<PAGE>
<PAGE>
SEMI-ANNUAL REPORT
- -------------------------------------------
April 30, 1996
NEUBERGER&BERMAN
INCOME FUNDS -Registered Service Mark-
Neuberger&Berman
GOVERNMENT MONEY FUND
Neuberger&Berman
CASH RESERVES
Neuberger&Berman
ULTRA SHORT BOND FUND
Neuberger&Berman
LIMITED MATURITY BOND FUND
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
PRESIDENT'S LETTER 4
PERFORMANCE
HIGHLIGHTS 9
FINANCIAL STATEMENTS 10
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Government Money Fund 20
Cash Reserves 21
Ultra Short Bond Fund 22
Limited Maturity Bond
Fund 23
THE PORTFOLIOS
SCHEDULE OF
INVESTMENTS
Government Money
Portfolio 26
Cash Reserves Portfolio 27
Ultra Short Bond
Portfolio 31
Limited Maturity Bond
Portfolio 35
FINANCIAL STATEMENTS 42
FINANCIAL HIGHLIGHTS 52
OTHER INFORMATION
Directory/Officers and
Trustees 54
</TABLE>
3
<PAGE>
PRESIDENT'S LETTER June 17, 1996
Dear Shareholder,
When we last reported to you, in your Fund's October 1995 Annual Report,
interest rates were falling and the bond market was in the midst of one of its
strongest rallies in over a decade. The economic environment remained relatively
subdued through the end of 1995, and prices of corporate, government, and
municipal bonds continued to increase.
Early in the first quarter of 1996, however, this positive trend for bonds
began to reverse itself due to a steady flow of positive economic data. The
economy, as measured by real gross domestic product (real GDP is the total
output of goods and services in the U.S., adjusted for inflation), grew at an
annualized rate of 2.8% through the first quarter, which was much higher than
expected. In addition, a February jobs report showed stronger-than-expected
growth in non-agricultural jobs, causing the biggest one-day rise in long-term
interest rates since the Gulf War in August of 1990.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DESCRIPTION: GRAPH DEPICTING RELATIVE YIELDS OF THE 30 YEAR TREASURY BOND,
TREASURY BILLS AND MERRILL LYNCH 12-22 YEAR MUNICIPAL BOND INDEX FOR THE TIME
PERIOD NOV. 1, 1995 - APRIL 30, 1996
<TABLE>
<CAPTION>
THREE-MONTH
TREASURY BONDS TREASURY BILLS MUNICIPAL BONDS
<S> <C> <C> <C>
11/1 6.30 5.46 5.50
11/2 6.24 5.39 5.43
11/3 6.28 5.42 5.44
11/6 6.29 5.47 5.42
11/7 6.31 5.50 5.42
11/8 6.25 5.43 5.35
11/9 6.28 5.44 5.36
11/10 6.34 5.50 5.39
11/13 6.28 5.46 5.37
11/14 6.29 5.45 5.40
11/15 6.29 5.50 5.42
11/16 6.22 5.45 5.35
11/17 6.23 5.43 5.34
11/20 6.25 5.44 5.37
11/21 6.27 5.47 5.36
11/22 6.28 5.49 5.37
11/23 6.28 5.48
11/24 6.25 5.47 5.34
11/27 6.22 5.46 5.33
11/28 6.23 5.48 5.33
11/29 6.20 5.40 5.30
11/30 6.13 5.38 5.24
12/1 6.09 5.37 5.21
12/4 6.03 5.37 5.17
12/5 6.05 5.37 5.21
12/6 6.03 5.37 5.22
12/7 6.08 5.40 5.17
12/8 6.05 5.43 5.18
12/11 6.05 5.41 5.17
12/12 6.05 5.42 5.23
12/13 6.08 5.43 5.23
12/14 6.09 5.40 5.30
12/15 6.10 5.36 5.31
12/18 6.20 5.35 5.37
12/19 6.11 5.23 5.31
12/20 6.12 5.15 5.31
12/21 6.09 5.03 5.34
12/22 6.06 5.03 5.30
12/25 6.07 5.02
12/26 6.04 5.00 5.29
12/27 6.01 5.03 5.27
12/28 5.98 4.98 5.24
12/29 5.95 5.08 5.21
12/31 5.21
1/1 5.95 5.08
1/2 5.96 5.12 5.26
1/3 5.96 5.21 5.24
1/4 6.03 5.19 5.30
1/5 6.05 5.18 5.26
1/8 6.04 5.17 5.24
1/9 6.11 5.15 5.24
1/10 6.18 5.17 5.32
1/11 6.15 5.17 5.30
1/12 6.15 5.17 5.30
1/15 6.15 5.17 5.29
1/16 6.06 5.14 5.23
1/17 6.01 5.13 5.19
1/18 5.99 5.11 5.15
1/19 5.97 5.11 5.15
1/22 6.04 5.13 5.22
1/23 6.09 5.12 5.22
1/24 6.04 5.11 5.17
1/25 6.11 5.13 5.24
1/26 6.04 5.10 5.05
1/29 6.09 5.15 5.10
1/30 6.04 5.12 5.04
1/31 6.03 5.05 4.99
2/1 6.07 5.00 4.97
2/2 6.16 4.98 5.01
2/5 6.16 5.00 5.00
2/6 6.13 4.99 4.99
2/7 6.16 4.93 4.99
2/8 6.15 4.91 4.93
2/9 6.10 4.93 4.92
2/12 6.03 4.93 4.88
2/13 6.03 4.92 4.84
2/14 6.09 4.93 4.85
2/15 6.17 4.90 4.89
2/16 6.24 4.89 4.93
2/19 6.24 4.89
2/20 6.40 4.96 5.06
2/21 6.37 4.96 5.04
2/22 6.34 4.94 5.01
2/23 6.41 4.95 5.04
2/26 6.46 4.98 5.07
2/27 6.48 5.02 5.10
2/28 6.47 5.01 5.12
2/29 6.47 5.03 5.12
3/1 6.37 5.00 5.12
3/4 6.33 5.03 5.08
3/5 6.38 5.03 5.11
3/6 6.45 5.03 5.14
3/7 6.46 5.03 5.15
3/8 6.71 5.03 5.37
3/11 6.64 5.10 5.38
3/12 6.67 5.10 5.41
3/13 6.68 5.12 5.40
3/14 6.69 5.12 5.40
3/15 6.74 5.15 5.49
3/18 6.71 5.18 5.47
3/19 6.72 5.21 5.49
3/20 6.64 5.14 5.43
3/21 6.62 5.06 5.42
3/22 6.66 5.11 5.44
3/25 6.58 5.07 5.37
3/26 6.58 5.15 5.36
3/27 6.68 5.16 5.41
3/28 6.72 5.19 5.41
3/29 6.67 5.14 5.36
3/31 5.36
4/1 6.63 5.16 5.21
4/2 6.60 5.17 5.21
4/3 6.63 5.15 5.21
4/4 6.67 5.12 5.21
4/5 6.82 5.16 5.21
4/8 6.87 5.16 5.50
4/9 6.83 5.09 5.47
4/10 6.95 5.09 5.48
4/11 6.94 5.10 5.49
4/12 6.80 5.08 5.49
4/15 6.79 5.00 5.37
4/16 6.79 4.97 5.35
4/17 6.81 4.96 5.35
4/18 6.83 5.00 5.35
4/19 6.79 5.03 5.36
4/22 6.75 5.00 5.32
4/23 6.78 5.11 5.33
4/24 6.82 5.14 5.33
4/25 6.80 5.10 5.35
4/26 6.79 5.12 5.31
4/29 6.84 5.16 5.34
4/30 6.91 5.15 5.37
</TABLE>
SOURCE: BLOOMBERG FINANCIAL MARKETS -- 30 YEAR TREASURY BOND & TREASURY BILLS
MERRILL LYNCH 12-22 YEAR MUNICIPAL BOND INDEX
Other factors that contributed to the strength in the economy during the first
quarter were signs of increasing capital and government spending, including
higher personal-consumption and business-related purchases. Department store
sales and retailing stocks recovered from
4
<PAGE>
their late 1995 doldrums, auto sales rose, factory orders surged after a short
dip in February, requests for unemployment benefits dropped, and Americans
increased their borrowing pace. The economy remained strong despite the January
blizzards, a government shutdown, and a widespread strike by General Motors
employees.
In response to the mounting evidence that the economy was more robust than
expected, the yield on the long bond (the benchmark 30-year Treasury) jumped
from under 6% in January to nearly 7% by the end of April. As a result, the
total return of 30-year bonds through April 30, 1996 registered a 10.5%
decline.* Municipal bond returns declined less dramatically, as moderate new
issuance and rejuvenated confidence in municipal bonds' credit quality (since
the Orange County default of 1994) bolstered their standing in the overall bond
market. Mortgage-backed securities also lost value, but they were buoyed
slightly by reduced prepayment fears (home loan refinancing slows as interest
rates rise). Foreign bond markets performed only marginally better than the
domestic bond market, as the strengthening dollar and the condition of U.S.
bonds stifled their performance; high-yielding markets such as Australia, Italy,
and Sweden fared best while low-yielding foreign markets such as Japan, Germany,
and the U.K. did worse.
