<PAGE>
SEMI-ANNUAL REPORT
- ----------------------------------------------
April 30, 1997
NEUBERGER&BERMAN
INCOME TRUST -Registered Trademark-
NEUBERGER&BERMAN
ULTRA SHORT BOND TRUST
NEUBERGER&BERMAN
LIMITED MATURITY BOND TRUST
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE TRUSTS
PRESIDENT'S LETTER A-4
PERFORMANCE HIGHLIGHTS B-1
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Ultra Short Bond Trust B-9
Limited Maturity Bond Trust B-10
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
Ultra Short Bond Portfolio B-12
Limited Maturity Bond Portfolio B-15
FINANCIAL STATEMENTS B-22
FINANCIAL HIGHLIGHTS B-29
OTHER INFORMATION
Directory/Officers and Trustees C-1
</TABLE>
A-3
<PAGE>
PRESIDENT'S LETTER June 20, 1997
Dear Shareholder,
Let me begin with a brief "state of the bond market" address. Fixed income
market performance continues to reflect inflationary concerns. I will say,
however, that on an absolute and "real rate of return" basis (the spread between
bond yields and inflation), we believe bonds are more fundamentally attractive
today than in recent years. For example, with virtually no change in the rate of
inflation, bond yields in the one through 10-year maturity range as of April 30,
1997, are now 140-290 basis points (1.4%-2.9%) higher than their 1993 lows. In
addition, we currently enjoy a favorable political and economic backdrop for
bonds. We have a diligent inflation-fighting Federal Reserve, and Congress and
the Clinton Administration appear committed to a balanced budget deal. Thanks to
a healthy economy and improved corporate balance sheets, credit quality is
excellent. In recent years, bond returns have been overshadowed by the strong
performance of the stock market. This may or may not continue. The relevant
issue for us is that based on their own fundamental merits, we find that bonds
currently provide an appealing investment opportunity.
Also, permit me a few words on our investment discipline. There are three
basic ways we attempt to add value to the fixed income investment process. The
first is by active trend following maturity/duration management. We monitor
weighted average portfolio maturity in money market funds, and the weighted
average portfolio duration -- a measure of interest rate sensitivity -- in our
other income funds. This is a long handle for a simple and straightforward
strategy. When interest rates decline, we lengthen maturity/duration to enhance
the portfolios' yield. When interest rates rise, we shorten maturity/duration to
minimize price erosion (longer maturity/duration bonds generally decline more
than shorter maturity/duration bonds as interest rates move higher). We use a
number of quantitative models to determine changes in interest rate trends and
adjust our portfolios' average maturity/ duration accordingly.
Secondly, we identify those sectors within the broad fixed income market that
we believe offer the best risk adjusted return potential. For example, if we
believe the difference in yields between high credit
A-4
<PAGE>
quality corporate bonds and Treasury securities are fundamentally unjustified,
we will favor corporates as investments for the appropriate portfolios. If we
believe mortgage securities are attractively priced, we will increase our
exposure to this sector. We will focus on asset-backed securities (bonds
collateralized by specific assets), if we think they offer value and
opportunity.
Finally, it bears noting that the bond market is not homogeneous. We analyze
issuers' management quality, products and product cycles, balance sheets and
income statements in much the same way an equity analyst would. Our goal is to
find bonds with realistic prospects for credit upgrades and perhaps more
importantly, identify and avoid those that may not deserve their current credit
quality rankings.
Now, let's review what transpired in the credit markets since we last wrote to
you at the end of October 1996. After a bumpy ride, bond yields of most
maturities finished the six-month period ended April 30, 1997, just about where
they started at the beginning of that period. The bond rally, which began in
mid-summer 1996, extended through mid-December when Federal Reserve Chairman
Alan Greenspan issued his now famous warning about the potential consequences of
the "irrational exuberance" of the financial markets. Equity investors shrugged
off this warning, waiting for Greenspan to raise the Federal Funds Rate 25 basis
points in March before a modest and short-lived stock market retreat. Fixed
income investors took it quite seriously and bonds trended lower in price until
early April, when new economic data calmed inflationary fears.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
3-MONTH T-BILL 30-YR. TREASURY 12-22 YR. MUNICIPAL BOND INDEX
<S> <C> <C> <C>
11/1/96 5.16 6.68 5.189
11/8/96 5.18 6.51 5.136
11/15/96 5.14 6.46 5.132
11/22/96 5.16 6.44 5.087
11/29/96 5.13 6.35 5.024
12/6/96 5.02 6.51 5.149
12/13/96 4.92 6.57 5.181
12/20/96 5.02 6.61 5.177
12/27/96 5.09 6.56 5.136
1/3/97 5.16 6.73 5.55
1/10/97 5.16 6.84 5.639
1/17/97 5.15 6.82 5.611
1/24/97 5.16 6.89 5.622
1/31/97 5.15 6.79 5.576
2/7/97 5.12 6.7 5.482
2/14/97 5.08 6.52 5.363
2/21/97 5.08 6.64 5.425
2/28/97 5.22 6.8 5.543
3/7/97 5.21 6.81 5.586
3/14/97 5.23 6.94 5.641
3/21/97 5.4 6.97 5.673
3/28/97 5.36 7.09 5.772
4/4/97 5.27 7.12 5.839
4/11/97 5.28 7.17 5.873
4/18/97 5.28 7.05 5.815
4/26/97 5.3 7.14 5.829
(Total Returns in Percent-
age)
</TABLE>
SOURCE: BLOOMBERG FINANCIAL MARKETS FOR 30-YEAR TREASURY BOND AND
3-MONTH TREASURY BILLS; MERRILL LYNCH 12-22 YEAR MUNICIPAL BOND INDEX.
A-5
<PAGE>
We kept average portfolio maturities/durations relatively long, to take
advantage of declining interest rates through mid-December. As a defensive
measure, we then shortened durations as rates trended higher through March. In
early April, we modestly extended durations as rates declined from their peaks.
Our sector allocation favoring asset-backed, mortgage-backed, and corporate
bonds worked to our advantage as all these sectors outperformed Treasuries. Our
commitment to the mortgage sector demonstrates our opportunistic sector
allocation approach. Mortgage securities seem to attract manic depressives who
alternate between euphoria over the attractive yields offered by this sector and
despair over the prospects that prepayment of mortgages will lower the returns
on their investment. These extreme mood swings present opportunities for
value-oriented investors like ourselves. When others were abandoning this sector
as interest rates fell in the second half of 1996 (when interest rates decline,
mortgages tend to be pre-paid), we were scooping up bargains. As we anticipated,
fears of increased prepayments were overblown, and the yield advantage of
mortgage securities bolstered our returns.
