UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file Number: 811-3802
NEUBERGER BERMAN INCOME FUNDS
-----------------------------
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue
New York, New York 10158-0180
(Address of Principal Executive Offices - Zip Code)
Registrant's Telephone Number, including area code: (212) 476-8800
Peter E. Sundman, Chief Executive Officer
Neuberger Berman Income Funds
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Date of fiscal year end: October 31, 2002
Date of reporting period: April 30, 2003
ITEM 1. REPORTS TO SHAREHOLDERS
[NEUBERGER BERMAN LOGO]
Semi-Annual Report
April 30, 2003
Neuberger Berman
Income Funds
INVESTOR CLASS SHARES
TRUST CLASS SHARES
Cash Reserves
Government Money Fund
High Income Bond Fund
Limited Maturity Bond Fund
Municipal Money Fund
Municipal Securities Trust
<Page>
CONTENTS
<Table>
THE FUNDS
CHAIRMAN'S LETTER 2
PORTFOLIO COMMENTARY/
PERFORMANCE HIGHLIGHTS
Limited Maturity Bond Fund 4
High Income Bond Fund 6
Municipal Securities Trust 8
Municipal Money Fund 10
Cash Reserves 11
Government Money Fund 12
SCHEDULE OF INVESTMENTS
Cash Reserves 15
Government Money Fund 17
High Income Bond Fund 18
Limited Maturity Bond Fund 25
Municipal Money Fund 29
Municipal Securities Trust 38
FINANCIAL STATEMENTS 44
FINANCIAL HIGHLIGHTS (ALL CLASSES)
PER SHARE DATA
Cash Reserves 60
Government Money Fund 61
High Income Bond Fund 62
Limited Maturity Bond Fund 63
Municipal Money Fund 64
Municipal Securities Trust 65
DIRECTORY 68
TRUSTEES AND OFFICERS 69
</Table>
"Neuberger Berman" and the Neuberger Berman logo are service marks of Neuberger
Berman, LLC. "Neuberger Berman Management Inc." and the individual fund names in
this shareholder report are either service marks or registered service marks of
Neuberger Berman Management Inc. (C) 2003 Neuberger Berman Management Inc. All
rights reserved.
1
<Page>
CHAIRMAN'S LETTER
[PHOTO OF PETER SUNDMAN]
Dear Fellow Shareholder,
Fixed-income investments have been in a dramatic bull market since early
2000, and continued to produce strong results for the six-month period
ended April 30, 2003. We are pleased to report that Neuberger Berman's
Income Fund investors have participated in this strength. During the
period, we delivered to our shareholders exactly what they expect from
their fixed-income investments -- positive returns and capital
preservation. Our Funds generally performed better than their peers and
benchmark averages.
During the period, the U.S. agency markets continued to be very strong as
buyers flocked to these high-quality issues, driving down their incremental
yields over U.S. Treasury securities. Our Limited Maturity Bond Fund
portfolio managers reduced their overall exposure to this sector of the
market in April on the belief that it had become overvalued. They
reinvested the proceeds in Treasuries, while awaiting the opportunity to
return to the agency sector at more attractive levels, or to commit the
funds to another undervalued sector of the market.
Although our municipal bond Funds produced good returns for the period, the
broader bond market was impacted by a number of issues. Budget weakness on
the federal, state, and local levels has left municipalities facing
declining tax revenues and budget deficits for the foreseeable future.
Widespread fiscal pressures, combined with general economic weakness, makes
credit selection and monitoring all the more essential. In this
environment, we have stepped up our intense focus on quality, seeking to
invest only in what we perceive to be the strongest municipal credits.
Our short-term money market Funds produced good returns during the
reporting period, as shareholders continued to seek the relative safety of
this asset class. Money markets have been in a protracted period of tight
spreads and an essentially flat yield curve. Consequently, the shorter end
of the yield curve could be vulnerable if the economy improves and interest
rates begin to trend upward. Our managers' strategy is to remain
conservatively positioned in regard to the average weighted maturity and
duration of our Funds in order to remain flexible in the
2
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
event of further Reserve Board easings, or even a rate hike if the economy
begins to show dramatic improvement.
The high-yield bond sector rebounded strongly during the reporting period,
having been plagued in 2002 with numerous difficulties, foremost among them
the well-publicized corporate accounting scandals. In the current low
interest rate environment, investors were drawn to the historically wide
yield spread opportunities available in the high-yield marketplace, which
drove high-yield bond prices significantly higher and yields dramatically
lower. Although the recent rally in the high-yield sector has narrowed the
spread relationship between high-yield bonds and comparable Treasury
securities to near historical averages, we believe high-yield spreads
remain at attractive levels.
Looking ahead to a market environment with short-term rates hovering at
40-year lows, fixed-income management will remain challenging. However, we
believe this market plays to Neuberger Berman's strengths: Our fixed-income
money managers are experienced at finding compelling and significant values
in all types of market conditions. In the current climate, we believe that
an experienced fixed-income team can best take advantage of the
opportunities that exist, seeking both returns and safety for your
investments.
Overall, we are pleased with the performance of our Income Funds. We have
worked diligently to provide our shareholders with competitive levels of
income, while keeping principal preservation a top priority. We take our
commitment to protect shareholders' capital very seriously, and as always,
we will continue to invest your funds with a disciplined investment
strategy and rigorous fundamental analysis.
Sincerely,
/s/ Peter Sundman
PETER SUNDMAN
CHAIRMAN OF THE BOARD
NEUBERGER BERMAN INCOME FUNDS
3
<Page>
LIMITED MATURITY BOND FUND PORTFOLIO COMMENTARY
Your Limited Maturity Bond Fund performed well during the bond market's
rally over the past three years. The Fund's Investor Class Shares have
averaged an annual rate of return of 7.09% (6.99% for Trust Class Shares)
for the three years ended April 30, 2003, outperforming its peers in the
Lipper Short Investment Grade Debt Funds Index and Average, both of which
posted gains of 6.38%.
For the most recent six-month reporting period ended April 30, 2003, the
Fund's Investor Class Shares and Trust Class Shares soundly outperformed
the Merrill Lynch 1-3 Year Treasury Index, posting a return of 2.48% and
2.34% respectively, compared to 1.42% for the Index. The Fund benefited
from its higher exposure to non-Treasury investments, all of which
performed well. The corporate bond sector was the strongest performing
sector during the last six months. Corporate bonds' yield advantage over
U.S. Treasuries began to narrow in October when investor attention shifted
toward the higher yields available on corporate securities. Prospects for
balance sheet deleveraging and improved cash flow also helped ease concerns
over excessive debt build-up and debt servicing capabilities.
We increased the Fund's corporate debt allocation, its largest sector
weighting, to 47.7% during the period from 47.3% at the end of October
2002. The average credit quality of the portfolio remains high at AA,
although our increased comfort level with bonds in the A and BBB rating
categories led us to modestly increase our exposure to this segment of the
market. We maintained a small position of high-yield securities (an
average 2.2% of assets) during the period. Over the last six months, lower
quality securities were one of the best performers and benefited the
Fund's overall return.
The U.S. Government Agency markets continued to be very strong during this
period as buyers flocked into these high-quality issues, driving their
incremental yields over Treasuries to very narrow levels. Having felt that
agencies had become overvalued, we sold into this strength in April,
significantly reducing our exposure to just under 10% from 27% at the
beginning of the period. We reinvested the proceeds in Treasuries and are
waiting for an opportunity to either return to the agency sector at more
attractive levels or commit the funds to another undervalued sector of the
market.
Our investments in the mortgage sector hovered between 6.8% and 10% of
assets, ending the reporting period at 8.8%. We kept our exposure to this
area at modest levels, primarily due to refinancing activity and prepayment
risk remaining at high levels throughout the reporting period.
PERFORMANCE HIGHLIGHTS
<Table>
<Caption>
SIX MONTH AVERAGE ANNUAL
NEUBERGER BERMAN PERIOD ENDED TOTAL RETURNS(1)
LIMITED MATURITY BOND(2),(6) INCEPTION DATE 4/30/2003(1) 1 YEAR(1) 5 YEARS 10 YEARS
INVESTOR CLASS 06/09/1986 2.48% 5.47% 5.18% 5.21%
TRUST CLASS 08/30/1993 2.34% 5.32% 5.07% 5.13%
</Table>
The 30-day SEC yield of the Investor Class Shares ending 4/30/03 was 1.96%, and
the Trust Class Shares was 1.86%.
The composition, industries and holdings of the fund are subject to change.
Investment return will fluctuate. Share values of the Limited Maturity Bond Fund
will also fluctuate, and your shares, when redeemed, may be worth more or less
than you paid for them. Past performance is no guarantee of future results.
4
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
From an interest rate standpoint, we are continuing to keep the portfolio
defensively positioned. At the end of April, the average duration of the
Fund was 1.5 years, down from 1.7 years at the end of October. With
interest rates at historically low levels, opportunities for capital gains
are limited. As one of our primary goals is the preservation of principal,
we must be vigilant about a trend reversal toward higher interest rates.
Now that the war in Iraq has ended, we are watching for a clearer economic
picture to emerge. On the one hand, low levels of capital spending and high
oil prices continue to be a drag on economic growth, while on the other
hand, low interest rates, an accomodative Federal Reserve, and a weak
dollar should work to increase exports and boost growth.
In the event that the economy begins to show signs of an upturn and
interest rates begin to trend upward, we will be quick to shorten duration
further to protect your principal. In the meantime, rates could remain at
current levels for quite some time, as the Federal Reserve Board seems more
concerned about battling disinflation than inflation. We think the Fund's
large commitment to higher yielding sectors makes it well positioned to
earn an attractive return in a stable, low interest rate environment.
Protection and preservation of principal is a primary objective of the
Limited Maturity Bond Fund. We are well aware of our responsibility to
protect your hard-earned capital and it continues to be our foremost
concern.
Sincerely,
/s/ Ted Giuliano /s/ Catherine Waterworth
TED GIULIANO
AND
CATHERINE WATERWORTH
PORTFOLIO CO-MANAGERS
5
<Page>
HIGH INCOME BOND FUND PORTFOLIO COMMENTARY
The High Income Bond Fund provided consistent performance during the
six-month period ended April 30, 2003, returning 6.84% to investors. The
Fund's returns trailed the Lehman Brothers Intermediate Ba U.S. High Yield
Index, which posted a return of 13.88% for the period, and the Lipper High
Current Yield Bond Funds Index, which returned 18.94%.
By focusing on the higher quality, lower risk investment opportunities
available among primarily BB rated securities and diligently selecting the
companies we believe are most capable of covering their fixed charges, the
Fund avoided some of the problem areas that plagued the high-yield bond
market in 2002. We did not expose our investors to last year's downside
volatility in the high-yield markets, or attempt to ride the dramatic
turnaround over the last six months by reaching for yield. Instead, we
maintained our disciplined approach, which provided shareholders with
steady, consistent returns throughout a volatile period. Our strategy
enabled the Fund to outperform its peer group and benchmark for calendar
year 2002 by more than 700 basis points, but caused our returns to lag the
broader averages over the last six months, when lower quality credits
outperformed higher-rated issues. In addition, the Fund's conservative
stance in regards to maturity and duration also muted returns.
Despite continued economic weakness, geopolitical turmoil, disappointing
corporate earnings, and corporate governance concerns, the high-yield
market has undergone a dramatic rebound during the last six months. The
rebound can be attributed primarily to positive investor reaction to the
historically wide yield spread opportunities available in the high-yield
marketplace. A combination of heightened investor interest, a challenging
equity market, low government bond market yields, and a renewed focus on
income-oriented investment alternatives has caused bond prices to rise
dramatically and yields to decline precipitously. As of April 30, 2003,
rising high-yield bond prices have returned to near historical averages and
compressed the yield advantage of high-yield bonds to comparable Treasury
securities by more than 400 basis points.
The portfolio composition reflected the Fund's disciplined investment
process. Of the Fund's non-cash (or cash equivalent) holdings, the
percentage of BB securities remained relatively steady for the first fiscal
half of 2003, closing the period at 44.2% of bonds in the portfolio on
April 30, 2003. The percentage of BBB securities declined modestly from
October 31, 2002, closing the period at 12.7% of bonds in the Fund, while B
securities accounted for 39.5% of the bonds in the Fund.
PERFORMANCE HIGHLIGHTS
<Table>
<Caption>
SIX MONTH AVERAGE ANNUAL
NEUBERGER BERMAN PERIOD ENDED TOTAL RETURNS(1)
HIGH INCOME BOND FUND(2) INCEPTION DATE 4/30/2003(1) 1 YEAR(1) 5 YEARS 10 YEARS
INVESTOR CLASS(9) 02/01/1992 6.84% 7.55% 5.79% 7.66%
</Table>
The 30-day SEC yield of the Investor Class Shares was 6.17% for the period
ending April 30, 2003.
The composition, industries and holdings of the fund are subject to change.
Investment return will fluctuate. Share values of the High Income Bond Fund will
also fluctuate, and your shares, when redeemed, may be worth more or less than
you paid for them. Past performance is no guarantee of future results.
* The Lipper High Income Bond Fund is not, and has not been, affiliated with the
Lipper High Yield Bond Fund Index.
6
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
We are not market prognosticators, but we have successfully managed
portfolios of high-yield bonds through various market environments, and we
believe that our disciplined strategy will continue to provide an effective
method of preserving and enhancing our clients' assets. Through disciplined
portfolio management and rigorous fundamental analysis, we will continue to
focus on our longstanding investment objective of high total returns
consistent with capital preservation.
Sincerely,
/s/ Wayne C. Plewniak
WAYNE C. PLEWNIAK
SENIOR PORTFOLIO MANAGER
7
<Page>
MUNICIPAL SECURITIES TRUST PORTFOLIO COMMENTARY
Municipal Securities Trust soundly outperformed the Lipper Intermediate
Municipal Debt Funds Index during the six-month period ended April 30,
2003, as investor sentiment continued to favor the relative stability of
fixed-income investments.
During this reporting period, the municipal bond market continued to post
strong returns and we are pleased to report that your Fund participated in
this strength. Our diligent focus on quality, stable municipal securities
helped the Fund provide good returns and preserve capital -- two goals not
easily achieved in the current economic and financial market environment.
With investor attention focused almost exclusively on geopolitical issues,
equities faltered, while the relative safety of fixed-income investments
became increasingly attractive. Although bad news for the equity markets
often means good news for bonds, the municipal bond market was not entirely
immune to broader market events. Our diligent focus on credit quality
helped us limit our exposure to weak credits in the airline and tobacco
industries, two areas that have been hit particularly hard by the current
economic environment and company-specific issues. Knowing that all bonds
are not created equal, our challenge is to be in the right securities at
the right time. Careful security selection during the period benefited the
Fund's overall returns.
Weakness at the federal budget level has trickled down to the state and
local level, where governments are now facing declining tax revenues and
budget deficits for the foreseeable future. We have therefore intensified
our ever-vigilant focus on credit quality. In addition to facing large
budget shortfalls, New York municipal bonds have been hurt by general
financial market weakness and a slowdown in tourism following the September
11, 2001 terrorist attacks. California municipal bonds have also suffered
from increasingly large budget deficits, along with the dramatic downturn
in the high-tech sector, which in the past was a powerful economic driver,
and a lack of growth in trade with Japan and the Far East. Given the budget
problems in New York and California, we continue to seek opportunities to
invest in these areas at attractive price levels, but intend to only buy
the bonds of issuers that meet our strict credit quality standards. If we
discover that we have made an investment mistake, we will be dispassionate
sellers.
Fixed-income investments have been in a dramatic bull market since early
2000, and have continued to produce strong results through the end of this
reporting period. With interest rates at extraordinarily low levels, it is
incumbent upon us to provide our shareholders with a competitive level of
tax-protected income, while emphasizing safety and principal preservation.
We believe that
PERFORMANCE HIGHLIGHTS
<Table>
<Caption>
SIX MONTH AVERAGE ANNUAL
NEUBERGER BERMAN PERIOD ENDED TOTAL RETURNS(1)
MUNICIPAL SECURITIES TRUST(2),(8) INCEPTION DATE 4/30/2003(1) 1 YEAR(1) 5 YEARS 10 YEARS
INVESTOR CLASS 07/09/1987 3.52% 8.11% 5.83% 5.38%
</Table>
For the period ending 4/30/03, the 30-day SEC yield of the Municipal Securities
Trust was 2.52% and the tax-equivalent yield was 4.10% for an investor in the
highest federal income tax bracket (38.6%).
The composition, industries and holdings of the fund are subject to change.
Investment return will fluctuate. Share values of the Municipal Securities Trust
will also fluctuate, and your shares, when redeemed, may be worth more or less
than you paid for them. Past performance is no guarantee of future results.
8
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
our conservative approach in seeking these objectives will benefit our
shareholders in the near and long term.
Sincerely,
/s/ Ted Giuliano
/s/ Thomas Brophy
/s/ Kelly Landron
TED GIULIANO,
THOMAS BROPHY
AND
KELLY LANDRON
PORTFOLIO CO-MANAGERS
9
<Page>
MUNICIPAL MONEY FUND PORTFOLIO COMMENTARY
The Municipal Money Fund posted positive returns for the six-month period
ended April 30, 2003, matching the performance of the Money Fund Report
Tax-Free National Retail Average. During the period the municipal bond
market continued to post strong returns and we are pleased to report that
your Fund participated in this strength. Our diligent focus on high
quality, stable municipal securities helped the Fund provide good returns
and preserve capital -- two goals not easily achieved in the current
economic and financial market environment.
Since the Fund's inception in 1984, we have not wavered from our focus on
investing in quality municipal securities. Over the past three years in the
equity markets -- through the bursting of the Internet bubble, widespread
accounting scandals, and global conflict -- we have sought competitive
levels of current income and the relative stability of high-quality money
market instruments, and we have consistently succeeded.
Although interest rates continue to hover at extraordinarily low levels, we
do not believe in speculating in lower quality credits to reach for yield
and a few extra basis points. For clients who hold money market instruments
in their portfolios, our goal is to be buyers of quality. While economic
and equity market uncertainty remains, we are more focused than ever on
providing solid income while conservatively managing your money.
PERFORMANCE HIGHLIGHTS
<Table>
<Caption>
FOR THE 7 DAYS ENDED 4/30/03
NEUBERGER BERMAN TAX-EQUIVALENT
MUNICIPAL MONEY FUND(5),(8) INCEPTION DATE CURRENT YIELD(4) EFFECTIVE YIELD(4) EFFECTIVE YIELD(7)
INVESTOR CLASS 12/10/1984 0.68% 0.68% 1.12%
</Table>
Sincerely,
/s/ Ted Giuliano
/s/ Thomas Brophy
/s/ Kelly Landron
TED GIULIANO,
THOMAS BROPHY
AND
KELLY LANDRON
PORTFOLIO CO-MANAGERS
For the period ending 4/30/03, the 7-day current yield of the Municipal Money
Fund was 0.68% and the tax-equivalent yield was 1.11% for an investor in the
highest federal income tax bracket (38.6%). The effective yield was 0.68% and
the tax-equivalent yield was 1.12% for an investor in the highest federal income
tax bracket (38.6%).
The composition, industries and holdings of the fund are subject to change.
Investment return will fluctuate. Past performance is no guarantee of future
results.
10
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
CASH RESERVES PORTFOLIO COMMENTARY
Cash Reserves performed well during the six-month period ending April 30,
2003. Our shareholders benefited from positive returns, capital
preservation, and a haven from the weakness that continued in the broader
financial markets. The Fund returned 0.41% during the period, outperforming
the Money Fund Report Taxable First Tier Retail Average. The Fund closed
the period with a 0.67% seven-day current and effective yield.
Although interest rates continue to hover at extraordinarily low levels, we
do not believe in reaching for yield and a few extra basis points by
speculating in lower credit quality issues. Our goal is to be buyers of
quality. Money markets have been in a protracted period of tight spreads
and an essentially flat yield curve. Consequently, the shorter end of the
yield curve could be vulnerable if the economy improves and interest rates
begin to trend upward.
During the reporting period we increased our holdings of commercial paper,
purchasing short-dated commercial paper where the best return advantage
over U.S. Treasury bills could be obtained. On the long end of the money
market yield curve, we continued to increase our exposure to U.S. Treasury
securities, favoring the risk/reward profile of the Treasury sector
relative to agencies and commercial paper.
We also carefully managed the portfolio's weighted average maturity to
avoid risks and enhance returns. Weighted average maturity fell from 65.4
days on October 31, 2002 to 43.0 days on April 30, 2003. We believe the
Fund's conservative positioning helps us remain flexible so that we can
take advantage of any further Federal Reserve Board easings or a rate hike
if the economy were to show dramatic improvement. We are happy to report
that yields on your Fund remained ahead of the benchmark average in this
low interest rate environment.
In today's challenging market environment, we are more committed than ever
to providing our investors with solid income while emphasizing capital
preservation. With interest rates hovering at 40-year lows, we believe that
our many years of investment experience and careful attention to detail
will continue to reward investors who have trusted us to protect their
principal and provide current income. The challenge going forward will be
to remain vigilant on credit quality, while seeking competitive returns.
PERFORMANCE HIGHLIGHTS
<Table>
<Caption>
FOR THE 7 DAYS ENDED 4/30/03
NEUBERGER BERMAN CASH RESERVES(2),(5) INCEPTION DATE CURRENT YIELD(4) EFFECTIVE YIELD(4)
INVESTOR CLASS 04/12/1988 0.67% 0.67%
</Table>
Sincerely,
/s/ Ted Giuliano /s/ Cynthia Damian
/s/ Catherine Waterworth /s/ Alyssa Juros
TED GIULIANO CYNTHIA DAMIAN
AND AND
CATHERINE WATERWORTH ALYSSA JUROS
PORTFOLIO CO-MANAGERS PORTFOLIO ASSOCIATE MANAGERS
The composition, industries and holdings of the fund are subject to change.
Investment return will fluctuate. Past performance is no guarantee of future
results.
11
<Page>
GOVERNMENT MONEY FUND PORTFOLIO COMMENTARY
The Government Money Fund performed well during the six-month period ending
April 30, 2003. Our shareholders benefited from positive returns, capital
preservation, and a haven from the weakness that continued in the broader
financial markets. The Fund returned 0.47% during the period, outperforming
the Money Fund Report Government & Agencies Retail Average by 13 basis
points. The Fund closed the period with a 0.74% seven-day current and
effective yield.
During the period, interest rates continued to hover at extraordinarily low
levels. Money markets have been in a protracted period of tight spreads and
an essentially flat yield curve. Consequently, the shorter end of the yield
curve could be vulnerable if the economy improves and interest rates begin
to trend upward.
The U.S. Treasury continues to issue large amounts of Treasury bills to
fund the federal budget deficit. We continue to manage the mix of Treasury
bills and agencies to maximize the spread relationship between the two
sectors. As of April 30, 2003, the Fund held 47.5% of assets in U.S.
Treasury securities and 51.9% in U.S. Government Agency securities.
We also carefully managed the portfolio's weighted average maturity to
avoid risks and enhance returns. Weighted average maturity fell from 59.4
days on October 31, 2002 to 42.4 days on April 30, 2003. These changes
reflect our cautious approach.
We are happy to report that yields on your Fund remained ahead of the
benchmark average in this low interest rate environment. We believe the
Fund's conservative positioning helps us remain flexible so that we can
take advantage of any further Federal Reserve Board easings, or a rate hike
if the economy were to show dramatic improvement.
While financial markets overall remained challenging in the first fiscal
half of 2003, our conservative management provided solid income while
preserving your hard-earned capital. With interest rates remaining at
40-year lows, we believe that our many years of investment experience and
careful attention to detail will continue to reward investors who have
trusted us to protect their principal while providing current income.
PERFORMANCE HIGHLIGHTS
<Table>
<Caption>
NEUBERGER BERMAN FOR THE 7 DAYS ENDED 4/30/03
GOVERNMENT MONEY FUND(2),(5) INCEPTION DATE CURRENT YIELD(4) EFFECTIVE YIELD(4)
INVESTOR CLASS 11/14/1983 0.74% 0.74%
</Table>
Sincerely,
/s/ Ted Giuliano /s/ Cynthia Damian
/s/ Catherine Waterworth /s/ Alyssa Juros
TED GIULIANO CYNTHIA DAMIAN
AND AND
CATHERINE WATERWORTH ALYSSA JUROS
PORTFOLIO CO-MANAGERS PORTFOLIO ASSOCIATE MANAGERS
The composition, industries and holdings of the fund are subject to change.
Investment return will fluctuate. Past performance is no guarantee of future
results.
12
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
ENDNOTES
1. One-year and average annual total returns are for the periods ended
April 30, 2003. Results are shown on a "total return" basis and
include reinvestment of all dividends and capital gain distributions.
Performance data quoted represents past performance, which is no
guarantee of future results. The investment return and principal value
of an investment will fluctuate so that the shares, when redeemed, may
be worth more or less than their original cost.
2. Neuberger Berman Management Inc. ("Management") has contractually
undertaken to reimburse the following funds so that the total
operating expenses exclusive of taxes, interest, brokerage commissions
and extraordinary expenses are limited to 0.65% for Neuberger Berman
Cash Reserves, 1.00% for Neuberger Berman High Income Bond Fund, 0.70%
for Neuberger Berman Limited Maturity Bond Fund (Investor Class),
0.80% for Neuberger Berman Limited Maturity Bond Fund (Trust Class),
and 0.65% for Neuberger Berman Municipal Securities Trust, of average
daily net assets. Each undertaking lasts until October 31, 2006. Each
of these funds has contractually undertaken to reimburse Management
for the excess expenses paid by Management, provided the
reimbursements do not cause its total operating expenses, (exclusive
of taxes, interest, brokerage commissions and extraordinary expenses)
to exceed the above stated expense limitation and the reimbursements
are made within three years after the year that Management incurred
the expense. Management has voluntarily agreed to reimburse certain
operating expenses of Neuberger Berman Government Money Fund so that
expenses are limited to 0.45% of average daily net assets. This
arrangement can be terminated without notice to the fund. For the
twelve months ended October 31, 2002, there were no reimbursements of
expenses by Management to Cash Reserves. Absent such reimbursements,
the total returns of Neuberger Berman's Limited Maturity Investor
Class, Limited Maturity Trust Class, High Income Bond Fund, Government
Money and Municipal Securities Trust would have been less.
3. From commencement of operations.
4. "Current yield" of a money market fund refers to the income generated
by an investment in the Fund over a recent 7-day period. This income
is then "annualized." The "effective yield" is calculated similarly
but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of
this assumed reinvestment. Yields of a money market fund will
fluctuate and past performance is not a guarantee of future results.
5. An investment in a money market fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government
agency. There can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share. The
return on an investment in Neuberger Berman Government Money Fund,
Neuberger Berman Municipal Money Fund, or Neuberger Berman Cash
Reserves will fluctuate.
6. Performance prior to August 1993 is for the Investor Class, which has
lower expenses and typically higher returns than the Trust Class. In
addition, Management caps the Trust Class expenses. Absent such
arrangement, which is subject to change, the total return would have
been less.
7. Tax-equivalent effective yield is the taxable effective yield that an
investor would have had to receive in order to realize the same level
of yield after Federal taxes at the highest Federal tax rate,
currently 38.6%, assuming that all of the Fund's income is exempt from
Federal income taxes.
8. A portion of the income of Neuberger Berman Municipal Money and
Neuberger Berman Municipal Securities Trust may be subject to the
Federal alternative minimum tax for certain investors.
9. This Fund is the successor to the Lipper High Income Bond Fund
("Lipper Fund"). The total return and data for the periods prior to
September 7, 2002, are those of the Lipper High Income Bond Fund
Premier Class. The data reflects performance of the Lipper Fund for
the period April 1, 1996 through September 6, 2002, and the
performance of Lipper Fund's predecessor partnership for the period
February 1, 1992 (date of inception), through March 31, 1996, as
applicable. The investment policies, objectives, guidelines and
restrictions of the Fund are in all material respects equivalent to
those of the Lipper Fund which were in all material respects
equivalent to those of its predecessor partnership. Had Lipper Fund's
predecessor partnership been subject to the provisions of the 1940
Act, its investment performance may have been adversely affected.
Returns would have been lower if the manager of the Lipper Fund had
not waived certain of its fees during the periods shown.
13
<Page>
GLOSSARY OF INDICES
THE MERRILL LYNCH 1-3 YEAR TREASURY An unmanaged total return market value
INDEX: index consisting of all coupon-bearing
U.S. Treasury publicly placed debt
securities with maturities between 1
and 3 years.
THE LEHMAN BROTHERS Ba INTERMEDIATE An unmanaged index comprised of
BOND INDEX: Ba-rated bonds with maturities of less
than 10 years.
THE LEHMAN BROTHERS 7-YEAR GENERAL An unmanaged total return performance
OBLIGATION INDEX: benchmark for the intermediate-term,
7-year, investment grade General
Obligations (State and Local)
tax-exempt bond market.
THE MONEY FUND REPORT TAXABLE FIRST Measures the performance of money
TIER RETAIL AVERAGE: market mutual funds which hold "First
Tier" securities as defined by Rule
2a-7 of the Investment Company Act of
1940 (not including Second Tier
Commercial Paper). First Tier
securities are those rated in the
highest short-term rating category by
two or more nationally recognized
statistical ratings organizations.
THE MONEY FUND REPORT TREASURY RETAIL Measures the performance of money
AVERAGE: market mutual funds which invest only
in obligations of the U.S. Treasury
(T-Bills).
THE MONEY FUND REPORT GOVERNMENT AND Measures the performance of money
AGENCIES RETAIL AVERAGE: market mutual funds which invest in
obligations of the U.S. Treasury
(T-Bills), repurchase agreements, or
U.S. Government Agency securities.
THE MONEY FUND REPORT TAX-FREE Measures all national tax-free and
NATIONAL RETAIL AVERAGE: municipal retail funds. Portfolio
holdings of tax-free funds includes
Rated and Unrated Demand Notes, Rated
and Unrated General Market Notes,
Commercial Paper, Put Bonds -- 6
months or less, Put Bonds -- over 6
months, AMT Paper, and Other Tax-Free
holdings.
THE LIPPER HIGH YIELD BOND FUND INDEX: An equally weighted index, adjusted
for the reinvestment of capital gain
distributions and income dividends, of
typically the largest 30 mutual funds
that aim at a high (relative) current
yield from fixed income securities,
have no quality or maturity
restrictions, and tend to invest in
lower grade debt issues.
Please note that indices do not take into account any fees and expenses of
investing in the individual securities that they track, and that investors
cannot invest directly in any index or average. Data about the performance of
each index are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. Each Portfolio may invest in many
securities not included in its respective index.