Shortly after the Semi-Annual Report period ended, lower bond prices and
temporarily diminished inflationary concerns incited a May rally in the bond
market. Although the recent volatility in the bond market may not inspire an
investor's desire to take on extra risk, we feel it's also not a time of
complete gloom and doom. We also believe these are times when fixed-income fund
investors should feel comfortable about their investments, whether rates exceed
7% this year or return to 1995 yield levels. So we are especially pleased to
report that your Neuberger&Berman Income Funds posted positive returns over the
six-month period ended April 30, 1996 and were proactively managed, especially
against the backdrop of rising interest rates.
We strive to merit your continued confidence and remain committed to providing
consistent performance in all market conditions. A discussion of each
Portfolio's strategy over the six-month period of the Semi-Annual Report
follows.
*SOURCE: SALOMON 30-YEAR TREASURY INDEX.
5
<PAGE>
GOVERNMENT MONEY AND CASH RESERVES. The Semi-Annual Report period began with
an "inverted" yield curve, where interest rates on money market instruments
maturing in three months or less were higher than rates on some of their
longer-term counterparts. This inversion on the yield curve was initially the
result of investors' preference to lock in longer-term interest rates as the
Federal Reserve Board (the "Fed") continued to cut the Fed Funds rate. Abruptly,
inflation fears changed the direction of interest rates. As long-term rates
rose, rates for money market investments began to decline. With bond prices
slipping, investors increased their demand for short-term instruments which,
although lower in yield, offered a safer haven from the price deterioration of
longer maturity bonds. We carefully adjusted our weighted average portfolio
maturities not only to take advantage of the yield curve, but also to protect
principal. Over this period, Cash Reserves' weighted average maturity was
shortened from 61.3 days to 41.8 days, and Government Money's maturity was
shortened from 81.3 days to 69.5 days. Cash Reserves continued to hold only the
highest-quality money market securities. Government Money continued to invest
exclusively in U.S. Treasury issues.+
ULTRA SHORT BOND FUND. At the start of the Semi-Annual Report period, bond
market expectations were so strong that two-year Treasury Notes yielded slightly
less than the overnight Fed Funds rate (the overnight lending rate charged by
banks with excess reserves to those that need loans to meet reserve
requirements; it is the most sensitive indicator of the direction of interest
rates, since it is set daily by the market). This represented an "inverted"
(also called "negative") yield curve, where investors found higher yields in
shorter-term bonds. But as inflation fears crept in during February, the
direction of interest rates changed and the shape of the yield curve changed to
"positive" (the usual curve, where shorter-term bonds have lower yields than
longer-term bonds of the same quality). Yields increased by more than 50 basis
points in two-and three-year Treasuries as the Semi-Annual Report period
progressed into spring. At the same time, short-term money market rates dropped
by more than 30 basis points as investors began to absorb the supply of shorter
maturities in an attempt to protect their principal.
We began the Semi-Annual Report period optimistically, extending our portfolio
duration as interest rates were trending lower (duration is a measure of the
Portfolio's price sensitivity to a change in interest rates).
6
<PAGE>
However, we rapidly changed that direction as the bond market deteriorated and
rates rose in the first quarter of 1996. We enhanced the Portfolio's yield by
diversifying into different sectors of the bond market that offered higher
yields than Treasuries. Our analysis encouraged us to maintain most of our
corporate bond exposure and increase our positions in corporate money market
securities. We maintained our exposure to asset-backed securities (bonds backed
by loans or accounts receivable originated by banks, credit card companies, or
other providers of credit) and commercial paper which were offering higher
yields than Treasuries with similar durations. Our selection of agency
mortgage-backed securities added significant incremental yield to the Portfolio
as earlier fears of rapid home mortgage refinancing offered us an opportunity to
invest in a sector that, in our judgment, was undervalued.
LIMITED MATURITY BOND FUND. The yields on two-year Treasuries opened 1996 at
5.15% and closed at 6.05% by the end of April. Similarly, 30-year Treasury rates
increased 96 basis points to 6.91%, and pushed through 7.00% shortly thereafter.
Our response to the reversal of fortune in the bond market was consistent with
our trend-following duration management approach. We became more cautious as our
trend models turned negative, and reduced the Portfolio's duration (duration is
a measure of the Portfolio's exposure to interest rate risk) from 3.0 years to
approximately 2.5 years during February.
During the six-month period ended April 30, 1996, we added to the Portfolio's
corporate bond allocation as a significant new supply of corporate debt allowed
us to purchase 5-year bonds -- mainly of financial institutions -- at what we
felt were attractive prices. In addition, we added bonds of a few companies
rated just below investment grade (below BBB according to Standard & Poor's or
Baa by Moody's Investors Services Inc.) at significant yield premiums above
Treasuries. We only invested in companies we believed were fundamentally sound;
these companies included Federated Department Stores, a leading operator of
department stores, and Riverwood International, a specialty paper producer that
we considered well-positioned. Corporate bonds
7
<PAGE>
accounted for about 61.8% of the Portfolio at the end of April. We also began to
add to our mortgage-backed bond position, for these securities were selling at
what we believed to be attractive prices.
Sincerely,
/s/ Theresa A. Havell
Theresa A. Havell
President and Trustee
Neuberger&Berman Income Funds
+There is no assurance that Government Money Fund or Cash Reserves will be able
to maintain a stable net asset value of $1.00 per share. The value of either
Fund's shares, like the shares of all other mutual funds, is neither insured
nor guaranteed by the U.S. Government. The return on an investment in
Government Money Fund and Cash Reserves will fluctuate. Results represent past
performance and do not indicate future results. Neuberger&Berman Management
Inc. voluntarily bears certain operating expenses of Cash Reserves in excess of
0.65% of average daily net assets per annum. The arrangement can be terminated
upon 60 days' notice to the Fund.
8
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
TOTAL RETURN ILLUSTRATION
SIX AVERAGE ANNUAL TOTAL
MONTH RETURNS(1)
PERIOD -------------------------
NEUBERGER&BERMAN INCEPTION ENDED SINCE
INCOME FUNDS DATE 4/30/96 1 YR(1) 5 YR INCEPTION
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ULTRA SHORT BOND FUND* 11/7/86 +1.93% +5.24% +4.32% +5.80%
LIMITED MATURITY BOND FUND* 6/9/86 +1.47% +6.28% +6.03% +6.94%
</TABLE>
<TABLE>
<CAPTION>
YIELD ILLUSTRATION
FOR 7 DAYS ENDED 4/30/96
INCEPTION DATE CURRENT YIELD(2)
EFFECTIVE YIELD(2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GOVERNMENT MONEY FUND* 11/14/83 4.43% 4.53%
CASH RESERVES* 4/12/88 4.70% 4.81%
</TABLE>
1) One year and average annual total returns are for periods ended April 30,
1996. Includes reinvestment of all dividends and capital gain distributions.
The Neuberger&Berman Income Funds were reorganized in July, 1993. Performance
and information for periods prior to July, 1993 refer to the predecessors of
the Funds. 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.
2) "Current Yield" refers to the income generated by an investment in the Fund
over a 7-day period. This income is then "annualized." The "effective yield"
is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The "effective yield"
will be slightly higher than the "current yield" because of the compounding
effect of this assumed reinvestment. Yields of a money market fund will
fluctuate and past performance is no guarantee of future results.
* Neuberger&Berman Management Inc. voluntarily bears certain operating expenses
in excess of .65% of the average daily net assets per annum of Cash Reserves
and Ultra Short Bond Fund and .70% of the average daily net assets per annum
of Limited Maturity Bond Fund. These arrangements can be terminated upon 60
days' prior written notice to the appropriate Fund. Absent such
reimbursements, the total returns for Ultra Short Bond Fund and Limited
Maturity Bond Fund would have been less. Absent such reimbursement, the
current and effective yields for Cash Reserves would have been 4.68% and
4.79%, respectively, for the seven-day period ended 4/30/96.
There is no assurance that Government Money Fund or Cash Reserves will be
able to maintain a stable net asset value of $1.00 per share. The value of
each Fund's shares, like the value of shares of all other mutual funds, is
neither insured nor guaranteed by the U.S. Government. The return on an
investment in Government Money Fund and Cash Reserves will fluctuate.
