Neuberger&Berman Income Funds
This information supplements the Prospectus dated March 1, 1995
Neuberger&Berman Cash Reserves
Neuberger&Berman Government Income Fund
Neuberger&Berman Government Money Fund
Neuberger&Berman Municipal Money Fund
Neuberger&Berman Municipal Securities Trust
Neuberger&Berman Limited Maturity Bond Fund
Neuberger&Berman Ultra Short Bond Fund
(each, a "Fund")
HOW TO BUY SHARES
You can invest as little as $50 each month under an automatic investing plan.
(See "Automatic Investing and Dollar Cost Averaging" on page 37.)
Due to a change in Securities and Exchange Commission rules regarding the
settlement period for securities transactions, your order may be cancelled if
your payment is not received by the third business day after your order is
placed. In that case, you could be liable for any resulting losses or fees
the Fund or its agents have incurred. To recover those losses or fees, a Fund
has the right to redeem shares from your account. To meet the new three day
deadline, you can wire payment, send a check through overnight mail, or call
800-877-9700 for information on how to make electronic transfers through your
bank.
HOW TO SELL SHARES
Usually, redemption proceeds will be mailed to you on the next business day
after receipt of your request, but in any case, within three business days.
(Under unusual circumstances, a fund may take longer as permitted by law.)
You may also call 800-877-9700 for information on how to make and receive
electronic transfers through your bank.
(over please)
1
<PAGE>
In addition, if you have changed the record address by telephone or
facsimile, shares may not be redeemed by telephone or facsimile for 15 days
after receipt of the address change. Please call 800-877-9700 to confirm
receipt of your order submitted by facsimile.
If you purchased shares directly through certain stockbrokers, banks or other
financial institutions, you may sell those shares only through those
organizations.
The date of this Supplement is June 1, 1995.
2
<PAGE>
Neuberger&Berman
INCOME FUNDS
No-Load Income Funds
Neuberger&Berman GOVERNMENT MONEY FUND
Neuberger&Berman CASH RESERVES
Neuberger&Berman ULTRA SHORT BOND FUND
Neuberger&Berman GOVERNMENT INCOME FUND
Neuberger&Berman LIMITED MATURITY BOND FUND
Neuberger&Berman MUNICIPAL MONEY FUND
Neuberger&Berman MUNICIPAL SECURITIES TRUST
Minimum Initial Purchase $2,000 -- Call 800-877-9700
EACH FUND (A "FUND") INVESTS ALL OF ITS NET INVESTABLE ASSETS IN ITS
CORRESPONDING PORTFOLIO (A "PORTFOLIO") OF INCOME MANAGERS TRUST ("MANAGERS
TRUST"), AN OPEN-END MANAGEMENT INVESTMENT COMPANY MANAGED BY NEUBERGER&BERMAN
MANAGEMENT INCORPORATED ("N&B MANAGEMENT"). EACH PORTFOLIO INVESTS IN SECURITIES
IN ACCORDANCE WITH AN INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS IDENTICAL
TO THOSE OF ITS CORRESPONDING FUND. THE INVESTMENT PERFORMANCE OF EACH FUND WILL
DIRECTLY CORRESPOND WITH THE INVESTMENT PERFORMANCE OF ITS CORRESPONDING
PORTFOLIO. THIS "MASTER/FEEDER FUND" STRUCTURE IS DIFFERENT FROM THAT OF MANY
OTHER INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES. FOR MORE INFORMATION ON THIS UNIQUE STRUCTURE THAT YOU
SHOULD CONSIDER, SEE "SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS" ON PAGE 28.
Please read this Prospectus before investing in any of the Funds and keep it
for future reference. It contains information about the Funds that a prospective
investor should know before investing. Statements of Additional Information
("SAIs"), one about the Municipal Funds and Portfolios and one about the taxable
Funds and Portfolios, dated March 1, 1995, are on file with the Securities and
Exchange Commission. The SAIs are incorporated herein by reference (so they are
legally considered a part of this Prospectus). You can obtain a free copy of
either SAI by calling N&B Management at 800-877-9700. An investment in the
Funds, as in any mutual fund, is neither insured nor guaranteed by the U.S.
Government. Although Neuberger&Berman Government Money Fund, Neuberger&Berman
Cash Reserves, and Neuberger&Berman Municipal Money Fund seek to maintain a net
asset value of $1.00 per share, there is no assurance they will be able to do
so. Prospectus Dated March 1, 1995
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY
BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SUMMARY 3
The Funds and Portfolios 3
Risk Factors 5
Management 5
EXPENSE INFORMATION 6
Shareholder Transaction
Expenses for Each Fund 6
Annual Fund Operating Expenses 6
Example 7
FINANCIAL HIGHLIGHTS 9
Government Money 10
Cash Reserves 11
Ultra Short 12
Limited Maturity 13
Government Income 14
Municipal Money 15
Municipal Securities 16
INVESTMENT PROGRAMS 20
Money Market Portfolios 20
Bond Portfolios 21
Municipal Portfolios 22
Short-Term Trading; Portfolio
Turnover 23
Ratings of Securities 23
Borrowings 24
Other Investments 25
PERFORMANCE INFORMATION 26
Yield 26
Total Return 26
Tax-Equivalent Yield 26
Yield and Total Return
Information 27
SPECIAL INFORMATION
REGARDING ORGANIZATION,
CAPITALIZATION,
AND OTHER MATTERS 28
The Funds 28
The Portfolios 29
HOW TO BUY SHARES 31
By Mail 31
By Wire 31
By Telephone 31
By Exchanging Shares 32
Other Information 32
HOW TO SELL SHARES 33
By Mail or Facsimile Transmission (Fax) 33
By Telephone 34
By Check 34
Other Information 35
ADDITIONAL INFORMATION ON TELEPHONE
TRANSACTIONS 36
SHAREHOLDER SERVICES 37
Automatic Investing and Dollar Cost
Averaging 37
Exchange Privilege 37
Systematic Withdrawal Plans 38
Retirement Plans 38
SHARE PRICES AND
NET ASSET VALUE 39
DIVIDENDS, OTHER
DISTRIBUTIONS, AND TAXES 40
Distribution Options 40
Taxes 40
MANAGEMENT AND ADMINISTRATION 43
Trustees and Officers 43
Investment Manager, Administrator,
Distributor, and Sub-Adviser 43
Expenses 44
Shareholder Servicing Arrangements 46
DESCRIPTION OF INVESTMENTS 47
USE OF JOINT PROSPECTUS AND
STATEMENTS OF
ADDITIONAL INFORMATION 54
DIRECTORY 55
FUNDS ELIGIBLE FOR EXCHANGE 56
</TABLE>
2
<PAGE>
SUMMARY
The Funds and Portfolios
Each Fund is a series of Neuberger&Berman Income Funds (the "Trust") and
invests in a corresponding Portfolio that, in turn, invests in securities in
accordance with an investment objective, policies, and limitations that are
identical to those of the Fund. The trustees of the Trust believe that this
master/feeder fund structure may benefit shareholders. For more information
about the organization of the Funds and the Portfolios, including certain
features of the master/feeder fund structure, see "Special Information Regarding
Organization, Capitalization, and Other Matters" on page 28.
In this Prospectus you will find information about three different basic
types of income mutual funds--money market funds, bond funds, and municipal
funds.