14
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS CASH RESERVES
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
U.S. TREASURY SECURITIES-BACKED BY THE FULL FAITH AND CREDIT OF THE
U.S. GOVERNMENT (40.1%)
$ 25,000 U.S. Treasury Bills, 1.16% & 1.19%, due 5/22/03 TSY TSY $ 24,983
20,000 U.S. Treasury Bills, 1.17%, due 5/29/03 TSY TSY 19,982
5,000 U.S. Treasury Bills, 1.14%, due 6/12/03 TSY TSY 4,993
25,000 U.S. Treasury Bills, 1.10%, due 6/19/03 TSY TSY 24,963
20,000 U.S. Treasury Bills, 1.23%, due 6/26/03 TSY TSY 19,962
30,000 U.S. Treasury Bills, 1.12%, due 7/3/03 TSY TSY 29,941
40,000 U.S. Treasury Bills, 1.13% & 1.15%, due 7/10/03 TSY TSY 39,911
50,000 U.S. Treasury Bills, 1.09% & 1.16%, due 7/17/03 TSY TSY 49,881
30,000 U.S. Treasury Bills, 1.17%, due 7/24/03 TSY TSY 29,918
15,000 U.S. Treasury Bills, 1.07%, due 8/7/03 TSY TSY 14,957
10,000 U.S. Treasury Bills, 1.14%, due 8/28/03 TSY TSY 9,962
10,000 U.S. Treasury Bills, 1.17%, due 9/4/03 TSY TSY 9,959
----------
TOTAL U.S. TREASURY SECURITIES-BACKED BY THE FULL
FAITH AND CREDIT OF THE U.S. GOVERNMENT 279,412
----------
U.S. GOVERNMENT AGENCY SECURITIES (32.9%)
5,000 Fannie Mae, Disc. Notes, 2.09%, due 5/2/03 AGY AGY 5,000
14,000 Fannie Mae, Disc. Notes, 1.22%, due 5/21/03 AGY AGY 13,990
10,000 Fannie Mae, Disc. Notes, 1.19%, due 9/3/03 AGY AGY 9,959
4,000 Federal Farm Credit Bank, Disc. Notes, 1.16%, due 5/8/03 AGY AGY 3,999
8,000 Federal Farm Credit Bank, Disc. Notes, 1.58%, due 6/16/03 AGY AGY 7,984
20,000 Federal Home Loan Bank, Disc. Notes, 1.16%, due 5/2/03 AGY AGY 19,999
36,500 Federal Home Loan Bank, Disc. Notes, 1.18% & 1.22%, due 5/7/03 AGY AGY 36,493
7,469 Federal Home Loan Bank, Disc. Notes, 1.22%, due 5/9/03 AGY AGY 7,467
15,000 Federal Home Loan Bank, Disc. Notes, 1.18%, due 5/14/03 AGY AGY 14,994
15,000 Federal Home Loan Bank, Disc. Notes, 1.18% & 1.30%, due 5/16/03 AGY AGY 14,992
7,000 Federal Home Loan Bank, Disc. Notes, 1.22%, due 5/23/03 AGY AGY 6,995
20,000 Federal Home Loan Bank, Disc. Notes, 1.16% & 1.18%, due 6/11/03 AGY AGY 19,973
20,000 Federal Home Loan Bank, Disc. Notes, 1.17% & 1.18%, due 7/23/03 AGY AGY 19,946
13,113 Freddie Mac, Disc. Notes, 1.22%, due 5/8/03 AGY AGY 13,110
15,000 Freddie Mac, Disc. Notes, 1.22%, due 6/19/03 AGY AGY 14,975
10,000 Freddie Mac, Disc. Notes, 1.22%, due 6/30/03 AGY AGY 9,980
10,000 Freddie Mac, Disc. Notes, 1.19%, due 8/15/03 AGY AGY 9,965
----------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES 229,821
----------
CERTIFICATES OF DEPOSIT (6.0%)
10,000 Barclays Bank PLC, Yankee CD, 1.21%, due 5/5/03 P-1 A-1+ 10,000
5,000 BNP Paribas, Yankee CD, 2.25%, due 6/18/03 P-1 A-1+ 5,000
10,000 Rabobank Nederland, Yankee CD, 1.23%, due 5/27/03 P-1 A-1+ 10,000
7,000 Royal Bank of Scotland NY, Yankee CD, 1.20%, due 6/19/03 P-1 A-1+ 7,000
10,000 Wells Fargo Bank NA, Domestic CD, 1.24%, due 5/27/03 P-1 A-1+ 10,000
----------
TOTAL CERTIFICATES OF DEPOSIT 42,000
----------
CORPORATE DEBT SECURITIES (1.4%)
10,000 American Express Credit Corp., Floating Rate Medium-Term Notes,
Ser. B, 1.30%, due 5/7/03 P-1 A-1 10,000
----------
</Table>
See Notes to Schedule of Investments
15
<Page>
SCHEDULE OF INVESTMENTS CASH RESERVES CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
COMMERCIAL PAPER (16.5%)
$ 7,000 Alcon Capital Corp., 1.20%, due 5/30/03 P-1 A-1+ $ 6,993
5,616 ANZ (Delaware), Inc., 1.24%, due 5/5/03 P-1 A-1+ 5,615
10,000 Bank of America Corp., 1.26%, due 5/19/03 P-1 A-1 9,994
5,000 Barclays U.S. Funding Corp., 1.24%, due 7/1/03 P-1 A-1+ 4,990
5,000 BNP Paribas Finance, 1.21%, due 5/21/03 P-1 A-1+ 4,997
5,000 Eksportfinans ASA, 1.22%, due 5/6/03 P-1 A-1+ 4,999
7,216 Gannett Co., Inc., 1.23%, due 5/2/03 & 5/6/03 P-1 A-1 7,215
10,000 General Electric Capital Corp., 1.25%, due 5/16/03 & 5/20/03 P-1 A-1+ 9,994
5,000 Kimberly-Clark Corp., 1.20%, due 5/12/03 P-1 A-1+ 4,998
10,000 National Australia Funding (Delaware), Inc., 1.22%, due 5/5/03 P-1 A-1+ 9,999
5,000 Novartis Finance Corp., 1.22%, due 5/29/03 P-1 A-1+ 4,995
15,000 Pfizer, Inc., 1.20%, due 5/19/03 P-1 A-1+ 14,991
14,969 Societe Generale N.A., Inc., 1.21% - 1.25%, due 5/8/03 - 6/4/03 P-1 A-1+ 14,960
10,000 UBS Finance (Delaware), Inc., 1.25%, due 5/7/03 P-1 A-1+ 9,998
----------
TOTAL COMMERCIAL PAPER 114,738
----------
TIME DEPOSITS (1.4%)
10,000 Danske Bank A/S Copenhagen, 1.34%, due 5/1/03 P-1 A-1+ 10,000
----------
REPURCHASE AGREEMENTS (1.9%)
13,037 State Street Bank and Trust Co. Repurchase Agreement, 1.27%,
due 5/1/03, dated 4/30/03, Maturity Value $13,037,460,
Collateralized by $12,895,000 Freddie Mac, Notes, 3.25%, due
11/15/04 (Collateral Value $13,429,601) 13,037
----------
TOTAL INVESTMENTS (100.2%) 699,008
Liabilities, less cash, receivables and other assets [(0.2%)] (1,494)
----------
TOTAL NET ASSETS (100.0%) $ 697,514
----------
</Table>
16
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS GOVERNMENT MONEY FUND
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE++
(000'S OMITTED) (000'S OMITTED)
U.S. TREASURY SECURITIES-BACKED BY THE FULL FAITH AND CREDIT OF THE U.S. GOVERNMENT (47.5%)
$ 25,000 U.S. Treasury Bills, 1.15%, due 5/1/03 $ 25,000
50,000 U.S. Treasury Bills, 1.14% & 1.20%, due 5/8/03 49,989
20,000 U.S. Treasury Bills, 1.16%, due 5/15/03 19,991
25,000 U.S. Treasury Bills, 1.16% & 1.18%, due 5/22/03 24,983
45,000 U.S. Treasury Bills, 1.17% & 1.18%, due 5/29/03 44,959
30,000 U.S. Treasury Bills, 1.14%, due 6/5/03 29,967
40,000 U.S. Treasury Bills, 1.10%, due 6/19/03 39,940
40,000 U.S. Treasury Bills, 1.12%, due 7/3/03 39,922
75,000 U.S. Treasury Bills, 1.13% - 1.15%, due 7/10/03 74,834
55,000 U.S. Treasury Bills, 1.09% & 1.16%, due 7/17/03 54,868
40,000 U.S. Treasury Bills, 1.17%, due 7/24/03 39,891
25,000 U.S. Treasury Bills, 1.07%, due 8/7/03 24,927
20,000 U.S. Treasury Bills, 1.14%, due 8/28/03 19,925
25,000 U.S. Treasury Bills, 1.17%, due 9/4/03 24,897
-----------
TOTAL U.S. TREASURY SECURITIES-BACKED BY THE FULL
FAITH AND CREDIT OF THE U.S. GOVERNMENT 514,093
-----------
U.S. GOVERNMENT AGENCY SECURITIES (42.9%)
20,000 Federal Farm Credit Bank, Disc. Notes, 1.16%, due 5/12/03 19,993
15,000 Federal Farm Credit Bank, Disc. Notes, 1.58%, due 6/16/03 14,970
20,513 Federal Farm Credit Bank, Disc. Notes, 1.18%, due 8/6/03 20,448
20,000 Federal Home Loan Bank, Disc. Notes, 1.22%, due 5/2/03 19,999
25,000 Federal Home Loan Bank, Disc. Notes, 1.18%, due 5/7/03 24,995
72,607 Federal Home Loan Bank, Disc. Notes, 1.18% - 1.22%, due 5/9/03 72,588
10,000 Federal Home Loan Bank, Disc. Notes, 1.30%, due 5/16/03 9,995
45,000 Federal Home Loan Bank, Disc. Notes, 1.18%, due 5/21/03 44,971
29,800 Federal Home Loan Bank, Disc. Notes, 1.22%, due 5/23/03 29,778
60,000 Federal Home Loan Bank, Disc. Notes, 1.16% & 1.18%, due 6/11/03 59,920
25,335 Federal Home Loan Bank, Disc. Notes, 1.18%, due 6/18/03 25,295
25,000 Federal Home Loan Bank, Disc. Notes, 1.17%, due 7/11/03 24,942
30,000 Federal Home Loan Bank, Disc. Notes, 1.17%, due 7/23/03 29,919
26,250 Federal Home Loan Bank, Disc. Notes, 1.17%, due 7/25/03 26,177
40,000 Sallie Mae, Disc. Notes, 1.17%, due 5/8/03 39,991
-----------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES 463,981
-----------
REPURCHASE AGREEMENTS (9.0%)
97,551 State Street Bank and Trust Co. Repurchase Agreement, 1.27%, due
5/1/03, dated 4/30/03, Maturity Value $97,554,441, Collateralized
by $96,480,000 Fannie Mae, Notes, 3.25%, due 11/15/04
(Collateral Value $100,479,868) 97,551
-----------
TOTAL INVESTMENTS (99.4%) 1,075,625
Cash, receivables and other assets, less liabilities (0.6%) 6,196
-----------
TOTAL NET ASSETS (100.0%) $ 1,081,821
-----------
</Table>
See Notes to Schedule of Investments
17
<Page>
SCHEDULE OF INVESTMENTS HIGH INCOME BOND FUND
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
CORPORATE DEBT SECURITIES (95.1%)
$ 2,500 Abitibi-Consolidated, Inc., Guaranteed Notes, 6.95%, due 12/15/06 Ba1 BB+ $ 2,595
2,000 AES Corp., Senior Secured Notes, 10.00%, due 7/15/05 B2 BB 2,100**
1,525 AGCO Corp., Senior Subordinated Notes, 8.50%, due 3/15/06 B1 BB- 1,525|
100 Airgas, Inc., Senior Subordinated Notes, 9.13%, due 10/1/11 Ba2 B+ 112
1,250 AK Steel Corp., Senior Notes, 7.88%, due 2/15/09 B1 BB 1,109|
2,075 Alliant Techsystems, Inc., Senior Subordinated Notes, 8.50%,
due 5/15/11 B2 B 2,262
3,625 Allied Waste North America, Inc., Guaranteed Senior Notes,
Ser. B, 7.63%, due 1/1/06 Ba3 BB- 3,761
1,000 Allied Waste North America, Inc., Senior Subordinated Notes,
Ser. B, 10.00%, due 8/1/09 B2 B+ 1,069
750 Alpharma, Inc., Senior Notes, 8.63%, due 5/1/11 B3 B+ 776**
150 American Standard, Inc., Senior Notes, 7.38%, due 4/15/05 Ba2 BB+ 157
100 Amerigas Partners L.P., Senior Notes, Ser. B, 8.88%,
due 5/20/11 B2 BB- 108
3,125 Amerigas Partners L.P., Senior Notes, Ser. D, 10.00%,
due 4/15/06 B2 BB- 3,383
3,000 AMETEK, Inc., Senior Notes, 7.20%, due 7/15/08 Ba1 BBB 3,155
1,175 Amphenol Corp., Senior Subordinated Notes, 9.88%, due 5/15/07 BB- 1,225
625 Aramark Services, Inc., Guaranteed Notes, 6.75%, due 8/1/04 Baa3 BBB- 648
375 Aramark Services, Inc., Guaranteed Notes, 7.00%, due 7/15/06 Baa3 BBB- 403
2,125 ARCO Chemical Co., Debentures, 9.38%, due 12/15/05 Ba3 BB 2,146
3,250 ArvinMeritor, Inc., Notes, 6.63%, due 6/15/07 Baa3 BBB- 3,282
1,875 Ball Corp., Guaranteed Senior Notes, 7.75%, due 8/1/06 Ba3 BB 2,002
3,000 Ball Corp., Guaranteed Senior Subordinated Notes, 8.25%, due 8/1/08 B1 BB- 3,150
500 Bergen Brunswig Corp., Senior Notes, 7.25%, due 6/1/05 BB 520
2,750 Boise Cascade Corp., Notes, 7.50%, due 2/1/08 Baa3 BB+ 2,939
125 Boyd Gaming Corp., Senior Notes, 9.25%, due 10/1/03 Ba3 BB- 128
1,000 Canandaigua Brands, Inc., Guaranteed Senior Notes, 8.63%,
due 8/1/06 Ba2 BB 1,083
2,875 Case Corp., Notes, Ser. B, 6.25%, due 12/1/03 Ba2 BB 2,875
4,250 Cinemark USA, Inc., Senior Subordinated Notes, 9.00%, due 2/1/13 B3 B- 4,579**
2,250 Cinemark USA, Inc., Senior Subordinated Notes, Ser. B, 8.50%,
due 8/1/08 B3 B- 2,340
4,175 Cinemark USA, Inc., Senior Subordinated Notes, Ser. D, 9.63%,
due 8/1/08 B3 B- 4,232
350 Circus Circus Enterprises, Inc., Senior Notes, 6.45%, due 2/1/06 Ba2 BB+ 355
2,125 Citgo Petroleum Corp., Senior Notes, 7.88%, due 5/15/06 Ba3 B+ 2,136
3,250 CK Witco Corp., Senior Notes, 8.50%, due 3/15/05 Ba1 BBB- 3,445
1,675 CMS Energy Corp., Senior Notes, 8.38%, due 7/1/03 B3 B+ 1,688
2,125 CMS Energy Corp., Senior Notes, Ser. B, 6.75%, due 1/15/04 B3 B+ 2,130
3,500 CMS Panhandle Holding Co., Senior Notes, 6.13%, due 3/15/04 Ba2 BB 3,570
1,100 Compass Minerals Group, Inc., Senior Subordinated Notes, 10.00%,
due 8/15/11 B3 B 1,221
1,175 Corn Products International, Inc., Senior Notes, 8.45%, due 8/15/09 Ba1 BBB- 1,235
</Table>
18
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS HIGH INCOME BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 25 Cott Beverages, Inc., Guaranteed Notes, 8.00%, due 12/15/11 B2 B+ $ 27
2,350 Cross Timbers Oil Co., Senior Subordinated Notes, Ser. B, 8.75%,
due 11/1/09 Ba3 BB- 2,456
2,500 Crown European Holdings S.A., Senior Secured Notes, 9.50%,
due 3/1/11 B1 B+ 2,662**
1,000 Crown, Cork & Seal Co., Guaranteed Notes, 7.00%, due 12/15/06 B3 B 938
1,250 Crown, Cork & Seal Co., Notes, 8.38%, due 1/15/05 B3 B 1,256####
3,250 CSC Holdings, Inc., Senior Subordinated Debentures, 9.88%,
due 2/15/13 B2 B+ 3,404
1,000 Cyprus Amax Minerals Co., Notes, 6.63%, due 10/15/05 Baa3 BBB- 1,027
500 D.R. Horton, Inc., Guaranteed Notes, 10.50%, due 4/1/05 Ba1 BB 553####
1,375 D.R. Horton, Inc., Guaranteed Senior Notes, 8.38%, due 6/15/04 Ba1 BB 1,437
1,750 D.R. Horton, Inc., Guaranteed Senior Notes, 7.50%, due 12/1/07 Ba1 BB 1,855
3,250 Dana Corp., Notes, 6.50%, due 3/15/08 Ba3 BB 3,152
3,250 Dean Foods Co., Senior Notes, 6.75%, due 6/15/05 Ba3 BB- 3,331
1,000 Delhaize America, Inc., Guaranteed Notes, 7.38%, due 4/15/06 Ba1 BB+ 1,035
2,875 Dole Foods Co., Inc., Variable Rate Senior Notes, 7.25%, due 5/1/09 B2 B+ 3,112
3,125 Domino's Inc., Guaranteed Senior Subordinated Notes, Ser. B, 10.38%,
due 1/15/09 B2 B 3,359
1,125 Dresser, Inc., Guaranteed Senior Subordinated Notes, 9.38%,
due 4/15/11 B2 B 1,159
4,125 El Paso Energy Partners L.P., Senior Subordinated Notes, 8.50%,
due 6/1/10 B1 BB- 4,445**
3,000 El Paso Natural Gas, Notes, 6.75%, due 11/15/03 B1 B+ 3,007
1,625 ENSERCH Corp., Notes, 7.13%, due 6/15/05 Baa3 BBB 1,615
3,225 Entravision Communications Corp., Senior Subordinated Notes, 8.13%,
due 3/15/09 B3 B- 3,370
3,500 Express Scripts, Inc., Guaranteed Senior Notes, 9.63%, due 6/15/09 Ba1 BBB- 3,859
3,500 Fairchild Semiconductor Corp., Guaranteed Senior Subordinated Notes,
10.38%, due 10/1/07 B 3,692
2,750 FastenTech, Inc., Senior Notes, 11.50%, due 5/1/11 B3 B- 2,832**###
1,500 Felcor Lodging L.P., Guaranteed Senior Notes, 9.50%, due 9/15/08 Ba3 B+ 1,505
1,625 Felcor Suites L.P., Guaranteed Senior Notes, 7.38%, due 10/1/04 Ba3 B+ 1,625
3,495 Ferrellgas Partners L.P., Senior Notes, 8.75%, due 6/15/12 B2 B 3,775
3,125 Fisher Scientific International, Inc., Notes, 7.13%, due 12/15/05 B1 BB+ 3,281
1,250 Flowserve Corp., Guaranteed Senior Subordinated Notes, 12.25%,
due 8/15/10 B2 B 1,413***
2,125 Food Lion, Inc., Notes, 7.55%, due 4/15/07 Ba1 BB+ 2,215
1,750 Ford Motor Credit Co., Notes, 7.50%, due 3/15/05 A3 BBB 1,830
3,875 Forest Oil Corp., Senior Notes, 8.00%, due 6/15/08 Ba3 BB 4,107
1,250 Georgia Gulf Corp., Guaranteed Senior Subordinated Notes, 10.38%,
due 11/1/07 B2 BB- 1,350
1,250 Georgia Gulf Corp., Notes, 7.63%, due 11/15/05 Ba2 BBB- 1,288
1,925 Grant Prideco, Inc., Guaranteed Senior Notes, Ser. B, 9.63%,
due 12/1/07 Ba3 BB- 2,127
</Table>
See Notes to Schedule of Investments
19
<Page>
SCHEDULE OF INVESTMENTS HIGH INCOME BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 1,000 Grey Wolf, Inc., Senior Notes, 8.88%, due 7/1/07 B1 B+ $ 1,031
1,250 Gruma S.A., Senior Notes, 7.63%, due 10/15/07 Ba2 BB 1,316
250 Grupo Televisa S.A., Notes, 8.00%, due 9/13/11 Baa3 BBB- 270
1,000 Harrah's Operating Co., Inc., Guaranteed Senior Subordinated Notes,
7.88%, due 12/15/05 Ba1 BB+ 1,078
975 HCA-The Healthcare Co., Notes, 7.13%, due 6/1/06 Ba1 BBB- 1,048
100 HCA-The Healthcare Co., Senior Notes, 7.88%, due 2/1/11 Ba1 BBB- 113
2,750 HMH Properties, Inc., Guaranteed Senior Notes, Ser. A, 7.88%,
due 8/1/05 Ba3 B+ 2,777
100 HORNBECK-LEEVAC Marine Services, Inc., Senior Notes, 10.63%,
due 8/1/08 B1 B+ 108
1,925 Host Marriott L.P., Senior Notes, Ser. E, 8.38%, due 2/15/06 Ba3 B+ 1,978
1,000 IDEX Corp., Senior Notes, 6.88%, due 2/15/08 Baa3 BBB 1,060
2,000 Illinois Power Co., Mortgage Bonds, 7.50%, due 6/15/09 B3 B 1,980
100 IMC Global, Inc., Debentures, 6.88%, due 7/15/07 Ba3 B+ 100
2,250 Iron Mountain, Inc., Guaranteed Senior Subordinated Notes, 8.25%,
due 7/1/11 B2 B 2,407
3,000 iStar Financial, Inc., Senior Notes, 7.00%, due 3/15/08 Ba1 BB+ 3,105
1,000 ITT Corp., Notes, 6.75%, due 11/15/05 Ba1 BBB- 1,035
2,375 K & F Industries, Inc., Senior Subordinated Notes, 9.25%,
due 10/15/07 B3 B 2,476
2,625 Kansas City Southern Railway Co., Guaranteed Senior Notes, 7.50%,
due 6/15/09 Ba3 BB- 2,717
1,525 Kansas Gas & Electric Co., Notes, 7.60%, due 12/15/03 Ba1 BB+ 1,548
1,000 Kaufman & Broad Home Corp., Senior Notes, 7.75%, due 10/15/04 Ba2 BB+ 1,035
2,750 KB Home, Senior Subordinated Notes, 8.63%, due 12/15/08 Ba3 BB- 2,970
500 Kennametal, Inc., Senior Notes, 7.20%, due 6/15/12 Ba1 BBB 532
1,000 Key Energy Services, Inc., Guaranteed Senior Notes, Ser. C, 8.38%,
due 3/1/08 Ba2 BB 1,068
3,125 L-3 Communications Corp., Guaranteed Senior Subordinated Notes,
Ser. B, 8.00%, due 8/1/08 Ba3 BB- 3,262
1,675 L-3 Communications Corp., Senior Subordinated Notes, 8.50%,
due 5/15/08 Ba3 BB- 1,744
3,125 Lamar Media Corp., Guaranteed Senior Subordinated Notes, 8.63%,
due 9/15/07 B 3,266
2,750 Lear Corp., Guaranteed Senior Notes, Ser. B, 7.96%, due 5/15/05 Ba1 BB+ 2,942
3,250 LIN Television Corp., Guaranteed Senior Subordinated Notes,
8.38%, due 3/1/08 B2 B 3,404
2,000 LNR Property Corp., Senior Subordinated Notes, 10.50%, due 1/15/09 Ba3 B+ 2,140
1,650 Louisiana-Pacific Corp., Senior Notes, 8.50%, due 8/15/05 Ba1 BB- 1,772
1,075 Louisiana-Pacific Corp., Senior Subordinated Notes, 10.88%,
due 11/15/08 Ba2 B+ 1,204
100 Magnum Hunter Resources, Inc., Senior Notes, 9.60%, due 3/15/12 B2 B+ 108
230 Methanex Corp., Notes, 7.75%, due 8/15/05 Ba1 BBB- 239
1,725 MGM Mirage, Inc., Guaranteed Senior Subordinated Notes, 9.75%,
due 6/1/07 Ba2 BB+ 1,932
1,000 MGM Mirage, Inc., Guaranteed Senior Notes, 8.50%, due 9/15/10 Ba1 BBB- 1,120
</Table>
20
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS HIGH INCOME BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 3,250 Midland Funding II, Debentures, Ser. A, 11.75%, due 7/23/05 Ba3 BB- $ 3,469
1,000 Millennium America, Inc., Guaranteed Notes, 7.00%, due
11/15/06 Ba1 BB+ 1,015
575 Mirage Resorts, Inc., Senior Notes, 7.25%, due 10/15/06 Ba1 BBB- 601
1,100 Moog, Inc., Senior Subordinated Notes, Ser. B, 10.00%,
due 5/1/06 B 1,100
1,500 Moore N.A. Finance, Inc., Senior Notes, 7.88%, due 1/15/11 B1 BB- 1,590**####
4,250 Nextel Communications, Inc., Senior Serial Redeemable
Discount Notes, 9.75%, due 10/31/07 B3 B 4,399
1,425 Noram Energy Corp., Debentures, 6.50%, due 2/1/08 Ba1 BBB 1,525
1,250 Norampac Inc., Senior Notes, 9.50%, due 2/1/08 Ba2 BB+ 1,313
1,250 Nortek, Inc., Senior Notes, Ser. B, 9.25%, due 3/15/07 B1 B+ 1,289
2,375 Nortek, Inc., Senior Notes, Ser. B, 9.13%, due 9/1/07 B1 B+ 2,464
1,250 Nortel Networks Corp., Guaranteed Notes, 7.40%, due 6/15/06 B3 B 1,219
1,625 Northwest Pipeline Corp., Debentures, 6.63%, due 12/1/07 B3 B+ 1,633
4,750 NVR, Inc., Guaranteed Senior Notes, 8.00%, due 6/1/05 Ba1 BB+ 5,011
4,500 Ocean Energy, Inc., Guaranteed Senior Subordinated Notes,
Ser. B, 8.38%, due 7/1/08 Ba1 BB+ 4,731
2,625 Offshore Logistics, Inc., Guaranteed Senior Notes, Ser. B,
7.88%, due 1/15/08 Ba3 BB 2,559
100 Omnicare, Inc., Senior Subordinated Notes, 8.13%, due 3/15/11 Ba2 BB+ 109
1,000 Oshkosh Truck Corp., Guaranteed Senior Subordinated Notes,
8.75%, due 3/1/08 Ba3 BB+ 1,040
400 Overseas Shipholding Group, Inc., Notes, 8.00%, due 12/1/03 Ba1 BB+ 406
50 Owens & Minor, Inc., Senior Subordinated Notes, 8.50%,
due 7/15/11 Ba3 BB- 54
3,000 Owens-Brockway Glass Container, Inc., Guaranteed Senior Notes,
8.88%, due 2/15/09 B1 BB 3,217####
1,500 Owens-Brockway Glass Container, Inc., Guaranteed Senior
Secured Notes, 7.75%, due 5/15/11 B1 BB 1,553**###
1,750 Owens-Brockway Glass Container, Inc., Senior Notes, 8.25%,
due 5/15/13 B2 B+ 1,811**###
3,575 Packaging Corp. of America, Guaranteed Senior Subordinated
Notes, Ser. B, 9.63%, due 4/1/09 Ba2 BB+ 3,879
2,625 Park Place Entertainment Corp., Senior Subordinated Notes,
7.88%, due 12/15/05 Ba2 BB+ 2,750
33 Pennzoil-Quaker State Co., Senior Notes, 10.00%, due 11/1/08 Aa2 AAA 41
1,000 Phelps Dodge Corp., Notes, 6.38%, due 11/1/04 Baa3 BBB- 1,026
1,500 Pierce Leahy Command Co., Senior Notes, 8.13%, due 5/15/08 B2 B 1,568
1,000 Pilgrim's Pride Corp., Senior Notes, 9.63%, due 9/15/11 Ba3 BB- 988***
50 Pioneer Natural Resources Co., Guaranteed Senior Notes,
6.50%, due 1/15/08 Ba1 BB+ 54
1,125 Plains All-American Pipeline L.P., Senior Notes, 7.75%,
due 10/15/12 Ba2 BB+ 1,226
500 Polyone Corp., Senior Notes, 10.63%, due 5/15/10 B2 BB- 500**
2,125 Potlatch Corp., Guaranteed Senior Subordinated Notes,
10.00%, due 7/15/11 Ba1 BB- 2,306
2,000 Pride International, Inc., Senior Notes, 10.00%, due 6/1/09 Ba2 BB 2,190
</Table>
See Notes to Schedule of Investments
21
<Page>
SCHEDULE OF INVESTMENTS HIGH INCOME BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 3,125 Pride Petroleum Services, Inc., Senior Notes, 9.38%, due
5/1/07 Ba2 BB $ 3,250
2,250 PSE&G Energy Holdings, Inc., Notes, 7.75%, due 4/16/07 Baa3 BBB- 2,357**
3,025 Qwest Corp., Notes, 7.63%, due 6/9/03 Ba3 B- 3,025
1,875 Radio One, Inc., Senior Subordinated Notes, 8.88%, due 7/1/11 B2 B- 2,062
1,875 Reliant Energy Resources Corp., Notes, Ser. B, 8.13%,
due 7/15/05 Ba1 BBB 2,025
3,250 Rent-A-Center, Inc., Guaranteed Senior Subordinated Notes,
Ser. D, 11.00%, due 8/15/08 B1 B+ 3,486***
1,125 Rite Aid Corp., Guaranteed Senior Secured Notes, 12.50%,
due 9/15/06 B- 1,271
3,250 Royal Caribbean Cruises Ltd., Senior Notes, 8.13%, due 7/28/04 Ba2 BB+ 3,315***
3,250 Ryland Group, Inc., Senior Notes, 8.00%, due 8/15/06 Ba1 BB+ 3,469
2,125 Salem Communications Holding Corp., Guaranteed Senior
Subordinated Notes, Ser. B, 9.00%, due 7/1/11 B3 B- 2,247
1,100 Scotts Co., Guaranteed Senior Subordinated Notes, 8.63%,
due 1/15/09 B2 B+ 1,166
725 Sequa Corp., Senior Notes, 9.00%, due 8/1/09 Ba3 BB- 758
1,000 Sequa Corp., Senior Notes, Ser. B, 8.88%, due 4/1/08 Ba3 BB- 1,033
2,175 Sinclair Broadcast Group, Inc., Guaranteed Senior
Subordinated Notes, 8.00%, due 3/15/12 B2 B 2,295
1,600 Sinclair Broadcast Group, Inc., Guaranteed Senior
Subordinated Notes, 8.00%, due 3/15/12 B2 B 1,688**
1,000 Six Flags, Inc., Senior Notes, 8.88%, due 2/1/10 B2 B 1,000
1,625 Smithfield Foods, Inc., Senior Subordinated Notes, 7.63%,
due 2/15/08 Ba3 BB+ 1,592***
3,625 Southern California Edison Co., Senior Mortgage-Secured