9
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) MONEY FUND
--------------
<S> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 254,449
Receivable for Trust shares sold 382
--------------
254,831
--------------
LIABILITIES
Dividends payable 12
Payable for Trust shares redeemed 451
Payable to administrator -- net (Note B) 60
Accrued expenses 60
--------------
583
--------------
NET ASSETS at value $ 254,248
--------------
NET ASSETS consist of:
Par value $ 254
Paid-in capital in excess of par value 254,014
Dividends in excess of net investment income --
Accumulated net realized losses on
investment (20)
Net unrealized depreciation in value of
investment --
--------------
NET ASSETS at value $ 254,248
--------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 254,268
--------------
NET ASSET VALUE, offering and redemption price per
share $1.00
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
LIMITED
CASH ULTRA SHORT MATURITY
RESERVES BOND FUND BOND FUND
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 455,783 $ 95,909 $ 293,023
Receivable for Trust shares sold 312 278 378
------------------------------------------------
456,095 96,187 293,401
------------------------------------------------
LIABILITIES
Dividends payable 9 48 255
Payable for Trust shares redeemed 386 98 389
Payable to administrator -- net (Note B) 81 5 69
Accrued expenses 99 44 72
------------------------------------------------
575 195 785
------------------------------------------------
NET ASSETS at value $ 455,520 $ 95,992 $ 292,616
------------------------------------------------
NET ASSETS consist of:
Par value $ 456 $ 10 $ 30
Paid-in capital in excess of par value 455,073 101,235 304,796
Dividends in excess of net investment income -- -- (148)
Accumulated net realized losses on
investment (9) (4,821) (7,082)
Net unrealized depreciation in value of
investment -- (432) (4,980)
------------------------------------------------
NET ASSETS at value $ 455,520 $ 95,992 $ 292,616
------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 455,529 10,157 29,527
------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $9.45 $9.91
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
(000'S OMITTED) MONEY FUND
------------
<S> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 7,530
------
Expenses:
Administration fee (Note B) 378
Auditing fees 4
Custodian fees 5
Legal fees 10
Registration and filing fees 37
Shareholder reports 19
Shareholder servicing agent fees 40
Trustees' fees and expenses 11
Miscellaneous 3
Expenses from corresponding Portfolio (Note
A) 436
------
Total expenses 943
Deduct -- expenses reimbursed by
administrator (Note B) --
------
Total net expenses 943
------
Net investment income 6,587
------
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 (20)
Net realized loss on foreign currency
transactions --
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies --
Net unrealized appreciation of financial
futures contracts --
------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions from corresponding
Portfolio (Note A) (20)
------
Net increase in net assets resulting from
operations $ 6,567
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
For the Six Months Ended April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
CASH ULTRA SHORT LIMITED MATURITY
RESERVES BOND FUND BOND FUND
-----------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 12,236 $ 3,004 $ 9,946
-----------------------------------------------
Expenses:
Administration fee (Note B) 593 131 404
Auditing fees 4 4 4
Custodian fees 5 5 5
Legal fees 10 13 11
Registration and filing fees 65 17 28
Shareholder reports 24 17 18
Shareholder servicing agent fees 101 33 87
Trustees' fees and expenses 17 5 12
Miscellaneous 4 2 4
Expenses from corresponding Portfolio (Note
A) 664 190 481
-----------------------------------------------
Total expenses 1,487 417 1,054
Deduct -- expenses reimbursed by
administrator (Note B) (58) (101) (8)
-----------------------------------------------
Total net expenses 1,429 316 1,046
-----------------------------------------------
Net investment income 10,807 2,688 8,900
-----------------------------------------------
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 5 (161) 1,486
Net realized loss on foreign currency
transactions -- -- (97)
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies -- (616) (6,016)
Net unrealized appreciation of financial
futures contracts -- -- 415
-----------------------------------------------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions from corresponding
Portfolio (Note A) 5 (777) (4,212)
-----------------------------------------------
Net increase in net assets resulting from
operations $ 10,812 $ 1,911 $ 4,688
-----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
MONEY FUND
Six Months
Ended Year
April 30, Ended
1996 October 31,
(000'S OMITTED) (UNAUDITED) 1995
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 6,587 $ 14,864
Net realized gain (loss) on
investments, financial futures
contracts, and foreign currency
transactions from corresponding
Portfolio (Note A) (20) 4
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 in net assets resulting
from operations 6,567 14,868
-----------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (6,587) (14,864)
Net realized gain on investments (4) (1)
-----------------------------
Total distributions to shareholders (6,591) (14,865)
-----------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 362,383 714,547
Proceeds from reinvestment of
dividends and distributions 6,505 14,697
Payments for shares redeemed (422,961) (672,444)
-----------------------------
Net increase (decrease) from Trust
share transactions (54,073) 56,800
-----------------------------
NET INCREASE (DECREASE) IN NET ASSETS (54,097) 56,803
NET ASSETS:
Beginning of period 308,345 251,542
-----------------------------
End of period $ 254,248 $ 308,345
-----------------------------
Dividends in excess of net
investment income $ -- $ --
-----------------------------
NUMBER OF TRUST SHARES:
Sold 362,383 714,547
Issued on reinvestment of dividends
and distributions 6,505 14,697
Redeemed (422,961) (672,444)
-----------------------------
Net increase (decrease) in shares
outstanding (54,073) 56,800
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
CASH ULTRA SHORT LIMITED MATURITY
RESERVES BOND FUND BOND FUND
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
April 30, Ended April 30, Ended April 30, Ended
1996 October 31, 1996 October 31, 1996 October 31,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 10,807 $ 18,014 $ 2,688 $ 4,889 $ 8,900 $ 18,500
Net realized gain (loss) on
investments, financial futures
contracts, and foreign currency
transactions from corresponding
Portfolio (Note A) 5 (3) (161) (330) 1,389 (3,613)
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) -- -- (616) 833 (5,601) 8,911
---------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 10,812 18,011 1,911 5,392 4,688 23,798
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (10,807) (18,014) (2,688) (4,889) (8,900) (18,500)
Net realized gain on investments -- -- -- -- -- --
---------------------------------------------------------------------------------------
Total distributions to shareholders (10,807) (18,014) (2,688) (4,889) (8,900) (18,500)
---------------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 386,977 550,538 17,217 64,831 48,486 92,153
Proceeds from reinvestment of
dividends and distributions 10,610 17,639 2,354 4,098 7,463 15,501
Payments for shares redeemed (350,946) (471,218) (23,324) (70,002) (66,532) (114,110)
---------------------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions 46,641 96,959 (3,753) (1,073) (10,583) (6,456)
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 46,646 96,956 (4,530) (570) (14,795) (1,158)
NET ASSETS:
Beginning of period 408,874 311,918 100,522 101,092 307,411 308,569
---------------------------------------------------------------------------------------
End of period $ 455,520 $ 408,874 $ 95,992 $ 100,522 $ 292,616 $ 307,411
---------------------------------------------------------------------------------------
Dividends in excess of net
investment income $ -- $ -- $ -- $ -- $ (148) $ (148)
---------------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 386,977 550,538 1,809 6,822 4,810 9,271
Issued on reinvestment of dividends
and distributions 10,610 17,639 247 431 741 1,561
Redeemed (350,946) (471,218) (2,450) (7,375) (6,591) (11,509)
---------------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding 46,641 96,959 (394) (122) (1,040) (677)
---------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
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"), and Neuberger&Berman Limited Maturity
Bond Fund ("Limited Maturity") (collectively, the "Funds") are separate
operating 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%, 94.23%, and 95.39%, for Government Money, Cash
Reserves, Ultra Short, and Limited Maturity, respectively, at April 30,
1996). 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: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by 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
16
<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, are normally
distributed in December. To the extent 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,
and $4,713,841 and $3,757,068 expiring in 2002 and 2003, respectively, for
Limited Maturity, 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) 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 a more appropriate
allocation of expenses to each Fund can otherwise be made fairly. Expenses
directly attributable to a Fund are charged to that Fund.
6) 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.
17
<PAGE>
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, 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 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 six months ended April 30, 1996.
In addition, Management has voluntarily undertaken to reimburse Cash
Reserves, Ultra Short, and Limited Maturity for their Operating Expenses which
exceed, in the aggregate, .65% per annum for Cash Reserves and Ultra Short, and
.70% per annum for Limited Maturity of their average daily net assets. Each
undertaking is subject to termination by Management upon at least 60 days' prior
written notice to the appropriate Fund. For the six months ended April 30, 1996,
such excess expenses amounted to $58,236, $100,741, and $7,845, for Cash
Reserves, Ultra Short, and Limited Maturity, 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
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. As of May 1, 1995, the service agreement and the administration
agreement were combined into a single agreement with a fee of .27%.
18
<PAGE>
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 six months ended April 30, 1996, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
------------- -------------
<S> <C> <C>
GOVERNMENT MONEY $ 323,361,292 $ 384,471,028
CASH RESERVES 226,531,003 191,555,938
ULTRA SHORT 8,145,791 14,601,611
LIMITED MATURITY 22,234,387 42,376,505
</TABLE>
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent auditors. Annual reports
contain audited financial statements.
