<PAGE>
NEUBERGER BERMAN
Neuberger Berman
MUNICIPAL FUNDS -Registered Trademark-
----------------------------------------------------------
MUNICIPAL MONEY FUND
MUNICIPAL SECURITIES TRUST ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
PRESIDENT'S LETTER A-4
GROWTH OF A DOLLAR CHART
COMPARISON OF A $10,000 INVESTMENT
Municipal Securities Trust B-1
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Municipal Money Fund B-8
Municipal Securities Trust B-9
REPORT OF INDEPENDENT AUDITORS B-11
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Municipal Money Portfolio C-1
Municipal Securities Portfolio C-16
FINANCIAL STATEMENTS C-21
FINANCIAL HIGHLIGHTS
Municipal Money Portfolio C-27
Municipal Securities Portfolio C-28
REPORT OF INDEPENDENT AUDITORS C-29
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
A-3
<PAGE>
PRESIDENT'S LETTER December 20, 1999
Dear Shareholder,
Fiscal 1999 was a challenging year for fixed income investors.
Although inflation remained modest, market interest rates trended higher and the
Federal Reserve took steps to head off any potential inflationary threat. The
bond market also had a slight case of the Y2K jitters, which we expect to pass
as we enter the new millennium. Finally, bonds suffered from supply/demand
imbalances in the market resulting from issuers attempting to take maximum
advantage of low interest rates at the beginning of this reporting period. All
these factors combined put pressure on bond prices. Of course, one of the great
advantages of bonds is that yield can compensate for price declines.
Over the long term, markets are quite rational. Over the short term, however,
investor emotion drives markets to extremes. Remarkably, just a little more than
a year ago, bond investors were giddy over consensus forecasts for moderate
economic growth and subdued inflation -- a "best of all possible worlds" for
bonds. Then, with Asia recovering faster than anticipated, European economies
regaining momentum, and the U.S. economy picking up steam, the consensus
shifted. The surprisingly strong global economy reignited inflationary concerns,
excessive optimism gave way to extreme pessimism, and bonds started to retreat.
At Neuberger Berman, we don't get carried away by emotion. A year ago, we
believed bond investors were overconfident. Today, we feel they are unduly
depressed. We believe inflationary concerns are already well discounted in the
market, as are any reasonably foreseeable Y2K-oriented problems. There is plenty
of liquidity in most sectors of the fixed income market and reduced new issuance
is helping correct supply/demand imbalances. We can't predict what the Fed will
do over the next six months, or the precise impact of Fed policy on the bond
market. However, with attractive nominal and real yields (yield in excess of the
prevailing rate of inflation), we believe bonds offer great longer-term value.
This is not to say that the bond market will reverse course in the immediate
future. Right now, investors can't seem to see the forest -- very attractive
bond yields -- through all the trees -- the government's
A-4
<PAGE>
latest monthly economic reports and Fed Chairman Greenspan's every utterance.
This short-term focus may continue to restrain bond prices. However, from our
perspective as long-term investors, we think it is a wonderful opportunity to
buy bonds at very attractive valuations.
What will we be doing to add value to the fixed income investment process in
the year ahead? The same things we always do -- seeking to identify undervalued
securities in the most fundamentally attractive sectors, and to effectively
manage interest rate risk. We are confident this remains the single best method
of preserving and enhancing the assets you have entrusted to us.
NEUBERGER BERMAN MUNICIPAL MONEY FUND Due to generally favorable supply/demand
balance in the market, short-term tax-free instruments are usually impacted less
by Federal Reserve actions and interest rate swings than Treasury securities.
This fiscal year, demand was relatively static, but with municipal issuers flush
with cash, supply was even more constrained than usual. Steady demand combined
with reduced supply helped support short term municipal securities' prices and
allowed us to extend the portfolio's weighted average maturity to lock in higher
yields without being penalized by rising interest rates and two Federal Reserve
rate hikes. At the end of this reporting period, weighted average maturity was
62.7 days, compared to approximately 51 days for the average tax-free money
fund.
At the end of July 1999, we began reducing our exposure to variable rate
demand notes and building up positions in higher yielding tax exempt commercial
paper. This also helped enhance portfolio yield.
The current and effective (compounded) yields for the Fund as of October 31,
1999 were 2.79% and 2.83% respectively. This can be translated into
tax-equivalent current and effective yields of 4.62% and 4.73% respectively for
an investor in the highest federal income tax bracket.*
NEUBERGER BERMAN MUNICIPAL SECURITIES TRUST In second half fiscal 1999,
intermediate and longer-term municipal securities experienced the "double
whammy" of rising interest rates and deteriorating supply/demand dynamics. With
the Consumer Price Index trending higher, inflationary concerns drove interest
rates higher and municipal bond prices lower. We responded to rising rates by
gravitating to higher coupon bonds, which generally hold up better
A-5
<PAGE>
when interest rates are trending up. While this strategy helped preserve capital
in a declining municipal bond market, the portfolio closed full year fiscal 1999
with a modest loss.
The other significant change in the portfolio during this reporting period is
that we substantially reduced what had been an unusually high allocation to cash
at the start of fiscal 1999. We had taken some profits in October 1998, after
the strong bond rally in the summer and early fall. In addition, new money had
been coming into the portfolio as investors looked for safe harbor in the midst
of the stock market storm. With municipal bond yields quite low and concern over
liquidity following the U.S. hedge fund debacle, we held on to cash until the
market dust settled. We invested most of this cash in early fiscal 1999. Blessed
with perfect hindsight, we would have been better off maintaining this much
larger than normal cash cushion. However, it is not our policy to try to time
the market by holding large cash reserves.
Supply in the municipal securities market remained relatively steady
throughout the year. However, demand declined substantially. This was partly a
function of rising interest rates -- investors tend to avoid bonds when rates
are moving higher. It is also the result of anemic total returns -- these days,
individuals are quick to pull the trigger on any investment that doesn't live up
to their short-term expectations. Indeed, we did see substantial redemptions
from municipal bond funds this year. Finally, the municipal securities market
lost the support of property and casualty insurers, the largest institutional
buyers of municipal bonds. Property and casualty insurance premiums are taxable
and during good times, insurers use excess capital to buy a lot of munis. This
year, with property and casualty insurers paying out a lot of hurricane related
claims, they were net sellers of municipal securities.
The 30-Day SEC Yield for the Fund as of October 31, 1999 was 4.38%. This can
be translated into a tax-equivalent yield of 7.25% for an investor in the
highest federal income tax bracket.*
Looking ahead, we think we will enjoy a healthier municipal bond market in
fiscal 2000. Credit quality has never been better -- calendar third quarter 1999
was the sixteenth consecutive quarter in which credit upgrades exceeded credit
downgrades. Real yields (yield in excess of the prevailing rate of inflation)
are now quite attractive -- generally a good measure of bond value. While we are
not making any strategic
A-6
<PAGE>
bets that interest rates will decline in the year ahead, we do believe they will
stabilize around current levels and if we see some indications of a slowing U.S.
economy, perhaps trend lower.
Sincerely,
/s/ Theodore P. Giuliano
Theodore P. Giuliano
President and Trustee
Neuberger Berman Income Funds
*An investment in Municipal Money Fund, like all other mutual funds, is neither
insured nor guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
funds. The return on investment in Municipal Money Fund will fluctuate and past
performance is no guarantee of future results.
"Current yield" refers to the income generated by an investment in the funds
over a 7-day period. The income is then "annualized." The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment
in the funds 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.
Tax-equivalent yield is the taxable current or effective yield that an investor
would have had to receive in order to realize that same level of yield after
federal taxes at 39.6%, assuming that all of the Funds' income is exempt from
Federal income taxes. A portion of the income may be subject to the federal
alternative minimum tax for certain investors.
Neuberger Berman Management Inc.-Registered Trademark- currently absorbs
certain operating expenses of Municipal Securities Trust. Absent this
arrangement, which is subject to change, the 30-day SEC yield of Municipal
Securities Trust would have been 4.02% and the tax-equivalent yield would have
been 6.66%. Past performance is no guarantee of future results.
A-7
<PAGE>
(This page has been left blank intentionally.)
