<PAGE>
NEUBERGER BERMAN
NEUBERGER BERMAN
INCOME FUNDS-R-
Government Money Fund SEMI-ANNUAL REPORT
Cash Reserves APRIL 30, 1999
Limited Maturity Bond Fund
High Yield Bond Fund
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
PRESIDENT'S LETTER A-4
PERFORMANCE HIGHLIGHTS B-1
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Government Money Fund B-12
Cash Reserves B-13
Limited Maturity Bond Fund B-14
High Yield Bond Fund B-15
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Government Money Portfolio C-1
Cash Reserves Portfolio C-2
Limited Maturity Bond
Portfolio C-5
High Yield Bond Portfolio C-12
FINANCIAL STATEMENTS C-20
FINANCIAL HIGHLIGHTS
Government Money Portfolio C-30
Cash Reserves Portfolio C-31
Limited Maturity Bond
Portfolio C-32
High Yield Bond Portfolio C-33
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,
After the extreme volatility of late summer 1998, bonds entered a period of
relative peace and quiet in first half fiscal year 1999 (ending April 30). Our
portfolios performed to our expectations -- helping to preserve principal in a
moderately rising interest rate environment. Our sector weighting decisions,
security selection, and trend following duration discipline, all worked in our
favor.
We adjust sector weightings based on where we see the best value. This led us
to increase Limited Maturity Bond Portfolio's allocation to mortgage securities
and U.S. Agency obligations, and to gravitate to more attractively priced
securities within the corporate sector. Concurrently, we reduced our exposure to
Treasuries, which we believe had become overvalued during investors' "flight to
quality" in third quarter 1998. This strategic decision paid off, with all major
sectors outperforming Treasuries over this reporting period. Security selection
also contributed to results, most notably in the high-yield market where we
earned generous returns from our investments in telecommunications industry
leaders.
We also 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 anticipated and interest rates drifted 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, 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 fixed income investment
process. Looking ahead, we will continue to remain focused on relative value in
different sectors of the market, work hard to identify individual securities
with the best risk/reward characteristics,
A-4
<PAGE>
and monitor interest rate trends and adjust portfolio durations 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.
GOVERNMENT MONEY FUND AND CASH RESERVES In reviewing trends in the short-term
Treasury securities market over this six-month reporting period, two things
stand out: yields moved higher, and the yield curve steepened. On October 31,
1998, three-month T-bills yielded 4.32%, six-month T-bills 4.35% and one-year
T-bills 4.18%. On April 30, 1999, yields were 4.53%, 4.64%, and 4.79%,
respectively. Why did yields increase? A major change in investor psychology
from fear the world was ending during last Fall's global financial crisis to
renewed confidence in corporate America resulted in a move out of "fail safe"
Treasuries into other higher risk/return asset classes. Why has the yield curve
returned to more normal shape, with one-year T-Bills now yielding more than
3-month Bills? When interest rates were declining sharply in Fall 1998,
investors were willing to pay a premium for longer maturities to lock in yields.
Now that stability has returned to the financial markets, investors are once
again demanding higher yields for longer-term loans to the government.
Our active maturity management reflected these changes in interest rate
trends. Government Money Fund began the period with a weighted average maturity
of 80.9 days. As interest rates rose, weighted average maturity was shortened to
62.6 days at the end of February. When rates stabilized in March and April, the
weighted average maturity was once again lengthened and closed this reporting
period at 79.7 days.
As of April 30, 1999, Government Money Fund had a 7-day current yield of 3.89%
and a 7-day effective (compounded) yield of 3.97%.(1)
Unlike Treasury securities, shorter-term (5 months and under) commercial paper
yields came down and longer term paper yields rose only modestly during the last
six months. This is also explained by the transition in investor psychology from
concern over the future health of the economy to confidence that corporate cash
flows and overall credit quality would remain healthy. Now that investors have
determined the world is more stable, commercial paper once again offers a
material yield advantage over Treasuries. The yield curve in the commercial
paper market also reverted to a more normal shape, with longer maturities
providing higher yields. At the end of October 1998, the highest credit quality
30-day commercial paper had a higher yield than 90-day
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<PAGE>
and six-month paper, reflecting stronger demand for longer maturities. By April
30, 1999, investors were once again demanding a higher yield from longer
maturity paper.
Changes in Cash Reserves' weighted average maturity were similar to that of
Government Money Fund. Cash Reserves began the reporting period at 71.6 days,
shortened to 44.7 days at the end of January, and closed at 56.1 days.
The only material change in Cash Reserves sector allocation was a reduction in
our position in bank CD's from 19.2% at the beginning of this reporting period
to 12.6% at its end and an increase in our weighting in commercial paper from
67.8% to 73.2% over the same period. This change reflects our perception of
better value in commercial paper.
As of April 30, 1999, Cash Reserves had a 7-day current yield of 4.30% and a
7-day effective (compounded) yield of 4.39%.(1)
LIMITED MATURITY BOND FUND At the beginning of this reporting period, the
"flight to quality" had propelled U.S. Treasury securities prices to what we
believed were unsustainable levels. This prompted us to begin reducing our
exposure to Treasuries and to start gravitating to U.S. Agency issues and
mortgage pass-through securities with comparable credit quality and higher
yields. Treasuries were cut from 10.4% of the portfolio's assets at year-end
1998 to just 3.4% at the close of the first half of fiscal 1999. Our mortgage
commitment rose from 7.6% to 23% of assets, and the Agency position increased
modestly. This strategy worked to our advantage, with mortgage securities, U.S.
Agencies, and corporates all outperforming Treasuries in first half fiscal 1999.
We also took advantage of value-oriented opportunities in lower rated
corporates and mortgage-backed securities. When it became clear that the global
economic crisis was not as severe as first anticipated, higher credit quality
securities were the first to recover. This led us to selective BB and B rated
credits with materially higher yields. Due to our increased allocation to AAA
rated government agency mortgages, we were able to be opportunistic in lower
rated securities and still maintain the portfolio's high credit quality rating.
Security selection also helped buoy returns. Our financial service investments
did well, with good earnings gains and consolidation in the industry leading to
good relative performance. Our media, cable television, and telecommunications
investments also contributed to returns, reflecting strong cash flow and
earnings growth in these industries. Most recently, our cyclical holdings in the
oil and gas, chemical, and paper groups have come to life as commodities prices
firmed.
A-6
<PAGE>
Looking ahead to the balance of 1999, we will likely maintain the portfolio's
defensive posture as long as rates continue to drift higher. Although we have
yet to see any convincing statistical evidence of renewed inflation, the
surprising strength of the economy has our, and perhaps the Federal Reserve's,
attention. If the Fed does raise rates and the market over-reacts, we may become
more aggressive. In the interim, we will continue to maintain our current
positioning, focusing on yield more than capital appreciation potential. Going
forward, we believe this will continue to serve our shareholders well.
HIGH YIELD BOND FUND Investors' renewed confidence in the surprisingly vibrant
U.S. economy sparked a recovery in the high-yield bond market in the first half
of fiscal 1999. The yield spread between high-yield and 10-year Treasury
securities narrowed from just over 6% at the end of October 1998 to about 5% at
the end of this reporting period. We believe the economy will stay healthy for
the foreseeable future and that the high-yield default rate will not increase to
troublesome levels. If we are right, the high-yield market should benefit
accordingly.
As always, we have employed a relatively conservative, risk-averse investment
strategy toward the high-yield market. We favor the bonds of more established
companies with consistent cash flows, good debt service coverage, and large
equity bases. These bonds may not have as much capital appreciation potential as
issues of start-up companies. However, we are much more comfortable investing in
"what is" than speculating on "what may be". In essence, we believe in buying
steak instead of just sizzle.
The telecommunications industry has been one of the high-yield market's
hottest sectors. However, consistent with our risk-averse discipline, we have
chosen to avoid new issues coming from unseasoned telecommunications companies
that use high-yield debt to finance new networks or new services. These
companies may have all the potential in the world, but with no operating track
record, it is impossible to do any kind of real credit analysis. If we can't
evaluate how secure we think a credit will be, we won't risk our shareholders'
money.
We have identified what we believe to be much lower risk ways to participate
in this growth sector through investments in issues like Nextel. This company
already has a national wireless network, a large customer base, and is turning
free cash flow positive. It also has a substantial equity cushion, with cellular
telephone pioneer Craig McCaw its largest single shareholder. We think Nextel
bonds are a solid credit that still offer good capital appreciation potential.
The bonds have
A-7
<PAGE>
already been upgraded from CCC+ to B-, and if fundamentals continue to improve,
we believe we could see another credit upgrade pushing the bond even higher.
Kindercare, a national chain of day care centers, is another good example of
our investment discipline. Demographic trends favor continuing growth in this
industry. Kindercare has issued high-yield debt to expand its franchise. Even
with debt at peak levels to finance this expansion, the company's cash flow is
twice debt service requirements. Kindercare is currently controlled by the
leveraged buyout firm Kohlberg, Kravis & Roberts, which is in the process of
taking the company public once again. The company says it will use the proceeds
from the equity IPO to reduce debt. We believe this has the potential to lead to
a credit upgrade and a nice move in Kindercare bonds.
Neuberger Berman High Yield Bond Fund-SM- is now a little more than a year
old. But it has already gone through a full cycle in the high-yield market.
Within the last 12 months, we have seen the best of times (the strong high-yield
market in second quarter 1998), the worst of times (the global liquidity crisis
in third quarter 1998), and relatively good times (the 1999 recovery). Through
it all, we have demonstrated that our investment philosophy and strategies can
produce very competitive risk-adjusted returns. We will continue to strive to
identify and invest in what we determine to be solid high-yield credits with
realistic capital appreciation potential.
Sincerely,
/s/ Theodore P. Giuliano
Theodore P. Giuliano
President and Trustee
Neuberger Berman Income Funds
(1)Current yield refers to the income generated by an investment in the funds
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 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. Yields of a money market fund will fluctuate
and past performance is no guarantee of future results.
An investment in a money market fund, like Cash Reserves and Government Money
Fund, is not insured or 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 composition and holdings of the portfolios are subject to change. Past
performance is no guarantee of future results.