Here is a summary of important features of the Funds and their corresponding
Portfolios. You may want to invest in a variety of Funds to fit your particular
investment needs. Of course, there can be no assurance that a Fund will meet its
investment objective.
<TABLE>
<CAPTION>
Neuberger&Berman Investment Principal Portfolio Comparative
Income Funds Objective Investments Information
<S> <C> <C> <C>
MONEY MARKET
FUNDS
Government Money Maximum safety and U.S. Treasury Seeks to maintain a
liquidity and the obligations and other constant share price of
highest available money market $1.00; dollar- weighted
current income instruments backed by average portfolio
the full faith and maturity of up to 90
credit of the United days
States
Cash Reserves Highest current income High quality money Seeks to maintain a
consistent with safety market instruments of constant share price of
and liquidity government and $1.00; dollar- weighted
non-government average portfolio
issuers maturity of up to 90
days
BOND FUNDS
Ultra Short Higher total return High quality money Lowest expected price
than is available from market instruments and fluctuation of
money market funds, short-term debt Neuberger & Berman bond
with minimal risk to securities of funds; dollar-weighted
principal and government and non- average portfolio
liquidity government issuers maturity of up to two
years
3
<PAGE>
Limited Maturity Highest current income Short-to- More potential price
consistent with low intermediate- term fluctuation; dollar-
risk to principal and debt securities, at weighted average
liquidity; and least investment portfolio maturity of up
secondarily, total grade to five years
return
Government Income High level of current At least 65% in U.S. Greater price
income and total Government and Agency fluctuation; invests in
return, consistent securities, with an securities with a wide
with safety of emphasis on U.S. range of maturities
principal Government
mortgage-backed
securities; at least
25% in mortgage-
backed and asset-
backed securities
MUNICIPAL FUNDS
Municipal Money Maximum current High quality, Seeks to maintain a
tax-exempt income short-term municipal constant share price of
consistent with safety securities $1.00; dollar- weighted
and liquidity average portfolio
maturity of up to 90
days
Municipal Securities High current tax- Municipal securities More potential price
exempt income with low rated A or better fluctuation; dollar-
risk to principal, weighted average
limited price portfolio maturity of up
fluctuation, and to 12 years
liquidity; and
secondarily, total
return
</TABLE>
4
<PAGE>
Risk Factors
An investment in any Fund involves certain risks, depending upon the types of
investments made by its corresponding Portfolio. For example, Neuberger&Berman
Government Money Portfolio, which invests only in U.S. Treasury obligations, has
less risk than Neuberger&Berman Government Income Portfolio, which invests at
least 25% of its total assets in mortgage-backed and asset-backed securities,
may engage in lending portfolio securities and other investment techniques, and
may borrow for leverage. Special risk factors apply to investments, which may be
made by certain Portfolios, in foreign securities, options and futures
contracts, zero coupon bonds, and swap agreements. The Portfolios invest in
fixed income securities, the value of which is likely to decline in times of
rising interest rates and rise in times of falling interest rates. In general,
the longer the maturity of a fixed income security, the more pronounced is the
effect of a change in interest rates on the value of the security. For more
details about each Portfolio, its investments and their risks, see "Investment
Programs" on page 20 and "Description of Investments" on page 47.
The investment program of Neuberger&Berman Government Income Portfolio is
intended to protect principal by focusing on the credit quality of the issuers.
Principal may, however, be at risk due to market rate fluctuations.
Management
N&B Management, with the assistance of Neuberger&Berman, L.P.
("Neuberger&Berman") as sub-adviser, selects investments for the Portfolios. N&B
Management also provides administrative services to the Portfolios and the Funds
and acts as distributor of Fund shares. See "Management and Administration" on
page 43. If you want to know how to buy and sell shares or exchange them for
shares of other Neuberger&Berman Funds(SM), see "How to Buy Shares" on page 31,
"How to Sell Shares" on page 33, and "Shareholder Services--Exchange Privilege"
on page 37.
5
<PAGE>
EXPENSE INFORMATION
This section gives you certain information about the expenses of each Fund and
its corresponding Portfolio. See "Performance Information" for important facts
about the investment performance of each Fund, after taking expenses into
account.
Shareholder Transaction Expenses for Each Fund
As shown by this table, you pay no transaction charges when you buy or sell Fund
shares.
<TABLE>
<CAPTION>
<S> <C>
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
</TABLE>
If you want to redeem shares by wire transfer, the Funds' transfer agent
charges a fee (currently $8.00) for each wire redemption. Shareholders who have
one or more accounts in the Neuberger&Berman Funds(SM) aggregating $250,000 or
more in value are not charged for wire redemptions; the $8.00 fee is borne by
N&B Management.
Annual Fund Operating Expenses
(as a percentage of average net assets)
The following table shows anticipated Annual Fund Operating Expenses, which
are paid out of the assets of each Fund and which include each Fund's pro
rata portion of the Operating Expenses of its corresponding Portfolio. These
expenses are borne indirectly by Fund shareholders. Each Fund pays N&B
Management an administration fee and shareholder servicing fee, each based on
the Fund's net asset value. Each Portfolio pays N&B Management a management fee,
based on the Portfolio's average daily net assets; a pro rata portion of this
fee is borne indirectly by the corresponding Fund. Therefore, the table combines
management and administration fees. The Funds and Portfolios also incur other
expenses for things such as accounting and legal fees, maintaining shareholder
records, and furnishing shareholder statements and Fund reports. "Operating
Expenses" exclude interest, taxes, brokerage commissions, and extraordinary
expenses. The Funds' expenses are factored into their share prices and dividends
and are not charged directly to Fund shareholders. For more information, see
"Management and Administration" and the SAIs.
6
<PAGE>
<TABLE>
<CAPTION>
Neuberger&Berman Management and 12b-1 Other Total Operating
Income Funds Administration Fees Fees Expenses Expenses
<S> <C> <C> <C> <C>
GOVERNMENT MONEY 0.50% None 0.22% 0.72%
CASH RESERVES 0.44% None 0.21% 0.65%
ULTRA SHORT 0.29% None 0.36% 0.65%
LIMITED MATURITY 0.49% None 0.21% 0.70%
GOVERNMENT INCOME 0.00% None 0.75% 0.75%
MUNICIPAL MONEY 0.50% None 0.23% 0.73%
MUNICIPAL SECURITIES 0.33% None 0.32% 0.65%
</TABLE>
(Reflects N&B Management's expense reimbursement undertaking described below)
Anticipated Annual Fund Operating Expenses for each Fund are annualized
projections based upon current administration fees for the Fund and management
fees for its corresponding Portfolio, with "Other Expenses" based on each Fund's
and Portfolio's expenses for the past fiscal year. The trustees of the Trust
believe that the aggregate per share expenses of each Fund and its corresponding
Portfolio will be approximately equal to the expenses the Fund would incur if
its assets were invested directly in the type of securities being held by its
corresponding Portfolio. The trustees of the Trust also believe that investment
in a Portfolio by investors in addition to a Fund may enable the Portfolio to
achieve economies of scale which could reduce expenses. Other feeder funds may
invest in the Portfolios, and such other funds' expenses and, correspondingly,
their returns may differ from those of the Funds.
