<PAGE>
<PAGE>
ANNUAL REPORT
- --------------------------------------------
October 31, 1995
NEUBERGER&BERMAN
INCOME FUNDS -SM-
NEUBERGER&BERMAN
GOVERNMENT MONEY FUND
NEUBERGER&BERMAN
CASH RESERVES
NEUBERGER&BERMAN
ULTRA SHORT BOND FUND
NEUBERGER&BERMAN
LIMITED MATURITY BOND FUND
NEUBERGER&BERMAN
GOVERNMENT INCOME FUND
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
PRESIDENT'S LETTER 4
RATINGS SUMMARY 8
GROWTH OF A DOLLAR
CHARTS
COMPARISON OF A
$10,000 INVESTMENT
Ultra Short Bond Fund 10
Limited Maturity Bond
Fund 11
Government Income Fund 12
REPORT OF
INDEPENDENT AUDITORS 13
FINANCIAL STATEMENTS 14
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Government Money Fund 25
Cash Reserves 26
Ultra Short Bond Fund 27
Limited Maturity Bond
Fund 28
Government Income Fund 29
THE PORTFOLIOS
REPORT OF
INDEPENDENT AUDITORS 32
SCHEDULE OF
INVESTMENTS
Government Money
Portfolio 33
Cash Reserves Portfolio 34
Ultra Short Bond
Portfolio 38
Limited Maturity Bond
Portfolio 42
Government Income
Portfolio 46
FINANCIAL STATEMENTS 50
FINANCIAL HIGHLIGHTS 59
OTHER INFORMATION
Directory/Officers and
Trustees 61
</TABLE>
3
<PAGE>
PRESIDENT'S LETTER December 18, 1995
Dear Shareholders,
Shortly after our October 1994 Annual Report, the bond market sprang back
after 12 months of sustained capital losses. It's been on an upward tack ever
since November 1994, causing one of the strongest bond rallies in over a decade.
The Federal Reserve Board (the "Fed") crafted the current fixed income
environment carefully. The Fed, led by Chairman Alan Greenspan, effectively
voted the bond market out of the high interest-rate quagmire of 1994. This was
the beginning of a succession of well-calculated decisions not to raise rates
that set the bond market back on a positive trend. Then in July the Fed cut the
discount rate by 0.25% (the first cut in about two years). Not only did the
easing of interest rates lay the groundwork for a dual bull market for bonds and
stocks, but they also served your Neuberger&Berman fixed income funds well.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YIELDS ON U.S. TREASURY BONDS
<S> <C> <C>
Plotted Weekly
30-year bonds 3-year bonds
10/28/94 7.958% 7.033%
11/04 8.159% 7.310%
11/11 8.149% 7.387%
11/18 8.131% 7.523%
11/25 7.931% 7.427%
12/02 7.906% 7.571%
12/09 7.859% 7.663%
12/16 7.854% 7.694%
12/23 7.827% 7.801%
12/30 7.881% 7.784%
1/6/95 7.860% 7.773%
01/13 7.792% 7.506%
01/20 7.891% 7.664%
01/27 7.730% 7.375%
02/03 7.626% 7.286%
02/10 7.669% 7.445%
02/17 7.586% 7.190%
02/24 7.528% 6.971%
03/03 7.541% 7.016%
03/10 7.462% 6.930%
03/17 7.368% 6.790%
03/24 7.364% 6.727%
03/31 7.431% 6.892%
04/07 7.390% 6.744%
04/14 7.335% 6.606%
04/21 7.333% 6.535%
04/28 7.336% 6.696%
05/05 7.018% 6.279%
05/12 6.989% 6.299%
05/19 6.917% 6.288%
05/26 6.748% 6.036%
06/02 6.529% 5.634%
06/09 6.726% 6.070%
06/16 6.616% 5.821%
06/23 6.501% 5.676%
06/30 6.618% 5.858%
07/07 6.524% 5.611%
07/14 6.604% 5.782%
07/21 6.962% 6.090%
07/28 6.900% 6.053%
08/04 6.909% 6.034%
08/11 6.990% 6.199%
08/18 6.897% 6.218%
08/25 6.704% 5.968%
09/01 6.616% 5.891%
09/08 6.587% 5.903%
09/15 6.480% 5.808%
09/22 6.584% 5.920%
09/29 6.501% 5.920%
10/06 6.420% 5.787%
10/13 6.304% 5.714%
10/20 6.361% 5.780%
10/27 6.356% 5.706%
</TABLE>
SOURCE: BLOOMBERG FINANCIAL MARKETS
By your Funds' fiscal year-end of October 31, 1995, the economy remained
tempered by a host of moderate indicators: Gross Domestic Product (GDP) grew
4.0% over the 12-month period, inflation hovered in check near 3% for the year
(dipping to 2.8% by October), unemployment averaged a low 5.6%, and consumer
confidence remained high. These figures highlighted the U.S. economy's ability
to stifle inflation without choking off economic growth.
4
<PAGE>
The rate at which yields on the benchmark 30-year Treasury bond has been
falling has generally decreased since summer. After falling dramatically from a
high of 8.2% in the fourth quarter of 1994 to 6.6% by June 30, 1995, it dropped
to around 6.3% by October's end. Due to a moderate level of economic expansion
through July, the Fed halted rate cuts from August through October. During the
hiatus on rate cuts, long-term bond yields crept up to about 7% in early August,
then drifted back down as signs of economic weakness surfaced again. This
classic "push-pull" scenario of gently rising and falling rates was consistent
with the slow growth, low inflation "soft landing" the Fed had planned for the
U.S. economy all along.
The bond sectors have turned in a mixed performance heading into autumn.
Mortgage-backed security prices have backed off slightly from late summer
(prices decreased, yields increased) due to prepayment fears; adjustable rate
mortgages (ARMs) were showing minor losses in October, with only slightly
positive performance in Government Mortgages and GNMAs.* Homeowners typically
begin a wave of mortgage refinancing as interest rates come down. Foreign bonds
have begun to cool due to a sharply rising U.S. dollar. Government and corporate
debt obligations, however, continued to increase in value as your Funds' fiscal
year came to a close. With inflation under control, the real yield on bonds (the
nominal stated yield minus the current rate of inflation) continued to offer an
attractive return.
We strive to merit your confidence, and remain committed to providing
consistent performance. A discussion of each Portfolio's strategy over the
12-month period of the Annual Report follows.
GOVERNMENT MONEY FUND AND CASH RESERVES The Federal Reserve Board's last
increase in short-term interest rates in February 1995 was followed by a
moderate decrease in rates in July. Since then, the market has been buoyed by
low inflation reports, modest economic recovery, low commodity prices and a
rally in the U.S. dollar. These factors have encouraged international
participation in the U.S. domestic markets, and benefited securities with longer
maturities.
During this same time frame three-month Treasury Bill yields actually
increased from 5.14% to 5.49%. Both of our taxable money market fund yields have
risen by more than 68 basis points during the fiscal year.
*Source: IBC Bond Fund Report for November 3, 1995, reflecting bond prices and
performance through 10/31/95.
5
<PAGE>
We began extending the dollar-weighted average portfolio maturity in 1995,
once it became clear that the Fed was satisfied with inflationary trends. For
the fiscal year, Cash Reserves was extended from 46 to 61 days, and Government
Money Fund was extended from 48 to 81 days. The securities in Cash Reserves
continue to be of the highest quality as determined by our internal credit
criteria as well as the nationally recognized rating services. Therefore, as we
enter our new fiscal year we have not taken advantage of the significant yield
premium being offered by Japanese banks on short-term investments. We recognize
the dichotomy in yields developing as a direct result of the "Japanese Premium,"
however, we have chosen the conservative path and decided not to invest in
Japanese banks at this time.
ULTRA SHORT BOND FUND The greatest benefit in the fixed income markets has
been received in the longer end of the maturity spectrum as the yield on
Treasury Bonds with 30-year maturities declined from 7.97% at the end of October
1994 to 6.33% at the end of October 1995. The yield on 5-year Treasury Notes
declined from 7.48% to 5.81%, but 6-month Treasury Bills declined only 10 basis
points from 5.66% to 5.56%. As yields on long-term securities fell further than
those with shorter maturities, which caused the difference in yield between
short-term and longer-term bond funds to narrow, the yield on our Ultra Short
Bond Fund has become even more attractive.
We have been extending the weighted average portfolio maturity throughout this
time, and have focused our attention on capturing additional yield by purchasing
AAA-rated asset-backed securities of high quality issuers collateralized by
autos or similar hard assets. We have also purchased U.S. Government Agency and
Agency mortgage-backed securities with short final maturities as well as high
quality short-term corporate notes.
LIMITED MATURITY BOND FUND In response to the positive trend in the bond
market we gradually increased the portfolio's dollar-weighted average maturity
to 2.7 years from 1.9 years at the beginning of the fiscal year. This benefited
the Portfolio's performance as the market rally continued all the way through
October 1995. The magnitude of the rally is illustrated by two-year Treasury
note yields which declined from nearly 7.70% at calendar year end 1994 to 5.61%
on October 31, 1995. (When yields decrease, bond prices increase.) While the
market has come a long way already, we remain optimistic that the positive trend
6
<PAGE>
will continue, bolstered by low inflation and further possible interest rate
reductions by the Federal Reserve.
Corporate bonds remained expensive throughout the period with historically
narrow spreads relative to comparable Treasury bonds. Corporate bonds are
measured by their spreads (yield differentials) to Treasury securities. When
spreads are wide it pays to invest in corporate bonds. But if the difference in
the yield between corporate bonds and Treasury securities is small and then
widens or increases, corporate bonds have historically underperformed comparable
maturity Treasury securities. These tight spreads have been supported by strong,
and for the most part improving credit quality, moderate supply, voracious
investor appetite for new issues and a long track record of outperforming
Treasuries. We believe that as corporate earnings momentum slows, investors will
demand a higher premium for credit risk. We think this had just begun to happen
as the fiscal year ended and we will look to add to our corporate bond position
at more attractive prices.
GOVERNMENT INCOME FUND The 1995 bond market rally had a dramatic impact on
all sectors of the fixed income markets. Our strategy early in the year was to
invest heavily in the mortgage sector in response to slowing prepayment speeds
and attractive yield spreads over comparable maturity Treasuries. As interest
rates dropped during the year and prepayment speeds accelerated, we reduced our
exposure to high-coupon mortgage-backed securities in favor of longer-term U.S.
Treasuries. As a result, the dollar-weighted average portfolio maturity rose
from 6.6 years to 8.7 years over the fiscal year.
While we successfully managed the Fund through a difficult year for the
mortgage bond market, our significant commitment to this sector still had a
negative impact on performance due to the conditions of the mortgage security
market mentioned earlier. However, our management of the Portfolio's average
maturity and credit risk exposure helped offset the difficulties in the mortgage
bond market.
Sincerely,
/s/ Theresa A. Havell
Theresa A. Havell
President and Trustee
Neuberger&Berman Income Funds
7
<PAGE>
RATINGS SUMMARY
The following table shows the ratings distribution and dollar-weighted
average portfolio maturity for each Portfolio as of October 31, 1995. Ratings
distribution and average maturity may change in the future.
<TABLE>
<CAPTION>
DOLLAR-WEIGHTED
PERCENT OF TOTAL AVERAGE PORTFOLIO
NEUBERGER&BERMAN MOODY'S RATINGS INVESTMENTS MATURITY
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Government Money Portfolio Treasury 100.0% 81.3 days
Cash Reserves Portfolio Agency 10.1% 61.3 days
P-1 89.9
-----
100.0%
Ultra Short Bond Portfolio Treasury 2.9% 0.8 years
Agency 37.2
Aaa 23.3
Aa2, Aa3 9.5
P-1 27.1
-----
100.0%
Limited Maturity Bond Portfolio Treasury 36.7% 2.7 years
Agency 15.4
Aaa 11.9
Aa2, Aa3 4.8
A1, A2, A3 20.2
Baa2, Baa3 11.0
-----
100.0%
Government Income Portfolio Treasury 53.5% 8.7 years
Agency 44.5
Not Rated 2.0
-----
100.0%
</TABLE>
Treasury - Securities issued by the U.S. Treasury. These securities are not
rated by Moody's.
Agency - U.S. Government Agency Securities. These securities are not rated by
Moody's. Some agency securities are not backed by the full faith and credit of
the U.S. Government.
MOODY'S INVESTORS SERVICE, INC. (MOODY'S) CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or exceptionally stable margin, and
principal is secure. Although the various protective elements are likely to
change, the changes that can be visualized are most unlikely to impair the
fundamentally strong position of the issue.
Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as "high-grade
bonds." They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa-rated securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
that make the long-term risks appear somewhat larger than in Aaa-rated
securities.
A - Bonds rated A possess many favorable investment attributes and are
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment some time in the future.
8
<PAGE>
Baa - Bonds rated Baa are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
These bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
MOODY'S SHORT-TERM DEBT RATINGS:
Issuers rated PRIME-1 (P-1), or related supporting institutions, have a superior
capacity for repayment of short-term promissory obligations. PRIME-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well-established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternative liquidity.