A-8
<PAGE>
PERFORMANCE HIGHLIGHTS
TOTAL RETURN ILLUSTRATION
<TABLE>
<CAPTION>
SIX MONTH AVERAGE ANNUAL
PERIOD TOTAL RETURNS(1)
NEUBERGER BERMAN INCEPTION ENDED --------------------
INCOME FUNDS DATE 4/30/99(1) 1 YR(1) 5 YR 10 YR
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIMITED MATURITY BOND
FUND(2) 6/9/86 +1.40% +3.60% +5.71% +6.73%
HIGH YIELD BOND FUND(2) 3/2/98 +5.82% +1.99% +3.46% (3) N/A
</TABLE>
YIELD ILLUSTRATION
FOR THE 7 DAYS ENDED 4/30/99
<TABLE>
<CAPTION>
INCEPTION CURRENT EFFECTIVE
DATE YIELD(4) YIELD(4)
- --------------------------------------------------------------------
<S> <C> <C> <C>
GOVERNMENT MONEY FUND(5) 11/14/83 3.89% 3.97%
CASH RESERVES(2)(5) 4/12/88 4.30% 4.39%
</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. ("Management") voluntarily bears certain
operating expenses in excess of 0.70% of the average daily net assets per
annum of Neuberger Berman Limited Maturity Bond Fund ("Limited Maturity"),
1.00% of the average daily net assets per annum for Neuberger Berman High
Yield Bond Fund ("High Yield"), and 0.65% of the average daily net assets per
annum of Neuberger Berman Cash Reserves ("Cash Reserves"). These arrangements
can be terminated upon 60 days' prior written notice to the appropriate Fund.
For the six months ended April 30, 1999, there was no reimbursement of
expenses by Management to Cash Reserves. Absent such reimbursements, the
total returns for Limited Maturity and High Yield for the above stated
periods would have been less.
3) From inception.
4) "Current yield" refers to the income generated by an investment in the Fund
over a 7-day period. This income is then "annualized." The "effective yield"
is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The "effective yield"
will be slightly higher than the "current yield" because of the compounding
effect of this assumed reinvestment. Yields of a money market fund will
fluctuate and past performance is no guarantee of future results.
5) An investment in a money market fund 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 Government Money Fund and Cash Reserves will fluctuate.
B-1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) MONEY FUND
--------------
<S> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 670,691
Deferred organization costs (Note A) --
Receivable for Trust shares sold 22
Receivable from administrator -- net (Note
B) --
--------------
670,713
--------------
LIABILITIES
Dividends payable 11
Payable for Trust shares redeemed 431
Payable to administrator -- net (Note B) 140
Accrued expenses 68
--------------
650
--------------
NET ASSETS at value $ 670,063
--------------
NET ASSETS consist of:
Par value $ 670
Paid-in capital in excess of par value 669,352
Accumulated net realized gains (losses) on
investment 41
Net unrealized depreciation in value of
investment --
--------------
NET ASSETS at value $ 670,063
--------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 670,022
--------------
NET ASSET VALUE, offering and redemption price per
share $1.00
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
LIMITED
CASH MATURITY HIGH YIELD
RESERVES BOND FUND BOND FUND
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 1,060,938 $ 258,630 $ 25,978
Deferred organization costs (Note A) -- -- 55
Receivable for Trust shares sold 259 1,208 148
Receivable from administrator -- net (Note
B) -- -- 19
------------------------------------------------
1,061,197 259,838 26,200
------------------------------------------------
LIABILITIES
Dividends payable 17 1,282 194
Payable for Trust shares redeemed 3,086 1,075 --
Payable to administrator -- net (Note B) 254 38 --
Accrued expenses 175 114 38
------------------------------------------------
3,532 2,509 232
------------------------------------------------
NET ASSETS at value $ 1,057,665 $ 257,329 $ 25,968
------------------------------------------------
NET ASSETS consist of:
Par value $ 1,058 $ 26 $ 3
Paid-in capital in excess of par value 1,056,632 277,390 27,445
Accumulated net realized gains (losses) on
investment (25) (18,947) (536)
Net unrealized depreciation in value of
investment -- (1,140) (944)
------------------------------------------------
NET ASSETS at value $ 1,057,665 $ 257,329 $ 25,968
------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 1,057,690 26,357 2,747
------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $9.76 $9.45
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
(000'S OMITTED) MONEY FUND
------------
<S> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 11,450
------------
Expenses:
Administration fee (Note B) 671
Amortization of deferred organization and
initial offering expenses (Note A) --
Auditing fees 4
Custodian fees 5
Legal fees 9
Registration and filing fees 12
Shareholder reports 25
Shareholder servicing agent fees 43
Trustees' fees and expenses 14
Miscellaneous 6
Expenses from corresponding Portfolio (Notes
A & B) 718
------------
Total expenses 1,507
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) --
------------
Total net expenses 1,507
------------
Net investment income 9,943
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 41
Net realized loss on financial futures
contracts --
Net realized gain on foreign currency
transactions --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, translation of
assets and liabilities in foreign
currencies, and foreign currency contracts --
------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 41
------------
Net increase in net assets resulting from
operations $ 9,984
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
For the Six Months Ended April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
CASH LIMITED MATURITY HIGH YIELD
RESERVES BOND FUND BOND FUND
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 26,068 $ 9,126 $ 1,312
------------------------------------------------
Expenses:
Administration fee (Note B) 1,373 376 35
Amortization of deferred organization and
initial offering expenses (Note A) -- -- 7
Auditing fees 4 4 3
Custodian fees 5 5 5
Legal fees 12 14 11
Registration and filing fees 59 25 28
Shareholder reports 56 32 13
Shareholder servicing agent fees 190 120 14
Trustees' fees and expenses 27 9 3
Miscellaneous 11 5 1
Expenses from corresponding Portfolio (Notes
A & B) 1,377 435 93
------------------------------------------------
Total expenses 3,114 1,025 213
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) -- (47) (81)
------------------------------------------------
Total net expenses 3,114 978 132
------------------------------------------------
Net investment income 22,954 8,148 1,180
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities (3) (1,437) (494)
Net realized loss on financial futures
contracts -- (288) --
Net realized gain on foreign currency
transactions -- 321 --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, translation of
assets and liabilities in foreign
currencies, and foreign currency contracts -- (2,672) 717
------------------------------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) (3) (4,076) 223
------------------------------------------------
Net increase in net assets resulting from
operations $ 22,951 $ 4,072 $ 1,403
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger Berman
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
MONEY FUND
Six Months
Ended Year
April 30, Ended
1999 October 31,
(000'S OMITTED) (UNAUDITED) 1998
---------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 9,943 $ 16,612
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 41 31
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) -- --
---------------------------
Net increase (decrease) in net
assets resulting from operations 9,984 16,643
---------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (9,943) (16,612)
Net realized gain on investments (22) --
---------------------------
Total distributions to shareholders (9,965) (16,612)
---------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 805,917 924,226
Proceeds received in connection with
merger (Note D) -- --
Proceeds from reinvestment of
dividends and distributions 9,880 16,433
Payments for shares redeemed (513,350) (881,250)
---------------------------
Net increase (decrease) from Trust
share transactions 302,447 59,409
---------------------------
NET INCREASE (DECREASE) IN NET ASSETS 302,466 59,440
NET ASSETS:
Beginning of period 367,597 308,157
---------------------------
End of period $ 670,063 $ 367,597
---------------------------
NUMBER OF TRUST SHARES:
Sold 805,917 924,226
Issued in connection with merger
(Note D) -- --
Issued on reinvestment of dividends
and distributions 9,880 16,433
Redeemed (513,350) (881,250)
---------------------------
Net increase (decrease) in shares
outstanding 302,447 59,409
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
- ----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
CASH LIMITED MATURITY HIGH YIELD
RESERVES BOND FUND BOND FUND
Period from
March 3, 1998
Six Months Six Months Six Months (Commencement
Ended Year Ended Year Ended of Operations)
April 30, Ended April 30, Ended April 30, to
1999 October 31, 1999 October 31, 1999 October 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 22,954 $ 39,567 $ 8,148 $ 17,005 $ 1,180 $ 895
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) (3) (4) (1,404) (3,885) (494) (42)
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) -- -- (2,672) 186 717 (1,661)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 22,951 39,563 4,072 13,306 1,403 (808)
-----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (22,954) (39,567) (8,148) (16,966) (1,180) (895)
Net realized gain on investments -- -- -- -- -- --
-----------------------------------------------------------------------------------------
Total distributions to shareholders (22,954) (39,567) (8,148) (16,966) (1,180) (895)
-----------------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 761,354 1,612,173 49,595 108,089 12,518 28,413
Proceeds received in connection with
merger (Note D) -- -- -- 44,974 -- --
Proceeds from reinvestment of
dividends and distributions 22,671 39,064 6,643 14,489 632 460
Payments for shares redeemed (750,911) (1,290,742) (90,057) (124,074) (9,995) (4,580)
-----------------------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions 33,114 360,495 (33,819) 43,478 3,155 24,293
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 33,111 360,491 (37,895) 39,818 3,378 22,590
NET ASSETS:
Beginning of period 1,024,554 664,063 295,224 255,406 22,590 --
-----------------------------------------------------------------------------------------
End of period $ 1,057,665 $ 1,024,554 $ 257,329 $ 295,224 $ 25,968 $ 22,590
-----------------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 761,354 1,612,173 5,049 10,819 1,318 2,844
Issued in connection with merger
(Note D) -- -- -- 4,493 -- --
Issued on reinvestment of dividends
and distributions 22,671 39,064 676 1,451 67 47
Redeemed (750,911) (1,290,742) (9,170) (12,422) (1,056) (473)
-----------------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding 33,114 360,495 (3,445) 4,341 329 2,418
-----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Funds
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Government Money Fund ("Government Money"),
Neuberger Berman Cash Reserves ("Cash Reserves"), Neuberger Berman Limited
Maturity Bond Fund ("Limited Maturity"), and Neuberger Berman High Yield Bond
Fund ("High Yield") (collectively, the "Funds") are separate operating series
of Neuberger Berman Income Funds (the "Trust"), a Delaware business trust
organized pursuant to a Trust Instrument dated December 23, 1992. 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. High Yield had no operations
until March 3, 1998, other than matters relating to its organization and
registration as a series of the Trust. The 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 (100.00%, 100.00%, 80.89%, and 100.00%, for Government Money,
Cash Reserves, Limited Maturity, and High Yield, respectively, 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 Government Money and Cash Reserves to maintain a
continuous net asset value per share of $1.00; each Fund has adopted certain
investment, valuation, and dividend and distribution policies, which conform
to general industry practice, to enable it to do so. However, there is no
assurance either Fund will be able to maintain a stable net asset value per
share.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
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 regulated
investment companies by complying with the provisions available to certain
B-8
<PAGE>
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 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 ($7,878, $2,998, $6,904, and $4,112 expiring in
2002, 2003, 2005, and 2006, respectively, for Cash Reserves; $774,663,
$533,438, $6,076,188, $4,086,330, $2,160,210, $517,222, and $3,229,127
expiring in 2000, 2001, 2002, 2003, 2004, 2005, and 2006, respectively, for
Limited Maturity; and $42,133 expiring in 2006 for High Yield, determined as
of October 31, 1998), it is the policy of each Fund not to distribute such
gains. The capital loss carryforwards shown above for Limited Maturity
include $774,663, $533,438, $1,362,347, $329,262, and $552,290 expiring in
2000, 2001, 2002, 2003, and 2004, respectively, which were acquired on
February 27, 1998 in the merger with Neuberger Berman Ultra Short Bond Fund
("Ultra Short"). The use of these losses to offset future gains may be
limited in a given year.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by High Yield in connection with its
organization are being amortized on a straight-line basis over a five-year
period. At April 30, 1999, the unamortized balance of such expenses amounted
to $55,281.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more funds are allocated in
proportion to the net assets of such funds, except where a more appropriate
allocation of expenses to each fund can otherwise be made fairly. Expenses
directly attributable to a fund are charged to that fund.