The previous table reflects N&B Management's voluntary undertaking to reimburse
Cash Reserves, Ultra Short, Limited Maturity, Government Income, and Municipal
Securities for each Fund's Operating Expenses and that Fund's pro rata share of
its corresponding Portfolio's Operating Expenses which, in the aggregate, exceed
0.65% per annum (0.70% for Limited Maturity; 0.75% for Government Income) of the
Fund's average daily net assets. Each undertaking can be terminated by N&B
Management by giving a Fund at least 60 days' prior written notice. Absent the
reimbursement, total anticipated aggregate Fund and Portfolio Operating Expenses
would be 0.71%, 0.86%, 0.71%, 2.07% and 0.83% per annum of the average daily net
assets of Cash Reserves, Ultra Short, Limited Maturity, Government Income, and
Municipal Securities, respectively, based upon expenses of each Fund for its
1994 fiscal year.
Example
To illustrate the effect of Operating Expenses, let's assume that each Fund's
annual return is 5% and that it had annual Operating Expenses described in the
table above. For every $1,000 you invested in each Fund, you would have paid the
following amounts of total expenses if you closed your account at the end of
each of the following time periods:
7
<PAGE>
<TABLE>
<CAPTION>
Neuberger&Berman
Income Funds 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
GOVERNMENT MONEY $7 $23 $40 $89
CASH RESERVES $7 $21 $36 $81
ULTRA SHORT $7 $21 $36 $81
LIMITED MATURITY $7 $22 $39 $87
GOVERNMENT INCOME $8 $24 $42 $93
MUNICIPAL MONEY $7 $23 $41 $91
MUNICIPAL SECURITIES $7 $21 $36 $81
</TABLE>
The assumption in this example of a 5% annual return is required by
regulations of the Securities and Exchange Commission applicable to all mutual
funds. THE INFORMATION IN THE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE
GREATER OR LESS THAN THOSE SHOWN, AND MAY CHANGE IF EXPENSE REIMBURSEMENTS
CHANGE.
8
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
The financial information in the following tables is for each Fund as of October
31, 1994 and includes data related to each Fund (except Government Income)
before it was converted into a series of the Trust on July 2, 1993. This
information has been audited by the Funds' independent auditors. You may obtain
further information about the performance of each Fund at no cost in the Fund's
annual report to shareholders by calling 800-877-9700. Also, see "Performance
Information."
9
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Government Money Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
1994(1) 1993(1) 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $1.0000 $1.0000 $1.0003 $1.0000 $ .9997
Income From Investment
Operations
Net Investment Income .0302 .0248 .0354 .0567 .0718
Net Gains or Losses on
Securities -- -- -- .0003 .0003
Total From Investment
Operations .0302 .0248 .0354 .0570 .0721
Less Distributions
Dividends (from net
investment income) (.0302) (.0248) (.0354) (.0567) (.0718)
Distributions (from
capital gains) -- -- (.0003) -- --
Total Distributions (.0302) (.0248) (.0357) (.0567) (.0718)
Net Asset Value, End of
Year $1.0000 $1.0000 $1.0000 $1.0003 $1.0000
Total Return+ +3.07% +2.51% +3.62% +5.82% +7.42%
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $ 251.5 $ 277.2 $ 301.1 $ 246.5 $ 234.6
Ratio of Expenses to
Average Net Assets(4) .72% .70% .66% .68% .74%
Ratio of Net Income to
Average Net Assets(4) 3.00% 2.48% 3.50% 5.66% 7.19%
</TABLE>
See Notes to Financial Highlights.
<TABLE>
<CAPTION>
Year Ended October 31,
1989 1988 1987 1986(2) 1985
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $1.0000 $1.0002 $1.0002 $1.0003 $1.0001
Income From Investment
Operations
Net Investment Income .0758 .0579 .0504 .0597 .0751
Net Gains or Losses on
Securities (.0002) -- .0002 .0002 .0003
Total From Investment
Operations .0756 .0579 .0506 .0599 .0754
Less Distributions
Dividends (from net
investment income) (.0758) (.0579) (.0504) (.0597) (.0751)
Distributions (from
capital gains) (.0001) (.0002) (.0002) (.0003) (.0001)
Total Distributions (.0759) (.0581) (.0506) (.0600) (.0752)
Net Asset Value, End of
Year $ .9997 $1.0000 $1.0002 $1.0002 $1.0003
Total Return+ +7.86% +5.97% +5.18% +6.17% +7.79%
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $ 184.3 $ 173.2 $ 266.4 $ 156.1 $ 62.6
Ratio of Expenses to
Average Net Assets(4) .87% .79% .75% .75% .75%
Ratio of Net Income to
Average Net Assets(4) 7.55% 5.73% 5.11% 5.80% 7.29%
</TABLE>
See Notes to Financial Highlights.
10
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Cash Reserves
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
Period from
April 12,
1988(3)
to October 31,
1994(1) 1993(1) 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $1.0001 $1.0001 $1.0000 $1.0000 $1.0001 $1.0000 $ 1.0000
Income From
Investment
Operations
Net Investment
Income .0327 .0263 .0363 .0600 .0766 .0866 .0401
Net Gains or Losses
on Securities -- .0002 .0002 -- -- .0001 --
Total From
Investment
Operations .0327 .0265 .0365 .0600 .0766 .0867 .0401
Less Distributions
Dividends (from net
investment income) (.0327) (.0263) (.0363) (.0600) (.0766) (.0866) (.0401)
Distributions (from
capital gains) (.0001) (.0002) (.0001) -- (.0001) -- --
Total
Distributions (.0328) (.0265) (.0364) (.0600) (.0767) (.0866) (.0401)
Net Asset Value, End
of Year $1.0000 $1.0001 $1.0001 $1.0000 $1.0000 $1.0001 $ 1.0000
Total Return+ +3.33% +2.68% +3.69% +6.17% +7.94% +9.01% +4.08%(7)
Ratios/Supplemental
Data
Net Assets, End of
Year (in millions) $ 311.9 $ 273.1 $ 261.7 $ 278.9 $ 278.2 $ 267.1 $ 140.9
Ratio of Expenses
to Average Net
Assets(4) .65% .65% .65% .65% .65% .65% .60%(5)
Ratio of Net Income
to Average Net
Assets(4) 3.31% 2.63% 3.63% 6.00% 7.66% 8.70% 7.54%(5)
</TABLE>
See Notes to Financial Highlights.
11
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Ultra Short Bond Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
1994(1) 1993(1) 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $ 9.64 $ 9.70 $ 9.83 $ 9.79 $ 9.83 $ 9.87
Income From Investment
Operations
Net Investment Income .35 .40 .56 .68 .79 .89
Net Gains or Losses on
Securities
(both realized and
unrealized) (.17) (.06) (.13) .04 (.04) (.04)
Total From Investment
Operations .18 .34 .43 .72 .75 .85
Less Distributions
Dividends (from net
investment income) (.35) (.40) (.56) (.68) (.79) (.89)
Net Asset Value, End of
Year $ 9.47 $ 9.64 $ 9.70 $ 9.83 $ 9.79 $ 9.83
Total Return+ +1.96% +3.53% +4.44% +7.64% +7.98% +9.05%
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $101.1 $104.4 $103.3 $ 97.9 $ 85.8 $103.3
Ratio of Expenses to
Average Net Assets(4) .65% .65% .65% .65% .65% .65%
Ratio of Net Income to
Average Net Assets(4) 3.72% 4.09% 5.70% 6.97% 8.14% 9.06%
Portfolio Turnover Rate(6) -- 115% 66% 89% 120% 85%
</TABLE>
See Notes to Financial Highlights.