Bonds, 8.00%, due 2/15/07 Ba2 BB 3,951**
2,375 Southern Natural Gas Co., Notes, 6.13%, due 9/15/08 B1 B+ 2,292
1,625 Speedway Motorsports, Inc., Guaranteed Senior Subordinated
Notes, Ser. D, 8.50%, due 8/15/07 Ba2 B+ 1,688
1,500 Steinway Musical Instruments, Inc., Guaranteed Senior Notes,
8.75%, due 4/15/11 Ba3 BB- 1,470
2,250 Stena AB, Senior Notes, 8.75%, due 6/15/07 Ba3 BB- 2,320
3,250 Stone Container Corp., Senior Notes, 9.75%, due 2/1/11 B2 B 3,648
750 Stone Container Finance, Guaranteed Senior Notes, 11.50%,
due 8/15/06 B2 B 803**
100 Teekay Shipping Corp., Senior Notes, 8.88%, due 7/15/11 Ba2 BB- 109
2,500 Tekni-Plex, Inc., Guaranteed Senior Subordinated Notes,
Ser. B, 12.75%, due 6/15/10 B3 B- 2,444
3,250 Tembec Industries, Inc., Guaranteed Senior Notes, 8.63%,
due 6/30/09 Ba1 BB+ 3,380***
825 Tenet Healthcare Corp., Senior Notes, 5.38%, due 11/15/06 Baa3 BBB- 796
2,000 Toll Corp., Guaranteed Senior Subordinated Notes, 8.13%,
due 2/1/09 Ba2 BB+ 2,105
1,350 Transcontinental Gas Pipe Line Corp., Notes, 6.13%,
due 1/15/05 B3 B+ 1,370
3,025 Transcontinental Gas Pipe Line Corp., Notes, 6.25%,
due 1/15/08 B3 B+ 3,040
1,625 Triad Hospitals, Inc., Guaranteed Senior Notes, Ser. B,
8.75%, due 5/1/09 B1 B- 1,767
</Table>
22
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS HIGH INCOME BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 750 Tuboscope, Inc., Guaranteed Senior Notes, 7.50%, due 2/15/08 Baa2 BBB+ $ 829
3,325 TXU Corp., Senior Notes, Ser. J, 6.38%, due 6/15/06 Ba1 BBB- 3,541
3,525 Tyco International Group S.A., Guaranteed Notes, 6.38%,
due 6/15/05 Ba2 BBB- 3,560***
1,000 Tyco International Group S.A., Guaranteed Notes, 5.80%,
due 8/1/06 Ba2 BBB- 985
3,125 U.S. West Communications, Inc., Notes, 7.20%, due 11/1/04 Ba3 B- 3,156
1,375 United Rentals, Inc., Guaranteed Senior Notes, Ser. B,
10.75%, due 4/15/08 B1 BB- 1,485
1,250 United Rentals, Inc., Guaranteed Senior Subordinated Notes,
Ser. B, 8.80%, due 8/15/08 B2 B+ 1,175
2,000 Universal City Development, Senior Notes, 11.75%, due 4/1/10 B2 B- 2,155**
500 Vintage Petroleum, Inc., Senior Subordinated Notes, 9.75%,
due 6/30/09 B1 B 535
250 Waste Management, Inc., Senior Notes, 6.50%, due 11/15/08 Baa3 BBB 280
1,000 Western Oil Sands, Inc., Senior Secured Notes, 8.38%,
due 5/1/12 Ba2 BB+ 1,070
1,000 Wolverine Tube, Inc., Senior Notes, 7.38%, due 8/1/08 B1 BB- 943**
1,000 World Color Press, Inc., Senior Subordinated Notes, 7.75%,
due 2/15/09 Baa2 BBB 1,046
100 XTO Energy, Inc., Senior Notes, 7.50%, due 4/15/12 Ba2 BB 110
----------
TOTAL CORPORATE DEBT SECURITIES (COST $340,571) 349,156
----------
REPURCHASE AGREEMENTS (3.6%)
$ 13,210 State Street Bank and Trust Co. Repurchase Agreement, 1.27%,
due 5/1/03, dated 4/30/03, Maturity Value $13,210,466,
Collateralized by $13,280,000 Freddie Mac, Medium-Term
Notes, 3.50%, due 2/20/04 (Collateral Value $13,610,313)
(COST $13,210) 13,210#
----------
CONVERTIBLE BONDS (3.0%)
1,000 CommScope, Inc., Subordinated Notes, 4.00%, due 12/15/06 Ba3 B+ 872
1,250 Fairchild Semiconductor Corp., Senior Subordinated Notes,
5.00%, due 11/1/08 B 1,176
1,250 Kerr-McGee Corp., Subordinated Debentures, 5.25%, due 2/15/10 Baa3 BBB- 1,334
1,000 Key Energy Services, Inc., Subordinated Notes, 5.00%, due
9/15/04 Ba3 BB 950
500 Lamar Advertising Co., Notes, 5.25%, due 9/15/06 B 507
</Table>
See Notes to Schedule of Investments
23
<Page>
SCHEDULE OF INVESTMENTS HIGH INCOME BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 3,025 LifePoint Hospitals, Inc., Subordinated Notes, 4.50%, due
6/1/09 B3 B $ 2,825
1,175 LSI Logic Corp., Subordinated Notes, 4.00%, due 11/1/06 B 1,030
1,000 Omnicare, Inc., Subordinated Debentures, 5.00%, due 12/1/07 Ba3 BB+ 1,009
1,500 Sanmina Corp., Subordinated Notes, 4.25%, due 5/1/04 B1 B 1,476***
----------
TOTAL CONVERTIBLE BONDS (COST $10,393) 11,179
----------
SHORT-TERM INVESTMENTS (5.7%)
20,958 N&B Securities Lending Quality Fund, LLC
(COST $20,958) 20,958#
----------
NUMBER OF SHARES
WARRANTS (0.0%)
500 Dayton Superior Corp. --*
500 Jostens Inc. --*
625 XM Satellite Radio, Inc. --*
----------
TOTAL WARRANTS (COST $0) --
----------
TOTAL INVESTMENTS (107.4%) (COST $385,132) 394,503##
Liabilities, less cash, receivables and other assets [(7.4%)] (27,253)
----------
TOTAL NET ASSETS (100.0%) $ 367,250
----------
</Table>
24
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS LIMITED MATURITY BOND FUND
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
U.S. TREASURY SECURITIES (28.1%)
$ 1,535 U.S. Treasury Notes, 3.63%, due 8/31/03 TSY TSY $ 1,547
6,650 U.S. Treasury Notes, 3.63%, due 3/31/04 TSY TSY 6,800
17,500 U.S. Treasury Notes, 3.38%, due 4/30/04 TSY TSY 17,884
8,200 U.S. Treasury Notes, 2.88%, due 6/30/04 TSY TSY 8,359
7,500 U.S. Treasury Notes, 2.13%, due 8/31/04 TSY TSY 7,587
12,350 U.S. Treasury Notes, 2.00%, due 11/30/04 TSY TSY 12,478
1,700 U.S. Treasury Notes, 1.75%, due 12/31/04 TSY TSY 1,711
11,660 U.S. Treasury Notes, 1.63%, due 3/31/05 TSY TSY 11,695
1,000 U.S. Treasury Notes, 4.38%, due 5/15/07 TSY TSY 1,073
3,170 U.S. Treasury Notes, 3.00%, due 11/15/07 TSY TSY 3,213
3,000 U.S. Treasury Notes, 3.00%, due 2/15/08 TSY TSY 3,031
----------
TOTAL U.S. TREASURY SECURITIES (COST $75,219) 75,378
----------
U.S. GOVERNMENT AGENCY SECURITIES (9.9%)
24,560 Federal Home Loan Bank, Notes, 3.25%, due 8/15/05 AGY AGY 25,345
1,150 Freddie Mac, Notes, 4.50%, due 6/15/03 AGY AGY 1,155
----------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $25,965) 26,500
----------
MORTGAGE-BACKED SECURITIES (8.8%)
FANNIE MAE
1,100 Commercial Mortgage Pass-Through Certificates, Ser. 2003-16,
Class PA, 4.50%, due 11/25/09 AGY AGY 1,139
15,745 Pass-Through Certificates, 6.50%, due 5/1/13 - 9/1/17 AGY AGY 16,688
FREDDIE MAC
$ 44 ARM Certificates, 3.63%, due 1/1/17 AGY AGY 45
1,100 Commercial Mortgage Pass-Through Certificates, Ser. 2592,
Class PA, 4.50%, due 12/15/07 AGY AGY 1,137
1,586 Pass-Through Certificates, 5.00%, due 2/1/07 AGY AGY 1,646
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
84 Pass-Through Certificates, 12.00%, due 5/15/12 - 5/15/14 AGY AGY 99
2,658 Pass-Through Certificates, 7.00%, due 4/15/11 & 6/15/32 AGY AGY 2,826
26 Pass-Through Certificates, 7.50%, due 10/15/09 - 9/15/10 AGY AGY 28
----------
TOTAL MORTGAGE-BACKED SECURITIES (COST $22,851) 23,608
----------
ASSET-BACKED SECURITIES (0.4%)
260 Daimler Chrysler Auto Trust, Ser. 2000-C, Class A3, 6.82%,
due 9/6/04 Aaa AAA 261
457 Ford Credit Auto Owner Trust, Ser. 2000-C, Class A4, 7.24%,
due 2/15/04 Aaa AAA 460
233 Ford Credit Auto Owner Trust, Ser. 2000-E, Class A4, 6.74%,
due 6/15/04 Aaa AAA 235
121 Nissan Auto Receivables Owner Trust, Ser. 2000-B, Class A3,
7.25%, due 4/15/04 Aaa AAA 121
----------
TOTAL ASSET-BACKED SECURITIES (COST $1,072) 1,077
----------
CORPORATE DEBT SECURITIES (47.7%)
1,200 Abitibi-Consolidated, Inc., Bonds, 8.30%, due 8/1/05 Ba1 BB+ 1,297
2,555 Akzo Nobel, Inc., Guaranteed Notes, 6.00%, due 11/15/03 A3 A- 2,618**
2,450 Allstate Corp., Senior Notes, 7.88%, due 5/1/05 A1 A+ 2,728
1,880 American General Finance Corp., Floating Rate Notes, 1.51%,
due 1/9/04 A1 A+ 1,881
</Table>
See Notes to Schedule of Investments
25
<Page>
SCHEDULE OF INVESTMENTS LIMITED MATURITY BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 970 American General Finance Corp., Floating Rate Notes, Ser. G,
1.65%, due 12/17/04 A1 A+ $ 974
1,310 AT&T Wireless Services, Inc., Senior Notes, 7.35%,
due 3/1/06 Baa2 BBB 1,459
2,100 Bank One Corp., Notes, 6.50%, due 2/1/06 Aa3 A 2,336
2,350 Bear Stearns Co., Inc., Floating Rate Notes, 1.63%,
due 12/1/03 A2 A 2,354
2,120 Bear Stearns Co., Inc., Notes, 6.50%, due 5/1/06 A2 A 2,369
1,300 Boeing Capital Corp., Senior Notes, 5.65%, due 5/15/06 A3 A+ 1,393
680 Boyd Gaming Corp., Senior Notes, 9.25%, due 10/1/03 Ba3 BB- 694
2,700 British Telecom PLC, Notes, 7.88%, due 12/15/05 Baa1 A- 3,061
1,000 Capital One Bank, Senior Notes, 8.25%, due 6/15/05 Baa2 BBB- 1,084
1,000 Caterpillar Financial Services Corp., Floating Rate Notes,
1.51%, due 2/4/04 A2 A+ 1,001
1,200 Caterpillar Financial Services Corp., Medium-Term Notes,
7.59%, due 12/10/03 A2 A+ 1,245
2,400 Caterpillar Financial Services Corp., Notes, 6.88%,
due 8/1/04 A2 A+ 2,553
1,300 CBS Corp., Guaranteed Senior Notes, 7.15%, due 5/20/05 A3 A- 1,422
960 Chase Manhattan Corp., Subordinated Notes, 7.25%, due 6/1/07 A2 A 1,095
1,855 CIT Group, Inc., Notes, 5.50%, due 2/15/04 A2 A 1,900
1,300 Comcast Cable Communications, Senior Notes, 6.38%, due 1/30/06 Baa3 BBB 1,409
1,500 Countrywide Home Loans, Inc., Guaranteed Medium-Term Notes,
Ser. J, 5.50%, due 8/1/06 A3 A 1,614
2,100 Countrywide Home Loans, Inc., Medium-Term Notes, Ser. J,
5.25%, due 6/15/04 A3 A 2,182
1,250 Cox Communications, Inc., Notes, 7.75%, due 8/15/06 Baa2 BBB 1,423
1,615 Cox Radio, Inc., Notes, 6.25%, due 5/15/03 Baa3 BBB 1,617
2,300 Daimler Chrysler N.A. Holdings Corp., Floating Rate Notes,
Ser. C, 1.57%, due 8/21/03 A3 BBB+ 2,299
1,500 Daimler Chrysler N.A. Holdings Corp., Notes, 6.40%,
due 5/15/06 A3 BBB+ 1,639
400 Delhaize America, Inc., Guaranteed Notes, 7.38%, due 4/15/06 Ba1 BB+ 414
1,050 Dole Foods Co., Inc., Notes, 7.00%, due 5/15/03 B2 BBB- 1,050
2,400 Dow Chemical Co., Notes, 5.25%, due 5/14/04 A3 A- 2,476
660 EOP Operating Limited Partnership, Notes, 6.63%, due 2/15/05 Baa1 BBB+ 705
1,300 Everest Reinsurance Holdings, Inc., Senior Notes, 8.50%,
due 3/15/05 A3 A- 1,420
1,600 Ford Motor Credit Co., Notes, 7.50%, due 6/15/03 A3 BBB 1,607
3,500 General Electric Capital Corp., Medium-Term Notes, Ser. A,
4.25%, due 1/28/05 Aaa AAA 3,656
1,000 General Motors Acceptance Corp., Notes, 5.75%, due 11/10/03 A2 BBB 1,018
3,170 General Motors Acceptance Corp., Notes, 6.85%, due 6/17/04 A2 BBB 3,303
800 General Motors Acceptance Corp., Notes, 6.13%, due 9/15/06 A2 BBB 830
1,040 Halliburton Co., Floating Rate Notes, 1.45%, due 7/16/03 Baa2 BBB 1,035
815 Hartford Life, Inc., Notes, 6.90%, due 6/15/04 A2 A- 860
2,000 Heller Financial, Inc., Notes, 6.00%, due 3/19/04 Aaa AAA 2,079
340 IBP, Inc., Senior Notes, 6.13%, due 2/1/06 Baa3 BBB 362
</Table>
26
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS LIMITED MATURITY BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 2,120 International Lease Finance Corp., Medium-Term Notes,
Ser. M, 5.50%, due 6/7/04 A1 AA- $ 2,204
1,325 International Paper Co., Notes, 8.13%, due 7/8/05 Baa2 BBB 1,484
1,070 ITT Corp., Notes, 6.75%, due 11/15/05 Ba1 BBB- 1,107
1,400 Lear Corp., Guaranteed Senior Notes, Ser. B, 7.96%,
due 5/15/05 Ba1 BB+ 1,498
635 Lehman Brothers Holdings, Inc., Floating Rate Notes, Ser. G,
1.68%, due 7/6/04 A2 A 637
3,025 Lehman Brothers Holdings, Inc., Medium-Term Notes, Ser. E,
7.00%, due 5/15/03 A2 A 3,030
2,100 Masco Corp., Notes, 6.13%, due 9/15/03 Baa1 BBB+ 2,132
1,200 Merrill Lynch & Co., Inc., Floating Rate Medium-Term Notes,
Ser. B, 1.60%, due 2/3/05 Aa3 A+ 1,201
400 Methanex Corp., Notes, 7.75%, due 8/15/05 Ba1 BBB- 415
2,200 Morgan Stanley Dean Witter & Co., Notes, 5.63%, due 1/20/04 Aa3 A+ 2,266
2,600 National Rural Utilities Cooperative Finance Corp.,
Collateral Trust, 6.00%, due 5/15/06 A1 A+ 2,855
2,450 Nationwide Mutual Insurance Co., Notes, 6.50%, due 2/15/04 A2 A- 2,530**
2,400 Norfolk Southern Corp., Floating Rate Senior Notes, 1.85%,
due 7/7/03 Baa1 BBB 2,401
500 NVR, Inc., Guaranteed Senior Notes, 8.00%, due 6/1/05 Ba1 BB+ 527
2,600 Pacific Bell, Notes, 6.25%, due 3/1/05 A1 AA- 2,803
2,900 Paine Webber Group, Inc., Notes, 6.45%, due 12/1/03 Aa2 AA+ 2,987
445 PDVSA Finance Ltd., Notes, 8.75%, due 2/15/04 Caa1 B- 443
1,000 Pepsi Bottling Holdings, Inc., Guaranteed Notes, 5.38%,
due 2/17/04 A1 A 1,031**
1,000 Placer Dome Inc., Notes, 6.91%, due 11/21/05 BBB+ 1,094
1,325 Popular, Inc., Medium-Term Notes, Ser. 3, 6.38%, due 9/15/03 A3 BBB+ 1,348
1,200 Powergen US Funding LLC, Notes, 4.50%, due 10/15/04 A2 BBB+ 1,232
620 Quest Diagnostics, Inc., Senior Notes, 6.75%, due 7/12/06 Baa3 BBB- 685
1,645 Raytheon Co., Notes, 6.50%, due 7/15/05 Baa3 BBB- 1,776
1,340 Reliant Energy Resources Corp., Notes, Ser. B, 8.13%,
due 7/15/05 Ba1 BBB 1,447
2,000 Rockwell International Corp., Notes, 6.63%, due 6/1/05 A2 A+ 2,170
1,000 Royal Caribbean Cruises Ltd., Senior Notes, 8.13%,
due 7/28/04 Ba2 BB+ 1,020
1,500 Sara Lee Corp., Medium-Term Notes, Ser. B, 6.40%,
due 6/9/05 A3 A+ 1,633
1,500 SCANA Corp., Floating Rate Notes, 2.33%, due 2/1/04 A3 BBB+ 1,497
500 Texas Gas Transmission Corp., Notes, 8.63%, due 4/1/04 B3 B+ 520
2,100 Textron Financial Corp., Floating Rate Medium-Term Notes,
Ser. E, 1.58%, due 6/6/03 A3 A- 2,099
1,340 Tyco International Group S.A., Guaranteed Notes, 6.38%,
due 6/15/05 Ba2 BBB- 1,353
1,675 Tyson Foods, Inc., Notes, 6.63%, due 10/1/04 Baa3 BBB 1,749
2,350 Verizon Wireless, Inc., Floating Rate Notes, 1.66%,
due 12/17/03 A3 A+ 2,348
1,500 Walt Disney Co., Notes, 4.88%, due 7/2/04 Baa1 BBB+ 1,547
2,500 Washington Mutual, Inc., Senior Notes, 5.63%,
due 1/15/07 A3 BBB+ 2,729
1,285 Wells Fargo & Co., Notes, 6.63%, due 7/15/04 Aa2 A+ 1,362
</Table>
See Notes to Schedule of Investments
27
<Page>
SCHEDULE OF INVESTMENTS LIMITED MATURITY BOND FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 2,000 Weyerhaeuser Co., Notes, 5.50%, due 3/15/05 Baa2 BBB $ 2,101
----------
TOTAL CORPORATE DEBT SECURITIES (COST $124,123) 127,723
----------
FOREIGN GOVERNMENT SECURITIES (1.9%)
17,500 Poland Government, Bonds, Ser. 1106, 8.50%, due 11/12/06 A
(COST $4,939) 5,091
----------
REPURCHASE AGREEMENTS (2.0%)
5,440 State Street Bank and Trust Co. Repurchase Agreement, 1.27%,
due 5/1/03, dated 4/30/03, Maturity Value $5,440,192,
Collateralized by $5,385,000 Freddie Mac, Notes, 3.25%, due
11/15/04 (Collateral Value $5,608,251) (COST $5,440) 5,440#
----------
TOTAL INVESTMENTS (98.8%) (COST $259,609) 264,817##
Cash, receivables and other assets, less liabilities (1.2%) 3,343
----------
TOTAL NET ASSETS (100.0%) $ 268,160
----------
</Table>
28
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
MUNICIPAL NOTES (8.5%)
$ 10,000 Gwinnett Co. (GA) Sch. Dist. Construction Sales Tax Notes,
Ser. 2003, 2.00%, due 12/29/03 MIG1 $ 10,059
6,500 Minneapolis (MN) Spec. Sch. Dist. Number 1 Aid Anticipation
Cert. of Indebtedness G.O. Notes, Ser. 2003, 1.75%,
due 7/28/03 SP-1+ 6,511
4,500 Oregon St. Full Faith and Credit TANS, Ser. 2002 A, 3.25%,
due 5/1/03 MIG1 SP-1+ 4,500
10,000 Texas St. TRANS, Ser. 2002, 2.75%, due 8/29/03 MIG1 SP-1+ 10,044
2,000 Toledo (OH) City Sch. Dist. BANS, Ser. 2003, 2.00%,
due 7/23/03 MIG1 2,004
7,000 Wichita (KS) G.O. Renewal & Imp. Temporary Notes, Ser. 207,
2.00%, due 8/21/03 MIG1 SP-1+ 7,020
----------
40,138
----------
TAX-EXEMPT SECURITIES-BACKED BY LETTERS OF CREDIT (0.9%)
FINANCIAL SECURITY ASSURANCE INC.
3,275 Dallas (TX) Waterworks & Swr. Sys. Ref. & Imp. Rev., Ser.
2003, 3.00%, due 10/1/03 3,301
STATE STREET BANK AND TRUST COMPANY
1,000 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1996-1, 1.80%,
due 6/1/26 Putable 6/1/03 A-1+ 1,000
----------
4,301
----------
TAX-EXEMPT SECURITIES-BACKED BY INSURANCE (1.0%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
4,460 Colorado River (TX) Muni. Wtr. Dist. Wtr. Sys. Ref. Rev.,
Ser. 2003, 3.00%, due 1/1/04 4,514
----------
TAX-EXEMPT SECURITIES-OTHER (4.9%)
8,510 Ada & Canyon Cos. (ID) Joint Sch. Dist. Number 2 (Meridian)
Sch. G.O., Ser. 2002, 2.50%, due 7/30/03 8,534
5,460 Indiana Univ. Std. Fee Rev., Ser. 2001 N, 5.00%, due 8/1/03 5,514
5,220 King Co. (WA) Lake Washington Sch. Dist. Number 414
Unlimited Tax Ref. G.O., Ser. 2002, 3.00%, due 12/1/03 5,277
3,595 New Castle Co. (DE) G.O., Ser. 2002 A, 3.00%, due 10/1/03 3,623
----------
22,948
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES (22.5%)
400 Berkeley Co. (SC) Exempt Fac. Ind. Rev. (Amoco Chemical Co.
Proj.), Ser. 1998, 1.40%, VRDN due 4/1/28 VMIG1 A-1+ 400!
1,800 Berkeley Co. (SC) IDR (Nucor Corp. Proj.), Ser. 1995, 1.45%,
VRDN due 9/1/28 VMIG1 A-1+ 1,800!
5,000 Berkeley Co. (SC) IDR (Nucor Corp. Proj.), Ser. 1996 A,
1.45%, VRDN due 3/1/29 VMIG1 A-1+ 5,000!
8,300 Berkeley Co. (SC) IDR (Nucor Corp. Proj.), Ser. 1997, 1.45%,
VRDN due 4/1/30 VMIG1 A-1+ 8,300!
1,800 Berkeley Co. (SC) IDR (Nucor Corp. Proj.), Ser. 1998, 1.45%,
VRDN due 4/1/31 VMIG1 A-1+ 1,800!
700 Berkeley Co. (SC) Ref. PCR (Amoco Chemical Co. Proj.), Ser.
1994, 1.35%, VRDN due 7/1/12 VMIG1 A-1+ 700!
2,300 California Poll. Ctrl. Fin. Au. Solid Waste Disp. Rev.
(Shell Martinez Refining Co. Proj.), Ser.1996 B, 1.30%, VRDN
due 10/1/31 VMIG1 A-1+ 2,300!
</Table>
See Notes to Schedule of Investments
29
<Page>
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 2,000 Colorado Hsg. & Fin. Au. Multi-Family Hsg. Ref. Rev.
(Huntersridge Proj.), Ser. 1996 E, 1.33%, VRDN
due 10/15/16 A-1+ $ 2,000
1,000 Comm. Dev. Administration (MD) Multi-Family Dev. Ref. Rev.
(Avalon Ridge Apts. Proj.), Ser. 1997, 1.30%, VRDN
due 6/15/26 VMIG1 1,000!
650 Connecticut St. Hlth. & Ed. Fac. Au. Rev. (Yale Univ.
Issues), Ser. 2003 X-3, 1.30%, VRDN due 7/1/37 VMIG1 A-1+ 650
2,850 Dallas/Fort Worth (TX) Int'l. Arpt. Fac. Imp. Corp. Ref.
Rev. (United Parcel Svc., Inc.), Ser. 2002, 1.40%, VRDN
due 5/1/32 VMIG1 A-1+ 2,850!
200 East Baton Rouge Parish (LA) Ref. PCR (Exxon Proj.), Ser.
1989, 1.30%, VRDN due 11/1/19 P-1 A-1+ 200!
200 East Baton Rouge Parish (LA) Ref. PCR (Exxon Proj.), Ser.
1993, 1.28%, VRDN due 3/1/22 P-1 A-1+ 200!
1,000 Florida Hsg. Fin. Agcy. Multi-Family Hsg. Rev. (Beneva Place
Proj.), Ser. 1988 C, 1.28%, VRDN due 8/1/06 VMIG1 1,000
2,360 Florida Hsg. Fin. Agcy. Rev. (Heron Park Proj.), Ser. 1996
U, 1.32%, VRDN due 12/1/29 VMIG1 2,360
2,500 Gibson Co. (IN) Industrial PCR (Toyota Motor Mfg. Ind.
Proj.), Ser. 1997, 1.38%, VRDN due 10/1/27 A-1+ 2,500!
6,000 Gibson Co. (IN) PCR (Toyota Motor Mfg. Proj.), Ser. 2001,
1.38%, VRDN due 2/1/31 VMIG1 A-1+ 6,000!
400 Gulf Coast (TX) IDA Marine Term. Rev. (Amoco Oil Co. Proj.),
Ser. 1993, 1.40%, VRDN due 4/1/28 VMIG1 400!
100 Gulf Coast (TX) Waste Disp. Au. Env. Fac. Rev. (Amoco Oil
Co. Proj.), Ser. 1998, 1.40%, VRDN due 1/1/26 VMIG1 A-1+ 100!
100 Gulf Coast (TX) Waste Disp. Au. PCR (Amoco Oil Co. Proj.),
Ser. 1994, 1.40%, VRDN due 6/1/24 VMIG1 A-1+ 100!
1,000 Gulf Coast (TX) Waste Disp. Au. Poll. Ctrl. & Solid Waste
Disp. Ref. Rev. (Amoco Oil Co. Proj.), Ser. 1996, 1.40%,
VRDN due 5/1/24 VMIG1 1,000!
1,500 Gulf Coast (TX) Waste Disp. Au. Ref. PCR (Amoco Oil Co.
Proj.), Ser. 1992, 1.30%, VRDN due 10/1/17 VMIG1 1,500!
1,000 Gulf Coast (TX) Waste Disp. Au. Solid Waste Disp. Ref. Rev.
(Amoco Oil Co. Proj.), Ser. 1994, 1.40%, VRDN due 8/1/23 VMIG1 A-1+ 1,000!
1,400 Hurley (NM) PCR (Kennecott Sante Fe Corp. Proj.), Ser. 1985,
1.35%, VRDN due 12/1/15 P-1 A-1+ 1,400!
1,200 Jackson Co. (MS) Port Fac. Ref. Rev. (Chevron U.S.A., Inc.
Proj.), Ser. 1993, 1.35%, VRDN due 6/1/23 P-1 1,200!
1,200 Kemmerer (WY) PCR (Exxon Proj.), Ser. 1984, 1.11%, VRDN
due 11/1/14 P-1 A-1+ 1,200!
300 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1984 A, 1.11%, VRDN
due 11/1/14 VMIG1 A-1+ 300!
1,600 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1985, 1.30%, VRDN
due 8/1/15 P-1 A-1+ 1,600!
1,100 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1987 A, 1.40%, VRDN
due 7/1/17 P-1 A-1+ 1,100!
200 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1987 C, 1.40%, VRDN
due 7/1/17 P-1 A-1+ 200!
300 Louisville & Jefferson Co. (KY) Reg. Arpt. Au. Spec. Fac.
Rev. (UPS Worldwide Forwarding, Inc. Proj.), Ser. 1999 B,
1.40%, VRDN due 1/1/29 VMIG1 A-1+ 300!
</Table>
30
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 1,600 Louisville & Jefferson Co. (KY) Reg. Arpt. Au. Spec. Fac.
Rev. (UPS Worldwide Forwarding, Inc. Proj.), Ser. 1999 C,
1.40%, VRDN due 1/1/29 A-1+ $ 1,600!
500 Madison Co. (IL) Env. Imp. Rev. (Shell Wood River Refining
Co. Proj.), Ser. 1997, 1.40%, VRDN due 4/1/32 VMIG1 A-1+ 500!
200 Madison Co. (IL) Env. Imp. Rev. (Shell Wood River Refining
Co. Proj.), Ser. 1997 A, 1.40%, VRDN due 3/1/33 VMIG1 A-1+ 200!
11,700 New York City (NY) Hsg. Dev. Corp. Multi-Family Rental Hsg.
Rev. (James Tower Dev.), Ser. 2002 A, 1.32%, VRDN
due 6/15/32 P-1 A-1 11,700
1,500 New York City (NY) Hsg. Dev. Corp. Multi-Family Rental Hsg.
Rev. (Parkgate Dev.), Ser. 1998, 1.32%, VRDN due 10/15/28 A-1+ 1,500
2,200 New York City (NY) Hsg. Dev. Corp. Multi-Family Rental Hsg.
Rev. (The Foundry), Ser. 2002 A, 1.38%, VRDN due 8/15/32 A-1+ 2,200
7,900 New York St. Hsg. Fin. Agcy. Rev. (101 West End Avenue
Hsg.), Ser. 1999 A, 1.35%, VRDN due 5/1/31 VMIG1 7,900
1,600 Ohio St. Solid Waste Ref. Rev. (BP Exploration & Oil Inc.
Proj. - BP p.l.c.), Ser. 2001, 1.40%, VRDN due 8/1/34 VMIG1 A-1+ 1,600!
1,100 Ohio St. Solid Waste Ref. Rev. (BP Prod. North America, Inc.
Proj. - BP p.l.c.), Ser. 2002, 1.40%, VRDN due 8/1/34 VMIG1 A-1+ 1,100!
3,400 Pinellas Co. (FL) Hsg. Fin. Au. Multi-Family Hsg. Ref. Rev.
(Foxbridge Apts. Proj.), Ser. 1995 A, 1.33%, VRDN
due 6/15/25 A-1+ 3,400
1,700 Port Bellingham (WA) Ind. Dev. Corp. Env. Fac. Ind. Rev. (BP
West Coast Prod. LLC Proj.), Ser. 2002, 1.40%, VRDN
due 12/1/33 VMIG1 A-1+ 1,700!
