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[LOGO]
Neuberger Berman
Municipal Funds-Registered Trademark-
Municipal Money Fund Semi-Annual Report
Municipal Securities Trust April 30, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
CHAIRMAN'S LETTER A-4
PERFORMANCE HIGHLIGHTS A-8
FINANCIAL STATEMENTS B-1
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Municipal Money Fund B-7
Municipal Securities Trust B-8
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Municipal Money Portfolio C-1
Municipal Securities Portfolio C-13
FINANCIAL STATEMENTS C-18
FINANCIAL HIGHLIGHTS
Municipal Money Portfolio C-23
Municipal Securities Portfolio C-24
DIRECTORY D-1
OFFICERS AND TRUSTEES D-2
</TABLE>
The "Neuberger Berman" name and logo are service marks of Neuberger
Berman, LLC. "Neuberger Berman Management Inc." and the individual fund
names in this report are either service marks or registered trademarks
of Neuberger Berman Management Inc. -C-2000.
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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. We believe that the result -- nearly the widest
spreads between Treasury and other fixed income sector yields in a
decade -- provides an exceptional buying opportunity in municipal 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 an investment grade intermediate maturity municipal bond with a tax
equivalent yield in excess of 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 the municipal bond market.
During this reporting period, municipal bond prices stabilized as supply and
demand in the market became more balanced. Although demand remained relatively
weak -- fixed income investors wanted to own Treasuries and little
else -- supply was severely limited as higher interest rates and record state
and local government budget surpluses significantly reduced new issuance. Yield
curve trends in the Treasury bond market strongly influenced municipal bonds as
well. Although the municipal bond market's yield curve did not invert like the
Treasury yield curve did, it flattened considerably, reflecting the much better
performance of longer maturity municipal bonds.
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Looking ahead, with supply likely to remain constrained, any improvement in
demand would have a very favorable impact on municipal securities prices. As I
write, investors have yet to start coming back to the municipal bond market. In
fact, municipal bond funds have had negative cash flows for the last two months.
This is a function of rising interest rates, the popularity of Treasuries, and
the result of the seasonal pattern of investors selling municipal securities to
raise cash to pay their taxes. This year, municipal bonds may also have been
sold to meet margin requirements on equity accounts as technology stocks
tumbled.
Going forward, we believe that demand for municipal securities will gradually
improve. If stocks continue to swoon, municipal securities could attract a more
immediate and enthusiastic following. But, market timing is not our forte. No
one can predict with certainty when municipal bonds will rally. However, with
yields at current levels, we believe municipal securities offer good absolute
and relative value. We will strive to enhance returns by looking for the most
fundamentally attractive market sectors and securities, and by managing interest
rate risk.
MUNICIPAL MONEY FUND In the first half of fiscal 2000 (ended April 30), a
series of Federal Reserve rate hikes translated into higher yields in the
municipal money market. In response to rising rates, we began reducing the
portfolio's weighted average maturity (WAM) in early December 1999, going from a
high of 65.2 days on December 3, 1999, to 43.9 days at the end of this reporting
period. With a flat yield curve, (providing very little difference in the yields
of long and short maturity securities), we did not sacrifice much yield by
reducing the portfolio's WAM.
During this reporting period, we increased our commitments to Pre-refunded
Escrowed securities (short-term debt instruments, which the issuer has refunded,
with the proceeds placed in an escrow account generally comprised of U.S.
Treasury securities). In our opinion, these securities were priced attractively
and served as a good substitute for longer maturity variable rate demand notes,
which were in very short supply. We also reduced our allocation in tax-exempt
commercial paper, which we believed had become fully valued.
Looking ahead, if the yield curve steepens, we may extend weighted average
maturity to a more normalized 50-60 days to enhance the
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portfolio's yield. As always, we will continually appraise value in the
different sectors of the tax-exempt money market and adjust asset allocation as
we think appropriate.
The current and effective (compounded) yields for the portfolio as of
April 30, 2000 are 3.69% and 3.76% respectively. This can be translated into
tax-equivalent current and effective yields of 6.11% and 6.30% respectively for
an investor in the highest federal income tax bracket.*
MUNICIPAL SECURITIES TRUST Severely limited supply helped offset persistently
weak demand in the municipal securities market, helping the Fund post a modestly
positive total return in the first half of fiscal 2000. In the first four months
of calendar year 2000, supply declined by more than 30%. With budget surpluses
and higher interest rates, state and local governments issued less debt. Demand
remained anemic. Overall, investors pulled more money out of municipal bond
mutual funds than they put in, while property and casualty insurers (traditional
buyers of municipal debt) continued to sit on the sidelines.
We kept the portfolio's weighted average maturity (WAM) and duration in the
lower end of their normal range throughout this reporting period -- a reflection
of our desire to minimize interest rate risk posed by aggressive Federal Reserve
tightening. An anomaly in the Treasury Bond market -- that is, a run-up in
prices of longer maturity Treasuries following the Treasury Department's
announcement it intended to retire some of this debt -- exerted a strong
influence on the municipal securities market. Following the Treasury Bond
market's lead, municipal bonds with longer maturity/duration outperformed
despite rising interest rates. Nevertheless, preservation of our shareholders'
capital is always our primary concern. We invest only in securities that are
investment grade when purchased, and during this period we believed it most
prudent, in light of rising interest rates, to keep the portfolio's WAM and
duration at the low end of their normal range.
On the asset allocation front, we reduced our commitments to General
Obligation bonds from state and local governments by 7.4% and increased our
exposure to higher yielding Revenue bonds by 8.4%.
Looking ahead, we see better times for municipal bonds. Credit quality
continues to improve. In calendar year 1999, credit upgrades outpaced credit
downgrades by a whopping 9 to 1 margin. We don't yet have year-to-date 2000
data, but we expect credit upgrades to continue
A-6
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to exceed downgrades by a wide margin. As mentioned before, we believe municipal
securities yields are relatively attractive on both an absolute and real rate of
return basis. At the end of this reporting period, the portfolio's 30-day yield
was 4.50%, compared to 4.38% at the end of October, 1999. For investors in the
highest federal income tax bracket, this translates into a tax equivalent yield
of 7.45%.* We think that's a pretty good deal. Also, although no one can predict
where stocks are headed, if the current market correction evolves into a full
fledged bear market, we believe that demand for municipal bonds will improve
quickly and substantially. With supply likely to remain limited, we expect
improving demand to have a very favorable impact on municipal securities prices.
Sincerely,
/s/ Theodore P. Giuliano
Ted Giuliano
Chairman of the Board and Trustee
Neuberger Berman Income Funds
*An investment in Municipal Money Fund, like all other mutual funds, is neither
insured nor guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
fund. The return on investment in Municipal Money Fund will fluctuate and past
performance is no guarantee of future results.
"Current yield" of a money market fund refers to the income generated by an
investment in the fund over a 7-day period. The income is then "annualized."
The "effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the funds is assumed to be reinvested. The
"effective yield" will be slightly higher than the "current yield" because of
the compounding effect of this assumed reinvestment.
Tax-equivalent yield is the taxable current or effective yield that an investor
would have had to receive in order to realize that same level of yield after
federal taxes at 39.6%, assuming that all of the Funds' income is exempt from
Federal income taxes. A portion of the income may be subject to the federal
alternative minimum tax for certain investors.
Neuberger Berman Management Inc.-Registered Trademark- currently absorbs
certain operating expenses of Municipal Securities Trust. Absent this
arrangement, which is subject to change, the 30-day SEC yield of Municipal
Securities Trust would have been 3.84% and the tax-equivalent yield would have
been 6.36%.
The composition, industries and holdings of the funds are subject to change.
Investment return will fluctuate. Share value of Municipal Securities Trust
will also fluctuate, and your shares, when redeemed, may be worth more or less
than you paid for them. Past performance is no guarantee of future results.