<TABLE>
<CAPTION>
Period from
March 1, Period from
1988 November 7,
to October Year Ended 1986( (3)) to
31, February 29, February 28,
1988 1988 1987
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $ 9.93 $ 9.98 $ 9.99
Income From Investment Operations
Net Investment Income .47 .66 .18
Net Gains or Losses on Securities
(both realized and unrealized) (.06) (.05) (.01)
Total From Investment Operations .41 .61 .17
Less Distributions
Dividends (from net investment income) (.47) (.66) (.18)
Net Asset Value, End of Year $ 9.87 $ 9.93 $ 9.98
Total Return+ +4.20%(7) +6.31% +1.75%(7)
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $101.0 $125.3 $ 66.7
Ratio of Expenses to Average Net Assets(4) .63%(5) .50% .50%(5)
Ratio of Net Income to Average Net Assets(4) 7.01%(5) 6.72% 6.03%(5)
Portfolio Turnover Rate(6) 47% 121% 39%
</TABLE>
See Notes to Financial Highlights.
12
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Limited Maturity Bond Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
1994(1) 1993(1) 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $10.49 $10.40 $10.24 $ 9.91 $ 9.96 $ 9.88
Income From Investment
Operations
Net Investment Income .56 .58 .63 .71 .80 .82
Net Gains or Losses on
Securities (both realized
and unrealized) (.55) .14 .16 .33 (.05) .08
Total From Investment
Operations .01 .72 .79 1.04 .75 .90
Less Distributions
Dividends (from net
investment income) (.56) (.58) (.63) (.71) (.80) (.82)
Distributions (from
capital gains) (.05) (.05) -- -- -- --
Distributions (in excess
of capital gains) (.01) -- -- -- -- --
Tax return of capital -- -- -- -- -- --
Total Distributions (.62) (.63) (.63) (.71) (.80) (.82)
Net Asset Value, End of
Year $ 9.88 $10.49 $10.40 $ 10.24 $ 9.91 $ 9.96
Total Return+ +.13% +7.09% +7.87% +10.89% +7.85% +9.56%
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $308.6 $357.3 $273.0 $ 163.2 $101.3 $107.7
Ratio of Expenses to
Average Net Assets(4) .69% .65% .65% .65% .65% .65%
Ratio of Net Income to
Average Net Assets(4) 5.53% 5.49% 6.02% 7.07% 8.09% 8.33%
Portfolio Turnover Rate(6) -- 114% 113% 88% 88% 121%
</TABLE>
See Notes to Financial Highlights.
<TABLE>
<CAPTION>
Period from Period from
March 1, 1988 Year Ended June 9,1986(3)
to October 31, February 29, to February 28,
1988 1988 1987
<S> <C> <C> <C>
Net Asset Value, Beginning of
Year $ 10.00 $10.17 $10.00
Income From Investment
Operations
Net Investment Income .48 .69 .48
Net Gains or Losses on
Securities (both realized and
unrealized) (.12) (.17) .17
Total From Investment
Operations .36 .52 .65
Less Distributions
Dividends (from net investment
income) (.48) (.69) (.48)
Distributions (from capital
gains) -- -- --
Distributions (in excess of
capital gains) -- -- --
Tax return of capital -- -- --
Total Distributions (.48) (.69) (.48)
Net Asset Value, End of Year $ 9.88 $10.00 $10.17
Total Return+ +3.76%(7) +5.39% +6.58%(7)
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 133.5 $107.3 $ 69.6
Ratio of Expenses to Average
Net Assets(4) .63%(5) .50% .50%(5)
Ratio of Net Income to Average
Net Assets(4) 7.34%(5) 6.97% 6.71%(5)
Portfolio Turnover Rate(6) 68% 158% 41%
</TABLE>
See Notes to Financial Highlights.
13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Government Income Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
July 6, 1993( (3))
Year Ended to
October 31, 1994 October 31, 1993
<S> <C> <C>
Net Asset Value, Beginning of Year $10.07 $10.00
Income From Investment Operations
Net Investment Income .63 .19
Net Gains or Losses on Securities (both
realized and unrealized) (.83) .07
Total From Investment Operations (.20) .26
Less Distributions
Dividends (from net investment income) (.61) (.19)
Distributions (from capital gains) (.02) --
Distributions (in excess of capital gains) -- --
Tax return of capital (.02) --
Total Distributions (.65) (.19)
Net Asset Value, End of Year $ 9.22 $10.07
Total Return+ -2.08% +2.57%(7)
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 11.1 $ 8.3
Ratio of Expenses to Average Net Assets(4) .75% .75%(5)
Ratio of Net Income to Average Net Assets(4) 6.52% 6.02%(5)
</TABLE>
See Notes to Financial Highlights.
14
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Municipal Money Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
1994(1) 1993(1) 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $ .9996 $ .9995 $ .9989 $ .9989 $ .9989
Income From Investment
Operations
Net Investment Income .0204 .0184 .0263 .0432 .0539
Net Gains or Losses on
Securities (.0001) .0001 .0006 -- --
Total From Investment
Operations .0203 .0185 .0269 .0432 .0539
Less Distributions
Dividends (from net
investment income) (.0204) (.0184) (.0263) (.0432) (.0539)
Net Asset Value, End of
Year $ .9995 $ .9996 $ .9995 $ .9989 $ .9989
Total Return+ +2.06% +1.86% +2.66% +4.40% +5.53%
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $ 150.3 $ 181.6 $ 195.6 $ 173.9 $ 190.6
Ratio of Expenses to
Average Net Assets .73% .74% .67% .66% .67%
Ratio of Net Income to
Average Net Assets 2.02% 1.85% 2.63% 4.34% 5.41%
</TABLE>
See Notes to Financial Highlights.
<TABLE>
<CAPTION>
Period from
December 10,
1984( (3)) to
Year Ended October 31, October 31,
1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $ .9993 $ .9995 $1.0000 $1.0000 $ 1.0000
Income From Investment
Operations
Net Investment Income .0591 .0478 .0388 .0447 .0485
Net Gains or Losses on
Securities (.0004) (.0002) (.0005) -- --
Total From Investment
Operations .0587 .0476 .0383 .0447 .0485
Less Distributions
Dividends (from net
investment income) (.0591) (.0478) (.0388) (.0447) (.0485)
Net Asset Value, End of
Year $ .9989 $ .9993 $ .9995 $1.0000 $ 1.0000
Total Return+ +6.07% +4.89% +3.95% +4.56% +4.53%(7)
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $ 204.8 $ 184.5 $ 226.1 $ 231.4 $ 84.3
Ratio of Expenses to
Average Net Assets .74% .69% .71% .72% .59%(4)
Ratio of Net Income to
Average Net Assets 5.91% 4.76% 3.90% 4.29% 4.79%(4)
</TABLE>
See Notes to Financial Highlights.
15
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Municipal Securities Trust
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended October 31,
1994(1) 1993(1) 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $11.12 $ 10.53 $10.39 $10.14 $10.09
Income From Investment
Operations
Net Investment Income .46 .48 .54 .58 .64
Net Gains or Losses on
Securities
(both realized and
unrealized) (.73) .68 .14 .25 .05
Total From Investment
Operations (.27) 1.16 .68 .83 .69
Less Distributions
Dividends (from net
investment income) (.46) (.48) (.54) (.58) (.64)
Distributions (from
capital gains) (.12) (.09) -- -- --
Distributions (in excess
of capital gains) (.01) -- -- -- --
Total Distributions (.59) (.57) (.54) (.58) (.64)
Net Asset Value, End of
Year $10.26 $ 11.12 $10.53 $10.39 $10.14
Total Return+ -2.57% +11.30% +6.72% +8.41% +6.99%
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $ 51.1 $ 105.2 $ 37.0 $ 25.5 $ 14.1
Ratio of Expenses to
Average Net Assets(4) .65% .62% .50% .50% .50%
Ratio of Net Income to
Average Net Assets(4) 4.24% 4.33% 5.16% 5.61% 6.28%
Portfolio Turnover Rate(6) -- 35% 46% 10% 42%
</TABLE>
See Notes to Financial Highlights.