A-8
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman October 31, 1999
- ----------------------------------------------------------------------
Municipal Securities Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MUNICIPAL SECURITIES TRUST LEHMAN BROTHERS 7-YEAR GO INDEX
<S> <C> <C>
1989 $10,000 $10,000
1990 $10,699 $10,771
1991 $11,599 $11,945
1992 $12,378 $12,897
1993 $13,777 $14,431
1994 $13,423 $14,138
1995 $14,812 $15,931
1996 $15,393 $16,689
1997 $16,426 $17,955
1998 $17,613 $19,291
1999 $17,431 $19,306
AVERAGE ANNUAL TOTAL RETURN (1)
MUNICIPAL SECURITIES TRUST LEHMAN BROTHERS 7-YEAR GO INDEX (2)
1 YEAR -1.03% +0.07%
5 YEAR +5.36% +6.43%
10 YEAR +5.71% +6.80%
LIFE OF FUND +5.86% +6.71%
</TABLE>
Neuberger Berman Municipal Securities Trust ("Municipal Securities Trust")
commenced operations on 7/9/87.
The tax equivalent annualized yield for Municipal Securities Trust is 7.25%
for the thirty days ended 10/31/99 (based on an annualized yield of 4.38% and
assuming a federal tax rate of 39.6%). A portion of the income of Municipal
Securities Trust may be subject to the federal alternative minimum tax for
certain investors.
Neuberger Berman Management Inc. ("Management") has voluntarily undertaken to
reimburse Municipal Securities Trust for its operating expenses and its pro rata
share of its Portfolio's operating expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) which, in the aggregate,
exceed .65% per annum of Municipal Securities Trust's average daily net assets.
This arrangement can be terminated upon 60 days' prior written notice. Absent
such arrangement, the annualized and tax equivalent yields for the thirty days
ended 10/31/99 would have been 4.02% and 6.66%, respectively. Absent such
arrangement, the average annual total returns would have been less.
1. "Total Return" includes reinvestment of all dividends and distributions.
Results represent past performance and do not indicate future results. The value
of an investment in the Fund and the return on the investment both will
fluctuate, and redemption proceeds may be higher or lower than an investor's
original cost.
2. The Lehman Brothers 7-Year General Obligation Index is an unmanaged total
return performance benchmark for the intermediate-term, 7-year, investment grade
General Obligations (State and Local) tax-exempt bond market. Please note that
indices do not take into account any fees and expenses of investing in the
individual securities that they track, and that individuals cannot invest
directly in any index. Data about the performance of this index are prepared or
obtained by Management and include reinvestment of all dividends and capital
gain distributions. The Portfolio may invest in many securities not included in
the above-described index.
B-1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger Berman October 31, 1999
- ----------------------------------------------------------------------
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) $ 293,992 $ 34,987
Receivable for Trust shares sold 8 40
Receivable from administrator -- net
(Note B) -- 4
----------------------------
294,000 35,031
----------------------------
LIABILITIES
Dividends payable 4 39
Payable for Trust shares redeemed 111 --
Payable to administrator (Note B) 67 --
Accrued expenses 44 35
----------------------------
226 74
----------------------------
NET ASSETS at value $ 293,774 $ 34,957
----------------------------
NET ASSETS consist of:
Par value $ 294 $ 3
Paid-in capital in excess of par value 293,479 35,657
Accumulated net realized gains (losses) on
investment 1 (125)
Net unrealized depreciation in value of
investment -- (578)
----------------------------
NET ASSETS at value $ 293,774 $ 34,957
----------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 293,846 3,244
----------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $10.78
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger Berman For the Year Ended October 31, 1999
- ----------------------------------------------------------------------
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) $ 7,259 $ 1,780
------------------------
Expenses:
Administration fee (Note B) 604 103
Auditing fees 9 8
Custodian fees 10 10
Legal fees 15 15
Registration and filing fees 27 25
Shareholder reports 28 22
Shareholder servicing agent fees 33 30
Trustees' fees and expenses 15 7
Miscellaneous 10 3
Expenses from corresponding Portfolio
(Notes A & B) 756 184
------------------------
Total expenses 1,507 407
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (7) (159)
------------------------
Total net expenses 1,500 248
------------------------
Net investment income 5,759 1,532
------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain on investment securities 1 89
Net realized gain on financial futures
contracts -- 33
Change in net unrealized appreciation
(depreciation) of investment securities -- (2,049)
------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 1 (1,927)
------------------------
Net increase (decrease) in net assets
resulting from operations $ 5,760 $ (395)
------------------------
</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
Year Year
Ended Ended
October 31, October 31,
(000'S OMITTED) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 5,759 $ 5,408 $ 1,532 $ 1,416
Net realized gain on investments
from corresponding Portfolio
(Note A) 1 26 122 426
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) -- -- (2,049) 583
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 5,760 5,434 (395) 2,425
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (5,759) (5,408) (1,532) (1,416)
------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 322,654 319,207 9,140 16,999
Proceeds from reinvestment of
dividends 5,709 5,334 972 898
Payments for shares redeemed (256,071) (259,407) (13,376) (10,385)
------------------------------------------------------
Net increase (decrease) from Trust
share transactions 72,292 65,134 (3,264) 7,512
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 72,293 65,160 (5,191) 8,521
NET ASSETS:
Beginning of year 221,481 156,321 40,148 31,627
------------------------------------------------------
End of year $ 293,774 $ 221,481 $ 34,957 $ 40,148
------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 322,654 319,207 816 1,520
Issued on reinvestment of dividends 5,709 5,334 88 80
Redeemed (256,071) (259,407) (1,199) (930)
------------------------------------------------------
Net increase (decrease) in shares
outstanding 72,292 65,134 (295) 670
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman October 31, 1999
- ----------------------------------------------------------------------
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 October 31, 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 ($124,792 expiring in 2003 for Municipal
Securities Trust, determined as of October 31, 1999), 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 year ended October 31, 1999, such excess expenses amounted to
$157,108 for Municipal Securities Trust.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Several
individuals who are officers and/or trustees of the Trust are also employees of
Neuberger and/or 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 $7,032 and $2,234, for Municipal Money and Municipal Securities
Trust, respectively.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended October 31, 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 $292,944,000 $227,075,000
MUNICIPAL SECURITIES TRUST 6,301,000 11,211,000
</TABLE>
B-7
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Fund(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
----------------------------------------------
Net Asset Value, Beginning of Year $.9997 $.9994 $.9993 $.9994 $.9995
----------------------------------------------
Income From Investment Operations
Net Investment Income .0256 .0288 .0296 .0285 .0324
Net Gains or Losses on Securities .0001 .0003 .0001 (.0001) (.0001)
----------------------------------------------
Total From Investment Operations .0257 .0291 .0297 .0284 .0323
----------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0256) (.0288) (.0296) (.0285) (.0324)
----------------------------------------------
Net Asset Value, End of Year $.9998 $.9997 $.9994 $.9993 $.9994
----------------------------------------------
Total Return(2) +2.59% +2.92% +3.00% +2.89% +3.29%
----------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $293.8 $221.5 $156.3 $132.6 $160.9
----------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(3) .68% .72% .73% .73% .71%
----------------------------------------------
Ratio of Net Expenses to Average Net
Assets .67% .71% .72% .72% .71%
----------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 2.58% 2.88% 2.95% 2.86% 3.24%
----------------------------------------------
</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 year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
----------------------------------------------
Net Asset Value, Beginning of Year $11.34 $11.02 $10.78 $10.83 $10.26
----------------------------------------------
Income From Investment Operations
Net Investment Income .45 .46 .47 .47 .47
Net Gains or Losses on Securities
(both realized and unrealized) (.56) .32 .24 (.05) .57
----------------------------------------------
Total From Investment Operations (.11) .78 .71 .42 1.04
----------------------------------------------
Less Distributions
Dividends (from net investment
income) (.45) (.46) (.47) (.47) (.47)
----------------------------------------------
Net Asset Value, End of Year $10.78 $11.34 $11.02 $10.78 $10.83
----------------------------------------------
Total Return(2) -1.03% +7.22% +6.71% +3.92% +10.35%
----------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 35.0 $ 40.1 $ 31.6 $ 38.9 $ 44.3
----------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(3) .66% .66% .66% .66% .66%
----------------------------------------------
Ratio of Net Expenses to Average Net
Assets(4) .65% .65% .65% .65% .65%
----------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 4.03% 4.13% 4.30% 4.32% 4.45%
----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-9
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman October 31, 1999
- ----------------------------------------------------------------------
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) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
4) 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>
MUNICIPAL Year Ended October 31,
SECURITIES TRUST 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET EXPENSES 1.07% 1.11% 1.05% 1.04% .98%
</TABLE>
B-10
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Neuberger Berman Income Funds and
Shareholders of:
Neuberger Berman Municipal Money Fund and
Neuberger Berman Municipal Securities Trust
We have audited the accompanying statements of assets and liabilities of the
Neuberger Berman Municipal Money Fund and Neuberger Berman Municipal Securities
Trust, two of the series constituting the Neuberger Berman Income Funds (the
"Trust"), as of October 31, 1999, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Neuberger Berman Income Funds at October 31,
1999, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and their
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 3, 1999
B-11
<PAGE>
(This page has been left blank intentionally.)
