<PAGE>
NEUBERGER BERMAN
NEUBERGER BERMAN
INCOME FUNDS-Registered Trademark-
SEMI-ANNUAL REPORT
APRIL 30, 2000
GOVERNMENT MONEY FUND
CASH RESERVES
LIMITED MATURITY BOND FUND
HIGH YIELD BOND FUND
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
CHAIRMAN'S LETTER A-4
PERFORMANCE HIGHLIGHTS A-9
FINANCIAL STATEMENTS B-1
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Government Money Fund B-11
Cash Reserves B-12
Limited Maturity Bond Fund B-13
High Yield Bond Fund B-14
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Government Money Portfolio C-1
Cash Reserves Portfolio C-2
Limited Maturity Bond
Portfolio C-6
High Yield Bond Portfolio C-12
FINANCIAL STATEMENTS C-18
FINANCIAL HIGHLIGHTS
Government Money Portfolio C-28
Cash Reserves Portfolio C-29
Limited Maturity Bond
Portfolio C-30
High Yield Bond Portfolio C-31
OTHER INFORMATION
Directory/Officers and Trustees D-1
</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- 2000.
A-3
<PAGE>
CHAIRMAN'S LETTER May 26, 2000
Dear Shareholder,
During this reporting period, the fixed income markets suffered the same kind
of split personality that affected the stock market before April's correction in
technology stocks. U.S. Treasury securities were the bond market equivalent of
"new economy" stocks. Everyone seemed to want them, regardless of fundamental
value. Bonds in other sectors, however, remained out of favor, despite
increasingly attractive yields. The result -- nearly the widest spreads between
Treasury and other fixed income sector yields in a decade -- provides what we
believe is an exceptional buying opportunity in corporate, government agency,
asset-backed, mortgage, and high-yield bonds.
What is responsible for this split personality? The major culprit is the U.S.
Treasury Department. In January, the Treasury announced plans to begin retiring
longer maturity Treasury debt. In March and April, it began doing so. With
supply already somewhat limited due to reduced issuance, the buyback gave
Treasuries "scarcity" value. Fixed income investors pursued Treasuries like kids
at a picnic going after the last hot dog. More financially nourishing bonds were
left for the ants.
We believe this will change in the year ahead. Why? We expect that fixed
income investors will ultimately gravitate to value, as they recognize that
buying a 10-year investment grade corporate or government agency bond yielding
8% makes much more sense than buying a 10-year Treasury yielding 6%. In the
interim, our portfolios will continue to feast on very attractive yields in
out-of-favor sectors.
Rising interest rates may continue to restrain bond prices over the next
several months. The Federal Reserve hiked short-term interest rates three times
during our fiscal period ending April 30, 2000. On May 16, it raised them again
by a full half point. Until the Fed sees evidence that the economy is slowing,
it will likely continue to step on the monetary brakes. It may be difficult for
bond prices to make much headway swimming against a strong tide of rising
short-term interest rates.
However, attractive yields should produce respectable total returns. Looking
farther ahead, if the current stock market correction evolves into a full-scale
bear market, we believe that bonds may develop a larger and more enthusiastic
following. In the long term, we also believe that bonds will be major
beneficiaries of the "new economy". The Internet is eliminating the "middleman"
from the financial system, and in doing
A-4
<PAGE>
so, it is removing an entire cost layer from the economy. We believe that this
powerful disinflationary force, over the longer term, will bring interest rates
significantly lower.
Irrespective of short-term bond market trends, we will continue to focus on
value -- investing in what we perceive to be the best individual opportunities
in the most promising sectors of the fixed income market. We will also continue
to attempt to control interest rate risk through maturity/duration management
strategies.
GOVERNMENT MONEY FUND AND CASH RESERVES Short-term interest rates rose
steadily higher in the first half of fiscal 2000 as the Federal Reserve
implemented a series of three 25 basis point (0.25%) rate hikes in an effort to
slow an economy that kept gaining momentum. The yield on 90-day Treasury Bills
increased by 85 basis points (0.85%). However, the yield on 90-day commercial
paper rose only 32 basis points (0.32%) over the same period. This was a
November/December market anomaly resulting from investors' demand for yield
premiums on commercial paper maturing after year-end 1999 as insurance against
any possible problems relating to the year 2000 transition (the so-called Y2K
bug).
In response to rising short-term interest rates, we continued to maintain
relatively conservative weighted average maturities (WAM) in both the Government
Money Fund and Cash Reserves. Government Money Fund began the reporting period
with a WAM of 59.2 days and ended it at 69.4 days. Cash Reserves started at 49.3
days and ended at 54.0 days. Throughout the period, we employed a strategy of
keeping weighted average maturities relatively short as short-term interest
rates rose in anticipation of Fed rate hikes, and then extending WAM when the
hikes were announced. This strategy allowed us to roll over assets faster into
higher yielding securities as rates were rising and lock in higher yields as
rates temporarily stabilized following Fed actions.
We made only one major asset allocation shift in Cash Reserves, increasing our
commitment to commercial paper during the calendar year 2000, while decreasing
our positions in U.S. Government Agency securities. In the fall of 1999, we had
built a larger than normal position in the more liquid Agencies, assuming a
"better safe than sorry" posture concerning potential Y2K related market
disruptions. After the new millennium dawned without any serious glitches, we
quickly returned to higher yielding commercial paper, which, at the close of the
first half of our fiscal 2000, comprised a more normal 82.7% of portfolio
assets.
As of April 30, 2000, Government Money Fund had a 5.14% 7-day current yield
and 5.27% 7-day effective yield.* The corresponding
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<PAGE>
yields for Cash Reserves were 5.61% and 5.77%.* In our view, these yields
represent attractive real rates of return (yield above the prevailing inflation
rate) for money market funds.
LIMITED MATURITY BOND FUND We are pleased to report that the Limited Maturity
Bond Fund posted a modestly positive total return for the six months ending
April 30, in what has been a very challenging fixed income market. True to its
name, this is a portfolio of fixed income instruments with relatively short-term
maturities. During this reporting period, weighted average maturity ranged from
2.4 to 5.2 years, a segment of the yield curve directly impacted by Federal
Reserve rate hikes. Also, the portfolio is traditionally biased toward higher
yielding fixed income sectors, with less substantial positions in Treasuries.
With Treasuries significantly outperforming all other fixed income sectors, we
were running uphill through the first half of fiscal 2000.
In response to rising interest rates, the portfolio's weighted average
maturity and duration (a standard measure of interest rate sensitivity) were
reduced from 4.6 years and 3.5 years respectively at the beginning of this
reporting period to 2.7 years and 2.1 years at its close. We currently expect to
maintain this conservative maturity/duration posture until we see interest rate
risk abating.
The most significant change in our portfolio's sector allocation was a
substantial reduction in mortgage backed securities. We believed the sector had
become fully valued and that increasing interest rate volatility posed a problem
for mortgage securities going forward. At the end of November, we began taking
profits and whittled our allocation down from 30.1% at the beginning of fiscal
first-half 2000 to 7.9% at the end of February. Our timing was relatively good,
as mortgages began stumbling in late March.
We used most of the proceeds from our sales of mortgage bonds to increase our
allocation to federally sponsored agency securities, which we believed were
priced attractively. Much has been made over proposed legislation to eliminate
lines of credit to government-sponsored enterprises such as Fannie Mae (Federal
National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage
Corp.). We do not anticipate the Treasury Department pulling the rug out from
under this sector. Furthermore, even on a stand-alone basis, these entities
would still enjoy very high credit ratings. We believe the Fannie Mae benchmark
issues are priced especially attractively and may get a boost if reduced
issuance of Treasuries makes the Fannie Mae benchmark a substitute for
Treasuries as a standard fixed income reference, as some observers expect to
happen. Modest trimming in other sectors allowed us to increase our allocation
to U.S. Treasuries, which should continue
A-6
<PAGE>
to benefit from favorable supply/demand dynamics, and cash equivalent reserves.
We believe having some "dry powder" to invest in evolving opportunities will
serve the Fund well in the months ahead.
No one can be sure of what the bond market holds in store over the short term.
Should the Fed remain aggressive, we will likely see further erosion in bond
prices. However, at some point we believe the Fed will succeed in slowing the
economy, setting the stage for a bond market rally. In the interim, we believe
high nominal yields and real rates of return make bonds a good value for income
oriented investors.
HIGH YIELD BOND FUND In the first half of fiscal 2000, high-yield bonds
continued to suffer from declining demand accentuated by mutual fund
withdrawals. In the first four months of calendar 2000 alone, approximately
$4.6 billion flowed out of high-yield mutual funds. This four-month total
exceeds the highest previous outflow for any single year since high-yield fund
data became available in 1984. What is causing this stampede out of high-yield
bonds? Historically, during periods of rising interest rates, bonds of lower
credit quality are hit the hardest. Also, since high-yield bonds are
subordinated in a company's credit structure, weakness in a company's stock
price tends to create selling pressure on the company's high-yield bonds as
well. The recent overall stock market weakness has pressured high-yield bond
prices in general.
What will bring investors back to the high-yield market? In our opinion, very
high yields relative to Treasuries may do the job. As of May 8, 2000 (shortly
after the April 30 close of this reporting period), the Merrill Lynch High-Yield
Master II Index yielded 12.4%, or 5.5% more than comparable maturity Treasuries.