B-9
<PAGE>
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains 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 Cash Reserves, Limited
Maturity, and High Yield for their operating expenses plus their pro rata
portion of their corresponding Portfolio's operating expenses (including the
fees payable to Management but excluding interest, taxes, brokerage commissions,
and extraordinary expenses) ("Operating Expenses") which exceed, in the
aggregate, 0.65%, 0.70%, and 1.00%, respectively, per annum of their average
daily net assets (each an "Expense Limitation"). Each undertaking is subject to
termination by Management upon at least 60 days' prior written notice to the
appropriate Fund. For the six months ended April 30, 1999, such excess expenses
amounted to $46,427 and $81,287, for Limited Maturity and High Yield,
respectively. For the six months ended April 30, 1999, there was no
reimbursement of expenses by Management for Cash Reserves. High Yield has agreed
to repay Management through December 31, 1999, for its excess Operating Expenses
previously reimbursed by Management, so long as its annual Operating Expenses
during that period do not exceed its Expense Limitation.
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 $76, $76, $599, and $28, for Government Money, Cash Reserves,
Limited Maturity, and High Yield, respectively.
B-10
<PAGE>
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>
GOVERNMENT MONEY $ 757,029,000 $ 464,877,000
CASH RESERVES 499,989,000 492,498,000
LIMITED MATURITY 19,824,000 61,706,000
HIGH YIELD 8,434,000 6,536,000
</TABLE>
NOTE D -- MERGER:
On February 27, 1998, Limited Maturity acquired all of the net assets of
Ultra Short pursuant to a plan of reorganization approved by the Board of
Trustees on September 24, 1997. The merger was accomplished by a tax-free
exchange of 4,492,869 shares of Limited Maturity (valued at $44,973,622) for the
4,723,570 shares of Ultra Short outstanding on February 27, 1998. Ultra Short's
net assets at that date ($44,973,622), including $289,235 of unrealized
appreciation, were combined with those of Limited Maturity. The aggregate net
assets of Limited Maturity and Ultra Short immediately before the merger were
$251,846,857 and $44,973,622, respectively, resulting in aggregate net assets of
$296,820,479 immediately after the merger.
NOTE E -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent auditors. Annual reports
contain audited financial statements.
B-11
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Government Money Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
1999 Year Ended October 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0001 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
----------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0200 .0459 .0468 .0464 .0499 .0302
Net Gains or Losses on Securities .0001 .0001 -- -- -- --
----------------------------------------------------------------------------
Total From Investment Operations .0201 .0460 .0468 .0464 .0499 .0302
----------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0200) (.0459) (.0468) (.0464) (.0499) (.0302)
Distributions (from net capital
gains) (.0001) -- -- -- -- --
----------------------------------------------------------------------------
Total Distributions (.0201) (.0459) (.0468) (.0464) (.0499) (.0302)
----------------------------------------------------------------------------
Net Asset Value, End of Period $1.0001 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
----------------------------------------------------------------------------
Total Return(2) +2.02%(3) +4.69% +4.78% +4.74% +5.10% +3.07%
----------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $670.1 $367.6 $308.2 $363.4 $308.3 $251.5
----------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .61%(5) .64% .64% .67% .65% --
----------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .61%(5) .63% .63% .67% .65% .72%
----------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 4.01%(5) 4.61% 4.65% 4.65% 5.00% 3.00%
----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-12
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Cash Reserves(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six
Months
Ended
April 30,
1999 Year Ended October 31,
(UNAUDITED) 1998 1997 1996 1995 1994
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0001
---------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0226 .0499 .0499 .0486 .0529 .0327
Net Gains or Losses on Securities -- -- -- -- -- --
---------------------------------------------------------------------------
Total From Investment Operations .0226 .0499 .0499 .0486 .0529 .0327
---------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0226) (.0499) (.0499) (.0486) (.0529) (.0327)
Distributions (from net capital
gains) -- -- -- -- -- (.0001)
---------------------------------------------------------------------------
Total Distributions (.0226) (.0499) (.0499) (.0486) (.0529) (.0328)
---------------------------------------------------------------------------
Net Asset Value, End of Period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
---------------------------------------------------------------------------
Total Return(2) +2.28%(3) +5.10% +5.11% +4.97% +5.42% +3.33%
---------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $1,057.7 $1,024.6 $664.1 $482.0 $408.9 $311.9
---------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .61%(5) .64% .63% .66% .65% --
---------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(6) .61%(5) .63% .63% .65% .65% .65%
---------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 4.53%(5) 5.00% 4.98% 4.86% 5.30% 3.31%
---------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
1999 Year Ended October 31,
(UNAUDITED) 1998 1997 1996 1995 1994
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.91 $ 10.03 $ 9.99 $ 10.06 $ 9.88 $ 10.49
-----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .29 .60 .63 .60 .62 .56
Net Gains or Losses on Securities
(both realized and unrealized) (.15) (.12) .04 (.07) .18 (.55)
-----------------------------------------------------------------------
Total From Investment Operations .14 .48 .67 .53 .80 .01
-----------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.29) (.60) (.63) (.60) (.62) (.56)
Distributions (from net capital
gains) -- -- -- -- -- (.05)
Distributions (in excess of net
capital gains) -- -- -- -- -- (.01)
-----------------------------------------------------------------------
Total Distributions (.29) (.60) (.63) (.60) (.62) (.62)
-----------------------------------------------------------------------
Net Asset Value, End of Period $ 9.76 $ 9.91 $ 10.03 $ 9.99 $ 10.06 $ 9.88
-----------------------------------------------------------------------
Total Return(2) +1.40%(3) +4.92% +6.97% +5.44% +8.32% +0.13%
-----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 257.3 $ 295.2 $ 255.4 $ 245.7 $ 307.4 $ 308.6
-----------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .70%(5) .71% .70% .71% .70% --
-----------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(6) .70%(5) .70% .70% .70% .70% .69%
-----------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 5.86%(5) 6.03% 6.34% 6.10% 6.21% 5.53%
-----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-14
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
High Yield Bond Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months Period from
Ended March 3,
April 30, 1998(7) to
1999 October 31,
(UNAUDITED) 1998
---------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 9.34 $ 10.00
---------------------------
Income From Investment Operations
Net Investment Income .43 .51
Net Gains or Losses on Securities
(both realized and unrealized) .11 (.66)
---------------------------
Total From Investment Operations .54 (.15)
---------------------------
Less Distributions
Dividends (from net investment
income) (.43) (.51)
---------------------------
Net Asset Value, End of Period $ 9.45 $ 9.34
---------------------------
Total Return(2)(3) +5.82% -1.69%
---------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 26.0 $ 22.6
---------------------------
Ratio of Gross Expenses to Average
Net Assets(4)(5) 1.01% 1.00%
---------------------------
Ratio of Net Expenses to Average Net
Assets(5)(6) 1.01% 1.00%
---------------------------
Ratio of Net Investment Income to
Average Net Assets(5) 9.04% 8.03%
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-15
<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 each Fund
(excluding Government Money), 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>
Year Ended October 31,
CASH RESERVES 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses .67% .68% .71%
----------------------------------------------
</TABLE>
For the years ended October 31, 1997 and 1998, and the six months ended
April 30, 1999, there was no reimbursement of expenses by Management for Cash
Reserves.
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended October 31,
LIMITED MATURITY 1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses .74% .75% .71% .71% .71% .71%
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
Six Months Ended March 3, 1998
April 30, to October 31,
HIGH YIELD 1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net Expenses 1.63% 1.65%
-------------------------------------
</TABLE>
7) The date investment operations commenced.