A-7
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PERFORMANCE HIGHLIGHTS
TOTAL RETURN ILLUSTRATION
<TABLE>
<CAPTION>
AVERAGE ANNUAL
SIX MONTH TOTAL RETURNS(1)
NEUBERGER BERMAN INCEPTION PERIOD ENDED -------------------------------
INCOME FUNDS DATE 04/30/00(1) 1 YR(1) 5 YR 10 YR
<S> <C> <C> <C> <C> <C>
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MUNICIPAL SECURITIES
TRUST(2) 7/9/87 +1.30% -1.01% +4.62% +5.61%
</TABLE>
YIELD ILLUSTRATION
FOR THE 7 DAYS ENDED 4/30/00
<TABLE>
<CAPTION>
TAX-
EQUIVALENT
CURRENT EFFECTIVE EFFECTIVE
YIELD(3) YIELD(3) YIELD(4)
<S> <C> <C> <C>
------------------------------------------------------------------------------
MUNICIPAL MONEY FUND(5) 3.69% 3.76% 6.30%
</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. voluntarily bears certain operating expenses
in excess of 0.65% of the average daily net assets per annum of Neuberger
Berman Municipal Securities Trust ("Municipal Securities Trust"). This
arrangement can be terminated upon 60 days' prior written notice. Absent such
reimbursement, the total returns for the above stated periods would have been
less.
3) "Current yield" refers to the income generated by an investment in the Fund
over a 7-day period. This income is then "annualized." The "effective yield"
is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The "effective yield"
will be slightly higher than the "current yield" because of the compounding
effect of this assumed reinvestment. Yields of a money market fund will
fluctuate and past performance is no guarantee of future results.
4) Tax-equivalent effective yield is the taxable effective yield that an
investor would have had to receive in order to realize the same level of
yield after Federal taxes at the highest Federal tax rate, 39.6%, assuming
that all of the Fund's income is exempt from Federal income taxes.
5) An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. There
can be no assurance that a money market fund will be able to maintain a
stable net asset value of $1.00 per share. The return on an investment in
Neuberger Berman Municipal Money Fund ("Municipal Money") will fluctuate.
A portion of the income of Municipal Money and Municipal Securities Trust may be
subject to the Federal alternative minimum tax for certain investors.
A-8
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STATEMENTS OF ASSETS AND LIABILITIES
Neuberger Berman April 30, 2000 (Unaudited)
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Income Funds
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) FUND TRUST
<S> <C> <C>
----------------------------
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 227,581 $ 30,372
Receivable for Trust shares sold 41 --
Receivable from administrator -- net
(Note B) -- 9
----------------------------
227,622 30,381
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LIABILITIES
Dividends payable 4 35
Payable for Trust shares redeemed 485 --
Payable to administrator (Note B) 51 --
Accrued expenses 81 54
----------------------------
621 89
----------------------------
NET ASSETS at value $ 227,001 $ 30,292
----------------------------
NET ASSETS consist of:
Par value $ 227 $ 3
Paid-in capital in excess of par value 226,781 31,229
Accumulated net realized losses on
investment (7) (277)
Net unrealized depreciation in value of
investment -- (663)
----------------------------
NET ASSETS at value $ 227,001 $ 30,292
----------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 227,081 2,833
----------------------------
NET ASSET VALUE, offering and redemption price per
share $1.00 $10.69
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-1
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STATEMENTS OF OPERATIONS
Neuberger Berman For the Six Months Ended April 30, 2000 (Unaudited)
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Income Funds
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED) FUND TRUST
<S> <C> <C>
------------------------
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 5,215 $ 796
------------------------
Expenses:
Administration fee (Note B) 378 43
Auditing fees 4 4
Custodian fees 5 5
Legal fees 10 11
Registration and filing fees 39 21
Shareholder reports 23 20
Shareholder servicing agent fees 16 12
Trustees' fees and expenses 10 3
Miscellaneous 25 4
Expenses from corresponding Portfolio
(Notes A & B) 469 86
------------------------
Total expenses 979 209
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (6) (105)
------------------------
Total net expenses 973 104
------------------------
Net investment income 4,242 692
------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS FROM
CORRESPONDING PORTFOLIO (NOTE A)
Net realized loss on investment securities (7) (152)
Change in net unrealized depreciation of
investment securities -- (85)
------------------------
Net loss on investments from corresponding
Portfolio (Note A) (7) (237)
------------------------
Net increase in net assets resulting from
operations $ 4,235 $ 455
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
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STATEMENTS OF CHANGES IN NET ASSETS
Neuberger Berman
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Income Funds
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
FUND TRUST
Six Months Six Months
Ended Year Ended Year
April 30, Ended April 30, Ended
2000 October 31, 2000 October 31,
(000'S OMITTED) (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C>
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INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 4,242 $ 5,759 $ 692 $ 1,532
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) (7) 1 (152) 122
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) -- -- (85) (2,049)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 4,235 5,760 455 (395)
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (4,242) (5,759) (692) (1,532)
Net realized gain on investments (1) -- -- --
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Total distributions to shareholders (4,243) (5,759) (692) (1,532)
------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 162,662 322,654 7,197 9,140
Proceeds from reinvestment of
dividends and distributions 4,195 5,709 451 972
Payments for shares redeemed (233,622) (256,071) (12,076) (13,376)
------------------------------------------------------
Net increase (decrease) from Trust
share transactions (66,765) 72,292 (4,428) (3,264)
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NET INCREASE (DECREASE) IN NET ASSETS (66,773) 72,293 (4,665) (5,191)
NET ASSETS:
Beginning of period 293,774 221,481 34,957 40,148
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End of period $ 227,001 $ 293,774 $ 30,292 $ 34,957
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NUMBER OF TRUST SHARES:
Sold 162,662 322,654 674 816
Issued on reinvestment of dividends
and distributions 4,195 5,709 42 88
Redeemed (233,622) (256,071) (1,127) (1,199)
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Net increase (decrease) in shares
outstanding (66,765) 72,292 (411) (295)
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman April 30, 2000 (Unaudited)
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Income Funds
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Municipal Money Fund ("Municipal Money") and
Neuberger Berman Municipal Securities Trust ("Municipal Securities Trust")
(collectively, the "Funds") are separate operating series of Neuberger Berman
Income Funds (the "Trust"), a Delaware business trust organized pursuant to a
Trust Instrument dated December 23, 1992. The Trust is registered as a
diversified, open-end management investment company under the Investment
Company Act of 1940, as amended, and its shares are registered under the
Securities Act of 1933, as amended. The trustees of the Trust may establish
additional series or classes of shares without the approval of shareholders.
The assets of each Fund belong only to that Fund, and the liabilities of
each Fund are borne solely by that Fund and no other.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding portfolio of Income Managers
Trust (each a "Portfolio") having the same investment objective and policies
as the Fund. The value of each Fund's investment in its corresponding
Portfolio reflects that Fund's proportionate interest in the net assets of
that Portfolio (100% for each Fund at April 30, 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 Municipal Money to maintain a continuous net asset
value per share of $1.00; the Fund has adopted certain investment, valuation,
and dividend and distribution policies, which conform to general industry
practice, to enable it to do so. However, there is no assurance the Fund will
be able to maintain a stable net asset value per share.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
as indicated in the notes following the Portfolios' Schedule of Investments.
3) TAXES: The Funds are treated as separate entities for U.S. Federal income tax
purposes. It is the policy of each Fund to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of investment company taxable income
and net capital gains (after reduction for any amounts available for U.S.
Federal income tax
B-4
<PAGE>
purposes as capital loss carryforwards) sufficient to relieve it from all, or
substantially all, U.S. Federal income taxes. Accordingly, each Fund paid no
U.S. Federal income taxes and no provision for U.S. Federal income taxes was
required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of
Portfolio expenses, daily on its investment in its corresponding Portfolio.