This is in the high end of the historical yield spread range, and in our
opinion, indicates good value. While we can't predict the future, at least one
research study indicates that high-yield securities have usually posted strong
relative performance during the six- and twelve-month periods following NASDAQ
sell-offs.
Over the last 10 months, we have restructured the portfolio to bring it more
in line with the broad high-yield market and our benchmark index. We have moved
out of the securities of smaller, less widely followed issuers and into the more
actively traded securities of larger, more visible companies. We have also
altered our industry allocation to achieve more balanced market weighting. In
the process, we increased the portfolio's exposure to what we believe are solid
credits in growth industries like technology and telecommunications.
Restructuring the portfolio has been a challenge in the midst of a difficult
market. However, we believe it is now positioned to produce
A-7
<PAGE>
better relative performance going forward. We expect to see the benefits when
the high-yield market rebounds. Larger, more liquid securities tend to have
stronger credit profiles and are generally the first to recover when the
high-yield market turns around. Also, issuers in industries with the most
favorable growth prospects tend to attract the most investor attention when the
high-yield market rallies.
Here is one example of a current portfolio holding we believe represented a
good high-yield opportunity: Nextel(1) is a recognized industry leader in
wireless telecommunications. The company has strong subscriber growth and
improving profitability. Perhaps most importantly, Nextel has been increasing
its share in the business market. If this market share increase continues,
Nextel should be a prime beneficiary of increased data transmission over
wireless systems. The portfolio owns Nextel's 9.95% Senior Discount Notes of
2/15/08. This security, as of April 30, yielded 11.2%, which was 4.8% more than
comparable maturity Treasuries.
In closing, high-yield securities and high-yield funds are not for everyone.
However, we believe investors who can withstand volatility will be
satisfactorily rewarded over the long term. We are very near to completing a
substantial restructuring of the Fund. We are quite pleased with its current
composition and believe the Fund is well positioned to achieve its goal of
attractive absolute and relative long-term returns.
Sincerely,
/s/ Ted Giuliano
Ted Giuliano
Chairman of the Board and Trustee
Neuberger Berman Income Funds
*An investment in either Government Money Fund or Cash Reserves, like all other
mutual funds, is neither insured nor guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the funds seek
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the funds. The return on investment in Government
Money Fund and Cash Reserves will fluctuate. The composition, industries and
holdings of the funds are subject to change. Past performance is no guarantee
of future results.
"Current yield" of money market funds refers to the income generated by an
investment in the funds over a 7-day period. The income is then "annualized."
The "effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the funds is assumed to be reinvested. The "effective
yield" will be slightly higher that the "current yield" because of the
compounding effect of this assumed reinvestment.
The composition and holdings of the portfolios are subject to change.
(1) The fund held 400,000 par as of 4/30/00, but has since sold a significant
amount of its position.
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 4/30/00(1) 1 YR(1) 5 YR 10 YR
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY BOND
FUND(2) 6/9/86 +0.62% +1.20% +4.93% +5.94%
HIGH YIELD BOND FUND(2) 3/2/98 -8.30% -11.73% -3.86%(3) N/A
</TABLE>
YIELD ILLUSTRATION
FOR THE 7 DAYS ENDED 4/30/00
<TABLE>
<CAPTION>
INCEPTION CURRENT EFFECTIVE
DATE YIELD(4) YIELD(4)
<S> <C> <C> <C>
----------------------------------------------------------------------
GOVERNMENT MONEY FUND(5) 11/14/83 5.14% 5.27%
CASH RESERVES(2)(5) 4/12/88 5.61% 5.77%
</TABLE>
1) One-year and average annual total returns are for the periods ended
April 30, 2000. 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 of 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, 2000, 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.
A-9
<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) $ 461,345
Deferred organization costs (Note A) --
Receivable for Trust shares sold 736
Receivable from administrator -- net
(Note B) --
-------------
462,081
-------------
LIABILITIES
Dividends payable 12
Payable for Trust shares redeemed 331
Payable to administrator -- net (Note B) 95
Accrued expenses 137
-------------
575
-------------
NET ASSETS at value $ 461,506
-------------
NET ASSETS consist of:
Par value $ 462
Paid-in capital in excess of par value 461,048
Accumulated net realized losses on
investment (4)
Net unrealized depreciation in value of
investment --
-------------
NET ASSETS at value $ 461,506
-------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 461,510
-------------
NET ASSET VALUE, offering and redemption price per
share $1.00
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-1
<PAGE>
April 30, 2000 (Unaudited)
----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
CASH LIMITED MATURITY HIGH YIELD
RESERVES BOND FUND BOND FUND
<S> <C> <C> <C>
----------------------------------------------
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 1,192,859 $ 190,145 $ 14,719
Deferred organization costs (Note A) -- -- 41
Receivable for Trust shares sold 8,680 105 25
Receivable from administrator -- net
(Note B) -- -- 11
----------------------------------------------
1,201,539 190,250 14,796
----------------------------------------------
LIABILITIES
Dividends payable 21 121 32
Payable for Trust shares redeemed 810 121 3
Payable to administrator -- net (Note B) 247 20 --
Accrued expenses 267 123 39
----------------------------------------------
1,345 385 74
----------------------------------------------
NET ASSETS at value $ 1,200,194 $ 189,865 $ 14,722
----------------------------------------------
NET ASSETS consist of:
Par value $ 1,200 $ 20 $ 2
Paid-in capital in excess of par value 1,199,020 221,139 20,963
Accumulated net realized losses on
investment (26) (26,407) (4,088)
Net unrealized depreciation in value of
investment -- (4,887) (2,155)
----------------------------------------------
NET ASSETS at value $ 1,200,194 $ 189,865 $ 14,722
----------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 1,200,220 20,486 1,944
----------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $9.27 $7.57
----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<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) $ 13,093
-----------
Expenses:
Administration fee (Note B) 656
Amortization of deferred organization and
initial offering expenses (Note A) --
Auditing fees 4
Custodian fees 5
Legal fees 8
Registration and filing fees 81
Shareholder reports 33
Shareholder servicing agent fees 50
Trustees' fees and expenses 14
Miscellaneous 57
Expenses from corresponding Portfolio
(Notes A & B) 722
-----------
Total expenses 1,630
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (3)
-----------
Total net expenses 1,627
-----------
Net investment income 11,466
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized loss on investment securities (4)
Net realized loss on financial futures
contracts --
Net realized loss on foreign currency
transactions --
Change in net unrealized depreciation of
investment securities, financial futures
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts --
-----------
Net loss on investments from corresponding
Portfolio (Note A) (4)
-----------
Net increase (decrease) in net assets
resulting from operations $ 11,462
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
For the Six Months Ended April 30, 2000 (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) $ 32,949 $ 7,352 $ 981
-------------------------------------------
Expenses:
Administration fee (Note B) 1,520 279 24
Amortization of deferred organization and
initial offering expenses (Note A) -- -- 7
Auditing fees 4 4 2
Custodian fees 5 5 5
Legal fees 8 12 11
Registration and filing fees 60 23 24
Shareholder reports 54 24 19
Shareholder servicing agent fees 127 98 13
Trustees' fees and expenses 27 7 3
Miscellaneous 95 22 3
Expenses from corresponding Portfolio
(Notes A & B) 1,490 348 85
-------------------------------------------
Total expenses 3,390 822 196
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (3) (97) (106)
-------------------------------------------
Total net expenses 3,387 725 90
-------------------------------------------
Net investment income 29,562 6,627 891
-------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized loss on investment securities -- (5,562) (2,819)
Net realized loss on financial futures
contracts -- (4) (21)
Net realized loss on foreign currency
transactions -- (372) --
Change in net unrealized depreciation of
investment securities, financial futures
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts -- 547 289
-------------------------------------------
Net loss on investments from corresponding
Portfolio (Note A) -- (5,391) (2,551)
-------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 29,562 $ 1,236 $ (1,660)
-------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger Berman
----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
GOVERNMENT
MONEY FUND
Six Months
Ended Year
April 30, Ended
2000 October 31,
(000'S OMITTED) (UNAUDITED) 1999
<S> <C> <C>
--------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 11,466 $ 24,438
Net realized loss on investments
from corresponding Portfolio
(Note A) (4) --
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) -- --
--------------------------
Net increase (decrease) in net
assets resulting from operations 11,462 24,438
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (11,466) (24,438)
Net realized gain on investments -- (22)
--------------------------
Total distributions to shareholders (11,466) (24,460)
--------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 392,916 1,208,139
Proceeds from reinvestment of
dividends and distributions 11,382 24,307
Payments for shares redeemed (596,165) (946,644)
--------------------------
Net increase (decrease) from Trust
share transactions (191,867) 285,802
--------------------------
NET INCREASE (DECREASE) IN NET ASSETS (191,871) 285,780
NET ASSETS:
Beginning of period 653,377 367,597
--------------------------
End of period $ 461,506 $ 653,377
--------------------------
NUMBER OF TRUST SHARES:
Sold 392,916 1,208,139
Issued on reinvestment of dividends
and distributions 11,382 24,307
Redeemed (596,165) (946,644)
--------------------------
Net increase (decrease) in shares
outstanding (191,867) 285,802
--------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
----------------------------------------------------------------------
Income Funds
<TABLE>
<CAPTION>
CASH LIMITED MATURITY HIGH YIELD
RESERVES BOND FUND BOND FUND