3,000 Port of Anacortes (WA) IDC Ref. Rev. (Texaco Proj.), Ser.
1985, 1.05%, TECP due 6/15/19 P-1 A-1+ 3,000!
6,000 Port of Port Arthur (TX) Dist. Rev., 1.10%, TECP due 5/1/35 P-1 6,000!
5,000 Port of Port Arthur (TX) Navigation Dist. Rev. (BASF Corp.
Proj.), Ser. 2000 A, 1.15%, TECP due 5/1/35 P-1 5,000!
1,125 Salt Lake Co. (UT) Ref. PCR (Svc. Sta. Holdings, Inc. Proj.-
The British Petroleum Co. p.l.c.), Ser. 1994, 1.35%,
VRDN due 2/1/08 P-1 A-1+ 1,125!
100 Southwestern (IL) Dev. Au. Solid Waste Disp. Rev. (Shell Oil
Co. Wood River Proj.), Ser. 1992, 1.40%, VRDN due 4/1/22 VMIG1 A-1+ 100!
2,200 Stanton Co. (NE) IDR (Nucor Corp. Proj.), Ser. 1996, 1.45%,
VRDN due 11/1/26 VMIG1 A-1+ 2,200!
300 Uinta Co. (WY) Ref. PCR (Chevron U.S.A., Inc. Proj.), Ser.
1992, 1.40%, VRDN due 12/1/22 VMIG1 300!
100 Valdez (AK) Marine Term. Ref. Rev. (ExxonMobil Proj.), Ser.
2001, 1.30%, VRDN due 1/1/31 VMIG1 100!
1,400 West Side Calhoun Co. (TX) Nav. Dist. Sewage & Solid Waste
Disp. Rev. (BP Chemicals Inc. Proj.), Ser. 1996, 1.40%,
VRDN due 4/1/31 P-1 1,400!
500 Whiting (IN) Env. Fac. Rev. (Amoco Oil Co. Proj.), Ser.
2000, 1.40%, VRDN due 7/1/31 VMIG1 A-1+ 500!
400 Whiting (IN) Swr. & Solid Waste Disp. Ref. Rev. (Amoco Oil
Co. Proj.), Ser. 1999, 1.40%, VRDN due 1/1/26 VMIG1 A-1+ 400!
1,885 Will Co. (IL) Exempt Fac. Ref. Rev. (ExxonMobil Oil Corp.
Proj.), Ser. 2001, 1.35%, VRDN due 4/1/26 VMIG1 1,885!
----------
105,870
----------
</Table>
See Notes to Schedule of Investments
31
<Page>
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
TAX-EXEMPT CASH EQUIVALENT SECURITIES-BACKED BY LETTERS OF CREDIT (50.4%)
ABN AMRO BANK NV
$ 1,000 Clark Co. (NV) IDR (Nevada Cogeneration Assoc. 2 Proj.),
Ser. 1992, 1.40%, VRDN due 12/1/22 VMIG1 A-1+ $ 1,000
150 Grand Forks (ND) Hlth. Care Fac. Rev. (United Hosp. Oblig.
Group Proj.), Ser. 1992, 1.31%, VRDN due 12/1/16 VMIG1 150
BANK OF AMERICA
1,800 Angelina & Neches Cos. (TX) River Au. IDC Solid Waste Rev.,
Ser. 1984 D, 1.37%, VRDN due 5/1/14 P-1 1,800
1,200 Calhoun Co. (TX) Navigation IDA Port Rev. (Formosa Plastics
Corp., Texas Proj.), Ser. 1994, 1.45%, VRDN due 11/1/15 VMIG1 1,200
3,425 Clarksville (TN) Pub. Bldg. Au. Rev., Ser. 1997, 1.35%,
VRDN due 11/1/27 VMIG1 3,425
2,400 Florida Hsg. Fin. Corp. Rev. (The Club at Vero Arpt. Proj.),
Ser. 1998 E, 1.31%, VRDN due 6/1/17 A-1+ 2,400
1,875 Hillsborough Co. (FL) Hsg. Fin. Au. Multi-Family Hsg. Rev.
(Lakewood Shores Apts. Proj.), Ser. 2000 A, 1.42%,
VRDN due 4/1/33 A-1+ 1,875
4,000 King Co. (WA) Hsg. Au. Rev. (Overlake TOD Proj.), Ser. 2000
B, 1.45%, VRDN due 1/1/43 A-1+ 4,000
300 Louisiana Pub. Fac. Au. IDR (Kenner Hotel L.P. Proj.), Ser.
1985, 1.35%, VRDN due 12/1/15 P-1 300
2,800 Nashville & Davidson Co. (TN) Metro Gov't. IDB Multi-Family
Hsg. Rev., Ser. 1996 A, 1.30%, VRDN due 9/1/06 VMIG1 2,800
800 Port of Portland (OR) Spec. Oblig. Rev. (Horizon Air Ind.,
Inc. Proj.), Ser. 1997, 1.28%, VRDN due 6/15/27 A-1+ 800
BANK OF NEW YORK
10,000 New York City (NY) G.O., Sub. Ser. 2002 C-5, 1.30%,
VRDN due 8/1/20 VMIG1 A-1+ 10,000
BANK OF NOVA SCOTIA
200 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2000 M,
1.45%, VRDN due 8/1/33 VMIG1 A-1 200
2,967 Harris Co. (TX) G.O., Ser. D, 1.00%, TECP due 5/12/03 P-1 A-1+ 2,967
1,760 Harris Co. (TX) G.O., Ser. D, 1.10%, TECP due 5/20/03 P-1 A-1+ 1,760
4,300 Harris Co. (TX) G.O., Ser. C, 1.10%, TECP due 5/20/03 P-1 A-1+ 4,300(L)
6,000 New York St. Env. Rev., Ser. 1998 A, 1.05%, TECP due 2/1/18 P-1 A-1+ 6,000
4,230 Sunshine St. (FL) Gov't. Fin. Comm. Rev., Ser. A, 1.10%,
TECP due 5/21/03 P-1 A-1 4,230
2,331 Sunshine St. (FL) Gov't. Fin. Comm. Rev., Ser. A, 1.15%,
TECP due 5/21/03 P-1 A-1 2,331
2,855 Wisconsin, Ser. A, 1.05%, TECP due 8/15/03 P-1 A-1 2,855
2,000 Wisconsin, Ser. B, 1.05%, TECP due 8/15/03 VMIG1 A-1 2,000
BANK ONE
2,000 Colorado Hlth. Fac. Au. Hosp. Rev. (Boulder Comm. Hosp.
Proj.), Ser. 2000, 1.50%, VRDN due 10/1/30 VMIG1 A-1 2,000
1,100 Emery Co. (UT) Ref. PCR (PacifiCorp Proj.), Ser. 1991,
1.40%, VRDN due 7/1/15 VMIG1 A-1+ 1,100
1,300 Galveston (TX) Ind. Dev. Corp. Ref. Rev. (Mitchell Interests
Proj.), Ser. 1993 A, 1.55%, VRDN due 9/1/13 A-1 1,300
2,000 Lake Charles (LA) Harbor & Rev. Dist. Ref. Rev. (Conoco,
Inc. Proj.), Ser. 1999 A, 1.35%, VRDN due 9/1/29 VMIG1 A-1+ 2,000
4,000 Midlothian (TX) IDC Env. Fac. Rev. (Holnam TX L.P. Proj.),
Ser. 1999, 1.37%, VRDN due 9/1/31 A-1 4,000
</Table>
32
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
BANQUE NATIONALE DE PARIS
$ 2,500 Pinal Co. (AZ) Ind. Dev. Au. Ref. PCR (Magma Copper Co.
Proj.), Ser. 1992, 1.35%, VRDN due 12/1/11 VMIG1 A-1+ $ 2,500
BARCLAYS BANK INT'L., LTD.
400 Farmington City (NM) PCR (Arizona Pub. Svc. Co. Four Corners
Proj.), Ser. 1994 C, 1.40%, VRDN due 9/1/24 VMIG1 A-1+ 400
9,884 Michigan Strategic Fund Solid Waste Disp. Rev. (Grayling
Generating Proj.), Ser. 1990, 1.38%, VRDN due 1/1/14 VMIG1 9,884
1,400 Ohio St. Wtr. Dev. Au. PCR (Ohio Edison Co. Proj.), Ser.
1988, 1.30%, VRDN due 9/1/18 P-1 1,400
BAYERISCHE LANDESBANK GIROZENTRALE
2,300 Chicago (IL) O'Hare Int'l. Arpt. Rev. (Gen. Arpt. Second
Lien), Ser. 1988 A, 1.29%, VRDN due 1/1/18 VMIG1 A-1+ 2,300
300 Chicago (IL) O'Hare Int'l. Arpt. Rev. (Gen. Arpt. Second
Lien), Ser. 1988 B, 1.29%, VRDN due 1/1/18 VMIG1 300
1,000 Denver (CO) City & Co. Arpt. Rev., Ser. 1997 A, 1.15%, TECP
due 5/1/03 P-1 A-1+ 1,000
7,548 Gainesville Util. (FL) Rev., Ser. 1983 C, 1.00%, TECP
due 7/10/03 P-1 A-1+ 7,548
975 New York St. Job Dev. Au. Spec. Purp. Rev., Ser. 1989 A-1
through A-42, 1.30%, VRDN due 3/1/05 VMIG1 975~
BNP PARIBAS
1,000 Tulsa Co. (OK) Ind. Au. First Mtge. Rev. (Montereau in
Warren Woods Proj.), Ser. 2002 A, 1.35%, VRDN due 7/1/32 A-1+ 1,000
CHASE MANHATTAN BANK, N.A.
2,000 Brazoria Co. (TX) Hlth. Fac. Dev. Corp. Hosp. Rev.
(Brazosport Mem. Hosp.), Ser. 1999, 1.40%,
VRDN due 7/1/13 VMIG1 2,000
1,455 Douglas Co. (GA) Dev. Au. IDR (Whirlwind Steel Bldg., Inc.
Proj.), Ser. 1997, 1.45%, VRDN due 12/1/12 VMIG1 A-1 1,455
400 Lawrence Co. (SD) Solid Waste Disp. Rev. (Homestake Mining
Co. Proj.), Ser. 1997 A, 1.50%, VRDN due 7/1/32 P-1 400
CITIBANK, N.A.
1,100 Austin Co. (TX) Ind. Dev. Corp. IDR (Justin Ind., Inc.
Proj.), Ser. 1984, 1.35%, VRDN due 12/1/14 P-1 1,100
CREDIT SUISSE
1,000 King George Co. (VA) IDA Exempt Fac. Rev. (Birchwood Pwr.
Partners, L.P. Proj.), Ser. 1995, 1.40%, VRDN due 11/1/25 A-1+ 1,000
1,000 Texas Capital Hlth. Fac. Dev. Corp. (Island on Lake Travis
Ltd. Proj.), Ser. 1986, 1.40%, VRDN due 12/1/16 A-1+ 1,000
DEUTSCHE BANK AG
2,000 Elk Co. (PA) IDA Solid Waste Disp. Rev. (Willamette Ind.,
Inc. Proj.), Ser. 1992, 1.38%, VRDN due 8/1/10 A-1+ 2,000
1,900 Lincoln Parish (LA) Exempt Fac. Rev. (Willamette Ind., Inc.
Proj.), Ser. 1996, 1.38%, VRDN due 4/1/26 A-1+ 1,900
FIRST UNION NATIONAL BANK
1,000 Midlothian (TX) IDC Exempt Fac. Rev. (Texas Ind., Inc.
Proj.), Ser. 1999, 1.40%, VRDN due 5/1/29 VMIG1 A-1+ 1,000
1,495 Philadelphia (PA) Hosp. & Higher Ed. Fac. Au. Rev. (Temple
East, Inc.), Ser. 1999 B, 1.30%, VRDN due 6/1/14 A-1+ 1,495
3,100 Washington Co. (PA) Au. Lease Rev. (Higher Ed. Pooled Equip.
Leasing Prog.), Ser. 1985 A, 1.40%, VRDN due 11/1/05 VMIG1 3,100
1,345 Whitfield Co. (GA) Residential Care Fac. Rev. (Royal Oaks
Sr. Living Comm.), Ser. 1992, 1.35%, VRDN due 11/1/25 A-1 1,345
</Table>
See Notes to Schedule of Investments
33
<Page>
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
FLEET BANK, N.A.
$ 1,400 New Hampshire Hlth. & Ed. Fac. Au. Rev. (St. Anselm
College), Ser. 2002, 1.35%, VRDN due 7/1/32 VMIG1 $ 1,400
GENERAL ELECTRIC CAPITAL CORP.
1,000 Delaware Co. (PA) IDA Res. Rec. Fac. Ref. Rev. (Gen. Elec.
Cap. Corp.), Ser. 1997 G, 1.28%, VRDN due 12/1/31 P-1 A-1+ 1,000
4,700 Maine St. Hsg. Au. Multi-Family Rev. (Park Village Apts.
Proj.), Ser. 1997, 1.45%, VRDN due 10/28/32 VMIG1 4,700
HARRIS TRUST AND SAVINGS BANK
200 Illinois Dev. Fin. Au. IDR (Grayhill, Inc. Proj.), Ser. 1995 C,
1.50%, VRDN due 2/1/05 A-1+ 200
400 Illinois Dev. Fin. Au. IDR (Overton Gear & Tool Corp.
Proj.), Ser. 1994, 1.38%, VRDN due 10/1/08 A-1+ 400
KBC BANK
1,800 Emmaus (PA) Gen. Au. Local Gov't. Rev. (Bond Pool
Prog.), Ser. 1989 H, 1.38%, VRDN due 3/1/24 A-1 1,800
1,600 New York City (NY) G.O., Sub. Ser. 1999 A-5, 1.40%,
VRDN due 8/1/15 VMIG1 A-1 1,600
LANDESBANK HESSEN-THUERINGEN GIROZENTRALE
100 Jay Street (NY) Dev. Corp. Courts Fac. Lease Rev.
(New York City - Jay Street Proj.), Ser. 2001 A-2, 1.26%,
VRDN due 5/1/20 VMIG1 A-1+ 100
300 New York City (NY) Transitional Fin. Au. Rev. (NYC Rec.),
Ser. 2002 Sub. Ser. 1D, 1.30%, VRDN due 11/1/22 VMIG1 300
4,000 North Carolina St. Pub. Imp. G.O., Ser. 2002 F, 1.32%,
VRDN due 5/1/21 MIG1 A-1+ 4,000
4,700 Northampton Co. (PA) Higher Ed. Au. College Funding Oblig.
Rev. (Lafayette College), Ser. 1998 A, 1.35%,
VRDN due 11/1/28 A-1+ 4,700
5,000 Sunshine St. (FL) Gov't. Fin. Comm. Rev., Ser. 2001,
1.10%, TECP due 5/8/03 P-1 A-1+ 5,000
1,185 Univ. of North Carolina Board of Governors Univ. Hosp. at
Chapel Hill Rev., Ser. 2001 A, 1.28%, VRDN due 2/15/31 VMIG1 A-1+ 1,185
LASALLE NATIONAL BANK
1,900 Elmhurst City, DuPage & Cook Cos. (IL) IDR (Randall
Manufactured Prod., Inc. Proj.), Ser. 2002, 1.55%,
VRDN due 2/1/27 A-1+ 1,900
MORGAN GUARANTY TRUST CO.
2,800 Austin (TX) Arpt. Sys. Prior Lien Rev., Ser. 1995 A, 1.40%,
VRDN due 11/15/17 P-1 2,800
300 New York City (NY) G.O., Sub. Ser. 1993 A-10, 1.26%,
VRDN due 8/1/17 VMIG1 A-1+ 300
1,000 New York City (NY) G.O., Sub. Ser. 1994 A-8, 1.40%,
VRDN due 8/1/18 VMIG1 A-1+ 1,000
700 New York City (NY) G.O., Sub. Ser. 1993 B-2, 1.26%,
VRDN due 8/15/19 VMIG1 700
400 New York City (NY) G.O., Sub. Ser. 1994 E-2, 1.26%,
VRDN due 8/1/20 VMIG1 A-1+ 400
NATIONAL WESTMINSTER BANK PLC
300 Marion Co. (WV) Comm. Solid Waste Disp. Fac. Rev. (Grant
Town Cogeneration Proj.), Ser. 1990 A, 1.40%,
VRDN due 10/1/17 VMIG1 A-1+ 300
</Table>
34
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 300 Marion Co. (WV) Comm. Solid Waste Disp. Fac. Rev. (Grant
Town Cogeneration Proj.), Ser. 1990 D, 1.45%,
VRDN due 10/1/17 VMIG1 A-1+ $ 300
NORTHERN TRUST CO.
3,200 Iowa Higher Ed. Loan Au. Rev. (Private College - St.
Ambrose), Ser. 2003, 1.35%, VRDN due 4/1/33 A-1+ 3,200
200 St. Joseph Co. (IN) Ed. Fac. Rev. (Univ. of Notre Dame du
Lac Proj.), Ser. 2002, 1.30%, VRDN due 3/1/37 VMIG1 200^^
SLM HOLDING CORP.
2,200 Panhandle-Plains (TX) Higher Ed. Au. Inc. Std. Loan Rev.,
Ser. 1991 A, 1.40%, VRDN due 6/1/21 VMIG1 2,200
1,600 Panhandle-Plains (TX) Higher Ed. Au. Inc. Std. Loan Rev.,
Ser. 1995 A, 1.40%, VRDN due 6/1/25 VMIG1 1,600
SOCIETE GENERALE
5,700 Chicago (IL) O'Hare Int'l. Arpt. Gen. Arpt. 2nd Lien Rev.,
Ser. 1984 A, 1.25%, VRDN due 1/1/15 VMIG1 A-1+ 5,700
2,865 Chicago (IL) O'Hare Int'l. Arpt. Gen. Arpt. 2nd Lien Rev.,
Ser. 1984 B, 1.25%, VRDN due 1/1/15 VMIG1 A-1+ 2,865
1,800 Chicago (IL) O'Hare Int'l. Arpt. Spec. Fac. Rev. (Compagnie
Nationale Air France Proj.), Ser. 1990, 1.45%,
VRDN due 5/1/18 A-1+ 1,800
1,700 Los Angeles (CA) Reg. Arpt. Imp. Corp. Term. Fac. Completion
Rev. (Los Angeles Int'l. Arpt.), Ser. 1989, 1.34%,
VRDN due 12/1/25 A-1+ 1,700
3,500 Ohio St. Air Quality Dev. Au. Rev. (JMG Funding L.P. Proj.),
Ser. 1994 B, 1.50%, VRDN due 4/1/28 VMIG1 A-1+ 3,500
2,900 Ohio St. Air Quality Dev. Au. Rev. (JMG Funding L.P. Proj.),
Ser. 1995 A, 1.29%, VRDN due 4/1/29 A-1+ 2,900
5,000 Riverside-San Bernardino (CA) Hsg. & Fin. Agcy. Lease Rev.
Pass-Through Oblig., Ser. 2001 A, 1.45%, VRDN due 7/1/06 A-1+ 5,000
STATE STREET BANK AND TRUST COMPANY
3,000 Arizona Ed. Loan Mktg. Corp. Ed. Loan Rev., Ser. 1991 A,
1.40%, VRDN due 12/1/20 VMIG1 3,000
12,000 Massachusetts St. Hlth. & Ed. Fac. Au. Rev. (Boston Univ.),
Ser. 1985 H, 1.24%, VRDN due 12/1/29 VMIG1 A-1+ 12,000
700 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1995-1, 1.45%,
VRDN due 7/1/19 A-1+ 700
2,000 Rhode Island Std. Loan Au. Prog. Rev., Ser. 1996-3, 1.45%,
VRDN due 6/1/26 A-1+ 2,000
SUNTRUST BANK
600 DeKalb (GA) Private Hosp. Au. Anticipation Cert. Rev.
(Egleston Children's Hosp.), Ser. 1994 A, 1.35%,
VRDN due 3/1/24 VMIG1 A-1+ 600
700 Mayfield (KY) IDR (Seaboard Farms of Kentucky, Inc. Proj.),
Ser. 1989, 1.50%, VRDN due 8/1/19 VMIG1 700
3,500 Sarasota (FL) Hosp. Rev. (Sarasota Memorial Hosp.), Ser.
1995 C, 1.10%, TECP due 10/1/20 VMIG1 A-1+ 3,500
TORONTO DOMINION BANK
2,500 Indiana Muni. Pwr. Agcy. Pwr. Supply Sys. Ref. Rev., Ser.
1998 A, 1.35%, VRDN due 1/1/18 VMIG1 A-1+ 2,500
5,000 Sunshine St. (FL) Gov't. Fin. Comm. Rev., Ser. C, 1.05%,
TECP due 6/18/03 P-1 A-1+ 5,000
1,800 Utah St. G.O., Ser. 1999 A, 1.30%, VRDN due 7/1/16 VMIG1 A-1 1,800
</Table>
See Notes to Schedule of Investments
35
<Page>
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
UNION BANK OF SWITZERLAND
$ 300 Alaska Ind. Dev. & Export Au. Fac. Rev. (Fairbanks Gold
Mining, Inc. Proj.), Ser. 1997, 1.37%, VRDN due 5/1/09 VMIG1 A-1+ $ 300
400 Clark Co. (NV) Arpt. Sys. Sub. Lien Rev., Ser. 1995 A-2,
1.29%, VRDN due 7/1/25 VMIG1 A-1+ 400
760 Pennsylvania Energy Dev. Au. Rev. (B & W Ebensburg Proj.),
Ser. 1986, 1.40%, VRDN due 12/1/11 VMIG1 760
WACHOVIA BANK & TRUST CO.
500 Fulco (GA) Hosp. Au. Anticipation Cert. Rev. (Shepherd Ctr.,
Inc. Proj.), Ser. 1997, 1.35%, VRDN due 9/1/17 A-1+ 500
4,300 Jackson-Union Cos. (IL) Reg. Port Dist. Port Fac. Ref. Rev.
(Enron Trans. Svc., L.P. Proj.), Ser. 1994, 1.31%,
VRDN due 4/1/24 VMIG1 A-1+ 4,300
500 Morgan Co. (UT) Solid Waste Disp. Rev. (Holnam, Inc. Proj.),
Ser. 1996, 1.41%, VRDN due 8/1/31 VMIG1 A-1+ 500
1,200 South Carolina Jobs Econ. Dev. Au. Hosp. Rev. (Tuomey Reg.
Med. Ctr.), Ser. 1995 B, 1.35%, VRDN due 11/1/25 VMIG1 A-1+ 1,200
2,000 South Carolina Jobs Econ. Dev. Au. Rev. (Florence RHF Hsg.,
Inc. Proj.), Ser. 1987 A, 1.50%, VRDN due 11/1/07 P-1 2,000
WELLS FARGO & CO.
800 New Ulm (MN) Hosp. Ref. Rev. (Hlth. Central Sys. Proj.),
Ser. 1985, 1.30%, VRDN due 8/1/14 A-1+ 800
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1,825 Clark Co. (NV) Arpt. Sys. Sub. Lien Rev., Ser. 1995 A-1,
1.35%, VRDN due 7/1/25 VMIG1 A-1+ 1,825
5,000 Denver (CO) City & Co. Arpt. Rev., 1.15%, TECP due 5/1/03 P-1 A-1+ 5,000(Y)
2,500 Denver (CO) City & Co. Arpt. Rev., Ser. 2000 A, 1.35%, TECP
due 5/1/03 P-1 A-1+ 2,500(Y)
2,000 Nueces Co. (TX) Port of Corpus Christi Au. Marine Term. Rev.
(Reynolds Metal Co.), Ser. 1984, 1.30%, VRDN due 9/1/14 A-1+ 2,000
4,000 Pennsylvania Econ. Dev. Fin. Au. Exempt Fac. Rev. (Reliant
Energy Seward, LLC Proj.), Ser. 2001 A, 1.45%,
VRDN due 12/1/36 VMIG1 4,000
2,300 Southern (CA) Metro. Wtr. Dist. Wtr. Au. Rev., Ser. 2000
B-3, 1.35%, VRDN due 7/1/35 VMIG1 A-1+ 2,300
----------
236,830
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES-BACKED BY INSURANCE (8.4%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,500 Coastal Bend (TX) Hlth. Fac. Dev. Corp. Rev. (Incarnate Word
Hlth. Sys.), Ser. 1998 B, 1.36%, VRDN due 8/15/28 VMIG1 SP-1+ 1,500
2,600 Indiana Secondary Mkt. for Ed. Loans, Inc. Rev., Ser. 1988 B,
1.40%, VRDN due 12/1/13 VMIG1 A-1+ 2,600
1,160 Michigan Higher Ed. Std. Loan Au. Ref. Rev., Ser. 1988 XII-B,
1.40%, VRDN due 10/1/13 VMIG1 A-1 1,160
100 New York City (NY) G.O., Sub. Ser. 1994 B-7, 1.40%,
VRDN due 8/15/18 VMIG1 A-1+ 100
2,000 Pennsylvania St. Higher Ed. Assist. Agcy. Std. Loan Rev.,
Ser. 1995 A, 1.40%, VRDN due 12/1/25 VMIG1 A-1+ 2,000^
2,000 Utah St. Board of Regents Std. Loan Rev., Ser. 1995 L,
1.40%, VRDN due 11/1/25 A-1+ 2,000
FINANCIAL GUARANTY INSURANCE CO.
3,300 Arizona Hlth. Fac. Au. Rev. (Pooled Loan Prog.), Ser. 1985,
1.36%, VRDN due 10/1/15 VMIG1 A-1 3,300
</Table>
36
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS MUNICIPAL MONEY FUND CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING@@ VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 1,340 Central Bucks (PA) Sch. Dist., Ser. 2000 A, 1.42%,
VRDN due 2/1/20 VMIG1 $ 1,340
4,000 Detroit (MI) Wtr. Supply Sys. Second Lien Ref. Rev., Ser.
2001- C, 1.35%, VRDN due 7/1/29 VMIG1 4,000
680 Eastern Michigan Univ. Gen. Ref. Rev., Ser. 2001,
1.40%, VRDN due 6/1/27 A-1+ 680
9,700 Massachusetts Wtr. Res. Au. Multi-Modal Subordinated Gen.
Rev., Ser. 2001 A, 1.30%, VRDN due 8/1/23 A-1+ 9,700
700 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys.
Rev., Ser. 1992 C, 1.40%, VRDN due 6/15/22 VMIG1 A-1+ 700
FINANCIAL SECURITY ASSURANCE INC.
400 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2001 J,
1.28%, VRDN due 2/1/32 VMIG1 A-1 400
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
100 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2001 U,
1.28%, VRDN due 8/1/32 VMIG1 A-1+ 100
600 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2002 J,
1.28%, VRDN due 2/1/33 VMIG1 A-1+ 600~~
1,560 Charlotte (NC) Arpt. Ref. Rev., Ser. 1997 A, 1.40%,
VRDN due 7/1/17 VMIG1 A-1 1,560
330 Clark Co. (NV) Arpt. Sub. Lien Rev., Ser. 1998 B, 1.29%,
VRDN due 7/1/28 VMIG1 A-1+ 330
415 Harris Co. (TX) Hlth. Fac. Dev. Corp. Hosp. Rev. (Texas
Children's Hosp. Proj.), Ser. 1999 B-1, 1.35%,
VRDN due 10/1/29 VMIG1 A-1+ 415
900 Kentucky Higher Ed. Std. Loan Corp. Rev., Ser. 1996 A,
1.40%, VRDN due 6/1/26 VMIG1 A-1+ 900
2,000 Massachusetts St. Hlth. & Ed. Fac. Au. Rev. (Cap. Asset
Prog.), Ser. 1985 B, 1.30%, VRDN due 7/1/10 VMIG1 A-1+ 2,000
1,000 Massachusetts St. Hlth. & Ed. Fac. Au. Rev. (Cap. Asset
Prog.), Ser. 1985 C, 1.30%, VRDN due 7/1/10 VMIG1 A-1+ 1,000
200 Massachusetts St. Hlth. & Ed. Fac. Au. Rev. (Cap. Asset
Prog.), Ser. 1985 D, 1.35%, VRDN due 1/1/35 VMIG1 200
2,700 Michigan St. Hsg. Dev. Au. Rental Hsg. Rev., Ser. 2002 C,
1.35%, VRDN due 4/1/21 A-1+ 2,700(LL)
100 New York City (NY) G.O., Sub. Ser. 1995 B-3, 1.40%,
VRDN due 8/15/04 VMIG1 A-1+ 100
----------
39,385
----------
TOTAL INVESTMENTS (96.6%) 453,986
Cash, receivables and other assets, less liabilities (3.4%) 15,767
==========
TOTAL NET ASSETS (100.0%) $ 469,753
----------
</Table>
See Notes to Schedule of Investments
37
<Page>
SCHEDULE OF INVESTMENTS MUNICIPAL SECURITIES TRUST
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
TAX-EXEMPT SECURITIES-PRE-REFUNDED BACKED BY U.S. GOVERNMENT SECURITIES (7.3%)
$ 1,000 Clark Co. (NV) Sch. Dist. Imp. G.O., Ser. 1995 A, 5.60%, due
6/15/08 P/R 6/15/05 Aaa AAA $ 1,098
875 New York City (NY) Transitional Fin. Au. Future Tax Secured
Rev., Ser. 2000 B, 6.00%, due 11/15/19 P/R 5/15/10 AAA 1,048
1,000 Phoenix (AZ) Civic Imp. Corp. Jr. Lien Wastewater Sys. Rev.,
Ser. 2000, 6.00%, due 7/1/12 P/R 7/1/10 Aaa AAA 1,195
----------
3,341
----------
TAX-EXEMPT SECURITIES-BACKED BY INSURANCE (37.0%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
1,000 Atlanta (GA) Arpt. Fac. Ref. Rev., Ser. 1996, 6.50%, due
1/1/06 Aaa AAA 1,123
1,000 Larimer Co. (CO) Sales & Use Tax Rev., Ser. 2000, 5.75%, due
12/15/15 Aaa AAA 1,155
FINANCIAL GUARANTY INSURANCE CO.
1,000 Dade Co. (FL) Wtr. & Swr. Sys. Rev., Ser. 1995, 6.25%, due
10/1/06 Aaa AAA 1,148
750 Detroit (MI) Wayne Co. Sch. Dist. Sch. Bldg. & Site Imp.
Ref. G.O., Ser. 1998 C, 5.25%, due 5/1/13 Aaa AAA 846
1,000 Grapevine (TX) Combination Tax & Tax Increment Reinvestment
Zone Rev., Ser. 2000, 5.63%, due 8/15/15 Aaa AAA 1,134
500 Illinois St. G.O., First Ser. 2000, 5.50%, due 1/1/06 AAA 550
1,205 Salinas (CA) Union High Sch. Dist. G.O., Ser. 2003 A, 5.25%,
due 10/1/14 Aaa AAA 1,371
500 Scottsdale (AZ) Excise Tax Rev., Ser. 1998, 6.00%, due
7/1/07 Aaa AAA 576
1,000 Tampa Bay (FL) Wtr. Util. Sys. Rev., Ser. 1998 B, 5.13%, due
10/1/09 Aaa AAA 1,123
FINANCIAL SECURITY ASSURANCE INC.