B-16
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
Principal Annualized
Amount Yield at Value(1)
(000's Date (000's
omitted) of Purchase omitted)
- ------------- ----------- -------------
<C> <S> <C> <C>
U.S. TREASURY
SECURITIES -- BACKED BY THE
FULL FAITH AND CREDIT OF THE
U.S. GOVERNMENT (99.7%)
$ 45,335 U.S. Treasury Bills, due
5/6/99 4.45-4.49% $ 45,318
16,695 U.S. Treasury Bills, due
5/13/99 4.49-4.53% 16,675
48,410 U.S. Treasury Bills, due
5/20/99 4.51-4.55% 48,309
20,000 U.S. Treasury Bills, due
5/27/99 4.49% 19,941
48,340 U.S. Treasury Bills, due
6/3/99 4.29-4.68% 48,159
53,170 U.S. Treasury Bills, due
6/10/99 4.29-4.62% 52,926
108,000 U.S. Treasury Bills, due
6/17/99 4.48-4.60% 107,401
8,465 U.S. Treasury Bills, due
6/24/99 4.42% 8,413
20,000 U.S. Treasury Notes, 6.75%,
due 6/30/99 4.39% 20,072
22,945 U.S. Treasury Bills, due
7/22/99 4.35-4.43% 22,726
24,730 U.S. Treasury Bills, due
7/29/99 4.48-4.51% 24,468
52,070 U.S. Treasury Bills, due
8/5/99 4.51-4.67% 51,472
55,295 U.S. Treasury Bills, due
8/19/99 4.42-4.71% 54,551
35,000 U.S. Treasury Notes, 5.875%,
due 8/31/99 4.55-4.56% 35,144
30 U.S. Treasury Bills, due
9/2/99 4.66% 30
20,400 U.S. Treasury Notes, 7.125%,
due 9/30/99 4.69% 20,599
285 U.S. Treasury Bills, due
10/14/99 4.50% 279
51,300 U.S. Treasury Notes, 6.00%,
due 10/15/99 4.71-4.74% 51,587
30,000 U.S. Treasury Notes, 7.75%,
due 11/30/99 4.68-4.71% 30,512
10,000 U.S. Treasury Notes, 5.375%,
due 1/31/00 4.78% 10,043
-------------
TOTAL U.S. TREASURY SECURITIES 668,625
Cash, receivables and other
assets, less liabilities
(0.3%) 2,066
-------------
TOTAL NET ASSETS (100.0%) $ 670,691
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
Principal
Amount Value(1)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- --------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(0.5%)
$ 5,000 U.S. Treasury Bills, 4.335%,
due 11/12/99 TSY TSY $ 4,884
--------------
U.S. GOVERNMENT AGENCY
SECURITIES (5.7%)
11,000 Federal Home Loan Bank,
Discount Notes, 4.90%, due
5/3/99 AGY AGY 11,000
30,000 Freddie Mac, Discount Notes,
4.70%, due 6/18/99 AGY AGY 29,820
20,100 Federal Home Loan Bank, Bonds,
4.97%, due 2/16/00 AGY AGY 20,100
--------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES 60,920
--------------
ASSET-BACKED COMMERCIAL PAPER
(3.4%)
5,000 Ciesco, L.P., 4.83%, due
5/19/99 P-1 A-1+ 4,989
21,645 Enterprise Funding Corp.,
4.82%, due 5/20/99 P-1 A-1+ 21,596
9,700 Asset Securitization
Cooperative Corp., 4.81%, due
6/25/99 P-1 A-1+ 9,631
--------------
TOTAL ASSET-BACKED COMMERCIAL
PAPER 36,216
--------------
CORPORATE COMMERCIAL PAPER
(69.8%)
20,000 BP America, Inc., 4.74%, due
5/3/99 P-1 A-1+ 20,000
24,500 National Australia Funding
Delaware Inc., 4.92%, due
5/3/99 P-1 A-1+ 24,500
10,000 SmithKline Beecham, 4.92%, due
5/3/99 P-1 A-1+ 10,000
13,000 Hershey Foods Corp., 4.73%,
due 5/7/99 P-1 A-1 12,993
20,000 Merrill Lynch & Co., Inc.,
4.84%, due 5/7/99 P-1 A-1+ 19,989
20,000 MetLife Funding, Inc., 4.79%,
due 5/10/99 P-1 A-1+ 19,981
40,200 Bayer Corp., 4.82% & 4.83%,
due 5/4/99 & 5/11/99 P-1 A-1+ 40,176
29,500 Novartis Finance Corp., 4.77%,
due 5/11/99 P-1 A-1+ 29,469
44,500 Sara Lee Corp., 4.77% & 4.80%,
due 5/7/99 & 5/14/99 P-1 A-1+ 44,454
19,000 Illinois Tool Works, Inc.,
4.81%, due 5/18/99 P-1 A-1+ 18,962
26,350 Florida Power Corp., 4.77% &
4.78%, due 5/7/99 & 5/20/99 P-1 A-1+ 26,327
30,000 New York Life Capital Corp.,
4.75%, due 5/20/99 P-1 A-1+ 29,933
9,449 Westpac Capital Corp., 4.78%,
due 5/21/99 P-1 A-1+ 9,426
15,000 Lucent Technologies, Inc.,
4.79%, due 5/25/99 P-1 A-1 14,956
20,000 Canadian Wheat Board, Canada,
4.78%, due 5/27/99 P-1 A-1+ 19,936
6,000 USAA Capital Corp., 4.81%, due
5/27/99 P-1 A-1+ 5,981
40,000 General Electric Capital
Corp., 4.79%-4.82%, due
5/3/99-6/2/99 P-1 A-1+ 39,955
</TABLE>
C-2
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(1)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- --------------
<C> <S> <C> <C> <C>
$ 35,300 BellSouth Telecommunications,
Inc., 4.75%-4.83%, due
5/7/99-6/4/99 P-1 A-1+ $ 35,183
17,000 American Express Credit Corp.,
5.15% & 5.21%, due 5/27/99 &
6/7/99 P-1 A-1 16,930
20,000 BMW U.S. Capital Corp., 4.80%,
due 6/8/99 P-1 A-1 19,904
38,400 Colgate-Palmolive Co., 4.78% &
4.83%, due 5/6/99 & 6/8/99 P-1 A-1 38,296
40,000 Prudential Funding Corp.,
4.79%-5.25%, due
5/26/99-6/9/99 P-1 A-1 39,829
40,000 Ford Motor Credit Co., 4.79% &
4.81%, due 5/3/99 & 6/14/99 P-1 A-1 39,888
20,000 Morgan Stanley Dean Witter,
4.83%, due 6/18/99 P-1 A-1 19,877
25,000 Goldman Sachs Group, L.P.,
4.78%, due 6/22/99 P-1 A-1+ 24,834
20,000 du Pont (E.I.) de Nemours &
Co., 4.80%, due 6/25/99 P-1 A-1+ 19,859
25,000 Toyota Motor Credit Corp.,
4.80%, due 6/28/99 P-1 A-1+ 24,813
20,000 Motorola, Inc., 4.81%, due
7/1/99 P-1 A-1+ 19,842
35,000 Kredietbank North America
Finance Corp., 4.79% & 4.80%,
due 5/10/99 & 7/26/99 P-1 A-1+ 34,763
10,000 Campbell Soup Co., 4.78%, due
9/13/99 P-1 A-1+ 9,823
10,000 ANZ (Delaware) Inc., 4.80%,
due 9/16/99 P-1 A-1+ 9,819
--------------
TOTAL CORPORATE COMMERCIAL
PAPER 740,698
--------------
TAXABLE REVENUE BONDS (1.1%)
11,700 Health Institute of Indiana,
Inc., Loan Program Notes, Ser.
A, 4.85%, VRDN due 10/1/28 P-1 A-1 11,700
--------------
CERTIFICATES OF DEPOSIT
(12.6%)
10,730 Creditanstalt-Bankverein,
Yankee C.D., 5.76%, due 5/7/99 P-1 A-1 10,730
9,300 Chase Manhattan Bank, Domestic
C.D., 5.745%, due 5/10/99 P-1 A-1+ 9,300
15,000 Westdeutsche Landesbank
Girozentrale, Yankee C.D.,
4.85%, due 5/28/99 P-1 A-1+ 15,000
15,000 Commerzbank AG, Yankee C.D.,
5.085%, due 2/16/00 P-1 A-1+ 14,996
30,000 UBS AG Stamford CT, Yankee
C.D., 5.29%, due 3/7/00 P-1 A-1+ 30,033
3,500 Canadian Imperial Bank of
Commerce, Yankee C.D., 5.18%,
due 3/15/00 P-1 A-1+ 3,499
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(1)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- --------------
<C> <S> <C> <C> <C>
$ 40,000 National Westminster Bank PLC,
Yankee C.D., 5.0475%-5.7375%,
due 5/7/99-4/7/00 P-1 A-1+ $ 40,000
10,000 Bank of Montreal, Yankee C.D.,
5.12%, due 4/10/00 P-1 A-1+ 9,997
--------------
TOTAL CERTIFICATES OF DEPOSIT 133,555
--------------
FUNDING AGREEMENTS (6.6%)
30,000 John Hancock Mutual Life
Insurance Co., Non-Expiring
Variable Rate Funding
Agreement, 4.94875% P-1 A-1+ 30,000
40,000 Travelers Insurance Co.,
Variable Rate Funding
Agreement, 4.9588% & 4.9688%,
expiring 10/29/99 & 3/16/00 P-1 A-1+ 40,000
--------------
TOTAL FUNDING AGREEMENTS 70,000
--------------
TOTAL INVESTMENTS (99.7%) 1,057,973
Cash, receivables and other
assets, less liabilities
(0.3%) 2,965
--------------
TOTAL NET ASSETS (100.0%) $1,060,938
--------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-4
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
Principal
Amount Value(2)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- ------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (3.4%)
$ 1,000 U.S. Treasury Notes, 5.25%, due 1/31/01 TSY TSY $ 1,003
10,112 U.S. Treasury Inflation-Indexed Notes, 3.375%, due 1/15/07 TSY TSY 9,746
------------
TOTAL U.S. TREASURY SECURITIES (COST $10,886) 10,749
------------
U.S. GOVERNMENT AGENCY SECURITIES (3.7%)
4,802 Federal Home Loan Bank, Discount Notes, 4.90%, due 5/3/99 AGY AGY 4,802
7,100 Fannie Mae, Notes, 5.25%, due 1/15/03 AGY AGY 7,029
------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $11,970) 11,831
------------
MORTGAGE-BACKED SECURITIES (23.3%)
1,489 GE Capital Mortgage Services, Inc., REMIC Pass-Through
Certificates, Ser. 1998-25, Class B3, 6.25%, due 12/25/28 BB(3) 1,083(4)
1,597 PNC Mortgage Securities Corp., Pass-Through Certificates,
Ser. 1999-1, Class 1B4, 6.25%, due 2/25/29 BB(5) 1,142(4)
965 Morgan Stanley Capital I Inc., Commercial Mortgage
Pass-Through Certificates, Ser. 1998-HF2, 6.01%, due
11/15/30 BB(3) 661(4)
FANNIE MAE
24 REMIC Floating Rate CMO, Ser. 1992-59F, 5.337%, due 8/25/06 AGY AGY 24
4,993 Pass-Through Certificates, 7.00%, due 9/1/03 & 6/1/11 AGY AGY 5,126
5,554 Pass-Through Certificates, 6.50%, due 4/1/13 AGY AGY 5,601
FREDDIE MAC
83 Gold Balloon Mortgage Participation Certificates, 6.50%, due
9/1/99 AGY AGY 83
44 Mortgage Participation Certificates, 10.50%, due 10/1/00 &
12/1/00 AGY AGY 46
</TABLE>
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(2)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$ 192 Mortgage Participation Certificates, 8.50%, due 10/1/01 AGY AGY $ 197
137 ARM Certificates, 6.00%, due 1/1/17 AGY AGY 138
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
84 Pass-Through Certificates, 7.50%, due 10/15/09-9/15/10 AGY AGY 87
115 Pass-Through Certificates, 12.00%, due 5/15/12-3/15/15 AGY AGY 131
22,850 Pass-Through Certificates, 6.50%, due 12/15/28 AGY AGY 22,708
36,770 Pass-Through Certificates, 7.00%, due 4/15/11-1/15/29 AGY AGY 37,345
------------
TOTAL MORTGAGE-BACKED SECURITIES (COST $74,809) 74,372
------------
ASSET-BACKED SECURITIES (11.0%)
1,238 Money Store Auto Grantor Trust, Ser. 1997-2, Class A-1,
6.17%, due 3/20/01 Aaa AAA 1,248
239 Chase Manhattan Grantor Trust, Automobile Loan Pass-Through
Certificates, Ser. 1995-A, 6.00%, due 9/17/01 Aaa AAA 239
6,500 Ford Credit Auto Loan Master Trust, Auto Loan Certificates,
Ser. 1996-1, 5.50%, due 2/15/03 Aaa AAA 6,476
174 Honda Auto Receivables Grantor Trust, Ser. 1997-A, Class A,
5.85%, due 2/15/03 Aaa AAA 175
5,600 Chase Credit Card Master Trust, Ser. 1997-2, Class A, 6.30%,
due 4/15/03 Aaa AAA 5,566
1,226 Navistar Financial Owner Trust, Ser. 1996-B, Class A-3,
6.33%, due 4/21/03 Aaa AAA 1,236
4,720 Chemical Master Credit Card Trust 1, Ser. 1995-2, Class A,
6.23%, due 6/15/03 Aaa AAA 4,774
5,289 World Omni Automobile Lease Securitization Trust, Ser.
