Managers Trust II

Derivatives not accounted for as hedging instruments

Amount

Short Duration

Interest rate futures contracts

N-CSR 1 dncsr.htm MANAGERS TRUST II Managers Trust II

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-06431

MANAGERS TRUST II

(Exact name of registrant as specified in charter)

800 Connecticut Avenue, Norwalk, Connecticut 06854

(Address of principal executive offices) (Zip code)

Managers Investment Group LLC

800 Connecticut Avenue, Norwalk, Connecticut 06854

(Name and address of agent for service)

Registrant’s telephone number, including area code: (203) 299-3500

Date of fiscal year end: DECEMBER 31

Date of reporting period: JANUARY 1, 2010 – DECEMBER 31, 2010

(Annual Shareholder Report)

Item 1.

Reports to Shareholders

LOGO

ANNUAL REPORT

Managers Trust II Funds

December 31, 2010

Managers AMG Chicago Equity Partners Mid-Cap Fund

Managers AMG Chicago Equity Partners Balanced Fund

Managers High Yield Fund

Managers Fixed Income Fund

Managers Short Duration Government Fund

Managers Intermediate Duration Govetx157832_rnment Fund

AR002-1210

Managers Trust II Funds

Annual Report — December 31, 2010


TABLE OF CONTENTS	Page

LETTER TO SHAREHOLDERS		1

ABOUT YOUR FUND’S EXPENSES		4

INVESTMENT MANAGER’S COMMENTS, FUND SNAPSHOTS, AND SCHEDULES OF PORTFOLIO INVESTMENTS

Managers AMG Chicago Equity Partners Mid-Cap Fund		6

Managers AMG Chicago Equity Partners Balanced Fund		12

Managers High Yield Fund		21

Managers Fixed Income Fund		33

Managers Short Duration Government Fund		44

Managers Intermediate Duration Government Fund		57

FINANCIAL STATEMENTS:

Statements of Assets and Liabilities		67
Fund balance sheets, net asset value (NAV) per share computations and cumulative undistributed amounts

Statements of Operations		69
Detail of sources of income, Fund expenses, and realized and unrealized gains (losses) during the year

Statements of Changes in Net Assets		70
Detail of changes in Fund assets for the past two years

FINANCIAL HIGHLIGHTS		73
Historical net asset values per share, distributions, total returns, expense ratios, turnover ratios and net assets

NOTES TO FINANCIAL STATEMENTS		83
Accounting and distribution policies, details of agreements and transactions with Fund management and affiliates, and descriptions of certain investment risks

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		94

TRUSTEES AND OFFICERS		95

Nothing contained herein is to be considered an offer, sale or solicitation of an offer to buy shares of any series of the Managers Family of Funds. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

Letter to Shareholders

Dear Shareholder:

Our foremost goal at Managers Investment Group (“MIG”) is to structure and manage mutual funds that will help our shareholders and clients successfully reach their investment goals and objectives.

Each of our Funds is geared to provide you with exposure to a specific asset class or style of investing. Investors tend to use our Funds as part of their broader portfolio in order to tailor their asset allocation to meet their individual needs. Most of our Funds, like those detailed in this report, are therefore designed to be building blocks.

At MIG, we have overall responsibility for the investment management and administration of the Funds. As a “manager of managers,” we work with external investment managers that make the day-to-day investment decisions in the Funds (the “Portfolio Managers”). We devote considerable resources to our disciplined process of identifying and selecting Portfolio Managers for the Funds. As a manager of managers, MIG performs many activities to monitor the ongoing investment, compliance, and administrative aspects of all of the Funds, which gives our shareholders added confidence in their investments.

Our parent company, Affiliated Managers Group (“AMG”), is a global asset management company with ownership interests in a diverse group of boutique investment management firms (its “Affiliates”). MIG has the unique opportunity to access the investment skills and acumen of some of AMG’s Affiliates. The set of our Funds managed by these proprietary firms also benefit from our activities to monitor the investment, compliance, and administrative aspects of the Funds.

Below is a brief overview of the securities markets and the performance results for the Funds. Following this letter, we also provide the Portfolio Managers’ discussion of their investment management approach, performance results, and market outlook.

The economic recovery that began in 2009 extended into 2010, thanks in part to a concerted effort by global governments to provide a framework conducive to growth and asset inflation. More specifically, government officials, especially those in the U.S., used monetary policy to keep interest rates low in order to entice corporations to spend and investors to allocate funds to risk-based assets. This accommodative monetary policy proved to be very successful in the short run as economies continued to recover and riskier assets appreciated substantially. That being said, the path higher was somewhat choppy as fears over sovereign debt and the potential for a double-dip recession weighed on the minds of investors. Fear turned into courage in the second half of the year as corporate earnings proved to be better than expected and a sovereign debt crisis was averted when European government officials agreed to provide the Irish government with an $89 billion rescue package. These events contributed to a strong year for credit sensitive fixed-income securities, especially those in the high-yield sector with the Barclays U.S. Capital Corporate High Yield Index gaining 15.12%. The risk trade was also in favor on the equity side of the ledger and benefited greatly from strong corporate earnings as well as the Federal Reserve’s plan to stimulate the U.S. economy via another round of quantitative easing (QE2). For the year, small-cap stocks posted the best results with the Russell 2000^® Index rising 26.85%, closely followed by the performance of mid-cap stocks, as represented by the Russell MidCap^® Index, which gained 25.48% for the year.

Against this backdrop, the Managers AMG Chicago Equity Partners Mid-Cap Fund, Managers AMG Chicago Equity Partners Balanced Fund, Managers High Yield Fund, Managers Fixed Income Fund, Managers Short Duration Government Fund and the Managers Intermediate Duration Government Fund (each a “Fund” and collectively the “Funds”), generated the following returns as detailed below:


Periods Ended 12/31/10		6 Months			1 Year			3 Years			5 Years			10 Years			Since Inception			Inception Date
Managers AMG Chicago Equity Partners Mid-Cap Fund
-Class A	No Load		30.97	%		28.06	%		0.96	%		2.43	%		4.42	%		9.62	%		1/2/1997
-Class A	With Load		23.48	%		20.68	%		(1.01	)%		1.23	%		3.80	%		9.15	%		1/2/1997
-Class B	No Load		30.12	%		26.78	%		0.11	%		1.59	%		3.72	%		8.00	%		1/28/1998
-Class B	With Load		25.12	%		21.78	%		(0.89	)%		1.21	%		3.72	%		8.00	%		1/28/1998
-Class C	No Load		30.18	%		26.71	%		0.10	%		1.55	%		3.71	%		7.43	%		2/19/1998
-Class C	With Load		29.18	%		25.71	%		0.10	%		1.55	%		3.71	%		7.43	%		2/19/1998
-Institutional Class			30.84	%		27.97	%		1.11	%		2.57	%		4.74	%		10.02	%		1/2/1997
Russell Midcap^® Index			28.12	%		25.48	%		1.05	%		4.66	%		6.54	%		9.28	%

Letter to Shareholders (continued)


Periods Ended 12/31/10		6 Months			1 Year			3 Years			5 Years			10 Years			Since Inception			Inception Date
Managers AMG Chicago Equity Partners Balanced Fund
-Class A	No Load		12.52	%		11.14	%		2.76	%		5.24	%		4.10	%		7.46	%		1/2/1997
-Class A	With Load		6.03	%		4.76	%		0.76	%		4.01	%		3.49	%		7.01	%		1/2/1997
-Class B	No Load		12.07	%		10.28	%		2.02	%		4.47	%		3.46	%		5.79	%		2/10/1998
-Class B	With Load		7.07	%		5.28	%		1.05	%		4.13	%		3.46	%		5.79	%		2/10/1998
-Class C	No Load		12.08	%		10.27	%		2.00	%		4.46	%		3.45	%		5.73	%		2/13/1998
-Class C	With Load		11.08	%		9.27	%		2.00	%		4.46	%		3.45	%		5.73	%		2/13/1998
-Institutional Class			12.65	%		11.42	%		3.03	%		5.50	%		4.49	%		7.90	%		1/2/1997
60% Russell 1000^® Index/40% Barclays Capital U.S. Aggregate Bond Index			14.52	%		12.72	%		2.11	%		4.74	%		4.09	%		6.57	%

Managers High Yield Fund
-Class A	No Load		10.27	%		14.20	%		7.16	%		6.92	%		8.16	%		6.52	%		1/2/1998
-Class A	With Load		5.64	%		9.29	%		5.60	%		5.99	%		7.69	%		6.17	%		1/2/1998
-Class B	No Load		9.94	%		13.40	%		6.26	%		6.02	%		7.41	%		5.49	%		2/19/1998
-Class B	With Load		4.94	%		8.40	%		5.42	%		5.73	%		7.41	%		5.49	%		2/19/1998
-Class C	No Load		9.94	%		13.42	%		6.33	%		6.07	%		7.44	%		5.51	%		2/19/1998
-Class C	With Load		8.94	%		12.42	%		6.33	%		6.07	%		7.44	%		5.51	%		2/19/1998
-Institutional Class			10.49	%		14.58	%		7.54	%		7.24	%		8.58	%		6.61	%		3/2/1998
Barclays Capital U.S. Corporate High Yield Index			10.15	%		15.12	%		10.38	%		8.91	%		8.88	%		N/A

Managers Fixed Income Fund
-Class A	No Load		4.24	%		10.04	%		6.66	%		6.52	%		6.50	%		6.50	%		1/2/1997
-Class A	With Load		(0.20	)%		5.39	%		5.12	%		5.60	%		6.04	%		6.17	%		1/2/1997
-Class B	No Load		3.87	%		9.26	%		5.87	%		5.72	%		5.82	%		5.65	%		3/20/1998
-Class B	With Load		(1.13	)%		4.26	%		4.97	%		5.40	%		5.82	%		5.65	%		3/20/1998
-Class C	No Load		3.85	%		9.22	%		5.84	%		5.72	%		5.82	%		5.74	%		3/5/1998
-Class C	With Load		2.85	%		8.22	%		5.84	%		5.72	%		5.82	%		5.74	%		3/5/1998
-Institutional Class			4.27	%		10.29	%		6.90	%		6.78	%		6.87	%		6.95	%		1/2/1997
Barclays Capital U.S. Aggregate Bond Index			1.15	%		6.54	%		5.90	%		5.80	%		5.84	%		6.25	%

Managers Short Duration Government Fund			0.78	%		1.58	%		2.26	%		3.25	%		3.52	%		4.32	%		3/31/1992
BofA Merrill Lynch Six-Month U.S. Treasury Bill Index			0.19	%		0.36	%		1.50	%		2.97	%		2.78	%		3.86	%

Managers Intermediate Duration Government Fund			1.49	%		7.30	%		6.74	%		6.24	%		5.69	%		6.57	%		3/31/1992
Citigroup Mortgage Index			0.75	%		5.50	%		6.57	%		6.37	%		5.94	%		6.58	%

For the year ended December 31, 2010, the Managers AMG Chicago Equity Partners Mid-Cap Fund (Institutional Class) returned 27.97%, versus the Russell Midcap^® Index at 25.48%. The primary driver of the Fund’s outperformance was security selection in the consumer discretionary, health care, and technology sectors while selection from the financial and materials sectors detracted from performance.

For the year ended December 31, 2010, the Managers AMG Chicago Equity Partners Balanced Fund (Institutional Class) returned 11.42%, underperforming the 12.72% return for its hypothetical benchmark, which consists of 60% of the return of the Russell 1000^® Index and 40% of the return of the Barclays Capital U.S. Aggregate Bond Index. The primary driver of the Fund’s underperformance was its underweight to equities

Letter to Shareholders (continued)

relative to the benchmark. The team at Chicago Equity Partners moved to this allocation in mid-August, reflecting the continued economic uncertainty and slow-growth recovery scenario.

For the year ended December 31, 2010 the Managers High Yield Fund (Institutional Class) returned 14.58%, compared to 15.12% for the Barclays Capital U.S. Corporate High Yield Index. Performance was hindered by an underweight to the insurance sector and poor performance in the lodging, cable, and media sectors. This was partly offset by decent performance in the health care and telecommunications sectors.

For the year ended December 31, 2010, Managers Fixed Income Fund (Institutional Class) returned 10.29%, easily outpacing the 6.54% return for the Barclays Capital U.S. Aggregate Bond Index. The primary driver of the solid results was the Fund’s exposures to investment-grade and high-yield corporate bonds. The primary detractor from performance was the Fund’s cash allocation.

For the year ended December 31, 2010, the Managers Short Duration Government Fund returned 1.58%, outperforming its benchmark, the BofA Merrill Lynch Six-Month Treasury Bill Index, which returned 0.36%. The primary driver of the Fund’s outperformance for 2010 was its agency MBS exposure. The Fund’s yield-curve positioning detracted slightly from performance.

For the year ended December 31, 2010, the Managers Intermediate Duration Government Fund returned 7.30%, compared to 5.50% for its benchmark, the Citigroup Mortgage Index. Most of the Fund’s outperformance for 2010 was attributable to its exposure to agency and non-agency mortgage-backed securities. The Fund’s yield-curve positioning detracted slightly from performance.

The following report covers the one-year period ended December 31, 2010. Should you have any questions about this report, or if you’d like to receive a prospectus and additional information, including fees and expenses for these or any of the other Funds in our family, please feel free to contact us at 1-800-835-3879, or visit our Web site at www.managersinvest.com. As always, please read the prospectus carefully before you invest or send money.

If you are curious about how you can better diversify your investment program, visit the Knowledge Center on our Web site and view our articles in the investment strategies section. You can rest assured that under all market conditions our team is focused on delivering excellent investment management services for your benefit.

We thank you for your continued confidence and investment in The Managers Funds.

Respectfully,

LOGO

John H. Streur

Senior Managing Partner

Managers Investment Group LLC

About Your Fund’s Expenses

As a shareholder of a Fund, you may incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on $1,000 invested at the beginning of the period and held for the entire period as indicated below.

Actual Expenses

The first line of the following table provides information about the actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.


Six Months Ended December 31, 2010	Expense Ratio for the Period			Beginning Account Value 07/01/2010		Ending Account Value 12/31/2010		Expenses Paid During Period*
Managers AMG Chicago Equity Partners Mid-Cap Fund Class A
Based on Actual Fund Return		1.24	%	$	1,000	$	1,310	$	7.22
Based on Hypothetical 5% Annual Return		1.24	%	$	1,000	$	1,019	$	6.31

Managers AMG Chicago Equity Partners Mid-Cap Fund Class B
Based on Actual Fund Return		1.99	%	$	1,000	$	1,301	$	11.54
Based on Hypothetical 5% Annual Return		1.99	%	$	1,000	$	1,015	$	10.11

Managers AMG Chicago Equity Partners Mid-Cap Fund Class C
Based on Actual Fund Return		1.99	%	$	1,000	$	1,302	$	11.55
Based on Hypothetical 5% Annual Return		1.99	%	$	1,000	$	1,015	$	10.11

Managers AMG Chicago Equity Partners Mid-Cap Fund Institutional Class
Based on Actual Fund Return		0.99	%	$	1,000	$	1,308	$	5.76
Based on Hypothetical 5% Annual Return		0.99	%	$	1,000	$	1,020	$	5.04

Managers AMG Chicago Equity Partners Balanced Fund Class A
Based on Actual Fund Return		1.25	%	$	1,000	$	1,125	$	6.70
Based on Hypothetical 5% Annual Return		1.25	%	$	1,000	$	1,019	$	6.36

Managers AMG Chicago Equity Partners Balanced Fund Class B
Based on Actual Fund Return		2.00	%	$	1,000	$	1,121	$	10.69
Based on Hypothetical 5% Annual Return		2.00	%	$	1,000	$	1,015	$	10.16

Managers AMG Chicago Equity Partners Balanced Fund Class C
Based on Actual Fund Return		2.00	%	$	1,000	$	1,121	$	10.69
Based on Hypothetical 5% Annual Return		2.00	%	$	1,000	$	1,015	$	10.16

Managers AMG Chicago Equity Partners Balanced Fund Institutional Class
Based on Actual Fund Return		1.00	%	$	1,000	$	1,127	$	5.36
Based on Hypothetical 5% Annual Return		1.00	%	$	1,000	$	1,020	$	5.09

*	Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184), then divided by 365.

About Your Fund’s Expenses (continued)


Six Months Ended December 31, 2010	Expense Ratio for the Period			Beginning Account Value 07/01/2010		Ending Account Value 12/31/2010		Expenses Paid During Period*
Managers High Yield Fund Class A
Based on Actual Fund Return		1.15	%	$	1,000	$	1,103	$	6.09
Based on Hypothetical 5% Annual Return		1.15	%	$	1,000	$	1,019	$	5.85

Managers High Yield Fund Class B
Based on Actual Fund Return		1.90	%	$	1,000	$	1,099	$	10.05
Based on Hypothetical 5% Annual Return		1.90	%	$	1,000	$	1,016	$	9.65

Managers High Yield Fund Class C
Based on Actual Fund Return		1.90	%	$	1,000	$	1,099	$	10.05
Based on Hypothetical 5% Annual Return		1.90	%	$	1,000	$	1,016	$	9.65

Managers High Yield Fund Institutional Class
Based on Actual Fund Return		0.90	%	$	1,000	$	1,105	$	4.77
Based on Hypothetical 5% Annual Return		0.90	%	$	1,000	$	1,021	$	4.58

Managers Fixed Income Fund Class A
Based on Actual Fund Return		0.84	%	$	1,000	$	1,042	$	4.32
Based on Hypothetical 5% Annual Return		0.84	%	$	1,000	$	1,021	$	4.28

Managers Fixed Income Fund Class B
Based on Actual Fund Return		1.59	%	$	1,000	$	1,039	$	8.17
Based on Hypothetical 5% Annual Return		1.59	%	$	1,000	$	1,017	$	8.08

Managers Fixed Income Fund Class C
Based on Actual Fund Return		1.59	%	$	1,000	$	1,039	$	8.17
Based on Hypothetical 5% Annual Return		1.59	%	$	1,000	$	1,017	$	8.08

Managers Fixed Income Fund Institutional Class
Based on Actual Fund Return		0.59	%	$	1,000	$	1,043	$	3.04
Based on Hypothetical 5% Annual Return		0.59	%	$	1,000	$	1,022	$	3.01

Managers Short Duration Government Fund
Based on Actual Fund Return		0.81	%	$	1,000	$	1,008	$	4.10
Based on Hypothetical 5% Annual Return		0.81	%	$	1,000	$	1,021	$	4.13

Managers Intermediate Duration Government Fund
Based on Actual Fund Return		0.89	%	$	1,000	$	1,015	$	4.52
Based on Hypothetical 5% Annual Return		0.89	%	$	1,000	$	1,021	$	4.53

*	Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184), then divided by 365.

Managers AMG Chicago Equity Partners Mid-Cap Fund

Investment Manager’s Comments

The Year in Review

For the year ended December 31, 2010, the Managers AMG Chicago Equity Partners Mid-Cap Fund’s Institutional Class returned 27.97%, versus the Russell Midcap^® Index at 25.48%.

The economic news in the third and fourth quarters of 2010 was generally positive. Fears of a ‘double-dip’ recession receded, as the third quarter GDP growth number was 2.6%, which was a pick-up from the 1.7% reading in the prior three months. The general consensus is for a similar reading in the fourth quarter. Unemployment dropped from 9.8% to 9.4% in the latest reading, but this was due to equal parts increased jobs and a reduction in the workforce. The unemployment rate, which has been volatile, is based on a survey of only 60,000 households. It has generally been stronger than the more complete payroll survey of businesses, which showed an increase of 103,000 jobs in the same December release – a slight disappointment. While we may have seen the worst in terms of job losses, hiring levels remain weak. There was a rebound in the manufacturing economy, where the Institute for Supply Management new orders index ended December at a 60.9 reading, up from 51.1, at the end of the prior quarter (values above 50 indicate expansion). The personal savings rate fell slightly in the 4th quarter, as spending rose faster than disposable income. Ultimately, consumers will need to repair their financial net worth, which requires a long-term savings rate of 7% to 8%, according to most estimates. This is difficult to achieve with falling or flattening incomes combined with the massive hit to net worth from the decline in housing values, although the portfolio wealth effect from a resurgent stock market is a positive. The savings rate data is volatile for several reasons, but it appears the underlying trend right now is in the 5% to 6% range. A recent pick-up is real disposable income growth in the latest few months is the key to supporting higher spending levels and higher savings. The latest consumer confidence expectations reading of 71.9 from December 2010 is actually down from the 75.9 reading at the end of 2009. In general, the consumer remains cautious and nervous about prospects for job and income growth in the future, but spending appears to have picked up recently. Everyone will be watching to see if this spending is maintained.

Factor group performance in 2010 varied by quarter. Value has been particularly inconsistent, working in the first quarter, negative

in the second quarter, only to work very well in the third quarter. While value was the best factor group in the fourth quarter, it was driven mostly by the month of December, when the low-priced stocks (and P/B factor) rallied. Despite doing well in October and November, the momentum factors reversed in December, ending the quarter with a negative average.

After much variation throughout the year, all four factor groups ended 2010 with a positive average return. Security selection in consumer discretionary, energy, health care and technology was positive; selection from financials, materials, and consumer staples detracted from performance. Overall, we continue to see an improving environment. For the year the highest ranked stocks outperformed the lowest ranked stocks, but the spread between the two was narrower than the long term.

Looking Forward

Overall, our philosophy will not change based on short-term trends or conditions in the market. Our goal is to add value through security selection, while attempting to neutralize other risk factors, such as market timing and sector rotation, for which there is not adequate compensation by the market. We will continue to use our disciplined approach as we seek to provide added value at controlled levels of risk.

This commentary reflects the viewpoints of the portfolio manager, Chicago Equity Partners, as of January 21, 2011.

Cumulative Total Return Performance

Mid-Cap’s cumulative total return is based on the daily change in net asset value (NAV), and assumes that all dividends and distributions were reinvested. The Russell Midcap^® Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap^® Index is a subset of the Russell 1000^® Index and measures the performance of the 800 smallest companies in the Russell 1000^® Index, which represent approximately 27% of the total market capitalization of the Russell 1000^® Index. The S&P Mid Cap 400 Index is the most widely used index for mid-size companies and covers approximately 7% of the U.S. equity market. Both indices assume reinvestment of dividends. Unlike the Fund, the indices are unmanaged, are not available for investment and do not incur expenses. This chart compares a hypothetical $10,000

Managers AMG Chicago Equity Partners Mid-Cap Fund

Investment Manager’s Comments (continued)

Cumulative Total Return Performance (continued)

investment made in the Fund’s Class A Shares (with load) on December 31, 2000, with a $10,000 investment made in the Russell Midcap^® Index and the S&P Mid Cap 400 Index for the same time periods. Performance for periods longer than one year is annualized. The graph and table do not reflect the deduction of taxes that a shareholder would pay on a Fund distribution or redemption of shares. Past performance is not indicative of future results. The listed returns for the Fund are net of expenses and the returns for the indices exclude expenses.

LOGO

The table below shows the average annual total returns for the Managers AMG CEP Mid-Cap Fund, the Russell Midcap^® Index and the S&P Mid Cap 400 Index from December 31, 2000 through December 31,2010.


Average Annual Total Returns¹			1 Year			5 Years			10 Years
Managers AMG CEP Mid-Cap Fund^2,3	-Class A	No Load		28.06	%		2.43	%		4.42	%
	-Class A	With Load		20.68	%		1.23	%		3.80	%
	-Class B	No Load		26.78	%		1.59	%		3.72	%
	-Class B	With Load		21.78	%		1.21	%		3.72	%
	-Class C	No Load		26.71	%		1.55	%		3.71	%
	-Class C	With Load		25.71	%		1.55	%		3.71	%
	-Institutional Class	No Load		27.97	%		2.57	%		4.74	%

Russell Midcap^® Index⁴				25.48	%		4.66	%		6.54	%

S&P Mid Cap 400 Index (former benchmark)⁵				26.64	%		5.73	%		7.16	%

The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. For performance information through the most recent month end please call (800) 835-3879 or visit our Web site at www.managersinvest.com.

Performance differences among the share classes are due to differences in sales charge structures and class expenses. Returns shown reflect maximum sales charge of 5.75% on Class A, as well as the applicable contingent deferred sales charge (CDSC) on both Class B and C shares. The Class B shares’ CDSC declines annually between years 1 through 6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge is assessed after year six. Class C shares held for less than one year are subject to a 1% CDSC.

In choosing a Fund, investors should carefully consider the amount they plan to invest, their investment objectives, the Fund’s investment objectives, risks, charges and expenses before investing. For this and other information, please call (800) 835-3879 or visit www.managersinvest.com for a free prospectus. Read it carefully before investing or sending money. Distributed by Managers Distributors, Inc., member FINRA.

Total return equals income yield plus share price change and assumes reinvestment of all dividends and capital gain distributions. Returns are net of fees and may reflect offsets of Fund expenses as described in the Prospectus. No adjustment has been made for taxes payable by shareholders on their reinvested dividends and capital gain distributions. Returns for periods greater than one year are annualized. The listed returns on the Fund are net of expenses and based on the published NAV as of December 31, 2010. All returns are in U.S. dollars($).

²	The Fund is subject to risks associated with investments in mid-capitalization companies, such as erratic earnings patterns, competitive conditions, limited earnings history, and a reliance on one or a limited number of products.

³	From time to time, the Fund’s advisor has waived its fees and/or absorbed Fund expenses, which has resulted in higher returns.

⁴	The Russell Midcap^® Index measures the performance of the 800 smallest companies in the Russell 1000^® Index. Unlike the Fund, the Russell Midcap^® Index is unmanaged, is not available for investment, and does not incur expenses.

⁵

The S&P Mid Cap 400 Index is the most widely used index for mid-size companies and covers approximately 7% of the U.S. equities market. Unlike the Fund, the S&P Mid Cap 400 Index is unmanaged, is not available for investment and does not incur expenses. The S&P Mid Cap 400 Index is a proprietary data of Standard & Poor’s, a division of McGraw-Hill Companies, Inc. All rights reserved. On December 31, 2009, the Investment Manager changed the benchmark from the S&P Mid Cap 400 Index to the Russell Midcap^® Index.

The Russell Midcap^® Index is a registered trademark of Russell Investments. Russell^® is a trademark of Russell Investments.

Not FDIC insured, nor bank guaranteed. May lose value.

Managers AMG Chicago Equity Partners Mid-Cap Fund

Fund Snapshots

December 31, 2010

Portfolio Breakdown


Industry	Managers AMG CEP Mid-Cap Fund**			Russell Midcap^® Index			S&P Mid Cap 400 Index
Financials		18.9	%		18.8	%		19.8	%
Industrials		18.1	%		13.1	%		16.2	%
Information Technology		16.4	%		14.5	%		15.6	%
Consumer Discretionary		11.7	%		15.2	%		14.3	%
Health Care		10.6	%		9.0	%		11.1	%
Materials		6.9	%		6.1	%		6.8	%
Utilities		5.7	%		6.4	%		5.9	%
Energy		5.3	%		8.8	%		5.9	%
Consumer Staples		4.2	%		6.0	%		3.6	%
Telecommunication Services		0.9	%		2.1	%		0.8	%
Other Assets and Liabilities		1.3	%		0.0	%		0.0	%

**	As a percentage of net assets

Top Ten Holdings


Top Ten Holdings	% of Net Assets
Timken Co.*		2.5	%
Cathay General Bancorp		2.0
MICROS Systems, Inc.		1.9
Factset Research Systems, Inc.		1.7
Kennametal, Inc.*		1.7
Anixter International, Inc.		1.6
Atmel Corp.		1.5
Oil States International, Inc.		1.5
RenaissanceRe Holdings, Ltd.*		1.4
Nationwide Health Properties, Inc.		1.4

Top Ten as a Group		17.2	%

*	Top Ten Holding at June 30, 2010

Any sectors, industries, or securities discussed should not be perceived as investment recommendations. Mention of a specific security should not be considered a recommendation to buy or solicitation to sell that security. Specific securities mentioned in this report may have been sold from the Fund’s portfolio of investments by the time you receive this report.

Managers AMG Chicago Equity Partners Mid-Cap Fund

Schedule of Portfolio Investments

December 31, 2010


	Shares			Value
Common Stocks - 98.7%
Consumer Discretionary - 11.7%
Advance Auto Parts, Inc.		7,100		$	469,665
American Greetings Corp., Class A		200			4,432
AnnTaylor Stores Corp.*		4,300			117,777
Brinker International, Inc.		16,100			336,168
Chipotle Mexican Grill, Inc.*		1,100			233,926
Dana Holding Corp.*		6,800			117,028
Dillard’s, Inc., Class A		2,500	²		94,850
Dollar Tree, Inc.*		7,400			414,992
Fossil, Inc.*		3,600			253,728
Gannett Co., Inc.		7,900			119,211
Interpublic Group of Companies, Inc.*		9,200			97,704
Liberty Global, Inc., Class A*		5,300	²		187,514
Polaris Industries, Inc.		7,100			553,942
Signet Jewelers, Ltd.*		1,900			82,460
Sotheby’s		6,700			301,500
Timberland Co.*		10,300			253,277
Tractor Supply Co.		5,000			242,450
TRW Automotive Holdings Corp.*		4,600	²		242,420
Warnaco Group, Inc., The*		2,000			110,140
Williams-Sonoma, Inc.		14,600			521,074
Total Consumer Discretionary					4,754,258
Consumer Staples - 4.2%
Alberto-Culver Co.		2,900			107,416
Constellation Brands, Inc.*		3,600			79,740
Corn Products International, Inc.		9,300			427,800
Energizer Holdings, Inc.*		1,800			131,220
Hansen Natural Corp.*		3,500			182,980
Herbalife, Ltd.		3,500			239,295
Hormel Foods Corp.		5,000			256,300
McCormick & Co., Inc.		3,800			176,814
Nu Skin Enterprises, Inc., Class A		3,900			118,014
Total Consumer Staples					1,719,579
Energy - 5.3%
Berry Petroleum Co., Class A		3,300			144,210
Bill Barrett Corp.*		4,600			189,198
Newfield Exploration Co.*		1,100			79,321
Oil States International, Inc.*		9,800			628,082
Patterson-UTI Energy, Inc.		16,800			362,040


	Shares			Value
Seacor Holdings, Inc.*		900		$	90,981
Tesoro Corp.		15,800			292,932
Whiting Petroleum Corp.*		3,200			375,008
Total Energy					2,161,772
Financials - 18.9%
Ares Capital Corp.		6,300			103,824
Assurant, Inc.		11,000			423,720
Cathay General Bancorp		48,500			809,950
CBL & Associates Properties, Inc.		11,400			199,500
Chimera Investment Corp.		57,400			235,914
Commerce Bancshares, Inc.		240			9,535
Commonwealth REIT		14,700			374,997
Everest Re Group, Ltd.		1,400			118,748
Federal Realty Investment Trust		2,700			210,411
First American Financial Corp.		6,106			91,224
Hospitality Properties Trust		15,200			350,208
Huntington Bancshares, Inc.		61,000			419,070
Janus Capital Group, Inc.		11,300			146,561
Legg Mason, Inc.		9,500			344,565
Liberty Property Trust		7,900			252,168
MFA Financial, Inc.		47,100			384,336
National Retail Properties, Inc.		11,600			307,400
Nationwide Health Properties, Inc.		15,400			560,252
Platinum Underwriter Holdings, Ltd.		6,700	²		301,299
Raymond James Financial, Inc.		8,900			291,030
Rayonier, Inc.		6,700			351,884
Realty Income Corp.		6,500	²		222,300
RenaissanceRe Holdings, Ltd.		8,800			560,472
SVB Financial Group*		1,200			63,660
Tanger Factory Outlet Centers, Inc.		3,300			168,927
Trustmark Corp.		11,900			295,596
Webster Financial Corp.		5,800			114,260
Total Financials					7,711,811
Health Care - 10.6%
AMERIGROUP Corp.*		8,300			364,536
Cephalon, Inc.*		4,100			253,052
Cooper Companies, Inc., The		9,100			512,694
Coventry Health Care, Inc.*		18,100			477,840
Health Net, Inc.*		20,500			559,445
Hill-Rom Holdings, Inc.		11,000			433,070

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Mid-Cap Fund

Schedule of Portfolio Investments (continued)


	Shares			Value
Health Care - 10.6% (continued)
Kindred Healthcare, Inc.*		10,700		$	196,559
Kinetic Concepts, Inc.*		2,600			108,888
Medicis Pharmaceutical Corp., Class A		13,600			364,344
Mettler-Toledo International, Inc.*		1,500			226,815
Owens & Minor, Inc.		6,850	²		201,596
Sirona Dental Systems, Inc.*		2,600			108,628
Steris Corp.		3,300			120,318
United Therapeutics Corp.*		6,500			410,930
Total Health Care					4,338,715
Industrials - 18.1%
Aecom Technology Corp.*		16,900			472,693
AGCO Corp.*		2,800			141,848
Alaska Airgroup, Inc.*		4,000			226,760
Alexander & Baldwin, Inc.		7,800			312,234
Baldor Electric Co.		1,800			113,472
Bucyrus International, Inc.		3,000			268,200
Chicago Bridge & Iron Co., N.V.*		2,700			88,830
Corporate Executive Board Co.		4,100			153,955
Crane Co.		8,400			344,988
EMCOR Group, Inc.*		10,200			295,596
Esterline Technologies Corp.*		900			61,731
Gardner Denver, Inc.		2,500			172,050
GATX Corp.		8,200			289,296
Hexcel Corp.*		2,800			50,652
Joy Global, Inc.		1,400			121,450
KBR, Inc.		16,300			496,661
Kennametal, Inc.		17,400			686,604
Manpower, Inc.		5,100			320,076
Nordson Corp.		3,900			358,332
Oshkosh Truck Corp.*		5,400			190,296
R.R. Donnelley & Sons Co.		7,500			131,025
Snap-On, Inc.		2,100			118,818
Timken Co.		21,000			1,002,330
Toro Co., The		5,000			308,200
Towers Watson & Co., Class A		2,300			119,738
United Rentals, Inc.*		15,100			343,525
URS Corp.*		4,300			178,923
Total Industrials					7,368,283
Information Technology - 16.4%
Acme Packet, Inc.*		2,100			111,636


	Shares			Value
Anixter International, Inc.		10,700		$	639,111
Aruba Networks, Inc.*		3,200			66,816
Atmel Corp.*		51,000			628,320
Avnet, Inc.*		8,500			280,755
CommScope, Inc.*		3,300			103,026
Factset Research Systems, Inc.		7,400			693,824
Gartner, Inc.*		15,800			524,560
IAC/InterActiveCorp*		3,400			97,580
International Rectifier Corp.*		10,900			323,621
MICROS Systems, Inc.*		18,100			793,866
NCR Corp.*		8,000			122,960
NeuStar, Inc., Class A*		5,200			135,460
Plantronics, Inc.		4,900			182,378
RF Micro Devices, Inc.*		8,400			61,740
Riverbed Technology, Inc.*		8,400			295,428
Skyworks Solutions, Inc.*		9,900			283,437
Solera Holdings, Inc.		5,200			266,864
Tech Data Corp.*		2,000			88,040
TIBCO Software, Inc.*		16,200			319,302
ValueClick, Inc.*		8,600			137,858
Veeco Instruments, Inc.*		3,100	²		133,176
VeriFone Holdings, Inc.*		6,100			235,216
Zebra Technologies Corp.*		4,400			167,156
Total Information Technology					6,692,130
Materials - 6.9%
Cabot Corp.		11,800			444,270
Cytec Industries, Inc.		3,300			175,098
Domtar Corp.		4,300			326,456
International Flavors & Fragrances, Inc.		1,000			55,590
Lubrizol Corp.		5,000			534,400
Reliance Steel & Aluminum Co.		4,200			214,620
Rock-Tenn Co., Class A		2,100			113,295
RPM International, Inc.		4,600			101,660
Sonoco Products Co.		11,100			373,737
Worthington Industries, Inc.		24,700			454,480
Total Materials					2,793,606
Telecommunication Services - 0.9%
MetroPCS Communications, Inc.*		16,300			205,869
Telephone & Data Systems, Inc.		4,500			164,475
Total Telecommunication Services					370,344

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Mid-Cap Fund

Schedule of Portfolio Investments (continued)


	Shares			Value
Utilities - 5.7%
AGL Resources, Inc.		2,500		$	89,625
American Water Works Co., Inc.		7,800			197,262
Energen Corp.		3,600			173,736
Idacorp, Inc.		9,300			343,914
Integrys Energy Group, Inc.		6,200			300,762
NiSource, Inc.		28,600			503,932
Northeast Utilities		17,300			551,524
Pepco Holdings, Inc.		4,300			78,475
Piedmont Natural Gas Co.		2,600	²		72,696
Total Utilities					2,311,926
Total Common Stocks (cost $33,119,818)					40,222,424


	Shares		Value
Short-Term Investments - 2.7%¹
BNY Institutional Cash Reserves Fund, Series B*^3,4		159,721	$	127,301
BNY Mellon Overnight Government Fund, 0.23%³		607,000		607,000
Dreyfus Cash Management Fund, Institutional Class Shares, 0.14%		343,668		343,668
Total Short-Term Investments - (cost $1,110,389)				1,077,969
Total Investments - 101.4% - (cost $34,230,207)				41,300,393
Other Assets, less Liabilities - (1.4)%				(556,886	)
Net Assets - 100.0%			$	40,743,507

Note: Based on the approximate cost of investments of $34,580,971 for Federal income tax purposes at December 31, 2010, the aggregate gross unrealized appreciation and depreciation were $6,910,209 and $190,787, respectively, resulting in net unrealized appreciation of investments of $6,719,422.

^*	Non-income-producing security.

¹	Yield shown for each investment company represents the December 31, 2010, seven-day average yield, which refers to the sum of the previous seven days’ dividends paid, expressed as an annual percentage.

²	Some or all of these shares were out on loan to various brokers as of December 31, 2010, amounting to $745,322, or 1.8% of net assets.

³	Collateral received from brokers for securities lending was invested in this short-term investment.

⁴	On September 12, 2008, The Bank of New York Mellon established a separate sleeve of the BNY Institutional Cash Reserves Fund (Series B) to hold certain Lehman Brothers floating rate notes. The Fund’s position in Series B is being fair valued daily. (See Note 7 in the Notes to Financial Statements.)

The following table summarizes the inputs used to value the Fund’s net assets by the fair value hierarchy levels as of December 31, 2010: (See Note 1(a) in the Notes to Financial Statements.)


	Quoted Prices in Active Markets for Identical Investments Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Investments in Securities
Common Stocks^†	$	40,222,424		—		—	$	40,222,424
Short-Term Investments		950,668	$	127,301		—		1,077,969

Total Investments in Securities	$	41,173,092	$	127,301		—	$	41,300,393

†	All common stocks held in the Fund are Level 1 securities. For a detailed break-out of common stocks by major industry classification, please refer to the Schedule of Portfolio Investments.

As of December 31, 2010, the Fund had no significant transfers between Level 1 and Level 2 from the beginning of the reporting period.