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
April 30, Ended April 30, Ended April 30, Ended
2000 October 31, 2000 October 31, 2000 October 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 29,562 $ 47,825 $ 6,627 $ 15,532 $ 891 $ 2,396
Net realized loss on investments
from corresponding Portfolio
(Note A) -- (4) (5,938) (3,322) (2,840) (1,206)
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) -- -- 547 (6,966) 289 (783)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 29,562 47,821 1,236 5,244 (1,660) 407
----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (29,562) (47,825) (6,627) (15,781) (891) (2,396)
Net realized gain on investments -- -- -- -- -- --
----------------------------------------------------------------------------------
Total distributions to shareholders (29,562) (47,825) (6,627) (15,781) (891) (2,396)
----------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 1,150,868 1,564,077 70,521 83,283 2,518 18,400
Proceeds from reinvestment of
dividends and distributions 29,282 46,947 5,459 12,908 488 1,316
Payments for shares redeemed (1,084,121) (1,531,409) (107,765) (153,837) (9,539) (16,511)
----------------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions 96,029 79,615 (31,785) (57,646) (6,533) 3,205
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 96,029 79,611 (37,176) (68,183) (9,084) 1,216
NET ASSETS:
Beginning of period 1,104,165 1,024,554 227,041 295,224 23,806 22,590
----------------------------------------------------------------------------------
End of period $ 1,200,194 $ 1,104,165 $ 189,865 $ 227,041 $ 14,722 $ 23,806
----------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 1,150,868 1,564,077 7,510 8,570 313 1,956
Issued on reinvestment of dividends
and distributions 29,282 46,947 582 1,331 61 142
Redeemed (1,084,121) (1,531,409) (11,478) (15,831) (1,174) (1,772)
----------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding 96,029 79,615 (3,386) (5,930) (800) 326
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman April 30, 2000 (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. 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%, 84.47%, and 100.00%, for Government Money,
Cash Reserves, Limited Maturity, and High Yield, respectively, at April 30,
2000). 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 of these Funds 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 a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code,
B-7
<PAGE>
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, $4,112, and $3,565
expiring in 2002, 2003, 2005, 2006, and 2007, respectively, for Cash
Reserves; $533,438, $1,362,347, $5,043,103, $4,309,358, $1,607,920, $517,222,
$3,229,127, and $3,698,620 expiring in 2000, 2001, 2002, 2003, 2004, 2005,
2006, and 2007, respectively, for Limited Maturity; and $42,133 and
$1,206,076 expiring in 2006 and 2007, respectively, for High Yield,
determined as of October 31, 1999), it is the policy of each Fund not to
distribute such gains. The capital loss carryforwards shown above for Limited
Maturity include $533,438, $1,362,347, $329,262, and $552,290 expiring in
2000, 2001, 2002, and 2003, 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: Organization expenses incurred by High Yield are being
amortized on a straight-line basis over a five-year period. At April 30,
2000, the unamortized balance of such expenses amounted to $40,928.
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.
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.
B-8
<PAGE>
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, 2000, such excess expenses
amounted to $93,515 and $106,089, for Limited Maturity and High Yield,
respectively. For the six months ended April 30, 2000, there was no
reimbursement of expenses by Management for Cash Reserves. High Yield had 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 did not exceed its Expense Limitation. For the period from
November 1, 1999 to December 31, 1999, High Yield did not reimburse Management.
At April 30, 2000, High Yield has no remaining contingent liability to
Management under the agreement for any amount not repaid through December 31,
1999.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Several
individuals who are officers and/or trustees of the Trust are also employees of
Neuberger and/or Management.
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $3,372, $2,556, $2,724, and $271, for Government Money, Cash
Reserves, Limited Maturity, and High Yield, respectively.
B-9
<PAGE>
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended April 30, 2000, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
-----------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT MONEY $337,358,000 $542,250,000
CASH RESERVES 824,897,000 769,133,000
LIMITED MATURITY 40,767,000 80,659,000
HIGH YIELD 1,134,000 8,782,000
</TABLE>
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent auditors. Annual reports
contain audited financial statements.
B-10
<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,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------
Net Asset Value, Beginning of Period $1.0000 $1.0001 $1.0000 $1.0000 $1.0000 $1.0000
------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0236 .0406 .0459 .0468 .0464 .0499
Net Gains or Losses on Securities -- -- .0001 -- -- --
------------------------------------------------------------------
Total From Investment Operations .0236 .0406 .0460 .0468 .0464 .0499
------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0236) (.0406) (.0459) (.0468) (.0464) (.0499)
Distributions (from net capital
gains) -- (.0001) -- -- -- --
------------------------------------------------------------------
Total Distributions (.0236) (.0407) (.0459) (.0468) (.0464) (.0499)
------------------------------------------------------------------
Net Asset Value, End of Period $1.0000 $1.0000 $1.0001 $1.0000 $1.0000 $1.0000
------------------------------------------------------------------
Total Return(2) +2.39%(3) +4.14% +4.69% +4.78% +4.74% +5.10%
------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 461.5 $ 653.4 $ 367.6 $ 308.2 $ 363.4 $ 308.3
------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .67%(5) .60% .64% .64% .67% .65%
------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .67%(5) .60% .63% .63% .67% .65%
------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 4.72%(5) 4.08% 4.61% 4.65% 4.65% 5.00%
------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-11
<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,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.0000 $ 1.0000 $ 1.0000 $1.0000 $1.0000 $1.0000
--------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0260 .0453 .0499 .0499 .0486 .0529
Net Gains or Losses on Securities -- -- -- -- -- --
--------------------------------------------------------------------
Total From Investment Operations .0260 .0453 .0499 .0499 .0486 .0529
--------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0260) (.0453) (.0499) (.0499) (.0486) (.0529)
--------------------------------------------------------------------
Net Asset Value, End of Period $ 1.0000 $ 1.0000 $ 1.0000 $1.0000 $1.0000 $1.0000
--------------------------------------------------------------------
Total Return(2) +2.63%(3) +4.63% +5.10% +5.11% +4.97% +5.42%
--------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $1,200.2 $1,104.2 $1,024.6 $ 664.1 $ 482.0 $ 408.9
--------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .60%(5) .61% .64% .63% .66% .65%
--------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(6) .60%(5) .61% .63% .63% .65% .65%
--------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 5.25%(5) 4.55% 5.00% 4.98% 4.86% 5.30%
--------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-12
<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,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.51 $ 9.91 $10.03 $ 9.99 $10.06 $ 9.88
-------------------------------------------------------------
Income From Investment Operations
Net Investment Income .30 .59 .60 .63 .60 .62
Net Gains or Losses on Securities
(both realized and unrealized) (.24) (.40) (.12) .04 (.07) .18
-------------------------------------------------------------
Total From Investment Operations .06 .19 .48 .67 .53 .80
-------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.30) (.59) (.60) (.63) (.60) (.62)
-------------------------------------------------------------
Net Asset Value, End of Period $ 9.27 $ 9.51 $ 9.91 $10.03 $ 9.99 $10.06
-------------------------------------------------------------
Total Return(2) +0.62%(3) +1.98% +4.92% +6.97% +5.44% +8.32%
-------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $189.9 $227.0 $295.2 $255.4 $245.7 $307.4
-------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .70%(5) .70% .71% .70% .71% .70%
-------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(6) .70%(5) .70% .70% .70% .70% .70%
-------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 6.37%(5) 5.98% 6.03% 6.34% 6.10% 6.21%
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-13
<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
Ended Period from
April 30, Year Ended March 3, 1998(7)
2000 October 31, to October 31,
(UNAUDITED) 1999 1998
<S> <C> <C> <C>
-------------------------------------------------
Net Asset Value, Beginning of Period $8.68 $9.34 $10.00
-------------------------------------------------
Income From Investment Operations
Net Investment Income .40 .85 .51
Net Gains or Losses on Securities
(both realized and unrealized) (1.11) (.66) (.66)
-------------------------------------------------
Total From Investment Operations (.71) .19 (.15)
-------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.40) (.85) (.51)
-------------------------------------------------
Net Asset Value, End of Period $7.57 $8.68 $ 9.34
-------------------------------------------------
Total Return(2) -8.30%(3) +1.86% -1.69%(3)
-------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $14.7 $23.8 $ 22.6
-------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) 1.00%(5) 1.01% 1.00%(5)
-------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(6) 1.00%(5) 1.01% 1.00%(5)
-------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 9.99%(5) 9.20% 8.03%(5)
-------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-14
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman April 30, 2000 (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) 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
--------------------------------------------------------------------
<S> <C> <C>
Net Expenses .67% .68%
-------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
April 30, Year Ended October 31,
LIMITED MATURITY 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses .79% .72% .75% .71% .71% .71%
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
Six Months Ended Year Ended March 3, 1998
April 30, October 31, to October 31,
HIGH YIELD 2000 1999 1998
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 2.19% 1.43% 1.65%
-------------------------------------------------
</TABLE>
7) The date investment operations commenced.