1,150 Puerto Rico Muni. Fin. Agcy. Rev., Ser. 2002 A, 4.50%, due
8/1/12 Aaa AAA 1,245
800 Will & Kendall Cos. (IL) Plainfield Comm. Cons. Sch. Dist.
Number 202 Sch. Bldg. G.O., Ser. 2001, 5.38%, due 1/1/13 AAA 899
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,395 Florida Muni. Loan Council Rev., Ser. 2002 C, 5.25%, due
11/1/15 AAA 1,568
500 Metro. (IL) Pier & Exposition Au. Dedicated St. Sales Tax
Rev. (McCormick Place Expansion), Ser. 2002 A, 5.25%, due
6/15/08 Aaa AAA 565
1,000 Mississippi Dev. Bank Spec. Oblig. Rev. (Muni. Gas Au.
Natural Gas Supply Proj.), Ser. 1998, 5.00%, due 1/1/08 Aaa AAA 1,111
1,100 Orange Co. (CA) Local Trans. Au. Measure M Sales Tax
(Limited Tax) Second Sr. Rev., Ser. 1998 A, 5.50%, due
2/15/10 Aaa AAA 1,258
1,000 Wisconsin St. G.O., Ser. 2002 C, 5.25%, due 5/1/14 Aaa AAA 1,114
----------
16,786
----------
TAX-EXEMPT SECURITIES-OTHER (52.4%)
1,000 Board of Regents of the Texas A&M Univ. Sys. Perm. Univ.
Fund Rev., Ser. 1998, 5.00%, due 7/1/08 Aaa AAA 1,120
1,000 Columbus (OH) Var. Purp. Ltd. Tax G.O., Ser. 1998-1, 5.00%,
due 6/15/08 Aaa AAA 1,122
</Table>
38
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS MUNICIPAL SECURITIES TRUST CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 400 Denver(CO) City & Co. Sch. Dist. No. 1 Ref. G.O., Ser. 1994
A, 6.50%, due 6/1/10 Aa3 AA- $ 483
500 Florida St. Board of Ed. Cap. Outlay Ref. G.O., Ser. 1998 B,
5.25%, due 6/1/09 Aa2 AA+ 567
1,000 Georgia G.O., Ser. 1995 C, 7.25%, due 7/1/04 Aaa AAA 1,070
1,000 Illinois St. Sales Tax Rev., Ser. 1997 Y, 5.25%, due 6/15/10 Aa2 AAA 1,131
1,000 Indiana St. Office Bldg. Commission Fac. Ref. Rev., Ser.
1998 A, 5.13%, due 7/1/14 Aa2 1,096
1,000 Lake Co. (IL) Forest Preserve Dist. Ref. G.O., Ser. 1997,
5.50%, due 2/1/09 Aa1 AAA 1,138
1,000 Lake Co. (IL) Sch. Dist. No. 109 Deerfield Ref. G.O., Ser.
1999 C, 5.00%, due 12/15/14 Aa2 AA+ 1,111
1,000 Minnesota St. Var. Purp. G.O., 5.25%, due 8/1/13 Aaa AAA 1,114
65 Mississippi Higher Ed. Assist. Corp. Std. Loan Sub. Rev.,
Ser. 1993 C, 6.05%, due 9/1/07 A 66
1,000 Missouri St. Env. Imp. & Energy Res. Au. Wtr. Ref. PCR
(St. Revolving Fund Prog.-Master Trust), Ser. 2001 B, 5.50%, due
1/1/11 Aaa AAA 1,142
1,000 Nevada Ref. Ltd. Tax G.O., Ser. 1997 A-2, 6.00%, due 5/15/06 Aa2 AA 1,126
500 New Jersey Bldg. Au. St. Bldg. Rev., Ser. 1994, 5.00%, due
6/15/11 Aa3 AA 512
575 New Jersey Trans. Trust Fund Au. Trans. Sys. Rev., Ser. 1999
A, 5.63%, due 6/15/13 Aa3 AA 667
1,000 New York St. Thruway Au. Svc. Contract Rev., Ser. 1997,
5.25%, due 4/1/10 A3 AA- 1,116
1,000 Northside (TX) Independent Sch. Dist. Unlimited Tax Sch.
Bldg. G.O., Ser. 1999 A, 6.38%, due 8/15/09 Aaa AAA 1,196
500 Oklahoma City (OK) Ref. G.O., Ser. 1993, 5.55%, due 8/1/11 Aa2 AA 579
735 Ramsey Co. (MN) Cap. Imp. Plan G.O., Ser. 2000 A, 5.80%, due
2/1/16 Aaa AAA 829
1,000 San Antonio (TX) Elec. & Gas Sys. Ref. Rev., Ser. 1998 A,
5.00%, due 2/1/05 Aa1 AA 1,062
1,000 South Carolina St. Budget & Ctrl. Board St. Fac. Installment
Purchase Rev., (Dept. of Pub. Safety Proj.), Ser. 2003,
4.50%, due 1/1/11 Aa2 AA+ 1,075
500 South Carolina St. Cap. Imp. G.O., Ser. 2001 B, 5.38%, due
4/1/13 Aa2 AAA 567
1,000 Texas Pub. Fin. Au. Ref. G.O., Ser. 1998 B, 5.13%, due
10/1/09 A AA 1,122
1,000 Texas Wtr. Dev. Board St. Revolving Fund Sr. Lien Rev., Ser.
1996 B, 5.25%, due 7/15/13 AAA 1,090
1,000 Utah St. G.O., Ser. 2002 A, 5.00%, due 7/1/08 Aaa AAA 1,124
500 Wyoming St. Loan & Investment Board Cap. Fac. Ref. Rev.,
Ser. 2002, 5.00%, due 10/1/10 AA- 555
----------
23,780
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES (0.7%)
200 Ascension Parish (LA) Rev. (Shell Chemical LP Proj.), Ser.
2001, 1.40%, VRDN due 12/1/36 VMIG1 A-1 200
100 Harris Co. (TX) IDC Solid Waste Disp. Rev. (Exxon Proj.),
Ser. 1997, 1.40%, VRDN due 4/1/32 VMIG1 A-1+ 100!
----------
300
----------
</Table>
See Notes to Schedule of Investments
39
<Page>
SCHEDULE OF INVESTMENTS MUNICIPAL SECURITIES TRUST CONT'D
<Table>
<Caption>
PRINCIPAL AMOUNT SECURITY@ RATING VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
TAX-EXEMPT CASH EQUIVALENT SECURITIES-BACKED BY LETTERS OF CREDIT (0.7%)
MORGAN GUARANTY TRUST CO.
$ 200 New York City (NY) G.O., Sub Ser. 1993 A-10, 1.26%,
VRDN due 8/1/17 VMIG1 A-1+ $ 200
100 New York City (NY) G.O., Sub. Ser. 1993 B-2, 1.26%,
VRDN due 8/15/18 VMIG1 A-1+ 100
----------
300
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES-BACKED BY INSURANCE (0.4%)
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
200 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2002 J,
1.28%, VRDN due 2/1/33 VMIG1 A-1+ 200
----------
TOTAL INVESTMENTS (98.5%) (COST $42,091) 44,707##
Cash, receivables and other assets, less liabilities (1.5%) 676
==========
TOTAL NET ASSETS (100.0%) $ 45,383
----------
</Table>
40
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
NOTES TO SCHEDULE OF INVESTMENTS
+ Investment securities of the Fund are valued daily by obtaining bid
price quotations from independent pricing services on all securities
available in each service's data base. For all other securities
requiring daily quotations, bid prices are obtained from principal
market makers in those securities or, if quotations are not available,
by a method the trustees of Neuberger Berman Income Funds (the
"Trust") believe accurately reflects fair value. Foreign security
prices are furnished by independent quotation services expressed in
local currency values. Foreign security prices are translated from the
local currency into U.S. dollars using current exchange rates.
Short-term debt securities with less than 60 days until maturity may
be valued at cost which, when combined with interest earned,
approximates market value.
++ Investment securities of the Fund are valued at amortized cost, which
approximates U.S. Federal income tax cost.
# At cost, which approximates market value.
## At April 30, 2003, selected Fund information on a U.S. Federal income
tax basis was as follows:
<Table>
<Caption>
GROSS GROSS NET
(000'S OMITTED) UNREALIZED UNREALIZED UNREALIZED
NEUBERGER BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
HIGH INCOME BOND FUND $ 385,132 $ 9,774 $ 403 $ 9,371
LIMITED MATURITY BOND FUND 259,609 5,450 237 5,213
MUNICIPAL SECURITIES TRUST 42,091 2,616 - 2,616
</Table>
@ Municipal securities held by Neuberger Berman Municipal Money Fund
("Municipal Money") and Neuberger Berman Municipal Securities Trust
("Municipal Securities Trust") are within the two and four highest
rating categories, respectively, assigned by a nationally recognized
statistical rating organization ("NRSRO") such as Moody's Investors
Service, Inc. or Standard & Poor's or, where not rated, are determined
by the Fund's investment manager to be of comparable quality.
Approximately 79% and 46% of the municipal securities held by
Municipal Money and Municipal Securities Trust, respectively, have
credit enhancement features backing them, which the Funds may rely on,
such as letters of credit, insurance, or guarantees. Without these
credit enhancement features the securities may or may not meet the
quality standards of the Funds. Pre-refunded bonds are supported by
securities in escrow issued or guaranteed by the U.S. Government, its
agencies, or instrumentalities. The amount escrowed is sufficient to
pay the periodic interest due and the principal of these bonds.
Putable bonds give the Funds the right to sell back the issue on the
date specified.
@@ Where no rating appears from any NRSRO, the security is deemed unrated
for purposes of Rule 2a-7 under the Investment Company Act of 1940, as
amended. Each of these securities is an eligible security based on a
comparable quality analysis performed by the Fund's investment
manager.
* Non-income producing security.
** 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, 2003, these securities amounted to $34,745,000 or
9.5% of net assets for Neuberger Berman High Income Bond Fund ("High
Income") and $6,179,000 or 2.3% of net assets for Neuberger Berman
Limited Maturity Bond Fund.
! Security is guaranteed by the corporate obligor.
(L) Security is subject to a fractional guarantee provided by Bank of Nova
Scotia and Lloyds Bank, p.l.c., each backing 50% of the total
principal.
See Notes to Financial Statements
41
<Page>
NOTES TO SCHEDULE OF INVESTMENTS CONT'D
(LL) Security is subject to a guarantee provided by Landesbank
Hessen-Thueringen Girozentrale, backing 100% of the total principal.
^ Security is subject to a fractional guarantee provided by Credit
Suisse First Boston, Inc. and American Municipal Bond Assurance Corp.,
each backing 50% of the total principal.
^^ Security is subject to a fractional guarantee provided by Northern
Trust Co. and Fifth Third Bank, each backing 50% of the total
principal.
~ Security is subject to a fractional guarantee provided by Bayerische
Landesbank Girozentrale and Chase Manhattan Bank, N.A., each backing
45% and 55%, respectively, of the total principal.
~~ Security is subject to a guarantee provided by Lloyds Bank, p.l.c.,
backing 100% of the total principal.
(Y) Security is subject to a fractional guarantee provided by Bayerische
Landesbank Girozentrale, Westdeutsche Landesbank Girozentrale, and
State Street Bank and Trust Company, each backing 33.3% of the total
principal.
### Security purchased on a when-issued basis. At April 30, 2003, these
securities amounted to $6,196,000 for High Income.
#### Security is segregated as collateral for when-issued purchase
commitments.
*** All or a portion of this security is on loan (see Note A of Notes to
Financial Statements). At April 30, 2003, these securities amounted to
$19,979,000 for High Income.
See Notes to Financial Statements
42
<Page>
This page has been left blank intentionally
43
<Page>
STATEMENTS OF ASSETS AND LIABILITIES
<Table>
<Caption>
NEUBERGER BERMAN INCOME FUNDS CASH GOVERNMENT
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) RESERVES MONEY FUND
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE* (NOTE A)--SEE
SCHEDULE OF INVESTMENTS $ 699,008 $ 1,075,625
Cash -- --
- ------------------------------------------------------------------------------------------------------------
Interest receivable 124 3
Receivable for securities sold -- --
- ------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 588 7,186
Prepaid expenses and other assets 13 14
============================================================================================================
TOTAL ASSETS 699,733 1,082,828
============================================================================================================
LIABILITIES
Dividends payable 281 603
Payable for collateral on securities loaned (Note A) -- --
- ------------------------------------------------------------------------------------------------------------
Payable for securities purchased -- --
Payable for Fund shares redeemed 1,502 53
- ------------------------------------------------------------------------------------------------------------
Payable to investment manager (Note B) 141 200
Payable to administrator--net (Note B) 158 60
- ------------------------------------------------------------------------------------------------------------
Accrued expenses and other payables 137 91
============================================================================================================
TOTAL LIABILITIES 2,219 1,007
============================================================================================================
NET ASSETS AT VALUE $ 697,514 $ 1,081,821
============================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 697,515 $ 1,081,816
Undistributed (dividends in excess of) net investment income -- --
- ------------------------------------------------------------------------------------------------------------
Accumulated net realized gains (losses) on investments (1) 5
Net unrealized appreciation (depreciation) in value of investments -- --
============================================================================================================
NET ASSETS AT VALUE $ 697,514 $ 1,081,821
============================================================================================================
NET ASSETS
Investor Class $ 697,514 $ 1,081,821
Trust Class -- --
- ------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($.001 PAR VALUE; UNLIMITED SHARES AUTHORIZED)
Investor Class 697,514 1,081,816
- ------------------------------------------------------------------------------------------------------------
Trust Class -- --
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
Investor Class $ 1.00 $ 1.00
Trust Class -- --
============================================================================================================
*COST OF INVESTMENTS $ 699,008 $ 1,075,625
============================================================================================================
</Table>
See Notes to Financial Statements
44
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
NEUBERGER BERMAN INCOME FUNDS HIGH INCOME LIMITED MATURITY
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) BOND FUND BOND FUND
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE* (NOTE A)--SEE
SCHEDULE OF INVESTMENTS $ 394,503 $ 264,817
Cash 4 2
- ------------------------------------------------------------------------------------------------------------
Interest receivable 7,669 2,915
Receivable for securities sold 4,895 --
- ------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 4,305 2,316
Prepaid expenses and other assets 5 5
============================================================================================================
TOTAL ASSETS 411,381 270,055
============================================================================================================
LIABILITIES
Dividends payable 210 57
Payable for collateral on securities loaned (Note A) 20,958 --
- ------------------------------------------------------------------------------------------------------------
Payable for securities purchased 22,392 358
Payable for Fund shares redeemed 335 1,289
- ------------------------------------------------------------------------------------------------------------
Payable to investment manager (Note B) 129 54
Payable to administrator--net (Note B) 79 55
- ------------------------------------------------------------------------------------------------------------
Accrued expenses and other payables 28 82
============================================================================================================
TOTAL LIABILITIES 44,131 1,895
============================================================================================================
NET ASSETS AT VALUE $ 367,250 $ 268,160
============================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 377,624 $ 286,745
Undistributed (dividends in excess of) net investment income 24 (1,110)
- ------------------------------------------------------------------------------------------------------------
Accumulated net realized gains (losses) on investments (19,769) (22,688)
Net unrealized appreciation (depreciation) in value of investments 9,371 5,213
============================================================================================================
NET ASSETS AT VALUE $ 367,250 $ 268,160
============================================================================================================
NET ASSETS
Investor Class $ 367,250 $ 224,302
Trust Class -- 43,858
- ------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($.001 PAR VALUE; UNLIMITED SHARES AUTHORIZED)
Investor Class 40,343 23,130
- ------------------------------------------------------------------------------------------------------------
Trust Class -- 4,746
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
Investor Class $ 9.10 $ 9.70
Trust Class -- 9.24
============================================================================================================
*COST OF INVESTMENTS $ 385,132 $ 259,609
============================================================================================================
<Caption>
NEUBERGER BERMAN INCOME FUNDS MUNICIPAL MONEY MUNICIPAL SECURITIES
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) FUND TRUST
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE* (NOTE A)--SEE
SCHEDULE OF INVESTMENTS $ 453,986 $ 44,707
Cash 155 43
- -----------------------------------------------------------------------------------------------------------------
Interest receivable 1,188 649
Receivable for securities sold 11,920 --
- -----------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 2,995 52
Prepaid expenses and other assets 5 --
=================================================================================================================
TOTAL ASSETS 470,249 45,451
=================================================================================================================
LIABILITIES
Dividends payable 228 14
Payable for collateral on securities loaned (Note A) -- --
- -----------------------------------------------------------------------------------------------------------------
Payable for securities purchased -- --
Payable for Fund shares redeemed 12 16
- -----------------------------------------------------------------------------------------------------------------
Payable to investment manager (Note B) 99 9
Payable to administrator--net (Note B) 107 1
- -----------------------------------------------------------------------------------------------------------------
Accrued expenses and other payables 50 28
=================================================================================================================
TOTAL LIABILITIES 496 68
=================================================================================================================
NET ASSETS AT VALUE $ 469,753 $ 45,383
=================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 469,759 $ 42,711
Undistributed (dividends in excess of) net investment income 1 --
- -----------------------------------------------------------------------------------------------------------------
Accumulated net realized gains (losses) on investments (7) 56
Net unrealized appreciation (depreciation) in value of investments -- 2,616
=================================================================================================================
NET ASSETS AT VALUE $ 469,753 $ 45,383
=================================================================================================================
NET ASSETS
Investor Class $ 469,753 $ 45,383
Trust Class -- --
- -----------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($.001 PAR VALUE; UNLIMITED SHARES AUTHORIZED)
Investor Class 469,833 3,797
- -----------------------------------------------------------------------------------------------------------------
Trust Class -- --
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
Investor Class $ 1.00 $ 11.95
Trust Class -- --
=================================================================================================================
*COST OF INVESTMENTS $ 453,986 $ 42,091
=================================================================================================================
</Table>
45
<Page>
STATEMENTS OF OPERATIONS
<Table>
<Caption>
NEUBERGER BERMAN INCOME FUNDS CASH GOVERNMENT
(000'S OMITTED) RESERVES MONEY FUND
INVESTMENT INCOME
Interest income (Note A) $ 5,543 $ 7,985
Income from securities loaned--net -- --
============================================================================================================
Total income 5,543 7,985
============================================================================================================
EXPENSES:
Investment management fee (Note B) 922 1,330
Administration fee (Note B):
- ------------------------------------------------------------------------------------------------------------
Investor Class 1,037 1,544
Trust Class -- --
-----------------------------------------------------------------------------------------------------
Shareholder servicing agent fees:
Investor Class 131 41
-----------------------------------------------------------------------------------------------------
Trust Class -- --
Auditing fees 15 15
- ------------------------------------------------------------------------------------------------------------
Custodian fees (Note B) 97 119
Insurance expense 9 13
- ------------------------------------------------------------------------------------------------------------
Legal fees 13 16
Registration and filing fees 27 80
- ------------------------------------------------------------------------------------------------------------
Reimbursement of expenses previously assumed by administrator (Note B) -- --
Shareholder reports 15 --
- ------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 15 15
Miscellaneous -- 126
============================================================================================================
Total expenses 2,281 3,299
Expenses reimbursed by administrator and/or reduced by
custodian fee expense offset arrangement (Note B) -- (725)
=========================================================================================================
Total net expenses 2,281 2,574
============================================================================================================
Net investment income (loss) 3,262 5,411
============================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold -- 5
Net realized gain (loss) on foreign currency (Note A) -- --
- ------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) in value of:
Investment securities (Note A) -- --
-----------------------------------------------------------------------------------------------------
Foreign currency (Note A) -- --
=====================================================================================================
Net gain (loss) on investments -- 5
============================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,262 $ 5,416
============================================================================================================
</Table>
See Notes to Financial Statements
46
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
NEUBERGER BERMAN FOR THE SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
NEUBERGER BERMAN INCOME FUNDS HIGH INCOME LIMITED MATURITY
(000'S OMITTED) BOND FUND BOND FUND
INVESTMENT INCOME
Interest income (Note A) $ 8,879 $ 5,230
Income from securities loaned--net 11 --
============================================================================================================
Total income 8,890 5,230
============================================================================================================
EXPENSES:
Investment management fee (Note B) 553 328
Administration fee (Note B):
- ------------------------------------------------------------------------------------------------------------
Investor Class 311 297
Trust Class -- 105
-----------------------------------------------------------------------------------------------------
Shareholder servicing agent fees:
Investor Class 56 91
-----------------------------------------------------------------------------------------------------
Trust Class -- 10
Auditing fees -- 19
- ------------------------------------------------------------------------------------------------------------
Custodian fees (Note B) 44 73
Insurance expense -- 3
- ------------------------------------------------------------------------------------------------------------
Legal fees 15 14
Registration and filing fees 27 34
- ------------------------------------------------------------------------------------------------------------
Reimbursement of expenses previously assumed by administrator (Note B) 2 --
Shareholder reports -- 2
- ------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 6 17
Miscellaneous -- 15
============================================================================================================
Total expenses 1,014 1,008
Expenses reimbursed by administrator and/or reduced by
custodian fee expense offset arrangement (Note B) -- (68)
=========================================================================================================
Total net expenses 1,014 940
============================================================================================================
Net investment income (loss) 7,876 4,290
============================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold (763) 1,152
Net realized gain (loss) on foreign currency (Note A) -- 115
- ------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) in value of:
Investment securities (Note A) 8,693 701
-----------------------------------------------------------------------------------------------------
Foreign currency (Note A) -- 4
=====================================================================================================
Net gain (loss) on investments 7,930 1,972
============================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 15,806 $ 6,262
============================================================================================================
<Caption>
NEUBERGER BERMAN INCOME FUNDS MUNICIPAL MUNICIPAL
(000'S OMITTED) MONEY FUND SECURITIES TRUST
INVESTMENT INCOME
Interest income (Note A) $ 3,129 $ 833
Income from securities loaned--net -- --
============================================================================================================
Total income 3,129 833
============================================================================================================
EXPENSES:
Investment management fee (Note B) 642 52
Administration fee (Note B):
- ------------------------------------------------------------------------------------------------------------
Investor Class 696 56
Trust Class -- --
-----------------------------------------------------------------------------------------------------
Shareholder servicing agent fees:
Investor Class 13 15
-----------------------------------------------------------------------------------------------------
Trust Class -- --
Auditing fees 15 18
- ------------------------------------------------------------------------------------------------------------
Custodian fees (Note B) 98 20
Insurance expense 4 --
- ------------------------------------------------------------------------------------------------------------
Legal fees 13 14
Registration and filing fees 29 15
- ------------------------------------------------------------------------------------------------------------
Reimbursement of expenses previously assumed by administrator (Note B) -- --
Shareholder reports -- --
- ------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 14 14
Miscellaneous 23 1
============================================================================================================
Total expenses 1,547 205
Expenses reimbursed by administrator and/or reduced by
custodian fee expense offset arrangement (Note B) (1) (71)
=========================================================================================================
Total net expenses 1,546 134
============================================================================================================
Net investment income (loss) 1,583 699
============================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold -- 56
Net realized gain (loss) on foreign currency (Note A) -- --
- ------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) in value of:
Investment securities (Note A) -- 690
-----------------------------------------------------------------------------------------------------
Foreign currency (Note A) -- --
=====================================================================================================
Net gain (loss) on investments -- 746
============================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,583 $ 1,445
============================================================================================================
</Table>
47
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
CASH RESERVES
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 3,262 $ 13,552
Net realized gain (loss) on investments -- (1)
- ----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investments -- --
============================================================================================================================
Net increase (decrease) in net assets resulting from operations 3,262 13,551
============================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE E):
NET INVESTMENT INCOME:
Investor Class (3,262) (13,552)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NET REALIZED GAIN ON INVESTMENTS:
Investor Class -- (103)
============================================================================================================================
Total distributions to shareholders (3,262) (13,655)
============================================================================================================================
FROM FUND SHARE TRANSACTIONS (NOTE E):
PROCEEDS FROM SHARES SOLD:
Investor Class 342,065 994,396
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
PROCEEDS FROM REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 967 8,442
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
PAYMENTS FOR SHARES REDEEMED:
Investor Class (487,523) (1,276,724)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
VALUE OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
Net increase (decrease) from Fund share transactions (144,491) (273,886)
============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (144,491) (273,990)
NET ASSETS:
Beginning of period 842,005 1,115,995
============================================================================================================================
End of period $ 697,514 $ 842,005
============================================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) at end of period $ -- $ --
============================================================================================================================
<Caption>
GOVERNMENT MONEY FUND
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 5,411 $ 17,332
Net realized gain (loss) on investments 5 6
- ----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investments -- --
============================================================================================================================
Net increase (decrease) in net assets resulting from operations 5,416 17,338
============================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE E):
NET INVESTMENT INCOME:
Investor Class (5,411) (17,332)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NET REALIZED GAIN ON INVESTMENTS:
Investor Class (6) (4)
============================================================================================================================
Total distributions to shareholders (5,417) (17,336)
============================================================================================================================
FROM FUND SHARE TRANSACTIONS (NOTE E):
PROCEEDS FROM SHARES SOLD:
Investor Class 786,330 1,764,813
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
PROCEEDS FROM REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 379 7,488
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
PAYMENTS FOR SHARES REDEEMED:
Investor Class (1,050,042) (999,040)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
VALUE OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
Net increase (decrease) from Fund share transactions (263,333) 773,261
============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (263,334) 773,263
NET ASSETS:
Beginning of period 1,345,155 571,892
============================================================================================================================
End of period $ 1,081,821 $ 1,345,155
============================================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) at end of period $ -- $ --
============================================================================================================================
</Table>
See Notes to Financial Statements
48
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
HIGH INCOME BOND FUND
-----------------------------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED TEN MONTHS YEAR
APRIL 30, ENDED ENDED
2003 OCTOBER 31, DECEMBER 31,
(000'S OMITTED) (UNAUDITED) 2002 2001
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 7,876 $ 6,735 $ 6,654
Net realized gain (loss) on investments (763) (3,296) (655)
- -----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investments 8,693 735 1,362
=============================================================================================================================
Net increase (decrease) in net assets resulting from operations 15,806 4,174 7,361
=============================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE E):
NET INVESTMENT INCOME:
Investor Class (7,876) (1,399) --
Trust Class -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- (3,800) (5,505)
Retail Shares -- (1,653) (816)
- -----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- (10) (348)
NET REALIZED GAIN ON INVESTMENTS:
Investor Class -- -- --
=============================================================================================================================
Total distributions to shareholders (7,876) (6,862) (6,669)
=============================================================================================================================
FROM FUND SHARE TRANSACTIONS (NOTE E):
PROCEEDS FROM SHARES SOLD:
Investor Class 274,867 31,636 --
Trust Class -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- 29,531 32,338
Retail Shares -- 36,907 20,652
- -----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- 732 1,851
PROCEEDS FROM REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 7,012 1,267 --
- -----------------------------------------------------------------------------------------------------------------------------
Trust Class -- -- --
Premier Shares -- 3,033 4,219
- -----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- 1,587 782
Group Retirement Plan Shares -- 9 347
- -----------------------------------------------------------------------------------------------------------------------------
PAYMENTS FOR SHARES REDEEMED:
Investor Class (71,175) (14,968) --
Trust Class -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- (63,221) (4,693)
Retail Shares -- (15,350) (4,627)
- -----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- (6,777) (364)
VALUE OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- 140,460 --
- -----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- (67,762) --
Retail Shares -- (46,776) --
=============================================================================================================================
Net increase (decrease) from Fund share transactions 210,704 30,308 50,505
=============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 218,634 27,620 51,197
NET ASSETS:
Beginning of period 148,616 120,996 69,799
=============================================================================================================================
End of period $ 367,250 $ 148,616 $ 120,996
=============================================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) at end of period $ 24 $ (118) $ --
=============================================================================================================================
<Caption>
LIMITED MATURITY BOND FUND
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 4,290 $ 10,838
Net realized gain (loss) on investments 1,267 1,415
- ----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investments 705 (3,921)
============================================================================================================================
Net increase (decrease) in net assets resulting from operations 6,262 8,332
============================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE E):
NET INVESTMENT INCOME:
Investor Class (4,296) (9,622)
Trust Class (800) (1,853)
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NET REALIZED GAIN ON INVESTMENTS:
Investor Class -- --
============================================================================================================================
Total distributions to shareholders (5,096) (11,475)
============================================================================================================================
FROM FUND SHARE TRANSACTIONS (NOTE E):
PROCEEDS FROM SHARES SOLD:
Investor Class 285,738 255,373
Trust Class 21,739 68,740
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
PROCEEDS FROM REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 3,924 8,890
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class 789 1,811
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
PAYMENTS FOR SHARES REDEEMED:
Investor Class (286,595) (246,170)
Trust Class (21,813) (65,231)
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
VALUE OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
Net increase (decrease) from Fund share transactions 3,782 23,413
============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 4,948 20,270
NET ASSETS:
Beginning of period 263,212 242,942
============================================================================================================================
End of period $ 268,160 $ 263,212
============================================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) at end of period $ (1,110) $ (304)
============================================================================================================================
<Caption>
MUNICIPAL MONEY FUND
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 1,583 $ 4,213
Net realized gain (loss) on investments -- --
- ----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investments -- --
============================================================================================================================
Net increase (decrease) in net assets resulting from operations 1,583 4,213
============================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE E):
NET INVESTMENT INCOME:
Investor Class (1,583) (4,213)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NET REALIZED GAIN ON INVESTMENTS:
Investor Class -- --
============================================================================================================================
Total distributions to shareholders (1,583) (4,213)
============================================================================================================================
FROM FUND SHARE TRANSACTIONS (NOTE E):
PROCEEDS FROM SHARES SOLD:
Investor Class 243,551 557,232
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
PROCEEDS FROM REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 49 1,807
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
PAYMENTS FOR SHARES REDEEMED:
Investor Class (307,123) (480,980)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
VALUE OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
Net increase (decrease) from Fund share transactions (63,523) 78,059
============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (63,523) 78,059
NET ASSETS:
Beginning of period 533,276 455,217
============================================================================================================================
End of period $ 469,753 $ 533,276
============================================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) at end of period $ 1 $ 1
============================================================================================================================
<Caption>
MUNICIPAL SECURITIES TRUST
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 699 $ 1,227
Net realized gain (loss) on investments 56 293
- ----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investments 690 254
============================================================================================================================
Net increase (decrease) in net assets resulting from operations 1,445 1,774
============================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE E):
NET INVESTMENT INCOME:
Investor Class (699) (1,227)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NET REALIZED GAIN ON INVESTMENTS:
Investor Class (200) --
============================================================================================================================
Total distributions to shareholders (899) (1,227)
============================================================================================================================
FROM FUND SHARE TRANSACTIONS (NOTE E):
PROCEEDS FROM SHARES SOLD:
Investor Class 14,390 17,512
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
PROCEEDS FROM REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 802 1,070
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
PAYMENTS FOR SHARES REDEEMED:
Investor Class (8,241) (14,044)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
VALUE OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
Net increase (decrease) from Fund share transactions 6,951 4,538
============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 7,497 5,085
NET ASSETS:
Beginning of period 37,886 32,801
============================================================================================================================
End of period $ 45,383 $ 37,886
============================================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) at end of period $ -- $ --
============================================================================================================================
</Table>
49
<Page>
<Table>
<Caption>
CASH RESERVES
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
NUMBER OF FUND SHARES (NOTE E):
SOLD:
Investor Class 342,064 994,396
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
ISSUED ON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 967 8,442
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
REDEEMED:
Investor Class (487,523) (1,276,724)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NUMBER OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (144,492) (273,886)
============================================================================================================================
<Caption>
GOVERNMENT MONEY FUND
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
NUMBER OF FUND SHARES (NOTE E):
SOLD:
Investor Class 786,330 1,764,813
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
ISSUED ON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 379 7,488
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
REDEEMED:
Investor Class (1,050,042) (999,040)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NUMBER OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (263,333) 773,261
============================================================================================================================
</Table>
See Notes to Financial Statements
50
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
HIGH INCOME BOND FUND
-----------------------------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED TEN MONTHS YEAR
APRIL 30, ENDED ENDED
2003 OCTOBER 31, DECEMBER 31,
(000'S OMITTED) (UNAUDITED) 2002 2001
NUMBER OF FUND SHARES (NOTE E):
SOLD:
Investor Class 30,636 3,600 --
Trust Class -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- 3,335 3,568
Retail Shares -- 4,087 2,295
- -----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- 81 204
ISSUED ON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 780 143 --
- -----------------------------------------------------------------------------------------------------------------------------
Trust Class -- -- --
Premier Shares -- 337 465
- -----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- 179 87
Group Retirement Plan Shares -- 1 39
- -----------------------------------------------------------------------------------------------------------------------------
REDEEMED:
Investor Class (7,939) (1,700) --
Trust Class -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- (7,080) (520)
Retail Shares -- (1,725) (513)
- -----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- (695) (41)
NUMBER OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- 14,822 --
- -----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- (6,879) --
Retail Shares -- (5,075) --
=============================================================================================================================
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 23,477 3,431 5,584
=============================================================================================================================
<Caption>
LIMITED MATURITY BOND FUND
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
NUMBER OF FUND SHARES (NOTE E):
SOLD:
Investor Class 29,555 26,526
Trust Class 2,360 7,499
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
ISSUED ON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 405 923
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class 85 197
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
REDEEMED:
Investor Class (29,657) (25,575)
Trust Class (2,369) (7,115)
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NUMBER OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 379 2,455
============================================================================================================================
<Caption>
MUNICIPAL MONEY FUND
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
NUMBER OF FUND SHARES (NOTE E):
SOLD:
Investor Class 243,551 557,232
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
ISSUED ON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 49 1,807
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
REDEEMED:
Investor Class (307,123) (480,980)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NUMBER OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (63,523) 78,059
============================================================================================================================
<Caption>
MUNICIPAL SECURITIES TRUST
----------------------------------
NEUBERGER BERMAN INCOME FUNDS SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2003 OCTOBER 31,
(000'S OMITTED) (UNAUDITED) 2002
NUMBER OF FUND SHARES (NOTE E):
SOLD:
Investor Class 1,216 1,513
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
ISSUED ON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS:
Investor Class 67 92
- ----------------------------------------------------------------------------------------------------------------------------
Trust Class -- --
Premier Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Retail Shares -- --
Group Retirement Plan Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
REDEEMED:
Investor Class (697) (1,216)
Trust Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
- ----------------------------------------------------------------------------------------------------------------------------
Group Retirement Plan Shares -- --
NUMBER OF SHARES ISSUED (REDEEMED) IN CONNECTION WITH REORGANIZATIONS:
Investor Class -- --
- ----------------------------------------------------------------------------------------------------------------------------
Premier Shares -- --
Retail Shares -- --
============================================================================================================================
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 586 389
============================================================================================================================
</Table>
51
<Page>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1 GENERAL: Neuberger Berman Cash Reserves ("Cash Reserves"), Neuberger
Berman Government Money Fund ("Government Money"), Neuberger Berman
High Income Bond Fund ("High Income"), Neuberger Berman Limited
Maturity Bond Fund ("Limited Maturity"), Neuberger Berman Municipal
Money Fund ("Municipal Money"), and Neuberger Berman Municipal
Securities Trust ("Municipal Securities Trust") (individually a
"Fund", collectively, the "Funds") are separate operating series of
Neuberger Berman Income Funds (the "Trust"), a Delaware statutory
trust organized pursuant to a Trust Instrument dated December 23,
1992. The Trust is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and its shares are registered under the
Securities Act of 1933, as amended (the "1933 Act"). All of the Funds
offer Investor Class shares and one offers Trust Class shares. The
Investor Class of High Income had no operations until September 7,
2002 other than matters relating to its organization and registration
of its shares under the 1933 Act. On September 6, 2002 the Lipper High
Income Bond Fund ("Lipper High Income") and Neuberger Berman High
Yield Bond Fund ("NB High Yield") merged with High Income (see Note
E). 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.
