[NEUBERGER BERMAN LOGO]
ANNUAL REPORT
OCTOBER 31, 2002
NEUBERGER BERMAN
INTERMEDIATE
MUNICIPAL
CLOSED-END FUNDS
CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC.
INTERMEDIATE MUNICIPAL FUND INC.
NEW YORK INTERMEDIATE MUNICIPAL FUND INC.
CONTENTS
THE FUNDS
CHAIRMAN'S LETTER 2
PORTFOLIO COMMENTARIES 4
SCHEDULE OF INVESTMENTS
California Intermediate Municipal Fund Inc. 7
Intermediate Municipal Fund Inc. 10
New York Intermediate Municipal Fund Inc. 14
FINANCIAL STATEMENTS 17
FINANCIAL HIGHLIGHTS (ALL CLASSES)
PER SHARE DATA
California Intermediate Municipal Fund Inc. 24
Intermediate Municipal Fund Inc. 25
New York Intermediate Municipal Fund Inc. 26
REPORT OF INDEPENDENT AUDITORS 28
DIVIDEND REINVESTMENT PLAN 29
DIRECTORY 31
DIRECTORS AND OFFICERS 32
"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)2002 Neuberger Berman Management Inc. All
rights reserved.
1
CHAIRMAN'S LETTER
[PHOTO]
Dear Fellow Shareholder,
Welcome to the Neuberger Berman Intermediate Municipal Closed-End Funds, which
opened on September 24, 2002. We are honored that you have entrusted us with
your hard-earned assets, and I can assure you that we will strive to achieve the
highest tax-protected yield consistent with controlling risk. The Funds are off
to a good start, completing their first month of operation with strong
performance across the board.
Each Fund's investment objective is to provide current income exempt from
regular Federal income tax and, for each state-specific Fund, current income
exempt from that state's income taxes.
We choose to invest in intermediate-term municipal bonds (maturities between
three and eight years) because our experience and research indicate strongly
that this maturity range has offered the best risk/reward profile on the yield
curve, providing much of the return of longer-term bonds--with less volatility
and risk.
At this point in the economic cycle, our portfolio managers believe the
municipal market offers excellent relative value. As investors have sought
safety from the recent stock market declines, they have opted largely for U.S.
Treasury bonds, overlooking the intrinsic value and potential of high-quality
municipal securities.
This is a time of flux in the municipal markets. On the one hand, many state and
local governments now face declining tax revenues and budget deficits, which
could lead to credit downgrades. On the other hand, the Federal Reserve has been
providing major stimulus to the national economy in the form of interest rate
cuts. Our managers expect municipal markets overall to remain strong even as
equity markets recover, and they see value in many sectors that may benefit from
overall economic improvement. In this environment, we believe that our aversion
to excessive risk and our strict bottom-up credit evaluation process will
provide a substantial advantage.
2
NEUBERGER BERMAN OCTOBER 31, 2002
We hope that the Intermediate Municipal Funds will become a core holding of your
portfolio. We believe our conservative investing philosophy and disciplined
investment process will benefit you with superior tax-protected income and
principal preservation, in both the near and long term.
Thank you for your trust in Neuberger Berman. We will work diligently to keep
earning it.
Sincerely,
/s/ Peter Sundman
PETER SUNDMAN
CHAIRMAN OF THE BOARD
NEUBERGER BERMAN INTERMEDIATE
MUNICIPAL CLOSED-END FUNDS
3
INTERMEDIATE MUNICIPAL CLOSED-END FUNDS Portfolio Commentaries
We are pleased to present our first report to shareholders of the Neuberger
Berman Intermediate Municipal Fund Inc., the California Intermediate Municipal
Fund Inc., and the New York Intermediate Municipal Fund Inc. Although it is a
short reporting period, each Fund's performance is off to a very good start.
We believe the Funds were created at an especially opportune moment in the
municipal markets. While the bond market appears to anticipate an end to the
Federal Reserve's long easing cycle, meaning that interest rates could rise and
bond prices could drop, we view this period of market fluctuation and
uncertainty as a moment of opportunity. Even if the stock market recovers, we
believe that many investors, having discovered the risks of stocks, will remain
heavily invested in the municipal bond market. We see value in many sectors and
hope to reap benefits from the potential for rising rates and an improving
economy. In this environment, we believe that our strict bottom-up credit
evaluation process will provide a substantial advantage for the Funds.
Even as the bond market anticipates an end to the Federal Reserve's easing
cycle, we note that the federal budget has swung dramatically to a deficit and
many states and local governments face declining tax revenues and budget
deficits. Therefore, we have assumed an especially vigilant posture on credit
quality. We are seeking to purchase only those high-quality, stable credits that
we believe will withstand an economic downturn, even where that might mean
sacrificing incremental yield.
We believe that a well-managed portfolio of municipal bonds can provide
well-diversified investors with a solid cornerstone for their portfolios. We
believe that our conservative approach to providing tax-protected income, safety
and principal preservation will be gratifying for investors in the near and long
term. We are optimistic about the prospects for the Funds.
INTERMEDIATE MUNICIPAL FUND INC.
The Intermediate Municipal Fund Inc. opened on September 24, 2002, and in the
remaining weeks of fiscal 2002 (ending October 31, 2002) performed very well.
The Fund outperformed the Lipper Closed End General Leveraged Municipal Debt
Fund Average, although the Fund had not yet used leverage.
On October 31, 2002, the portfolio was comprised 52.6% of revenue bonds, 19.7%
of general obligations and 27.7% of cash and equivalents. The Fund's average
yield to maturity was 4.6% and the duration was 5.4 years. When the Fund is
fully invested, we currently expect to meet the projected average duration of 7
years.
Although the Fund is not yet fully invested, sectors currently of interest
include health care and transportation.
CUMULATIVE TOTAL RETURN (Life of Fund as of October 31, 2002)
INTERMEDIATE CALIFORNIA INTERMEDIATE NEW YORK INTERMEDIATE
MUNICIPAL FUND MUNICIPAL FUND MUNICIPAL FUND
AMEX TICKER SYMBOL NBH AMEX TICKER SYMBOL NBW AMEX TICKER SYMBOL NBO
NAV (0.17%) (0.10%) (0.03%)
MARKET PRICE 0.00% 0.00% 0.00%
INCEPTION DATE 09/24/2002 09/24/2002 09/24/2002
4
CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC.
The California Intermediate Municipal Fund Inc. opened on September 24, 2002,
and in the remaining weeks of fiscal 2002 (ending October 31, 2002) performed
very well. The Fund outperformed the Lipper Closed End California Municipal Debt
Fund Index and the Lipper Closed End California Municipal Debt Fund Average.
On October 31, 2002, the portfolio was comprised 51% of revenue bonds, 4.2% of
general obligations and 44.8% of cash and equivalents. The Fund's average yield
to maturity was 4.2% at the close of the period and duration was 5.2 years. When
the Fund is fully invested, we currently expect to meet the projected average
duration of 7 years.
Although the Fund is not yet fully invested, sectors currently of interest
include solid waste management, health care and transportation.
NEW YORK INTERMEDIATE MUNICIPAL FUND INC.
The New York Intermediate Municipal Fund Inc. opened on September 24, 2002, and
in the remaining weeks of fiscal 2002 (ending October 31, 2002) performed very
well. The Fund outperformed the Lipper Closed End New York Municipal Debt Fund
Average.
On October 31, 2002, the portfolio was comprised 70.7% of revenue bonds, 5% of
general obligations and 24.3% of cash and equivalents. The Fund's average yield
to maturity averaged 4.5% at the close of the period and duration was 5.9 years.
When the Fund is fully invested, we currently expect to meet the projected
average duration of 7 years.
Although the Fund is not yet fully invested, sectors of interest include
dormitory, energy and mortgage issues, as well as health care and
transportation.
Sincerely,
/s/ Ted Giuliano
/s/ Thomas Brophy
/s/ Lori Canell
TED GIULIANO, THOMAS BROPHY AND
LORI CANELL
PORTFOLIO CO-MANAGERS
Closed-end funds, unlike open-end funds are not continually offered. There is a
one-time public offering and once issued, shares of closed-end funds are sold in
the open market through a stock exchange.
5
GLOSSARY OF INDICES
NEW YORK MUNICIPAL DEBT FUND AVERAGE: An equally weighted average of those closed-end funds that limit
their assets to those securities that are exempt from taxation
in New York (double tax-exempt) or a city in New York (triple
tax-exempt).
CALIFORNIA MUNICIPAL DEBT FUND INDEX: An equally weighted index, adjusted for income dividends and
capital gains distributions, of typically the largest 30
closed-end funds that invest at least 65% of assets in municipal
debt issues that are exempt from taxation in California.
CALIFORNIA MUNICIPAL DEBT FUND AVERAGE: An equally weighted average of those closed-end funds that
invest at least 65% of assets in municipal debt issues that are
exempt from taxation in California.
GENERAL LEVERAGED MUNICIPAL DEBT FUND INDEX: An equally weighted index, adjusted for income dividends and
capital gains distributions, of typically the largest 30
closed-end funds that invest 65% or more of their assets in
municipal debt issues rated in the top four credit ratings.
These funds can be leveraged via use of debt, preferred equity,
and/or reverse repurchase agreements.
GENERAL LEVERAGED MUNICIPAL DEBT FUND AVERAGE: An equally weighted average of those closed-end funds that
invest 65% or more of their assets in municipal debt issues
rated in the top four credit ratings. These funds can be
leveraged via use of debt, preferred equity, and/or reverse
repurchase agreements.
6
SCHEDULE OF INVESTMENTS California Intermediate Municipal Fund Inc.
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
TAX-EXEMPT SECURITIES--BACKED BY INSURANCE (30.1%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
$ 1,285 Bay Area (CA) Governments Assoc. Bart SFO Extension Rev.
