<PAGE>
[NEUBERGER BERMAN LOGO]
Neuberger Berman
INCOME TRUST-REGISTERED TRADEMARK-
Institutional Cash Trust ANNUAL REPORT
OCTOBER 31, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE TRUST
CHAIRMAN'S LETTER A-4
FINANCIAL STATEMENTS B-1
FINANCIAL HIGHLIGHTS
PER SHARE DATA B-6
REPORT OF INDEPENDENT AUDITORS B-8
THE PORTFOLIO
SCHEDULE OF INVESTMENTS C-1
FINANCIAL STATEMENTS C-4
FINANCIAL HIGHLIGHTS C-9
REPORT OF INDEPENDENT AUDITORS C-10
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 name in this report
are either service marks or registered trademarks of Neuberger Berman Management
Inc. -C-2000 Neuberger Berman Management Inc.
A-3
<PAGE>
CHAIRMAN'S LETTER December 20, 2000
--------------------------------------------------------------------------------
Dear Shareholder,
In fiscal 2000, fixed-income markets constituted something of a tale of two
cities. For the first six months, the great majority of investors continued to
sell bonds and buy equities. Investors seemed to view fixed income of all
classes as an afterthought, as they chased the high returns of equities, and
more specifically the stocks of the so-called new economy. But by the end of the
period, investors were beginning to see the benefits of cash and bond funds, as
they looked for vehicles offering relative safety in a storm. While investors in
taxable cash products did extremely well, results for most of our other taxable
fixed-income funds were muted but positive nonetheless.
The fixed-income markets for the year were dominated by the U.S. Government
buyback of Treasury securities. These gigantic purchases created a relative
scarcity of Treasuries, causing their prices to soar while the rest of the bond
market languished. The yield difference between Treasuries and most other
sectors of the market widened to 10-year highs. Other trends exacerbated this
dichotomy: The U.S. Government Agency bond market was fraught with concern that
proposed legislation would end government guarantees. The corporate market was
affected by high oil prices, a weak Euro and increasing earnings and credit
problems that caused more credit downgrades than upgrades -- and much market
volatility.
At Neuberger Berman, we have taken pride in our contrarian approach. During
this fiscal year, we saw negative investor sentiment as an opportunity to buy
weaker sectors with higher yields, while selling into the strength of U.S.
Treasury bonds. High-quality bonds in many sectors now yield between 6.0% and
7.5%. From our perspective as long-term investors, we believe that the scheduled
return of principal that comes with yields now available from high-quality bonds
make the bond market overall a wonderful investment opportunity.
In the year ahead, we will continue to add value to the fixed-income
investment process. We still consider many market sectors to be attractive as
Treasury supplies shrink. As always, we focus first on high credit quality and
the return of principal. We continue to adhere to our traditional strategy:
looking for undervalued securities in the most fundamentally attractive sectors,
while carefully managing risk. We are confident that these remain the best tools
to enhance the income from the capital you have entrusted to us.
INSTITUTIONAL CASH TRUST During fiscal 2000, our portfolio co-managers kept
their approach to cash management simple -- and the strategy worked. We invested
in high-quality paper, short maturities and moved sector allocations as
necessary to benefit from rising interest rates. Short-term securities, which
have been weak over the last several years, in the second half of the fiscal
year garnered much more investor attention. As the world focused on the
so-called new economy, compound interest and high quality securities this year
proved they have yet to go out of style.
Rising short-term rates continued to have an impact on the market, as did the
beginning of an economic slowing of the U.S. and global economies -- in the wake
of four Federal Reserve Board rate increases during the fiscal year, as well as
higher oil prices and a lower Euro. All that being said, it has been a terrific
period for cash investors, as returns indicate. Whereas rising rates normally
hurt longer-term bond investors, cash investors benefit from them. Neuberger
Berman Institutional Cash Trust served as a secure harbor, protecting capital
and providing strong rates of return. From the fund's May 8, 2000 inception
through Oct. 31, 2000, the portfolio returned 3.11% and at the close of the
fiscal year it had current and effective yields of 6.32% and 6.52%,
respectively.*
A-4
<PAGE>
Our portfolio co-managers used rising rates to shareholders' advantage by
reinvesting, at higher rates, throughout the period. As rates rose, higher
returns were quickly reflected in the portfolio's yields. As the year
progressed, however, one year-paper became more compelling and we invested
accordingly. At the end of the fiscal year, the portfolio co-managers increased
investments in one-year maturity paper, creating a "barbell" structure of short
and longer-term maturities in the portfolio, in anticipation of the possibility
that yields on longer-term paper may fall.