It is the policy of Cash Reserves, Government Money, and Municipal
Money to maintain a continuous net asset value per share of $1.00;
each of these Funds has adopted certain investment, valuation, and
dividend and distribution policies, which conform to general industry
practice, to enable it to do so. However, there is no assurance the
Funds will be able to maintain a stable net asset value per share.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires Neuberger
Berman Management Inc. ("Management") to make estimates and
assumptions at the date of the financial statements. Actual results
could differ from those estimates.
2 PORTFOLIO VALUATION: Investment securities are valued as indicated in
the notes following the Funds' Schedule of Investments.
3 FOREIGN CURRENCY TRANSLATION: High Income and Limited Maturity may
invest in foreign securities denominated in foreign currency. The
accounting records of the Funds are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars at the
current rate of exchange of such currency against the U.S. dollar to
determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4 SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Interest income, including
accretion of discount (adjusted for original issue discount, where
applicable) and amortization of premium, where applicable, is recorded
on the accrual basis. Realized gains and
52
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
losses from securities transactions and foreign currency transactions
are recorded on the basis of identified cost and stated separately in
the Statements of Operations.
5 FEDERAL INCOME TAXES: The Funds are treated as separate entities for
U.S. Federal income tax purposes. It is the policy of each Fund to
continue to qualify as a regulated investment company by complying
with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to
make distributions of investment company taxable income and net
capital gains (after reduction for any amounts available for U.S.
Federal income tax purposes as capital loss carryforwards) sufficient
to relieve them from all, or substantially all, U.S. Federal income
taxes. Accordingly, each Fund paid no U.S. Federal income taxes and no
provision for U.S. Federal income taxes was required.
6 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income,
net of expenses, daily on its investments. 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. Income
dividends and capital gain distributions to shareholders are recorded
on the ex-dividend date. To the extent each Fund's net realized
capital gains, if any, can be offset by capital loss carryforwards, it
is the policy of each Fund not to distribute such gains. At October
31, 2002, the capital loss carryforwards for each Fund were as
follows:
<Table>
<Caption>
EXPIRING IN:
2003 2004 2005 2006 2007 2008 2009 2010
CASH RESERVES $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 842
HIGH INCOME(1) -- -- 42,133 2,646,308 5,308,350 5,123,202 2,182,233 3,608,017
LIMITED MATURITY(2) 4,380,183 1,656,586 1,100,286 4,035,877 5,146,514 7,177,986 456,883 --
MUNICIPAL MONEY -- -- -- -- -- 6,744 -- --
</Table>
(1) The capital loss carryforwards shown above for High Income
include $42,133, $1,206,076, $4,142,445, $2,021,774, and $923,187
expiring in 2005, 2006, 2007, 2008, and 2009, respectively, which
were acquired on September 6, 2002 in the High Income Merger (See
Note E). The use of these losses to offset future gains may be
limited in a given year.
(2) Of the total capital loss carryforwards shown for Limited
Maturity, $2,979,971 was acquired on February 9, 2001 in a
tax-free reorganization. The use of these losses to offset future
gains may be limited in a given year.
Prior to September 6, 2002, Lipper High Income distributed
substantially all of its net investment income monthly and net
realized capital gains, if any, annually.
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 tax 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 in the
components of net assets on the Statements of Assets and Liabilities.
53
<Page>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS CONT'D
7 EXPENSE ALLOCATION: Expenses directly attributable to a Fund are
charged to that Fund. Expenses not directly attributed to a Fund are
allocated, on the basis of relative net assets, except where a more
appropriate allocation of expenses to each of the Funds can otherwise
be made fairly. Each Fund's expenses (other than those specific to
each class) are allocated proportionally each day between the classes
based upon the relative net assets of each class.
8 FINANCIAL FUTURES CONTRACTS: High Income, Limited Maturity, and
Municipal Securities Trust may each buy and sell financial futures
contracts to hedge against changes in securities prices resulting from
changes in prevailing interest rates. At the time a Fund enters into a
financial futures contract, it is required to deposit with its
custodian a specified amount of cash or liquid securities, known as
"initial margin," ranging upward from 1.1% of the value of the
financial futures contract being traded. Each day, the futures
contract is valued at the official settlement price of the board of
trade or U.S. commodity exchange on which such futures contract is
traded. Subsequent payments, known as "variation margin," to and from
the broker are made on a daily basis as the market price of the
financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market," are recorded by the
Funds 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 Fund recognizes a gain or loss. Risks of entering into
futures contracts include the possibility there may be an illiquid
market and/or a change in the value of the contract may not correlate
with changes in the value of the underlying securities.
For U.S. Federal income tax purposes, the futures transactions
undertaken by a Fund may cause that Fund 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 Fund. Also, a Fund's losses on
transactions involving futures contracts may be deferred rather than
being taken into account currently in calculating such Fund's taxable
income.
During the six months ended April 30, 2003, High Income, Limited
Maturity, and Municipal Securities Trust did not enter into any
financial futures contracts.
9 FORWARD FOREIGN CURRENCY CONTRACTS: High Income and Limited Maturity
may each enter into forward foreign currency contracts ("contracts")
in connection with planned purchases or sales of securities to hedge
the U.S. dollar value of portfolio securities denominated in a foreign
currency. The gain or loss arising from the difference between the
original contract price and the closing price of such contract is
included in net realized gains or losses on foreign currency
transactions. Fluctuations in the value of forward foreign currency
contracts are recorded for financial reporting purposes as unrealized
gains or losses by each Fund. Neither Fund has a specific limitation
on the percentage of assets which may be committed to these types of
contracts, but neither Fund may invest more than 25% of its net assets
in foreign
54
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
securities denominated in or indexed to foreign currencies. The Funds
could be exposed to risks if a counterparty to a contract were unable
to meet the terms of its contract or if the value of the foreign
currency changes unfavorably. The U.S. dollar value of foreign
currency underlying all contractual commitments held by each Fund is
determined using forward foreign currency exchange rates supplied by
an independent pricing service.
10 SECURITY LENDING: High Income entered into a securities lending
agreement with Bear Stearns Securities Corp. ("Bear Stearns") on
December 26, 2002. Securities loans involve certain risks in the event
Bear Stearns should default or fail financially, including delays or
inability to recover the loaned securities or foreclose against the
collateral. The investment manager, under the general supervision of
the Trust's Board of Trustees, monitors the creditworthiness of the
parties to whom High Income makes security loans. High Income receives
cash collateral equal to at least 102% of the current market value of
the loaned securities. High Income invests the cash collateral in the
N&B Securities Lending Quality Fund, LLC ("investment vehicle"), which
is managed by State Street Bank and Trust Company ("State Street").
High Income pays a fee to Bear Stearns with respect to the cash
collateral that it receives and retains the income earned on
reinvestment of that cash collateral. High Income also receives
payments from Bear Stearns equal to income earned on loaned securities
during the time that they are on loan. Income earned on the securities
loans is reflected in the Statements of Operations.
11 REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements
with institutions that the Fund's investment manager has determined
are creditworthy. Each repurchase agreement is recorded at cost. Each
Fund requires that the securities purchased in a repurchase
transaction be transferred to the custodian in a manner sufficient to
enable the Fund to obtain those securities in the event of a default
under the repurchase agreement. Each Fund monitors, on a daily basis,
the value of the securities transferred to ensure that their value,
including accrued interest, is greater than amounts owed to the Fund
under each such repurchase agreement.
12 OTHER: All net investment income and realized and unrealized capital
gains and losses of each Fund are allocated pro rata among its
respective classes.
NOTE B--MANAGEMENT FEES, ADMINISTRATION FEES, DISTRIBUTION
ARRANGEMENTS, AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Fund retains Management as its investment manager under a
Management Agreement. For such investment management services, each
Fund (except High Income) pays Management a fee at the annual rate of
0.25% of the first $500 million of that Fund's average daily net
assets, 0.225% of the next $500 million, 0.20% of the next $500
million, 0.175% of the next $500 million, and 0.15% of average daily
net assets in excess of $2 billion. High Income pays Management a fee
for investment management services at the annual rate of 0.48% of the
Fund's average daily net assets.
Lipper & Company, L.L.C. ("Lipper") acted as the investment adviser to
Lipper High Income from its inception through September 6, 2002, and
was paid a management fee at the annual rate of 0.75% of its average
daily net assets.
55
<Page>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS CONT'D
Each Fund retains Management as its administrator under an
Administration Agreement ("Agreement"). Pursuant to this Agreement
each Fund's Investor Class pays Management an administration fee at
the annual rate of 0.27% of its average daily net assets and the Trust
Class of Limited Maturity pays Management an administration fee at the
annual rate of 0.50% of its average daily net assets.
Additionally, Management retains State Street as its sub-administrator
under a Sub-Administration Agreement. Management pays State Street a
fee for all services received under the agreement.
ALPS Mutual Funds Services, Inc. served as the administrator to Lipper
High Income from April 27, 2002 through September 6, 2002, and was
paid an administration fee at the monthly rate of $28,000 allocated on
the basis of relative net assets among the three funds comprising The
Lipper Funds, Inc. J.P. Morgan Investor Services Co. served as the
administrator to Lipper High Income from its inception through April
26, 2002, and was paid an administration fee at the annual rate of
0.20% of the first $200 million of the fund's average daily net
assets, 0.10% of the next $200 million, and 0.05% of average daily net
assets in excess of $400 million, subject to a minimum annual fee of
$70,000.
Lipper & Company, L.P. served as Lipper High Income Retail Shares'
distributor from its inception through September 6, 2002, and was paid
a fee at the annual rate of 0.25% of the average daily net assets of
the Lipper High Income's Retail Shares for distribution services
rendered.
Lipper & Company, L.P. served as Lipper High Income Group Retirement
Plan Shares' shareholder servicing agent from its inception through
the class' discontinuation on March 1, 2002 (see Note E), and was paid
a fee at the annual rate of 0.25% of the average daily net assets of
the Lipper High Income's Group Retirement Plan Shares for shareholder
support services rendered.
Management has undertaken to reimburse operating expenses (including
fees payable to Management but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) ("Operating Expenses") which
exceed the expense limitation as detailed in the following table:
<Table>
<Caption>
REIMBURSEMENT FROM
MANAGEMENT FOR THE
EXPENSE SIX MONTHS ENDED
CLASS LIMITATION(1) CONTRACTUAL/VOLUNTARY EXPIRATION(2) APRIL 30, 2003
CASH RESERVES INVESTOR CLASS 0.65% Contractual 10/31/06 $ --
GOVERNMENT MONEY FUND INVESTOR CLASS 0.45% Voluntary -- 724,564
HIGH INCOME BOND FUND INVESTOR CLASS 1.00% Contractual 10/31/06 --
LIMITED MATURITY BOND FUND INVESTOR CLASS 0.70% Contractual 10/31/06 43,329
LIMITED MATURITY BOND FUND TRUST CLASS 0.80% Contractual 10/31/06 25,118
MUNICIPAL SECURITIES TRUST INVESTOR CLASS 0.65% Contractual 10/31/06 71,127
</Table>
(1) Expense limitation per annum of the respective class' average
daily net assets.
(2) For Government Money, this undertaking is subject to termination
by Management without written notice to the Fund.
56
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
Through September 6, 2002, Lipper agreed to voluntarily waive fees and
reimburse expenses of Lipper High Income to the extent necessary to
maintain an annual operating expense ratio to net assets of not more
than 1.00% for the Lipper High Income Premier Shares, and 1.25% for
the Lipper High Income Retail Shares and Group Retirement Plan Shares.
The Investor Classes of Cash Reserves, High Income, Limited Maturity
and Municipal Securities Trust and the Trust Class of Limited Maturity
have agreed to repay Management for their excess Operating Expenses
previously reimbursed by Management, so long as their annual Operating
Expenses during that period do not exceed their Expense Limitations,
and the repayments are made within three years after the year in which
Management issued the reimbursement. During the six months ended April
30, 2003, High Income reimbursed Management $1,904 under this
agreement. At April 30, 2003, contingent liabilities to Management
under the agreement were as follows:
<Table>
CASH RESERVES INVESTOR CLASS $ --
HIGH INCOME BOND FUND INVESTOR CLASS --
LIMITED MATURITY BOND FUND INVESTOR CLASS 80,962
LIMITED MATURITY BOND FUND TRUST CLASS 59,821
MUNICIPAL SECURITIES TRUST INVESTOR CLASS 181,063
</Table>
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of
The New York Stock Exchange and sub-adviser to each Fund, are wholly
owned subsidiaries of Neuberger Berman Inc., a publicly held company.
Neuberger is retained by Management to furnish it with investment
recommendations and research information without added cost to each
Fund. Several individuals who are officers and/or trustees of the
Trust are also employees of Neuberger and/or Management.
Each class of shares 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 share class.
Each Fund 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 $4, $2, $320, $27, $1,306 and $361 for Cash Reserves,
Government Money, High Income, Limited Maturity, Municipal Money, and
Municipal Securities Trust, respectively.
NOTE C--SECURITIES TRANSACTIONS:
During the six months ended April 30, 2003, there were purchase and
sale transactions (excluding short-term securities and foreign
currency contracts) as follows:
<Table>
<Caption>
(000'S OMITTED) PURCHASES SALES
HIGH INCOME $ 379,361 $ 163,589
LIMITED MATURITY 192,502 175,798
MUNICIPAL SECURITIES TRUST 9,904 1,764
</Table>
All securities transactions for Cash Reserves, Government Money, and
Municipal Money were short-term.
57
<Page>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS CONT'D
NOTE D--LINE OF CREDIT:
At April 30, 2003, High Income and Limited Maturity were two
participants in a single committed, unsecured $200,000,000 line of
credit with State Street, to be used only for temporary or emergency
purposes. Interest is charged on borrowings under this agreement at
the overnight Federal Funds Rate plus 0.50% per annum. A facility fee
of 0.10% per annum of the available line of credit is charged, of
which each Fund has agreed to pay its pro rata share, based on the
ratio of its individual net assets to the net assets of all
participants at the time the fee is due and payable. The fee is paid
quarterly in arrears. No compensating balance is required. Other
investment companies managed by Management also participate in this
line of credit on the same terms. Because several investment companies
participate, there is no assurance that an individual Fund will have
access to the entire $200,000,000 at any particular time. High Income
and Limited Maturity had no loans outstanding pursuant to this line of
credit at April 30, 2003. During the six months ended April 30, 2003,
High Income and Limited Maturity did not utilize this line of credit.
From February 4, 2002 through September 6, 2002, Lipper High Income
had an uncommitted line of credit with Custodial Trust Company to meet
temporary cash needs. Prior to February 4, 2002, Lipper High Income
had a $20,000,000 line of credit with JPMorgan Chase Bank to meet
temporary cash needs. Lipper High Income paid a commitment fee for
both lines of credit.
NOTE E--MERGERS AND REORGANIZATIONS:
After the close of business on September 6, 2002, High Income acquired
all of the assets and assumed all of the liabilities of Lipper High
Income, a multi class Maryland corporation which commenced operations
on April 1, 1996 as a diversified, open-end management investment
company and NB High Yield, another series of the Trust which commenced
operations on March 3, 1998 as a diversified, open-end management
investment company. The reorganizations were accomplished by a
tax-free exchange of 14,821,844 shares of High Income (valued at
$131,737,824) for the assets and liabilities of Lipper High Income
Bond Fund Premier Shares, the assets and liabilities of Lipper High
Income Bond Fund Retail Shares, and the assets and liabilities of NB
High Yield. The aggregate net assets of Lipper High Income Bond Fund
Premier Shares, Lipper High Income Bond Fund Retail Shares, and NB
High Yield immediately before the reorganizations were $61,142,779,
$44,672,815, and $25,922,230, respectively, resulting in aggregate net
assets of $131,737,824 immediately after the reorganizations.
The acquisitions were treated as tax-free reorganizations and
accordingly, any unrealized appreciation or depreciation on the
securities on the date of the acquisitions was treated as non-taxable
by Lipper High Income and NB High Yield. As such, High Income's basis
in the securities acquired reflected their historical cost basis as of
the date of transfer. The net unrealized appreciation (depreciation)
as of September 6, 2002, was $904,655 and ($190,463), for Lipper High
Income and NB High Yield, respectively. Based upon the relevant
factors, the Premier Share class of Lipper High Income was determined
to be the accounting survivor following the mergers. As such, the
financial results of Lipper High Income and the financial highlights
of Lipper High Income Premier Shares prior to the merger date are
presented in the
58
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
statements of operations, changes in net assets and financial
highlights of High Income. Effective with the mergers, the Retail
Share class of Lipper High Income and the Investor Class of NB High
Yield ceased to exist and therefore the financial highlights of the
Lipper High Income Retail Shares and NB High Yield Investor Class
prior to the merger date are no longer presented. Certain prior year
financial statement items have been reclassified to conform to the
current period presentation.
Lipper High Income charged a redemption fee of 1% on shares redeemed
or exchanged for shares of another fund within 30 days or less of the
purchase date. For the period ended October 31, 2002, there were no
redemption fees paid to the fund.
Costs incurred by Lipper High Income in connection with its
organization were deferred and amortized on a straight-line basis over
a five-year period. As of the merger date, the balance of such
expenses had been completely amortized.
Effective March 1, 2002, Lipper High Income discontinued the Group
Retirement Plan shares. Group Retirement Plan shareholders were asked
to redeem their shares and purchase either Premier Shares or Retail
Shares, as applicable.
NOTE F--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.
59
<Page>
FINANCIAL HIGHLIGHTS CASH RESERVES
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements.
<Table>
<Caption>
SIX MONTHS ENDED
INVESTOR CLASS+ APRIL 30, YEAR ENDED OCTOBER 31,
---------------- --------------------------------------------------------------
2003 2002 2001 2000 1999 1998
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.0000 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .0041 .0154 .0440 .0562 .0453 .0499
NET GAINS OR LOSSES ON SECURITIES -- (.0000) .0001 -- -- --
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .0041 .0154 .0441 .0562 .0453 .0499
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.0041) (.0154) (.0440) (.0562) (.0453) (.0499)
FROM NET CAPITAL GAINS -- (.0001) -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (.0041) (.0155) (.0440) (.0562) (.0453) (.0499)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.0000 $ 1.0000 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN++ +0.41%** +1.56% +4.49% +5.76% +4.63% +5.10%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 697.5 $ 842.0 $ 1,116.0 $ 1,324.8 $ 1,104.2 $ 1,024.6
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .58%* .60% .55% .60% .61% .64%
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS .58%* .60% .55% .60% .61% .63%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS .83%* 1.54% 4.59% 5.61% 4.55% 5.00%
</Table>
See Notes to Financial Highlights
60
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
FINANCIAL HIGHLIGHTS GOVERNMENT MONEY FUND
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements.
<Table>
<Caption>
SIX MONTHS ENDED
INVESTOR CLASS+ APRIL 30, YEAR ENDED OCTOBER 31,
---------------- ---------------------------------------------------------------
2003 2002 2001 2000 1999 1998
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0001 $ 1.0000
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .0047 .0149 .0423 .0509 .0406 .0459
NET GAINS OR LOSSES ON SECURITIES .0000 .0000 -- -- -- .0001
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .0047 .0149 .0423 .0509 .0406 .0460
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.0047) (.0149) (.0423) (.0509) (.0406) (.0459)
FROM NET CAPITAL GAINS (.0000) (.0000) -- -- (.0001) --
---------- ---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (.0047) (.0149) (.0423) (.0509) (.0407) (.0459)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0001
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN++ +0.47%** +1.50% +4.31% +5.22% +4.14% +4.69%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 1,081.8 $ 1,345.2 $ 571.9 $ 303.8 $ 653.4 $ 367.6
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .45%* .47% .59% .67% .60% .64%
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS .45%*! .47%! .59% .67% .60% .63%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS .95%* 1.45% 3.92% 4.99% 4.08% 4.61%
</Table>
See Notes to Financial Highlights
61
<Page>
FINANCIAL HIGHLIGHTS HIGH INCOME BOND FUND
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements.@
<Table>
<Caption>
TEN MONTHS
SIX MONTHS ENDED ENDED
INVESTOR CLASS^ APRIL 30, OCTOBER 31, YEAR ENDED DECEMBER 31,
---------------- ----------- ---------------------------------------------------
2003 2002(L) 2001 2000 1999 1998 1997
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.81 $ 9.03 $ 8.90 $ 9.22 $ 9.57 $ 10.11 $ 10.18
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .30 .52(Y) .69 .75 .74 .84 .91
NET GAINS OR LOSSES ON SECURITIES
(BOTH REALIZED AND UNREALIZED) .29 (.21)(Y) .12 (.33) (.35) (.48) .19
------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS .59 .31 .81 .42 .39 .36 1.10
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.30) (.53) (.68) (.74) (.74) (.86) (.91)
IN EXCESS OF NET INVESTMENT INCOME -- -- -- -- -- (.00) --
FROM NET CAPITAL GAINS -- -- -- -- -- (.04) (.26)
------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (.30) (.53) (.68) (.74) (.74) (.90) (1.17)
------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 9.10 $ 8.81 $ 9.03 $ 8.90 $ 9.22 $ 9.57 $ 10.11
------- ------- ------- ------- ------- ------- -------
TOTAL RETURN++ +6.84%** +3.52%** +9.27% +4.81% +4.20% +3.61% +11.22%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD
(IN MILLIONS) $ 367.3 $ 148.6 $ 92.8 $ 60.3 $ 66.2 $ 85.7 $ 85.2
RATIO OF GROSS EXPENSES TO
AVERAGE NET ASSETS# .88%* 1.00%* 1.00% 1.00% 1.00% 1.00% 1.00%
RATIO OF NET EXPENSES TO
AVERAGE NET ASSETS .88%*+++ 1.00%*! 1.00%! 1.00%! 1.00%! 1.00%! 1.00%!
RATIO OF NET INVESTMENT
INCOME (LOSS)
TO AVERAGE NET ASSETS 6.84%* 6.96%*(Y) 7.54% 8.15% 7.72% 8.50% 8.58%
PORTFOLIO TURNOVER RATE 75% 95%!! 85% 63% 103% 110% 105%
</Table>
See Notes to Financial Highlights
62
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
FINANCIAL HIGHLIGHTS LIMITED MATURITY BOND FUND
The following tables include selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements.@
<Table>
<Caption>
SIX MONTHS ENDED
INVESTOR CLASS+ APRIL 30, YEAR ENDED OCTOBER 31,
---------------- ------------ --------------------------------------------------
2003 2002 2001 2000 1999 1998
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.65 $ 9.78 $ 9.31 $ 9.51 $ 9.91 $ 10.03
---------- ---------- -------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .16 .43(Y) .58 .61 .59 .60
NET GAINS OR LOSSES ON SECURITIES
(BOTH REALIZED AND UNREALIZED) .08 (.11)##(Y) .47 (.20) (.40) (.12)
---------- ---------- -------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .24 .32 1.05 .41 .19 .48
---------- ---------- -------- ---------- ---------- ----------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.19) (.45) (.58) (.58) (.59) (.60)
TAX RETURN OF CAPITAL -- -- -- (.03) -- --
---------- ---------- -------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (.19) (.45) (.58) (.61) (.59) (.60)
---------- ---------- -------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.70 $ 9.65 $ 9.78 $ 9.31 $ 9.51 $ 9.91
---------- ---------- -------- ---------- ---------- ----------
TOTAL RETURN++ +2.48%** +3.42% +11.62% +4.47% +1.98% +4.92%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 224.3 $ 220.3 $ 204.8 $ 167.9 $ 227.0 $ 295.2
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .70%* .70% .70% .70% .70% .71%
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS! .70%* .70% .70% .70% .70% .70%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS 3.29%* 4.44%Y 6.05% 6.43% 5.98% 6.03%
PORTFOLIO TURNOVER RATE 69% 140% 147% 105% 102% 44%
</Table>
<Table>
<Caption>
SIX MONTHS ENDED
TRUST CLASS+ APRIL 30, YEAR ENDED OCTOBER 31,
---------------- --------------------------------------------------------------
2003 2002 2001 2000 1999 1998
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.20 $ 9.32 $ 8.88 $ 9.06 $ 9.45 $ 9.57
---------- ---------- -------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .15 .40(Y) .55 .57 .56 .57
NET GAINS OR LOSSES ON SECURITIES
(BOTH REALIZED AND UNREALIZED) .06 (.10)##(Y) .44 (.18) (.39) (.12)
---------- ---------- -------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .21 .30 .99 .39 .17 .45
---------- ---------- -------- ---------- ---------- ----------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.17) (.42) (.55) (.54) (.55) (.57)
IN EXCESS OF NET INVESTMENT INCOME -- -- -- -- (.01) --
TAX RETURN OF CAPITAL -- -- -- (.03) -- --
---------- ---------- -------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (.17) (.42) (.55) (.57) (.56) (.57)
---------- ---------- -------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.24 $ 9.20 $ 9.32 $ 8.88 $ 9.06 $ 9.45
---------- ---------- -------- ---------- ---------- ----------
TOTAL RETURN++ +2.34%** +3.35% +11.41% +4.50% +1.86% +4.79%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 43.9 $ 42.9 $ 38.1 $ 26.9 $ 41.5 $ 60.4
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .80%* .80% .80% .80% .81% .80%
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS! .80%* .80% .80% .80% .80% .80%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS 3.18%* 4.31%(Y) 5.95% 6.34% 5.87% 5.94%
PORTFOLIO TURNOVER RATE 69% 140% 147% 105% 102% 44%
</Table>
See Notes to Financial Highlights
63
<Page>
FINANCIAL HIGHLIGHTS MUNICIPAL MONEY FUND
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements.