<TABLE>
<CAPTION>
Period from
July 9,
1987( (3)) to
Year Ended October 31, October 31,
1989 1988 1987
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $10.08 $ 9.73 $ 10.00
Income From Investment Operations
Net Investment Income .63 .59 .15
Net Gains or Losses on Securities
(both realized and unrealized) .01 .35 (.27)
Total From Investment Operations .64 .94 (.12)
Less Distributions
Dividends (from net investment income) (.63) (.59) (.15)
Distributions (from capital gains) -- -- --
Distributions (in excess of capital gains) -- -- --
Total Distributions (.63) (.59) (.15)
Net Asset Value, End of Year $10.09 $10.08 $ 9.73
Total Return+ +6.55% +9.88% -1.15%(7)
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 10.5 $ 9.8 $ 6.7
Ratio of Expenses to Average Net Assets(4) .50% .50% .50%(5)
Ratio of Net Income to Average Net Assets(4) 6.26% 5.90% 5.29%(5)
Portfolio Turnover Rate(6) 17% 23% 0%
</TABLE>
See Notes to Financial Highlights.
16
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
1) The per share amounts and ratios which are shown reflect income and
expenses including each Fund's proportionate share of its corresponding
Portfolio's income and expenses.
2) Data for the year ended October 31, 1986 includes the combined
operations of the Neuberger&Berman Government Money Fund and of Sentry Cash
Management Fund for the period from the date of the merger of the two funds
(March 3, 1986). The merger was accounted for under the purchase method of
accounting. The data shown above for the period prior thereto are the historical
results of the Neuberger&Berman Government Money Fund.
3) The date investment operations commenced.
4) After reduction of expenses of the Neuberger&Berman Government Money
Fund by the administrator. Had the administrator not undertaken such action the
annualized ratios of expenses and investment income--net to average daily net
assets would have been .83% and 5.69%, respectively, for the year ended October
31, 1988, .90% and 4.96%, respectively, in 1987, .95% and 5.60%, respectively,
in 1986, and 1.15% and 6.89%, respectively, in 1985. There was no reduction of
expenses by the administrator for the years ended October 31, 1989 through and
including 1994.
After reduction of expenses of Neuberger&Berman Cash Reserves by the
administrator. Had the administrator not undertaken such action the annualized
ratios of expenses and investment income--net to average daily net assets would
have been .71% and 3.25%, respectively, for the year ended October 31, 1994,
.76% and 2.52%, respectively, in 1993, .69% and 3.59%, respectively, in 1992,
.69% and 5.96%, respectively, in 1991, .72% and 7.59%, respectively, in 1990,
.83% and 8.52%, respectively, in 1989 and 1.03% and 7.11%, respectively, in
1988.
After reduction of expenses of the Neuberger&Berman Ultra Short Bond Fund by
the administrator. Had the administrator not undertaken such action the
annualized ratios of expenses and investment income--net to average daily net
assets would have been .86% and 3.51%, respectively, for the year ended October
31, 1994, .95% and 3.79%, respectively, in 1993, .87% and 5.48%, respectively,
in 1992, .87% and 6.75%, respectively, in 1991, .81% and 7.98%, respectively, in
1990, .92% and 8.79%, respectively, in 1989, .89% and 6.75%, respectively, for
the period ended October 31, 1988, .95% and 6.27%, respectively, for the year
ended February 29, 1988 and 1.50% and 5.03%, respectively, in 1987.
After reduction of expenses of the Neuberger&Berman Limited Maturity Bond
Fund by the administrator. Had the administrator not undertaken such action the
annualized ratios of expenses and investment income--net to average daily net
assets would have been .71% and 5.51%, respectively, for the year ended October
31, 1994, .73% and 5.42%, respectively, in 1993, .68% and 5.99%, respectively,
in 1992, .72% and 7.00%, respectively, in 1991, .71% and 8.03%, respectively, in
1990, .77% and
17
<PAGE>
8.21%, respectively, in 1989, .74% and 7.23%, respectively, for the period ended
October 31, 1988, .78% and 6.69%, respectively, for the year ended February 29,
1988, and 1.50% and 5.71%, respectively, in 1987.
After reduction of expenses of the Neuberger&Berman Government Income Fund by
the administrator. Had the administrator not undertaken such action the
annualized ratios of expenses and investment income--net to average daily net
assets would have been 2.07% and 5.20%, respectively, for the year ended October
31, 1994 and 2.50% and 4.27%, respectively, in 1993.
Annualized. After reduction of expenses of the Neuberger&Berman Municipal
Money Fund by the administrator. Had the administrator not undertaken such
action the annualized ratios of expenses and investment income--net to average
daily net assets would have been .85% and 4.53%, respectively, in 1985.
After reduction of expenses of the Neuberger&Berman Municipal Securities
Trust by the administrator. Had the administrator not undertaken such action the
annualized ratios of expenses and investment income--net to average daily net
assets would have been .82% and 4.07%, respectively, for the year ended October
31, 1994, 1.04% and 3.91%, respectively, in 1993, 1.16% and 4.50%, respectively,
in 1992, 1.38% and 4.73%, respectively, in 1991, 1.67% and 5.11%, respectively,
in 1990, 2.50% and 4.26%, respectively, in 1989, 2.00% and 4.40%, respectively,
in 1988 and 1.50% and 4.29%, respectively, in 1987.
5) Annualized.
6) Each Fund (except Neuberger&Berman Government Income Fund) transferred
all of its portfolio securities into its respective Portfolio on July 2, 1993
and no additional security-related activity occurred in any Fund after that
date. The portfolio turnover rates for each Portfolio were as follows:
<TABLE>
<CAPTION>
Period from
July 2, 1993
(Commencement
Year Ended of Operations) to
October 31, 1994 October 31, 1993
<S> <C> <C>
Neuberger&Berman Ultra Short Bond Portfolio 94% 46%
Neuberger&Berman Limited Maturity Bond Portfolio 102% 71%
Neuberger&Berman Municipal Securities Portfolio 127% 25%
</TABLE>
<TABLE>
<CAPTION>
Period from
July 6, 1993
(Commencement
Year Ended of Operations) to
October 31, 1994 October 31, 1993
<S> <C> <C>
Neuberger&Berman Government Income Portfolio 263% 119%
</TABLE>
18
<PAGE>
7) Not annualized.
+ 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 year, and
assumes dividends and capital gain distributions, if any, were reinvested.
Results represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate and shares when redeemed may be
worth more or less than original cost. Total return would have been lower for
all Funds (except Neuberger&Berman Government Money Fund and Neuberger&Berman
Municipal Money Fund) if N&B Management had not absorbed certain expenses.
19
<PAGE>
INVESTMENT PROGRAMS
The investment policies and limitations of each Fund and its corresponding
Portfolio are identical. Each Fund invests only in its corresponding Portfolio.
