<PAGE>
NEUBERGER BERMAN [LOGO]
NEUBERGER BERMAN
MUNICIPAL FUNDS-R-
Municipal Money Fund SEMI-ANNUAL REPORT
Municipal Securities Trust APRIL 30, 1999
<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
Municipal Money Fund B-8
Municipal Securities Trust B-9
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Municipal Money Portfolio C-1
Municipal Securities Portfolio C-12
FINANCIAL STATEMENTS C-17
FINANCIAL HIGHLIGHTS
Municipal Money Portfolio C-23
Municipal Securities Portfolio C-24
DIRECTORY D-1
OFFICERS AND TRUSTEES D-2
</TABLE>
The "Neuberger Berman" name and logo are service marks of Neuberger
Berman LLC. "Neuberger Berman Management Inc." and the individual fund
names in this report are either service marks or registered trademarks
of Neuberger Berman Management Inc. -C-1999. Neuberger Berman Management
Inc.
A-3
<PAGE>
PRESIDENT'S LETTER June 16, 1999
Dear Shareholder,
Stability is the word that best describes the municipal bond market over this
reporting period. While the 5-year Treasury bond declined substantially, pushing
the yield up by 90 basis points (0.90%) in first half fiscal year 1999, 5-year
investment grade municipal bond prices held steady and yields moved just 10
basis points (0.10%) higher. We believe the low volatility of municipal bonds is
appealing to investors, especially during periods such as this when other asset
classes were quite volatile. Our portfolios performed to our
expectations -- helping to preserve principal in a moderately rising interest
rate environment. We continued to focus on geographic tactics (favoring states
with healthy economies and strong balance sheets), sectors presenting the best
value, security selection, and trend following duration management.
Due to superior performance relative to Treasuries over the last six months,
intermediate term municipal securities yields are now approximately 70% of
Treasury yields, versus 82% at the end of October 1998. Importantly, municipals
still offer a significant after-tax yield advantage to investors in high federal
income tax brackets.
We adjust portfolio duration (a traditional barometer of interest rate risk)
in response to changing interest rate trends, rather than interest rate
forecasts. Following the global economic turmoil of third quarter 1998, the
strong consensus was that the U.S. economy would decelerate and interest rates
would decline. Investors swayed by this consensus viewpoint extended portfolio
duration in an attempt to maximize returns. When the economy continued to grow
much faster than consensus expectations and interest rates climbed higher, this
strategy was counter-productive. Our trend following duration management --
adjusting duration according to what is happening in the market rather than
speculating on what will happen -- once again helped us reduce risk to
shareholder assets during a period in which interest rates defied consensus
forecasts.
In closing, municipal bonds have been catching their breath following last
year's robust rally. This gave us the opportunity to demonstrate how our
philosophy and portfolio management strategies add value to the municipal
securities investment process. Going forward, we will
A-4
<PAGE>
remain focused on relative value in different sectors of the municipal
securities market, work hard to identify individual securities with the best
risk/reward characteristics, and monitor interest rate trends and adjust
portfolio duration accordingly. We are confident that we can continue to invest
the assets you have entrusted to us using a low-risk approach, while also
providing the opportunity to enhance those assets.
MUNICIPAL MONEY FUND Although short term tax-free instruments are generally
impacted less by Federal Reserve actions and interest rate swings than Treasury
securities, active maturity management is still a critical ingredient in the
investment process. During the six-month period ended April 30, 1999, the Fund's
weighted average maturity peaked at 49.5 days in mid-February, and closed the
reporting period at 39.5 days. This relatively low weighted average maturity
reflects the very limited supply of longer notes in the marketplace, and
positions the portfolio against possible Federal Reserve tightening. The short
term tax-free yield curve remains relatively flat, with longer maturities
providing only a modest yield advantage. So, we have not had to sacrifice much
yield to protect the portfolio from a potential Fed rate hike.
We have not changed sector allocation much over this reporting period. Our
largest allocation (64.2%) remains in variable rate demand notes, the sector in
which we still see the best value.
The current and effective (compounded) yields for the portfolio as of April
30, 1999 are 2.86% and 2.90%. This can be translated into tax-equivalent current
and effective yields of 4.74% and 4.85%, respectively, for an investor in the
highest federal income tax bracket.1
MUNICIPAL SECURITIES TRUST Despite excellent performance relative to
Treasuries and respectable returns in fiscal first half 1999, municipal bonds
were somewhat restrained by reduced new issuance. Many municipal issuers took
maximum advantage of 1998's low interest rates to meet this year's financing
requirements. Also, the strong economy has created budget surpluses, further
reducing borrowing needs. With strong demand and less inventory to move,
municipal securities issuers have been able to price new issues a bit higher. We
expect to see more attractive pricing this summer, the season in which issuance
generally spikes.
During this reporting period, we moved to a fully invested position and
increased our commitment to general obligation and revenue
A-5
<PAGE>
bonds. The drop in the stock market in late 1998 gave us the luxury of a strong
positive cash flow to work with and we were able to carefully select attractive
issues in these sectors.
With intermediate term municipal yields remaining relatively stable in the
face of interest rate swings, we did not make any major shifts in the
portfolio's duration. The low during this reporting period was 5.6 years at the
end of November 1998, and the high was 6.1 years at year-end 1998. With interest
rates drifting higher in 1999, we reduced duration to 5.7 years at the end of
this reporting period.
In closing, municipal securities have been a serene island in the midst of
troubled economic and financial market waters. Municipals weathered last Fall's
emerging market meltdown and the liquidity crisis spawned by the near collapse
of Long Term Capital Management. This year, they have held steady in the face of
rising oil prices and concern over a possible Fed tightening. Through it all,
municipals have fulfilled their mandate -- providing a lower risk and productive
home for shareholder assets.
Sincerely,
/s/ Theodore P. Giuliano
Theodore P. Giuliano
President and Trustee
Neuberger Berman Income Funds
1Current yield refers to the income generated by an investment in the Fund over
a seven-day period. The 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.
Tax-equivalent yield is the taxable yield that an investor would have had to
receive in order to realize the same level after federal taxes at the highest
tax rate, 39.6%, assuming that all of the Fund's income is exempt from federal
income taxes.
An investment in Municipal Money Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
The composition and holdings of the portfolios are subject to change. Results
represent past performance and do not indicate future results.
A-6
<PAGE>
PERFORMANCE HIGHLIGHTS
TOTAL RETURN ILLUSTRATION
<TABLE>
<CAPTION>
SIX MONTH AVERAGE ANNUAL
PERIOD TOTAL RETURNS(1)
NEUBERGER BERMAN INCEPTION ENDED --------------------
INCOME FUNDS DATE 4/30/99(1) 1 YR(1) 5 YR 10 YR
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL SECURITIES TRUST(2) 7/9/87 +1.28% +6.46% +5.79% +6.40%
</TABLE>
YIELD ILLUSTRATION
FOR THE 7 DAYS ENDED 4/30/99
<TABLE>
<CAPTION>
TAX-
EQUIVALENT
CURRENT EFFECTIVE EFFECTIVE
YIELD(3) YIELD(3) YIELD(4)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL MONEY FUND(5) 2.86% 2.90% 4.85%
</TABLE>
1) One-year and average annual total returns are for the periods ended April 30,
1999. Results are shown on a "total return" basis and include reinvestment of
all dividends and capital gain 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. voluntarily bears certain operating expenses
in excess of 0.65% of the average daily net assets per annum of Neuberger
Berman Municipal Securities Trust ("Municipal Securities Trust"). This
arrangement can be terminated upon 60 days' prior written notice. Absent such
reimbursement, the total returns for the above stated periods would have been
less.
3) "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.
4) Tax-equivalent effective yield is the taxable effective yield that an
investor would have had to receive in order to realize the same level of
yield after Federal taxes at the highest Federal tax rate, 39.6%, assuming
that all of the Fund's income is exempt from Federal income taxes.
5) An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. 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 Municipal Money Fund ("Municipal Money") will fluctuate.
