<PAGE>
SEMI-ANNUAL REPORT
------------------------------------------------------
April 30, 1998
NEUBERGER&BERMAN
INCOME FUNDS-Registered Trademark-
Neuberger&Berman
GOVERNMENT MONEY FUND
Neuberger&Berman
CASH RESERVES
Neuberger&Berman
LIMITED MATURITY BOND FUND
Neuberger&Berman
HIGH YIELD 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
Limited Maturity Bond Fund B-14
High Yield Bond Fund B-15
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Government Money Portfolio B-18
Cash Reserves Portfolio B-19
Limited Maturity Bond
Portfolio B-23
High Yield Bond Portfolio B-32
FINANCIAL STATEMENTS B-38
FINANCIAL HIGHLIGHTS
Government Money Portfolio B-49
Cash Reserves Portfolio B-50
Limited Maturity Bond
Portfolio B-51
High Yield Bond Portfolio B-52
OTHER INFORMATION
Directory/Officers and Trustees C-1
</TABLE>
A-3
<PAGE>
PRESIDENT'S LETTER June 16, 1998
Dear Shareholder,
As you may remember, we turned very positive on the intermediate-term
prospects for the bond market in late 1996. Our bullish posture was rewarded by
excellent 1997 returns. We still believe the political and economic backdrop for
bonds is quite favorable. However, we think current investor expectations are so
high that even modest disappointments may unsettle the market.
In our opinion, there are some short-term economic crosscurrents that may take
investors by surprise. The economy is surprisingly strong and may remain so over
the next several quarters. We have seen rather rapid money supply growth and the
dollar may suffer as it competes with the Euro (the currency of soon to be
economically unified Europe). These three factors along with Federal Reserve
Chairman Alan Greenspan's stated concern about inflation in financial
assets -- the runaway stock market -- may prompt the Fed to bump up short-term
interest rates. With yields of longer-term bonds only marginally higher than
short-term securities, an increase in the Fed Funds Rate would probably result
in an uptick in rates along the yield curve (yields along the maturity
spectrum). Consequently, we have become somewhat more cautious and have been
shortening weighted average maturities/ durations in most of our portfolios. As
always, we are favoring those sectors of the bond market that in our opinion
offer the best value, and individual securities we believe have the best
risk-adjusted return potential.
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>
11/28/97 5.23 6.04 5.13
12/5/97 5.25 6.08 5.11
12/12/97 5.19 5.93 5.01
12/19/97 5.44 5.91 4.97
12/26/97 5.34 5.91 4.97
1/2/98 5.32 5.85 5.02
1/9/98 5.05 5.71 4.88
1/16/98 5.13 5.82 4.84
1/23/98 5.16 5.96 4.96
1/30/98 5.17 5.81 4.91
2/6/98 5.15 5.91 4.93
2/13/98 5.25 5.85 4.90
2/20/98 5.26 5.86 4.90
2/27/98 5.35 5.92 4.97
3/6/98 5.20 6.02 5.09
3/13/98 5.18 5.89 5.04
3/20/98 5.21 5.89 5.00
3/27/98 5.20 5.95 5.01
4/3/98 5.08 5.78 4.98
4/9/98 5.05 5.88 5.04
4/17/98 5.09 5.88 5.07
4/24/98 5.04 5.94 5.14
5/1/98 5.01 5.94 5.17
</TABLE>
SOURCE: BLOOMBERG FINANCIAL MARKETS 30 YEAR TREASURY BOND &
TREASURY BILLS
MERRILL LYNCH 12-22 YEAR MUNICIPAL BOND INDEX
A-4
<PAGE>
I want to emphasize that despite our short-term concerns, we believe the
longer-term outlook for bonds remains quite positive. The government appears
finally to have its fiscal house in order and we are likely to have a federal
budget surplus this year. Corporate cash flows are strong and balance sheets
have improved as debt has been refinanced at lower rates. Also, bonds may begin
to get a "tailwind" from investors concerned by high equity valuations. Some of
our institutional clients have been re-balancing their portfolios -- taking some
profits in the equity market and buying more bonds. They understand and
appreciate that boosting bond allocations is a good way to reduce overall
portfolio risk. We think mutual fund investors may come to the same conclusion
in the year ahead.
While we may see a somewhat more choppy bond market over the next several
months, we believe bonds still offer value. Irrespective of what the bond market
holds in store for us, bonds provide yield and relative safety of principal: two
timeless and priceless elements in a prudent investment program.
In closing, I also want to introduce you to our newest fixed-income product,
Neuberger&Berman High Yield Bond Fund, launched on March 3, 1998. Our
fixed-income investment team has been managing high-yield assets institutionally
for four years and has a solid track record. We believe High Yield Bond Fund is
a compelling investment alternative for investors willing to accept more risk in
return for potentially higher yields than those offered by investment grade bond
funds. I will detail our approach to the high-yield market later in the report.
GOVERNMENT MONEY FUND AND CASH RESERVES+ The Government Money Fund's weighted
average maturity changed very little during this six-month reporting period.
With strong demand (resulting in part from investors' flight to safety from
Southeast Asian government debt), and reduced supply (the shrinking federal
budget deficit reduced the government's short-term funding needs), Treasury Bill
yields declined 5-20 basis points in first-half fiscal 1998. As of April 30,
1998, the Fund had a seven-day current yield of 4.67% and a compounded yield of
4.78%.
Cash Reserves' weighted average maturity was reduced from 72.8 days at the
beginning of this reporting period to 49.9 days at its close. The strong U.S.
economy increased corporations' operating capital needs and merger and
acquisition oriented financings also contributed to rising issuance. In order to
move all this inventory, commercial paper (short-term corporate debt) was priced
attractively and in December, peak yields had increased by 10 to more than 40
basis points. Consequently, we were able to reduce the portfolio's weighted
average maturity and therefore, interest rate risk, without sacrificing much
yield.
A-5
<PAGE>
Cash Reserves' sector allocation was largely unchanged. Commercial paper
comprised 74.5% of assets compared to 73.4% six months earlier; bank debt was
17.9% compared to 20.2%. The balance remains in floating rate notes and other
short-term securities.
ULTRA SHORT BOND FUND On February 27, 1998, Ultra Short Bond Fund was
dissolved. Shareholders were given the opportunity to exchange their shares for
an equal value of shares in the Limited Maturity Bond Fund on a tax-free basis.
We took this step believing the Limited Maturity Bond Fund offers shareholders a
chance to pursue similar investment goals with greater diversification, expanded
opportunities in fixed-income securities and sectors, and more flexibility in
maturity and duration.
LIMITED MATURITY BOND FUND Consistent with our trend-following duration
management discipline (shortening durations when interest rates are rising and
extending durations when interest rates are declining), we have modestly reduced
the portfolio's weighted average duration. At 1.6 years, it is currently in the
low end of our traditional duration range.
We have also modestly reduced our allocation to corporate securities. We began
increasing our exposure to corporates in mid-October, 1997, as Asian economic
turmoil sent prices lower and yields higher. In early 1998, when investors began
to recognize that Asian economic problems were not likely to have as negative an
impact on corporate earnings and balance sheets as first feared, corporate
securities rallied -- producing some strong gains for our portfolio. As yields
came down, we began taking some profits in corporates, and finished this
reporting period with a 62.9% allocation. Despite their good relative
performance, corporates still enjoy a meaningful yield advantage over Treasuries
and we are still able to uncover a good number of high quality bonds trading at
what we view as reasonable prices.
At the end of fiscal first-half 1998, 16.9% of the portfolio was invested in
asset-backed securities. These are mostly triple A rated securities backed by
either credit card or auto loan receivables. Asset-backed bonds have given us
material incremental yield over Treasuries, which we think has come at very low
risk.
We have reduced our allocation in mortgage-backed securities from 7.7% at the
beginning of this reporting period to 5.7% at its close. This was in response to
declining interest rates and increasing prepayment risk. We are concentrated in
low and current coupon mortgage bonds, where we believe pre-payment risk is
minimal.
As of April 30, 1998, we had 8.4% in Agencies and Treasuries. We are favoring
Agencies, because relatively strong new issuance has bumped up yields providing
a modest, but material yield advantage over Treasuries.
A-6
<PAGE>
Recently, we have been taking a closer look at debt securities of Real Estate
Investment Trusts (REITS). Although commercial real estate prices have recovered
substantially from their lows, we don't believe we are near the top of the
cycle. REIT bonds offer a material yield advantage over comparable credit
quality industrial bonds. We believe as bond investors become more familiar and
comfortable with an industry group that is relatively new to the bond market,
this spread will narrow.
HIGH YIELD BOND FUND In this, Neuberger&Berman High Yield Bond Fund's
inaugural letter to shareholders, I want to detail our approach to this unique
asset class. But, first a few comments about our decision to start a high-yield
fund are in order.
Neuberger&Berman has been managing assets in the high-yield sector for four
years. We have assembled an experienced team of portfolio managers, traders and
credit analysts with a proven track record in this asset class. While high-yield
securities are inherently riskier than investment grade bonds, the high-yield
market has more than compensated investors for taking on this incremental risk.
Our studies show that in 1990, the worst year yet for high-yield bonds, the
Merrill Lynch High Yield Master II Index declined just 4.4%.++ This performance
was quite impressive considering that this was a year in which the biggest
underwriter of high-yield debt went out of business. Our approach to building
well-diversified, value-oriented portfolios makes us comfortable with the
overall risk characteristics of the high-yield market. After having managed
high-yield assets institutionally with excellent results, we are confident our
approach to this market can be effective for mutual fund investors.
Consistent with our Neuberger&Berman heritage, we are value conscious and risk
averse. We evaluate high-yield bonds in much the same way our equity fund
manager counterparts at Neuberger& Berman evaluate stocks -- on a selective,
research driven basis. We go over corporations' income statements and balance
sheets, meet with management to discuss business strategies and judge their
ability to effectively execute them, and we use valuation tools to try to
identify bargains. We tend to like established, leading market share companies
in boring businesses that are less likely to attract competition. We are seeking
steady cash flows well in excess of debt service requirements. These companies
may have a lot of debt -- in many cases, one of the reasons for below investment
grade ratings. While we can't predict the future, strong and steady cash flows
give us confidence that the principal and interest on the bonds may be
relatively secure.
Let me give you a few examples. Diamond Brands makes wooden matchsticks,
wooden clothes pins and plastic cutlery. Boring businesses perhaps, but Diamond
has 80-90% market shares that we believe are
A-7
<PAGE>
relatively secure. The company's cash flow is approximately double interest
expense and we give it a solid single B internal credit rating. We've bought
Diamond Brands Senior Step Up Debentures, which mature in 2009 and currently
yield 12 7/8%. We view this as a very attractive yield on what we believe to be
a very low risk investment.