Issue and sector selection was even more important than usual throughout this
period. Given that an increasing number of corporations have had significant
negative earnings surprises, the co-managers reacted quickly where there was
even a remote whisper of problems. Notwithstanding weakness in some industries,
the corporate sector offered extremely attractive returns. The portfolio's
position in asset-backed and corporate commercial paper reached as high as 94.4%
of portfolio net assets in June, up from 89.1% at the end of the portfolio's
first month, and finishing the fiscal year at 86.1%. During the period, the
portfolio co-managers made no investments in U.S. Government Agency or Treasury
securities. At the end of the fiscal year, the balance of the portfolio was made
up of certificates of deposit (5.6% of the portfolio) and other money market
securities and assets (8.3%).
Looking forward to fiscal 2001, investors may realize that the so-called new
economy has not displaced the benefits of capital preservation and compound
interest. We are confident that the Institutional Cash Trust can continue to
fulfill its role of providing a secure and productive vehicle to preserve and
enhance a portion of your assets.
Sincerely,
/s/ Peter Sundman
Peter Sundman
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND TRUSTEE
Neuberger Berman Income Trust
*An investment in Institutional Cash Trust, 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 Institutional Cash Trust will
fluctuate. The composition, industries and holdings of the funds are subject to
change. Past performance is no guarantee of future results. Current yield would
have been lower had Neuberger Berman Management Inc. not reimbursed certain
fees and expenses.
The "current yield" of the money market funds refers to the income generated by
an investment in the funds over the 7-day period ending 10/31/00. 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.
A-5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Cash Trust
<TABLE>
<CAPTION>
October 31,
(000'S OMITTED EXCEPT PER SHARE AMOUNT) 2000
<S> <C>
-------------
ASSETS
Investment in Portfolio, at value (Note A) $ 635,518
-------------
LIABILITIES
Payable to administrator (Note B) 72
Accrued expenses 52
-------------
124
-------------
NET ASSETS at value $ 635,394
-------------
NET ASSETS consist of:
Par value $ 635
Paid-in capital in excess of par value 634,765
Accumulated net realized losses on
investment (6)
-------------
NET ASSETS at value $ 635,394
-------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 635,400
-------------
NET ASSET VALUE, offering and redemption price per
share $1.00
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-1
<PAGE>
STATEMENT OF OPERATIONS
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Cash Trust
<TABLE>
<CAPTION>
For the
Period from
May 8, 2000
(Commencement
of Operations) to
October 31,
(000'S OMITTED) 2000
<S> <C>
-----------------
INVESTMENT INCOME
Investment income from Portfolio (Note A) $ 12,708
-----------------
Expenses:
Administration fee (Note B) 279
Legal fees 46
Shareholder reports 41
Trustees' fees and expenses 8
Custodian fees 5
Auditing fees 4
Registration and filing fees 1
Shareholder servicing agent fees 1
Expenses from Portfolio (Notes A & B) 278
-----------------
Total expenses 663
Expenses reduced by custodian fee expense
offset arrangement (Note B) (1)
-----------------
Total net expenses 662
-----------------
Net investment income 12,046
-----------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS FROM
PORTFOLIO (NOTE A)
Net realized loss on investment securities (6)
-----------------
Net increase in net assets resulting from
operations $ 12,040
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Cash Trust
<TABLE>
<CAPTION>
Period from
May 8, 2000
(Commencement
of Operations) to
October 31,
(000'S OMITTED) 2000
<S> <C>
-----------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 12,046
Net realized loss on investments
from Portfolio (Note A) (6)
-----------------
Net increase in net assets resulting
from operations 12,040
-----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (12,046)
-----------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 871,181
Proceeds from reinvestment of
dividends 12,035
Payments for shares redeemed (247,816)
-----------------
Net increase from Trust share
transactions 635,400
-----------------
NET INCREASE IN NET ASSETS 635,394
NET ASSETS:
Beginning of period --
-----------------
End of period $ 635,394
-----------------
NUMBER OF TRUST SHARES:
Sold 871,181
Issued on reinvestment of dividends 12,035
Redeemed (247,816)
-----------------
Net increase in shares outstanding 635,400
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman October 31, 2000
--------------------------------------------------------------------------------
Income Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Institutional Cash Trust (the "Fund") is a 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 Fund had no
operations until May 8, 2000, other than matters relating to its organization
and registration as a series of the Trust. The trustees of the Trust may
establish additional series or classes of shares without the approval of
shareholders.