B-12
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAX-EXEMPT
SECURITIES -- PRE-REFUNDED
BACKED BY U.S. GOVERNMENT
SECURITIES (7.4%)
$1,500 Baltimore (MD) Wtr. Util. Rev.
(Wtr. Proj.), Ser. 1990 A,
6.50%, due 7/1/20 P/R 7/1/00 $ 1,525
1,000 Clark Co. (NV) Sch. Dist.
G.O., Ser. 1990, 7.50%,
due 5/1/04 P/R 5/1/00 1,038
2,000 Grapevine-Colleyville (TX)
Independent Sch. Dist. G.O.,
Ser. 1989, 6.60%, due 8/15/02
P/R 8/15/00 2,046
3,000 Maryland St. Hlth. & Higher
Ed. Fac. Au. Rev. (Francis
Scott Key Med. Ctr.),
Ser. 1990, 6.75%, due 7/1/23
P/R 7/1/00 3,122
2,000 Massachusetts Wtr. Res. Au.
Rev., Ser. 1990 A, 6.00%,
due 4/1/20 P/R 4/1/00 2,019
2,000 Mobile Co. (AL) G.O.,
Ser. 1991, 6.70%, due 2/1/11
P/R 2/1/00 2,057
1,000 New Hampshire Cap. Imp. G.O.,
Ser. 1989, 6.50%, due 12/1/09
P/R 1/15/00 1,026
1,500 Pennsylvania Higher Ed. Fac.
Au. Rev., Ser. 1990 D, 7.15%,
due 6/15/15 P/R 6/15/00 1,534
1,150 Rhode Island & Providence
Plantations Cons. Cap. Dev.
Loan G.O., Ser. 1991 B, 6.00%,
due 5/15/02 P/R 5/15/00 1,187
2,000 South Carolina Cap. Imp. G.O.,
Ser. 1991 W, 5.75%,
due 5/1/06 P/R 5/1/00 2,063
1,000 Washington Co. (PA) Au. Muni.
Fac. Lease Rev. (Shadyside
Hosp. Proj.), Ser. 1985 C-1B,
7.38%, due 12/15/09 P/R
6/15/00 1,054
3,000 Washington St. G.O.,
Ser. 1990 B, 6.80%,
due 8/1/04 P/R 8/1/00 3,065
--------
21,736
--------
TAX-EXEMPT
SECURITIES -- ESCROWED IN U.S.
GOVERNMENT SECURITIES (2.4%)
1,225 Milwaukee (WI) Metro. Swr.
Dist. G.O., Ser. 1990 A,
6.70%, due 10/1/00 1,257
1,200 Milwaukee Co. (WI) Corp. Purp.
G.O., Ser. 1993 A, 4.60%,
due 12/1/99 1,201
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$1,000 New York St. Pwr. Au. Gen.
Purp. Rev., Ser. 1991 Z,
5.85%, due 1/1/00 $ 1,005
2,625 Pennsylvania Convention Ctr.
Au. Rev., Ser. 1989 A, 6.60%,
due 9/1/00 2,689
1,000 Texas Muni. Pwr. Agcy. Ref.
Rev., Ser. 1992, 5.50%,
due 9/1/00 1,013
--------
7,165
--------
MUNICIPAL NOTES (2.2%)
1,000 Louisiana Pub. Fac. Au.
Advance Funding Notes,
Ser. 1999 B, 4.25%,
due 10/24/00 SP-1+ 1,004
2,500 Racine Co. (WI) Unified Sch.
Dist. TRANS, 3.60%,
due 7/6/00 MIG 1 2,502
1,000 Rockdale Co. (GA) Wtr. & Swr.
Au. Cap. Outlay Notes, 3.75%,
due 12/15/99 MIG 1 1,000
2,000 Texas TRANS, Ser. 1999 A,
4.50%, due 8/31/00 VMIG 1 SP-1+ 2,013
--------
6,519
--------
TAX-EXEMPT SECURITIES --BACKED
BY LETTERS OF CREDIT (1.4%)
MORGAN GUARANTY TRUST CO.
3,000 Chicago (IL) G.O., Ser. 1998,
3.75%, due 1/31/00 Putable
12/1/99 VMIG 1 A-1+ 3,000
STATE STREET BANK AND TRUST COMPANY
1,000 Rhode Island Std. Loan Au.
Prog. Rev., Ser. 1996-1,
3.60%, due 6/1/26 Putable
6/1/00 A-1+ 1,000
--------
4,000
--------
TAX-EXEMPT SECURITIES --BACKED
BY INSURANCE (4.3%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,000 Anchorage (AK) Sch. G.O.,
Ser. 1996 A, 5.50%,
due 8/1/00 1,013
2,000 Atlanta (GA) Sales Tax Rev.
(Metro. Atlanta Rapid Transit
Au.), Ser. 1993 A, 4.90%,
due 7/1/00 A-1+ 2,021
1,250 Franklin & Pickaway Cos. (OH)
South-Western City Sch. Dist.
Sch. Bldg. Construction
Unlimited Tax G.O., 3.00%,
due 12/1/99 1,250
</TABLE>
C-2
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$1,000 Lower Colorado River (TX) Au.
Priority Ref. Rev., Ser. 1991
A, 6.375%, due 1/1/00 A-1+ $ 1,005
3,330 Missouri Cert. of
Participation (Bonne Terre
Prison Proj.), Ser. 1999 A,
4.25%, due 6/1/00 3,348
FINANCIAL GUARANTY INSURANCE CO.
1,000 Clark Co. (NV) Sch. Dist. Sch.
Imp. Ltd. Tax G.O.,
Ser. 1996, 6.50%, due 6/15/00 1,019
1,000 Connecticut Spec. Assessment
Unemployment Comp. Adv. Fund
Rev., Ser. 1993 C, 3.38%,
due 11/15/01 Putable 7/1/00 VMIG 1 A-1+ 1,000
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,000 New Mexico St. Univ. Ref. &
Imp. Rev., Ser. 1998, 3.95%,
due 4/1/00 1,002
1,000 Portland (OR) Swr. Sys. Rev.,
Ser. 1998 A, 5.00%,
due 6/1/00 1,008
--------
12,666
--------
TAX-EXEMPT SECURITIES -- OTHER
(8.3%)
1,000 Albuquerque (NM) G.O.,
Ser. 1994 A, 4.70%,
due 7/1/00 1,009
1,585 Arlington (TX) Perm. Imp.
G.O., Ser. 1999, 4.00%,
due 8/15/00 1,591
1,125 Commonwealth of Virginia G.O.,
Ser. 1999, 4.75%, due 6/1/00 1,131
1,000 Cook Co. (IL) Metro. Wtr.
Reclamation Dist. of Greater
Chicago Ref. G.O., Ser. 1997,
4.15%, due 12/1/99 1,001
1,000 Fort Worth (TX) Tarrant &
Denton Cos. Gen. Purp. Ref.
G.O., Ser. 1996 A, 5.50%,
due 3/1/00 1,008
1,000 Fulton Co. (GA) Sch. Dist.