To summarize, our experience tells us market timers end up with speculators'
results or worse. So, we won't forecast where the bond market is heading over
the next six months. We do believe bonds are fundamentally attractive at current
levels. In general, the strategies we have employed over the last six months
have been productive. The following commentary provides greater detail on how
these strategies have been implemented in each of our funds.
ULTRA SHORT BOND TRUST With a maximum average portfolio duration of 2 years,
Ultra Short Bond Trust can move farther out on the yield curve than a money
market fund. The weighted average portfolio duration was 1.49 years on November
1, 1996, peaked at 1.72 years in mid-December, and as of April 30, 1997, was
1.62 years. Currently, we are somewhat concentrated in bonds with durations in
the 2-3 year range (46% of the portfolio), the "pocket" we believe offers the
most value at this time.
Our asset-backed securities performed well despite some hysteria generated in
this sector by increasing consumer debt levels and credit card delinquency
rates. Here, our commitment to high-quality collateral paid off as we invested
in capital equipment and auto loans and
A-6
<PAGE>
avoided the problematic credit card issuers. We are maintaining our 19%
weighting in asset-backed securities because investors' over-reaction to
perceived risk in this sector has resulted in yields we believe are very
attractive.
The mortgage sector also treated us well over the last six months. We bought
Agency bonds only (mortgage pools of U.S. Government agencies including Fannie
Mae, Freddie Mac and Ginnie Mae), so there is minimal credit risk. Exaggerated
fears of pre-payment risk when interest rates were declining in the fall,
presented an opportunity to lock in what we perceived to be very attractive
yields in this sector.
In the corporate debt arena, we have been buying bonds issued by leading stock
brokerage/asset management companies like Merrill Lynch and Lehman Brothers. In
the bad old days, much of a stock brokerage firm's cash flow came from trading
firm accounts and transaction-driven commissions. When interest rates
rose -- often with negative consequences for the stock market, and in-house and
retail trading activity -- brokerage firms' balance sheets and bonds suffered.
With fee-based asset management now a much bigger part of these companies'
business, cash flow and earnings are more stable and balance sheets are much
less dependent on a healthy stock market. In our opinion, the bond market hasn't
yet factored in the improving credit quality of these issuers, and these
securities are undervalued.
LIMITED MATURITY BOND TRUST During the six month period ended April 30,
1997, our duration management strategy kept us busy as interest rates fell
during November and early December, climbed through late March, and finally
moderated in April. We reacted as soon as our models indicated an established
trend -- extending average duration, shortening, and extending once again.
Average duration peaked at 2.25 years, troughed at 1.90 years, and ended the
reporting period at 1.90 years. By making the trend our friend rather than
gambling on interest rate forecasts, we avoided the pitfalls that result from
speculating on the direction of interest rates.
Our ability to invest up to 10% of the portfolio in below investment grade
corporate bonds (no lower than single B rated), continued to pay off as this
group out-performed investment grade corporates and Treasuries. We remain
attracted to the high yield sector. In the robust
A-7
<PAGE>
economic climate we currently enjoy, credit risk is reduced as is reflected by
the narrowing spreads between high yield bonds and investment grade corporates.
We particularly like companies in the auto parts industry like Mark IV
Industries and Collins & Aikman. The automotive industry is healthy, parts
suppliers' cash-flows and earnings are strong, and balance sheets are improving.
Also, consolidation within the industry is eliminating competition and reducing
the big automakers' ability to squeeze parts suppliers' profit margins.
The fund's 11% exposure to mortgage securities at April 30, 1997, contributed
to positive returns. We successfully took advantage of investors' over-reaction
to increased pre-payment risk as interest rates trended lower through the fall
and early winter. This turned out to be a double play for us. We locked in
higher yields as investors abandoned the mortgage market in the fall, and
realized some nice gains as they piled back in when interest rates trended
higher from December through March. Our asset-backed securities (approximately
18% of the portfolio), also performed well, principally because we focused not
just on collateral, but also on the credit quality of sponsors. Blue chip
companies like NationsBank proved largely immune to problems in the credit card
industry that hurt sub-prime lenders catering to marginal borrowers.
Looking ahead, we don't anticipate any substantial changes in the portfolio's
current sector allocation. We favor corporates, both investment grade and high
yield, mortgage debt, and asset-backed securities over Treasuries, which at the
close of the reporting period comprised just 3% of the portfolio's assets.
Sincerely,
/s/ Theodore P. Giuliano
Theodore P. Giuliano
President and Trustee
Neuberger&Berman Income Trust
A-8
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTH AVERAGE ANNUAL TOTAL
PERIOD RETURNS(1)
NEUBERGER&BERMAN ENDED --------------------
INCOME TRUST 4/30/97(1) 1 YR(1) 5 YR 10 YR
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ULTRA SHORT BOND TRUST(2) +2.01% +5.25% +4.14% +5.80%
LIMITED MATURITY BOND TRUST(2) +2.42% +6.31% +5.54% +7.00%
</TABLE>
1) One-year and average annual total returns are for periods ended April 30,
1997. Includes reinvestment of all dividends and other distributions. 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.
2) Neuberger&Berman Ultra Short Bond Trust-Registered Trademark- ("Ultra Short")
and Neuberger&Berman Limited Maturity Bond Trust-Registered Trademark-
("Limited Maturity") started operating on September 7, 1993 and August 30,
1993, respectively. The Funds have identical investment objectives and
policies and invest in the same Portfolios as other funds ("Sister Funds")
that have names similar to the Funds. The Sister Funds are also administered
by Neuberger&Berman Management Inc.-Registered Trademark- The performance
information for the Funds prior to their commencement of operations is for
the Sister Funds. Neuberger&Berman Management Inc. voluntarily bears certain
operating expenses in excess of .75% of the average daily net assets per
annum of Ultra Short and .80% of the average daily net assets per annum of
Limited Maturity. These arrangements can be terminated upon 60 days' prior
written notice to the appropriate Fund. Absent such arrangements, the total
returns would have been less. The total returns for periods prior to the
Funds' commencement of operations would have been lower had they reflected
the higher expense ratios of the Funds instead of those of the Sister Funds.