Therefore, the following shows you the kinds of securities in which each
Portfolio invests. For an explanation of some types of investments, see
"Description of Investments" on page 47.
The investment objectives of the Funds and Portfolios are not fundamental.
The Funds have undertaken to a state securities commission that they will seek
shareholder approval before changing any investment objective. The Funds have
also undertaken not to change their investment objectives without 30 days' prior
notice to shareholders. There can be no assurance that the Funds or Portfolios
will achieve their objectives. Investment policies and limitations of the Funds
and the Portfolios are not fundamental unless otherwise specified in this
Prospectus or the SAIs. While a non-fundamental policy or limitation may be
changed by the trustees of the Trust or of Managers Trust without shareholder
approval, the Funds intend to notify shareholders before making any material
change to such policies or limitations. Fundamental policies may not be changed
without shareholder approval. Each Fund, by itself, does not represent a
comprehensive investment program.
Additional investment techniques, features, and limitations concerning the
Portfolios' investment programs are described in the SAIs.
The value of fixed income securities is likely to rise in times of falling
market interest rates and fall in times of rising interest rates. Investments in
shorter-term income securities normally are less affected by interest rate
changes than are investments in longer-term securities. The value of income
securities is also affected by the creditworthiness of the issuer.
Money Market Portfolios
The investment objective of Neuberger&Berman Government Money Fund and Portfolio
is to provide maximum safety and liquidity with the highest available current
income. The investment objective of Neuberger&Berman Cash Reserves Fund and
Portfolio is to provide the highest current income consistent with safety and
liquidity.
Neuberger&Berman Government Money Portfolio and Neuberger&Berman Cash
Reserves Portfolio each invests in a portfolio of debt instruments with
remaining maturities of 397 days or less and maintains a dollar-weighted average
portfolio maturity of not more than 90 days. Each Portfolio uses the amortized
cost method of valuation to enable its corresponding Fund to maintain a stable
$1.00 share price. Of course, there is no guarantee that either Fund will be
able to maintain a $1.00 share price.
20
<PAGE>
Neuberger&Berman Government Money Portfolio, as a fundamental policy, may invest
only in U.S. Treasury obligations and other securities backed by the full faith
and credit of the United States. Currently, the Portfolio invests only in U.S.
Treasury obligations. As a fundamental policy, the Portfolio may not invest in
repurchase agreements.
Neuberger&Berman Cash Reserves Portfolio invests in high quality U.S. dollar-
denominated money market instruments of U.S. and foreign issuers, including
governments and their agencies and instrumentalities, banks and other financial
institutions, and corporations, and may invest in repurchase agreements with
respect to these instruments. The Portfolio may invest 25% or more of its total
assets in U.S. Government and Agency securities or in certificates of deposit or
bankers' acceptances issued by domestic branches of U.S. banks.
Bond Portfolios
The investment objective of Neuberger&Berman Ultra Short Bond Fund and Portfolio
is to provide a higher total return than is available from money market funds,
with minimal risk to principal and liquidity. The investment objective of
Neuberger& Berman Limited Maturity Bond Fund and Portfolio is to provide the
highest current income consistent with low risk to principal and liquidity; and
secondarily, total return. The investment objective of Neuberger&Berman
Government Income Fund and Portfolio is to provide a high level of current
income and total return, consistent with safety of principal.
Neuberger&Berman Ultra Short Bond Portfolio, Neuberger&Berman Limited
Maturity Bond Portfolio, and Neuberger&Berman Government Income Portfolio each
invests in a diversified portfolio of fixed and variable rate debt securities
and seeks to increase income and preserve or enhance total return by actively
managing average portfolio maturity in light of market conditions and trends.
Neuberger&Berman Ultra Short Bond Portfolio invests in a diversified
portfolio of U.S. Government and Agency securities and high-quality debt
securities issued by financial institutions, corporations, and others. These
securities include mortgage- backed and asset-backed securities, money market
instruments, repurchase agreements with respect to U.S. Government and Agency
securities, and U.S. dollar-denominated securities of foreign issuers. The
Portfolio may also purchase and sell options, futures contracts and options on
futures contracts. The Portfolio may invest 25% or more of its total assets in
U.S. Government and Agency securities or in certificates of deposit or bankers'
acceptances issued by domestic branches of U.S. banks. The Portfolio's
dollar-weighted average portfolio maturity ranges up to two years, providing
greater flexibility than the Money Market Portfolios.
Neuberger&Berman Limited Maturity Bond Portfolio invests in a diversified
portfolio of short-to-intermediate-term U.S. Government and Agency securities
and debt securities issued by financial institutions, corporations, and others,
of at least
21
<PAGE>
investment grade. These securities include mortgage-backed and asset-backed
securities, repurchase agreements with respect to U.S. Government and Agency
securities, and foreign investments. The Portfolio may purchase and sell covered
call and put options, interest-rate futures contracts, and options on those
futures contracts and may engage in lending portfolio securities. The Portfolio
may invest up to 5% of its net assets in municipal securities when N&B
Management believes such securities may outperform other available issues. The
Portfolio's dollar-weighted average portfolio maturity may range up to five
years.
Neuberger&Berman Government Income Portfolio invests at least 65% of its
total assets in U.S. Government and Agency securities, with an emphasis on U.S.
Government mortgage-backed securities. The Portfolio invests at least 25% of its
total assets in mortgage-backed securities (including U.S. Government
mortgage-backed securities) and asset-backed securities. The Portfolio may also
invest in investment grade debt securities, including foreign investments, and
securities issued by financial institutions and corporations, and may purchase
and sell covered call and put options, interest-rate and foreign currency
futures contracts, and options on those futures contracts. Although there are no
restrictions on the maturity composition of its portfolio of securities, the
Portfolio anticipates that it normally will invest in intermediate-term and
longer-term securities, but will remain flexible to respond to market conditions
and interest rate trends. The Portfolio may engage in lending portfolio
securities, short-term trading, purchasing forward commitments on securities,
and repurchase agreements, and may use leverage.
The investment program of Neuberger&Berman Government Income Portfolio is
intended to protect principal by focusing on the credit quality of the issuers.
Principal may, however, be at risk due to market rate fluctuations.
Municipal Portfolios
The investment objective of Neuberger&Berman Municipal Money Fund and Portfolio
is to provide the maximum current income exempt from federal income tax
("tax-exempt income") consistent with safety and liquidity. The investment
objective of Neuberger&Berman Municipal Securities Trust and Portfolio is to
provide high current tax-exempt income with low risk to principal, limited price
fluctuation and liquidity; and secondarily, total return.
Neuberger&Berman Municipal Money Portfolio and Neuberger&Berman Municipal
Securities Portfolio each normally invests only in municipal obligations with
fixed and variable interest rates. These obligations include private activity
bonds, the interest income from which is an item of tax preference for purposes
of the federal alternative minimum tax. In addition, when, in N&B Management's
opinion, market conditions warrant a defensive posture, each Portfolio may
temporarily invest part of its assets in short-term, high quality taxable
securities.
22
<PAGE>
Neuberger&Berman Municipal Money Portfolio invests in high quality municipal
obligations with remaining maturities of 397 days or less and maintains a
dollar- weighted average portfolio maturity of not more than 90 days. The
Portfolio uses the amortized cost method of valuation to enable its
corresponding Fund to maintain a stable $1.00 share price. Of course, there is
no guarantee that the Fund will be able to maintain a $1.00 share price.