G.O., Ser. 1991, 5.80%,
due 5/1/00 1,012
1,500 Georgia St. G.O., Ser. 1991 A,
7.70%, due 2/1/00 1,514
1,315 Horry Co. (SC) Sch. Dist.
G.O., Ser. 1999 B, 4.50%,
due 3/1/00 1,319
1,200 Kansas Dept. of Trans. Hwy.
Rev., Ser. 1992, 5.90%,
due 3/1/00 1,211
1,000 Minnesota St. Var. Purp. Ref.
G.O., 4.50%, due 6/1/00 1,005
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$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. Multi-Purp. Imp.
G.O., Ser. 1997 A, 5.125%,
due 11/15/99 1,501
3,000 Oklahoma Wtr. Res. Board Rev.
(Std. Loan Prog.), Ser. 1999,
3.60%, due 9/1/32 Putable
3/1/00 A-1+ 3,000
1,235 South Carolina Cap. Imp. G.O.,
Ser. 1991 W, 6.00%,
due 5/1/00 1,251
2,000 Tempe (AZ) Excise Tax Rev.,
Ser. 1999 A, 3.75%,
due 7/1/00 MIG 1 SP-1+ 2,003
1,995 Virginia Beach (VA) Pub. Imp.
G.O., Ser. 1991 A, 6.30%,
due 3/1/00 2,011
--------
24,567
--------
TAX-EXEMPT CASH EQUIVALENT
SECURITIES (13.8%)
300 Berkeley Co. (SC) Fac. Ind.
Rev. (Amoco Chemical Co.
Proj.), Ser. 1997, 3.60%, VRDN
due 4/1/27 VMIG 1 A-1+ 300(5)
9,700 Blytheville (AR) IDR (Nucor
Corp. Proj.), Ser. 1998,
3.55%, VRDN due 6/1/28 P-1 A-1+ 9,700(5)
1,500 Carlton (WI) PCR (Wisconsin
Pwr. & Lt. Co. Proj.),
Ser. 1988, 3.55%, VRDN
due 8/1/15 VMIG 1 1,500(5)
5,300 Commonwealth of Massachusetts
Ref. G.O., Ser. 1998 A, 3.40%,
VRDN due 9/1/16 VMIG 1 A-1+ 5,300
1,500 Decatur (AL) IDB Solid Waste
Disp. Rev. (Amoco Chemical Co.
Proj.), Ser. 1995, 3.60%, VRDN
due 5/1/25 VMIG 1 1,500(5)
1,000 Delaware Co. (PA) IDA Res.
Rec. Fac. Ref. Rev. (Gen.
Elec. Cap. Corp.), Ser. 1997
G, 3.40%, VRDN due 12/1/31 A-1+ 1,000(5)
1,900 Gulf Coast (TX) Waste Disp.
Au. Env. Fac. Rev. (Bayer
Corp. Proj.), Ser. 1997,
3.60%, VRDN due 5/1/27 P-1 A-1+ 1,900(5)
1,900 Harris Co. (TX) IDC Solid
Waste Disp. Rev. (Exxon
Proj.), Ser. 1997, 3.60%, VRDN
due 4/1/32 VMIG 1 A-1+ 1,900(5)
</TABLE>
C-4
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$ 200 Hurley (NM) PCR (Kennecott
Sante Fe Corp. Proj.), 3.50%,
VRDN due 12/1/15 P-1 A-1+ $ 200(5)
850 Lincoln Co. (WY) PCR (Exxon
Proj.), Ser. 1987 A, 3.60%,
VRDN due 7/1/17 P-1 A-1+ 850(5)
1,000 Madison Co. (IL) Env. Imp.
Rev. (Shell Wood River
Refining Co. Proj.),
Ser. 1997 A, 3.60%, VRDN
due 3/1/33 VMIG 1 A-1+ 1,000(5)
2,000 Nueces Co. (TX) Port of Corpus
Christi Au. Solid Waste Disp.
Ref. Rev. (Koch Refining Co.,
L.P. Proj.), Ser. 1996, 3.55%,
VRDN due 5/1/26 VMIG 1 A-1+ 2,000(5)
600 Parish of St. Charles (LA) PCR
(Shell Oil Co. Norco Proj.),
Ser. 1991, 3.60%, VRDN
due 11/1/21 VMIG 1 A-1+ 600(5)
1,900 Parish of St. Charles (LA) PCR
(Shell Oil Co. Norco Proj.),
Ser. 1993, 3.60%, VRDN
due 9/1/23 VMIG 1 A-1+ 1,900(5)
100 Parish of St. Charles (LA)
Ref. PCR (Shell Oil Co.
Proj.), Ser. 1992 B, 3.45%,
VRDN due 10/1/22 VMIG 1 A-1+ 100(5)
8,000 Rhode Island & Providence
Plantations G.O., 3.45%, 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,
3.50%, VRDN due 4/1/04 A-1+ 800
1,600 Southwestern (IL) Dev. Au.
Solid Waste Disp. Rev. (Shell
Oil Co. Wood River Proj.),
Ser. 1991, 3.60%, VRDN
due 8/1/21 VMIG 1 A-1+ 1,600(5)
100 Southwestern (IL) Dev. Au.
Solid Waste Disp. Rev. (Shell
Oil Co. Wood River Proj.),
Ser. 1992, 3.60%, VRDN
due 4/1/22 VMIG 1 A-1+ 100(5)
300 Sublette Co. (WY) PCR (Exxon
Proj.), Ser. 1984, 3.50%,
VRDN due 11/1/14 P-1 A-1+ 300
150 Uinta Co. (WY) PCR (Chevron
U.S.A. Inc. Proj.),
Ser. 1997, 3.50%, VRDN
due 4/1/10 P-1 150(5)
--------
40,700
--------
</TABLE>
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- BACKED BY
LETTERS OF CREDIT (50.2%)
ABN AMRO BANK NV
$ 200 Long Island (NY) Pwr. Au.
Elec. Sys. Subordinated Rev.,
Ser. 1998-6, 3.65%, VRDN
due 5/1/33 VMIG 1 A-1+ $ 200(6)
5,000 Phenix City (AL) IDB Env. Imp.
Rev. (Mead Coated Board
Proj.), Ser. 1988, 3.50% &
3.65%, TECP due 11/15/99 &
2/10/00 P-1 5,000
5,000 Southern Minnesota (MN) Muni.
Pwr., Ser. 1995 B, 3.65%, TECP
due 2/7/00 P-1 A-1+ 5,000(7)
BANK OF AMERICA
1,200 Calhoun Co. (TX) Navigation
IDA Port Rev. (Formosa
Plastics Corp., Texas Proj.),
Ser. 1994, 3.60%, VRDN
due 11/1/15 VMIG 1 1,200
2,400 Florida Hsg. Fin. Corp. Rev.
(The Club at Vero Arpt.
Proj.), Ser. 1998 E, 3.40%,
VRDN due 6/1/17 A-1+ 2,400
4,500 Utah Intermountain Pwr. Agcy.
Pwr. Supply Rev., 3.40% &
3.50%, TECP due 11/9/99 &
11/17/99 A-1 4,500(8)
BANK OF MONTREAL
100 Port of Portland (OR) Spec.
Oblig. Rev. (Horizon Air Ind.,
Inc. Proj.), Ser. 1997, 3.70%,
VRDN due 6/15/27 A-1+ 100
BANK OF NOVA SCOTIA
2,204 Harris Co. (TX) Lien Rev.,
Ser. 1998 D, 3.40%, TECP
due 11/3/99 P-1 A-1+ 2,204
BANK OF SCOTLAND
5,755 Loudoun Co. (VA) IDA
Residential Care Fac. Ref.
Rev. (Falcons Landon Proj.),
Ser. 1998, 3.50%, VRDN
due 11/1/28 VMIG 1 5,755
BANK ONE
100 Indiana Emp. Dev. Comm. Econ.
Dev. Rev. (K & F Ind., Inc.
Proj.), Ser. 1988, 3.65%, VRDN
due 1/1/14 VMIG 1 100
</TABLE>
C-6
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
BANQUE NATIONALE DE PARIS
$2,500 St. Clair Co. (AL) IDB Ind.
Rev. (Nat'l. Cement Co. Inc.,
Proj.), Ser. 1985, 3.50%, VRDN
due 3/1/05 A-1 $ 2,500
BARCLAYS BANK INT'L., LTD.