A portion of the income of Municipal Money and Municipal Securities Trust may be
subject to the Federal alternative minimum tax for certain investors.
B-1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger Berman April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) FUND TRUST
-------------------------------
<S> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 193,722 $ 39,853
Receivable for Trust shares sold 1 164
Receivable from administrator -- net (Note
B) -- 14
-------------------------------
193,723 40,031
-------------------------------
LIABILITIES
Dividends payable 4 131
Payable for Trust shares redeemed 16 263
Payable to administrator (Note B) 49 --
Accrued expenses 45 47
-------------------------------
114 441
-------------------------------
NET ASSETS at value $ 193,609 $ 39,590
-------------------------------
NET ASSETS consist of:
Par value $ 194 $ 4
Paid-in capital in excess of par value 193,414 38,631
Accumulated net realized gains (losses) on
investment 1 (149)
Net unrealized appreciation in value of
investment -- 1,104
-------------------------------
NET ASSETS at value $ 193,609 $ 39,590
-------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 193,681 3,515
-------------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $11.26
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger Berman For the Six Months Ended April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED) FUND TRUST
---------------------------
<S> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 3,343 $ 905
---------------------------
Expenses:
Administration fee (Note B) 287 53
Auditing fees 4 4
Custodian fees 5 5
Legal fees 11 13
Registration and filing fees 20 19
Shareholder reports 19 17
Shareholder servicing agent fees 15 15
Trustees' fees and expenses 7 4
Miscellaneous 3 1
Expenses from corresponding Portfolio (Notes
A & B) 365 94
---------------------------
Total expenses 736 225
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (3) (97)
---------------------------
Total net expenses 733 128
---------------------------
Net investment income 2,610 777
---------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain on investment securities 1 64
Net realized gain on financial futures
contracts -- 34
Change in net unrealized appreciation of
investment securities -- (367)
---------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 1 (269)
---------------------------
Net increase in net assets resulting from
operations $ 2,611 $ 508
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
FUND TRUST
Six Months Six Months
Ended Year Ended Year
April 30, Ended April 30, Ended
1999 October 31, 1999 October 31,
(000'S OMITTED) (UNAUDITED) 1998 (UNAUDITED) 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 2,610 $ 5,408 $ 777 $ 1,416
Net realized gain on investments
from corresponding Portfolio (Note
A) 1 26 98 426
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) -- -- (367) 583
-------------------------------------------------------------
Net increase in net assets resulting
from operations 2,611 5,434 508 2,425
-------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,610) (5,408) (777) (1,416)
-------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 123,109 319,207 6,211 16,999
Proceeds from reinvestment of
dividends 2,584 5,334 485 898
Payments for shares redeemed (153,566) (259,407) (6,985) (10,385)
-------------------------------------------------------------
Net increase (decrease) from Trust
share transactions (27,873) 65,134 (289) 7,512
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (27,872) 65,160 (558) 8,521
NET ASSETS:
Beginning of period 221,481 156,321 40,148 31,627
-------------------------------------------------------------
End of period $ 193,609 $ 221,481 $ 39,590 $ 40,148
-------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 123,109 319,207 549 1,520
Issued on reinvestment of dividends 2,584 5,334 43 80
Redeemed (153,566) (259,407) (616) (930)
-------------------------------------------------------------
Net increase (decrease) in shares
outstanding (27,873) 65,134 (24) 670
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Municipal Money Fund ("Municipal Money") and
Neuberger Berman Municipal Securities Trust ("Municipal Securities Trust")
(collectively, the "Funds") are separate operating series of Neuberger Berman
Income Funds (the "Trust"), a Delaware business trust organized pursuant to a
Trust Instrument dated December 23, 1992. The Trust is registered as 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 Fund belong only to that Fund, and the liabilities of
each Fund are borne solely by that Fund 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% for each Fund at April 30, 1999). 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 Municipal Money to maintain a continuous net asset
value per share of $1.00; the 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 the 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
as indicated in the notes following the Portfolios' Schedule of Investments.
3) TAXES: The Funds are treated as separate entities for U.S. Federal income tax
purposes. It is the policy of each Fund to continue 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 U.S.
Federal income tax
B-5
<PAGE>
purposes as capital loss carryforwards) sufficient to relieve it from all, or
substantially all, U.S. Federal income taxes. Accordingly, each Fund paid no
U.S. Federal income taxes and no provision for U.S. 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 ($267 expiring in 2003 for Municipal Money and
$246,798 expiring in 2003 for Municipal Securities Trust, determined as of
October 31, 1998), 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) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more funds are allocated in
proportion to the net assets of such funds, except where a more appropriate
allocation of expenses to each fund can otherwise be made fairly. Expenses
directly attributable to a fund are charged to that fund.
6) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Neuberger Berman Management Inc. ("Management") as its
administrator under an Administration Agreement ("Agreement"). Pursuant to this
Agreement each Fund pays 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).
Management has voluntarily undertaken to reimburse Municipal Securities Trust
for its operating expenses plus its pro rata portion of its corresponding
Portfolio's operating expenses (including the fees payable to Management but
excluding interest, taxes, brokerage commissions, and extraordinary expenses)
which exceed, in the aggregate, 0.65% per annum of its average daily net assets.
This undertaking is subject
B-6
<PAGE>
to termination by Management upon at least 60 days' prior written notice to the
Fund. For the six months ended April 30, 1999, such excess expenses amounted to
$96,074 for Municipal Securities Trust.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger Berman, LLC ("Neuberger"), a member firm of The New York
Stock Exchange and sub-adviser to each Portfolio. Several individuals who are
officers and/or trustees of the Trust are also principals of Neuberger and/or
officers and/or directors of Management.
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of each Fund.
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 $3,495 and $1,095, for Municipal Money and Municipal Securities
Trust, respectively.
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended April 30, 1999, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL MONEY $ 106,586,000 $ 137,458,000
MUNICIPAL SECURITIES TRUST 4,373,000 5,289,000
</TABLE>
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent auditors. Annual reports
contain audited financial statements.
B-7
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal 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,
1999 Year Ended October 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $.9997 $ .9994 $ .9993 $ .9994 $ .9995 $ .9996
----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0123 .0288 .0296 .0285 .0324 .0204
Net Gains or Losses on Securities -- .0003 .0001 (.0001) (.0001) (.0001)
----------------------------------------------------------------------
Total From Investment Operations .0123 .0291 .0297 .0284 .0323 .0203
----------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.0123) (.0288) (.0296) (.0285) (.0324) (.0204)
----------------------------------------------------------------------
Net Asset Value, End of Period $.9997 $ .9997 $ .9994 $ .9993 $ .9994 $ .9995
----------------------------------------------------------------------
Total Return(2) +1.24%(3) +2.92% +3.00% +2.89% +3.29% +2.06%
----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $193.6 $ 221.5 $ 156.3 $ 132.6 $ 160.9 $ 150.3
----------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) .70%(5) .72% .73% .73% .71% --
----------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets .69%(5) .71% .72% .72% .71% .73%
----------------------------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets 2.46%(5) 2.88% 2.95% 2.86% 3.24% 2.02%
----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-8
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Securities Trust(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,
1999 Year Ended October 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.34 $ 11.02 $ 10.78 $ 10.83 $ 10.26 $ 11.12
----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .22 .46 .47 .47 .47 .46
Net Gains or Losses on Securities (both realized
and unrealized) (.08) .32 .24 (.05) .57 (.73)
----------------------------------------------------------------------
Total From Investment Operations .14 .78 .71 .42 1.04 (.27)
----------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.22) (.46) (.47) (.47) (.47) (.46)
Distributions (from net capital gains) -- -- -- -- -- (.12)
Distributions (in excess of net capital gains) -- -- -- -- -- (.01)
----------------------------------------------------------------------
Total Distributions (.22) (.46) (.47) (.47) (.47) (.59)
----------------------------------------------------------------------
Net Asset Value, End of Period $11.26 $ 11.34 $ 11.02 $ 10.78 $ 10.83 $ 10.26
----------------------------------------------------------------------
Total Return(2) +1.28%(3) +7.22% +6.71% +3.92% +10.35% -2.57%
----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 39.6 $ 40.1 $ 31.6 $ 38.9 $ 44.3 $ 51.1
----------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) .66%(5) .66% .66% .66% .66% --
----------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(6) .66%(5) .65% .65% .65% .65% .65%
----------------------------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets 3.98%(5) 4.13% 4.30% 4.32% 4.45% 4.24%
----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-9
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman April 30, 1999 (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 Municipal
Securities Trust, total return would have been lower if 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 Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
Six
Months
Ended
April
MUNICIPAL 30, Year Ended October 31,
SECURITIES TRUST 1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses 1.15% 1.11% 1.05% 1.04% .98% .82%
---------------------------------------------------------
</TABLE>
B-10
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Money Portfolio
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
TAX-EXEMPT SECURITIES -- PRE-REFUNDED BACKED BY U.S.