<Table>
<Caption>
SIX MONTHS ENDED
INVESTOR CLASS^ APRIL 30, YEAR ENDED OCTOBER 31,
---------------- --------------------------------------------------------------
2003 2002 2001 2000 1999 1998
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ .9998 $ .9998 $ .9997 $ .9998 $ .9997 $ .9994
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .0031 .0092 .0269 .0336 .0256 .0288
NET GAINS OR LOSSES ON SECURITIES -- -- .0001## -- .0001 .0003
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .0031 .0092 .0270 .0336 .0257 .0291
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.0031) (.0092) (.0269) (.0336) (.0256) (.0288)
FROM NET CAPITAL GAINS -- -- -- (.0001) -- --
---------- ---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (.0031) (.0092) (.0269) (.0337) (.0256) (.0288)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ .9998 $ .9998 $ .9998 $ .9997 $ .9998 $ .9997
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN++ +0.31%** +0.93% +2.72% +3.41% +2.59% +2.92%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 469.8 $ 533.3 $ 455.2 $ 255.5 $ 293.8 $ 221.5
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .60%* .62% .61% .68% .68% .72%
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS .60%* .62% .60% .67% .67% .71%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS .61%* .92% 2.60% 3.33% 2.58% 2.88%
</Table>
See Notes to Financial Highlights
64
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
FINANCIAL HIGHLIGHTS MUNICIPAL SECURITIES TRUST
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements.@
<Table>
<Caption>
SIX MONTHS ENDED
INVESTOR CLASS+ APRIL 30, YEAR ENDED OCTOBER 31,
---------------- --------------------------------------------------------------
2003 2002 2001 2000 1999 1998
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.80 $ 11.62 $ 11.00 $ 10.78 $ 11.34 $ 11.02
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .20 .43 .45 .46 .45 .46
NET GAINS OR LOSSES ON SECURITIES
(BOTH REALIZED AND UNREALIZED) .21 .18 .62 .22 (.56) .32
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .41 .61 1.07 .68 (.11) .78
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.20) (.43) (.45) (.46) (.45) (.46)
FROM NET CAPITAL GAINS (.06) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS (.26) (.43) (.45) (.46) (.45) (.46)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.95 $ 11.80 $ 11.62 $ 11.00 $ 10.78 $ 11.34
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN++ +3.52%** +5.35% +9.89% +6.46% -1.03% +7.22%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 45.4 $ 37.9 $ 32.8 $ 28.7 $ 35.0 $ 40.1
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .65%* .65% .66% .66% .66% .66%
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS! .65%* .65% .65% .65% .65% .65%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS 3.39%* 3.67% 3.96% 4.22% 4.03% 4.13%
PORTFOLIO TURNOVER RATE 4% 17% 26% 37% 17% 24%
</Table>
See Notes to Financial Highlights
65
<Page>
NOTES TO FINANCIAL HIGHLIGHTS INCOME FUNDS
+ The per share amounts and ratios which are shown reflect income and
expenses, including each Fund's proportionate share of its corresponding
Portfolio's income and expenses through February 9, 2001 under the prior
master-feeder fund structure.
++ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each
fiscal period and assumes dividends and other distributions, if any, were
reinvested. Results represent past performance and do not guarantee future
results. Investment returns and principal may fluctuate and shares when
redeemed may be worth more or less than original cost. For each Fund
(excluding Cash Reserves and Municipal Money), total return would have been
lower if Management had not reimbursed certain expenses.
# The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
## The amounts shown at this caption for a share outstanding may not accord
with the change in aggregate gains and losses in securities for the year
because of the timing of sales and repurchases of Fund shares.
! After reimbursement of expenses by Management. Had Management not
undertaken such action the annualized ratios of net expenses to average
daily net assets would have been:
<Table>
<Caption>
SIX MONTHS ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
2003 2002 2001 2000 1999 1998
GOVERNMENT MONEY FUND INVESTOR CLASS .58% .55% -- -- -- --
LIMITED MATURITY BOND FUND INVESTOR CLASS .74% .73% .74% .76% .72 .75%
LIMITED MATURITY BOND FUND TRUST CLASS .92% .92% 1.01% 1.26% 1.12 1.22%
MUNICIPAL SECURITIES TRUST INVESTOR CLASS 1.00% 1.10% 1.07% 1.22% 1.07 1.11%
</Table>
<Table>
<Caption>
SIX MONTHS ENDED TEN MONTHS ENDED
APRIL 30, OCTOBER 31, YEAR ENDED DECEMBER 31,
2003 2002 2001 2000 1999 1998 1997
HIGH INCOME BOND FUND
INVESTOR CLASS -- 1.31% 1.15% 1.18% 1.15% 1.15% 1.16%
</Table>
+++ After reimbursement of expenses previously paid by Management. Had
Management not been reimbursed, the annualized ratios of net expenses to
average daily net assets would have been:
<Table>
<Caption>
SIX MONTHS
ENDED
APRIL 30,
2003
HIGH INCOME BOND FUND INVESTOR CLASS .88%
</Table>
!! Portfolio turnover excludes purchases and sales of securities by High Yield
prior to the merger date (see Note E of Notes to Financial Statements).
* Annualized.
** Not annualized.
@ The per share amounts which are shown for the periods ended October 31,
2001 (October 31, 2002 for High Income) and thereafter, have been computed
based on the average number of shares outstanding during each fiscal
period.
(L) Effective after the close of business on September 6, 2002, Neuberger
Berman Management Inc. succeeded Lipper & Company, L.L.C., as the Fund's
investment manager.
66
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
NOTES TO FINANCIAL HIGHLIGHTS INCOME FUNDS CONT'D
(Y) For fiscal years ended after October 31, 2001, the funds are required by
the American Institute of Certified Public Accountants to amortize premiums
and discounts on fixed income securities. Accordingly, for the year ended
October 31, 2002, the per share amounts and ratios shown decreased or
increased as follows:
<Table>
<Caption>
TEN MONTHS
ENDED
OCTOBER 31,
HIGH INCOME BOND FUND INVESTOR CLASS 2002
NET INVESTMENT INCOME (.01)
NET GAINS OR LOSSES ON SECURITIES .01
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS (.19%)
<Caption>
YEAR ENDED
OCTOBER 31,
LIMITED MATURITY BOND FUND INVESTOR CLASS 2002
NET INVESTMENT INCOME (.02)
NET GAINS OR LOSSES ON SECURITIES .02
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS (.26%)
<Caption>
YEAR ENDED
OCTOBER 31,
LIMITED MATURITY BOND FUND TRUST CLASS 2002
NET INVESTMENT INCOME (.02)
NET GAINS OR LOSSES ON SECURITIES .02
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS (.26%)
</Table>
^ The financial highlights for the periods ended December 31, 2001 and prior
are those of the Premier Shares of Lipper High Income, and have been
audited by other auditors whose report dated February 25, 2002 expressed an
unqualified opinion. The financial highlights for the ten-month period
ended October 31, 2002 include the income and expenses attributable to the
Lipper High Income Premier Shares for the period from January 1, 2002
through September 6, 2002 and the income and expenses of High Income,
thereafter.
67
<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
FOR INVESTOR CLASS SHAREHOLDERS
ADDRESS CORRESPONDENCE TO:
Neuberger Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
800.877.9700 or 212.476.8800
FOR TRUST CLASS SHAREHOLDERS
ADDRESS CORRESPONDENCE TO:
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
Attn: Institutional Services
800.366.6264
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
68
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
TRUSTEES AND OFFICERS (UNAUDITED)
The following tables set forth information concerning the trustees and officers
of the Trust. All persons named as trustees and officers also serve in similar
capacities for other funds administered or managed by NB Management and
Neuberger Berman. The Statement of Additional Information includes additional
information about fund trustees and is available upon request, without charge,
by calling (800) 877-9700.
INFORMATION ABOUT THE BOARD OF TRUSTEES
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS (1) SERVED (2) PRINCIPAL OCCUPATION(S) (3) TRUSTEE FUND COMPLEX BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
John Cannon (73) Trustee since Consultant. Formerly, Chairman 35 Independent Trustee or
1994 and Chief Investment Officer, Director of three series of
CDC Capital Management Oppenheimer Funds;
(registered investment adviser) Limited Term New York
(1993-January 1999); prior Municipal Fund, Rochester
thereto, President and Chief Fund Municipals, and
Executive Officer, AMA Oppenheimer Convertible
Investment Advisors, an affiliate Securities Fund since 1992.
of the American Medical
Association.
Faith Colish (67) Trustee since Counsel, Carter Ledyard & 35 Director, American Bar
2000 Milburn LLP (law firm) since Retirement Association
October 2002; Formerly, (ABRA) since 1997
Attorney at Law and President, (not-for-profit membership
Faith Colish, A Professional association).
Corporation, 1980 to 2002.
Walter G. Ehlers (70) Trustee since Consultant; Retired President 35
2000 and Trustee, Teachers
Insurance & Annuity (TIAA)
and College Retirement
Equities Fund (CREF).
</Table>
69
<Page>
TRUSTEES AND OFFICERS (UNAUDITED) CONT'D
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS (1) SERVED (2) PRINCIPAL OCCUPATION(S) (3) TRUSTEE FUND COMPLEX BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
C. Anne Harvey (65) Trustee since Consultant, C. A. Harvey 35 Member, Individual Investors
2000 Associates since June 2001; Advisory Committee to the
Director, AARP, 1978 to New York Stock Exchange
December 2000. Board of Directors, 1998 to
June 2002; President, Board of
Associates to The National
Rehabilitation Hospital's
Board of Directors since 2002;
Member, American Savings
Education Council's Policy
Board (ASEC), 1998-2000;
Member, Executive Committee,
Crime Prevention Coalition of
America, 1997-2000.
Barry Hirsch (70) Trustee since Attorney at Law. Senior 35
1993 Counsel, Loews Corporation
(diversified financial
corporation) May 2002 until
April 2003; prior thereto,
Senior Vice President,
Secretary and General
Counsel, Loews Corporation.
Robert A. Kavesh (75) Trustee since Professor of Finance and 35 Director, Delaware Labs,
1993 Economics, Stern School of (cosmetics) since 1978.
Business, New York University.
Howard A. Mileaf (66) Trustee since Retired. Formerly, Vice 35 Director, WHX Corporation
2000 President and Special Counsel, (holding company) since
WHX Corporation (holding August 2002; Director,
company) 1993-2001. Webfinancial Corporation
(holding company) since
December 2002; Director,
State Theatre of New Jersey
(not-for-profit theater) since
2000; Formerly, Director,
Kevlin Corporation
(manufacturer of
microwave and
other products).
</Table>
70
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS (1) SERVED (2) PRINCIPAL OCCUPATION(S) (3) TRUSTEE FUND COMPLEX BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
John P. Rosenthal (70) Trustee since Senior Vice President, 35 Director, 92nd Street Y
2000 Burnham Securities Inc. (a (non-profit) since 1967;
registered broker-dealer) since Formerly, Director, Cancer
1991. Treatment Holdings, Inc.
William E. Rulon (70) Trustee since Retired. Senior Vice President, 35 Director, Pro-Kids Golf and
1993 Foodmaker, Inc. (operator Learning Academy (teach
and franchiser of restaurants) golf and computer usage to
until January 1997. "at risk" children) since 1998;
Director, Prandium, Inc.
(restaurants) from March 2001
until July 2002.
Cornelius T. Ryan (71) Trustee since Founding General Partner, 35 Director, Capital Cash
2000 Oxford Partners and Oxford Management Trust (money
Bioscience Partners (venture market fund), Narragansett
capital partnerships) and Insured Tax-Free Income
President, Oxford Venture Fund, Rocky Mountain Equity
Corporation. Fund, Prime Cash Fund,
several private companies and
QuadraMed Corporation
(NASDAQ).
Tom Decker Seip (53) Trustee since General Partner, Seip 35 Director, H&R Block, Inc.
2000 Investments LP (a private (financial services company)
investment partnership); since May 2001; Director,
President and CEO, Westaff, Inc. General Magic (voice
(temporary staffing), May 2001 recognition software) since
to January 2002; Senior November 2001; Director,
Executive at the Charles Schwab Forward Management, Inc.
Corporation from 1983 to 1999; (asset management) since
including Chief Executive 2001; Director, E-Finance
Officer, Charles Schwab Corporation (credit
Investment Management, Inc. decisioning services) since
and Trustee, Schwab Family 1999; Director, Save-
of Funds and Schwab Daily.com (micro investing
Investments from 1997 to 1998 services) since 1999;
and Executive Vice President- Formerly, Director, Offroad
Retail Brokerage, Charles Schwab Capital Inc. (pre-public
Investment Management from internet commerce company).
1994 to 1997.
</Table>
71
<Page>
TRUSTEES AND OFFICERS (UNAUDITED) CONT'D
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS (1) SERVED (2) PRINCIPAL OCCUPATION(S) (3) TRUSTEE FUND COMPLEX BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Candace L. Straight (55) Trustee since Private investor and consultant 35 Director, Providence
1993 specializing in the insurance Washington (property and
industry; Advisory Director, casualty insurance company)
Securities Capital LLC (a global since December 1998;
private equity investment firm Director, Summit Global
dedicated to making investments Partners (insurance brokerage
in the insurance sector). firm) since October 2000.
Peter P. Trapp (58) Trustee since Regional Manager for Atlanta 35
2000 Region, Ford Motor Credit
Company since August 1997;
prior thereto, President, Ford
Life Insurance Company, April
1995 until August 1997.
TRUSTEES WHO ARE "INTERESTED PERSONS"
Edward I. O'Brien* (74) Trustee since Member, Investment Policy 35 Director, Legg Mason, Inc.
2000 Committee, Edward Jones, (financial services holding
1993-2001; President, Securities company) since 1993; Director,
Industry Association ("SIA") Boston Financial Group
(securities industry's (real estate and tax shelters)
representative in government 1993-1999.
relations and regulatory matters
at the federal and state levels)
from 1974-1992; Adviser to SIA,
November 1992-November 1993.
Jack L. Rivkin* (62) President Executive Vice President and 35 Director, Dale Carnegie and
and Trustee Chief Investment Officer, Associates, Inc. (private
since Neuberger Berman since 2002 company) since 1998; Director,
December 2002 and 2003, respectively; Director Emagin Corp. (public
and Chairman, NB Management company) since 1997;
since December 2002; Executive Director, Solbright, Inc.
Vice President, Citigroup (private company) since 1998;
Investments, Inc. from September Director, Infogate, Inc.
1995 to February 2002; Executive (private company)
Vice President, Citigroup Inc. since 1997.
from September 1995 to
February 2002.
</Table>
72
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS (1) SERVED (2) PRINCIPAL OCCUPATION(S) (3) TRUSTEE FUND COMPLEX BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Peter E. Sundman* (44) Chairman of the Executive Vice President, 35 Executive Vice President,
Board, Chief Neuberger Berman since 1999; Neuberger Berman Inc.
Executive Principal, Neuberger Berman (holding company) since 1999;
Officer from 1997 until 1999; Senior Director, Neuberger Berman
and Trustee Vice President, NB Management Inc. from 1999 through March
since 2000 from 1996 until 1999. 2003; President and Director,
President and NB Management since 1999;
Chief Executive Director and Vice President,
Officer from Neuberger & Berman Agency,
1999 to 2000 Inc. since 2000.
</Table>
(1) The business address of each listed person is 605 Third Avenue, New York,
New York 10158.
(2) Pursuant to the Trust's Trust Instrument, each Trustee shall hold office
for life or until his or her successor is elected or the Trust terminates;
except that (a) any Trustee may resign by delivering a written resignation;
(b) any Trustee may be removed with or without cause at any time by a
written instrument signed by at least two-thirds of the other Trustees; (c)
any Trustee who requests to be retired, or who has become unable to serve,
may be retired by a written instrument signed by a majority of the other
Trustees; and (d) any Trustee may be removed at any shareholder meeting by
a vote of at least two-thirds of the outstanding shares.
(3) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a Trustee who is an "interested person" within the meaning of the
1940 Act. Mr. Sundman and Mr. Rivkin are interested persons of the Trust by
virtue of the fact that they are officers and/or directors of NB Management
and Executive Vice Presidents of Neuberger Berman. Mr. O'Brien is an
interested person of the Trust by virtue of the fact that he is a director
of Legg Mason, Inc., a wholly owned subsidiary of which, from time to time,
serves as a broker or dealer to the Fund and other funds for which NB
Management serves as investment manager.
73
<Page>
TRUSTEES AND OFFICERS (UNAUDITED) CONT'D
INFORMATION ABOUT THE OFFICERS OF THE TRUST
<Table>
<Caption>
POSITION AND
NAME, AGE, AND ADDRESS (1) LENGTH OF TIME SERVED (2) PRINCIPAL OCCUPATION(S) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
Claudia A. Brandon (46) Secretary since 1985 Vice President-Mutual Fund Board Relations,
NB Management since 2000; Vice President,
Neuberger Berman since 2002 and employee
since 1999; Vice President, NB Management
from 1986 to 1999; Secretary, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(four since 2002 and two since 2003).
Robert Conti (46) Vice President since 2000 Senior Vice President, Neuberger Berman
since 2003; Vice President, Neuberger Berman
from 1999 until 2003; Senior Vice President,
NB Management since 2000; Controller, NB
Management until 1996; Treasurer, NB
Management from 1996 until 1999; Vice
President, nine registered investment
companies for which NB Management acts as
investment manager and administrator (three
since 2000, four since 2002 and two since
2003).
Brian J. Gaffney (49) Vice President since 2000 Managing Director, Neuberger Berman since
1999; Senior Vice President, NB Management
since 2000; Vice President, NB Management
from 1997 until 1999; Vice President, nine
registered investment companies for which NB
Management acts as investment manager and
administrator (three since 2000, four since
2002 and two since 2003).
Sheila R. James (37) Assistant Secretary since 2002 Employee, Neuberger Berman since 1999;
Employee, NB Management from 1991 to 1999;
Assistant Secretary, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(seven since 2002 and two since 2003).
Kevin Lyons (47) Assistant Secretary since 2003 Employee, Neuberger Berman since 1999;
Employee, NB Management from 1993 to 1999;
Assistant Secretary, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(since 2003).
</Table>
74
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
POSITION AND
NAME, AGE, AND ADDRESS (1) LENGTH OF TIME SERVED (2) PRINCIPAL OCCUPATION(S) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
John M. McGovern (33) Assistant Treasurer since 2002 Employee, NB Management since 1993;
Assistant Treasurer, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(seven since 2002 and two since 2003).
Barbara Muinos (44) Treasurer and Principal Financial and Vice President, Neuberger Berman since 1999;
Accounting Officer since 2002 Assistant Vice President, NB Management from
1993 to 1999; Treasurer and Principal
Financial and Accounting Officer, nine
registered investment companies for which NB
Management acts as investment manager and
administrator (seven since 2002 and two
since 2003); Assistant Treasurer, three
registered investment companies for which NB
Management acts as investment manager and
administrator from 1996 until 2002.
Frederic B. Soule (57) Vice President since 2000 Senior Vice President, Neuberger Berman
since 2003; Vice President, Neuberger Berman
from 1999 until 2003; Vice President, NB
Management from 1995 until 1999; Vice
President, nine registered investment
companies for which NB Management acts as
investment manager and administrator (three
since 2000, four since 2002 and two since
2003).
Trani Jo Wyman (33) Assistant Treasurer since 2002 Employee, NB Management since 1991;
Assistant Treasurer, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(seven since 2002 and two since 2003).
</Table>
- ----------------
(1) The business address of each listed person is 605 Third Avenue, New York,
New York 10158.
(2) Pursuant to the By-Laws of the Trust, each officer elected by the Trustees
shall hold office until his or her successor shall have been elected and
qualified or until his or her earlier death, inability to serve, or
resignation. Officers serve at the pleasure of the Trustees and may be
removed at any time with or without cause.
(3) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
75
<Page>
[NEUBERGER BERMAN 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.nb.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.
[RECYCLED SYMBOL] B0524 06/03
SEMI-ANNUAL REPORT [NEUBERGER BERMAN LOGO]
APRIL 30, 2003
NEUBERGER BERMAN
INCOME FUNDS(R)
TRUST CLASS SHARES INSTITUTIONAL CASH FUND
<Page>
CONTENTS
- --------
<Table>
THE FUND
CHAIRMAN'S LETTER 2
PORTFOLIO COMMENTARY/
PERFORMANCE HIGHLIGHTS 4
SCHEDULE OF INVESTMENTS 7
FINANCIAL STATEMENTS 10
FINANCIAL HIGHLIGHTS
PER SHARE DATA 16
DIRECTORY 18
TRUSTEES AND OFFICERS 19
</Table>
"Neuberger Berman" and the Neuberger Berman logo are service marks of Neuberger
Berman, LLC. "Neuberger Berman Management Inc." and the individual fund name in
this shareholder report are either service marks or registered service marks of
Neuberger Berman Management Inc. (C)2003 Neuberger Berman Management Inc. All
rights reserved.
1
<Page>
CHAIRMAN'S LETTER
- -----------------
[PHOTO OF PETER SUNDMAN]
DEAR FELLOW SHAREHOLDER,
Fixed-income investments have been in a dramatic bull market since early 2000,
and continued to produce strong results for the six-month period ended April 30,
2003. We are pleased to report that Neuberger Berman's Income Fund investors
have participated in this strength. During the period, we delivered to our
shareholders exactly what they expect from their fixed-income investments --
positive returns and capital preservation. Our Funds generally performed better
than their peers and benchmark averages.
During the period, the U.S. agency markets continued to be very strong as buyers
flocked to these high-quality issues, driving down their incremental yields over
U.S. Treasury securities. Our Limited Maturity Bond Fund portfolio managers
reduced their overall exposure to this sector of the market in April on the
belief that it had become overvalued. They reinvested the proceeds in
Treasuries, while awaiting the opportunity to return to the agency sector at
more attractive levels, or to commit the funds to another undervalued sector of
the market.
Although our municipal bond Funds produced good returns for the period, the
broader bond market was impacted by a number of issues. Budget weakness on the
federal, state, and local levels has left municipalities facing declining tax
revenues and budget deficits for the foreseeable future. Widespread fiscal
pressures, combined with general economic weakness, makes credit selection and
monitoring all the more essential. In this environment, we have stepped up our
intense focus on quality, seeking to invest only in what we perceive to be the
strongest municipal credits.
Our short-term money market Funds produced good returns during the reporting
period, as shareholders continued to seek the relative safety of this asset
class. Money markets have been in a protracted period of tight spreads and an
essentially flat yield curve. Consequently, the shorter end of the yield curve
could be vulnerable if the economy improves and interest rates begin to trend
upward. Our managers' strategy is to remain conservatively positioned in regard
to the average weighted maturity and duration of our
2
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
Funds in order to remain flexible in the event of further Reserve Board easings,
or even a rate hike if the economy begins to show dramatic improvement.
The high-yield bond sector rebounded strongly during the reporting period,
having been plagued in 2002 with numerous difficulties, foremost among them the
well-publicized corporate accounting scandals. In the current low interest rate
environment, investors were drawn to the historically wide yield spread
opportunities available in the high-yield marketplace, which drove high-yield
bond prices significantly higher and yields dramatically lower. Although the
recent rally in the high-yield sector has narrowed the spread relationship
between high-yield bonds and comparable Treasury securities to near historical
averages, we believe high-yield spreads remain at attractive levels.
Looking ahead to a market environment with short-term rates hovering at 40-year
lows, fixed-income management will remain challenging. However, we believe this
market plays to Neuberger Berman's strengths: Our fixed-income money managers
are experienced at finding compelling and significant values in all types of
market conditions. In the current climate, we believe that an experienced
fixed-income team can best take advantage of the opportunities that exist,
seeking both returns and safety for your investments.
Overall, we are pleased with the performance of our Income Funds. We have worked
diligently to provide our shareholders with competitive levels of income, while
keeping principal preservation a top priority. We take our commitment to protect
shareholders' capital very seriously, and as always, we will continue to invest
your funds with a disciplined investment strategy and rigorous fundamental
analysis.
Sincerely,
/s/ Peter Sundman
PETER SUNDMAN
CHAIRMAN OF THE BOARD
NEUBERGER BERMAN INCOME FUNDS
3
<Page>
INSTITUTIONAL CASH FUND PORTFOLIO COMMENTARY
- --------------------------------------------
The Institutional Cash Fund performed well during the six-month period ending
April 30, 2003. Our shareholders benefited from positive returns, capital
preservation, and a haven from the weakness that continued in the broader
financial markets. The Fund returned 0.55% during the period, outperforming the
Money Fund Report Taxable First Tier Institutional Average. The Fund closed the
period with a 0.92% seven-day current and effective yield.
Although interest rates continue to hover at extraordinarily low levels, we do
not believe in reaching for yield and a few extra basis points by speculating in
lower credit quality issues. Our goal is to be buyers of quality. Money markets
have been in a protracted period of tight spreads and an essentially flat yield
curve. Consequently, the shorter end of the yield curve could be vulnerable if
the economy improves and interest rates begin to trend upward.
During the reporting period we increased our holdings of commercial paper,
purchasing short-dated commercial paper where the best return advantage over
U.S. Treasury bills could be obtained. On the long end of the money market yield
curve, we continued to increase our exposure to U.S. Treasury securities,
favoring the risk/reward profile of the Treasury sector relative to agencies and
commercial paper.
We also carefully managed the portfolio's weighted average maturity to avoid
risks and enhance returns. Weighted average maturity fell from 60.0 days on
October 31, 2002, to 40.9 days on April 30, 2003. We believe the Fund's
conservative positioning helps us remain flexible so that we can take advantage
of any further Federal Reserve Board easings or a rate hike if the economy
begins to show dramatic improvement.
In today's challenging market environment, we are more committed than ever to
providing our investors with solid income while emphasizing capital
preservation. With interest rates hovering at 40-year lows, we believe that our
many years of investment experience and careful attention to
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
<Table>
<Caption>
NEUBERGER BERMAN INSTITUTIONAL INCEPTION DATE FOR THE 7 DAYS ENDED 4/30/03
CASH FUND(1),(3) CURRENT YIELD(2) EFFECTIVE YIELD(2)
Trust Class 05/08/2000 0.92% 0.92%
</Table>
The composition, industries and holdings of the fund are subject to change.
Investment return will fluctuate. Past performance is no guarantee of future
results.
4
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
detail will continue to reward institutions who have trusted us to protect their
principal and provide current income. The challenge going forward will be to
remain vigilant on credit quality, while seeking competitive returns.
Sincerely,
/s/ Ted Giuliano
/s/ Catherine Waterworth
TED GIULIANO AND CATHERINE WATERWORTH
PORTFOLIO CO-MANAGERS
/s/ Cynthia Damian
/s/ Alyssa Juros
CYNTHIA DAMIAN AND ALYSSA JUROS
PORTFOLIO ASSOCIATE MANAGERS
5
<Page>
ENDNOTES
- --------
(1) Neuberger Berman Management Inc. ("Management") has contractually
undertaken to reimburse the Fund so that total operating expenses exclusive
of taxes, interest, brokerage commissions and extraordinary expenses of the
Fund are limited to 0.41% of average daily net assets. This undertaking
lasts until October 31, 2006. The Fund has contractually undertaken to
reimburse Management for the excess expenses paid by Management, provided
the reimbursements do not cause operating expenses (exclusive of taxes,
interest, brokerage commissions, and extraordinary expenses) to exceed an
annual rate of 0.41%, and the reimbursements are made within three years
after the year that Management incurred the expense. If this reimbursement
was not made, performance would be lower.
(2) "Current yield" of a money market fund refers to the income generated by an
investment in the Fund over a recent 7-day period. This income is then
"annualized." The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because of the compounding effect of this assumed reinvestment.
Yields of a money market fund will fluctuate and past performance is no
guarantee of future results.
(3) An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. There
can be no assurance that a money market fund will be able to maintain a
stable net asset value of $1.00 per share. The return on an investment in
the Fund will fluctuate.
(4) The Money Fund Report Taxable First Tier Institutional Average measures the
performance of money market mutual funds which invest in anything
allowable, except Second Tier Commercial Paper. Investors cannot invest
directly in the Average.