(Arpt. Premium Fare), Ser. 2002 A, 5.00%, due 8/1/21 AAA $ 1,311
1,445 Oceanside (CA) Cert. of Participation Ref. Rev., Ser. 2003 A,
5.25%, due 4/1/14 AAA 1,565*
500 Salinas Valley (CA) Solid Waste Au. Rev., Ser. 2002, 5.00%,
due 8/1/06 AAA 538
2,000 San Francisco (CA) St. Bldg. Au. Lease Rev. (San Francisco
Civic Ctr. Complex), Ser. 1996 A, 5.25%, due 12/1/16 AAA 2,171
2,500 San Jose (CA) Fin. Au. Lease Rev. (Civic Ctr. Proj.), Ser. 2002 B,
5.25%, due 6/1/17 AAA 2,689*
FINANCIAL GUARANTY INSURANCE CO.
2,655 California Wtr. & Swr. Cert. of Participation Eastern Muni. Wtr.
Dist. Rev., Ser. 2001 A, 5.00%, due 7/1/19 Aaa AAA 2,736
1,045 Oakland (CA) G.O., Ser. 2002 A, 5.00%, due 1/15/15 AAA 1,116*
2,000 San Diego (CA) Unified Sch. Dist. G.O. (Election of 1998),
Ser. 2002 D, 5.25%, due 7/1/21 Aaa AAA 2,103
FINANCIAL SECURITY ASSURANCE INC.
2,000 California St. Dept. Wtr. Res. Wtr. Rev., Ser. 2001 W, 5.50%,
due 12/1/13 AAA 2,301
3,000 California St. Pub. Works Board Lease Rev. (UCLA Replacement
Hosp.), Ser. 2002 A, 5.38%, due 10/1/13 AAA 3,379
500 Dixie (CA) Elementary Sch. Dist. Unlimited G.O., Ser. 2002,
5.38%, due 8/1/17 AAA 539
1,620 Fremont Union (CA) High Sch. Dist. Rev. (Santa Clara Co.,
Election of 1998), Ser. 2002 C, 5.00%, due 9/1/20 Aaa AAA 1,664
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
2,000 Pasadena (CA) Elec. Rev., Ser. 2002, 5.00%, due 6/1/17 Aaa AAA 2,104
2,260 San Diego (CA) Pub. Fac. Fin. Au. Wtr. Rev., Ser. 2002,
5.00%, due 8/1/18 Aaa AAA 2,359
750 Saratoga Union (CA) Sch. Dist. (Santa Clara Co.) Ref. G.O.,
Ser. 1999, 5.13%, due 9/1/11 AAA 837
1,000 Univ. of California Regents Rev. (Multi. Purp. Proj.), Ser. 2000 K,
5.00%, due 9/1/12 AAA 1,077
----------
28,489
----------
TAX-EXEMPT SECURITIES--OTHER (25.6%)
780 Abag (CA) Fin. Au. For Nonprofit Corps. Rev. Cert. of Participation
(Channing House), Ser. 1999, 4.90%, due 2/15/09 BBB+ 797
1,000 California Co. (CA) Tobacco Securitization Agcy. Tobacco
Settlement Asset-Backed Rev., Ser. 2002, 4.75%, due 6/1/19 A1 A+ 957
1,750 California Ed. Fac. Au. Ref. Rev. (Stanford Univ.), Ser. 2001 R,
5.00%, due 11/1/21 Aaa AAA 1,788
2,000 California Hlth. Fac. Fin. Au. Rev. (Cedars-Sinai Med. Ctr.),
Ser. 1999 A, 6.13%, due 12/1/19 A3 2,145
2,500 California Poll. Ctrl. Fin. Au. Solid Waste Disp. Rev. (Waste
Management, Inc. Proj.), Ser. 2002 B, 4.45%, due 7/1/27 BBB 2,527
3,000 California St. G.O., Ser. 2002, 5.00%, due 10/1/17 A1 A+ 3,095
1,000 California St. Univ., Fresno Assoc., Inc. Auxiliary Organization
Event Ctr. Sr. Rev., Ser. 2002, 5.00%, due 7/1/12 Baa3 BBB- 1,037**
1,000 California Statewide CDA Cert. of Participation (The Internext
Group), Ser. 1999, 5.38%, due 4/1/17 BBB 1,004
See Notes to Schedule of Investments
7
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 3,000 California Statewide CDA Rev. (Kaiser Permanente),
Ser. 2002 E, 4.70%, due 11/1/36 A3 $ 3,113
1,020 Cerritos (CA) Pub. Fin. Au. Subordinate Tax Allocation Rev.
(Cerritos Redevelopment Proj.), Ser. 2002 B, 4.40%, due 11/1/16 BBB 970
1,210 Elk Grove (CA) Spec. Tax Rev. (East Franklin Comm. Number 1),
Ser. 2002 A, 5.38%, due 8/1/17 1,186
3,000 Puerto Rico Children's Trust Tobacco Settlement Asset-Backed
Rev., Ser. 2002, 5.38%, due 5/15/33 A1 A 2,885
1,000 South Gate (CA) Pub. Fin. Au. Tax Allocation Rev. (South Gate
Redevelopment Proj. No. 1), Ser. 2002, 5.00%, due 9/1/16 AAA 1,053
600 Univ. of California Regents Cert. of Participation (San Diego
Campus & Sacramento Proj.), Ser. 2002 A, 5.25%, due 1/1/18 Aa2 633
1,000 Virgin Islands Wtr. & Pwr. Au. Elec. Sys. Ref. Rev., Ser. 1998,
5.30%, due 7/1/18 BBB 987
----------
24,177
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES (15.4%)
3,045 California Hsg. Fin. Agcy. Multi-Family Hsg. Rev., Ser. 2000 B,
1.95%, VRDN due 2/1/31 VMIG1 A-1+ 3,045
3,100 California Poll. Ctrl. Fin. Au. Solid Waste Disp. Rev. (Shell
Oil Co. Martinez Proj.), Ser. 1994 A, 2.00%, VRDN due 10/1/24 VMIG1 A-1+ 3,100++
3,000 California Statewide CDA Poll. Ctrl. Ref. Rev. (Chevron U.S.A.
Inc. Proj.), Ser. 2002, 1.95%, VRDN due 5/15/24 A-1+ 3,000++
3,000 Los Angeles (CA) Wtr. & Pwr. Rev., Sub. Ser. 2001 B-3,
1.95%, VRDN due 7/1/34 VMIG1 A-1+ 3,000
2,400 Los Angeles (CA) Wtr. & Pwr. Rev., Sub. Ser. 2001 B-6,
1.95%, VRDN due 7/1/34 VMIG1 A-1+ 2,400
----------
14,545
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES--BACKED BY LETTERS OF CREDIT (39.7%)
BANK OF AMERICA
4,650 California Ed. Fac. Au. Rev. (St. Mary's College), Ser. 2001 B,
1.85%, VRDN due 10/1/31 VMIG1 4,650
400 Newport Beach (CA) Rev. (Hoag Mem. Hosp. Presbyterian),
Ser. 1992, 1.98%, VRDN due 10/1/22 VMIG1 A-1+ 400
2,100 Newport Beach (CA) Rev. (Hoag Mem. Hosp. Presbyterian),
Ser. 1996 A, 2.00%, VRDN due 10/1/26 VMIG1 2,100
BANK OF NEW YORK
3,800 Abag (CA) Fin. Au. For Nonprofit Corp. Rev. (Jewish Comm.
Ctr. Proj.), Ser. 2002, 2.00%, VRDN due 11/15/31 VMIG1 3,800
4,500 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2001 U,
1.98%, VRDN due 8/1/32 VMIG1 A-1+ 4,500
DEXIA CREDIT LOCALE DE FRANCE
1,000 Orange Co. (CA) Sanitation Dist. Ref. Cert. of Participation,
Ser. 2000 B, 1.95%, VRDN due 8/1/30 VMIG1 A-1+ 1,000
KBC BANK
1,100 California Hlth. Fac. Fin. Au. Hosp. Rev. (Adventist Hlth.
Sys./West), Ser. 2002 B, 1.95%, VRDN due 9/1/25 VMIG1 1,100
4,000 Irvine (CA) Ltd. Oblig. Imp. Rev. (Assessment Dist.
Number 87-8), Ser. 1999, 1.95%, VRDN due 9/2/24 VMIG1 4,000
3,000 Orange Co. (CA) Imp. Rev. (Assessment Dist. Number 88-1),
Ser. 1988, 1.95%, VRDN due 9/2/18 P-1 A-1+ 3,000
LANDESBANK HESSEN-THUERINGEN GIROZENTRALE
3,500 California Hsg. Fin. Agcy. Multi-Family Hsg. Rev., Ser. 2000 A,
2.01%, VRDN due 2/1/26 VMIG1 A-1+ 3,500
3,400 California Hsg. Fin. Agcy. Multi-Family Hsg. Rev., Ser. 2000 A,
2.01%, VRDN due 2/1/35 VMIG1 A-1+ 3,400
8
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
U.S. BANK, N.A.
$ 3,750 California Statewide CDA Rev. (Masters College), Ser. 2002,
1.85%, VRDN due 2/1/32 VMIG1 $ 3,750
WESTDEUTSCHE LANDESBANK GIROZENTRALE
2,300 Southern California Metro. Wtr. Dist. Wtr. Rev., Ser. 2000 B-3,
2.00%, VRDN due 7/1/35 VMIG1 A-1+ 2,300
----------
37,500
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES--BACKED BY INSURANCE (2.1%)
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
2,000 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2002 J,
1.98%, VRDN due 2/1/33 VMIG1 A-1+ 2,000
TOTAL INVESTMENTS (112.9%) (COST $106,714) 106,711##
Liabilities, less cash, receivables and other assets [(12.9%)] (12,170)
----------
TOTAL NET ASSETS (100.0%) $ 94,541
----------
See Notes to Schedule of Investments
9
SCHEDULE OF INVESTMENTS Intermediate Municipal Fund Inc.
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
TAX-EXEMPT SECURITIES--BACKED BY INSURANCE (32.6%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
$ 5,000 Chicago (IL) G.O., Ser. 1996 A-2, 6.25%, due 1/1/13 Aaa AAA $ 5,950**
4,100 Fargo (ND) Hlth. Sys. Rev. (Meritcare Obligated Group),
Ser. 2002 A, 5.63%, due 6/1/17 AAA 4,452
FINANCIAL GUARANTY INSURANCE CO.