1997-A, Class A-3, 6.85%, due 6/25/03 Aaa AAA 5,379
1,626 Chevy Chase Auto Receivables Trust, Ser. 1996-2, Class A,
5.90%, due 7/15/03 Aaa AAA 1,631
</TABLE>
C-6
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(2)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$ 5,000 Standard Credit Card Master Trust I, Credit Card
Participation Certificates, Ser. 1994-4, Class A, 8.25%, due
11/7/03 Aaa AAA $ 5,304
3,320 American Express Master Trust, Accounts Receivable Trust
Certificates, Ser. 1998-1, Class A, 5.90%, due 4/15/04 Aaa AAA 3,330
------------
TOTAL ASSET-BACKED SECURITIES (COST $35,522) 35,358
------------
BANKS & FINANCIAL INSTITUTIONS (18.3%)
2,500 Associates Corp. of North America, Senior Notes, 6.375%, due
8/15/99 Aa3 AA- 2,510
1,300 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E,
7.08%, due 5/22/00 Baa1 A 1,312
1,800 International Lease Finance Corp., Notes, 6.625%, due 6/1/00 A1 A+ 1,820
3,150 Countrywide Funding Corp., Medium-Term Notes, Ser. A, 7.31%,
due 8/28/00 A3 A 3,216
7,090 Associates Pass-Through Asset Trust, Ser. 1997-1, 6.45%, due
9/15/00 Aa3 AA- 7,175(4)
5,000 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E,
6.89%, due 10/10/00 Baa1 A 5,045
3,600 Countrywide Home Loans, Inc., Notes, 5.62%, due 10/16/00 A3 A 3,597
1,725 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E,
6.65%, due 11/8/00 Baa1 A 1,735
2,000 NationsBank Corp., Senior Medium-Term Notes, Ser. E, 5.70%,
due 2/9/01 Aa2 A+ 1,993
6,600 Capital One Bank, Bank Notes, 5.95%, due 2/15/01 Baa3 BBB- 6,548
4,430 Morgan Stanley, Dean Witter, & Co., Global Medium-Term
Notes, Ser. C, 6.09%, due 3/9/01 Aa3 A+ 4,450
6,660 Household Finance Corp., Senior Medium-Term Notes, 6.06%,
due 5/14/01 A2 A 6,692
3,550 BankAmerica Corp., Subordinated Notes, 6.85%, due 3/1/03 Aa3 A 3,639
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(2)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$ 4,000 CIT Group, Inc., Notes, 5.50%, due 2/15/04 Aa3 A+ $ 3,895
3,610 Riggs National Corp., Subordinated Notes, 8.50%, due 2/1/06 Ba1(6) BB+(6) 3,754
1,000 Bank United, Subordinated Medium-Term Notes, 8.00%, due
3/15/09 Ba2 BBB- 1,001
------------
TOTAL BANKS & FINANCIAL INSTITUTIONS (COST $58,389) 58,382
------------
CORPORATE DEBT SECURITIES (35.3%)
7,000 Lockheed Martin Corp., Notes, 6.55%, due 5/15/99 Baa1 BBB+ 7,002
2,710 Arkla, Inc., Notes, 8.875%, due 7/15/99 Baa1 BBB 2,726
4,680 Time Warner Pass-Through Asset Trust, Ser. 1997-2, 4.90%,
due 7/29/99 Baa3 BBB 4,670(4)
1,000 General Motors Acceptance Corp., Medium-Term Notes, 6.15%,
due 9/20/99 A2 A 1,004
3,655 Commonwealth Edison Co., First Mortgage Bonds, Ser. 90,
6.50%, due 4/15/00 Baa2 BBB 3,685
4,800 Norfolk Southern Corp., Notes, 6.70%, due 5/1/00 Baa1 BBB+ 4,854
2,000 Ford Motor Credit Co., Medium-Term Notes, 6.84%, due 8/16/00 A1 A 2,031
2,000 American General Finance Corp., Senior Notes, 6.125%, due
9/15/00 A2 A+ 2,014
2,510 Chesapeake Corp., Notes, 10.375%, due 10/1/00 Baa3 BBB 2,659
1,730 BHP Finance (USA) Ltd., Guaranteed Notes, 5.625%, due
11/1/00 A3 A- 1,712
2,577 Safeway Inc., Notes, 5.75%, due 11/15/00 Baa2 BBB 2,564
2,300 General Electric Capital Corp., Global Medium-Term Notes,
Ser. A, 5.52%, due 1/15/01 Aaa AAA 2,302
3,325 AT&T Capital Corp., Notes, 6.875%, due 1/16/01 Baa3 BBB 3,379
2,320 Fort James Corp., Notes, 6.234%, due 3/15/01 Baa2 BBB- 2,300
2,290 Colonial Realty Limited Partnership, Senior Notes, 7.50%,
due 7/15/01 Baa3 BBB- 2,279
1,220 USA Waste Services, Inc., Senior Notes, 6.125%, due 7/15/01 Baa2 BBB+ 1,225
</TABLE>
C-8
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(2)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- ------------
<C> <S> <C> <C> <C>
$ 3,300 Texas Utilities Co., Notes, 5.94%, due 10/15/01 Baa3 BBB $ 3,301
4,160 Tyco International Ltd., Notes, 6.50%, due 11/1/01 A3 A- 4,211
2,380 Marlin Water Trust, Senior Secured Notes, 7.09%, due
12/15/01 Baa2 BBB 2,383(4)
2,965 ICI Wilmington Inc., Guaranteed Notes, 7.50%, due 1/15/02 Baa1 A- 3,058
2,835 Black & Decker Corp., Medium-Term Notes, Ser. A, 8.90%, due
1/21/02 Baa2 BBB 3,030
900 Ford Motor Credit Co., Global Bonds, 6.50%, due 2/28/02 A1 A 915
2,280 Fort James Corp., Senior Notes, 6.50%, due 9/15/02 Baa2 BBB- 2,277
1,000 Safeway Inc., Medium-Term Notes, 8.57%, due 4/1/03 Baa2 BBB 1,075
3,360 Stewart Enterprises, Inc., Notes, 6.40%, due 5/1/03 Baa3 BBB 3,377
6,600 WorldCom, Inc., Notes, 6.25%, due 8/15/03 Baa2 BBB+ 6,622
60 Core-Mark International, Inc., Senior Subordinated Notes,
11.375%, due 9/15/03 B3 B 60
2,555 Akzo Nobel Inc., Guaranteed Notes, 6.00%, due 11/15/03 A2 A 2,529(4)
705 Loomis Fargo & Co., Senior Subordinated Notes, 10.00%, due
1/15/04 B3 B 717
1,740 PDVSA Finance Ltd., Notes, 8.75%, due 2/15/04 A3 BBB+ 1,756(4)
660 EOP Operating Limited Partnership, Notes, 6.625%, due
2/15/05 Baa1 BBB 654
975 WestPoint Stevens Inc., Senior Notes, 7.875%, due 6/15/05 Ba3 BB 1,002
1,750 Protection One, Inc., Senior Notes, 7.375%, due 8/15/05 Ba1 BBB- 1,667
4,200 Heritage Media Corp., Senior Subordinated Notes, 8.75%, due
2/15/06 B1 BB+ 4,510
855 Mark IV Industries, Inc., Senior Subordinated Notes, 7.75%,
due 4/1/06 Ba2(7) BB-(7) 844
735 Calpine Corp., Senior Notes, 7.625%, due 4/15/06 Ba2 BB 739
$ 400 Printpack, Inc., Senior Subordinated Notes, Ser. B,
</TABLE>
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(2)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- ------------
10.625%, due 8/15/06 B3 B+ $ 382
<C> <S> <C> <C> <C>
2,825 Time Warner Inc., Notes, 8.11%, due 8/15/06 Baa3 BBB 3,099
680 Newport News Shipbuilding Inc., Senior Subordinated Notes,
9.25%, due 12/1/06 B1 B+ 729
1,250 GFSI Inc., Senior Subordinated Notes, 9.625%, due 3/1/07 B3 B- 1,172
300 French Fragrances, Inc., Senior Notes, Ser. B, 10.375%, due
5/15/07 B2 B+ 305
1,685 Owens-Illinois, Inc., Senior Debentures, 8.10%, due 5/15/07 Ba1(8) BB+(8) 1,751
250 Safety Components International, Inc., Senior Subordinated
Notes, 10.125%, due 7/15/07 B3 B- 249
880 HydroChem Industrial Services, Inc., Senior Subordinated
Notes, Ser. B, 10.375%, due 8/1/07 Caa1 B- 779
2,210 Interpool, Inc., Notes, 7.20%, due 8/1/07 Ba1 BB+ 1,934
1,500 Mirage Resorts, Inc., Notes, 6.75%, due 8/1/07 Baa2 BBB+ 1,452
520 NBTY, Inc., Senior Subordinated Notes, Ser. B, 8.625%, due
9/15/07 B1 B+ 494
1,000 Thiokol Corp., Senior Notes, 6.625%, due 3/1/08 Baa3 BBB 967
1,700 Beckman Coulter, Inc., Senior Notes, 7.45%, due 3/4/08 Ba1(8) BB+(8) 1,653
160 APCOA, Inc., Senior Subordinated Notes, 9.25%, due 3/15/08 Caa1 B- 149
610 IMPAC Group, Inc., Senior Subordinated Notes, 10.125%, due
3/15/08 B3 B- 602
470 Trans-Resources, Inc., Senior Notes, Ser. B, 10.75%, due
3/15/08 B3 B- 461
300 Columbus McKinnon Corp., Senior Subordinated Notes, 8.50%,
due 4/1/08 B2 B 298
160 Great Central Mines Ltd., Senior Notes, 8.875%, due 4/1/08 Ba2 BB 158
1,000 Global Crossing Holdings Ltd., Senior Notes, 9.625%, due
5/15/08 B1 B 1,117
$ 450 Home Products International, Inc., Senior
</TABLE>
C-10
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Value(2)
(000's Rating (000's
omitted) Moody's S&P omitted)
- ------------- ----------- --------- ------------
Subordinated Notes, 9.625%, due 5/15/08 B3 B $ 439
<C> <S> <C> <C> <C>
1,500 CSC Holdings, Inc., Senior Notes, 7.25%, due 7/15/08 Ba2 BB+ 1,518
1,085 Tenet Healthcare Corp., Senior Subordinated Notes, 8.125%,
due 12/1/08 Ba3 BB- 1,052(4)
520 KinderCare Learning Centers, Inc., Senior Subordinated
Notes, Ser. B, 9.50%, due 2/15/09 B3 B- 523
500 Garden State Newspapers, Inc., Senior Subordinated Notes,
8.625%, due 7/1/11 B1 B+ 506(4)
------------
TOTAL CORPORATE DEBT SECURITIES (COST $113,714) 112,922
------------
FOREIGN GOVERNMENT SECURITIES(9) (3.0%)
CAD 5,700 Canadian Government, 5.00%, due 12/1/00 Aa2 AA+ 3,922
SEK 41,100 Kingdom of Sweden, 13.00%, due 6/15/01 Aa1 AAA 5,845
------------
TOTAL FOREIGN GOVERNMENT SECURITIES (COST $9,763) 9,767
------------
TOTAL INVESTMENTS (98.0%) (COST $315,053) 313,381(10)
Cash, receivables and other assets, less liabilities (2.0%) 6,337
------------
TOTAL NET ASSETS (100.0%) $319,718
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
High Yield Bond Portfolio
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES (4.1%)
$ 1,071 Federal Home Loan Bank,
Discount Notes, 4.90%, due
5/3/99 (COST $1,071) AGY AGY $ 1,071
-------------
MORTGAGE-BACKED SECURITIES
(3.2%)
429 BA Mortgage Securities, Inc.,
Mortgage Pass-Through
Certificates, Ser. 1998-6,
6.25%, due 12/26/28 BB 308(4)
747 Morgan Stanley Capital I Inc.,
Commercial Mortgage
Pass-Through Certificates,
Ser. 1998-HF2, 6.01%, due
11/15/30 BB(3) 511(4)
-------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $803) 819
-------------
CORPORATE DEBT SECURITIES
(88.4%)
310 Revlon Worldwide Corp., Senior
Secured Notes, Ser. B,
Zero-Coupon, Yielding 9.237%,
due 3/15/01 B3 B- 209
450 Stone Container Corp., Senior
Subordinated Debentures,
12.25%, due 4/1/02 B3 B- 456
60 Core-Mark International, Inc.,
Senior Subordinated Notes,
11.375%, due 9/15/03 B3 B 60
60 Loomis Fargo & Co., Senior
Subordinated Notes, 10.00%,
due 1/15/04 B3 B 61
250 MTS, INC., Senior Subordinated
Notes, 9.375%, due 5/1/05 B2 B 248
440 Protection One, Inc., Senior
Notes, 7.375%, due 8/15/05 Ba1 BBB- 419
275 Mark IV Industries, Inc.,
Senior Subordinated Notes,
7.75%, due 4/1/06 Ba2(7) BB-(7) 272