The assets of each Fund belong only to that Fund, and the liabilities of
each Fund are borne solely by that Fund and no other.
The Fund seeks to achieve its investment objective by investing all of its
net investable assets in Neuberger Berman Institutional Money Market
Portfolio (the "Portfolio") of Income Managers Trust having the same
investment objective and policies as the Fund. The value of the Fund's
investment in the Portfolio reflects the Fund's proportionate interest in the
net assets of the Portfolio (100.00% at October 31, 2000). The performance of
the Fund is directly affected by the performance of the Portfolio. The
financial statements of the Portfolio, including the Schedule of Investments,
are included elsewhere in this report and should be read in conjunction with
the Fund's financial statements.
It is the policy of the Fund 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: The Fund records its investment in the Portfolio at
value. Investment securities held by the Portfolio are valued as indicated in
the notes following the Portfolio's Schedule of Investments.
3) TAXES: The Fund is treated as a separate entity for U.S. Federal income tax
purposes. It is the intention of the Fund 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 purposes as capital loss carryforwards) sufficient to
relieve it from all, or substantially all, U.S. Federal income taxes.
Accordingly, the 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: The Fund earns income, net of
Portfolio expenses, daily on its investment in the Portfolio. It is the
policy of the 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 the Fund's net realized capital gains, if any, can be offset by
capital loss carryforwards ($6,108 expiring in 2008, determined as of
October 31, 2000), it is the policy of the Fund not to distribute such gains.
The 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: The Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more funds are allocated in
proportion to the net assets of such funds, except where a more appropriate
allocation of expenses to each fund can otherwise be made fairly. Expenses
directly attributable to a fund are charged to that fund.
B-4
<PAGE>
6) OTHER: All net investment income and realized and unrealized capital gains
and losses of the 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:
The Fund retains Neuberger Berman Management Inc. ("Management") as its
administrator under an Administration Agreement ("Agreement"). Pursuant to this
Agreement the Fund pays Management an administration fee at the annual rate of
0.15% of the Fund's average daily net assets. The Fund indirectly pays for
investment management services through its investment in the Portfolio (see
Note B of Notes to Financial Statements of the Portfolio).
Management has voluntarily undertaken to reimburse the Fund for its operating
expenses plus its pro rata portion of the Portfolio's operating expenses
(including the fees payable to Management, but excluding interest, taxes,
brokerage commissions, and extraordinary expenses) which exceed, in the
aggregate, 0.41% per annum of the Fund's average daily net assets. This
undertaking is subject to termination by Management upon at least 60 days' prior
written notice to the Fund. For the period ended October 31, 2000, no
reimbursement to the Fund was required.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to the 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.
The 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 the Fund.
The Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations under the caption Expenses from Portfolio, was a reduction of
$749.
NOTE C -- INVESTMENT TRANSACTIONS:
During the period ended October 31, 2000, additions and reductions in the
Fund's investment in the Portfolio amounted to $866,321,000 and $243,227,000,
respectively.
NOTE D -- REORGANIZATION:
On October 31, 2000, the shareholders of the Fund approved a plan of
reorganization whereby the Fund will be converted from a separate series of the
Trust to a new class of shares of Neuberger Berman Institutional Cash Fund (the
"New Fund"), a separate series of Neuberger Berman Income Funds, which is
currently inactive. On the closing date of the conversion, the Fund will
transfer its assets and liabilities to the New Fund in return for shares of a
new class of the New Fund equal in value to the net assets of the Fund. The Fund
will then distribute to its investors the New Fund shares it received, making
those investors shareholders of the New Fund, and the Fund will dissolve. The
New Fund will also receive from the Portfolio the entire portfolio of market
securities and other assets and the Portfolio will dissolve. Thus, the New Fund
will no longer invest all of its net investable assets in the Portfolio.
Instead, it will own directly the securities formerly held in the Portfolio.
It's a condition to the consummation of the reorganization that the
reorganization will qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended. The effective
date of the proposed conversion is February 9, 2001.