2,150 Cass Lake (MN) Independent Sch. Dist. No. 115 G.O.,
5.00%, due 2/1/18 AAA 2,246*
4,000 Denver (CO) City & Co. Arpt. Sys. Ref. Rev., Ser. 2002 E,
5.25%, due 11/15/14 Aaa AAA 4,214**
3,075 Detroit (MI) City Sch. Dist. Sch. Bldg. & Site Imp. G.O.,
Ser. 2002 A, 5.50%, due 5/1/15 AAA 3,442
4,935 Massachusetts St. Hlth. & Ed. Fac. Au. Rev.
(New England Med. Ctr. Hosp.), Ser. 2002 H, 5.38%,
due 5/15/16 AAA 5,251*
2,140 Mt. Pleasant (SC) Wtr. & Swr. Ref. Rev., 5.25%, due 12/1/17 AAA 2,301
8,140 Orange Co. (FL) Sales Tax Ref. Rev., Ser. 2002 A, 5.13%,
due 1/1/18 Aaa AAA 8,605
5,500 Prince Georges Co. (MD) Cons. Pub. Imp. G.O., Ser. 2001,
5.25%, due 12/1/16 Aaa AAA 6,005**
1,000 Sarasota Co. (FL) Util. Sys. Ref. Rev., Ser. 2002 C, 5.25%,
due 10/1/20 Aaa AAA 1,055
FINANCIAL SECURITY ASSURANCE INC.
7,000 Harris Co. (TX) Senior Lien Toll Road Rev., 5.38%, due 8/1/16 AAA 7,619*
4,260 King Co. (WA) Pub. Trans. Sales Tax Ref. G.O., Ser. 2002,
5.38%, due 12/1/14 Aaa AAA 4,738*
1,725 Maine Muni. Bond Bank Rev., Ser. 1998 C, 5.35%,
due 11/1/18 AAA 1,836
5,395 Truckee Meadows (NV) Wtr. Au. Wtr. Rev., Ser. 2001 A, 5.50%,
due 7/1/15 AAA 5,937
1,370 Wisconsin St. Hlth. & Ed. Fac. Au. Rev. (Aurora Med. Group,
Inc. Proj.), Ser. 1996, 6.00%, due 11/15/11 Aaa AAA 1,581
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
1,465 Arizona St. Energy Mgt. Svcs. Energy Conservation Rev.
(Arizona St. Univ. Proj.), Ser. 2002, 5.25%, due 7/1/17 AAA 1,574
5,335 Clark Co. (NV) Passenger Fac. Charge Ref. Rev. (Las Vegas
McCarran Arpt. Proj.), Ser. 2002, 5.25%, due 7/1/10 AAA 5,768
5,000 Illinois G.O., First Ser. 2002, 5.25%, due 10/1/14 Aaa 5,507
3,000 Illinois Hlth. Fac. Au. Rev. (Loyola Univ.), Ser. 1997 A, 6.00%,
due 7/1/14 Aaa AAA 3,482
4,555 Washington St. G.O., Ser. 1998 C, 6.00%, due 7/1/12 AAA 5,359**
1,000 Western (MI) Townships Util. Au. Sewage Disp. Sys. Ref. G.O.,
Ser. 2001 A, 5.25%, due 1/1/13 Aaa AAA 1,091
7,205 Wisconsin St. G.O., Ser. 2002 C, 5.25%, due 5/1/17 Aaa AAA 7,717
----------
95,730
----------
TAX-EXEMPT SECURITIES--OTHER (39.0%)
1,000 Austin (TX) Convention Enterprises, Inc. Convention Ctr. Hotel
First Tier Rev., Ser. 2001 A, 6.38%, due 1/1/16 Baa3 BBB- 1,035
2,000 Badger (WI) Tobacco Asset Securitization Corp. Asset-Backed
Rev., Ser. 2002, 5.50%, due 6/1/10 A1 A 2,004
2,635 Beaufort Co. (SC) Sch. Dist. G.O., Ser. 2001 A, 5.00%,
due 3/1/18 Aa1 2,739
10
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 6,000 Brazos River (TX) Harbor Navigation Dist. Rev. (Dow Chemical
Co. Proj.), Ser. 2002 B-2, 4.75%, due 5/15/33 A3 A $ 5,824
5,000 Burke Co. (GA) Dev. Au. PCR (Georgia Pwr. Co. Plant Vogtle Proj.),
Ser. 2001, 4.45%, due 1/1/32 A2 A 5,217
1,000 Clark Co. (WA) Sch. Dist. No. 037 G.O., Ser. 1998, 5.13%,
due 12/1/12 A3 1,108
1,765 Cumberland Co. (PA) West Shore Area Au. Hosp. Rev.,
(Holy Spirit Hosp. of the Sisters of Christian Charity Proj.),
6.05%, due 1/1/19 BBB+ 1,828
4,210 DCH Hlth. Care Au. (AL) Hlth. Care Fac. Rev., Ser. 2002, 5.25%,
due 6/1/14 A1 A+ 4,362
4,495 Dist. of Columbia Ref. G.O., Ser. 2002 C, 5.25%, due 6/1/13 AAA 4,897
825 Fort Bend Co. (TX) Ind. Dev. Corp. Ref. PCR (Frito-Lay Inc. Proj.),
Ser. 1987, 3.00%, due 10/1/11 A1 819
5,130 Illinois Ed. Fac. Au. Rev. (Field Museum of Natural History),
Ser. 2002, 4.30%, due 11/1/36 A2 A 5,094
3,500 Indiana St. Dev. Fin. Au. Solid Waste Disp. Rev. (Waste
Management, Inc. Proj.), Ser. 2001, 3.45%, due 10/1/31 BBB 3,492
2,000 Jasper (IN) Hosp. Au. Hosp. Fac. Ref. Rev. (Mem. Hosp. Ctr. Proj.),
5.50%, due 11/1/17 AA 2,072*
2,000 Lubbock (TX) Hlth. Fac. Dev. Corp. Rev. (St. Joseph Hlth. Sys.),
Ser. 1998, 5.25%, due 7/1/16 Aa3 AA- 2,053**
1,500 Maricopa Co. (AZ) IDA Multi-Family Hsg. Rev. (Sun King Arpts.
Proj.), Ser. 2000 A, 6.75%, due 11/1/18 A3 A 1,628
1,000 Martin Co. (NC) Ind. Fac. & Poll. Ctrl. Fin. Au. Solid Waste
Disp. Rev. (Weyerhaeuser Co. Proj.), Ser. 1994, 6.80%,
due 5/1/24 Baa2 BBB 1,042
1,000 Maryland St. Hlth. & Higher Ed. Fac. Au. Rev. (Union Hosp. of
Cecil Co.), Ser. 2002, 5.50%, due 7/1/14 A3 1,083
2,400 Mashnatucket Western Pequot Tribe (CT) Spec. Rev.,
Sub. Ser. 1997 B, 5.70%, due 9/1/12 Baa3 2,532
2,450 Massachusetts St. Hlth. & Ed. Fac. Au. Rev. (Caritas Christi
Oblig. Group), Ser. 1999 A, 5.70%, due 7/1/15 A+ 2,467
2,810 Massachusetts St. Hlth. & Ed. Fac. Au. Rev. (Milford-Whitinsville
Reg. Hosp.), Ser. 1998 C, 5.75%, due 7/15/13 Baa2 BBB 2,966
3,085 Memphis-Shelby Co. (TN) Arpt. Au. Spec. Fac. Ref. Rev.
(Federal Express Corp.), Ser. 2002, 5.05%, due 9/1/12 Baa2 BBB 3,186
1,085 Mesa (AZ) IDA Std. Hsg. Rev. (Mesa Std. Hsg.), Ser. 2001,
5.70%, due 7/1/11 A 1,189**
1,500 Michigan St. Bldg. Au. Rev. (Fac. Prog.), Ser. 2001 II, 5.50%,
due 10/15/18 Aa1 AA+ 1,621
3,235 Minneapolis (MN) G.O., 5.00%, due 12/1/18 AAA 3,381*
2,000 Missouri St. Env. Imp. & Energy Res. Au. Wtr. Poll. Ctrl. Rev.,
Ser. 2002 B, 5.50%, due 7/1/16 AAA 2,225*
1,500 Missouri St. Hsg. Dev. Comm. Multi-Family Hsg. Rev.,
Ser. 2001 II, 5.25%, due 12/1/16 AA 1,568
5,000 Montgomery Co. (PA) Higher Ed. & Hlth. Au. Hosp. Rev.
(Abington Mem. Hosp.), Ser. 2002 A, 5.00%, due 6/1/19 A 4,933**
3,000 Moraine (OH) Solid Waste Disp. Rev. (General Motors Corp. Proj.),
Ser. 1994, 6.75%, due 7/1/14 A3 BBB 3,293**
4,780 North Central (TX) Hlth. Fac. Dev. Corp. Ref. Hosp. Rev.
(Baylor Hlth. Care Sys. Proj.), Ser. 1998, 5.10%, due 5/15/13 Aa3 AA- 4,974
2,085 Palm Beach Co. (FL) Hlth. Fac. Au. Ref. Rev. (Boca Raton Comm.
Hosp. Corp.), Ser. 2001, 5.00%, due 12/1/12 A+ 2,170
See Notes to Schedule of Investments
11
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 8,000 Puerto Rico Children's Trust Tobacco Settlement Asset-Backed
Rev., Ser. 2002, 5.38%, due 5/15/33 A1 A $ 7,693
2,000 Sayre (PA) Hlth. Care Fac. Au. Rev. (Guthrie Hlth.), Ser. 2002 A,
5.75%, due 12/1/21 A- 2,049
1,000 Spokane Co. (WA) G.O., Ser. 1998, 5.10%, due 12/1/17 Aa3 1,042
2,500 St. Louis (MO) IDA Rev. (St. Louis Convention Center
Headquarters Hotel Proj.), Ser. 2000 A, 7.00%, due 12/15/15 Baa3 2,524
2,540 St. Paul (MN) Port Au. Lease Rev. (Office Bldg.), Ser. 2002,
5.00%, due 12/1/17 Aa1 2,623*
500 Texas Std. Hsg. Corp. Std. Hsg. Rev. (Midwestern St. Univ. Proj.),
Ser. 2002, 5.50%, due 9/1/12 Baa3 495
3,000 Tobacco Settlement Au. (IA) Tobacco Settlement Rev.,
Ser. 2001 B, 5.30%, due 6/1/25 A1 A 2,651
3,500 Union Co. (SC) IDR (Federal Paper Board Co., Inc. Proj.),
Ser. 1989, 4.55%, due 11/1/09 Baa2 BBB 3,510
1,900 Univ. (WI) Hosp. & Clinics Au. Rev., Ser. 2002 B, 5.50%,
due 4/1/12 A1 2,012
3,155 Washington St. Hlth. Care Fac. Au. Rev. (Yakima Valley Mem.