340 MTL Inc., Senior Subordinated
Notes, 10.00%, due 6/15/06 B3 B- 339
470 Printpack, Inc., Senior
Subordinated Notes, Ser. B,
10.625%, due 8/15/06 B3 B+ 449
540 Motors and Gears, Inc., Senior
Notes, Ser. B, 10.75%, due
11/15/06 B3 B 556
</TABLE>
C-12
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 150 Newport News Shipbuilding
Inc., Senior Subordinated
Notes, 9.25%, due 12/1/06 B1 B+ $ 161
400 Safelite Glass Corp., Senior
Subordinated Notes, 9.875%,
due 12/15/06 B3 B- 384
500 Pen-Tab Industries, Inc.,
Senior Subordinated Notes,
Ser. B, 10.875%, due 2/1/07 B3 B- 426
430 Fonda Group, Inc., Senior
Subordinated Notes, Ser. B,
9.50%, due 3/1/07 B3 B- 360
60 GFSI Inc., Senior Subordinated
Notes, 9.625%, due 3/1/07 B3 B- 56
500 French Fragrances, Inc.,
Senior Notes, Ser. B, 10.375%,
due 5/15/07 B2 B+ 509
120 Doane Pet Care Co., Senior
Subordinated Notes, 9.75%, due
5/15/07 B3 B- 125(4)
500 Hedstrom Corp., Senior
Subordinated Notes, 10.00%,
due 6/1/07 B3 B- 436
150 Polymer Group, Inc., Senior
Subordinated Notes, 9.00%, due
7/1/07 B2 B 154
520 Safety Components
International, Inc., Senior
Subordinated Notes, 10.125%,
due 7/15/07 B3 B- 518
60 HydroChem Industrial Services,
Inc., Senior Subordinated
Notes, Ser. B, 10.375%, due
8/1/07 Caa1 B- 53
150 SC International Services,
Inc., Senior Subordinated
Notes, Ser. B, 9.25%, due
9/1/07 B2 B 161
125 Southern Foods Group, L.P.,
Senior Subordinated Notes,
9.875%, due 9/1/07 B2 B 131
560 NBTY, Inc., Senior
Subordinated Notes, Ser. B,
8.625%, due 9/15/07 B1 B+ 532
85 K & F Industries, Inc., Senior
Subordinated Notes, 9.25%, due
10/15/07 B3 B- 88
60 United Defense, L.P., Senior
Subordinated Notes, 8.75%, due
11/15/07 B2 B 60
110 Amscan Holdings, Inc., Senior
Subordinated Notes, 9.875%,
due 12/15/07 B3 B- 94
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 250 Fisher Scientific
International Inc., Senior
Subordinated Notes, 9.00%, due
2/1/08 B3 B- $ 253
540 Brand Scaffold Services, Inc.,
Senior Notes, 10.25%, due
2/15/08 B3 B- 531
400 Nextel Communications, Inc.,
Senior Redeemable Step Up
Notes, Yielding 10.926%, due
2/15/08 B2 B- 296
185 Universal Compression, Inc.,
Senior Step Up Notes, Yielding
9.929%, due 2/15/08 B2 B 116
300 APCOA, Inc., Senior
Subordinated Notes, 9.25%, due
3/15/08 Caa1 B- 280
70 IMPAC Group, Inc., Senior
Subordinated Notes, 10.125%,
due 3/15/08 B3 B- 69
250 Musicland Group, Inc., Senior
Subordinated Notes, 9.875%,
due 3/15/08 B3 B- 254
520 Trans-Resources, Inc., Senior
Notes, Ser. B, 10.75%, due
3/15/08 B3 B- 510
250 AMSC Acquisition Co., Inc.,
Senior Notes, Ser. B, 12.25%,
due 4/1/08 189(11)
200 Columbus McKinnon Corp.,
Senior Subordinated Notes,
8.50%, due 4/1/08 B2 B 198
300 Great Central Mines Ltd.,
Senior Notes, 8.875%, due
4/1/08 Ba2 BB 296
150 Numatics, Inc., Senior
Subordinated Notes, 9.625%,
due 4/1/08 B3 B- 141
500 Riverwood International Corp.,
Senior Subordinated Notes,
10.875%, due 4/1/08 Caa1 CCC+ 492
250 Hudson Respiratory Care Inc.,
Senior Subordinated Notes,
9.125%, due 4/15/08 B3 B- 224
500 Level 3 Communications, Inc.,
Senior Notes, 9.125%, due
5/1/08 B3 B 510
320 Sun Healthcare Group, Inc.,
Senior Subordinated Notes,
9.375%, due 5/1/08 Ca C 71(4)
300 Ziff-Davis Inc., Senior
Subordinated Notes, 8.50%, due
5/1/08 B2 B 300
</TABLE>
C-14
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 179 Boyds Collection, Ltd., Senior
Subordinated Notes, 9.00%, due
5/15/08 B2 B- $ 191(4)
390 Home Products International,
Inc., Senior Subordinated
Notes, 9.625%, due 5/15/08 B3 B 381
300 La Petite Academy, Inc.,
Senior Notes, 10.00%, due
5/15/08 B3 B- 301
200 Owens-Illinois, Inc., Senior
Notes, 7.35%, due 5/15/08 Ba1 BB+ 199
300 Telecommunications Techniques
Co., LLC, Senior Subordinated
Notes, 9.75%, due 5/15/08 B3 B- 305
350 Coyne International
Enterprises Corp., Senior
Subordinated Notes, 11.25%,
due 6/1/08 B3 B- 348
300 General Binding Corp., Senior
Subordinated Notes, 9.375%,
due 6/1/08 B2 B 305
300 Key Components, LLC, Senior
Notes, 10.50%, due 6/1/08 B3 B- 288
340 Schuff Steel Co., Senior
Notes, 10.50%, due 6/1/08 B3 B+ 315
300 Steel Heddle Mfg. Co., Senior
Subordinated Notes, 10.625%,
due 6/1/08 Caa1 CCC+ 150
725 WESCO International, Inc.,
Senior Step Up Notes, Ser. B,
Yielding 11.175%, due 6/1/08 B3 B 507
500 AKI, Inc., Senior Notes,
10.50%, due 7/1/08 B2 B+ 475
300 Aqua-Chem, Inc., Senior
Subordinated Notes, 11.25%,
due 7/1/08 B3 B- 251
250 Aurora Foods Inc., Senior
Subordinated Notes, 8.75%, due
7/1/08 B1 B+ 261
340 Marsulex Inc., Senior
Subordinated Notes, 9.625%,
due 7/1/08 B2 B+ 351
350 Moll Industries, Inc., Senior
Subordinated Notes, 10.50%,
due 7/1/08 B3 B 304
400 CSC Holdings, Inc., Senior
Notes, 7.25%, due 7/15/08 Ba2 BB+ 405
435 GEO Specialty Chemicals, Inc.,
Senior Subordinated Notes,
10.125%, due 8/1/08 B3 B- 438(4)
</TABLE>
C-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal Value(2)
Amount Rating (000's
(000's omitted) Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
$ 250 Loews Cineplex Entertainment
Corp., Senior Subordinated
Notes, 8.875%, due 8/1/08 B3 B $ 252
440 Bell Sports, Inc., Senior
Subordinated Notes, 11.00%,
due 8/15/08 B3 B- 451
350 Tenet Healthcare Corp., Senior
Subordinated Notes, 8.125%,
due 12/1/08 Ba3 BB- 339(4)
250 True Temper Sports, Inc.,
Senior Subordinated Notes,
10.875%, due 12/1/08 B3 B- 232(4)
500 National Wine & Spirits, Inc.,
Senior Notes, 10.125%, due
1/15/09 B2 B 519(4)
500 Willis Corroon Corp., Senior
Subordinated Notes, 9.00%, due
2/1/09 Ba3 B+ 508(4)
490 KinderCare Learning Centers,
Inc., Senior Subordinated
Notes, Ser. B, 9.50%, due
2/15/09 B3 B- 493
100 AK Steel Corp., Senior Notes,
7.875%, due 2/15/09 Ba2 BB- 101(4)
500 Panolam Industries, Senior
Subordinated Notes, 11.50%,
due 2/15/09 B3 B- 526(4)
500 Diamond Brands Inc., Senior
Step Up Debentures, Yielding
12.875%, due 4/15/09 Caa1 CCC+ 110
500 Fairchild Corp., Senior
Subordinated Notes, 10.75%,
due 4/15/09 B3 B- 503(4)
750 TeleCorp PCS, Inc., Senior
Subordinated Step Up Notes,
Yielding 11.625%, due 4/15/09 B3 423(4)
500 MEDIQ Inc., Senior Step Up
Debentures, Yielding 13.00%,
due 6/1/09 Caa1 B- 204
760 Charter Communications
Holdings, LLC, Senior Step Up
Notes, Yielding 9.225%, due
4/1/11 B2 B+ 494(4)
-------------
TOTAL CORPORATE DEBT
SECURITIES (COST $23,953) 22,977
-------------
</TABLE>
C-16
<PAGE>
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Value(2)
Number Rating (000's
of Units Moody's S&P omitted)
- --------------- ----------- --------- -------------
<C> <S> <C> <C> <C>
UNITS (2.0%)
500 DeCrane Aircraft Holdings,
Inc. (Each Unit consists of
$1,000 par value of Senior
Subordinated Notes, 12.00%,
due 9/30/08 and 1 DeCrane
Aircraft Holdings Warrant)
(COST $500) Caa1 B- $ 515
-------------
<CAPTION>
Number
of Shares
- ---------------
<C> <S> <C> <C> <C>
WARRANTS (0.0%)
250 American Mobile Satellite 1
500 MEDIQ Inc. --
-------------
TOTAL WARRANTS (COST $0) 1
-------------
TOTAL INVESTMENTS (97.7%)
(COST $26,327) 25,383(10)
Cash, receivables and other
assets, less liabilities
(2.3%) 596
-------------
TOTAL NET ASSETS (100.0%) $ 25,979
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-17
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
1) Investment securities of the Portfolio are valued at amortized cost, which
approximates U.S. Federal income tax cost.
2) Investment securities of the Portfolio are valued daily by obtaining bid
price quotations from independent pricing services on selected securities
available in each service's data base. For all other securities requiring
daily quotations, bid prices are obtained from principal market makers in
those securities or, if quotations are not available, by a method the
trustees of Income Managers Trust believe accurately reflects fair value.
Foreign security prices are furnished by independent quotation services
expressed in local currency values. Foreign security prices are translated
from the local currency into U.S. dollars using current exchange rates.
Short-term debt securities with less than 60 days until maturity may be
valued at cost which, when combined with interest earned, approximates
market value.
3) Not rated by Moody's; the rating shown is from Fitch Investors Services,
Inc.
4) Security exempt from registration under the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers under Rule 144A. At April 30, 1999, these
securities amounted to $22,957,000 or 7.2% of net assets for Neuberger
Berman Limited Maturity Bond Portfolio and $5,289,000 or 20.4% of net assets
for Neuberger Berman High Yield Bond Portfolio.
5) Not rated by Moody's; the rating shown is from Duff & Phelps Credit Rating
Co.
6) Rated BBB by Thomson BankWatch, Inc.
7) Rated BBB- by Fitch Investors Services, Inc.
8) Rated BBB- by Duff & Phelps Credit Rating Co.
9) Principal amount is stated in the currency in which the security is
denominated.
CAD -- Canadian Dollar
SEK -- Swedish Krona
10) At April 30, 1999, selected Portfolio information on a U.S. Federal income
tax basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER BERMAN COST APPRECIATION DEPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIMITED MATURITY BOND PORTFOLIO $ 315,053,000 $ 1,446,000 $3,118,000 $ 1,672,000
HIGH YIELD BOND PORTFOLIO 26,327,000 402,000 1,346,000 944,000
</TABLE>
11) Not rated by a nationally recognized statistical rating organization.