GOVERNMENT SECURITIES (4.3%)
$ 1,000 Los Angeles (CA) Muni. Imp. Corp. Leasehold Rev.
(Central Library Proj.), Ser. 1990 A, 7.10%, due 6/1/10
P/R 6/1/99 $ 1,023
2,000 Mobile Co. (AL) G.O., Ser. 1991, 6.70%, due 2/1/11 P/R
2/1/00 2,090
1,000 Orlando (FL) Util. Comm. Wtr. & Elec. Sub. Rev., Ser.
1989 C, 7.00%, due 10/1/23 P/R 10/1/99 1,034
1,000 Phoenix (AZ) Var. Purp. G.O., Ser. 1991, 6.80%, due
7/1/07 P/R 7/1/99 1,026
1,000 Utah Intermountain Pwr. Agcy. Pwr. Supply Ref. Rev.,
Ser. 1989 A, 7.20%, due 7/1/11 P/R 7/1/99 1,025
1,000 Wisconsin G.O., Ser. 1990 G, 6.75%, due 5/1/09 P/R
5/1/99 1,010
1,000 Wisconsin Hlth. & Ed. Fac. Au. Rev. (St. Luke's Med.
Ctr. Proj.), Ser. 1989, 7.40%, due 8/15/19 P/R 8/15/99 1,032
------------
8,240
------------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENT
SECURITIES (0.5%)
1,000 New York St. Pwr. Au. Gen. Purp. Rev., Ser. 1991 Z,
5.85%, due 1/1/00 1,018
------------
MUNICIPAL NOTES (3.9%)
1,425 Cleveland (OH) BANS (Cleveland Stadium Proj.), Ser.
1997 B, 4.50%, due 10/1/99 SP-1 1,433
1,250 Kentucky Asset/Liability Comm. Gen. Fund TRANS, Ser.
1998 B, 4.00%, due 6/25/99 MIG 1 SP-1+ 1,251
1,000 Kentucky Rural Wtr. Fin. Corp. Pub. Proj. Construction
Notes, Ser. 1998, 4.00%, due 7/15/99 MIG 1 1,002
2,400 Kentucky Sch. Boards Fin. Corp. Cert. of Participation
Ed. TRANS, Ser. 1998, 3.66%, due 6/30/99 MIG 1 2,400
1,500 Wayne Co. (MI) Detroit Sch. Dist. St. Sch. Aid Ltd. Tax
G.O. Notes, Ser. 1998, 4.50%, due 7/1/99 SP-1+ 1,502
------------
7,588
------------
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT
(0.5%)
NATIONAL WESTMINSTER BANK PLC
$ 1,000 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1996-1,
3.80%, due 6/1/26 Putable 6/1/99 A-1+ $ 1,000
------------
TAX-EXEMPT SECURITIES -- BACKED BY INSURANCE (5.1%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,250 Franklin & Pickway Cos. (OH) South-Western City Sch.
Dist. Sch. Bldg. Construction Unlimited Tax G.O.,
3.00%, due 12/1/99 1,250
1,000 Lower Colorado (TX) River Au. Priority Ref. Rev., Ser.
1991 A, 6.375%, due 1/1/00 A-1+ 1,021
FINANCIAL GUARANTY INSURANCE CO.
1,000 Connecticut Spec. Assessment Unemployment Comp. Adv.
Fund Rev., Ser. 1993 C, 3.60%, due 11/15/01 Putable
7/1/99 VMIG 1 A-1+ 1,000
1,060 Port of Portland (OR) Ref. Rev. (Portland Int'l.
Arpt.), Ser. 1998 12B, 4.00%, due 7/1/99 1,062
1,260 Rhode Island & Providence Plantations Cons. Cap. Dev.
Loan G.O., Ser. 1998 A, 4.25%, due 9/1/99 1,262
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
3,000 Oklahoma Cap. Imp. Au. St. Hwy. Rev., Ser. 1998, 4.25%,
due 6/1/99 3,001
1,250 Utah Intermountain Pwr. Agcy. Pwr. Supply Ref. Rev.,
Ser. 1996 C, 5.50%, due 7/1/99 1,254
------------
9,850
------------
TAX-EXEMPT SECURITIES -- OTHER (10.5%)
1,000 Bexar Co. (TX) San Antonio Independent Sch. Dist.
Unlimited Tax Sch. Bldg. G.O., Ser. 1997, 7.00%, due
8/15/99 1,011
1,000 Board of Regents of the Texas A&M Univ. Sys. Fin. Sys.
Ref. Rev., Ser. 1998, 5.00%, due 5/15/99 1,001
1,000 Cook Co. (IL) Metro. Wtr. Reclamation Dist. of Greater
Chicago Ref. G.O., Ser. 1997, 4.15%, due 12/1/99 1,006
</TABLE>
C-2
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
$ 1,000 Fort Worth (TX) Tarrant & Denton Cos. Gen. Purp. Ref.
Rev. G.O., Ser. 1996 A, 5.50%, due 3/1/00 $ 1,020
1,200 Kansas Dept. of Trans. Hwy. Rev., Ser. 1992, 5.90%, due
3/1/00 1,228
1,500 Milwaukee (WI) Metro. Swr. Dist. Cap. Purp. Ref. G.O.,
Ser. 1997 A, 4.25%, due 10/1/99 1,506
3,000 Minnesota Tax & Aid Anticipation Borrowing Prog. Cert.
of Participation, Tax Anticipation G.O., Ser. 1999 A,
3.00%, due 2/3/00 MIG 1 3,000
1,500 Nashville & Davidson Co. (TN) Metro. Gov't. G.O.
(Multi-Purp. Imp.), Ser. 1997 A, 5.125%, due 11/15/99 1,517
3,000 Oklahoma Wtr. Res. Board Rev. (St. Loan Prog.), Ser.
1999, 2.90%, due 9/1/32 Putable 9/1/99 A-1+ 3,000
2,000 Scottsdale (AZ) Muni. Prop. Corp. Excise Tax Rev., Ser.
1998, 4.00%, due 7/1/99 2,003
1,250 Tennessee Sch. Bond Au. Higher Ed. Fac. Second Prog.
Ref. Rev., Ser. 1998 C, 4.00%, due 5/1/99 1,250
1,645 Texas Pub. Fin. Au. Ref. G.O., Ser. 1998 B, 4.00%, due
10/1/99 A-1+ 1,651
1,185 Trustees of Purdue Univ. (IN) Student Fee Rev., Ser.
1998 P, 4.00%, due 7/1/99 VMIG 1 1,187
------------
20,380
------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES (16.1%)
300 Berkeley Co. (SC) Fac. Ind. Rev. (Amoco Chemical Co.
Proj.), Ser. 1997, 4.30%, VRDN due 4/1/27 VMIG 1 A-1+ 300(4)
9,700 Blytheville (AR) IDR (Nucor Corp. Proj.), Ser. 1998,
4.05%, VRDN due 6/1/28 P-1 A-1+ 9,700(4)
1,500 Carlton (WI) PCR (Wisconsin Pwr. & Lt. Co. Proj.), Ser.