Hosp. Assoc.), Ser. 2002, 5.00%, due 12/1/17 A 3,096*
1,000 Washington St. Var. Purp. G.O., Ser. 1998 A, 4.75%, due 7/1/17 Aa1 AA+ 1,013
2,780 Wisconsin St. Hlth. & Ed. Fac. Au. Rev. (Kenosha Hosp. & Med.
Ctr., Inc. Proj.), Ser. 1999, 5.50%, due 5/15/15 A 2,861
----------
114,371
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES (16.0%)
700 Harris Co. (TX) IDC Solid Waste Disp. Rev. (Exxon Proj.),
Ser. 1997, 2.00%, VRDN due 4/1/32 VMIG1 A-1+ 700++
14,400 Jackson Co. (MS) Port Fac. Ref. Rev. (Chevron U.S.A., Inc. Proj.),
Ser. 1993, 2.00%, VRDN due 6/1/23 P-1 14,400++
3,500 Joliet (IL) Reg. Port Dist. Ref. Rev. (Exxon Proj.), Ser. 1989,
1.89%, VRDN due 10/1/24 VMIG1 A-1+ 3,500
10,000 Kentucky Econ. Dev. Fin. Au. Hosp. Fac. Rev. (Baptist Hlth.
Care Sys.), Ser. 1999 C, 2.00%, VRDN due 8/15/31 VMIG1 A-1 10,000**
3,100 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1984 C, 1.89%,
VRDN due 11/1/14 A-1+ 3,100++
2,900 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1984 D, 1.89%,
VRDN due 11/1/14 P-1 A-1+ 2,900++ **
6,000 Lincoln Co. (WY) PCR (Exxon Proj.), Ser. 1987 C, 2.00%,
VRDN due 7/1/17 A-1+ 6,000++
6,200 Massachusetts St. Dev. Fin. Agcy. Rev. (Boston Univ.),
Ser. 2002 R-4, 1.69%, VRDN due 10/1/42 VMIG1 6,200
----------
46,800
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES--BACKED BY LETTERS OF CREDIT (19.1%)
BANK OF AMERICA
5,000 Missouri St. Hlth. & Ed. Fac. Au. Ed. Fac. Rev. (Rockhurst Univ.),
Ser. 2002, 1.95%, VRDN due 11/1/32 A-1+ 5,000
BANK OF NEW YORK
5,900 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2001 U, 1.98%,
VRDN due 8/1/32 VMIG1 A-1+ 5,900
BARCLAYS BANK INT'L., LTD.
4,800 Farmington City (NM) Ref. PCR (Arizona Pub. Svc. Co. Four
Corners Proj.), Ser. 1994 C, 2.00%, VRDN due 9/1/24 VMIG1 A-1+ 4,800
BAYERISCHE LANDESBANK GIROZENTRALE
6,500 Nashville (TN) Metro. Arpt. Au. Spec. Fac. Ref. Rev. (Amer.
Airlines, Inc. Proj.), Ser. 1995 B, 2.00%, VRDN due 10/1/12 A-1+ 6,500
12
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
BNP PARIBAS
$ 5,000 Alachua Co. (FL) Hlth. Fac. Continuing Care Rev. (Oak Hammock
Univ. Proj.), Ser. 2002 A, 1.95%, VRDN due 10/1/32 VMIG1 $ 5,000
LANDESBANK HESSEN-THUERINGEN GIROZENTRALE
6,400 California Hsg. Fin. Agcy. Multi-Family Hsg. Rev., Ser. 2000 A,
2.01%, VRDN due 2/1/26 VMIG1 A-1+ 6,400
2,900 Univ. of North Carolina Board of Governors Univ. Hosp. at Chapel
Hill Rev., Ser. 2001 A, 1.99%, VRDN due 2/15/31 VMIG1 A-1+ 2,900
MORGAN GUARANTY TRUST CO.
6,900 New York City (NY) G.O., Sub. Ser. 1993 A-10, 1.95%,
VRDN due 8/1/16 VMIG1 A-1+ 6,900
6,900 New York City (NY) G.O., Sub. Ser. 1993 A-10, 1.95%,
VRDN due 8/1/17 VMIG1 A-1+ 6,900
5,700 New York City (NY) G.O., Sub. Ser. 1993 B-2, 1.95%,
VRDN due 8/15/20 VMIG1 A-1+ 5,700
----------
56,000
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES--BACKED BY INSURANCE (12.4%)
FINANCIAL GUARANTY INSURANCE CO.
170 Clark Co. (NV) Arpt. Rev., Ser. 2001 A, 2.09%,
VRDN due 7/1/36 VMIG1 A-1+ 170
FINANCIAL SECURITY ASSURANCE INC.
4,300 Clark Co. (NV) Sch. Dist. G.O., Ser. 2001 A, 1.95%,
VRDN due 6/15/21 VMIG1 4,300
2,200 Clark Co. (NV) Sch. Dist. Rev., Ser. 2001 B, 1.89%,
VRDN due 6/15/21 VMIG1 A-1+ 2,200
13,000 Illinois Hlth. Fac. Au. Rev. (Resurrection Hlth. Care),
Ser. 1999 A, 2.00%, VRDN due 5/15/29 VMIG1 A-1+ 13,000
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
6,370 California Hsg. Fin. Agcy. Home Mtge. Rev., Ser. 2002 J,
1.98%, VRDN due 2/1/33 VMIG1 A-1+ 6,370
10,340 Massachusetts St. Hlth. & Ed. Fac. Au. Rev. (Cap. Asset Prog.),
Ser. 1985 D, 1.95%, VRDN due 1/1/35 VMIG1 10,340
----------
36,380
----------
TOTAL INVESTMENTS (119.1%) (COST $349,557) 349,281##
Liabilities, less cash, receivables and other assets [(19.1%)] (55,968)
----------
TOTAL NET ASSETS (100.0%) $ 293,313
----------
See Notes to Schedule of Investments
13
SCHEDULE OF INVESTMENTS New York Intermediate Municipal Fund Inc.
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
TAX-EXEMPT SECURITIES--BACKED BY INSURANCE (22.6%)
AMERICAN MUNICIPAL BOND ASSURANCE CORP.
$ 2,920 New York City (NY) Ind. Dev. Agcy. Civic Fac. Rev.
(Packer Collegiate Inst. Proj.), Ser. 2002, 5.00%, due 6/1/22 Aaa AAA $ 2,949**
960 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys. Rev.,
Ser. 1992 A, 5.88%, due 6/15/13 Aaa 1,124
2,025 New York City (NY) Transitional Fin. Au. Ref. Rev., Ser. 2002 C,
5.25%, due 8/1/17 AAA 2,169*
2,410 New York St. Dorm. Au. Rev. (Rochester Institute of Technology),
Ser. 2002 A, 5.25%, due 7/1/19 Aaa 2,548*
3,000 Port Authority of NY & NJ Rev., Ser. 2002, 5.50%, due 12/15/12 AAA 3,406
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
2,000 New York St. Dorm. Au. Insured Rev. (Long Island Jewish
Med. Ctr.), Ser. 1998, 5.00%, due 7/1/18 AAA 2,050
1,980 New York St. Dorm. Au. Insured Rev. (New York Med. College),
Ser. 1998, 5.00%, due 7/1/21 Aaa AAA 2,011
1,000 Port Au. of NY & NJ Spec. Proj. Rev. (JFK Int'l. Arpt.
Term. LLC Proj.), Ser. 1997-6, 6.00%, due 12/1/06 Aaa AAA 1,121
----------
17,378
----------
TAX-EXEMPT SECURITIES--OTHER (55.7%)
585 Kenmore Village (NY) Hsg. Au. Std. Hsg. Rev. (St. Univ. of N.Y. at
Buffalo Std. Apt. Proj.), Ser. 1999 A, 5.40%, due 8/1/12 Baa1 AA 647
2,000 Long Island Pwr. Au. (NY) Elec. Sys. Gen. Rev., Ser. 1998 A,
5.50%, due 12/1/13 Aaa AAA 2,284**
1,000 Monroe Co. (NY) G.O. Pub. Imp. Ref. Rev., Ser. 1996, 6.00%,
due 3/1/13 A3 AA- 1,171
980 Monroe Co. (NY) Ind. Dev. Agcy. Std. Hsg. Rev., (Collegiate Hsg.
Foundation - Rochester Institute of Technology Proj.), 5.25%,
due 4/1/19 Baa3 979
1,000 New York City (NY) G.O., Ser. 1998 J, 5.00%, due 8/1/11 A2 A 1,042
1,500 New York City (NY) G.O., Ser. 2002 A, 5.50%, due 8/1/11 A2 A 1,629
2,000 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys. Rev.,
Ser. 2002 D, 5.25%, due 6/15/15 Aa2 AA 2,170
1,125 New York St. Dorm. Au. Cons. Rev. (City Univ. Sys.), Ser. 1995 A,
5.63%, due 7/1/16 A3 AA- 1,279
250 New York St. Dorm. Au. Ref. Rev. (Brookdale Hosp.), Ser. 1998 J,
5.20%, due 2/15/16 A3 AA- 260
2,985 New York St. Dorm. Au. Rev. (Lenox Hill Hosp. Oblig. Group),
Ser. 2001, 5.75%, due 7/1/14 A3 3,266
2,000 New York St. Dorm. Au. Third Gen. Resolution Rev. (St. Univ. Ed.
