<PAGE>
SEMI-ANNUAL REPORT
- -------------------------------------------------------------------
April 30, 1997
NEUBERGER&BERMAN
INCOME FUNDS-REGISTERED TRADEMARK-
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 A-4
PERFORMANCE HIGHLIGHTS B-1
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Government Money Fund B-12
Cash Reserves B-13
Ultra Short Bond Fund B-14
Limited Maturity Bond Fund B-15
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Government Money Portfolio B-18
Cash Reserves Portfolio B-19
Ultra Short Bond Portfolio B-23
Limited Maturity Bond Portfolio B-26
FINANCIAL STATEMENTS B-34
FINANCIAL HIGHLIGHTS B-44
OTHER INFORMATION
Directory/Officers and Trustees C-1
</TABLE>
A-3
<PAGE>
PRESIDENT'S LETTER June 20, 1997
Dear Shareholder,
Let me begin with a brief "state of the bond market" address. Fixed income
market performance continues to reflect inflationary concerns. I will say,
however, that on an absolute and "real rate of return" basis (the spread between
bond yields and inflation), we believe bonds are more fundamentally attractive
today than in recent years. For example, with virtually no change in the rate of
inflation, bond yields in the one through 10-year maturity range as of April 30,
1997, are now 140-290 basis points (1.4%-2.9%) higher than their 1993 lows. In
addition, we currently enjoy a favorable political and economic backdrop for
bonds. We have a diligent inflation-fighting Federal Reserve, and Congress and
the Clinton Administration appear committed to a balanced budget deal. Thanks to
a healthy economy and improved corporate balance sheets, credit quality is
excellent. In recent years, bond returns have been overshadowed by the strong
performance of the stock market. This may or may not continue. The relevant
issue for us is that based on their own fundamental merits, we find that bonds
currently provide an appealing investment opportunity.
Also, permit me a few words on our investment discipline. There are three
basic ways we attempt to add value to the fixed income investment process. The
first is by active trend following maturity/duration management. We monitor
weighted average portfolio maturity in money market funds, and the weighted
average portfolio duration -- a measure of interest rate sensitivity -- in our
other income funds. This is a long handle for a simple and straightforward
strategy. When interest rates decline, we lengthen maturity/duration to enhance
the portfolios' yield. When interest rates rise, we shorten maturity/ duration
to minimize price erosion (longer maturity/duration bonds generally decline more
than shorter maturity/duration bonds as interest rates move higher). We use a
number of quantitative models to determine changes in interest rate trends and
adjust our portfolios' average maturity/duration accordingly.
Secondly, we identify those sectors within the broad fixed income market that
we believe offer the best risk adjusted return potential. For example, if we
believe the difference in yields between high credit quality corporate bonds and
Treasury securities are fundamentally unjustified, we will favor corporates as
investments for the appropriate portfolios. If we believe mortgage securities
are attractively priced, we will increase our exposure to this sector. We will
focus on asset-backed securities (bonds collateralized by specific assets), if
we think they offer value and opportunity.
A-4
<PAGE>
Finally, it bears noting that the bond market is not homogeneous. We analyze
issuers' management quality, products and product cycles, balance sheets and
income statements in much the same way an equity analyst would. Our goal is to
find bonds with realistic prospects for credit upgrades and perhaps more
importantly, identify and avoid those that may not deserve their current credit
quality rankings.
Now, let's review what transpired in the credit markets since we last wrote
to you at the end of October 1996. After a bumpy ride, bond yields of most
maturities finished the six-month period ended April 30, 1997, just about where
they started at the beginning of that period. The bond rally, which began in
mid-summer 1996, extended through mid-December when Federal Reserve Chairman
Alan Greenspan issued his now famous warning about the potential consequences of
the "irrational exuberance" of the financial markets. Equity investors shrugged
off this warning, waiting for Greenspan to raise the Federal Funds Rate 25 basis
points in March before a modest and short-lived stock market retreat. Fixed
income investors took it quite seriously and bonds trended lower in price until
early April, when new economic data calmed inflationary fears.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
3-MONTH T-BILL 30-YR. TREASURY 12-22 YR. MUNICIPAL BOND INDEX
<S> <C> <C> <C>
11/1/96 5.16 6.68 5.189
11/8/96 5.18 6.51 5.136
11/15/96 5.14 6.46 5.132
11/22/96 5.16 6.44 5.087
11/29/96 5.13 6.35 5.024
12/6/96 5.02 6.51 5.149
12/13/96 4.92 6.57 5.181
12/20/96 5.02 6.61 5.177
12/27/96 5.09 6.56 5.136
1/3/97 5.16 6.73 5.55
1/10/97 5.16 6.84 5.639
1/17/97 5.15 6.82 5.611
1/24/97 5.16 6.89 5.622
1/31/97 5.15 6.79 5.576
2/7/97 5.12 6.7 5.482
2/14/97 5.08 6.52 5.363
2/21/97 5.08 6.64 5.425
2/28/97 5.22 6.8 5.543
3/7/97 5.21 6.81 5.586
3/14/97 5.23 6.94 5.641
3/21/97 5.4 6.97 5.673
3/28/97 5.36 7.09 5.772
4/4/97 5.27 7.12 5.839
4/11/97 5.28 7.17 5.873
4/18/97 5.28 7.05 5.815
4/26/97 5.3 7.14 5.829
(Total Returns in
Percentage)
</TABLE>
SOURCE: BLOOMBERG FINANCIAL MARKETS FOR 30-YEAR TREASURY BOND AND
3-MONTH TREASURY BILLS; MERRILL LYNCH 12-22 YEAR MUNICIPAL BOND
INDEX.
We kept average portfolio maturities/durations relatively long, to take
advantage of declining interest rates through mid-December. As a defensive
measure, we then shortened durations as rates trended higher through March. In
early April, we modestly extended durations as rates declined from their peaks.
Our sector allocation favoring asset-backed, mortgage-backed, and corporate
bonds worked to our advantage as all these sectors outperformed
A-5
<PAGE>
Treasuries. Our commitment to the mortgage sector demonstrates our opportunistic
sector allocation approach. Mortgage securities seem to attract manic
depressives who alternate between euphoria over the attractive yields offered by
this sector and despair over the prospects that prepayment of mortgages will
lower the returns on their investment. These extreme mood swings present
opportunities for value-oriented investors like ourselves. When others were
abandoning this sector as interest rates fell in the second half of 1996 (when
interest rates decline, mortgages tend to be pre-paid), we were scooping up
bargains. As we anticipated, fears of increased prepayments were overblown, and
the yield advantage of mortgage securities bolstered our returns.
To summarize, our experience tells us market timers end up with speculators'
results or worse. So, we won't forecast where the bond market is heading over
the next six months. We do believe bonds are fundamentally attractive at current
levels. In general, the strategies we have employed over the last six months
have been productive. The following commentary provides greater detail on how
these strategies have been implemented in each of our funds.
GOVERNMENT MONEY FUND AND CASH RESERVES At the start of this six month
reporting period (November 1, 1996), the Government Money Fund had an average
maturity of 80.8 days, reflecting our strategy of locking in higher yields as
interest rates trended lower. We reversed course as the market began pricing in
Federal Reserve Chairman Greenspan's warning, ultimately reducing average
maturity to 43.4 days in late March. At the end of April we lengthened average
maturity to 71.6 days as interest rates trended lower.
Over the last six months, we followed a similar course in Cash Reserves. We
began this reporting period with an average maturity of 58.2 days. It was
shortened to 40.7 days and then extended to 44.3 days at the end of April.
In Cash Reserves, the biggest change during this period was increasing our
commercial paper (short-term corporate debt) allocation from 67% to 72% of the
portfolio. As long-term interest rates trend up and corporations must pay higher
rates on longer term debt, they tend to issue more commercial paper. The
additional supply in the marketplace forces issuers to price these securities
more cheaply, and therefore, the yield advantage of commercial paper over
Treasury securities increases. Six months ago, the spread between the highest
quality 90-day commercial paper and 90-day Treasury securities was about 25
basis points. As of April 30, 1997, it is 50 basis points. We view this as a
market supply/demand phenomenon, not a reflection of additional credit risk.
Consequently, our increased allocation to commercial paper allowed us to
prudently enhance portfolio yield.+
ULTRA SHORT BOND FUND With a maximum average portfolio duration of 2 years,
Ultra Short Bond Fund can move farther out on the yield curve
A-6
<PAGE>
than a money market fund. The weighted average portfolio duration was 1.49 years
on November 1, 1996, peaked at 1.72 years in mid-December, and as of April 30,
1997 was 1.62 years. Currently, we are somewhat concentrated in bonds with
durations in the 2-3 year range (46% of the portfolio), the "pocket" we believe
offers the most value at this time.
Our asset-backed securities performed well despite some hysteria generated in
this sector by increasing consumer debt levels and credit card delinquency
rates. Here, our commitment to high-quality collateral paid off as we invested
in capital equipment and auto loans and avoided the problematic credit card
issuers. We are maintaining our 19% weighting in asset-backed securities because
investors' over-reaction to perceived risk in this sector has resulted in yields
we believe are very attractive.