Investments Definitions and Abbreviations:

REIT: Real Estate Investment Trust

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Balanced Fund

Investment Manager’s Comments

The Year in Review

For the year ended December 31, 2010, the Managers AMG Chicago Equity Partners Balanced Fund’s Institutional Class returned 11.42%, underperforming the 12.72% return for its hypothetical benchmark, which consists of 60% of the return of the Russell 1000^® Index and 40% of the return of the Barclays Capital U.S. Aggregate Bond Index.

During the second half of the year, the Fund’s allocation was approximately 5% underweight to stocks, which was the main reason for the underperformance because equities posted double-digit gains during the last two quarters, while fixed income was slightly negative during the fourth quarter. We moved to this allocation in mid-August, reflecting the continued economic uncertainty and slow growth recovery scenario. As a result of the Fed’s actions and other positive news, the more cautious allocation erased the positive excess returns from both the equity and fixed portfolios over the one-year period.

The S&P 500 finished the year up 15%, posting a second year of double-digit gains as the market continues to recover from the financial crisis. Reaching that 15% return was no easy feat, however. The market had to digest several crisis (PIIGS, Gulf oil spill, flash crash) and mixed economic news (domestic and global) throughout the year. Recall that at the end of the second quarter, the S&P 500 was down almost 7%, and the words “double dip” were on the tip of everyone’s tongue. It wasn’t until the late August Fed meeting at Jackson Hole, Wyoming, that the market rallied, reflecting high expectations for Quantitative Easing 2.0 (QE2).

The equity portion of the Fund slightly outperformed its benchmark for the year. For the year, the highest ranked stocks outperformed the lowest ranked stocks, but the spread between the two was narrower than the long term. The performance of the quantitative factors (grouped by valuation, quality, momentum, and growth) that the Fund uses varied by quarter. Value has been particularly inconsistent, working in the first quarter, negative in the second quarter, only to work very well in the third quarter. While value was the best factor group in the fourth quarter, it was driven mostly by the month of December when the low-priced stocks (and P/B factor) rallied. Despite doing well in October and November, the momentum factors reversed in December, ending the quarter with a negative average.

After much variation throughout the year, all four factor groups ended 2010 with a positive average return. Security selection in consumer discretionary, consumer staples, and telecommunications was positive; selection from the industrial, health care, and utility sectors detracted from performance.

Overall, our philosophy will not change based on short-term trends or conditions in the market. Our goal is to add value through security selection, while attempting to neutralize other risk factors, such as market cap and sector rotation, for which there is not adequate compensation by the market.

The fixed-income market was characterized by two different sets of expectations in 2010. After remaining stable though the first quarter, interest rates declined dramatically in the second and third quarters as economic growth decelerated from 2009 levels. As the possibility of a double-dip recession emerged, investors globally became more risk averse. In addition to concerns over the U.S. economy, concern

developed over the credit worthiness of several European countries. In the fourth quarter, however, renewed optimism resulting from the Federal Reserve’s announcement of additional stimulus, in the form of QE2, caused interest rates to increase sharply. In spite of the change of direction in rates in the fourth quarter, fixed income returns finished the year at or above historical averages. Excess non-Treasury sectors remained strong in 2010. Quality spreads, curve slope, and rate volatility, likewise responded to the changing outlook throughout 2010. After declining dramatically in 2009 and early 2010, quality spreads increased mid-year, but resumed their decline into year end. The yield curve, after flattening early in 2010, resumed an upward slope after the Fed announced its desire to stimulate inflation. While reported year-over-year core CPI was at the lowest level in 50 years through November 2010, bond markets have increased the inflation premium in fixed income securities in spite of uncertainty over the effectiveness of QE2. The fixed income portion of the Fund outperformed over the one-year period.

Looking Forward

We have reduced our exposure to credit given concerns about 2011. In a post financial crisis environment, we believe the credit cycle will likely be shorter than in a normal post-recession period. Valuations are no longer compelling given the macroeconomic uncertainty. Agency debentures, agency mortgage-backed securities, and Treasuries were purchased with corporate sale proceeds. Reducing risk is prudent at this point in the recovery. Additionally, the portfolio is positioned to take advantage of the steep yield curve, while portfolio duration remains within + / -10% of the benchmark. As always, we will be diligent in monitoring exposures and will adjust the portfolio accordingly as we monitor the market conditions.

This commentary reflects the viewpoints of the portfolio manager, Chicago Equity Partners, as of January 21, 2011.

Cumulative Total Return Performance

The Fund’s cumulative total return is based on the daily change in net asset value (NAV), and assumes that all dividends and distributions were reinvested. The Barclays Capital U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds. The Russell 1000^® Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000^® Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000^® Index represents approximately 92% of the U.S. market. The S&P 500 Index is a capitalization-weighted index of 500 stocks. The S&P 500 Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Unlike the Fund, the Russell 1000^® Index, the S&P 500 Index, and the Barclays Capital U.S. Aggregate Bond Index are unmanaged, are not available for investment, and do not incur expenses. The chart illustrates the performance of a hypothetical $10,000 investment made in the Fund’s Class A Shares (with load) on December 31, 2000, to a $10,000 investment made in the benchmarks for the same time periods. The graph and table do not reflect the deduction of taxes that a shareholder would pay on a Fund distribution or redemption of shares. Performance for periods longer than one year is annualized. The listed returns for the Fund

Managers AMG Chicago Equity Partners Balanced Fund

Investment Manager’s Comments (continued)

Cumulative Total Return Performance (continued)

are net of expenses and the returns for the indices exclude expenses. Total returns for the Fund would have been lower had certain expenses not been reduced.

LOGO

The table below shows the average annual total returns for the Managers AMG CEP Balanced Fund, 60% Russell 1000^® Index & 40% Barclays Capital U.S. Aggregate Bond Index, and 60% S&P 500 & 40% Barclays Capital U.S. Aggregate Bond Index from December 31, 2000 through December 31, 2010.


Average Annual Total Returns¹			1 Year			5 Years			10 Years
Managers AMG CEP Balanced Fund^2,3	-Class A	No Load		11.14	%		5.24	%		4.10	%
	-Class A	With Load		4.76	%		4.01	%		3.49	%
	-Class B	No Load		10.28	%		4.47	%		3.46	%
	-Class B	With Load		5.28	%		4.13	%		3.46	%
	-Class C	No Load		10.27	%		4.46	%		3.45	%
	-Class C	With Load		9.27	%		4.46	%		3.45	%
	-Institutional Class	No Load		11.42	%		5.50	%		4.49	%

60% Russell 1000^® Index & 40% Barclays Capital U.S. Aggregate Bond Index^4,5				12.72	%		4.74	%		4.09	%

60% S&P 500 Index & 40% Barclays Capital U.S. Aggregate Bond Index (former benchmark)⁶				12.10	%		4.55	%		3.83	%

free prospectus. Read it carefully before investing or sending money. Distributed by Managers Distributors, Inc., member FINRA.

²	The Fund is subject to risks associated with investments in debt securities, such as default risk and fluctuations in the perception of the debtors’ ability to pay their creditors.

³	From time to time, the Fund’s advisor has waived its fees and/or absorbed Fund expenses, which has resulted in higher returns.

⁴

The Russell 1000^® Index measures the performance of approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. Market. Unlike the Fund, the Russell 1000^® Index is unmanaged, is not available for investment, and does not incur expenses.

⁵	The Barclays Capital U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds. Unlike the Fund, the Barclays Capital U.S. Aggregate Bond Index is unmanaged, is not available for investment, and does not incur expenses.

⁶

The Fund’s former benchmark was a combination of the S&P 500 Index and the Barclays Capital U.S. Aggregate Index. The S&P 500 Index is a capitalization-weighted index of 500 stocks. The S&P 500 Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays Capital U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds. Unlike the Fund, the S&P 500 and the Barclays Capital U.S. Aggregate Bond Index is unmanaged, is not available for investment, and does not incur expenses. On December 31, 2009, the Investment Manager changed the benchmark from the S&P 500 Index and the Barclays Capital U.S. Aggregate Bond Index to the Russell 1000^® Index.

The Russell 1000^® Index is a registered trademark of Russell Investments. Russell^® is a trademark of Russell Investments.

Not FDIC insured, nor bank guaranteed. May lose value.

Managers AMG Chicago Equity Partners Balanced Fund

Fund Snapshots

December 31, 2010

Portfolio Breakdown


Industry	Managers AMG CEP Balanced Fund**
U. S. Government and Agency Obligations		31.3	%
Information Technology		11.6	%
Financials		10.0	%
Industrials		9.9	%
Health Care		6.4	%
Consumer Staples		6.2	%
Energy		6.2	%
Consumer Discretionary		5.6	%
Mortgage-Backed Securities		2.9	%
Materials		2.7	%
Utilities		2.4	%
Telecommunication Services		1.6	%
Asset-Backed Securities		0.2	%
Other Assets and Liabilities		3.0	%

**	As a percentage of net assets

Top Ten Holdings


Top Ten Holdings	% of Net Assets
FHLMC, 1.625%, 09/26/12		1.9	%
Johnson & Johnson*		1.7
FHLB, 4.000%, 09/06/13		1.6
U.S. Treasury, Principal Only Strip, 08/15/39		1.4
International Business Machines Corp.		1.4
U.S. Treasury Notes, 2.250%, 05/31/14		1.4
Apple, Inc.*		1.3
ConocoPhillips Co.*		1.3
FNMA, 4.500%, 10/01/40		1.3
FNMA, 5.000%, 08/01/40		1.3

Top Ten as a Group		14.6	%

*	Top Ten Holding at June 30, 2010

Managers AMG Chicago Equity Partners Balanced Fund

Schedule of Portfolio Investments

December 31, 2010


Security Description	Shares			Value
Common Stocks - 57.5%
Consumer Discretionary - 5.6%
Advance Auto Parts, Inc.		500		$	33,075
Carmax, Inc.*		1,400			44,632
Coach, Inc.		500			27,655
Interpublic Group of Companies, Inc.*		10,600			112,572
Liberty Global, Inc., Class A*		3,500	²		123,830
Macy’s, Inc.		2,400			60,720
McDonald’s Corp.		1,700			130,492
News Corp., Inc., Class A		9,600			139,776
Ross Stores, Inc.		1,500			94,875
Stanley Black & Decker, Inc.		1,200			80,244
Starbucks Corp.		4,500			144,585
TRW Automotive Holdings Corp.*		1,100	²		57,970
Total Consumer Discretionary					1,050,426
Consumer Staples - 6.2%
Altria Group, Inc.		3,120			76,815
Coca-Cola Co., The		2,500			164,425
Coca-Cola Enterprises, Inc.		1,900			47,557
Corn Products International, Inc.		1,700			78,200
Estee Lauder Co., Class A		2,300			185,610
Herbalife, Ltd.		1,000			68,370
Hormel Foods Corp.		1,400			71,764
Kroger Co., The		2,100			46,956
Lorillard, Inc.		1,300			106,678
McCormick & Co., Inc.		2,000			93,060
Wal-Mart Stores, Inc.		4,300			231,899
Total Consumer Staples					1,171,334
Energy - 6.2%
Chevron Corp.		1,500			136,875
ConocoPhillips Co.		3,700			251,970
Devon Energy Corp.		1,900			149,169
Exxon Mobil Corp.		3,020			220,823
Halliburton Co.		1,900			77,577
Oil States International, Inc.*		1,800			115,362
Patterson-UTI Energy, Inc.		4,100			88,355
Seacor Holdings, Inc.*		200			20,218
Tesoro Corp.		2,600			48,204
Valero Energy Corp.		2,400			55,488
Total Energy					1,164,041

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Balanced Fund

Schedule of Portfolio Investments (continued)


Security Description	Shares		Value
Financials - 9.0%
American Express Co.		600	$	25,752
American Financial Group, Inc.		2,800		90,412
Annaly Capital Management, Inc.		4,000		71,680
Berkshire Hathaway, Inc., Class B*		800		64,088
Capital One Financial Corp.		2,600		110,656
Citigroup, Inc.*		38,000		179,740
Commonwealth REIT		4,200		107,142
Discover Financial Services		2,500		46,325
Goldman Sachs Group, Inc.		545		91,647
JPMorgan Chase & Co.		5,348		226,862
KeyCorp		23,000		203,550
M&T Bank Corp.		900		78,345
RenaissanceRe Holdings, Ltd.		2,700		171,963
SL Green Realty Corp.		900		60,759
SLM Corp.*		3,800		47,842
Travelers Companies, Inc., The		1,200		66,852
Wells Fargo & Co.		1,500		46,485
Total Financials				1,690,100
Health Care - 6.4%
AmerisourceBergen Corp.		5,600		191,072
Amgen, Inc.*		2,900		159,210
Biogen Idec, Inc.*		700		46,935
CR Bard, Inc.		1,200		110,124
Hill-Rom Holdings, Inc.		1,400		55,118
Humana, Inc.*		1,800		98,532
Johnson & Johnson		5,100		315,435
Medco Health Solutions, Inc.*		1,500		91,905
Pfizer, Inc.		8,157		142,829
Total Health Care				1,211,160
Industrials - 6.2%
Caterpillar, Inc.		900		84,294
Chicago Bridge & Iron Co., N.V.*		2,200		72,380
General Dynamics Corp.		1,200		85,152
General Electric Co.		9,300		170,097
Grainger (W.W.), Inc.		1,000		138,110
KBR, Inc.		1,500		45,705
Manpower, Inc.		1,100		69,036
Northrop Grumman Corp.		1,900		123,082
Timken Co.		4,400		210,012
Union Pacific Corp.		600		55,596

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Balanced Fund

Schedule of Portfolio Investments (continued)


Security Description	Shares		Value
Industrials - 6.2% (continued)
United Continental Holdings, Inc.*		2,000	$	47,640
United Parcel Service, Inc., Class B		900		65,322
Total Industrials				1,166,426
Information Technology - 11.6%
Accenture PLC, Class A		3,700		179,413
Altera Corp.		4,200		149,436
Apple, Inc.*		790		254,822
Automatic Data Processing, Inc.		900		41,652
Cognizant Technology Solutions Corp.*		1,200		87,948
F5 Networks, Inc.*		1,700		221,272
Google, Inc.*		170		100,975
International Business Machines Corp.		1,800		264,168
Intuit, Inc.*		1,400		69,020
Jabil Circuit, Inc.		3,000		60,270
Linear Technology Corp.		4,000		138,360
Microsoft Corp.		8,250		230,340
NetApp, Inc.*		2,200		120,912
Oracle Corp.		3,200		100,160
Tech Data Corp.*		700		30,814
Visa, Inc., Class A		1,900		133,722
Total Information Technology				2,183,284
Materials - 2.7%
Alcoa, Inc.		4,100		63,099
Cabot Corp.		1,500		56,475
Domtar Corp.		1,000		75,920
Freeport McMoRan Copper & Gold, Inc., Class B		900		108,081
Lubrizol Corp.		1,400		149,632
PPG Industries, Inc.		700		58,849
Total Materials				512,056
Telecommunication Services - 1.6%
American Tower Corp., Class A*		400		20,656
AT&T, Inc.		6,500		190,970
Verizon Communications, Inc.		2,600		93,028
Total Telecommunication Services				304,654
Utilities - 2.0%
Duke Energy Corp.		9,600		170,976
Integrys Energy Group, Inc.		1,800		87,318
NiSource, Inc.		2,700		47,574
Pepco Holdings, Inc.		3,900		71,175
Total Utilities				377,043
Total Common Stocks (cost $8,996,145)				10,830,524

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Balanced Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Corporate Bonds - 5.1%
Financials - 1.0%
American Express Co., 7.250%, 05/20/14	$	50,000		$	57,005
Bank of America Corp., 5.750%, 12/01/17		15,000			15,632
Bank of America Funding Corp., 7.625%, 06/01/19		5,000			5,766
Citigroup, Inc. 8.500%, 05/22/19		15,000			18,651
Credit Suisse New York, Medium Term Notes, 5.000%, 05/15/13		40,000			43,075
General Electric Capital Corp., Global Medium Term Notes, Series A, 6.750%, 03/15/32		10,000			11,355
Goldman Sachs Group, Inc., 5.950%, 01/18/18		15,000			16,297
JPMorgan Chase & Co., 6.000%, 01/15/18		15,000			16,775
Morgan Stanley, 5.950%, 12/28/17		5,000			5,298
Morgan Stanley, Global Medium Term Notes, Series F, 5.625%, 09/23/19		5,000			5,107
Total Financials					194,961
Industrials - 3.7%
Altria Group, Inc., 9.700%, 11/10/18		23,000			30,387
AT&T, Inc., 5.100%, 09/15/14		80,000			87,602
AT&T, Inc., 6.700%, 11/15/13		65,000			73,900
Coca-Cola Enterprises, Inc., 7.375%, 03/03/14		50,000			58,328
E.I. du Pont de Nemours & Company, 5.000%, 01/15/13		6,000			6,448
Hewlett-Packard Co., 4.500%, 03/01/13		55,000			58,900
Honeywell International, Inc., 4.250%, 03/01/13		55,000	²		58,852
International Business Machines Corp., 5.600%, 11/30/39		20,000			21,872
Kellogg Co., 7.450%, 04/01/31		20,000			25,136
Kroger Co., The, 5.500%, 02/01/13		25,000			27,056
Kroger Co., The, 6.750%, 04/15/12		40,000			42,714
McDonald’s Corp., 4.300%, 03/01/13		40,000			42,664
McDonald’s Corp., 6.300%, 10/15/37		20,000			23,663
TransCanada Pipelines, Ltd., 4.875%, 01/15/15		45,000			49,150
United Parcel Service, Inc., 6.200%, 01/15/38		20,000			23,553
Wal-Mart Stores, Inc., 6.500%, 08/15/37		20,000			23,577
Wyeth, 5.250%, 03/15/13		40,000			43,758
Total Industrials					697,560
Utilities - 0.4%
Florida Power & Light Co., 4.850%, 02/01/13		45,000			48,188
Georgia Power Co., Series 2010B, 5.400%, 06/01/40		20,000			20,277
Total Utilities					68,465
Total Corporate Bonds (cost $899,865)					960,986
Asset-Backed Securities - 0.2%
Harley-Davidson Motorcycle Trust 2006-2, Class A2, 5.350%, 03/15/13 (cost $33,407)		33,431			33,782
Mortgage-Backed Securities - 2.9%
Bank of America Commercial Mortgage, Inc., Series 2005-6, Class A4, 5.195%, 09/10/47⁴		96,000			103,227
CSFB Mortgage Securities Corp., Series 2005-C2, Class A3, 4.691%, 04/15/37		68,435			68,726

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Balanced Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Mortgage-Backed Securities - 2.9% (continued)
GE Capital Commercial Mortgage Corp., Series 2002-2A, Class A2, 4.970%, 08/11/36	$	14,449		$	14,832
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A2, 5.117%, 04/10/37		108,320			109,161
Greenwich Capital Commercial Funding Corp., Series 2004-GG1, Class A7, 5.317%, 06/10/36⁴		80,000			86,354
JP Morgan Chase Mortgage Securities Corp., Series 2002-C2, Class A2, 5.050%, 12/12/34		90,000			94,843
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A4, 4.850%, 10/15/41⁴		70,000			74,698
Total Mortgage-Backed Securities (cost $500,555)					551,841
U.S. Government and Agency Obligations - 31.3%
Federal Home Loan Bank - 2.0%
FHLB, 4.000%, 09/06/13		280,000			301,712
FHLB, 5.375%, 05/18/16		65,000			74,660
Total Federal Home Loan Bank					376,372
Federal Home Loan Mortgage Corporation - 6.7%
FHLMC, 1.625%, 09/26/12		350,000			356,301
FHLMC, 3.750%, 03/27/19		215,000	²		222,955
FHLMC, 4.375%, 07/17/15		55,000			60,729
FHLMC, 4.500%, 01/15/14 to 11/01/24		216,480			236,145
FHLMC, 4.750%, 11/17/15		145,000			162,611
FHLMC, 5.000%, 12/01/20		64,218			68,412
FHLMC, 5.125%, 07/15/12		35,000			37,432
FHLMC, 6.000%, 01/01/38		63,588			68,959
FHLMC Gold Pool, 6.000%, 04/01/38		46,474			50,399
Total Federal Home Loan Mortgage Corporation					1,263,943
Federal National Mortgage Association - 17.5%
FNMA, 2.875%, 12/11/13		45,000	²		47,338
FNMA, 3.630%, 02/12/13		65,000			68,949
FNMA, 4.000%, 10/01/20 to 10/01/40		335,228			338,188
FNMA, 4.375%, 03/15/13		160,000			172,494
FNMA, 4.500%, 11/01/19 to 10/01/40		751,969			774,778
FNMA, 5.000%, 05/11/17 to 08/01/40		854,597			916,468
FNMA, 5.375%, 07/15/16 to 06/12/17		220,000			253,295
FNMA, 5.500%, 02/01/22 to 06/01/38		463,376			497,104
FNMA, 6.000%, 03/01/37 to 08/01/37		147,883			161,084
FNMA, 6.500%, 03/01/37		53,275			59,413
Total Federal National Mortgage Association					3,289,111
United States Treasury Securities - 5.1%
U.S. Treasury Bonds, 3.500% 02/05/39		275,000			237,016
U.S. Treasury Notes, 2.250%, 05/31/14		250,000			258,652
U.S. Treasury Notes, 2.625%, 08/15/20		206,100			195,425
U.S. Treasury, Principal Only Strip, 08/15/39		1,000,000			270,314
Total United States Treasury Treasury Securities					961,407
Total U.S. Government and Agency Obligations (cost $5,928,102)					5,890,833

The accompanying notes are an integral part of these financial statements.

Managers AMG Chicago Equity Partners Balanced Fund

Schedule of Portfolio Investments (continued)


Security Description	Shares		Value
Short-Term Investments - 6.0%¹
BNY Institutional Cash Reserves Fund, Series B*^3,5		28,392	$	22,629
BNY Mellon Overnight Government Fund, 0.23%³		344,000		344,000
Dreyfus Cash Management Fund, Institutional Class Shares, 0.14%		771,247		771,247
Total Short-Term Investments (cost $1,143,639)				1,137,876
Total Investments - 103.0% (cost $17,501,712)				19,405,842
Other Assets, less Liabilities - (3.0)%				(570,248	)
Net Assets - 100.0%			$	18,835,594

Note: Based on the approximate cost of investments of $17,567,700 for Federal income tax purposes at December 31, 2010, the aggregate gross unrealized appreciation and depreciation were $2,001,660 and $163,518, respectively, resulting in net unrealized appreciation of investments of $1,838,142.

*	Non-income-producing security.

¹	Yield shown for each investment company represents the December 31, 2010, seven-day average yield, which refers to the sum of the previous seven days’ dividends paid, expressed as an annual percentage.

²	Some or all of these securities were out on loan to various brokers as of December 31, 2010, amounting to a market value of $363,692, or 1.9% of net assets.

³	Collateral received from brokers for securities lending was invested in this short-term investment.

⁴	Variable Rate Security. The rate listed is as of December 31, 2010, and is periodically reset subject to terms and conditions set forth in the debenture.

⁵

On September 12, 2008, The Bank of New York Mellon established a separate sleeve of the BNY Institutional Cash Reserves Fund (Series B) to hold certain Lehman Brothers floating rate notes. The Fund’s position in Series B is being fair valued daily. (See Note 7 in the Notes to Financial Statements.) The following table summarizes the inputs used to value the Fund’s net assets by the fair value hierarchy levels as of December 31, 2010: (See Note 1(a) in the Notes to Financial Statements.)


	Quoted Prices in Active Markets for Identical Investments Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Investments in Securities
Common Stocks^†	$	10,830,524		—		—	$	10,830,524
Corporate Bonds^††		—	$	960,986		—		960,986
U.S. Government and Agency Obligations
Federal Home Loan Bank		—		376,372		—		376,372
Federal Home Loan Mortgage Corporation		—		1,263,943		—		1,263,943
Federal National Mortgage Association		—		3,289,111		—		3,289,111
United States Treasury Securities		—		961,407		—		961,407
Asset-Backed Securities		—		33,782		—		33,782
Mortgage-Backed Securities		—		551,841		—		551,841
Short-Term Investments		1,115,247		22,629		—		1,137,876

Total Investments in Securities	$	11,945,771	$	7,460,071		—	$	19,405,842

†	All common stocks held in the Fund are Level 1 securities. For a detailed break-out of common stocks by major industry classification, please refer to the Schedule of Portfolio Investments.

††	All corporate bonds held in the Fund are Level 2 securities. For a detailed break-out of the corporate bonds by major industry classification, please refer to the Schedule of Portfolio Investments.

As of December 31, 2010, the Fund had no significant transfers between Level 1 and Level 2 from the beginning of the reporting period.

Investments Definitions and Abbreviations:



FHLB:		Federal Home Loan Bank
FHLMC:		Federal Home Loan Mortgage Corp.
FNMA:		Federal National Mortgage Association
REIT:		Real Estate Investment Trust

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Investment Manager’s Comments

The Year in Review

The Managers High Yield Fund (Institutional Class shares) returned 14.58% in 2010, compared with 15.12% for the Barclays Capital U.S. Corporate High Yield Index (the “Index”).

High-yield began the year on a strong note as it continued to build on the solid momentum of year-end 2009. Spreads were somewhat volatile in February before swiftly recovering and trending tighter through the end of April. In general, however, improving economic data, favorable technicals, strong capital market conditions, and lower default trends provided an encouraging backdrop to the high yield market through early April. By the end of April, high-yield bonds had posted 14-consecutive monthly gains and the year-to-date return was 7%. At the same time, the primary market was setting both weekly and monthly records. May ushered in a substantial correction as market volatility surged due to European sovereign concerns causing risk appetite levels to wane leading to a steady stream of large retail outflows and a sharp slowdown to the record pace of new issue activity in May and early June. Regulatory and economic uncertainty forced an equity sell-off during the second half of January 2010, which in turn pushed high-yield spreads wider. The high-yield market began the third quarter positively with solid corporate earnings reports, stronger capital market conditions, and declining default volumes. Weakening global economic conditions, however, weighed heavily on market sentiment during August before falling Treasury rates, rising equities, healthy demand, and dramatic improvements in capital market access rallied the market in September. Continued macroeconomic fears persisted, leading the Federal Reserve to announce a second round of quantitative easing in early-November. Despite some volatility in mid-November, which largely resulted from the Treasury curve backup and renewed macroeconomic risks from notable events in China and Ireland, the high-yield market finished the year strongly with a more stable macroeconomic environment, robust demand, unprecedented new issuance, and broader access to capital for high yield issuers. Overall, modest economic growth, improving corporate conditions, strong retail fund inflows, accommodative primary market conditions, and a sharp decline in default activity led to strong returns for high-yield credit in 2010.

Again in 2010, the lower end of the quality spectrum (i.e., CCC-rated bonds and distressed bonds) outperformed single-B and double-B rated credits for the year, illustrating the stronger desire for riskier assets. All sectors posted positive returns for a second-consecutive year, with life insurance, property and casualty insurance, and banking leading performance for the Barclays Capital U.S. High Yield Corporate Index in 2010. The lowest-performing sectors in the Index for the year were supermarkets, electric utilities, and health care.

Compared to the record high default volume and an upward spike in the default rate in 2009, default activity dramatically decreased in 2010. Only 44 companies defaulted during the year, affecting $19.8 billion in bonds and loans. The 12-month trailing par-weighted domestic default rate for high-yield bonds ended the year at 0.79%, well below the historical average of 4.3% and down drastically from 10.3% a year ago.

Increased demand for riskier assets helped to foster a robust new-issue market for high-yield bonds. High-yield issuers priced over $302 billion in 2010, exceeding last year’s record by more than $120 billion. High-yield mutual funds experienced inflows of $12.2 billion in 2010, compared to a record-setting $31.9 billion in inflows during 2009. Year-to-date redemptions, maturities, tenders and upgrades to investment grade totaled $174.2 billion versus $117.4 billion for the same period in 2009. These activities are important because they effectively create additional market demand for remaining issues.

Performance

The Fund underperformed its primary benchmark during 2010. Benchmarking fixed income funds is somewhat challenging because broad fixed income indexes do not incur trading costs, may invest in illiquid segments of the market that are not easily accessible, have no cash flows, and exclude fees. For the trailing 12-months, the Fund’s performance was hurt by its exposure to the media non-cable, media-cable, and insurance sectors. Performance was hindered by relative weightings in Ameristar Casinos, Wynn Las Vegas LLC, Virgin Media Finance, Windstream Corp., and Dex One Corp. Conversely, performance was aided by security selection in the health care, telecommunication, and chemicals sectors, with the largest contributions coming from Caesars Entertainment Operating Company, Vanguard Health Holdings, New Communications Holdings, Advanced Micro Devices, and GMAC.

Looking Forward

We expect that improvement in the economic environment will continue. Stronger issuer fundamentals, accommodating capital access, and robust demand will sustain a more conducive credit environment for high yield. Companies remain cautious, yet the broadening capital market access will further promote companies to refinance near-term debt maturities, thereby strengthening their balance sheets and ultimately lowering default outlooks. Corporate profitability should continue to build as revenue growth improves and margins hold. We believe that current valuations are attractive based on moderate gross domestic product growth, improved credit fundamentals, and low default risk. Accordingly, we expect spreads to tighten further as issuer fundamentals remain intact and moderate flows into the asset class continue. Again, we will rely on our individual security selection to be the primary driver of performance.

This commentary reflects the viewpoints of the Fund’s subadvisor, JPMorgan Asset Management as of January 24, 2011.

Cumulative Total Return Performance

High Yield’s cumulative total return is based on the daily change in net asset value (NAV), and assumes that all distributions were reinvested. The Barclays Capital U.S. Corporate High Yield Bond Index is a total return performance benchmark for fixed income securities having a maximum quality rating of Ba1 (as determined by Moody’s Investors Service). Unlike the Fund, the Barclays Capital U.S. Corporate High Yield Bond Index is unmanaged, is not available for investment, and does not incur expenses. The chart

Managers High Yield Fund

Investment Manager’s Comments (continued)

Cumulative Total Return Performance (continued)

illustrates the performance of a hypothetical $10,000 investment made in the Fund’s Class A Shares (with load) on December 31, 2000 to a $10,000 investment made in the Barclays Capital U.S. Corporate High Yield Bond Index for the same time period. The graph and table do not reflect the deduction of taxes that a shareholder would pay on a Fund distribution or redemption of shares. Performance for periods longer than one year is annualized. The listed returns for the Fund are net of expenses and the returns for the index exclude expenses. Total returns for the Fund would have been lower had certain expenses not been reduced.

LOGO

The table below shows the average annual total returns for the Managers High Yield Fund and the Barclays Capital U.S. Corporate High Yield Index from December 31, 2000 through December 31,2010.


Average Annual Total Returns¹			1 Year			5 Years			10 Years
Managers High Yield Fund^2,3	-Class A	No Load		14.20	%		6.92	%		8.16	%
	-Class A	With Load		9.29	%		5.99	%		7.69	%
	-Class B	No Load		13.40	%		6.02	%		7.41	%
	-Class B	With Load		8.40	%		5.73	%		7.41	%
	-Class C	No Load		13.42	%		6.07	%		7.44	%
	-Class C	With Load		12.42	%		6.07	%		7.44	%
	-Institutional Class	No Load		14.58	%		7.24	%		8.58	%

Barclays Capital U.S. Corporate High Yield Bond Index⁴				15.12	%		8.91	%		8.88	%

Performance differences among the share classes are due to differences in sales charge structures and class expenses. Returns shown reflect maximum sales charge of 4.25% on Class A, as well as the applicable contingent deferred sales charge (CDSC) on both Class B and C shares. The Class B shares’ CDSC declines annually between years 1 through 6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge is assessed after year six. Class C shares held for less than one year are subject to a 1% CDSC.

¹ Total return equals income yield plus share price change and assumes reinvestment of all dividends and capital gain distributions. Returns are net of fees and may reflect offsets of Fund expenses as described in the Prospectus. No adjustment has been made for taxes payable by shareholders on their reinvested dividends and capital gain distributions. Returns for periods greater than one year are annualized. The listed returns on the Fund are net of expenses and based on the published NAV as of December 31, 2010. All returns are in U.S. dollars($).

² The Fund is subject to the risks associated with investments in debt securities, such as default risk and fluctuations in the perception of the debtors’ ability to pay their creditors.

³ From time to time, the Fund’s advisor has waived its fees and/or absorbed Fund expenses, which has resulted in higher returns.

⁴ The Barclays Capital U.S. Corporate High Yield Bond Index is a total return performance benchmark for fixed income securities having a maximum quality rating of Ba1 (as determined by Moody’s Investors Service). Unlike the Fund, the Barclays Capital U.S. Corporate High Yield Bond Index is unmanaged, is not available for investment, and does not incur expenses.

Not FDIC insured, nor bank guaranteed. May lose value.

Managers High Yield Fund

Fund Snapshots

December 31, 2010

Portfolio Breakdown


Industry	Managers High Yield Fund**
Industrials		83.7	%
Financials		11.4	%
Utilities		2.4	%
Materials		0.2	%
Information Technology		0.3	%
Consumer Discretionary		0.1	%
Other Assets and Liabilities		1.9	%

**	As a percentage of net assets

Top Ten Holdings


Top Ten Holdings	% of Net Assets
HCA, Inc., 9.625%, 11/15/16*		2.8	%
GMAC, Inc., 6.750%, 12/01/14		1.5
Sprint Capital Corp., 8.750%, 03/15/32		1.3
Biomet, Inc., 10.375%, 10/15/17*		1.3
Simmons Bedding Co., 11.250%, 07/15/15*		1.3
Sungard Data Systems, Inc., 10.250%, 08/15/15*		1.2
EchoStar DBS Corp., 7.750%, 05/31/15*		1.1
Ford Motor Credit Co. LLC, 8.700%, 10/01/14		1.1
Intelsat Jackson Holdings, Ltd., 9.500%, 06/15/16*		1.1
EchoStar Communications Corp., 7.125%, 02/01/16		1.0

Top Ten as a Group		13.7	%

*	Top Ten Holding at June 30, 2010

Managers High Yield Fund

Schedule of Portfolio Investments

December 31, 2010


Security Description	Principal Amount		Value
Corporate Bonds - 97.5%
Financials - 11.4%
Alliance Laundry Systems LLC, Term Loan, Class B, 6.250%, 09/10/16, (04/06/11)⁴	$	151,737	$	153,697
Ally Financial, Inc., 6.250%, 12/01/17 (a)		85,000		85,106
Bank of America Corp., 8.000%, 12/29/49⁶		90,000		90,823
Bumble Bee Acquisition Corp., 9.000%, 12/15/17 (a)		50,000		52,250
Caesars Entertainment Operating Co., Inc., Term B-3 Loan, 3.288%, 01/28/15, (01/26/11)⁴		118,124		106,893
Caesars Entertainment Operating Co., Inc., Term B-3 Loan, 3.303%, 01/28/15, (03/31/11)⁴		170		154
CIT Group, Inc., 7.000%, 05/01/15		50,789		51,043
CIT Group, Inc., 7.000%, 05/01/16		322,983		325,002
CIT Group, Inc., 7.000%, 05/01/17		170,176		171,027
Citigroup Capital XXI, 8.300%, 12/21/57⁶		85,000		88,825
Clear Channel Communications, Inc. Term Loan B, 3.911%, 01/29/16, (01/31/11)⁴		38,111		32,768
First Data Corp. Term Loan B-2, 3.011%, 09/24/14, (01/31/11)⁴		56,615		52,320
Ford Motor Credit Co. LLC, 7.000%, 04/15/15		110,000		118,317
Ford Motor Credit Co. LLC, 8.700%, 10/01/14		295,000		332,484
GMAC, Inc., 6.750%, 12/01/14		442,000		467,415
Host Hotels & Resorts, L.P., 6.375%, 03/15/15		130,000		132,600
Host Hotels & Resorts, L.P., 9.000%, 05/15/17		30,000		33,450
Ineos Holdings, Ltd., Term Loan, Class B-2, 7.501%, 12/16/13, (03/31/11)⁴		143,602		148,448
Ineos Holdings, Ltd., Term Loan, Class C-2, 8.001%, 12/16/14, (03/31/11)⁴		164,289		169,833
International Lease Finance Corp., 7.125%, 09/01/18 (a)		25,000		26,688
International Lease Finance Corp., 8.250%, 12/15/20		40,000		41,250
International Lease Finance Corp., 8.625%, 09/15/15 (a)		130,000		140,075
International Lease Finance Corp., 8.750%, 03/15/17 (a)		160,000		172,000
Nuveen Investments, Inc., 2nd Lien Term Loan, 12.500%, 07/21/15		70,000		75,906
Pinafore LLC/Pinafore, Inc., 9.000%, 10/01/18 (a)		55,000		59,675
Pinnacle Foods Finance LLC, 9.250%, 04/01/25		35,000		36,619
Texas Competitive Electric Holdings, Term Loan, Class B-2, 3.803%, 12/14/13, (01/10/11)⁴		92,775		71,864
Texas Competitive Electric Holdings, Term Loan, Class B-2, 3.803%, 10/10/14, (01/10/11)⁴		93,190		72,185
UCI Holdco, Inc., 9.250%, 12/15/13, (03/15/11)⁴		158,645		159,042
Vertafore, Inc., 2nd Lien Term Loan, 9.750%, 10/18/17, (03/29/11)⁴		45,000		45,478
Total Financials				3,513,237
Industrials - 83.7%
ACCO Brands Corp., 7.625%, 08/15/15		65,000		65,325
ACCO Brands Corp., 10.625%, 03/15/15		115,000		129,950
Accellent, Inc., 8.375%, 02/01/17		20,000		20,600
Accellent, Inc., 10.000%, 11/01/17 (a)		85,000		80,538
Aeroflex, Inc., 11.750%, 02/15/15		145,000		160,225
Aircastle, Ltd., 9.750%, 08/01/18		55,000		60,362
Alliant Techsystems, Inc., 6.750%, 04/01/16		120,000		124,950