B-1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) BOND TRUST BOND TRUST
------------------------------
<S> <C> <C>
ASSETS
Investment in corresponding Portfolio, at value (Note A) $9,521 $33,153
Deferred organization costs (Note A) 15 14
Receivable for Trust shares sold 23 239
Receivable from administrator -- net (Note B) 1 2
------------------------------
9,560 33,408
------------------------------
LIABILITIES
Dividends payable 1 --
Payable for Trust shares redeemed 2 4
Accrued expenses 37 52
------------------------------
40 56
------------------------------
NET ASSETS at value $9,520 $33,352
------------------------------
NET ASSETS consist of:
Par value $ 1 $ 4
Paid-in capital in excess of par value 9,598 33,646
Accumulated net realized gains (losses) on investment (67) 2
Net unrealized depreciation in value of investment (12) (300)
------------------------------
NET ASSETS at value $9,520 $33,352
------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 976 3,526
------------------------------
NET ASSET VALUE, offering and redemption price
per share $9.75 $9.46
------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman For the Six Months Ended April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
(000'S OMITTED) BOND TRUST BOND TRUST
------------------------------
<S> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio (Note A) $252 $1,059
------------------------------
Expenses:
Administration fee (Note B) 20 74
Amortization of deferred organization and initial offering expenses (Note A) 5 5
Auditing fees 2 2
Custodian fees 5 5
Legal fees 11 12
Registration and filing fees 17 25
Shareholder reports 20 28
Shareholder servicing agent fees 9 11
Trustees' fees and expenses 1 1
Miscellaneous 1 1
Expenses from corresponding Portfolio
(Notes A & B) 16 49
------------------------------
Total expenses 107 213
Deduct -- expenses reimbursed by administrator (Note B) (76) (94)
------------------------------
Total net expenses 31 119
------------------------------
Net investment income 221 940
------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM CORRESPONDING PORTFOLIO
(NOTE A)
Net realized loss on investment securities (19) --
Net realized gain on financial futures contracts -- 47
Net realized gain on foreign currency transactions -- 2
Change in net unrealized appreciation (depreciation) of investment securities (34) (364)
Change in net unrealized appreciation (depreciation) of financial futures
contracts -- 15
------------------------------
Net loss on investments from corresponding Portfolio (Note A) (53) (300)
------------------------------
Net increase in net assets resulting from operations $168 $ 640
------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Income Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
BOND TRUST BOND TRUST
Six Months Six Months
Ended Year Ended Year
April 30, Ended April 30, Ended
1997 October 31, 1997 October 31,
(000'S OMITTED) (UNAUDITED) 1996 (UNAUDITED) 1996
-----------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 221 $ 336 $ 940 $ 923
Net realized gain (loss) on investments from corresponding
Portfolio (Note A) (19) (42) 49 (10)
Change in net unrealized appreciation (depreciation) of
investments from corresponding Portfolio (Note A) (34) 19 (349) (58)
-----------------------------------------------------
Net increase in net assets resulting from operations 168 313 640 855
-----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (221) (336) (940) (922)
-----------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 4,344 8,353 19,512 15,484
Proceeds from reinvestment of dividends 296 335 937 906
Payments for shares redeemed (1,700) (3,772) (8,025) (7,010)
-----------------------------------------------------
Net increase from Trust share transactions 2,940 4,916 12,424 9,380
-----------------------------------------------------
NET INCREASE IN NET ASSETS 2,887 4,893 12,124 9,313
NET ASSETS:
Beginning of period 6,633 1,740 21,228 11,915
-----------------------------------------------------
End of period $ 9,520 $ 6,633 $33,352 $21,228
-----------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 444 849 2,044 1,629
Issued on reinvestment of dividends 30 34 98 95
Redeemed (174) (384) (843) (737)
-----------------------------------------------------
Net increase in shares outstanding 300 499 1,299 987
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Ultra Short Bond Trust ("Ultra Short") and
Neuberger&Berman Limited Maturity Bond Trust ("Limited Maturity")
(collectively, the "Funds") are separate operating series of Neuberger&Berman
Income Trust (the "Trust"), a Delaware business trust organized pursuant to a
Trust Instrument dated May 6, 1993. 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 series belong only to that series, and the liabilities
of each series are borne solely by that series 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 (11.19% and 12.22% for Ultra Short and Limited Maturity,
respectively, at April 30, 1997). 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.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
by Income Managers Trust as indicated in the notes following the Portfolios'
Schedule of Investments.
3) FEDERAL INCOME TAXES: Each series of the Trust is treated as a separate
entity for 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 Federal income tax purposes as capital loss
carryforwards) sufficient to relieve it from all, or substantially all,
Federal income taxes. Accordingly, each Fund paid no Federal income taxes and
no provision for Federal income taxes was required.
B-5
<PAGE>
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 ($29, $6,430, $1,909, and $39,554 expiring in
2001, 2002, 2003, and 2004, respectively, for Ultra Short and $86, $11,896,
$24,346, and $70,825 expiring in 2001, 2002, 2003, and 2004, respectively,
for Limited Maturity, determined as of October 31, 1996), 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) ORGANIZATION EXPENSES: Expenses incurred by each Fund in connection with its
organization are being amortized by each Fund on a straight-line basis over a
five-year period. At April 30, 1997, the unamortized balance of such expenses
amounted to $14,854 and $14,061 for Ultra Short and Limited Maturity,
respectively.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to both Funds are allocated in proportion
to the net assets of the 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.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Neuberger&Berman Management Incorporated ("Management") as
its administrator under an Administration Agreement ("Agreement") dated as of
July 12, 1993. Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of .50% 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). The Agreement provides that, if with respect to
any fiscal year of each Fund, its total operating expenses plus its pro rata
portion of its corresponding
B-6
<PAGE>
Portfolio's operating expenses (including the fees payable to Management but
excluding interest, taxes, brokerage commissions, and extraordinary expenses)
("Operating Expenses") exceed the most restrictive of the expense limitations
imposed by securities laws of the states in which such Fund's shares are
qualified for sale, the administration fees for that fiscal year will be reduced
by the amount of such excess, provided that Management has no obligation to
reimburse the Fund for any such expenses that exceed the administration fee. The
most restrictive expense limitation applicable during the fiscal year ended
October 31, 1996, to which each Fund was subject, was 2 1/2% of the first $30
million of average daily net assets, 2% of the next $70 million of average daily
net assets, and 1 1/2% of any additional average daily net assets. As of October
1996, the expense limitations imposed by state securities laws no longer apply.
Management has voluntarily undertaken to reimburse each Fund for its
respective
Operating Expenses which exceed, in the aggregate, .75% per annum for Ultra
Short and .80% per annum for Limited Maturity of their respective average daily
net assets. 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, 1997, such excess expenses amounted to $75,884 and $94,147 for
Ultra Short and Limited Maturity, respectively.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New York
Stock Exchange and sub-adviser to each Portfolio. Several individuals who are
officers and/or trustees of the Trust are also principals of Neuberger and/or
officers and/or directors of Management.
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $8 and $11 for Ultra Short and Limited Maturity, respectively,
which is less than .01% of each Fund's average daily net assets.