The mortgage sector also treated us well over the last six months. We bought
Agency bonds only (mortgage pools of U.S. Government agencies including Fannie
Mae, Freddie Mac and Ginnie Mae), so there is minimal credit risk. Exaggerated
fears of pre-payment risk when interest rates were declining in the fall,
presented an opportunity to lock in what we perceived to be very attractive
yields in this sector.
In the corporate debt arena, we have been buying bonds issued by leading
stock brokerage/asset management companies like Merrill Lynch and Lehman
Brothers. In the bad old days, much of a stock brokerage firm's cash flow came
from trading firm accounts and transaction-driven commissions. When interest
rates rose -- often with negative consequences for the stock market, and
in-house and retail trading activity -- brokerage firms' balance sheets and
bonds suffered. With fee based asset management now a much bigger part of these
companies' business, cash flow and earnings are more stable and balance sheets
are much less dependent on a healthy stock market. In our opinion, the bond
market hasn't yet factored in the improving credit quality of these issuers, and
these securities are undervalued.
LIMITED MATURITY BOND FUND During the six month period ended April 30, 1997,
our duration management strategy kept us busy as interest rates fell during
November and early December, climbed through late March, and finally moderated
in April. We reacted as soon as our models indicated an established
trend -- extending average duration, shortening, and extending once again.
Average duration peaked at 2.25 years, troughed at 1.90 years, and ended the
reporting period at 1.90 years. By making the trend our friend rather than
gambling on interest rate forecasts, we avoided the pitfalls that result from
speculating on the direction of interest rates.
Our ability to invest up to 10% of the portfolio in below investment grade
corporate bonds (no lower than single B rated), continued to pay off as this
A-7
<PAGE>
group out-performed investment grade corporates and Treasuries. We remain
attracted to the high yield sector. In the robust economic climate we currently
enjoy, credit risk is reduced as is reflected by the narrowing spreads between
high yield bonds and investment grade corporates. We particularly like companies
in the auto parts industry like Mark IV Industries and Collins & Aikman. The
automotive industry is healthy, parts suppliers' cash-flows and earnings are
strong, and balance sheets are improving. Also, consolidation within the
industry is eliminating competition and reducing the big automakers' ability to
squeeze parts suppliers' profit margins.
The Fund's 11% exposure to mortgage securities at April 30, 1997, contributed
to positive returns. We successfully took advantage of investors' over-reaction
to increased pre-payment risk as interest rates trended lower through the fall
and early winter. This turned out to be a double play for us. We locked in
higher yields as investors abandoned the mortgage market in the fall, and
realized some nice gains as they piled back in when interest rates trended
higher from December through March. Our asset-backed securities (approximately
18% of the portfolio), also performed well, principally because we focused not
just on collateral, but also on the credit quality of sponsors. Blue chip
companies like NationsBank proved largely immune to problems in the credit card
industry that hurt sub-prime lenders catering to marginal borrowers.
Looking ahead, we don't anticipate any substantial changes in the portfolio's
current sector allocation. We favor corporates, both investment grade and high
yield, mortgage debt, and asset-backed securities over Treasuries which at the
close of the reporting period comprised just 3% of the portfolio's assets.
Sincerely,
/s/ Theodore P. Giuliano
Theodore P. Giuliano
President and Trustee
Neuberger&Berman Income Funds
+An investment in either Government Money Fund or Cash Reserves, like all other
mutual funds, is neither insured nor guaranteed by the U.S. Government and
there can be no assurance that either Fund will be able to maintain a stable
net asset value of $1.00 per share. The return on an investment in either
Government Money Fund or Cash Reserves will fluctuate. Results represent past
performance and do not indicate future results.
A-8
<PAGE>
PERFORMANCE HIGHLIGHTS
TOTAL RETURN ILLUSTRATION
<TABLE>
<CAPTION>
SIX MONTH AVERAGE ANNUAL TOTAL
PERIOD RETURNS(1)
NEUBERGER&BERMAN INCEPTION ENDED --------------------
INCOME FUNDS DATE 4/30/97(1) 1 YR(1) 5 YR 10 YR
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ULTRA SHORT BOND FUND(3) 11/7/86 +2.14% +5.45% +4.18% +5.82%
LIMITED MATURITY BOND FUND(3) 6/9/86 +2.40% +6.42% +5.56% +7.00%
</TABLE>
YIELD ILLUSTRATION
FOR THE 7 DAYS ENDED 4/30/97
<TABLE>
<CAPTION>
INCEPTION CURRENT EFFECTIVE
DATE YIELD(2) YIELD(2)
- ----------------------------------------------------------------------
<S> <C> <C> <C>
GOVERNMENT MONEY FUND(4) 11/14/83 4.70% 4.81%
CASH RESERVES(3)(4) 4/12/88 4.92% 5.04%
</TABLE>
1) One-year and average annual total returns are for periods ended April 30,
1997. Includes reinvestment of all dividends and other distributions. 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.
3) Neuberger&Berman Management Inc.-Registered Trademark- voluntarily bears
certain operating expenses in excess of .65% of the average daily net assets
per annum of Neuberger&Berman Cash Reserves-Registered Trademark- ("Cash
Reserves") and Neuberger&Berman Ultra Short Bond Fund-Registered Trademark-
("Ultra Short") and .70% of the average daily net assets per annum of
Neuberger&Berman Limited Maturity Bond Fund-Registered Trademark- ("Limited
Maturity"). These arrangements can be terminated upon 60 days' prior written
notice to the appropriate Fund. Absent such reimbursements, the total returns
for Ultra Short and Limited Maturity for the above stated periods would have
been less, and the current and effective yields for Cash Reserves would have
been the same.
4) An investment in a money market fund, like all other mutual funds, is neither
insured nor guaranteed by the U.S. Government. There can be no assurance that
a money market fund will be able to maintain a stable net asset value of
$1.00 per share. The return on an investment in Neuberger&Berman Government
Money Fund-Registered Trademark- and Cash Reserves will fluctuate.
B-1
<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) $ 278,702
Receivable for Trust shares sold 615
--------------
279,317
--------------
LIABILITIES
Dividends payable 12
Payable for Trust shares redeemed 105
Payable to administrator -- net (Note B) 63
Accrued expenses 66
--------------
246
--------------
NET ASSETS at value $ 279,071
--------------
NET ASSETS consist of:
Par value $ 279
Paid-in capital in excess of par value 278,805
Accumulated net realized losses on
investment (13)
Net unrealized depreciation in value of
investment --
--------------
NET ASSETS at value $ 279,071
--------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 279,084
--------------
NET ASSET VALUE, offering and redemption price per
share $1.00
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
April 30, 1997 (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) $ 601,845 $ 75,595 $ 238,183
Receivable for Trust shares sold 644 16 238
------------------------------------------------
602,489 75,611 238,421
------------------------------------------------
LIABILITIES
Dividends payable 23 45 208
Payable for Trust shares redeemed 2,414 161 365
Payable to administrator -- net (Note B) 134 8 43
Accrued expenses 123 41 67
------------------------------------------------
2,694 255 683
------------------------------------------------
NET ASSETS at value $ 599,795 $ 75,356 $ 237,738
------------------------------------------------
NET ASSETS consist of:
Par value $ 600 $ 8 $ 24
Paid-in capital in excess of par value 599,212 80,020 249,899
Accumulated net realized losses on
investment (17) (4,597) (9,503)
Net unrealized depreciation in value of
investment -- (75) (2,682)
------------------------------------------------
NET ASSETS at value $ 599,795 $ 75,356 $ 237,738
------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 599,812 7,995 23,983
------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $9.43 $9.91
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<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) $ 8,954
------
Expenses:
Administration fee (Note B) 458
Auditing fees 4
Custodian fees 5
Legal fees 18
Registration and filing fees 2
Shareholder reports 22
Shareholder servicing agent fees (Note B) 42
Trustees' fees and expenses 13
Miscellaneous 3
Expenses from corresponding Portfolio (Notes
A & B) 519
------
Total expenses 1,086
Deduct -- expenses reimbursed by
administrator (Note B) --
------
Total net expenses 1,086
------
Net investment income 7,868
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized loss on investment securities (7)
Net realized loss on financial futures
contracts --
Net realized gain on foreign currency
transactions --
Change in net unrealized appreciation
(depreciation) of investment securities --
Change in net unrealized depreciation of
financial futures contracts --
------
Net loss on investments from corresponding
Portfolio (Note A) (7)
------
Net increase in net assets resulting from
operations $ 7,861
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
For the Six Months Ended April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