Iron Age, Inc. makes safety shoes -- steel-toed shoes for people who work in
factories and refineries. The company serves large corporations, which buy their
shoes and then sell them to employees at a subsidized price. Iron Age has been
around for quite awhile and current management has been with the company for 20
years. Iron Age has a leading market share in what we believe is a stable niche
business. Recently, the company issued its first high-yield debt -- bonds
maturing in 2008, and yielding 9 7/8%. We were delighted to add this issue to
the portfolio.
We are excited by the prospects for the high-yield asset class in general and
believe our conservative approach to the high-yield market can deliver superior
risk-adjusted returns.
In closing, I want to emphasize that we believe bonds will continue to benefit
from favorable long-term political and economic trends. There are some
short-term economic crosscurrents that might cause a somewhat bumpy ride over
the next several months. The most important thing for all investors to remember
is bonds provide yield and relative safety of principal -- two critical elements
for preserving and enhancing financial 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 investment in Government
Money Fund and Cash Reserves will fluctuate.
++The Merrill Lynch High Yield Master II Index provides a broad-based measure of
the performance of the non-investment grade U.S. domestic bond market. The
index currently captures close to $200 billion of the outstanding debt of
domestic market issuers rated below investment grade but not in default.
The composition and holdings of the portfolios are subject to change. Past
performance is no guarantee of future results.
A-8
<PAGE>
PERFORMANCE HIGHLIGHTS
TOTAL RETURN ILLUSTRATION
<TABLE>
<CAPTION>
SIX MONTH AVERAGE ANNUAL
PERIOD TOTAL RETURNS(1)
NEUBERGER&BERMAN INCEPTION ENDED --------------------
INCOME FUNDS DATE 4/30/98(1) 1 YR(1) 5 YR 10 YR
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIMITED MATURITY BOND FUND(2) 6/9/86 +2.70% +7.27% +5.24% +7.00%
HIGH YIELD BOND FUND(2) 3/3/98 +2.00%(3) N/A N/A N/A
</TABLE>
YIELD ILLUSTRATION
FOR THE 7 DAYS ENDED 4/30/98
<TABLE>
<CAPTION>
INCEPTION CURRENT EFFECTIVE
DATE YIELD(4) YIELD(4)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
GOVERNMENT MONEY FUND(5) 11/14/83 4.67% 4.78%
CASH RESERVES(2)(5) 4/12/88 4.90% 5.02%
</TABLE>
1) One-year and average annual total returns are for periods ended April 30,
1998. Results are shown on a "total return" basis and include reinvestment of
all dividends and other distributions. Performance data quoted represents
past performance, which is no guarantee of future results. The investment
return and principal value of an investment will fluctuate so that the
shares, when redeemed, may be worth more or less than their original cost.
2) Neuberger&Berman Management Inc.-Registered Trademark- ("NBMI") voluntarily
bears certain operating expenses in excess of 0.70% of the average daily net
assets per annum of Neuberger&Berman Limited Maturity Bond
Fund-Registered Trademark- ("Limited Maturity"), 1.00% of the average daily
net assets per annum of Neuberger& Berman High Yield Bond Fund-SM- ("High
Yield"), and 0.65% of the average daily net assets per annum of
Neuberger&Berman Cash Reserves-Registered Trademark- ("Cash Reserves"). These
arrangements can be terminated upon 60 days' prior written notice to the
appropriate Fund. For the six months ended April 30, 1998, there was no
reimbursement of expenses by NBMI for Cash Reserves. Absent such
reimbursements, the total returns for Limited Maturity and High Yield for the
above stated periods would have been less.
3) From inception.
4) "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.
5) 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) $426,979
Deferred organization costs (Note A) --
Receivable for Trust shares sold 171
Receivable from administrator -- net (Note B) --
----------
427,150
----------
LIABILITIES
Dividends payable 12
Payable for Trust shares redeemed 412
Payable to administrator -- net (Note B) 82
Accrued organization costs (Note A) --
Accrued expenses 46
----------
552
----------
NET ASSETS at value $426,598
----------
NET ASSETS consist of:
Par value $ 427
Paid-in capital in excess of par value 426,169
Accumulated net realized gains (losses) on investment 2
Net unrealized appreciation in value of investment --
----------
NET ASSETS at value $426,598
----------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 426,596
----------
NET ASSET VALUE, offering and redemption price per share $1.00
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
April 30, 1998 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
HIGH
CASH LIMITED MATURITY YIELD
RESERVES BOND FUND BOND FUND
----------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at value (Note A) $751,392 $294,430 $12,043
Deferred organization costs (Note A) -- -- 68
Receivable for Trust shares sold 2,208 273 167
Receivable from administrator -- net (Note B) -- -- 11
----------------------------------------
753,600 294,703 12,289
----------------------------------------
LIABILITIES
Dividends payable 13 198 34
Payable for Trust shares redeemed 2,433 1,048 --
Payable to administrator -- net (Note B) 171 59 --
Accrued organization costs (Note A) -- -- 54
Accrued expenses 96 135 11
----------------------------------------
2,713 1,440 99
----------------------------------------
NET ASSETS at value $750,887 $293,263 $12,190
----------------------------------------
NET ASSETS consist of:
Par value $ 751 $ 29 $ 1
Paid-in capital in excess of par value 750,157 307,572 12,155
Accumulated net realized gains (losses) on investment (21) (14,969) 9
Net unrealized appreciation in value of investment -- 631 25
----------------------------------------
NET ASSETS at value $750,887 $293,263 $12,190
----------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 750,908 29,362 1,208
----------------------------------------
NET ASSET VALUE, offering and redemption price per share $1.00 $9.99 $10.09
----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
MONEY FUND
For the
Six Months
Ended
April 30,
1998
(000'S OMITTED) (UNAUDITED)
-----------
<S> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio (Note A) $8,692
-----------
Expenses:
Administration fee (Note B) 443
Amortization of deferred organization and initial
offering expenses (Note A) --
Auditing fees 4
Custodian fees 5
Legal fees 3
Registration and filing fees 14
Shareholder reports 18
Shareholder servicing agent fees (Note B) 44
Trustees' fees and expenses 8
Miscellaneous 2
Expenses from corresponding Portfolio (Notes A & B) 502
-----------
Total expenses 1,043
Expenses reimbursed by administrator and/or reduced by
custodian fee and shareholder servicing expense offset
arrangements (Note B) (8)
-----------
Total net expenses 1,035
-----------
Net investment income 7,657
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM
CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment securities 11
Net realized loss on financial futures contracts --
Change in net unrealized appreciation of investment
securities, financial futures contracts, translation of
assets and liabilities in foreign currencies, and foreign
currency contracts --
-----------
Net gain (loss) on investments from corresponding
Portfolio (Note A) 11
-----------
Net increase in net assets resulting from operations $7,668
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
HIGH YIELD
BOND FUND
CASH LIMITED MATURITY
RESERVES BOND FUND For the
Period from
For the For the March 3, 1998
Six Months Six Months (Commencement
Ended Ended of Operations)
April 30, April 30, to April 30,
1998 1998 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio (Note A) $20,059 $ 9,184 $ 91
----------------------------------------------------------
Expenses:
Administration fee (Note B) 959 362 3
Amortization of deferred organization and initial
offering expenses (Note A) -- -- 2
Auditing fees 4 6 2
Custodian fees 5 5 2
Legal fees 7 43 2
Registration and filing fees 50 27 --
Shareholder reports 37 32 5
Shareholder servicing agent fees (Note B) 144 126 --
Trustees' fees and expenses 18 10 2
Miscellaneous 3 2 --
Expenses from corresponding Portfolio (Notes A & B) 1,023 468 21
----------------------------------------------------------
Total expenses 2,250 1,081 39
Expenses reimbursed by administrator and/or reduced by
custodian fee and shareholder servicing expense offset
arrangements (Note B) (16) (143) (28)
----------------------------------------------------------
Total net expenses 2,234 938 11
----------------------------------------------------------
Net investment income 17,825 8,246 80
----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM
CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment securities (3) 324 9
Net realized loss on financial futures contracts -- (821) --
Change in net unrealized appreciation of investment
securities, financial futures contracts, translation of
assets and liabilities in foreign currencies, and foreign
currency contracts -- (715) 25
----------------------------------------------------------
Net gain (loss) on investments from corresponding
Portfolio (Note A) (3) (1,212) 34
----------------------------------------------------------
Net increase in net assets resulting from operations $17,822 $ 7,034 $114
----------------------------------------------------------
</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
1998 October 31,
(000'S OMITTED) (UNAUDITED) 1997
--------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 7,657 $ 15,288
Net realized gain (loss) on investments from
corresponding Portfolio (Note A) 11 (3)
Change in net unrealized appreciation
(depreciation) of investments from
corresponding Portfolio (Note A) -- --
--------------------------------
Net increase in net assets resulting from
operations 7,668 15,285
--------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (7,657) (15,288)
--------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 448,541 959,168
Proceeds received in connection with merger
(Note D) -- --
Proceeds from reinvestment of dividends 7,580 15,110
Payments for shares redeemed (337,691) (1,029,506)
--------------------------------
Net increase (decrease) from Trust share
transactions 118,430 (55,228)
--------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 118,441 (55,231)
NET ASSETS:
Beginning of period 308,157 363,388
--------------------------------
End of period $ 426,598 $ 308,157
--------------------------------
NUMBER OF TRUST SHARES:
Sold 448,541 959,168
Issued in connection with merger (Note D) -- --
Issued on reinvestment of dividends 7,580 15,110
Redeemed (337,691) (1,029,506)
--------------------------------
Net increase (decrease) in shares outstanding 118,430 (55,228)
--------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
HIGH YIELD
BOND FUND
CASH LIMITED MATURITY
RESERVES BOND FUND Period from
March 3, 1998
Six Months Six Months (Commencement
Ended Year Ended Year of Operations)
April 30, Ended April 30, Ended to April 30,
1998 October 31, 1998 October 31, 1998
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 17,825 $ 30,697 $ 8,246 $ 15,544 $ 80
Net realized gain (loss) on investments
from corresponding Portfolio (Note A) (3) (7) (497) (950) 9
Change in net unrealized appreciation
(depreciation) of investments from
corresponding Portfolio (Note A) -- -- (715) 2,103 25
-----------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 17,822 30,690 7,034 16,697 114
-----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (17,825) (30,697) (8,246) (15,559) (80)
-----------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 649,273 1,398,237 52,633 87,972 12,211
Proceeds received in connection with
merger (Note D) -- -- 44,974 -- --
Proceeds from reinvestment of dividends 17,600 30,194 7,066 12,926 28
Payments for shares redeemed (580,046) (1,246,359) (65,604) (92,319) (83)
-----------------------------------------------------------------------------------
Net increase (decrease) from Trust share
transactions 86,827 182,072 39,069 8,579 12,156
-----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 86,824 182,065 37,857 9,717 12,190
NET ASSETS:
Beginning of period 664,063 481,998 255,406 245,689 --
-----------------------------------------------------------------------------------
End of period $ 750,887 $ 664,063 $293,263 $255,406 $12,190
-----------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 649,273 1,398,237 5,253 8,817 1,213
Issued in connection with merger (Note D) -- -- 4,493 -- --
Issued on reinvestment of dividends 17,600 30,194 706 1,294 3
Redeemed (580,046) (1,246,359) (6,551) (9,247) (8)
-----------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding 86,827 182,072 3,901 864 1,208
-----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman April 30, 1998 (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 Limited
Maturity Bond Fund ("Limited Maturity"), and Neuberger& Berman High Yield
Bond Fund ("High Yield") (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. High
Yield had no operations until March 3, 1998, other than matters relating to
its organization and registration as a series of the Trust. The Trust is
registered as a diversified, 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%, 85.21%, and 100.00%, for Government Money,
Cash Reserves, Limited Maturity, and High Yield, respectively, at April 30,
1998). 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.