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 83.7% (continued)
AMC Entertainment Holdings, Inc., 9.750%, 12/01/20 (a)	$	65,000		$	67,925
American Axle and Manufacturing, Inc., 7.875%, 03/01/17		95,000			97,731
American Tire Distributors, Inc., 9.750%, 06/01/17 (a)		65,000			70,525
Amkor Technologies, Inc., 7.375%, 05/01/18		115,000	²		120,175
Amsted Industries, Inc., 8.125%, 03/15/18 (a)		60,000			63,975
Anadarko Petroleum Corp., 6.375%, 09/15/17		55,000			59,994
Arch Coal, Inc., 8.750%, 08/01/16		135,000			147,825
Ardagh Packaging Finance PLC, 9.125%, 10/15/20 (a)		200,000			209,000
Ashland, Inc., 9.125%, 06/01/17		30,000			34,725
Ashtead Capital, Inc., 9.000%, 08/15/16 (a)		70,000			73,325
Aspect Software, Inc., 10.625%, 05/15/17 (a)		55,000			56,719
Associated Materials, Inc., 9.125%, 11/01/17 (a)		75,000			78,562
Atkore International, Inc., 9.875%, 01/01/18 (a)		30,000			31,350
Atlas Energy Operating Company LLC, 10.750%, 02/01/18		155,000			190,069
Avaya, Inc., 9.750%, 11/01/15		65,000			66,462
Avaya, Inc., 10.125%, 11/01/15⁵		94,893			97,740
Avis Budget Car Rental LLC, 7.750%, 05/15/16		110,000			112,750
Avis Budget Car Rental LLC, 8.250%, 01/15/19 (a)		45,000			45,675
Avis Budget Car Rental LLC, 9.625%, 03/15/18		40,000	²		43,300
AWAS Aviation Capital, Ltd., 7.000%, 10/15/16 (a)		100,000			99,625
B&G Foods, Inc., 7.625%, 01/15/18		30,000			31,650
Baldor Electric Co., 8.625%, 02/15/17		80,000			90,000
Bausch & Lomb, Inc., 9.875%, 11/01/15		65,000			69,875
BE Aerospace, Inc., 6.875%, 10/01/20		40,000			41,500
Belden, Inc., 9.250%, 06/15/19		75,000			82,594
Berry Plastics Corp., 9.750%, 01/15/21 (a)		85,000			84,575
Biomet, Inc., 10.375%, 10/15/17⁵		370,000			406,075
Bon-Ton Stores, Inc., The, 10.250%, 03/15/14		85,000			87,125
Boyd Gaming Corp., 7.125%, 02/01/16		50,000	²		45,125
BreitBurn Energy, L.P., 8.625%, 10/15/20 (a)		85,000			85,850
Brigham Exploration Co., 8.750%, 10/01/18 (a)		70,000			75,950
Building Materials Corp. of America, 6.875%, 08/15/18 (a)		85,000			84,575
Bumble Bee Foods LLC, 7.750%, 12/15/15		70,000			80,404
BWAY Holding Co., 10.000%, 06/15/18 (a)		110,000	²		119,212
Caesars Entertainment Inc., 10.000%, 12/15/18		107,000			98,172
Caesars Entertainment Inc., 11.250%, 06/01/17		185,000			209,050
Case New Holland, Inc., 7.875%, 12/01/17 (a)		80,000			87,800
CCH II LLC & CCH II Capital Corp., 13.500%, 11/30/16		25,000			29,938
CCO Holdings LLC/CCO Holdings Capital Corp., 7.250%, 10/30/17		75,000			76,500
CCO Holdings LLC/CCO Holdings Capital Corp., 7.875%, 04/30/18		125,000			130,000
Central Garden & Pet Co., 8.250%, 03/01/18		85,000			86,488

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 83.7% (continued)
Cequel Communications Holdings I, LLC and Cequel Capital Corp., 8.625%, 11/15/17 (a)	$	190,000		$	199,500
Chemtura Corp., 7.875%, 09/01/18 (a)		25,000			26,625
Chesapeake Energy Corp., 6.625%, 08/15/20		5,000			4,950
Chesapeake Energy Corp., 6.875%, 08/15/18		40,000			40,800
Chesapeake Energy Corp., 7.250%, 12/15/18		75,000			78,000
Chiquita Brands International, Inc., 8.875%, 12/01/15		165,000			169,228
Cincinnati Bell, Inc., 8.375%, 10/15/20		100,000			96,250
Citizens Communications Co., 6.625%, 03/15/15		90,000			94,500
Clean Harbors, Inc., 7.625%, 08/15/16		61,000			65,118
Clear Channel Worldwide Holdings, Inc., Series B, 9.250%, 12/15/17		250,000			275,000
Clearwater Paper Corp., 7.125%, 11/01/18 (a)		5,000			5,188
Clearwater Paper Corp.,10.625%, 06/15/16		85,000			97,538
Clearwire Communications LLC, 12.000%, 12/01/15 (a)		185,000			200,725
Clearwire Communications LLC/Clearwire Finance, Inc., 12.000%, 12/01/17 (a)		25,000	²		25,938
Cloud Peak Energy Resources LLC/ Cloud Peak Energy Finance Corp., 8.250%, 12/15/17		100,000			107,875
Community Health Systems, Inc., 8.875%, 07/15/15		155,000			163,138
Constellation Brands, Inc., 7.125%, 09/01/16		60,000			63,900
Constellation Brands, Inc., 8.375%, 12/15/14		90,000			98,775
Cooper Companies, Inc., 7.125%, 02/15/15		60,000			62,100
Cott Beverages USA, Inc., 8.125%, 09/01/18		20,000			21,650
Cricket Communications, Inc., 10.000%, 07/15/15		50,000	²		53,812
Crosstex Energy, L.P., 8.875%, 02/15/18		115,000			123,769
DaVita, Inc., 6.375%, 11/01/18		10,000			9,975
DaVita, Inc., 6.625%, 11/01/20		10,000			9,925
Denbury Resources, Inc., 9.750%, 03/01/16		50,000			56,000
Digicel Group, Ltd., 10.500%, 04/15/18 (a)		100,000			110,500
DineEquity, Inc., 9.500%, 10/30/18 (a)		60,000			63,900
Diversey, Inc., 8.250%, 11/15/19		110,000			119,900
DJO Finance LLC, 10.875% 11/15/14		140,000			153,475
Dole Food Co., Inc., 8.000%, 10/01/16 (a)		40,000			42,400
Dole Food Co., Inc., 13.875%, 03/15/14		36,000			44,190
Dunkin Finance Corp., 9.625%, 12/01/18 (a)		35,000			35,525
Easton-Bell Sports, Inc., 9.750%, 12/01/16		145,000			159,862
EchoStar Communications Corp., 7.125%, 02/01/16		315,000			326,812
EchoStar DBS Corp., 7.750%, 05/31/15		325,000			346,938
El Paso Natural Gas Co., 7.250%, 06/01/18		65,000			69,908
EXCO Resources, Inc., 7.500%, 09/15/18		60,000			59,100
Fidelity National Information Services, Inc., 7.625%, 07/15/17 (a)		15,000			15,862
Fidelity National Information Services, Inc., 7.875%, 07/15/20 (a)		10,000			10,625
First Data Corp., 8.250%, 01/15/21 (a)		118,000	²		113,870
First Data Corp., 8.750%, 01/15/22 (a)⁵		120,000	²		116,700

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 83.7% (continued)
First Data Corp., 8.875%, 08/15/20 (a)	$	85,000		$	90,100
First Data Corp., 10.550%, 09/24/15⁵		2,737	²		2,607
First Data Corp., 12.625%, 01/15/21 (a)		240,000	²		230,400
Forest Oil Corp., 7.250%, 06/15/19		25,000			25,500
Freescale Semiconductor, Inc., 9.250%, 04/15/18 (a)		210,000			232,050
FTI Consulting, Inc., 6.750%, 10/01/20 (a)		55,000			54,862
GCI, Inc., 8.625%, 11/15/19		150,000	²		163,125
General Cable Corp., 7.125%, 04/01/17		105,000			108,675
Geo Group, Inc., The, 7.750%, 10/15/17		105,000			110,775
Georgia-Pacific Corp., 7.000%, 01/15/15 (a)		28,000			29,190
Georgia-Pacific Corp., 8.250%, 05/01/16, (a)		20,000			22,675
Giraffe Acquisition Corp., 9.125%, 12/01/18 (a)		35,000	²		36,662
Goodyear Tire & Rubber Co., The, 8.250%, 08/15/20		90,000	²		93,600
Goodyear Tire & Rubber Co., The, 8.750%, 08/15/20		10,000			10,575
Goodyear Tire & Rubber Co., The, 10.500%, 05/15/16		45,000	²		51,525
Graham Packaging Co., L.P., 8.250%, 01/01/17		90,000			94,050
Graham Packaging Co., L.P., 8.250%, 10/01/18		15,000			15,825
Graham Packaging Co., L.P./GPC Capital Corp. I, 9.875%, 10/15/14		105,000			109,200
Graphic Packaging International, Inc., 7.875%, 10/01/18		35,000			36,838
GWR Operating Partnership, L.L.L.P., 10.875%, 04/01/17		85,000			90,100
GXS Worldwide, Inc., 9.750%, 06/15/15		85,000			84,362
Hanesbrands, Inc., 8.000%, 12/15/16		105,000			113,138
HCA Holdings, Inc., 7.750%, 05/15/21 (a)		105,000	²		105,262
HCA, Inc., 9.625%, 11/15/16⁵		823,000			883,696
Health Management Associates, Inc., 6.125%, 04/15/16		195,000			197,925
HealthSouth Corp., 7.250%, 10/01/18		50,000			51,125
HealthSouth Corp., 7.750%, 09/15/22		50,000			51,750
Hertz Corp., 7.500%, 10/15/18 (a)		100,000	²		104,250
Hertz Corp., 8.875%, 01/01/14		110,000			113,025
Hexion U.S. Finance Corp./Hexion Nova Scotia Finance ULC, 9.000%, 11/15/20 (a)		50,000			53,000
Hillman Group, Inc., 10.875%, 06/01/18		60,000			66,150
Huntsman International LLC, 5.500%, 06/30/16		55,000			53,488
Huntsman International LLC, 7.375%, 01/01/15		50,000			51,375
Huntsman International LLC, 8.625%, 03/15/20		45,000	²		49,162
Huntsman International LLC, 8.625%, 03/15/21 (a)		25,000			27,125
Ineos Group Holdings PLC, 8.500%, 02/15/16		100,000			95,750
Inergy L.P./Inergy Finance Corp., 6.875%, 12/15/14		25,000			25,500
Inergy L.P./Inergy Finance Corp., 7.000%, 10/01/18 (a)		70,000			70,875
Inergy L.P./Inergy Finance Corp., 8.250%, 03/01/16		25,000			26,188
Inergy L.P./Inergy Finance Corp., 8.750%, 03/01/15		30,000			32,100
Intelsat Bermuda, Ltd., 11.250%, 06/15/16		190,000			205,675

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 83.7% (continued)
Intelsat Jackson Holdings S.A., 7.250%, 10/15/20 (a)	$	75,000		$	76,125
Intelsat Jackson Holdings, Ltd., 9.500%, 06/15/16		310,000			328,600
Intelsat Subsidiary Holding Co., Ltd., 8.875%, 01/15/15 (a)		35,000			35,962
Interactive Data Corp., 10.250%, 08/01/18 (a)		105,000			113,925
Interline Brands, Inc., 7.000%, 11/15/18 (a)		50,000			51,000
IPCS, Inc., 3.537%, 05/01/14, (02/01/11)⁴		147,764			142,592
Iron Mountain, Inc., 8.750%, 07/15/18		190,000			200,450
ITC Deltacom, Inc., 10.500%, 04/01/16		65,000			71,012
J.C. Penney Co., Inc., 7.950%, 04/01/17		45,000			49,275
Jarden Corp., 7.500%, 05/01/17		85,000			89,994
Jarden Corp., 8.000%, 05/01/16		100,000			109,375
JDA Software Group, Inc., 8.000%, 12/15/14		115,000			124,488
LBI Escrow Corp., 8.000%, 11/01/17 (a)		100,000			110,875
Lear Corp., 7.875%, 03/15/18		15,000			16,125
Libbey Glass, Inc., 10.000%, 02/15/15 (a)		95,000			102,600
Linn Energy LLC, 9.875%, 07/01/18		100,000			110,000
Linn Energy LLC/Linn Energy Finance Corp., 7.750%, 02/01/21 (a)		40,000			41,200
Linn Energy LLC/Linn Energy Finance Corp., 11.750%, 05/15/17		15,000			17,250
Lucent Technologies, Inc., 6.450%, 03/15/29		140,000			111,300
Lyondell Chemical Co., 11.000%, 05/01/18		164,918			187,594
MagnaChip Semiconductor Corp., 10.500%, 04/15/18		125,000			132,500
Manitowoc Co., Inc., 8.500%, 11/01/20		70,000			74,725
Manitowoc Co., Inc., 9.500%, 02/15/18		55,000	²		60,500
Marina District Finance Co., Inc., 9.500%, 10/15/15 (a)		35,000	²		34,562
Marina District Finance Co., Inc., 9.875%, 08/15/18 (a)		125,000	²		123,750
MarkWest Energy Partners LP, 8.750%, 04/15/18		120,000			130,500
Masco Corp., 7.125%, 03/15/20		20,000			20,958
MetroPCS Wireless, Inc., 7.875%, 09/01/18		140,000			145,950
MGM Mirage, Inc., 6.750%, 04/01/13		305,000			304,695
MGM Mirage, Inc., 6.875%, 04/01/16		40,000	²		35,850
MGM Mirage, Inc., 9.000%, 03/15/20 (a)		50,000			55,250
MGM Mirage, Inc., 11.125%, 11/15/17		160,000			184,800
Michael Foods, Inc., 9.750%, 07/15/18 (a)		45,000			49,388
Michaels Stores, Inc., 7.750%, 11/01/18 (a)		95,000	²		95,238
Michaels Stores, Inc., 13.000%, 11/01/16 (b)		40,000			39,800
Mueller Water Products, Inc., 8.750%, 09/01/20		40,000			44,400
Mylan, Inc., 7.625%, 07/15/17 (a)		25,000			26,719
Mylan, Inc., 7.875%, 07/15/20 (a)		115,000			124,488
Nalco Co., 6.625%, 01/15/19 (a)		20,000	²		20,550
Neiman Marcus Group, Inc., The, 9.000%, 10/15/15⁵		114,897	²		120,929
NewPage Corp., 11.375%, 12/31/14		50,000			47,250

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 83.7% (continued)
Nexstar Broadcasting, Inc., 8.875%, 04/15/17 (a)	$	75,000		$	80,062
Noranda Aluminium Acquisition Corp., 5.193%, 05/15/15, (05/15/11)⁵		203,822			185,223
Nova Chemicals Corp., 8.625%, 11/01/19		40,000	²		43,900
Novelis, Inc., 8.375%, 12/15/17 (a)		70,000			72,800
Novelis, Inc., 8.750%, 12/15/20 (a)		90,000			93,825
NXP B.V./NXP Funding LLC, 9.500%, 10/15/15		75,000			80,438
NXP B.V./NXP Funding LLC, 9.750%, 08/01/18 (a)		165,000			186,450
NXP B.V./NXP Funding LLC, 10.000%, 07/15/13 (a)		75,000			84,375
OPTI Canada, Inc., 8.250%, 12/15/14		55,000			39,462
OPTI Canada, Inc., 9.000%, 12/15/12 (a)		35,000			35,262
OPTI Canada, Inc., 9.750%, 08/15/13 (a)		35,000			35,175
Oshkosh Corp., 8.250%, 03/01/17		45,000			49,162
P.H. Glatfelter Co., 7.125%, 05/01/16		115,000			119,744
Packaging Dynamics, Inc., 10.000%, 05/11/16 (a)		160,000			165,000
PAETEC Holding Corp., 8.875%, 06/30/17		90,000			96,525
PAETEC Holding Corp., 9.500%, 07/15/15		45,000	²		46,800
PAETEC Escrow Corp., 9.875%, 12/01/18 (a)		100,000			103,250
Parker Drilling Co., 9.125%, 04/01/18		55,000			57,750
Petco Animal Supplies, Inc., 9.250%, 12/01/18 (a)		75,000			79,406
Petrohawk Energy Corp., 7.250%, 08/15/18		20,000			20,300
Petrohawk Energy Corp., 7.875%, 06/01/15		170,000			177,862
Plains Exploration & Production Co., 7.000%, 03/15/17		70,000			72,275
Plains Exploration & Production Co., 7.750%, 06/15/15		25,000			26,188
PolyOne Corp., 7.375%, 09/15/20		50,000	²		51,938
Polypore International, Inc., 7.500%, 11/15/17 (a)		60,000			61,500
Reynolds Group Issuer, Inc., 8.500%, 05/15/18 (a)		205,000			207,050
Quebecor Media, Inc., 7.750%, 03/15/16		250,000			259,375
Quebecor World, Escrow, 6.500%, 08/01/27*		165,000			8,250
Qwest Communications International, Inc., 7.500%, 02/15/14		135,000			137,362
Radiation Therapy Services, Inc., 9.875%, 04/15/17 (a)		80,000			80,200
RailAmerica, Inc., 9.250%, 07/01/17		73,000			80,575
Rain CII Carbon LLC/Rain CII Carbon Corp., 8.000%, 12/01/18 (a)		30,000	²		30,900
RBS Global, Inc./Rexnord LLC, 8.500%, 05/01/18		200,000			213,500
Reichhold Industries, Inc., 9.000%, 08/15/14 (a)		235,000			208,562
Rental Service Corp., 9.500%, 12/01/14		105,000			110,775
Rite Aid Corp., 7.500%, 03/01/17		100,000	²		96,625
Rite Aid Corp., 8.000%, 08/15/20		60,000	²		62,775
Rite Aid Corp., 9.500%, 06/15/17		40,000	²		34,200
Sally Holdings LLC, 9.250%, 11/15/14		40,000			42,200
SBA Telecommunications, Inc., 8.000%, 08/15/16		30,000			32,625
Scotts Miracle-Gro Co., The, 7.250%, 01/15/18		20,000			21,100

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 83.7% (continued)
Sealy Mattress Co., 8.250%, 06/15/14	$	315,000		$	323,663
Sequa Corp., 11.750%, 12/01/15 (a)		90,000			96,750
Service Corp. International, 6.750%, 04/01/15		175,000			180,250
Service Corp. International, 7.000%, 06/15/17 to 05/15/19		100,000			101,700
ServiceMaster Co., 10.750%, 07/15/15 (a)⁵		155,000			166,625
Simmons Bedding Co., 11.250%, 07/15/15 (a)		365,000			396,025
Sinclair Television Group, Inc., 8.375%, 10/15/18 (a)		10,000			10,375
Sinclair Television Group, Inc., 9.250%, 11/01/17 (a)		75,000			81,562
Solo Cup Co., 8.500%, 02/15/14		50,000	²		45,250
Solo Cup Co., 10.500%, 11/01/13		100,000			105,000
Spectrum Brands, Inc., 9.500%, 06/15/18 (a)		55,000			60,500
Spectrum Brands, Inc., 12.000%, 08/28/19⁵		186,327			208,919
Spirit AeroSystems, Inc., 7.500%, 10/01/17		90,000			94,050
Sprint Capital Corp., 6.900%, 05/01/19		110,000			109,175
Sprint Capital Corp., 8.750%, 03/15/32		415,000			421,225
SSI Investments II, Ltd./SSI Co-Issuer LLC, 11.125%, 06/01/18		100,000			109,000
Steinway Musical Instruments, Inc., 7.000%, 03/01/14 (a)		200,000			202,500
Sun Media Corp., 7.625%, 02/15/13		5,000			5,038
SunGard Data Systems, Inc., 7.375%, 11/15/18 (a)		50,000			50,500
SunGard Data Systems, Inc., 10.250%, 08/15/15		370,000			389,888
SUPERVALU, Inc., 8.000%, 05/01/16		265,000	²		255,062
Surgical Care Affiliates, Inc., 8.875%, 07/15/15 (a)⁵		159,291			161,680
Syniverse Holdings, Inc., 9.125%, 01/15/19 (a)		30,000			31,125
Tenet Healthcare Corp., 8.875%, 07/01/19		45,000			51,075
Tenet Healthcare Corp., 9.250%, 01/01/15		230,000			246,100
Terex Corp., 8.000%, 11/15/17		110,000			111,650
Travelport LLC, 4.921%, 09/01/14, (03/01/11)⁴		60,000			53,400
Travelport LLC, 9.000%, 03/01/16		40,000			38,950
Travelport LLC, 11.875%, 09/01/16		90,000	²		88,875
Trinidad Drilling, Ltd., 7.875%, 01/15/19 (a)		60,000			60,900
Triumph Group, Inc., 8.000%, 11/15/17		20,000			20,900
Triumph Group, Inc., 8.625%, 07/15/18		35,000			38,412
TRW Automotive, Inc., 7.250%, 03/15/17 (a)		50,000			54,125
United Rentals North America, Inc., 8.375%, 09/15/20		25,000			25,562
United Rentals North America, Inc., 9.250%, 12/15/19		85,000			94,988
United Surgical Partners International, Inc., 8.875%, 05/01/17		15,000			15,525
United Surgical Partners International, Inc., 9.250%, 05/01/17⁵		145,000			151,525
US Oncology, Inc., 9.125%, 08/15/17		170,000			210,376
Valeant Pharmaceuticals International, Inc., 6.750%, 10/01/17 (a)		15,000			14,962
Valeant Pharmaceuticals International, Inc., 6.875%, 12/01/18 (a)		150,000			149,626
Vertellus Specialties, Inc., 9.375%, 10/01/15 (a)		75,000			79,688

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 83.7% (continued)
Visant Corp.,10.000%, 10/01/17 (a)	$	130,000		$	138,450
Wind Acquisition Finance, S.A., 11.750%, 07/15/17 (a)		100,000			113,250
Windstream Corp., 8.125%, 09/01/18		40,000			42,200
Windstream Corp., 8.625%, 08/01/16		190,000			200,925
WMG Acquisition Corp., 9.500%, 06/15/16		75,000			80,812
Wynn Las Vegas LLC, 7.875%, 11/01/17		15,000			16,238
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 7.750%, 08/15/20		35,000			38,062
Yankee Acquisition Corp., Series B, 9.750%, 02/15/17		100,000			104,750
Zayo Group LLC, 10.250%, 03/15/17		105,000			115,500
Total Industrials					26,136,939
Utilities - 2.4%
AES Corp., 9.750%, 04/15/16		125,000			140,312
Calpine Corp., 7.500%, 02/15/21 (a)		60,000			59,400
Calpine Corp., 7.875%, 07/31/20 (a)		65,000			66,138
Dynegy Holdings, Inc., 7.625%, 10/15/26		125,000			74,375
Dynegy Holdings, Inc., 7.750%, 06/01/19		50,000	²		33,625
Energy Future Holdings Corp., 10.000%, 01/15/20 (a)		70,000	²		72,364
Energy Future Intermediate Holding Co. LLC, 10.000%, 12/01/20		96,000			99,482
NRG Energy, Inc., 7.375%, 02/01/16		145,000	²		148,988
NRG Energy, Inc., 8.250%, 09/01/20 (a)		55,000			56,650
Total Utilities					751,334
Total Corporate Bonds (cost $28,294,208)					30,401,510
Common Stocks - 0.6%

Consumer Discretionary - 0.1%	Shares
Dex One Corp.*		3,380			25,215
Information Technology - 0.3%
Flextronics International, Ltd.*		10,500			82,425
Materials - 0.2%
Huntsman Corp.		5,000			78,051
Total Common Stocks (cost $455,793)					185,691
Short-Term Investments - 9.1%¹
BNY Institutional Cash Reserves Fund, Series B*^3,7		87,750			69,938
BNY Mellon Overnight Government Fund, 0.23%³		2,785,000			2,785,000
Total Short-Term Investments (cost $2,872,750)					2,854,938
Total Investments - 107.2%(cost $31,622,751)					33,442,139
Other Assets, less Liabilities - (7.2)%					(2,248,169	)
Net Assets - 100.0%				$	31,193,970

The accompanying notes are an integral part of these financial statements.

Managers High Yield Fund

Notes to Schedule of Portfolio Investments

Note: Based on the approximate cost of investments of $31,628,262 for Federal income tax purposes at December 31, 2010, the aggregate gross unrealized appreciation and depreciation were $2,243,166 and $429,289, respectively, resulting in net unrealized appreciation of investments of $1,813,877.

*	Non-income-producing security.

(a)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified buyers. At December 31, 2010, the market value of these securities amounted to $8,683,428, or 27.8% of net assets.

(b)	Step Bond: A debt instrument with either deferred interest payments or an interest rate that resets at specific times during its term.

¹	Yield shown for each investment company represents the December 31, 2010, seven-day average yield, which refers to the sum of the previous seven days’ dividends paid, expressed as an annual percentage.

²	Some or all of these securities were out on loan to various brokers as of December 31, 2010, amounting to a market value of $2,754,828, or 8.8% of net assets.

³	Collateral received from brokers for securities lending was invested in this short-term investment.

⁴	Floating Rate Security. The rate listed is as of December 31, 2010. Date in parentheses represents the securities next coupon rate reset.

⁵	Payment-in-kind security: A type of high yield debt instrument whose issuer has the option of making interest payments in either cash or additional debt securities.

⁶	Variable Rate Security. The rate listed is as of December 31, 2010, and is periodically reset subject to terms and conditions set forth in the debenture.

⁷	On September 12, 2008, The Bank of New York Mellon established a separate sleeve of the BNY Institutional Cash Reserves Fund (Series B) to hold certain Lehman Brothers floating rate notes. The Fund’s position in Series B is being fair valued daily. (See Note 7 in the Notes to Financial Statements.)

The following table summarizes the inputs used to value the Fund’s net assets by the fair value hierarchy levels as of December 31, 2010: (See Note 1(a) in the Notes to Financial Statements.)


	Quoted Prices in Active Markets for Identical Investments Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Investments in Securities
Common Stocks^†	$	185,691		—		—	$	185,691
Corporate Bonds^††		—	$	30,401,510		—		30,401,510
Short-Term Investments		2,785,000		69,938		—		2,854,938

Total Investments in Securities	$	2,970,691	$	30,471,448		—	$	33,442,139

†	All common stocks held in the Fund are Level 1 securities. For a detailed break-out of common stocks by major industry classification, please refer to the Schedule of Portfolio Investments.

††	All corporate bonds held in the Fund are Level 2 securities. For a detailed break-out of the corporate bonds by major industry classification, please refer to the Schedule of Portfolio Investments.

As of December 31, 2010, the Fund had no significant transfers between Level 1 and Level 2 from the beginning of the reporting period.

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Investment Manager’s Comments

The Year in Review

Managers Fixed Income Fund (Institutional Class) returned 10.29% for the 12 months ended December 31, 2010, easily outpacing the return of 6.54% for the Barclays Capital U.S. Aggregate Bond Index (“the Index”).

At the beginning of 2010, attention shifted from economic recovery to economic growth, as investors began to displace lingering economic pessimism with overdue optimism. The transition was far from smooth, however, as new concerns materialized and old ones resurfaced. Increased anxiety over sovereign debt solvency in Europe and China’s lending restrictions percolated through global credit markets, tempering investor sentiment early in the year. In the U.S., unsteady economic readings and regulatory reform risk led some market participants back into defensive mode, but these challenges failed to offset a persistent overall positive market tone, which led to a solid year for the fixed income markets. For the entire year, government and investment-grade sectors earned returns of 4% to 9% while high yield and emerging markets posted double-digit gains. The modest rise in yields and spread tightening forecast by our macro and sector teams suggest returns may be less generous in 2011.

The primary driver of the Fund’s performance relative to the Index during 2010 was its emphasis on corporate bonds and related underweight to U.S. Treasuries, the same two factors that led to strong results for the prior year. Spreads contracted substantially in 2009 and this pattern extended into 2010. The Fund benefited most from its exposure to U.S. investment-grade bonds. A sizeable portion of the Fund’s corporate exposure is invested in BBB-rated securities, the lowest and most credit-sensitive part of the investment-grade spectrum. As a group, BBB-rated securities performed very well during 2010 after posting exceptional returns in the prior year. Moving even further down on the credit spectrum, the Fund also benefited from its high yield exposure. The majority of the rest of the Fund’s solid results were attributable to its non-U.S. dollar denominated and convertible bonds.

Looking Forward

Bond returns may be more tempered in 2011 due in part to the current low level of yields and the possibility for rates to move higher. Low current yields as of December 31, 2010, are particularly problematic for government and investment-grade sectors. The 10-year Treasury could earn 3.3% in one year if rates are unchanged, but lose 1.8% if rates rise to just 4.0% (the peak in 2010). The corporate market offers more yield and we like that many company balance sheets are generally in good shape with strong cash balances and growing profits. We anticipate that economic trends will remain supportive of credit quality, allowing the

sector to earn higher returns than Treasurys, but we see the sector’s low 4.0% yield as capping its upside. In addition to shopping the investment-grade corporate market, we see the securitized sector as offering attractive opportunities. Many managers are underweight MBS due to the government’s involvement in the sector, but we see recent improvements in valuations as a chance to reduce those underweights. Selected securities in the non-agency markets have particular appeal.

The speculative-grade market yield of 7.4% also may limit the upside as the sector typically offers more generous yields. High yield bonds remain one of our favored sectors, though, as we believe the incremental income may shore up returns in an environment where yields may be at to rising. High yield loans, too, will become even more attractive when yield increases are more worrisome. Equity markets (and their proxies, convertible bonds) could earn higher returns than high yield in 2011 as investors reduce overweights to fixed income. But for those who prefer a potentially lower-volatility strategy with income, we believe the high yield market remains very attractive.

On the international front, we expect a continuation of China as a growth engine for the world, with faster growth and higher yields in developing countries than in developed nations. While we have a slight preference for U.S. Dollar over Euro or Yen, we are not enamored by any of them and continue to see emerging markets as having greater return potential. We see both Asia ex-Japan and Latin America as benefiting from China’s commodity demands. Our sovereign analysts are forecasting, for example, growth near 4% for commodity exporters like Australia and Brazil. This faster growth and higher yields continue to attract investor in flows, boosting the return potential for both the bonds and currencies.

This commentary reflects the viewpoints of the portfolio manager, Loomis, Sayles & Company, as of December 31, 2010, and are not intended as a forecast or guarantee of future results.

Cumulative Total Return Performance

Managers Fixed Income Fund’s cumulative total return is based on the daily change in net asset value (NAV), and assumes that all distributions were reinvested. The Barclays Capital U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds. Unlike the Fund, the Barclays Capital U.S. Aggregate Bond Index is unmanaged, is not available for investment, and does not incur expenses. The chart illustrates the performance of a hypothetical $10,000 investment made in the Fund’s Class A Shares (with load) on December 31, 2000, with a $10,000 investment made in the Barclays Capital U.S. Aggregate Bond Index for the same time period. The graph and table do not reflect the deduction of taxes

Managers Fixed Income Fund

Investment Manager’s Comments (continued)

Cumulative Total Return Performance (continued)

that a shareholder would pay on a Fund distribution or redemption of shares. Performance for periods longer than one year is annualized. The listed returns for the Fund are net of expenses and the returns for the index exclude expenses. Total returns for the Fund would have been lower had certain expenses not been reduced.

LOGO

The table below shows the average annual total returns for the Managers Fixed Income Fund and the Barclays Capital U.S. Aggregate Bond Index from December 31, 2000 through December 31, 2010.


Average Annual Total Returns¹			1 Year			5 Years			10 Years
Managers Fixed Income Fund^2,3	-Class A	No Load		10.04	%		6.52	%		6.50	%
	-Class A	With Load		5.39	%		5.60	%		6.04	%
	-Class B	No Load		9.26	%		5.72	%		5.82	%
	-Class B	With Load		4.26	%		5.40	%		5.82	%
	-Class C	No Load		9.22	%		5.72	%		5.82	%
	-Class C	With Load		8.22	%		5.72	%		5.82	%
	-Institutional Class	No Load		10.29	%		6.78	%		6.87	%

Barclays Capital U.S. Aggregate Bond Index⁴				6.54	%		5.80	%		5.84	%

²	The Fund is subject to the risks associated with investments in debt securities, such as default risk and fluctuations in the perception of the debtors’ ability to pay its creditors.

³	From time to time, the Fund’s advisor has waived its fees and/or absorbed Fund expenses, which has resulted in higher returns.

⁴	The Barclays Capital U.S. Aggregate Bond Index is an index of the U.S. investment-grade, fixed-rate bond market, including both government and corporate bonds. Unlike the Fund, the Barclays Capital U.S. Aggregate Bond Index is unmanaged, is not available for investment, and does not incur expenses.

Not FDIC insured, nor bank guaranteed. May lose value.

Managers Fixed Income Fund

Fund Snapshots

December 31, 2010

Portfolio Breakdown


Industry	Managers Fixed Income Fund**
Industrials		38.7	%
Financials		21.0	%
U.S. Government and Agency Obligations		12.8	%
Foreign Government Obligations		8.2	%
Utilities		7.7	%
Asset-Backed Securities		5.3	%
Common Stocks		2.9	%
Municipal Bonds		1.1	%
Mortgage-Backed Securities		0.6	%
Preferred Stocks		0.5	%
Other Assets and Liabilities		1.2	%

**	As a percentage of net assets

Top Ten Holdings


Top Ten Holdings	% of Net Assets
Ford Motor Co., 4.250%, 11/15/16		4.5	%
U.S. Treasury Notes, 3.125%, 05/15/19*		4.1
Intel Corp.		2.9
Canadian Government, 2.000%, 09/01/12*		2.5
U.S. Treasury Notes, 3.875%, 11/15/40		2.0
Trinity Rail Leasing, L.P., Series 2010 1A, Class A, 5.194%, 10/16/40		2.0
Inter-American Development Bank, 6.000%, 12/15/17*		1.9
Kinder Morgan Energy Partners, L.P., 5.950%, 02/15/18*		1.7
Continental Airlines, Inc., Series 2010 B, 6.000%, 01/12/19		1.7
International Paper Co., 7.500%, 08/15/21*		1.6

Top Ten as a Group		24.9	%

*	Top Ten Holding at June 30, 2010

Managers Fixed Income Fund

Schedule of Portfolio Investments

December 31, 2010


Security Description	Principal Amount			Value
Corporate Bonds - 67.4%
Financials - 21.0%
AgriBank FCB, 9.125%, 07/15/19⁶	$	810,000		$	963,419
Alta Wind Holdings LLC, 7.000%, 06/30/35 (a)		600,000			641,865
American General Finance Corp., Medium Term Notes, Series I, 4.875%, 07/15/12		200,000			189,250
American General Finance Corp., Medium Term Notes, Series J, 5.200%, 12/15/11		100,000			97,625
American General Finance Corp., Medium Term Notes, Series G, 5.375%, 10/01/12		400,000			380,000
American General Finance Corp., Medium Term Notes, Series I, 5.850%, 06/01/13		100,000	²		91,250
American General Finance Corp., Medium Term Notes, Series J, 6.900%, 12/15/17		2,770,000			2,250,625
American International Group, Inc., Euro Medium Term Notes, 5.000%, 04/26/23		750,000			984,542
American International Group, Inc., Medium Term Notes, Series MP, 5.450%, 05/18/17		30,000			30,460
Associates Corp. of North America, 6.950%, 11/01/18		650,000			711,499
Bank of America Capital Trust VI, 5.625%, 03/08/35		295,000			250,551
Bear Stearns Companies, Inc., The, 4.650%, 07/02/18		480,000			493,726
Bear Stearns Companies, Inc., The, 5.300%, 10/30/15		25,000			27,158
Camden Property Trust, 5.700%, 05/15/17		255,000			269,453
Cantor Fitzgerald, L.P., 6.375%, 06/26/15 (a)		910,000			920,982
Cantor Fitzgerald, L.P., 7.875%, 10/15/19 (a)⁶		700,000			722,014
Caterpillar Financial Services Corp., 6.125%, 02/17/14		615,000			691,903
Citigroup, Inc., 5.500%, 10/15/14		1,340,000			1,445,015
Citigroup, Inc., 5.850%, 12/11/34		75,000			73,447
Citigroup, Inc., 6.125%, 05/15/18		345,000			378,521
Citigroup, Inc., 6.125%, 08/25/36		935,000			898,748
Colonial Realty, L.P., 4.800%, 04/01/11		181,000			181,431
Crown Castle Towers LLC, 6.113%, 01/15/20 (a)		850,000			888,372
Duke Realty, L.P., 5.950%, 02/15/17		35,000			36,498
ERAC USA Finance Co., 6.375%, 10/15/17 (a)		240,000			266,802
ERAC USA Finance Co., 6.700%, 06/01/34 (a)		65,000			67,559
ERAC USA Finance Co., 7.000%, 10/15/37 (a)		925,000			999,191
ERP Operating, L.P., 5.125%, 03/15/16		15,000			16,201
ERP Operating, L.P., 5.750%, 06/15/17		70,000			76,802
GE Capital Australia Funding Pty., Ltd., Euro Medium Term Notes, 8.000%, 02/13/12	AUD	260,000			271,648
General Electric Capital Corp., Global Medium Term Notes, Series A, 0.589%, 05/13/24, (01/18/11)⁴		180,000			151,598
Hanover Insurance Group, Inc., The, 7.500%, 03/01/20		465,000			490,808
Highwoods Realty, L.P., 5.850%, 03/15/17		30,000			30,925
Highwoods Realty, L.P., 7.500%, 04/15/18		350,000			391,190
International Lease Finance Corp., Medium Term Notes, Series R, 5.650%, 06/01/14		105,000			104,738
International Lease Finance Corp., 8.625%, 09/15/15 (a)		10,000			10,775
iStar Financial, Inc., 0.803%, 10/01/12, (04/01/11)^4,8		325,000			289,250
Lloyds TSB Bank PLC, 6.500%, 09/14/20 (a)		1,255,000			1,156,651
Marsh & McLennan Companies, Inc., 5.375%, 07/15/14		410,000			436,508
Marsh & McLennan Companies, Inc., 5.875%, 08/01/33		1,230,000			1,128,040

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Financials - 21.0% (continued)
MBIA Insurance Corp., 14.000%, 01/15/33 (a)⁵	$	25,000	²	$	13,812
Merrill Lynch & Co., Inc., Medium Term Notes, Series C, 6.050%, 06/01/34		1,100,000			1,029,648
Merrill Lynch & Co., Inc., 6.110%, 01/29/37		1,800,000			1,629,821
Metlife, Inc., 6.400%, 12/15/36		340,000			321,300
Morgan Stanley, 4.750%, 04/01/14		540,000			553,387
Morgan Stanley, 5.500%, 07/24/20		1,200,000			1,214,566
Morgan Stanley, 5.550%, 04/27/17		620,000			646,774
Morgan Stanley, 5.950%, 12/28/17		200,000			211,910
Morgan Stanley, 6.625%, 04/01/18		160,000			173,814
Morgan Stanley, Global Medium Term Notes, Series F, 5.500%, 01/26/20		200,000			201,962
Morgan Stanley, Global Medium Term Notes, Series F, 5.625%, 09/23/19		500,000			510,715
Mutual of Omaha Insurance Co., 6.800%, 06/15/36 (a)		620,000			588,109
National City Bank of Indiana, 4.250%, 07/01/18		395,000			384,509
Penn Mutual Life Insurance Co., The, 7.625%, 06/15/40 (a)		895,000			884,592
ProLogis Trust, 5.625%, 11/15/15		15,000			15,758
ProLogis Trust, 5.750%, 04/01/16		15,000			15,591
Simon Property Group, L.P., 5.250%, 12/01/16		25,000			27,005
Simon Property Group, L.P., 5.750%, 12/01/15		85,000			94,536
Simon Property Group, L.P., 5.875%, 03/01/17		40,000			43,966
Simon Property Group, L.P., 6.100%, 05/01/16		100,000			112,230
SLM Corp., 0.588%, 01/27/14, (01/25/11)⁴		135,000			121,688
SLM Corp., 5.000%, 10/01/13		10,000			10,032
SLM Corp., 5.375%, 01/15/13		20,000			20,409
SLM Corp., 8.450%, 06/15/18		845,000			879,469
Sovereign Bank, 5.125%, 03/15/13		335,000			339,236
Standard Chartered Bank, 6.400%, 09/29/17 (a)		100,000			107,148
Standard Chartered PLC, 5.500%, 11/18/14 (a)		750,000			813,534
WEA Finance LLC / WT Finance Australia, 6.750%, 09/02/19 (a)	AUD	535,000			596,994
Willis North America, Inc., 7.000%, 09/29/19		220,000			229,673
XL Capital PLC, 6.500%, 01/15/12		105,000			108,483
Total Financials					31,407,711
Industrials - 38.7%
Alltel Corp., 7.875%, 07/01/32		210,000			269,087
Anadarko Petroleum Corp., 5.950%, 09/15/16		450,000			484,016
Anadarko Petroleum Corp., 6.450%, 09/15/36		395,000			395,199
Anheuser-Busch InBev Worldwide, Inc., 5.375%, 11/15/14 (a)		975,000			1,075,152
AT&T Corp., 6.500%, 03/15/29		775,000	²		810,791
Avnet, Inc., 6.000%, 09/01/15		720,000			770,915
Avnet, Inc., 6.625%, 09/15/16		140,000			154,919
Bell Atlantic Pennsylvania, Inc., 6.000%, 12/01/28		85,000			79,631
BellSouth Corp., 6.000%, 11/15/34		280,000			279,764