Security is an eligible security based on a comparable quality analysis
performed by the Portfolio's investment manager within the guidelines
approved by the trustees of Income Managers Trust.
SEE NOTES TO FINANCIAL STATEMENTS
C-18
<PAGE>
(This page has been left blank intentionally.)
C-19
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY
(000'S OMITTED) PORTFOLIO
--------------
<S> <C>
ASSETS
Investments in securities, at value*
(Note A) -- see Schedule of Investments $ 668,625
Cash 8
Deferred organization costs (Note A) --
Interest receivable 2,219
Net receivable for forward foreign currency
exchange contracts sold (Note C) --
Prepaid expenses and other assets 5
Receivable for securities sold --
Receivable for variation margin (Note A) --
--------------
670,857
--------------
LIABILITIES
Payable to investment manager (Note B) 129
Accrued expenses 37
--------------
166
--------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 670,691
--------------
NET ASSETS consist of:
Paid-in capital $ 670,691
Net unrealized depreciation in value of
investment securities, financial futures
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts --
--------------
NET ASSETS $ 670,691
--------------
*Cost of investments $ 668,625
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-20
<PAGE>
April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
LIMITED
CASH MATURITY HIGH YIELD
RESERVES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value*
(Note A) -- see Schedule of Investments $ 1,057,973 $ 313,381 $ 25,383
Cash 7 2 1
Deferred organization costs (Note A) -- -- 1
Interest receivable 3,231 4,630 623
Net receivable for forward foreign currency
exchange contracts sold (Note C) -- 135 --
Prepaid expenses and other assets 8 4 --
Receivable for securities sold -- 1,623 --
Receivable for variation margin (Note A) -- 58 --
------------------------------------------------
1,061,219 319,833 26,008
------------------------------------------------
LIABILITIES
Payable to investment manager (Note B) 221 67 8
Accrued expenses 60 48 21
------------------------------------------------
281 115 29
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,060,938 $ 319,718 $ 25,979
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 1,060,938 $ 321,210 $ 26,923
Net unrealized depreciation in value of investment
securities, financial futures contracts,
translation of assets and liabilities in foreign
currencies, and foreign currency contracts -- (1,492) (944)
------------------------------------------------
NET ASSETS $ 1,060,938 $ 319,718 $ 25,979
------------------------------------------------
*Cost of investments $ 1,057,973 $ 315,053 $ 26,327
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-21
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY
(000'S OMITTED) PORTFOLIO
------------
<S> <C>
INVESTMENT INCOME
Interest income $ 11,450
------------
Expenses:
Investment management fee (Note B) 623
Accounting fees 5
Auditing fees 12
Custodian fees (Note B) 55
Insurance expense 3
Legal fees 6
Trustees' fees and expenses 14
------------
Total expenses 718
Expenses reduced by custodian fee expense
offset arrangement (Note B) --
------------
Total net expenses 718
------------
Net investment income 10,732
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold 41
Net realized loss on financial futures
contracts (Note A) --
Net realized gain on foreign currency
transactions (Note A) --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, translation of
assets and liabilities in foreign
currencies, and foreign currency contracts
(Note A) --
------------
Net gain (loss) on investments 41
------------
Net increase in net assets resulting from
operations $ 10,773
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-22
<PAGE>
For the Six Months Ended April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
CASH LIMITED MATURITY HIGH YIELD
RESERVES BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 26,068 $ 11,152 $ 1,312
------------------------------------------------
Expenses:
Investment management fee (Note B) 1,206 427 50
Accounting fees 5 5 5
Auditing fees 13 13 7
Custodian fees (Note B) 112 65 18
Insurance expense 4 2 --
Legal fees 10 9 10
Trustees' fees and expenses 27 11 3
------------------------------------------------
Total expenses 1,377 532 93
Expenses reduced by custodian fee expense
offset arrangement (Note B) -- (1) --
------------------------------------------------
Total net expenses 1,377 531 93
------------------------------------------------
Net investment income 24,691 10,621 1,219
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold (3) (1,765) (494)
Net realized loss on financial futures
contracts (Note A) -- (353) --
Net realized gain on foreign currency
transactions (Note A) -- 407 --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, translation of
assets and liabilities in foreign
currencies, and foreign currency contracts
(Note A) -- (3,279) 717
------------------------------------------------
Net gain (loss) on investments (3) (4,990) 223
------------------------------------------------
Net increase in net assets resulting from
operations $ 24,688 $ 5,631 $ 1,442
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY PORTFOLIO
Six Months
Ended Year
April 30, Ended
1999 October 31,
(000'S OMITTED) (UNAUDITED) 1998
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 10,732 $ 17,794
Net realized gain (loss) on
investments 41 31
Change in net unrealized
appreciation (depreciation) of
investments -- --
-----------------------------
Net increase (decrease) in net
assets resulting from operations 10,773 17,825
-----------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 757,029 829,488
Additions related to reorganization
(Note D) -- --
Reductions (464,877) (787,491)
-----------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 292,152 41,997
-----------------------------
NET INCREASE (DECREASE) IN NET ASSETS 302,925 59,822
NET ASSETS:
Beginning of period 367,766 307,944
-----------------------------
End of period $ 670,691 $ 367,766
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-24
<PAGE>
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
HIGH YIELD
CASH RESERVES LIMITED MATURITY BOND PORTFOLIO
PORTFOLIO BOND PORTFOLIO Period from
March 3, 1998
Six Months Six Months Six Months (Commencement
Ended Year Ended Year Ended of Operations)
April 30, Ended April 30, Ended April 30, to
1999 October 31, 1999 October 31, 1999 October 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 24,691 $ 42,282 $ 10,621 $ 21,213 $ 1,219 $ 907
Net realized gain (loss) on
investments (3) (4) (1,711) (4,564) (494) (42)
Change in net unrealized
appreciation (depreciation)
of investments -- -- (3,279) 180 717 (1,661)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations 24,688 42,278 5,631 16,829 1,442 (796)
-----------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS:
Additions 499,989 1,091,774 27,131 71,026 8,434 25,827
Additions related to
reorganization (Note D) -- -- -- 54,073 -- --
Reductions (492,498) (771,057) (69,700) (78,238) (6,536) (2,392)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
transactions in investors'
beneficial interests 7,491 320,717 (42,569) 46,861 1,898 23,435
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS 32,179 362,995 (36,938) 63,690 3,340 22,639
NET ASSETS:
Beginning of period 1,028,759 665,764 356,656 292,966 22,639 --
-----------------------------------------------------------------------------------------
End of period $ 1,060,938 $ 1,028,759 $ 319,718 $ 356,656 $ 25,979 $ 22,639
-----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Government Money Portfolio ("Government Money"),
Neuberger Berman Cash Reserves Portfolio ("Cash Reserves"), Neuberger Berman
Limited Maturity Bond Portfolio ("Limited Maturity"), and Neuberger Berman
High Yield Bond Portfolio ("High Yield") (collectively, the "Portfolios") are
separate operating series of Income Managers Trust ("Managers Trust"), a New
York common law trust organized as of December 1, 1992. Managers Trust is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940, as amended. High Yield had no operations
until March 3, 1998, other than matters relating to its organization and
registration as a series of Managers Trust. Other regulated investment
companies sponsored by Neuberger Berman Management Inc. ("Management"), whose
financial statements are not presented herein, also invest in these and other
Portfolios of 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) FOREIGN CURRENCY TRANSLATION: Limited Maturity and High Yield may invest in
foreign securities denominated in foreign currency. The accounting records of
the Portfolios are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the current rate of exchange of such currency
against the U.S. dollar to determine the value of investments, other assets
and liabilities. Purchase and sale prices of securities, and income and
expenses are translated into U.S. dollars at the prevailing rate of exchange
on the respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Interest income, including accretion of
discount (adjusted for original issue discount, where applicable) and
amortization of premium, where applicable, is recorded on the accrual basis.