Neuberger&Berman Municipal Securities Portfolio invests in securities rated A
or better by Standard & Poor's Ratings Group ("S&P") and Moody's Investors
Service, Inc. ("Moody's") (or if unrated by either of these agencies, deemed by
N&B Management to be of comparable quality). As a fundamental policy, the
Portfolio invests at least 80% of its total assets in municipal obligations. The
Portfolio's dollar-weighted average portfolio maturity will not exceed twelve
years. The Portfolio seeks to increase income and preserve or enhance total
return by actively managing the average portfolio maturity in light of market
conditions and trends. The Portfolio also may seek to hedge all or a part of its
portfolio against changes in securities prices resulting from changes in
interest rates by buying or selling interest rate futures contracts and options
on those contracts.
Short-Term Trading; Portfolio Turnover
Neuberger&Berman Government Income Portfolio may engage in short-term trading to
a substantial degree to take advantage of anticipated changes in interest rates.
This investment policy may be considered speculative. Although none of the other
Portfolios purchases securities with the intention of profiting from short-term
trading, each Portfolio may sell portfolio securities prior to maturity when N&B
Management believes that such action is advisable. The portfolio turnover rate
of the Neuberger& Berman Ultra Short Bond, Limited Maturity Bond, Government
Income, and Municipal Securities Portfolios and the portfolio turnover rates for
the predecessors of Ultra Short Bond, Limited Maturity Bond and Municipal
Securities for 1994 and earlier years is set forth under "Notes to Financial
Highlights." It is anticipated that Neuberger&Berman Government Income
Portfolio's turnover rate generally will exceed 100%. Turnover rates in excess
of 100% generally result in higher costs (which are borne directly by the
Portfolio) and a possible increase in realized short-term capital gains (or
losses).
Ratings of Securities
HIGH QUALITY DEBT SECURITIES (ALL PORTFOLIOS). High quality debt securities are
securities that have received a rating from at least one nationally recognized
statistical rating organization ("NRSRO"), such as S&P or Moody's, in one of the
two highest rating categories (the highest category in the case of commercial
paper) or, if not rated
23
<PAGE>
by any NRSRO, such as U.S. Government and Agency securities, have been
determined by N&B Management to be of comparable quality. If two or more NRSROs
have rated a security, at least two of them must rate it as high quality if the
security is to be eligible for purchase by a Money Market Portfolio.
INVESTMENT GRADE DEBT SECURITIES (NEUBERGER&BERMAN LIMITED MATURITY BOND AND
NEUBERGER&BERMAN GOVERNMENT INCOME PORTFOLIOS). Investment grade debt securities
are securities that have received a rating from at least one NRSRO in one of the
four highest rating categories or, if not rated by any NRSRO, have been
determined by N&B Management to be of comparable quality. Moody's deems
securities rated in its fourth highest category (Baa) to have speculative
characteristics; a change in economic factors could lead to a weakened capacity
of the issuer to repay.
If the quality of securities held by any Portfolio (other than money market
Portfolios) deteriorates so that the securities would no longer satisfy its
standards, the Portfolio will engage in an orderly disposition of the downgraded
securities to the extent necessary to ensure that the Portfolio's holdings of
such securities will not exceed 5% of the Portfolio's net assets. The money
market Portfolios, in accordance with Rule 2a-7, will consider disposing of the
securities. Further information regarding the ratings assigned to securities
purchased by the Portfolios is included in the SAIs.
Borrowings
(ALL PORTFOLIOS EXCEPT NEUBERGER&BERMAN GOVERNMENT INCOME PORTFOLIO). Each
Portfolio has a fundamental policy that it may not borrow money, except that it
may (1) borrow money from banks for temporary or emergency purposes and not for
leveraging or investment and (2) except for Neuberger&Berman Government Money
Portfolio, enter into reverse repurchase agreements for any purpose, so long as
the aggregate amount of borrowings and reverse repurchase agreements does not
exceed one-third of the Portfolio's total assets (including the amount borrowed)
less liabilities (other than borrowings). None of the Portfolios expects to
borrow money. As a non- fundamental policy, none of these Portfolios may
purchase portfolio securities if its outstanding borrowings, including reverse
repurchase agreements, exceed 5% of its total assets. Dollar rolls are treated
as reverse repurchase agreements.
(NEUBERGER&BERMAN GOVERNMENT INCOME PORTFOLIO). The Portfolio, as a
fundamental policy, may borrow money from banks for any purpose, including to
meet redemptions and increase the amount available for investment, and enter
into reverse repurchase agreements (including dollar rolls) for any purpose, so
long as the aggregate amount of borrowings and reverse repurchase agreements
does not exceed one-third of the Portfolio's total assets (including the amount
borrowed) less liabilities (other than borrowings). Leveraging (borrowing) to
increase amounts available for investment may exaggerate the effect on net asset
value of any increase or decrease in the market value
24
<PAGE>
of the securities of the Portfolio. Money borrowed for leveraging will be
subject to interest costs which may or may not be recovered by income and
appreciation of the securities purchased.
Other Investments
For temporary defensive purposes, the Portfolios may invest up to 100% of their
total assets in cash or cash equivalents, or in commercial paper (except for
Neuberger&Berman Government Money Portfolio), U.S. Government and Agency
securities and (except for Neuberger&Berman Government Money Portfolio)
repurchase agreements on U.S. Government and Agency securities, the interest on
which may be subject to federal and state income taxes, and may adopt shorter
weighted average maturities than normal.
25
<PAGE>
PERFORMANCE INFORMATION
The performance of the Neuberger&Berman Income Funds can be measured as yield or
as total return. The Funds' corresponding Portfolios invest in various kinds of
fixed income securities, so their performance is related to changes in interest
rates. Generally, investments in shorter-term income securities are less
affected by interest rate changes than are investments in longer-term income
securities. For this reason, longer-term bond funds usually have higher yields
and carry more risk than shorter- term bond funds. Money market funds, which
seek to maintain a stable share price and invest only in income securities with
remaining maturities of 397 days or less, have the least risk. The
creditworthiness of issuers of income securities also affects their risk; for
example, U.S. Government and Agency securities are generally considered to have
less risk than bonds rated "investment grade."
The table under "Summary--The Funds and Portfolios" shows the investment
objective, principal types of investments, and comparative information about
each Fund and its corresponding Portfolio. This should help you decide which
Fund best fits your needs. For more detailed information, see "Investment
Programs" and "Description of Investments." Further information regarding each
Fund's performance is presented in its annual report to shareholders, which is
available without charge by calling 800-877-9700.
Yield
YIELD refers to the income generated by an investment over a particular period
of time, which is annualized (assumed to have been generated for one year) and
expressed as an annual percentage rate. Effective yield is yield assuming that
all distributions are reinvested. Yields for money market funds over a seven-day
period are called current yields.
Total Return
TOTAL RETURN is the change in value of an investment in a fund over a particular
period, assuming that all distributions have been reinvested. Thus, total return
reflects not only income earned, but also variations in share prices from the
beginning to the end of the period.