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Industrials - 38.7% (continued)
Cardinal Health, Inc., 4.000%, 06/15/15	$	320,000	$	331,786
CenturyTel, Series P, 7.600%, 09/15/39		605,000		611,561
Charter Communications Operating LLC, 8.000%, 04/30/12		245,000		258,475
Chevron Phillips Chemical Co. LLC, 8.250%, 06/15/19 (a)		1,205,000		1,455,781
Choice Hotels International, Inc., 5.700%, 08/28/20		810,000		787,994
Ciena Corp., 0.875%, 06/15/17⁸		180,000		148,500
CIGNA Corp., 6.150%, 11/15/36		240,000		248,740
Coca-Cola HBC Finance, B.V., 5.125%, 09/17/13		265,000		285,377
Comcast Corp., 5.650%, 06/15/35		150,000		146,194
Continental Airlines, Inc., 5.983%, 04/19/22		409,964		432,512
Continental Airlines, Inc., Series 2010 B, 6.000%, 01/12/19		2,500,000		2,500,000
Continental Airlines, Inc., Series B, 6.903%, 04/19/22		92,335		94,181
Continental Airlines, Inc., Series 00A1, 8.048%, 11/01/20		80,267		90,702
Corning, Inc., 6.850%, 03/01/29		600,000		665,418
Covidien International Finance, S.A., 6.000%, 10/15/17		295,000		335,744
Cummins Engine Co., Inc., 6.750%, 02/15/27		153,000		159,970
Cytec Industries, Inc., 6.000%, 10/01/15		80,000		87,721
Darden Restaurants, Inc., 6.000%, 08/15/35		170,000		161,113
Delta Air Lines, Inc. Pass Through Certificate, Series 2010-1A, 6.200%, 07/02/18		350,000		371,875
Delta Air Lines, Inc., 8.021%, 08/10/22		655,443		668,552
DP World, Ltd., 6.850%, 07/02/37 (a)		1,720,000		1,590,818
Dun & Bradstreet Corp., The, 6.000%, 04/01/13		790,000		861,098
El Paso Corp., 6.950%, 06/01/28		165,000		153,296
Energy Transfer Partners, L.P., 6.125%, 02/15/17		65,000		71,545
Energy Transfer Partners, L.P., 6.625%, 10/15/36		145,000		153,345
Equifax, Inc., 7.000%, 07/01/37		228,000		249,055
Equitable Resources, Inc., 6.500%, 04/01/18		1,730,000		1,877,299
Express Scripts, Inc., 6.250%, 06/15/14		305,000		341,245
Express Scripts, Inc., 7.250%, 06/15/19		185,000		219,326
Ford Motor Co., 4.250%, 11/15/16⁸		3,380,000		6,772,675
GATX Corp., 4.750%, 10/01/12		560,000		586,862
Georgia-Pacific Corp., 7.250%, 06/01/28		70,000		76,125
Hasbro, Inc., 6.600%, 07/15/28		165,000		169,584
HCA, Inc., 7.500%, 11/06/33		75,000		69,375
Intel Corp., 2.950%, 12/15/35⁸		265,000		265,331
Intel Corp., 3.250%, 08/01/39⁸		1,035,000		1,245,881
International Paper Co., 7.500%, 08/15/21		2,000,000		2,366,808
International Paper Co., 7.950%, 06/15/18		114,000		135,852
Intuit, Inc., 5.750%, 03/15/17		210,000		229,241
J.C. Penney Co., Inc., 5.750%, 02/15/18		25,000		24,750
J.C. Penney Co., Inc., 6.375%, 10/15/36		297,000		271,755
J.C. Penney Co., Inc., 7.625%, 03/01/97		25,000		22,312

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 38.7% (continued)
Kinder Morgan Energy Partners, L.P., 5.950%, 02/15/18	$	2,335,000		$	2,575,328
Kinder Morgan Finance Co., 5.700%, 01/05/16		165,000			167,888
KLA Instruments Corp., 6.900%, 05/01/18		420,000			462,673
Kroger Co., The, 7.000%, 05/01/18		460,000			525,735
Macy’s Retail Holdings, Inc., 6.790%, 07/15/27		80,000			76,400
Macy’s Retail Holdings, Inc., 6.900%, 04/01/29		30,000			29,625
Marks & Spencer Group PLC, 7.125%, 12/01/37 (a)		300,000			299,936
Masco Corp., 5.850%, 03/15/17		350,000			349,242
Masco Corp., 6.500%, 08/15/32		25,000			22,059
Masco Corp., 7.125%, 03/15/20		300,000			314,368
Masco Corp., 7.750%, 08/01/29		50,000			49,124
Medco Health Solutions, Inc., 7.250%, 08/15/13		420,000			477,348
Methanex Corp., 6.000%, 08/15/15		320,000			308,200
Missouri Pacfic Railroad Co., 5.000%, 01/01/45⁶		200,000			144,886
Motorola, Inc., 6.500%, 09/01/25		15,000			15,463
Motorola, Inc., 6.500%, 11/15/28		70,000	²		69,077
New England Telephone & Telegraph Co., 7.875%, 11/15/29		95,000			103,241
News America, Inc., 7.280%, 06/30/28		225,000			254,340
News America, Inc., 7.625%, 11/30/28		460,000			537,440
Nextel Communications, Inc., 5.950%, 03/15/14		710,000			701,125
Northwest Airlines, Inc., 8.028%, 11/01/17		336,017			347,777
Omnicare, Inc., 3.750%, 12/15/25⁸		470,000			526,400
Owens & Minor, Inc., 6.350%, 04/15/16⁶		125,000			127,403
Owens Corning, Inc., 6.500%, 12/01/16		210,000			222,688
Owens Corning, Inc., 7.000%, 12/01/36		385,000			397,871
PPG Industries, Inc., 6.650%, 03/15/18		1,935,000			2,228,750
Pulte Homes, Inc., 6.000%, 02/15/35		1,265,000			942,425
Pulte Homes, Inc., 6.375%, 05/15/33		465,000			353,400
Qantas Airways, Ltd., 6.050%, 04/15/16 (a)		1,500,000			1,597,983
Qwest Corp., 6.875%, 09/15/33		20,000			19,750
Rowan Cos., Inc., 7.875%, 08/01/19		300,000			348,707
Safeway, Inc., 6.350%, 08/15/17		400,000			447,284
Samsung Electronics Co., Ltd., 7.700%, 10/01/27 (a)		510,000			579,643
SBC Communications, Inc., 6.150%, 09/15/34		840,000			870,244
Sprint Capital Corp., 6.900%, 05/01/19		15,000			14,888
Sprint Capital Corp., 8.750%, 03/15/32		5,000			5,075
Telecom Italia Capital S.p.A., 6.000%, 09/30/34		40,000			33,288
Telecom Italia Capital S.p.A., 6.375%, 11/15/33		105,000			90,371
Tele-Communications, Inc., 9.800%, 02/01/12		350,000			381,050
Telefonica Emisiones SAU, 5.877%, 07/15/19		265,000			271,216
Texas Eastern Transmission, L.P., 7.000%, 07/15/32		255,000			294,934
TGT Pipeline LLC, 5.200%, 06/01/18		465,000			481,477

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount			Value
Industrials - 38.7% (continued)
Time Warner Cable, Inc., 6.750%, 07/01/18	$	1,500,000		$	1,751,145
Time Warner, Inc., 6.625%, 05/15/29		270,000			298,964
Time Warner, Inc., 7.625%, 04/15/31		80,000			97,527
Time Warner, Inc., 7.700%, 05/01/32		685,000			838,569
Toll Brothers Finance Corp., 5.150%, 05/15/15		540,000			552,540
Toro Co., The, 6.625%, 05/01/37⁶		365,000			335,321
V.F. Corp., 6.450%, 11/01/37		412,000			464,944
Verizon Maryland, Inc., 5.125%, 06/15/33		295,000			260,536
Verizon New England, Inc., 6.500%, 09/15/11		530,000			550,708
Verizon New York, Inc., Series B, 7.375%, 04/01/32		110,000			123,783
Viacom, Inc., 6.875%, 04/30/36		470,000			540,983
Western Union Co., 6.200%, 11/17/36		450,000			446,236
Western Union Co., The, 6.200%, 06/21/40		5,000			4,963
Weyerhaeuser Co., 6.875%, 12/15/33		660,000			620,968
Weyerhaeuser Co., 7.375%, 10/01/19		50,000			54,713
Weyerhaeuser Co., 7.375%, 03/15/32		90,000			91,224
Wyndham Worldwide Corp., 6.000%, 12/01/16		405,000			424,332
Wyndham Worldwide Corp., 7.375%, 03/01/20		460,000			506,552
Total Industrials					57,945,378
Utilities - 7.7%
Abu Dhabi National Energy Co., 7.250%, 08/01/18 (a)		1,040,000			1,155,298
Ameren Energy Generating Co., 7.000%, 04/15/18		1,200,000	²		1,184,540
Ameren Illinois Co., 6.250%, 04/01/18		1,370,000			1,514,116
Bruce Mansfield Unit 12, 6.850%, 06/01/34⁶		315,916			336,100
Cleveland Electric Illuminating Co., The, 5.950%, 12/15/36		695,000			666,133
Commonwealth Edison Co., 4.700%, 04/15/15		510,000			552,947
Empresa Nacional de Electricidad, 7.875%, 02/01/27		900,000			1,001,996
ITC Holdings Corp., 5.875%, 09/30/16 (a)		225,000			251,845
ITC Holdings Corp., 6.375%, 09/30/36 (a)		300,000			309,578
Korea Gas Corp., 6.000%, 07/15/14 (a)		300,000			325,295
Nisource Finance Corp., 6.400%, 03/15/18		1,645,000			1,826,226
Nisource Finance Corp., 6.800%, 01/15/19		900,000			1,042,947
Southwestern Electric Power Co., 6.450%, 01/15/19		1,225,000			1,347,365
Total Utilities					11,514,386
Total Corporate Bonds (cost $93,130,299)					100,867,475
U.S. Government and Agency Obligations - 12.8%
Federal Home Loan Bank - 0.7%
FHLB, 1.875%, 06/21/13		1,040,000			1,064,880
Federal Home Loan Mortgage Corporation - 1.8%
FHLMC, 1.625%, 04/15/13		1,040,000			1,058,823
FHLMC, 2.125%, 09/21/12		1,560,000			1,600,607
Total Federal Home Loan Mortgage Corporation					2,659,430

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Schedule of Portfolio Investments (continued)


Security Description		Principal Amount		Value
Federal National Mortgage Association - 1.9%
FNMA, 1.375%, 04/28/11		$	2,080,000	$	2,088,162
FNMA, 1.875%, 04/20/12			650,000		661,856
Total Federal National Mortgage Association					2,750,018
United States Treasury Securities - 8.4%
U.S. Treasury Inflation Indexed Notes, 2.000%, 01/15/14			520,771		559,584
U.S. Treasury Notes, 1.000%, 08/31/11			1,970,000		1,980,236
U.S. Treasury Notes, 3.125%, 05/15/19			6,000,000		6,064,218
U.S. Treasury Notes, 3.875%, 11/15/40			3,080,000		3,030,431
U.S. Treasury Notes, 4.750%, 05/15/14			835,000		932,787
Total United States Treasury Securities					12,567,256
Total U.S. Government and Agency Obligations (cost $18,397,022)					19,041,584
Foreign Government Obligations - 8.2%
Brazil, Republic of, 10.250%, 01/10/28	BRL		750,000		471,461
Canadian Government, 2.000%, 09/01/12	CAD		3,700,000		3,745,250
Canadian Government, 3.750%, 06/01/12	CAD		135,000		139,941
Canadian Government, 5.250%, 06/01/12	CAD		390,000		412,428
Inter-American Development Bank, 6.000%, 12/15/17	NZD		3,500,000		2,814,126
International Bank for Reconstruction & Development, Series GDIF, 1.430%, 03/05/14	SGD		1,000,000		782,505
Ireland Government Notes, 4.500%, 04/18/20	EUR		75,000		72,577
Ireland Government Notes, 5.000%, 10/18/20	EUR		25,000		24,524
Ireland Treasury Bonds, 4.500%, 10/18/18	EUR		275,000		280,814
Ireland Treasury Bonds, 5.400%, 03/13/25	EUR		125,000		119,626
Mexican Bonos, Series M10, 7.250%, 12/15/16	MXN		6,850,000		577,064
Mexican Fixed Rate Bonds, 8.000%, 12/07/23	MXN		3,500,000		303,976
Mexican Government, 9.000%, 12/20/12	MXN		5,950,000		516,903
New South Wales Treasury Corp., 6.000%, 05/01/12	AUD		995,000		1,027,906
New South Wales Treasury Corp., Series 12RG, 6.000%, 05/01/12	AUD		260,000		268,625
Portugal Obrigacoes do Tesouro, 3.850%, 04/15/21	EUR		50,000		52,477
Portugal Obrigacoes do Tesouro, 4.800%, 06/15/20	EUR		25,000		29,284
Queensland Treasury Corp., Series 11G, 6.000%, 06/14/11	AUD		665,000		682,468
Total Foreign Government Obligations (cost $11,110,137)					12,321,955
Municipal Bonds - 1.1%
Buckeye Tobacco Settlement Financing Authority, Series 2007 A-2, 5.875%, 06/01/47⁶			250,000		164,300
California State, 4.500%, 08/01/27, (AMBAC Insured)			45,000		39,398
California State, 4.500%, 10/01/29			130,000		110,902
California State, 4.500%, 08/01/30			30,000		25,520
California State, 4.500%, 08/01/30, (AMBAC Insured)			35,000		29,773
California State, Variable Purpose Bond, 3.250%, 12/01/27, (National Insured)			25,000		18,164
California State, Variable Purpose Bond, 4.500%, 12/01/33, (AMBAC Insured)			110,000		91,994
Chicago Illinois O’Hare International Airport Revenue Bond, Series 2008 A, 4.500%, 01/01/38, (AGM Insured)			15,000		12,709
Eufaula Alabama, Series 2003 C, 4.000%, 08/15/12, (AMBAC Insured)			175,000		175,710

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Municipal Bonds - 1.1% (continued)
Michigan Tobacco Settlement Financial Authority, Series 2006 A, 7.309%, 06/01/34⁶	$	390,000	$	277,625
San Jose California Redevelopment Agency Tax Allocation, Series 2006 C, 3.750%, 08/01/28, (BHAC Insured)		15,000		11,686
San Jose California Redevelopment Agency Tax Allocation, Series 2006 C, 3.750%, 08/01/28, (National Insured)		35,000		26,751
Virginia Tobacco Settlement Financing Corp., 6.706%, 06/01/46⁶		1,055,000		659,628
Total Municipal Bonds (cost $2,251,637)				1,644,160
Asset-Backed Securities - 5.3%
Centex Home Equity Loan, Series 2004-A, Class AF6, 4.270%, 01/25/34⁵		247,720		249,867
Chase Issuance Trust, Series 2007-B1, Class B1, 0.510%, 04/15/19, (01/18/11)⁴		845,000		813,433
Chrysler Financial Lease Trust, Series 2010-A, Class B, 3.460%, 09/16/13 (a)		640,000		640,648
Countrywide Home Loans, Series 2002-S1, Class A5, 6.460%, 11/25/16 (b)		140,186		132,439
Marriott Vacation Club Owner Trust, Series 2009-2A, Class A, 4.809%, 07/20/31 (a)		854,130		880,549
Merrill Auto Trust Securitization, Series 2008-1, Class B, 6.750%, 04/15/15		200,000		212,857
Sierra Receivables Funding Company, Series 2010-2A, Class A, 3.840%, 11/20/25 (a)		1,522,849		1,526,273
Trinity Rail Leasing, L.P., Series 2010 1A, Class A, 5.194%, 10/16/40 (a)		2,983,175		2,989,472
World Financial Network Credit Card Master Note Trust, Series 2010-A, 6.750%, 04/15/19		500,000		536,112
Total Asset-Backed Securities (cost $7,790,182)				7,981,650
Mortgage-Backed Securities - 0.6%
Credit Suisse Mortgage Capital, Series 2007-C5, Class A4, 5.695%, 09/15/40⁵		300,000		308,556
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2007-LDPX, Class A3, 5.420%, 01/15/49		110,000		114,581
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2007-LD11, Class A4, 5.817%, 06/15/49 ⁵		220,000		230,557
LB-UBS Commercial Mortgage Trust, Series 2001-C3, Class A2, 6.365%, 12/15/28		295,102		298,764
Total Mortgage-Backed Securities (cost $642,729)				952,458

Common Stocks - 2.9%	Shares
Information Technology
Intel Corp. (cost $4,461,584)		204,750		4,305,892
Preferred Stocks - 0.5%
General Motors Co., Series 2010 B, 4.750%⁸		2,400		129,864
Newell Financial Trust I, 5.250%⁸		13,455		568,474
Total Preferred Stocks (cost $697,997)				698,338
Short-Term Investments - 1.2%¹
BNY Institutional Cash Reserves Fund, Series B*^3,7		247,573		197,321
BNY Mellon Overnight Government Fund, 0.23%³		1,264,000		1,264,000
Dreyfus Cash Management Fund, Institutional Class Shares, 0.14%		301,535		301,535
Total Short-Term Investments (cost $1,813,108)				1,762,856
Total Investments - 100.0% (cost $140,294,695)				149,576,368
Other Assets, less Liabilities - (0.0)%^#				(37,548	)
Net Assets - 100.0%			$	149,538,820

The accompanying notes are an integral part of these financial statements.

Managers Fixed Income Fund

Notes to Schedules of Portfolio Investments

Note: Based on the approximate cost of investments of $140,316,188 for Federal income tax purposes at December 31, 2010, the aggregate gross unrealized appreciation and depreciation were $11,256,713 and $1,996,533, respectively, resulting in net unrealized appreciation of investments of $9,260,180.

^#	Rounds to less than 0.01%.

(a)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified buyers. At December 31, 2010, the value of these securities amounted to $23,356,671, or 15.6% of net assets.

(b)	Step Bond: A debt instrument with either deferred interest payments or an interest rate that resets at specific times during its term.

¹	Yield shown for each investment company represents its December 31, 2010, seven-day average yield, which refers to the sum of the previous seven days’ dividends paid, expressed as an annual percentage.

²	Some or all of these securities were out on loan to various brokers as of December 31, 2010, amounting to a market value of $1,461,845, or 1.0% of net assets.

³	Collateral received from brokers for securities lending was invested in this short-term investment.

⁴	Floating Rate Security. The rate listed is as of December 31, 2010. Date in parentheses represents the securities next coupon rate reset.

⁵	Variable Rate Security. The rate listed is as of December 31, 2010, and is periodically reset subject to terms and conditions set forth in the debenture.

⁶

Illiquid Security: A security not readily convertible into cash such as a stock, bond or commodity that is not actively traded and would be difficult to sell in a current sale. The Funds may not invest more than 15% of their net assets in illiquid securities. All securities are valued on the basis of valuations provided by dealers or independent pricing services. At December 31, 2010, the market value of these securities amounted to $3,730,696, or 2.5% of net assets.

⁷	On September 12, 2008, The Bank of New York Mellon established a separate sleeve of the BNY Institutional Cash Reserves Fund (Series B) to hold certain Lehman Brothers floating rate notes. The Fund’s position in Series B is being fair valued daily. (See Note 7 in the Notes to Financial Statements.)

⁸	Convertible Bond: A corporate bond, usually a junior debenture that can be converted, at the option of the holder, for a specific number of shares of the company’s preferred stock or common stock. At December 31, 2010, the market value of these bonds amounted to $9,946,375, or 6.7% of net assets.

The following table summarizes the inputs used to value the Fund’s net assets by the fair value hierarchy levels as of December 31, 2010: (See Note 1(a) in the Notes to Financial Statements.)


	Quoted Prices in Active Markets for Identical Investments Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Investments in Securities
Corporate Bonds^†		—	$	100,867,475		—	$	100,867,475
U.S. Government and Agency Obligations		—		19,041,584		—		19,041,584
Asset-Backed Securities		—		7,981,650		—		7,981,650
Mortgage-Backed Securities		—		952,458		—		952,458
Foreign Government Obligations		—		12,321,955		—		12,321,955
Municipal Bonds		—		1,644,160		—		1,644,160
Common Stocks	$	4,305,892		—		—		4,305,892
Preferred Stocks		—		698,338		—		698,338
Short-Term Investments		1,565,535		197,321		—		1,762,856

Total Investments in Securities	$	5,871,427	$	143,704,941		—	$	149,576,368

†	All corporate bonds held in the Fund are Level 2 securities. For a detailed break-out of the corporate bonds by major industry classification, please refer to the Schedule of Portfolio Investments.

As of December 31, 2010, the Fund had no significant transfers between Level 1 and Level 2 from the beginning of the reporting period.


Investments Definitions and Abbreviations:

AGM:	Assured Guaranty Municipal Corp.	GDIF:	Global Debt Insurance Facility
AMBAC:	American Municipal Bond Assurance Corp.	GNMA:	Government National Mortgage Association
BHAC:	Berkshire Hathaway Assurance Corp.	GSR:	Goldman Sachs REMIC
FGIC:	Federal Guaranty Insurance Corp.	National:	National Public Finance Guarantee Group
FHLB:	Federal Home Loan Bank	REIT:	Real Estate Investment Trust
FHLMC:	Federal Home Loan Mortgage Corp.
FNMA:	Federal National Mortgage Association

Abbreviations have been used throughout the portfolios to indicate amounts shown in currencies or par values other than the U.S. dollar (USD):


AUD:	Australian Dollar	MXN:	Mexican Peso
BRL:	Brazilian Real	NZD:	New Zealand Dollar
CAD:	Canadian Dollar	SGD:	Singapore Dollar
EUR:	Euro

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Investment Manager’s Comments

The Managers Short Duration Government Bond Fund (“the Fund”) seeks to provide investors with a high level of current income, consistent with a low volatility of net asset value.

The Fund seeks to achieve its objective by matching the duration, or interest-rate risk, of a portfolio that invests exclusively in six-month U.S. Treasury securities on a constant maturity basis. Under normal circumstances, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in debt securities issued by the U.S. government or its agencies and instrumentalities and synthetic instruments or derivatives having economic characteristics similar to such debt securities.

The Fund typically employs hedging techniques using instruments such as interest rate futures, options, floors, caps, and swaps, designed to reduce the interest-rate risk of their fixed-income securities. The Fund’s benchmark is the six-month Treasury bill.

The Portfolio Manager

Smith Breeden Associates, Inc.

Smith Breeden Associates, Inc. (“Smith Breeden”) is the subadvisor for the Fund. Smith Breeden, located at 280 South Mangum Street, Suite 301, Durham, NC, was founded in 1982. Smith Breeden is an investment management firm for a client base including corporate and public pension plans, central and supranational banks, endowments and foundations, private banks and financial institutions, insurance companies, and other institutional investors. Specializing in fixed income portfolios, the firm offers separate accounts, commingled funds, and serves as a subadvisor to ‘40 Act funds. As of December 31, 2010, Smith Breeden managed assets of approximately $6.4 billion.

Smith Breeden believes that innovative research provides critical insights into the fixed income market. The firm’s experienced investment professionals apply these research insights to the management of investment portfolios designed to achieve their clients’ objectives. The key tenets of this market-tested investment philosophy are:

•

Over a market cycle, a portfolio of fixed income securities with wide risk-adjusted spreads produces an attractive total return in comparison to the market return.

•

The incremental return available from security selection and sector allocation, based on careful relative value analysis, quantitative research, and experienced market judgment, is more consistent than the incremental return from predicting the direction of interest rates or other macro-factor trading strategies.

•

Within the investment-grade fixed income market, the spread sectors, e.g., corporate bonds, mortgage-backed securities (MBS), commercial MBS (CMBS), and asset-backed securities (ABS), will tend to outperform Treasury securities over a market cycle. The corporate, mortgage, CMBS, and ABS sectors also offer the greatest active management opportunity for adding value through security selection.

The portfolio management team at Smith Breeden specializes in analyzing and investing in mortgage securities. Through careful analysis and comparison of the characteristics of these securities, such as type of issuer, coupon, maturity, geographic structure, and prepayment rates, the portfolio manager seeks to structure a portfolio with similar risk characteristics to six-month U.S. Treasury securities and slightly higher returns. Because there is less certainty about the timing of principal payments to individual mortgage securities than for U.S. Treasury securities, they tend to carry a slightly higher yield. A properly structured portfolio of mortgage securities, however, can have a highly predictable cash flow while maintaining a yield advantage over Treasuries. Although the portfolio management team often purchases securities with maturities longer than six months, it does not attempt to increase returns by actively positioning the interest rate sensitivity of the Portfolio. Instead, the team typically manages the weighted average duration of the Portfolio so that it remains close to the Index.

The ideal investment exhibits many of the following traits:

•

Yield advantage over Treasuries

•

Very high quality (Government or AAA)

•

Attractive value relative to other MBS opportunities

The portfolio:

•

Seeks to optimize return per unit of risk

•

Maintains minimal exposure to credit risk and interest rate risk

•

Consists of high-quality MBS, CMBS, and ABS securities

•

Will tend to have an interest-rate sensitivity similar to a six-month Treasury bill

The investment team will make a sell decision when:

•

They no longer view the bonds as attractive

•

They deem it necessary to reallocate the Portfolio

•

They need to maintain the Portfolio’s target duration

The Year in Review

During the year ended December 31, 2010, the Fund returned 1.58%, while the BofA Merrill Lynch Six-Month U.S Treasury Bill Index returned 0.36%.

Economic conditions and the recovery in 2010 were largely shaped by the prior few years of historic market moves, a credit and liquidity crisis, and unprecedented government intervention. The prior year included high economic uncertainty, uncertain inflation expectations, constrained capital given restrictive risk management limits, and somewhat impaired liquidity. 2010 saw tightening across spread sectors, lower risk premia, improved liquidity, and lower market volatility as the markets continued healing.

Managers Short Duration Government Fund

Investment Manager’s Comments (continued)

By the end of the first quarter of 2010, the Federal Reserve buying program of MBS was completed, culminating in purchases of $1.25 trillion. This program kept demand for MBS strong through most of 2009 and the early part of 2010 and mortgage rates lower than they otherwise would have been through a volatile period for the U.S. housing market and the overall economy. With the end to quantitative easing, the market had lost the volatility buffer provided not only by Federal Reserve buying, but also by the Fed’s assumption of massive amounts of prepayment risk via their MBS holdings.

Despite this, mortgage rates moved significantly lower during the second quarter. Demand remained strong as mortgages represented a high credit-quality security that offered a better yield than Treasury securities. With prepayments generally remaining mild and supply being light despite historically low rates, agency mortgages kept pace with a rally in Treasuries. It should be noted that one of the great technical supports for the agency MBS market in 2010 was the net negative supply primarily due to Government Sponsored Enterprise buyouts of delinquent loans.

As fears of a double dip in the economy emerged during the third quarter, both Treasury yields and mortgage rates again moved lower. Talk of a second round of quantitative easing surfaced toward the end of the quarter, which helped spur the bond market rally. Mortgage spreads widened in this rally as concerns emerged over increasing levels of prepayments and origination. Apart from agency MBS, spread sectors performed well during the quarter.

In the fourth quarter, interest rates backed up significantly as the market’s fear of a double dip in the economy gave way, and the market, buoyed by further quantitative easing (QE2) from the Federal Reserve, began to price in stronger growth expectations. The result was a very steep yield curve and a forward curve, which anticipates a less accommodative Federal Reserve in the coming quarters. This more optimistic outlook also spilled into fixed income spreads, where we now see tighter spread levels in virtually every market.

Most of the Fund outperformance for 2010 was attributed to agency MBS exposure. Agency adjustable-rate (ARMs), fixed-rate mortgages (FRMs), and Collateralized Mortgage Obligations (CMOs (considered by some to be mortgage derivatives)) were beneficiaries of lower realized volatility, hedging costs, and mortgage rates. A benign prepayment environment also helped the Fund’s very small exposure (2.7%) to mortgage derivatives. CMBS also outperformed as risk appetite continues to be strong for the asset class, especially as the commercial real estate market firms up. Supply in CMBS is almost non-existent, and market technicals continue to be supportive of tighter spreads.

The Fund’s Treasury Inflation-Protected Securities (TIPS) exposure was performance neutral for the year despite a strong fourth quarter where higher growth, an easy FOMC, and less deflation risk contributed to good TIPS performance. The portfolio remains positioned largely in the highest-quality securities. At year end, the Fund held no leverage.

Derivatives such as financial futures, options, and mortgage derivatives are used for portfolio duration and convexity risk management. Although we prefer to have the flexibility to use the largest array of instruments possible, derivatives are not crucial to our ability to add value.

Looking Forward

On December 31, portfolio duration closely approximated that of the six-month Treasury bill. In 2010, CMO (agency and non-agency), agency ARM, and ABS exposures were reduced by approximately

8.1%, 1.3%, and 0.3%, respectively, on a market-value basis within the portfolio. Cash and equivalents also decreased from 8.6% of the portfolio at year-end 2009 to 1.6% of capital at year-end 2010. The largest securitized sector increases were in 15-year agency FRMs and CMBS, which were increased from 15% and 5% of capital to nearly 30% and 9%, respectively. The Fund maintains a small allocation (1.8%) of TIPS. Given the supply changes and lack of backstop buyers, spread volatility in agency MBS will remain elevated, providing a good environment for active management. Security selection opportunities should also be high as prepayment levels are raised due to record low rates. We believe that high-quality spread assets held in the portfolio are likely to continue to experience positive performance, since spreads are still relatively generous by historical standards and technical conditions remain supportive.

This commentary reflects the viewpoints of Smith Breeden Associates, Inc., as of January 21, 2011.

Cumulative Total Return Performance

Managers Short Duration Government Fund’s cumulative total return is based on the daily change in net asset value (NAV), and assumes that all distributions were reinvested. The BofA Merrill Lynch Six-Month U.S. Treasury Bill Index is an unmanaged index that measures returns of six-month U.S. Treasury bills. Unlike the Fund, the BofA Merrill Lynch Six-Month U.S. Treasury Bill Index is unmanaged, is not available for investment, and does not incur expenses. The chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on December 31, 2000 to a $10,000 investment made in the BofA Merrill Lynch Six-Month U.S. Treasury Bill Index for the same time periods. Figures include

Managers Short Duration Government Fund

Investment Manager’s Comments (continued)

Cumulative Total Return Performance (continued)

reinvestment of capital gains and dividends. The listed returns for the Fund are net of expenses and the returns for the index exclude expenses. Total returns for the Fund would have been lower had certain expenses not been reduced.

LOGO

The table below shows the average annual total returns for the Managers Short Duration Government Fund and the BofA Merrill Lynch Six-Month U.S. Treasury Bill Index from December 31, 2000 through December 31, 2010.


Average Annual Total Returns¹	1 Year			5 Years			10 Years
Managers Short Duration Government Fund^2,3,4		1.58	%		3.25	%		3.52	%
BofA Merrill Lynch Six-Month U.S. Treasury Bill Index⁵		0.36	%		2.97	%		2.78	%

²	Changing interest rates may adversely affect the value of an investment. An increase in interest rates typically causes the value of bonds and other fixed income securities to fall.

The Fund may use derivative instruments for hedging purposes or as part of its investment strategy. There is 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 or that the counterparty may fail to honor its contract terms, causing a loss for the Fund. Use of these instruments may also involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk and the risk that a fund could not close out a position when it would be most advantageous to do so.

⁴

Many bonds have call provisions which allow the debtors to pay them back before maturity. This is especially true with mortgage securities, which can be paid back anytime. Typically debtors prepay their debt when it is to their advantage (when interest rates drop making a new loan at current rates more attractive), and thus likely to the disadvantage of bondholders, who may have to reinvest prepayment proceeds in securities with lower yields. Prepayment risk will vary depending on the provisions of the security and current interest rates relative to the interest rate of the debt.

⁵	The BofA Merrill Lynch Six-Month Treasury Bill Index is an unmanaged index that measures returns of six-month Treasury Bills. Unlike the Fund, the BofA Merrill Lynch Six-Month Treasury Bill Index is unmanaged, is not available for investment, and does not incur expenses.

Not FDIC insured, nor bank guaranteed. May lose value.

Managers Short Duration Government Fund

Fund Snapshots

December 31, 2010


Portfolio Breakdown
Portfolio Breakdown	Managers Short Duration Government Fund**
U.S. Government and Agency Obligations		89.0	%
Mortgage-Backed Securities		8.9	%
Asset-Backed Securities		0.3	%
Other Assets and Liabilities		1.8	%

**	As a percentage of net assets

Top Ten Holdings


Top Ten Holdings	% of Net Assets
FNMA, 3.500%, TBA		15.1	%
FHLMC Discount Notes, 0.077%, 02/07/11		4.8
FNMA, 2.710%, 11/01/34*		2.3
U.S. Treasury Inflation Linked Notes, 2.375%, 01/15/25*		1.8
FHLMC, Series 2638, Class OW, 4.500%, 10/15/27*		1.7
FNMA, 4.855%, 02/01/36		1.4
LB-UBS Commercial Mortgage Trust, Series 2001-C3, Class A2, 6.365%, 12/15/28		1.2
FHLMC, Series 2939, Class DE, 4.750%, 04/15/25*		1.2
FHLMC, Series 2764, Class TD, 5.000%, 02/15/29		1.2
FNMA, 5.000%, 10/01/19		1.1

Top Ten as a Group		31.8	%

*	Top Ten Holding at June 30, 2010

Managers Short Duration Government Fund

Schedule of Portfolio Investments

December 31, 2010


Security Description	Principal Amount		Value
U.S. Government and Agency Obligations - 89.0%
Federal Home Loan Mortgage Corporation - 29.2%
FHLMC, 2.250%, 11/01/33, (11/01/11)⁴	$	1,702,868	$	1,779,959
FHLMC, 2.396%, 10/01/28, (08/01/11)⁴		132,278		137,984
FHLMC, 2.482%, 12/01/33, (11/01/11)⁴		3,332,211		3,475,577
FHLMC, 2.484%, 10/01/33, (10/01/11)⁴		2,483,681		2,600,061
FHLMC, 2.493%, 10/01/33, (10/01/11)⁴		3,951,791		4,133,114
FHLMC, 2.570%, 09/01/35, (09/01/11)^4,9		3,071,259		3,186,286
FHLMC, 2.655%, 07/01/34, (06/01/11)^4,9		592,310		618,223
FHLMC, 2.742%, 02/01/23, (06/01/11)⁴		1,029,668		1,078,033
FHLMC, 2.946%, 09/01/33, (06/01/11)^4,9		3,582,149		3,773,429
FHLMC, 2.984%, 06/01/35, (06/01/11)^4,9		1,396,768		1,466,079
FHLMC, 3.455%, 12/01/35, (06/01/11)⁴		948,039		989,494
FHLMC, 4.500%, 07/01/18⁹		3,086,667		3,258,362
FHLMC, 5.000%, 05/01/18⁹		808,270		861,944
FHLMC, 5.000%, 07/15/25⁶		36,266		36,251
FHLMC, 5.000%, 09/01/17 to 10/15/27		1,351,115		1,421,566
FHLMC, 5.500%, 11/01/19⁹		3,801,865		4,100,668
FHLMC, 5.717%, 02/01/37, (02/01/12)^4,9		2,099,193		2,224,320
FHLMC Gold Pool, 0.510%, 06/15/35, (01/15/11)^4,9		3,277,813		3,277,375
FHLMC Gold Pool, 3.750%, 11/15/25^6,9		141,018		140,995
FHLMC Gold Pool, 5.000%, 05/01/18⁹		724,470		772,579
FHLMC Gold Pool, 5.000%, 01/01/19⁹		949,502		1,016,115
FHLMC Gold Pool, 5.000%, 04/01/19 to 08/01/19		698,710		746,227
FHLMC Gold Pool, 5.500%, 11/01/17⁹		410,989		441,235
FHLMC Gold Pool, 5.500%, 12/01/17 to 09/01/19		732,081		790,751
FHLMC Gold Pool, 5.500%, 01/01/20⁹		3,543,240		3,835,005
FHLMC Gold Pool, 7.000%, 06/01/17		1,592,428		1,726,187
FHLMC Gold Pool, 7.500%, 04/01/15 to 03/01/33		1,033,312		1,167,518
FHLMC REMICS, Series 2870, Class CN, 4.000%, 10/15/27		281,227		285,047
FHLMC REMICS, Series 2885, Class DE, 4.500%, 12/15/17		208,753		215,094
FHLMC REMICS, Series 2769, Class BX, 4.500%, 07/15/27		138,438		138,860
FHLMC Structured Pass Through Securities, Series T-51, Class 2A, 7.500%, 08/25/42⁵		181,894		211,338
FHLMC, Series 2628, Class GQ, 3.140%, 11/15/17		1,082,295		1,110,110
FHLMC, Series 2836, Class P, 4.000%, 01/15/16		1,272,652		1,276,067
FHLMC, Series 2692, Class AB, 4.000%, 05/15/16		1,224,964		1,245,563
FHLMC, Series 2675, Class CB, 4.000%, 05/15/16		533,876		542,037
FHLMC, Series 2677, Class BA, 4.000%, 09/15/16		1,097,639		1,120,152
FHLMC, Series 2696, Class MD, 4.000%, 11/15/16		631,205		643,271
FHLMC, Series 2574, Class HW, 4.000%, 11/15/16⁶		158,321		158,962
FHLMC, Series 2551, Class CH, 4.000%, 12/15/16		284,797		287,715
FHLMC, Series 2608, Class GJ, 4.000%, 03/15/17		386,830		392,458