1988, 4.05%, VRDN due 8/1/15 VMIG 1 1,500(4)
1,000 Delaware Co. (PA) IDA Res. Rec. Fac. Ref. Rev. (Gen.
Elec. Cap. Corp.), Ser. 1997 G, 3.90%, VRDN due 12/1/31 A-1+ 1,000(4)
200 Harris Co. (TX) IDC Solid Waste Disp. Rev. (Exxon
Proj.), Ser. 1997, 4.30%, VRDN due 4/1/32 VMIG 1 200(4)
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
$ 400 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1984 C, 4.15%,
VRDN due 11/1/14 P-1 A-1+ $ 400(4)
800 Minneapolis (MN) Comm. Dev. Agcy. Ref. PCR (No. States
Pwr. Co. Proj.), Ser. 1985, 4.05%, VRDN due 3/1/11 P-1 A-1+ 800(4)
1,000 Navajo Co. (AZ) IDA (Citizens Util. Co. Proj.), Ser.
1997, 4.00%, VRDN due 5/1/32 A-1+ 1,000
2,000 Nueces Co. (TX) Port of Corpus Christi Au. Solid Waste
Disp. Ref. Rev. (Koch Refining Co., L.P. Proj.), Ser.
1996, 4.10%, VRDN due 5/1/26 VMIG 1 A-1+ 2,000
100 Parish of St. Charles (LA) Ref. PCR (Shell Oil Co.
Proj.), Ser. 1992 B, 4.20%, VRDN due 10/1/22 VMIG 1 A-1+ 100(4)
5,000 Port of Anacortes (WA) IDC Ref. Rev. (Texaco Proj.),
Ser. 1985, 3.10%, TECP due 5/4/99 P-1 A-1 5,000(4)
8,000 Rhode Island & Providence Plantations G.O.,
3.95%, VRDN due 6/1/18 VMIG 1 A-1+ 8,000
800 San Antonio (TX) Higher Ed. Au., Inc. Ref. Rev.
(Trinity Univ. Proj.), Ser. 1993, 3.90%, VRDN due
4/1/04 A-1+ 800
100 Southwestern (IL) Dev. Au. Solid Waste Disp. Rev.
(Shell Oil Co. Wood River Proj.), Ser. 1992, 4.30%,
VRDN due 4/1/22 VMIG 1 A-1+ 100(4)
300 Sublette Co. (WY) PCR (Exxon Proj.), Ser. 1984, 4.20%,
VRDN due 11/1/24 P-1 A-1+ 300(4)
------------
31,200
------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- BACKED BY
LETTERS OF CREDIT (45.7%)
ABN AMRO BANK NV
2,000 Phenix City (AL) IDB Env. Imp. Rev. (Mead Coated Board
Proj.), Ser. 1988, 3.00%, TECP due 6/15/99 P-1 2,000
BANK OF AMERICA
1,200 Calhoun Co. (TX) Navigation IDA Port Rev. (Formosa
Plastics Corp., Texas Proj.), Ser. 1994, 4.00%, VRDN
due 11/1/15 VMIG 1 1,200
</TABLE>
C-4
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
BAYERISCHE LANDESBANK GIROZENTRALE
$ 1,000 Dallas (TX) Area Rapid Transit Sales Tax Rev., Ser. A,
3.10%, TECP due 5/10/99 P-1 A-1+ $ 1,000(5)
2,000 Denver (CO) City & Co. Arpt. Sys. Sub. Rev., Ser. 1997
A, 3.15%, TECP due 8/12/99 P-1 A-1+ 2,000
CANADIAN IMPERIAL BANK OF COMMERCE
3,900 Louisa Co. (IA) Customized Purchase Ref. PCR
(Iowa-Illinois Gas & Elec. Co. Proj.), Ser. 1987,
3.90%, VRDN due 3/1/17 A-1 3,900
CHASE MANHATTAN BANK, N.A.
2,000 Brazoria Co. (TX) Hlth. Fac. Dev. Corp. Hosp. Rev.
(Brazosport Mem. Hosp.), Ser. 1999, 4.05%, VRDN due
7/1/13 VMIG 1 2,000
1,935 Douglas Co. (GA) Dev. Au. IDR (Whirlwind Steel Bldg.,
Inc. Proj.), Ser. 1997, 4.15%, VRDN due 12/1/12 VMIG 1 A-1 1,935
950 Virginia Small Bus. Fin. Au. IDR (Coral Graphic Svc.,
Inc. Proj.), Ser. 1998, 4.15%, VRDN due 1/1/13 VMIG 1 A-1 950
CITIBANK, N.A.
1,100 Austin Co. (TX) Ind. Dev. Corp. IDR (Justin Ind., Inc.
Proj.), Ser. 1984, 3.90%, VRDN due 12/1/14 P-1 1,100
CREDIT COMMERCIAL DE FRANCE
200 Elkhart Co. (IN) Econ. Dev. Rev. (Pace Amer. Inc.
Proj.), 4.15%, VRDN due 1/1/13 VMIG 1 200
2,850 South Carolina Jobs Econ. Dev. Au. Rev. (Florence RHF
Hsg., Inc. Proj.), Ser. 1987 A, 4.05%, VRDN due 11/7/07 P-1 2,850
430 South Carolina Jobs Econ. Dev. Au. Rev. (Osmose Wood
Preserving), Ser. 1989 B, 4.15%, VRDN due 12/1/04 P-1 430
100 South Carolina Jobs Econ. Dev. Au. Rev. (Su-Dan Co. &
Delta Prop.), Ser. 1989 A, 4.25%, VRDN due 1/1/04 VMIG 1 100
CREDIT LOCAL DE FRANCE
1,000 Colorado Reg. Trans. Dist. Spec. Passenger Fare Rev.,
Ser. 1989 A, 3.85%, VRDN due 6/1/99 A-1+ 1,000
</TABLE>
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
CREDIT SUISSE
$ 1,300 Chattanooga (TN) Ind. Dev. Board IDR (Market Street
Ltd. Proj.), 3.95%, VRDN due 12/15/12 A-1+ $ 1,300
3,000 Emery Co. (UT) Ref. PCR (PacifiCorp Proj.), Ser. 1991,
3.90%, VRDN due 7/1/15 VMIG 1 A-1+ 3,000
1,200 Hubbard Co. (MN) Solid Waste Disp. Rev. (Potlatch Corp.
Proj.), Ser. 1990, 4.20%, VRDN due 8/1/14 A-1+ 1,200
200 Montgomery Co. (TX) Ind. Dev. Corp. IDR (Dal-Tile Corp.
Proj.), Ser. 1986 B, 4.10%, VRDN due 12/1/03 A-1+ 200
1,000 Texas Capital Hlth. Fac. Dev. Corp. (Island on Lake
Travis Ltd. Proj.), Ser. 1986, 3.95%, VRDN due 12/1/16 A-1+ 1,000
600 Warren (AR) Solid Waste Disp. Rev. (Potlatch Corp.
Proj.), Ser. 1993, 4.20%, VRDN due 4/1/12 A-1+ 600
DEUTSCHE BANK AG
400 Florence Co. (SC) Solid Waste Disp. & Wastewater
Treatment Fac. Rev. (Roche Carolina Inc. Proj.), Ser.
1998, 4.30%, VRDN due 4/1/28 A-1+ 400
FIRST OF AMERICA BANK
845 Michigan St. Hosp. Fin. Au. Rev. Hosp. Equip. Loan
Prog. Rev., Ser. A, 4.05%, VRDN due 12/1/23 VMIG 1 845
FIRST NATIONAL BANK OF CHICAGO
1,400 Indiana Hlth. Fac. Fin. Au. Hosp. Rev. (Deaconess
Hosp., Inc.), Ser. 1992, 3.90%, VRDN due 1/1/22 VMIG 1 1,400
100 Massachusetts Hlth. & Ed. Fac. Au. Rev. (Cap. Asset
Prog.), Ser. 1985 E, 4.20%, VRDN due 1/1/35 VMIG 1 100
FIRST UNION NATIONAL BANK
300 Jackson-Union Cos. (IL) Reg. Port Dist. Port Fac. Ref.
Rev. (Enron Trans. Svc., L.P. Proj.), Ser. 1994, 4.00%,
VRDN due 4/1/24 A-1 300
1,000 Monroe Co. (NY) IDA Rev. (Collegiate Hsg. Foundation,
Inc. Fac. at Rochester Institute of Technology), Ser.