B-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
Principal Annualized
Amount Yield at Date Value(1)
(000's omitted) of Purchase (000's omitted)
--------------------- ------------- ---------------
<C> <S> <C> <C>
U.S. TREASURY
SECURITIES -- BACKED BY THE
FULL FAITH AND CREDIT OF THE
U.S. GOVERNMENT (92.3%)
$ 6,635 U.S. Treasury Bills,
due 5/4/00 5.44% $ 6,632
18,015 U.S. Treasury Bills,
due 5/11/00 5.63-5.66% 17,987
1,445 U.S. Treasury Bills,
due 5/18/00 5.65% 1,441
57,925 U.S. Treasury Bills,
due 5/25/00 5.70-5.71% 57,711
38,570 U.S. Treasury Bills,
due 6/1/00 5.64-5.77% 38,387
40,070 U.S. Treasury Bills,
due 6/15/00 5.84-5.86% 39,785
26,789 U.S. Treasury Bills,
due 6/22/00 5.90-5.94% 26,566
10,000 U.S. Treasury Notes, 5.375%,
due 6/30/00 5.64% 9,996
27,672 U.S. Treasury Bills,
due 7/6/00 5.69-5.86% 27,390
47,583 U.S. Treasury Bills,
due 7/13/00 5.73-5.87% 47,041
79,383 U.S. Treasury Bills,
due 7/20/00 5.77-5.87% 78,394
30,122 U.S. Treasury Bills,
due 7/27/00 5.76-5.78% 29,713
10,000 U.S. Treasury Notes, 6.25%,
due 8/31/00 6.21% 10,001
25,000 U.S. Treasury Notes, 5.75%,
due 10/31/00 6.29% 24,934
10,000 U.S. Treasury Notes, 4.00%,
due 10/31/00 6.20% 9,894
------------
TOTAL U.S. TREASURY SECURITIES 425,872
Cash, receivables and other
assets, less liabilities
(7.7%) 35,473
------------
TOTAL NET ASSETS (100.0%) $ 461,345
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
ASSET-BACKED COMMERCIAL PAPER
(12.1%)
$ 5,000 Asset Securitization
Cooperative Corp., 6.01%,
due 5/12/00 P-1 A-1+ $ 4,991
25,000 Receivables Capital Corp.,
6.08%, due 6/14/00 P-1 A-1+ 24,814
15,062 Monte Rosa Capital Corp.,
6.14%, due 6/19/00 P-1 A-1+ 14,936
20,000 Enterprise Funding Corp.,
6.12%, due 6/28/00 P-1 A-1+ 19,803
56,025 Govco Inc., 5.92%-6.14%,
due 5/1/00-7/6/00 P-1 A-1+ 55,711
25,000 Windmill Funding Corp., 6.13%,
due 7/17/00 P-1 A-1+ 24,672
----------
TOTAL ASSET-BACKED COMMERCIAL
PAPER 144,927
----------
CORPORATE COMMERCIAL PAPER
(70.6%)
19,300 Bell Atlantic Financial
Services, Inc., 5.98%,
due 5/1/00 P-1 A-1 19,300
20,000 General Motors Acceptance
Corp., 6.08%, due 5/1/00 P-1 A-1 20,000
2,580 UBS Finance (Delaware), Inc.,
6.04%, due 5/1/00 P-1 A-1+ 2,580
10,975 Emerson Electric Co., 6.00%,
due 5/4/00 P-1 A-1+ 10,970
8,310 Ford Motor Credit Co., 5.98%,
due 5/4/00 P-1 A-1+ 8,306
20,000 Merck & Co., Inc., 5.97%,
due 5/9/00 P-1 A-1+ 19,973
4,700 Abbey National North America
Corp., 5.63%, due 5/12/00 P-1 A-1+ 4,692
13,625 Gillette Co., 6.00% & 6.02%,
due 5/11/00 & 5/12/00 P-1 A-1+ 13,601
7,192 GTE Funding Inc., 6.00%,
due 5/12/00 P-1 A-1 7,179
9,000 Eksportfinans ASA, 6.00%,
due 5/16/00 P-1 A-1+ 8,977
20,000 PPG Industries, Inc., 6.01%,
due 5/16/00 P-1 A-1 19,950
19,571 Colgate-Palmolive Co., 6.00%,
due 5/17/00 P-1 A-1 19,519
10,000 Pitney Bowes Credit Corp.,
6.00%, due 5/18/00 P-1 A-1+ 9,972
20,000 Gannett Co., Inc., 6.05%,
due 5/22/00 P-1 A-1+ 19,929
45,000 Snap-On Inc., 6.00% & 6.07%,
due 5/8/00 & 5/22/00 P-1 A-1 44,900
15,664 Bell Atlantic Network Funding
Corp., 6.02% & 6.07%,
due 5/23/00 & 5/24/00 P-1 A-1+ 15,605
5,000 Halliburton Co., 5.98%,
due 5/30/00 P-1 A-1 4,976
</TABLE>
C-2
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
$ 6,000 Illinois Tool Works, Inc.,
6.02%, due 5/31/00 P-1 A-1+ $ 5,970
25,000 ANZ (Delaware) Inc., 6.04%,
due 6/21/00 P-1 A-1+ 24,786
9,500 AWB (Finance) Ltd., 6.05%,
due 6/30/00 P-1 A-1+ 9,404
30,000 Deutsche Bank Financial Inc.,
6.07%, due 7/5/00 P-1 A-1+ 29,671
30,000 Toyota Motor Credit Corp.,
6.10%, due 7/5/00 P-1 A-1+ 29,670
30,000 Coca-Cola Co., 6.09%,
due 7/6/00 P-1 A-1 29,665
15,000 MetLife Funding, Inc., 6.12%,
due 7/6/00 P-1 A-1+ 14,832
54,590 Goldman Sachs Group, L.P.,
5.91%-6.16%,
due 5/1/00-7/10/00 P-1 A-1+ 54,177
19,700 Westpac Capital Corp., 6.09%,
due 7/12/00 P-1 A-1+ 19,460
23,000 USAA Capital Corp., 6.00% &
6.09%, due 5/23/00 & 7/14/00 P-1 A-1+ 22,827
38,825 Minnesota Mining &
Manufacturing Co.,
5.84%-6.10%,
due 5/19/00-7/19/00 P-1 A-1+ 38,371
30,000 Merrill Lynch & Co., Inc.,
5.91% & 6.14%, due 5/16/00 &
7/21/00 P-1 A-1+ 29,642
42,000 KFW International Finance,
6.01% & 6.10%, due 5/17/00 &
7/26/00 P-1 A-1+ 41,650
15,000 Canadian Wheat Board, Canada,
6.06%, due 7/31/00 P-1 A-1+ 14,770
34,000 Diageo Capital PLC, 6.00% &
6.02%, due 5/17/00 & 9/12/00 P-1 A-1 33,514
49,505 British Telecommunications
PLC, 5.91%-6.13%,
due 5/23/00-9/15/00 P-1 A-1+ 48,961
30,000 General Electric Capital
Corp., 5.71%-6.24%,
due 5/10/00-9/27/00 P-1 A-1+ 29,512
19,500 National Rural Utilities Coop.