B-7
<PAGE>
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended April 30, 1997, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- -----------------------------------------------------------------------------
<S> <C> <C>
ULTRA SHORT $ 3,703,243 $1,001,455
LIMITED MATURITY 16,928,114 5,738,082
</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-8
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Trust
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. 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, September 7, 1993(1)
1997 Year Ended October 31, to October 31,
(UNAUDITED) 1996 1995 1994 1993
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.82 $9.85 $9.79 $9.97 $10.00
------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .26 .53 .53 .37 .05
Net Gains or Losses on Securities (both
realized and unrealized) (.07) (.03) .06 (.18) (.03)
------------------------------------------------------------------
Total From Investment Operations .19 .50 .59 .19 .02
------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.26) (.53) (.53) (.37) (.05)
------------------------------------------------------------------
Net Asset Value, End of Period $9.75 $9.82 $9.85 $9.79 $9.97
------------------------------------------------------------------
Total Return(2) +2.01%(3) +5.24% +6.15% +1.92% +0.17%(3)
------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 9.5 $ 6.6 $ 1.7 $ 1.2 $ 0.2
------------------------------------------------------------------
Ratio of Expenses to Average Net Assets(4) .77%(5) .76% .72% .65% .65%(5)
------------------------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets(4) 5.46%(5) 5.43% 5.42% 3.86% 2.98%(5)
------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-9
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond Trust
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months Period from
Ended April 30, August 30, 1993(1)
1997 Year Ended October 31, to October 31,
(UNAUDITED) 1996 1995 1994 1993
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.53 $9.61 $9.43 $9.97 $10.00
----------------------------------------------------------------
Income From Investment Operations
Net Investment Income .30 .57 .58 .54 .08
Net Gains or Losses on Securities (both
realized and unrealized) (.07) (.08) .18 (.54) (.03)
----------------------------------------------------------------
Total From Investment Operations .23 .49 .76 -- .05
----------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.30) (.57) (.58) (.54) (.08)
----------------------------------------------------------------
Net Asset Value, End of Period $9.46 $9.53 $9.61 $9.43 $9.97
----------------------------------------------------------------
Total Return(2) +2.42%(3) +5.29% +8.36% -0.01% +0.55%(3)
----------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $33.4 $21.2 $11.9 $ 6.7 $ 0.1
----------------------------------------------------------------
Ratio of Expenses to Average Net Assets(4) .80%(5) .80% .77% .70% .65%(5)
----------------------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets(4) 6.35%(5) 6.06% 6.16% 5.72% 4.99%(5)
----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-10
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Trust
1) The date investment operations commenced.
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. Total return would
have been lower if Management had not reimbursed certain expenses.
3) Not annualized.
4) After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
Period from
Six Months Ended Year Ended September 7, 1993
April 30, October 31, to October 31,
ULTRA SHORT 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 2.64% 2.50% 2.50% 2.50% 2.50%
---------------------------------------------------------------
Net Investment Income 3.59% 3.69% 3.64% 2.01% 1.13%
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
Six Months Ended Year Ended August 30, 1993
April 30, October 31, to October 31,
LIMITED MATURITY 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 1.44% 1.91% 2.18% 2.50% 2.50%
---------------------------------------------------------------
Net Investment Income 5.71% 4.95% 4.75% 3.92% 3.14%
---------------------------------------------------------------
</TABLE>
5) Annualized.
B-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Ultra Short Bond Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
- --------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (31.6%)
$ 375 U.S. Treasury Notes, 6.25%, due 7/31/98 TSY TSY $ 376
5,000 U.S. Treasury Notes, 6.00%, due 9/30/98 TSY TSY 4,994
6,000 U.S. Treasury Notes, 6.875%, due 8/31/99 TSY TSY 6,067
4,430 U.S. Treasury Notes, 5.875%, due 11/15/99 TSY TSY 4,377
1,785 U.S. Treasury Notes, 5.875%, due 2/15/00 TSY TSY 1,760
9,220 U.S. Treasury Notes, 6.75%, due 4/30/00 TSY TSY 9,294
-------
TOTAL U.S. TREASURY SECURITIES (COST $26,875) 26,868
-------
U.S. GOVERNMENT AGENCY SECURITIES (2.4%)
1,275 Federal Home Loan Bank, Discount Notes, 5.25%, due
5/1/97 AGY AGY 1,275
250 Federal Home Loan Bank, Variable Rate Notes,
4.559%, due 1/29/98 AGY AGY 248
500 Federal Home Loan Bank, Variable Rate Notes,
4.584%, due 2/25/98 AGY AGY 495
-------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $2,022) 2,018
-------
MORTGAGE-BACKED SECURITIES (17.8%)
FEDERAL HOME LOAN MORTGAGE CORP.
580 REMIC Floating Rate CMO, Ser. 1270-F, 6.10%, due
5/15/97 AGY AGY 580
29 Mortgage Participation Certificates, 11.50%, due
2/1/00 & 5/1/00 AGY AGY 31
3,448 Gold Balloon Mortgage Participation Certificates,
6.50%, due 9/1/98-11/1/00 AGY AGY 3,416
75 Mortgage Participation Certificates, 10.50%, due
6/1/00-11/1/00 AGY AGY 79
1,578 Gold Balloon Mortgage Participation Certificates,
7.50%, due 11/1/01 AGY AGY 1,595
FANNIE MAE
2,398 Balloon Pass-Through Certificates, 7.00%, due
8/1/03 AGY AGY 2,393
2,288 Pass-Through Certificates, 7.50%, due 7/1/11 AGY AGY 2,304
</TABLE>
B-12
<PAGE>
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Ultra Short Bond 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>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
$2,435 Pass-Through Certificates, 7.50%, due
10/15/09-10/15/10 AGY AGY $ 2,462
2,284 Pass-Through Certificates, 7.00%, due 4/15/11 AGY AGY 2,272
-------
TOTAL MORTGAGE-BACKED SECURITIES
(COST $15,219) 15,132
-------
ASSET-BACKED SECURITIES (19.1%)
1,000 Capita Equipment Receivables Trust, Ser. 1996-1,
Class A-2, 5.95%, due 7/15/98 Aaa AAA 999
211 Daimler-Benz Auto Grantor Trust, Ser. 1993-A,
Class A, 3.90%, due 10/15/98 Aaa AAA 211
40 USAA Auto Loan Grantor Trust, Automobile Loan
Pass-Through Certificates, Ser. 1993-1, 3.90%, due
3/15/99 Aaa AAA 40
3,000 Premier Auto Trust, Ser. 1995-3, Class A-4, 6.10%,
due 7/6/99 Aaa AAA 2,998
1,600 Chase Manhattan Grantor Trust, Automobile Loan
Pass-Through Certificates, Ser. 1997-A, 5.95%, due
10/15/99 AAA 1,596
770 Premier Auto Trust, Ser. 1997-1, Class A-2, 5.90%,
due 4/6/00 Aaa AAA 769
1,084 Ford Credit Grantor Trust, Ser. 1995-A, Class A,
5.90%, due 5/15/00 Aaa AAA 1,085
359 Caterpillar Financial Asset Trust, Ser. 1995-A,
Class A-2, 6.10%, due 8/25/01 Aaa AAA 359
1,707 Chase Manhattan Grantor Trust, Automobile Loan
Pass-Through Certificates, Ser. 1995-A, 6.00%, due
9/17/01 Aaa AAA 1,702
2,733 Banc One Auto Grantor Trust, Ser. 1996-B, Class A,
6.55%, due 2/15/03 Aaa AAA 2,745
3,756 Case Equipment Loan Trust, Ser. 1996-B, Class A-2,
6.25%, due 9/15/03 Aaa AAA 3,767
-------
TOTAL ASSET-BACKED SECURITIES (COST $16,252) 16,271
-------
</TABLE>
B-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Ultra Short Bond 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>
BANKS & FINANCIAL INSTITUTIONS (17.7%)
$3,000 Societe Generale, Yankee C.D., 5.77%, due 5/15/97 P-1 A-1+ $ 3,000
3,000 J.P. Morgan & Co. Inc., Domestic C.D., 5.73%, due
8/12/97 P-1 A-1+ 2,999
2,100 Lehman Brothers Holdings Inc., Senior Notes,
5.75%, due 2/15/98 Baa1 A 2,092
3,500 Merrill Lynch & Co., Inc., Medium-Term Notes, Ser.