1998 A, 3.95%, VRDN due 10/1/28 VMIG 1 1,000
</TABLE>
C-6
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
$ 2,000 Washington Co. (PA) Au. Lease Rev. (Higher Ed. Pooled
Equip. Leasing Prog.), Ser. 1985 A, 4.05%, VRDN due
11/1/05 VMIG 1 $ 2,000
GENERAL ELECTRIC CAPITAL CORP.
800 New Hampshire Hsg. Fin. Au. Multi-Family Hsg. Rev.
(Countryside L.P. Proj.), Ser. 1994, 4.05%, VRDN due
7/1/24 VMIG 1 800
8,500 New Hampshire Hsg. Fin. Au. Multi-Family Hsg. Rev.
(P.R.A. Prop. L.P.-Pheasant Run Proj.), Ser. 1985,
4.05%, VRDN due 5/1/25 VMIG 1 8,500
HARRIS TRUST AND SAVINGS BANK
600 Illinois Dev. Fin. Au. IDR (Grayhill, Inc. Proj.), Ser.
1995 C, 4.15%, VRDN due 2/1/05 A-1+ 600
440 Illinois Dev. Fin. Au. IDR (Overton Gear & Tool Corp.
Proj.), Ser. 1994, 4.15%, VRDN due 10/1/08 A-1+ 440
LANDESBANK HESSEN-THUERINGEN GIROZENTRALE
500 Southwest (TX) Higher Ed. Au. Inc. Ref. Rev. (Southern
Methodist Univ. Proj.), Ser. 1985, 4.25%, VRDN due
7/1/15 VMIG 1 500
MORGAN GUARANTY TRUST CO.
100 Grapevine (TX) IDC Rev. (Amer. Airlines, Inc. Proj.),
Ser. 1984 A-3, 4.25%, VRDN due 12/1/24 P-1 100
NATIONAL WESTMINSTER BANK PLC
1,200 Hillsborough Co. (FL) Aviation Au. Rev. (Tampa Int'l.
Arpt.), 2.95%, TECP due 5/4/99 P-1 A-1+ 1,200
300 Marion Co. (WV) Comm. Solid Waste Disp. Fac. Rev.
(Grant Town Cogeneration Proj.), Ser. 1990 A, 4.05%,
VRDN due 10/1/17 VMIG 1 A-1+ 300
300 Marion Co. (WV) Comm. Solid Waste Disp. Fac. Rev.
(Grant Town Cogeneration Proj.), Ser. 1990 D, 4.10%,
VRDN due 10/1/17 VMIG 1 A-1+ 300
1,000 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1995-1,
4.00%, VRDN due 7/1/19 A-1+ 1,000
3,000 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1996-3,
4.00%, VRDN due 6/1/26 A-1+ 3,000
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
NATIONSBANK N.A.
$ 1,400 Florida Hsg. Fin. Corp. Rev. (The Club at Vero Arpt.
Proj.), Ser. 1998 E, 4.00%, VRDN due 6/1/17 A-1+ $ 1,400
NBD BANK, N.A.
100 Indiana Emp. Dev. Comm. Econ. Dev. Rev. (K & F Ind.,
Inc. Proj.), Ser. 1988, 4.15%, VRDN due 1/1/14 VMIG 1 100
NORWEST BANK
800 New Ulm (MN) Hosp. Ref. Rev. (Hlth. Central Sys.
Proj.), Ser. 1985, 3.45%, VRDN due 8/1/14 A-1+ 800
PNC BANK N.A.
1,000 Rockport (IN) Rev. (AK Steel Corp. Proj.), Ser. 1997 A,
4.05%, VRDN due 12/1/27 P-1 A-1 1,000
RABOBANK NEDERLAND
1,500 Henderson Co. (KY) Solid Waste Disp. Rev. (Hudson
Foods, Inc. Proj.), Ser. 1995, 4.10%, VRDN due 3/1/15 VMIG 1 1,500
SLM HOLDING CORP.
300 Nebhelp Inc. (NE) Std. Loan Prog. Rev., Ser. 1986 A,
4.10%, VRDN due 12/1/16 A-1+ 300
2,200 Panhandle-Plains (TX) Higher Ed. Au., Inc. Std. Loan
Rev., Ser. 1991 A, 3.95%, VRDN due 6/1/21 VMIG 1 2,200
1,600 Panhandle-Plains (TX) Higher Ed. Au., Inc. Std. Loan
Rev., Ser. 1995 A, 3.95%, VRDN due 6/1/25 VMIG 1 1,600
SOCIETE GENERALE
1,900 Chicago (IL) O'Hare Int'l. Arpt. Spec. Fac. Rev.
(Compagnie Nationale Air France Proj.), Ser. 1990,
4.00%, VRDN due 5/1/18 A-1+ 1,900
5,000 Los Angeles (CA) Reg. Arpt. Imp. Corp. Term. Fac.
Completion Rev. (Los Angeles Int'l. Arpt.), Ser. 1989,
4.30%, VRDN due 12/1/25 A-1+ 5,000
500 Morgan Co. (UT) Solid Waste Disp. Rev. (Holnam Inc.
Proj.), Ser. 1996, 4.00%, VRDN due 8/1/31 VMIG 1 A-1+ 500
</TABLE>
C-8
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
SUNTRUST BANK
$ 1,600 Clark Co. (AR) Solid Waste Disp. Rev. (Reynolds Metals
Co. Proj.), Ser. 1992, 4.00%, VRDN due 8/1/22 P-1 A-1+ $ 1,600
4,700 Mayfield (KY) IDR (Seaboard Farms of Kentucky, Inc.
Proj.), Ser. 1989, 4.05%, VRDN due 8/1/19 P-1 4,700
TORONTO DOMINION BANK
2,500 Indiana Muni. Pwr. Agcy. Pwr. Supply Sys. Ref. Rev.,
Ser. 1998 A, 3.90%, VRDN due 1/1/18 VMIG 1 A-1+ 2,500
400 Stevenson (AL) IDB Env. Imp. Rev. (Mead Corp. Proj.),
Ser. 1997, 4.30%, VRDN due 6/1/32 A-1+ 400
120 Wisconsin Hlth. Fac. Au. Rev. (Franciscan Hlth. Care,
Inc.-Sys. Fin.), Ser. 1985 A-2, 3.95%, VRDN due 1/1/16 VMIG 1 A-1+ 120
UNION BANK OF SWITZERLAND
1,000 Alaska Ind. Dev. & Export Au. Fac. Rev. (Fairbanks Gold
Mining, Inc. Proj.), Ser. 1997, 4.00%, VRDN due 5/1/09 VMIG 1 A-1+ 1,000
200 Babylon (NY) IDA Res. Rec. Rev. (OFS Equity of Babylon,
Inc. Proj.), Ser. 1989, 4.15%, VRDN due 12/1/24 A-1+ 200
3,500 Beaver Co. (PA) Ind. Dev. Au. PCR (Duquesne Light Co.
Beaver Valley Proj.), Ser. 1993 A, 3.25% & 3.30%, TECP
due 5/10/99 & 5/11/99 VMIG 1 A-1+ 3,500
1,050 Pennsylvania Energy Dev. Au. Rev. (B & W Ebensburg
Proj.), Ser. 1986, 3.95%, VRDN due 12/1/11 VMIG 1 1,050
100 Sabine (TX) River Au. Ref. PCR (Texas Util. Elec. Co.
Proj.), Ser. 1995 B, 4.40%, VRDN due 6/1/30 VMIG 1 A-1+ 100
WACHOVIA BANK & TRUST CO.
1,000 Crossett (AR) PCR (Georgia-Pacific Corp. Proj.), Ser.