19
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Government Money Fund
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months
Ended
April 30,
1996 Year Ended October 31,
(UNAUDITED)(1) 1995(1) 1994(1) 1993(1) 1992 1991
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0003 $ 1.0000
-----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0234 .0499 .0302 .0248 .0354 .0567
Net Gains or Losses on
Securities (.0001) -- -- -- -- .0003
-----------------------------------------------------------------------
Total From Investment
Operations .0233 .0499 .0302 .0248 .0354 .0570
-----------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0234) (.0499) (.0302) (.0248) (.0354) (.0567)
Distributions (from capital
gains) -- -- -- -- (.0003) --
-----------------------------------------------------------------------
Total Distributions (.0234) (.0499) (.0302) (.0248) (.0357) (.0567)
-----------------------------------------------------------------------
Net Asset Value, End of Period $ .9999 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0003
-----------------------------------------------------------------------
Total Return+ +2.36%(2) +5.10% +3.07% +2.51% +3.62% +5.82%
-----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 254.2 $ 308.3 $ 251.5 $ 277.2 $ 301.1 $ 246.5
-----------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets .67%(3) .65% .72% .70% .66% .68%
-----------------------------------------------------------------------
Ratio of Net Investment Income
to Average Net Assets 4.69%(3) 5.00% 3.00% 2.48% 3.50% 5.66%
-----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
20
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months
Ended
April 30,
1996 Year Ended October 31,
(UNAUDITED)(1) 1995(1) 1994(1) 1993(1) 1992 1991
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $1.0000 $ 1.0000 $ 1.0001 $ 1.0001 $ 1.0000 $ 1.0000
-----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0245 .0529 .0327 .0263 .0363 .0600
Net Gains or Losses on
Securities -- -- -- .0002 .0002 --
-----------------------------------------------------------------------
Total From Investment
Operations .0245 .0529 .0327 .0265 .0365 .0600
-----------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0245) (.0529) (.0327) (.0263) (.0363) (.0600)
Distributions (from capital
gains) -- -- (.0001) (.0002) (.0001) --
-----------------------------------------------------------------------
Total Distributions (.0245) (.0529) (.0328) (.0265) (.0364) (.0600)
-----------------------------------------------------------------------
Net Asset Value, End of Period $1.0000 $ 1.0000 $ 1.0000 $ 1.0001 $ 1.0001 $ 1.0000
-----------------------------------------------------------------------
Total Return+ +2.47%(2) +5.42% +3.33% +2.68% +3.69% +6.17%
-----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 455.5 $ 408.9 $ 311.9 $ 273.1 $ 261.7 $ 278.9
-----------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets(4) .65%(3) .65% .65% .65% .65% .65%
-----------------------------------------------------------------------
Ratio of Net Investment Income
to Average Net Assets(4) 4.91%(3) 5.30% 3.31% 2.63% 3.63% 6.00%
-----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
21
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Fund
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months
Ended
April 30,
1996 Year Ended October 31,
(UNAUDITED)(1) 1995(1) 1994(1) 1993(1) 1992 1991
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 9.53 $ 9.47 $ 9.64 $ 9.70 $ 9.83 $ 9.79
-------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .26 .52 .35 .40 .56 .68
Net Gains or Losses on
Securities (both realized and
unrealized) (.08) .06 (.17) (.06) (.13) .04
-------------------------------------------------------------------------
Total From Investment
Operations .18 .58 .18 .34 .43 .72
-------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.26) (.52) (.35) (.40) (.56) (.68)
-------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.45 $ 9.53 $ 9.47 $ 9.64 $ 9.70 $ 9.83
-------------------------------------------------------------------------
Total Return+ +1.93%(2) +6.26% +1.96% +3.53% +4.44% +7.64%
-------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 96.0 $ 100.5 $ 101.1 $ 104.4 $ 103.3 $ 97.9
-------------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets(4) .65%(3) .65% .65% .65% .65% .65%
-------------------------------------------------------------------------
Ratio of Net Investment Income
to Average Net Assets(4) 5.54%(3) 5.44% 3.72% 4.09% 5.70% 6.97%
-------------------------------------------------------------------------
Portfolio Turnover Rate(5) -- -- -- 115% 66% 89%
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
22
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Fund
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months
Ended
April 30,
1996 Year Ended October 31,
(UNAUDITED)(1) 1995(1) 1994(1) 1993(1) 1992 1991
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 10.06 $ 9.88 $ 10.49 $ 10.40 $ 10.24 $ 9.91
-------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .30 .62 .56 .58 .63 .71
Net Gains or Losses on
Securities (both realized and
unrealized) (.15) .18 (.55) .14 .16 .33
-------------------------------------------------------------------------
Total From Investment
Operations .15 .80 .01 .72 .79 1.04
-------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.30) (.62) (.56) (.58) (.63) (.71)
Distributions (from capital
gains) -- -- (.05) (.05) -- --
Distributions (in excess of
capital gains) -- -- (.01) -- -- --
Tax return of capital -- -- -- -- -- --
-------------------------------------------------------------------------
Total Distributions (.30) (.62) (.62) (.63) (.63) (.71)
-------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.91 $ 10.06 $ 9.88 $ 10.49 $ 10.40 $ 10.24
-------------------------------------------------------------------------
Total Return+ +1.47%(2) +8.32% +0.13% +7.09% +7.87% +10.89%
-------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 292.6 $ 307.4 $ 308.6 $ 357.3 $ 273.0 $ 163.2
-------------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets(4) .70%(3) .70% .69% .65% .65% .65%
-------------------------------------------------------------------------
Ratio of Net Investment Income
to Average Net Assets(4) 5.94%(3) 6.21% 5.53% 5.49% 6.02% 7.07%
-------------------------------------------------------------------------
Portfolio Turnover Rate(5) -- -- -- 114% 113% 88%
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
23
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
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)Not annualized.
3)Annualized.
4)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>
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
CASH RESERVES 1996 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses .68% .68% .71% .76% .69% .69%
-----------------------------------------------
Net Investment Income 4.88% 5.27% 3.25% 2.52% 3.59% 5.96%
-----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
ULTRA SHORT 1996 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses .86% .87% .86% .95% .87% .87%
-----------------------------------------------
Net Investment Income 5.33% 5.22% 3.51% 3.79% 5.48% 6.75%
-----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
LIMITED MATURITY 1996 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses .70% .71% .71% .73% .68% .72%
-----------------------------------------------
Net Investment Income 5.94% 6.20% 5.51% 5.42% 5.99% 7.00%
-----------------------------------------------
</TABLE>
5)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 neither 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 period
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.
24
<PAGE>
(This page has been left blank intentionally.)
25