B, 6.64%, due 4/9/99 Aa3 AA- 3,508
3,500 Associates Corp. of North America, Senior Notes,
6.375%, due 8/15/99 Aa3 AA- 3,480
-------
TOTAL BANKS & FINANCIAL INSTITUTIONS
(COST $15,074) 15,079
-------
CORPORATE DEBT SECURITIES (5.7%)
4,000 du Pont (E.I.) de Nemours & Co., Medium-Term
Notes, Ser. F, 6.04%, due 12/16/97 Aa2 AA 4,004
900 Ford Motor Credit Co., Global Bonds, 6.50%, due
2/28/02 A1 A+ 882
-------
TOTAL CORPORATE DEBT SECURITIES (COST $4,899) 4,886
-------
CORPORATE COMMERCIAL PAPER (4.7%)
4,000 General Electric Capital Corp., 5.32%, due 5/16/97
(COST $3,999) P-1 A-1+ 3,999(2)
-------
TOTAL INVESTMENTS (99.0%) (COST $84,340) 84,253(3)
Cash, receivables and other assets, less
liabilities (1.0%) 863
-------
TOTAL NET ASSETS (100.0%) $85,116
-------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-14
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating Value(1)
(000's omitted) Moody's S&P (000's omitted)
- --------------- --------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (3.3%)
$ 35 U.S. Treasury Notes, 6.75%, due 5/31/97 TSY TSY $ 35
40 U.S. Treasury Notes, 7.375%, due 11/15/97 TSY TSY 40
1,130 U.S. Treasury Notes, 6.50%, due 4/30/99 TSY TSY 1,135
2,105 U.S. Treasury Notes, 6.375%, due 5/15/99 TSY TSY 2,108
1,315 U.S. Treasury Notes, 6.00%, due 8/15/99 TSY TSY 1,305
1,000 U.S. Treasury Notes, 6.75%, due 4/30/00 TSY TSY 1,008
640 U.S. Treasury Notes, 6.25%, due 5/31/00 TSY TSY 637
2,609 U.S. Treasury Inflation-Indexed Notes, 3.375%, due
1/15/07 TSY TSY 2,566
---------------
TOTAL U.S. TREASURY SECURITIES (COST $8,924) 8,834
---------------
MORTGAGE-BACKED SECURITIES (10.9%)
FEDERAL HOME LOAN MORTGAGE CORP.
145 Mortgage Participation Certificates, 10.50%, due
10/1/00 & 12/1/00 AGY AGY 153
512 Mortgage Participation Certificates, 8.50%, due
10/1/01 AGY AGY 523
393 ARM Certificates, 7.00%, due 1/1/17 & 2/1/17 AGY AGY 396
681 ARM Certificates, 7.125%, due 3/1/17 AGY AGY 687
FANNIE MAE
210 Balloon Pass-Through Certificates, 9.00%, due
8/1/97-8/1/98 AGY AGY 215
291 Balloon Pass-Through Certificates, 8.50%, due
9/1/97-11/1/98 AGY AGY 298
536 REMIC Floating Rate CMO, Ser. 1992-59F, 6.11875%,
due 8/25/06 AGY AGY 537
8,391 Pass-Through Certificates, 7.00%, due 9/1/03 &
6/1/11 AGY AGY 8,376
5,760 Pass-Through Certificates, 7.50%, due 9/1/11 AGY AGY 5,803
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
158 Pass-Through Certificates, 12.00%, due
5/15/12-3/15/15 AGY AGY 180
4,193 Pass-Through Certificates, 10.00%, due
9/15/15-6/15/20 AGY AGY 4,599
</TABLE>
B-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond 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>
$1,230 Pass-Through Certificates, 9.50%, due
8/15/09-4/15/22 AGY AGY $ 1,324
6,843 Pass-Through Certificates, 7.00%, due 1/15/27 AGY AGY 6,619
---------------
TOTAL MORTGAGE-BACKED SECURITIES
(COST $29,562) 29,710
---------------
ASSET-BACKED SECURITIES (18.3%)
6,300 Capita Equipment Receivables Trust, Ser. 1996-1,
Class A-3, 6.11%, due 7/15/99 Aaa AAA 6,288
3,820 Chase Manhattan Auto Owner Trust, Ser. 1996-C,
Class A-3, 5.95%, due 11/15/00 Aaa AAA 3,781
3,811 Navistar Financial Owner Trust, Ser. 1996-A, Class
A-2, 6.35%, due 11/15/02 Aaa AAA 3,810
4,634 Banc One Auto Grantor Trust, Ser. 1996-B, Class A,
6.55%, due 2/15/03 Aaa AAA 4,654
6,500 Ford Credit Auto Loan Master Trust, Auto Loan
Certificates, Ser. 1996-1, 5.50%, due 2/15/03 Aaa AAA 6,224
7,000 NationsBank Credit Card Master Trust, Ser. 1995-1,
Class A, 6.45%, due 4/15/03 Aaa AAA 6,976
2,590 Navistar Financial Owner Trust, Ser. 1996-B, Class
A-3, 6.33%, due 4/21/03 Aaa AAA 2,582
5,330 World Omni Automobile Lease Securitization Trust,
Ser. 1997-A, Class A-3, 6.85%, due 6/25/03 Aaa AAA 5,361
4,762 Chevy Chase Auto Receivables Trust, Ser. 1996-2,
Class A, 5.90%, due 7/15/03 Aaa AAA 4,711
5,000 Standard Credit Card Master Trust I, Credit Card
Participation Certificates, Ser. 1994-4, Class A,