B-5
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Cash Trust(1)
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. It should be read in conjunction with the Portfolio's Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
May 8, 2000(2)
to October 31,
2000
<S> <C>
-------------------
Net Asset Value, Beginning of Period $ 1.0000
-------------------
Income From Investment Operations
Net Investment Income .0307
Net Gains or Losses on Securities --
-------------------
Total From Investment Operations .0307
-------------------
Less Distributions
Dividends (from net investment
income) (.0307)
-------------------
Net Asset Value, End of Period $ 1.0000
-------------------
Total Return(3) +3.11%(4)
-------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 635.4
-------------------
Ratio of Gross Expenses to Average
Net Assets(5) .36%(6)
-------------------
Ratio of Net Expenses to Average Net
Assets .35%(6)
-------------------
Ratio of Net Investment Income to
Average Net Assets 6.45%(6)
-------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-6
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman October 31, 2000
--------------------------------------------------------------------------------
Institutional Cash Trust
1) The per share amounts and ratios which are shown reflect income and expenses,
including the Fund's proportionate share of the Portfolio's income and
expenses.
2) The date investment operations commenced.
3) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of the Fund during the 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.
4) Not annualized.
5) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
6) Annualized.
B-7
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Neuberger Berman Income Trust and
Shareholders of:
Neuberger Berman Institutional Cash Trust
We have audited the accompanying statement of assets and liabilities of the
Neuberger Berman Institutional Cash Trust, one of the series constituting
Neuberger Berman Income Trust (the "Trust"), as of October 31, 2000, and the
related statement of operations, the statement of changes in net assets, and the
financial highlights for the period from May 8, 2000 (commencement of
operations) to October 31, 2000. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
above mentioned series of Neuberger Berman Income Trust at October 31, 2000, the
results of its operations, the changes in its net assets, and the financial
highlights for the period from May 8, 2000 (commencement of operations) to
October 31, 2000, in conformity with accounting principles generally accepted in
the United States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 4, 2000
B-8
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman October 31, 2000
--------------------------------------------------------------------------------
Institutional Money Market Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating(1) Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- -------- --------- ---------------
<C> <S> <C> <C> <C>
ASSET-BACKED COMMERCIAL PAPER
(27.3%)
$ 2,430 Enterprise Funding Corp.,
6.58%, due 11/1/00 P-1 A-1+ $ 2,430
20,000 Ciesco, L.P., 6.49%,
due 11/6/00 P-1 A-1+ 19,982
12,295 Windmill Funding Corp., 6.49%,
due 11/20/00 P-1 A-1+ 12,253
22,000 Preferred Receivables Funding
Corp., 6.48%-6.50%,
due 11/27/00-12/6/00 P-1 A-1 21,886
25,000 Corporate Receivables Corp.,
6.52%, due 1/9/01 P-1 A-1+ 24,688
27,000 Asset Securitization
Cooperative Corp., 6.50% &
6.53%, due 11/27/00 & 1/11/01 P-1 A-1+ 26,775
15,000 Monte Rosa Capital Corp.,
6.56%, due 1/11/01 P-1 A-1+ 14,806
24,000 Receivables Capital Corp.,
6.51%-6.65%,
due 11/10/00-1/12/01 P-1 A-1+ 23,858
12,000 Surrey Funding Corp., 6.55%,
due 1/19/01 P-1 A-1+ 11,827
15,000 Govco Inc., 6.55%,
due 1/26/01 P-1 A-1+ 14,765
--------
TOTAL ASSET-BACKED COMMERCIAL
PAPER 173,270
--------
CORPORATE COMMERCIAL PAPER
(58.8%)
7,500 BellSouth Capital Funding
Corp., 6.53%, due 11/1/00 P-1 A-1+ 7,500
25,000 Gillette Co., 6.60%,
due 11/1/00 P-1 A-1+ 25,000
24,990 Morgan Stanley Dean Witter,
6.58%, due 11/1/00 P-1 A-1+ 24,990
25,000 Panasonic Finance (America),
6.62%, due 11/1/00 P-1 A-1+ 25,000
7,450 American Express Credit Corp.,
6.46%, due 11/2/00 P-1 A-1 7,449
25,000 BMW U.S. Capital Corp., 6.50%,
due 11/2/00 P-1 A-1 24,995
10,000 Merrill Lynch & Co., Inc.,
6.75%, due 11/17/00 P-1 A-1+ 9,970
20,000 Verizon Global Funding Corp.,
6.47%, due 11/21/00 P-1 A-1 19,928
5,000 Paccar Financial Corp., 6.47%,
due 11/22/00 P-1 A-1+ 4,981
5,000 Prudential Funding Corp.,
6.60%, due 11/29/00 P-1 A-1 4,974
4,000 ANZ (Delaware) Inc., 6.64%,
due 12/4/00 P-1 A-1+ 3,976
5,000 du Pont (E.I.) de Nemours &
Co., 6.61%, due 12/4/00 P-1 A-1+ 4,970
10,000 Lloyd's TSB Bank PLC, 6.74%,
due 12/4/00 P-1 A-1+ 9,938
10,000 SBC Communications Inc., 6.47%
& 6.62%, due 11/29/00 &
12/14/00 P-1 A-1+ 9,935
20,000 National Rural Utilities Coop.