800 Michigan St. Strategic Fund
Ltd. Oblig. Rev., 3.50%, VRDN
due 9/1/30 P-1 A-1+ 800
2,500 Michigan St. Strategic Fund
Solid Waste Disp. Rev.
(Grayling Generating Proj.),
Ser. 1990, 3.50%, VRDN
due 1/1/14 VMIG 1 2,500
1,000 Peninsula Ports (VA) Coal
Term. Ref. Rev. (Dominion
Term. Assoc. Proj.), 3.45%,
TECP due 1/18/00 P-1 1,000
BAYERISCHE LANDESBANK GIROZENTRALE
7,200 Denver (CO) City & Co. Arpt.
Sys. Sub. Rev., 3.40%-3.55%,
TECP due 11/10/99-2/9/00 VMIG 1 A-1+ 7,200
1,000 Emmaus (PA) Gen. Au. Local
Gov't. Rev., Ser. 1989 F-13,
3.55%, VRDN due 3/1/24 A-1+ 1,000
CANADIAN IMPERIAL BANK OF COMMERCE
3,500 Lake Charles (LA) Harbor &
Term. Dist. Rev. (Reynolds
Metals Co. Proj.), Ser. 1990,
3.50%, VRDN due 5/1/06 A-1+ 3,500
3,900 Louisa Co. (IA) Customized
Purchase Ref. PCR
(Iowa-Illinois Gas & Elec. Co.
Proj.), Ser. 1987, 3.60%,
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, 3.55%, VRDN
due 7/1/13 VMIG 1 2,000
1,935 Douglas Co. (GA) Dev. Au. IDR
(Whirlwind Steel Bldg., Inc.
Proj.), Ser. 1997, 3.65%, VRDN
due 12/1/12 VMIG 1 A-1 1,935
910 Virginia Small Bus. Fin. Au.
IDR (Coral Graphic Svc., Inc.
Proj.), Ser. 1998, 3.65%, VRDN
due 1/1/13 VMIG 1 A-1 910
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
CITIBANK, N.A.
$1,100 Austin Co. (TX) Ind. Dev.
Corp. IDR (Justin Ind., Inc.
Proj.), Ser. 1984, 3.50%, VRDN
due 12/1/14 P-1 $ 1,100
CREDIT COMMERCIAL DE FRANCE
200 Elkhart Co. (IN) Econ. Dev.
Rev. (Pace Amer. Inc. Proj.),
3.65%, VRDN due 1/1/13 VMIG 1 200
2,700 South Carolina Jobs Econ. Dev.
Au. Rev. (Florence RHF Hsg.,
Inc. Proj.), Ser. 1987 A,
3.60%, VRDN due 11/7/07 P-1 2,700
430 South Carolina Jobs Econ. Dev.
Au. Rev. (Osmose Wood
Preserving), Ser. 1989 B,
3.70%, VRDN due 12/1/04 P-1 430
100 South Carolina Jobs Econ. Dev.
Au. Rev. (Su-Dan Co. & Delta
Prop.), Ser. 1989 A, 3.80%,
VRDN due 1/1/04 VMIG 1 100
CREDIT LOCAL DE FRANCE
2,320 Elmhurst (IL) Rev. (Joint
Comm. Accreditation),
Ser. 1988, 3.50%, VRDN
due 7/1/18 VMIG 1 A-1+ 2,320
CREDIT SUISSE
1,300 Chattanooga (TN) Ind. Dev.
Board IDR (Market Street Ltd.
Proj.), 3.50%, VRDN
due 12/15/12 A-1+ 1,300
3,000 Emery Co. (UT) Ref. PCR
(PacifiCorp Proj.),
Ser. 1991, 3.45%, VRDN
due 7/1/15 VMIG 1 A-1+ 3,000
200 Montgomery Co. (TX) Ind. Dev.
Corp. IDR (Dal-Tile Corp.
Proj.), Ser. 1986 B, 3.70%,
VRDN due 12/1/03 A-1+ 200
1,000 Texas Capital Hlth. Fac. Dev.
Corp. (Island on Lake Travis
Ltd. Proj.), Ser. 1986, 3.55%,
VRDN due 12/1/16 A-1+ 1,000
DEUTSCHE BANK AG
400 Florence Co. (SC) Solid Waste
Disp. & Wastewater Treatment
Fac. Rev. (Roche Carolina Inc.
Proj.), Ser. 1998, 3.60%, VRDN
due 4/1/28 A-1+ 400
900 Hapeville (GA) Dev. Au. IDR
(Hapeville Hotel Ltd.
Partnership Proj.),
Ser. 1985, 3.55%, VRDN
due 11/1/15 P-1 900
</TABLE>
C-8
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$ 400 Louisiana Pub. Fac. Au. IDR
(Kenner Hotel L.P. Proj.),
Ser. 1985, 3.55%, VRDN
due 12/1/15 P-1 $ 400
FIRST OF AMERICA BANK
845 Michigan St. Hosp. Fin. Au.
Rev. Hosp. Equip. Loan Prog.
Rev., Ser. A, 3.52%, 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, 3.50%, VRDN
due 1/1/22 VMIG 1 1,400
2,600 Maryland St. Hlth. & Higher
Ed. Fac. Au. Rev. (Pooled Loan
Prog.), Ser. 1985 B, 3.45%,
VRDN due 4/1/35 VMIG 1 2,600
100 Massachusetts Hlth. & Ed. Fac.
Au. Rev. (Cap. Asset Prog.),
Ser. 1985 E, 3.50%, VRDN
due 1/1/35 VMIG 1 100
4,000 Stevenson (AL) IDB Env. Imp.
Rev. (Mead Corp. Proj.),
Ser. 1998 B, 3.60%, VRDN
due 4/1/33 A-1+ 4,000
FIRST UNION NATIONAL BANK
300 Jackson-Union Cos. (IL) Reg.
Port Dist. Port Fac. Ref. Rev.
(Enron Trans. Svc., L.P.
Proj.), Ser. 1994, 3.52%,
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, 3.45%, VRDN
due 10/1/28 VMIG 1 1,000
1,200 Wake Co. (NC) Ind. Fac. &
Poll. Ctrl. Fin. Au. PCR
(Carolina Pwr. & Lt. Co.
Proj.), Ser. 1987, 3.65%,
VRDN due 3/1/17 VMIG 1 1,200
2,000 Washington Co. (PA) Au. Lease
Rev. (Higher Ed. Pooled Equip.
Leasing Prog.), Ser. 1985 A,
3.60%, VRDN due 11/1/05 VMIG 1 2,000
GENERAL ELECTRIC CAPITAL CORP.
790 New Hampshire Hsg. Fin. Au.
Multi-Family Hsg. Rev.
(Countryside L.P. Proj.),
Ser. 1994, 3.65%, VRDN
due 7/1/24 VMIG 1 790
</TABLE>
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
HARRIS TRUST AND SAVINGS BANK
$ 600 Illinois Dev. Fin. Au. IDR
(Grayhill, Inc. Proj.),
Ser. 1995 C, 3.60%, VRDN
due 2/1/05 A-1+ $ 600
400 Illinois Dev. Fin. Au. IDR
(Overton Gear & Tool Corp.
Proj.), Ser. 1994, 3.60%, VRDN
due 10/1/08 A-1+ 400
LANDESBANK HESSEN-THUERINGEN GIROZENTRALE
900 Southwest (TX) Higher Ed. Au.
Inc. Ref. Rev. (Southern
Methodist Univ. Proj.),
Ser. 1985, 3.55%, VRDN
due 7/1/15 VMIG 1 900
MORGAN GUARANTY TRUST CO.
100 Grapevine (TX) IDC Rev.
(American Airlines, Inc.
Proj.), Ser. 1984 B3, 3.65%,
VRDN due 12/1/24 P-1 100
340 Harris Co. (TX) Hlth. Fac.
Dev. Corp. Rev. (St. Lukes
Episcopal Hosp.), Ser. 1997 B,
3.65%, VRDN due 6/15/27 A-1+ 340(9)
1,500 Jacksonville (FL) Elec. Au.