B-8
<PAGE>
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 Government Money,
Cash Reserves, and Limited Maturity to continue to and the intention of High
Yield to qualify as a regulated investment company by complying with the
provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions
of 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 and $3,277 expiring in 2004 and 2005,
respectively, for Government Money, $7,878, $2,998, and $6,904 expiring in
2002, 2003, and 2005, respectively, for Cash Reserves, and $774,592,
$774,663, $533,438, $6,076,188, $4,086,330, $2,160,210, and $517,222 expiring
in 1998, 2000, 2001, 2002, 2003, 2004, and 2005, respectively, for Limited
Maturity, determined as of October 31, 1997), it is the policy of each Fund
not to distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by High Yield in connection with its
organization are being amortized on a straight-line basis over a five-year
period. At April 30, 1998, the unamortized balance of such expenses amounted
to $67,583. The accrued organization costs are payable to Neuberger&Berman
Management Incorporated ("N&B Management"), the administrator of the Fund.
6) 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.
B-9
<PAGE>
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains N&B Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays N&B
Management an administration fee at the annual rate of 0.27% 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).
N&B Management has voluntarily undertaken to reimburse Cash Reserves, Limited
Maturity, and High Yield for their respective operating expenses plus their pro
rata portion of their corresponding Portfolio's operating expenses (including
the fees payable to N&B Management but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) ("Operating Expenses") which exceed, in
the aggregate, 0.65% per annum for Cash Reserves, 0.70% per annum for Limited
Maturity, and 1.00% per annum for High Yield of their respective average daily
net assets. Each undertaking is subject to termination by N&B Management upon at
least 60 days' prior written notice to the appropriate Fund. High Yield has
agreed to repay N&B Management through December 31, 1999, for its excess
Operating Expenses previously reimbursed by N&B Management, so long as its
annual Operating Expenses during that period do not exceed its expense
limitation. For the six months ended April 30, 1998, such excess expenses
amounted to $139,341 and $27,924, for Limited Maturity and High Yield,
respectively. For the six months ended April 30, 1998, there was no
reimbursement of expenses by N&B Management for Cash Reserves.
All of the capital stock of N&B 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 N&B Management.
Each Fund also has a distribution agreement with N&B Management. N&B
Management receives no compensation therefor and no commissions for sales or
redemptions of shares of beneficial interest of each Fund.
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 $89, $1,103, $339, and $44, for Government Money, Cash Reserves,
Limited Maturity, and High Yield, respectively.
Each Fund has an expense offset arrangement in connection with its
shareholder servicing agent contract. The impact of this arrangement, reflected
in the Statements
B-10
<PAGE>
of Operations under the caption Shareholder servicing agent fees, was a
reduction of $7,566, $15,245, $3,558, and $0, for Government Money, Cash
Reserves, Limited Maturity, and High Yield, respectively.
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended April 30, 1998, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT MONEY $ 400,800,382 $ 289,966,354
CASH RESERVES 402,038,446 335,444,430
LIMITED MATURITY 20,094,911 33,740,662
HIGH YIELD 11,986,169 46,413
</TABLE>
NOTE D -- MERGER:
On February 27, 1998, Limited Maturity acquired all of the net assets of
Neuberger&Berman Ultra Short Bond Fund-Registered Trademark- ("Ultra Short")
pursuant to a plan of reorganization approved by the Board of Trustees on
September 24, 1997. The merger was accomplished by a tax-free exchange of
4,492,869 shares of Limited Maturity (valued at $44,973,622) for the 4,723,570
shares of Ultra Short outstanding on February 27, 1998. Ultra Short's net assets
at that date ($44,973,622), including $289,235 of unrealized appreciation, were
combined with those of Limited Maturity. The aggregate net assets of Limited
Maturity and Ultra Short immediately before the merger were $251,846,857 and
$44,973,622, respectively, resulting in aggregate net assets of $296,820,479
immediately after the merger.
NOTE E -- 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(1)
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,
1998 Year Ended October 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
-----------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0229 .0468 .0464 .0499 .0302 .0248
Net Gains or Losses on Securities -- -- -- -- -- --
-----------------------------------------------------------------
Total From Investment Operations .0229 .0468 .0464 .0499 .0302 .0248
-----------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.0229) (.0468) (.0464) (.0499) (.0302) (.0248)
-----------------------------------------------------------------
Net Asset Value, End of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
-----------------------------------------------------------------
Total Return(2) +2.31%(3) +4.78% +4.74% +5.10% +3.07% +2.51%
-----------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 426.6 $ 308.2 $ 363.4 $ 308.3 $ 251.5 $ 277.2
-----------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) .64%(5) .64% .67% .65% -- --
-----------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets .63%(5) .63% .67% .65% .72% .70%
-----------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 4.68%(5) 4.65% 4.65% 5.00% 3.00% 2.48%
-----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-12
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves(1)
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,
1998 Year Ended October 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0001 $1.0001
-----------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0247 .0499 .0486 .0529 .0327 .0263
Net Gains or Losses on Securities -- -- -- -- -- .0002
-----------------------------------------------------------------
Total From Investment Operations .0247 .0499 .0486 .0529 .0327 .0265
-----------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.0247) (.0499) (.0486) (.0529) (.0327) (.0263)
Distributions (from net capital gains) -- -- -- -- (.0001) (.0002)
-----------------------------------------------------------------
Total Distributions (.0247) (.0499) (.0486) (.0529) (.0328) (.0265)
-----------------------------------------------------------------
Net Asset Value, End of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0001
-----------------------------------------------------------------
Total Return(2) +2.49%(3) +5.11% +4.97% +5.42% +3.33% +2.68%
-----------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 750.9 $ 664.1 $ 482.0 $ 408.9 $ 311.9 $ 273.1
-----------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) .64%(5) .63% .66% .65% -- --
-----------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(6) .63%(5) .63% .65% .65% .65% .65%
-----------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets(6) 5.03%(5) 4.98% 4.86% 5.30% 3.31% 2.63%
-----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Fund(1)
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,
1998 Year Ended October 31,
(UNAUDITED) 1997 1996 1995 1994 1993
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.03 $ 9.99 $10.06 $ 9.88 $10.49 $10.40
------------------------------------------------------------
Income From Investment Operations
Net Investment Income .31 .63 .60 .62 .56 .58
Net Gains or Losses on Securities (both realized and
unrealized) (.04) .04 (.07) .18 (.55) .14
------------------------------------------------------------
Total From Investment Operations .27 .67 .53 .80 .01 .72
------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.31) (.63) (.60) (.62) (.56) (.58)
Distributions (from net capital gains) -- -- -- -- (.05) (.05)
Distributions (in excess of net capital gains) -- -- -- -- (.01) --
Tax return of capital -- -- -- -- -- --
------------------------------------------------------------
Total Distributions (.31) (.63) (.60) (.62) (.62) (.63)
------------------------------------------------------------
Net Asset Value, End of Period $ 9.99 $10.03 $ 9.99 $10.06 $ 9.88 $10.49
------------------------------------------------------------
Total Return(2) +2.70%(3) +6.97% +5.44% +8.32% +0.13% +7.09%
------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $293.3 $255.4 $245.7 $307.4 $308.6 $357.3
------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) .71%(5) .70% .71% .70% -- --
------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(6) .70%(5) .70% .70% .70% .69% .65%
------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets(6) 6.17%(5) 6.34% 6.10% 6.21% 5.53% 5.49%
------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- -- 114%
------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-14
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
High Yield Bond Fund
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
March 3, 1998(8)
to April 30,
1998
(UNAUDITED)
-----------------
<S> <C>
Net Asset Value, Beginning of Period $ 10.00
------
Income From Investment Operations
Net Investment Income .11
Net Gains or Losses on Securities (both realized and
unrealized) .09
------
Total From Investment Operations .20
------
Less Distributions
Dividends (from net investment income) (.11)
------
Net Asset Value, End of Period $ 10.09
------
Total Return(2)(3) +2.00%
------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 12.2
------
Ratio of Gross Expenses to Average Net Assets(4)(5) 1.01%
------
Ratio of Net Expenses to Average Net Assets(5)(9) 1.00%
------
Ratio of Net Investment Income to Average Net Assets(5)(9) 7.07%
------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-15
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman April 30, 1998 (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
(excluding Government Money), total return would have been lower if N&B
Management had not reimbursed certain expenses.
3) Not annualized.
4) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
5) Annualized.
6) After reimbursement of expenses by N&B Management as described in Note B of
Notes to Financial Statements. Had N&B Management not undertaken such action
the annualized ratios of net expenses and net investment income to average
daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended October 31,
CASH RESERVES 1996 1995 1994 1993
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses .67% .68% .71% .76%
--------------------------------
Net Investment Income 4.84% 5.27% 3.25% 2.52%
--------------------------------
</TABLE>
For the year ended October 31, 1997, and the six months ended April 30, 1998,
there was no reimbursement of expenses by N&B Management for Cash Reserves.
<TABLE>
<CAPTION>
Six Months Ended
April 30, Year Ended October 31,
LIMITED MATURITY 1998 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses .81% .71% .71% .71% .71% .73%
-------------------------------------------------------------
Net Investment Income 6.06% 6.33% 6.09% 6.20% 5.51% 5.42%
-------------------------------------------------------------
</TABLE>
7) Limited Maturity transferred all of its investment securities into its
Portfolio on July 2, 1993. After that date the Fund invested only in its
corresponding Portfolio, and that Portfolio, rather than the Fund, engaged in
securities transactions. Therefore, after that date the Fund did not have a
portfolio turnover rate.
B-16
<PAGE>
Portfolio turnover rates for periods ending after July 2, 1993, are included
in the Financial Highlights of Neuberger&Berman Limited Maturity Bond
Portfolio, which appear elsewhere in this report.
8) The date investment operations commenced.
9) After reimbursement of expenses by N&B Management as described in Note B of
Notes to Financial Statements. Had N&B Management not undertaken such action
the annualized ratios of net expenses and net investment income to average
daily net assets would have been higher and lower, respectively.