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD AT DATE VALUE(1)
(000'S OMITTED) OF PURCHASE (000'S OMITTED)
- --------------- ---------------- ---------------
<C> <S> <C> <C>
U.S. TREASURY
SECURITIES -- BACKED BY THE
FULL FAITH AND CREDIT OF THE
U.S. GOVERNMENT (107.6%)
$ 25,980 U.S. Treasury Bills, due
5/2/96 4.88 - 5.26% $ 25,976
885 U.S. Treasury Bills, due
5/9/96 5.16% 884
7,490 U.S. Treasury Bills, due
5/23/96 5.14 - 5.15% 7,467
31,085 U.S. Treasury Bills, due
5/30/96 4.98 - 5.04% 30,962
23,890 U.S. Treasury Bills, due
6/6/96 4.98 - 5.04% 23,773
29,200 U.S. Treasury Bills, due
6/13/96 5.03 - 5.37% 29,026
23,810 U.S. Treasury Bills, due
7/5/96 5.11 - 5.20% 23,595
20,000 U.S. Treasury Bills, due
7/11/96 5.09 - 5.16% 19,803
2,455 U.S. Treasury Bills, due
7/18/96 5.00% 2,429
20,000 U.S. Treasury Bills, due
7/25/96 5.10% 19,765
7,160 U.S. Treasury Notes, 7.875%,
due 7/31/96 5.20% 7,207
6,175 U.S. Treasury Notes, 6.125%,
due 7/31/96 5.14% 6,189
20,000 U.S. Treasury Bills, due
8/1/96 5.12% 19,748
6,800 U.S. Treasury Bills, due
8/8/96 5.15% 6,707
14,720 U.S. Treasury Bills, due
8/15/96 5.00% 14,511
6,680 U.S. Treasury Bills, due
8/22/96 5.17% 6,575
1,100 U.S. Treasury Bills, due
9/19/96 5.18% 1,079
15,000 U.S. Treasury Notes, 7.00%,
due 9/30/96 5.30% 15,103
10,000 U.S. Treasury Bills, due
10/24/96 5.22% 9,755
3,210 U.S. Treasury Notes, 6.875%,
due 10/31/96 5.37% 3,233
---------------
TOTAL U.S. TREASURY SECURITIES 273,787
Liabilities, less cash,
receivables and other assets
[(7.6%)] (19,338)
---------------
TOTAL NET ASSETS (100.0%) $ 254,449
---------------
</TABLE>
26
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(1)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(0.1%)
$ 305 U.S. Treasury Bills, 4.96%,
due 11/14/96 TSY TSY $ 297
---------------
U.S. GOVERNMENT AGENCY
SECURITIES (11.6%)
10,000 Federal Farm Credit Bank,
Discount Notes, 5.13%, due
5/8/96 AGY AGY 9,990
20,000 Federal National Mortgage
Association, Discount Notes,
4.77%, due 8/9/96 AGY AGY 19,735
18,300 Federal Home Loan Bank,
Variable Rate Global Bonds,
5.10%, due 11/21/96 AGY AGY 18,297
5,000 Federal Farm Credit Bank,
Bonds, 5.40%, due 12/2/96 AGY AGY 5,002
---------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES 53,024
---------------
BANKERS' ACCEPTANCES (1.3%)
6,000 First National Bank of
Chicago, 5.03% & 5.08%, due
5/20/96 & 7/10/96 P-1 A-1 5,977
---------------
ASSET-BACKED COMMERCIAL PAPER
(7.3%)
15,000 McKenna Triangle National
Corp., 5.26% & 5.32%, due
5/10/96 & 5/14/96 P-1 A-1+ 14,974
5,000 Corporate Receivables Corp.,
5.32%, due 5/15/96 P-1 A-1 4,990
13,267 Ciesco, L.P., 5.10%-5.32%, due
5/9/96-5/22/96 P-1 A-1+ 13,246
---------------
TOTAL ASSET-BACKED COMMERCIAL
PAPER 33,210
---------------
CORPORATE COMMERCIAL PAPER
(59.5%)
3,838 Marsh & McLennan Cos., Inc.,
5.38%, due 5/1/96 P-1 A-1+ 3,838
2,000 Toys "R" Us, Inc., 5.32%, due
5/1/96 P-1 A-1+ 2,000
7,000 Morgan Stanley Group Inc.,
5.36%, due 5/2/96 P-1 A-1+ 6,999
10,000 BellSouth Telecommunications
Inc., 5.26% & 5.31%, due
5/3/96 & 5/8/96 P-1 A-1+ 9,993
</TABLE>
27
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(1)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
$ 5,741 Kingdom of Spain, 5.30%, due
5/9/96 P-1 A-1+ $ 5,734
11,890 Nalco Chemical Co., 5.33%, due
5/10/96 P-1 A-1 11,874
5,000 Eksportfinans A/S, 5.28%, due
5/13/96 P-1 A-1+ 4,991
7,725 Pitney Bowes Credit Corp.,
5.30% & 5.31%, due 5/14/96 &
5/17/96 P-1 A-1+ 7,708
5,315 Campbell Soup Co., 5.28%, due
5/23/96 P-1 A-1+ 5,298
3,255 Hitachi America, Ltd., 5.26%,
due 5/23/96 P-1 A-1+ 3,245
7,000 Ameritech Corp., 5.28%, due
5/24/96 P-1 A-1+ 6,976
2,000 Gannett Co., Inc., 5.28%, due
5/28/96 P-1 A-1+ 1,992
10,000 National Australia Funding
Delaware Inc., 5.32% & 5.43%,
due 5/9/96 & 5/28/96 P-1 A-1+ 9,974
10,015 Sandoz Corp., 5.05% & 5.15%,
due 5/10/96 & 5/29/96 P-1 A-1+ 9,984
7,000 Kingdom of Sweden, 5.125%, due
6/4/96 P-1 A-1+ 6,966
10,365 General Re Corp., 5.28%, due
6/5/96 P-1 A-1+ 10,312
10,000 Enel Commercial Paper, Inc.,
5.40%, due 6/6/96 P-1 A-1+ 9,946
6,000 Ameritech Capital Funding
Corp., 5.29%, due 6/10/96 P-1 A-1+ 5,965
1,930 Minnesota Mining &
Manufacturing Co., 5.24%, due
6/13/96 P-1 A-1+ 1,918
8,600 Northern States Power Co.,
5.30%, due 6/13/96 P-1 A-1+ 8,546
5,000 PACCAR Financial Corp., 5.22%,
due 6/14/96 P-1 A-1+ 4,968
7,720 Illinois Tool Works Inc.,
5.31%, due 5/28/96 & 6/18/96 P-1 A-1+ 7,677
17,000 Southwestern Bell Capital
Corp., 5.24% & 5.25%, due
5/22/96 & 6/19/96 P-1 A-1+ 16,919
7,000 Swedish Export Credit Corp.,
5.28%, due 6/21/96 P-1 A-1+ 6,948
10,000 Motorola Inc., 5.24%, due
6/27/96 P-1 A-1+ 9,917
5,645 Siemens Corp., 5.26%, due
6/28/96 P-1 A-1+ 5,597
</TABLE>
28
<PAGE>
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(1)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
$ 7,000 General Electric Capital
Corp., 5.14%, due 7/1/96 P-1 A-1+ $ 6,939
10,000 Glaxo Wellcome PLC, 5.05% &
5.26%, due 5/22/96 & 7/2/96 P-1 A-1+ 9,940
15,000 Colgate-Palmolive Co., 5.15% &
5.25%, due 7/8/96 & 7/12/96 P-1 A-1 14,847
23,000 Ontario Hydro, Canada,
5.05%-5.30%, due 5/17/96 &
7/17/96 P-1 A-1+ 22,884
15,400 Province of British Columbia,
Canada, 5.04% & 5.16%, due
7/8/96 & 7/29/96 P-1 A-1+ 15,240
15,000 Credit Suisse, Variable Rate
Notes, 5.428%, due 3/5/97 P-1 A-1 15,000
---------------
TOTAL CORPORATE COMMERCIAL
PAPER 271,135
---------------
TAXABLE REVENUE BONDS (0.9%)
2,000 Harris Co. (TX) Hlth. Fac.
Dev. Corp. SCH Hlth. Care Sys.
(Sisters of Charity of the
Incarnate Word, Houston,
Texas), Ser. 1993, 5.518%, due
5/30/96 P-1 A-1+ 2,000
2,100 Louisiana Pub. Fac. Au. SCH
Hlth. Care Sys. (Sisters of
Charity of the Incarnate Word,
Houston, Texas), Ser. 1993,
5.518%, due 5/30/96 P-1 A-1+ 2,100
---------------
TOTAL TAXABLE REVENUE BONDS 4,100
---------------
CERTIFICATES OF DEPOSIT
(13.4%)
5,000 Commerzbank AG, Yankee C.D.,
5.37%, due 5/13/96 P-1 A-1+ 5,000
5,000 Creditanstalt-Bankverein,
Yankee C.D., 5.36%, due
5/17/96 P-1 A-1 5,000
22,000 National Westminster Bank PLC,
Yankee C.D., 5.28%-5.38%, due
5/13/96-6/19/96 P-1 A-1+ 22,000
7,000 ABN AMRO Bank N.V., Eurodollar
C.D., 5.26%, due 7/8/96 P-1 A-1+ 7,002
</TABLE>
29
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(1)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
$ 7,000 Morgan Guaranty Trust,
Eurodollar C.D., 5.13%, due
7/8/96 P-1 A-1+ $ 6,997
10,000 Bayerische Vereinsbank AG,
Eurodollar C.D., 5.36%, due
7/23/96 P-1 A-1+ 10,000
5,000 Rabobank Nederland, Yankee
C.D., 5.21%, due 7/26/96 P-1 A-1+ 5,000
---------------
TOTAL CERTIFICATES OF DEPOSIT 60,999
---------------
CORPORATE DEBT SECURITIES
(5.6%)
15,000 PNC Bank, National
Association, Variable Rate
Short-Term Bank Notes, 5.388%,
due 8/9/96 P-1 A-1 14,998
10,500 AT&T Capital Corp.,
Medium-Term Notes, Ser. A,
7.22%, due 11/5/96 Aa3 AA 10,580
---------------
TOTAL CORPORATE DEBT
SECURITIES 25,578
---------------
TOTAL INVESTMENTS (99.7%) 454,320
Cash, receivables and other
assets, less liabilities
(0.3%) 1,463
---------------
TOTAL NET ASSETS (100.0%) $ 455,783
---------------
</TABLE>
30
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- ----------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES (8.9%)
$ 4,000 Student Loan Marketing
Association, Floating Rate
Notes, 6.08%, due 7/1/96 AGY AGY $ 4,001
2,000 Federal Home Loan Bank, Bonds,
Ser. CZ-1996, 5.10%, due
7/8/96 AGY AGY 1,999
1,000 Federal Farm Credit Bank,
Bonds, 5.40%, due 12/2/96 AGY AGY 1,000
1,300 Federal Home Loan Mortgage
Corp., Notes, 7.555%, due
2/10/97 AGY AGY 1,318
250 Federal Home Loan Bank,
Floating Rate Notes, 4.775%,
due 1/29/98 AGY AGY 245
500 Federal Home Loan Bank,
Floating Rate Notes, 4.80%,
due 2/25/98 AGY AGY 490
---------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $9,045) 9,053
---------------
MORTGAGE-BACKED SECURITIES
(18.0%)
FEDERAL HOME LOAN MORTGAGE CORP.