8.25%, due 11/7/03 Aaa AAA 5,262
---------------
TOTAL ASSET-BACKED SECURITIES (COST $50,201) 49,649
---------------
BANKS & FINANCIAL INSTITUTIONS (17.0%)
6,400 Alco Capital Resource, Inc., Medium-Term Notes,
Ser. B, 5.46%, due 2/22/99 A3 A- 6,274
5,180 CIT Group Holdings, Inc., Medium-Term Notes,
6.25%, due 10/25/99 Aa3 A+ 5,141
</TABLE>
B-16
<PAGE>
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond 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>
$3,940 First National Bank of Commerce, Senior Bank
Notes, 6.50%, due 1/14/00 A2 A- $ 3,911
5,000 Smith Barney Holdings Inc., Notes, 7.00%, due
5/15/00 A2 A 5,021
5,000 Lehman Brothers Holdings Inc., Medium-Term Notes,
Ser. E, 6.89%, due 10/10/00 Baa1 A 4,965
8,000 First USA Bank, Medium-Term Deposit Notes, 6.375%,
due 10/23/00 Baa2 BBB- 7,863
1,725 Lehman Brothers Holdings Inc., Medium-Term Notes,
Ser. E, 6.65%, due 11/8/00 Baa1 A 1,700
6,600 Capital One Bank, Bank Notes, 5.95%, due 2/15/01 Baa3 BBB- 6,303
5,150 Goldman Sachs Group, L.P., Global Notes, 6.75%,
due 2/15/06 A1 A+ 4,914(4)
---------------
TOTAL BANKS & FINANCIAL INSTITUTIONS
(COST $47,022) 46,092
---------------
CORPORATE DEBT SECURITIES (49.4%)
9,000 P. H. Glatfelter Co., Notes, 5.875%, due 3/1/98 Baa2 BBB+ 8,967
2,780 Colonial Gas Co., Medium-Term Notes, Ser. A,
6.20%, due 3/18/98 Baa1 A- 2,778
3,000 Ford Motor Credit Co., Medium-Term Notes, 9.10%,
due 5/4/98 A1 A+ 3,088
1,900 American Standard Inc., Senior Notes, 10.875%, due
5/15/99 Ba3 BB- 2,028
7,000 Lockheed Martin Corp., Notes, 6.55%, due 5/15/99 A3 BBB+ 6,996
4,800 NWCG Holdings Corp., Notes, Zero-Coupon, Yielding
7.05%, due 6/15/99 Ba2 BBB- 4,110
2,710 Arkla, Inc., Notes, 8.875%, due 7/15/99 Baa3 BBB 2,821
700 Caterpillar Finance, Medium-Term Notes, Ser. E,
6.11%, due 7/15/99 A2 A 693
990 Hoechst Celanese Corp., Notes, 9.625%, due 9/1/99 A2 A+ 1,000
5,000 Xerox Credit Corp., Medium-Term Notes, Ser. D,
6.84%, due 6/1/00 A2 A 5,019
5,400 Comdisco, Inc., Notes, 6.50%, due 6/15/00 Baa1 BBB+ 5,394
</TABLE>
B-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Limited Maturity Bond 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>
$ 455 ADT Operations, Inc., Senior Notes, 8.25%, due
8/1/00 Ba1 BBB- $ 469
4,550 Arvin Industries, Inc., Notes, 10.00%, due 8/1/00 Ba1 BBB- 4,825
2,000 Ford Motor Credit Co., Medium-Term Notes, 6.84%,
due 8/16/00 A1 A+ 2,001
2,510 Chesapeake Corp., Notes, 10.375%, due 10/1/00 Baa3 BBB 2,756
1,730 BHP Finance (USA) Limited, Guaranteed Notes,
5.625%, due 11/1/00 A2 A 1,666
500 Congoleum Corp., Senior Notes, 9.00%, due 2/1/01 B1 BB- 498
5,200 General Motors Acceptance Corp., Medium-Term
Notes, 8.125%, due 3/1/01 A3 A- 5,391
1,770 Revlon Worldwide Corp., Notes, Zero-Coupon,
Yielding 10.75%, due 3/15/01 B3 B- 1,164(4)
2,290 Colonial Realty Limited Partnership, Senior Notes,
7.50%, due 7/15/01 Baa3 BBB- 2,286
4,160 Tyco International Ltd., Notes, 6.50%, due 11/1/01 Baa2 BBB+ 4,062
2,965 ICI Wilmington Inc., Guaranteed Notes, 7.50%, due
1/15/02 A2 A+ 3,025
2,835 Black & Decker Corp., Medium-Term Notes, Ser. A,
8.90%, due 1/21/02 Baa3 BBB- 3,030
3,780 Federated Department Stores, Inc., Senior Notes,
8.125%, due 10/15/02 Ba1 BB- 3,870
2,830 Viacom, Senior Notes, 6.75%, due 1/15/03 Ba2(5) BB+(5) 2,661
1,000 Safeway Inc., Medium-Term Notes, 8.57%, due 4/1/03 Baa1 BBB 1,052
2,700 ADT Operations, Inc., Senior Subordinated Notes,
9.25%, due 8/1/03 Ba3 BB+ 2,855
500 Sweetheart Cup, Inc., Senior Subordinated Notes,
10.50%, due 9/1/03 B3 B- 508
4,920 Owens-Illinois, Inc., Senior Debentures, 11.00%,
due 12/1/03 Ba1(6) BB+(6) 5,486
4,200 Stewart Enterprises, Inc., Notes, 6.70%, due
12/1/03 Baa3 BBB 4,066
4,675 Duty Free International, Inc., Notes, 7.00%, due
1/15/04 Ba1 BBB- 4,387
</TABLE>
B-18
<PAGE>
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond 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>