NOTE: Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through Baa in its corporate bond ratings system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
9
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman October 31, 1995
- ----------------------------------------------------------------------
Ultra Short Bond Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Average Annual Total Return*
<TABLE>
<CAPTION>
Ultra Short 6-Month
Bond Fund T-Bill Index
<S> <C> <C>
1 Year +6.26% +5.98%
5 Year +4.75% +4.82%
Life of Fund +5.90% +5.97%
</TABLE>
Average Annual Total Return*
<TABLE>
<CAPTION>
Ultra Short 6-Month
Bond Fund T-Bill Index
<S> <C> <C>
11/07/86 10000 10000
10/31/87 10518 10600
1988 11271 11310
1989 12291 12300
1990 13272 13310
1991 14286 14190
1992 14920 14800
1993 15448 15280
1994 15750 15890
1995 16736 16840
</TABLE>
Life of Ultra Short Bond Fund is from 11/7/86.
Neuberger&Berman Management Inc. voluntarily bears certain operating expenses
of the Fund in excess of .65% per annum of average daily net assets. This
arrangement can be terminated upon 60 days' notice. Please see the Fund's
Financial Highlights for prior years' expense ratios. Returns would have been
lower had Neuberger&Berman Management Inc. not reimbursed these expenses.
*"Total Return" is calculated including reinvestment of all income dividends and
capital gain distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Fund and the return
on the investment both will fluctuate, and redemption proceeds may be higher or
lower than an investor's original cost.
The 6-Month Salomon Treasury Bill Index is an unmanaged index of the 6 most
recent 6-month Treasury bill securities. This index consists of a moving 6-month
average yield (not total return) of the 6-month Treasury bills. Please note that
indices do not take into account any fees and expenses of investing in the
individual securities that they track, and that individuals cannot invest
directly in any index. These data are derived by Neuberger&Berman Management
Inc. and include reinvestment of all dividends and capital gain distributions.
10
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman October 31, 1995
- ----------------------------------------------------------------------
Limited Maturity Bond Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Average Annual Total Return*
<TABLE>
<CAPTION>
Limited Maturity Merrill Lynch
Bond Fund Index
<S> <C> <C>
1 Year +8.32% +8.93%
5 Year +6.80% +7.02%
Life of Fund +7.15% +7.58%
</TABLE>
Average Annual Total Return*
<TABLE>
<CAPTION>
Limited Maturity Merrill Lynch
Bond Fund Index
<S> <C> <C>
06/09/86 10000 10000
10/31/86 10425 10500
1987 10767 11060
1988 11655 11900
1989 12769 13020
1990 13772 14160
1991 15272 15750
1992 16473 17040
1993 17641 18030
1994 17663 18250
1995 19132 19880
</TABLE>
Life of Limited Maturity Bond Fund is from 6/9/86.
Neuberger&Berman Management Inc. voluntarily bears certain operating expenses
of the Fund in excess of .70% per annum of average daily net assets. This
arrangement can be terminated upon 60 days' notice. Please see the Fund's
Financial Highlights for prior years' expense ratios. Returns would have been
lower had Neuberger&Berman Management Inc. not reimbursed these expenses.
*"Total Return" is calculated including reinvestment of all income dividends and
capital gain distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Fund and the return
on the investment both will fluctuate, and redemption proceeds may be higher or
lower than an investor's original cost.
The Merrill Lynch 1-3 Year Treasury Index is an unmanaged total return market
value index consisting of all coupon-bearing U.S. Treasury publicly placed debt
securities with maturities between 1 and 3 years. Please note that indices do
not take into account any fees and expenses of investing in the individual
securities that they track, and that individuals cannot invest directly in any
index. These data are derived by Neuberger&Berman Management Inc. and include
reinvestment of all dividends and capital gain distributions.
11
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman October 31, 1995
- ----------------------------------------------------------------------
Government Income Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Average Annual Total Return*
<TABLE>
<CAPTION>
Government Income Salomon Brothers
Fund Mortgage Index
<S> <C> <C>
1 Year +10.88% +14.51%
Life of Fund +4.75% +5.97%
</TABLE>
Average Annual Total Return*
<TABLE>
<CAPTION>
Government Income Salomon Brothers
Fund Mortgage Index
<S> <C> <C>
07/06/93 10,000 10,000
10/31/93 10,257 10,120
1994 10,044 9,990
1995 11,137 11,440
</TABLE>
Life of Government Income Fund is from 7/6/93.
Neuberger&Berman Management Inc. voluntarily bears certain operating expenses
of the Fund in excess of .75% per annum of average daily net assets. This
arrangement can be terminated upon 60 days' notice. Absent such reimbursement,
the average annual total returns for the period from 7/6/93 to 10/31/95 and for
the one year ended 10/31/95 would have been +3.21% and +9.36%, respectively.
*"Total Return" is calculated including reinvestment of all income dividends and
capital gain distributions. Results represent past performance and do not
indicate future results. The value of an investment in the Fund and the return
on the investment both will fluctuate, and redemption proceeds may be higher or
lower than an investor's original cost.
The Salomon Brothers Mortgage Index is an unmanaged total return index
consisting of all Agency pass-throughs, GNMA, FNMA, and FHLMC securities and
75-day, 30- and 15-year securities, and FHA and GNMA project loans. Please note
that indices do not take into account any fees and expenses of investing in the
individual securities that they track, and that individuals cannot invest
directly in any index. These data are derived by Neuberger&Berman Management
Inc. and include reinvestment of all dividends and capital gain distributions.
12
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees of
Neuberger&Berman Income Funds and
Shareholders of:
Neuberger&Berman Government Money Fund
Neuberger&Berman Cash Reserves
Neuberger&Berman Ultra Short Bond Fund
Neuberger&Berman Limited Maturity Bond Fund and
Neuberger&Berman Government Income Fund
We have audited the accompanying statements of assets and liabilities of the
Neuberger&Berman Government Money Fund, Neuberger&Berman Cash Reserves,
Neuberger&Berman Ultra Short Bond Fund, Neuberger&Berman Limited Maturity Bond
Fund, and Neuberger&Berman Government Income Fund, five of the series comprising
Neuberger&Berman Income Funds (the "Trust"), as of October 31, 1995, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Neuberger&Berman Income Funds at October 31,
1995, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
[SIGNATURE]
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 1, 1995
13
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT CASH
MONEY FUND RESERVES
-------------------------------
<S> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 308,485,084 $ 409,231,349
Deferred organization costs (Note A) -- --
Receivable for Trust shares sold 107,357 479,865
Receivable from administrator -- net (Note
B) -- --
-------------------------------
308,592,441 409,711,214
-------------------------------
LIABILITIES
Dividends payable 8,733 12,877
Payable for Trust shares redeemed 80,128 611,836
Payable to administrator -- net (Note B) 76,450 101,340
Accrued expenses 82,134 111,281
-------------------------------
247,445 837,334
-------------------------------
NET ASSETS at value $ 308,344,996 $ 408,873,880
-------------------------------
NET ASSETS consist of:
Par value $ 308,341 $ 408,888
Paid-in capital in excess of par value 308,032,819 408,479,535
Dividends in excess of net investment income -- --
Accumulated net realized gains (losses) on
investment 3,836 (14,543)
Net unrealized appreciation in value of
investment -- --
-------------------------------
NET ASSETS at value $ 308,344,996 $ 408,873,880
-------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 308,341,160 408,888,423
-------------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $1.00
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
October 31, 1995
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
LIMITED
ULTRA SHORT MATURITY GOVERNMENT
BOND FUND BOND FUND INCOME FUND
----------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 100,328,024 $ 307,911,418 $ 11,980,298
Deferred organization costs (Note A) -- -- 28,364
Receivable for Trust shares sold 365,154 308,830 5,110
Receivable from administrator -- net (Note
B) -- -- 9,081
----------------------------------------------------
100,693,178 308,220,248 12,022,853
----------------------------------------------------
LIABILITIES
Dividends payable 74,876 239,961 14,402
Payable for Trust shares redeemed 33,055 401,668 249
Payable to administrator -- net (Note B) 7,779 75,364 --
Accrued expenses 55,308 92,223 29,782
----------------------------------------------------
171,018 809,216 44,433
----------------------------------------------------
NET ASSETS at value $ 100,522,160 $ 307,411,032 $ 11,978,420
----------------------------------------------------
NET ASSETS consist of:
Par value $ 10,551 $ 30,567 $ 1,257
Paid-in capital in excess of par value 104,987,368 315,378,631 12,533,054
Dividends in excess of net investment income -- (148,192) (14,402)
Accumulated net realized gains (losses) on
investment (4,659,663) (8,470,909) (541,933)
Net unrealized appreciation in value of
investment 183,904 620,935 444
----------------------------------------------------
NET ASSETS at value $ 100,522,160 $ 307,411,032 $ 11,978,420
----------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 10,551,007 30,566,967 1,256,847
----------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $9.53 $10.06 $9.53
----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT CASH
MONEY FUND RESERVES
------------------------
<S> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $16,782,852 $20,224,570
------------------------
Expenses:
Administration fee (Note B) 776,885 886,218
Amortization of deferred organization and
initial offering expenses (Note A) -- --
Auditing fees 6,942 7,800
Custodian fees 10,000 10,000
Legal fees 1,594 6,764
Registration and filing fees 26,062 37,146
Service fees (Note B) 25,750 31,746
Shareholder reports 17,934 38,902
Shareholder servicing agent fees 100,279 201,430
Trustees' fees and expenses 27,375 30,714
Miscellaneous 731 3,968
Expenses from corresponding Portfolio (Note
A) 925,388 1,065,070
------------------------
Total expenses 1,918,940 2,319,758
Deduct -- expenses reimbursed by
administrator (Note B) -- (109,114)
------------------------
Total net expenses 1,918,940 2,210,644
------------------------
Net investment income 14,863,912 18,013,926
------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FINANCIAL FUTURES CONTRACTS, AND
FOREIGN CURRENCY TRANSACTIONS FROM CORRESPONDING
PORTFOLIO (NOTE A)
Net realized gain (loss) on investments 3,836 (2,998)
Net realized loss on financial futures
contracts -- --
Net realized gain (loss) on foreign currency
transactions -- --
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies -- --
Change in net unrealized depreciation of
financial futures contracts -- --
------------------------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions from corresponding
Portfolio (Note A) 3,836 (2,998)
------------------------
Net increase in net assets resulting from
operations $14,867,748 $18,010,928
------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
For the Year Ended October 31, 1995
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
LIMITED
ULTRA SHORT MATURITY GOVERNMENT
BOND FUND BOND FUND INCOME FUND
-----------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $5,474,360 $20,586,972 $ 819,016
-----------------------------------------
Expenses:
Administration fee (Note B) 233,700 775,191 27,413
Amortization of deferred organization and
initial offering expenses (Note A) -- -- 10,574
Auditing fees 7,800 7,800 7,800
Custodian fees 10,000 10,000 10,000
Legal fees 6,935 6,554 6,087
Registration and filing fees 26,662 36,212 25,028
Service fees (Note B) 9,038 29,447 981
Shareholder reports 24,629 37,909 13,856
Shareholder servicing agent fees 89,038 181,965 22,591
Trustees' fees and expenses 12,109 30,599 5,679
Miscellaneous 2,131 5,346 843
Expenses from corresponding Portfolio (Note
A) 359,923 997,847 110,067
-----------------------------------------
Total expenses 781,965 2,118,870 240,919
Deduct -- expenses reimbursed by
administrator (Note B) (196,865 ) (32,042) (161,316)
-----------------------------------------
Total net expenses 585,100 2,086,828 79,603
-----------------------------------------
Net investment income 4,889,260 18,500,144 739,413
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FINANCIAL FUTURES CONTRACTS, AND
FOREIGN CURRENCY TRANSACTIONS FROM CORRESPONDING
PORTFOLIO (NOTE A)
Net realized gain (loss) on investments (329,713 ) (3,704,772) (53,559)
Net realized loss on financial futures
contracts -- -- (1,768)
Net realized gain (loss) on foreign currency
transactions -- 91,601 (117,938)
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies 832,915 8,910,756 495,404
Change in net unrealized depreciation of
financial futures contracts -- -- 1,182
-----------------------------------------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions from corresponding
Portfolio (Note A) 503,202 5,297,585 323,321
-----------------------------------------
Net increase in net assets resulting from
operations $5,392,462 $23,797,729 $ 1,062,734
-----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT CASH
MONEY FUND RESERVES
Year Year
Ended Ended
October 31, October 31,
1995 1994 1995 1994
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 14,863,912 $ 6,621,261 $ 18,013,926 $ 9,589,175