It is the policy of each Fund to declare dividends from net investment income
on each business day; such dividends are paid monthly. Distributions from net
realized capital gains, if any, are normally distributed in December. To the
extent each Fund's net realized capital gains, if any, can be offset by
capital loss carryforwards ($124,792 expiring in 2003 for Municipal
Securities Trust, determined as of October 31, 1999), it is the policy of
each Fund not to distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more funds are allocated in
proportion to the net assets of such funds, except where a more appropriate
allocation of expenses to each fund can otherwise be made fairly. Expenses
directly attributable to a fund are charged to that fund.
6) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Neuberger Berman Management Inc. ("Management") as its
administrator under an Administration Agreement ("Agreement"). Pursuant to this
Agreement each Fund pays Management an administration fee at the annual rate of
0.27% of that Fund's average daily net assets. Each Fund indirectly pays for
investment management services through its investment in its corresponding
Portfolio (see Note B of Notes to Financial Statements of the Portfolios).
Management has voluntarily undertaken to reimburse Municipal Securities Trust
for its operating expenses plus its pro rata portion of its corresponding
Portfolio's operating expenses (including the fees payable to Management, but
excluding interest, taxes, brokerage commissions, and extraordinary expenses)
which exceed, in the aggregate, 0.65% per annum of its average daily net assets.
This undertaking is subject
B-5
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to termination by Management upon at least 60 days' prior written notice to the
Fund. For the six months ended April 30, 2000, such excess expenses amounted to
$104,107 for Municipal Securities Trust.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Several
individuals who are officers and/or trustees of the Trust are also employees of
Neuberger and/or Management.
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $6,315 and $1,300, for Municipal Money and Municipal Securities
Trust, respectively.
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>
MUNICIPAL MONEY $140,807,000 $211,963,000
MUNICIPAL SECURITIES TRUST 7,809,000 12,898,000
</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-6
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
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Municipal Money Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------
Net Asset Value, Beginning of Period $ .9998 $ .9997 $ .9994 $ .9993 $ .9994 $ .9995
------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0151 .0256 .0288 .0296 .0285 .0324
Net Gains or Losses on Securities (.0001) .0001 .0003 .0001 (.0001) (.0001)
------------------------------------------------------------------
Total From Investment Operations .0150 .0257 .0291 .0297 .0284 .0323
------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0151) (.0256) (.0288) (.0296) (.0285) (.0324)
Distributions (from net capital
gains) (.0001) -- -- -- -- --
------------------------------------------------------------------
Total Distributions (.0152) (.0256) (.0288) (.0296) (.0285) (.0324)
------------------------------------------------------------------
Net Asset Value, End of Period $ .9996 $ .9998 $ .9997 $ .9994 $ .9993 $ .9994
------------------------------------------------------------------
Total Return(2) +1.52%(3) +2.59% +2.92% +3.00% +2.89% +3.29%
------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 227.0 $ 293.8 $ 221.5 $ 156.3 $ 132.6 $ 160.9
------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .70%(5) .68% .72% .73% .73% .71%
------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .69%(5) .67% .71% .72% .72% .71%
------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 3.03%(5) 2.58% 2.88% 2.95% 2.86% 3.24%
------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-7
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
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Municipal Securities Trust(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
2000 Year Ended October 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------
Net Asset Value, Beginning of Period $10.78 $11.34 $11.02 $10.78 $10.83 $10.26
-------------------------------------------------------------
Income From Investment Operations
Net Investment Income .23 .45 .46 .47 .47 .47
Net Gains or Losses on Securities
(both realized and unrealized) (.09) (.56) .32 .24 (.05) .57
-------------------------------------------------------------
Total From Investment Operations .14 (.11) .78 .71 .42 1.04
-------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.23) (.45) (.46) (.47) (.47) (.47)
-------------------------------------------------------------
Net Asset Value, End of Period $10.69 $10.78 $11.34 $11.02 $10.78 $10.83
-------------------------------------------------------------
Total Return(2) +1.30%(3) -1.03% +7.22% +6.71% +3.92% +10.35%
-------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 30.3 $ 35.0 $ 40.1 $ 31.6 $ 38.9 $ 44.3
-------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(4) .66%(5) .66% .66% .66% .66% .66%
-------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(6) .65%(5) .65% .65% .65% .65% .65%
-------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 4.29%(5) 4.03% 4.13% 4.30% 4.32% 4.45%
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-8
<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 Municipal
Securities Trust, 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>
Six Months
Ended
MUNICIPAL April 30, Year Ended October 31,
SECURITIES TRUST 2000 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses 1.30% 1.07% 1.11% 1.05% 1.04% .98%
</TABLE>
B-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Money Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAX-EXEMPT SECURITIES -- PRE-REFUNDED BACKED BY U.S.
GOVERNMENT SECURITIES (12.4%)
$2,700 Austin (TX) Independent Sch. Dist. G.O., Ser. 1990, 6.75%,
due 8/1/05 P/R 8/1/00 $ 2,717
1,500 Baltimore (MD) Wtr. Util. Rev. (Wtr. Proj.), Ser. 1990 A,
6.50%, due 7/1/20 P/R 7/1/00 1,506
1,000 Central Arizona Wtr. Conservation Dist. Rev., Ser. 1990 A,
7.50%, due 11/1/05 P/R 11/1/00 1,036
1,000 Clark Co. (NV) Sch. Dist. G.O., Ser. 1990, 7.50%,
due 5/1/04 P/R 5/1/00 1,020
2,890 District of Columbia Rev. (Howard Univ.), Ser. 1990 A,
7.25%, due 10/1/20 P/R 10/1/00 2,985
2,000 Grapevine-Colleyville (TX) Independent Sch. Dist. G.O.,
Ser. 1989, 6.60%, due 8/15/02 P/R 8/15/00 2,017
1,000 Lower Colorado River (TX) Au. Priority Ref. Rev., Ser. 1991
B, 7.00%, due 1/1/11 P/R 1/1/01 1,038
3,000 Maryland St. Hlth. & Higher Ed. Fac. Au. Rev. (Francis Scott
Key Med. Ctr.), Ser. 1990, 6.75%, due 7/1/23 P/R 7/1/00 3,075
1,500 New York St. Pwr. Au. Gen. Purp. Rev., Ser. 1991 Y, 6.25%,
due 1/1/07 P/R 1/1/01 1,550
1,500 Pennsylvania Higher Ed. Fac. Au. Rev., Ser. 1990 D, 7.15%,
due 6/15/15 P/R 6/15/00 1,507
1,150 Rhode Island & Providence Plantations Cons. Cap. Dev. Loan
G.O., Ser. 1991 B, 6.00%, due 5/15/02 P/R 5/15/00 1,174
2,400 Seattle (WA) Muni. Metro. Swr. Rev., Ser. 1992 U, 6.60%,
due 1/1/32 P/R 1/1/01 2,485
2,000 South Carolina Cap. Imp. G.O., Ser. 1991 W, 5.75%,
due 5/1/06 P/R 5/1/00 2,040
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$1,000 Washington Co. (PA) Au. Muni. Fac. Lease Rev. (Shadyside
Hosp. Proj.), Ser. 1985 C-1B, 7.38%, due 12/15/09 P/R
6/15/00 $ 1,035
3,000 Washington St. G.O., Ser. 1990 B, 6.80%, due 8/1/04 P/R
8/1/00 3,022
--------
28,207
--------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENT
SECURITIES (2.7%)
1,225 Milwaukee (WI) Metro. Swr. Dist. G.O., Ser. 1990 A, 6.70%,
due 10/1/00 1,240
1,250 Northeast Ohio Reg. Swr. Dist. Waste Wtr. Imp. Rev.,
Ser. 1991, 6.20%, due 11/15/00 1,264
2,625 Pennsylvania Convention Ctr. Au. Rev., Ser. 1989 A, 6.60%,
due 9/1/00 2,651
1,000 Texas Muni. Pwr. Agcy. Ref. Rev., Ser. 1992, 5.50%,
due 9/1/00 1,005
--------
6,160
--------
MUNICIPAL NOTES (4.6%)
1,600 Iowa Sch. Corp. Warrant Certificates, Ser. B, 4.75%,
due 2/1/01 MIG 1 SP-1+ 1,608
1,000 Louisiana Pub. Fac. Au. Advance Funding Notes, Ser. 1999 B,
4.25%, due 10/24/00 SP-1+ 1,002
3,330 Missouri Cert. of Participation (Bonne Terre Prison Proj.),
Ser. 1999 A, 4.25%, due 6/1/00 3,333
2,500 Racine Co. (WI) Unified Sch. Dist. TRANS, 3.60%, due 7/6/00 MIG 1 2,500
2,000 Texas TRANS, Ser. 1999 A, 4.50%, due 8/31/00 MIG 1 SP-1+ 2,005
--------
10,448
--------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT (0.4%)
STATE STREET BANK AND TRUST COMPANY
1,000 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1996-1, 3.60%,
due 6/1/26 Putable 6/1/00 A-1+ 1,000
--------
</TABLE>
C-2
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAX-EXEMPT SECURITIES -- BACKED BY INSURANCE (3.2%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
$1,000 Anchorage (AK) Sch. G.O., Ser. 1996 A, 5.50%, due 8/1/00 $ 1,005
2,000 Atlanta (GA) Sales Tax Rev. (Metro. Atlanta Rapid Transit
Au.), Ser. 1993 A, 4.90%, due 7/1/00 2,005
1,150 Salt Lake City (UT) Wtr. & Swr. Ref. Rev., Ser. 1996, 6.00%,
due 2/1/01 1,166
FINANCIAL GUARANTY INSURANCE CO.