Finance Corp., 6.06% & 6.18%,
due 9/22/00 & 10/11/00 P-1 A-1+ 18,992
30,000 Electricite de France, 6.15%,
due 10/13/00 P-1 A-1+ 29,154
14,000 du Pont (E.I.) de Nemours &
Co., 6.15%, due 10/16/00 P-1 A-1+ 13,598
55,000 Anheuser-Busch Cos., Inc.,
6.20%, due 10/4/00 &
10/31/00 P-1 A-1 53,406
----------
TOTAL CORPORATE COMMERCIAL
PAPER 842,461
----------
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
TAXABLE REVENUE BONDS (4.1%)
$11,585 Health Institute of Indiana,
Inc., Loan Program Notes,
Ser. A, 6.24%, VRDN
due 10/1/28 P-1 A-1 $ 11,585
7,000 Rhode Island St. Student Loan
Au. Student Loan Rev.,
Ser. 4, 6.15%, VRDN
due 12/1/34 MIG-1 A-1+ 7,000
30,100 Florida Housing Finance Corp.,
Rev. Bonds, Ser. 1999 A,
6.10%, VRDN due 1/1/44 MIG-1 A-1+ 30,100
----------
TOTAL TAXABLE REVENUE BONDS 48,685
----------
CERTIFICATES OF DEPOSIT (3.4%)
5,000 Rabobank Nederland, Yankee
C.D., 5.205%, due 5/15/00 P-1 A-1+ 5,000
10,000 Bayerische Hypo-und
Vereinsbank AG, Yankee C.D.,
5.345%, due 5/24/00 P-1 A-1 10,000
10,000 Bank of Nova Scotia, Yankee
C.D., 6.02%, due 6/6/00 P-1 A-1 10,000
15,000 Abbey National Treasury
Services PLC, Eurodollar C.D.,
6.05%, due 6/15/00 P-1 A-1+ 15,000
----------
TOTAL CERTIFICATES OF DEPOSIT 40,000
----------
CORPORATE DEBT SECURITIES
(2.1%)
25,000 American Express Centurion
Bank, Variable Rate Notes,
6.19%, due 5/8/00 P-1 A-1 25,000
----------
TIME DEPOSITS (1.7%)
20,000 Sun Trust Bank, Inc., 6.0625%,
due 5/1/00 P-1 A-1+ 20,000
----------
</TABLE>
C-4
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Cash Reserves Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
FUNDING AGREEMENTS (5.9%)
$30,000 Hartford Life Insurance Co.,
Variable Rate Funding
Agreement, 6.17%, expiring
7/31/00 P-1 A-1 $ 30,000
40,000 Travelers Insurance Co.,
Variable Rate Funding
Agreement, 6.17%, expiring
10/27/00 & 3/16/01 P-1 A-1+ 40,000
----------
TOTAL FUNDING AGREEMENTS 70,000
----------
TOTAL INVESTMENTS (99.9%) 1,191,073
Cash, receivables and other
assets, less liabilities
(0.1%) 1,786
----------
TOTAL NET ASSETS (100.0%) $1,192,859
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES
(13.8%)
$ 9,860 U.S. Treasury Notes, 6.375%,
due 9/30/01 TSY TSY $ 9,815
4,500 U.S. Treasury Notes, 6.50%,
due 3/31/02 TSY TSY 4,483
10,385 U.S. Treasury Notes, 5.50%,
due 5/31/03 TSY TSY 10,065
4,390 U.S. Treasury Notes, 6.00%,
due 8/15/04 TSY TSY 4,299
2,510 U.S. Treasury
Inflation-Indexed Notes,
3.375%, due 1/15/07 TSY TSY 2,419
--------
TOTAL U.S. TREASURY SECURITIES
(COST $31,212) 31,081
--------
U.S. GOVERNMENT AGENCY
SECURITIES (10.7%)
24,300 Fannie Mae, Notes, 4.625%,
due 10/15/01 AGY AGY 23,522
510 Freddie Mac, Notes, 5.75%,
due 7/15/03 AGY AGY 488
--------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES
(COST $24,131) 24,010
--------
MORTGAGE-BACKED SECURITIES
(12.8%)
1,472 GE Capital Mortgage Services,
Inc., REMIC Pass-Through
Certificates, Ser. 1998-25,
Class B3, 6.25%, due 12/25/28 BB(3) 1,019(4)
1,579 PNC Mortgage Securities Corp.,
Pass-Through Certificates,
Ser. 1999-1, Class 1B4, 6.25%,
due 2/25/29 BB(3) 1,048(4)
941 Norwest Asset Securities
Corp., Mortgage Pass-Through
Certificates, Ser. 1999-13,
6.75%, due 5/25/29 BB(3) 674(4)
1,105 GE Capital Mortgage Services,
Inc., REMIC Pass-Through
Certificates, Ser. 1999-11,
Class B3, 6.50%, due 7/25/29 BB(3) 774(4)
965 Morgan Stanley Capital I Inc.,
Commercial Mortgage
Pass-Through Certificates,
Ser. 1998-HF2, 6.01%,
due 11/15/30 BB(3) 652(4)
</TABLE>
C-6
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
FANNIE MAE
$ 3,856 Pass-Through Certificates,
7.00%, due 9/1/03 & 6/1/11 AGY AGY $ 3,816
4,829 Pass-Through Certificates,
6.50%, due 5/1/13 AGY AGY 4,653
FREDDIE MAC
11 Mortgage Participation
Certificates, 10.50%,
due 10/1/00 & 12/1/00 AGY AGY 11
89 Mortgage Participation
Certificates, 8.50%,
due 10/1/01 AGY AGY 90
108 ARM Certificates, 7.00%,
due 1/1/17 AGY AGY 108
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
64 Pass-Through Certificates,
7.50%, due 10/15/09-9/15/10 AGY AGY 64
111 Pass-Through Certificates,
12.00%, due 5/15/12-3/15/15 AGY AGY 125
3,140 Pass-Through Certificates,
7.00%, due 4/15/11 & 12/15/28 AGY AGY 3,055
6,599 Pass-Through Certificates,
6.50%, due 2/15/29 & 8/15/29 AGY AGY 6,190
3,500 Pass-Through Certificates,
6.50%, TBA, 30 Year Maturity AGY AGY 3,277
3,185 Pass-Through Certificates,
8.00%, TBA, 30 Year Maturity AGY AGY 3,193
--------
TOTAL MORTGAGE-BACKED
SECURITIES
(COST $29,367) 28,749
--------
ASSET-BACKED SECURITIES (9.2%)
2,180 Honda Auto Lease Trust,
Ser. 1999-A, Class A4, 6.45%,
due 9/16/02 Aaa AAA 2,160
6,500 Ford Credit Auto Loan Master
Trust, Auto Loan Certificates,
Ser. 1996-1, 5.50%,
due 2/15/03 Aaa AAA 6,424
62 Honda Auto Receivables Grantor
Trust, Ser. 1997-A, Class A,
5.85%, due 2/15/03 Aaa AAA 61
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
$ 5,600 Chase Credit Card Master
Trust, Ser. 1997-2, Class A,
6.30%, due 4/15/03 Aaa AAA $ 5,596
477 Navistar Financial Owner
Trust, Ser. 1996-B,
Class A-3, 6.33%, due 4/21/03 Aaa AAA 477
4,720 Chemical Master Credit Card
Trust 1, Ser. 1995-2,
Class A, 6.23%, due 6/15/03 Aaa AAA 4,709
714 Chevy Chase Auto Receivables
Trust, Ser. 1996-2, Class A,
5.90%, due 7/15/03 Aaa AAA 711
600 Daimler Chrysler Auto Trust,
Ser. 2000-A, Class A3, 7.09%,
due 12/6/03 Aaa AAA 597
--------
TOTAL ASSET-BACKED SECURITIES
(COST $20,911) 20,735
--------
BANKS & FINANCIAL INSTITUTIONS
(13.2%)
3,150 Countrywide Funding Corp.,
Medium-Term Notes, Ser. A,
7.31%, due 8/28/00 A3 A 3,153
3,600 Countrywide Home Loans, Inc.,
Notes, 5.62%, due 10/16/00 A3 A 3,577
2,000 Dime Bancorp, Inc., Notes,
6.375%, due 1/30/01 Ba1 BBB- 1,979
2,000 NationsBank Corp., Senior
Medium-Term Notes, Ser. E,
5.70%, due 2/9/01 Aa2 A+ 1,977
4,430 Morgan Stanley, Dean Witter, &
Co., Global Medium-Term Notes,
Ser. C, 6.09%, due 3/9/01 Aa3 A+ 4,391
6,660 Household Finance Corp.,
Senior Medium-Term Notes,
6.06%, due 5/14/01 A2 A 6,576
1,500 Dime Bancorp, Inc., Notes,
7.00%, due 7/25/01 Ba1 BBB- 1,482
3,025 Lehman Brothers Holdings Inc.,
Medium-Term Notes, Ser. E,
7.00%, due 5/15/03 A3 A 2,955
2,900 Paine Webber Group Inc.,
Notes, 6.45%, due 12/1/03 Baa1 BBB+ 2,748
1,000 Bank United Corp., Medium-Term
Notes, Ser. A, 8.00%,
due 3/15/09 Ba2 BBB- 886
--------
TOTAL BANKS & FINANCIAL
INSTITUTIONS
(COST $30,182) 29,724
--------
</TABLE>
C-8
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
CORPORATE DEBT SECURITIES
(34.4%)
$ 4,800 Norfolk Southern Corp., Notes,
6.70%, due 5/1/00 Baa1 BBB+ $ 4,800
2,510 Chesapeake Corp., Notes,