Rev., 3.50%, TECP due 11/4/99 P-1 A-1+ 1,500
2,800 Maricopa Co. (AZ) Poll. Ctrl.
Corp. PCR (Arizona Pub. Svc.
Co. Palo Verde Proj.),
Ser. 1994 B, 3.50%, VRDN
due 5/1/29 P-1 A-1+ 2,800
200 New York St. Energy Research &
Dev. Au. PCR (NYS Elec. &
Gas), Ser. 1994 C, 3.60%, VRDN
due 6/1/29 VMIG 1 A-1+ 200
300 New York St. Job Dev. Au.
Spec. Purp. Rev., Ser. 1988,
3.60%, VRDN due 3/1/03 VMIG 1 A-1+ 300(10)
1,000 North Carolina Catawba Elec.
Muni. Pwr. Agcy. Rev., 3.65%,
TECP due 11/30/99 P-1 A-1+ 1,000(11)
500 Princeton (IN) Ref. PCR (PSI
Energy Inc., Proj.),
Ser. 1997, 3.55%, VRDN
due 4/1/22 VMIG 1 A-1+ 500
3,000 Utah Intermountain Pwr. Agcy.
Pwr. Supply Rev., 3.50%, TECP
due 11/3/99 A-1 3,000
</TABLE>
C-10
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
NATIONAL WESTMINSTER BANK PLC
$ 300 Marion Co. (WV) Comm. Solid
Waste Disp. Fac. Rev. (Grant
Town Cogeneration Proj.),
Ser. 1990 A, 3.55%, 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, 3.55%, VRDN
due 10/1/17 VMIG 1 A-1+ 300
3,800 Venango (PA) IDA Res. Rec.
Rev. (Scrubgrass Proj.),
Ser. 1990 B, 3.70%, TECP
due 3/13/00 A-1+ 3,800
NATIONSBANK N.A.
600 Des Moines (IA) Arpt. Rev.,
4.05%, TECP due 3/14/00 P-1 600
NORTHERN TRUST CO.
1,165 Illinois Hlth. Fac. (Rush
Presbyterian St. Lukes) Rev.,
Ser. 1996 B, 3.55%, TECP
due 11/15/99 VMIG 1 A-1+ 1,165
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,
3.55%, 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, 3.60%, VRDN
due 3/1/15 VMIG 1 1,500
SLM HOLDING CORP.
300 Nebhelp Inc. (NE) Std. Loan
Prog. Rev., Ser. 1986 A,
3.55%, VRDN due 12/1/16 A-1+ 300
2,200 Panhandle-Plains (TX) Higher
Ed. Au. Inc. Std. Loan Rev.,
Ser. 1991 A, 3.55%, VRDN
due 6/1/21 VMIG 1 2,200
1,600 Panhandle-Plains (TX) Higher
Ed. Au. Inc. Std. Loan Rev.,
Ser. 1995 A, 3.55%, VRDN
due 6/1/25 VMIG 1 1,600
</TABLE>
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
SOCIETE GENERALE
$1,500 Athens-Clarke Co. (GA) Ind.
Dev. Au. IDR (Rhone Merieux,
Inc. Proj.), Ser. 1988, 3.70%,
TECP due 2/17/00 VMIG 1 $ 1,500
1,900 Chicago (IL) O'Hare Int'l.
Arpt. Spec. Fac. Rev.
(Compagnie Nationale Air
France Proj.), Ser. 1990,
3.60%, VRDN due 5/1/18 A-1+ 1,900
200 Los Angeles (CA) Reg. Arpt.
Imp. Corp. Term. Fac.
Completion Rev. (Los Angeles
Int'l. Arpt.), Ser. 1989,
3.70%, VRDN due 12/1/25 A-1+ 200
STATE STREET BANK AND TRUST COMPANY
2,000 Rhode Island Std. Loan Au.
Prog. Rev., Ser. 1996-3,
3.60%, VRDN due 6/1/26 A-1+ 2,000
SUNTRUST BANK
1,600 Clark Co. (AR) Solid Waste
Disp. Rev. (Reynolds Metals
Co. Proj.), Ser. 1992, 3.60%,
VRDN due 8/1/22 P-1 A-1+ 1,600
4,700 Mayfield (KY) IDR (Seaboard
Farms of Kentucky, Inc.
Proj.), Ser. 1989, 3.60%, 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, 3.50%, VRDN
due 1/1/18 VMIG 1 A-1+ 2,500
100 New York St. Energy Research &
Dev. Au. PCR (Niagra Mohawk
Pwr. Co. Proj.), Ser. 1986 A,
3.60%, VRDN due 12/1/26 P-1 100
1,860 Phenix City (AL) IDB Env. Imp.
Rev. (Mead Coated Board
Proj.), Ser. 1993 A, 3.70%,
VRDN due 6/1/28 A-1+ 1,860
3,500 Stevenson (AL) IDB Env. Imp.
Rev. (Mead Corp. Proj.),
Ser. 1997, 3.60%, VRDN
due 6/1/32 A-1+ 3,500
120 Wisconsin Hlth. Fac. Au. Rev.
(Franciscan Hlth. Care,
Inc.-Sys. Fin.), Ser. 1985
A-2, 3.50%, VRDN due 1/1/16 VMIG 1 A-1+ 120
</TABLE>
C-12
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
UNION BANK OF SWITZERLAND
$1,000 Alaska Ind. Dev. & Export Au.
Fac. Rev. (Fairbanks Gold
Mining, Inc. Proj.),
Ser. 1997, 3.60%, VRDN
due 5/1/09 VMIG 1 A-1+ $ 1,000
8,489 Dallas (TX) Wtr. & Swr. Rev.,
3.30%-3.50%, TECP
due 12/6/99-12/15/99 P-1 A-1+ 8,489
1,050 Pennsylvania Energy Dev. Au.
Rev. (B & W Ebensburg Proj.),
Ser. 1986, 3.55%, VRDN
due 12/1/11 VMIG 1 1,050
1,200 West Virginia Pub. Energy Au.
Rev. (Morgantown Energy Assoc.
Proj.), Ser. 1989 A, 3.40%,
TECP due 11/10/99 P-1 A-1+ 1,200
WACHOVIA BANK & TRUST CO.
1,000 Crossett (AR) PCR
(Georgia-Pacific Corp. Proj.),
Ser. 1984, 3.45%, VRDN
due 10/1/07 P-1 1,000
300 Los Angeles (CA) Reg. Arpt.
Imp. Corp. Lease Rev.
(American Airlines-Los Angeles
Int'l. Arpt.), Ser. 1984 D,
3.65%, VRDN due 12/1/24 P-1 300
500 Morgan Co. (UT) Solid Waste
Disp. Rev. (Holnam Inc.
Proj.), Ser. 1996, 3.60%, VRDN
due 8/1/31 VMIG 1 A-1+ 500
300 North Carolina Ed. Fac. Fin.
Agcy. Updates Rev. (Bowman
Gray Sch. of Medicine Proj.),
Ser. 1996, 3.50%, VRDN
due 9/1/26 VMIG 1 300
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1,855 Clark Co. (NV) Arpt. Sys. Sub.
Lien Rev., Ser. 1995 A-1,
3.45%, VRDN due 7/1/25 VMIG 1 A-1+ 1,855
3,000 Dallas (TX) Area Rapid Trans.,
Ser. 1995 A, 3.55%, TECP
due 11/8/99 P-1 A-1+ 3,000(12)
600 Indianapolis (IN) Adjustable
Tender Res. Rec. Rev. (Ogden
Martin Sys. of Indianapolis,
Inc. Proj.), Ser. 1987, 3.60%,
VRDN due 12/1/16 A-1+ 600
1,000 Port of Corpus Christi (TX)
Util. Sys. Rev., Ser. 1998 A,
3.80%, TECP due 2/8/00 P-1 1,000
--------
147,468
--------
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- BACKED BY
INSURANCE (7.5%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
$1,500 Coastal Bend (TX) Hlth. Fac.
Dev. Corp. Rev. (Incarnate
Word Hlth. Sys.), Ser. 1998 B,
3.55%, VRDN due 8/15/28 VMIG 1 $ 1,500
1,400 Illinois Hlth. Fac. Au. Rev.