Net realized gain (loss) on
investments sold, financial
futures contracts, and foreign
currency transactions from
corresponding Portfolio (Note A) 3,836 1,195 (2,998) (11,545)
Change in net unrealized
appreciation (depreciation) of
investments, financial futures
contracts, and translation of
assets and liabilities in foreign
currencies from corresponding
Portfolio (Note A) -- -- -- --
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 14,867,748 6,622,456 18,010,928 9,577,630
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (14,863,912) (6,621,261) (18,013,926) (9,589,175)
Net realized gain on investments (1,195) (3,815) -- (16,720)
Excess of net realized gain on
investments -- -- -- --
Tax return of capital -- -- -- --
------------------------------------------------------
Total distributions to shareholders (14,865,107) (6,625,076) (18,013,926) (9,605,895)
------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 714,547,173 345,675,970 550,538,145 505,715,252
Proceeds from reinvestment of
dividends and distributions 14,697,588 6,512,499 17,638,802 9,354,872
Payments for shares redeemed (672,444,324) (377,812,862) (471,218,211) (476,201,944)
------------------------------------------------------
Net increase (decrease) from Trust
share transactions 56,800,437 (25,624,393) 96,958,736 38,868,180
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 56,803,078 (25,627,013) 96,955,738 38,839,915
NET ASSETS:
Beginning of year 251,541,918 277,168,931 311,918,142 273,078,227
------------------------------------------------------
End of year $308,344,996 $251,541,918 $408,873,880 $311,918,142
------------------------------------------------------
Dividends in excess of net
investment income $ -- $ -- $ -- $ --
------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 714,547,173 345,675,970 550,538,145 505,715,252
Issued on reinvestment of dividends
and distributions 14,697,588 6,512,499 17,638,802 9,354,872
Redeemed (672,444,324) (377,812,862) (471,218,211) (476,201,944)
------------------------------------------------------
Net increase (decrease) in shares
outstanding 56,800,437 (25,624,393) 96,958,736 38,868,180
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY GOVERNMENT
BOND FUND BOND FUND INCOME FUND
Year Year Year
Ended Ended Ended
October 31, October 31, October 31,
1995 1994 1995 1994 1995 1994
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 4,889,260 $ 3,951,050 $ 18,500,144 $ 18,281,141 $ 739,413 $ 728,293
Net realized gain (loss) on
investments sold, financial
futures contracts, and foreign
currency transactions from
corresponding Portfolio (Note A) (329,713) (1,363,257) (3,613,171) (4,896,464) (173,265) (525,607)
Change in net unrealized
appreciation (depreciation) of
investments, financial futures
contracts, and translation of
assets and liabilities in foreign
currencies from corresponding
Portfolio (Note A) 832,915 (602,638) 8,910,756 (13,597,814) 496,586 (491,930)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 5,392,462 1,985,155 23,797,729 (213,137) 1,062,734 (289,244)
----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (4,889,260) (3,951,050) (18,500,144) (18,281,141) (615,814) (706,192)
Net realized gain on investments -- -- -- (1,811,658) -- (21,302)
Excess of net realized gain on
investments -- -- -- (116,101) -- --
Tax return of capital -- -- -- (75,623) (123,599) (24,208)
----------------------------------------------------------------------------------
Total distributions to shareholders (4,889,260) (3,951,050) (18,500,144) (20,284,523) (739,413) (751,702)
----------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 64,830,726 93,555,784 92,152,769 143,687,767 4,637,501 13,904,743
Proceeds from reinvestment of
dividends and distributions 4,098,222 3,385,603 15,500,744 16,374,729 591,769 624,976
Payments for shares redeemed (70,001,618) (98,293,924) (114,109,482) (188,322,764) (4,647,733) (10,741,553)
----------------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions (1,072,670) (1,352,537) (6,455,969) (28,260,268) 581,537 3,788,166
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (569,468) (3,318,432) (1,158,384) (48,757,928) 904,858 2,747,220
NET ASSETS:
Beginning of year 101,091,628 104,410,060 308,569,416 357,327,344 11,073,562 8,326,342
----------------------------------------------------------------------------------
End of year $100,522,160 $101,091,628 $307,411,032 $308,569,416 $ 11,978,420 $ 11,073,562
----------------------------------------------------------------------------------
Dividends in excess of net
investment income $ -- $ -- $ (148,192) $ -- $ (14,402) $ --
----------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 6,821,630 9,799,969 9,271,489 14,111,382 495,448 1,409,511
Issued on reinvestment of dividends
and distributions 431,350 355,582 1,560,924 1,617,641 63,370 64,841
Redeemed (7,374,945) (10,308,727) (11,509,263) (18,537,136) (502,947) (1,099,952)
----------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding (121,965) (153,176) (676,850) (2,808,113) 55,871 374,400
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman October 31, 1995
- ----------------------------------------------------------------------
Income Funds
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Government Money Fund ("Government
Money"), Neuberger&Berman Cash Reserves ("Cash Reserves"), Neuberger& Berman
Ultra Short Bond Fund ("Ultra Short"), Neuberger&Berman Limited Maturity Bond
Fund ("Limited Maturity"), and Neuberger&Berman Government Income Fund
("Government Income") (collectively, the "Funds") are separate series of
Neuberger&Berman Income Funds (the "Trust"), a Delaware business trust
organized pursuant to a Trust Instrument dated December 23, 1992. The Trust
is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended, and its shares are registered
under the Securities Act of 1933, as amended. The trustees of the Trust may
establish additional series or classes of shares without the approval of
shareholders.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding Portfolio of Income Managers
Trust (the "Portfolio") having the same investment objective and policies as
the Fund. The value of each Fund's investment in its corresponding Portfolio
reflects that Fund's proportionate interest in the net assets of that
Portfolio (100.00%, 100.00%, 98.30%, 96.33%, and 99.51%, for Government
Money, Cash Reserves, Ultra Short, Limited Maturity, and Government Income,
respectively, at October 31, 1995). The performance of each Fund is directly
affected by the performance of its corresponding Portfolio. The financial
statements of each Portfolio, including the schedule of investments, are
included elsewhere in this report and should be read in conjunction with each
Fund's financial statements.
It is the policy of Government Money and Cash Reserves to maintain a
continuous net asset value per share of $1.00; each Fund has adopted certain
investment, valuation, and dividend and distribution policies, which conform
to general industry practice, to enable it to do so. However, there is no
assurance either Fund will be able to maintain a stable net asset value per
share.
2) PORTFOLIO VALUATION: Investments in each Portfolio of Income Managers Trust
are valued by Income Managers Trust as indicated in the notes following the
Portfolios' schedule of investments.
3) FEDERAL INCOME TAXES: Each series of the Trust is treated as a separate
entity for Federal income tax purposes. It is the policy of each Fund of the
Trust to continue
20
<PAGE>
to qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of taxable income
(after reduction for any amounts available for Federal income tax purposes as
capital loss carryforwards) sufficient to relieve it from all, or
substantially all, Federal income taxes. Accordingly, each Fund paid no
Federal income taxes and no provision for Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net
of Portfolio expenses, daily on its investment in its corresponding
Portfolio. It is the policy of each Fund to declare dividends from net
investment income on each business day; such dividends are paid monthly.
Distributions from net realized capital gains, if any, will be declared and
paid annually after the end of the fiscal year. To the extent that each
Fund's net realized capital gains, if any, can be offset by capital loss
carryforwards ($11,545 and $2,998 expiring in 2002 and 2003, respectively,
for Cash Reserves, $762,839, $122,522, $774,592, $774,663, $533,438,
$1,362,347, and $329,262 expiring in 1996, 1997, 1998, 2000, 2001, 2002, and
2003, respectively, for Ultra Short, $4,713,841 and $3,757,068 expiring in
2002 and 2003, respectively, for Limited Maturity, and $487,780 and $54,153
expiring in 2002 and 2003, respectively, for Government Income, determined as
of October 31, 1995), it is the policy of each Fund not to distribute such
gains. During the year ended October 31, 1995, $185,088 was reclassified from
accumulated net realized losses on investment to paid-in capital for Ultra
Short due to the expiration of a capital loss carryforward. This change had
no effect on the net assets or net asset value per share.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by Government Income in
connection with its organization are being amortized on a straight-line basis
over a five-year period. At October 31, 1995, the unamortized balance of such
expenses amounted to $28,364.
6) EXPENSE ALLOCATION: The Funds bear all costs of operations. Expenses incurred
by the Trust with respect to any two or more Funds are allocated in
proportion to the net assets of such Funds, except where another more
appropriate allocation of expenses to each Fund can otherwise be made fairly.
Expenses directly attributable to a Fund are charged to that Fund.
21
<PAGE>
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION AND DISTRIBUTION FEES AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Neuberger&Berman Management Incorporated ("Management") as
its administrator under an Administration Agreement ("Agreement") dated as of
May 1, 1995. Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of .27% (.25% prior to May 1, 1995) of
that Fund's average daily net assets and indirectly pays for investment
management services through its investment in its corresponding Portfolio. (See
Note B of Notes to Financial Statements of the Portfolios.) The Agreement
provides that if with respect to any fiscal year of each Fund, its total
operating expenses plus its pro rata portion of its corresponding Portfolio's
operating expenses (including the fees payable to Management but excluding
interest, taxes, brokerage commissions, and extraordinary expenses) ("Operating
Expenses") exceed the most restrictive of the expense limitations imposed by
securities laws of the states in which such Fund's shares are qualified for
sale, the administration fees for that fiscal year will be reduced by the amount
of such excess, provided that Management has no obligation to reimburse the Fund
for any such expenses that exceed the administration fee. The most restrictive
expense limitation to which each Fund is currently subject is 2 1/2% of the
first $30 million of average daily net assets, 2% of the next $70 million of
average daily net assets, and 1 1/2% of any additional average daily net assets.
No reduction in the administration fee as a result of any state expense
limitation was required for the year ended October 31, 1995.
In addition, Management has voluntarily undertaken to reimburse Cash
Reserves, Ultra Short, Limited Maturity, and Government Income for their
Operating Expenses which exceed, in the aggregate, .65% per annum for Cash
Reserves and Ultra Short, .70% per annum for Limited Maturity, and .75% per
annum for Government Income of their average daily net assets. Each undertaking
is subject to termination by Management upon at least sixty (60) days' prior
written notice to the Fund. For the year ended October 31, 1995, such excess
expenses amounted to $109,114, $196,865, $32,042, and $161,316, for Cash
Reserves, Ultra Short, Limited Maturity, and Government Income, respectively.
All of the capital stock of Management is owned by individuals who are also
general partners of Neuberger&Berman, L.P. ("Neuberger"), a member firm of The
New York Stock Exchange and the sub-adviser to each Portfolio. Several
individuals who are officers and/or trustees of the Trust are also partners of
Neuberger and/or officers and/or directors of Management.
Under a service agreement, which was in effect through April 30, 1995, each
Fund had retained Management to provide certain shareholder, shareholder-related
22
<PAGE>
and other services not furnished by the shareholder servicing agent. Pursuant to
the service agreement each Fund paid Management a monthly fee at the annual rate
of .02% of the average daily net assets of the Fund as compensation for such
services. For the period from November 1, 1994 to April 30, 1995, Government
Money, Cash Reserves, Ultra Short, Limited Maturity, and Government Income paid
$25,750, $31,746, $9,038, $29,447, and $981, respectively, for such services. As
of May 1, 1995, the service agreement and the administration agreement were
combined into a single agreement with a fee of .27%.
Each Fund also has a distribution agreement with Management, which receives
no compensation therefor and no commissions for sales or redemptions of shares
of beneficial interest of each Fund.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended October 31, 1995, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
----------- ------------
<S> <C> <C>
GOVERNMENT MONEY $642,711,316 $601,644,238
CASH RESERVES 331,244,608 253,130,982
ULTRA SHORT 35,758,746 41,785,070
LIMITED MATURITY 36,429,615 62,811,410
GOVERNMENT INCOME 3,802,376 3,915,936
</TABLE>
23
<PAGE>
(This page has been left blank intentionally.)