1984, 4.00%, VRDN due 10/1/07 P-1 1,000
300 North Carolina Ed. Fac. Fin. Agcy. Updates Rev. (Bowman
Gray Sch. of Medicine Proj.), Ser. 1996, 3.95%, VRDN
due 9/1/26 VMIG 1 300
</TABLE>
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
$ 1,890 Clark Co. (NV) Arpt. Sys. Sub. Lien Rev., Ser. 1995
A-1, 3.85%, VRDN due 7/1/25 VMIG 1 A-1+ $ 1,890
600 Indianapolis (IN) Adjustable Tender Res. Rec. Rev.
(Ogden Martin Sys. of Indianapolis, Inc. Proj.), Ser.
1987, 4.30%, VRDN due 12/1/16 A-1+ 600
2,600 Mesa (AZ) Muni. Dev. Corp. Spec. Tax Updates, Ser. 1996
A, 3.10%, TECP due 7/22/99 VMIG 1 A-1+ 2,600
------------
88,610
------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- BACKED BY
INSURANCE (12.4%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,400 Illinois Hlth. Fac. Au. Rev. (Swedish Covenant Hosp.
Proj.), Ser. 1995, 4.00%, VRDN due 8/1/25 VMIG 1 A-1+ 1,400
2,600 Indiana Secondary Mkt. for Ed. Loans, Inc. Rev., Ser.
1988 B, 4.10%, VRDN due 12/1/13 VMIG 1 A-1+ 2,600
400 Rockport (IN) Ref. PCR (AEP Generating Co. Proj.), Ser.
1995 B, 4.25%, VRDN due 7/1/25 A-1+ 400
100 Sabine (TX) River Au. Collateralized PCR (Texas Util.
Elec. Co. Proj.), Ser. 1996 B, 4.35%, VRDN due 3/1/26 VMIG 1 A-1+ 100
400 Sayre (PA) Hlth. Care Fac. Au. Hosp. Rev. (VHA of PA,
Inc. Cap. Asset Fin. Prog.), Ser. 1985 A, 4.00%, VRDN
due 12/1/20 A-1+ 400
500 Trinity (TX) River Au. Collateralized PCR (Texas Util.
Elec. Co. Proj.), Ser. 1996 A, 4.30%, VRDN due 3/1/26 VMIG 1 A-1+ 500
1,100 Utah St. Board of Regents Std. Loan Rev., Ser. 1988 B,
4.00%, VRDN due 11/1/00 VMIG 1 A-1+ 1,100
FINANCIAL GUARANTY INSURANCE CO.
2,400 Arizona Hlth. Fac. Au. Rev. (Pooled Loan Prog.), Ser
1985, 4.00%, VRDN due 10/1/15 VMIG 1 A-1 2,400
200 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys.
Rev., Ser. 1994 C, 4.25%, VRDN due 6/15/23 VMIG 1 A-1+ 200
</TABLE>
C-10
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(3)
Amount Rating(2) (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
$ 2,100 Ohio Air Quality Dev. Au. PCR (Cleveland Elec.
Illumination Co.), Ser. 1988, 3.15%, TECP due 6/10/99 VMIG 1 A-1+ $ 2,100
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,845 Charlotte (NC) Arpt. Ref. Rev., Ser. 1997 A, 3.95%,
VRDN due 7/1/17 VMIG 1 A-1+ 1,845
900 Kentucky Higher Ed. Std. Loan Corp. Rev., Ser. 1996 A,
4.05%, VRDN due 6/1/26 VMIG 1 A-1+ 900
2,100 Lower Colorado (TX) River Au. Jr. Lien Ref. Rev.,
Supplemental 3rd. Ser., 3.85%, VRDN due 1/1/13 VMIG 1 A-1+ 2,100
5,500 Missouri-Illinois Metro. Dist. Bi-State Dev. Agcy. Rev.
(St. Clair Co. Metrolink Extension), Ser. 1998 B,
4.00%, VRDN due 7/1/28 VMIG 1 A-1+ 5,500
440 Polk Co. (IA) Hosp. Equip. & Imp. Rev., Ser. 1985,
4.00%, VRDN due 12/1/05 VMIG 1 A-1 440
2,000 South Texas Higher Ed. Au. Inc. Std. Loan Rev., Ser.
1998, 3.95%, VRDN due 12/1/03 VMIG 1 2,000
------------
23,985
------------
TOTAL INVESTMENTS (99.0%) 191,871
Cash, receivables and other assets, less liabilities
(1.0%) 1,851
------------
TOTAL NET ASSETS (100.0%) $193,722
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Securities Portfolio
<TABLE>
<CAPTION>
Principal Value(6)
Amount Rating (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
TAX-EXEMPT SECURITIES -- PRE-REFUNDED BACKED BY U.S.
GOVERNMENT SECURITIES (2.7%)
$ 1,000 Nebraska Inv. Fin. Au. Hosp. Rev. (Nebraska Methodist
Hlth. Sys., Inc.), Ser. 1991, 7.00%, due 3/1/06 P/R
3/1/01 Aaa AAA $ 1,079
------------
TAX-EXEMPT SECURITIES -- BACKED BY INSURANCE (39.3%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,000 Atlanta (GA) Arpt. Fac. Ref. Rev., Ser. 1996, 6.50%,
due 1/1/06 Aaa AAA 1,134
1,000 New York City (NY) Muni. Assist. Corp. Rev., Ser. D,
5.25%, due 7/1/02 Aaa AAA 1,047
1,000 Pittsburgh (PA) G.O., Ser. 1997 A, 5.00%, due 9/1/06 Aaa AAA 1,051
FINANCIAL GUARANTY INSURANCE CO.
1,000 Chicago (IL) Equip. G.O., Ser. 1998, 5.00%, due 1/1/07 Aaa AAA 1,043
1,000 Dade Co. (FL) Wtr. & Swr. Sys. Rev., Ser. 1995, 6.25%,
due 10/1/06 Aaa AAA 1,132
1,000 Tampa Bay (FL) Wtr. Util. Sys. Rev., Ser. 1998 B,
5.125%, due 10/1/09 Aaa AAA 1,063
FINANCIAL SECURITY ASSURANCE INC.
1,000 Illinois Dev. Fin. Au. Cap. Appreciation Cons. Sch.
Dist. #304 Rev., Zero Coupon, Yielding 4.80%, due
1/1/09 Aaa 638
1,000 Maine Muni. Bond Bank Ref. Rev., Ser. 1998 A, 5.00%,
due 11/1/05 Aaa AAA 1,054
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,000 Clark Co. (NV) Sch. Dist. Imp. G.O., Ser. 1995 A,
5.60%, due 6/15/08 Aaa AAA 1,092
1,000 Commonwealth of Pennsylvania G.O. (Ref. & Proj.), 2nd
Ser. 1994, 5.20%, due 6/15/04 Aaa AAA 1,059
</TABLE>
C-12
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Securities Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(6)
Amount Rating (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
$ 1,000 Connecticut Spec. Tax Oblig. Ref. Rev. (Trans.
Infrastructure Purp.), Ser. 1993 A, 5.40%, due 9/1/09 Aaa AAA $ 1,057
1,000 Harris Co. (TX) Hlth. Fac. Dev. Corp. Hosp. Rev. (Mem.
Hosp. Sys. Proj.), Ser. A, 5.00%, due 6/1/06 Aaa AAA 1,041
1,000 Mississippi Dev. Bank Spec. Oblig. Rev. (Muni. Gas Au.
Proj.), Ser. 1998, 5.00%, due 1/1/08 Aaa AAA 1,040
1,000 New York Dorm. Au. Rev. (Univ. of Rochester), Ser. 1997
A, 5.50%, due 7/1/06 Aaa AAA 1,082
1,000 Puerto Rico Elec. Pwr. Au. Ref. Rev., Ser. W, 6.50%,
due 7/1/05 Aaa AAA 1,135
------------
15,668
------------
TAX-EXEMPT SECURITIES -- OTHER (52.8%)
1,000 Board of Regents of the Texas A&M Univ. Sys. Perm.