(Swedish Covenant Hosp.
Proj.), Ser. 1995, 3.55%, VRDN
due 11/15/99 VMIG 1 A-1+ 1,400
2,600 Indiana Secondary Mkt. for Ed.
Loans Inc. Rev., Ser. 1988 B,
3.55%, VRDN due 12/1/13 VMIG 1 A-1+ 2,600
200 Rockport (IN) Ref. PCR (AEP
Generating Co. Proj.),
Ser. 1995 B, 3.50%, VRDN
due 7/1/25 A-1+ 200
100 Sabine (TX) River Au.
Collateralized PCR (Texas
Util. Elec. Co. Proj.),
Ser. 1996 B, 3.65%, 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, 3.50%, VRDN
due 12/1/20 A-1+ 400
500 Trinity (TX) River Au.
Collateralized PCR (Texas
Util. Elec. Co. Proj.),
Ser. 1996 A, 3.60%, VRDN
due 3/1/26 VMIG 1 A-1+ 500
1,100 Utah State Board of Regents
Std. Loan Rev., Ser. 1988 B,
3.45%, VRDN due 11/1/00 VMIG 1 A-1+ 1,100
FINANCIAL GUARANTY INSURANCE CO.
3,300 Arizona Hlth. Fac. Au. Rev.
(Pooled Loan Prog.),
Ser. 1985, 3.55%, VRDN
due 10/1/15 VMIG 1 A-1 3,300
300 New York City (NY) Muni. Wtr.
Fin. Au. Wtr. & Swr. Sys.
Rev., Ser. 1994 C, 3.55%, VRDN
due 6/15/23 VMIG 1 A-1+ 300
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,745 Charlotte (NC) Arpt. Ref.
Rev., Ser. 1997 A, 3.55%, VRDN
due 7/1/17 VMIG 1 A-1+ 1,745
900 Kentucky Higher Ed. Std. Loan
Corp. Rev., Ser. 1996 A,
3.50%, VRDN due 6/1/26 VMIG 1 A-1+ 900
5,500 Missouri-Illinois Metro. Dist.
Bi-State Dev. Agcy. Rev. (St.
Clair Co. Metrolink
Extension), Ser. 1998 B,
3.45%, VRDN due 7/1/28 VMIG 1 A-1+ 5,500
</TABLE>
C-14
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2)(3) Value(4)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$ 390 Polk Co. (IA) Hosp. Equip. &
Imp. Rev., Ser. 1985, 3.55%,
VRDN due 12/1/05 VMIG 1 A-1 $ 390
2,000 South Texas Higher Ed. Au.
Inc. Std. Loan Rev.,
Ser. 1998, 3.55%, VRDN
due 12/1/03 VMIG 1 2,000
--------
21,935
--------
TOTAL INVESTMENTS (97.5%) 286,756
Cash, receivables and other
assets, less
liabilities (2.5%) 7,236
--------
TOTAL NET ASSETS (100.0%) $293,992
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Securities Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(13)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAX-EXEMPT
SECURITIES -- PRE-REFUNDED
BACKED BY U.S. GOVERNMENT
SECURITIES (3.0%)
$1,000 Clark Co. (NV) Sch. Dist. Imp.
G.O., Ser. 1995 A, 5.60%,
due 6/15/08 P/R 6/15/05 Aaa AAA $ 1,048
-------
TAX-EXEMPT SECURITIES --BACKED
BY INSURANCE (38.3%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,000 Atlanta (GA) Arpt. Fac. Ref.
Rev., Ser. 1996, 6.50%,
due 1/1/06 Aaa AAA 1,082
500 New York City (NY) Muni.
Assist. Corp. Rev., Ser. D,
5.25%, due 7/1/02 Aaa AAA 510
1,000 Pittsburgh (PA) G.O.,
Ser. 1997 A, 5.00%,
due 9/1/06 Aaa AAA 1,003
FINANCIAL GUARANTY INSURANCE CO.
1,000 Chicago (IL) Equip. G.O.,
Ser. 1998, 5.00%, due 1/1/07 Aaa AAA 993
1,000 Dade Co. (FL) Wtr. & Swr. Sys.
Rev., Ser. 1995, 6.25%,
due 10/1/06 Aaa AAA 1,083
1,000 Tampa Bay (FL) Wtr. Util. Sys.
Rev., Ser. 1998 B, 5.125%,
due 10/1/09 Aaa AAA 1,004
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 609
1,000 Maine Muni. Bond Bank Ref.
Rev., Ser. 1998 A, 5.00%,
due 11/1/05 Aaa AAA 1,010
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,000 Commonwealth of Pennsylvania
G.O. (Ref. & Proj.), 2nd
Ser. 1994, 5.20%, due 6/15/04 Aaa AAA 1,021
1,000 Connecticut Spec. Tax Oblig.
Ref. Rev. (Trans.
Infrastructure Purp.),
Ser. 1993 A, 5.40%,
due 9/1/09 Aaa AAA 1,013
1,000 Foothill/Eastern (CA) Trans.
Corridor Agcy. Toll Road Ref.
Rev., Ser. 1999, 5.25%,
due 1/15/12 Aaa AAA 987
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 993
</TABLE>
C-16
<PAGE>
October 31, 1999
- --------------------------------------------------------------------------------
Municipal Securities Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(13)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$1,000 Mississippi Dev. Bank Spec.
Oblig. Rev. (Muni. Gas Au.
Proj.), Ser. 1998, 5.00%,
due 1/1/08 Aaa AAA $ 988
1,000 Puerto Rico Elec. Pwr. Au.
Ref. Rev., Ser. W, 6.50%,
due 7/1/05 Aaa AAA 1,092
-------
13,388
-------
TAX-EXEMPT SECURITIES -- OTHER
(55.6%)
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 994
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 449(5)
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 453(5)
1,000 Columbus (OH) Var. Purp. Ltd.
Tax G.O., Ser. 1998-1, 5.00%,
due 6/15/08 Aaa AAA 998
1,000 Commonwealth of Massachusetts
Ref. G.O., Ser. 1995 A,
6.25%, due 7/1/04 Aa3 AA- 1,066
1,000 Florida St. Board of Ed. Cap.
Outlay Ref. G.O., Ser. B,
5.25%, due 6/1/09 Aa2 AA+ 1,010
1,000 Georgia G.O., Ser. 1995 C,
7.25%, due 7/1/04 Aaa AAA 1,108
1,000 Lake Co. (IL) Forest Preserve
Dist. Ref. G.O., Ser. 1997,
5.50%, due 2/1/09 Aa1 AA+ 1,022
1,500 Lubbock (TX) Hlth. Fac. Dev.
Corp. Rev. (St. Joseph Hlth.
Sys.), Ser. 1998, 5.00%,
due 7/1/08 Aa3 AA 1,479
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 1,488
1,000 Maryland Wtr. Quality Fin.
Admin. Ref. Rev. (Revolving
Loan Fund), Ser. 1995 A,
5.50%, due 9/1/11 Aa2 AA 1,009
1,000 Mecklenburg Co. (NC) Pub. Imp.
G.O., Ser. 1994, 5.50%,
due 4/1/12 Aaa AAA 1,005
135 Mississippi Higher Ed. Assist.
Corp. Std. Loan Sub. Rev.,
Ser. 1993 C, 6.05%,
due 9/1/07 A 136
1,000 Nevada Ref. Ltd. Tax G.O.,
Ser. 1997 A-2, 6.00%,
due 5/15/06 Aa2 AA 1,057
</TABLE>
C-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman October 31, 1999
- --------------------------------------------------------------------------------
Municipal Securities Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(13)
(000's omitted) Security(1) Moody's S&P (000's omitted)
- --------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$ 500 New Jersey Bldg. Au. St. Bldg.
Rev., Ser. 1994, 5.00%,
due 6/15/11 Aa2 AA- $ 484
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 748
1,000 New York St. Env. Fac. Corp.
Rev., Ser. 1999 B, 5.00%,
due 10/15/09 Aaa AAA 985
1,000 North Carolina Cap. Imp. G.O.,
Ser. 1994 A, 4.70%,
due 2/1/06 Aaa AAA 995
1,000 Omaha (NE) Pub. Pwr. Dist.