$2,125 Triton Energy Limited, Senior Notes, 9.25%, due
4/15/05 Ba2 BB $ 2,168
360 TLC Beatrice International Holdings, Senior
Secured Notes, 11.50%, due 10/1/05 B1 BB- 396
1,535 Mark IV Industries, Inc., Senior Subordinated
Notes, 7.75%, due 4/1/06 Ba3 BB+ 1,454
350 Collins & Aikman Products Co., Senior Subordinated
Notes, 11.50%, due 4/15/06 B3 B 385
400 Printpack, Inc., Senior Subordinated Notes, Ser.
B, 10.625%, due 8/15/06 B3 B+ 415
2,825 Time Warner Inc., Notes, 8.11%, due 8/15/06 Ba1 BBB- 2,876
400 Commonwealth Aluminum Corp., Senior Subordinated
Notes, 10.75%, due 10/1/06 B2 B- 413
415 Evenflo & Spalding Holdings Corp., Senior
Subordinated Notes, Ser. B, 10.375%, due 10/1/06 B3 B- 427
2,235 International Home Foods, Inc., Senior
Subordinated Notes, 10.375%, due 11/1/06 B2 B- 2,274
500 Motors and Gears, Inc., Senior Notes, Ser. A,
10.75%, due 11/15/06 B3 BB- 497(4)
260 Allied Waste North America, Inc., Senior
Subordinated Notes, 10.25%, due 12/1/06 B3 B+ 273(4)
635 Fresenius Medical Care Capital Trust, Preferred
Securities, 9.00%, due 12/1/06 Ba3 B+ 630
680 Newport News Shipbuilding Inc., Senior
Subordinated Notes, 9.25%, due 12/1/06 B1 B+ 690
857 AMTROL Inc., Senior Subordinated Notes, 10.625%,
due 12/31/06 B3 B- 881
2,200 Tenet Healthcare Corp., Senior Subordinated Notes,
8.625%, due 1/15/07 Ba3 B+ 2,179
820 Pen-Tab Industries, Inc., Senior Subordinated
Notes, 10.875%, due 2/1/07 B3 B- 820(4)
180 Fonda Group, Inc., Senior Subordinated Notes,
9.50%, due 3/1/07 B3 B- 171(4)
</TABLE>
B-19
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Limited Maturity Bond 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>
$ 180 GFSI Inc., Senior Subordinated Notes, 9.625%, due
3/1/07 B3 B- $ 178(4)
120 Tekni-Plex, Inc., Senior Subordinated Notes,
11.25%, due 4/1/07 B3 B- 124(4)
3,050 Comcast Cablevision, Notes, 8.375%, due 5/1/07 Ba1 BBB- 3,071(4)
7,290 Tenneco Inc., Debentures, 10.20%, due 3/15/08 Baa1 BBB 8,721
725 Buckeye Cellulose Corp., Senior Subordinated
Notes, 9.25%, due 9/15/08 Ba3 BB- 736
360 KinderCare Learning Centers, Inc., Senior
Subordinated Notes, 9.50%, due 2/15/09 B3 B- 341(4)
5,165 News America Holdings, Notes, 8.00%, due 10/17/16 Baa3 BBB 4,935
---------------
TOTAL CORPORATE DEBT SECURITIES (COST $135,202) 134,007
---------------
TOTAL INVESTMENTS (98.9%) (COST $270,911) 268,292(3)
Cash, receivables and other assets, less
liabilities (1.1%) 3,044
---------------
TOTAL NET ASSETS (100.0%) $271,336
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-20
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
1) 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 that the
trustees of Income Managers Trust believe accurately reflects fair value.
Short-term investments with less than 60 days until maturity may be valued at
cost which, when combined with interest earned, approximates market value.
2) At cost, which approximates market value.
3) At April 30, 1997, selected Portfolio information on a Federal income tax
basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
COST APPRECIATION DEPRECIATION DEPRECIATION
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ULTRA SHORT BOND PORTFOLIO $ 84,340,000 $128,000 $ 215,000 $ 87,000
LIMITED MATURITY BOND PORTFOLIO 270,912,000 937,000 3,557,000 2,620,000
</TABLE>
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, 1997, these
securities amounted to $11,553,000 or 4.3% of Neuberger&Berman Limited
Maturity Bond Portfolio's net assets.
5) Rated BBB- by Fitch Investors Services, Inc.
6) Rated BBB- by Duff & Phelps Credit Rating Co.
SEE NOTES TO FINANCIAL STATEMENTS
B-21
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
BOND BOND
(000'S OMITTED) PORTFOLIO PORTFOLIO
-------------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at market value*
(Note A) -- see Schedule of Investments $ 84,253 $ 268,292
Cash 3 12
Deferred organization costs (Note A) 2 6
Interest receivable 897 3,837
Prepaid expenses and other assets 3 13
Receivable for securities sold 6 10,888
-------------------------------------
85,164 283,048
-------------------------------------
LIABILITIES
Payable for securities purchased -- 11,390
Payable for variation margin (Note A) -- 222
Payable to investment manager (Note B) 18 56
Accrued expenses 30 44
-------------------------------------
48 11,712
-------------------------------------
NET ASSETS Applicable to Investors' Beneficial Interests $ 85,116 $ 271,336
-------------------------------------
NET ASSETS consist of:
Paid-in capital $ 85,203 $ 274,318
Net unrealized depreciation in value of investment securities and financial
futures contracts (87) (2,982)
-------------------------------------
NET ASSETS $ 85,116 $ 271,336
-------------------------------------
*Cost of investments $ 84,340 $ 270,911
-------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-22
<PAGE>
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
BOND BOND
(000'S OMITTED) PORTFOLIO PORTFOLIO
-----------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income $ 2,771 $ 9,526
-----------------------------------
Expenses:
Investment management fee (Note B) 112 335
Accounting fees 5 5
Amortization of deferred organization and initial offering expenses (Note A) 1 3
Auditing fees 11 12
Custodian fees (Note B) 32 66
Insurance expense 1 3
Legal fees 11 7
Trustees' fees and expenses 5 11
-----------------------------------
Total expenses 178 442
-----------------------------------
Net investment income 2,593 9,084
-----------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment securities sold (167) (50)
Net realized loss on financial futures contracts (Note A) -- (87)
Net realized gain on foreign currency transactions (Note A) -- 17
Change in net unrealized appreciation (depreciation) of investment securities
and foreign currency contracts (446) (2,427)
Change in net unrealized depreciation of financial futures contracts (Note A) -- 443
-----------------------------------
Net loss on investments (613) (2,104)
-----------------------------------
Net increase in net assets resulting from operations $ 1,980 $ 6,980
-----------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
BOND PORTFOLIO BOND PORTFOLIO
Six Months Six Months
Ended Year Ended Year
April 30, Ended April 30, Ended
1997 October 31, 1997 October 31,
(000'S OMITTED) (UNAUDITED) 1996 (UNAUDITED) 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 2,593 $ 5,817 $ 9,084 $ 19,386
Net realized loss on investments (167) (592) (120) (992)
Change in net unrealized appreciation (depreciation) of
investments (446) 172 (1,984) (1,726)
-------------------------------------------------------------
Net increase in net assets resulting from operations 1,980 5,397 6,980 16,668
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 8,003 20,518 32,007 45,924
Reductions (20,930) (31,918) (34,960) (114,929)
-------------------------------------------------------------
Net decrease in net assets resulting from transactions
in investors' beneficial interests (12,927) (11,400) (2,953) (69,005)
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (10,947) (6,003) 4,027 (52,337)
NET ASSETS:
Beginning of period 96,063 102,066 267,309 319,646
-------------------------------------------------------------
End of period $ 85,116 $ 96,063 $ 271,336 $ 267,309
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (Unaudited)
- ----------------------------------------------------------------------
Income Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Ultra Short Bond Portfolio ("Ultra Short") and
Neuberger&Berman Limited Maturity Bond Portfolio ("Limited Maturity")
(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 an open-end management
investment company under the Investment Company Act of 1940, as amended.