10.375%, due 10/1/00 Ba1 BB+ 2,538
2,577 Safeway Inc., Notes, 5.75%,
due 11/15/00 Baa2 BBB 2,557
3,325 AT&T Capital Corp., Notes,
6.875%, due 1/16/01 A1 A+ 3,320
2,320 Fort James Corp., Notes,
6.234%, due 3/15/01 Baa2 BBB 2,295
1,125 Tyco International Group S.A.,
Notes, 6.125%, due 6/15/01 Baa1 A- 1,109
1,780 CMS Energy Corp., Senior
Notes, 8.00%, due 7/1/01 Ba3 BB 1,758
3,300 Telecom Argentina Stet-France
SA, Medium-Term Notes, 9.75%,
due 7/12/01 B1 BBB- 3,316(4)
2,290 Colonial Realty Limited
Partnership, Senior Notes,
7.50%, due 7/15/01 Baa3 BBB- 2,266
1,220 USA Waste Services, Inc.,
Senior Notes, 6.125%,
due 7/15/01 Ba1 BBB 1,172
1,325 Cox Communications, Inc.,
Notes, 7.00%, due 8/15/01 Baa2 BBB+ 1,308
3,300 Texas Utilities Co., Notes,
5.94%, due 10/15/01 Baa3 BBB 3,232
2,080 Tyco International Ltd.,
Notes, 6.50%, due 11/1/01 A3 A- 2,053
1,923 Marlin Water Trust, Senior
Secured Notes, 7.09%,
due 12/15/01 Baa2 BBB 1,891(4)
2,965 ICI Wilmington Inc.,
Guaranteed Notes, 7.50%,
due 1/15/02 Baa1 A- 2,950
2,835 Black & Decker Corp.,
Medium-Term Notes, Ser. A,
8.90%, due 1/21/02 Baa2 BBB 2,869
945 Century Communications Corp.,
Senior Notes, 9.75%,
due 2/15/02 B1 BB- 944
900 Ford Motor Credit Co., Global
Bonds, 6.50%, due 2/28/02 A2 A 883
900 Comdisco, Senior Notes, 7.25%,
due 9/1/02 Baa1 BBB+ 884
3,195 Crown Cork & Seal Co., Inc.,
Notes, 7.125%, due 9/1/02 Baa2 BBB 3,112
2,280 Fort James Corp., Senior
Notes, 6.50%, due 9/15/02 Baa2 BBB 2,214
</TABLE>
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
$ 1,200 Adelphia Communications Corp.,
Senior Notes, Ser. B, 9.25%,
due 10/1/02 B1 B+ $ 1,176
2,460 Conseco Inc., Notes, 8.50%,
due 10/15/02 Ba1(5) BB-(5) 1,525
800 Reliant Energy Finance Co.,
Notes, 7.40%, due 11/15/02 Baa1 BBB+ 779(4)
1,375 American Standard Inc., Senior
Notes, 7.125%, due 2/15/03 Ba3 BB- 1,304
1,000 Safeway Inc., Medium-Term
Notes, 8.57%, due 4/1/03 Baa2 BBB 1,014
1,615 Cox Radio, Inc., Notes, 6.25%,
due 5/15/03 Baa2 BBB+ 1,540
60 Core-Mark International, Inc.,
Senior Subordinated Notes,
11.375%, due 9/15/03 B3 B 56
2,555 Akzo Nobel Inc., Guaranteed
Notes, 6.00%, due 11/15/03 A2 A 2,396(4)
705 Loomis Fargo & Co., Senior
Subordinated Notes, 10.00%,
due 1/15/04 B3 B 680
1,740 PDVSA Finance Ltd., Notes,
8.75%, due 2/15/04 Baa1 1,698(4)
2,400 Caterpillar Financial Services
Corp., Notes, 6.875%,
due 8/1/04 A2 A+ 2,321
660 EOP Operating Limited
Partnership, Notes, 6.625%,
due 2/15/05 Baa1 BBB+ 614
975 WestPoint Stevens Inc., Senior
Notes, 7.875%, due 6/15/05 Ba3 BB 804
4,200 Heritage Media Corp., Senior
Subordinated Notes, 8.75%,
due 2/15/06 Ba3 BB+ 4,137
735 Calpine Corp., Senior Notes,
7.625%, due 4/15/06 Ba1(5) BB+(5) 691
325 Jones Apparel Group, Senior
Notes, 7.875%, due 6/15/06 Baa2 BBB- 308
210 Printpack, Inc., Senior
Subordinated Notes, Ser. B,
10.625%, due 8/15/06 Caa1 B 202
2,825 Time Warner Inc., Notes,
8.11%, due 8/15/06 Baa3 BBB 2,849
680 Newport News Shipbuilding
Inc., Senior Subordinated
Notes, 9.25%, due 12/1/06 Ba3 B+ 677
</TABLE>
C-10
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Limited Maturity Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
$ 880 HydroChem Industrial Services,
Inc., Senior Subordinated
Notes, Ser. B, 10.375%,
due 8/1/07 Caa1 B- $ 669
2,000 Interpool, Inc., Notes, 7.20%,
due 8/1/07 Ba2(6) BB+(6) 1,579
1,000 Thiokol Corp., Senior Notes,
6.625%, due 3/1/08 Baa3 BBB 901
610 IMPAC Group, Inc., Senior
Subordinated Notes, 10.125%,
due 3/15/08 B3 B- 610
470 Trans-Resources, Inc., Senior
Notes, Ser. B, 10.75%,
due 3/15/08 B3 B- 254
160 Great Central Mines Ltd.,
Senior Notes, 8.875%,
due 4/1/08 Ba2 BB 150
1,000 Global Crossing Holdings Ltd.,
Senior Notes, 9.625%,
due 5/15/08 Ba2 BB 980
--------
TOTAL CORPORATE DEBT
SECURITIES (COST $81,791) 77,385
--------
FOREIGN GOVERNMENT
SECURITIES(7) (1.0%)
CAD 3,380 Canadian Treasury Bills,
5.543%, due 3/29/01
(COST $2,202) Aa1 AAA 2,157
--------
CORPORATE COMMERCIAL PAPER
(1.7%)
3,940 Bell Atlantic Network Funding
Corp., 6.05%, due 6/7/00
(COST $3,914) P-1 A-1+ 3,914(12)
--------
REPURCHASE AGREEMENTS (2.3%)
5,270 State Street Bank and Trust
Co. Repurchase Agreement,
5.81%, due 5/1/00, dated
4/28/00, Maturity Value
$5,272,552, Collateralized by
$5,415,000 Federal Home Loan
Bank, Notes, 5.40%,
due 11/17/03 (Collateral Value
$5,428,538)
(COST $5,270) 5,270(12)
--------
TOTAL INVESTMENTS (99.1%)
(COST $228,980) 223,025(8)
Cash, receivables and other
assets, less liabilities
(0.9%) 2,079
--------
TOTAL NET ASSETS (100.0%) $225,104
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
High Yield Bond Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- ---------- ---------------
<C> <S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES
(7.7%)
$423 BA Mortgage Securities, Inc.,
Mortgage Pass-Through
Certificates, Ser. 1998-6,
6.25%, due 12/26/28 BB(3) $ 282(4)
495 GE Capital Mortgage Services,
Inc., REMIC Pass-Through
Certificates, Ser. 1999-11,
Class B3, 6.50%, due 7/25/29 BB(3) 347(4)
747 Morgan Stanley Capital I Inc.,
Commercial Mortgage
Pass-Through Certificates,
Ser. 1998-HF2, 6.01%,
due 11/15/30 BB(3) 505(4)
-------
TOTAL MORTGAGE-BACKED
SECURITIES
(COST $1,144) 1,134
-------
CORPORATE DEBT SECURITIES
(82.5%)
60 Core-Mark International, Inc.,
Senior Subordinated Notes,
11.375%, due 9/15/03 B3 B 56
125 Acetex Corp., Guaranteed
Notes, 9.75%, due 10/1/03 B3 B+ 117
98 Loomis Fargo & Co., Senior
Subordinated Notes, 10.00%,
due 1/15/04 B3 B 95
210 Playtex Products, Inc., Senior
Notes, Ser. B, 8.875%,
due 7/15/04 B1 B+ 204
60 AMERCO, Senior Notes, 8.80%,
due 2/4/05 Ba1 BBB 58
250 MTS, INC., Senior Subordinated
Notes, 9.375%, due 5/1/05 Caa1 B- 107
210 Seagull Energy Corp., Senior
Subordinated Notes, 8.625%,
due 8/1/05 Ba3 BB- 203
250 Clearnet Communications Inc.,
Senior Step Up Notes, Yielding
12.183%, due 12/15/05 B3 254
300 Vintage Petroleum, Inc.,
Senior Subordinated Notes,
9.00%, due 12/15/05 B1 BB- 296
210 Microcell Telecommunications,
Senior Step Up Notes, Yielding
11.4225%, due 6/1/06 B3 190
</TABLE>
C-12
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- ---------- ---------------
<C> <S> <C> <C> <C>
$115 Printpack, Inc., Senior
Subordinated Notes, Ser. B,
10.625%, due 8/15/06 Caa1 B $ 110
150 Motors and Gears, Inc., Senior
Notes, Ser. B, 10.75%,
due 11/15/06 B3 B 143
150 Newport News Shipbuilding
Inc., Senior Notes, 8.625%,
due 12/1/06 Ba1 BB 148
210 Nuevo Grupo Iusacell S.A.,
Senior Notes, 14.25%,
due 12/1/06 B1 B+ 219(4)
250 Bio Rad Laboratories, Inc.,
Senior Subordinated Notes,
11.625%, due 2/15/07 B2 B 255(4)
180 Fonda Group, Inc., Senior