LIMITED
CASH ULTRA SHORT MATURITY
RESERVES BOND FUND BOND FUND
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 15,060 $ 2,519 $ 8,467
------------------------------------------------
Expenses:
Administration fee (Note B) 738 109 321
Auditing fees 4 4 4
Custodian fees 5 5 5
Legal fees 12 11 11
Registration and filing fees 28 18 23
Shareholder reports 38 18 21
Shareholder servicing agent fees (Note B) 117 31 75
Trustees' fees and expenses 16 4 8
Miscellaneous 4 2 3
Expenses from corresponding Portfolio (Notes
A & B) 806 162 393
------------------------------------------------
Total expenses 1,768 364 864
Deduct -- expenses reimbursed by
administrator (Note B) -- (100) (32)
------------------------------------------------
Total net expenses 1,768 264 832
------------------------------------------------
Net investment income 13,292 2,255 7,635
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized loss on investment securities (6) (148) (50)
Net realized loss on financial futures
contracts -- -- (134)
Net realized gain on foreign currency
transactions -- -- 15
Change in net unrealized appreciation
(depreciation) of investment securities -- (412) (2,063)
Change in net unrealized depreciation of
financial futures contracts -- -- 428
------------------------------------------------
Net loss on investments from corresponding
Portfolio (Note A) (6) (560) (1,804)
------------------------------------------------
Net increase in net assets resulting from
operations $ 13,286 $ 1,695 $ 5,831
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
MONEY FUND
Six Months
Ended Year
April 30, Ended
1997 October 31,
(000'S OMITTED) (UNAUDITED) 1996
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 7,868 $ 13,199
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) (7) (6)
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) -- --
-----------------------------
Net increase in net assets resulting
from operations 7,861 13,193
-----------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (7,868) (13,199)
Net realized gain on investments -- (4)
-----------------------------
Total distributions to shareholders (7,868) (13,203)
-----------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 437,440 725,958
Proceeds from reinvestment of
dividends and distributions 7,780 13,025
Payments for shares redeemed (529,530) (683,930)
-----------------------------
Net increase (decrease) from Trust
share transactions (84,310) 55,053
-----------------------------
NET INCREASE (DECREASE) IN NET ASSETS (84,317) 55,043
NET ASSETS:
Beginning of period 363,388 308,345
-----------------------------
End of period $ 279,071 $ 363,388
-----------------------------
NUMBER OF TRUST SHARES:
Sold 437,440 725,958
Issued on reinvestment of dividends
and distributions 7,780 13,025
Redeemed (529,530) (683,930)
-----------------------------
Net increase (decrease) in shares
outstanding (84,310) 55,053
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<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
1997 October 31, 1997 October 31, 1997 October 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 13,292 $ 22,645 $ 2,255 $ 5,218 $ 7,635 $ 17,341
Net realized gain (loss) on
investments from
corresponding Portfolio (Note
A) (6) 4 (148) (550) (169) (982)
Change in net unrealized
appreciation (depreciation)
of investments from
corresponding Portfolio (Note
A) -- -- (412) 153 (1,635) (1,668)
------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 13,286 22,649 1,695 4,821 5,831 14,691
------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (13,292) (22,645) (2,255) (5,218) (7,635) (17,078)
Net realized gain on
investments -- -- -- -- -- --
------------------------------------------------------------------------------
Total distributions to
shareholders (13,292) (22,645) (2,255) (5,218) (7,635) (17,078)
------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 754,829 865,548 10,600 26,938 36,654 81,362
Proceeds from reinvestment of
dividends and distributions 13,066 22,257 1,867 4,575 6,330 14,168
Payments for shares redeemed (650,092) (814,685) (25,502) (42,687) (49,131) (154,865)
------------------------------------------------------------------------------
Net increase (decrease) from
Trust share transactions 117,803 73,120 (13,035) (11,174) (6,147) (59,335)
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS 117,797 73,124 (13,595) (11,571) (7,951) (61,722)
NET ASSETS:
Beginning of period 481,998 408,874 88,951 100,522 245,689 307,411
------------------------------------------------------------------------------
End of period $599,795 $481,998 $ 75,356 $ 88,951 $237,738 $245,689
------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 754,829 865,548 1,121 2,838 3,680 8,134
Issued on reinvestment of
dividends and distributions 13,066 22,257 198 482 635 1,419
Redeemed (650,092) (814,685) (2,695) (4,500) (4,929) (15,523)
------------------------------------------------------------------------------
Net increase (decrease) in
shares outstanding 117,803 73,120 (1,376) (1,180) (614) (5,970)
------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman April 30, 1997 (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 (each a "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%, 88.81%, and 87.78%, for Government Money,
Cash Reserves, Ultra Short, and Limited Maturity, respectively, at April 30,
1997). 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 the corresponding 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 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 to
continue to qualify as
B-8
<PAGE>
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 investment company
taxable income and net capital gains (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 ($6,216 expiring in 2004 for Government Money,
$7,878 and $2,998 expiring in 2002 and 2003, respectively, for Cash Reserves,
$122,522, $774,592, $774,663, $533,438, $1,362,347, $329,262, and $552,290
expiring in 1997, 1998, 2000, 2001, 2002, 2003, and 2004, respectively, for
Ultra Short, and $4,713,841, $3,757,068, and $1,607,920 expiring in 2002,
2003, and 2004, respectively, for Limited Maturity, determined as of October
31, 1996), it is the policy of each Fund not to distribute such gains. During
the year ended October 31, 1996, $762,839 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: Each Fund bears all costs of its 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.
B-9
<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% of that Fund's average daily net
assets. Each Fund indirectly pays for investment management services through its
investment in its corresponding Portfolio (see Note B of Notes to Financial
Statements of the Portfolios). The Agreement provides that, if with respect to
any fiscal year of each Fund, its total operating expenses plus its pro rata
portion of its corresponding Portfolio's operating expenses (including the fees
payable to Management but excluding interest, taxes, brokerage commissions, and
extraordinary expenses) ("Operating Expenses") exceed the most restrictive of
the expense limitations imposed by securities laws of the states in which such
Fund's shares are qualified for sale, the administration fees for that fiscal
year will be reduced by the amount of such excess, provided that Management has
no obligation to reimburse the Fund for any such expenses that exceed the
administration fee. The most restrictive expense limitation applicable during
the six months ended April 30, 1997, to which each Fund was subject, was 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, 1997. Currently,
there are no state expense limitations applicable to any Fund.
Management has voluntarily undertaken to reimburse Cash Reserves, Ultra
Short, and Limited Maturity for their respective 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 respective 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, 1997, such excess expenses amounted to $99,793 and $32,299, for Ultra
Short and Limited Maturity, respectively. For the six months ended April 30,
1997, there was no reimbursement of expenses by Management for Cash Reserves.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New York
Stock Exchange and sub-adviser to each Portfolio. Several individuals who are
officers and/or trustees of the Trust are also principals of Neuberger and/or
officers and/or directors of Management.
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of each Fund.
B-10
<PAGE>
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $1,934, $1,604, $70, and $95, for Government Money, Cash Reserves,
Ultra Short, and Limited Maturity, respectively, which is less than .01% of each
Fund's average daily net assets.
Each Fund has an expense offset arrangement in connection with its
shareholder servicing agent contract. The impact of this arrangement, reflected
in the Statements of Operations under the caption Shareholder servicing agent
fees, was a reduction of $2,583, $5,860, $1,266, and $2,056, for Government
Money, Cash Reserves, Ultra Short, and Limited Maturity, respectively, which is
less than .01% of each Fund's average daily net assets.
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended April 30, 1997, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT MONEY $ 392,899,072 $ 485,106,596
CASH RESERVES 550,135,017 446,513,304
ULTRA SHORT 4,300,029 19,928,884
LIMITED MATURITY 15,079,364 29,222,358
</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.