B-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
Principal Annualized
Amount Yield at Date Value(1)
(000's omitted) of Purchase (000's omitted)
- --------------- ------------- ---------------
<C> <S> <C> <C>
U.S. TREASURY SECURITIES -- BACKED BY THE FULL FAITH AND CREDIT
OF THE U.S. GOVERNMENT (99.1%)
$35,325 U.S. Treasury Notes, 9.00%, due 5/15/98 5.25-5.27% $ 35,374
10,000 U.S. Treasury Notes, 6.125%, due 5/15/98 5.35% 10,003
49,210 U.S. Treasury Bills, due 5/28/98 4.97-5.36% 49,025
12,135 U.S. Treasury Bills, due 6/4/98 5.31% 12,076
4,615 U.S. Treasury Bills, due 6/11/98 5.37% 4,588
15,800 U.S. Treasury Bills, due 6/25/98 5.30-5.31% 15,676
5,000 U.S. Treasury Notes, 6.25%, due 6/30/98 5.53% 5,006
20,000 U.S. Treasury Notes, 5.125%, due 6/30/98 5.27% 19,993
12,750 U.S. Treasury Notes, 8.25%, due 7/15/98 5.29% 12,825
37,860 U.S. Treasury Bills, due 7/23/98 5.07% 37,429
330 U.S. Treasury Bills, due 7/30/98 5.03% 326
30,795 U.S. Treasury Notes, 6.25%, due 7/31/98 5.22-5.32% 30,864
3,250 U.S. Treasury Notes, 5.25%, due 7/31/98 5.32% 3,249
13,730 U.S. Treasury Bills, due 8/13/98 5.14% 13,532
57,995 U.S. Treasury Bills, due 8/20/98 5.11-5.26% 57,104
1,170 U.S. Treasury Bills, due 8/27/98 5.10% 1,151
18,320 U.S. Treasury Notes, 6.125%, due 8/31/98 5.32-5.41% 18,363
45,000 U.S. Treasury Notes, 4.75%, due 8/31/98 5.33-5.34% 44,908
4,430 U.S. Treasury Bills, due 9/3/98 5.23% 4,352
22,120 U.S. Treasury Notes, 6.00%, due 9/30/98 5.44% 22,170
15,000 U.S. Treasury Notes, 4.75%, due 9/30/98 5.41% 14,960
1,260 U.S. Treasury Bills, due 10/22/98 5.26% 1,229
8,950 U.S. Treasury Notes, 5.125%, due 11/30/98 5.41-5.48% 8,933
---------------
TOTAL U.S. TREASURY SECURITIES 423,136
Cash, receivables and other assets, less liabilities (0.9%) 3,843
---------------
TOTAL NET ASSETS (100.0%) $426,979
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-18
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
- --------------- ------- ------- ---------------
<C> <S> <C> <C> <C>
BANKERS' ACCEPTANCES (1.6%)
$ 7,000 First National Bank of Chicago, 5.58%, due 5/5/98 P-1 A-1 $ 6,995
5,000 Deutsche Bank, 5.60%, due 5/18/98 P-1 A-1+ 4,987
---------------
TOTAL BANKERS' ACCEPTANCES 11,982
---------------
ASSET-BACKED COMMERCIAL PAPER (8.6%)
15,000 Corporate Asset Funding Co., Inc., 5.42%, due 5/8/98 P-1 A-1+ 14,984
15,000 Ciesco, L.P., 5.50%, due 6/4/98 P-1 A-1+ 14,922
6,000 Corporate Receivables Corp., 5.50%, due 6/10/98 P-1 A-1+ 5,964
19,000 Asset Securitization Cooperative Corp., 5.44%-5.51%, due 5/8/98-6/18/98 P-1 A-1+ 18,907
9,681 Enterprise Funding Corp., 5.51% & 5.52%, due 5/28/98 & 6/19/98 P-1 A-1+ 9,617
---------------
TOTAL ASSET-BACKED COMMERCIAL PAPER 64,394
---------------
CORPORATE COMMERCIAL PAPER (65.9%)
6,800 Anheuser-Busch Cos., Inc., 5.50%, due 5/1/98 P-1 A-1 6,800
10,000 BP America, Inc., 5.53%, due 5/1/98 P-1 A-1+ 10,000
4,905 Hershey Foods Corp., 5.42%, due 5/1/98 P-1 A-1 4,905
9,500 Export Development Corp., 5.50%, due 5/6/98 P-1 A-1+ 9,493
10,000 Nestle Capital Corp., 5.51%, due 5/7/98 P-1 A-1+ 9,991
3,040 BellSouth Telecommunications, Inc., 5.49%, due 5/8/98 P-1 A-1+ 3,037
10,000 Consolidated Natural Gas Co., 5.50%, due 5/8/98 P-1 A-1+ 9,989
10,000 Sara Lee Corp., 5.50%, due 5/11/98 P-1 A-1+ 9,985
4,000 Daimler-Benz North America Corp., 5.46%, due 5/12/98 P-1 A-1 3,993
22,365 PPG Industries, Inc., 5.50%, due 5/11/98 & 5/12/98 P-1 A-1 22,328
6,000 SBC Communications Inc., 5.47%, due 5/22/98 P-1 A-1+ 5,981
20,000 Caisse d'Amortissement de la Dette Sociale, 5.61%, due 5/26/98 P-1 A-1+ 19,922
7,650 MetLife Funding, Inc., 5.52%, due 5/26/98 P-1 A-1+ 7,621
10,400 Motorola Credit Corp., 5.49%, due 5/26/98 P-1 A-1+ 10,360
</TABLE>
B-19
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
- --------------- ------- ------- ---------------
<C> <S> <C> <C> <C>
$15,000 Ameritech Capital Funding Corp., 5.38% & 5.41%, due 5/8/98 & 6/10/98 P-1 A-1+ $ 14,960
19,747 Bell Atlantic Financial Services, Inc., 5.48% & 5.51%, due 5/19/98 &
6/12/98 P-1 A-1 19,674
15,000 National Australia Funding Delaware Inc., 5.36% & 5.50%, due 5/4/98 &
6/12/98 P-1 A-1+ 14,935
7,000 Westpac Capital Corp., 5.40%, due 6/12/98 P-1 A-1+ 6,956
5,000 Electricite de France, 5.46%, due 7/2/98 P-1 A-1+ 4,953
15,000 Ford Motor Credit Co., 5.45%, due 7/2/98 P-1 A-1 14,859
5,000 Atlantic Richfield Co., 5.47%, due 7/6/98 P-1 A-1 4,950
25,000 American Express Credit Corp., 5.45% & 5.51%, due 5/6/98 & 7/8/98 P-1 A-1 24,886
14,500 Swedish Export Credit Corp., 5.46%, due 7/13/98 P-1 A-1+ 14,339
30,065 Goldman Sachs Group, L.P., 5.43%-5.56%, due 5/8/98-7/14/98 P-1 A-1+ 29,865
2,000 USAA Capital Corp., 5.40%, due 7/14/98 P-1 A-1+ 1,978
5,000 J.P. Morgan & Co., Inc., 5.30%, due 7/15/98 P-1 A-1+ 4,945
31,700 Pitney Bowes Credit Corp., 5.46%-5.47%, due 6/19/98-7/15/98 P-1 A-1+ 31,403
15,000 Amoco Co., 5.40%, due 7/17/98 P-1 A-1+ 14,827
15,000 du Pont (E.I.) de Nemours & Co., 5.46% & 5.52%, due 5/6/98 & 7/20/98 P-1 A-1+ 14,875
39,000 Eksportfinans ASA, 5.45%-5.50%, due 6/12/98-7/22/98 P-1 A-1+ 38,628
10,000 Minnesota Mining & Manufacturing Co., 5.44%, due 7/22/98 P-1 A-1+ 9,876
27,000 Merrill Lynch & Co., Inc., 5.50%, due 6/15/98 & 7/31/98 P-1 A-1+ 26,674
17,000 ANZ (Delaware) Inc., 5.46% & 5.47%, due 6/26/98 & 8/6/98 P-1 A-1+ 16,793
</TABLE>
B-20
<PAGE>
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
- --------------- ------- ------- ---------------
<C> <S> <C> <C> <C>
$27,000 General Electric Capital Corp., 5.44%-5.62%, due 5/20/98-9/2/98 P-1 A-1+ $ 26,689
24,000 Prudential Funding Corp., 5.38%-5.53%, due 5/1/98-9/22/98 P-1 A-1 23,840
---------------
TOTAL CORPORATE COMMERCIAL PAPER 495,310
---------------
CERTIFICATES OF DEPOSIT (15.0%)
10,000 Bank of Montreal, Yankee C.D., 5.52%, due 5/6/98 P-1 A-1+ 10,000
10,000 Societe Generale, Yankee C.D., 5.73%, due 5/11/98 P-1 A-1+ 10,000
2,000 Swiss Bank Corp., Yankee C.D., 6.05%, due 5/22/98 P-1 A-1+ 2,000
10,000 Banque Nationale de Paris, Eurodollar C.D., 5.52%, due 5/26/98 P-1 A-1 10,000
2,000 Landesbank Hessen-Thueringen Girozentrale, Yankee C.D., 6.03%, due 6/12/98 P-1 A-1+ 2,001
10,000 Toronto Dominion Bank, Eurodollar C.D., 5.57%, due 6/15/98 P-1 A-1+ 10,000
15,000 Bayerische Vereinsbank AG, Eurodollar C.D., 5.80%, due 6/18/98 P-1 A-1+ 15,007
20,000 ABN AMRO Bank NV, Yankee C.D., 5.68%, due 7/2/98 P-1 A-1+ 20,005
6,000 Deutsche Bank, Yankee C.D., 5.62%, due 7/6/98 P-1 A-1+ 6,000
10,000 Abbey National Treasury Services PLC, Eurodollar C.D., 5.59%, due 10/22/98 P-1 A-1+ 10,000
17,500 Rabobank Nederland, Yankee C.D., 5.69% & 5.70%, due 4/16/99 & 4/20/99 P-1 A-1+ 17,492
---------------
TOTAL CERTIFICATES OF DEPOSIT 112,505
---------------
CORPORATE DEBT SECURITIES (3.3%)
15,000 Morgan Stanley Group Inc., Senior Variable Rate Medium-Term Notes, Ser. C,
5.575%, due 5/18/98 P-1 A-1 15,000
10,000 Morgan Guaranty Trust Co., Bank Notes, 5.93%, due 8/31/98 P-1 A-1+ 10,003
---------------
TOTAL CORPORATE DEBT SECURITIES 25,003
---------------
</TABLE>
B-21
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
- --------------- ------- ------- ---------------
<C> <S> <C> <C> <C>
TIME DEPOSITS (1.3%)
$10,000 Den Danske Bank, 5.50%, due 5/1/98 P-1 A-1 $ 10,000
---------------
FUNDING AGREEMENTS (4.0%)
30,000 Travelers Insurance Co., Variable Rate Funding Agreement, 5.7075%, expiring
3/16/99 P-1 A-1+ 30,000
---------------
TOTAL INVESTMENTS (99.7%) 749,194
Cash, receivables and other assets, less liabilities (0.3%) 2,198