Univ. Fund Rev., Ser. 1998, 5.00%, due 7/1/08 Aaa AAA 1,051
500 Brownwood (TX) Independent Sch. Dist. Unlimited Tax
Sch. Bldg. & Ref. G.O. (Brown Co., Texas), Ser. 1994,
Zero Coupon, Yielding 5.90%, due 2/15/02 Aaa 450(4)
560 Brownwood (TX) Independent Sch. Dist. Unlimited Tax
Sch. Bldg. & Ref. G.O. (Brown Co., Texas), Ser. 1994,
Zero Coupon, Yielding 6.10%, due 2/15/04 Aaa 461(4)
590 Cincinnati (OH) Std. Loan Funding Corp. Ref. Rev., Ser.
1992 C, 6.10%, due 7/1/02 Aaa 608
1,000 Columbus (OH) Var. Purp. Ltd. Tax G.O., Ser. 1998-1,
5.00%, due 6/15/08 Aaa AAA 1,058
1,000 Commonwealth of Massachusetts Ref. G.O., Ser. 1995 A,
6.25%, due 7/1/04 Aa3 AA- 1,107
1,000 Florida St. Board of Ed. Cap. Outlay Ref. G.O., Ser. B,
5.25%, due 6/1/09 Aa2 AA+ 1,070
1,000 Georgia G.O., Ser. 1995 C, 7.25%, due 7/1/04 Aaa AAA 1,155
1,000 Lake Co. (IL) Forest Preserve Dist. Ref. G.O., Ser.
1997, 5.50%, due 2/1/09 Aa2 AA+ 1,083
1,500 Lubbock (TX) Hlth. Fac. Dev. Corp. Rev. (St. Joseph
Hlth. Sys.), Ser. 1998, 5.00%, due 7/1/08 Aa3 AA 1,543
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Securities Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(6)
Amount Rating (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
$ 1,500 Maryland Comm. Dev. Admin. Dept. of Hsg. & Comm. Dev.
Rev. (Single Family Prog.), 3rd Ser. 1993, 5.15%, due
4/1/08 Aa2 $ 1,549
1,000 Maryland Wtr. Quality Fin. Admin. Ref. Rev. (Revolving
Loan Fund), Ser. 1995 A, 5.50%, due 9/1/11 Aa2 AA 1,069
1,000 Mecklenburg Co. (NC) Pub. Imp. G.O., Ser. 1994, 5.50%,
due 4/1/12 Aaa AAA 1,075
165 Mississippi Higher Ed. Assist. Corp. Std. Loan Sub.
Rev., Ser. 1993 C, 6.05%, due 9/1/07 A 172
1,000 Nevada Ref. Ltd. Tax G.O., Ser. 1997 A-2, 6.00%, due
5/15/06 Aa2 AA 1,109
500 New Jersey Bldg. Au. St. Bldg. Rev., Ser. 1994, 5.00%,
due 6/15/11 Aa2 AA- 510
750 New York City (NY) IDA Spec. Fac. Rev. (Term. One Group
Assoc., L.P. Proj.), Ser. 1994, 6.00%, due 1/1/15 A3 A 796
1,000 North Carolina Cap. Imp. G.O., Ser. 1994 A, 4.70%, due
2/1/06 Aaa AAA 1,035
1,000 Omaha (NE) Pub. Pwr. Dist. Elec. Sys. Rev., Ser. 1993
E, 4.60%, due 2/1/06 Aa2 AA 1,025
1,000 Port of Portland (OR) Ref. G.O., Ser. 1993 A, 4.50%,
due 3/1/05 Aa2 AA+ 1,024
1,000 San Antonio (TX) Elec. & Gas Sys. Ref. Rev., Ser. 1998
A, 5.00%, due 2/1/05 Aa1 AA 1,047
1,000 Texas Pub. Fin. Au. Ref. G.O., Ser. 1998 B, 5.13%, due
10/1/09 Aa2 AA 1,059
------------
21,056
------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- BACKED BY
LETTERS OF CREDIT (3.8%)
BANK OF NOVA SCOTIA
200 Port of Portland (OR) Ref. PCR (Reynolds Metals Co.
Proj.), Ser. 1985, 4.25%, VRDN due 12/1/09 P-1 200
BAYERISCHE VEREINSBANK AG
400 Phenix City (AL) IDB Env. Imp. Rev. (Mead Coated Board
Proj.), Ser. 1996, 4.30%, VRDN due 3/1/31 VMIG 1 400
</TABLE>
C-14
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Municipal Securities Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(6)
Amount Rating (000's
(000's omitted) Security(1) Moody's S&P omitted)
- ---------------- ------------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
FIRST UNION NATIONAL BANK
$ 100 Wake Co. (NC) Ind. Fac. & Poll. Ctrl. Fin. Au. PCR
(Carolina Pwr. & Lt. Co. Proj.), Ser. 1997, 4.30%, VRDN
due 3/1/17 P-1 $ 100
LANDESBANK HESSEN-THUERINGEN GIROZENTRALE
200 Southwest (TX) Higher Ed. Au. Inc. Ref. Rev. (Southern
Methodist Univ. Proj.), Ser. 1985, 4.25%, VRDN due
7/1/15 VMIG 1 200
MORGAN GUARANTY TRUST CO.
300 Grapevine (TX) IDC Rev. (Amer. Airlines, Inc. Proj.),
Ser. 1984 A-4, 4.25%, VRDN due 12/1/24 P-1 300
300 Grapevine (TX) IDC Rev., (Amer. Airlines, Inc. Proj.),
Ser. 1984 B-3, 4.25%, VRDN due 12/1/24 P-1 300
------------
1,500
------------
TOTAL INVESTMENTS (98.6%) (COST $38,199) 39,303(7)
Cash, receivables and other assets, less liabilities
(1.4%) 550
------------
TOTAL NET ASSETS (100.0%) $ 39,853
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-15
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
1) Municipal securities held by Neuberger Berman Municipal Money Portfolio
("Municipal Money") and Neuberger Berman Municipal Securities Portfolio
("Municipal Securities") are within the two and four highest rating
categories, respectively, assigned by a nationally recognized statistical
rating organization ("NRSRO") such as Moody's Investors Service, Inc. or
Standard & Poor's or, where not rated, are determined by the Portfolio's
investment manager to be of comparable quality within guidelines approved by
the trustees of Income Managers Trust. Approximately 79% and 49% of the
municipal securities held by Municipal Money and Municipal Securities,
respectively, have credit enhancement features backing them, which the
Portfolios may rely on, such as letters of credit, insurance, or guarantees.
Without these credit enhancement features the securities may or may not meet
the quality standards of the Portfolios. Pre-refunded bonds are supported by
securities in escrow issued or guaranteed by the U.S. Government, its
agencies, or instrumentalities. The amount escrowed is sufficient to pay the
periodic interest due and the principal of these bonds. Putable bonds give
the Portfolios the right to sell back the issue on the date specified.
2) Where no rating appears from any NRSRO, the security is deemed unrated for
purposes of Rule 2a-7 under the Investment Company Act of 1940, as amended.
Each of these securities is an eligible security based on a comparable
quality analysis performed by the Portfolio's investment manager within the
guidelines approved by the trustees of Income Managers Trust.
3) Investment securities of the Portfolio are valued at amortized cost, which
approximates U.S. Federal income tax cost.
4) Security is guaranteed by the corporate obligor.
5) Security is subject to a fractional guarantee provided by Bayerische
Landesbank Girozentrale and Westdeutsche Landesbank Girozentrale, each
backing 50% of the total principal.
6) Investment securities of the Portfolio are valued daily by obtaining bid
price quotations from an independent pricing service on all securities
available in the 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.