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Federal Home Loan Mortgage Corporation - 29.2% (continued)
FHLMC, Series 2840, Class E, 4.250%, 08/15/12⁶	$	65,692	$	65,686
FHLMC, Series 3249, Class CJ, 4.250%, 01/15/29		1,048,220		1,059,455
FHLMC, Series 2561, Class EO, 4.500%, 09/15/16⁹		510,617		513,236
FHLMC, Series 2760, Class EB, 4.500%, 09/15/16		1,777,866		1,803,818
FHLMC, Series 2574, Class TK, 4.500%, 11/15/16⁶		315,384		316,827
FHLMC, Series 2582, Class BC, 4.500%, 04/15/17		624,974		636,875
FHLMC, Series 2688, Class DA, 4.500%, 02/15/20		878,156		887,218
FHLMC, Series 2776, Class OL, 4.500%, 11/15/27		531,924		537,497
FHLMC, Series 2561, Class BH, 4.500%, 05/15/17		1,177,094		1,208,221
FHLMC, Series 2664, Class GA, 4.500%, 01/15/18		704,145		715,122
FHLMC, Series 2697, Class LP, 4.500%, 10/15/19		134,134		135,025
FHLMC, Series 2844, Class PU, 4.500%, 06/15/27		1,154,866		1,168,238
FHLMC, Series 2857, Class BG, 4.500%, 08/15/27		2,681,098		2,709,639
FHLMC, Series 2638, Class OW, 4.500%, 10/15/27		6,350,501		6,399,813
FHLMC, Series 2760, Class PN, 4.500%, 11/15/27		1,560,778		1,579,270
FHLMC, Series 2725, Class PC, 4.500%, 05/15/28		144,074		144,025
FHLMC, Series 2939, Class DE, 4.750%, 04/15/25		4,476,216		4,576,816
FHLMC, Series 2877, Class MV, 4.750%, 12/15/28		973,525		993,519
FHLMC, Series 2707, Class PC, 5.000%, 02/15/17		630,576		632,467
FHLMC, Series 2657, Class DA, 5.000%, 10/15/20		332,658		335,737
FHLMC, Series 3062, Class HB, 5.000%, 03/15/25		40,493		40,500
FHLMC, Series 2726, Class PB, 5.000%, 04/15/26		957,889		967,708
FHLMC, Series 2753, Class PC, 5.000%, 05/15/26		412,346		412,859
FHLMC, Series 2866, Class WC, 5.000%, 01/15/27		1,438,736		1,445,601
FHLMC, Series 2764, Class UC, 5.000%, 05/15/27		2,204,179		2,226,642
FHLMC, Series 2844, Class PB, 5.000%, 06/15/27		1,354,284		1,370,762
FHLMC, Series 2907, Class HC, 5.000%, 06/15/27		2,445,885		2,500,518
FHLMC, Series 2780, Class LC, 5.000%, 07/15/27		1,368,537		1,384,836
FHLMC, Series 2893, Class PB, 5.000%, 12/15/27		2,897,522		2,929,146
FHLMC, Series 2783, Class PB, 5.000%, 01/15/28		1,465,093		1,487,531
FHLMC, Series 2684, Class PC, 5.000%, 05/15/28		2,036,785		2,044,986
FHLMC, Series 2881, Class TC, 5.000%, 06/15/28		1,760,149		1,795,311
FHLMC, Series 2649, Class OC, 5.000%, 07/15/28		623,161		632,991
FHLMC, Series 2827, Class TC, 5.000%, 10/15/28		427,834		435,041
FHLMC, Series 2764, Class TD, 5.000%, 02/15/29		4,369,000		4,541,228
FHLMC, Series 2960, Class NE, 5.000%, 08/15/31		2,527,874		2,552,561
FHLMC, Series 2558, Class UE, 5.500%, 05/15/22		790,508		823,350
FHLMC, Series 2429, Class HB, 6.500%, 12/15/23		502,388		558,323
Total Federal Home Loan Mortgage Corporation				111,250,409
Federal National Mortgage Association - 52.1%
FNMA, 0.581%, 11/25/30, (01/25/11)^4,9		2,017,366		2,019,443

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Federal National Mortgage Association - 52.1% (continued)
FNMA, 0.661%, 03/25/35, (01/25/11)^4,9	$	1,955,041	$	1,947,928
FNMA, 2.020%, 08/01/34, (04/01/11)⁴		776,706		801,653
FNMA, 2.044%, 01/01/35, (05/01/11)⁴		526,153		544,898
FNMA, 2.100%, 11/01/34, (04/01/11)⁴		808,280		838,995
FNMA, 2.107%, 01/01/24, (07/01/11)⁴		1,921,608		1,961,679
FNMA, 2.126%, 02/01/33, (03/01/11)⁴		2,913,046		3,014,763
FNMA, 2.141%, 01/01/35, (04/01/11)⁴		874,950		908,891
FNMA, 2.145%, 06/01/34, (05/01/11)⁴		2,029,817		2,118,280
FNMA, 2.200%, 09/01/34, (03/01/11)⁴		2,978,289		3,093,150
FNMA, 2.272%, 08/01/33, (02/01/11)⁴		947,343		982,270
FNMA, 2.279%, 08/01/33, (02/01/11) ⁴		604,786		627,198
FNMA, 2.496%, 05/01/33, (04/01/11)⁴		2,654,265		2,766,115
FNMA, 2.500%, 03/01/33, (01/01/11)⁴		1,140,995		1,190,118
FNMA, 2.524%, 04/01/35, (03/01/11)⁴		852,718		889,124
FNMA, 2.559%, 06/01/33, (05/01/11)⁴		1,087,601		1,136,458
FNMA, 2.561%, 01/01/26, (06/01/11)⁴		787,034		825,264
FNMA, 2.576%, 09/01/33, (09/01/11)^4,9		1,053,977		1,090,621
FNMA, 2.586%, 01/01/25, (07/01/11)⁴		968,791		1,014,729
FNMA, 2.666%, 06/01/34, (06/01/11)⁴		3,102,609		3,245,659
FNMA, 2.700%, 08/01/34, (06/01/11)⁴		950,457		992,397
FNMA, 2.709%, 06/01/35, (06/01/11)⁴		453,207		472,429
FNMA, 2.710%, 11/01/34, (09/01/11)⁴		8,407,315		8,805,877
FNMA, 2.725%, 06/01/35, (06/01/11)⁴		409,315		427,307
FNMA, 2.948%, 01/01/33, (02/01/11)⁴		1,922,283		1,999,048
FNMA, 2.993%, 09/01/35, (08/01/11)⁴		1,693,289		1,773,213
FNMA, 3.024%, 02/01/37, (07/01/11)⁴		636,388		666,264
FNMA, 3.196%, 03/01/36, (06/01/11)⁴		2,270,344		2,394,048
FNMA, 3.236%, 03/01/36, (06/01/11)⁴		2,577,214		2,719,246
FNMA, 3.259%, 01/01/33, (07/01/11)⁴		71,728		74,906
FNMA, 3.500%, TBA		57,000,000		57,391,876
FNMA, 3.533%. 01/01/36, (11/01/11)⁴		273,867		285,908
FNMA, 4.855%, 02/01/36, (10/01/11)⁴		5,144,895		5,390,123
FNMA, 5.000%, 09/01/19⁹		655,844		696,117
FNMA, 5.000%, 03/01/18 to 10/01/24		7,261,486		7,774,352
FNMA, 5.002%, 01/01/36, (09/01/11)⁴		121,886		127,667
FNMA, 5.272%, 08/01/36, (06/01/11)⁴		465,667		489,312
FNMA, 5.307%, 06/01/37, (05/01/11)⁴		870,234		913,684
FNMA, 5.442%, 05/01/36, (05/01/11)⁴		381,926		401,449
FNMA, 5.500%, 10/01/17 to 12/25/26		11,403,545		12,267,208
FNMA, 5.500%, 11/01/18⁹		1,087,618		1,170,038
FNMA, 5.795%, 09/01/37, (09/01/12)⁴		703,924		746,986

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Federal National Mortgage Association - 52.1% (continued)
FNMA, 6.000%, 03/01/17 to 10/01/23	$	8,192,213	$	8,925,147
FNMA, 6.000%, 09/01/22⁹		2,628,778		2,881,388
FNMA, 6.500%, 04/01/17⁹		484,103		529,714
FNMA, 6.500%, 05/01/17 to 08/01/32		2,722,279		3,001,727
FNMA, 7.000%, 09/01/14		564,528		610,953
FNMA, 7.500%, 12/01/33 to 01/01/34		191,912		216,863
FNMA Grantor Trust, Series 2003-T4, Class A1, 0.481%, 09/26/33, (01/26/11)⁴		17,032		15,863
FNMA Grantor Trust, Series 2002-T5, Class A1, 0.501%, 05/25/32, (01/25/11)⁴		448,694		429,454
FNMA Grantor Trust, Series 2003-T2, Class A1, 0.541%, 03/25/33, (01/25/11)⁴		307,889		254,293
FNMA Grantor Trust Pass Through, Series 2004-T1, Class 1A2, 6.500%, 01/25/44		723,778		801,326
FNMA Pass Through Securities, Series 2002-33, Class A2, 7.500%, 06/25/32		112,727		131,846
FNMA Whole Loan, Series 2005-W2, Class A1, 0.461%, 05/25/35, (01/25/11)^4,9		3,918,224		3,890,494
FNMA Whole Loan, Series 2003-W13, Class AV2, 0.541%, 10/25/33, (01/25/11)^4,6		86,831		79,561
FNMA Whole Loan, Series 2004-W14, Class 1AF, 0.661%, 07/25/44, (01/25/11)^4,9		3,628,339		3,626,542
FNMA Whole Loan, Series 2004-W5, Class F1, 0.711%, 02/25/47, (01/25/11)⁴		877,799		880,010
FNMA Whole Loan, Series 2002-W6, Class 2A, 7.324%, 06/25/42⁵		1,702,824		1,968,984
FNMA Whole Loan, Series 2003-W1, Class 2A, 7.349%, 12/25/42⁵		30,371		34,733
FNMA Whole Loan, Series 2002-W1, Class 2A, 7.365%, 02/25/42^5,9		525,526		604,355
FNMA Whole Loan, Series 2003-W4, Class 4A, 7.500%, 10/25/42⁹		904,165		1,033,775
FNMA, Series 2007-25, Class FA, 0.661%, 04/25/37, (01/25/11)⁴		2,665,722		2,675,532
FNMA, Series 2003-15, Class CH, 4.000%, 02/25/17		359,479		363,493
FNMA, Series 2003-23, Class AB, 4.000%, 03/25/17		1,230,240		1,251,427
FNMA, Series 2003-23, Class AD, 4.500%, 03/25/17		642,155		654,942
FNMA, Series 2002-94, Class CA, 5.000%, 05/25/17		3,192,371		3,242,025
FNMA, Series 2003-5, Class EL, 5.000%, 08/25/22		1,810,229		1,895,427
FNMA, Series 1994-76, Class J, 5.000%, 04/25/24		766,525		817,268
FNMA, Series 2006-75, Class YA, 5.000%, 12/25/25		311,661		314,445
FNMA, Series 2004-90, Class PC, 5.000%, 03/25/27		2,103,413		2,117,145
FNMA, Series 2006-107, Class QA, 5.000%, 04/25/27		927,459		937,041
FNMA, Series 2882, Class YB, 5.000%, 10/15/27		984,298		998,441
FNMA, Series 2005-15, Class EA, 5.000%, 10/25/28		919,708		939,745
FNMA, Series 2003-81, Class MB, 5.000%, 05/25/29		2,704,476		2,746,239
FNMA, Series 2006-44, Class OA, 5.500%, 12/25/26		1,625,368		1,636,526
FNMA, Series 2006-57, Class PA, 5.500%, 08/25/27		937,579		944,860
FNMA, Series 2005-99, Class KC, 5.500%, 02/25/28		3,993,774		4,003,449
FNMA, Series 2006-48, Class TA, 5.500%, 04/25/28		952,416		966,018
FNMA, Series 2006-129, Class PA, 5.500%, 07/25/28		1,069,004		1,084,152
FNMA, Series 2005-118, Class MC, 6.000%, 01/25/32		1,310,406		1,313,621
FNMA, Series 1993-139, Class GA, 7.000%, 08/25/23^6,9		698,266		702,733
Total Federal National Mortgage Association				198,518,248

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Government National Mortgage Association - 3.2%
GNMA, 1.875%, 03/20/37, (04/01/11)⁴	$	495,701	$	502,648
GNMA, 2.500%, 07/20/35, (10/01/11)^4,9		1,594,885		1,632,122
GNMA, 2.500%, 09/20/35, (10/01/11)⁴		1,280,689		1,310,590
GNMA, 2.625%, 07/20/18 to 09/20/35, (10/01/11)⁴		3,706,890		3,802,111
GNMA, 2.750%, 01/20/32, (04/01/11)⁴		140,756		144,547
GNMA, 2.750%, 10/20/34, (01/01/12)⁴		347,251		356,487
GNMA, 3.000%, 03/20/35, (04/01/11)⁴		89,670		92,197
GNMA, 3.000%, 06/20/35, (07/01/11)⁴		105,393		108,205
GNMA, 3.125%, 10/20/17, (01/01/12)^4,9		53,917		55,493
GNMA, 3.125%, 11/20/17 to 11/20/27, (01/01/12)⁴		1,552,001		1,597,357
GNMA, 3.250%, 01/20/28, (04/01/11)⁴		69,633		71,763
GNMA, 3.375%, 03/20/21, (04/01/11)⁴		51,315		52,909
GNMA, 3.375%, 06/20/22, (07/01/11)⁴		97,393		100,450
GNMA, 3.375%, 04/20/24, (07/01/11)^4,9		552,795		570,148
GNMA, 3.375%, 04/20/26 to 05/20/33, (07/01/11)⁴		217,671		224,503
GNMA, 3.375%, 05/20/27, (07/01/11)^4,9		490,064		505,447
GNMA, 3.500%, 07/20/18, (10/01/11)⁴		64,215		66,142
GNMA, 3.500%, 02/20/34		226,067		229,629
GNMA, Series 2005-58, Class NJ, 4.500%, 08/20/35		575,422		590,046
GNMA, 9.500%, 12/15/17		9,490		10,640
Total Government National Mortgage Association				12,023,434
Interest Only Strips - 2.5%
FHLMC, Series 2010-121, Class SB, 4.189%, 10/25/40, (01/25/11)⁴		1,685,315		161,158
FHLMC, Series 3721, Class SA, 4.240%, 09/15/40, (01/15/11)⁴		4,332,667		411,934
FHLMC, Series 3449, Class AI, 4.500%, 10/15/20		1,379,223		45,932
FHLMC, 4.500%, 09/15/35		261,559		45,081
FHLMC, Series 3685, Class EI, 5.000%, 03/15/19		5,237,610		535,830
FHLMC, Series 3659, Class IE, 5.000%, 03/15/19		2,193,777		255,503
FHLMC, Series 3731, Class IO, 5.000%, 07/15/19		2,413,919		242,208
FHLMC, 5.000%, 02/15/20 to 04/15/20		900,525		121,316
FHLMC, Series 2637, Class SI, 5.740%, 06/15/18, (01/15/11)⁴		573,455		54,322
FHLMC, Series 3560, Class KS, 6.140%, 11/15/36, (01/15/11)⁴		3,884,253		683,356
FHLMC, Series 3424, Class XI, 6.310%, 05/15/36, (01/15/11)⁴		1,252,964		200,895
FHLMC, Series 3153, Class JI, 6.360%, 05/15/36, (01/15/11)⁴		6,138,214		985,943
FHLMC, 6.440%, 11/15/18, (01/15/11)⁴		890,590		77,872
FHLMC, Series 2882, Class SJ, 6.440%, 10/15/34, (01/15/11)⁴		796,788		97,543
FHLMC, Series 2980, Class SL, 6.440%, 11/15/34, (01/15/11)⁴		1,070,749		159,216
FHLMC, Series 2922, Class SE, 6.490%, 02/15/35, (01/15/11)⁴		749,599		128,252
FHLMC, Series 2929, Class CS, 6.540%, 12/15/22, (01/15/11)⁴		342,593		15,116
FHLMC, Series 2530, Class QI, 6.740%, 01/15/32, (01/15/11)⁴		519,894		86,086
FHLMC, Series 2608, Class SJ, 6.840%, 03/15/17, (01/15/11)⁴		394,905		12,050

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Interest Only Strips - 2.5% (continued)
FHLMC, 6.840%, 11/15/30, (01/15/11)⁴	$	289,363	$	19,202
FHLMC, Series 2644, Class ES, 6.890%, 02/15/18, (01/15/11)⁴		1,451,601		129,863
FHLMC, Series 2772, Class KS, 6.920%, 06/15/22, (01/15/11)⁴		361,849		22,825
FHLMC, Series 3489, Class SD, 7.540%, 06/15/32, (01/15/11)⁴		1,077,700		193,560
FHLMC, 8.000%, 06/01/31⁶		262,149		65,292
FNMA, Series 2008-22, Class AI, 1.097%, 09/25/12⁵		22,883,354		297,275
FNMA, Series 2010-95, Class DI, 4.500%, 11/25/20		3,119,568		275,871
FNMA, Series 2008 86, Class IO, 4.500%, 03/25/23		4,592,598		477,781
FNMA, Series 2010-105, Class IO, 5.000%, 08/25/20		2,211,360		267,440
FNMA, Series 2010-65, Class IO, 5.000%, 09/25/20		5,403,101		687,083
FNMA, 5.000%, 12/01/35		393,199		70,229
FNMA, Series 2003-48, Class SJ, 5.739%, 06/25/18, (01/25/11)⁴		730,968		68,161
FNMA, Series 2005-67, Class SM, 5.889%, 08/25/35, (01/25/11)⁴		538,332		69,403
FNMA, Series 2006-3, Class SA, 5.889%, 03/25/36, (01/25/11)⁴		1,225,815		177,169
FNMA, Series 2009-87, Class SX, 5.989%, 11/25/39, (01/25/11)⁴		2,670,544		335,640
FNMA, Series 2003-73, Class SM, 6.339%, 04/25/18, (01/25/11)⁴		772,482		81,506
FNMA, Series 2005-45, Class SR, 6.459%, 06/25/35, (01/25/11)⁴		1,139,966		151,936
FNMA, Series 2005-12, Class SC, 6.489%, 03/25/35, (01/25/11)⁴		845,049		118,451
FNMA, Series 2005-29, Class SC, 6.489%, 04/25/35, (01/25/11)⁴		1,508,009		182,302
FNMA, Series 2008-34, Class SM, 6.489%, 05/25/38, (01/25/11)⁴		2,340,745		339,414
FNMA, Series 2005-66, Class GS, 6.589%, 07/25/20, (01/25/11)⁴		540,514		71,414
FNMA, Series 2004-49, Class SQ, 6.789%, 07/25/34, (01/25/11)⁴		615,894		96,643
FNMA, Series 2004-64, Class SW, 6.789%, 08/25/34, (01/25/11)⁴		1,958,476		299,447
FNMA, Series 2003-67, Class TS, 6.839%, 08/25/17, (01/25/11)⁴		974,074		52,354
FNMA, Series 2004-51, Class SX, 6.859%, 07/25/34, (01/25/11)⁴		1,001,426		175,551
FNMA, Series 2006-101, Class SE, 6.989%, 10/25/36, (01/25/11)⁴		3,291,202		560,710
FNMA, 7.500%, 11/18/14⁶		10,826		307
FNMA, 8.000%, 05/01/30⁶		202,026		50,981
FNMA, 9.000%, 12/15/16⁶		30,644		5,148
Total Interest Only Strips				9,662,571
U.S. Treasury Notes - 2.0%
U.S. Treasury Inflation Linked Notes, 2.375%, 04/15/11		808,809		816,013
U.S. Treasury Inflation Linked Notes, 2.375%, 01/15/25		6,149,696		6,843,455
Total U.S. Treasury Notes				7,659,468
Total U.S. Government and Agency Obligations (cost $336,974,796)				339,114,130
Mortgage-Backed Securities - 8.9%
Bank of America Commercial Mortgage, Inc., Series 2005-2, Class A4, 4.783%, 07/10/43⁵		1,774,185		1,840,808
Bank of America Commercial Mortgage, Inc., Series 2002-2, Class A3, 5.118%, 07/11/43		877,000		903,498
Bank of America Commercial Mortgage, Inc., Series 2002-PB2, Class A4, 6.186%, 06/11/35		570,976		591,183
Countrywide Home Loans, Inc., 0.761%, 02/25/35, (01/25/11)^4,6,9		1,339,306		329,738
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A3, 4.500%, 11/15/37		1,000,000		1,014,813
Freddie Mac Multiclass Certificates, Series 3113, Class QA, 5.000%, 11/15/25		186,029		186,540

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Mortgage-Backed Securities - 8.9% (continued)
GE Capital Commercial Mortgage Corp., Series 2002-2A, Class A3, 5.349%, 08/11/36	$	1,650,000	$	1,726,297
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A2, 6.070%, 06/10/38		765,000		785,525
GE Capital Commercial Mortgage Corp., Series 2002-1A, Class A3, 6.269%, 12/10/35		1,532,085		1,596,085
GMAC Commercial Mortgage Securities, Inc., Series 2003 C3, Class A3, 4.646%, 04/10/40		755,063		784,026
Greenwich Capital Commercial Funding Corp., Class A2, Series 2005-GG3, 4.305%, 08/10/42		992,243		1,001,965
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2004-CBX, Class A4, 4.529%, 01/12/37		1,310,000		1,331,714
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2005 CB12, Class A3A1, 4.824%, 09/12/37		725,000		733,578
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A3A1, 4.871%, 10/15/42		3,078,802		3,115,280
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP6, Class A3B, 5.559%, 04/15/43⁵		2,892,000		2,946,569
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2001-CIBC1, Class B, 6.446%, 03/15/33		1,464,249		1,462,913
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2001-CIB3, Class A3, 6.465%, 11/15/35		1,196,729		1,228,717
LB-UBS Commercial Mortgage Trust, Series 2004-C8, Class A3, 4.435%, 12/15/29		2,145,000		2,169,803
LB-UBS Commercial Mortgage Trust, Series 2004-C8, Class A4, 4.510%, 12/15/29		1,037,500		1,056,846
LB-UBS Commercial Mortgage Trust, Series 2008-C8, Class A3, 4.830%, 11/15/27		801,750		820,259
LB-UBS Commercial Mortgage Trust, Series 2001-C3, Class A2, 6.365%, 12/15/28		4,680,146		4,737,805
LB-UBS Commercial Mortgage Trust, Series 2002-C1, Class A4, 6.462%, 03/15/31		979,633		1,022,544
Merrill Lynch Mortgage Trust, Series 2004-MKB1, Class A3, 4.892%, 02/12/42		2,000,000		2,040,303
Washington Mutual, Class 2A3, Series 2005-AR2, 0.611%, 01/25/45, (01/25/11)⁴		729,572		506,516
Total Mortgage-Backed Securities (cost $35,364,389)				33,933,325
Asset-Backed Securities - 0.3%
First Franklin Mortgage Loan Asset Backed Certificates, Series 2005-FF10, Class A4, 0.581%, 11/25/35, (01/25/11)⁴		1,057,510		908,025
Structured Asset Investment Loan Trust, 0.801%, 12/25/34, (01/25/11)^4,9		235,318		222,006
Total Asset-Backed Securities (cost $1,293,327)				1,130,031
Short-Term Investments - 16.4%
U.S. Government and Agency Discount Notes - 5.6%
FHLMC Discount Notes, 0.033%, 01/11/11³		1,125,000		1,124,988
FHLMC Discount Notes, 0.077%, 02/07/11^3,8		18,200,000		18,198,580
FHLMC Discount Notes, 0.099%, 03/15/11^3,8		400,000		399,921
FNMA Discount Notes, 0.030%, 01/12/11³		1,475,000		1,474,981
FNMA Discount Notes, 0.221%, 09/12/11^3,8		100,000		99,846
Total U.S. Government and Agency Discount Notes				21,298,316

Other Investment Companies - 10.8%¹	Shares
BNY Institutional Cash Reserves Fund, Series B*^2,7		15,506		12,359
Dreyfus Cash Management Fund, Institutional Class Shares, 0.14%		34,164,185		34,164,185
JPMorgan Liquid Assets Money Market Fund, Capital Shares, 0.14%		7,030,328		7,030,328
Total Other Investment Companies				41,206,872
Total Short-Term Investments (cost $62,506,721)				62,505,188
Total Investments- 114.6% (cost $436,139,233)				436,682,674
Other Assets, less Liabilities - (14.6)%				(55,756,416	)
Net Assets - 100.0%			$	380,926,258

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Notes to Schedule of Portfolio Investments

Note: Based on the approximate cost of investments of $436,144,559 for Federal income tax purposes at December 31, 2010, the aggregate gross unrealized appreciation and depreciation were $4,444,040 and $3,905,925, respectively, resulting in net unrealized appreciation of investments of $538,115.

¹	Yield shown for each investment company represents its December 31, 2010, seven-day average yield, which refers to the sum of the previous seven days’ dividends paid, expressed as an annual percentage.

²	Collateral received from brokers for securities lending was invested in this short-term investment.

³	Percentage rate listed represents yield to maturity at December 31, 2010.

⁴	Floating Rate Security. The rate listed is as of December 31, 2010. Date in parentheses represents the securities next coupon rate reset.

⁵	Variable Rate Security. The rate listed is as of December 31, 2010, and is periodically reset subject to terms and conditions set forth in the debenture.

⁶

⁷	On September 12, 2008, The Bank of New York Mellon established a separate sleeve of the BNY Institutional Cash Reserves Fund (Series B) to hold certain Lehman Brothers floating rate notes. The Fund’s position in Series B is being fair valued daily. (See Note 7 in the Notes to Financial Statements.)

⁸	Security pledged to cover margin requirements for open futures positions at December 31, 2010.

⁹	All or part of the security has been segregated for delayed delivery transactions.

The following table summarizes the inputs used to value the Fund’s net assets by the fair value hierarchy levels as of December 31, 2010: (See Note 1(a) in the Notes to Financial Statements.)


	Quoted Prices in Active Markets for Identical Investments Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Investments in Securities
U.S. Government and Agency Obligations^†		—	$	339,114,130		—	$	339,114,130
Mortgage-Backed Securities		—		33,933,325		—		33,933,325
Asset-Backed Securities		—		1,130,031		—		1,130,031
Short-Term Investments:
U.S. Government and Agency Discount Notes		—		21,298,316		—		21,298,316
Other Investment Companies	$	41,194,513		12,359		—		41,206,872

Total Investments in Securities	$	41,194,513	$	395,488,161		—	$	436,682,674

Derivatives‡
Interest Rate Futures Contracts	$	135,027		—		—	$	135,027

Total Derivatives	$	135,027		—		—	$	135,027

†	All U.S. Government and Agency Obligations held in the Fund are Level 2 securities.

‡	Derivative instruments, such as futures, forwards, options and swap contracts, are not reflected in the Schedule of Portfolio Investments and are valued at the unrealized appreciation/depreciation of the instrument.

As of December 31, 2010, the Fund had no significant transfers between Level 1 and Level 2 from the beginning of the reporting period.

The following schedule shows the fair value of derivative instruments as of December 31, 2010:

Asset Derivatives

Liability Derivatives

Fund

Derivatives not accounted for as hedging
instruments

Statement of Assets and

Liabilities Location

Fair Value

Statement of Assets and

Liabilities Location

Fair Value

Short Duration

Interest rate futures contracts

Receivable for variation
margin on futures

20,300

Payable for variation
margin on futures

231,522

The accompanying notes are an integral part of these financial statements.

Managers Short Duration Government Fund

Notes to Schedule of Portfolio Investments (continued)

For the year ended December 31, 2010, the effect of derivative instruments on the Statement of Operations and the amount of realized gain/(loss) on derivatives recognized in income were as follows:



The change in unrealized gain/(loss) on derivatives recognized in income were as follows:

At December 31, 2010, the Fund had the following open futures contracts: (See Note 2 (a) in the Notes to Financial Statements.)


Type	Number of Contracts	Position		Expiration	Unrealized Gain/ (Loss)
2-Year U.S. Treasury Note	76		Long	March 2011		($10,878	)
5-Year U.S. Treasury Note	1		Short	March 2011		2,271
10-Year U.S. Treasury Note	79		Short	March 2011		316,419
U.S. Treasury Long Bond	24		Short	March 2011		119,190
5-Year Interest Rate Swap	207		Short	March 2011		127,170
10-Year Interest Rate Swap	136		Short	March 2011		304,199
3-Month Eurodollar	43		Short	March 2011 - March 2014		(212,145	)
3-Month Eurodollar	39		Short	June 2011 - June 2013		(218,335	)
3-Month Eurodollar	1		Long	September 2011		10,785
3-Month Eurodollar	19		Short	September 2012 - September 2013		(81,322	)
3-Month Eurodollar	38		Short	December 2011 - December 2013		(222,327	)

				Total		$135,027


Investments Definitions and Abbreviations:

FHLMC:		Federal Home Loan Mortgage Corp.
FNMA:		Federal National Mortgage Association
GNMA:		Government National Mortgage Association
TBA:		To Be Announced

The accompanying notes are an integral part of these financial statements.

Managers Intermediate Duration Government Fund

Investment Manager’s Comments

The Managers Intermediate Duration Government Fund’s objective is to achieve total return in excess of the total return of the major market indices for mortgage-backed securities.

The Managers Intermediate Duration Government Fund seeks to achieve its objective by matching the duration, or interest-rate risk, of a portfolio that invests exclusively in mortgage-backed securities, as weighted in the major market indices for mortgage-backed securities. These indices currently include the Citigroup Mortgage Index and the Barclays Capital Mortgage Index, each of which includes all outstanding government sponsored fixed-rate mortgage-backed securities, weighted in proportion to their current market capitalization. The duration of these indices is generally similar to that of intermediate-term U.S. Treasury notes, and typically will range between three and five years.

Under normal circumstances, the Fund will invest at least 80% of its assets in debt securities issued by the U.S. Government, its agencies and instrumentalities, and synthetic instruments or derivatives, or securities having economic characteristics similar to such debt securities. The Fund’s benchmark is the Citigroup Mortgage Index.

The Portfolio Manager

Smith Breeden Associates, Inc.

Smith Breeden believes that innovative research provides critical insights into the fixed-income market. The firm’s experienced investment professionals apply these research insights to the management of investment portfolios designed to achieve their clients’ objectives. The key tenets of this market-tested investment philosophy are:

•

Over a market cycle, a portfolio of fixed income securities with wide risk-adjusted spreads produces an attractive total return in comparison to the market return.

•

Within the investment-grade fixed-income market, the spread sectors, e.g., corporate bonds, mortgage-backed securities (MBS), commercial MBS (CMBS), and asset-backed securities (ABS), will tend to outperform Treasury securities over a market cycle. The corporate, mortgage, CMBS, and ABS sectors also offer the greatest active management opportunity for adding value through security selection.

The portfolio management team at Smith Breeden specializes in analyzing and investing in mortgage-backed securities. Through careful analysis and comparison of the characteristics of these securities, such as type of issuer, coupon, maturity, geographic structure, and historic and prospective prepayment rates, the team seeks to structure a portfolio that will outperform the Citigroup Mortgage Index. While the portfolio managers will purchase securities of any maturity or duration, they do not attempt to add value by actively positioning the interest-rate sensitivity of the portfolio. Instead, they typically manage the weighted average duration of the portfolio so that it is similar to that of the duration of the Citigroup Mortgage Index.

The ideal investment exhibits the following traits:

•

Very high quality (AAA or Government)

•

Attractive value relative to other MBS opportunities

The portfolio managers limit purchases to securities from the following asset classes:

•

Securities issued directly or guaranteed by the U.S. Government or its agencies or instrumentalities

•

Mortgage-backed securities rated AAA by Standard & Poor’s Corporation (“S&P”) or Aaa by Moody’s Investors Service, Inc. (“Moody’s”)

•

Securities fully collateralized by assets in either of the above classes

•

Assets that would qualify as liquidity items under federal regulations (which may change from time to time) if held by a commercial bank or savings institution; and hedge instruments

•

Stripped mortgage-backed securities, which may only be used for risk management purposes

Managers Intermediate Duration Government Fund

Investment Manager’s Comments (continued)

The investment team will make a sell decision when:

•

They no longer view the bonds as attractive

•

They need to maintain the portfolio’s target duration

•

They deem it necessary for portfolio allocation purposes

The Year in Review

During the year ended December 31, 2010, the Fund returned 7.30%, compared to 5.50% for its benchmark, the Citigroup Mortgage Index (“Citi Mortgage”).

Economic conditions and the recovery in 2010 were largely shaped by the prior few years of historic market moves, a credit and liquidity crisis, and unprecedented government intervention. The prior year included high economic uncertainty, uncertain inflation expectations, constrained capital given restrictive risk-management limits, and somewhat impaired liquidity. 2010 saw tightening across spread sectors, lower risk premia, improved liquidity, and lower market volatility as the markets continued healing.

In the fourth quarter, interest rates backed up significantly as the market’s fear of a double dip in the economy gave way, and the mar-

ket, buoyed by further quantitative easing (QE2) from the Federal Reserve, began to price in stronger growth expectations. The result was a very steep yield curve and a forward curve, which anticipates a less accommodative Federal Reserve in the coming quarters. This more optimistic outlook also spilled into fixed income spreads, where we now see tighter spread levels in virtually every market.

Most of the portfolio outperformance for 2010 was attributed to agency, non-agency MBS, and CMBS exposure. Agency adjustable-rate (ARMs), fixed-rate mortgages (FRMs), and Collateralized Mortgage Obligations (CMOs (considered by some to be mortgage derivatives)) were beneficiaries of lower realized volatility, hedging costs, and mortgage rates. A benign prepayment environment also helped the Fund’s very small exposure (2.8%) to mortgage derivatives. CMBS outperformed as risk appetite continues to be strong for the asset class, especially as the commercial real estate market firms up. Supply in CMBS is almost non-existent and market technicals continue to be supportive of tighter spreads.

Looking Forward

On December 31, 2010, the Fund held the bulk of its exposure in 15- and 30-year agency FRMs. In addition, 10% of capital was allocated to CMBS, which are not included in the Citigroup Mortgage Index. The total allocation to CMBS increased by 3% of capital during the year. We decreased the allocation to 15- and

30-year agency FRMs by approximately 8% during the year. The Fund also maintains a small allocation to ARMs, Interest-Only (IO) strips, CMOs, and Treasury Inflation Protected Securities (TIPS). We believe that high-quality spread assets that are held in the portfolio are likely to continue experiencing positive performance. Although spreads may tighten more slowly in 2011 as government intervention and stimulus efforts begin slowing or coming to an end, continued market demand for risk assets will keep a floor on prices across sectors.

This commentary reflects the viewpoints of Smith Breeden Associates, Inc., as of January 21, 2011.

Cumulative Total Return Performance

Managers Intermediate Duration Government Fund’s cumulative total return is based on the daily change in net asset value (NAV), and assumes that all distributions were reinvested. Unlike the Fund, the Citigroup Mortgage Index is unmanaged, is not available for investment, and does not incur expenses. The chart illustrates

Managers Intermediate Duration Government Fund

Investment Manager’s Comments (continued)

Cumulative Total Return Performance (continued)

the performance of a hypothetical $10,000 investment made in the Fund on December 31, 2000 to a $10,000 investment made in the Citigroup Mortgage Index for the same time periods. Figures include reinvestment of capital gains and dividends. The listed returns for the Fund are net of expenses and the returns for the index exclude expenses. Total returns for the Fund would have been lower had certain expenses not been reduced.

LOGO

The table below shows the average annual total returns for the Managers Intermediate Duration Government Fund and the Citigroup Mortgage Index from December 31, 2000 through December 31, 2010.


Average Annual Total Returns¹	1 Year			5 Years			10 Years
Managers Intermediate Duration Government Fund^2,3,4,5		7.30	%		6.24	%		5.69	%
Citigroup Mortgage Index⁶		5.50	%		6.37	%		5.94	%

²	From time to time, the Fund’s advisor has waived its fees and/or absorbed Fund expenses, which has resulted in higher returns.

³	The Fund is subject to the risks associated with investments in debt securities, such as default risk and fluctuations in the perception of the debtors’ ability to pay their creditors.

⁴

⁵

⁶

The Citigroup Mortgage Index includes all outstanding government sponsored fixed-rate mortgage-backed securities, weighted in proportion to their current market capitalization. The Index reflects no deductions for fees, expenses, or taxes. Unlike the Fund, the Citigroup Mortgage Index is unmanaged, is not available for investment, and does not incur expenses.

Not FDIC insured, nor bank guaranteed. May lose value.

Managers Intermediate Duration Government Fund

Fund Snapshots

December 31, 2010

Portfolio Breakdown


Portfolio Breakdown	Managers Intermediate Duration Government Fund**
U.S. Government and Agency Obligations		108.7	%
Mortgage-Backed Securities		15.7	%
Other Assets and Liabilities		(24.4	%)

**	As a percentage of net assets

Top Ten Holdings


Top Ten Holdings	% of Net Assets
FNMA, 4.500%, TBA		14.7	%
FNMA, 5.000%, TBA*		9.6
FNMA, 3.500%, TBA		6.6
FHLMC, 5.000%, TBA*		4.8
FNMA, 6.000%, TBA*		4.2
FHLMC, 5.500%, 01/13/35		4.2
FHLMC Gold Pool, 5.500%, 06/01/35*		3.4
FHLMC, 5.624%, 01/01/36*		3.3
GNMA, 5.500%, 10/15/39*		2.5
FNMA, 4.500%, 10/01/40		2.5

Top Ten as a Group		55.8	%

*	Top Ten Holding at June 30, 2010

Managers Intermediate Duration Government Fund

Schedule of Portfolio Investments

December 31, 2010


Security Description	Principal Amount		Value
U.S. Government and Agency Obligations - 108.7%
Federal Home Loan Mortgage Corporation - 36.8%
FHLMC, 2.474%, 11/01/33, (12/01/11)⁴	$	1,809,353	$	1,881,051
FHLMC, 4.500%, 04/01/35		463,439		478,095
FHLMC, 5.000%, 05/01/18		243,999		260,202
FHLMC, 5.000%, 11/01/35⁹		3,215,866		3,394,878
FHLMC, 5.000%, TBA		7,000,000		7,341,250
FHLMC, 5.500%, 09/01/33⁹		986,063		1,059,441
FHLMC, 5.500%, 05/01/34⁹		828,916		894,122
FHLMC, 5.500%, 11/01/17 to 01/13/35		7,055,513		7,530,617
FHLMC, 5.624%, 01/01/36, (01/01/13)⁴		4,805,998		5,115,028
FHLMC, 5.717%, 02/01/37, (02/01/12)⁴		175,770		186,247
FHLMC, 6.000%, 02/01/22 to 03/01/22		845,077		922,282
FHLMC, 7.500%, 07/01/34⁹		2,288,977		2,619,823
FHLMC Gold Pool, 3.750%, 11/15/25^6,9		94,662		94,647
FHLMC Gold Pool, 4.500%, 10/01/34⁹		1,641,202		1,693,102
FHLMC Gold Pool, 4.500%, 04/01/35⁹		2,516,979		2,595,000
FHLMC Gold Pool, 4.500%, 10/01/35⁹		1,891,725		1,950,364
FHLMC Gold Pool, 4.500%, 11/01/35⁹		1,611,101		1,661,042
FHLMC Gold Pool, 4.500%, 05/01/34 to 05/01/35		717,966		740,356
FHLMC Gold Pool, 5.000%, 10/01/18 to 08/01/19		430,673		459,328
FHLMC Gold Pool, 5.500%, 02/01/35⁹		1,208,775		1,295,704
FHLMC Gold Pool, 5.500%, 06/01/35⁹		4,802,374		5,152,241
FHLMC Gold Pool, 5.500%, 06/01/35⁹		1,540,609		1,652,847
FHLMC Gold Pool, 5.500%, 12/01/38⁹		1,014,629		1,084,426
FHLMC Gold Pool, 5.500%, 10/01/33 to 05/01/38		2,177,279		2,330,238
FHLMC Gold Pool, 6.000%, 09/01/17 to 05/01/22		3,544,377		3,870,511
FHLMC Structured Pass Through Securities, Series T-51, Class 2A, 7.500%, 08/25/42⁵		254,651		295,873
Total Federal Home Loan Mortgage Corporation				56,558,715
Federal National Mortgage Association - 57.8%
FNMA, 0.581%, 11/25/30, (01/25/11)^4,9		2,017,366		2,019,443
FNMA, 0.661%, 03/25/35, (01/25/11)^4,9		1,214,644		1,210,224
FNMA, 2.062%, 07/01/33, (06/01/11)⁴		543,425		561,322
FNMA, 2.145%, 06/01/34, (05/01/11)^4,9		1,617,909		1,688,420
FNMA, 2.666%, 06/01/34, (06/01/11)^4,9		1,864,668		1,950,642
FNMA, 2.700%, 08/01/34, (06/01/11)⁴		760,366		793,917
FNMA, 3.322%, 06/01/37, (05/01/11)⁴		691,627		726,159
FNMA, 3.500%, TBA		10,000,000		10,068,750
FNMA, 4.500%, 10/01/40 to 11/01/40		6,183,887		6,353,351
FNMA, 4.500%, TBA		22,000,000		22,580,932
FNMA, 5.000%, 01/01/20⁹		1,845,364		1,984,055
FNMA, 5.000%, 06/01/18 to 03/01/36		4,065,672		4,295,514

The accompanying notes are an integral part of these financial statements.

