-OF-SHARES-REDEEMED> 583080
<SHARES-REINVESTED> 3539
<NET-CHANGE-IN-ASSETS> 70614
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 324
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1389
<AVERAGE-NET-ASSETS> 215859
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .032
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> THE 100% US TREASURY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1337369
<INVESTMENTS-AT-VALUE> 1337369
<RECEIVABLES> 1896
<ASSETS-OTHER> 92
<OTHER-ITEMS-ASSETS> 22
<TOTAL-ASSETS> 1339379
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1830
<TOTAL-LIABILITIES> 1830
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1337563
<SHARES-COMMON-STOCK> 1337563
<SHARES-COMMON-PRIOR> 1024138
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1337549
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 59142
<OTHER-INCOME> 0
<EXPENSES-NET> 6177
<NET-INVESTMENT-INCOME> 52965
<REALIZED-GAINS-CURRENT> 287
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 53252
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 52965
<DISTRIBUTIONS-OF-GAINS> 288
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8315731
<NUMBER-OF-SHARES-REDEEMED> 8041134
<SHARES-REINVESTED> 38827
<NET-CHANGE-IN-ASSETS> 313424
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 13
<GROSS-ADVISORY-FEES> 1591
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6519
<AVERAGE-NET-ASSETS> 1060489
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .050
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .050
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> THE U.S. TREASURY MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1654498
<INVESTMENTS-AT-VALUE> 1654498
<RECEIVABLES> 1911
<ASSETS-OTHER> 11072
<OTHER-ITEMS-ASSETS> 34
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[KPMG Peat Marwick LLP Letterhead]
To the Board of Directors of
The Hanover Funds, Inc.:
In planning and performing our audit of the financial statements of The Hanover
Funds, Inc. for the year ended November 30, 1995, we considered its internal
control structure, including procedures for safeguarding securities, in order
to determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and to comply with the requirements of Form N-SAR,
not to provide assurance on the internal control structure.
The management of The Hanover Funds, Inc. is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control policies and procedures. Two of
the objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts
that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
November 30, 1995.
This report is intended solely for the information and use of the Board of
Directors, management and the Securities and Exchange Commission.
/s/ KPMG Peat Marwick LLP
January 19, 1996