7) At April 30, 1999, the cost of investments for U.S. Federal income tax
purposes was $38,199,000. Gross unrealized appreciation of investments was
$1,163,000 and gross unrealized depreciation of investments was $59,000,
resulting in net unrealized appreciation of $1,104,000, based on cost for
U.S. Federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
C-16
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED) PORTFOLIO PORTFOLIO
-------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value*
(Note A) -- see Schedule of Investments $ 191,871 $ 39,303
Cash 601 60
Interest receivable 1,337 522
Prepaid expenses and other assets 2 --
-------------------------------
193,811 39,885
-------------------------------
LIABILITIES
Payable to investment manager (Note B) 46 8
Accrued expenses 43 24
-------------------------------
89 32
-------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 193,722 $ 39,853
-------------------------------
NET ASSETS consist of:
Paid-in capital $ 193,722 $ 38,749
Net unrealized appreciation in value of
investment securities -- 1,104
-------------------------------
NET ASSETS $ 193,722 $ 39,853
-------------------------------
*Cost of investments $ 191,871 $ 38,199
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-17
<PAGE>
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED) PORTFOLIO PORTFOLIO
---------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income $ 3,343 $ 905
---------------------------
Expenses:
Investment management fee (Note B) 266 49
Accounting fees 5 5
Auditing fees 16 12
Custodian fees (Note B) 62 17
Insurance expense 1 --
Legal fees 8 8
Trustees' fees and expenses 7 3
---------------------------
Total expenses 365 94
Expenses reduced by custodian fee expense
offset arrangement (Note B) (3) (1)
---------------------------
Total net expenses 362 93
---------------------------
Net investment income 2,981 812
---------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold 1 64
Net realized gain on financial futures
contracts (Note A) -- 34
Change in net unrealized appreciation of
investment securities -- (367)
---------------------------
Net gain (loss) on investments 1 (269)
---------------------------
Net increase in net assets resulting from
operations $ 2,982 $ 543
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-18
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
PORTFOLIO PORTFOLIO
Six Months Six Months
Ended Year Ended Year
April 30, Ended April 30, Ended
1999 October 31, 1999 October 31,
(000'S OMITTED) (UNAUDITED) 1998 (UNAUDITED) 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 2,981 $ 6,065 $ 812 $ 1,466
Net realized gain on investments 1 26 98 426
Change in net unrealized
appreciation of investments -- -- (367) 583
-------------------------------------------------------------
Net increase in net assets resulting
from operations 2,982 6,091 543 2,475
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 106,586 281,553 4,373 14,666
Reductions (137,458) (222,519) (5,289) (8,627)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (30,872) 59,034 (916) 6,039
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (27,890) 65,125 (373) 8,514
NET ASSETS:
Beginning of period 221,612 156,487 40,226 31,712
-------------------------------------------------------------
End of period $ 193,722 $ 221,612 $ 39,853 $ 40,226
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Municipal Money Portfolio ("Municipal Money") and
Neuberger Berman Municipal Securities Portfolio ("Municipal Securities")
(collectively, the "Portfolios") are separate operating series of Income
Managers Trust ("Managers Trust"), a New York common law trust organized as
of December 1, 1992. Managers Trust is registered as 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 Inc. ("Management"), whose financial statements are not presented
herein, also invest in Managers Trust.
The assets of each Portfolio belong only to that Portfolio, and the
liabilities of each Portfolio are borne solely by that Portfolio and no
other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) 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, is recorded on the accrual basis. Realized gains and
losses from securities transactions are recorded on the basis of identified
cost.
4) 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 U.S. Federal income tax purposes and is therefore not subject to U.S.
Federal income tax.
5) 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.
6) FINANCIAL FUTURES CONTRACTS: Municipal Securities may buy and sell financial
futures contracts to hedge against changes in securities prices resulting
from changes in prevailing interest rates. At the time the 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
C-20
<PAGE>
contract is valued at the official settlement price of the board of trade or
U.S. commodity exchange on which such futures contract is traded. Subsequent
payments, known as "variation margin," to and from the broker are made on a
daily basis as the market price of the financial futures contract fluctuates.
Daily variation margin adjustments, arising from this "mark to market," are
recorded by the Portfolio as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts. When the contracts are closed, the Portfolio
recognizes a gain or loss. Risks of entering into futures contracts include
the possibility 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 U.S. Federal income tax purposes, the futures transactions undertaken
by the Portfolio may cause the Portfolio to recognize gains or losses from
marking to market even though its positions have not been sold or terminated,
may affect the character of the gains or losses recognized as long-term or
short-term, and may affect the timing of some capital gains and losses
realized by the Portfolio. Also, the Portfolio's losses on transactions
involving futures contracts may be deferred rather than being taken into
account currently in calculating the Portfolio's taxable income.
During the six months ended April 30, 1999, Municipal Securities had
entered into financial futures contracts. At April 30, 1999, there were no
open positions.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
pays Management a fee at the annual rate of 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.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger Berman, LLC ("Neuberger"), a member firm of The New York
Stock Exchange and sub-adviser to each Portfolio. Neuberger is retained by
Management to furnish it with investment recommendations and research
information without added cost to each Portfolio. Several individuals who are
officers and/or trustees of Managers Trust are also principals of Neuberger
and/or officers and/or directors of Management.
C-21
<PAGE>
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Custodian fees, was a reduction of $3,495 and
$1,095, for Municipal Money and Municipal Securities, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended April 30, 1999, there were purchase and sale
transactions (excluding short-term securities and financial futures contracts)
of $6,827,000 and $1,962,000, respectively, for Municipal Securities. All
securities transactions for Municipal Money were short-term.
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent auditors. Annual reports
contain audited financial statements.
C-22
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio
<TABLE>
<CAPTION>
Six
Months
Ended
April
30,
1999 Year Ended October 31,
(UNAUDITED) 1998 1997 1996 1995 1994
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .34%(2) .36% .38% .37% .37% --
-------------------------------------------------------------------
Net Expenses .34%(2) .36% .37% .36% .36% .36%
-------------------------------------------------------------------
Net Investment Income 2.81%(2) 3.22% 3.29% 3.21% 3.57% 2.38%
-------------------------------------------------------------------
Net Assets, End of Period (in millions) $193.7 $221.6 $156.5 $132.7 $161.1 $150.5
-------------------------------------------------------------------
</TABLE>
1) 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.
2) Annualized.
C-23
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Securities Portfolio
<TABLE>
<CAPTION>
Six
Months
Ended
April
30,
1999 Year Ended October 31,
(UNAUDITED) 1998 1997 1996 1995 1994
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .48%(2) .51% .51% .47% .47% --
-------------------------------------------------------------
Net Expenses .47%(2) .51% .50% .47% .46% .40%
-------------------------------------------------------------
Net Investment Income 4.15%(2) 4.27% 4.44% 4.49% 4.63% 4.47%
-------------------------------------------------------------
Portfolio Turnover Rate 5% 24% 22% 3% 66% 127%
-------------------------------------------------------------
Net Assets, End of Period (in millions) $39.9 $40.2 $31.7 $39.0 $44.4 $51.4
-------------------------------------------------------------
</TABLE>
1) 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.
2) Annualized.
C-24
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800.877.9700 or 212.476.8800
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, NW
2nd Floor
Washington, DC 20036-1800
D-1
<PAGE>
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
D-2
<PAGE>
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.
NEUBERGER BERMAN [LOGO]
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
www.nbfunds.com
[-RECYCLE LOGO-] NMATR6870699
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
FATIMA SULAIMAN
(202) 778-9223
[email protected]
June 24, 1999
VIA EDGAR
- ---------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Neuberger Berman Income Funds:
Neuberger Berman Municipal Money Fund
Neuberger Berman Municipal Securities Trust
1933 Act File No. 2-85229
1940 Act File No. 811-3802
-------------------------------------------
Dear Sir or Madam:
Transmitted herewith for filing is the Semi-Annual Report to Shareholders
of the above-referenced series of Neuberger Berman Income Funds for the period
ended April 30, 1999. This filing is being made pursuant to Section 30(b)(2) of
the Investment Company Act of 1940, as amended, and Rule 30b2-1 thereunder.
If you should have any questions regarding this filing, please contact the
undersigned.
Sincerely,
/s/ Fatima Sulaiman
Fatima Sulaiman
Enclosure