666 REMIC Floating Rate CMO, Ser.
1270-F, 5.9125%, due 5/15/97 AGY AGY 667
57 Mortgage Participation
Certificates, 11.50%, due
2/1/00 & 5/1/00 AGY AGY 61
4,631 Gold Balloon Payment
Certificates, 6.50%, due
3/1/97-11/1/00 AGY AGY 4,614
114 Mortgage Participation
Certificates, 10.50%, due
6/1/00-11/1/00 AGY AGY 119
1,776 Gold Balloon Payment
Certificates, 7.50%, due
11/1/01 AGY AGY 1,798
469 ARM Certificates, 7.125%, due
12/1/16 AGY AGY 473
605 ARM Certificates, 6.625%, due
3/1/17 AGY AGY 608
</TABLE>
31
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- ----------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
$ 2,698 Pass-Through Certificates,
7.50%, due 10/15/09-10/15/10 AGY AGY $ 2,729
4,914 Pass-Through Certificates,
6.50%, due 11/15/10-2/15/11 AGY AGY 4,785
2,514 Pass-Through Certificates,
7.00%, due 4/15/11 AGY AGY 2,498
---------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $18,644) 18,352
---------------
ASSET-BACKED SECURITIES
(13.2%)
106 General Motors Acceptance
Corp. Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1992-F,
Class A, 4.50%, due 9/15/97 Aaa AAA 106
750 Daimler-Benz Auto Grantor
Trust, Ser. 1993-A, Class A,
3.90%, due 10/15/98 Aaa AAA 744
166 USAA Auto Loan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1993-1,
3.90%, due 3/15/99 Aaa AAA 164
1,402 Ford Credit Grantor Trust,
Ser. 1995-A, Class A, 5.90%,
due 5/15/00 Aaa AAA 1,403
4,644 Onyx Acceptance Grantor Trust,
Auto Loan Pass-Through
Certificates, Ser. 1996-1,
5.40%, due 5/15/01 Aaa AAA 4,577
4,185 Caterpillar Financial Asset
Trust, Ser. 1995-A, Class A-2,
6.10%, due 8/25/01 Aaa AAA 4,180
2,306 Chase Manhattan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1995-A,
6.00%, due 9/17/01 Aaa AAA 2,300
---------------
TOTAL ASSET-BACKED SECURITIES
(COST $13,541) 13,474
---------------
</TABLE>
32
<PAGE>
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- ----------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
BANKS & FINANCIAL INSTITUTIONS
(14.8%)
$ 3,000 Bayerische Hypotheken-und
Wechsel-Bank, Eurodollar C.D.,
5.33%, due 8/1/96 P-1 A-1+ $ 3,000
3,000 Norwest Corp., Medium-Term
Notes, Ser. E, 7.75%, due
12/31/96 Aa3 AA- 3,041
4,000 Deutsche Bank A.G., Yankee
C.D., 7.498%, due 1/21/97 Aaa AAA 4,052
5,000 Associates Corp. of North
America, Senior Notes, 5.75%,
due 11/15/98 Aa3 AA 4,916
---------------
TOTAL BANKS & FINANCIAL
INSTITUTIONS (COST $15,087) 15,009
---------------
CORPORATE DEBT SECURITIES
(7.9%)
1,000 British Telecom Finance B.V.,
Guaranteed Bonds, 7.625%, due
9/30/96 Aaa AAA 1,006
3,000 AT&T Capital Corp.,
Medium-Term Notes, Ser. A,
7.22%, due 11/5/96 Aa3 AA 3,023
4,000 du Pont (E.I.), de Nemours &
Co., Medium-Term Notes, Ser.
F, 6.04%, due 12/16/97 Aa2 AA 3,984
---------------
TOTAL CORPORATE DEBT
SECURITIES (COST $8,049) 8,013
---------------
CORPORATE COMMERCIAL PAPER
(39.4%)
5,000 Corporate Asset Funding Co.,
Inc., 5.33%, due 5/1/96 P-1 A-1+ 5,000(3)
1,395 Marsh & McLennan Cos., Inc.,
5.37%, due 5/1/96 P-1 A-1+ 1,395(3)
3,000 Province of Alberta, Canada,
5.32%, due 5/1/96 P-1 A-1+ 3,000(3)
3,790 Goldman Sachs Group, L.P.,
5.25%, due 5/3/96 P-1 A-1+ 3,789(3)
3,000 PepsiCo, Inc., 5.28%, due
5/6/96 P-1 A-1 2,998(3)
4,200 Raytheon Co., 5.25%, due
5/6/96 P-1 A-1+ 4,197(3)
4,000 Enterprise Funding Corp.,
5.35%, due 5/16/96 P-1 A-1 3,991(3)
</TABLE>
33
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- ----------------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
$ 4,000 UNUM Corp., 5.30%, due 5/16/96 P-1 A-1 $ 3,991(3)
4,000 Donnelley & Sons (R.R.) Co.,
5.28%, due 5/22/96 P-1 A-1 3,988(3)
2,650 Ciesco, L.P., 5.27%, due
5/23/96 P-1 A-1+ 2,641(3)
3,170 McKenna Triangle National
Corp., 5.27%, due 5/24/96 P-1 A-1+ 3,159(3)
2,000 Province of British Columbia,
Canada, 5.45%, due 7/3/96 P-1 A-1+ 1,981
---------------
TOTAL CORPORATE COMMERCIAL
PAPER (COST $40,130) 40,130
---------------
TOTAL INVESTMENTS (102.2%)
(COST $104,496) 104,031(4)
Liabilities, less cash,
receivables and other assets
[(2.2%)] (2,248)
---------------
TOTAL NET ASSETS (100.0%) $ 101,783
---------------
</TABLE>
34
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(8.1%)
$ 1,500 U.S. Treasury Notes, 6.75%,
due 5/31/97 TSY TSY $ 1,515
1,820 U.S. Treasury Notes, 7.375%,
due 11/15/97 TSY TSY 1,857
7,930 U.S. Treasury Notes, 7.25%,
due 2/15/98 TSY TSY 8,088
1,130 U.S. Treasury Notes, 6.50%,
due 4/30/99 TSY TSY 1,138
7,265 U.S. Treasury Notes, 7.75%,
due 1/31/00 TSY TSY 7,596
3,500 U.S. Treasury Notes, 6.75%,
due 4/30/00 TSY TSY 3,544
1,070 U.S. Treasury Notes, 6.25%,
due 5/31/00 TSY TSY 1,065
---------------
TOTAL U.S. TREASURY SECURITIES
(COST $24,436) 24,803
---------------
U.S. GOVERNMENT AGENCY
SECURITIES (12.8%)
200 Federal Home Loan Bank,
Discount Notes, 5.30%, due
5/1/96 AGY AGY 200
4,855 Federal Home Loan Mortgage
Corp., Discount Notes, 5.30%,
due 5/1/96 AGY AGY 4,854
11,645 Federal National Mortgage
Association, Discount Notes,
5.21%, due 5/10/96 AGY AGY 11,628
10,000 Federal Home Loan Mortgage
Corp., Discount Notes, 5.17%,
due 5/20/96 AGY AGY 9,971
5,590 Federal Home Loan Mortgage
Corp., Discount Notes, 5.17%,
due 7/5/96 AGY AGY 5,537
7,100 Federal Home Loan Mortgage
Corp., Discount Notes, 5.17%,
due 7/17/96 AGY AGY 7,021
---------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $39,217) 39,211
---------------
MORTGAGE-BACKED SECURITIES
(6.2%)
FEDERAL HOME LOAN MORTGAGE CORP.
221 Mortgage Participation
Certificates, 10.50%, due
10/1/00 & 12/1/00 AGY AGY 231
719 Mortgage Participation
Certificates, 8.50%, due
10/1/01 AGY AGY 736
275 ARM Certificates, 7.00%, due
1/1/17 AGY AGY 277
195 ARM Certificates, 6.875%, due
2/1/17 AGY AGY 196
807 ARM Certificates, 6.625%, due
3/1/17 AGY AGY 811
430 ARM Certificates, 7.50%, due
10/1/17 AGY AGY 439
</TABLE>
35
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
$ 325 Balloon Payment, Certificates,
9.00%, due 3/1/97-8/1/98 AGY AGY $ 333
365 Balloon Payment, Certificates,
8.50%, due 9/1/97-11/1/98 AGY AGY 374
1,099 Mortgage Participation
Certificates, 7.00%, due
9/1/03 AGY AGY 1,100
826 REMIC Floating Rate CMO, Ser.
1992-59F, 5.8688%, due 8/25/06 AGY AGY 827
6,160 Mortgage Participation
Certificates, 7.50%, TBA, 15
Year Maturity AGY AGY 6,187
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
223 Pass-Through Certificates,
12.00%, due 5/15/12-3/15/15 AGY AGY 256
5,247 Pass-Through Certificates,
10.00%, due 9/15/15-6/15/20 AGY AGY 5,752
1,533 Pass-Through Certificates,
9.50%, due 8/15/09-4/15/22 AGY AGY 1,642
---------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $18,992) 19,161
---------------
ASSET-BACKED SECURITIES
(12.9%)
257 World Omni Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1992-A,
4.75%, due 1/15/98 Aaa AAA 255
402 Volvo Auto Receivables Grantor
Trust, Automobile Loan
Pass-Through Certificates,
Ser. 1992-A, 4.65%, due
6/15/98 Aaa AAA 400
1,500 Daimler-Benz Auto Grantor
Trust, Ser. 1993-A, Class A,
3.90%, due 10/15/98 Aaa AAA 1,489
1,576 Premier Auto Trust, Ser.