1,000 Clark Co. (NV) Sch. Dist. Sch. Imp. Ltd. Tax G.O.,
Ser. 1996, 6.50%, due 6/15/00 1,004
1,000 Connecticut Spec. Assessment Unemployment Comp. Adv. Fund
Rev., Ser. 1993 C, 3.38%, due 11/15/01 Putable 7/1/00 VMIG 1 A-1+ 1,000
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,000 Portland (OR) Swr. Sys. Rev., Ser. 1998 A, 5.00%,
due 6/1/00 1,001
--------
7,181
--------
TAX-EXEMPT SECURITIES -- OTHER (7.0%)
1,000 Albuquerque (NM) G.O., Ser. 1994 A, 4.70%, due 7/1/00 1,002
1,585 Arlington (TX) Perm. Imp. G.O., Ser. 1999, 4.00%,
due 8/15/00 1,587
3,000 Attleboro (MA) G.O. BANS, Ser. 2000, 4.50%, due 7/18/00 MIG 1 3,003
1,125 Commonwealth of Virginia G.O., Ser. 1999, 4.75%, due 6/1/00 1,126
2,000 Cook Co. (IL) Metro. Wtr. Reclamation Dist. of Greater
Chicago Cap. Imp. G.O., Ser. 1991, 7.00%, due 1/1/01 2,037
1,000 Dekalb Co. (GA) Ref. G.O., Ser. 1992, 5.20%, due 1/1/01 1,007
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$1,000 Fulton Co. (GA) Sch. Dist. G.O., Ser. 1991, 5.80%,
due 5/1/00 $ 1,000
1,000 Minnesota St. Var. Purp. Ref. G.O., 4.50%, due 6/1/00 1,001
1,000 New Castle Co. (DE) G.O., Ser. 1999, 4.50%, due 10/1/00 1,002
1,235 South Carolina Cap. Imp. G.O., Ser. 1991 W, 6.00%,
due 5/1/00 1,235
2,000 Tempe (AZ) Excise Tax Rev., Ser. 1999 A, 3.75%, due 7/1/00 MIG 1 SP-1+ 2,001
--------
16,001
--------
TAX-EXEMPT CASH EQUIVALENT SECURITIES (12.6%)
1,000 Berkeley Co. (SC) IDR (Nucor Corp. Proj.), Ser. 1997, 5.15%,
VRDN due 4/1/30 VMIG 1 A-1+ 1,000(4)
1,500 Carlton (WI) PCR (Wisconsin Pwr. & Lt. Co. Proj.),
Ser. 1988, 5.15%, VRDN due 8/1/15 VMIG 1 1,500(4)
5,300 Commonwealth of Massachusetts Ref. G.O., Ser. 1998 A, 5.00%,
VRDN due 9/1/16 VMIG 1 A-1+ 5,300
1,000 Delaware Co. (PA) IDA Res. Rec. Fac. Ref. Rev. (Gen. Elec.
Cap. Corp.), Ser. 1997 G, 4.90%, VRDN due 12/1/31 A-1+ 1,000(4)
200 Gulf Coast (TX) Waste Disp. Au. Env. Fac. Rev. (Bayer Corp.
Proj.), Ser. 1997, 6.25%, VRDN due 5/1/27 P-1 A-1+ 200(4)
300 Madison Co. (IL) Env. Imp. Rev. (Shell Wood River Refining
Co. Proj.), Ser. 1997 A, 6.20%, VRDN due 3/1/33 VMIG 1 A-1+ 300(4)
8,000 Rhode Island & Providence Plantations G.O., 5.00%, VRDN
due 6/1/18 VMIG 1 A-1+ 8,000
700 San Antonio (TX) Higher Ed. Au. Inc. Ref. Rev. (Trinity
Univ. Proj.), Ser. 1993, 5.05%, VRDN due 4/1/04 A-1+ 700
</TABLE>
C-4
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$ 100 Southwestern (IL) Dev. Au. Solid Waste Disp. Rev. (Shell Oil
Co. Wood River Proj.), Ser. 1992, 6.20%, VRDN due 4/1/22 VMIG 1 A-1+ $ 100(4)
2,200 Stanton Co. (NE) IDR (Nucor Corp. Proj.), 5.15%, VRDN
due 11/1/26 VMIG 1 A-1+ 2,200(4)
6,825 Sunshine St. (FL) Gov't. Fin. Comm. Rev., Ser. 1995 A,
4.05%, TECP due 6/13/00 & 7/19/00 A-1 6,825
1,500 Sunshine St. (FL) Gov't. Fin. Comm. Rev., Ser. 1995 B,
4.05%, TECP due 6/15/00 A-1 1,500
--------
28,625
--------
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- BACKED BY LETTERS OF
CREDIT (44.3%)
ABN AMRO BANK NV
3,500 Phenix City (AL) IDB Env. Imp. Rev. (Mead Coated Board
Proj.), Ser. 1988, 3.80% & 3.85%, TECP due 12/1/23 P-1 3,500
BANK OF AMERICA
1,200 Calhoun Co. (TX) Navigation IDA Port Rev. (Formosa Plastics
Corp., Texas Proj.), Ser. 1994, 5.15%, VRDN due 11/1/15 VMIG 1 1,200
2,400 Florida Hsg. Fin. Corp. Rev. (The Club at Vero Arpt. Proj.),
Ser. 1998 E, 5.05%, VRDN due 6/1/17 A-1+ 2,400
2,800 Nashville & Davidson Co. (TN) Metro Gov't. IDB Multi-Family
Hsg. Rev. (Chimney Top II - Oxford Associates L.P.),
Ser. 1999 A, 4.50%, VRDN due 9/1/06 VMIG 1 2,800
BANK ONE
4,000 Midlothian (TX) IDC Env. Fac. Rev. (Holnam TX L.P. Proj.),
Ser. 1999, 5.05%, VRDN due 9/1/31 A-1 4,000
</TABLE>
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
BANQUE NATIONALE DE PARIS
$2,500 St. Clair Co. (AL) IDB Ind. Rev. (Nat'l. Cement Co. Inc.,
Proj.), Ser. 1985, 5.05%, VRDN due 3/1/05 A-1 $ 2,500
BARCLAYS BANK INT'L., LTD.