---------------
TOTAL NET ASSETS (100.0%) $751,392
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-22
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
- --------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (3.9%)
$1,785 U.S. Treasury Notes, 5.875%, due 2/15/00 TSY TSY $ 1,794
2,220 U.S. Treasury Notes, 6.75%, due 4/30/00 TSY TSY 2,268
7,980 U.S. Treasury Notes, 5.75%, due 11/15/00 TSY TSY 8,006
1,625 U.S. Treasury Inflation-Indexed Notes, 3.375%, due 1/15/07 TSY TSY 1,573
---------------
TOTAL U.S. TREASURY SECURITIES (COST $13,658) 13,641
---------------
U.S. GOVERNMENT AGENCY SECURITIES (4.5%)
7,430 Federal Home Loan Bank, Discount Notes, 5.43%, due 5/1/98 AGY AGY 7,429
2,000 Federal Home Loan Bank, Discount Notes, 5.40%, due 5/8/98 AGY AGY 1,998
6,180 SLM Holding Co., Medium-Term Notes, 6.38%, due 12/11/01 AGY AGY 6,181
---------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $15,618) 15,608
---------------
MORTGAGE-BACKED SECURITIES (5.7%)
FANNIE MAE
1 Balloon Pass-Through Certificates, 9.00%, due 8/1/98 AGY AGY 1
187 Balloon Pass-Through Certificates, 8.50%, due 10/1/98-11/1/98 AGY AGY 193
1,756 Balloon Pass-Through Certificates, 7.00%, due 8/1/03 AGY AGY 1,780
272 REMIC Floating Rate CMO, Ser. 1992-59F, 6.0875%, due 8/25/06 AGY AGY 272
6,914 Pass-Through Certificates, 7.00%, due 9/1/03 & 6/1/11 AGY AGY 7,084
6,220 Pass-Through Certificates, 6.50%, due 4/1/13 AGY AGY 6,241
</TABLE>
B-23
<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>
FREDDIE MAC
$ 380 Gold Balloon Mortgage Participation Certificates, 6.50%, due 9/1/98 &
9/1/99 AGY AGY $ 382
91 Mortgage Participation Certificates, 10.50%, due 10/1/00 & 12/1/00 AGY AGY 95
331 Mortgage Participation Certificates, 8.50%, due 10/1/01 AGY AGY 340
198 ARM Certificates, 7.00%, due 1/1/17 AGY AGY 201
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
810 Pass-Through Certificates, 7.50%, due 10/15/09-10/15/10 AGY AGY 836
1,996 Pass-Through Certificates, 7.00%, due 4/15/11 AGY AGY 2,041
139 Pass-Through Certificates, 12.00%, due 5/15/12-3/15/15 AGY AGY 160
---------------
TOTAL MORTGAGE-BACKED SECURITIES
(COST $19,305) 19,626
---------------
ASSET-BACKED SECURITIES (16.9%)
871 Chase Manhattan Grantor Trust, Automobile Loan Pass-Through
Certificates, Ser. 1997-A, Class A-2, 5.95%, due 10/15/99 Aaa AAA 871
5,710 PNC Student Loan Trust I, Ser. 1997-2, Class A-2, 6.138%, due 1/25/00 Aaa AAA 5,739
370 Premier Auto Trust, Ser. 1997-1, Class A-2, 5.90%, due 4/6/00 Aaa AAA 370
401 Ford Credit Grantor Trust, Ser. 1995-A, Class A, 5.90%, due 5/15/00 Aaa AAA 402
3,820 Chase Manhattan Auto Owner Trust, Ser. 1996-C, Class A-3, 5.95%, due
11/15/00 Aaa AAA 3,825
4,949 Money Store Auto Grantor Trust, Ser. 1997-2, Class A-1, 6.17%, due
3/20/01 Aaa AAA 4,961
773 Chase Manhattan Grantor Trust, Automobile Loan Pass-Through
Certificates, Ser. 1995-A, 6.00%, due 9/17/01 Aaa AAA 774
</TABLE>
B-24
<PAGE>
April 30, 1998 (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>
$3,594 Banc One Auto Grantor Trust, Ser. 1996-B, Class A, 6.55%, due 2/15/03 Aaa AAA $ 3,618
6,500 Ford Credit Auto Loan Master Trust, Auto Loan Certificates, Ser.
1996-1, 5.50%, due 2/15/03 Aaa AAA 6,440
348 Honda Auto Receivables Grantor Trust, Ser. 1997-A, Class A, 5.85%, due
2/15/03 Aaa AAA 348
5,600 Chase Credit Card Master Trust, Ser. 1997-2, Class A, 6.30%, due
4/15/03 Aaa AAA 5,663
2,445 Navistar Financial Owner Trust, Ser. 1996-B, Class A-3, 6.33%, due
4/21/03 Aaa AAA 2,463
5,330 World Omni Automobile Lease Securitization Trust, Ser. 1997-A, Class
A-3, 6.85%, due 6/25/03 Aaa AAA 5,402
2,992 Chevy Chase Auto Receivables Trust, Ser. 1996-2, Class A, 5.90%, due
7/15/03 Aaa AAA 2,992
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 5,329
4,923 ContiMortgage Net Interest Margin Notes, Ser. 1998-A, Class A, 7.92%,
due 3/16/28 BBB+(3) 4,910(4)
4,244 IMC Excess Cashflow Trust, Ser. 1997-A, 7.41%, due 11/26/28 BBB(3) 4,228(4)
---------------
TOTAL ASSET-BACKED SECURITIES (COST $58,338) 58,335
---------------
BANKS & FINANCIAL INSTITUTIONS (25.2%)
2,500 Merrill Lynch & Co., Inc., Medium-Term Notes, Ser. B, 6.64%, due
4/9/99 Aa3 AA- 2,514
5,250 Household Finance Corp., Medium-Term Notes, 6.62%, due 5/28/99 A2 A 5,274
5,240 Merrill Lynch & Co., Inc., Medium-Term Notes, Ser. B, 6.28%, due
6/25/99 Aa3 AA- 5,253
4,850 Chase Manhattan Bank USA, Senior Global Bank Notes, 5.875%, due 8/4/99 Aa2 AA- 4,844
2,500 Associates Corp. of North America, Senior Notes, 6.375%, due 8/15/99 Aa3 AA- 2,515
</TABLE>
B-25
<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>
$5,180 CIT Group Holdings, Inc., Medium-Term Notes, 6.25%, due 10/25/99 Aa3 A+ $ 5,192
3,940 First National Bank of Commerce, Senior Bank Notes, 6.50%, due 1/14/00 A2 A- 3,966
3,980 HomeSide Lending, Inc., Notes, 6.875%, due 5/15/00 A1 A+ 4,029
5,000 Salomon Smith Barney Holdings Inc., Notes, 7.00%, due 5/15/00 A2 A 5,093
1,300 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E, 7.08%, due
5/22/00 Baa1 A 1,324
1,800 International Lease Finance Corp., Notes, 6.625%, due 6/1/00 A1 A+ 1,822
5,400 Comdisco, Inc., Notes, 6.50%, due 6/15/00 Baa1 BBB+ 5,438
3,150 Countrywide Funding Corp., Medium-Term Notes, Ser. A, 7.31%, due
8/28/00 A3 A 3,226
7,090 Associates Pass-Through Asset Trust, Ser. 1997-1, 6.45%, due 9/15/00 Aa3 AA- 7,146(4)
5,000 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E, 6.89%, due
10/10/00 Baa1 A 5,087
1,725 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E, 6.65%, due
11/8/00 Baa1 A 1,746
3,000 Aristar, Inc., Senior Notes, 6.125%, due 12/1/00 A3 A- 3,002
2,000 NationsBank Corp., Senior Medium-Term Notes, Ser. E, 5.70%, due 2/9/01 Aa3 A+ 1,979
6,600 Capital One Bank, Bank Notes, 5.95%, due 2/15/01 Baa3 BBB- 6,531
4,430 Morgan Stanley, Dean Witter, Discover & Co., Global Medium-Term Notes,
Ser. C, 6.09%, due 3/9/01 A1 A+ 4,422
</TABLE>
B-26
<PAGE>
April 30, 1998 (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>
$3,610 Riggs National Corp., Subordinated Notes, 8.50%, due 2/1/06 Ba1(5) BB-(5) $ 3,813
2,400 Riggs National Corp., Subordinated Debentures, 9.65%, due 6/15/09 Ba1(5) BB-(5) 2,859
---------------
TOTAL BANKS & FINANCIAL INSTITUTIONS
(COST $86,706) 87,075
---------------
CORPORATE DEBT SECURITIES (37.7%)
2,000 AT&T Capital Corp., Medium-Term Notes, Ser. 1997-4, 6.92%, due 4/29/99 Baa3 BBB 2,014
1,900 American Standard Inc., Senior Notes, 10.875%, due 5/15/99 Ba3 BB- 1,990
7,000 Lockheed Martin Corp., Notes, 6.55%, due 5/15/99 A3 BBB+ 7,031
5,200 Williams Holdings of Delaware, Inc., Medium-Term Notes, Ser. A, 6.40%,
due 6/17/99 Baa2 BBB- 5,216
2,710 Arkla, Inc., Notes, 8.875%, due 7/15/99 Baa1 BBB 2,791
4,680 Time Warner Pass-Through Asset Trust, Ser. 1997-2, 4.90%, due 7/29/99 Ba1 BBB- 4,607(4)
1,000 General Motors Acceptance Corp., Medium-Term Notes, 6.15%, due 9/20/99 A2 A 1,003
4,800 Norfolk Southern Corp., Notes, 6.70%, due 5/1/00 Baa1 BBB+ 4,854
5,490 Sears Roebuck Acceptance Corp., Medium-Term Notes, Ser. IV, 6.23%, due
7/12/00 A2 A- 5,503
2,000 Ford Motor Credit Co., Medium-Term Notes, 6.84%, due 8/16/00 A1 A 2,034
3,220 MedPartners, Inc., Senior Subordinated Notes, 6.875%, due 9/1/00 Ba3 BB- 3,102
2,000 American General Finance Corp., Senior Notes, 6.125%, due 9/15/00 A2 A+ 2,008
2,510 Chesapeake Corp., Notes, 10.375%, due 10/1/00 Baa3 BBB 2,737
1,730 BHP Finance (USA) Ltd., Guaranteed Notes, 5.625%, due 11/1/00 A2 A 1,706
5,590 IKON Capital, Inc., Medium-Term Notes, Ser. C, 6.33%, due 12/8/00 A3 A- 5,603