Fac. Issue), Ser. 2002 B, 5.25%, due 11/15/23 A3 AA- 2,185
3,000 New York St. Energy Res. & Dev. Au. Fac. Rev., Ser. 2001, 4.70%,
due 6/1/36 A1 A+ 3,000
2,000 New York St. Env. Fac. Corp. Solid Waste Disp. Rev. (Waste
Management, Inc. Proj.), Ser. 2002 A, 4.00%, due 5/1/12 BBB 2,003
2,000 New York St. Mtge. Agcy. Homeowner Mtge. Rev., Ser. 1997-67,
5.70%, due 10/1/17 Aa1 2,150
2,500 New York St. Mtge. Agcy. Homeowner Mtge. Rev., Ser. 2002-105,
4.25%, due 10/1/17 Aa1 2,412
2,000 New York St. Pwr. Au. Rev., Ser. 2002 A, 5.25%, due 11/15/16 Aa2 AA- 2,162
1,325 New York St. Urban Dev. Corp. Proj. Ref. Rev. (Ctr. for Ind.
Innovation), Ser. 1995, 6.25%, due 1/1/09 A3 AA- 1,517
2,000 Niagara Co. (NY) Ind. Dev. Agcy. Civic Fac. Rev. (Niagara Univ.
Proj. - Asset Guaranty Insured), Ser. 2001 A, 5.50%, due 11/1/16 AA 2,150**
14
PRINCIPAL AMOUNT SECURITY@ RATING^ VALUE+
(000'S OMITTED) MOODY'S S&P (000'S OMITTED)
$ 2,500 Niagara Co. (NY) Ind. Dev. Agcy. Solid Waste Disp. Fac. Ref. Rev.
(American Ref.-Fuel Co. of Niagara), Ser. 2001 C, 5.63%,
due 11/15/24 Baa1 BBB $ 2,622
2,000 Puerto Rico Children's Trust Tobacco Settlement Asset-Backed
Rev., Ser. 2002, 5.38%, due 5/15/33 A1 A 1,923
2,215 Triborough Bridge & Tunnel Au. (NY) Gen. Purp. Rev., Ser. 2001 A,
5.00%, due 1/1/19 Aa3 AA- 2,282
2,390 TSASC, Inc. (NY) Tobacco Flexible Amortization Rev., Ser. 1999-1,
5.70%, due 7/15/14 A1 A 2,505**
1,000 Yonkers (NY) Ind. Dev. Agcy. Civic Fac. Rev. (Comm. Dev.
Properties - Yonkers Inc.), Ser. 2001 A, 6.25%, due 2/1/16 Baa3 BBB- 1,067
----------
42,705
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES--BACKED BY LETTERS OF CREDIT (12.5%)
BANK OF NEW YORK
2,000 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys. Rev.,
Sub. Ser. 2002 C-3, 1.90%, VRDN due 6/15/18 VMIG1 A-1+ 2,000
CHASE MANHATTAN BANK, N.A.
3,100 New York City (NY) Hsg. Dev. Corp. Rev. (East 17th St.),
Ser. 1993 A, 2.00%, VRDN due 1/1/23 A-1+ 3,100
DEXIA CREDIT LOCALE DE FRANCE
600 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys. Rev.,
Ser. 2000 C, 1.99%, VRDN due 6/15/33 P-1 A-1+ 600
MORGAN GUARANTY TRUST CO.
100 New York City (NY) G.O., Sub. Ser. 1993 E-2, 1.95%,
VRDN due 8/1/21 VMIG1 A-1+ 100
1,800 New York City (NY) G.O., Sub. Ser. 1994 E-2, 1.95%,
VRDN due 8/1/20 VMIG1 A-1+ 1,800
2,000 Port Au. of NY & NJ Versatile Structure Oblig. Rev., Ser. 1995-3,
1.95%, VRDN due 6/1/20 VMIG1 A-1+ 2,000
----------
9,600
----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES--BACKED BY INSURANCE (18.4%)
FINANCIAL GUARANTY INSURANCE CO.
4,500 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys. Rev.,
Ser. 1994 C, 2.00%, VRDN due 6/15/23 VMIG1 A-1+ 4,500
1,000 New York City (NY) Muni. Wtr. Fin. Au. Wtr. & Swr. Sys. Rev.,
Ser. 1994 G, 1.90%, VRDN due 6/15/24 VMIG1 A-1+ 1,000
FINANCIAL SECURITY ASSURANCE INC.
4,405 New York City (NY) G.O., Sub. Ser. 1994 H3, 1.90%,
VRDN due 8/1/14 VMIG1 A-1+ 4,405
MUNICIPAL BOND INVESTORS ASSURANCE CORP.
700 New York City (NY) G.O., Sub. Ser. 1994 B-3, 2.00%,
VRDN due 8/15/04 VMIG1 A-1+ 700
3,500 New York City (NY) G.O., Sub. Ser. 1994 B-4, 2.00%,
VRDN due 8/15/23 VMIG1 A-1+ 3,500
----------
14,105
----------
TOTAL INVESTMENTS (109.2%) (COST $83,747) 83,788##
----------
Liabilities, less cash, receivables and other assets [(9.2%)] (7,082)
----------
TOTAL NET ASSETS (100.0%) $ 76,706
----------
See Notes to Schedule of Investments
15
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 directors
of Neuberger Berman California Intermediate Municipal Fund Inc.
("California"), Neuberger Berman Intermediate Municipal Fund Inc.
("Intermediate"), and Neuberger Berman New York Intermediate Municipal Fund
Inc. ("New York") (individually a "Fund", collectively, the "Funds"),
believe accurately reflects fair value. 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.
## At October 31, 2002, selected Fund information on a U.S. Federal income tax
basis was as follows:
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
NEUBERGER BERMAN COST APPRECIATION DEPRECIATION (DEPRECIATION)
CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC. $ 106,714,000 $ 511,000 $ 514,000 $ (3,000)
INTERMEDIATE MUNICIPAL FUND INC. 349,557,000 1,983,000 2,259,000 (276,000)
NEW YORK INTERMEDIATE MUNICIPAL FUND INC. 83,747,000 547,000 506,000 41,000
@ Municipal securities held by the Funds are within the four highest ratings
categories (with respect to at least 80% of total assets) assigned by a
nationally recognized statistical rating organization ("NRSRO") such as
Moody's Investors Service, Inc., Standard & Poor's, or Fitch Investors
Services, Inc. or, where not rated, are determined by the Funds' investment
manager to be of comparable quality. Approximately 72%, 63%, and 49% of the
municipal securities held by California, Intermediate, and New York,
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.
^ Credit ratings are unaudited.
++ Security is guaranteed by the corporate obligor.
* Security purchased on a when-issued basis. At October 31, 2002, these
securities amounted to $5,370,000, $33,251,000, and $4,717,000 for
California, Intermediate, and New York, respectively.
** Security is segregated as collateral for when-issued purchase
commitments.
See Notes to Financial Statements
16
STATEMENTS OF ASSETS AND LIABILITIES
CALIFORNIA INTERMEDIATE NEW YORK
NEUBERGER BERMAN INTERMEDIATE MUNICIPAL CLOSED-END FUNDS INTERMEDIATE MUNICIPAL INTERMEDIATE
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) MUNICIPAL FUND FUND MUNICIPAL FUND
ASSETS
INVESTMENTS IN SECURITIES, AT MARKET VALUE* (NOTE A)-SEE
SCHEDULE OF INVESTMENTS $ 106,711 $ 349,281 $ 83,788
Cash 1,323 4,688 27
----------------------------------------------------------------------------------------------------------------------
Interest receivable 556 2,592 780
Receivable for securities sold - 200 -
======================================================================================================================
TOTAL ASSETS 108,590 356,761 84,595
======================================================================================================================
LIABILITIES
Payable for securities purchased 13,983 63,326 7,829
Payable to administrator (Note B) 23 70 18
----------------------------------------------------------------------------------------------------------------------
Accrued expenses and other payables 43 52 42
======================================================================================================================
TOTAL LIABILITIES 14,049 63,448 7,889
======================================================================================================================
NET ASSETS AT VALUE $ 94,541 $ 293,313 $ 76,706
======================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 94,447 $ 293,147 $ 76,578
Undistributed (dividends in excess of) net investment income 97 442 87
----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) in value of investments (3) (276) 41
======================================================================================================================
NET ASSETS AT VALUE $ 94,541 $ 293,313 $ 76,706
======================================================================================================================
SHARES OUTSTANDING ($.0001 PAR VALUE; 1,000,000,000 SHARES AUTHORIZED) 6,607 20,507 5,357
----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE OUTSTANDING $ 14.31 $ 14.30 $ 14.32
======================================================================================================================
*COST OF INVESTMENTS $ 106,714 $ 349,557 $ 83,747
======================================================================================================================
See Notes to Financial Statements
17
STATEMENTS OF OPERATIONS
CALIFORNIA NEW YORK
INTERMEDIATE INTERMEDIATE INTERMEDIATE
MUNICIPAL FUND MUNICIPAL FUND MUNICIPAL FUND
FOR THE FOR THE FOR THE
PERIOD FROM PERIOD FROM PERIOD FROM
SEPTEMBER 27, SEPTEMBER 27, SEPTEMBER 27,
2002 2002 2002
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) TO OF OPERATIONS) TO OF OPERATIONS) TO
NEUBERGER BERMAN INTERMEDIATE MUNICIPAL CLOSED-END FUNDS OCTOBER 31, OCTOBER 31, OCTOBER 31,
(000'S OMITTED) 2002 2002 2002
INVESTMENT INCOME
Interest income $ 169 $ 579 $ 154
============================================================================================================================
EXPENSES:
Investment management fee (Note B) 22 68 18
Administration fee (Note B) 26 82 22
----------------------------------------------------------------------------------------------------------------------------
Stock transfer agent fees 3 3 3
Auditing fees 22 22 22
Custodian fees (Note B) 10 17 9
----------------------------------------------------------------------------------------------------------------------------
Shareholder reports 8 8 8
----------------------------------------------------------------------------------------------------------------------------
Stock exchange listing fees 1 2 1
Directors' fees and expenses 3 3 3
Miscellaneous - 1 -
============================================================================================================================
Total expenses 95 206 86
Investment management fee waived and expenses reduced by custodian
fee expense offset arrangement (Note B) (23) (69) (19)
============================================================================================================================
Total net expenses 72 137 67
============================================================================================================================
Net investment income 97 442 87
============================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Change in net unrealized appreciation (depreciation) in value of:
Investment securities (Note A) (3) (276) 41
============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 94 $ 166 $ 128
============================================================================================================================
See Notes to Financial Statements
18
STATEMENTS OF CHANGES IN NET ASSETS
CALIFORNIA NEW YORK
INTERMEDIATE INTERMEDIATE INTERMEDIATE
MUNICIPAL FUND MUNICIPAL FUND MUNICIPAL FUND
PERIOD FROM PERIOD FROM PERIOD FROM
SEPTEMBER 27, SEPTEMBER 27, SEPTEMBER 27,
2002 2002 2002
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) TO OF OPERATIONS) TO OF OPERATIONS) TO
NEUBERGER BERMAN INTERMEDIATE MUNICIPAL CLOSED-END FUNDS OCTOBER 31, OCTOBER 31, OCTOBER 31,
(000'S OMITTED) 2002 2002 2002
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 97 $ 442 $ 87
Change in net unrealized appreciation (depreciation) of investments (3) (276) 41
============================================================================================================================
Net increase (decrease) in net assets resulting from operations 94 166 128
============================================================================================================================
FROM FUND SHARE TRANSACTIONS:
Proceeds from issuance of common shares 90,158 278,852 73,719
Proceeds from underwriters' over-allotment option exercised 4,289 14,295 2,859
============================================================================================================================
Total proceeds from Fund share transactions 94,447 293,147 76,578
============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 94,541 293,313 76,706
NET ASSETS:
Beginning of period - - -
============================================================================================================================
End of period $ 94,541 $ 293,313 $ 76,706
============================================================================================================================
Accumulated undistributed net investment income at end of period $ 97 $ 442 $ 87
============================================================================================================================
See Notes to Financial Statements
19
NOTES TO FINANCIAL STATEMENTS Intermediate Municipal Closed-End Funds
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1 GENERAL: Neuberger Berman California Intermediate Municipal Fund Inc.