B-11
<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,
1997 Year Ended October 31,
(UNAUDITED)(1) 1996(1) 1995(1) 1994(1) 1993(1) 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0003
-------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0228 .0464 .0499 .0302 .0248 .0354
Net Gains or Losses on Securities -- -- -- -- -- --
-------------------------------------------------------------------------------
Total From Investment Operations .0228 .0464 .0499 .0302 .0248 .0354
-------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0228) (.0464) (.0499) (.0302) (.0248) (.0354)
Distributions (from capital gains) -- -- -- -- -- (.0003)
-------------------------------------------------------------------------------
Total Distributions (.0228) (.0464) (.0499) (.0302) (.0248) (.0357)
-------------------------------------------------------------------------------
Net Asset Value, End of Period $1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------------------------------------------------------------------------------
Total Return(2) +2.30%(3) +4.74% +5.10% +3.07% +2.51% +3.62%
-------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 279.1 $ 363.4 $ 308.3 $ 251.5 $ 277.2 $ 301.1
-------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets .64%(4) .67% .65% .72% .70% .66%
-------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 4.61%(4) 4.65% 5.00% 3.00% 2.48% 3.50%
-------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-12
<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,
1997 Year Ended October 31,
(UNAUDITED)(1) 1996(1) 1995(1) 1994(1) 1993(1) 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0000 $ 1.0000 $ 1.0000 $ 1.0001 $ 1.0001 $ 1.0000
-------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0239 .0486 .0529 .0327 .0263 .0363
Net Gains or Losses on Securities -- -- -- -- .0002 .0002
-------------------------------------------------------------------------------
Total From Investment Operations .0239 .0486 .0529 .0327 .0265 .0365
-------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0239) (.0486) (.0529) (.0327) (.0263) (.0363)
Distributions (from capital gains) -- -- -- (.0001) (.0002) (.0001)
-------------------------------------------------------------------------------
Total Distributions (.0239) (.0486) (.0529) (.0328) (.0265) (.0364)
-------------------------------------------------------------------------------
Net Asset Value, End of Period $1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0001 $ 1.0001
-------------------------------------------------------------------------------
Total Return(2) +2.42%(3) +4.97% +5.42% +3.33% +2.68% +3.69%
-------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 599.8 $ 482.0 $ 408.9 $ 311.9 $ 273.1 $ 261.7
-------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets(5) .64%(4) .65% .65% .65% .65% .65%
-------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(5) 4.84%(4) 4.86% 5.30% 3.31% 2.63% 3.63%
-------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-13
<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,
1997 Year Ended October 31,
(UNAUDITED)(1) 1996(1) 1995(1) 1994(1) 1993(1) 1992
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.49 $9.53 $ 9.47 $ 9.64 $ 9.70 $ 9.83
-----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .26 .52 .52 .35 .40 .56
Net Gains or Losses on Securities
(both realized and unrealized) (.06) (.04) .06 (.17) (.06) (.13)
-----------------------------------------------------------------------
Total From Investment Operations .20 .48 .58 .18 .34 .43
-----------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.26) (.52) (.52) (.35) (.40) (.56)
-----------------------------------------------------------------------
Net Asset Value, End of Period $9.43 $9.49 $ 9.53 $ 9.47 $ 9.64 $ 9.70
-----------------------------------------------------------------------
Total Return(2) +2.14%(3) +5.23% +6.26% +1.96% +3.53% +4.44%
-----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $75.4 $89.0 $100.5 $101.1 $104.4 $ 103.3
-----------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets(5) .65%(4) .65% .65% .65% .65% .65%
-----------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(5) 5.57%(4) 5.53% 5.44% 3.72% 4.09% 5.70%
-----------------------------------------------------------------------
Portfolio Turnover Rate(6) -- -- -- -- 115% 66%
-----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-14
<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,
1997 Year Ended October 31,
(UNAUDITED)(1) 1996(1) 1995(1) 1994(1) 1993(1) 1992
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.99 $10.06 $ 9.88 $10.49 $10.40 $ 10.24
--------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .32 .60 .62 .56 .58 .63
Net Gains or Losses on Securities
(both realized and unrealized) (.08) (.07) .18 (.55) .14 .16
--------------------------------------------------------------------------
Total From Investment Operations .24 .53 .80 .01 .72 .79
--------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.32) (.60) (.62) (.56) (.58) (.63)
Distributions (from capital gains) -- -- -- (.05) (.05) --
Distributions (in excess of capital
gains) -- -- -- (.01) -- --
Tax return of capital -- -- -- -- -- --
--------------------------------------------------------------------------
Total Distributions (.32) (.60) (.62) (.62) (.63) (.63)
--------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.91 $ 9.99 $10.06 $ 9.88 $10.49 $ 10.40
--------------------------------------------------------------------------
Total Return(2) +2.40%(3) +5.44% +8.32% +0.13% +7.09% +7.87%
--------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $237.7 $245.7 $307.4 $308.6 $357.3 $ 273.0
--------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets(5) .70%(4) .70% .70% .69% .65% .65%
--------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(5) 6.43%(4) 6.10% 6.21% 5.53% 5.49% 6.02%
--------------------------------------------------------------------------
Portfolio Turnover Rate(6) -- -- -- -- 114% 113%
--------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-15
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman April 30, 1997 (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) 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 fiscal
period and assumes dividends and other 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.
3) Not annualized.
4) Annualized.
5) After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended October 31,
CASH RESERVES 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses .67% .68% .71% .76% .69%
--------------------------------------------------
Net Investment Income 4.84% 5.27% 3.25% 2.52% 3.59%
--------------------------------------------------
</TABLE>
For the six months ended April 30, 1997, there was no reimbursement of
expenses by Management for Cash Reserves.
<TABLE>
<CAPTION>
Six Months
Ended April 30, Year Ended October 31,
ULTRA SHORT 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses .90% .84% .87% .86% .95% .87%
----------------------------------------------------------------------
Net Investment Income 5.32% 5.34% 5.22% 3.51% 3.79% 5.48%
----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended April 30, Year Ended October 31,
LIMITED MATURITY 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expenses .73% .71% .71% .71% .73% .68%
----------------------------------------------------------------------
Net Investment Income 6.40% 6.09% 6.20% 5.51% 5.42% 5.99%
----------------------------------------------------------------------
</TABLE>
B-16
<PAGE>
6) 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 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.
B-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
Principal Annualized
Amount Yield at Value(1)
(000's Date (000's
omitted) of Purchase omitted)
- ------------- ----------- -------------
<C> <S> <C> <C>
U.S. TREASURY
SECURITIES -- BACKED BY THE
FULL FAITH AND CREDIT OF THE
U.S. GOVERNMENT (101.7%)
$ 5,130 U.S. Treasury Bills, due
5/1/97 5.17% $ 5,130
19,060 U.S. Treasury Bills, due
5/15/97 5.15-5.19% 19,023
10,000 U.S. Treasury Notes, 6.50%,
due 5/15/97 5.31% 10,004
9,140 U.S. Treasury Bills, due
5/22/97 5.13-5.15% 9,113
38,460 U.S. Treasury Bills, due
5/29/97 5.14-5.27% 38,309
15,535 U.S. Treasury Bills, due
6/5/97 5.21-5.28% 15,458
14,590 U.S. Treasury Bills, due
6/12/97 5.23-5.29% 14,504
465 U.S. Treasury Bills, due
6/19/97 5.23-5.24% 462
25,000 U.S. Treasury Bills, due
6/26/97 5.41% 24,795
25,590 U.S. Treasury Bills, due
7/3/97 5.07-5.32% 25,359
18,190 U.S. Treasury Bills, due
7/24/97 5.10-5.42% 17,968
5,210 U.S. Treasury Bills, due
7/31/97 5.06-5.21% 5,141
8,275 U.S. Treasury Bills, due
8/7/97 5.41% 8,157
20,000 U.S. Treasury Bills, due
8/14/97 5.45% 19,692
38,360 U.S. Treasury Bills, due
8/21/97 5.23-5.56% 37,732
20,435 U.S. Treasury Bills, due
9/18/97 5.50-5.60% 20,010
12,565 U.S. Treasury Notes, 5.625%,
due 10/31/97 5.77% 12,556
-------------
TOTAL U.S. TREASURY SECURITIES 283,413
Liabilities, less cash,
receivables and other assets
[(1.7%)] (4,711)
-------------
TOTAL NET ASSETS (100.0%) $ 278,702
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-18