24
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Government Money Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1995(1) 1994(1) 1993(1) 1992 1991 1990 1989 1988 1987 1986(2)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0003 $ 1.0000 $ .9997 $ 1.0000 $ 1.0002 $ 1.0002 $ 1.0003
--------------------------------------------------------------------------------------------------------
Income From
Investment
Operations
Net Investment
Income .0499 .0302 .0248 .0354 .0567 .0718 .0758 .0579 .0504 .0597
Net Gains or
Losses on
Securities -- -- -- -- .0003 .0003 (.0002) -- .0002 .0002
--------------------------------------------------------------------------------------------------------
Total From
Investment
Operations .0499 .0302 .0248 .0354 .0570 .0721 .0756 .0579 .0506 .0599
--------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from
net investment
income) (.0499) (.0302) (.0248) (.0354) (.0567) (.0718) (.0758) (.0579) (.0504) (.0597)
Distributions
(from capital
gains) -- -- -- (.0003) -- -- (.0001) (.0002) (.0002) (.0003)
--------------------------------------------------------------------------------------------------------
Total
Distributions (.0499) (.0302) (.0248) (.0357) (.0567) (.0718) (.0759) (.0581) (.0506) (.0600)
--------------------------------------------------------------------------------------------------------
Net Asset Value, End
of Year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0003 $ 1.0000 $ .9997 $ 1.0000 $ 1.0002 $ 1.0002
--------------------------------------------------------------------------------------------------------
Total Return+ +5.10% +3.07% +2.51% +3.62% +5.82% +7.42% +7.86% +5.97% +5.18% +6.17%
--------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End
of Year (in
millions) $ 308.3 $ 251.5 $ 277.2 $ 301.1 $ 246.5 $ 234.6 $ 184.3 $ 173.2 $ 266.4 $ 156.1
--------------------------------------------------------------------------------------------------------
Ratio of
Expenses to
Average Net
Assets .65% .72% .70% .66% .68% .74% .87% .79%(5) .75%(5) .75%(5)
--------------------------------------------------------------------------------------------------------
Ratio of Net
Investment
Income to
Average Net
Assets 5.00% 3.00% 2.48% 3.50% 5.66% 7.19% 7.55% 5.73%(5) 5.11%(5) 5.80%(5)
--------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
25
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 12,
1988(3)
TO OCTOBER
YEAR ENDED OCTOBER 31, 31,
1995(1) 1994(1) 1993(1) 1992 1991 1990 1989 1988
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 1.0000 $ 1.0001 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0001 $ 1.0000 $1.0000
----------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income .0529 .0327 .0263 .0363 .0600 .0766 .0866 .0401
Net Gains or Losses
on Securities -- -- .0002 .0002 -- -- .0001 --
----------------------------------------------------------------------------------------
Total From
Investment
Operations .0529 .0327 .0265 .0365 .0600 .0766 .0867 .0401
----------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.0529) (.0327) (.0263) (.0363) (.0600) (.0766) (.0866) (.0401)
Distributions (from
capital gains) -- (.0001) (.0002) (.0001) -- (.0001) -- --
----------------------------------------------------------------------------------------
Total Distributions (.0529) (.0328) (.0265) (.0364) (.0600) (.0767) (.0866) (.0401)
----------------------------------------------------------------------------------------
Net Asset Value, End of
Year $ 1.0000 $ 1.0000 $ 1.0001 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0001 $1.0000
----------------------------------------------------------------------------------------
Total Return+ +5.42% +3.33% +2.68% +3.69% +6.17% +7.94% +9.01% +4.08%(4)
----------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Year (in millions) $ 408.9 $ 311.9 $ 273.1 $ 261.7 $ 278.9 $ 278.2 $ 267.1 $ 140.9
----------------------------------------------------------------------------------------
Ratio of Expenses to
Average Net
Assets(5) .65% .65% .65% .65% .65% .65% .65% .60%(6)
----------------------------------------------------------------------------------------
Ratio of Net
Investment Income to
Average Net
Assets(5) 5.30% 3.31% 2.63% 3.63% 6.00% 7.66% 8.70% 7.54%(6)
----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
26
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MARCH 1, YEAR NOVEMBER 7,
1988 ENDED 1986(3) TO
TO OCTOBER FEBRUARY FEBRUARY
YEAR ENDED OCTOBER 31, 31, 29, 28,
1995(1) 1994(1) 1993(1) 1992 1991 1990 1989 1988 1988 1987
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 9.47 $ 9.64 $ 9.70 $ 9.83 $ 9.79 $ 9.83 $ 9.87 $ 9.93 $ 9.98 $ 9.99
---------------------------------------------------------------------------------------------------------------
Income From
Investment
Operations
Net Investment
Income .52 .35 .40 .56 .68 .79 .89 .47 .66 .18
Net Gains or
Losses on
Securities
(both realized
and unrealized) .06 (.17) (.06) (.13) .04 (.04) (.04) (.06) (.05) (.01)
---------------------------------------------------------------------------------------------------------------
Total From
Investment
Operations .58 .18 .34 .43 .72 .75 .85 .41 .61 .17
---------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from
net investment
income) (.52) (.35) (.40) (.56) (.68) (.79) (.89) (.47) (.66) (.18)
---------------------------------------------------------------------------------------------------------------
Net Asset Value, End
of Year $ 9.53 $ 9.47 $ 9.64 $ 9.70 $ 9.83 $ 9.79 $ 9.83 $ 9.87 $ 9.93 $ 9.98
---------------------------------------------------------------------------------------------------------------
Total Return+ +6.26% +1.96% +3.53% +4.44% +7.64% +7.98% +9.05% +4.20%(4) +6.31% +1.75%(4)
---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End
of Year (in
millions) $ 100.5 $ 101.1 $ 104.4 $ 103.3 $ 97.9 $ 85.8 $ 103.3 $ 101.0 $ 125.3 $ 66.7
---------------------------------------------------------------------------------------------------------------
Ratio of
Expenses to
Average Net
Assets(5) .65% .65% .65% .65% .65% .65% .65% .63%(6) .50% .50%(6)
---------------------------------------------------------------------------------------------------------------
Ratio of Net
Investment
Income to
Average Net
Assets(5) 5.44% 3.72% 4.09% 5.70% 6.97% 8.14% 9.06% 7.01%(6) 6.72% 6.03%(6)
---------------------------------------------------------------------------------------------------------------
Portfolio
Turnover
Rate(7) -- -- 115% 66% 89% 120% 85% 47% 121% 39%
---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
27
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MARCH 1, YEAR JUNE 9,
1988 ENDED 1986(3)
TO OCTOBER FEBRUARY TO FEBRUARY
YEAR ENDED OCTOBER 31, 31, 29, 28,
1995(1) 1994(1) 1993(1) 1992 1991 1990 1989 1988 1988 1987
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 9.88 $ 10.49 $ 10.40 $ 10.24 $ 9.91 $ 9.96 $ 9.88 $ 10.00 $ 10.17 $ 10.00
---------------------------------------------------------------------------------------------------------------
Income From
Investment
Operations
Net Investment
Income .62 .56 .58 .63 .71 .80 .82 .48 .69 .48
Net Gains or
Losses on
Securities
(both realized
and unrealized) .18 (.55) .14 .16 .33 (.05) .08 (.12) (.17) .17
---------------------------------------------------------------------------------------------------------------
Total From
Investment
Operations .80 .01 .72 .79 1.04 .75 .90 .36 .52 .65
---------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from
net investment
income) (.62) (.56) (.58) (.63) (.71) (.80) (.82) (.48) (.69) (.48)
Distributions
(from capital
gains) -- (.05) (.05) -- -- -- -- -- -- --
Distributions
(in excess of
capital gains) -- (.01) -- -- -- -- -- -- -- --
Tax return of
capital -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------
Total
Distributions (.62) (.62) (.63) (.63) (.71) (.80) (.82) (.48) (.69) (.48)
---------------------------------------------------------------------------------------------------------------
Net Asset Value, End
of Year $ 10.06 $ 9.88 $ 10.49 $ 10.40 $ 10.24 $ 9.91 $ 9.96 $ 9.88 $ 10.00 $ 10.17
---------------------------------------------------------------------------------------------------------------
Total Return+ +8.32% +0.13% +7.09% +7.87% +10.89% +7.85% +9.56% +3.76%(4) +5.39% +6.58%(4)
---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End
of Year (in
millions) $ 307.4 $ 308.6 $ 357.3 $ 273.0 $ 163.2 $ 101.3 $ 107.7 $ 133.5 $ 107.3 $ 69.6
---------------------------------------------------------------------------------------------------------------
Ratio of
Expenses to
Average Net
Assets(5) .70% .69% .65% .65% .65% .65% .65% .63%(6) .50% .50%(6)
---------------------------------------------------------------------------------------------------------------
Ratio of Net
Investment
Income to
Average Net
Assets(5) 6.21% 5.53% 5.49% 6.02% 7.07% 8.09% 8.33% 7.34%(6) 6.97% 6.71%(6)
---------------------------------------------------------------------------------------------------------------
Portfolio
Turnover
Rate(7) -- -- 114% 113% 88% 88% 121% 68% 158% 41%
---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
28
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Government Income Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
PERIOD FROM
JULY 6,
YEAR ENDED 1993(3) TO
OCTOBER 31, OCTOBER 31,
1995 1994 1993
---------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $ 9.22 $ 10.07 $ 10.00
---------------------------------------
Income From Investment Operations
Net Investment Income .66 .63 .19
Net Gains or Losses on Securities (both
realized and unrealized) .31 (.83) .07
---------------------------------------
Total From Investment Operations .97 (.20) .26
---------------------------------------
Less Distributions
Dividends (from net investment income) (.56) (.61) (.19)
Distributions (from capital gains) -- (.02) --
Tax return of capital (.10) (.02) --
---------------------------------------
Total Distributions (.66) (.65) (.19)
---------------------------------------
Net Asset Value, End of Year $ 9.53 $ 9.22 $ 10.07
---------------------------------------
Total Return+ +10.88% -2.08% +2.57%(4)
---------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 12.0 $ 11.1 $ 8.3
---------------------------------------
Ratio of Expenses to Average Net Assets(5) .76% .75% .75%(6)
---------------------------------------
Ratio of Net Investment Income to Average Net
Assets(5) 7.03% 6.52% 6.02%(6)
---------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
29
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman October 31, 1995
- ----------------------------------------------------------------------
Income Funds
1)The per share amounts and ratios which are shown reflect income and expenses,
including each Fund's proportionate share of its corresponding Portfolio's
income and expenses.
2)Data for the year ended October 31, 1986 includes the combined operations of
the Neuberger&Berman Government Money Fund and of Sentry Cash Management Fund
for the period from the date of the merger of the two funds (March 3, 1986).
The merger was accounted for under the purchase method of accounting.
3)The date investment operations commenced.
4)Not annualized.
5)After reimbursement of expenses by the administrator. Had the administrator
not undertaken such action the annualized ratios to average daily net assets
would have been:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER
31,
GOVERNMENT MONEY 1988 1987 1986
- ------------------------------------------
<S> <C> <C> <C>
Expenses .83% .90% .95%
-------------------
Net Investment Income 5.69% 4.96% 5.60%
-------------------
</TABLE>
After reimbursement of expenses by the administrator as described in Note B of
Notes to Financial Statements. Had the administrator not undertaken such
action the annualized ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
PERIOD
FROM
APRIL
12,
1988
TO
OCTOBER
YEAR ENDED OCTOBER 31, 31,
CASH RESERVES 1995 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses .68% .71% .76% .69% .69% .72% .83% 1.03%
------------------------------------------------------
Net Investment Income 5.27% 3.25% 2.52% 3.59% 5.96% 7.59% 8.52% 7.11%
------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD PERIOD
FROM FROM
MARCH NOVEMBER
1, 7,
1988 YEAR 1986
TO ENDED TO
OCTOBER FEBRUARY FEBRUARY
YEAR ENDED OCTOBER 31, 31, 29, 28,
ULTRA SHORT 1995 1994 1993 1992 1991 1990 1989 1988 1988 1987
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses .87% .86% .95% .87% .87% .81% .92% .89% .95% 1.50%
--------------------------------------------------------------------
Net Investment Income 5.22% 3.51% 3.79% 5.48% 6.75% 7.98% 8.79% 6.75% 6.27% 5.03%
--------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD PERIOD
FROM FROM
MARCH JUNE
1, 9,
1988 YEAR 1986
TO ENDED TO
OCTOBER FEBRUARY FEBRUARY
YEAR ENDED OCTOBER 31, 31, 29, 28,
LIMITED MATURITY 1995 1994 1993 1992 1991 1990 1989 1988 1988 1987
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses .71% .71% .73% .68% .72% .71% .77% .74% .78% 1.50%
--------------------------------------------------------------------
Net Investment Income 6.20% 5.51% 5.42% 5.99% 7.00% 8.03% 8.21% 7.23% 6.69% 5.71%
--------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
PERIOD
FROM
JULY
6,
1993
TO
YEAR ENDED OCTOBER
OCTOBER 31, 31,
GOVERNMENT INCOME 1995 1994 1993
- ------------------------------------------
<S> <C> <C> <C>
Expenses 2.29% 2.07% 2.50%
-------------------
Net Investment Income 5.50% 5.20% 4.27%
-------------------
</TABLE>
6)Annualized.
7)Ultra Short and Limited Maturity transferred all of their investment
securities into their respective Portfolios on July 2, 1993. After that date
each Fund invested only in its corresponding Portfolio and that Portfolio,
rather than the Fund, engaged in securities transactions. Therefore, after
that date no Fund had a portfolio turnover rate. Portfolio turnover rates for
the periods ending after July 2, 1993 are included elsewhere in
Neuberger&Berman Ultra Short Bond Portfolio's and Neuberger& Berman Limited
Maturity Bond Portfolio's Financial Highlights.
+ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each year
and assumes dividends and capital gain distributions, if any, were reinvested.
Results represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate and shares when redeemed may be
worth more or less than original cost. For each Fund (except Government Money
Fund), total return would have been lower if Management had not reimbursed
certain expenses.