Subordinated Notes, Ser. B,
9.50%, due 3/1/07 B3 B- 144
120 Doane Pet Care Co., Senior
Subordinated Notes, 9.75%,
due 5/15/07 B3 B- 105
360 Venture Holdings Trust, Senior
Notes, 11.00%, due 6/1/07 B2 B 302
100 Stena AB, Senior Notes, 8.75%,
due 6/15/07 Ba2 BB 83
150 Polymer Group, Inc., Senior
Subordinated Notes, 9.00%,
due 7/1/07 B2 B 135
60 HydroChem Industrial Services,
Inc., Senior Subordinated
Notes, Ser. B, 10.375%,
due 8/1/07 Caa1 B- 46
250 Nortek, Inc., Senior Notes,
Ser. B, 9.125%, due 9/1/07 B1 B+ 231
210 NBTY, Inc., Senior
Subordinated Notes, Ser. B,
8.625%, due 9/15/07 B1 B+ 183
85 K & F Industries, Inc., Senior
Subordinated Notes, 9.25%,
due 10/15/07 B3 B- 79
250 Fisher Scientific
International Inc., Senior
Subordinated Notes, 9.00%,
due 2/1/08 B3 B- 230
210 Allegiance Telecom, Inc.,
Senior Step Up Notes, Yielding
10.992%, due 2/15/08 B3 B 148
270 Brand Scaffold Services, Inc.,
Senior Notes, 10.25%,
due 2/15/08 B3 B- 235
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- ---------- ---------------
<C> <S> <C> <C> <C>
$400 Nextel Communications, Inc.,
Senior Redeemable Step Up
Notes, Yielding 10.926%,
due 2/15/08 B1 B $ 282
210 Beckman Coulter, Inc., Senior
Notes, 7.45%, due 3/4/08 Ba1 BB+ 191
70 IMPAC Group, Inc., Senior
Subordinated Notes, 10.125%,
due 3/15/08 B3 B- 70
250 Musicland Group, Inc., Senior
Subordinated Notes, 9.875%,
due 3/15/08 B2 B 205
520 Trans-Resources, Inc., Senior
Notes, Ser. B, 10.75%,
due 3/15/08 B3 B- 281
300 Great Central Mines Ltd.,
Senior Notes, 8.875%,
due 4/1/08 Ba2 BB 280
150 Numatics, Inc., Senior
Subordinated Notes, 9.625%,
due 4/1/08 B3 CCC+ 119
250 Riverwood International Corp.,
Senior Subordinated Notes,
10.875%, due 4/1/08 Caa1 CCC+ 240
200 Ultrapetrol (Bahamas) Ltd.,
First Preferred Ship Mortgage
Notes, 10.50%, due 4/1/08 B1 BB- 176
250 Hudson Respiratory Care Inc.,
Senior Subordinated Notes,
9.125%, due 4/15/08 B3 B- 192
250 Level 3 Communications, Inc.,
Senior Notes, 9.125%,
due 5/1/08 B3 B 217
320 Sun Healthcare Group, Inc.,
Senior Subordinated Notes,
9.375%, due 5/1/08 19(4)(9)(10)
250 Great Lakes Carbon Corp.,
Senior Subordinated Notes,
10.25%, due 5/15/08 B3 B- 221
200 Millar Western Forest Products
Ltd., Senior Notes, 9.875%,
due 5/15/08 B3 B+ 194
300 Aqua-Chem, Inc., Senior
Subordinated Notes, 11.25%,
due 7/1/08 Caa2 CCC+ 168
190 Bell Sports, Inc., Senior
Subordinated Notes, 11.00%,
due 8/15/08 B3 B- 187
500 DeCrane Aircraft Holdings,
Inc., Senior Subordinated
Notes, 12.00%, due 9/30/08 Caa1 B- 435
</TABLE>
C-14
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- ---------- ---------------
<C> <S> <C> <C> <C>
$250 Bulong Operations Ltd., Senior
Secured Notes, 12.50%,
due 12/15/08 Caa1 CC $ 148(11)
100 AK Steel Corp., Senior Notes,
7.875%, due 2/15/09 Ba2 BB 91
250 McLeodUSA Inc., Senior Notes,
8.125%, due 2/15/09 B1 B+ 225
500 Diamond Brands Inc., Senior
Step Up Debentures, Yielding
12.875%, due 4/15/09 Caa1 CCC+ 85
250 Isle of Capri Casinos, Inc.,
Senior Subordinated Notes,
Ser. B, 8.75%, due 4/15/09 B2 B 226
750 TeleCorp PCS, Inc., Senior
Subordinated Step Up Notes,
Yielding 11.625%, due 4/15/09 B3 491
250 Adelphia Communications Corp.,
Senior Notes, 7.875%,
due 5/1/09 B1 B+ 213
200 Avis Group Holdings, Senior
Subordinated Notes, 11.00%,
due 5/1/09 B2 BB- 208
25 Dura Operating Corp., Senior
Subordinated Notes, 9.00%,
due 5/1/09 B2 B 22
500 MEDIQ Inc., Senior Step Up
Debentures, Yielding 13.00%,
due 6/1/09 Ca CC 25
250 Nextlink Communications, Inc.,
Senior Notes, 10.75%,
due 6/1/09 B2 B 246
450 Falcon Products, Inc., Senior
Subordinated Notes, 11.375%,
due 6/15/09 B3 B 421
75 PSINet, Senior Notes, 11.00%,
due 8/1/09 B3 B- 66
250 Williams Communications Group,
Inc., Senior Notes, 10.875%,
due 10/1/09 B2 BB- 251
250 Global Crossing Holdings Ltd.,
Senior Notes, 9.50%,
due 11/15/09 Ba2 BB 244(4)
200 Voicestream Wireless Co.,
Senior Notes, 10.375%,
due 11/15/09 B2 B- 203(4)
210 Metromedia Fiber Network,
Inc., Senior Notes, 10.00%,
due 12/15/09 B2 B+ 200
</TABLE>
C-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
High Yield Bond Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- --------- ---------- ---------------
<C> <S> <C> <C> <C>
$250 Charter Communications
Holdings, LLC, Senior Notes,
10.25%, due 1/15/10 B2 B+ $ 241(4)
125 RCN Corp., Senior Notes,
10.125%, due 1/15/10 B3 B- 111
100 Telewest Communications PLC,
Senior Notes, 9.875%,
due 2/1/10 B1 B+ 98(4)
80 Del Webb Corp., Senior
Subordinated Debentures,
10.25%, due 2/15/10 B2 B- 66
125 Rhythms Netconnections, Senior
Notes, 14.00%, due 2/15/10 B3 CCC+ 111(4)
250 FLAG Telecom Holdings Limited,
Senior Notes, 11.625%,
due 3/30/10 B2 B 231(4)
100 Crown Castle International
Corp., Senior Step Up Notes,
Yielding 11.238%, due 5/15/11 B3 B 60
-------
TOTAL CORPORATE DEBT
SECURITIES (COST $14,302) 12,136
-------
REPURCHASE AGREEMENTS (4.3%)
630 State Street Bank and Trust
Co. Repurchase Agreement,
5.81%, due 5/1/00, dated
4/28/00, Maturity Value
$630,305, Collateralized by
$650,000 Federal Home Loan
Bank, Notes, 5.40%,
due 11/17/03 (Collateral Value
$651,625)
(COST $630) 630(12)
-------
CONVERTIBLE BONDS (1.5%)
290 Omnicare, Inc., Subordinated
Debentures, 5.00%,
due 12/1/07 (COST $206) Ba3 BBB- 227
-------
<CAPTION>
Number
of Shares
---------------------
<C> <S> <C> <C> <C>
WARRANTS (0.0%)
500 DeCrane Aircraft Holdings,
Inc. --
500 MEDIQ Inc. --
-------
TOTAL WARRANTS (COST $0) --
-------
TOTAL INVESTMENTS (96.0%)
(COST $16,282) 14,127(8)
Cash, receivables and other
assets, less liabilities
(4.0%) 593
-------
TOTAL NET ASSETS (100.0%) $14,720
-------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-16
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 2000 (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, 2000, these
securities amounted to $14,247,000 or 6.3% of net assets for Neuberger
Berman Limited Maturity Bond Portfolio and $2,755,000 or 18.7% of net assets
for Neuberger Berman High Yield Bond Portfolio.
5) Rated BBB- by Duff & Phelps Credit Rating Co.
6) Rated BBB by Fitch Investors Services, Inc.
7) Principal amount is stated in the currency in which the security is
denominated.
CAD -- Canadian Dollar
8) At April 30, 2000, 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 $228,980,000 $45,000 $6,000,000 $5,955,000
HIGH YIELD BOND PORTFOLIO 16,282,000 92,000 2,247,000 2,155,000
</TABLE>
9) Not rated by a nationally recognized statistical rating organization.
10) Non-income producing security -- in default.
11) Non-income producing security.
12) At cost, which approximates market value.