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
Principal
Amount Value(1)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES (5.4%)
$ 14,400 Fannie Mae, Variable Rate
Medium-Term Notes, Ser. B,
5.5175%, due 9/12/97 AGY AGY $ 14,397
18,660 Fannie Mae, Discount Notes,
5.22% & 5.54%, due 7/28/97 &
9/18/97 AGY AGY 18,290
-------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES 32,687
-------------
BANKERS' ACCEPTANCES (0.5%)
3,000 First National Bank of
Chicago, 5.25%, due 5/21/97 P-1 A-1 2,991
-------------
ASSET-BACKED COMMERCIAL PAPER
(5.7%)
5,000 Asset Securitization
Cooperative Corp., 5.32%, due
5/16/97 P-1 A-1+ 4,989
4,320 Ciesco, L.P., 5.48%, due
5/22/97 P-1 A-1+ 4,306
15,000 Corporate Receivables Corp.,
5.55%, due 6/3/97 & 6/12/97 P-1 A-1 14,917
10,000 Corporate Asset Funding Co.,
Inc., 5.55%, due 6/13/97 P-1 A-1+ 9,934
-------------
TOTAL ASSET-BACKED COMMERCIAL
PAPER 34,146
-------------
CORPORATE COMMERCIAL PAPER
(66.7%)
2,400 H.J. Heinz Co., 5.52%, due
5/1/97 P-1 A-1 2,400
11,500 Sara Lee Corp., 5.48%, due
5/1/97 P-1 A-1+ 11,500
1,900 Laclede Gas Co., 5.49%, due
5/5/97 P-1 A-1+ 1,899
5,000 PACCAR Financial Corp., 5.51%,
due 5/5/97 P-1 A-1+ 4,997
14,615 Province of British Columbia,
Canada, 5.24% & 5.30%, due
5/6/97 & 5/7/97 P-1 A-1+ 14,603
7,000 Kellogg Co., 5.50%, due
5/12/97 P-1 A-1+ 6,988
2,800 Pacific Bell, 5.50%, due
5/12/97 P-1 A-1+ 2,795
6,430 Air Products & Chemicals,
Inc., 5.33%, due 5/16/97 P-1 A-1 6,416
8,850 Colonial Pipeline Co., 5.32%,
due 5/19/97 P-1 A-1+ 8,826
4,000 MetLife Funding, Inc., 5.25%,
due 5/19/97 P-1 A-1+ 3,990
10,000 Caisse d'Amortissement de la
Dette Sociale, 5.32%, due
5/20/97 P-1 A-1+ 9,972
3,770 Illinois Tool Works Inc.,
5.50%, due 5/20/97 P-1 A-1+ 3,759
</TABLE>
B-19
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(1)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 10,000 Novartis Finance Corp., 5.49%,
due 5/21/97 P-1 A-1+ $ 9,970
12,000 Toyota Motor Credit Corp.,
5.23% & 5.25%, due 5/23/97 &
5/27/97 P-1 A-1+ 11,959
16,595 Eksportfinans A/S, 5.32% &
5.35%, due 5/27/97 & 5/29/97 P-1 A-1+ 16,527
17,000 Cargill, Inc., 5.22% & 5.30%,
due 5/22/97 & 6/2/97 P-1 A-1+ 16,937
10,000 Coca-Cola Co., 5.50%, due
6/2/97 P-1 A-1+ 9,951
10,000 United Parcel Service of
America, Inc., 5.21%, due
6/2/97 P-1 A-1+ 9,954
21,000 Canadian Wheat Board, 5.30% &
5.52%, due 5/28/97 & 6/3/97 P-1 A-1+ 20,902
17,000 Merrill Lynch & Co., Inc.,
5.33% & 5.36%, due 6/2/97 &
6/5/97 P-1 A-1+ 16,916
17,865 American Express Credit Corp.,
5.28%-5.31%, due 5/5/97-6/9/97 P-1 A-1 17,817
20,000 Prudential Funding Corp.,
5.26% & 5.31%, due 5/20/97 &
6/9/97 P-1 A-1+ 19,930
10,000 AT&T Corp., 5.26%, due 6/13/97 P-1 A-1+ 9,937
15,000 Electricite de France, 5.22% &
5.23%, due 6/2/97 & 6/23/97 P-1 A-1+ 14,900
1,710 Queensland Treasury Corp.,
5.32%, due 6/24/97 P-1 A-1+ 1,696
7,000 Swedish Export Credit Corp.,
5.31%, due 7/2/97 P-1 A-1+ 6,936
20,000 General Electric Capital
Corp., 5.27%-5.40%, due
5/13/97-7/14/97 P-1 A-1+ 19,896
13,000 Nalco Chemical Co., 5.50% &
5.64%, due 5/9/97 & 7/14/97 P-1 A-1 12,932
15,000 Guinness PLC, 5.62%, due
7/21/97 P-1 A-1+ 14,810
3,925 Goldman Sachs Group, L.P.,
5.30% & 5.65%, due 5/5/97 &
7/25/97 P-1 A-1+ 3,881
8,000 Hitachi America, Ltd.,
5.33%-5.55%, due
5/15/97-7/25/97 P-1 A-1+ 7,948
10,000 Morgan Stanley Group Inc.,
5.28% & 5.38%, due 5/19/97 &
7/28/97 P-1 A-1+ 9,921
</TABLE>
B-20
<PAGE>
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(1)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 17,000 Kingdom of Sweden, 5.31% &
5.57%, due 7/24/97 & 7/29/97 P-1 A-1+ $ 16,778
23,000 Daimler-Benz North America
Corp., 5.26%-5.69%, due
5/21/97-9/9/97 P-1 A-1 22,750
20,700 Pitney Bowes Credit Corp.,
5.28%-5.66%, due
5/2/97-10/7/97 P-1 A-1+ 20,429
10,000 Elf Aquitaine Finance S.A.,
5.75%, due 10/27/97 P-1 A-1+ 9,714
-------------
TOTAL CORPORATE COMMERCIAL
PAPER 401,536
-------------
CERTIFICATES OF DEPOSIT
(15.1%)
10,000 Bayerische Vereinsbank AG,
Eurodollar C.D., 5.43%, due
5/12/97 P-1 A-1+ 10,000
8,000 Barclays Bank PLC, Yankee
C.D., 5.34%, due 5/19/97 P-1 A-1+ 8,000
10,000 Canadian Imperial Bank of
Commerce, Yankee C.D., 5.33%,
due 5/21/97 P-1 A-1+ 10,000
10,000 Abbey National Treasury
Services PLC, Eurodollar C.D.,
5.42%, due 5/27/97 P-1 A-1+ 10,000
10,000 Commerzbank AG, Yankee C.D.,
5.40%, due 6/3/97 P-1 A-1+ 10,000
23,000 National Westminster Bank PLC,
Eurodollar C.D., 5.66% &
5.69%, due 7/2/97 & 7/3/97 P-1 A-1+ 22,999
10,000 Societe Generale, Yankee C.D.,
5.45%, due 7/14/97 P-1 A-1+ 10,001
10,000 Bank of Nova Scotia, Yankee
C.D., 5.68%, due 7/23/97 P-1 A-1+ 10,000
-------------
TOTAL CERTIFICATES OF DEPOSIT 91,000
-------------
CORPORATE DEBT SECURITIES
(6.4%)
3,700 Ford Motor Credit Co.,
Variable Rate Medium-Term
Notes, 5.93%, due 5/20/97 P-1 A-1 3,700
15,000 Morgan Stanley Group Inc.,
Senior Variable Rate
Medium-Term Notes, Ser. C,
5.7964%, due 7/10/97 P-1 A-1+ 15,000
</TABLE>
B-21
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(1)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 5,000 Province of Ontario, Canada,
Global Bonds, 5.70%, due
10/1/97 P-1 A-1+ $ 4,993
14,500 First Union National Bank of
North Carolina, Floating Rate
Bank Notes, 5.86%, due
12/19/97 P-1 A-1 14,500
-------------
TOTAL CORPORATE DEBT
SECURITIES 38,193
-------------
TOTAL INVESTMENTS (99.8%) 600,553
Cash, receivables and other
assets, less liabilities
(0.2%) 1,292
-------------
TOTAL NET ASSETS (100.0%) $ 601,845
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-22
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(31.6%)
$ 375 U.S. Treasury Notes, 6.25%,
due 7/31/98 TSY TSY $ 376
5,000 U.S. Treasury Notes, 6.00%,
due 9/30/98 TSY TSY 4,994
6,000 U.S. Treasury Notes, 6.875%,
due 8/31/99 TSY TSY 6,067
4,430 U.S. Treasury Notes, 5.875%,
due 11/15/99 TSY TSY 4,377
1,785 U.S. Treasury Notes, 5.875%,
due 2/15/00 TSY TSY 1,760
9,220 U.S. Treasury Notes, 6.75%,
due 4/30/00 TSY TSY 9,294
-------------
TOTAL U.S. TREASURY SECURITIES
(COST $26,875) 26,868
-------------
U.S. GOVERNMENT AGENCY
SECURITIES (2.4%)
1,275 Federal Home Loan Bank,
Discount Notes, 5.25%, due
5/1/97 AGY AGY 1,275
250 Federal Home Loan Bank,
Variable Rate Notes, 4.559%,
due 1/29/98 AGY AGY 248
500 Federal Home Loan Bank,
Variable Rate Notes, 4.584%,
due 2/25/98 AGY AGY 495
-------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES
(COST $2,022) 2,018
-------------
MORTGAGE-BACKED SECURITIES
(17.8%)
FEDERAL HOME LOAN MORTGAGE CORP.
580 REMIC Floating Rate CMO, Ser.
1270-F, 6.10%, due 5/15/97 AGY AGY 580
29 Mortgage Participation
Certificates, 11.50%, due
2/1/00 & 5/1/00 AGY AGY 31
3,448 Gold Balloon Mortgage
Participation Certificates,
6.50%, due 9/1/98-11/1/00 AGY AGY 3,416
75 Mortgage Participation
Certificates, 10.50%, due
6/1/00-11/1/00 AGY AGY 79
1,578 Gold Balloon Mortgage
Participation Certificates,
7.50%, due 11/1/01 AGY AGY 1,595
FANNIE MAE
2,398 Balloon Pass-Through
Certificates, 7.00%, due
8/1/03 AGY AGY 2,393
2,288 Pass-Through Certificates,
7.50%, due 7/1/11 AGY AGY 2,304
</TABLE>
B-23
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
$ 2,435 Pass-Through Certificates,
7.50%, due 10/15/09-10/15/10 AGY AGY $ 2,462
2,284 Pass-Through Certificates,
7.00%, due 4/15/11 AGY AGY 2,272
-------------
TOTAL MORTGAGE-BACKED
SECURITIES
(COST $15,219) 15,132
-------------
ASSET-BACKED SECURITIES
(19.1%)
1,000 Capita Equipment Receivables
Trust, Ser. 1996-1, Class A-2,
5.95%, due 7/15/98 Aaa AAA 999
211 Daimler-Benz Auto Grantor
Trust, Ser. 1993-A, Class A,
3.90%, due 10/15/98 Aaa AAA 211
40 USAA Auto Loan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1993-1,
3.90%, due 3/15/99 Aaa AAA 40
3,000 Premier Auto Trust, Ser.
1995-3, Class A-4, 6.10%, due
7/6/99 Aaa AAA 2,998
1,600 Chase Manhattan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1997-A,
5.95%, due 10/15/99 AAA 1,596
770 Premier Auto Trust, Ser.
1997-1, Class A-2, 5.90%, due
4/6/00 Aaa AAA 769
1,084 Ford Credit Grantor Trust,
Ser. 1995-A, Class A, 5.90%,
due 5/15/00 Aaa AAA 1,085
359 Caterpillar Financial Asset
Trust, Ser. 1995-A, Class A-2,
6.10%, due 8/25/01 Aaa AAA 359
1,707 Chase Manhattan Grantor Trust,
Automobile Loan Pass-Through
Certificates, Ser. 1995-A,
6.00%, due 9/17/01 Aaa AAA 1,702
2,733 Banc One Auto Grantor Trust,
Ser. 1996-B, Class A, 6.55%,
due 2/15/03 Aaa AAA 2,745
3,756 Case Equipment Loan Trust,
Ser. 1996-B, Class A-2, 6.25%,
due 9/15/03 Aaa AAA 3,767
-------------
TOTAL ASSET-BACKED SECURITIES
(COST $16,252) 16,271
-------------
</TABLE>
B-24
<PAGE>
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
BANKS & FINANCIAL INSTITUTIONS
(17.7%)
$ 3,000 Societe Generale, Yankee C.D.,
5.77%, due 5/15/97 P-1 A-1+ $ 3,000
3,000 J.P. Morgan & Co. Inc.,
Domestic C.D., 5.73%, due
8/12/97 P-1 A-1+ 2,999
2,100 Lehman Brothers Holdings Inc.,
Senior Notes, 5.75%, due
2/15/98 Baa1 A 2,092
3,500 Merrill Lynch & Co., Inc.,
Medium-Term Notes, Ser. B,
6.64%, due 4/9/99 Aa3 AA- 3,508
3,500 Associates Corp. of North
America, Senior Notes, 6.375%,
due 8/15/99 Aa3 AA- 3,480
-------------
TOTAL BANKS & FINANCIAL
INSTITUTIONS
(COST $15,074) 15,079
-------------
CORPORATE DEBT SECURITIES
(5.7%)
4,000 du Pont (E.I.) de Nemours &
Co., Medium-Term Notes, Ser.