31
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees of
Income Managers Trust and
Owners of Beneficial Interest of:
Neuberger&Berman Government Money Portfolio
Neuberger&Berman Cash Reserves Portfolio
Neuberger&Berman Ultra Short Bond Portfolio
Neuberger&Berman Limited Maturity Bond Portfolio and
Neuberger&Berman Government Income Portfolio
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Neuberger&Berman Government Money
Portfolio, Neuberger&Berman Cash Reserves Portfolio, Neuberger&Berman Ultra
Short Bond Portfolio, Neuberger&Berman Limited Maturity Bond Portfolio, and
Neuberger&Berman Government Income Portfolio, five of the series comprising
Income Managers Trust (the "Trust"), as of October 31, 1995, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers or other
appropriate auditing procedures where replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Income Managers Trust at October 31, 1995, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
[SIGNATURE]
Boston, Massachusetts /s/ ERNST & YOUNG LLP
December 1, 1995
32
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman October 31, 1995
- --------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD AT DATE
AMOUNT OF PURCHASE VALUE(1)
- ---------- -------------- ------------
<C> <S> <C> <C>
U.S. TREASURY
SECURITIES -- BACKED BY THE
FULL FAITH AND CREDIT OF THE
U.S. GOVERNMENT (99.6%)
$3,460,000 U.S. Treasury Bills, due
11/2/95 5.59% $ 3,459,478
17,845,000 U.S. Treasury Bills, due
11/9/95 5.56-5.59% 17,823,556
10,000,000 U.S. Treasury Notes, 9.50%,
due 11/15/95 5.70% 10,013,972
240,000 U.S. Treasury Notes, 8.50%,
due 11/15/95 6.03% 240,218
23,730,000 U.S. Treasury Bills, due
11/16/95 5.57-5.59% 23,676,394
35,070,000 U.S. Treasury Bills, due
11/24/95 5.57-5.60% 34,948,304
1,340,000 U.S. Treasury Bills, due
11/30/95 5.64-5.85% 1,333,962
10,000,000 U.S. Treasury Notes, 4.25%,
due 11/30/95 5.85% 9,987,606
9,900,000 U.S. Treasury Bills, due
12/7/95 5.79-5.81% 9,844,875
14,265,000 U.S. Treasury Bills, due
12/14/95 5.48-5.81% 14,172,612
19,085,000 U.S. Treasury Bills, due
1/4/96 5.48-5.69% 18,901,937
9,925,000 U.S. Treasury Bills, due
1/11/96 5.62-5.67% 9,818,908
6,210,000 U.S. Treasury Notes, 9.25%,
due 1/15/96 5.71-5.74% 6,253,069
4,350,000 U.S. Treasury Bills, due
1/18/96 5.40-5.65% 4,299,174
16,000,000 U.S. Treasury Bills, due
1/25/96 5.69% 15,793,733
10,670,000 U.S. Treasury Bills, due
2/8/96 5.43-5.70% 10,509,820
25,000,000 U.S. Treasury Notes, 8.875%,
due 2/15/96 5.65% 25,223,415
10,000,000 U.S. Treasury Bills, due
2/22/96 5.66% 9,829,558
7,000,000 U.S. Treasury Bills, due
2/29/96 5.57% 6,875,400
2,220,000 U.S. Treasury Bills, due
3/7/96 5.50% 2,178,453
10,000,000 U.S. Treasury Bills, due
3/21/96 5.49% 9,792,417
10,000,000 U.S. Treasury Bills, due
4/4/96 5.60% 9,768,792
570,000 U.S. Treasury Bills, due
4/11/96 5.53% 556,380
9,000,000 U.S. Treasury Notes, 9.375%,
due 4/15/96 5.60% 9,148,898
23,915,000 U.S. Treasury Bills, due
4/18/96 5.51-5.56% 23,317,414
19,200,000 U.S. Treasury Notes, 7.625%,
due 4/30/96 5.65% 19,381,000
------------
TOTAL U.S. TREASURY SECURITIES 307,149,345
Cash, receivables and other
assets, less liabilities
(0.4%) 1,335,741
------------
TOTAL NET ASSETS (100.0%) $308,485,086
------------
</TABLE>
33
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(1)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
BANKERS' ACCEPTANCES (2.6%)
$5,000,000 First National Bank of
Chicago, 5.56%, due 3/5/96 P-1 A-1 $ 4,903,472
6,000,000 Republic National Bank, 5.48%,
due 3/15/96 P-1 A-1+ 5,876,700
------------
TOTAL BANKERS' ACCEPTANCES 10,780,172
------------
CORPORATE COMMERCIAL PAPER
(65.4%)
1,290,000 Emerson Electric Co., 5.73%,
due 11/1/95 P-1 A-1+ 1,290,000
5,000,000 Cargill, Inc., 5.67%, due
11/6/95 P-1 A-1+ 4,996,063
10,000,000 Export Development Corp.,
5.72%, due 11/7/95 P-1 A-1+ 9,990,467
9,000,000 GTE North Inc., 5.71% & 5.75%,
due 11/8/95 & 11/9/95 P-1 A-1+ 8,989,170
10,000,000 du Pont (E. I.) de Nemours &
Co., 5.58%, due 11/10/95 P-1 A-1+ 9,986,050
6,000,000 Hanson Finance (UK) PLC, 5.67%
& 5.68%, due 11/6/95 &
11/10/95 P-1 A-1 5,994,638
3,400,000 Lubrizol Corp., 5.74%, due
11/13/95 P-1 A-1+ 3,393,495
9,000,000 United Parcel Service of
America, 5.70%, due 11/13/95 P-1 A-1+ 8,982,900
3,000,000 Colgate-Palmolive Co., 5.72%,
due 11/15/95 P-1 A-1 2,993,327
5,000,000 Sara Lee Corp., 5.70%, due
11/16/95 P-1 A-1+ 4,988,125
7,000,000 BellSouth Telecommunications
Inc., 5.72%, due 11/17/95 P-1 A-1+ 6,982,204
10,000,000 Nalco Chemical Co., 5.73%, due
11/22/95 P-1 A-1 9,966,575
5,000,000 Pitney Bowes Credit Corp.,
5.64%, due 12/4/95 P-1 A-1+ 4,974,150
6,000,000 Akzo Nobel America Inc.,
5.70%, due 12/5/95 P-1 A-1 5,967,700
10,000,000 Ameritech Capital Funding
Corp., 5.55%, due 12/11/95 P-1 A-1+ 9,938,333
5,000,000 ENEL, Inc., 5.65%, due
12/14/95 P-1 A-1+ 4,966,257
9,800,000 National Australia Funding
Delaware Inc., 5.645% & 5.69%,
due 12/15/95 & 1/5/96 P-1 A-1+ 9,715,515
</TABLE>
34
<PAGE>
October 31, 1995
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(1)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$16,000,000 Swedish Export Credit Corp.,
5.67%-5.71%, due
12/5/95-1/5/96 P-1 A-1+ $ 15,871,386
6,000,000 Morgan Stanley Group Inc.,
5.72%, due 1/12/96 P-1 A-1+ 5,931,360
10,000,000 Glaxo Wellcome PLC, 5.61% &
5.70%, due 12/18/95 & 1/16/96 P-1 A-1+ 9,903,213
5,000,000 McKenna Triangle National
Corp., 5.68%, due 1/19/96 P-1 A-1+ 4,937,678
5,760,000 AON Corp., 5.63%-5.81%, due
11/7/95-1/23/96 P-1 A-1+ 5,712,892
5,035,000 Finnish Export Credit Ltd.,
5.71%, due 1/23/96 P-1 A-1+ 4,968,716
12,375,000 Queensland Treasury Corp.,
5.66% & 5.70%, due 1/12/96 &
1/24/96 P-1 A-1+ 12,224,214
5,000,000 Southwestern Bell Capital
Corp., 5.58%, due 1/24/96 P-1 A-1 4,934,900
3,000,000 SmithKline Beecham Corp.,
5.62%, due 1/30/96 P-1 A-1 2,957,850
12,302,000 Norfolk Southern Corp., 5.65%
& 5.68%, due 11/21/95 &
1/31/96 P-1 A-1+ 12,204,188
5,000,000 Abbey National North America
Corp., 5.64%, due 2/1/96 P-1 A-1+ 4,927,933
3,000,000 Golden Peanut Co., 5.67%, due
2/2/96 P-1 A-1+ 2,956,057
2,000,000 Campbell Soup Co., 5.67%, due
2/6/96 P-1 A-1+ 1,969,445
5,000,000 Province of Alberta, Canada,
5.58%, due 2/26/96 P-1 A-1+ 4,909,325
4,000,000 American Express Credit Corp.,
5.63%, due 3/1/96 P-1 A-1 3,924,308
10,130,000 Canadian Wheat Board, 5.60%,
due 11/27/95 & 3/8/96 P-1 A-1+ 10,025,563
8,000,000 Hitachi America, Ltd.,
5.61%-5.75%, due
11/30/95-3/15/96 P-1 A-1+ 7,914,676
7,000,000 Lilly (Eli) & Co., 5.54%, due
3/19/96 P-1 A-1+ 6,850,266
</TABLE>
35
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(1)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$20,000,000 Kingdom of Sweden,
5.58%-5.70%, due
1/31/96-3/22/96 P-1 A-1+ $ 19,627,568
6,000,000 Goldman Sachs Group, L.P.,
5.60%, due 2/16/96 & 4/5/96 P-1 A-1+ 5,862,022
5,000,000 Ontario Hydro, Canada, 5.59%,
due 4/9/96 P-1 A-1+ 4,875,778
------------
TOTAL CORPORATE COMMERCIAL
PAPER 267,604,307
------------
ADJUSTABLE RATE REVENUE BONDS
(2.1%)
4,300,000 Harris Co. (TX) Hlth. Fac.
Dev. Corp. SCH Hlth. Care Sys.
(Sisters of Charity of the
Incarnate Word, Houston,
Texas), Ser. 1993, 5.925%, due
11/15/95 P-1 A-1+ 4,300,000
4,400,000 Louisiana Pub. Fac. Au. SCH
Hlth. Care Sys. (Sisters of
Charity of the Incarnate Word,
Houston, Texas), Ser. 1993,
5.925%, due 11/15/95 P-1 A-1+ 4,400,000
------------
TOTAL ADJUSTABLE RATE REVENUE
BONDS 8,700,000
------------
ASSET-BACKED SECURITIES (4.6%)
5,000,000 CIESCO, L.P., 5.70%, due
11/28/95 P-1 A-1+ 4,978,625
9,000,000 Asset Securitization
Cooperative Corp., 5.72% &
5.73%, due 11/28/95 & 11/29/95 P-1 A-1+ 8,960,390
5,000,000 Corporate Receivables Corp.,
5.70%, due 1/19/96 P-1 A-1 4,937,458
------------
TOTAL ASSET-BACKED SECURITIES 18,876,473
------------
TIME DEPOSITS (1.2%)
5,000,000 Westdeutsche Landesbank
Girozentrale, Grand Cayman
Branch, 5.875%, due 12/12/95 P-1 A-1+ 5,000,000
------------
YANKEE CERTIFICATES OF DEPOSIT
(13.5%)
10,000,000 Union Bank of Switzerland,
Yankee C.D., 5.75%, due
12/28/95 P-1 A-1+ 10,002,356
15,000,000 Societe Generale, Yankee C.D.,
5.86% & 6.21%, due 11/6/95 &
1/22/96 P-1 A-1+ 15,001,010
</TABLE>
36
<PAGE>
October 31, 1995
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(1)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$5,000,000 Bank of Montreal, Yankee C.D.,
5.79%, due 1/23/96 P-1 A-1+ $ 5,000,114
5,000,000 Landesbank Hessen-Thueringen
Girozentrale, Yankee C.D.,
5.79%, due 1/26/96 P-1 A-1+ 5,000,118
10,000,000 Bank of Nova Scotia, Yankee
C.D., 5.77% & 5.81%, due
11/13/95 & 1/31/96 P-1 A-1+ 10,000,327
5,000,000 Bayerische Hypotheken-und
Wechsel-Bank, Yankee C.D.,
5.78%, due 4/12/96 P-1 A-1+ 5,000,660
5,000,000 Bayerische Landesbank
Girozentrale, Yankee C.D.,
5.95%, due 7/22/96 P-1 A-1+ 4,995,230
------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT 54,999,815
------------
MEDIUM-TERM NOTES (0.1%)
500,000 Westdeutsche Landesbank
Girozentrale, 6.75%, due
3/13/96 P-1 A-1+ 501,396
------------
U.S. GOVERNMENT AGENCY
SECURITIES (10.1%)
699,000 Federal Home Loan Mortgage
Corp., Discount Notes, 5.85%,
due 11/1/95 AGY AGY 699,000
10,000,000 Federal Home Loan Bank, 5.56%,
due 2/14/96 AGY AGY 9,837,833
24,360,000 Student Loan Marketing
Association, Floating Rate
Notes, 5.65%-5.67%, due
12/14/95-3/14/96 AGY AGY 24,360,000
6,390,000 Federal National Mortgage
Association, Discount Notes,
5.44%-5.50%, due
12/27/95-4/5/96 AGY AGY 6,291,606
------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES 41,188,439
------------
TOTAL INVESTMENTS (99.6%) 407,650,602
Cash, receivables and other
assets, less liabilities
(0.4%) 1,580,749
------------
TOTAL NET ASSETS (100.0%) $409,231,351
------------
</TABLE>
37
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ----------- ----------- --------- -------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(3.0%)
$3,000,000 U.S. Treasury Notes, 7.50%,
due 1/31/97 (COST $3,014,956) TSY TSY $ 3,067,500
-------------
U.S. GOVERNMENT AGENCY
SECURITIES (27.2%)
2,000,000 Federal National Mortgage
Association, Medium-Term
Notes, 6.37%, due 11/14/95 AGY AGY 2,000,760
1,250,000 Chattanooga Valley Corp., TVA,
Zero Coupon First Mortgage
Bonds, due 1/1/96 AGY AGY 1,239,062
3,000,000 Federal Home Loan Mortgage
Corp., Debentures, 6.84%, due
2/28/96 AGY AGY 3,012,870
4,000,000 Student Loan Marketing
Association, Floating Rate
Notes, 6.08%, due 7/1/96 AGY AGY 4,004,800
2,000,000 Federal Home Loan Bank, Bonds,
Ser. CZ-1996, 5.10%, due
7/8/96 AGY AGY 1,995,040
1,300,000 Federal Home Loan Mortgage
Corp., Notes, 7.555%, due
2/10/97 AGY AGY 1,329,406
3,000,000 Federal National Mortgage
Association, Notes, 7.50%, due
2/12/97 AGY AGY 3,013,020
250,000 Federal Home Loan Bank,
Floating Rate Notes, 4.933%,
due 1/29/98 AGY AGY 244,063
500,000 Federal Home Loan Bank,
Floating Rate Notes, 4.958%,
due 2/25/98 AGY AGY 488,125
2,400,000 Federal Home Loan Mortgage
Corp., Debentures, 6.95%, due
5/25/98 AGY AGY 2,401,584
2,000,000 Federal Home Loan Mortgage
Corp., Debentures, 6.50%, due
9/7/98 AGY AGY 2,000,620
2,000,000 Federal Home Loan Bank, Bonds,
Ser. TL-1998, 6.64%, due
9/15/98 AGY AGY 2,010,120
2,000,000 Federal Home Loan Bank, Bonds,
Ser. IU-2000, 7.30%, due
8/10/00 AGY AGY 2,002,780
2,000,000 Federal Home Loan Mortgage
Corp., Debentures, 6.98%, due
9/13/00 AGY AGY 2,003,120
-------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $27,687,148) 27,745,370
-------------
</TABLE>
38
<PAGE>
October 31, 1995
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ----------- ----------- --------- -------------
<C> <S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES
(11.1%)
FEDERAL HOME LOAN MORTGAGE CORP.