Finance Corp., 6.47% & 6.62%,
due 11/13/00 & 12/15/00 P-1 A-1+ 19,898
17,367 Snap-On Inc., 6.46% & 6.48%,
due 11/28/00 & 12/19/00 P-1 A-1 17,245
25,000 ING America Insurance
Holdings, Inc., 6.53%,
due 1/23/01 P-1 A-1+ 24,624
25,000 Abbey National North America
Corp., 6.46% & 6.47%,
due 11/22/00 & 1/29/01 P-1 A-1+ 24,845
7,500 Deutsche Bank Financial Inc.,
6.48%, due 1/29/01 P-1 A-1+ 7,380
22,000 Goldman Sachs Group, Inc.,
6.46%-6.52%,
due 2/5/01-2/16/01 P-1 A-1+ 21,597
20,000 General Electric Capital
Corp., 6.45% & 6.76%,
due 11/29/00 & 2/20/01 P-1 A-1+ 19,778
15,000 Washington Post Co., 6.50% &
6.52%, due 2/22/01 P-1 A-1+ 14,694
21,000 British Telecommunications
PLC, 6.50% & 6.78%,
due 11/9/00 & 3/7/01 P-1 A-1 20,735
5,000 Canadian Wheat Board, Canada,
6.43%, due 3/26/01 P-1 A-1+ 4,870
15,000 ABN Amro North America Finance
Inc., 6.43%, due 3/28/01 P-1 A-1+ 14,606
--------
TOTAL CORPORATE COMMERCIAL
PAPER 373,878
--------
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS (Cont'd)
Neuberger Berman October 31, 2000
--------------------------------------------------------------------------------
Institutional Money Market Portfolio
<TABLE>
<CAPTION>
Principal
Amount Rating(1) Value(2)
(000's omitted) Moody's S&P (000's omitted)
--------------------- -------- --------- ---------------
<C> <S> <C> <C> <C>
TAXABLE REVENUE BONDS (2.7%)
$ 2,000 Riverside Co. (CA) Cert. Of
Participation, Ser. 1997,
6.60%, VRDN due 11/1/27 VMIG-1 A-1+ $ 2,000
915 California Housing Finance
Agency Home Mortgage Rev.
Bonds, Ser. 1998 Q, 6.60%,
VRDN due 8/1/29 VMIG-1 A-1+ 915
1,200 Los Angeles (CA) Multi-Family
Housing Rev. Bonds, (Fountain
Park Proj.), Ser. 1999 Q,
6.60%, VRDN due 4/15/33 A-1+ 1,200
11,400 Florida Housing Finance Corp.,
Rev. Bonds, Ser. 1999 A,
6.55%, VRDN due 1/1/34 VMIG-1 A-1+ 11,400
1,800 Florida Housing Finance Corp.,
Rev. Bonds, Ser. 2000 A,
6.55%, VRDN due 1/1/45 1,800
--------
TOTAL TAXABLE REVENUE BONDS 17,315
--------
ASSET-BACKED SECURITIES (3.2%)
3,700 First Security Auto Owner
Trust 2000-2, 6.66%,
due 9/17/01 P-1 A-1+ 3,700
11,400 Honda Auto Receivables Owner
Trust 2001-1, 6.7113%,
due 11/15/01 P-1 A-1+ 11,400
5,000 Navistar Financial Owner Trust
2000-B, 6.73%, due 11/15/01 P-1 A-1+ 5,000
--------
TOTAL ASSET-BACKED SECURITIES 20,100
--------
CERTIFICATES OF DEPOSIT (5.6%)
2,500 First Union National Bank,
Domestic C.D., 7.00%,
due 11/22/00 P-1 A-1 2,500
18,000 Bank of Nova Scotia, Yankee
C.D., 6.68%, due 1/5/01 P-1 A-1 18,000
15,000 Societe Generale, Yankee C.D.,
6.71%, due 2/12/01 P-1 A-1+ 15,000
--------
TOTAL CERTIFICATES OF DEPOSIT 35,500
--------
CORPORATE DEBT SECURITIES
(0.7%)
4,500 Bank One N.A., Bank Notes,
6.84%, due 12/19/00 P-1 A-1 4,500
--------
FUNDING AGREEMENTS (2.3%)
15,000 Hartford Life Insurance Co.,
Variable Rate Funding
Agreement, 6.6588%, expiring
7/31/01 P-1 A-1 15,000
--------
TOTAL INVESTMENTS (100.6%) 639,563
Liabilities, less cash,
receivables and other assets
[(0.6%)] (4,102)
--------
TOTAL NET ASSETS (100.0%) $635,461
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-2
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
Neuberger Berman October 31, 2000
--------------------------------------------------------------------------------
Institutional Money Market Portfolio
1) Credit ratings are unaudited.