</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>
$2,300 General Electric Capital Corp., Global Medium-Term Notes, Ser. A,
5.52%, due 1/15/01 Aaa AAA $ 2,276
500 Congoleum Corp., Senior Notes, 9.00%, due 2/1/01 B1 BB- 505
2,320 Fort James Corp., Notes, 6.234%, due 3/15/01 Baa3 BBB- 2,313
3,470 Revlon Worldwide Corp., Senior Secured Notes, Ser. B, Zero-Coupon,
Yielding 10.75% & 10.959%, due 3/15/01 B3 B- 2,672
2,290 Colonial Realty Limited Partnership, Senior Notes, 7.50%, due 7/15/01 Baa3 BBB- 2,365
4,160 Tyco International Ltd., Notes, 6.50%, due 11/1/01 A3 A- 4,199
2,965 ICI Wilmington Inc., Guaranteed Notes, 7.50%, due 1/15/02 Baa1 A- 3,094
2,835 Black & Decker Corp., Medium-Term Notes, Ser. A, 8.90%, due 1/21/02 Baa2 BBB- 3,066
900 Ford Motor Credit Co., Global Bonds, 6.50%, due 2/28/02 A1 A 910
2,280 Fort James Corp., Senior Notes, 6.50%, due 9/15/02 Baa3 BBB- 2,266
1,000 Safeway Inc., Medium-Term Notes, 8.57%, due 4/1/03 Baa2 BBB 1,088
3,360 Stewart Enterprises, Inc., Notes, 6.40%, due 5/1/03 Baa3 BBB 3,339
60 Core-Mark International, Inc., Senior Subordinated Notes, 11.375%, due
9/15/03 B3 B 64
705 Loomis Fargo & Co., Senior Subordinated Notes, 10.00%, due 1/15/04 B3 B 712
175 Playtex Products, Inc., Senior Notes, Ser. B, 8.875%, due 7/15/04 B1 B+ 181
660 EOP Operating Limited Partnership, Notes, 6.625%, due 2/15/05 Baa1 BBB 655(4)
495 Earle M. Jorgensen Co., Senior Notes, 9.50%, due 4/1/05 B3 B- 495(4)
190 ICN Pharmaceuticals, Inc., Senior Notes, Ser. B, 9.25%, due 8/15/05 B1 BB 201
</TABLE>
B-28
<PAGE>
April 30, 1998 (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>
$1,300 Burlington Industries, Inc., Notes, 7.25%, due 9/15/05 Baa3 BBB- $ 1,308
4,200 Heritage Media Corp., Senior Subordinated Notes, 8.75%, due 2/15/06 B1 BB+ 4,489
4,320 Mark IV Industries, Inc., Senior Subordinated Notes, 7.75%, due 4/1/06 Ba2(6) BB+(6) 4,396
460 Premier Parks Inc., Senior Notes, 9.25%, due 4/1/06 B3 B- 466
400 Printpack, Inc., Senior Subordinated Notes, Ser. B, 10.625%, due
8/15/06 B3 B+ 434
2,825 Time Warner Inc., Notes, 8.11%, due 8/15/06 Ba1 BBB- 3,079
400 Commonwealth Aluminum Corp., Senior Subordinated Notes, 10.75%, due
10/1/06 B2 B- 430
2,235 MedPartners, Inc., Senior Notes, 7.375%, due 10/1/06 Baa3 BBB 2,024
500 Motors and Gears, Inc., Senior Notes, Ser. B, 10.75%, due 11/15/06 B3 B 544
680 Newport News Shipbuilding Inc., Senior Subordinated Notes, 9.25%, due
12/1/06 B1 B+ 716
60 Safelite Glass Corp., Senior Subordinated Notes, 9.875%, due 12/15/06 B3 B 64(4)
917 AMTROL Inc., Senior Subordinated Notes, 10.625%, due 12/31/06 B3 B- 947
1,275 Pen-Tab Industries, Inc., Senior Subordinated Notes, Ser. B, 10.875%,
due 2/1/07 B3 B- 1,265
1,050 Fonda Group, Inc., Senior Subordinated Notes, Ser. B, 9.50%, due
3/1/07 B3 B- 1,029
1,250 GFSI Inc., Senior Subordinated Notes, 9.625%, due 3/1/07 B3 B- 1,320
300 French Fragrances, Inc., Senior Notes, Ser. B, 10.375%, due 5/15/07 B2 B+ 321
2,410 Owens-Illinois, Inc., Senior Debentures, 8.10%, due 5/15/07 Ba1(7) BB+(7) 2,546
</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>
$ 405 AmeriServe Food Distribution, Inc., Senior Subordinated Notes,
10.125%, due 7/15/07 B3 B- $ 437
250 Safety Components International, Inc., Senior Subordinated Notes,
10.125%, due 7/15/07 B3 B- 261
880 HydroChem Industrial Services, Inc., Senior Subordinated Notes, Ser.
B, 10.375%, due 8/1/07 B3 B- 922
4,960 Interpool, Inc., Notes, 7.20%, due 8/1/07 Ba1 BBB- 4,960
190 Insilco Corp., Senior Subordinated Notes, 10.25%, due 8/15/07 B3 B+ 199
520 NBTY, Inc., Senior Subordinated Notes, Ser. B, 8.625%, due 9/15/07 B1 B+ 534
2,360 UPM-Kymmene Corp., Notes, 6.875%, due 11/26/07 Baa1 BBB+ 2,361(4)
2,490 IDEX Corp., Senior Notes, 6.875%, due 2/15/08 Ba1 BBB- 2,451
1,585 Central Maine Power & Co., General and Refunding Mortgage Bonds, Ser.
Q, 7.05%, due 3/1/08 Baa3 BB+ 1,561
1,000 Thiokol Corp., Senior Notes, 6.625%, due 3/1/08 Baa3 BBB 991
4,840 Beckman Coulter, Inc., Senior Notes, 7.45%, due 3/4/08 Ba1(7) BB+(7) 4,851(4)
160 APCOA, Inc., Senior Subordinated Notes, 9.25%, due 3/15/08 Caa1 B- 160(4)
610 IMPAC Group, Inc., Senior Subordinated Notes, 10.125%, due 3/15/08 B3 B- 618(4)
470 Trans-Resources, Inc., Senior Notes, 10.75%, due 3/15/08 B3 B- 482(4)
300 Columbus McKinnon Corp., Senior Subordinated Notes, 8.50%, due 4/1/08 B2 B 299(4)
160 Great Central Mines Ltd., Senior Notes, 8.875%, due 4/1/08 Ba2 BB 161(4)
285 Morris Material Handling, Inc., Senior Notes, 9.50%, due 4/1/08 B2 B 280(4)
</TABLE>
B-30
<PAGE>
April 30, 1998 (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>
$ 210 PharMerica, Inc., Senior Subordinated Notes, 8.375%, due 4/1/08 B2 B $ 209(4)
520 KinderCare Learning Centers, Inc., Senior Subordinated Notes, Ser. B,
9.50%, due 2/15/09 B3 B- 532
---------------
TOTAL CORPORATE DEBT SECURITIES (COST $129,825) 130,247
---------------
FOREIGN GOVERNMENT SECURITIES(8) (2.8%)
NZD 5,160 New Zealand, 6.50%, due 2/15/00 Aaa AAA 2,806
SEK 53,100 Kingdom of Sweden, 5.50%, due 4/12/02 Aa1 6,969
---------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(COST $9,978) 9,775
---------------
CORPORATE COMMERCIAL PAPER (1.9%)
$1,500 Procter & Gamble Co., 5.37%, due 6/8/98 P-1 A-1+ 1,491
5,000 MetLife Funding, Inc., 5.48%, due 6/18/98 P-1 A-1+ 4,964(9)
---------------
TOTAL CORPORATE COMMERCIAL PAPER
(COST $6,455) 6,455
---------------
TOTAL INVESTMENTS (98.6%) (COST $339,883) 340,762(10)
Cash, receivables and other assets, less liabilities (1.4%) 4,781
---------------
TOTAL NET ASSETS (100.0%) $345,543
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-31
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
High Yield Bond Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
- --------------- -------- -------- ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (28.1%)
$$3,385 Federal Home Loan Bank, Discount Notes, 5.43%, due 5/1/98 (COST
$3,385) AGY AGY $ 3,384
-------
CORPORATE DEBT SECURITIES (78.4%)
70 Congoleum Corp., Senior Notes, 9.00%, due 2/1/01 B1 BB- 71
80 Revlon Worldwide Corp., Senior Secured Notes, Ser. B, Zero-Coupon,
Yielding 9.237%, due 3/15/01 B3 B- 62
150 Stone Container Corp., Senior Subordinated Debentures, 12.25%, due
4/1/02 B3 B- 155
60 Core-Mark International, Inc., Senior Subordinated Notes, 11.375%, due
9/15/03 B3 B 64
60 Loomis Fargo & Co., Senior Subordinated Notes, 10.00%, due 1/15/04 B3 B 61
60 Playtex Products, Inc., Senior Notes, Ser. B, 8.875%, due 7/15/04 B1 B+ 62
150 Earle M. Jorgensen Co., Senior Notes, 9.50%, due 4/1/05 B3 B- 150(4)
250 MTS, INC., Senior Subordinated Notes, 9.375%, due 5/1/05 B2 B 250(4)
300 R.A.B. Enterprises, Inc., Senior Notes, 10.50%, due 5/1/05 B3 B- 302(4)
70 ICN Pharmaceuticals, Inc., Senior Notes, Ser. B, 9.25%, due 8/15/05 B1 BB 74
150 Burlington Industries, Inc., Notes, 7.25%, due 9/15/05 Baa3 BBB- 151
150 Mark IV Industries, Inc., Senior Subordinated Notes, 7.75%, due 4/1/06 Ba2(6) BB+(6) 153
60 Printpack, Inc., Senior Subordinated Notes, Ser. B, 10.625%, due
8/15/06 B3 B+ 65
70 Commonwealth Aluminum Corp., Senior Subordinated Notes, 10.75%, due
10/1/06 B2 B- 75
330 Evenflo & Spalding Holdings Corp., Senior Subordinated Notes, Ser. B,
10.375%, due 10/1/06 Caa2 CCC 275
</TABLE>
B-32
<PAGE>
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
High Yield 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>
$ 60 Motors and Gears, Inc., Senior Notes, Ser. B, 10.75%, due 11/15/06 B3 B $ 65