$ 76,526 REMIC CMO, Ser. 1078-GA,
6.50%, due 2/15/96 AGY AGY $ 76,402
695,814 REMIC ARM CMO, Ser. 1270-F,
6.2875%, due 5/15/97 AGY AGY 695,660
73,908 Mortgage Participation
Certificates, 11.50%, due
2/1/00 & 5/1/00 AGY AGY 78,384
3,794,329 Gold Balloon Payment
Certificates, 6.50%, due
3/1/97-10/1/00 AGY AGY 3,817,792
132,384 Mortgage Participation
Certificates, 10.50%, due
6/1/00-11/1/00 AGY AGY 138,846
2,006,901 Gold Balloon Payment
Certificates, 7.50%, due
11/1/01 AGY AGY 2,048,162
498,314 ARM Certificates, 6.875%, due
12/1/16 AGY AGY 500,494
653,136 ARM Certificates, 7.125%, due
3/1/17 AGY AGY 656,402
FEDERAL NATIONAL MORTGAGE ASSOCIATION
285,596 REMIC Trust, Ser. 1991-30,
Class 30-E, 8.50%, due 3/25/09 AGY AGY 284,628
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
3,000,000 MIDGET Pass-Through
Certificates, 7.50%, TBA, 15
Year Maturity AGY AGY 3,074,040
-------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $11,342,429) 11,370,810
-------------
ASSET-BACKED SECURITIES
(15.5%)
67,638 General Motors Acceptance
Corp. Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1991-C,
Class A, 5.70%, due 12/15/96 Aaa AAA 67,618
2,788,952 General Motors Acceptance
Corp. Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1992-D,
5.55%, due 5/15/97 Aaa AAA 2,786,442
</TABLE>
39
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ----------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 227,719 General Motors Acceptance
Corp. Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1992-F,
Class A, 4.50%, due 9/15/97 Aaa AAA $ 225,852
1,220,575 Daimler-Benz Auto Grantor
Trust, Ser. 1993-A, 3.90%, due
10/15/98 Aaa AAA 1,203,853
284,419 USAA Auto Loan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1993-1,
3.90%, due 3/15/99 Aaa AAA 280,949
2,226,578 General Motors Acceptance
Corp. Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1995-A,
7.15%, due 3/15/00 Aaa AAA 2,258,062
1,798,347 Ford Credit Grantor Trust,
Ser. 1995-A, Class A, 5.90%,
due 5/15/00 Aaa AAA 1,802,015
4,300,000 Caterpillar Financial Asset
Trust, Ser. 1995-A, Class A-2,
6.10%, due 8/25/01 Aaa AAA 4,306,450
2,901,142 Chase Manhattan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1995-A,
6.00%, due 9/17/01 Aaa AAA 2,905,929
-------------
TOTAL ASSET-BACKED SECURITIES
(COST $15,788,759) 15,837,170
-------------
BANKS & FINANCIAL INSTITUTIONS
(11.9%)
2,000,000 Citibank Canada, Domestic
C.D., 7.62%, due 1/9/96 P-1 A-1 2,005,120
3,000,000 Westdeutsche Landesbank
Girozentrale, Medium-Term
Notes, 6.75%, due 3/13/96 Aa2 AA+ 3,009,690
3,000,000 Trust Company Bank, Atlanta,
Georgia, Medium-Term Bank
Notes, 6.50%, due 3/21/96 Aa2 AA 3,008,610
4,000,000 Deutsche Bank A.G., Yankee
C.D., 7.498%, due 1/21/97 Aaa AAA 4,065,480
-------------
TOTAL BANKS & FINANCIAL
INSTITUTIONS (COST
$12,038,032) 12,088,900
-------------
</TABLE>
40
<PAGE>
October 31, 1995
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ----------- ----------- --------- -------------
<C> <S> <C> <C> <C>
CORPORATE DEBT SECURITIES
(16.2%)
$4,000,000 Hanson Overseas B.V., Yankee
Guaranteed Senior Notes,
5.50%, due 1/15/96 P-1 A-1 $ 3,997,640
4,000,000 USAA Capital Corp.,
Medium-Term Notes, 4.70%, due
3/4/96 P-1 A-1+ 3,951,200
1,000,000 British Telecom Finance B.V.,
Guaranteed Bonds, 7.625%, due
9/30/96 Aaa AAA 1,015,040
3,600,000 Toyota Motor Credit Corp.,
Floating Rate Medium-Term
Notes, 5.62%, due 6/13/97 Aaa AAA 3,580,020
4,000,000 du Pont (E.I.), de Nemours &
Co., Medium-Term Notes, Ser.
F, 6.04%, due 12/16/97 Aa3 AA- 4,002,000
-------------
TOTAL CORPORATE DEBT
SECURITIES (COST $16,597,254) 16,545,900
-------------
CORPORATE COMMERCIAL PAPER
(18.2%)
4,500,000 Marsh & McLennan Cos., Inc.,
5.87%, due 11/1/95 P-1 A-1+ 4,500,000
3,270,000 Oklahoma Gas & Electric Co.,
5.85%, due 11/1/95 P-1 A-1+ 3,270,000
4,000,000 Ford Motor Credit Co., 5.73%,
due 11/2/95 P-1 A-1 3,999,364
3,000,000 Eksportfinans A/S, 5.75%, due
11/6/95 P-1 A-1+ 2,997,604
3,840,000 Cargill, Inc., 5.70%, due
11/20/95 P-1 A-1+ 3,828,448
-------------
TOTAL CORPORATE COMMERCIAL
PAPER (COST $18,595,416) 18,595,416(4)
-------------
TOTAL INVESTMENTS (103.1%)
(COST $105,063,994) 105,251,066(5)
Liabilities, less cash,
receivables and other assets
[(3.1%)] (3,185,460)
-------------
TOTAL NET ASSETS (100.0%) $ 102,065,606
-------------
</TABLE>
41
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(36.4%)
$1,500,000 U.S. Treasury Notes, 6.75%,
due 5/31/97 TSY TSY $ 1,524,555
1,820,000 U.S. Treasury Notes, 7.375%,
due 11/15/97 TSY TSY 1,879,587
11,660,000 U.S. Treasury Notes, 7.25%,
due 2/15/98 TSY TSY 12,046,296
36,835,000 U.S. Treasury Notes, 6.50%,
due 4/30/99 TSY TSY 37,698,780
15,865,000 U.S. Treasury Notes, 7.75%,
due 1/31/00 TSY TSY 17,003,314
3,500,000 U.S. Treasury Notes, 6.75%,
due 4/30/00 TSY TSY 3,626,350
41,660,000 U.S. Treasury Notes, 6.25%,
due 5/31/00 TSY TSY 42,376,552
------------
TOTAL U.S. TREASURY SECURITIES
(COST $114,072,254) 116,155,434
------------
U.S. GOVERNMENT AGENCY
SECURITIES (10.6%)
765,000 Federal Home Loan Mortgage
Corp., Discount Notes, 5.63%,
due 11/13/95 AGY AGY 763,447
17,545,000 Federal National Mortgage
Association, Discount Notes,
5.61%, due 11/17/95 AGY AGY 17,498,330
6,860,000 Federal Home Loan Mortgage
Corp., Discount Notes, 5.64%,
due 11/20/95 AGY AGY 6,838,528
6,685,000 Federal Farm Credit Bank,
Discount Notes, 5.58%, due
12/7/95 AGY AGY 6,646,561
2,210,000 Federal National Mortgage
Association, Discount Notes,
5.58%, due 12/7/95 AGY AGY 2,197,293
------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $33,949,765) 33,944,159
------------
MORTGAGE-BACKED SECURITIES
(4.7%)
FEDERAL HOME LOAN MORTGAGE CORP.
267,284 Mortgage Participation
Certificates, 10.50%, due
10/1/00 & 12/1/00 AGY AGY 280,333
838,834 Mortgage Participation
Certificates, 8.50%, due
10/1/01 AGY AGY 861,692
302,559 ARM Certificates, 7.00%, due
1/1/17 AGY AGY 303,883
1,079,173 ARM Certificates, 7.125%, due
2/1/17 & 3/1/17 AGY AGY 1,084,439
467,213 ARM Certificates, 7.25%, due
10/1/17 AGY AGY 474,222
</TABLE>
42
<PAGE>
October 31, 1995
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
$ 393,211 Balloon Payment, Certificates,
9.00%, due 3/1/97-8/1/98 AGY AGY $ 404,886
426,843 Balloon Payment, Certificates,
8.50%, due 9/1/97-11/1/98 AGY AGY 438,581
1,289,858 Mortgage Participation
Certificates, 7.00%, due
9/1/03 AGY AGY 1,307,258
1,008,907 REMIC Floating Rate CMO, Ser.
1992-59F, 6.30625%, due
8/25/06 AGY AGY 1,010,259
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
246,557 Pass-Through Certificates,
12.00%, due 5/15/12-3/15/15 AGY AGY 281,075
6,028,694 Pass-Through Certificates,
10.00%, due 9/15/15-6/15/20 AGY AGY 6,584,479
1,749,174 Pass-Through Certificates,
9.50%, due 8/15/09-4/15/22 AGY AGY 1,869,429
------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $14,687,575) 14,900,536
------------
ASSET-BACKED SECURITIES
(10.8%)
336,509 General Motors Acceptance
Corp. Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1991-C,
Class A, 5.70%, due 12/15/96 Aaa AAA 336,408
298,635 General Motors Acceptance
Corp. Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1992-D,
5.55%, due 5/15/97 Aaa AAA 298,366
561,438 Nissan Auto Receivables
Grantor Trust, Automobile Loan
Pass-Through Certificates,
Ser. 1992-B, 4.30%, due
9/15/97 Aaa AAA 556,497
506,222 World Omni Financial Corp.
Grantor Trust, Automobile Loan
Pass-Through Certificates,
Ser. 1992-A, 4.75%, due
1/15/98 Aaa AAA 502,932
824,461 Volvo Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1992-A,
4.65%, due 6/15/98 Aaa AAA 817,453
2,441,151 Daimler-Benz Auto Grantor
Trust, Ser. 1993-A, 3.90%, due
10/15/98 Aaa AAA 2,407,707
</TABLE>
43
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$2,237,684 Premier Auto Trust, Ser.