7,400 Michigan St. Strategic Fund Solid Waste Disp. Rev. (Grayling
Generating Proj.), Ser. 1990, 5.15%, VRDN due 1/1/14 VMIG 1 7,400
BAYERISCHE LANDESBANK GIROZENTRALE
2,000 Denver (CO) City & Co. Arpt. Sys. Sub. Rev., 4.05%, TECP
due 7/20/00 VMIG 1 A-1+ 2,000
CANADIAN IMPERIAL BANK OF COMMERCE
3,500 Brazos (TX) PCR (Texas Utilities Elec. Co. Proj.),
Ser. 1994 A, 3.80% & 3.85%, TECP due 5/1/29 VMIG 1 A-1+ 3,500
CHASE MANHATTAN BANK, N.A.
4,000 Anne Arundel Co. (MD) Econ. Dev. Rev. (Baltimore Gas & Elec.
Co. Proj.), Ser. 1998, 3.70% & 4.00%, TECP due 12/1/18 VMIG 1 A-1+ 4,000(5)
2,000 Brazoria Co. (TX) Hlth. Fac. Dev. Corp. Hosp. Rev.
(Brazosport Mem. Hosp.), Ser. 1999, 5.15%, VRDN due 7/1/13 VMIG 1 2,000
1,870 Douglas Co. (GA) Dev. Au. IDR (Whirlwind Steel Bldg., Inc.
Proj.), Ser. 1997, 5.25%, VRDN due 12/1/12 VMIG 1 A-1 1,870
790 Virginia Small Bus. Fin. Au. IDR (Coral Graphic Svc., Inc.
Proj.), Ser. 1998, 5.25%, VRDN due 1/1/13 VMIG 1 A-1 790
CITIBANK, N.A.
1,100 Austin Co. (TX) Ind. Dev. Corp. IDR (Justin Ind., Inc.
Proj.), Ser. 1984, 5.05%, VRDN due 12/1/14 P-1 1,100
</TABLE>
C-6
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
CREDIT COMMERCIAL DE FRANCE
$ 150 Elkhart Co. (IN) Econ. Dev. Rev. (Pace Amer. Inc. Proj.),
5.40%, VRDN due 1/1/13 VMIG 1 $ 150
2,600 South Carolina Jobs Econ. Dev. Au. Rev. (Florence RHF Hsg.,
Inc. Proj.), Ser. 1987 A, 5.15%, VRDN due 11/7/07 P-1 2,600
345 South Carolina Jobs Econ. Dev. Au. Rev. (Osmose Wood
Preserving), Ser. 1989 B, 5.25%, VRDN due 12/1/04 P-1 345
50 South Carolina Jobs Econ. Dev. Au. Rev. (Su-Dan Co. & Delta
Prop.), Ser. 1989 A, 5.35%, VRDN due 1/1/04 VMIG 1 50
CREDIT SUISSE
3,000 Emery Co. (UT) Ref. PCR (PacifiCorp Proj.), Ser. 1991,
5.00%, VRDN due 7/1/15 VMIG 1 A-1+ 3,000
200 Montgomery Co. (TX) Ind. Dev. Corp. IDR (Dal-Tile Corp.
Proj.), Ser. 1986 B, 5.25%, VRDN due 12/1/03 A-1+ 200
1,000 Texas Capital Hlth. Fac. Dev. Corp. (Island on Lake Travis
Ltd. Proj.), Ser. 1986, 5.10%, VRDN due 12/1/16 A-1+ 1,000
FIRST OF AMERICA BANK
745 Michigan St. Hosp. Fin. Au. Rev. Hosp. Equip. Loan Prog.
Rev., Ser. A, 5.00%, VRDN due 12/1/23 VMIG 1 745
FIRST NATIONAL BANK OF CHICAGO
1,400 Indiana Hlth. Fac. Fin. Au. Hosp. Rev. (Deaconess Hosp.,
Inc.), Ser. 1992, 5.05%, VRDN due 1/1/22 VMIG 1 1,400
2,600 Maryland St. Hlth. & Higher Ed. Fac. Au. Rev. (Pooled Loan
Prog.), Ser. 1985 B, 5.00%, VRDN due 4/1/35 VMIG 1 2,600
3,215 Wisconsin St. Hlth. & Ed. Fac. Au. Rev. (Felician Hlth.
Care, Inc. Proj.), Ser. 1994, 5.00%, VRDN due 1/1/19 VMIG 1 A-1 3,215
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
FIRST UNION NATIONAL BANK
$ 300 Jackson-Union Cos. (IL) Reg. Port Dist. Port Fac. Ref. Rev.
(Enron Trans. Svc., L.P. Proj.), Ser. 1994, 5.05%, VRDN
due 4/1/24 A-1 $ 300
3,100 Washington Co. (PA) Au. Lease Rev. (Higher Ed. Pooled Equip.
Leasing Prog.), Ser. 1985 A, 5.15%, VRDN due 11/1/05 VMIG 1 3,100
GENERAL ELECTRIC CAPITAL CORP.
790 New Hampshire St. Hsg. Fin. Au. Multi-Family Hsg. Rev.
(Countryside L.P. Proj.), Ser. 1994, 5.20%, VRDN due 7/1/24 VMIG 1 790
3,500 New Hampshire St. Hsg. Fin. Au. Multi-Family Hsg. Rev.
(Greenways L.P. - Fairways Proj.), Ser. 1994 1, 5.05%, VRDN
due 1/1/24 VMIG 1 3,500
HARRIS TRUST AND SAVINGS BANK
500 Illinois Dev. Fin. Au. IDR (Grayhill, Inc. Proj.),
Ser. 1995 C, 5.15%, VRDN due 2/1/05 A-1+ 500
400 Illinois Dev. Fin. Au. IDR (Overton Gear & Tool Corp.
Proj.), Ser. 1994, 5.15%, VRDN due 10/1/08 A-1+ 400
MORGAN GUARANTY TRUST CO.
2,700 Illinois Dev. Fin. Au. PCR (Illinois Pwr. Co. Proj.),
Ser. 1987 D, 4.55%, VRDN due 3/1/17 2,700
NATIONAL WESTMINSTER BANK PLC
4,600 Indiana Dev. Fin. Au. Solid Waste Disp. Rev. (Pure Air on
the Lake, L.P. Proj.), Ser. 1991 A, 4.00%, TECP due 7/1/16 P-1 A-1+ 4,600
300 Marion Co. (WV) Comm. Solid Waste Disp. Fac. Rev. (Grant
Town Cogeneration Proj.), Ser. 1990 A, 5.15%, VRDN
due 10/1/17 VMIG 1 A-1+ 300
300 Marion Co. (WV) Comm. Solid Waste Disp. Fac. Rev. (Grant
Town Cogeneration Proj.), Ser. 1990 D, 5.10%, VRDN
due 10/1/17 VMIG 1 A-1+ 300
</TABLE>
C-8
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
NBD BANK, N.A.
$ 100 Indiana Emp. Dev. Comm. Econ. Dev. Rev. (K & F Ind., Inc.
Proj.), Ser. 1988, 5.40%, VRDN due 1/1/14 VMIG 1 $ 100
NORWEST BANK
800 New Ulm (MN) Hosp. Ref. Rev. (Hlth. Central Sys. Proj.),
Ser. 1985, 4.70%, VRDN due 8/1/14 A-1+ 800
PNC BANK N.A.
1,000 Rockport (IN) Rev. (AK Steel Corp. Proj.), Ser. 1997 A,
5.15%, VRDN due 12/1/27 P-1 1,000
RABOBANK NEDERLAND
1,500 Henderson Co. (KY) Solid Waste Disp. Rev. (Hudson Foods,
Inc. Proj.), Ser. 1995, 5.20%, VRDN due 3/1/15 VMIG 1 1,500
SLM HOLDING CORP.