Managers Intermediate Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Federal National Mortgage Association - 57.8% (continued)
FNMA, 5.000%, TBA	$	14,000,000	$	14,717,500
FNMA, 5.457%, 02/01/36, (02/01/11)⁴		177,876		185,480
FNMA, 5.500%, 01/01/19⁹		452,713		487,021
FNMA, 5.500%, 11/01/34⁹		1,453,029		1,563,947
FNMA, 5.500%, 03/01/17 to 07/01/38		5,350,919		5,772,313
FNMA, 5.500%, TBA		2,100,000		2,246,671
FNMA, 6.000%, 08/01/17		221,510		241,619
FNMA, 6.000%, TBA		6,000,000		6,521,250
FNMA, 6.500%, 11/01/28 to 07/01/32		433,324		482,975
FNMA, Series 1994-55, Class H, 7.000%, 03/25/24⁹		2,021,246		2,255,339
FNMA Whole Loan, Series 2003-W4, Class 4A, 7.500%, 10/25/42		150,694		172,296
Total Federal National Mortgage Association				88,879,140
Government National Mortgage Association - 10.9%
GNMA, 3.000%, 08/20/17, (10/01/11)⁴		31,844		32,667
GNMA, 3.000%, 08/20/18, (10/01/11)⁴		70,891		72,723
GNMA, 3.125%, 11/20/17, (01/01/12)⁴		203,609		209,559
GNMA, 3.125%, 12/20/17, (01/01/12)⁴		15,184		15,628
GNMA, 3.375%, 03/20/16, (04/01/11)⁴		18,609		19,187
GNMA, 3.375%, 06/20/16, (07/01/11)⁴		23,311		24,043
GNMA, 3.375%, 05/20/21, (07/01/11)⁴		35,659		36,778
GNMA, 4.500%, 09/15/40		995,666		1,035,071
GNMA, 4.500%, TBA		2,300,000		2,387,687
GNMA, 5.000%, 09/15/39 to 12/15/39		7,540,680		8,056,195
GNMA, 5.500%, 10/15/39 to 11/15/39		4,422,461		4,828,062
GNMA, 7.500%, 09/15/28 to 11/15/31		25,529		29,512
Total Government National Mortgage Association				16,747,112
Interest Only Strips - 2.7%
FHLMC, Series 2010-121, Class SB, 4.189%, 10/25/40, (01/25/11)⁴		741,320		74,205
FHLMC, Series 3721, Class SA, 4.240%, 09/15/40, (01/15/11)⁴		1,897,357		180,394
FHLMC, 4.500%, 09/15/35		512,655		88,359
FHLMC, 5.000%, 05/15/17 to 04/15/20		935,433		114,244
FHLMC, Series 3685, Class EI, 5.000%, 03/15/19		2,345,561		275,512
FHLMC, Series 3659, Class IE, 5.000%, 03/15/19		982,440		93,807
FHLMC, Series 3731, Class IO, 5.000%, 07/15/19		1,064,163		106,776
FHLMC, Series 2637, Class SI, 5.740%, 06/15/18, (01/15/11)⁴		439,004		41,586
FHLMC, 6.000%, 05/01/31		5,863		1,294
FHLMC, Series 3560, Class KS, 6.140%, 11/15/36, (01/15/11)⁴		1,338,566		235,493
FHLMC, Series 3424, Class XI, 6.310%, 05/15/36, (01/15/11)⁴		561,856		90,085
FHLMC, Series 3153, Class JI, 6.360%, 05/15/36, (01/15/11)⁴		1,065,251		145,004
FHLMC, 6.440%, 11/15/18, (01/15/11)⁴		707,904		61,899
FHLMC, Series 2882, Class SJ, 6.440%, 10/15/34, (01/15/11)⁴		1,767,064		216,324
FHLMC, Series 2980, Class SL, 6.440%, 11/15/34, (01/15/11)⁴		485,196		72,146

The accompanying notes are an integral part of these financial statements.

Managers Intermediate Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Interest Only Strips - 2.7% (continued)
FHLMC, Series 2922, Class SE, 6.490%, 02/15/35, (01/15/11)⁴	$	332,557	$	47,416
FHLMC, Series 2608, Class SJ, 6.840%, 03/15/17, (01/15/11)⁴		604,633		18,450
FHLMC, 6.840%, 11/15/30, (01/15/11)⁴		117,637		7,806
FHLMC, Series 2644, Class ES, 6.890%, 02/15/18, (01/15/11)⁴		769,270		68,820
FHLMC, Series 2772, Class KS, 6.920%, 06/15/22, (01/15/11)⁴		277,011		17,474
FHLMC, 7.390%, 10/15/16, (01/15/11)^4,6		26,886		216
FHLMC, Series 3489, Class SD, 7.540%, 06/15/32, (01/15/11)⁴		481,539		86,487
FHLMC, 7.640%, 06/15/31, (01/15/11)⁴		50,251		9,043
FNMA, 4.000%, 09/01/33 to 09/01/34		825,505		75,469
FNMA, Series 2010-95, Class DI, 4.500%, 11/25/20		1,394,240		123,296
FNMA, Series 2008-86, Class IO, 4.500%, 03/25/23		2,052,586		213,538
FNMA, 4.500%, 09/01/33		295,692		42,119
FNMA, Series 2010-65, Class IO, 5.000%, 09/25/20		2,334,810		296,905
FNMA, 5.000%, 05/01/34 to 12/01/35		1,305,781		224,820
FNMA, Series 2006-3, Class SA, 5.889%, 03/25/36, (01/25/11)⁴		529,646		76,550
FNMA, Series 2009-87, Class SX, 5.989%, 11/25/39, (01/25/11)⁴		1,193,256		149,972
FNMA, Series 2003-73, Class SM, 6.339%, 04/25/18, (01/25/11)⁴		591,368		62,396
FNMA, Series 2005-45, Class SR, 6.459%, 06/25/35, (01/25/11)⁴		505,743		67,406
FNMA, Series 2005-12, Class SC, 6.489%, 03/25/35, (01/25/11)⁴		375,629		52,652
FNMA, Series 2005-29, Class SC, 6.489%, 04/25/35, (01/25/11)⁴		811,372		98,086
FNMA, Series 2008-34, Class SM, 6.489%, 05/25/38, (01/25/11)⁴		1,040,473		150,872
FNMA, Series 2004-49, Class SQ, 6.789%, 07/25/34, (01/25/11)⁴		276,180		42,667
FNMA, Series 2004-64, Class SW, 6.789%, 08/25/34, (01/25/11)⁴		851,080		130,129
FNMA, Series 2003-67, Class TS, 6.839%, 08/25/17, (01/25/11)⁴		745,694		40,079
FNMA, Series 2004-51, Class SX, 6.859%, 07/25/34, (01/25/11)⁴		563,757		98,827
FNMA, Series 2006-101, Class SE, 6.989%, 10/25/36, (01/25/11)⁴		671,765		114,446
FNMA, 7.000%, 04/01/23⁶		227,104		55,782
FNMA, 7.000%, 06/01/23⁶		24,045		4,460
Total Interest Only Strips				4,173,311
U.S. Treasury Notes - 0.5%
U.S. Treasury Inflation Linked Notes, 2.375%, 04/15/11		723,915		730,363
Total U.S. Government and Agency Obligations (cost $162,930,549)				167,088,641
Mortgage-Backed Securities - 15.7%
American Home Mortgage Assets, Series 2005-1, Class 1A1, 3.073%, 11/25/35, (01/25/11)⁴		108,297		66,503
American Home Mortgage Investment Trust, 2.261%, 02/25/45, (02/01/11)⁴		744,586		662,548
American Home Mortgage Investment Trust, 2.457%, 04/25/44, (02/01/11)⁴		180,070		138,382
American Home Mortgage Investment Trust, 2.457%, 06/25/45, (02/01/11)⁴		96,577		88,084
American Home Loan Investment Trust, 2.457%, 06/25/45, (02/01/11)⁴		1,615,703		1,409,796
Banc of America Commercial Mortgage, Inc., Series 2006-6, Class A2, 5.309%, 10/10/45		1,592,772		1,622,129
Bank of America Funding Corp., Series 2004-B, Class 1A2, 2.997%, 12/20/34⁵		206,417		139,677
Bear Stearns Alt-A Trust, Mortgage Pass-Through Certificates, Series 2005-3, 2.901%, 04/25/35⁵		189,753		130,567

The accompanying notes are an integral part of these financial statements.

Managers Intermediate Duration Government Fund

Schedule of Portfolio Investments (continued)


Security Description	Principal Amount		Value
Mortgage-Backed Securities - 15.7% (continued)
Bear Stearns Commercial Mortgage Securities, Series 2005-PWR9, Class A3, 4.868%, 09/11/42	$	1,000,000	$	1,012,954
Citigroup Commercial Mortgage Trust, Series 2008-C7, Class A3, 6.179%, 12/10/49⁵		1,148,000		1,221,066
Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A4, 5.658%, 10/15/48		2,000,000		2,078,021
Countrywide Alternative Loan Trust, 0.561%, 05/25/35, (01/25/11)⁴		719,382		644,240
Countrywide Home Loans, Inc., Series 2004-R2, Class 1AF1, 0.681%, 11/25/34, (01/25/11) (a)^4,6		308,304		269,542
Countrywide Home Loans, Inc., Series 2005-HYB8, Class 1A1, 2.773%, 12/20/35⁵		144,503		109,586
Countrywide Home Loans, Inc., Series 2005-HYB2, Class 1A4, 3.342%, 05/20/35⁵		146,132		99,113
CS First Boston Mortgage Securities Corp., Series 2005-C3, Class A3, 4.645%, 07/15/37		2,000,000		2,062,314
CS First Boston Mortgage Securities Corp., Series 2002-CP5, Class A2, 4.940%, 12/15/35		1,000,000		1,049,598
GMAC Commercial Mortgage Securities, Inc., Series 2005 C1, Class A3, 4.538%, 05/10/43		850,263		849,759
Goldman Sachs Mortgage Loan Trust, Series 2005-RP2, Class 1AF, 0.611%, 03/25/35, (01/25/11) (a)^4,6		304,395		255,779
GSR Mortgage Loan Trust, Series 2004-5, Class 1A3, 2.000%, 05/25/34, (02/01/11)⁴		77,466		62,004
Harborview Mortgage Loan Trust, 2.636%, 11/19/34⁵		119,869		78,997
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2004 CBX, Class A4, 4.529%, 01/12/37		350,000		355,801
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP6, Class A3B, 5.559%, 04/15/43⁵		1,900,000		1,935,851
LB-UBS Commercial Mortgage Trust, Series 2004-C8, Class A3, 4.435%, 12/15/29		1,000,000		1,011,563
Master Alternative Loans Trust, 6.000%, 01/25/35⁹		998,948		944,805
Morgan Stanley Mortgage Loan Trust, 6.031%, 08/25/35⁵		1,463,055		1,282,511
Structured Asset Securities Corp., Series 2005-RF1, Class A, 0.611%, 03/25/35, (01/25/11) (a)^4,6		362,627		299,539
Wachovia Bank Commercial Mortgage Trust, Series 2005 C19, Class A3, 4.566%, 05/15/44		309,028		312,854
Wachovia Bank Commercial Mortgage Trust, Series 2006-C28, Class A3, 5.679%, 10/15/48		2,206,000		2,293,192
Wells Fargo Mortgage Backed Securities Trust, Series 2007-16, Class 1A1, 6.000%, 12/28/37		1,531,915		1,585,291
Total Mortgage-Backed Securities (cost $22,874,038)				24,072,066
Short-Term Investments - 22.7%
U.S. Government and Agency Discount Notes - 0.1%
FHLMC, Discount Notes, 0.038%, 01/19/11^3,8		150,000		149,997

Other Investment Companies - 22.6%¹	Shares
BNY Institutional Cash Reserves Fund, Series B*^2,7		13,850		11,039
Dreyfus Cash Management Fund, Institutional Class Shares, 0.14%		5,723,243		5,723,243
JPMorgan Liquid Assets Money Market Fund, Capital Shares, 0.14%		29,040,181		29,040,181
Total Other Investment Companies				34,774,463
Total Short-Term Investments (cost $34,927,254)				34,924,460
Total Investments - 147.1% (cost $220,731,841)				226,085,167
Other Assets, less Liabilities - (47.1)%				(72,440,871	)
Net Assets -100.0%			$	153,644,296

The accompanying notes are an integral part of these financial statements.

Managers Intermediate Duration Government Fund

Notes to Schedule of Portfolio Investments

Note: Based on the approximate cost of investments of $220,731,841 for Federal income tax purposes at December 31, 2010, the aggregate gross unrealized appreciation and depreciation were $7,156,150 and $1,802,824, respectively, resulting in net unrealized appreciation of investments of $5,353,326.

(a)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified buyers. At December 31, 2010, the value of these securities amounted to $824,860, or 0.5% of net assets.

¹	Yield shown for each investment company represents its December 31, 2010, seven-day average yield, which refers to the sum of the previous seven days’ dividends paid, expressed as an annual percentage.

²	Collateral received from brokers for securities lending was invested in this short-term investment.

³	Percentage rate listed represents yield to maturity at December 31, 2010.

⁴	Floating Rate Security. The rate listed is as of December 31, 2010. Date in parentheses represents the securities next coupon rate reset.

⁵	Variable Rate Security. The rate listed is as of December 31, 2010, and is periodically reset subject to terms and conditions set forth in the debenture.

⁶

⁷	On September 12, 2008, The Bank of New York Mellon established a separate sleeve of the BNY Institutional Cash Reserves Fund (Series B) to hold certain Lehman Brothers floating rate notes. The Fund’s position in Series B is being fair valued daily. (See Note 7 in the Notes to Financial Statements.)

⁸	Security pledged to cover margin requirements for open futures positions at December 31, 2010.

⁹	All or part of the security has been segregated for delayed delivery transactions.

The following table summarizes the inputs used to value the Fund’s net assets by the fair value hierarchy levels as of December 31, 2010: (See Note 1(a) in the Notes to Financial Statements.)


	Quoted Prices in Active Markets for Identical Investments Level 1			Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Investments in Securities
U.S. Government and Agency Obligations^†		—		$	167,088,641		—	$	167,088,641
Mortgage-Backed Securites		—			24,072,066		—		24,072,066
Short-Term Investments:
U.S. Government and Agency Discount Notes		—			149,997		—		149,997
Other Investment Companies	$	34,763,424			11,039		—		34,774,463

Total Investments in Securities	$	34,763,424		$	191,321,743		—	$	226,085,167

Derivatives‡
Interest Rate Futures Contracts	($	272,109	)		—		—	($	272,109	)

Total Derivatives	($	272,109	)		—		—	($	272,109	)

†	All U.S. Government and Agency Obligations held in the Fund are Level 2 securities.

‡	Derivative instruments, such as futures, forwards, options and swap contracts, are not reflected in the Schedule of Portfolio Investments and are valued at the unrealized appreciation/depreciation of the instrument.

As of December 31, 2010, the Fund had no significant transfers between Level 1 and Level 2 from the beginning of the reporting period. The following schedule shows the fair value of derivative instruments as of December 31, 2010:

Asset Derivatives

Liability Derivatives

Fund

Derivatives not accounted for as hedging
instruments

Statement of Assets and
Liabilities Location

Fair Value

Statement of Assets and
Liabilities Location

Fair Value

Intermediate Duration

Interest rate futures contracts

Receivable for variation

margin on futures

7,891

Payable for variation

margin on futures

16,387

The accompanying notes are an integral part of these financial statements.

Managers Intermediate Duration Government Fund

Notes to Schedule of Portfolio Investments (continued)

For the year ended December 31, 2010, the effect of derivative instruments on the

Statement of Operations and the amount of realized gain/(loss) on derivatives recognized in income were as follows:

The change in unrealized gain/(loss) on derivatives recognized in income were as follows:

At December 31, 2010, the Fund had the following TBA forward sale commitments:

(See Note 1(k) in the Notes to Financial Statements.)

Fund

Principal Amount

Security

Current Liability

Intermediate Duration

6,200,000

FNMA, 4.500

%, TBA

6,363,717

At December 31, 2010, the Fund had the following open futures contracts:

(See Note 2 (a) in the Notes to Financial Statements.)


Type	Number of Contracts		Position		Expiration		Unrealized Gain/(Loss)
2-Year U.S. Treasury Note		8		Short		March 2011	$	1,105
5-Year U.S. Treasury Note		13		Long		March 2011		(29,689	)
10-Year U.S. Treasury Note		1		Long		March 2011		(4,018	)
U.S. Treasury Long Bond		3		Long		March 2011		(14,914	)
5-Year Interest Rate Swap		21		Short		March 2011		36,369
3-Month Eurodollar		12		Short		March 2011 - March 2013		(61,955	)
3-Month Eurodollar		12		Short		June 2011 - June 2013		(62,855	)
3-Month Eurodollar		12		Short		September 2011 - September 2013		(62,855	)
3-Month Eurodollar		14		Short		December 2011 - December 2013		(73,297	)

Total							($	272,109	)


Investments Definitions and Abbreviations:

FHLMC:		Federal Home Loan Mortgage Corp.
FNMA:		Federal National Mortgage Association
GNMA:		Government National Mortgage Association
GSR:		Goldman Sachs REMIC
TBA:		To Be Announced

The accompanying notes are an integral part of these financial statements.

Statements of Assets and Liabilities

December 31, 2010


	Managers AMG Chicago Equity Partners Mid-Cap Fund			Managers AMG Chicago Equity Partners Balanced Fund			Managers High Yield Fund			Managers Fixed Income Fund
Assets:
Investments at value* (including securities on loan valued at $745,322, $363,692, $2,754,828, and $1,461,845, respectively)	$	41,300,393		$	19,405,842		$	33,442,139		$	149,576,368
Foreign currency**		—			—			—			17,713
Receivable for investments sold		168,036			—			119,212			—
Receivable for Fund shares sold		61,419			24,506			44,164			345,892
Receivable from affiliate		6,529			7,632			14,547			30,235
Dividends, interest and other receivables		45,820			62,949			567,274			1,757,164
Prepaid expenses		27,019			26,131			25,819			28,353
Total assets		41,609,216			19,527,060			34,213,155			151,755,725
Liabilities:
Payable for Fund shares repurchased		21,169			552			40,920			498,527
Payable upon return of securities loaned		766,721			372,392			2,872,750			1,511,573
Payable for investments purchased		—			258,916			—			—
Payable to custodian		—			—			8,029			—
Accrued expenses:
Investment management and advisory fees		24,103			10,907			18,562			56,982
Administrative fees		6,887			3,116			5,303			25,325
Other		46,829			45,583			73,621			124,498
Total liabilities		865,709			691,466			3,019,185			2,216,905
Net Assets	$	40,743,507		$	18,835,594		$	31,193,970		$	149,538,820
Net Assets Represent:
Paid-in capital	$	44,861,522		$	17,931,878		$	33,762,389		$	141,241,138
Undistributed net investment income		72,740			646			21,178			103,298
Accumulated net realized loss from investments and foreign currency transactions		(11,260,941	)		(1,001,060	)		(4,408,985	)		(1,091,179	)
Net unrealized appreciation of investments and foreign currency translations		7,070,186			1,904,130			1,819,388			9,285,563
Net Assets	$	40,743,507		$	18,835,594		$	31,193,970		$	149,538,820
Class A Shares - Net Assets	$	7,590,093		$	7,604,788		$	21,729,621		$	38,654,802
Shares outstanding		551,014			563,725			2,807,896			3,514,552
Net asset value and redemption price per share	$	13.77		$	13.49		$	7.74		$	11.00
Offering price per share based on a maximum sales charge of 5.75% (NAV per share/(100% - 5.75%)	$	14.61		$	14.31			n/a			n/a
Offering price per share based on a maximum sales charge of 4.25% (NAV per share/(100% - 4.25%)		n/a			n/a		$	8.08		$	11.49
Class B Shares - Net Assets	$	261,136		$	562,216		$	693,012		$	3,773,319
Shares outstanding		20,350			42,206			90,910			345,750
Net asset value and offering price per share	$	12.83		$	13.32		$	7.62		$	10.91
Class C Shares - Net Assets	$	3,025,662		$	2,805,309		$	4,053,079		$	45,363,045
Shares outstanding		236,158			209,272			531,464			4,132,099
Net asset value and offering price per share	$	12.81		$	13.41		$	7.63		$	10.98
Institutional Class Shares - Net Assets	$	29,866,616		$	7,863,281		$	4,718,258		$	61,747,654
Shares outstanding		2,062,646			578,082			603,544			5,597,461
Net asset value, offering and redemption price per share	$	14.48		$	13.60		$	7.82		$	11.03
* Investments at cost	$	34,230,207		$	17,501,712		$	31,622,751		$	140,294,695
** Foreign currency at cost		—			—			—		$	17,713

The accompanying notes are an integral part of these financial statements.

Statements of Assets and Liabilities

December 31, 2010


	Managers Short Duration Government Fund			Managers Intermediate Duration Government Fund
Assets:
Investments at value*	$	436,682,674		$	226,085,167
Receivable for delayed delivery investments sold		533,158			6,353,796
Receivable for Fund shares sold		1,198,456			233,011
Dividends, interest and other receivables		1,419,244			688,570
Receivable for variation margin on futures		20,300			7,891
Receivable from affiliate		358			3,624
Prepaid expenses		35,582			14,732
Total assets		439,889,772			233,386,791
Liabilities:
Payable upon return of securities loaned		15,506			13,850
Payable for delayed delivery investments purchased		57,732,094			72,460,141
Payable for Fund shares repurchased		652,309			692,227
Payable for TBA sale commitments		—			6,363,717
Payable for variation margin on futures		231,522			16,387
Accrued expenses:
Investment management and advisory fee payable		229,263			92,919
Other		102,820			103,254
Total liabilities		58,963,514			79,742,495
Net Assets	$	380,926,258		$	153,644,296
Shares outstanding		39,768,933			13,949,203
Net asset value, offering and redemption price per share	$	9.58		$	11.01
Net Assets Represent:
Paid-in capital	$	386,609,691		$	148,821,489
Undistributed net investment income		155			26,057
Accumulated net realized loss from investments and futures contracts		(6,362,056	)		(254,922	)
Net unrealized appreciation of investments, futures contracts and TBA sale commitments		678,468			5,051,672
Net Assets	$	380,926,258		$	153,644,296
*Investments at cost	$	436,139,233		$	220,731,841

The accompanying notes are an integral part of these financial statements.

Statements of Operations

For the year ended December 31, 2010


	Managers AMG Chicago Equity Partners Mid-Cap Fund			Managers AMG Chicago Equity Partners Balanced Fund			Managers High Yield Fund			Managers Fixed Income Fund			Managers Short Duration Government Fund			Managers Intermediate Duration Government Fund
Investment Income:
Dividend income	$	641,314		$	203,048		$	4,868		$	53,230		$	63,677		$	68,865
Interest income		—			291,917			2,935,872			7,208,009			7,822,996			6,053,774
Securities lending fees		12,912			374			10,389			2,796			91			—
Total investment income		654,226			495,339			2,951,129			7,264,035			7,886,764			6,122,639
Expenses:
Investment management and advisory fees		256,964			124,691			224,397			658,465			2,513,934			1,161,863
Administrative fees		73,418			35,626			64,113			292,651			—			—
Distribution Fees - Class A		16,765			17,007			57,271			107,796			—			—
Distribution Fees - Class B		3,520			6,162			8,057			35,684			—			—
Distribution Fees - Class C		32,274			29,037			42,357			526,409			—			—
Registration fees		48,522			47,830			56,786			53,634			64,092			40,842
Professional fees		35,768			29,074			41,667			65,810			95,018			62,435
Custodian		13,016			23,383			59,540			39,864			102,821			46,732
Transfer agent		9,123			5,470			20,035			36,604			61,044			212,756
Reports to shareholders		5,098			6,099			15,877			29,172			53,431			44,372
Trustees fees and expenses		2,632			1,655			2,983			16,630			28,471			13,760
Miscellaneous		3,923			2,759			4,505			9,472			18,256			10,305
Total expenses before offsets		501,023			328,793			597,588			1,872,191			2,937,067			1,593,065
Expense reimbursements		(85,869	)		(98,345	)		(200,682	)		(338,740	)		—			(115,172	)
Expense reductions		(20,036	)		(4,788	)		(47	)		(241	)		(520	)		(242	)
Expense waivers		—			—			—			(1,861	)		(10,408	)		(13,097	)
Net expenses		395,118			225,660			396,859			1,531,349			2,926,139			1,464,554
Net investment income		259,108			269,679			2,554,270			5,732,686			4,960,625			4,658,085
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments		5,949,208			1,761,338			1,025,889			(203,562	)		376,114			2,961,520
Net realized gain (loss) on options and futures contracts		—			—			—			—			(1,143,175	)		988,323
Net realized loss on foreign currency transactions		—			—			—			(5,669	)		—			—
Net change in unrealized appreciation (depreciation) of investments		2,895,240			(153,247	)		628,227			7,912,745			419,657			3,200,478
Net change in unrealized appreciation (depreciation) of futures contracts		—			—			—			—			1,010,057			(347,733	)
Net change in unrealized appreciation of foreign currency translations		—			—			—			5,281			—			—
Net realized and unrealized gain		8,844,448			1,608,091			1,654,116			7,708,795			662,653			6,802,588
Net increase in net assets resulting from operations	$	9,103,556		$	1,877,770		$	4,208,386		$	13,441,481		$	5,623,278		$	11,460,673

The accompanying notes are an integral part of these financial statements.

Statements of Changes in Net Assets

For the year ended December 31,


	Managers AMG Chicago Equity Partners Mid-Cap Fund						Managers AMG Chicago Equity Partners Balanced Fund
	2010			2009			2010			2009
Increase (Decrease) in Net Assets From Operations:
Net investment income	$	259,108		$	352,975		$	269,679		$	360,130
Net realized gain (loss) on investments and foreign currency transactions		5,949,208			(4,735,306	)		1,761,338			(324,188	)
Net change in unrealized appreciation (depreciation) of investments and foreign currency translations		2,895,240			14,983,377			(153,247	)		3,834,541
Net increase in net assets resulting from operations		9,103,556			10,601,046			1,877,770			3,870,483

Distributions to Shareholders:
From net investment income:
Class A		(32,789	)		(49,401	)		(108,880	)		(174,382	)
Class B		—			—			(4,280	)		(13,932	)
Class C		—			(1,778	)		(22,845	)		(32,235	)
Institutional Class		(197,349	)		(248,789	)		(136,824	)		(138,347	)
Return of capital:
Class A		—			—			—			—
Class B		—			—			—			—
Class C		—			—			—			—
Institutional Class		—			—			—			—
Total distributions to shareholders		(230,138	)		(299,968	)		(272,829	)		(358,896	)

From Capital Share Transactions:
Proceeds from sale of shares		3,759,737			3,048,654			3,414,197			4,406,764
Reinvestment of dividends and distributions		211,777			270,979			204,143			200,915
Cost of shares repurchased		(7,615,267	)		(9,422,753	)		(4,518,470	)		(11,346,529	)
Net decrease from capital share transactions		(3,643,753	)		(6,103,120	)		(900,130	)		(6,738,850	)
Total increase (decrease) in net assets		5,229,665			4,197,958			704,811			(3,227,263	)

Net Assets:
Beginning of year		35,513,842			31,315,884			18,130,783			21,358,046
End of year		40,743,507		$	35,513,842		$	18,835,594		$	18,130,783
End of year undistributed net investment income	$	72,740		$	57,893		$	646		$	1,100

The accompanying notes are an integral part of these financial statements.

Statements of Changes in Net Assets

For the year ended December 31,


	Managers High Yield Fund						Managers Fixed Income Fund
	2010			2009			2010			2009
Increase (Decrease) in Net Assets From Operations:
Net investment income	$	2,554,270		$	3,022,671		$	5,732,686		$	6,415,578
Net realized gain (loss) on investments and foreign currency transactions		1,025,889			(3,933,716	)		(209,231	)		(347,617	)
Net change in unrealized appreciation of investments and foreign currency translations		628,227			14,623,076			7,918,026			20,379,847
Net increase in net assets resulting from operations		4,208,386			13,712,031			13,441,481			26,447,808

Distributions to Shareholders:
From net investment income:
Class A		(1,845,390	)		(2,177,410	)		(1,816,800	)		(1,993,554	)
Class B		(57,140	)		(157,986	)		(124,108	)		(233,528	)
Class C		(309,306	)		(353,778	)		(1,815,282	)		(2,238,016	)
Institutional Class		(342,789	)		(322,893	)		(2,145,972	)		(1,699,098	)
Return of capital:
Class A		—			—			—			(67,729	)
Class B		—			—			—			(6,757	)
Class C		—			—			—			(96,278	)
Institutional Class		—			—			—			(57,608	)
Total distributions to shareholders		(2,554,625	)		(3,012,067	)		(5,902,162	)		(6,392,568	)

From Capital Share Transactions:
Proceeds from sale of shares		6,148,030			22,442,475			54,457,609			47,864,130
Reinvestment of dividends and distributions		1,995,842			2,190,315			3,976,670			4,423,829
Cost of shares repurchased		(16,508,471	)		(23,516,157	)		(53,494,943	)		(44,997,081	)
Net increase (decrease) from capital share transactions		(8,364,599	)		1,116,633			4,939,336			7,290,878
Total increase (decrease) in net assets		(6,710,838	)		11,816,597			12,478,655			27,346,118

Net Assets:
Beginning of year		37,904,808			26,088,211			137,060,165			109,714,047
End of year	$	31,193,970		$	37,904,808		$	149,538,820		$	137,060,165
End of year undistributed net investment income	$	21,178		$	14,874		$	103,298			—

The accompanying notes are an integral part of these financial statements.

Statements of Changes in Net Assets

For the year ended December 31,


	Managers Short Duration Government Fund						Managers Intermediate Duration Government Fund
	2010			2009			2010			2009
Increase (Decrease) in Net Assets From Operations:
Net investment income	$	4,960,625		$	6,458,920		$	4,658,085		$	6,484,248
Net realized gain (loss) on investments and futures		(767,061	)		1,386,051			3,949,843			4,377,340
Net change in unrealized appreciation of investments and futures		1,429,714			8,560,257			2,852,745			8,789,067
Net increase in net assets resulting from operations		5,623,278			16,405,228			11,460,673			19,650,655

Distributions to Shareholders:
From net investment income		(5,130,631	)		(6,294,858	)		(4,636,850	)		(6,508,347	)
From net realized gain on investments		—			—			(4,790,544	)		(1,431,402	)
Total distributions to shareholders		(5,130,631	)		(6,294,858	)		(9,427,394	)		(7,939,749	)

From Capital Share Transactions:
Proceeds from sale of shares		313,082,969			219,292,105			92,990,465			90,588,567
Reinvestment of dividends and distributions		4,896,319			6,090,797			8,373,360			7,193,562
Cost of shares repurchased		(212,875,291	)		(203,712,138	)		(104,979,200	)		(124,447,216	)
Net increase (decrease) from capital share transactions		105,103,997			21,670,764			(3,615,375	)		(26,665,087	)
Total increase (decrease) in net assets		105,596,644			31,781,134			(1,582,096	)		(14,954,181	)

Net Assets:
Beginning of year		275,329,614			243,548,480			155,226,392			170,180,573
End of year	$	380,926,258		$	275,329,614		$	153,644,296		$	155,226,392
End of year undistributed net investment income	$	155		$	170,161		$	26,057		$	6,062

Share Transactions:
Sale of shares		32,697,915			23,244,837			8,279,870			8,559,142
Reinvestment of dividends and distributions		511,626			647,394			757,008			674,455
Shares repurchased		(22,230,366	)		(21,579,682	)		(9,332,613	)		(11,724,027	)
Net increase (decrease) in shares		10,979,175			2,312,549			(295,735	)		(2,490,430	)

The accompanying notes are an integral part of these financial statements.