1993-3, Class A-3, 4.90%, due
12/15/98 Aaa AAA $ 2,215,307
3,000,000 Ford Credit Master Trust,
Automobile Loan Certificates,
Ser. 1992-1, 6.875%, due
1/15/99 Aaa AAA 3,046,650
5,000,000 Ford Credit Auto Loan Master
Trust, Automobile Loan
Certificates, Ser. 1992-2,
7.375%, due 4/15/99 Aaa AAA 5,121,250
2,953,121 Case Equipment Loan Trust,
Ser. 1993-B, Class A-1, 4.30%,
due 5/15/99 Aaa AAA 2,930,973
5,711,365 Nissan Auto Receivables
Grantor Trust, Automobile Loan
Pass-Through Certificates,
Ser. 1994-A, Class A, 6.45%,
due 9/15/99 Aaa AAA 5,744,148
3,447,229 Case Equipment Loan Trust,
Ser. 1995-A, 7.30%, due
3/15/02 Aaa AAA 3,508,797
7,000,000 NationsBank Credit Card Master
Trust, Ser. 1995-1, Class A,
6.45%, due 4/15/03 Aaa AAA 7,095,340
------------
TOTAL ASSET-BACKED SECURITIES
(COST $34,382,356) 34,581,828
------------
BANKS & FINANCIAL INSTITUTIONS
(13.5%)
5,000,000 Union Bank of Finland Ltd.,
Global Notes, 5.25%, due
6/15/96 A2 BBB 4,976,950
5,000,000 State Bank of New South Wales,
Eurodollar Notes, 8.50%, due
7/1/96 Aa2 AA 5,078,100
10,000,000 Society National Bank, Bank
Notes, 6.875%, due 10/15/96 Aa3 A 10,089,200
5,000,000 BankAmerica Corp., Medium-Term
Notes, 6.875%, due 11/20/97 A2 A+ 5,078,100
10,000,000 Chemical Banking Corp.,
Corporate Notes, 6.625%, due
1/15/98 A2 A 10,098,200
8,000,000 First USA Bank, Medium-Term
Deposit Notes, 6.375%, due
10/23/00 Baa2 BBB- 7,947,840
------------
TOTAL BANKS & FINANCIAL
INSTITUTIONS (COST
$43,740,452) 43,268,390
------------
</TABLE>
44
<PAGE>
October 31, 1995
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ---------- ----------- --------- ------------
<C> <S> <C> <C> <C>
CORPORATE DEBT SECURITIES
(23.0%)
$3,000,000 General Electric Capital
Corp., Medium-Term Notes,
8.67%, due 12/15/95 Aaa AAA $ 3,009,540
5,000,000 Hanson Overseas B.V., Yankee
Guaranteed Senior Notes,
5.50%, due 1/15/96 A2 A+ 4,997,050
10,000,000 Chrysler Financial Corp.,
Corporate Notes, 6.00%, due
4/15/96 A3 A- 9,998,300
8,000,000 Discover Credit Corp.,
Medium-Term Notes, 7.97%, due
5/7/97 A2 BBB 8,234,000
9,000,000 P.H. Glatfelter Co., Corporate
Notes, 5.875%, due 3/1/98 Baa2 BBB+ 8,861,220
3,000,000 Ford Motor Credit Co.,
Medium-Term Notes, 9.10%, due
5/4/98 A1 A+ 3,203,820
5,600,000 Tenneco Inc., Medium-Term
Notes, 10.00%, due 8/1/98 Baa2 BBB- 6,097,560
5,975,000 News America Holdings Inc.,
Senior Notes, 9.125%, due
10/15/99 Baa3 BBB 6,466,324
5,000,000 Xerox Credit Corp.,
Medium-Term Notes, 6.84%, due
6/1/00 A2 A 5,033,850
1,750,000 Sears Roebuck Acceptance
Corp., Medium-Term Notes, Ser.
I, 6.42%, due 10/10/00 A2 BBB 1,754,305
5,000,000 Sears Roebuck Acceptance
Corp., Medium-Term Notes, Ser.
I, 6.40%, due 10/11/00 A2 BBB 5,000,000
5,200,000 General Motors Acceptance
Corp., Medium-Term Notes,
8.125%, due 3/1/01 A3 A- 5,564,052
5,000,000 Rhone Poulenc S.A., Yankee
Bonds, 7.75%, due 1/15/02 Baa2 BBB+ 5,288,450
------------
TOTAL CORPORATE DEBT
SECURITIES (COST $74,705,527) 73,508,471
------------
TOTAL INVESTMENTS (99.0%)
(COST $315,537,929) 316,358,818(5)
Cash, receivables and other
assets, less liabilities
(1.0%) 3,287,063
------------
TOTAL NET ASSETS (100.0%) $319,645,881
------------
</TABLE>
45
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Government Income Portfolio
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ----------- --------- --------- -----------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(57.4%)
$1,200,000 U.S. Treasury Notes, 5.625%,
due 8/31/97 TSY TSY $ 1,199,784
525,000 U.S. Treasury Notes, 6.75%,
due 6/30/99 TSY TSY 541,716
2,150,000 U.S. Treasury Notes, 6.25%,
due 8/31/00 TSY TSY 2,193,236
850,000 U.S. Treasury Notes, 6.375%,
due 8/15/02 TSY TSY 872,168
260,000 U.S. Treasury Notes, 6.50%,
due 5/15/05 TSY TSY 268,978
1,880,000 U.S. Treasury Bonds, 6.25%,
due 8/15/23 TSY TSY 1,837,418
-----------
TOTAL U.S. TREASURY SECURITIES
(COST $6,893,547) 6,913,300
-----------
U.S. GOVERNMENT AGENCY
SECURITIES (9.3%)
25,000 Federal National Mortgage
Association, Discount Notes,
5.57%, due 11/8/95 AGY AGY 24,969
100,000 Federal Home Loan Mortgage
Corp., Discount Notes, 5.55%,
due 11/9/95 AGY AGY 99,859
200,000 Federal Home Loan Mortgage
Corp., Discount Notes, 5.60%,
due 11/15/95 AGY AGY 199,532
700,000 Federal Home Loan Mortgage
Corp., Discount Notes, 5.63%,
due 11/20/95 AGY AGY 697,809
100,000 Federal National Mortgage
Association, Discount Notes,
5.62%, due 11/20/95 AGY AGY 99,687
-----------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $1,122,038) 1,121,856
-----------
MORTGAGE-BACKED SECURITIES
(40.7%)
250,000 Nomura Asset Securities Corp.
Pass-Through Certificates
REMIC CMO, Ser. 1995 MDIII,
Class A-4, 9.0143%, due 3/4/20 BBB(6) BBB 264,900
FEDERAL HOME LOAN MORTGAGE CORP.
35,440 Multiclass Mortgage
Participation Certificates
Inverse Floater, Ser. 1139S,
13.64%, due 9/15/96 AGY AGY 35,748
110,625 Multiclass Mortgage
Participation Certificates
Inverse Floater, Ser. 1549L,
6.3795%, due 7/15/08 AGY AGY 77,869
</TABLE>
46
<PAGE>
October 31, 1995
- --------------------------------------------------------------------------------
Government Income Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL RATING(2)
AMOUNT MOODY'S S&P VALUE(3)
- ----------- --------- --------- -----------
<C> <S> <C> <C> <C>
$ 219,002 REMIC CMO, Ser. 1658, Class
AG, 10.00%, due 4/15/21 AGY AGY $ 238,565
562,985 Gold Mortgage Participation
Certificates, 8.50%, due
10/1/24 AGY AGY 583,591
FEDERAL NATIONAL MORTGAGE ASSOCIATION
3,603,141 REMIC CMO, Interest Only
Strip, Ser. 1994 M1, Yielding
7.00%, due 10/25/03 AGY AGY 168,987
422,327 Mortgage Participation
Certificates, 9.50%, due
7/1/12 AGY AGY 444,111
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
392,578 Pass-Through Certificates,
8.20%, due 1/15/19 AGY AGY 405,360
1,875,253 Pass-Through Certificates,
8.00%, due 2/15/23 AGY AGY 1,930,236
745,000 ARM Certificates, 6.00%, TBA,
30 Year Maturity AGY AGY 746,415
-----------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $4,914,691) 4,895,782
-----------
TOTAL INVESTMENTS (107.4%)
(COST $12,930,276) 12,930,938(5)
Liabilities, less cash,
receivables and other assets
[(7.4%)] (892,220)
-----------
TOTAL NET ASSETS (100.0%) $12,038,718
-----------
</TABLE>
47
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
October 31, 1995
- ----------------------------------------------------------------------
Income Managers Trust
1)Investment securities of the Portfolio are valued at amortized cost, which
approximates Federal income tax cost.
2)Credit ratings are unaudited.
3)Investment securities of the Portfolio are valued daily by obtaining bid price
quotations from independent pricing services on selected securities available
in each service's data base. For all other securities requiring daily
quotations, bid prices are obtained from principal market makers in those
securities. Short-term investments with less than sixty days until maturity at
the time of purchase are valued at amortized cost which, when combined with
interest earned, approximates market value.
4)At cost, which approximates market value.
5)At October 31, 1995, selected Portfolio information on a Federal income tax
basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER&BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ULTRA SHORT BOND PORTFOLIO $ 105,063,994 $ 278,835 $ 91,763 $ 187,072
LIMITED MATURITY BOND PORTFOLIO 315,537,929 2,903,244 2,082,355 820,889
GOVERNMENT INCOME PORTFOLIO 12,930,276 62,840 62,178 662
</TABLE>
6)Not rated by Moody's; the rating shown is from Fitch Investors Services, Inc.
SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>
(This page has been left blank intentionally.)
49
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT CASH
MONEY RESERVES
PORTFOLIO PORTFOLIO
----------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value* (Note
A) -- see Schedule of Investments $307,149,345 $ 407,650,602
Cash 127,310 386,948
Deferred organization costs (Note A) 14,052 12,376
Interest receivable 1,310,741 1,310,223
Prepaid expenses and other assets 16,402 18,776
Receivable for securities sold -- --
----------------------------
308,617,850 409,378,925
----------------------------
LIABILITIES
Net payable for forward foreign currency
contracts purchased (Note C) -- --
Payable for securities purchased -- --
Payable to investment manager (Note B) 70,956 83,698
Accrued expenses 61,808 63,876
----------------------------
132,764 147,574
----------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $308,485,086 $ 409,231,351
----------------------------
NET ASSETS consist of:
Paid-in capital $308,485,086 $ 409,231,351
Net unrealized appreciation in value of
investments and translation of assets and
liabilities in foreign
currencies -- --
----------------------------
NET ASSETS $308,485,086 $ 409,231,351
----------------------------
*Cost of investments $307,149,345 $ 407,650,602
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
October 31, 1995
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
LIMITED
ULTRA SHORT MATURITY GOVERNMENT
BOND BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value* (Note
A) -- see Schedule of Investments $105,251,066 $316,358,818 $ 12,930,938
Cash 3,022 3,646 30,025
Deferred organization costs (Note A) 5,111 14,130 8,344
Interest receivable 1,157,801 3,412,423 118,703
Prepaid expenses and other assets 3,915 18,330 2,285
Receivable for securities sold 29,782 70,695 1,825,392
-------------------------------------------
106,450,697 319,878,042 14,915,687
-------------------------------------------
LIABILITIES
Net payable for forward foreign currency contracts
purchased (Note C) -- 93,371 --
Payable for securities purchased 4,313,772 -- 2,840,455
Payable to investment manager (Note B) 22,823 68,732 3,690
Accrued expenses 48,496 70,058 32,824
-------------------------------------------
4,385,091 232,161 2,876,969
-------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $102,065,606 $319,645,881 $ 12,038,718
-------------------------------------------
NET ASSETS consist of:
Paid-in capital $101,878,534 $318,918,363 $ 12,038,056
Net unrealized appreciation in value of
investments and translation of assets and
liabilities in foreign
currencies 187,072 727,518 662
-------------------------------------------
NET ASSETS $102,065,606 $319,645,881 $ 12,038,718
-------------------------------------------
*Cost of investments $105,063,994 $315,537,929 $ 12,930,276
-------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT CASH
MONEY RESERVES
PORTFOLIO PORTFOLIO
-------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income $16,782,852 $20,224,570
-------------------------
Expenses:
Investment management fee (Note B) 745,052 852,207
Accounting fees 10,000 10,000
Amortization of deferred organization and
initial offering expenses (Note A) 5,244 4,621
Auditing fees 23,000 24,199
Custodian fees 95,424 117,277
Insurance expense 9,291 13,991
Legal fees 9,354 11,141
Trustees' fees and expenses 27,965 31,250
Miscellaneous 58 384
-------------------------
Total expenses 925,388 1,065,070
-------------------------
Net investment income 15,857,464 19,159,500
-------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FINANCIAL FUTURES CONTRACTS, AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investments sold 3,836 (2,998)
Net realized loss on financial futures
contracts (Note A) -- --
Net realized gain (loss) on foreign currency
transactions (Note A) -- --
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies -- --
Change in net unrealized depreciation of
financial futures contracts (Note A) -- --
-------------------------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions 3,836 (2,998)
-------------------------
Net increase in net assets resulting from
operations $15,861,300 $19,156,502
-------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
For the Year Ended October 31, 1995
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY GOVERNMENT
BOND BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 5,565,725 $ 21,191,050 $ 823,705
------------------------------------------------
Expenses:
Investment management fee (Note B) 229,072 769,332 37,063
Accounting fees 10,000 10,000 10,000
Amortization of deferred organization and
initial offering expenses (Note A) 1,905 5,292 3,112
Auditing fees 22,700 24,200 21,200
Custodian fees 71,591 157,808 18,416
Insurance expense 4,806 14,614 480
Legal fees 13,291 13,476 14,721
Trustees' fees and expenses 12,434 31,913 5,688
Miscellaneous 111 382 14
------------------------------------------------
Total expenses 365,910 1,027,017 110,694
------------------------------------------------
Net investment income 5,199,815 20,164,033 713,011
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FINANCIAL FUTURES CONTRACTS, AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investments sold (331,171) (3,720,375) (53,117)
Net realized loss on financial futures
contracts (Note A) -- -- (1,779)
Net realized gain (loss) on foreign currency
transactions (Note A) -- 94,670 (118,562)
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies 842,011 9,091,942 497,830
Change in net unrealized depreciation of
financial futures contracts (Note A) -- -- 1,187
------------------------------------------------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions 510,840 5,466,237 325,559
------------------------------------------------
Net increase in net assets resulting from
operations $ 5,710,655 $ 25,630,270 $ 1,038,570
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
53
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT CASH RESERVES
MONEY PORTFOLIO PORTFOLIO
Year Year
Ended Ended
October 31, October 31,
1995 1994 1995 1994
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 15,857,464 $ 7,472,586 $ 19,159,500 $ 10,536,037
Net realized gain (loss) on
investments sold, financial
futures contracts, and foreign
currency transactions 3,836 1,195 (2,998) (11,545)
Change in net unrealized
appreciation (depreciation) of
investments, financial futures
contracts, and translation of
assets and liabilities in foreign
currencies -- -- -- --
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 15,861,300 7,473,781 19,156,502 10,524,492
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 642,711,316 261,107,441 331,244,608 308,616,604
Reductions (601,644,238) (294,693,206) (253,130,982) (280,432,476)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 41,067,078 (33,585,765) 78,113,626 28,184,128
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 56,928,378 (26,111,984) 97,270,128 38,708,620
NET ASSETS:
Beginning of year 251,556,708 277,668,692 311,961,223 273,252,603
------------------------------------------------------
End of year $308,485,086 $251,556,708 $409,231,351 $311,961,223
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY GOVERNMENT
BOND PORTFOLIO BOND PORTFOLIO INCOME PORTFOLIO
Year Year Year
Ended Ended Ended
October 31, October 31, October 31,
1995 1994 1995 1994 1995 1994
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 5,199,815 $ 4,274,305 $ 20,164,033 $ 19,589,439 $ 713,011 $ 711,778
Net realized gain (loss) on
investments sold, financial
futures contracts, and foreign
currency transactions (331,171) (1,368,777) (3,625,705) (4,909,960) (173,458) (528,076)
Change in net unrealized
appreciation (depreciation) of
investments, financial futures
contracts, and translation of
assets and liabilities in foreign
currencies 842,011 (608,217) 9,091,942 (13,672,095) 499,017 (494,021)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 5,710,655 2,297,311 25,630,270 1,007,384 1,038,570 (310,319)
----------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 37,399,892 34,813,829 42,386,132 58,828,899 3,842,596 11,131,499
Reductions (43,020,643) (39,468,962) (64,495,000) (101,591,060) (3,955,940) (7,841,890)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (5,620,751) (4,655,133) (22,108,868) (42,762,161) (113,344) 3,289,609
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 89,904 (2,357,822) 3,521,402 (41,754,777) 925,226 2,979,290
NET ASSETS:
Beginning of year 101,975,702 104,333,524 316,124,479 357,879,256 11,113,492 8,134,202
----------------------------------------------------------------------------------
End of year $102,065,606 $101,975,702 $319,645,881 $316,124,479 $ 12,038,718 $ 11,113,492
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
- ----------------------------------------------------------------------
Income Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Government Money Portfolio ("Government
Money"), Neuberger&Berman Cash Reserves Portfolio ("Cash Reserves"),
Neuberger&Berman Ultra Short Bond Portfolio ("Ultra Short"), Neuberger&
Berman Limited Maturity Bond Portfolio ("Limited Maturity"), and
Neuberger&Berman Government Income Portfolio ("Government Income")
(collectively, the "Portfolios") are separate series of Income Managers Trust
("Managers Trust"), a New York common law trust organized as of December 1,
1992. Managers Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended. Other regulated
investment companies sponsored by Neuberger&Berman Management Incorporated
("Management"), whose financial statements are not presented herein, also
invest in these and other Portfolios of Managers Trust.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
2) PORTFOLIO VALUATION: Investments are valued as indicated in the notes
following the Portfolios' schedule of investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) FORWARD FOREIGN CURRENCY CONTRACTS: Limited Maturity and Government
Income may enter into forward foreign currency contracts ("contracts") in
connection with planned purchases or sales of securities, to hedge the U.S.