6
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
SCHEDULE OF INVESTMENTS INSTITUTIONAL CASH FUND
- -----------------------------------------------
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
U.S. TREASURY SECURITIES-BACKED BY THE FULL
FAITH AND CREDIT OF THE U.S. GOVERNMENT (37.6%)
$130,000 U.S. Treasury Bills, 1.16% - 1.19%, due 5/22/03 TSY TSY $ 129,911
90,000 U.S. Treasury Bills, 1.17% & 1.18%, due 5/29/03 TSY TSY 89,918
50,000 U.S. Treasury Bills, 1.09%, due 6/5/03 TSY TSY 49,947
80,000 U.S. Treasury Bills, 1.10% & 1.14%, due 6/12/03 TSY TSY 79,896
80,000 U.S. Treasury Bills, 1.10%, due 6/19/03 TSY TSY 79,880
60,000 U.S. Treasury Bills, 1.23%, due 6/26/03 TSY TSY 59,886
100,000 U.S. Treasury Bills, 1.12%, due 7/3/03 TSY TSY 99,805
110,000 U.S. Treasury Bills, 1.13% & 1.15%, due 7/10/03 TSY TSY 109,756
160,000 U.S. Treasury Bills, 1.09% & 1.16%, due 7/17/03 TSY TSY 159,619
60,000 U.S. Treasury Bills, 1.17%, due 7/24/03 TSY TSY 59,836
50,000 U.S. Treasury Bills, 1.07%, due 8/7/03 TSY TSY 49,855
50,000 U.S. Treasury Bills, 1.14%, due 8/28/03 TSY TSY 49,813
50,000 U.S. Treasury Bills, 1.17%, due 9/4/03 TSY TSY 49,795
----------
TOTAL U.S. TREASURY SECURITIES-BACKED BY THE FULL
FAITH AND CREDIT OF THE U.S. GOVERNMENT 1,067,917
----------
U.S. GOVERNMENT AGENCY SECURITIES (35.8%)
15,000 Fannie Mae, Disc. Notes, 2.09%, due 5/2/03 AGY AGY 14,999
16,000 Fannie Mae, Disc. Notes, 1.22%, due 5/21/03 AGY AGY 15,989
30,000 Fannie Mae, Disc. Notes, 1.19%, due 9/3/03 AGY AGY 29,876
6,800 Federal Farm Credit Bank, Disc. Notes, 1.16%, due 5/8/03 AGY AGY 6,798
22,915 Federal Farm Credit Bank, Disc. Notes, 1.58%, due 6/16/03 AGY AGY 22,869
130,000 Federal Home Loan Bank,
Disc. Notes, 1.17% - 1.22%, due 5/2/03 AGY AGY 129,996
40,000 Federal Home Loan Bank, Disc. Notes, 1.18%, due 5/7/03 AGY AGY 39,992
25,000 Federal Home Loan Bank, Disc. Notes, 1.22%, due 5/9/03 AGY AGY 24,993
50,000 Federal Home Loan Bank, Disc. Notes, 1.18%, due 5/14/03 AGY AGY 49,979
140,810 Federal Home Loan Bank,
Disc. Notes, 1.18% - 1.30%, due 5/16/03 AGY AGY 140,739
20,000 Federal Home Loan Bank, Disc. Notes, 1.22%, due 5/23/03 AGY AGY 19,985
27,975 Federal Home Loan Bank, Disc. Notes, 1.14%, due 6/6/03 AGY AGY 27,943
67,000 Federal Home Loan Bank,
Disc. Notes, 1.16% & 1.18%, due 6/11/03 AGY AGY 66,911
26,409 Federal Home Loan Bank, Disc. Notes, 1.18%, due 6/27/03 AGY AGY 26,360
65,000 Federal Home Loan Bank,
Disc. Notes, 1.17% & 1.18%, due 7/23/03 AGY AGY 64,824
40,968 Freddie Mac, Disc. Notes, 1.22%, due 5/15/03 AGY AGY 40,949
29,933 Freddie Mac, Disc. Notes, 1.23%, due 5/22/03 AGY AGY 29,911
50,000 Freddie Mac, Disc. Notes, 1.22%, due 6/19/03 AGY AGY 49,917
60,000 Freddie Mac, Disc. Notes, 1.22%, due 6/30/03 AGY AGY 59,878
30,000 Freddie Mac, Disc. Notes, 1.19%, due 8/15/03 AGY AGY 29,895
40,000 Freddie Mac, Disc. Notes, 1.19%, due 9/30/03 AGY AGY 39,799
35,000 Sallie Mae, Disc. Notes, 1.17%, due 5/1/03 AGY AGY 35,000
50,000 Sallie Mae, Disc. Notes, 1.17%, due 5/7/03 AGY AGY 49,990
----------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES 1,017,592
----------
CERTIFICATES OF DEPOSIT (4.1%)
25,000 Barclays Bank PLC, Yankee CD, 1.21%, due 5/5/03 P-1 A -1+ 25,000
10,000 BNP Paribas, Yankee CD, 2.25%, due 6/18/03 P-1 A -1+ 10,000
30,000 Rabobank Nederland, Yankee CD, 1.23%, due 5/27/03 P-1 A -1+ 30,000
</Table>
See Notes to Schedule of Investments 7
<Page>
SCHEDULE OF INVESTMENTS INSTITUTIONAL CASH FUND CONT'D
- ------------------------------------------------------
<Table>
<Caption>
PRINCIPAL AMOUNT RATING VALUE++
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 23,000 Royal Bank of Scotland NY, Yankee CD, 1.20%, due 6/19/03 P-1 A -1+ $ 23,000
30,000 Wells Fargo Bank NA, Domestic CD, 1.24%, due 5/27/03 P-1 A -1+ 30,000
----------
TOTAL CERTIFICATES OF DEPOSIT 118,000
----------
CORPORATE DEBT SECURITIES (0.7%)
20,000 American Express Credit Corp., Floating Rate Medium-Term
Notes, Ser. B, 1.30%, due 5/7/03 P-1 A-1 20,000
----------
COMMERCIAL PAPER (15.5%)
28,000 Alcon Capital Corp., 1.20% & 1.23%, due 5/13/03 & 5/30/03 P-1 A -1+ 27,976
15,300 ANZ (Delaware), Inc., 1.23% & 1.24%, due 5/5/03 P-1 A -1+ 15,298
10,000 Aventis SA, 1.23% & 1.25%, due 5/6/03 & 6/4/03 P-1 A-1 9,993
25,000 Bank of America Corp., 1.26%, due 5/19/03 P-1 A-1 24,984
25,000 Barclays U.S. Funding Corp., 1.24%, due 7/1/03 P-1 A -1+ 24,947
20,000 BNP Paribas Finance, 1.21%, due 5/21/03 P-1 A -1+ 19,987
10,000 Eksportfinans ASA, 1.22%, due 5/6/03 P-1 A -1+ 9,998
34,350 Gannett Co., Inc., 1.23% - 1.25%, due 5/2/03 - 5/6/03 P-1 A-1 34,346
40,000 General Electric Capital Corp., 1.25%, due 5/16/03 & 5/20/03 P-1 A -1+ 39,976
22,000 Johnson & Johnson, 1.20%, due 5/20/03 P-1 A -1+ 21,986
20,500 Kimberly-Clark Corp., 1.20%, due 5/2/03 & 5/12/03 P-1 A -1+ 20,496
30,000 National Australia Funding (Delaware), Inc., 1.22%, due 5/5/03 P-1 A -1+ 29,996
23,100 Novartis Finance Corp., 1.22%, due 5/29/03 P-1 A -1+ 23,078
40,000 Pfizer, Inc., 1.20%, due 5/19/03 P-1 A -1+ 39,976
45,000 Societe Generale N.A., Inc., 1.21% - 1.25%, due 5/8/03 - 6/4/03 P-1 A -1+ 44,973
43,100 UBS Finance (Delaware), Inc., 1.25% & 1.36%,
due 5/1/03 & 5/7/03 P-1 A -1+ 43,097
10,000 Wal-Mart Stores, Inc., 1.21%, due 5/2/03 P-1 A -1+ 10,000
----------
TOTAL COMMERCIAL PAPER 441,107
----------
TIME DEPOSITS (1.1%)
30,000 Danske Bank A/S Copenhagen, 1.34%, due 5/1/03 P-1 A -1+ 30,000
----------
REPURCHASE AGREEMENTS (4.6%)
130,854 State Street Bank and Trust Co. Repurchase Agreement, 1.27%,
due 5/1/03, dated 4/30/03, Maturity Value $130,858,616,
Collateralized by $135,330,000 Fannie Mae, Discount Notes,
1.14%, due 8/29/03 (Collateral Value $134,788,680) 130,854
----------
TOTAL INVESTMENTS (99.4%) 2,825,470
Cash, receivables and other assets, less liabilities (0.6%) 17,445
----------
TOTAL NET ASSETS (100.0%) $2,842,915
----------
</Table>
8
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
NOTES TO SCHEDULE OF INVESTMENTS
- --------------------------------
++ Investment securities of the Fund are valued at amortized cost, which
approximates U.S. Federal income tax cost.
See Notes to Financial Statements 9
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------
<Table>
<Caption>
-------------
INSTITUTIONAL
NEUBERGER BERMAN INCOME FUNDS CASH
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) FUND
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE* (NOTE A)--SEE
SCHEDULE OF INVESTMENTS $2,825,470
Cash 1
- ---------------------------------------------------------------------------------------------
Interest receivable 295
- ---------------------------------------------------------------------------------------------
Receivable for Fund shares sold 24,207
- ---------------------------------------------------------------------------------------------
Prepaid expenses and other assets 27
=============================================================================================
TOTAL ASSETS 2,850,000
=============================================================================================
LIABILITIES
Dividends payable 1,867
- ---------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 4,519
- ---------------------------------------------------------------------------------------------
Payable to investment manager (Note B) 231
- ---------------------------------------------------------------------------------------------
Payable to administrator (Note B) 347
- ---------------------------------------------------------------------------------------------
Accrued expenses and other payables 121
=============================================================================================
TOTAL LIABILITIES 7,085
=============================================================================================
NET ASSETS AT VALUE $2,842,915
=============================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $2,842,912
- ---------------------------------------------------------------------------------------------
Accumulated net realized gains (losses) on investments 3
=============================================================================================
NET ASSETS AT VALUE $2,842,915
=============================================================================================
SHARES OUTSTANDING ($.001 PAR VALUE; UNLIMITED SHARES AUTHORIZED) 2,842,912
- ---------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $1.00
=============================================================================================
*COST OF INVESTMENTS $2,825,470
=============================================================================================
</Table>
See Notes to Financial Statements 10
<Page>
NEUBERGER BERMAN FOR THE SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
STATEMENT OF OPERATIONS
- -----------------------
<Table>
<Caption>
-------------
INSTITUTIONAL
NEUBERGER BERMAN INCOME FUNDS CASH
(000'S OMITTED) FUND
INVESTMENT INCOME
Interest income $20,633
=============================================================================================
EXPENSES:
Investment management fee (Note B) 1,480
- ---------------------------------------------------------------------------------------------
Administration fee (Note B) 2,220
- ---------------------------------------------------------------------------------------------
Shareholder servicing agent fees 5
- ---------------------------------------------------------------------------------------------
Auditing fees 15
- ---------------------------------------------------------------------------------------------
Custodian fees (Note B) 285
- ---------------------------------------------------------------------------------------------
Insurance expense 31
- ---------------------------------------------------------------------------------------------
Legal fees 11
- ---------------------------------------------------------------------------------------------
Registration and filing fees 116
- ---------------------------------------------------------------------------------------------
Shareholder reports 22
- ---------------------------------------------------------------------------------------------
Trustees' fees and expenses 20
- ---------------------------------------------------------------------------------------------
Miscellaneous 39
=============================================================================================
Total expenses 4,244
Expenses reduced by custodian fee
expense offset arrangement (Note B) --
==========================================================================================
Total net expenses 4,244
=============================================================================================
Net investment income (loss) 16,389
=============================================================================================
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold 4
=============================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $16,393
=============================================================================================
</Table>
See Notes to Financial Statements 11
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
<Table>
<Caption>
INSTITUTIONAL CASH FUND
-----------------------------------
SIX MONTHS YEAR
NEUBERGER BERMAN INCOME FUNDS ENDED ENDED
(000'S OMITTED) APRIL 30, OCTOBER 31,
2003 2002
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 16,389 $ 47,786
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 4 (1)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 16,393 47,785
======================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (16,389) (47,786)
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments -- (45)
======================================================================================================
Total distributions to shareholders (16,389) (47,831)
======================================================================================================
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold 6,013,718 14,366,543
- ------------------------------------------------------------------------------------------------------
Proceeds from reinvestment of dividends and distributions 2,317 24,324
- ------------------------------------------------------------------------------------------------------
Payments for shares redeemed (6,329,602) (13,359,481)
======================================================================================================
Net increase (decrease) from Fund share transactions (313,567) 1,031,386
======================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (313,563) 1,031,340
NET ASSETS:
Beginning of period 3,156,478 2,125,138
======================================================================================================
End of period $ 2,842,915 $ 3,156,478
======================================================================================================
NUMBER OF FUND SHARES:
Sold 6,013,718 14,366,543
- ------------------------------------------------------------------------------------------------------
Issued on reinvestment of dividends and distributions 2,317 24,324
- ------------------------------------------------------------------------------------------------------
Redeemed (6,329,602) (13,359,481)
======================================================================================================
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (313,567) 1,031,386
======================================================================================================
</Table>
See Notes to Financial Statements 12
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS
- ------------------------------------------
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1 GENERAL: Neuberger Berman Institutional Cash Fund (the "Fund") is a
separate operating series of Neuberger Berman Income Funds (the "Trust"), a
Delaware business trust organized pursuant to a Trust Instrument dated
December 23, 1992. The Trust is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended, and its shares are registered under the Securities Act of 1933, as
amended. The Fund offers Trust Class shares. The trustees of the Trust may
establish additional series or classes of shares without the approval of
shareholders.
The assets of the Fund belong only to the Fund, and the liabilities of the
Fund are borne solely by the Fund and no other series of the Trust.
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.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires Neuberger
Berman Management Inc. ("Management") to make estimates and assumptions at
the date of the financial statements. Actual results could differ from
those estimates.
2 PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Fund'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 are recorded
on the basis of identified cost.
4 FEDERAL INCOME TAXES: The Fund is treated as a separate entity for U.S.
Federal income tax purposes. It is the policy of the Fund to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of
investment company taxable income and net capital gains (after reduction
for any amounts available for U.S. Federal income tax 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.
5 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund earns income, net of
expenses, daily on its investments. 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. Income dividends and capital gain
distributions to shareholders are recorded on the ex-dividend date. To the
extent the Fund's net realized capital gains, if any, can be offset
13
<Page>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS CONT'D
- -------------------------------------------------
by capital loss carryforwards ($794 expiring in 2010, determined as of
October 31, 2002), 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 tax 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 in the components of net assets on the
Statement of Assets and Liabilities.
6 EXPENSE ALLOCATION: Expenses directly attributable to the Fund are charged
to the Fund. Expenses not directly attributable to a series of the Trust
are allocated, on the basis of relative net assets, except where a more
appropriate allocation of expenses to each series can otherwise be made
fairly.
7 REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable the Fund to
obtain those securities in the event of a default under the repurchase
agreement. The Fund monitors, on a daily basis, the value of the securities
transferred to ensure that their value, including accrued interest, is
greater than amounts owed to the Fund under each such repurchase agreement.
NOTE B--MANAGEMENT FEES, ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS,
AND OTHER TRANSACTIONS WITH AFFILIATES:
The Fund retains Management as its investment manager under a Management
Agreement. For such investment management services, the Fund pays
Management a fee at the annual rate of 0.10% of the Fund's average daily
net assets.
The Fund retains Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement the Trust Class of the
Fund pays Management an administration fee at the annual rate of 0.15% of
its average daily net assets.
Additionally, Management retains State Street Bank and Trust Company
("State Street") as its sub-administrator under a Sub-Administration
Agreement. Management pays State Street a fee for all services received
under the agreement.
Management has contractually undertaken through October 31, 2006 to
reimburse the Trust Class of the Fund for its operating expenses (including
the fees payable to Management but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) ("Operating Expenses") which
exceed, in the aggregate, 0.41% per annum of its average daily net assets
(the "Expense Limitation"). For the six months ended April 30, 2003, no
reimbursement was required.
14
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
The Trust Class of the Fund has agreed to repay Management for its excess
Operating Expenses previously reimbursed by Management, so long as its
annual Operating Expenses during that period do not exceed its Expense
Limitation, and the repayment is made within three years after the year in
which Management issued the reimbursement. During the six months ended
April 30, 2003, there was no reimbursement to Management. At April 30,
2003, there was no contingent liability to Management under the agreement.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The
New York Stock Exchange and sub-adviser to the Fund, 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 Fund. 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 Trust Class of the
Fund.
The Fund 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 $2.
NOTE C--SECURITIES TRANSACTIONS:
All securities transactions for the Fund were short-term.
NOTE D--LINE OF CREDIT:
At April 30, 2003, the Fund was a participant in a single committed,
unsecured $200,000,000 line of credit with State Street, to be used only
for temporary or emergency purposes. Interest is charged on borrowings
under this agreement at the overnight Federal Funds Rate plus 0.50% per
annum. A facility fee of 0.10% per annum of the available line of credit is
charged, of which the Fund has agreed to pay its pro rata share, based on
the ratio of its individual net assets to the net assets of all
participants at the time the fee is due and payable. The fee is paid
quarterly in arrears. No compensating balance is required. Other investment
companies managed by Management also participate in this line of credit on
the same terms. Because several investment companies participate, there is
no assurance that an individual Fund will have access to the entire
$200,000,000 at any particular time. The Fund had no loans outstanding
pursuant to this line of credit at April 30, 2003. During the six months
ended April 30, 2003, the Fund did not utilize this line of credit.
NOTE E--UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of the Fund without audit by independent auditors. Annual reports
contain audited financial statements.
15
<Page>
FINANCIAL HIGHLIGHTS INSTITUTIONAL CASH FUND+
- ---------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements.
<Table>
<Caption>
PERIOD FROM
SIX MONTHS ENDED MAY 8, 2000^
APRIL 30, YEAR ENDED OCTOBER 31, TO OCTOBER 31,
---------------- ------------------------- ----------------
2003 2002 2001 2000
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000 $1.0000
-------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .0055 .0176 .0466 .0307
-------- -------- -------- -------
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.0055) (.0176) (.0466) (.0307)
FROM NET CAPITAL GAINS -- (.0000) -- --
-------- -------- -------- -------
TOTAL DISTRIBUTIONS (.0055) (.0176) (.0466) (.0307)
-------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000 $1.0000
-------- -------- -------- -------
TOTAL RETURN++ +0.55%** +1.77% +4.76% +3.11%**
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $2,842.9 $3,156.5 $2,125.1 $ 635.4
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .29%* .28% .29% .36%*
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS .29%* .28% .29% .35%*
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE
NET ASSETS 1.11%* 1.74% 4.52% 6.45%*
</Table>
See Notes to Financial Highlights 16
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
NOTES TO FINANCIAL HIGHLIGHTS
- -----------------------------
+ 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 through February 9, 2001 under the prior master-feeder
fund structure.
++ 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 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.
# The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
^ The date investment operations commenced.
* Annualized.
** Not annualized.
17
<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
18
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
TRUSTEES AND OFFICERS (UNAUDITED)
- ---------------------------------
The following tables set forth information concerning the trustees and officers
of the Trust. All persons named as trustees and officers also serve in similar
capacities for other funds administered or managed by NB Management and
Neuberger Berman. The Statement of Additional Information includes additional
information about fund trustees and is available upon request, without charge,
by calling (800) 877-9700.
INFORMATION ABOUT THE BOARD OF TRUSTEES
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS(1) SERVED(2) PRINCIPAL OCCUPATION(S)(3) TRUSTEE FUND COMPLEX BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
John Cannon (73) Trustee since Consultant. Formerly, Chairman 35 Independent Trustee or
1994 and Chief Investment Officer, Director of three series of
CDC Capital Management Oppenheimer Funds: Limited
(registered investment adviser) Term New York Municipal
(1993-January 1999); prior Fund, Rochester Fund
thereto, President and Chief Municipals, and Oppenheimer
Executive Officer, AMA Convertible Securities Fund
Investment Advisors, an since 1992.
affiliate of the American
Medical Association.
- -----------------------------------------------------------------------------------------------------------------------------------
Faith Colish (67) Trustee since Counsel, Carter Ledyard & 35 Director, American Bar
2000 Milburn LLP (law firm) since Retirement Association
October 2002; Formerly, (ABRA) since 1997
Attorney at Law and President, (not-for-profit membership
Faith Colish, A Professional association).
Corporation, 1980 to 2002.
- -----------------------------------------------------------------------------------------------------------------------------------
Walter G. Ehlers (70) Trustee since Consultant; Retired President 35
2000 and Trustee, Teachers
Insurance & Annuity (TIAA) and
College Retirement Equities
Fund (CREF).
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
19
<Page>
TRUSTEES AND OFFICERS (UNAUDITED) CONT'D
- ----------------------------------------
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS(1) SERVED(2) PRINCIPAL OCCUPATION(S)(3) TRUSTEE FUND COMPLEX BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
C. Anne Harvey (65) Trustee since Consultant, C.A. Harvey 35 Member, Individual
2000 Associates since June 2001; Investors Advisory
Director, AARP, 1978 to Committee to the New York
December 2000. Stock Exchange Board of
Directors, 1998 to
June 2002; President, Board
of Associates to The
National Rehabilitation
Hospital's Board of
Directors since 2002;
Member, American Savings
Education Council's Policy
Board (ASEC), 1998-2000;
Member, Executive
Committee, Crime Prevention
Coalition of America,
1997-2000.
- -----------------------------------------------------------------------------------------------------------------------------------
Barry Hirsch (70) Trustee since Attorney at Law. Senior Counsel, 35
1993 Loews Corporation (diversified
financial corporation) May 2002
until April 2003; prior thereto,
Senior Vice President, Secretary
and General Counsel, Loews
Corporation.
- -----------------------------------------------------------------------------------------------------------------------------------
Robert A. Kavesh (75) Trustee since Professor of Finance and 35 Director, Delaware Labs
1993 Economics, Stern School of (cosmetics) since 1978.
Business, New York University.
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
20
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS(1) SERVED(2) PRINCIPAL OCCUPATION(S)(3) TRUSTEE FUND COMPLEX BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
Howard A. Mileaf (66) Trustee since Retired. Formerly, Vice 35 Director, WHX Corporation
2000 President and Special (holding company) since
Counsel, WHX Corporation August 2002; Director,
(holding company) 1993 - Webfinancial Corporation
2001. (holding company) since
December 2002; Director,
State Theatre of New
Jersey (not-for-profit
theater) since 2000;
Formerly, Director, Kevlin
Corporation (manufacturer
of microwave and other
products).
- -----------------------------------------------------------------------------------------------------------------------------------
John P. Rosenthal (70) Trustee since Senior Vice President, 35 Director, 92nd Street Y
2000 Burnham Securities Inc. (a (non-profit) since 1967;
registered broker-dealer) Formerly, Director, Cancer
since 1991. Treatment Holdings, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
William E. Rulon (70) Trustee since Retired. Senior Vice 35 Director, Pro-Kids Golf
1993 President, Foodmaker. Inc. and Learning Academy
(operator and franchiser (teach golf and computer
restaurants) until usage to "at risk"
January 1997. children) since 1998;
Director, Prandium, Inc.
(restaurants) from
March 2001 until July 2002.
- -----------------------------------------------------------------------------------------------------------------------------------
Cornelius T. Ryan (71) Trustee since Founding General Partner, 35 Director, Capital Cash
2000 Oxford Partners and Oxford Management Trust (money
Bioscience Partners market fund), Narragansett
venture (capital Insured Tax-Free Income
partnerships) and Fund, Rocky Mountain
President, Oxford Venture Equity Fund, Prime Cash
Corporation. Fund, several private
companies and QuadraMed
Corporation (NASDAQ).
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
21
<Page>
TRUSTEES AND OFFICERS (UNAUDITED) CONT'D
- ----------------------------------------
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS(1) SERVED(2) PRINCIPAL OCCUPATION(S)(3) TRUSTEE FUND COMPLEX BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
Tom Decker Seip (53) Trustee since General Partner, Seip Investments 35 Director, H&R Block, Inc.
2000 LP (a private investment (financial services company)
partnership); President and CEO, since May 2001; Director,
Westaff, Inc. (temporary General Magic (voice
staffing), May 2001 to recognition software) since
January 2002; Senior Executive at November 2001; Director,
the Charles Schwab Corporation Forward Management, Inc.
from 1983 to 1999; including (asset management) since 2001;
Chief Executive Officer, Charles Director, E-Finance
Schwab Investment Management, Corporation (credit
Inc. and Trustee, Schwab Family decisioning services) since
of Funds and Schwab Investments 1999; Director, Save-Daily.com
from 1997 to 1998 and Executive (micro investing services)
Vice President-Retail Brokerage, since 1999; Formerly,
Charles Schwab Investment Director, Offroad Capital Inc.
Management from 1994 to 1997. (pre-public internet commerce
company).
- -----------------------------------------------------------------------------------------------------------------------------------
Candace L. Straight (55) Trustee since Private investor and consultant 35 Director, Providence
1993 specializing in the insurance Washington (property and
industry; Advisory Director, casualty insurance company)
Securitas Capital LLC (a global since December 1998; Director,
private equity investment firm Summit Global Partners
dedicated to making investments (insurance brokerage firm)
in the insurance sector). since October 2000.
- -----------------------------------------------------------------------------------------------------------------------------------
Peter P. Trapp (58) Trustee since Regional Manager for Atlanta 35
2000 Region, Ford Motor Credit Company
since August 1997; prior thereto,
President, Ford Life Insurance
Company, April 1995 until
August 1997.
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
22
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
POSITION AND FUND COMPLEX
LENGTH OF TIME OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
NAME, AGE, AND ADDRESS(1) SERVED(2) PRINCIPAL OCCUPATION(S)(3) TRUSTEE FUND COMPLEX BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
TRUSTEES WHO ARE "INTERESTED PERSONS"
- -----------------------------------------------------------------------------------------------------------------------------------
Edward I. O'Brien* (74) Trustee since Member, Investment Policy 35 Director, Legg Mason, Inc.
2000 Committee, Edward Jones, (financial services holding
1993-2001; President, company) since 1993; Director,
Securities Industry Boston Financial Group (real
Association ("SIA") estate and tax shelters)
(securities industry's 1993-1999.
representative in government
relations and regulatory
matters at the federal and
state levels) from 1974-1992;
Adviser to SIA,
November 1992-November 1993.
- -----------------------------------------------------------------------------------------------------------------------------------
Jack L. Rivkin* (62) President and Executive Vice President and 35 Director, Dale Carnegie and
Trustee since Chief Investment Officer, Associates, Inc. (private
December 2002 Neuberger Berman since 2002 company) since 1998; Director,
and 2003, respectively; Emagin Corp. (public company)
Director and Chairman, NB since 1997; Director, Solbright,
Management since December Inc. (private company) since
2002; Executive Vice 1998; Director, Infogate, Inc.
President, Citigroup (private company) since 1997.
Investments, Inc. from
September 1995 to February
2002; Executive Vice
President, Citigroup Inc. from
September 1995 to February
2002.
- -----------------------------------------------------------------------------------------------------------------------------------
Peter E. Sundman* (44) Chairman of Executive Vice President, 35 Executive Vice President,
the Board, Neuberger Berman Inc. Neuberger Berman Inc. (holding
Chief Executive since 1999; Principal, company) since 1999; Director,
Officer and Neuberger Berman from 1997 Neuberger Berman Inc. from
Trustee since until 1999; Senior Vice 1999 through March 2003;
2000 President President, NB Management from President and Director, NB
and Chief 1996 until 1999. Management since 1999;
Executive Director and Vice President,
Officer from Neuberger & Berman Agency,
1999 to 2000 Inc. since 2000.
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The business address of each listed person is 605 Third Avenue, New York,
New York 10158.
(2) Pursuant to the Trust's Trust Instrument, each Trustee shall hold office
for life or until his or her successor is elected or the Trust terminates;
except that (a) any Trustee may resign by delivering a written resignation;
(b) any Trustee may be removed with or without cause at any time by a
written instrument signed by at least two-thirds of the other Trustees; (c)
any Trustee who requests to be retired, or who has become unable to serve,
may be retired by a written instrument signed by a majority of the other
Trustees; and (d) any Trustee may be removed at any shareholder meeting by
a vote of at least two-thirds of the outstanding shares.
(3) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a Trustee who is an "interested person" within the meaning of the
1940 Act. Mr. Sundman and Mr. Rivkin are interested persons of the Trust by
virtue of the fact that they are officers and/or directors of NB Management
and Executive Vice Presidents of Neuberger Berman. Mr. O'Brien is an
interested person of the Trust by virtue of the fact that he is a director
of Legg Mason, Inc., a wholly owned subsidiary of which, from time to time,
serves as a broker or dealer to the Fund and other funds for which NB
Management serves as investment manager.
23
<Page>
TRUSTEES AND OFFICERS (UNAUDITED) CONT'D
- ----------------------------------------
INFORMATION ABOUT THE OFFICERS OF THE TRUST
<Table>
<Caption>
POSITION AND
NAME, AGE, AND ADDRESS(1) LENGTH OF TIME SERVED(2) PRINCIPAL OCCUPATION(S)(3)
- -----------------------------------------------------------------------------------------------------------------------------
Claudia A. Brandon (46) Secretary since 1985 Vice President-Mutual Fund Board Relations, NB
Management since 2000; Vice President,
Neuberger Berman since 2002 and employee since
1999; Vice President, NB Management from 1986
to 1999; Secretary, nine registered investment
companies for which NB Management acts as
investment manager and administrator (four
since 2002 and two since 2003).
Robert Conti (46) Vice President since 2000 Senior Vice President, Neuberger Berman since
2003; Vice President, Neuberger Berman from
1999 until 2003; Senior Vice President, NB
Management since 2000; Controller, NB
Management until 1996; Treasurer, NB Management
from 1996 until 1999; Vice President, nine
registered investment companies for which NB
Management acts as investment manager and
administrator (three since 2000, four since
2002 and two since 2003).
Brian J. Gaffney (49) Vice President since 2000 Managing Director, Neuberger Berman since 1999;
Senior Vice President, NB Management since
2000; Vice President, NB Management from 1997
until 1999; Vice President, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(three since 2000, four since 2002 and two
since 2003).
Sheila R. James (37) Assistant Secretary since 2002 Employee, Neuberger Berman since 1999;
Employee, NB Management from 1991 to 1999;
Assistant Secretary, nine registered investment
companies for which NB Management acts as
investment manager and administrator (seven
since 2002 and two since 2003).
Kevin Lyons (47) Assistant Secretary since 2003 Employee, Neuberger Berman since 1999;
Employee, NB Management from 1993 to 1999;
Assistant Secretary, nine registered investment
companies for which NB Management acts as
investment manager and administrator (since
2003).
</Table>
24
<Page>
NEUBERGER BERMAN APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
POSITION AND
NAME, AGE, AND ADDRESS(1) LENGTH OF TIME SERVED(2) PRINCIPAL OCCUPATION(S)(3)
- -----------------------------------------------------------------------------------------------------------------------------
John M. McGovern (33) Assistant Treasurer since 2002 Employee, NB Management since 1993; Assistant
Treasurer, nine registered investment companies
for which NB Management acts as investment
manager and administrator (seven since 2002 and
two since 2003).
Barbara Muinos (44) Treasurer and Principal Financial Vice President, Neuberger Berman since 1999;
and Accounting Officer since 2002 Assistant Vice President, NB Management from
1993 to 1999; Treasurer and Principal Financial
and Accounting Officer, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(seven since 2002 and two since 2003); Assistant
Treasurer, three registered investment companies
for which NB Management acts as investment
manager and administrator from 1996 until 2002.
Frederic B. Soule (57) Vice President since 2000 Senior Vice President, Neuberger Berman since
2003; Vice President, Neuberger Berman from 1999
until 2003; Vice President, NB Management from
1995 until 1999; Vice President, nine registered
investment companies for which NB Management
acts as investment manager and administrator
(three since 2000, four since 2002 and two since
2003).
Trani Jo Wyman (33) Assistant Treasurer since 2002 Employee, NB Management since 1991; Assistant
Treasurer, nine registered investment companies
for which NB Management acts as investment
manager and administrator (seven since 2002 and
two since 2003).
</Table>
- ----------
(1) The business address of each listed person is 605 Third Avenue, New York,
New York 10158.
(2) Pursuant to the By-Laws of the Trust, each officer elected by the Trustees
shall hold office until his or her successor shall have been elected and
qualified or until his or her earlier death, inability to serve, or
resignation. Officers serve at the pleasure of the Trustees and may be
removed at any time with or without cause.
(3) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
25
<Page>
[NEUBERGER BERMAN LOGO]
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
Statistics and projections in this 800.366.6264
report are derived from sources deemed www.nb.com
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. [RECYCLED SYMBOL] B0586 06/03
ITEM 2. CODE OF ETHICS
Form N-CSR disclosure requirement not yet effective with respect to registrant.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Form N-CSR disclosure requirement not yet effective with respect to registrant.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Form N-CSR disclosure requirement not yet effective with respect to registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to the registrant.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on an evaluation of the disclosure controls and procedures (as
defined in rule 30a-2(c) under the Act), the Principal Executive Officer
and Treasurer of the Company have concluded that such disclosure controls
and procedures are effectively designed to ensure that information
required to be disclosed by the Company is accumulated and communicated to
the Company's management to allow timely decisions regarding required
disclosure.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent
to the date of their evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS
(a) Form N-CSR disclosure requirement not yet effective with respect to
registrant.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached hereto. The certification provided pursuant to Section
906 of the Sarbanes-Oxley Act are not deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 ("Exchange Act"), or
otherwise subject to the liability of that section. Such certifications
will not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act, except to the extent that
the registrant specifically incorporates them by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Neuberger Berman Income Funds
By: /s/ Peter E. Sundman
--------------------------------
Peter E. Sundman
Chief Executive Officer
Date: July 7, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Barbara Muinos
--------------------------------
Barbara Muinos
Treasurer
Date: July 7, 2003