300 Nebhelp Inc. (NE) Std. Loan Prog. Rev., Ser. 1986 A, 5.10%,
VRDN due 12/1/16 A-1+ 300
2,200 Panhandle-Plains (TX) Higher Ed. Au. Inc. Std. Loan Rev.,
Ser. 1991 A, 5.10%, VRDN due 6/1/21 VMIG 1 2,200
1,600 Panhandle-Plains (TX) Higher Ed. Au. Inc. Std. Loan Rev.,
Ser. 1995 A, 5.10%, VRDN due 6/1/25 VMIG 1 1,600
2,000 Panhandle-Plains (TX) Higher Ed. Au. Inc. Std. Loan Rev.,
Ser. 1998 A, 5.10%, VRDN due 10/1/02 VMIG 1 2,000
SOCIETE GENERALE
1,900 Chicago (IL) O'Hare Int'l. Arpt. Spec. Fac. Rev. (Compagnie
Nationale Air France Proj.), Ser. 1990, 5.20%, VRDN
due 5/1/18 A-1+ 1,900
2,900 Ohio St. Air Quality Dev. Au. Rev. (JMG Funding L.P. Proj.),
Ser. 1995 A, 5.05%, VRDN due 4/1/29 A-1+ 2,900
STATE STREET BANK AND TRUST COMPANY
2,000 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1996-3, 5.15%,
VRDN due 6/1/26 A-1+ 2,000
</TABLE>
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
SUNTRUST BANK
$1,600 Clark Co. (AR) Solid Waste Disp. Rev. (Reynolds Metals Co.
Proj.), Ser. 1992, 5.05%, VRDN due 8/1/22 P-1 A-1+ $ 1,600
600 DeKalb (GA) Private Hosp. Au. Antic. Cert. Rev. (Egleston
Children's Hosp.), Ser. 1994 A, 5.05%, VRDN due 3/1/24 VMIG 1 A-1+ 600
700 Mayfield (KY) IDR (Seaboard Farms of Kentucky, Inc. Proj.),
Ser. 1989, 5.15%, VRDN due 8/1/19 VMIG 1 700
TORONTO DOMINION BANK
1,275 Cleveland (OH) Arpt. Sys. Rev., Ser. D, 5.10%, VRDN
due 1/1/27 VMIG 1 A-1+ 1,275
2,500 Indiana Muni. Pwr. Agcy. Pwr. Supply Sys. Ref. Rev.,
Ser. 1998 A, 5.05%, VRDN due 1/1/18 VMIG 1 A-1+ 2,500
100 New York St. Energy Research & Dev. Au. PCR (Niagra Mohawk
Pwr. Co. Proj.), Ser. 1986 A, 6.15%, VRDN due 12/1/26 P-1 100
120 Wisconsin Hlth. Fac. Au. Rev. (Franciscan Hlth. Care,
Inc.-Sys. Fin.), Ser. 1985 A-2, 5.00%, VRDN due 1/1/16 VMIG 1 A-1+ 120
UNION BANK OF SWITZERLAND
1,000 Alaska Ind. Dev. & Export Au. Fac. Rev. (Fairbanks Gold
Mining, Inc. Proj.), Ser. 1997, 5.05%, VRDN due 5/1/09 VMIG 1 A-1+ 1,000
200 Clark Co. (NV) Arpt. Sys. Sub. Lien Rev., Ser. 1995 A-2,
5.05%, VRDN due 7/1/25 VMIG 1 A-1+ 200
975 Pennsylvania Energy Dev. Au. Rev. (B & W Ebensburg Proj.),
Ser. 1986, 5.10%, VRDN due 12/1/11 VMIG 1 975
WACHOVIA BANK & TRUST CO.
1,000 Crossett (AR) PCR (Georgia-Pacific Corp. Proj.), Ser. 1984,
5.00%, VRDN due 10/1/07 P-1 1,000
500 Morgan Co. (UT) Solid Waste Disp. Rev. (Holnam Inc. Proj.),
Ser. 1996, 5.10%, VRDN due 8/1/31 VMIG 1 A-1+ 500
</TABLE>
C-10
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$ 300 North Carolina Ed. Fac. Fin. Agcy. Updates Rev. (Bowman Gray
Sch. of Medicine Proj.), Ser. 1996, 4.95%, VRDN due 9/1/26 VMIG 1 $ 300
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1,855 Clark Co. (NV) Arpt. Sys. Sub. Lien Rev., Ser. 1995 A-1,
5.00%, VRDN due 7/1/25 VMIG 1 A-1+ 1,855
1,000 Dallas (TX) Area Rapid Trans., Ser. 1998 B, 4.05%, TECP
due 7/13/00 P-1 A-1+ 1,000(6)
--------
100,880
--------
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- BACKED BY INSURANCE (9.4%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,500 Coastal Bend (TX) Hlth. Fac. Dev. Corp. Rev. (Incarnate Word
Hlth. Sys.), Ser. 1998 B, 5.00%, VRDN due 8/15/28 VMIG 1 1,500
1,400 Illinois Hlth. Fac. Au. Rev. (Swedish Covenant Hosp. Proj.),
Ser. 1995, 5.00%, VRDN due 8/1/25 VMIG 1 A-1 1,400
2,600 Indiana Secondary Mkt. for Ed. Loans Inc. Rev., Ser. 1988 B,
5.10%, VRDN due 12/1/13 VMIG 1 A-1+ 2,600
100 Rockport (IN) Ref. PCR (AEP Generating Co. Proj.),
Ser. 1995 B, 5.85%, VRDN due 7/1/25 A-1+ 100
100 Sabine (TX) River Au. Collateralized PCR (Texas Util. Elec.
Co. Proj.), Ser. 1996 B, 6.15%, VRDN due 3/1/26 VMIG 1 A-1+ 100
400 Sayre (PA) Hlth. Care Fac. Au. Hosp. Rev. (VHA of PA, Inc.
Cap. Asset Fin. Prog.), Ser. 1985 A, 5.05%, VRDN
due 12/1/20 A-1+ 400
1,100 Utah State Board of Regents Std. Loan Rev., Ser. 1988 B,
5.00%, VRDN due 11/1/00 VMIG 1 A-1+ 1,100
FINANCIAL GUARANTY INSURANCE CO.
3,300 Arizona Hlth. Fac. Au. Rev. (Pooled Loan Prog.), Ser. 1985,
5.00%, VRDN due 10/1/15 VMIG 1 A-1 3,300
</TABLE>
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Money Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating(2) Value(3)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
$1,745 Charlotte (NC) Arpt. Ref. Rev., Ser. 1997 A, 5.10%, VRDN
due 7/1/17 VMIG 1 A-1 $ 1,745
445 Clark Co. (NV) Arpt. Sub. Lien Rev., Ser. 1998 B, 5.05%,
VRDN due 7/1/28 VMIG 1 A-1+ 445
900 Kentucky Higher Ed. Std. Loan Corp. Rev., Ser. 1996 A,
5.05%, VRDN due 6/1/26 VMIG 1 A-1+ 900
5,500 Missouri-Illinois Metro. Dist. Bi-State Dev. Agcy. Rev. (St.
Clair Co. Metrolink Extension), Ser. 1998 B, 5.00%, VRDN
due 7/1/28 A-1+ 5,500
365 Polk Co. (IA) Hosp. Equip. & Imp. Rev., Ser. 1985, 5.10%,
VRDN due 12/1/05 VMIG 1 A-1 365
2,000 South Texas Higher Ed. Au. Inc. Std. Loan Rev., Ser. 1998,
5.10%, VRDN due 12/1/03 VMIG 1 2,000
--------
21,455
--------
TOTAL INVESTMENTS (96.6%) 219,957
Cash, receivables and other assets, less liabilities (3.4%) 7,624
--------
TOTAL NET ASSETS (100.0%) $227,581
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-12
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Securities Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(7)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAX-EXEMPT
SECURITIES -- PRE-REFUNDED
BACKED BY U.S. GOVERNMENT
SECURITIES (3.4%)
$1,000 Clark Co. (NV) Sch. Dist. Imp.
G.O., Ser. 1995 A, 5.60%,
due 6/15/08 P/R 6/15/05 Aaa AAA $ 1,033
-------
TAX-EXEMPT SECURITIES --BACKED
BY INSURANCE (35.6%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,000 Atlanta (GA) Arpt. Fac. Ref.