150 Newport News Shipbuilding Inc., Senior Subordinated Notes, 9.25%, due
12/1/06 B1 B+ 158
60 Pen-Tab Industries, Inc., Senior Subordinated Notes, Ser. B, 10.875%,
due 2/1/07 B3 B- 59
60 Fonda Group, Inc., Senior Subordinated Notes, Ser. B, 9.50%, due
3/1/07 B3 B- 59
60 GFSI Inc., Senior Subordinated Notes, 9.625%, due 3/1/07 B3 B- 63
60 French Fragrances, Inc., Senior Notes, Ser. B, 10.375%, due 5/15/07 B2 B+ 64
120 Windy Hill Pet Food Co., Inc., Senior Subordinated Notes, 9.75%, due
5/15/07 B3 B- 127
85 Hedstrom Corp., Senior Subordinated Notes, 10.00%, due 6/1/07 B3 B- 87
150 Polymer Group, Inc., Senior Subordinated Notes, 9.00%, due 7/1/07 B2 B 155
60 AmeriServe Food Distribution, Inc., Senior Subordinated Notes,
10.125%, due 7/15/07 B3 B- 65
60 Safety Components International, Inc., Senior Subordinated Notes,
10.125%, due 7/15/07 B3 B- 63
60 HydroChem Industrial Services, Inc., Senior Subordinated Notes, Ser.
B, 10.375%, due 8/1/07 B3 B- 63
150 SC International Services, Inc., Senior Subordinated Notes, Ser. B,
9.25%, due 9/1/07 B2 B 156
60 NBTY, Inc., Senior Subordinated Notes, Ser. B, 8.625%, due 9/15/07 B1 B+ 62
85 K & F Industries, Inc., Senior Subordinated Notes, 9.25%, due 10/15/07 B3 B- 88
60 United Defense, L.P., Senior Subordinated Notes, 8.75%, due 11/15/07 B3 B- 61
60 IDEX Corp., Senior Notes, 6.875%, due 2/15/08 Ba1 BBB- 59
</TABLE>
B-33
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
High Yield 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>
$ 185 Universal Compression, Inc., Senior Step Up Notes, Yielding 9.929%,
due 2/15/08 B2 B $ 115(4)
60 Beckman Coulter, Inc., Senior Notes, 7.45%, due 3/4/08 Ba1(7) BB+(7) 60(4)
300 APCOA, Inc., Senior Subordinated Notes, 9.25%, due 3/15/08 Caa1 B- 300(4)
70 IMPAC Group, Inc., Senior Subordinated Notes, 10.125%, due 3/15/08 B3 B- 71(4)
250 Musicland Group, Inc., Senior Subordinated Notes, 9.875%, due 3/15/08 Caa1 CCC+ 249(4)
70 Trans-Resources, Inc., Senior Notes, 10.75%, due 3/15/08 B3 B- 72(4)
250 AMSC Acquisition Co., Inc., Senior Notes, 12.25%, due 4/1/08 254(4)(11)
200 Columbus McKinnon Corp., Senior Subordinated Notes, 8.50%, due 4/1/08 B2 B 200(4)
300 Great Central Mines Ltd., Senior Notes, 8.875%, due 4/1/08 Ba2 BB 302(4)
175 Morris Material Handling, Inc., Senior Notes, 9.50%, due 4/1/08 B2 B 172(4)
150 Numatics, Inc., Senior Subordinated Notes, 9.625%, due 4/1/08 B3 B- 152(4)
250 PharMerica, Inc., Senior Subordinated Notes, 8.375%, due 4/1/08 B2 B 249(4)
500 Premier Parks Inc., Senior Step Up Notes, Yielding 10.00%, due 4/1/08 B3 B- 319
200 Terex Corp., Senior Subordinated Notes, 8.875%, due 4/1/08 B3 B- 199(4)
250 Hudson Respiratory Care Inc., Senior Subordinated Notes, 9.125%, due
4/15/08 B3 B- 250(4)
250 Mediacom LLC, Senior Notes, 8.50%, due 4/15/08 B2 B+ 247(4)
250 United Stationers Supply Co., Senior Subordinated Notes, 8.375%, due
4/15/08 B2 B 251(4)
</TABLE>
B-34
<PAGE>
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
High Yield 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>
$ 300 Advanstar Communications Inc., Senior Subordinated Notes, 9.25%, due
5/1/08 B2 B- $ 300(4)
300 Grove Worldwide LLC, Senior Subordinated Notes, 9.25%, due 5/1/08 B2 B 299(4)
300 Iron Age Corp., Senior Subordinated Notes, 9.875%, due 5/1/08 B3 B- 303(4)
300 Level 3 Communications, Inc., Senior Notes, 9.125%, due 5/1/08 B3 B- 297(4)
320 Sun Healthcare Group, Inc., Senior Subordinated Notes, 9.375%, due
5/1/08 B2 B- 322(4)
300 Ziff-Davis Inc., Senior Subordinated Notes, 8.50%, due 5/1/08 B2 B+ 300
300 Boyds Collection, Ltd., Senior Subordinated Notes, 9.00%, due 5/15/08 B2 B- 301(4)
160 KinderCare Learning Centers, Inc., Senior Subordinated Notes, Ser. B,
9.50%, due 2/15/09 B3 B- 164
500 Diamond Brands Inc., Senior Step Up Debentures, Yielding 12.875%, due
4/15/09 Caa1 CCC+ 271(4)
-------
TOTAL CORPORATE DEBT SECURITIES (COST $9,417) 9,443
-------
TOTAL INVESTMENTS (106.5%) (COST $12,802) 12,827(10)
Liabilities, less cash, receivables and other assets [(6.5%)] (783)
-------
TOTAL NET ASSETS (100.0%) $12,044
-------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-35
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 1998 (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.
Foreign security prices are furnished by independent quotation services
expressed in local currency values. Foreign security prices are translated
from the local currency into U.S. dollars using current exchange rates.
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) Not rated by Moody's; the rating shown is from Fitch Investors Services,
Inc.
4) 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, 1998, these
securities amounted to $31,526,000 or 9.1% of net assets for
Neuberger&Berman Limited Maturity Bond Portfolio and $5,938,000 or 49.3% of
net assets for Neuberger& Berman High Yield Bond Portfolio.
5) Rated BBB by Thomson Bank Watch, Inc.
6) Rated BBB- by Fitch Investors Services, Inc.
7) Rated BBB- by Duff & Phelps Credit Rating Co.
8) Principal amount is stated in the currency in which the security is
denominated.
NZD -- New Zealand Dollar
SEK -- Swedish Krona
9) At cost, which approximates market value.
10) At April 30, 1998, selected Portfolio information on a Federal income tax
basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER&BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIMITED MATURITY BOND PORTFOLIO $339,883,000 $2,448,000 $1,569,000 $879,000
HIGH YIELD BOND PORTFOLIO 12,802,000 47,000 22,000 25,000
</TABLE>
11) Not rated by a nationally recognized statistical rating organization.
Security is an eligible security based on a comparable quality analysis
performed by the Portfolio's investment manager.
SEE NOTES TO FINANCIAL STATEMENTS
B-36
<PAGE>
(This page has been left blank intentionally.)
B-37
<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 $ 423,136
Cash 1
Deferred organization costs (Note A) 1
Interest receivable 3,939
Prepaid expenses and other assets 4
Receivable for securities sold --
--------------
427,081
--------------
LIABILITIES
Payable for forward foreign currency exchange contracts
purchased
(Note C) --
Payable for securities purchased --
Payable for variation margin (Note A) --
Payable to investment manager (Note B) 76
Accrued organization costs (Note A) --
Accrued expenses 26
--------------
102
--------------
NET ASSETS Applicable to Investors' Beneficial Interests $ 426,979
--------------
NET ASSETS consist of:
Paid-in capital $ 426,979
Net unrealized appreciation in value of investment
securities, financial futures contracts, translation of
assets and liabilities in foreign currencies, and foreign
currency contracts --
--------------
NET ASSETS $ 426,979
--------------
*Cost of investments $ 423,136
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-38
<PAGE>
April 30, 1998 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
LIMITED
CASH MATURITY HIGH YIELD
RESERVES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value*
(Note A) -- see Schedule of Investments $ 749,194 $ 340,762 $ 12,827
Cash 6 1 2
Deferred organization costs (Note A) 1 1 2
Interest receivable 2,376 4,927 87
Prepaid expenses and other assets 9 5 --
Receivable for securities sold -- 312 61
------------------------------------------------
751,586 346,008 12,979
------------------------------------------------
LIABILITIES
Payable for forward foreign currency exchange contracts purchased
(Note C) -- 5 --
Payable for securities purchased -- -- 918
Payable for variation margin (Note A) -- 355 --
Payable to investment manager (Note B) 153 72 3
Accrued organization costs (Note A) -- -- 1
Accrued expenses 41 33 13
------------------------------------------------
194 465 935
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial Interests $ 751,392 $ 345,543 $ 12,044
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 751,392 $ 344,784 $ 12,019
Net unrealized appreciation in value of investment securities,
financial futures contracts, translation of assets and
liabilities in foreign currencies, and foreign currency
contracts -- 759 25
------------------------------------------------
NET ASSETS $ 751,392 $ 345,543 $ 12,044
------------------------------------------------
*Cost of investments $ 749,194 $ 339,883 $ 12,802
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-39
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY
PORTFOLIO
For the
Six Months
Ended
April 30,
1998
(000'S OMITTED) (UNAUDITED)
------------
<S> <C>
INVESTMENT INCOME
Interest income $ 8,692
------
Expenses:
Investment management fee (Note B) 411
Accounting fees 5
Amortization of deferred organization and initial offering
expenses (Note A) 3
Auditing fees 12
Custodian fees (Note B) 50
Insurance expense 2
Legal fees 9
Trustees' fees and expenses 10
------
Total expenses 502
Expenses reduced by custodian fee expense offset
arrangement (Note B) --
------
Total net expenses 502
------
Net investment income 8,190
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold 11
Net realized loss on financial futures contracts (Note A) --
Change in net unrealized appreciation of investment
securities, financial futures contracts, translation of
assets and liabilities in foreign currencies, and foreign
currency contracts (Note A) --
------
Net gain (loss) on investments 11
------
Net increase in net assets resulting from operations $ 8,201
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-40
<PAGE>
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
HIGH YIELD
CASH LIMITED MATURITY BOND
RESERVES BOND PORTFOLIO
PORTFOLIO PORTFOLIO
For the Period from
For the For the March 3, 1998
Six Months Six Months (Commencement
Ended Ended of Operations)
April 30, April 30, to April 30,
1998 1998 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 20,059 $ 10,720 $ 91
-------------------------------------------------------
Expenses:
Investment management fee (Note B) 862 392 4
Accounting fees 5 5 2
Amortization of deferred organization and initial offering
expenses (Note A) 2 3 --
Auditing fees 13 10 5
Custodian fees (Note B) 95 61 4
Insurance expense 5 2 --
Legal fees 20 61 4
Trustees' fees and expenses 21 12 2
-------------------------------------------------------
Total expenses 1,023 546 21
Expenses reduced by custodian fee expense offset
arrangement (Note B) (1) -- --
-------------------------------------------------------
Total net expenses 1,022 546 21
-------------------------------------------------------
Net investment income 19,037 10,174 70
-------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold (3) 391 9
Net realized loss on financial futures contracts (Note A) -- (962) --
Change in net unrealized appreciation of investment
securities, financial futures contracts, translation of
assets and liabilities in foreign currencies, and foreign
currency contracts (Note A) -- (848) 25
-------------------------------------------------------
Net gain (loss) on investments (3) (1,419) 34
-------------------------------------------------------
Net increase in net assets resulting from operations $ 19,034 $ 8,755 $ 104
-------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-41
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY PORTFOLIO
Six Months
Ended Year
April 30, Ended
1998 October 31,
(000'S OMITTED) (UNAUDITED) 1997
-------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 8,190 $ 16,368
Net realized gain (loss) on investments 11 (3)
Change in net unrealized appreciation (depreciation) of
investments -- --
-------------------------------
Net increase in net assets resulting from operations 8,201 16,365
-------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 400,800 872,761
Additions related to reorganization (Note D) -- --
Reductions (289,966) (943,664)
-------------------------------
Net increase (decrease) in net assets resulting from
transactions in investors' beneficial interests 110,834 (70,903)
-------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 119,035 (54,538)
NET ASSETS:
Beginning of period 307,944 362,482
-------------------------------
End of period $ 426,979 $ 307,944
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-42
<PAGE>
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
HIGH YIELD
BOND PORTFOLIO
CASH RESERVES LIMITED MATURITY
PORTFOLIO BOND PORTFOLIO Period from
March 3, 1998
Six Months Six Months (Commencement
Ended Year Ended Year of Operations)
April 30, Ended April 30, Ended to April 30,
1998 October 31, 1998 October 31, 1998
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 19,037 $ 32,775 $ 10,174 $ 18,661 $ 70
Net realized gain (loss) on
investments (3) (7) (571) (990) 9
Change in net unrealized
appreciation (depreciation) of
investments -- -- (848) 2,266 25
------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 19,034 32,768 8,755 19,937 104
------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 402,038 994,311 31,639 61,720 11,986
Additions related to reorganization
(Note D) -- -- 54,073 -- --
Reductions (335,444) (845,290) (41,890) (56,000) (46)
------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 66,594 149,021 43,822 5,720 11,940
------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 85,628 181,789 52,577 25,657 12,044
NET ASSETS:
Beginning of period 665,764 483,975 292,966 267,309 --
------------------------------------------------------------------------------------
End of period $ 751,392 $ 665,764 $ 345,543 $ 292,966 $ 12,044
------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (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
Limited Maturity Bond Portfolio ("Limited Maturity"), and Neuberger&Berman
High Yield Bond Portfolio ("High Yield") (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. High Yield had no
operations until March 3, 1998, other than matters relating to its
organization and registration as a series of Managers Trust. Managers Trust
is registered as a diversified, open-end management investment company under
the Investment Company Act of 1940, as amended. Other regulated investment
companies sponsored by Neuberger&Berman Management Incorporated ("N&B
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: Limited Maturity and High Yield may invest in
foreign securities denominated in foreign currency. The accounting records of
the Portfolios are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the current rate of exchange of such currency
against the U.S. dollar to determine the value of investments, other assets
and liabilities. Purchase and sale prices of securities, and income and
expenses are translated into U.S. dollars at the prevailing rate of exchange
on the respective dates of such transactions.