("California"), Neuberger Berman Intermediate Municipal Fund Inc.
("Intermediate"), and Neuberger Berman New York Intermediate Municipal Fund
Inc. ("New York") (individually a "Fund", collectively, the "Funds") were
organized as Maryland corporations on July 29, 2002. California and New York
are registered as non-diversified, closed-end management investment companies
and Intermediate is registered as a diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). Each Fund had no operations until September 27, 2002, other than
matters relating to their organization and the sale on September 19, 2002 of
6,981 shares of common stock for $100,005 ($14.325 per share) from each Fund
to Neuberger Berman LLC ("Neuberger"), the Funds' sub-adviser.
The assets of each Fund belong only to that Fund, and the liabilities of each
Fund are borne solely by that Fund and no other.
The 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 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: It is the intention of each Fund to qualify as a
regulated investment company by complying with the provisions available to
certain investment companies, as defined in applicable sections of the
Internal Revenue Code, and to make distributions of investment company
taxable income and net capital gains (after reduction for any amounts
available for U.S. Federal income tax purposes as capital loss carryforwards)
sufficient to relieve 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.
5 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
and pay dividends from net investment income on a monthly basis.
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.
20
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains in the components of net assets on the Statements of Assets and
Liabilities.
The Funds declared dividends from their net investment income which were paid
December 16, 2002, to shareholders of record on November 18, 2002, with an
ex-dividend date of November 14, 2002, as follows:
DIVIDEND PER SHARE
CALIFORNIA $ 0.06250
INTERMEDIATE 0.06625
NEW YORK 0.06500
As of October 31, 2002, the components of distributable earnings (accumulated
losses) on a federal income tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED UNREALIZED LOSS
TAX-EXEMPT TAXABLE LONG-TERM APPRECIATION CARRYFORWARDS
INCOME INCOME GAIN (DEPRECIATION) AND DEFERRALS TOTAL
CALIFORNIA $ 96,491 $ 56 $ - $ (2,566) $ - $ 93,981
INTERMEDIATE 441,103 440 - (276,028) - 165,515
NEW YORK 87,508 - - 40,553 - 128,061
There were no significant differences between book basis and tax basis.
6 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.
7 ORGANIZATION EXPENSES AND OFFERING COSTS: Management has agreed to pay all
organizational expenses and the amount by which each Fund's offering costs
for common stock (other than sales load) exceed $0.03 per share. Offering
costs for common stock paid by each Fund were charged as a reduction of
paid-in-capital at the completion of each Fund's offering and amounted to
$198,209, $615,209, and $160,709 for California, Intermediate, and New York,
respectively.
8 CONCENTRATION OF RISK: The ability of the issuers of the debt securities held
by the Funds to meet their obligations may be affected by economic
developments, including those particular to a specific industry or region.
The investment policies of California and New York involve investing
substantially all of their assets in California state and New York state
municipal bonds, respectively. This policy makes those funds more susceptible
to adverse economic, political, regulatory or other factors affecting the
issuers of such municipal bonds than a fund that does not limit its
investments to such issuers.
21
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 pays Management
a fee at the annual rate of 0.25% of its average daily Managed Assets.
Managed Assets equals the total assets of the Fund less liabilities, other
than the aggregate indebtedness entered into for purposes of leverage. For
purposes of calculating Managed Assets, the liquidation preference of any
preferred shares outstanding is not considered a liability.
Management has contractually agreed to waive a portion of the management fees
it is entitled to receive from each Fund at the following annual rates:
FISCAL PERIOD OR YEAR ENDED % OF AVERAGE
OCTOBER 31, DAILY MANAGED ASSETS
-----------------------------------------------------------------
2002 - 2007 0.25%
2008 0.20
2009 0.15
2010 0.10
2011 0.05
Management has not agreed to waive any portion of its fees beyond October 31,
2011.
For the period ended October 31, 2002, such waived fees amounted to $21,955,
$67,982, and $17,878 for California, Intermediate, and New York,
respectively.
Each Fund retains Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays Management
an administration fee at the annual rate of 0.30% of its average daily
Managed 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 and 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 directors of
each Fund are also employees of Neuberger and/or Management.
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 $1,289, $993,
and $696 for California, Intermediate, and New York, respectively.
22
NOTE C--SECURITIES TRANSACTIONS:
During the period ended October 31, 2002, there were purchase and sale
transactions (excluding short-term securities) as follows:
PURCHASES SALES
CALIFORNIA $ 52,677,000 $ 0
INTERMEDIATE 208,096,000 0
NEW YORK 60,056,000 0
NOTE D--CAPITAL:
At October 31, 2002, the shares outstanding and the shares owned by Neuberger
for each Fund were as follows:
COMMON SHARES COMMON SHARES OWNED
OUTSTANDING BY NEUBERGER
CALIFORNIA 6,606,981 6,981
INTERMEDIATE 20,506,981 6,981
NEW YORK 5,356,981 6,981
Transactions in common shares of capital stock for the period ended
October 31, 2002, were as follows:
SHARES ISSUED IN CONNECTION WITH:
UNDERWRITERS' REINVESTMENT OF NET INCREASE
INITIAL PUBLIC EXERCISE OF OVER- DIVIDENDS AND IN SHARES
OFFERING ALLOTMENT OPTION DISTRIBUTIONS OUTSTANDING
CALIFORNIA 6,306,981 300,000 - 6,606,981
INTERMEDIATE 19,506,981 1,000,000 - 20,506,981
NEW YORK 5,156,981 200,000 - 5,356,981
NOTE E--USE OF LEVERAGE:
Subject to market conditions, each Fund intends to offer Preferred Shares
representing approximately 38% of each Fund's capital after issuance. The
Funds also may add leverage to the portfolio through the utilization of
derivative instruments. The Funds may issue Preferred Shares so long as after
their issuance the liquidation value of the Preferred Shares, plus the
aggregate amount of senior securities representing indebtedness, does not
exceed 50% of each Fund's capital. Once Preferred Shares are issued and/or
other forms of leverage are used, the net asset value and market price of the
common shares and the yield to common stockholders will be more volatile.
23
FINANCIAL HIGHLIGHTS California Intermediate Municipal Fund
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements.
PERIOD FROM
SEPTEMBER 27, 2002^
TO OCTOBER 31,
2002
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.32
--------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .02
NET GAINS OR LOSSES ON SECURITIES (BOTH REALIZED AND UNREALIZED) -
--------
TOTAL FROM INVESTMENT OPERATIONS .02
--------
LESS CAPITAL CHARGES
ISSUANCE OF COMMON SHARES (.03)
--------
NET ASSET VALUE, END OF PERIOD $ 14.31
--------
MARKET VALUE, END OF PERIOD $ 15.00
--------
TOTAL RETURN, NET ASSET VALUE+ -0.10%**
TOTAL RETURN, MARKET VALUE+ +0.00%**
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 94.5
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .84%*
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS++ .83%*
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS 1.10%*
PORTFOLIO TURNOVER RATE 0%
See Notes to Financial Highlights
24
FINANCIAL HIGHLIGHTS Intermediate Municipal Fund
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements.
PERIOD FROM
SEPTEMBER 27, 2002^
TO OCTOBER 31,
2002
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.32
--------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .01
NET GAINS OR LOSSES ON SECURITIES (BOTH REALIZED AND UNREALIZED) -
--------
TOTAL FROM INVESTMENT OPERATIONS .01
--------
LESS CAPITAL CHARGES
ISSUANCE OF COMMON SHARES (.03)
--------
NET ASSET VALUE, END OF PERIOD $ 14.30
--------
MARKET VALUE, END OF PERIOD $ 15.00
--------
TOTAL RETURN, NET ASSET VALUE+ -0.17%**
TOTAL RETURN, MARKET VALUE+ +0.00%**
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 293.3
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .51%*
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS++ .51%*
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS 1.62%*
PORTFOLIO TURNOVER RATE 0%
See Notes to Financial Highlights
25
FINANCIAL HIGHLIGHTS New York Intermediate Municipal Fund
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements.