F, 6.04%, due 12/16/97 Aa2 AA 4,004
900 Ford Motor Credit Co., Global
Bonds, 6.50%, due 2/28/02 A1 A+ 882
-------------
TOTAL CORPORATE DEBT
SECURITIES (COST $4,899) 4,886
-------------
CORPORATE COMMERCIAL PAPER
(4.7%)
4,000 General Electric Capital
Corp., 5.32%, due 5/16/97
(COST $3,999) P-1 A-1+ 3,999(3)
-------------
TOTAL INVESTMENTS (99.0%)
(COST $84,340) 84,253(4)
Cash, receivables and other
assets, less liabilities
(1.0%) 863
-------------
TOTAL NET ASSETS (100.0%) $ 85,116
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-25
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
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
(3.3%)
$ 35 U.S. Treasury Notes, 6.75%,
due 5/31/97 TSY TSY $ 35
40 U.S. Treasury Notes, 7.375%,
due 11/15/97 TSY TSY 40
1,130 U.S. Treasury Notes, 6.50%,
due 4/30/99 TSY TSY 1,135
2,105 U.S. Treasury Notes, 6.375%,
due 5/15/99 TSY TSY 2,108
1,315 U.S. Treasury Notes, 6.00%,
due 8/15/99 TSY TSY 1,305
1,000 U.S. Treasury Notes, 6.75%,
due 4/30/00 TSY TSY 1,008
640 U.S. Treasury Notes, 6.25%,
due 5/31/00 TSY TSY 637
2,609 U.S. Treasury
Inflation-Indexed Notes,
3.375%, due 1/15/07 TSY TSY 2,566
---------------
TOTAL U.S. TREASURY SECURITIES
(COST $8,924) 8,834
---------------
MORTGAGE-BACKED SECURITIES
(10.9%)
FEDERAL HOME LOAN MORTGAGE CORP.
145 Mortgage Participation
Certificates, 10.50%, due
10/1/00 & 12/1/00 AGY AGY 153
512 Mortgage Participation
Certificates, 8.50%, due
10/1/01 AGY AGY 523
393 ARM Certificates, 7.00%, due
1/1/17 & 2/1/17 AGY AGY 396
681 ARM Certificates, 7.125%, due
3/1/17 AGY AGY 687
FANNIE MAE
210 Balloon Pass-Through
Certificates, 9.00%, due
8/1/97-8/1/98 AGY AGY 215
291 Balloon Pass-Through
Certificates, 8.50%, due
9/1/97-11/1/98 AGY AGY 298
536 REMIC Floating Rate CMO, Ser.
1992-59F, 6.11875%, due
8/25/06 AGY AGY 537
8,391 Pass-Through Certificates,
7.00%, due 9/1/03 & 6/1/11 AGY AGY 8,376
5,760 Pass-Through Certificates,
7.50%, due 9/1/11 AGY AGY 5,803
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
158 Pass-Through Certificates,
12.00%, due 5/15/12-3/15/15 AGY AGY 180
4,193 Pass-Through Certificates,
10.00%, due 9/15/15-6/15/20 AGY AGY 4,599
</TABLE>
B-26
<PAGE>
April 30, 1997 (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>
$1,230 Pass-Through Certificates,
9.50%, due 8/15/09-4/15/22 AGY AGY $ 1,324
6,843 Pass-Through Certificates,
7.00%, due 1/15/27 AGY AGY 6,619
---------------
TOTAL MORTGAGE-BACKED
SECURITIES
(COST $29,562) 29,710
---------------
ASSET-BACKED SECURITIES
(18.3%)
6,300 Capita Equipment Receivables
Trust, Ser. 1996-1, Class A-3,
6.11%, due 7/15/99 Aaa AAA 6,288
3,820 Chase Manhattan Auto Owner
Trust, Ser. 1996-C, Class A-3,
5.95%, due 11/15/00 Aaa AAA 3,781
3,811 Navistar Financial Owner
Trust, Ser. 1996-A, Class A-2,
6.35%, due 11/15/02 Aaa AAA 3,810
4,634 Banc One Auto Grantor Trust,
Ser. 1996-B, Class A, 6.55%,
due 2/15/03 Aaa AAA 4,654
6,500 Ford Credit Auto Loan Master
Trust, Auto Loan Certificates,
Ser. 1996-1, 5.50%, due
2/15/03 Aaa AAA 6,224
7,000 NationsBank Credit Card Master
Trust, Ser. 1995-1, Class A,
6.45%, due 4/15/03 Aaa AAA 6,976
2,590 Navistar Financial Owner
Trust, Ser. 1996-B, Class A-3,
6.33%, due 4/21/03 Aaa AAA 2,582
5,330 World Omni Automobile Lease
Securitization Trust, Ser.
1997-A, Class A-3, 6.85%, due
6/25/03 Aaa AAA 5,361
4,762 Chevy Chase Auto Receivables
Trust, Ser. 1996-2, Class A,
5.90%, due 7/15/03 Aaa AAA 4,711
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 5,262
---------------
TOTAL ASSET-BACKED SECURITIES
(COST $50,201) 49,649
---------------
BANKS & FINANCIAL INSTITUTIONS
(17.0%)
6,400 Alco Capital Resource, Inc.,
Medium-Term Notes, Ser. B,
5.46%, due 2/22/99 A3 A- 6,274
5,180 CIT Group Holdings, Inc.,
Medium-Term Notes, 6.25%, due
10/25/99 Aa3 A+ 5,141
</TABLE>
B-27
<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>
$3,940 First National Bank of
Commerce, Senior Bank Notes,
6.50%, due 1/14/00 A2 A- $ 3,911
5,000 Smith Barney Holdings Inc.,
Notes, 7.00%, due 5/15/00 A2 A 5,021
5,000 Lehman Brothers Holdings Inc.,
Medium-Term Notes, Ser. E,
6.89%, due 10/10/00 Baa1 A 4,965
8,000 First USA Bank, Medium-Term
Deposit Notes, 6.375%, due
10/23/00 Baa2 BBB- 7,863
1,725 Lehman Brothers Holdings Inc.,
Medium-Term Notes, Ser. E,
6.65%, due 11/8/00 Baa1 A 1,700
6,600 Capital One Bank, Bank Notes,
5.95%, due 2/15/01 Baa3 BBB- 6,303
5,150 Goldman Sachs Group, L.P.,
Global Notes, 6.75%, due
2/15/06 A1 A+ 4,914(5)
---------------
TOTAL BANKS & FINANCIAL
INSTITUTIONS
(COST $47,022) 46,092
---------------
CORPORATE DEBT SECURITIES
(49.4%)
9,000 P. H. Glatfelter Co., Notes,
5.875%, due 3/1/98 Baa2 BBB+ 8,967
2,780 Colonial Gas Co., Medium-Term
Notes, Ser. A, 6.20%, due
3/18/98 Baa1 A- 2,778
3,000 Ford Motor Credit Co.,
Medium-Term Notes, 9.10%, due
5/4/98 A1 A+ 3,088
1,900 American Standard Inc., Senior
Notes, 10.875%, due 5/15/99 Ba3 BB- 2,028
7,000 Lockheed Martin Corp., Notes,
6.55%, due 5/15/99 A3 BBB+ 6,996
4,800 NWCG Holdings Corp., Notes,
Zero-Coupon, Yielding 7.05%,
due 6/15/99 Ba2 BBB- 4,110
2,710 Arkla, Inc., Notes, 8.875%,
due 7/15/99 Baa3 BBB 2,821
700 Caterpillar Finance,
Medium-Term Notes, Ser. E,
6.11%, due 7/15/99 A2 A 693
990 Hoechst Celanese Corp., Notes,
9.625%, due 9/1/99 A2 A+ 1,000