Elec. Sys. Rev., Ser. 1993 E,
4.60%, due 2/1/06 Aa2 AA 980
1,000 San Antonio (TX) Elec. & Gas
Sys. Ref. Rev., Ser. 1998 A,
5.00%, due 2/1/05 Aa1 AA 1,007
1,000 Texas Pub. Fin. Au. Ref. G.O.,
Ser. 1998 B, 5.13%,
due 10/1/09 Aa1 AA 997
-------
19,470
-------
TAX-EXEMPT CASH EQUIVALENT
SECURITIES (0.6%)
100 Gulf Coast (TX) IDA Marine
Term. Rev. (Amoco Oil Co.
Proj.), Ser. 1993, 3.60%, VRDN
due 4/1/28 VMIG 1 A-1+ 100(5)
100 Lower Neches Valley (TX) Auth.
Ind. Dev. Corp. Rev. (Mobil
Oil Corp. Proj.), Ser. 1999,
3.60%, VRDN due 4/1/29 P-1 A-1+ 100(5)
-------
200
-------
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- BACKED BY
LETTERS OF
CREDIT (1.1%)
SOCIETE GENERALE
400 Los Angeles (CA) Reg. Arpt.
Imp. Corp. Term. Fac.
Completion Rev. (Los Angeles
Int'l. Arpt.), Ser. 1989,
3.70%, VRDN due 12/1/25 A-1+ 400
-------
TOTAL INVESTMENTS (98.6%)
(COST $35,084) 34,506(14)
Cash, receivables and other
assets, less
liabilities (1.4%) 481
-------
TOTAL NET ASSETS (100.0%) $34,987
-------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-18
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
October 31, 1999
- ----------------------------------------------------------------------
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. Approximately 84% and 46% 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) Credit ratings are unaudited.
3) 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.
4) Investment securities of the Portfolio are valued at amortized cost, which
approximates U.S. Federal income tax cost.
5) Security is guaranteed by the corporate obligor.
6) Security is subject to a fractional guarantee provided by ABN AMRO Bank NV
and Morgan Guaranty Trust Co., each backing 50% of the total principal.
7) Security is subject to a fractional guarantee provided by ABN AMRO Bank NV,
backing 41.2% of the total principal, Bank of Nova Scotia and Credit Agricole
Indosuez, each backing 29.4% of the total principal.
8) Security is subject to a fractional guarantee provided by Bank of America,
backing 66.7% of the total principal, and Bank of Nova Scotia, backing 33.3%
of the total principal.
9) Security is subject to a fractional guarantee provided by Morgan Guaranty
Trust Co., backing 46% of the total principal, Nationsbank N.A. and Toronto
Dominion Bank, each backing 27% of the total principal.
C-19
<PAGE>
10) Security is subject to a fractional guarantee provided by Morgan Guaranty
Trust Co., backing 55% of the total principal, and Bayerische Landesbank
Girozentrale, backing 45% of the total principal.
11) Security is subject to a fractional guarantee provided by Morgan Guaranty
Trust Co. and Union Bank of Switzerland, each backing 50% of the total
principal.
12) Security is subject to a fractional guarantee provided by Westdeutsche
Landesbank Girozentrale and Bayerische Landesbank Girozentrale, each backing
50% of the total principal.
13) 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.
14) At October 31, 1999, the cost of investments for U.S. Federal income tax
purposes was $35,084,000. Gross unrealized appreciation of investments was
$217,000 and gross unrealized depreciation of investments was $795,000,
resulting in net unrealized depreciation of $578,000, based on cost for U.S.
Federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
C-20
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1999
- ----------------------------------------------------------------------
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 $ 286,756 $ 34,506
Cash 331 56
Interest receivable 1,964 463
Prepaid expenses and other assets 3 1
Receivable for securities sold 6,595 --
----------------------------
295,649 35,026
----------------------------
LIABILITIES
Payable for securities purchased 1,543 --
Payable to investment manager (Note B) 62 7
Accrued expenses 52 32
----------------------------
1,657 39
----------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 293,992 $ 34,987
----------------------------
NET ASSETS consist of:
Paid-in capital $ 293,992 $ 35,565
Net unrealized depreciation in value of
investment securities -- (578)
----------------------------
NET ASSETS $ 293,992 $ 34,987
----------------------------
*Cost of investments $ 286,756 $ 35,084
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-21
<PAGE>
STATEMENTS OF OPERATIONS
For the Year Ended October 31, 1999
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED) PORTFOLIO PORTFOLIO
<S> <C> <C>
------------------------
INVESTMENT INCOME
Interest income $ 7,259 $ 1,780
------------------------
Expenses:
Investment management fee (Note B) 560 95
Accounting fees 10 10
Auditing fees 33 25
Custodian fees (Note B) 123 34
Insurance expense 2 --
Legal fees 13 13
Trustees' fees and expenses 15 7
------------------------
Total expenses 756 184
Expenses reduced by custodian fee expense
offset arrangement (Note B) (7) (2)
------------------------
Total net expenses 749 182
------------------------
Net investment income 6,510 1,598
------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold 1 89
Net realized gain on financial futures
contracts (Note A) -- 33
Change in net unrealized appreciation
(depreciation) of investment securities -- (2,049)
------------------------
Net gain (loss) on investments 1 (1,927)
------------------------
Net increase (decrease) in net assets
resulting from operations $ 6,511 $ (329)
------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-22
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
PORTFOLIO PORTFOLIO
Year Year
Ended Ended
October 31, October 31,
(000'S OMITTED) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 6,510 $ 6,065 $ 1,598 $ 1,466
Net realized gain on investments 1 26 122 426
Change in net unrealized
appreciation (depreciation) of
investments -- -- (2,049) 583
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 6,511 6,091 (329) 2,475
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 292,944 281,553 6,301 14,666
Reductions (227,075) (222,519) (11,211) (8,627)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 65,869 59,034 (4,910) 6,039
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 72,380 65,125 (5,239) 8,514
NET ASSETS:
Beginning of year 221,612 156,487 40,226 31,712
------------------------------------------------------
End of year $ 293,992 $ 221,612 $ 34,987 $ 40,226
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
- ----------------------------------------------------------------------
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-24
<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 year ended October 31, 1999, Municipal Securities had entered
into various financial futures contracts. At October 31, 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.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. 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 employees of
Neuberger and/or Management.
C-25
<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 $7,032 and
$2,234, for Municipal Money and Municipal Securities, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended October 31, 1999, there were purchase and sale
transactions (excluding short-term securities and financial futures contracts)
of $8,857,000 and $6,204,000, respectively, for Municipal Securities. All
securities transactions for Municipal Money were short-term.
C-26
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Money Portfolio
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .34% .36% .38% .37% .37%
---------------------------------------------------
Net Expenses .34% .36% .37% .36% .36%
---------------------------------------------------
Net Investment Income 2.91% 3.22% 3.29% 3.21% 3.57%
---------------------------------------------------
Net Assets, End of Year (in millions) $294.0 $221.6 $156.5 $132.7 $161.1
---------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
C-27
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Municipal Securities Portfolio
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
-----------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .48% .51% .51% .47% .47%
-----------------------------------------
Net Expenses .48% .51% .50% .47% .46%
-----------------------------------------
Net Investment Income 4.20% 4.27% 4.44% 4.49% 4.63%
-----------------------------------------
Portfolio Turnover Rate 17% 24% 22% 3% 66%
-----------------------------------------
Net Assets, End of Year (in millions) $35.0 $40.2 $31.7 $39.0 $44.4
-----------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
C-28
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Income Managers Trust and
Owners of Beneficial Interest of
Neuberger Berman Municipal Money Portfolio and
Neuberger Berman Municipal Securities Portfolio
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Neuberger Berman Municipal Money
Portfolio and Neuberger Berman Municipal Securities Portfolio, two of the series
constituting Income Managers Trust (the "Trust"), as of October 31, 1999, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the custodian
and brokers or other appropriate auditing procedures where replies from brokers
were not received. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Income Managers Trust at October 31, 1999, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and their financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 3, 1999
C-29
<PAGE>
(This page has been left blank intentionally.)
C-30
<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
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
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>
(This page has been left blank intentionally.)
<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
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
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