2) Investment securities of the Portfolio are valued at amortized cost, which
approximates U.S. Federal income tax cost.
SEE NOTES TO FINANCIAL STATEMENTS
C-3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Money Market Portfolio
<TABLE>
<CAPTION>
October 31,
(000'S OMITTED) 2000
<S> <C>
-------------
ASSETS
Investments in securities, at market value*
(Note A) -- see Schedule of Investments $ 639,563
Cash 6
Interest receivable 980
Prepaid expenses 5
-------------
640,554
-------------
LIABILITIES
Payable for securities purchased 5,000
Payable to investment manager (Note B) 51
Accrued expenses 42
-------------
5,093
-------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 635,461
-------------
NET ASSETS consist of:
Paid-in capital $ 635,461
-------------
NET ASSETS $ 635,461
-------------
*Cost of investments $ 639,563
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-4
<PAGE>
STATEMENT OF OPERATIONS
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Money Market Portfolio
<TABLE>
<CAPTION>
For the
Period from
May 8, 2000
(Commencement
of Operations) to
October 31,
(000'S OMITTED) 2000
<S> <C>
-----------------
INVESTMENT INCOME
Interest income $ 13,317
-----------------
Expenses:
Investment management fee (Note B) 196
Custodian fees (Note B) 56
Auditing fees 15
Legal fees 12
Trustees' fees and expenses 7
Insurance expense 1
Miscellaneous 5
-----------------
Total expenses 292
Expenses reduced by custodian fee expense
offset arrangement (Note B) (1)
-----------------
Total net expenses 291
-----------------
Net investment income 13,026
-----------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investment securities
sold (6)
-----------------
Net increase in net assets resulting from
operations $ 13,020
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Money Market Portfolio
<TABLE>
<CAPTION>
Period from
May 8, 2000
(Commencement
of Operations) to
October 31,
(000'S OMITTED) 2000
<S> <C>
-----------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 13,026
Net realized loss on investments (6)
-----------------
Net increase in net assets resulting
from operations 13,020
-----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 923,250
Reductions (300,809)
-----------------
Net increase in net assets resulting
from transactions in investors'
beneficial interests 622,441
-----------------
NET INCREASE IN NET ASSETS 635,461
NET ASSETS:
Beginning of period --
-----------------
End of period $ 635,461
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS October 31, 2000
--------------------------------------------------------------------------------
Income Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Institutional Money Market Portfolio (the
"Portfolio") is a 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. The
Portfolio had no operations until May 8, 2000, other than matters relating to
its organization and registration as a series of Managers Trust. Other
regulated investment companies sponsored by Neuberger Berman Management Inc.
("Management"), whose financial statements are not presented herein, also
invest in 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 Portfolio's 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, 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.
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: The 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:
The Portfolio retains Management as its investment manager under a Management
Agreement. For such investment management services, the Portfolio pays
Management a fee at the annual rate of 0.10% of the Portfolio's average daily
net assets.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to the 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 the Portfolio. Several individuals
who are officers and/or trustees of Managers Trust are also employees of
Neuberger and/or Management.
The Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations under the caption Custodian fees, was a reduction of $785.
NOTE C -- SECURITIES TRANSACTIONS:
All securities transactions for the Portfolio were short-term.