5,000 Xerox Credit Corp.,
Medium-Term Notes, Ser. D,
6.84%, due 6/1/00 A2 A 5,019
5,400 Comdisco, Inc., Notes, 6.50%,
due 6/15/00 Baa1 BBB+ 5,394
</TABLE>
B-28
<PAGE>
April 30, 1997 (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>
$ 455 ADT Operations, Inc., Senior
Notes, 8.25%, due 8/1/00 Ba1 BBB- $ 469
4,550 Arvin Industries, Inc., Notes,
10.00%, due 8/1/00 Ba1 BBB- 4,825
2,000 Ford Motor Credit Co.,
Medium-Term Notes, 6.84%, due
8/16/00 A1 A+ 2,001
2,510 Chesapeake Corp., Notes,
10.375%, due 10/1/00 Baa3 BBB 2,756
1,730 BHP Finance (USA) Limited,
Guaranteed Notes, 5.625%, due
11/1/00 A2 A 1,666
500 Congoleum Corp., Senior Notes,
9.00%, due 2/1/01 B1 BB- 498
5,200 General Motors Acceptance
Corp., Medium-Term Notes,
8.125%, due 3/1/01 A3 A- 5,391
1,770 Revlon Worldwide Corp., Notes,
Zero-Coupon, Yielding 10.75%,
due 3/15/01 B3 B- 1,164(5)
2,290 Colonial Realty Limited
Partnership, Senior Notes,
7.50%, due 7/15/01 Baa3 BBB- 2,286
4,160 Tyco International Ltd.,
Notes, 6.50%, due 11/1/01 Baa2 BBB+ 4,062
2,965 ICI Wilmington Inc.,
Guaranteed Notes, 7.50%, due
1/15/02 A2 A+ 3,025
2,835 Black & Decker Corp.,
Medium-Term Notes, Ser. A,
8.90%, due 1/21/02 Baa3 BBB- 3,030
3,780 Federated Department Stores,
Inc., Senior Notes, 8.125%,
due 10/15/02 Ba1 BB- 3,870
2,830 Viacom, Senior Notes, 6.75%,
due 1/15/03 Ba2(6) BB+(6) 2,661
1,000 Safeway Inc., Medium-Term
Notes, 8.57%, due 4/1/03 Baa1 BBB 1,052
2,700 ADT Operations, Inc., Senior
Subordinated Notes, 9.25%, due
8/1/03 Ba3 BB+ 2,855
500 Sweetheart Cup, Inc., Senior
Subordinated Notes, 10.50%,
due 9/1/03 B3 B- 508
4,920 Owens-Illinois, Inc., Senior
Debentures, 11.00%, due
12/1/03 Ba1(7) BB+(7) 5,486
4,200 Stewart Enterprises, Inc.,
Notes, 6.70%, due 12/1/03 Baa3 BBB 4,066
4,675 Duty Free International, Inc.,
Notes, 7.00%, due 1/15/04 Ba1 BBB- 4,387
</TABLE>
B-29
<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>
$2,125 Triton Energy Limited, Senior
Notes, 9.25%, due 4/15/05 Ba2 BB $ 2,168
360 TLC Beatrice International
Holdings, Senior Secured
Notes, 11.50%, due 10/1/05 B1 BB- 396
1,535 Mark IV Industries, Inc.,
Senior Subordinated Notes,
7.75%, due 4/1/06 Ba3 BB+ 1,454
350 Collins & Aikman Products Co.,
Senior Subordinated Notes,
11.50%, due 4/15/06 B3 B 385
400 Printpack, Inc., Senior
Subordinated Notes, Ser. B,
10.625%, due 8/15/06 B3 B+ 415
2,825 Time Warner Inc., Notes,
8.11%, due 8/15/06 Ba1 BBB- 2,876
400 Commonwealth Aluminum Corp.,
Senior Subordinated Notes,
10.75%, due 10/1/06 B2 B- 413
415 Evenflo & Spalding Holdings
Corp., Senior Subordinated
Notes, Ser. B, 10.375%, due
10/1/06 B3 B- 427
2,235 International Home Foods,
Inc., Senior Subordinated
Notes, 10.375%, due 11/1/06 B2 B- 2,274
500 Motors and Gears, Inc., Senior
Notes, Ser. A, 10.75%, due
11/15/06 B3 BB- 497(5)
260 Allied Waste North America,
Inc., Senior Subordinated
Notes, 10.25%, due 12/1/06 B3 B+ 273(5)
635 Fresenius Medical Care Capital
Trust, Preferred Securities,
9.00%, due 12/1/06 Ba3 B+ 630
680 Newport News Shipbuilding
Inc., Senior Subordinated
Notes, 9.25%, due 12/1/06 B1 B+ 690
857 AMTROL Inc., Senior
Subordinated Notes, 10.625%,
due 12/31/06 B3 B- 881
2,200 Tenet Healthcare Corp., Senior
Subordinated Notes, 8.625%,
due 1/15/07 Ba3 B+ 2,179
820 Pen-Tab Industries, Inc.,
Senior Subordinated Notes,
10.875%, due 2/1/07 B3 B- 820(5)
180 Fonda Group, Inc., Senior
Subordinated Notes, 9.50%, due
3/1/07 B3 B- 171(5)
</TABLE>
B-30
<PAGE>
April 30, 1997 (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>
$ 180 GFSI Inc., Senior Subordinated
Notes, 9.625%, due 3/1/07 B3 B- $ 178(5)
120 Tekni-Plex, Inc., Senior
Subordinated Notes, 11.25%,
due 4/1/07 B3 B- 124(5)
3,050 Comcast Cablevision, Notes,
8.375%, due 5/1/07 Ba1 BBB- 3,071(5)
7,290 Tenneco Inc., Debentures,
10.20%, due 3/15/08 Baa1 BBB 8,721
725 Buckeye Cellulose Corp.,
Senior Subordinated Notes,
9.25%, due 9/15/08 Ba3 BB- 736
360 KinderCare Learning Centers,
Inc., Senior Subordinated
Notes, 9.50%, due 2/15/09 B3 B- 341(5)
5,165 News America Holdings, Notes,
8.00%, due 10/17/16 Baa3 BBB 4,935
---------------
TOTAL CORPORATE DEBT
SECURITIES (COST $135,202) 134,007
---------------
TOTAL INVESTMENTS (98.9%)
(COST $270,911) 268,292(4)
Cash, receivables and other
assets, less liabilities
(1.1%) 3,044
---------------
TOTAL NET ASSETS (100.0%) $271,336
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-31
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 1997 (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 the
trustees of Income Managers Trust believe accurately reflects fair value.
Short-term investments with less than 60 days until maturity 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, 1997, 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 $84,340,000 $ 128,000 $ 215,000 $ 87,000
LIMITED MATURITY BOND PORTFOLIO 270,912,000 937,000 3,557,000 2,620,000
</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, 1997, these
securities amounted to $11,553,000 or 4.3% of Neuberger&Berman Limited
Maturity Bond Portfolio's net assets.
6) Rated BBB- by Fitch Investors Services, Inc.
7) Rated BBB- by Duff & Phelps Credit Rating Co.
SEE NOTES TO FINANCIAL STATEMENTS
B-32
<PAGE>
(This page has been left blank intentionally.)