PERIOD FROM
SEPTEMBER 27, 2002^
TO OCTOBER 31,
2002
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.32
--------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) .03
NET GAINS OR LOSSES ON SECURITIES (BOTH REALIZED AND UNREALIZED) -
--------
TOTAL FROM INVESTMENT OPERATIONS .03
--------
LESS CAPITAL CHARGES
ISSUANCE OF COMMON SHARES (.03)
--------
NET ASSET VALUE, END OF PERIOD $ 14.32
--------
MARKET VALUE, END OF PERIOD $ 15.00
--------
TOTAL RETURN, NET ASSET VALUE+ -0.03%**
TOTAL RETURN, MARKET VALUE+ +0.00%**
RATIOS/SUPPLEMENTAL DATA NET ASSETS, END OF PERIOD (IN MILLIONS) $ 76.7
RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS# .94%*
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS++ .93%*
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS 1.22%*
PORTFOLIO TURNOVER RATE 0%
See Notes to Financial Highlights
26
NOTES TO FINANCIAL HIGHLIGHTS Intermediate Municipal Closed-End Funds
+ 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. Total return based on per share market value assumes the
purchase of common shares at the market price on the first day and sales of
common shares at the market price on the last day of the period indicated.
Dividends and distributions, if any, are assumed to be reinvested at prices
obtained under each Fund's dividend reinvestment plan. Results represent
past performance and do not guarantee future results. For each Fund, total
return would have been lower if Management had not waived the investment
management fee.
# The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
++ After waiver of investment management fee. Had Management not undertaken
such action the annualized ratios of net expenses to average daily net
assets would have been:
PERIOD ENDED
OCTOBER 31,
2002
CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC. 1.08%(1)
INTERMEDIATE MUNICIPAL FUND INC. .76%(1)
NEW YORK INTERMEDIATE MUNICIPAL FUND INC. 1.18%(1)
(1) Period from September 27, 2002 to October 31, 2002.
^ The date investment operations commenced.
* Annualized.
** Not annualized.
27
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
Neuberger Berman California Intermediate Municipal Fund Inc.
Neuberger Berman Intermediate Municipal Fund Inc.
Neuberger Berman New York Intermediate Municipal Fund Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Neuberger Berman California Intermediate
Municipal Fund Inc., Neuberger Berman Intermediate Municipal Fund Inc., and
Neuberger Berman New York Intermediate Municipal Fund Inc. (the "Funds") as of
October 31, 2002, and the related statements of operations, statements of
changes in net assets and financial highlights for the period from September 27,
2002 (commencement of operations) to October 31, 2002. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2002, by correspondence with
the custodian and brokers or other appropriate auditing procedures where replies
from brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of Neuberger Berman California Intermediate Municipal Fund Inc., Neuberger
Berman Intermediate Municipal Fund Inc., and Neuberger Berman New York
Intermediate Municipal Fund Inc. at October 31, 2002, the results of their
operations, changes in their net assets, and their financial highlights for the
periods from September 27, 2002 (commencement of operations) to October 31,
2002, in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst and Young LLP
Boston, Massachusetts
December 6, 2002
28
DIVIDEND REINVESTMENT PLAN
The Fund's Board has established a Dividend Reinvestment Plan (the "Plan")
pursuant to which all holders of common stock ("Common Stockholders") whose
shares are registered in their own names will have all dividends and any capital
gain distributions (referred to collectively in this section as "dividends") on
their shares automatically reinvested in additional shares of common stock
("Common Shares") by The Bank of New York, as agent for the Common Stockholders
("Plan Agent"), unless such Common Stockholders elect to receive cash. An
election to receive cash may be revoked or reinstated at a Common Stockholder's
option. In the case of record Common Stockholders such as banks, brokers or
other nominees that hold shares of common stock for others who are the
beneficial owners, the Plan Agent will administer the Plan on the basis of the
number of shares certified from time to time by the record Common Stockholder as
representing the total amount registered in such Common Stockholder's name and
held for the account of beneficial owners who participate in the Plan. Common
Stockholders whose shares are held in the name of a bank, broker or other
nominee should contact the nominee for details. Such stockholders may not be
able to transfer their shares to another nominee and continue to participate in
the Plan. All dividends to investors who elect not to participate in the Plan
(or whose bank, broker or other nominee elects not to participate on the
investor's behalf), will be paid in cash by check mailed, in the case of direct
Common Stockholders, to the record holder by The Bank of New York, as the Fund's
dividend disbursement agent.
Unless you (or your bank, broker or other nominee) elect not to participate in
the Plan, the number of Common Shares you will receive as a result of a Fund
dividend will be determined as follows:
(1) If Common Shares are trading at or above their net asset value (minus
estimated brokerage commissions that would be incurred upon the
purchase of Common Shares on the open market) on the payment date, the
Fund will issue new Common Shares at the greater of (i) the net asset
value per Common Share on the payment date or (ii) 95% of the market
price per Common Share on the payment date. Because Common Shares may
be issued at less than their market price, Plan participants may get a
benefit that non-participants do not.
(2) If Common Shares are trading below their net asset value (minus
estimated brokerage commissions that would be incurred upon the
purchase of Common Shares on the open market) on the payment date, the
Plan Agent will receive the dividend in cash and will purchase Common
Shares in the open market, on the American Stock Exchange or
elsewhere, for the participants' accounts. It is possible that the
market price for the Common Shares may increase before the Plan Agent
has completed its purchases. Therefore, the average purchase price per
Common Share paid by the Plan Agent may exceed the market price
thereof on the payment date, resulting in the purchase of fewer Common
Shares than if the dividend had been paid in Common Shares issued by
the Fund. The Plan Agent will use all dividends received in cash to
purchase Common Shares in the open market on or shortly after the
payment date, but in no event later than the ex-dividend date for the
next dividend. Interest will not be paid on any uninvested cash
payments.
If you own Common Shares directly, you may withdraw from the Plan at any time by
giving written notice to the Plan Agent; please be sure to include your name and
account number. You may also rejoin the Plan later. Contact the Plan Agent at
the following address for information on how to do so: The Bank of New York,
ATTN: Stock Transfer Administration, 101 Barclay Street, 11-E, New York, New
York 10286. If you wish, the Plan Agent will sell the Common Shares and send you
the proceeds, minus brokerage commissions.
The Plan Agent maintains all stockholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
stockholders may need for tax records. The Plan Agent will also furnish each
Common Stockholder with written instructions detailing the procedures for
electing not to participate in the Plan and to instead receive dividends in
cash. Common Shares in your account will be held by the Plan Agent in
non-certificated form. Any proxy you receive will include all Common Shares held
for you under the Plan.
29
There is no brokerage charge for reinvestment of your dividends in Common
Shares. However, all participants will pay a pro rata share of brokerage
commissions incurred by the Plan Agent when it makes open market purchases.
Automatically reinvested dividends are taxed in the same manner as cash
dividends.
The Fund and the Plan Agent reserve the right to amend or terminate the Plan.
There is no direct service charge to participants in the Plan; however, the Fund
reserves the right to amend the Plan to include a service charge payable by the
participants. Additional information about the Plan may be obtained from your
broker or by calling The Bank of New York at 1-800-524-4458.
Notice is hereby given in accordance with Section 23(C) of the Investment
Company Act of 1940 that from time to time the Fund may purchase shares of its
common stock in the open market at market prices.
30
DIRECTORY
INVESTMENT MANAGER AND ADMINISTRATOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800.877.9700 or 212.476.8800
SUB-ADVISER
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
STOCK TRANSFER AGENT
Bank of New York
101 Barclay Street 11-E
New York, NY 10286
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
31
DIRECTORS AND OFFICERS (Unaudited)
The following tables set forth information concerning the directors and officers
of the Funds. All persons named as directors and officers also serve in similar
capacities for other funds administered or managed by NB Management and
Neuberger Berman, LLC. The Statement of Additional Information for each Fund
includes additional information about fund directors and is available upon
request, without charge, by calling (877) 461-1899.
THE BOARD OF DIRECTORS
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, AGE, ADDRESS(1) OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
AND POSITION WITH FUND PRINCIPAL OCCUPATION(S)(2) DIRECTOR FUND COMPLEX BY DIRECTOR
------------------------ -------------------------------------------------- -------------- --------------------------------
CLASS I
INDEPENDENT FUND DIRECTORS
Faith Colish (67) Counsel to Carter, Ledyard & Milburn since October 33
Director 2002; prior thereto, Attorney at Law and
President, Faith Colish, A Professional
Corporation; 1980 to 2002.
C. Anne Harvey (65) Consultant, C.A. Harvey Associates, June 2001 to 33
Director present; Member, Individual Investors Advisory
Committee to the New York Stock Exchange Board of
Directors, 1998 to present; Secretary, Board of
Associates to The National Rehabilitation
Hospital's Board of Directors; Director of
American Association of Retired Persons (AARP),
1978 to December 2000; Member, American Savings
Education Council's Policy Board (ASEC),
1998-2000; Member, Executive Committee, Crime
Prevention Coalition of America, 1997 - 2000.
Cornelius T. Ryan (71) General Partner of Oxford Partners and Oxford 33 Formerly, Director of Capital
Director Bioscience Partners (venture capital partnerships) Cash Management Trust (money
and President of Oxford Venture Corporation. market fund) and Prime Cash
Fund.
Peter P. Trapp (58) Regional Manager for Atlanta Region, Ford Motor 33
Director Credit Company since August 1997; prior thereto,
President, Ford Life Insurance Company, April 1995
until August 1997.
32
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, AGE, ADDRESS(1) OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
AND POSITION WITH FUND PRINCIPAL OCCUPATION(S)(2) DIRECTOR FUND COMPLEX BY DIRECTOR
------------------------ -------------------------------------------------- -------------- --------------------------------
DIRECTOR WHO IS AN "INTERESTED PERSON"
Peter E. Sundman* (43) Executive Vice President of Neuberger Berman since 33 Executive Vice President and
Chief Executive Officer, 1999; Principal of Neuberger Berman from 1997 Director of Neuberger Berman
Director and Chairman until 1999; Senior Vice President of NB Management Inc. (holding company) since
of the Board from 1996 until 1999; Director of Institutional 1999; President and Director
Services of NB Management from 1988 until 1996. of NB Management since 1999;
Director and Vice President of
Neuberger & Berman Agency,
Inc. since 2000.