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class A
Managers AMG Chicago Equity Partners Mid-Cap Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	10.80		$	7.82		$	13.67		$	14.60		$	13.48

Income from Investment Operations:
Net investment income (loss)		0.07			0.09			0.06			(0.02	)²		0.05
Net realized and unrealized gain (loss) on investments		2.96			2.98			(5.84	)		0.17	²		1.11
Total from investment operations		3.03			3.07			(5.78	)		0.15			1.16

Less Distributions to Shareholders from:
Net investment income		(0.06	)		(0.09	)		(0.06	)		—			(0.04	)
Net realized gain on investments		—			—			(0.01	)		(1.08	)		—
Total distributions to shareholders		(0.06	)		(0.09	)		(0.07	)		(1.08	)		(0.04	)
Net Asset Value, End of Year	$	13.77		$	10.80		$	7.82		$	13.67		$	14.60
Total Return¹		28.06	%		39.20	%		(42.28	)%		0.84	%		8.69	%
Ratio of net expenses to average net assets		1.19	%		1.19	%		1.18	%		1.21	%		1.23	%
Ratio of net investment income (loss) to average net assets¹		0.60	%		1.15	%		0.57	%		(0.10	)%		0.34	%
Portfolio turnover		137	%		115	%		107	%		125	%		85	%
Net assets at end of year (000’s omitted)	$	7,590		$	6,149		$	3,863		$	6,464		$	9,178

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.47	%		1.53	%		1.44	%		1.37	%		1.36	%
Ratio of net investment income (loss) to average net assets		0.32	%		0.81	%		0.31	%		(0.25	)%		0.22	%


	Class B
Managers AMG Chicago Equity Partners Mid-Cap Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	10.13		$	7.33		$	12.80		$	13.79		$	12.82

Income from Investment Operations:
Net investment loss		(0.03	)²		(0.12	)		(0.06	)		(0.13	)²		(0.08	)
Net realized and unrealized gain (loss) on investments		2.73	²		2.92			(5.40	)		0.15	²		1.09
Total from investment operations		2.70			2.80			(5.46	)		0.02			1.01

Less Distributions to Shareholders from:
Net investment income		—			—			—			—			(0.04	)
Net realized gain on investments		—			—			(0.01	)		(1.01	)		—
Total distributions to shareholders		—			—			(0.01	)		(1.01	)		(0.04	)
Net Asset Value, End of Year	$	12.83		$	10.13		$	7.33		$	12.80		$	13.79
Total Return¹		26.65	%⁴		38.20	%⁴		(42.67	)%		(0.03	)%		7.88	%
Ratio of net expenses to average net assets		1.94	%		1.94	%		1.94	%		1.96	%		1.98	%
Ratio of net investment income (loss) to average net assets¹		(0.23	)%		0.33	%		(0.30	)%		(0.86	)%		(0.41	)%
Portfolio turnover		137	%		115	%		107	%		125	%		85	%
Net assets at end of year (000’s omitted)	$	261		$	621		$	1,742		$	6,909		$	11,197

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		2.22	%		2.27	%		2.20	%		2.12	%		2.11	%
Ratio of net investment income (loss) to average net assets		(0.51	)%		0.00	%^#		(0.56	)%		(1.02	)%		(0.59	)%

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class C
Managers AMG Chicago Equity Partners Mid-Cap Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	10.11		$	7.32		$	12.79		$	13.80		$	12.83

Income from Investment Operations:
Net investment income (loss)		(0.04	)		0.02			(0.03	)		(0.12	)²		(0.06	)
Net realized and unrealized gain (loss) on investments		2.74			2.77			(5.43	)		0.12	²		1.07
Total from investment operations		2.70			2.79			(5.46	)		—			1.01

Less Distributions to Shareholders from:
Net investment income		—			(0.00	)#		—			—			(0.04	)
Net realized gain on investments		—			—			(0.01	)		(1.01	)		—
Total distributions to shareholders		—			(0.00	)#		(0.01	)		(1.01	)		(0.04	)

Net Asset Value, End of Year	$	12.81		$	10.11		$	7.32		$	12.79		$	13.80
Total Return¹		26.71	%		38.18	%		(42.71	)%		(0.19	)%		7.87	%
Ratio of net expenses to average net assets		1.94	%		1.94	%		1.94	%		1.96	%		1.98	%
Ratio of net investment income (loss) to average net assets¹		(0.18	)%		0.38	%		(0.23	)%		(0.85	)%		(0.41	)%
Portfolio turnover		137	%		115	%		107	%		125	%		85	%
Net assets at end of year (000’s omitted)	$	3,026		$	3,669		$	3,558		$	8,651		$	11,748

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		2.22	%		2.28	%		2.19	%		2.12	%		2.11	%
Ratio of net investment income (loss) to average net assets		(0.46	)%		0.04	%		(0.49	)%		(1.02	)%		(0.56	)%


	Institutional Class
Managers AMG Chicago Equity Partners Mid-Cap Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	11.39		$	8.24		$	14.42		$	15.41		$	14.19

Income from Investment Operations:
Net investment income		0.11			0.14			0.10			0.03	²		0.09
Net realized and unrealized gain (loss) on investments		3.08			3.12			(6.18	)		0.11	²		1.17
Total from investment operations		3.19			3.26			(6.08	)		0.14			1.26

Less Distributions to Shareholders from:
Net investment income		(0.10	)		(0.11	)		(0.09	)		—			(0.04	)
Net realized gain on investments		—			—			(0.01	)		(1.13	)		—
Total distributions to shareholders		(0.10	)		(0.11	)		(0.10	)		(1.13	)		(0.04	)
Net Asset Value, End of Year	$	14.48		$	11.39		$	8.24		$	14.42		$	15.41
Total Return¹		27.97	%		39.59	%		(42.13	)%		0.78	%		8.96	%
Ratio of net expenses to average net assets		0.94	%		0.94	%		0.94	%		0.96	%		0.98	%
Ratio of net investment income to average net assets¹		0.84	%		1.39	%		0.77	%		0.16	%		0.59	%
Portfolio turnover		137	%		115	%		107	%		125	%		85	%
Net assets at end of year (000’s omitted)	$	29,867		$	25,075		$	22,152		$	51,029		$	56,008

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.22	%		1.28	%		1.19	%		1.12	%		1.11	%
Ratio of net investment income to average net assets		0.56	%		1.05	%		0.51	%		0.01	%		0.47	%

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class A
Managers AMG Chicago Equity Partners Balanced Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	12.33		$	10.45		$	13.18		$	12.86		$	11.55
Income from Investment Operations:
Net investment income		0.20			0.22			0.29			0.25			0.25
Net realized and unrealized gain (loss) on investments		1.16			1.87			(2.74	)		0.34			1.32
Total from investment operations		1.36			2.09			(2.45	)		0.59			1.57
Less Distributions to Shareholders from:
Net investment income		(0.20	)		(0.21	)		(0.27	)		(0.27	)		(0.26	)
Return of capital		—			—			(0.01	)		—			—
Total distributions to shareholders		(0.20	)		(0.21	)		(0.28	)		(0.27	)		(0.26	)
Net Asset Value, End of Year	$	13.49		$	12.33		$	10.45		$	13.18		$	12.86
Total Return¹		11.14	%		20.06	%		(18.68	)%		4.63	%		13.73	%
Ratio of net expenses to average net assets		1.22	%		1.23	%		1.17	%		1.23	%		1.23	%
Ratio of net investment income to average net assets¹		1.56	%		1.77	%		2.53	%		1.93	%		2.05	%
Portfolio turnover		97	%		114	%		99	%		206	%		66	%
Net assets at end of year (000’s omitted)	$	7,605		$	6,933		$	9,932		$	2,076		$	1,933

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.80	%		1.76	%		1.68	%		1.78	%		1.81	%
Ratio of net investment income to average net assets		0.98	%		1.24	%		2.03	%		1.38	%		1.49	%


	Class B
Managers AMG Chicago Equity Partners Balanced Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	12.17		$	10.29		$	12.96		$	12.64		$	11.36
Income from Investment Operations:
Net investment income		0.10	²		0.16			0.16			0.16			0.18
Net realized and unrealized gain (loss) on investments		1.15	²		1.83			(2.66	)		0.33			1.29
Total from investment operations		1.25			1.99			(2.50	)		0.49			1.47
Less Distributions to Shareholders from:
Net investment income		(0.10	)		(0.11	)		(0.16	)		(0.17	)		(0.19	)
Return of capital		—			—			(0.01	)		—			—
Total distributions to shareholders		(0.10	)		(0.11	)		(0.17	)		(0.17	)		(0.19	)
Net Asset Value, End of Year	$	13.33		$	12.17		$	10.29		$	12.96		$	12.64
Total Return¹		10.28	%		19.42	%		(19.38	)%		3.86	%		12.83	%
Ratio of net expenses to average net assets		1.97	%		1.98	%		1.97	%		1.98	%		1.98	%
Ratio of net investment income to average net assets¹		0.81	%		1.11	%		1.53	%		1.16	%		1.30	%
Portfolio turnover		97	%		114	%		99	%		206	%		66	%
Net assets at end of year (000’s omitted)	$	562		$	978		$	2,434		$	6,026		$	8,485

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		2.55	%		2.51	%		2.55	%		2.53	%		2.56	%
Ratio of net investment income to average net assets		0.23	%		0.58	%		0.95	%		0.61	%		0.71	%

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class C
Managers AMG Chicago Equity Partners Balanced Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	12.25		$	10.38		$	13.08		$	12.76		$	11.46

Income from Investment Operations:
Net investment income		0.11			0.12			0.18			0.16			0.16
Net realized and unrealized gain (loss) on investments		1.15			1.88			(2.70	)		0.33			1.31
Total from investment operations		1.26			2.00			(2.52	)		0.49			1.47

Less Distributions to Shareholders from:
Net investment income		(0.10	)		(0.13	)		(0.17	)		(0.17	)		(0.17	)
Return of capital		—			—			(0.01	)		—			—
Total distributions to shareholders		(0.10	)		(0.13	)		(0.18	)		(0.17	)		(0.17	)
Net Asset Value, End of Year	$	13.41		$	12.25		$	10.38		$	13.08		$	12.76
Total Return¹		10.35	%⁴		19.33	%		(19.36	)%		3.86	%		12.88	%
Ratio of net expenses to average net assets		1.97	%		1.98	%		1.96	%		1.98	%		1.98	%
Ratio of net investment income to average net assets¹		0.81	%		1.04	%		1.57	%		1.17	%		1.30	%
Portfolio turnover		97	%		114	%		99	%		206	%		66	%
Net assets at end of year (000’s omitted)	$	2,805		$	3,056		$	2,926		$	4,013		$	4,479

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		2.55	%		2.51	%		2.52	%		2.53	%		2.56	%
Ratio of net investment income to average net assets		0.23	%		0.51	%		1.01	%		0.62	%		0.71	%


	Institutional Class
Managers AMG Chicago Equity Partners Balanced Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	12.43		$	10.54		$	13.28		$	12.96		$	11.64

Income from Investment Operations:
Net investment income		0.24			0.23			0.31			0.29			0.29
Net realized and unrealized gain (loss) on investments		1.17			1.90			(2.74	)		0.34			1.32
Total from investment operations		1.41			2.13			(2.43	)		0.63			1.61

Less Distributions to Shareholders from:
Net investment income		(0.24	)		(0.24	)		(0.30	)		(0.31	)		(0.29	)
Return of capital		—			—			(0.01	)		—			—
Total distributions to shareholders		(0.24	)		(0.24	)		(0.31	)		(0.31	)		(0.29	)
Net Asset Value, End of Year	$	13.60		$	12.43		$	10.54		$	13.28		$	12.96
Total Return¹		11.42	%		20.44	%		(18.51	)%		4.87	%		13.98	%
Ratio of net expenses to average net assets		0.97	%		0.98	%		0.96	%		0.98	%		0.98	%
Ratio of net investment income to average net assets¹		1.81	%		2.03	%		2.58	%		2.18	%		2.30	%
Portfolio turnover		97	%		114	%		99	%		206	%		66	%
Net assets at end of year (000’s omitted)	$	7,863		$	7,164		$	6,065		$	7,754		$	7,676

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.55	%		1.51	%		1.52	%		1.53	%		1.56	%
Ratio of net investment income to average net assets		1.23	%		1.50	%		2.02	%		1.63	%		1.73	%

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class A
Managers High Yield Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	7.35		$	5.25		$	8.23		$	8.63		$	8.30

Income from Investment Operations:
Net investment income		0.61			0.60			0.64			0.59			0.55
Net realized and unrealized gain (loss) on investments		0.39			2.10			(2.99	)		(0.40	)		0.33
Total from investment operations		1.00			2.70			(2.35	)		0.19			0.88

Less Distributions to Shareholders from:
Net investment income		(0.61	)		(0.60	)		(0.63	)		(0.59	)		(0.55	)
Net Asset Value, End of Year	$	7.74		$	7.35		$	5.25		$	8.23		$	8.63
Total Return¹		14.20	%		53.97	%⁴		(30.02	)%⁴		2.25	%		11.07	%
Ratio of net expenses to average net assets		1.15	%		1.15	%		1.15	%⁷		1.15	%		1.15	%
Ratio of net investment income to average net assets¹		8.06	%		9.33	%		8.57	%⁷		6.92	%		6.65	%
Portfolio turnover		60	%		56	%		41	%		51	%		65	%
Net assets at end of year (000’s omitted)	$	21,729		$	28,450		$	17,105		$	24,151		$	26,953

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.78	%		1.68	%		1.70	%		1.55	%		1.54	%
Ratio of net investment income to average net assets		7.43	%		8.80	%		8.01	%		6.52	%		6.26	%


	Class B
Managers High Yield Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	7.24		$	5.18		$	8.13		$	8.54		$	8.22

Income from Investment Operations:
Net investment income		0.54	²		0.58			0.56			0.54			0.50
Net realized and unrealized gain (loss) on investments		0.38	²		2.02			(2.94	)		(0.43	)		0.31
Total from investment operations		0.92			2.60			(2.38	)		0.11			0.81

Less Distributions to Shareholders from:
Net investment income		(0.54	)		(0.54	)		(0.57	)		(0.52	)		(0.49	)
Net Asset Value, End of Year	$	7.62		$	7.24		$	5.18		$	8.13		$	8.54
Total Return¹		13.25	%⁴		52.52	%⁴		(30.62	)%⁴		1.30	%		10.21	%
Ratio of net expenses to average net assets		1.90	%		1.90	%		1.90	%⁷		1.90	%		1.90	%
Ratio of net investment income to average net assets¹		7.35	%		8.90	%		7.80	%⁷		6.14	%		5.88	%
Portfolio turnover		60	%		56	%		41	%		51	%		65	%
Net assets at end of year (000’s omitted)	$	693		$	1,309		$	2,577		$	6,536		$	12,318

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		2.53	%		2.42	%		2.45	%		2.30	%		2.28	%
Ratio of net investment income to average net assets		6.72	%		8.38	%		7.25	%		5.74	%		5.50	%

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class C
Managers High Yield Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	7.24		$	5.18		$	8.12		$	8.53		$	8.21

Income from Investment Operations:
Net investment income		0.54			0.54			0.57			0.53			0.49
Net realized and unrealized gain (loss) on investments		0.39			2.06			(2.94	)		(0.41	)		0.32
Total from investment operations		0.93			2.60			(2.37	)		0.12			0.81
Less Distributions to Shareholders from:
Net investment income		(0.54	)		(0.54	)		(0.57	)		(0.53	)		(0.49	)

Net Asset Value, End of Year	$	7.62		$	7.24		$	5.18		$	8.12		$	8.53
Total Return¹		13.42	%		52.57	%⁴		(30.54	)%⁴		1.32	%		10.24	%
Ratio of net expenses to average net assets		1.90	%		1.90	%		1.90	%⁷		1.90	%		1.90	%
Ratio of net investment income to average net assets¹		7.29	%		8.68	%		7.91	%⁷		6.18	%		5.89	%
Portfolio turnover		60	%		56	%		41	%		51	%		65	%
Net assets at end of year (000’s omitted)	$	4,053		$	4,488		$	3,516		$	6,186		$	7,653

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		2.53	%		2.43	%		2.46	%		2.30	%		2.29	%
Ratio of net investment income to average net assets		6.66	%		8.15	%		7.36	%		5.78	%		5.50	%


	Institutional Class
Managers High Yield Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	7.42		$	5.29		$	8.29		$	8.70		$	8.36

Income from Investment Operations:
Net investment income		0.63			0.64			0.64			0.64			0.58
Net realized and unrealized gain (loss) on investments		0.40			2.11			(2.98	)		(0.43	)		0.34
Total from investment operations		1.03			2.75			(2.34	)		0.21			0.92

Less Distributions to Shareholders from:
Net investment income		(0.63	)		(0.62	)		(0.66	)		(0.62	)		(0.58	)
Net Asset Value, End of Year	$	7.82		$	7.42		$	5.29		$	8.29		$	8.70
Total Return¹		14.58	%		54.64	%⁴		(29.80	)%⁴		2.40	%		11.38	%
Ratio of net expenses to average net assets		0.90	%		0.90	%		0.90	%⁷		0.90	%		0.90	%
Ratio of net investment income to average net assets¹		8.26	%		9.68	%		8.90	%⁷		7.16	%		6.91	%
Portfolio turnover		60	%		56	%		41	%		51	%		65	%
Net assets at end of year (000’s omitted)	$	4,718		$	3,658		$	2,890		$	3,423		$	7,053

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.53	%		1.42	%		1.46	%		1.30	%		1.29	%
Ratio of net investment income to average net assets		7.63	%		9.16	%		8.34	%		6.77	%		6.51	%

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class A
Managers Fixed Income Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	10.43		$	8.93		$	10.54		$	10.55		$	10.36

Income from Investment Operations:
Net investment income		0.47			0.52			0.55			0.56			0.52
Net realized and unrealized gain (loss) on investments		0.56			1.49			(1.62	)		0.01			0.19
Total from investment operations		1.03			2.01			(1.07	)		0.57			0.71

Less Distributions to Shareholders from:
Net investment income		(0.46	)		(0.49	)		(0.54	)		(0.58	)		(0.52	)
Return of capital		—			(0.02	)		—			—			—
Total distributions to shareholders		(0.46	)		(0.51	)		(0.54	)		(0.58	)		(0.52	)
Net Asset Value, End of Year	$	11.00		$	10.43		$	8.93		$	10.54		$	10.55
Total Return¹		10.04	%		23.14	%		(10.45	)%		5.53	%		7.10	%
Ratio of net expenses to average net assets		0.84	%		0.84	%		0.84	%		0.82	%		0.74	%
Ratio of net investment income to average net assets¹		4.13	%		5.30	%		5.72	%		5.12	%		4.98	%
Portfolio turnover		23	%		42	%		16	%		17	%		55	%
Net assets at end of year (000’s omitted)	$	38,655		$	40,625		$	33,417		$	24,122		$	11,776

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.07	%		1.08	%		1.08	%		1.12	%		1.15	%
Ratio of net investment income to average net assets		3.90	%		5.06	%		5.48	%		4.84	%		4.60	%


	Class B
Managers Fixed Income Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	10.35		$	8.86		$	10.47		$	10.48		$	10.30

Income from Investment Operations:
Net investment income		0.40			0.49			0.48			0.51			0.43
Net realized and unrealized gain (loss) on investments		0.54			1.43			(1.62	)		(0.03	)		0.19
Total from investment operations		0.94			1.92			(1.14	)		0.48			0.62

Less Distributions to Shareholders from:
Net investment income		(0.38	)		(0.41	)		(0.47	)		(0.49	)		(0.44	)
Return of capital		—			(0.02	)		—			—			—
Total distributions to shareholders		(0.38	)		(0.43	)		(0.47	)		(0.49	)		(0.44	)
Net Asset Value, End of Year	$	10.91		$	10.35		$	8.86		$	10.47		$	10.48
Total Return¹		9.16	%⁴		22.22	%		(11.13	)%		4.74	%		6.25	%
Ratio of net expenses to average net assets		1.59	%		1.59	%		1.59	%		1.55	%		1.49	%
Ratio of net investment income to average net assets¹		3.40	%		4.67	%		4.90	%		4.37	%		4.23	%
Portfolio turnover		23	%		42	%		16	%		17	%		55	%
Net assets at end of year (000’s omitted)	$	3,773		$	4,055		$	6,349		$	9,029		$	13,089

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.82	%		1.83	%		1.82	%		1.85	%		1.90	%
Ratio of net investment income to average net assets		3.17	%		4.43	%		4.66	%		4.05	%		3.80	%

Financial Highlights

For a share outstanding throughout each year ended December 31,


	Class C
Managers Fixed Income Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	10.41		$	8.92		$	10.54		$	10.55		$	10.36

Income from Investment Operations:
Net investment income		0.39			0.44			0.48			0.48			0.43
Net realized and unrealized gain (loss) on investments		0.56			1.49			(1.62	)		0.01			0.20
Total from investment operations		0.95			1.93			(1.14	)		0.49			0.63

Less Distributions to Shareholders from:
Net investment income		(0.38	)		(0.42	)		(0.48	)		(0.50	)		(0.44	)
Return of capital		—			(0.02	)		—			—			—
Total distributions to shareholders		(0.38	)		(0.44	)		(0.48	)		(0.50	)		(0.44	)
Net Asset Value, End of Year	$	10.98		$	10.41		$	8.92		$	10.54		$	10.55
Total Return¹		9.22	%		22.13	%		(11.11	)%		4.75	%		6.31	%
Ratio of net expenses to average net assets		1.59	%		1.59	%		1.59	%		1.56	%		1.49	%
Ratio of net investment income to average net assets¹		3.39	%		4.53	%		4.96	%		4.38	%		4.23	%
Portfolio turnover		23	%		42	%		16	%		17	%		55	%
Net assets at end of year (000’s omitted)	$	45,363		$	57,658		$	41,387		$	32,154		$	15,454

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		1.82	%		1.83	%		1.83	%		1.86	%		1.90	%
Ratio of net investment income to average net assets		3.16	%		4.29	%		4.73	%		4.08	%		3.82	%


	Institutional Class
Managers Fixed Income Fund	2010			2009			2008			2007			2006
Net Asset Value, Beginning of Year	$	10.46		$	8.96		$	10.59		$	10.59		$	10.40

Income from Investment Operations:
Net investment income		0.49			0.55			0.58			0.59			0.54
Net realized and unrealized gain (loss) on investments		0.57			1.48			(1.63	)		0.01			0.19
Total from investment operations		1.06			2.03			(1.05	)		0.60			0.73

Less Distributions to Shareholders from:
Net investment income		(0.49	)		(0.51	)		(0.58	)		(0.60	)		(0.54	)
Return of capital		—			(0.02	)		—			—			—
Total distributions to shareholders		(0.49	)		(0.53	)		(0.58	)		(0.60	)		(0.54	)
Net Asset Value, End of Year	$	11.03		$	10.46		$	8.96		$	10.59		$	10.59
Total Return¹		10.29	%		23.39	%		(10.23	)%		5.84	%		7.34	%
Ratio of net expenses to average net assets		0.59	%		0.59	%		0.59	%		0.56	%		0.49	%
Ratio of net investment income to average net assets¹		4.34	%		5.55	%		5.93	%		5.37	%		5.23	%
Portfolio turnover		23	%		42	%		16	%		17	%		55	%
Net assets at end of year (000’s omitted)	$	61,748		$	34,723		$	28,561		$	33,412		$	25,861

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		0.82	%		0.83	%		0.83	%		0.86	%		0.90	%
Ratio of net investment income to average net assets		4.11	%		5.31	%		5.69	%		5.07	%		4.82	%

Financial Highlights

For a share outstanding throughout each period


													For the fiscal year ended March 31,
Short Duration Government Fund	For the year ended December 31, 2010			For the year ended December 31, 2009			For the year ended December 31, 2008			For the period from April 1, 2007 to December 31, 2007			2007			2006
Net Asset Value, Beginning of Period	$	9.56		$	9.20		$	9.68		$	9.68		$	9.61		$	9.66
Income from Investment Operations:
Net investment income		0.13			0.24			0.34			0.31			0.42			0.34
Net realized and unrealized gain (loss) on investments		0.03			0.35			(0.45	)		0.01			0.06			(0.05	)
Total from investment operations		0.16			0.59			(0.11	)		0.32			0.48			0.29
Less Distributions to Shareholders from:
Net investment income		(0.14	)		(0.23	)		(0.37	)		(0.32	)		(0.41	)		(0.34	)
Net Asset Value, End of Period	$	9.58		$	9.56		$	9.20		$	9.68		$	9.68		$	9.61
Total Return¹		1.68	%⁴		6.43	%⁴		(1.19	)%		3.41	%⁸		5.05	%		3.00	%
Ratio of net expenses to average net assets⁵		0.81	%		0.84	%		0.83	%		0.84	%⁹		0.83	%		0.83	%
Ratio of net investment income to average net assets^1,5		1.38	%		2.43	%		3.88	%		4.49	%⁹		4.15	%		3.41	%
Portfolio turnover		116	%		152	%		282	%		199	%⁸		230	%		315	%
Net assets at end of period (000’s omitted)	$	380,926		$	275,330		$	243,548		$	235,117		$	179,984		$	206,523

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		0.82	%		0.84	%		0.84	%		1.22	%⁹		1.36	%		1.08	%
Ratio of net investment income to average net assets		1.37	%		2.43	%		3.87	%		4.11	%⁹		3.62	%		3.16	%

Financial Highlights

For a share outstanding throughout each period


													For the fiscal year ended March 31,
Intermediate Duration Government Fund	For the year ended December 31, 2010			For the year ended December 31, 2009			For the year ended December 31, 2008			For the period from April 1, 2007 to December 31, 2007			2007			2006
Net Asset Value, Beginning of Period	$	10.90		$	10.17		$	10.67		$	10.54		$	10.37		$	10.53
Income from Investment Operations:
Net investment income		0.32			0.41			0.45			0.37			0.47			0.37
Net realized and unrealized gain (loss) on investments		0.46			0.83			(0.37	)		0.13			0.17			(0.16	)
Total from investment operations		0.78			1.24			0.08			0.50			0.64			0.21
Less Distributions to Shareholders from:
Net investment income		(0.32	)		(0.41	)		(0.45	)		(0.37	)		(0.47	)		(0.37	)
Net realized gain on investments		(0.35	)		(0.10	)		(0.13	)		—			—			—
Total distributions to shareholders		(0.67	)		(0.51	)		(0.58	)		(0.37	)		(0.47	)		(0.37	)
Net Asset Value, End of Period	$	11.01		$	10.90		$	10.17		$	10.67		$	10.54		$	10.37
Total Return¹		7.20	%⁴		12.40	%		0.85	%		4.85	%⁸		6.30	%		2.02	%
Ratio of net expenses to average net assets⁶		0.89	%		0.89	%		0.89	%		0.83	%⁹		0.87	%		0.88	%
Ratio of net investment income to average net assets^1,6		2.80	%		3.84	%		4.32	%		4.62	%⁹		4.46	%		3.53	%
Portfolio turnover		409	%		370	%		429	%		240.00	%⁸		445	%		672	%
Net assets at end of period (000’s omitted)	$	153,644		$	155,226		$	170,181		$	193,440		$	182,771		$	194,545

Ratios absent expense offsets:³
Ratio of total expenses to average net assets		0.96	%		0.98	%		0.95	%		0.84	%⁹		0.89	%		0.88	%
Ratio of net investment income to average net assets		2.73	%		3.75	%		4.26	%		4.61	%⁹		4.44	%		3.53	%

Notes to Financial Highlights

The following notes should be read in conjunction with the Financial Highlights of the Funds presented on the previous pages.

^#	Rounds to less than $0.01 or 0.01%.

¹	Total returns and net investment income would have been lower had certain expenses not been reduced. (See Note 1(c) of Notes to Financial Statements.)

²	Per share numbers have been calculated using average shares.

³	Excludes the impact of expense reimbursements or fee waivers and expense reductions such as brokerage credits, but includes non-reimbursable expenses, if any, such as interest and taxes. (See Note 1(c) of Notes to Financial Statements.)

⁴	The total return is based on the Financial Statement Net Asset Values as shown.

⁵	Excludes interest expense for the years ended December 31, 2010, 2009, and 2008, the period ended December 31, 2007 and the fiscal years ended March 31, 2007 and 2006 of 0.00%, 0.00%, 0.00%, 0.38%, 0.53%, and 0.23%, respectively. (See Note 1(c) of Notes to Financial Statements.)

⁶	Excludes interest expense for the years ended December 31, 2010, 2009, and 2008, the period ended December 31, 2007 and the fiscal years ended March 31, 2007 and 2006 of 0.00%, 0.00%, 0.00%, 0.01%, 0.04%, and 0.00%, respectively. (See Note 1(c) of Notes to Financial Statements.)

⁷	Excludes interest expense for the year ended December 31, 2008 of 0.06%.

⁸	Not annualized.

⁹	Annualized.

Notes to Financial Statements

December 31, 2010

1.	Summary of Significant Accounting Policies

Managers Trust II (the “Trust”) is an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the “1940 Act”). Currently, the Trust is comprised of a number of different funds, each having distinct investment management objectives, strategies, risks and policies. Included in this report are: Managers AMG Chicago Equity Partners Mid-Cap Fund (“Mid-Cap”), Managers AMG Chicago Equity Partners Balanced Fund (“Balanced”), Managers High Yield Fund (“High Yield”), Managers Fixed Income Fund (“Fixed Income”), Managers Short Duration Government Fund (“Short Duration”), and Managers Intermediate Duration Government Fund (“Intermediate Duration”), collectively the “Funds.”

Mid-Cap, Balanced, High Yield, and Fixed Income each offer four classes of shares: Class A, Class B, Class C and Institutional Class. Sales of Class A shares may be subject to a front-end sales charge. Redemptions of Class A, Class B and Class C shares may be subject to a contingent-deferred sales charge (as a percentage of the original offering price or the net asset value at time of sale, whichever is less). Institutional Class shares are available, with no sales charge, to certain institutional investors and qualifying individual investors. Each class represents an interest in the same assets of the Fund and the classes are identical except for class specific expenses related to shareholder activity. Each class has equal voting privileges except that each class has exclusive voting rights with respect to its services and/or distribution plan. Please refer to a current prospectus for additional information on each share class.

The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates and such differences may be material. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements:

a.	Valuation of Investments

Equity securities traded on a domestic or international securities exchange are valued at the last quoted sale price, or, lacking any sales, at the last quoted bid price. Over-the-counter securities are valued at the Nasdaq Official Closing Price, if one is available. Lacking any sales, over-the counter securities are valued at the last quoted bid price. The Funds’ investments are generally valued based on market quotations provided by third party pricing services approved by the Board of Trustees of the Funds. Under certain circumstances, the value of each Fund’s investment may be based on an evaluation of its fair value, pursuant to procedures established by and under the general supervision of the Board of Trustees of the Trust. Each Fund may use the fair value of a portfolio security to calculate its NAV when, for example, (1) market quotations are not readily available because a portfolio security is not traded in a public market or the principal market in which the security trades is closed, (2) trading in a portfolio security is suspended and has not resumed before the Fund calculates its NAV, (3) a significant event affecting the value of a

portfolio security is determined to have occurred between the time of the market quotation provided for a portfolio security and the time as of which the Fund calculates its NAV, (4) a security’s price has remained unchanged over a period of time (often referred to as a “stale price”), or (5) Managers Investment Group LLC (the “Investment Manager”) determines that a market quotation is inaccurate. Portfolio investments that trade primarily on foreign markets are priced based upon the market quotation of such securities as of the close of their respective principal markets, as adjusted to reflect the Investment Manager’s determination of the impact of events occurring subsequent to the close of such markets but prior to the time as of which the Funds calculate its NAV. In accordance with procedures approved by the Board of Trustees, the Investment Manager relies upon recommendations of a third-party fair valuation service in adjusting the prices of such foreign portfolio investments. The Funds may invest in securities that may be thinly traded. The Board of Trustees has adopted procedures to adjust prices when thinly traded securities are judged to be stale so that they reflect fair value. An investment valued on the basis of its fair value may be valued at a price higher or lower than available market quotations. An investment’s valuation may differ depending on the method used and the factors considered in determining value according to the Fund’s fair value procedures.

Fixed-income securities are valued based on valuations furnished by independent pricing services that utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Futures contracts for which market quotations are readily available are valued at the settlement price as of the close of the futures exchange. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Investments in other regulated investment companies are valued at their end of day net asset value per share except iShares or other ETF’s, which are valued the same as equity securities. Investments in certain mortgage-backed and stripped mortgage-backed securities, preferred stocks, convertible securities, derivatives and other debt securities not traded on an organized securities market are valued on the basis of valuations provided by dealers or by a pricing service which uses information with respect to transactions in such securities and various relationships between securities and yield to maturity in determining value. Securities (including derivatives) for which market quotations are not readily available are fair valued, as determined in good faith, and pursuant to procedures adopted by the Board of Trustees of the Trust. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized, since such amounts depend on future developments inherent in long-term investments. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

Generally Accepted Accounting Principles (GAAP) define fair value as the price that a Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants

Notes to Financial Statements (continued)

would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Funds. Unobservable inputs reflect the Funds’ own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation.

The three-tier hierarchy of inputs is summarized below:

Level 1 – inputs are quoted prices in active markets for identical investments (e.g., equity securities, open-end investment companies, futures contracts, options contracts) Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities with observable inputs)

Level 3 – inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., fair valued securities with unobservable inputs) The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments.

b.	Security Transactions

Security transactions are accounted for as of the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

c.	Investment Income and Expenses

Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed. These dividends are recorded as soon as the Trust is informed of the ex-dividend date. Dividend income on foreign securities is recorded net of any withholding tax. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Non-cash dividends included in dividend income, if any, are reported at the fair market value of the securities received. Other income and expenses are recorded on an accrual basis. Expenses that cannot be directly attributed to a fund are apportioned among the Funds in the Trust and in some cases other affiliated funds based upon their relative average net assets or number of shareholders. Investment income, realized and unrealized capital gains and losses, the common expenses of each Fund and certain Fund level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net

assets of each class to the total net assets of each Fund.

The following Funds had certain portfolio trades directed to various brokers who paid a portion of such Fund’s expenses. For the year ended December 31, 2010, under these arrangements, the amount by which the Funds’ expenses were reduced and the impact on the expense ratios were: Mid-Cap - $19,983 or 0.05%, and Balanced - $4,762 or 0.03%.

The Funds have a “balance credit” arrangement with The Bank of New York Mellon, the Funds’ custodian, whereby each Fund is credited with an interest factor equal to 0.75% below the effective 90-day T-Bill rate for account balances left uninvested overnight. If the T-Bill rate falls below 0.75%, no credits will be earned. These credits serve to reduce custody expenses that would otherwise be charged to each Fund. For the year ended December 31, 2010, the custodian expense was not reduced for any of the Funds.

Overdrafts will cause a reduction of any earnings credits, computed at 2% above the effective Federal Funds rate on the day of the overdraft. For the year ended December 31, 2010, overdraft fees and the impact on the expense ratios, if any, for Mid-Cap, Balanced, High Yield, Fixed Income, Short Duration, and Intermediate Duration equaled $0, $86, $182, $0, $0, and $0, respectively.

The Trust also has a balance credit arrangement with its Transfer Agent, BNY Mellon Investment Servicing (US) Inc., (formerly PNC Global Investment Servicing (U.S.) Inc.), whereby earnings credits are used to offset banking charges and other out-of-pocket expenses. For the year ended December 31, 2010, the transfer agent expense was reduced as follows: Mid-Cap - $53, Balanced - $26, High Yield - $47, Fixed Income - $241, Short Duration - $520, and Intermediate Duration - $242.

The Investment Manager has agreed to waive a portion of its management fee in consideration of shareholder servicing fees that it has received from JPMorgan Distribution Services, Inc., with respect to short-term cash investments each Fund may have made in the JPMor-gan Liquid Assets Money Market Fund – Capital Shares. For the year ended December 31, 2010, the management fee was reduced as follows: Mid-Cap - $0, Balanced - $0, High Yield - $0, Fixed Income - $1,861, Short Duration - $10,408, and Intermediate Duration - $13,097.

Total returns and net investment income for the Funds would have been lower had certain expenses not been offset. Total expenses before offsets exclude the impact of expense reimbursements or fee waivers and expense offsets such as brokerage recapture credits, but include non-reimburseable expenses, if any, such as interest and taxes, except in such cases where interest expense is disclosed separately.

d.	Dividends and Distributions

Dividends resulting from net investment income, if any, normally will be declared and paid annually for the Mid-Cap Fund, monthly for the Fixed Income, High Yield, Short Duration and Intermediate Duration and quarterly for the Balanced Fund. Distributions of capital gains, if any, will be made on an annual basis and when required for Federal excise tax purposes. Income and capital

Notes to Financial Statements (continued)

gain distributions are determined in accordance with Federal income tax regulations, which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for losses deferred due to wash sales, REITS, equalization accounting for tax purposes, foreign currency, options, futures, and market discount transactions. Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid-in-capital. The tax character of distributions paid during the years ended December 31, 2010 and December 31, 2009 were as follows:


	Mid Cap						Balanced						High Yield				Fixed Income
	2010			2009			2010			2009			2010		2009		2010		2009
Distributions paid from:
Ordinary income	$	230,138		$	299,968		$	272,829		$	358,896		$	2,554,625	$	3,012,067	$	5,902,162	$	6,164,196
Short-term capital gains		—			—			—			—			—		—		—		—
Long-term capital gains		—			—			—			—			—		—		—		—
Return of capital		—			—			—			—			—		—		—		228,372

Totals	$	230,138		$	299,968		$	272,829		$	358,896		$	2,554,625	$	3,012,067	$	5,902,162	$	6,392,568


As a % of distributions paid (unaudited):
Qualified ordinary income		100.00	%		100.00	%		66.71	%		75.22	%		—		—		—		—
Ordinary income - dividends received deduction		100.00	%		100.00	%		72.15	%		83.23	%		—		—		—		—


	Short Duration				Intermediate Duration
	2010		2009		2010		2009
Distributions paid from:
Ordinary income	$	5,130,631	$	6,294,858	$	4,638,090	$	6,508,347
Short-term capital gains		—		—		4,338,776		1,431,402
Long-term capital gains		—		—		450,528		—

Totals	$	5,130,631	$	6,294,858	$	9,427,394	$	7,939,749


As a % of distributions paid (unaudited):
Qualified ordinary income		—		—		—		—
Ordinary income - dividends received deduction		—		—		—		—

As of December 31, 2010, the components of distributable earnings (excluding unrealized appreciation/depreciation) on a tax basis consisted of:


	Mid Cap		Balanced		High Yield		Fixed Income		Short Duration		Intermediate Duration
Capital loss carryforward	$	10,896,210	$	934,426	$	4,403,474	$	1,069,686	$	5,162,225		—
Undistributed ordinary income		58,773		—		21,178		103,298		155	$	26,057
Undistributed short-term capital gains		—		—		—		—		—		—
Undistributed long-term capital gains		—		—		—		—		—		—

Notes to Financial Statements (continued)

e.	Federal Taxes

Each Fund intends to comply with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, to distribute substantially all of its taxable income and gains to its shareholders and to meet certain diversification and income requirements with respect to investment companies. Therefore, no provision for Federal income or excise tax is included in the accompanying financial statements.

Additionally, based on each Fund’s understanding of the tax rules and rates related to income, gains and transactions for the foreign jurisdictions in which it invests, each Fund will provide for foreign taxes, and where appropriate, deferred foreign taxes.

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (tax years ended December

31, 2007-2010), and has concluded that no provision for federal income tax is required in the Funds’ financial statements. The Funds are not aware of any tax position for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

f.	Capital Stock

The Trust’s Declaration of Trust authorizes for each series the issuance of an unlimited number of shares of beneficial interest, without par value. Each Fund records sales and repurchases of its capital stock on the trade date. Dividends and distributions to shareholders are recorded on the ex-dividend date. For the years ended December 31, 2010 and December 31, 2009, the capital stock transactions by class for Mid-Cap, Balanced, High Yield, and Fixed Income were:


	Mid-Cap												Balanced
	2010						2009						2010						2009
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Class A:
Proceeds from sales		152,527		$	1,817,076			175,871		$	1,573,981			153,940		$	1,989,622			259,779		$	2,845,086
Reinvestment of distributions		1,201			16,634			2,252			24,752			4,484			57,927			4,278			49,025
Cost of shares repurchased		(171,982	)		(2,035,553	)		(102,802	)		(889,571	)		(156,920	)		(1,998,654	)		(651,802	)		(7,638,243	)

Net Increase (Decrease) - Class A		(18,254	)		($201,843	)		75,321		$	709,162			1,504		$	48,895			(387,745	)		($4,744,132	)

Class B:
Proceeds from sales		84		$	935			168		$	1,155			9,548		$	123,057			23,140		$	259,990
Reinvestment of distributions		—			—			—			—			235			3,014			614			6,744
Cost of shares repurchased		(41,048	)		(441,806	)		(176,441	)		(1,444,034	)		(47,933	)		(597,986	)		(179,904	)		(1,952,017	)

Net Decrease - Class B		(40,964	)		($440,871	)		(176,273	)		($1,442,879	)		(38,150	)		($471,915	)		(156,150	)		($1,685,283	)

Class C:
Proceeds from sales		6,516		$	72,671			13,179		$	106,965			27,751		$	355,635			20,193		$	221,969
Reinvestment of distributions		—			—			53			542			585			7,541			716			8,106
Cost of shares repurchased		(133,269	)		(1,439,004	)		(136,234	)		(1,128,150	)		(68,533	)		(871,532	)		(53,253	)		(571,245	)

Net Decrease - Class C		(126,753	)		($1,366,333	)		(123,002	)		($1,020,643	)		(40,197	)		($508,356	)		(32,344	)		($341,170	)

Institutional Class:
Proceeds from sales		149,279		$	1,869,055			152,518		$	1,366,553			73,672		$	945,883			97,908		$	1,079,719
Reinvestment of distributions		13,403			195,143			21,216			245,685			10,429			135,661			11,948			137,040
Cost of shares repurchased		(301,849	)		(3,698,904	)		(659,517	)		(5,960,998	)		(82,243	)		(1,050,298	)		(109,145	)		(1,185,024	)

Net Increase (Decrease) - Institutional Class		(139,167	)		($1,634,706	)		(485,783	)		($4,348,760	)		1,858			$31,246			711			$31,735

Notes to Financial Statements (continued)


	High Yield												Fixed Income
	2010						2009						2010						2009
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Class A:
Proceeds from sales		561,569		$	4,207,687			2,670,648		$	15,897,970			1,650,400		$	17,834,800			2,132,956		$	20,258,557
Reinvestment of distributions		197,078			1,473,915			266,725			1,670,573			104,383			1,132,260			141,825			1,362,744
Cost of shares repurchased		(1,823,180	)		(13,579,835	)		(2,325,239	)		(13,838,087	)		(2,136,300	)		(23,308,029	)		(2,119,817	)		(20,513,025	)

Net Increase (Decrease) - Class A		(1,064,533	)	$	(7,898,233	)		612,134		$	3,730,456			(381,517	)	$	(4,340,969	)		154,964		$	1,108,276

Class B:
Proceeds from sales		12,741		$	93,537			15,442		$	93,910			75,696		$	826,667			78,959		$	754,143
Reinvestment of distributions		4,785			35,193			12,989			77,355			6,279			67,622			11,848			112,028
Cost of shares repurchased		(107,537	)		(782,312	)		(344,519	)		(2,060,740	)		(128,184	)		(1,363,867	)		(415,290	)		(4,008,505	)

Net Decrease - Class B		(90,011	)	$	(653,582	)		(316,088	)	$	(1,889,475	)		(46,209	)	$	(469,578	)		(324,483	)	$	(3,142,334	)

Class C:
Proceeds from sales		54,946		$	409,922			93,651		$	514,827			399,093		$	4,329,562			1,890,577		$	17,735,537
Reinvestment of distributions		23,277			171,625			27,854			172,760			98,849			1,070,100			136,213			1,311,233
Cost of shares repurchased		(166,548	)		(1,234,905	)		(180,948	)		(1,112,602	)		(1,905,917	)		(20,659,178	)		(1,127,609	)		(10,841,496	)

Net Increase (Decrease) - Class C		(88,325	)	$	(653,358	)		(59,443	)	$	(425,015	)		(1,407,975	)	$	(15,259,516	)		899,181		$	8,205,274

Institutional Class:
Proceeds from sales		189,264		$	1,436,884			1,070,145		$	5,935,768			2,862,678		$	31,466,580			945,116		$	9,115,892
Reinvestment of distributions		41,664			315,109			42,482			269,627			156,575			1,706,688			169,866			1,637,824
Cost of shares repurchased		(120,296	)		(911,419	)		(1,165,972	)		(6,504,728	)		(742,062	)		(8,163,869	)		(982,160	)		(9,634,055	)

Net Increase (Decrease) - Institutional Class		110,632		$	840,574			(53,345	)	$	(299,333	)		2,277,191		$	25,009,399			132,822		$	1,119,661

Notes to Financial Statements (continued)

At December 31, 2010, certain unaffiliated shareholders of record, specifically omnibus accounts, individually or collectively held greater than 10% of the outstanding shares of the following Funds: Mid-Cap – two collectively own 85%; Balanced – two collectively own 66%; High Yield – three collectively own 53%; Fixed Income – two collectively own 30%; Short Duration – two collectively own 67%; Intermediate Duration – three collectively own 62%. Transactions by these shareholders may have a material impact on the Funds.

g.	Capital Loss Carryovers

As of December 31, 2010, the following Funds had accumulated net realized capital loss carryovers from securities transactions for Federal income tax purposes as shown in the following chart. These amounts may be used to offset realized capital gains, if any, through the expiration dates listed.