Rev., Ser. 1996, 6.50%,
due 1/1/06 Aaa AAA 1,065
1,000 Puerto Rico Hwy. & Trans. Au.
Rev., Ser. A, 5.50%,
due 7/1/09 Aaa AAA 1,031
FINANCIAL GUARANTY INSURANCE CO.
1,000 Dade Co. (FL) Wtr. & Swr. Sys.
Rev., Ser. 1995, 6.25%,
due 10/1/06 Aaa AAA 1,066
1,000 Florida St. Board of Ed.
Lottery Rev., Ser. 2000 A,
5.38%, due 7/1/15 Aaa AAA 981
1,000 Tampa Bay (FL) Wtr. Util. Sys.
Rev., Ser. 1998 B, 5.125%,
due 10/1/09 Aaa AAA 997
FINANCIAL SECURITY ASSURANCE INC.
1,000 Illinois Dev. Fin. Au. Cap.
Appreciation Cons. Sch. Dist.
#304 Rev., Zero Coupon,
Yielding 4.80%, due 1/1/09 Aaa 618
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,000 Connecticut Spec. Tax Oblig.
Ref. Rev. (Trans.
Infrastructure Purp.),
Ser. 1993 A, 5.40%,
due 9/1/09 Aaa AAA 1,010
1,000 Foothill/Eastern (CA) Trans.
Corridor Agcy. Toll Road Ref.
Rev., Ser. 1999, 5.25%,
due 1/15/12 Aaa AAA 1,002
1,000 Mississippi Dev. Bank Spec.
Oblig. Rev. (Muni. Gas Au.
Natural Gas Supply Proj.),
Ser. 1998, 5.00%, due 1/1/08 Aaa AAA 956
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Securities Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(7)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$1,000 New York Local Government
Assist. Corp. Ref. Rev.,
Ser. 1997 B, 5.25%,
due 4/1/04 Aaa AAA $ 1,009
1,000 Puerto Rico Elec. Pwr. Au.
Ref. Rev., Ser. W, 6.50%,
due 7/1/05 Aaa AAA 1,073
-------
10,808
-------
TAX-EXEMPT SECURITIES -- OTHER
(59.4%)
1,000 Board of Regents of the Texas
A&M Univ. Sys. Perm. Univ.
Fund Rev., Ser. 1998, 5.00%,
due 7/1/08 Aaa AAA 986
1,000 Columbus (OH) Var. Purp. Ltd.
Tax G.O., Ser. 1998-1, 5.00%,
due 6/15/08 Aaa AAA 993
1,000 Florida St. Board of Ed. Cap.
Outlay Ref. G.O., Ser. B,
5.25%, due 6/1/09 Aa2 AA+ 1,006
1,000 Georgia G.O., Ser. 1995 C,
7.25%, due 7/1/04 Aaa AAA 1,084
1,000 Lake Co. (IL) Forest Preserve
Dist. Ref. G.O., Ser. 1997,
5.50%, due 2/1/09 Aa1 AA+ 1,017
1,500 Maryland Comm. Dev. Admin.
Dept. of Hsg. & Comm. Dev.
Rev. (Single Family Prog.),
3rd Ser. 1993, 5.15%,
due 4/1/08 Aa2 1,484
1,000 Maryland Wtr. Quality Fin.
Admin. Ref. Rev. (Revolving
Loan Fund), Ser. 1995 A,
5.50%, due 9/1/11 Aa2 AA 1,011
1,000 Mecklenburg Co. (NC) Pub. Imp.
G.O., Ser. 1994, 5.50%,
due 4/1/12 Aaa AAA 1,023
135 Mississippi Higher Ed. Assist.
Corp. Std. Loan Sub. Rev.,
Ser. 1993 C, 6.05%,
due 9/1/07 A 135
1,000 Nevada Ref. Ltd. Tax G.O.,
Ser. 1997 A-2, 6.00%,
due 5/15/06 Aa2 AA 1,043
500 New Jersey Bldg. Au. St. Bldg.
Rev., Ser. 1994, 5.00%,
due 6/15/11 Aa2 AA 485
750 New York City (NY) IDA Spec.
Fac. Rev. (Term. One Group
Assoc., L.P. Proj.),
Ser. 1994, 6.00%, due 1/1/15 A3 A 756
</TABLE>
C-14
<PAGE>
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Municipal Securities Portfolio (Cont'd)
<TABLE>
<CAPTION>
Principal
Amount Rating Value(7)
(000's omitted) Security(1) Moody's S&P (000's omitted)
--------------------- ----------- -------- --------- ---------------
<C> <S> <C> <C> <C>
$1,000 New York City (NY) Muni.
Assist. Corp. Rev., Ser. M,
Zero Coupon, Yielding 5.25%,
due 7/1/08 Aa2 AA $ 1,020
1,000 New York St. Env. Fac. Corp.
Rev., Ser. 1999 B, 5.00%,
due 10/15/09 Aaa AAA 984
1,000 North Carolina Cap. Imp. G.O.,
Ser. 1994 A, 4.70%,
due 2/1/06 Aaa AAA 983
1,000 Omaha (NE) Pub. Pwr. Dist.
Elec. Sys. Rev., Ser. 1993 E,
4.60%, due 2/1/06 Aa2 AA 964
1,000 Orange Co. (NY) Var. Purp.
Ref. G.O., Ser. 1997, 6.00%,
due 11/15/10 Aa2 1,064
1,000 San Antonio (TX) Elec. & Gas
Sys. Ref. Rev., Ser. 1998 A,
5.00%, due 2/1/05 Aa1 AA 995
1,000 Texas Pub. Fin. Au. Ref. G.O.,
Ser. 1998 B, 5.13%,
due 10/1/09 Aa1 AA 992
-------
18,025
-------
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- BACKED BY
INSURANCE (0.3%)
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
100 South Fork (PA) Muni. Au.
Hosp. Rev. (Conemaugh Hlth.
Sys. Proj.), Ser. 1998 A,
5.95%, VRDN due 7/1/28 VMIG 1 A-1+ 100
-------
TOTAL INVESTMENTS (98.7%)
(COST $30,629) 29,966(8)
Cash, receivables and other
assets, less liabilities
(1.3%) 406
-------
TOTAL NET ASSETS (100.0%) $30,372
-------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-15
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
----------------------------------------------------------------------
Income Managers Trust
1) Municipal securities held by Neuberger Berman Municipal Money Portfolio
("Municipal Money") and Neuberger Berman Municipal Securities Portfolio
("Municipal Securities") are within the two and four highest rating
categories, respectively, assigned by a nationally recognized statistical
rating organization ("NRSRO") such as Moody's Investors Service, Inc. or
Standard & Poor's or, where not rated, are determined by the Portfolio's
investment manager to be of comparable quality. Approximately 78% and 40% of
the municipal securities held by Municipal Money and Municipal Securities,
respectively, have credit enhancement features backing them, which the
Portfolios may rely on, such as letters of credit, insurance, or guarantees.
Without these credit enhancement features the securities may or may not meet
the quality standards of the Portfolios. Pre-refunded bonds are supported by
securities in escrow issued or guaranteed by the U.S. Government, its
agencies, or instrumentalities. The amount escrowed is sufficient to pay the
periodic interest due and the principal of these bonds. Putable bonds give
the Portfolios the right to sell back the issue on the date specified.
2) Where no rating appears from any NRSRO, the security is deemed unrated for
purposes of Rule 2a-7 under the Investment Company Act of 1940, as amended.
Each of these securities is an eligible security based on a comparable
quality analysis performed by the Portfolio's investment manager within the
guidelines approved by the trustees of Income Managers Trust.
3) Investment securities of the Portfolio are valued at amortized cost, which
approximates U.S. Federal income tax cost.
4) Security is guaranteed by the corporate obligor.
5) Security is subject to a fractional guarantee provided by Chase Manhattan
Bank, N.A. and Bank of New York Co., Inc., each backing 50% of the total
principal.