NOTE D -- REORGANIZATION:
As currently structured, the Portfolio receives investments from Neuberger
Berman Institutional Cash Trust (the "Fund"). On October 31, 2000, the
shareholders of the Fund approved a plan of reorganization whereby the Fund will
be converted from a separate series of Neuberger Berman Income Trust to a new
class of shares of Neuberger Berman Institutional Cash Fund (the "New Fund"), a
separate series of Neuberger Berman Income Funds, which is currently inactive.
On the closing date of the conversion, the Fund will transfer its assets and
liabilities to the New Fund in return for shares of a new class of the New Fund
equal in value to the net assets of the Fund. The Fund will then distribute to
its investors the New Fund shares it received, making those investors
shareholders of the New Fund, and the Fund will dissolve. On the conversion
date, the Portfolio will distribute its entire portfolio of market securities
C-7
<PAGE>
and other assets to the New Fund, and the Portfolio will also dissolve. Thus,
the New Fund will no longer invest all of its net investable assets in the
Portfolio. Instead, it will own directly the securities formerly held in the
Portfolio. It's a condition to the consummation of the reorganization that the
reorganization will qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended. The effective
date of the proposed conversion is February 9, 2001.
C-8
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Institutional Money Market Portfolio
<TABLE>
<CAPTION>
Period from
May 8, 2000(1)
to October 31,
2000
<S> <C>
--------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .15%(3)
--------------
Net Expenses .15%(3)
--------------
Net Investment Income 6.63%(3)
--------------
Net Assets, End of Period (in millions) $635.5
--------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-9
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Income Managers Trust and
Owners of Beneficial Interest of
Neuberger Berman Institutional Money Market Portfolio
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Neuberger Berman Institutional
Money Market Portfolio, one of the series constituting Income Managers Trust
(the "Trust"), as of October 31, 2000, and the related statement of operations,
the statement of changes in net assets, and the financial highlights for the
period from May 8, 2000 (commencement of operations) to October 31, 2000. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2000, by correspondence with
the custodian and brokers or other appropriate auditing procedures where replies
from brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
above mentioned series of Income Managers Trust at October 31, 2000, the results
of its operations, the changes in its net assets, and the financial highlights
for the period from May 8, 2000 (commencement of operations) to October 31,
2000, in conformity with accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 4, 2000
C-10
<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
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
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
-C-2000 Neuberger Berman Management Inc.
D-1
<PAGE>
OFFICERS AND TRUSTEES
John Cannon
TRUSTEE
Faith Colish
TRUSTEE
Walter G. Ehlers
TRUSTEE
C. Anne Harvey
TRUSTEE
Barry Hirsch
TRUSTEE
Michael M. Kassen
TRUSTEE
Robert A. Kavesh
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John P. Rosenthal
TRUSTEE
William E. Rulon
TRUSTEE
Cornelius T. Ryan
TRUSTEE
Tom D. Seip
TRUSTEE
Gustave H. Shubert
TRUSTEE
Candace L. Straight
TRUSTEE
Peter P. Trapp
TRUSTEE
Peter E. Sundman
PRESIDENT AND TRUSTEE
Daniel J. Sullivan
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>
Notice to Shareholders (Unaudited)
Under most state tax laws, mutual fund dividends which are derived from
direct investments in U.S. Government obligations are not taxable, as long as a
Fund meets certain requirements. Some states require that a Fund must provide
shareholders with a written notice, within 60 days of the close of a Fund's
taxable year, designating the portion of the dividends which represents interest
which those states consider to have been earned on U.S. Government obligations.
The chart below shows the percentage of income derived from such investments for
the twelve months ended October 31, 2000. This information should not be used to
complete your tax returns.
<TABLE>
<CAPTION>
CALIFORNIA,
CONNECTICUT, AND ALL OTHER
NEUBERGER BERMAN NEW YORK MAINE STATES
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
INSTITUTIONAL CASH TRUST 0.0% 0.0% 0.0%
</TABLE>
In January 2001 you will receive information to be used in filing your 2000
tax returns, which will include a notice of the exact tax status of all
dividends paid to you by the Fund during calendar 2000. Please consult your own
tax advisor for details as to how this information should be reflected on your
tax returns.
<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 Fund. This report
is prepared for the general information of
shareholders and is not an offer of shares
of the Fund. 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]
A1282 12/00