Realized gains and losses from securities transactions and foreign currency
transactions are recorded on the basis of identified cost.
5) FORWARD FOREIGN CURRENCY CONTRACTS: Limited Maturity and High Yield may each
enter into forward foreign currency contracts ("contracts") in connection
with planned purchases or sales of securities to hedge the U.S. dollar value
of portfolio securities denominated in a foreign currency. The gain or loss
arising
C-26
<PAGE>
from the difference between the original contract price and the closing price
of such contract is included in net realized gains or losses on foreign
currency transactions. Fluctuations in the value of forward foreign currency
contracts are recorded for financial reporting purposes as unrealized gains
or losses by each Portfolio. Neither Portfolio has a specific limitation on
the percentage of assets which may be committed to these types of contracts.
The Portfolios could be exposed to risks if a counterparty to a contract were
unable to meet the terms of its contract or if the value of the foreign
currency changes unfavorably. The U.S. dollar value of foreign currency
underlying all contractual commitments held by each Portfolio is determined
using forward foreign currency exchange rates supplied by an independent
pricing service.
6) 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.
7) ORGANIZATION EXPENSES: Expenses incurred by High Yield in connection with its
organization are being amortized on a straight-line basis over a five-year
period. At April 30, 1999, the unamortized balance of such expenses amounted
to $1,245.
8) 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.
9) FINANCIAL FUTURES CONTRACTS: Limited Maturity and High Yield may each buy and
sell financial futures contracts to hedge against changes in securities
prices resulting from changes in prevailing interest rates. At the time a
Portfolio enters into a financial futures contract, it is required to deposit
with its custodian a specified amount of cash or liquid securities, known as
"initial margin," ranging upward from 1.1% of the value of the financial
futures contract being traded. Each day, the futures contract is valued at
the official settlement price of the board of trade or U.S. commodity
exchange on which such futures contract is traded. Subsequent payments, known
as "variation margin," to and from the broker are made on a daily basis as
the market price of the financial futures contract fluctuates. Daily
variation margin adjustments, arising from this "mark to market," are
recorded by the Portfolios as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed
C-27
<PAGE>
out prior to delivery by offsetting purchases or sales of matching financial
futures contracts. When the contracts are closed, a Portfolio recognizes a
gain or loss. Risks of entering into futures contracts include the
possibility there may be an illiquid market and/or a change in the value of
the contract may not correlate with changes in the value of the underlying
securities.
For U.S. Federal income tax purposes, the futures transactions undertaken
by a Portfolio may cause that Portfolio to recognize gains or losses from
marking to market even though its positions have not been sold or terminated,
may affect the character of the gains or losses recognized as long-term or
short-term, and may affect the timing of some capital gains and losses
realized by the Portfolios. Also, a Portfolio's losses on transactions
involving futures contracts may be deferred rather than being taken into
account currently in calculating such Portfolio's taxable income.
During the six months ended April 30, 1999, High Yield did not enter into
any financial futures contracts.
At April 30, 1999, open positions in financial futures contracts for
Limited Maturity were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 1999 75 U.S. Treasury Notes, 5 Year Short $ 46,000
June 1999 40 U.S. Treasury Notes, 10 Year Short 3,000
</TABLE>
At April 30, 1999, Limited Maturity had the following securities deposited
in a segregated account to cover margin requirements on open financial
futures contracts:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SECURITY
- ---------------------------------------------------------
<C> <S>
$ 1,600,000 Standard Credit Card Master Trust I, Credit
Card Participation Certificates, Ser. 1994-4,
Class A, 8.25%, due 11/7/03
</TABLE>
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
(except High Yield) 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. High
Yield pays Management a fee for investment management services at the annual
rate of 0.38% of the first $500 million of that Portfolio's average daily net
assets, 0.355% of the next $500 million, 0.33% of the next $500 million, 0.305%
of the next $500 million, and 0.28% of average daily net assets in excess of $2
billion.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger Berman, LLC ("Neuberger"), a member firm of The New
C-28
<PAGE>
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.
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 $76, $76,
$732, and $28 for Government Money, Cash Reserves, Limited Maturity, and High
Yield, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended April 30, 1999, there were purchase and sale
transactions (excluding short-term securities, financial futures contracts, and
forward foreign currency contracts) as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- --------------------------------------------------------------------------------
<S> <C> <C>
LIMITED MATURITY $ 155,539,000 $ 143,903,000
HIGH YIELD 10,193,000 6,545,000
</TABLE>
All securities transactions for Government Money and Cash Reserves were
short-term.
During the six months ended April 30, 1999, Limited Maturity had entered into
various contracts to deliver currencies at specified future dates. At April 30,
1999, open contracts were as follows:
<TABLE>
<CAPTION>
NET
CONTRACTS IN EXCHANGE SETTLEMENT UNREALIZED
SALES TO DELIVER FOR DATE VALUE APPRECIATION
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Euro 6,034,000 $6,517,000 5/17/99 $6,381,000 $ 136,000
</TABLE>
NOTE D -- REORGANIZATION:
On February 27, 1998, Limited Maturity acquired all of the net assets of
Neuberger Berman Ultra Short Bond Portfolio ("Ultra Short") pursuant to a plan
of reorganization approved by the Board of Trustees on September 24, 1997. This
was accomplished by Neuberger Berman Ultra Short Bond Fund and Neuberger Berman
Ultra Short Bond Trust withdrawing their assets from Ultra Short and reinvesting
those assets in Limited Maturity. The reorganization was tax-free to investors.
Ultra Short's net assets as of February 27, 1998 ($54,072,964), including
$338,550 of unrealized appreciation, were combined with those of Limited
Maturity. The aggregate net assets of Limited Maturity and Ultra Short
immediately before the reorganization were $297,668,015 and $54,072,964,
respectively, resulting in aggregate net assets of $351,740,979 immediately
after the reorganization.
NOTE E -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent auditors. Annual reports
contain audited financial statements.
C-29
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Government 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) .29%(2) .31% .30% .31% .31% --
----------------------------------------------------------------
Net Expenses .29%(2) .31% .30% .31% .31% .33%
----------------------------------------------------------------
Net Investment Income 4.32%(2) 4.93% 4.96% 4.99% 5.32% 3.38%
----------------------------------------------------------------
Net Assets, End of Period (in
millions) $670.7 $367.8 $307.9 $362.5 $308.5 $251.6
----------------------------------------------------------------
</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-30
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Cash Reserves 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) .27%(2) .29% .29% .30% .31% --
----------------------------------------------------------------------
Net Expenses .27%(2) .29% .29% .30% .31% .32%
----------------------------------------------------------------------
Net Investment Income 4.86%(2) 5.33% 5.31% 5.20% 5.62% 3.63%
----------------------------------------------------------------------
Net Assets, End of Period (in
millions) $1,060.9 $1,028.8 $665.8 $484.0 $409.2 $312.0
----------------------------------------------------------------------
</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-31
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond 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) .31%(2) .33% .33% .33% .33% --
----------------------------------------------------------------------------
Net Expenses .31%(2) .33% .33% .33% .33% .34%
----------------------------------------------------------------------------
Net Investment Income 6.23%(2) 6.38% 6.70% 6.45% 6.55% 5.86%
----------------------------------------------------------------------------
Portfolio Turnover Rate 45% 44% 89% 169% 88% 102%
----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $319.7 $356.7 $293.0 $267.3 $319.6 $316.1
----------------------------------------------------------------------------
</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-32
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
High Yield Bond Portfolio
<TABLE>
<CAPTION>
Period from
Six Months March 3,
Ended 1998(1)
April 30, to October
1999 31,
(UNAUDITED) 1998
---------------------------
<S> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) .71% .89%
---------------------------
Net Expenses(3) .71% .89%
---------------------------
Net Investment Income(3) 9.32% 8.13%
---------------------------
Portfolio Turnover Rate 27% 16%
---------------------------
Net Assets, End of Period (in millions) $26.0 $22.6
---------------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-33
<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
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- NMATR6860699
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 Government Money Fund
Neuberger Berman Cash Reserves
Neuberger Berman Limited Maturity Bond Fund
Neuberger Berman High Yield Bond Fund
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