6) Security is subject to a fractional guarantee provided by Westdeutsche
Landesbank Girozentrale and Bayerische Landesbank Girozentrale, each backing
50% of the total principal.
7) Investment securities of the Portfolio are valued daily by obtaining bid
price quotations from an independent pricing service on all securities
available in the service's data base. For all other securities requiring
daily quotations, bid prices are obtained from principal market makers in
those securities or, if quotations are not available, by a method the
trustees of Income Managers Trust believe accurately reflects fair value.
C-16
<PAGE>
8) At April 30, 2000, the cost of investments for U.S. Federal income tax
purposes was $30,629,000. Gross unrealized appreciation of investments was
$119,000 and gross unrealized depreciation of investments was $782,000,
resulting in net unrealized depreciation of $663,000, based on cost for U.S.
Federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
C-17
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2000 (Unaudited)
----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED) PORTFOLIO PORTFOLIO
<S> <C> <C>
----------------------------
ASSETS
Investments in securities, at value*
(Note A) -- see Schedule of Investments $ 219,957 $ 29,966
Cash 425 39
Interest receivable 1,990 397
Prepaid expenses and other assets 2 1
Receivable for securities sold 5,305 --
----------------------------
227,679 30,403
----------------------------
LIABILITIES
Payable to investment manager (Note B) 48 6
Accrued expenses 50 25
----------------------------
98 31
----------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 227,581 $ 30,372
----------------------------
NET ASSETS consist of:
Paid-in capital $ 227,581 $ 31,035
Net unrealized depreciation in value of
investment securities -- (663)
----------------------------
NET ASSETS $ 227,581 $ 30,372
----------------------------
*Cost of investments $ 219,957 $ 30,629
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-18
<PAGE>
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 2000 (Unaudited)
----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
(000'S OMITTED) PORTFOLIO PORTFOLIO
<S> <C> <C>
------------------------
INVESTMENT INCOME
Interest income $ 5,215 $ 796
------------------------
Expenses:
Investment management fee (Note B) 351 40
Accounting fees 5 5
Auditing fees 16 12
Custodian fees (Note B) 75 14
Insurance expense 1 --
Legal fees 11 12
Trustees' fees and expenses 10 3
------------------------
Total expenses 469 86
Expenses reduced by custodian fee expense
offset arrangement (Note B) (6) (1)
------------------------
Total net expenses 463 85
------------------------
Net investment income 4,752 711
------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investment securities
sold (7) (152)
Change in net unrealized depreciation of
investment securities -- (85)
------------------------
Net loss on investments (7) (237)
------------------------
Net increase in net assets resulting from
operations $ 4,745 $ 474
------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
MUNICIPAL MUNICIPAL
MONEY SECURITIES
PORTFOLIO PORTFOLIO
Six Months Six Months
Ended Year Ended Year
April 30, Ended April 30, Ended
2000 October 31, 2000 October 31,
(000'S OMITTED) (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 4,752 $ 6,510 $ 711 $ 1,598
Net realized gain (loss) on
investments (7) 1 (152) 122
Change in net unrealized
appreciation (depreciation) of
investments -- -- (85) (2,049)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 4,745 6,511 474 (329)
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 140,807 292,944 7,809 6,301
Reductions (211,963) (227,075) (12,898) (11,211)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (71,156) 65,869 (5,089) (4,910)
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (66,411) 72,380 (4,615) (5,239)
NET ASSETS:
Beginning of period 293,992 221,612 34,987 40,226
------------------------------------------------------
End of period $ 227,581 $ 293,992 $ 30,372 $ 34,987
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
----------------------------------------------------------------------
Income Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Municipal Money Portfolio ("Municipal Money") and
Neuberger Berman Municipal Securities Portfolio ("Municipal Securities")
(collectively, the "Portfolios") are separate operating series of Income
Managers Trust ("Managers Trust"), a New York common law trust organized as
of December 1, 1992. Managers Trust is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended. Other regulated investment companies sponsored by Neuberger Berman
Management Inc. ("Management"), whose financial statements are not presented
herein, also invest in Managers Trust.
The assets of each Portfolio belong only to that Portfolio, and the
liabilities of each Portfolio are borne solely by that Portfolio and no
other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Interest income, including accretion of
discount (adjusted for original issue discount, where applicable) and
amortization of premium, is recorded on the accrual basis. Realized gains and
losses from securities transactions are recorded on the basis of identified
cost.
4) TAXES: Managers Trust intends to comply with the requirements of the Internal
Revenue Code. Each Portfolio of Managers Trust also intends to conduct its
operations so that each of its investors will be able to qualify as a
regulated investment company. Each Portfolio will be treated as a partnership
for U.S. Federal income tax purposes and is therefore not subject to U.S.
Federal income tax.
5) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by Managers Trust with respect to any two or more
portfolios are allocated in proportion to the net assets of such portfolios,
except where a more appropriate allocation of expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to a portfolio are
charged to that portfolio.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
pays Management a fee at the annual rate of 0.25% of the first $500 million of
that
C-21
<PAGE>
Portfolio's average daily net assets, 0.225% of the next $500 million, 0.20% of
the next $500 million, 0.175% of the next $500 million, and 0.15% of average
daily net assets in excess of $2 billion.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Neuberger is
retained by Management to furnish it with investment recommendations and
research information without added cost to each Portfolio. Several individuals
who are officers and/or trustees of Managers Trust are also employees of
Neuberger and/or Management.
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 $6,315 and
$1,300, for Municipal Money and Municipal Securities, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended April 30, 2000, there were purchase and sale
transactions (excluding short-term securities) of $5,129,000 and $8,912,000,
respectively, for Municipal Securities. All securities transactions for
Municipal Money were short-term.
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent auditors. Annual reports
contain audited financial statements.
C-22
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Money Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
April 30,
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) .34% .36% .38% .37% .37%
-------------------------------------------------------------
Net Expenses .33%(2) .34% .36% .37% .36% .36%
-------------------------------------------------------------
Net Investment Income 3.39%(2) 2.91% 3.22% 3.29% 3.21% 3.57%
-------------------------------------------------------------
Net Assets, End of Period (in millions) $227.6 $294.0 $221.6 $156.5 $132.7 $161.1
-------------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
2) Annualized.
C-23
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Municipal Securities 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) .54%(2) .48% .51% .51% .47% .47%
--------------------------------------------------------
Net Expenses .53%(2) .48% .51% .50% .47% .46%
--------------------------------------------------------
Net Investment Income 4.40%(2) 4.20% 4.27% 4.44% 4.49% 4.63%
--------------------------------------------------------
Portfolio Turnover Rate 16% 17% 24% 22% 3% 66%
--------------------------------------------------------
Net Assets, End of Period (in millions) $30.4 $35.0 $40.2 $31.7 $39.0 $44.4
--------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
2) Annualized.
C-24
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800.877.9700 or 212.476.8800
Institutional Services 800.366.6264
SUB-ADVISER
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
-C- 2000 Neuberger Berman Management Inc.
D-1
<PAGE>
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
D-2
<PAGE>
Statistics and projections in this report are
derived from sources deemed to be reliable
but cannot be regarded as a representation
of future results of the Funds. This report
is prepared for the general information of
shareholders and is not an offer of shares
of the Funds. Shares are sold only through
the currently effective prospectus, which
must precede or accompany this report.
[LOGO]
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
www.nbfunds.com
[LOGO] A0072 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
---------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Neuberger Berman Income Funds:
Neuberger Berman Municipal Money Fund
Neuberger Berman Municipal Securities Trust
1933 Act File No. 2-85229
1940 Act File No. 811-3802
------------------------------------------------------
Dear Sir or Madam:
Transmitted herewith for filing is the Semi-Annual Report to
Shareholders of the above-referenced series of Neuberger Berman Income Funds for
the period ended April 30, 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
-------------------
Fatima Sulaiman
Enclosures