1993-3, Class A-3, 4.90%, due
12/15/98 Aaa AAA 1,564
4,139 Nissan Auto Receivables
Grantor Trust, Automobile Loan
Pass-Through Certificates,
Ser. 1994-A, Class A, 6.45%,
due 9/15/99 Aaa AAA 4,157
</TABLE>
36
<PAGE>
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
$ 5,020 Chase Manhattan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1995-B,
5.90%, due 11/15/01 Aaa AAA $ 5,007
2,379 Case Equipment Loan Trust,
Ser. 1995-A, 7.30%, due
3/15/02 Aaa AAA 2,416
6,500 Ford Credit Auto Loan Master
Trust, Auto Loan Certificates,
Ser. 1996-1, 5.50%, due
2/15/03 Aaa AAA 6,150
7,000 NationsBank Credit Card Master
Trust, Ser. 1995-1, Class A,
6.45%, due 4/15/03 Aaa AAA 6,986
6,000 ADVANTA Credit Card Master
Trust II, Ser. 1995-F, Class
A-1, 6.05%, due 8/1/03 Aaa AAA 5,837
5,000 Standard Credit Card Master
Trust I, Credit Card
Participation Certificates,
Ser. 1994-4, Class A, 8.25%,
due 11/7/03 Aaa AAA 5,345
---------------
TOTAL ASSET-BACKED SECURITIES
(COST $40,278) 39,606
---------------
BANKS & FINANCIAL INSTITUTIONS
(27.5%)
5,000 Union Bank of Finland Ltd.,
Global Notes, 5.25%, due
6/15/96 A2 BBB 4,994
5,000 State Bank of New South Wales,
Eurodollar Notes, 8.50%, due
7/1/96 Aa2 AA 5,022
10,000 Society National Bank, Bank
Notes, 6.875%, due 10/15/96 Aa3 A 10,025
5,000 BankAmerica Corp., Medium-Term
Notes, 6.875%, due 11/20/97 A1 A+ 5,030
10,000 Chase Manhattan Corp., Senior
Notes, 6.625%, due 1/15/98 A1 A 10,037
6,400 Alco Capital Resource, Inc.,
Medium-Term Notes, Ser. B,
5.46%, due 2/22/99 Baa1 A 6,203
5,890 Sovereign Bancorp Inc.,
Subordinated Debentures,
6.75%, due 9/1/00 BB+ 5,710
8,000 First USA Bank, Medium-Term
Deposit Notes, 6.375%, due
10/23/00 Baa2 BBB- 7,787
</TABLE>
37
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
$ 6,310 NationsBank, Senior
Medium-Term Notes, Ser. D,
5.85%, due 1/17/01 A2 A $ 6,053
6,600 Capital One Bank, Bank Notes,
5.95%, due 2/15/01 Baa3 BBB- 6,292
4,000 Bear Stearns Co. Inc., Senior
Notes, 5.75%, due 2/15/01 A2 A 3,806
6,230 Citicorp, Senior Notes,
5.625%, due 2/15/01 A1 A+ 5,926
3,000 Chase Manhattan Corp., Senior
Medium-Term Notes, Ser. B,
6.43%, due 3/29/01 A1 A 2,945
5,150 Goldman Sachs Group, L.P.,
Global Notes, 6.75%, due
2/15/06 A1 A+ 4,878(5)
---------------
TOTAL BANKS & FINANCIAL
INSTITUTIONS (COST $87,211) 84,708
---------------
CORPORATE DEBT SECURITIES
(34.3%)
8,000 Discover Credit Corp.,
Medium-Term Notes, 7.97%, due
5/7/97 A2 BBB 8,185
5,185 Borden Inc., Zero-Coupon,
Yielding 6.76%, due 5/22/97 Ba1 BB+ 4,811(5)
9,000 P.H. Glatfelter Co., Corporate
Notes, 5.875%, due 3/1/98 Baa2 BBB+ 8,839
3,000 Ford Motor Credit Co.,
Medium-Term Notes, 9.10%, due
5/4/98 A1 A+ 3,151
5,000 Xerox Credit Corp.,
Medium-Term Notes, 6.84%, due
6/1/00 A2 A 4,930
2,000 Ford Motor Credit Co.,
Medium-Term Notes, 6.84%, due
8/16/00 A1 A+ 2,000
1,770 Premark International, Inc.,
Notes, 10.50%, due 9/15/00 Baa2 BBB+ 1,990
2,510 Chesapeake Corp., Notes,
10.375%, due 10/1/00 Baa3 BBB 2,825
1,750 Sears Roebuck Acceptance
Corp., Medium-Term Notes, Ser.
I, 6.42%, due 10/10/00 A2 BBB 1,714
5,000 Sears Roebuck Acceptance
Corp., Medium-Term Notes, Ser.
I, 6.40%, due 10/11/00 A2 BBB 4,891
5,200 General Motors Acceptance
Corp., Medium-Term Notes,
8.125%, due 3/1/01 A3 A- 5,464
</TABLE>
38
<PAGE>
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT RATING VALUE(2)
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
- --------------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
$ 4,500 Loewen Group International,
Inc., Senior Guaranteed Notes,
Ser. 1, 7.50%, due 4/15/01 Ba1(6) BB+(6) $ 4,427(5)
5,000 Rhone Poulenc S.A., Yankee
Bonds, 7.75%, due 1/15/02 Baa2 BBB 5,125
2,835 Black & Decker Corp.,
Medium-Term Notes, Ser. A,
8.90%, due 1/21/02 Baa3 BBB- 3,071
2,000 Marathon Oil, Notes, 7.00%,
due 6/1/02 Baa3 BB+ 1,972
2,000 Federated Department Stores,
Inc., Senior Notes, 8.125%,
due 10/15/02 Ba1 BB- 1,943
4,700 Viacom, Senior Notes, 6.75%,
due 1/15/03 Ba2(7) BB+(7) 4,483
1,000 Safeway Inc., Medium-Term
Notes, 8.57%, due 4/1/03 Ba1 BBB- 1,036
3,290 ADT Operations, Inc.,
Guaranteed Senior Subordinated
Notes, 9.25%, due 8/1/03 Ba3 BB+ 3,407
4,450 Tenet Healthcare Corp., Senior
Notes, 8.625%, due 12/1/03 Ba1 BB 4,539
5,950 BHP Copper Inc., Senior
Subordinated Notes, 8.70%, due
5/15/05 A2 A 6,500
4,015 Northrop Grumman, Senior
Notes, 7.00%, due 3/1/06 Baa3 BBB- 3,858(5)
5,575 Time Warner Inc., Notes,
8.11%, due 8/15/06 Ba1 BBB- 5,606
7,290 Tenneco Inc., Debentures,
10.00%, due 3/15/08 Baa2 BBB- 8,616
2,000 Riverwood International Corp.,
Senior Subordinated Notes,
10.875%, due 4/1/08 B3 B 1,993
---------------
TOTAL CORPORATE DEBT
SECURITIES (COST $108,322) 105,376
---------------
TOTAL INVESTMENTS (101.8%)
(COST $318,456) 312,865(4)
Liabilities, less cash,
receivables and other assets
[(1.8%)] (5,675)
---------------
TOTAL NET ASSETS (100.0%) $ 307,190
---------------
</TABLE>
39
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
1)Investment securities of the Portfolio are valued at amortized cost, which
approximates Federal income tax cost.
2)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 or, if quotations are not available, by a method that the trustees
of Income Managers Trust believe accurately reflects fair value. Short-term
investments with less than sixty days until maturity at the time of purchase
may be valued at cost which, when combined with interest earned, approximates
market value.
3)At cost, which approximates market value.
4)At April 30, 1996, 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 DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ULTRA SHORT BOND PORTFOLIO $ 104,496,000 $ 49,000 $ 514,000 $ 465,000
LIMITED MATURITY BOND PORTFOLIO 318,456,000 776,000 6,367,000 5,591,000
</TABLE>
5)Security exempt from registration under the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to
qualified institutional buyers under Rule 144A. At April 30, 1996, these
securities amounted to $17,974,429 or 5.9% of net assets.
6)Rated BBB- by Duff & Phelps, Inc.
7)Rated BBB- by Fitch Investors Services, Inc.
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
(This page has been left blank intentionally.)