4) FORWARD FOREIGN CURRENCY CONTRACTS: Limited Maturity and High Yield may each
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. 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 Portfolios. Neither Portfolio has a
specific limitation on the percentage of assets which may be committed to
these types of contracts. The Portfolios could be
B-44
<PAGE>
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 underlying all
contractual commitments held by the Portfolios is determined using forward
foreign currency exchange rates supplied by an independent pricing service.
5) FINANCIAL FUTURES CONTRACTS: Limited Maturity and High Yield may each buy and
sell financial futures contracts to hedge against changes in securities
prices resulting from changes in prevailing 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 securities, known as
"initial margin," ranging upward from 1.1% of the value of the financial
futures contract being traded. Each day, the futures contract is valued at
the official settlement price of the board of trade or U.S. commodity
exchange on which such futures contract is traded. Subsequent payments, known
as "variation margin," to and from the broker are made on a daily basis as
the market price of the financial futures contract fluctuates. Daily
variation margin adjustments, arising from this "mark to market," are
recorded by the Portfolios 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 Portfolios. 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 period from March 3, 1998 (Commencement of Operations) to April
30, 1998, High Yield did not enter into any financial futures contracts.
B-45
<PAGE>
At April 30, 1998, open positions in financial futures contracts for
Limited Maturity were as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
EXPIRATION OPEN CONTRACTS POSITION (DEPRECIATION)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 1998 185 U.S. Treasury Notes, 2 Year Long $ (79,031)
June 1998 160 U.S. Treasury Notes, 5 Year Short 15,114
June 1998 447 U.S. Treasury Notes, 10 Year Short (50,881)
</TABLE>
At April 30, 1998, 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
- ---------------------------------------------------------------------------------------
<C> <S>
$ 410,000 Fort James Corp., Senior Notes, 6.50%, due 9/15/02
1,480,000 Chase Credit Card Master Trust, Ser. 1997-2, Class A, 6.30%, due 4/15/03
</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. 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, 1998, the unamortized balance of
such expenses amounted to $948, $835, $1,242, and $2,058 for Government
Money, Cash Reserves, Limited Maturity, and High Yield, respectively. For
High Yield, the accrued organization costs are payable to N&B Management, the
administrator of the Portfolio.
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.
B-46
<PAGE>
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains N&B Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except High Yield) pays N&B Management a fee at the annual rate of 0.25% of the
first $500 million of that Portfolio's average daily net assets, 0.225% of the
next $500 million, 0.20% of the next $500 million, 0.175% of the next $500
million, and 0.15% of average daily net assets in excess of $2 billion. High
Yield pays N&B Management a fee for investment management services at the annual
rate of 0.38% of the first $500 million of that Portfolio's average daily net
assets, 0.355% of the next $500 million, 0.33% of the next $500 million, 0.305%
of the next $500 million, and 0.28% of average daily net assets in excess of $2
billion.
All of the capital stock of N&B 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
N&B 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 N&B 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 $89, $1,103,
$395, and $44 for Government Money, Cash Reserves, Limited Maturity, and High
Yield, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended April 30, 1998, 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>
LIMITED MATURITY $ 92,881,280 $101,240,627
HIGH YIELD 9,682,946 280,700
</TABLE>
All securities transactions for Government Money and Cash Reserves were
short-term.
At April 30, 1998, Limited Maturity had entered into various contracts to
deliver currencies at specified future dates.
Open contracts were as follows:
<TABLE>
<CAPTION>
CONTRACTS SETTLEMENT NET UNREALIZED
SALES TO DELIVER IN EXCHANGE FOR DATE VALUE DEPRECIATION
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Swedish Krona 54,600,000 $7,051,530 5/20/98 $7,056,646 $5,116
</TABLE>
B-47
<PAGE>
NOTE D -- REORGANIZATION:
On February 27, 1998, Limited Maturity acquired all of the net assets of
Neuberger&Berman Ultra Short Bond Portfolio ("Ultra Short") pursuant to a plan
of reorganization approved by the Board of Trustees on September 24, 1997. This
was accomplished by Neuberger&Berman Ultra Short Bond Fund-Registered Trademark-
and Neuberger& Berman Ultra Short Bond Trust-Registered Trademark- withdrawing
their assets from Ultra Short and reinvesting those assets in Limited Maturity.
The reorganization was tax-free to investors. Ultra Short's net assets as of
February 27, 1998 ($54,072,964), including $338,550 of unrealized appreciation,
were combined with those of Limited Maturity. The aggregate net assets of
Limited Maturity and Ultra Short immediately before the reorganization were
$297,668,015 and $54,072,964, respectively, resulting in aggregate net assets of
$351,740,979 immediately after the reorganization.
NOTE E -- 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-48
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
Period from
Six Months Ended July 2,
April 30, 1993(1)
1998 Year Ended October 31, to October 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .31%(3) .30% .31% .31% -- --
-----------------------------------------------------------------
Net Expenses .31%(3) .30% .31% .31% .33% .32%(3)
-----------------------------------------------------------------
Net Investment Income 5.00%(3) 4.96% 4.99% 5.32% 3.38% 2.82%(3)
-----------------------------------------------------------------
Net Assets, End of Period (in millions) $427.0 $307.9 $362.5 $308.5 $251.6 $277.7
-----------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-49
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
Period from
Six Months Ended July 2,
April 30, 1993(1)
1998 Year Ended October 31, to October 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .29%(3) .29% .30% .31% -- --
-----------------------------------------------------------------
Net Expenses .29%(3) .29% .30% .31% .32% .34%(3)
-----------------------------------------------------------------
Net Investment Income 5.36%(3) 5.31% 5.20% 5.62% 3.63% 2.88%(3)
-----------------------------------------------------------------
Net Assets, End of Period (in millions) $751.4 $665.8 $484.0 $409.2 $312.0 $273.3
-----------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-50
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
Period from
Six Months July 2,
Ended April 30, 1993(1)
1998 Year Ended October 31, to October 31,
(UNAUDITED) 1997 1996 1995 1994 1993
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .35%(3) .33% .33% .33% -- --
----------------------------------------------------------------
Net Expenses .35%(3) .33% .33% .33% .34% .33%(3)
----------------------------------------------------------------
Net Investment Income 6.50%(3) 6.70% 6.45% 6.55% 5.86% 5.53%(3)
----------------------------------------------------------------
Portfolio Turnover Rate 32% 89% 169% 88% 102% 71%
----------------------------------------------------------------
Net Assets, End of Period (in millions) $345.5 $293.0 $267.3 $319.6 $316.1 $357.9
----------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-51
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
High Yield Bond Portfolio
<TABLE>
<CAPTION>
Period from
March 3, 1998(1)
to April 30,
1998
(UNAUDITED)
----------------
<S> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) 1.89%
----------------
Net Expenses(3) 1.88%
----------------
Net Investment Income(3) 6.21%
----------------
Portfolio Turnover Rate 6%
----------------
Net Assets, End of Period (in millions) $12.0
----------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
B-52
<PAGE>
OTHER INFORMATION
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
Institutional Services 800-366-6264
SUB-ADVISER
Neuberger&Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, DC 20036-1800
OFFICERS AND TRUSTEES
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Theodore P. Giuliano
PRESIDENT AND TRUSTEE
John Cannon
TRUSTEE
Barry Hirsch
TRUSTEE
Robert A. Kavesh
TRUSTEE
William E. Rulon
TRUSTEE
Candace L. Straight
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
Neuberger&Berman Management Inc., Neuberger&Berman Government Money Fund,
Neuberger&Berman Cash Reserves, Neuberger&Berman Limited Maturity Bond Fund, and
Neuberger&Berman High Yield Bond Fund are registered service marks of
Neuberger&Berman Management Inc.
- -C- 1998 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 information of shareholders and is not an offer of shares
of the Funds. Shares are sold only through the currently
effective prospectus, which must precede or accompany this report.
[LOGO] PRINTED ON RECYCLED PAPER NBIFSAR00498