B-33
<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 $ 283,413
Cash 2
Deferred organization costs (Note A) 6
Interest receivable 301
Prepaid expenses and other assets 11
Receivable for securities sold --
--------------
283,733
--------------
LIABILITIES
Payable for securities purchased 4,934
Payable for variation margin (Note A) --
Payable to investment manager (Note B) 58
Accrued expenses 39
--------------
5,031
--------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 278,702
--------------
NET ASSETS consist of:
Paid-in capital $ 278,702
Net unrealized depreciation in value of
investment securities and financial
futures contracts --
--------------
NET ASSETS $ 278,702
--------------
*Cost of investments $ 283,413
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-34
<PAGE>
April 30, 1997 (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 $ 600,553 $ 84,253 $ 268,292
Cash 2 3 12
Deferred organization costs (Note A) 5 2 6
Interest receivable 1,446 897 3,837
Prepaid expenses and other assets 14 3 13
Receivable for securities sold -- 6 10,888
------------------------------------------------
602,020 85,164 283,048
------------------------------------------------
LIABILITIES
Payable for securities purchased -- -- 11,390
Payable for variation margin (Note A) -- -- 222
Payable to investment manager (Note B) 123 18 56
Accrued expenses 52 30 44
------------------------------------------------
175 48 11,712
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 601,845 $ 85,116 $ 271,336
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 601,845 $ 85,203 $ 274,318
Net unrealized depreciation in value of investment
securities and financial futures contracts -- (87) (2,982)
------------------------------------------------
NET ASSETS $ 601,845 $ 85,116 $ 271,336
------------------------------------------------
*Cost of investments $ 600,553 $ 84,340 $ 270,911
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-35
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY
(000'S OMITTED) PORTFOLIO
------------
<S> <C>
INVESTMENT INCOME
Interest income $ 8,954
------
Expenses:
Investment management fee (Note B) 425
Accounting fees 5
Amortization of deferred organization and
initial offering expenses (Note A) 3
Auditing fees 11
Custodian fees (Note B) 52
Insurance expense 2
Legal fees 6
Trustees' fees and expenses 15
------
Total expenses 519
------
Net investment income 8,435
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment securities
sold (7)
Net realized loss on financial futures
contracts (Note A) --
Net realized gain on foreign currency
transactions (Note A) --
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currency contracts --
Change in net unrealized depreciation of
financial futures contracts (Note A) --
------
Net loss on investments (7)
------
Net increase in net assets resulting from
operations $ 8,428
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-36
<PAGE>
For the Six Months Ended April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
LIMITED
CASH ULTRA SHORT MATURITY
RESERVES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 15,060 $ 2,771 $ 9,526
------------------------------------------------
Expenses:
Investment management fee (Note B) 678 112 335
Accounting fees 5 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 3 1 3
Auditing fees 12 11 12
Custodian fees (Note B) 75 32 66
Insurance expense 4 1 3
Legal fees 11 11 7
Trustees' fees and expenses 18 5 11
------------------------------------------------
Total expenses 806 178 442
------------------------------------------------
Net investment income 14,254 2,593 9,084
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment securities
sold (6) (167) (50)
Net realized loss on financial futures
contracts (Note A) -- -- (87)
Net realized gain on foreign currency
transactions (Note A) -- -- 17
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currency contracts -- (446) (2,427)
Change in net unrealized depreciation of
financial futures contracts (Note A) -- -- 443
------------------------------------------------
Net loss on investments (6) (613) (2,104)
------------------------------------------------
Net increase in net assets resulting from
operations $ 14,248 $ 1,980 $ 6,980
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-37
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY PORTFOLIO
Six Months
Ended Year
April 30, Ended
1997 October 31,
(000'S OMITTED) (UNAUDITED) 1996
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 8,435 $ 14,201
Net realized gain (loss) on
investments (7) (6)
Change in net unrealized
appreciation (depreciation) of
investments -- --
-----------------------------
Net increase in net assets resulting
from operations 8,428 14,195
-----------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 392,899 655,267
Reductions (485,107) (615,465)
-----------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (92,208) 39,802
-----------------------------
NET INCREASE (DECREASE) IN NET ASSETS (83,780) 53,997
NET ASSETS:
Beginning of period 362,482 308,485
-----------------------------
End of period $ 278,702 $ 362,482
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-38
<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
1997 October 31, 1997 October 31, 1997 October 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 14,254 $ 24,267 $ 2,593 $ 5,817 $ 9,084 $ 19,386
Net realized gain (loss) on
investments (6) 4 (167) (592) (120) (992)
Change in net unrealized
appreciation (depreciation)
of investments -- -- (446) 172 (1,984) (1,726)
---------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 14,248 24,271 1,980 5,397 6,980 16,668
---------------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS:
Additions 550,135 528,658 8,003 20,518 32,007 45,924
Reductions (446,513) (478,185) (20,930) (31,918) (34,960) (114,929)
---------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
transactions in investors'
beneficial interests 103,622 50,473 (12,927) (11,400) (2,953) (69,005)
---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS 117,870 74,744 (10,947) (6,003) 4,027 (52,337)
NET ASSETS:
Beginning of period 483,975 409,231 96,063 102,066 267,309 319,646
---------------------------------------------------------------------------------------------
End of period $ 601,845 $ 483,975 $ 85,116 $ 96,063 $ 271,336 $ 267,309
---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-39
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (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 a contract were unable to meet
the terms of its contract or if the value of the foreign currency changes
unfavorably. The U.S. dollar value of foreign currency
B-40
<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 liquid debt obligations, 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, a Portfolio
recognizes a gain or loss. Risks of entering into futures contracts include
the possibility there may be an illiquid market and/or 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 that 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, a Portfolio's losses on transactions
involving futures contracts may be deferred rather than being taken into
account currently in calculating such Portfolio's taxable income.
During the six months ended April 30, 1997, Ultra Short did not enter into
financial futures contracts. At April 30, 1997, open positions in financial
futures contracts for Limited Maturity were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 1997 79 U.S. Treasury Notes, 2 Year Short $ 56,860
June 1997 205 U.S. Treasury Notes, 5 Year Short 85,563
June 1997 380 U.S. Treasury Notes, 10 Year Short 220,375
June 1997 24 U.S. Treasury Bonds, 20 Year Short 750
</TABLE>
B-41
<PAGE>
At April 30, 1997, Limited Maturity had the following securities deposited in
a segregated account to cover margin requirements on open financial futures
contracts:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SECURITY
- ----------------------------------------------------------
<S> <C>
$643,375 U.S. Treasury Notes, 6.375%, due 5/15/99
243,250 U.S. Treasury Notes, 6.75%, due 4/30/00
</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 and foreign currency
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, 1997, the unamortized balance of
such expenses amounted to $6,193, $5,454, $2,236, and $6,203 for Government
Money, Cash Reserves, Ultra Short, and Limited Maturity, respectively.
9) EXPENSE ALLOCATION: Each Portfolio bears all costs of its 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. 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.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New York
Stock Exchange and sub-adviser to each Portfolio. Neuberger is retained by
B-42
<PAGE>
Management to furnish it with investment recommendations and research
information without added cost to each Portfolio. Several individuals who are
officers and/ or trustees of Managers Trust are also principals of Neuberger
and/or officers and/or directors of Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Custodian fees, was a reduction of $1,934,
$1,604, $78, and $106 for Government Money, Cash Reserves, Ultra Short, and
Limited Maturity, respectively, which is less than .01% of each Portfolio's
average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended April 30, 1997, 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 $ 46,603,259 $ 50,776,990
LIMITED MATURITY 98,737,558 102,170,085
</TABLE>
All securities transactions for Government Money and Cash Reserves were
short-term.
During the six months ended April 30, 1997, Limited Maturity entered into
various contracts to deliver currencies at specified future dates. There were no
open positions in these contracts at April 30, 1997.
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.
B-43
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT CASH RESERVES
MONEY PORTFOLIO PORTFOLIO
Period
Period from from
Six Months July 2, Six Months July 2,
Ended 1993(1) Ended 1993(1)
April 30, to October April 30, to October
1997 Year Ended October 31, 31, 1997 Year Ended October 31, 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996 1995 1994 1993
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO
AVERAGE NET
ASSETS:
Expenses .30%(2) .31% .31% .33% .32%(2) .29%(2) .30% .31% .32% .34%(2)
---------------------------------------------------------------------------------------------------------------
Net
Investment
Income 4.93%(2) 4.99% 5.32% 3.38% 2.82%(2) 5.18%(2) 5.20% 5.62% 3.63% 2.88%(2)
---------------------------------------------------------------------------------------------------------------
Portfolio
Turnover Rate -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------
Net Assets, End
of Period (in
millions) $278.7 $362.5 $308.5 $251.6 $277.7 $601.8 $484.0 $409.2 $312.0 $273.3
---------------------------------------------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) Annualized.
B-44
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
BOND PORTFOLIO BOND PORTFOLIO
Period
Period from from
Six Months July 2, Six Months July 2,
Ended 1993(1) Ended 1993(1)
April 30, to October April 30, to October
1997 Year Ended October 31, 31, 1997 Year Ended October 31, 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996 1995 1994 1993
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO
AVERAGE NET
ASSETS:
Expenses .40%(2) .39% .40% .38% .40%(2) .33%(2) .33% .33% .34% .33%(2)
--------------------------------------------------------------------------------------------------------------
Net
Investment
Income 5.80%(2) 5.77% 5.67% 3.98% 4.00%(2) 6.78%(2) 6.45% 6.55% 5.86% 5.53%(2)
--------------------------------------------------------------------------------------------------------------
Portfolio
Turnover Rate 59% 173% 148% 94% 46% 37% 169% 88% 102% 71%
--------------------------------------------------------------------------------------------------------------
Net Assets, End
of Period (in
millions) $85.1 $96.1 $102.1 $102.0 $104.3 $271.3 $267.3 $319.6 $316.1 $357.9
--------------------------------------------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) Annualized.
B-45
<PAGE>
OTHER INFORMATION
<TABLE>
<S> <C>
DIRECTORY OFFICERS AND TRUSTEES
INVESTMENT MANAGER, ADMINISTRATOR Stanley Egener
AND DISTRIBUTOR CHAIRMAN OF THE BOARD AND TRUSTEE
Neuberger&Berman Management Incorporated Theodore P. Giuliano
605 Third Avenue 2nd Floor PRESIDENT AND TRUSTEE
New York, NY 10158-0180 John Cannon
800-877-9700 TRUSTEE
Institutional Services 800-366-6264 Barry Hirsch
SUB-ADVISER TRUSTEE
Neuberger&Berman, LLC Robert A. Kavesh
605 Third Avenue TRUSTEE
New York, NY 10158-3698 William E. Rulon
CUSTODIAN AND SHAREHOLDER TRUSTEE
SERVICING AGENT Candace L. Straight
State Street Corporation TRUSTEE
225 Franklin Street Daniel J. Sullivan
Boston, MA 02110 VICE PRESIDENT
ADDRESS CORRESPONDENCE TO: Michael J. Weiner
Neuberger&Berman Funds VICE PRESIDENT
Boston Service Center Richard Russell
P.O. Box 8403 TREASURER
Boston, MA 02266-8403 Claudia A. Brandon
LEGAL COUNSEL SECRETARY
Kirkpatrick & Lockhart LLP Barbara DiGiorgio
1800 Massachusetts Avenue, NW ASSISTANT TREASURER
2nd Floor Celeste Wischerth
Washington, DC 20036-1800 ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
</TABLE>
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 service marks of
Neuberger&Berman Management Inc.
- -C- 1997 Neuberger&Berman Management Inc.
C-1
<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
WWW.NBFUNDS.COM
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 infor-
mation 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.
(recycle logo) PRINTED ON RECYCLED PAPER NBIFSAR00497