41
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY
(000'S OMITTED) PORTFOLIO
-------------
<S> <C>
ASSETS
Investments in securities, at value* (Note
A) -- see Schedule of
Investments $ 273,787
Cash 145
Deferred organization costs (Note A) 11
Interest receivable 325
Prepaid expenses and other assets 12
Receivable for securities sold --
Receivable for variation margin (Note A) --
-------------
274,280
-------------
LIABILITIES
Payable for securities purchased 19,748
Payable to investment manager (Note B) 56
Accrued expenses 27
-------------
19,831
-------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 254,449
-------------
NET ASSETS consist of:
Paid-in capital $ 254,449
Net unrealized depreciation in value of
investments and financial futures
contracts --
-------------
NET ASSETS $ 254,449
-------------
*Cost of investments $ 273,787
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
LIMITED
CASH ULTRA SHORT MATURITY
RESERVES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value* (Note
A) -- see Schedule of
Investments $ 454,320 $ 104,031 $ 312,865
Cash 674 2 5
Deferred organization costs (Note A) 10 4 11
Interest receivable 893 766 3,940
Prepaid expenses and other assets 14 3 14
Receivable for securities sold -- 23 58
Receivable for variation margin (Note A) -- -- 116
------------------------------------------------
455,911 104,829 317,009
------------------------------------------------
LIABILITIES
Payable for securities purchased -- 3,000 9,720
Payable to investment manager (Note B) 96 22 67
Accrued expenses 32 24 32
------------------------------------------------
128 3,046 9,819
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 455,783 $ 101,783 $ 307,190
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 455,783 $ 102,248 $ 312,344
Net unrealized depreciation in value of
investments and financial futures contracts -- (465) (5,154)
------------------------------------------------
NET ASSETS $ 455,783 $ 101,783 $ 307,190
------------------------------------------------
*Cost of investments $ 454,320 $ 104,496 $ 318,456
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY
(000'S OMITTED) PORTFOLIO
------------
<S> <C>
INVESTMENT INCOME
Interest income $ 7,530
------
Expenses:
Investment management fee (Note B) 351
Accounting fees 5
Amortization of deferred organization and
initial offering expenses (Note A) 3
Auditing fees 11
Custodian fees (Note B) 46
Insurance expense 4
Legal fees 5
Trustees' fees and expenses 11
------
Total expenses 436
------
Net investment income 7,094
------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FINANCIAL FUTURES CONTRACTS, AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investments sold (20)
Net realized loss on foreign currency
transactions (Note A) --
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies --
Net unrealized appreciation of financial
futures contracts (Note A) --
------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions (20)
------
Net increase in net assets resulting from
operations $ 7,074
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>
For the Six Months Ended April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
CASH ULTRA SHORT LIMITED MATURITY
RESERVES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 12,236 $ 3,184 $ 10,378
-----------------------------------------------
Expenses:
Investment management fee (Note B) 551 129 391
Accounting fees 5 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 2 1 3
Auditing fees 12 11 12
Custodian fees (Note B) 65 40 65
Insurance expense 5 1 4
Legal fees 7 9 9
Trustees' fees and expenses 17 6 13
-----------------------------------------------
Total expenses 664 202 502
-----------------------------------------------
Net investment income 11,572 2,982 9,876
-----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FINANCIAL FUTURES CONTRACTS, AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investments sold 5 (177) 1,554
Net realized loss on foreign currency
transactions (Note A) -- -- (100)
Change in net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities in
foreign currencies -- (652) (6,319)
Net unrealized appreciation of financial
futures contracts (Note A) -- -- 437
-----------------------------------------------
Net gain (loss) on investments, financial
futures contracts, and foreign currency
transactions 5 (829) (4,428)
-----------------------------------------------
Net increase in net assets resulting from
operations $ 11,577 $ 2,153 $ 5,448
-----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY PORTFOLIO
Six Months
Ended Year
April 30, Ended
1996 October 31,
(000'S OMITTED) (UNAUDITED) 1995
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 7,094 $ 15,857
Net realized gain (loss) on
investments sold, financial
futures contracts, and foreign
currency transactions (20) 4
Change in net unrealized
appreciation (depreciation) of
investments, financial futures
contracts, and translation of
assets and liabilities in foreign
currencies -- --
-----------------------------
Net increase in net assets resulting
from operations 7,074 15,861
-----------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 323,361 642,711
Reductions (384,471) (601,644)
-----------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (61,110) 41,067
-----------------------------
NET INCREASE (DECREASE) IN NET ASSETS (54,036) 56,928
NET ASSETS:
Beginning of period 308,485 251,557
-----------------------------
End of period $ 254,449 $ 308,485
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
46
<PAGE>
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
CASH RESERVES ULTRA SHORT LIMITED MATURITY
PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
April 30, Ended April 30, Ended April 30, Ended
1996 October 31, 1996 October 31, 1996 October 31,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 11,572 $ 19,159 $ 2,982 $ 5,200 $ 9,876 $ 20,164
Net realized gain (loss) on
investments sold, financial
futures contracts, and
foreign currency transactions 5 (3) (177) (331) 1,454 (3,625)
Change in net unrealized
appreciation (depreciation)
of investments, financial
futures contracts, and
translation of assets and
liabilities in foreign
currencies -- -- (652) 842 (5,882) 9,092
---------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 11,577 19,156 2,153 5,711 5,448 25,631
---------------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS:
Additions 226,531 331,245 14,587 37,400 27,776 42,386
Reductions (191,556) (253,131) (17,023) (43,021) (45,680) (64,495)
---------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
transactions in investors'
beneficial interests 34,975 78,114 (2,436) (5,621) (17,904) (22,109)
---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS 46,552 97,270 (283) 90 (12,456) 3,522
NET ASSETS:
Beginning of period 409,231 311,961 102,066 101,976 319,646 316,124
---------------------------------------------------------------------------------------------
End of period $ 455,783 $ 409,231 $ 101,783 $ 102,066 $ 307,190 $ 319,646
---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1996 (Unaudited)
- ----------------------------------------------------------------------
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"), and Neuberger&Berman Limited
Maturity Bond Portfolio ("Limited Maturity") (collectively, the "Portfolios")
are separate operating 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: Investment securities 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 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 its
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 Portfolio has no specific limitation on the percentage
of assets which may be committed to these types of contracts. The Portfolio
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
48
<PAGE>
underlying all contractual commitments held by the Portfolio is determined
using forward foreign currency exchange rates supplied by an independent
pricing service.
5) FINANCIAL FUTURES CONTRACTS: Ultra Short and Limited Maturity 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. At April 30, 1996, open
positions in financial futures contracts for Limited Maturity were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
June, 1996 41 U.S. Treasury Notes, 5 year Short $ 45,484
June, 1996 283 U.S. Treasury Notes, 10 year Short 391,938
</TABLE>
49
<PAGE>
At April 30, 1996, Limited Maturity had the following securities deposited in
a segregated account to cover margin requirements on open financial futures
contracts:
<TABLE>
<CAPTION>
PAR VALUE SECURITY
- ----------------------------------------------------------------
<C> <S>
Federal Home Loan Mortgage Corp., Discount Notes,
$ 495,000 5.17%, due 7/5/96
4,555,000 Capital One Bank, Bank Notes, 5.95%, due 2/15/01
Federated Department Stores, Inc., Senior Notes,
2,000,000 8.125%, due 10/15/02
BHP Copper Inc., Senior Subordinated Notes, 8.70%,
5,950,000 due 5/15/05
Goldman Sachs Group, L.P., Global Notes, 6.75%,
5,150,000 due 2/15/06
4,015,000 Northrop Grumman, Senior Notes, 7.00%, due 3/1/06
4,000,000 Time Warner Inc., Notes, 8.11%, due 8/15/06
5,000,000 Tenneco Inc., Debentures, 10.00%, due 3/15/08
</TABLE>
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 April 30, 1996, the unamortized balance of
such expenses amounted to $11,437, $10,075, $4,161, and $11,495 for
Government Money, Cash Reserves, Ultra Short, and Limited Maturity,
respectively.
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 a
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 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.
50
<PAGE>
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 six months ended April 30, 1996, 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 $40,862,657 $49,615,103
LIMITED MATURITY 246,450,856 247,512,913
</TABLE>
All securities transactions for Government Money and Cash Reserves were
short-term.
During the six months ended April 30, 1996, Limited Maturity entered into
various contracts to deliver currencies at specified future dates. There were no
open positions in these contracts at April 30, 1996.
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent auditors. Annual reports
contain audited financial statements.
51
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT CASH RESERVES
MONEY PORTFOLIO PORTFOLIO
Period Period
from from
July 2, July 2,
1993 1993
(Commencement (Commencement
Six Months of Six Months of
Ended Operations) Ended Operations)
April 30, Year Ended to October April 30, Year Ended to October
1996 October 31, 31, 1996 October 31, 31,
(UNAUDITED) 1995 1994 1993 (UNAUDITED) 1995 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .31%(1) .31% .33% .32%(1) .30%(1) .31% .32% .34%(1)
------------------------------------------------------------------------------------------------
Net Investment Income 5.04%(1) 5.32% 3.38% 2.82%(1) 5.24%(1) 5.62% 3.63% 2.88%(1)
------------------------------------------------------------------------------------------------
Portfolio Turnover Rate -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------
Net Assets, End of Period (in
millions) $254.4 $308.5 $251.6 $277.7 $455.8 $409.2 $312.0 $273.3
------------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
52
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
BOND PORTFOLIO BOND PORTFOLIO
Period Period
from from
July 2, July 2,
1993 1993
(Commencement (Commencement
Six Months of Six Months of
Ended Operations) Ended Operations)
April 30, Year Ended October to October April 30, Year Ended October to October
1996 31, 31, 1996 31, 31,
(UNAUDITED) 1995 1994 1993 (UNAUDITED) 1995 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .39%(1) .40% .38% .40%(1) .32%(1) .33% .34% .33%(1)
------------------------------------------------------------------------------------------------
Net Investment Income 5.78%(1) 5.67% 3.98% 4.00%(1) 6.23%(1) 6.55% 5.86% 5.53%(1)
------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 56% 148% 94% 46% 87% 88% 102% 71%
------------------------------------------------------------------------------------------------
Net Assets, End of Period (in
millions) $101.8 $102.1 $102.0 $104.3 $307.2 $319.6 $316.1 $357.9
------------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
53
<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 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
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
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
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, and
Neuberger&Berman Limited Maturity Bond Fund are registered servicemarks of
Neuberger&Berman Management Inc.
- -C- 1996 Neuberger&Berman Management Inc.
54
<PAGE>
NEUBERGER&BERMAN MANAGEMENT INC. -Registered Trademark-
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.
[LOGO] PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS NBIFSAR00496
<PAGE>