Other regulated investment companies sponsored by Neuberger&Berman Management
Incorporated ("Management"), whose financial statements are not presented
herein, also invest in these and other Portfolios of Managers Trust.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series 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: 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) FORWARD FOREIGN CURRENCY CONTRACTS: Limited Maturity may 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, or to increase or decrease its
exposure to a currency other than U.S. dollars. 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
transactions. Fluctuations in the value of forward foreign currency contracts
are recorded for financial reporting purposes as unrealized gains or losses
by the Portfolio. The Portfolio has no specific limitation on the percentage
of assets which may be committed to these types of contracts. The Portfolio
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 the Portfolio is determined using forward
foreign currency exchange rates supplied by an independent pricing service.
B-25
<PAGE>
5) FINANCIAL FUTURES CONTRACTS: Ultra Short and Limited Maturity may buy and
sell financial futures contracts to hedge against the effects of fluctuations
in 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 debt obligations, 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 Portfolio as unrealized gains or
losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts. When the contracts are closed, a Portfolio
recognizes a gain or loss. Risks of entering into futures contracts include
the possibility there may be an illiquid market and/or a change in the value
of the contract may not correlate with changes in the value of the underlying
securities.
For 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 Portfolio. 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, 1997, Ultra Short did not enter into
financial futures contracts. At April 30, 1997, open positions in financial
futures contracts for Limited Maturity were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
June 1997 79 U.S. Treasury Notes, 2 Year Short $ 56,860
June 1997 205 U.S. Treasury Notes, 5 Year Short 85,563
June 1997 380 U.S. Treasury Notes, 10 Year Short 220,375
June 1997 24 U.S. Treasury Bonds, 20 Year Short 750
</TABLE>
B-26
<PAGE>
At April 30, 1997, Limited Maturity had the following securities deposited
in a segregated account to cover margin requirements on open financial
futures contracts:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SECURITY
---------------------------------------------------------------------------
<S> <C>
$643,375 U.S. Treasury Notes, 6.375%, due 5/15/99
243,250 U.S. Treasury Notes, 6.75%, due 4/30/00
</TABLE>
6) 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.
7) FEDERAL INCOME TAXES: Managers Trust intends to comply with the requirements
of the Internal Revenue Code of 1986, as amended. 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 Federal income tax purposes and is
therefore not subject to Federal income tax.
8) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection with
its organization are being amortized by each Portfolio on a straight-line
basis over a five-year period. At April 30, 1997, the unamortized balance of
such expenses amounted to $2,236 and $6,203 for Ultra Short and Limited
Maturity, respectively.
9) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by Managers Trust with respect to both Portfolios are
allocated in proportion to the net assets of the 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 .25% of the first $500 million of
that Portfolio's average daily net assets, .225% of the next $500 million, .20%
of the next $500 million, .175% of the next $500 million, and .15% of average
daily net assets in excess of $2 billion.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New York
Stock Exchange and sub-adviser to each Portfolio. Neuberger is retained by
B-27
<PAGE>
Management to furnish it with investment recommendations and research
information without added cost to each Portfolio. Several individuals who are
officers and/or trustees of Managers Trust are also principals of Neuberger
and/or officers and/or directors of Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Custodian fees, was a reduction of $78 and $106
for Ultra Short and Limited Maturity, respectively, which is less than .01% of
each Portfolio's average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended April 30, 1997, 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>
ULTRA SHORT $ 46,603,259 $ 50,776,990
LIMITED MATURITY 98,737,558 102,170,085
</TABLE>
During the six months ended April 30, 1997, Limited Maturity entered into
various contracts to deliver currencies at specified future dates. There were no
open positions in these contracts at April 30, 1997.
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.
B-28
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Income Managers Trust
<TABLE>
<CAPTION>
ULTRA SHORT LIMITED MATURITY
BOND PORTFOLIO BOND PORTFOLIO
Six Months Period from Six Months Period from
Ended July 2, Ended July 2,
April 30, Year Ended October 1993(1) April 30, 1993(1)
1997 31, to October 31, 1997 Year Ended October 31, to October 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996 1995 1994 1993
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET
ASSETS:
Expenses .40%(2) .39% .40% .38% .40%(2) .33%(2) .33% .33% .34% .33%(2)
----------------------------------------------------------------------------------------------------------
Net Investment
Income 5.80%(2) 5.77% 5.67% 3.98% 4.00%(2) 6.78%(2) 6.45% 6.55% 5.86% 5.53%(2)
----------------------------------------------------------------------------------------------------------
Portfolio Turnover
Rate 59% 173% 148% 94% 46% 37% 169% 88% 102% 71%
----------------------------------------------------------------------------------------------------------
Net Assets, End of
Period (in millions) $85.1 $96.1 $102.1 $102.0 $104.3 $271.3 $267.3 $319.6 $316.1 $357.9
----------------------------------------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) Annualized.
B-29
<PAGE>
DIRECTORY
INVESTMENT MANAGER,
ADMINISTRATOR AND DISTRIBUTOR
Neuberger&Berman Management
Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
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
Institutional Services
605 Third Avenue 2nd Floor
New York, NY 10158-0180
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
OFFICERS AND TRUSTEES
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Theodore P. Giuliano
PRESIDENT AND TRUSTEE
John Cannon
TRUSTEE
Barry Hirsch
TRUSTEE
Robert A. Kavesh
TRUSTEE
William E. Rulon
TRUSTEE
Candace L. Straight
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
Neuberger&Berman Management Inc., Neuberger&Berman Ultra Short Bond Trust, and
Neuberger&Berman Limited Maturity Bond Trust are registered service marks of
Neuberger&Berman Management Inc.
- -C- 1997 Neuberger&Berman Management Inc.
C-1
<PAGE>
NEUBERGER&BERMAN MANAGEMENT INC. -Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
WWW.NBFUNDS.COM
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] PRINTED ON RECYCLED PAPER NBITSAR00497