dollar value of portfolio securities denominated in a foreign currency, or to
increase or decrease their exposure to a currency other than U.S. dollars.
The gain or loss arising from the difference between the original contract
price and the closing price of such contract is included in net realized
gains or losses on foreign currency transactions. Fluctuations in the value
of forward foreign currency contracts are recorded for financial reporting
purposes as unrealized gains or losses by the Portfolio. The Portfolios have
no specific limitation on the percentage of assets which may be committed to
these types of contracts. The Portfolios could be exposed to risks if a
counterparty to the contracts were unable to meet the terms of its contracts
or if the value of the foreign currency changes unfavorably. The U.S. dollar
value of foreign currency underlying all contractual commitments held by each
Portfolio is determined using forward foreign currency exchange rates
supplied by an independent pricing service.
56
<PAGE>
5) FINANCIAL FUTURES CONTRACTS: Ultra Short, Limited Maturity, and Government
Income may buy and sell financial futures contracts to hedge against the
effects of fluctuations in interest rates. At the time a Portfolio enters
into a financial futures contract, it is required to deposit with its
custodian a specified amount of cash or U.S. government securities, known as
"initial margin," ranging upward from 1.1% of the value of the financial
futures contract being traded. Each day, the futures contract is valued at
the official settlement price of the board of trade or U.S. commodity
exchange on which such futures contract is traded. Subsequent payments, known
as "variation margin," to and from the broker are made on a daily basis as
the market price of the financial futures contract fluctuates. Daily
variation margin adjustments, arising from this "mark to market," are
recorded by the Portfolio as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts. When the contracts are closed, the Portfolio
recognizes a gain or loss. Risks of entering into futures contracts include
the possibility that there may be an illiquid market and/or that a change in
the value of the contract may not correlate with changes in the value of the
underlying securities.
For Federal income tax purposes, the futures transactions undertaken by a
Portfolio may cause a Portfolio to recognize gains or losses from marking to
market even though its positions have not been sold or terminated, may affect
the character of the gains or losses recognized as long-term or short-term
and may affect the timing of some capital gains and losses realized by the
Portfolio. Also, the Portfolio's losses on its transactions involving futures
contracts may be deferred rather than being taken into account currently in
calculating such Portfolio's taxable income. During the year ended October
31, 1995, Government Income entered into financial futures contracts. There
were no open positions in financial futures contracts at October 31, 1995.
6) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Interest income, including accretion of
discount (adjusted for original issue discount, where applicable) and
amortization of premium, where applicable, is recorded on the accrual basis.
Realized gains and losses from securities transactions are recorded on the
basis of identified cost.
7) FEDERAL INCOME TAXES: Managers Trust intends to comply with the
requirements of the Internal Revenue Code of 1986, as amended. Each Portfolio of
Managers Trust also intends to conduct its operations so that each of its
investors will be able to qualify as a regulated investment company. Each
Portfolio will be treated as a partnership for Federal income tax purposes
and is therefore not subject to Federal income tax.
8) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection
with its organization are being amortized by each Portfolio on a
straight-line basis over a five-year period. At October 31, 1995, the
unamortized balance of such expenses amounted to $14,052, $12,376, $5,111,
$14,130, and $8,344 for Government Money, Cash Reserves, Ultra Short, Limited
Maturity, and Government Income, respectively.
57
<PAGE>
9) EXPENSE ALLOCATION: The Portfolios bear all costs of operations. Expenses
incurred by Managers Trust with respect to any two or more Portfolios are
allocated in proportion to the net assets of such Portfolios, except where
another more appropriate allocation of expenses to each Portfolio can
otherwise be made fairly. Expenses directly attributable to a Portfolio are
charged to that Portfolio.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement dated as of July 2, 1993. For such investment management
services, each Portfolio (except Government Income) pays Management a fee at the
annual rate of .25% of the first $500 million of that Portfolio's average daily
net assets, .225% of the next $500 million, .20% of the next $500 million, .175%
of the next $500 million, and .15% of average daily net assets in excess of $2
billion. Government Income pays Management a fee for investment management
services at the annual rate of .35% of the first $500 million of that
Portfolio's average daily net assets, .325% of the next $500 million, .30% of
the next $500 million, .275% of the next $500 million, and .25% of average daily
net assets in excess of $2 billion.
All of the capital stock of Management is owned by individuals who are also
general partners of Neuberger&Berman, L.P. ("Neuberger"), a member firm of The
New York Stock Exchange and the sub-adviser to each Portfolio. Neuberger is
retained by Management to furnish it with investment recommendations and
research information without cost to each Portfolio. Several individuals who are
officers and/ or trustees of Managers Trust are also partners of Neuberger
and/or officers and/or directors of Management.
Each Portfolio has an expense offset arrangement included in its custodian
contract. The impact of this arrangement on each Portfolio's custodian expense,
reflected in the Statement of Operations, is less than .01% of the Portfolio's
average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended October 31, 1995, there were purchase and sale
transactions (excluding short-term securities, financial futures contracts, and
forward foreign currency contracts) as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- -------------------------------------------------------------------------------
<S> <C> <C>
ULTRA SHORT $96,063,202 $83,116,696
LIMITED MATURITY 247,265,437 246,364,411
GOVERNMENT INCOME 30,109,213 30,856,833
</TABLE>
All securities transactions for Government Money and Cash Reserves were
short-term.
During the year ended October 31, 1995, Limited Maturity entered into various
contracts to deliver currencies at specified future dates. At October 31, 1995,
Limited Maturity had the following open contract:
<TABLE>
<CAPTION>
NET
CONTRACTS IN EXCHANGE SETTLEMENT UNREALIZED
SALES TO DELIVER FOR DATE VALUE DEPRECIATION
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Canadian
Dollars 7,000,000 $5,105,949 11/15/95 $5,199,320 $ 93,371
</TABLE>
58
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT CASH RESERVES ULTRA SHORT
MONEY PORTFOLIO PORTFOLIO BOND PORTFOLIO
Period Period Period
from from from
July 2, July 2, July 2,
1993 1993 1993
(Commencement (Commencement (Commencement
of of of
Operations) Operations) Operations)
Year Ended to October Year Ended to October Year Ended to October
October 31, 31, October 31, 31, October 31, 31,
1995 1994 1993 1995 1994 1993 1995 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .31% .33% .32%(1) .31% .32% .34%(1) .40% .38% .40%(1)
------------------------------------------------------------------------------------------------
Net Investment Income 5.32% 3.38% 2.82%(1) 5.62% 3.63% 2.88%(1) 5.67% 3.98% 4.00%(1)
------------------------------------------------------------------------------------------------
Portfolio Turnover Rate -- -- -- -- -- -- 148% 94% 46%
------------------------------------------------------------------------------------------------
Net Assets, End of Year (in
millions) $308.5 $251.6 $277.7 $409.2 $312.0 $273.3 $102.1 $102.0 $104.3
------------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
59
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
LIMITED MATURITY GOVERNMENT
BOND PORTFOLIO INCOME PORTFOLIO
Period Period
from from
July 2, July 6,
1993 1993
(Commencement (Commencement
of of
Operations) Operations)
Year Ended to October Year Ended to October
October 31, 31, October 31, 31,
1995 1994 1993 1995 1994 1993
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .33% .34% .33%(1) 1.05% .93% 2.85%(1)
---------------------------------------------------------------
Net Investment Income 6.55% 5.86% 5.53%(1) 6.73% 6.34% 3.98%(1)
---------------------------------------------------------------
Portfolio Turnover Rate 88% 102% 71% 288% 263% 119%
---------------------------------------------------------------
Net Assets, End of Year (in
millions) $319.6 $316.1 $357.9 $12.0 $11.1 $8.1
---------------------------------------------------------------
</TABLE>
1) Annualized.
60
<PAGE>
OTHER INFORMATION
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
Institutional Services 800-366-6264
SUB-ADVISER
Neuberger&Berman, L.P.
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Address correspondence to:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
800-225-1596
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 M Street, NW
Washington, DC 20036-5891
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
OFFICERS AND TRUSTEES
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Theresa A. Havell
PRESIDENT AND TRUSTEE
John Cannon
TRUSTEE
Charles DeCarlo
TRUSTEE
Barry Hirsch
TRUSTEE
Robert A. Kavesh
TRUSTEE
Harold R. Logan
TRUSTEE
William E. Rulon
TRUSTEE
Candace L. Straight
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
Neuberger&Berman Management Inc., Neuberger&Berman Government Money Fund,
Neuberger&Berman Cash Reserves, Neuberger&Berman Ultra Short Bond Fund,
Neuberger&Berman Limited Maturity Bond Fund, and Neuberger&Berman Government
Income Fund are service marks of Neuberger&Berman Management Inc.
- -C- 1995 Neuberger&Berman Management Inc.
61
<PAGE>
(This page has been left blank intentionally.)
62
<PAGE>
NEUBERGER&BERMAN MANAGEMENT INC.
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
Statistics and projections in this report are derived from sources
deemed to be reliable but cannot be regarded as a representation of
future results of the Funds. This report is prepared for the general
information of shareholders and is not an offer of shares of the Funds.
Shares are sold only through the currently effective prospectus, which
must precede or accompany this report.
PRINTED ON RECYCLED PAPER
[recycle logo]
WITH SOY BASED INKS NBIFAR001095
<PAGE>