	Capital Loss Carryover Amount		Expires Dec. 31,
Mid-Cap
	$	10,896,210		2017

Balanced
	$	934,426		2017

High Yield
	$	4,403,474		2017

Fixed Income
	$	616,984		2017
		452,702		2018

Total	$	1,069,686

Short Duration
	$	1,210,911		2016
		3,951,314		2017

Total	$	5,162,225

For the year ended December 31, 2010, the following Funds utilized capital loss carryovers: Mid-Cap - $5,902,212, Balanced - $1,681,674, High Yield - $999,707 and Short Duration - $806,171.

h.	Reverse Repurchase Agreements

A reverse repurchase agreement involves the sale of portfolio assets together with an agreement to repurchase the same or substantially the same assets later at a fixed price. An interest expense is charged

to the Fund for the duration of the sale. Additional assets are maintained in a segregated account with the custodian, and are marked to market daily. The segregated assets may consist of cash, U.S. Government securities, or other liquid securities at least equal in value to the obligations under the reverse repurchase agreements. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, a fund’s use of the proceeds under the agreement may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the obligation to repurchase the securities. For the year ended December 31, 2010, there were no reverse repurchase agreements, and therefore no interest expense.

i.	Delayed Delivery Transactions and When-Issued Securities

The Short Duration and Intermediate Duration Funds entered into securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked to market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the Funds’ Schedules of Portfolio Investments. With respect to purchase commitments, the Funds identify securities as segregated in their records with a value at least equal to the amount of the commitment. The payables and receivables associated with the purchases and sales of delayed delivery securities having the same coupon, settlement date and broker are offset. Delayed delivery or when-issued securities that have been purchased from and sold to different brokers are reflected as both payables and receivables in the Funds’ Statement of Assets and Liabilities. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract, or if the issuer does not issue the securities due to political, economic, or other factors.

j.	Dollar Roll and Reverse Dollar Roll Agreements

The Short Duration and Intermediate Duration Funds entered into dollar rolls in which they sell debt securities for delivery currently and simultaneously contract to repurchase similar, but not identical, securities at the same price or a lower price on an agreed date. The Funds receive compensation as consideration for entering into the commitment to repurchase. The compensation is the difference between the current sale price and the forward price for the future purchase (often referred to as the “drop”) as well as by the interest earned on the cash proceeds of the initial sale. The Funds may also be compensated by the receipt of a commitment fee. As the holder, the counterparty receives all principal and interest payments, including prepayments, made with respect to the similar security. Dollar rolls may be renewed with a new sale and repurchase price with a cash settlement made at renewal without physical delivery of the securities subject to the contract.

Notes to Financial Statements (continued)

Certain risks may arise upon entering into dollar rolls from the potential inability of counterparties to meet the terms of their commitments. Additionally, the value of such securities may change adversely before the Funds are able to repurchase them. There can be no assurance that the Funds’ use of the cash that they receive from a dollar roll will provide a return that exceeds its cost.

k.	Securities Transacted on a When Issued Basis

The Short Duration and Intermediate Duration Funds entered into To Be Announced (“TBA”) sale commitments to hedge their portfolio positions or to sell mortgage-backed securities they own under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, equivalent deliverable securities, or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as “cover” for the transaction. Unsettled TBA sale commitments are valued at the current market value of the underlying securities, according to the procedures described under “Valuation of Investments,” in footnote 1a above. Each contract is marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the Fund realizes a gain or loss. If the Fund delivers securities under the commitment, the Fund realizes a gain or a loss from the sale of the securities based upon the unit price established at the date the commitment was entered into.

2.	Derivative Instruments

The following disclosures contain information on how and why the Funds use derivative instruments, the credit-risk and how derivative instruments affect the Funds’ financial position, results of operations and cash flows. The location and fair value amounts of these instruments on the Statements of Assets and Liabilities and the realized and changes in unrealized gains and losses on the Statements of Operations, each categorized by type of derivative contract, are included in a table in the Schedules of Portfolio Investments for the applicable funds. The derivative instruments outstanding as of period end as disclosed in the Statements of Assets and Liabilities and the realized and changes in unrealized gains and losses on derivative instruments during the period as disclosed in the Statement of Operations serve as indicators of the volume of derivative activity for the Funds.

a.	Futures Contracts

The Short Duration and Intermediate Duration Funds invest in interest rate futures contracts for risk management purposes in order to reduce the interest rate risk of fixed-income securities. The Funds are subject to interest rate risk in the normal course of pursuing their investment objectives. With futures, there is minimal counterparty credit risk to the Funds since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. On entering into a futures contract, either cash or securities in an amount equal to a certain percentage of the contract value (initial margin) must be deposited with the futures broker. Subsequent payments (variation margin) are made or received each day. The variation margin

payments equal the daily changes in the contract value and are recorded as unrealized gains or losses. The Funds recognize a realized gain or loss when the contract is closed or expires equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Futures are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the financial statements. Fluctuations in the value of the contracts are recorded in the Statements of Assets and Liabilities as an asset (liability) and in the Statements of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures.

Futures transactions involve additional costs and may result in losses. The effective use of futures depends on the Fund’s ability to close futures positions at times when the Fund’s portfolio managers deem it desirable to do so. The use of futures also involves the risk of imperfect correlation among movements in the values of the securities underlying the futures purchased and sold by the Funds, of the futures contracts themselves, and of the securities that are the subject of a hedge.

b.	Assets Pledged to Cover Margin Requirements for Open Futures Positions

The aggregate market value of assets pledged to cover margin requirements for the open futures positions at December 31, 2010 was:


Fund	Assets Pledged
Short Duration	$	699,751
Intermediate Duration		149,997

c.	Stripped Securities

The Short Duration and Intermediate Duration Funds invest in stripped securities (“STRIPS”), primarily interest-only strips for their hedging characteristics. Interest-only STRIPS will most likely move differently than typical fixed-income securities in relation to changes in interest rates. STRIPS are usually structured with two classes that receive different proportions of the interest and principal distributions from a pool of underlying assets. A common type of STRIP will have one class receiving all of the interest from the underlying assets (“interest-only” or “IO” class), while the other class will receive the entire principal (“principal only” or “PO” class). However, in some instances, one class will receive some of the interest and most of the principal while the other class will receive most of the interest and the remainder of the principal. STRIPS are unusually volatile in response to changes in interest rates. The yield to maturity on an IO class of STRIPS is extremely sensitive not only to changes in prevailing interest rates but also to the rate of principal payments (including prepayments) on the underlying assets. A rapid rate of principal prepayments may have a measurably adverse effect on a Fund’s yield to maturity to the extent it invests in IOs. Conversely, POs tend to increase in

Notes to Financial Statements (continued)

value if prepayments are greater than anticipated and decline if prepayments are slower than anticipated. Thus, if the underlying assets experience greater than anticipated prepayments of principal, a Fund may fail to fully recover its initial investment in these securities, even if the STRIPS were rated of the highest credit quality by Standard & Poor’s Corporation or Moody’s. These risks are managed by investing in a variety of such securities and by using certain hedging techniques. In addition the secondary market for STRIPS may be less liquid than that of other mortgage-backed or asset-backed securities, potentially limiting a Fund’s ability to buy or sell those securities at any particular time.

3.	Commitments and Contingencies

In the normal course of business, the Funds may enter into contracts and agreements that contain a variety of representations and warranties which provide general indemnifications. The maximum exposure to the Funds under these agreements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risks of loss to be remote.

4.	Foreign Currency Translation

The books and records of the Funds are maintained in U.S. dollars. The value of investments, assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon current foreign exchange rates. Purchases and sales of foreign investments, income, and expenses are converted into U.S. dollars based on currency exchange rates prevailing on the respective dates of such transactions. Net realized and unrealized gain (loss) on foreign currency transactions represent: (1) foreign exchange gains and losses from the sale and holdings of foreign currencies; (2) gains and losses between trade date and settlement date on investment securities transactions and forward foreign currency exchange contracts; and (3) gains and losses from the difference between amounts of interest and dividends recorded and the amounts actually received.

In addition, the Funds do not isolate the net realized and unrealized gain or loss resulting from changes in exchange rates from the fluctuations resulting from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

5.	Agreements and Transactions with Affiliates

The Trust has entered into an Investment Management Agreement under which the Investment Manager, an independently managed subsidiary of Affiliated Managers Group, Inc. (“AMG”), provides or oversees investment management services to the Funds. The Investment Manager selects subadvisors for each Fund (subject to Trustee approval), allocates assets among subadvisors and monitors the subadvisors’ investment programs and results. Each Fund’s

investment portfolio is managed by a portfolio manager who serves pursuant to Subadvisory Agreements with the Investment Manager.

Investment management fees are paid directly by each Fund to the Investment Manager based on average daily net assets. The annual investment management fee rates, as a percentage of average daily net assets for the year ended December 31, 2010, were as follows:


	Investment Management Fee
Mid-Cap		0.70	%
Balanced		0.70	%
High Yield		0.70	%
Fixed Income		0.45	%
Short Duration		0.70	%
Intermediate Duration		0.70	%

The Investment Manager has contractually agreed, through at least May 1, 2011 to waive fees and pay or reimburse expenses to the extent that the total operating expenses (exclusive of brokerage costs, interest, taxes, acquired fund fees and extraordinary expenses) exceed the following percentages of the following Funds’ average daily net assets:


Mid-Cap		Balanced
1.24%	Class A		1.25	%	Class A
1.99%	Class B		2.00	%	Class B
1.99%	Class C		2.00	%	Class C
0.99%	Institutional Class		1.00	%	Inst. Class

High Yield		Fixed Income
1.15%	Class A		0.84	%	Class A
1.90%	Class B		1.59	%	Class B
1.90%	Class C		1.59	%	Class C
0.90%	Institutional Class		0.59	%	Inst. Class
Intermediate Duration		Short Duration
0.89%			n/a

Each of Mid-Cap, Balanced, High Yield, Fixed Income, and Intermediate Duration is obligated to repay the Investment Manager such amounts waived, paid or reimbursed in future years provided that the repayment occurs within thirty-six (36) months after the waiver or reimbursement and that such repayment would not cause the Fund’s expenses in any such year to exceed the above percentages,

Notes to Financial Statements (continued)

based on the Fund’s average daily net assets. For the year ended December 31, 2010, each Fund’s components of reimbursement are detailed in the following chart:


	Mid-Cap			Balanced			High Yield
Reimbursement Available - 12/31/09	$	305,458		$	316,064		$	525,904
Additional Reimbursements		85,869			98,345			200,682
Repayments		—			—			—
Expired Reimbursements		(110,934	)		(115,456	)		(184,970	)

Reimbursement Available - 12/31/10	$	280,393		$	298,953		$	541,616



	Fixed Income			Intermediate Duration
Reimbursement Available - 12/31/09	$	810,721		$	252,944
Additional Reimbursements		338,740			115,172
Repayments		—			—
Expired Reimbursements		(230,995	)		—

Reimbursement Available - 12/31/10	$	918,466		$	368,116

Mid-Cap, Balanced, High Yield, and Fixed Income have entered into an Administration and Shareholder Servicing Agreement under which Managers Investment Group LLC serves as each Fund’s administrator (the “Administrator”) and is responsible for all aspects of managing the Funds’ operations, including administration and shareholder services to each Fund, its shareholders, and certain institutions, such as bank trust departments, broker-dealers and registered investment advisers, that advise or act as an intermediary with the Funds’ shareholders. During the year ended December 31, 2010, each of these Funds paid an Administration fee at the rate of 0.20% per annum of the Fund’s average daily net assets.

The aggregate annual retainer paid to each Independent Trustee is $65,000, plus $4,000 or $2,500 for each regular or special meeting attended, respectively. The Trustees’ fees and expenses are allocated among all of the Funds for which the Investment Manager serves as the advisor (the “Managers Funds”) based on the relative net assets of such Funds. The Independent Chairman of the Trusts receives an additional payment of $15,000 per year. The Chairman of the Audit Committee receives an additional payment of $5,000 per year. The “Trustees fees and expenses” shown in the financial statements represents the Funds’ allocated portion of the total fees and expenses paid by the Managers Funds.

The Funds are distributed by Managers Distributors, Inc. (the “Distributor” or “MDI”), a wholly-owned subsidiary of the Investment Manager. MDI serves as the principal underwriter for each Fund in the Trust. MDI is a registered broker-dealer and member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Shares of each Fund will be continuously offered and will be sold by brokers, dealers or other financial intermediaries who have executed selling agreements with the Distributor. MDI bears all the expenses of providing services pursuant to the Underwriting Agreement, including

the payment of the expenses relating to the distribution of Prospectuses for sales purposes and any advertising or sales literature. Certain Trustees and Officers of the Funds are Officers and/or Directors of the Investment Manager, AMG and/or the Distributor.

Mid-Cap, Balanced, High Yield, and Fixed Income have adopted a distribution and service plan with respect to Class A, Class B and Class C shares of each Fund (the “Plan”), in accordance with the requirements of Rule 12b-1 under the 1940 Act and the requirements of the applicable rules of the FINRA regarding asset-based sales charges. Pursuant to the Plan, each Fund may compensate MDI for its expenditures in financing any activity primarily intended to result in the sale of each such class of Fund shares and for maintenance and personal service provided to existing shareholders of that class. The Plan authorizes payments to MDI up to 0.25%, 1.00% and 1.00% annually of each Fund’s average daily net assets attributable to its Class A, Class B and Class C shares, respectively.

The Plan further provide for periodic payments by MDI to brokers, dealers and other financial intermediaries for providing shareholder services and for promotional and other sales related costs. The portion of payments by Class A, Class B or Class C shares of a Fund for shareholder servicing may not exceed an annual rate of 0.25% of the average daily net asset value of Fund shares of that class owned by clients of such broker, dealer or financial intermediary.

The following summarizes the total fees incurred under the Plan for Class A, Class B and Class C shares for the year ended December 31, 2010:


	Amount
Mid-Cap	$	52,559
Balanced		52,206
High Yield		107,685
Fixed Income		669,889

On June 23, 2009, the Securities and Exchange Commission granted an exemptive order that permits the Funds to lend and borrow money for certain temporary purposes directly to and from other eligible Funds in the Managers Family of Funds (the “Fund Family”). Participation in this interfund lending program is voluntary for both borrowing and lending Funds, and an interfund loan is only made if it benefits each participating Fund. The Investment Manager administers the program according to procedures approved by the Funds’ Board of Trustees (the “Board”), and the Board monitors the operation of the program. An interfund loan must comply with certain conditions set out in the exemptive order, which are designed to assure fairness and protect all participating Funds. For the year ended December 31, 2010, the following Funds either borrowed from or lent to other Funds in the Fund family: High Yield borrowed varying amounts up to $2,081,574 for 24 days paying interest of $483; Fixed Income lent $1,030,486 for 6 days earning interest of $142. The interest amounts can be found in the Statement of Operations in interest income or as miscellaneous expense.

Notes to Financial Statements (continued)

6.	Purchases and Sales of Securities

Purchases and sales of securities (excluding short-term securities) for the year ended December 31, 2010, were as follows:


	Long-Term Securities (excluding U.S. Government Obligations)				U.S. Government Obligations
Fund	Purchases		Sales		Purchases		Sales
Mid-Cap	$	48,961,205	$	52,277,105		n/a		n/a
Balanced		9,859,622		13,668,116	$	6,902,743	$	4,216,683
High Yield		18,774,522		27,238,265		n/a		n/a
Fixed Income		33,452,204		22,335,508		6,399,947		8,430,934
Short Duration		38,389,106		23,009,289		473,421,575		362,518,748
Intermediate Duration		11,098,064		9,172,163		757,409,786		780,599,205

7.	Portfolio Securities Loaned

The Funds participate in a securities lending program offered by BNYM, providing for the lending of securities to qualified brokers. Securities lending fees include earnings of such temporary cash investments, plus or minus any rebate to a borrower. These earnings (after any rebate) are then divided between BNYM, as a fee for its services under the program, and the Fund, according to agreed-upon rates. Collateral on all securities loaned is accepted in cash and/or government securities and is maintained at a minimum level of 102% (105% in the case of certain foreign securities) of the market value, plus interest, if applicable, of investments on loan. It is the Funds’ policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Funds if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. The Funds bear the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Collateral received in the form of cash is invested temporarily in the BNY Mellon Overnight Government Fund, formerly the BNY Institutional Cash Reserves Fund (the “ICRF”), or other short-term investments as defined in the Securities Lending Agreement with BNYM.

Effective August 2, 2010, the Trust, on behalf of each applicable Fund, has entered into an agreement with The Bank of New York Mellon and the Bank of New York Mellon Corporation (“BNYMC”) with respect to each Fund’s position in the BNY Institutional Cash Reserves Fund (the “ICRF”), pursuant to which (i) BNYMC will support the value of certain defaulted securities issued by Lehman Brothers Holdings, Inc. and held by ICRF, and (ii) if certain conditions are met, BNYMC will purchase the defaulted securities from each Fund in September 2011. Each applicable Fund is fair valuing

its position in the ICRF daily. Each Fund’s position, if any, in the separate sleeve of the ICRF is included in the3Schedule of Portfolio Investments and the unrealized loss on such investment is included in Net Unrealized Appreciation on the Statement of Assets and Liabilities and Statement of Operations.

8.	Risks Associated with Collateralized Mortgage Obligations (“CMOs”)

The net asset value of the Short Duration and Intermediate Duration Funds may be sensitive to interest rate fluctuations because the Funds may hold several instruments, including CMOs and other derivatives, whose values can be significantly impacted by interest rate movements. CMOs are obligations collateralized by a portfolio of mortgages or mortgage-related securities. Payments of principal and interest on the mortgages are passed through to the holder of the CMOs on the same schedule as they are received, although certain classes of CMOs have priority over others with respect to the receipt of prepayments on the mortgages. Therefore, the investment in CMOs may be subject to a greater or lesser risk of prepayment than other types of mortgage-related securities. CMOs may have a fixed or variable rate of interest.

9.	Risks Associated with High Yield Securities (High Yield)

Investing in high yield securities involves greater risks and considerations not typically associated with U.S. Government and other high quality/investment grade securities. High Yield securities are generally below investment grade securities and do not have an established retail secondary market. Economic downturns may disrupt the high yield market and impair the issuer’s ability to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations and could cause the securities to become less liquid.

10.

Subsequent Events

The Funds have determined that no additional material events or transactions occurred through the issuance date of the Funds’ financial statements, which require additional disclosure in or adjustment of the Funds’ financial statements.

Tax Information (continued)

Tax Information (unaudited)

Each Fund hereby designates the maximum amount allowable of its net taxable income as qualified dividends as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003. The 2010 Form 1099-DIV you receive for each Fund will show the tax status of all distributions paid to you during the year.

Pursuant to section 852 of the Internal Revenue Code, Mid-Cap, Balanced, High Yield, Fixed Income, Short Duration, and Intermediate Duration hereby designate as a capital gain distribution with respect to the taxable year ended December 31, 2010, $0, $0, $0, $0, $0 and $450,528, respectively or, if subsequently determined to be different, the net capital gains of such year.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Managers Trust II and the Shareholders of Managers AMG Chicago Equity Partners Mid-Cap Fund, Managers AMG Chicago Equity Partners Balanced Fund, Managers High Yield Fund, Managers Fixed Income Fund, Managers Short Duration Government Fund and Managers Intermediate Duration Government Fund:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of portfolio investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Managers AMG Chicago Equity Partners Mid-Cap Fund, Managers AMG Chicago Equity Partners Balanced Fund, Managers High Yield Fund, Managers Fixed Income Fund, Managers Short Duration Government Fund and Managers Intermediate Duration Government Fund (constituting Managers Trust II, hereafter referred to as the “Funds”) at December 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

February 24, 2011

Trustees and Officers

The Trustees and Officers of the Trust, their business addresses, principal occupations for the past five years and dates of birth are listed below. The Trustees provide broad supervision over the affairs of the Trust and the Funds. The Trustees are experienced executives who meet periodically throughout the year to oversee the Funds’ activities, review contractual arrangements with companies that provide services to the Funds, and review the Funds’ performance. Unless otherwise noted, the address of each Trustee or Officer is the address of the Trust: 800 Connecticut Avenue, Norwalk, Connecticut 06854.

There is no stated term of office for Trustees. Trustees serve until their resignation, retirement or removal in accordance with the Trust’s organizational documents and policies adopted by the Board from time to time. The Chairman of the Trustees, President, Treasurer and Secretary of the Trust are elected by the Trustees annually. Other officers hold office at the pleasure of the Trustees.

Independent Trustees

The following Trustees are not “interested persons” of the Trust within the meaning of the 1940 Act:


Name, Date of Birth, Number of Funds Overseen in Fund Complex*		Principal Occupation(s) During Past 5 Years and Other Directorships Held by Trustee
Jack W. Aber, 9/9/37 • Trustee since 2000 • Oversees 41 Funds in Fund Complex		Professor of Finance, Boston University School of Management (1972-Present); Trustee of Appleton Growth Fund (1 portfolio); Trustee of Third Avenue Trust (5 portfolios); Trustee of Third Avenue Variable Trust (1 portfolio); Trustee of Aston Funds (24 portfolios).




William E. Chapman, II, 9/23/41 • Independent Chairman • Trustee since 2000 • Oversees 41 Funds in Fund Complex		President and Owner, Longboat Retirement Planning Solutions (1998-Present); Hewitt Associates, LLC (part time) (provider of Retirement and Investment Education Seminars) (2002-2009); Trustee of Bowdoin College (2002-Present); Director of Harding, Loevner Funds, Inc. (6 portfolios); Trustee of Third Avenue Trust (5 portfolios); Trustee of Third Avenue Variable Trust (1 portfolio); Trustee of Aston Funds (24 portfolios).





Edward J. Kaier, 9/23/45 • Trustee since 2000 • Oversees 41 Funds in Fund Complex		Attorney at Law and Partner, Teeters Harvey Gilboy & Kaier LLP (2007-Present); Attorney at Law and Partner, Hepburn Willcox Hamilton & Putnam, LLP (1977-2007); Trustee of Third Avenue Trust (5 portfolios); Trustee of Third Avenue Variable Trust (1 portfolio); Trustee of Aston Funds (24 portfolios).




Steven J. Paggioli, 4/3/50 • Trustee since 2000 • Oversees 41 Funds in Fund Complex		Consultant (2001-Present); Formerly Executive Vice President and Director, The Wadsworth Group (1986- 2001); Executive Vice President, Secretary and Director, Investment Company Administration, LLC (1990-2001); Vice President, Secretary and Director, First Fund Distributors, Inc. (1991-2001); Trustee, Professionally Managed Portfolios (40 portfolios); Advisory Board Member, Sustainable Growth Advisors, LP; Independent Director, Chase Investment Counsel (2008 – Present); Trustee of Aston Funds (24 portfolios).




Eric Rakowski, 6/5/58 • Trustee since 2000 • Oversees 41 Funds in Fund Complex		Professor, University of California at Berkeley School of Law (1990-Present); Director of Harding, Loevner Funds, Inc. (6 portfolios); Trustee of Third Avenue Trust (5 portfolios); Trustee of Third Avenue Variable Trust (1 portfolio); Trustee of Aston Funds (24 portfolios).




Thomas R. Schneeweis, 5/10/47 • Trustee since 2000 • Oversees 41 Funds in Fund Complex		Professor of Finance, University of Massachusetts (1977-Present); Director, CISDM at the University of Massachusetts, (1996-Present); President, Alternative Investment Analytics, LLC, (formerly Schneeweis Partners, LLC) (2001-Present); Partner, S Capital Management, LLC (2007-Present); Partner, TRS Associates (1982-Present); Trustee of Aston Funds (24 portfolios).

*	The Fund Complex consists of Managers AMG Funds, The Managers Funds, Managers Trust I and Managers Trust II.

Interested Trustees

The following Trustees are “interested persons” of the Trust within the meaning of the 1940 Act. Mr. Dalton is an interested person by virtue of his positions with, and interest in securities of, Affiliated Managers Group, Inc. and his position with Managers Distributors, Inc. Mr. Streur is an interested person by virtue of his positions with Managers Investment Group LLC.


Name, Date of Birth, Number of Funds Overseen in Fund Complex*		Principal Occupation(s) During Past 5 Years and Other Directorships Held by Trustee
Nathaniel Dalton, 9/29/66 • Trustee since 2008 • Oversees 41 Funds in Fund Complex		Executive Vice President and Chief Operating Officer, Affiliated Managers Group, Inc., (2006-Present); Executive Vice President, Affiliated Managers Group, Inc., (2002 -2006); Executive Vice President and General Counsel, Affiliated Managers Group, Inc. (2001-2002); Senior Vice President and General Counsel, Affiliated Managers Group, Inc. (1996-2001). Director, Managers Distributors, Inc. (2000-Present).




John H. Streur, 2/6/60 • Trustee since 2008 • President since 2008 • Oversees 41 Funds in Fund Complex		Senior Managing Partner, Managers Investment Group LLC (2006-Present); President, Managers Distributors, Inc. (2006-Present); Managing Partner, Managers Investment Group LLC (2005-2006); Chief Executive Officer, President and Chief Operating Officer, The Burridge Group LLC (1996-2004).




*Officers*
Name, Date of Birth, Position(s) Held with Fund and Length of Time Served		Principal Occupation(s) During Past 5 Years
Christine C. Carsman, 4/2/52 • Secretary since 2004 • Chief Legal Officer since 2004		Senior Vice President and Chief Regulatory Counsel, Affiliated Managers Group, Inc. (2004-Present); Secretary, The Managers Funds, Managers AMG Funds and Managers Trust I (2004-Present); Senior Counsel, Vice President and Director of Operational Risk Management and Compliance, Wellington Management Company, LLP (1995-2004); Deputy General Counsel, The Boston Company, Inc. (1993- 1995); Associate General Counsel, The Boston Company Advisors, Inc. (1991-1993); Associate, Sullivan & Worcester LLP (1987-1991).



Donald S. Rumery, 5/29/58 • Chief Financial Officer since 2007 • Treasurer since 2000		Senior Vice President, Managers Investment Group LLC (2005-Present); Treasurer and Chief Financial Officer, Managers Distributors, Inc. (2000-Present); Treasurer, The Managers Funds (1995-Present); Treasurer, Managers AMG Funds (1999-Present); Treasurer, Managers Trust I (2000-Present); Chief Financial Officer, The Managers Funds, Managers AMG Funds and Managers Trust I (2007-Present); Vice President, The Managers Funds LLC, (1994-2004).




Keitha L. Kinne, 5/16/58 • Chief Operating Officer since 2007		Managing Partner and Chief Operating Officer, Managers Investment Group LLC (2007-Present); Chief Investment Officer, Managers Investment Group LLC (2008-Present); Chief Operating Officer, The Managers Funds, Managers AMG Funds and Managers Trust I (2007-Present); Managing Director, Legg Mason & Co., LLC (2006-2007); Managing Director, Citigroup Asset Management (2004-2006).



David Kurzweil, 6/22/74 • Assistant Secretary since 2008		Senior Vice President and Associate Counsel, Managers Investment Group LLC (2008-Present); Assistant Secretary, The Managers Funds, Managers AMG Funds and Managers Trust I (2008-Present); Counsel and Senior Vice President, Lazard Asset Management LLC (2003-2008).


John J. Ferencz, 3/09/62 • Chief Compliance Officer • Code of Ethics Reporting Officer • AML Compliance Officer • Sarbanes-Oxley Code of Ethics Compliance Officer since 2010		Vice President, Legal and Compliance, Managers Investment Group LLC (2010-Present); Senior Compliance Analyst, Mutual Funds and Regulatory, GE Asset Management Incorporated (2005-2010).

Investment Manager and Administrator

Managers Investment Group LLC

333 W. Wacker Drive

Suite 1200

Chicago, IL 60606

(800) 835-3879

Distributor

Managers Distributors, Inc.

333 W. Wacker Drive

Suite 1200

Chicago, IL 60606

(800) 835-3879

Custodian

The Bank of New York Mellon

2 Hanson Place

Brooklyn, New York 11217

Legal Counsel

Ropes & Gray LLP

Prudential Tower, 800 Boylston Street

Boston, Massachusetts 02199-3600

Transfer Agent

BNY Mellon Investment Servicing (US) Inc.*

Attn: Managers

P.O. Box 9769

Providence, Rhode Island 02940

(800) 548-4539

For Managers Choice Only

Managers

c/o BNY Mellon Investment Servicing (US) Inc.*

P.O. Box 9847

Providence, Rhode Island 02940-8047

(800) 358-7668

*	Formerly PNC Global Investment Servicing (U.S.) Inc.

LOGO

MANAGERS AND MANAGERS AMG FUNDS


EQUITY FUNDS		BALANCED FUNDS
CADENCE CAPITAL APPRECIATION	INTERNATIONAL EQUITY	CHICAGO EQUITY PARTNERS BALANCED
CADENCE FOCUSED GROWTH	AllianceBernstein L.P.	Chicago Equity Partners, LLC
CADENCE MID-CAP	Lazard Asset Management, LLC	ALTERNATIVE FUNDS
CADENCE EMERGING COMPANIES	Martin Currie Inc.	ALTERNATIVE FUNDS
Cadence Capital Management, LLC
	REAL ESTATE SECURITIES	FQ GLOBAL ALTERNATIVES

CHICAGO EQUITY PARTNERS MID-CAP	Urdang Securities Management, Inc.	FQ GLOBAL ESSENTIALS
Chicago Equity Partners, LLC		First Quadrant, L.P.
	RENAISSANCE LARGE CAP GROWTH

EMERGING MARKETS EQUITY	Renaissance Group LLC	INCOME FUNDS
Rexiter Capital Management Limited Schroder Investment Management North America Inc.	SKYLINE SPECIAL EQUITIES	BOND (MANAGERS)
	PORTFOLIO	FIXED INCOME
ESSEX SMALL/MICRO CAP GROWTH	Skyline Asset Management, L.P.	GLOBAL BOND
Essex Investment Management Co., LLC		Loomis, Sayles & Co., L.P.
	SPECIAL EQUITY
FQ TAX-MANAGED U.S. EQUITY	Ranger Investment Management, L.P.	BOND (MANAGERS PIMCO)
FQ U.S. EQUITY	Lord, Abbett & Co. LLC	Pacific Investment Management Co. LLC
First Quadrant, L.P.	Smith Asset Management Group, L.P.	CALIFORNIA INTERMEDIATE TAX- FREE
	Federated MDTA LLC	Miller Tabak Asset Management LLC
FRONTIER SMALL CAP GROWTH
Frontier Capital Management Company, LLC	SYSTEMATIC VALUE	GW&K MUNICIPAL BOND
	SYSTEMATIC MID CAP VALUE	GW&K MUNICIPAL ENHANCED YIELD
GW&K SMALL CAP EQUITY	Systematic Financial Management, L.P.	Gannett Welsh & Kotler, LLC
Gannett Welsh & Kotler, LLC
	TIMESSQUARE MID CAP GROWTH	HIGH YIELD
INSTITUTIONAL MICRO-CAP	TIMESSQUARE SMALL CAP GROWTH	J.P. Morgan Investment Management LLC
MICRO-CAP	TSCM GROWTH EQUITY
Lord, Abbett & Co. LLC	TimesSquare Capital Management, LLC	INTERMEDIATE DURATION GOVERNMENT
WEDGE Capital Management L.L.P.		SHORT DURATION GOVERNMENT
Next Century Growth Investors LLC	TRILOGY GLOBAL EQUITY	Smith Breeden Associates, Inc.
RBC Global Asset Management (U.S.) Inc.	TRILOGY EMERGING MARKETS EQUITY
	TRILOGY INTERNATIONAL SMALL CAP
	Trilogy Global Advisors, L.P.
This report is prepared for the Funds’ shareholders. It is authorized for distribution to prospective investors only when preceded or accompanied by an effective prospectus. To receive a free copy of the prospectus or Statement of Additional Information, which includes additional information about Fund Trustees, please contact us by calling 800.835.3879. Distributed by Managers Distributors, Inc., member FINRA. A description of the policies and procedures each Fund uses to vote its proxies is available: (i) without charge, upon request, by calling 800.835.3879, or (ii) on the Securities and Exchange Commission’s (SEC) Web site at www. sec.gov. For information regarding each Fund’s proxy voting record for the 12-month period ended June 30, call 800.835.3879 or visit the SEC Web site at www.sec.gov. The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov. A Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330. To review a complete list of the Funds’ portfolio holdings, or to view the most recent quarterly holdings report, semiannual report, or annual report, please visit www.managersinvest.com.

www.managersinvest.com

LOGO

Item 2.

CODE OF ETHICS

Registrant has adopted a Code of Ethics. See attached Exhibit (a)(1).

Item 3.

AUDIT COMMITTEE FINANCIAL EXPERT

Registrant’s Board of Trustees has determined that independent Trustees Mr. Jack W. Aber and Mr. Steven J. Paggioli each qualify as the Audit Committee Financial Expert. Mr. Aber and Mr. Paggioli are “independent” as such term is defined in Form N-CSR.

Item 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed by PwC to the Fund for the Funds’ two most recent fiscal years for professional services rendered for audits of annual financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements (“Audit Fees”) were as follows:


	Fiscal 2010		Fiscal 2009
Managers AMG Chicago Equity Partners Mid-Cap Fund		20,014	$	23,161
Managers AMG Chicago Equity Partners Balanced Fund		20,056	$	21,101
Managers High Yield Fund		24,509	$	25,786
Managers Fixed Income Fund		27,537	$	28,971
Managers Short Duration Government Fund		25,638	$	23,554
Managers Intermediate Duration Government Fund		25,638	$	23,554
All Funds in the Managers Complex Audited by PwC		994,109	$	850,498

Audit-Related Fees

There were no fees billed by PwC to the Funds in its two recent fiscal years for services rendered for assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements, but are not reported as Audit Fees (“Audit-Related Fees”).

For the Funds’ two most recent fiscal years, there were no Audit-Related Fees billed by PwC for engagements related directly to the operations and financial reporting of one or more Funds by a Fund Service Provider. A Fund Service Provider is (a) any investment adviser to the Fund (not including any Subadvisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) or (b) any entity that provides ongoing services to the Fund and is controlling, controlled by or under common control with a Fund investment adviser described in (a).

Tax Fees

The aggregate fees billed by PwC to the Funds for the two most recent fiscal years for professional services rendered for tax compliance, tax advice, and tax planning (“Tax Fees”) were as follows:


	Fiscal 2010		Fiscal 2009
Managers AMG Chicago Equity Partners Mid-Cap Fund		7,200	$	5,800
Managers AMG Chicago Equity Partners Balanced Fund		7,200	$	5,800
Managers High Yield Fund		7,200	$	6,500
Managers Fixed Income Fund		7,200	$	6,500
Managers Short Duration Government Fund		9,000	$	9,050
Managers Intermediate Duration Government Fund		8,450	$	9,050

For the Funds’ two most recent fiscal years, Tax Fees billed by PwC for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Funds were $0 for fiscal 2008 and $0 for fiscal 2007, respectively.

The services for which Tax Fees were charged comprise all services performed by professional staff in PwC’s tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.

All Other Fees

There were no other fees billed by PwC to the Funds for all other non-audit services (“Other Fees”) during the Funds’ two most recent fiscal years. During the same period, there were no Other Fees billed by PwC for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Funds.

According to policies adopted by the Audit Committee, services provided by PwC to the Funds must be pre-approved by the Audit Committee. On an annual basis, the Audit Committee reviews and pre-approves various types of services that PwC may perform for the Funds without specific approval of each engagement, subject to specified budget limitations. As contemplated by the Sarbanes-Oxley Act of 2002 and related SEC rules, the Audit Committee also pre-approves non-audit services provided by PwC to any Fund Service Provider for any engagement that relates directly to the operations and financial reporting of the Funds. Any engagement that is not already pre-approved or that will exceed a pre-approved budget must be submitted to the Audit Committee for pre-approval. The Chairman of the Audit Committee is authorized on behalf of the Board of Trustees and the Audit Committee to approve the engagement of PwC to perform non-audit services subject to certain conditions, including notification to the Audit Committee of such pre-

approval not later than the next meeting of the Audit Committee following the date of such pre-approval.

There were no other fees billed by PwC for non-audit services rendered to the Funds and to Fund Service Providers for the Funds’ two most recent fiscal years.

The Audit Committee has considered whether the provision of non-audit services by PwC to Fund Service Providers that were not required to be pre-approved by the Audit Committee is compatible with maintaining PwC’s independence in its audit of the Funds, taking into account representations from PwC, in accordance with Independence Standards Board Standard No. 1, regarding its independence from the Funds and its related entities.

The following table sets forth the non-audit services provided by PwC to the Funds and its service affiliates defined as the Funds’ investment advisor and any entity controlling, controlled by or under common control with Managers Investment Group LLC that provides ongoing services to the Funds (“Control Affiliates”) for the last two fiscal years.


	Audit-related fees ^A				Tax fees ^A				All other fees ^A
	2009		2008		2009		2008		2009		2008
Control Affiliates	$	580,765	$	343,015	$	467,485	$	897,895	$	0	$	0

^A	Aggregate amounts may reflect rounding.

Item 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable.

Item 6.

SCHEDULE OF INVESTMENTS

The schedule of investments in unaffiliated issuers as of the close of the reporting period is included as part of the shareholder report contained in Item 1 hereof.

Item 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

Item 8.

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

Item 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS

Not applicable.

Item 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

Item 11.

CONTROLS AND PROCEDURES

(a) The Registrant’s principal executive and principal financial officers have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing of this report, that the Registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) There were no changes in the Registrant’s internal control over financial reporting during the Registrant’s fourth fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to affect, the internal control over financial reporting.

Item 12.

EXHIBITS


(a)(1)		Any Code of Ethics or amendments hereto. Filed herewith.

(a)(2)		Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 - Filed herewith.

(a)(3)		Not applicable.

(b)		Certifications pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 - Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


MANAGERS TRUST II

By:		/s/ John H. Streur
		John H. Streur, President

Date:		March 9, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:		/s/ John H. Streur
		John H. Streur, President

Date:		March 9, 2011

By:		/s/ Donald S. Rumery
		Donald S. Rumery, Chief Financial Officer

Date:		March 9, 2011