SEE NOTES TO FINANCIAL STATEMENTS
C-17
<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 $ 425,872
Cash 1
Deferred organization costs (Note A) --
Interest receivable 1,209
Prepaid expenses and other assets 6
Receivable for securities sold 34,395
-------------
461,483
-------------
LIABILITIES
Payable for securities purchased --
Payable to investment manager (Note B) 88
Accrued expenses 50
-------------
138
-------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 461,345
-------------
NET ASSETS consist of:
Paid-in capital $ 461,345
Net unrealized depreciation in value of
investment securities --
-------------
NET ASSETS $ 461,345
-------------
*Cost of investments $ 425,872
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-18
<PAGE>
April 30, 2000 (Unaudited)
----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
CASH LIMITED 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 $ 1,191,073 $ 223,025 $ 14,127
Cash 2 3 2
Deferred organization costs (Note A) -- -- 1
Interest receivable 2,052 2,860 374
Prepaid expenses and other assets 10 4 --
Receivable for securities sold -- 5,814 247
----------------------------------------------
1,193,137 231,706 14,751
----------------------------------------------
LIABILITIES
Payable for securities purchased -- 6,515 --
Payable to investment manager (Note B) 212 43 4
Accrued expenses 66 44 27
----------------------------------------------
278 6,602 31
----------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,192,859 $ 225,104 $ 14,720
----------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 1,192,859 $ 231,059 $ 16,875
Net unrealized depreciation in value of investment
securities -- (5,955) (2,155)
----------------------------------------------
NET ASSETS $ 1,192,859 $ 225,104 $ 14,720
----------------------------------------------
*Cost of investments $ 1,191,073 $ 228,980 $ 16,282
----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-19
<PAGE>
STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY
(000'S OMITTED) PORTFOLIO
<S> <C>
-----------
INVESTMENT INCOME
Interest income $ 13,093
-----------
Expenses:
Investment management fee (Note B) 609
Accounting fees 5
Auditing fees 13
Custodian fees (Note B) 67
Insurance expense 4
Legal fees 10
Trustees' fees and expenses 14
-----------
Total expenses 722
Expenses reduced by custodian fee expense
offset arrangement (Note B) (3)
-----------
Total net expenses 719
-----------
Net investment income 12,374
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment securities
sold (4)
Net realized loss on financial futures
contracts (Note A) --
Net realized loss on foreign currency
transactions (Note A) --
Change in net unrealized depreciation of
investment securities, financial futures
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts (Note A) --
-----------
Net loss on investments (4)
-----------
Net increase (decrease) in net assets
resulting from operations $ 12,370
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-20
<PAGE>
For the Six Months Ended April 30, 2000 (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 $ 32,949 $ 8,725 $ 981
-------------------------------------------
Expenses:
Investment management fee (Note B) 1,315 308 34
Accounting fees 5 5 5
Auditing fees 13 13 12
Custodian fees (Note B) 112 63 17
Insurance expense 6 2 --
Legal fees 12 14 14
Trustees' fees and expenses 27 8 3
-------------------------------------------
Total expenses 1,490 413 85
Expenses reduced by custodian fee expense
offset arrangement (Note B) (3) (3) --
-------------------------------------------
Total net expenses 1,487 410 85
-------------------------------------------
Net investment income 31,462 8,315 896
-------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment securities
sold -- (6,705) (2,819)
Net realized loss on financial futures
contracts (Note A) -- (4) (21)
Net realized loss on foreign currency
transactions (Note A) -- (445) --
Change in net unrealized depreciation of
investment securities, financial futures
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts (Note A) -- 758 289
-------------------------------------------
Net loss on investments -- (6,396) (2,551)
-------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 31,462 $ 1,919 $ (1,655)
-------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-21
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
GOVERNMENT
MONEY PORTFOLIO
Six Months
Ended Year
April 30,
Ended
2000 October 31,
(000'S OMITTED) (UNAUDITED) 1999
<S> <C> <C>
--------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 12,374 $ 26,324
Net realized loss on investments (4) --
Change in net unrealized
appreciation (depreciation) of
investments -- --
--------------------------
Net increase (decrease) in net
assets resulting from operations 12,370 26,324
--------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 337,358 1,124,520
Reductions (542,250) (864,743)
--------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (204,892) 259,777
--------------------------
NET INCREASE (DECREASE) IN NET ASSETS (192,522) 286,101
NET ASSETS:
Beginning of period 653,867 367,766
--------------------------
End of period $ 461,345 $ 653,867
--------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-22
<PAGE>
----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
CASH RESERVES
PORTFOLIO LIMITED MATURITY HIGH YIELD
Six Months BOND PORTFOLIO BOND PORTFOLIO
Ended Year Six Months Year Six Months Year
April 30, Ended Ended
Ended April 30, Ended April 30, Ended
2000 OCTOBER 31, 2000 OCTOBER 31, 2000 OCTOBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 31,462 $ 51,361 $ 8,315 $ 20,055 $ 896 $ 2,467
Net realized loss on investments -- (4) (7,154) (4,032) (2,840) (1,206)
Change in net unrealized
appreciation (depreciation) of
investments -- -- 758 (8,500) 289 (783)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 31,462 51,357 1,919 7,523 (1,655) 478
----------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 824,897 1,035,872 43,030 44,610 1,134 13,190
Reductions (769,133) (1,010,355) (89,972) (138,662) (8,782) (12,284)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 55,764 25,517 (46,942) (94,052) (7,648) 906
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 87,226 76,874 (45,023) (86,529) (9,303) 1,384
NET ASSETS:
Beginning of period 1,105,633 1,028,759 270,127 356,656 24,023 22,639
----------------------------------------------------------------------------------
End of period $ 1,192,859 $ 1,105,633 $ 225,104 $ 270,127 $ 14,720 $ 24,023
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 2000 (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. 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 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
C-24
<PAGE>
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: Organization expenses incurred by High Yield are being
amortized on a straight-line basis over a five-year period. At April 30,
2000, the unamortized balance of such expenses amounted to $922.
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 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.
C-25
<PAGE>
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, 2000, Limited Maturity and High
Yield had entered into various financial futures contracts. At April 30,
2000, there were no open positions.
10) REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements
with institutions that the Portfolio's investment manager has determined are
creditworthy. Each repurchase agreement is recorded at cost. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable a Portfolio to
obtain those securities in the event of a default under the repurchase
agreement. A Portfolio monitors, on a daily basis, the value of the
securities transferred to ensure that their value, including accrued
interest, is greater than amounts owed to a Portfolio under each such
repurchase agreement.
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.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Neuberger is
retained by Management to furnish it with investment recommendations and
research
C-26
<PAGE>
information without added cost to each Portfolio. Several individuals who are
officers and/or trustees of Managers Trust are also employees of Neuberger
and/or Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Custodian fees, was a reduction of $3,372,
$2,556, $3,232, and $271 for Government Money, Cash Reserves, Limited Maturity,
and High Yield, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended April 30, 2000, 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 $122,544,000 $176,794,000
HIGH YIELD 5,553,000 11,444,000
</TABLE>
All securities transactions for Government Money and Cash Reserves were
short-term.
During the six months ended April 30, 2000, Limited Maturity had entered into
various contracts to deliver currencies at specified future dates. At April 30,
2000, there were no open contracts.
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent auditors. Annual reports
contain audited financial statements.
C-27
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Government Money Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .30%(2) .28% .31% .30% .31% .31%
------------------------------------------------------------------
Net Expenses .29%(2) .28% .31% .30% .31% .31%
------------------------------------------------------------------
Net Investment Income 5.08%(2) 4.39% 4.93% 4.96% 4.99% 5.32%
------------------------------------------------------------------
Net Assets, End of Period (in millions) $461.3 $653.9 $367.8 $307.9 $362.5 $308.5
------------------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
2) Annualized.
C-28
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Cash Reserves Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .26%(2) .27% .29% .29% .30% .31%
-------------------------------------------------------------------
Net Expenses .26%(2) .27% .29% .29% .30% .31%
-------------------------------------------------------------------
Net Investment Income 5.58%(2) 4.88% 5.33% 5.31% 5.20% 5.62%
-------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,192.9 $1,105.6 $1,028.8 $665.8 $484.0 $409.2
-------------------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
2) Annualized.
C-29
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .33%(2) .31% .33% .33% .33% .33%
------------------------------------------------------------------
Net Expenses .33%(2) .31% .33% .33% .33% .33%
------------------------------------------------------------------
Net Investment Income 6.72%(2) 6.35% 6.38% 6.70% 6.45% 6.55%
------------------------------------------------------------------
Portfolio Turnover Rate 52% 102% 44% 89% 169% 88%
------------------------------------------------------------------
Net Assets, End of Period (in millions) $225.1 $270.1 $356.7 $293.0 $267.3 $319.6
------------------------------------------------------------------
</TABLE>
1) 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
--------------------------------------------------------------------------------
High Yield Bond Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
April 30, Year Ended March 3, 1998(1)
2000 October 31, to October 31,
(UNAUDITED) 1999 1998
<S> <C> <C> <C>
-------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .94%(3) .73% .89%(3)
-------------------------------------------------
Net Expenses .94%(3) .73% .89%(3)
-------------------------------------------------
Net Investment Income 10.03%(3) 9.44% 8.13%(3)
-------------------------------------------------
Portfolio Turnover Rate 34% 66% 16%
-------------------------------------------------
Net Assets, End of Period (in millions) $14.7 $24.0 $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-31
<PAGE>
OTHER INFORMATION
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
OFFICERS AND TRUSTEES
Theodore P. Giuliano
CHAIRMAN OF THE BOARD AND TRUSTEE
John Cannon
TRUSTEE
Barry Hirsch
TRUSTEE
Robert A. Kavesh
TRUSTEE
William E. Rulon
TRUSTEE
Candace L. Straight
TRUSTEE
Peter E. Sundman
PRESIDENT
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- 2000 Neuberger Berman Management Inc.
D-1
<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
[LOGO] A0071 05/00
<PAGE>
------------------------------------------------------
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 23, 2000
VIA EDGAR
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Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Neuberger Berman Income Funds:
Neuberger Berman Cash Reserves
Neuberger Berman Government Money Fund
Neuberger Berman High Yield Bond Fund
Neuberger Berman Limited Maturity Bond Fund
1933 Act File No. 2-85229
1940 Act File No. 811-3802
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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, 2000. 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
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Fatima Sulaiman
Enclosures