CLASS II
INDEPENDENT FUND DIRECTORS
John Cannon (72) Retired. Formerly, Chairman and Chief Investment 33 Independent Trustee or
Director Officer of CDC Capital Management (registered Director of three series of
investment adviser) (1993-Jan.1999). OppenheimerFunds: Limited Term
New York Municipal Fund,
Rochester Fund Municipals, and
Oppenheimer Convertible
Securities Fund, 1992 to
present.
Barry Hirsch (69) Senior Vice President and Senior Counsel of Loews 33
Director Corporation (diversified financial corporation)
since May 2002; prior thereto, General Counsel of
Loews Corporation.
Howard A. Mileaf (65) Retired. Formerly, Vice President and Special 33 Director, State Theatre of New
Director Counsel to WHX Corporation (holding company); 1993 Jersey (not-for-profit
- 2001. theater), 2000 to present;
Formerly, Director of Kevlin
Corporation (manufacturer of
microwave and other products).
John P. Rosenthal (69) Senior Vice President of Burnham Securities Inc. 33 Director, 92nd Street Y
Director (a registered broker-dealer) since 1991. (non-profit), 1967 to present;
Formerly, Director, Cancer
Treatment Holdings, Inc.
33
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, AGE, ADDRESS(1) OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
AND POSITION WITH FUND PRINCIPAL OCCUPATION(S)(2) DIRECTOR FUND COMPLEX BY DIRECTOR
------------------------ -------------------------------------------------- ------------- ---------------------------------
Tom Decker Seip (52) General Partner of Seip Investments LP (a private 33 Director, H&R Block, Inc.
Director investment partnership); President and CEO of (financial services company),
Westaff, Inc. (temporary staffing), May 2001 to May 2001 to present; Director,
January 2002; Senior Executive at the Charles General Magic (voice
Schwab Corporation from 1983 to 1999, including recognition software),
Chief Executive Officer of Charles Schwab November 2001 to present;
Investment Management, Inc. and Trustee of Schwab Director, Forward Management,
Family of Funds and Schwab Investments from 1997 Inc. (asset management), 2001
to 1998 and Executive Vice President-Retail to present; Member of the
Brokerage for Charles Schwab Investment Management Board of Directors of
from 1994 to 1997. E-Finance Corporation (credit
decisioning services), 1999 to
present; Director,
Save-Daily.com (micro
investing services), 1999 to
present; Formerly, Director of
Offroad Capital Inc.
(pre-public internet commerce
company).
DIRECTOR WHO IS AN "INTERESTED PERSON"
Michael M. Kassen* (49) Executive Vice President and Chief Investment 33 Executive Vice President,
President and Director Officer of Neuberger Berman since 1999; Executive Chief Investment Officer and
Vice President and Chief Investment Officer of NB Director of Neuberger Berman
Management from November 1999 to May 2000; Vice Inc. (holding company) since
President of NB Management from 1990 until 1999; 1999; Chairman since May 2000
Partner or Principal of Neuberger Berman from and Director of NB Management
1993. since April 1996.
CLASS III
INDEPENDENT FUND DIRECTORS
Walter G. Ehlers (69) Consultant; Retired President and Director of 33
Director Teachers Insurance & Annuity (TIAA) and College
Retirement Equities Fund (CREF).
Robert A. Kavesh (75) Professor of Finance and Economics at Stern School 33 Director, Delaware Labs
Director of Business, New York University. (cosmetics), 1978 to
present.
Candace L. Straight (55) Private investor and consultant specializing in 33 Director, Providence
Director the insurance industry; Advisory Director of Washington (property and
Securities Capital LLC (a global private equity casualty insurance company),
investment firm dedicated to making investments in December 1998 to present;
the insurance sector). Director, Summit Global
Partners (insurance brokerage
firm), October 2000 to
present.
34
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, AGE, ADDRESS(1) OVERSEEN BY OTHER DIRECTORSHIPS HELD OUTSIDE
AND POSITION WITH FUND PRINCIPAL OCCUPATION(S)(2) DIRECTOR FUND COMPLEX BY DIRECTOR
------------------------ -------------------------------------------------- ------------- --------------------------------
DIRECTORS WHO ARE "INTERESTED PERSONS"
Edward I. O'Brien* (74) Member, Investment Policy Committee, Edward Jones, 33 Director of Legg Mason, Inc.
Director 1993 - 2001; President of the Securities Industry (financial services holding
Association (SIA) (securities industry's company), 1993 to present;
representative in government relations and Director, Boston Financial
regulatory matters at the federal and state Group (real estate and tax
levels) from 1974 - 1992; Adviser to SIA from shelters), 1993-1999.
November 1992 -November 1993.
William E. Rulon (70) Retired. Senior Vice President of Foodmaker, Inc. 33 Director, Pro-Kids Golf and
Director (operator and franchiser of restaurants) until Learning Academy (teach golf
January 1997; Secretary of Foodmaker, Inc. until and computer usage to "at
July 1996. risk" children), 1998 to
present; Formerly, Director of
Prandium, Inc. (restaurants).
* Indicates a director who is an "interested person" within the meaning of
the 1940 Act. Mr. Sundman and Mr. Kassen are interested persons of the Fund
by virtue of the fact that each is an officer and/or director of NB
Management and Executive Vice President of Neuberger Berman. Mr. O'Brien is
an interested person of the Fund 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 or
accounts for which NB Management serves as investment manager.
(1) The business address of each listed person is 605 Third Avenue, New York,
New York 10158.
(2) Except as otherwise indicated, each person has held the positions shown for
at least the last five years. The Board of Directors shall at all times be
divided as equally as possible into three classes of Directors designated
Class I, Class II, and Class III. The terms of office of Class I, Class II,
and Class III Directors shall expire at the annual meetings of stockholders
held in 2003, 2004, and 2005 respectively, and at each third annual meeting
of stockholders thereafter.
35
INFORMATION ABOUT THE OFFICERS OF THE FUND
POSITION AND LENGTH OF
NAME, AGE, AND ADDRESS(1) TIME SERVED(2) PRINCIPAL OCCUPATION(S)
------------------------------------------------------------------------------------------------------------------------
Claudia A. Brandon (46) Secretary since 2002 Vice President of Neuberger Berman since 2002 and
employee since 1999; Vice President-Mutual Fund
Board Relations of NB Management since 2000; Vice
President of NB Management from 1986 to 1999;
Secretary of six other registered investment
companies for which NB Management acts as
investment manager and administrator.
Robert Conti (46) Vice President since 2002 Vice President of Neuberger Berman since 1999;
Senior Vice President of NB Management since
2000; Controller of NB Management until 1996;
Treasurer of NB Management from 1996 until 1999;
Vice President of three other registered
investment companies for which NB Management acts
as investment manager and administrator since
2000 and of three other registered investment
companies since 2002.
Stacy Cooper-Shugrue (39) Assistant Secretary since 2002 Vice President-Mutual Fund Board Relations of NB
Management since 2002; Employee of Neuberger
Berman since 1999; Assistant Vice President of NB
Management from 1993 to 1999; Assistant Secretary
of six other registered investment companies for
which NB Management acts as investment manager
and administrator.
Brian J. Gaffney (49) Vice President since 2002 Managing Director of Neuberger Berman since 1999;
Senior Vice President of NB Management since
2000; Vice President of NB Management from 1997
until 1999; Vice President of three other
registered investment companies for which NB
Management acts as investment manager and
administrator since 2000 and of three other
registered investment companies since 2002.
Sheila R. James (37) Assistant Secretary since 2002 Employee of Neuberger Berman since 1999; Employee
of NB Management from 1991 to 1999; Assistant
Secretary of six other registered investment
companies for which NB Management acts as
investment manager and administrator since 2002.
36
POSITION AND LENGTH OF
NAME, AGE, AND ADDRESS(1) TIME SERVED(2) PRINCIPAL OCCUPATION(S)
------------------------------------------------------------------------------------------------------------------------
John M. McGovern (32) Assistant Treasurer since 2002 Employee of NB Management since 1993; Assistant
Treasurer of six other registered investment
companies for which NB Management acts as
investment manager and administrator since 2002.
Barbara Muinos (43) Treasurer and Principal Vice President of Neuberger Berman since 1999; Assistant
Financial and Accounting Vice President of NB Management from 1993 to 1999;
Officer since 2002 Treasurer and Principal Financial and Accounting Officer
of six other registered investment companies for which
NB Management acts as investment manager and
administrator since 2002; Assistant Treasurer from 1996
to 2002 of three other mutual funds for which NB
Management acts as investment manager and administrator.
Frederic B. Soule (56) Vice President since 2002 Vice President of Neuberger Berman since 1999;
Vice President of NB Management from 1995 until
1999; Vice President of three other registered
investment companies for which NB Management acts
as investment manager and administrator since
2000 and of three other registered investment
companies since 2002.
Trani Wyman (33) Assistant Treasurer since 2002 Employee of NB Management since 1991; Assistant
Treasurer of six other registered investment
companies for which NB Management acts as
investment manager and administrator since 2002.
(1) The business address of each listed person is 605 Third Avenue, New York,
New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
37
TABLE OF COMPENSATION FOR PERIOD ENDED 10/31/02
AGGREGATE COMPENSATION
NAME AND POSITION WITH THE FUND FROM THE FUND
-------------------------------------------------------------------------
INDEPENDENT FUND DIRECTORS
John Cannon
Director $ 2,060
Faith Colish
Director 2,060
Walter G. Ehlers
Director 2,060
C. Anne Harvey
Director 2,060
Barry Hirsch
Director 2,060
Robert A. Kavesh
Director 2,060
Howard A. Mileaf
Director 2,060
John P. Rosenthal
Director 2,060
William E. Rulon
Director 2,060
Cornelius T. Ryan
Director 2,060
Tom Decker Seip
Director 2,060
Candace L. Straight
Director 2,060
Peter P. Trapp
Director 2,060
DIRECTORS WHO ARE "INTERESTED PERSONS"
Michael M. Kassen
Director 0
Edward I. O'Brien
Director 2,060
Peter E. Sundman
Director 0
38
[NEUBERGER BERMAN LOGO]
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
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.
- C0453 12/02