Tax-Equivalent Yield
STATE AND LOCAL TAXES. Substantially all of Neuberger&Berman Government Money
Fund's income dividends and a portion of Neuberger&Berman Government Income
Fund's income dividends are not subject to income taxes of most states and
localities. For those states and localities, these Funds may measure their
performance by a tax-equivalent yield. This reflects the taxable yield that an
individual
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investor at the highest marginal income tax rate for that state or municipality
would have to receive to equal the yield from Neuberger&Berman Government Money
Fund or Neuberger&Berman Government Income Fund taking into account that a
portion is tax-exempt. Of course, all dividends paid by Neuberger&Berman
Government Money Fund and Neuberger&Berman Government Income Fund are subject to
federal income tax at applicable rates.
FEDERAL TAX. Substantially all income dividends paid by Neuberger&Berman
Municipal Money Fund and Neuberger&Berman Municipal Securities Trust are exempt
from federal income tax. The Municipal Funds also may measure their performance
by a tax-equivalent yield. This reflects the taxable yield that an investor at
the highest marginal federal income tax rate would have to receive to equal the
primarily tax-exempt yield from each Municipal Fund.
Before investing in one of the Municipal Funds, you may want to determine
which investment--tax-free or taxable--will result in a higher after-tax yield.
To do this, divide the tax-free yield on the investment by the decimal
determined by subtracting from 1 the highest federal tax rate you pay. For
example, if the tax-free yield is 4% and your maximum federal tax bracket is
39.6%, the computation is:
4% Tax-Free Yield / (1 - .396 Tax Rate)
= 4% / .604 = 6.62% Tax-Equivalent Yield
In this example, your after-tax return would be higher from the 4% tax-free
investment if available taxable yields are below 6.62%. Conversely, the taxable
investment would provide a higher yield when taxable yields exceed 6.62%. This
example assumes that all of the income from the investment is exempt.
Yield and Total Return Information
N&B Management has reimbursed certain Funds for certain expenses, which has the
effect of increasing their yields and total returns. You can obtain current
performance information about each Fund by calling N&B Management at
800-877-9700.
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SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS
The Funds
Each Fund is a separate series of the Trust, a Delaware business trust organized
pursuant to a Trust Instrument dated December 23, 1992. The Trust is registered
under the Investment Company Act of 1940 (the "1940 Act") as a diversified,
open-end management investment company, commonly known as a mutual fund. The
Trust has eight separate operating series. Each Fund invests all of its net
investable assets in its corresponding Portfolio, in each case receiving a
beneficial interest in that Portfolio. The predecessors of the Funds (except
Neuberger&Berman Government Income Fund) were converted into the Funds on July
2, 1993; these conversions were approved by the shareholders of the predecessors
of the Funds in April 1993. Neuberger&Berman Government Income Fund began
operations on July 6, 1993. The trustees of the Trust may establish additional
series or classes of shares without the approval of shareholders. The assets of
each series belong only to that series, and the liabilities of each series are
borne solely by that series and no other.
DESCRIPTION OF SHARES. Each Fund is authorized to issue an unlimited number
of shares of beneficial interest (par value $0.001 per share). Shares of each
Fund represent equal proportionate interests in the assets of that Fund only and
have identical voting, dividend, redemption, liquidation, and other rights. All
shares issued are fully paid and non-assessable, and shareholders have no
preemptive or other right to subscribe to any additional shares.
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to hold annual
meetings of shareholders of the Funds. The trustees will call special meetings
of shareholders of a Fund only if required under the 1940 Act or in their
discretion or upon the written request of holders of 10% or more of the
outstanding shares of that Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the shareholders
of a Fund will not be personally liable for the obligations of any Fund; a
shareholder is entitled to the same limitation of personal liability extended to
shareholders of corporations. To guard against the risk that Delaware law might
not be applied in other states, the Trust Instrument requires that every written
obligation of the Trust or a Fund contain a statement that such obligation may
be enforced only against the assets of the Trust or Fund and provides for
indemnification out of Trust or Fund property of any shareholder nevertheless
held personally liable for Trust or Fund obligations, respectively.
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The Portfolios
Each Portfolio is a separate series of Managers Trust, a New York common law
trust organized as of December 1, 1992. Managers Trust is registered under the
1940 Act as a diversified, open-end management investment company. Managers
Trust has eight separate operating Portfolios. The assets of each Portfolio
belong only to that Portfolio, and the liabilities of each Portfolio are borne
solely by that Portfolio and no other.
FUNDS' INVESTMENTS IN PORTFOLIOS. Each Fund seeks to achieve its investment
objective by investing all of its net investable assets in its corresponding
Portfolio having the same investment objective, policies, and limitations as the
Fund. Accordingly, each Portfolio directly acquires its own securities and its
corresponding Fund acquires an indirect interest in those securities.
Historically, N&B Management, which is the investment manager of each Portfolio,
has sponsored, with Neuberger&Berman, traditionally structured funds since 1950.
However, it has operated 12 master funds and 20 feeder funds since August 1993
and now operates 15 master funds and 24 feeder funds.
Each Fund's investment in its corresponding Portfolio is in the form of a
non- transferable beneficial interest. Members of the general public may not
purchase a direct interest in a Portfolio. Three mutual funds that are series of
Neuberger&Berman Income Trust ("N&B Income Trust"), Neuberger&Berman Ultra Short
Bond Trust, Neuberger&Berman Limited Maturity Bond Trust, and Neuberger&Berman
Government Income Trust, invest all of their respective net investable assets in
their corresponding Portfolios described herein. Each Portfolio may also permit
other investment companies and/or other institutional investors to invest in the
Portfolio. All investors will invest in the Portfolio on the same terms and
conditions as the Funds and will pay a proportionate share of the Portfolio's
expenses. N&B Income Trust does not sell its shares directly to members of the
general public. Other investors in a Portfolio would not be required to sell
their shares at the same public offering price as the Fund, could have a
different administration fee and expenses than the Fund, and (except N&B Income
Trust) might charge a sales commission. Therefore, Fund shareholders may have
different returns than shareholders in another investment company that invests
exclusively in the Portfolio. There is currently no such other investment
company that offers its shares directly to members of the general public.
Information regarding any fund that may invest in a Portfolio in the future will
be available from N&B Management by calling 800-877-9700.
A Fund's investment in its corresponding Portfolio may be affected by the
actions of other large investors in the Portfolio, if any. For example, if a
large investor in a Portfolio other than a Fund redeemed its interest in the
Portfolio, the Portfolio's remaining investors (including the Fund) might, as a
result, experience higher pro rata operating expenses, thereby producing lower
returns.
Each Fund may withdraw its entire investment from its corresponding Portfolio
at any time, if the trustees of the Trust determine that it is in the best
interests of the
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Fund and its shareholders to do so. A Fund might withdraw, for example, if there
were other investors in a Portfolio with power to, and who did by a vote of all
investors (including the Fund), change the investment objective, policies, or
limitations of the Portfolio in a manner not acceptable to the trustees of the
Trust. A withdrawal could result in a distribution in kind of securities (as
opposed to a cash distribution) by the Portfolio. That distribution could result
in a less diversified portfolio of investments for the Fund and could affect
adversely the liquidity of the Fund's investment portfolio. If the Fund decided
to convert those securities to cash, it usually would incur brokerage fees or
other transaction costs. If a Fund withdrew its investment from a Portfolio, the
trustees would consider what action might be taken, including the investment of
all of the Fund's net investable assets in another pooled investment entity
having substantially the same investment objective as the Fund or the retention
by the Fund of its own investment manager to manage its assets in accordance
with its investment objective, policies, and limitations. The inability of the
Fund to find a suitable replacement could have a significant impact on
shareholders.
INVESTOR MEETINGS AND VOTING. Each Portfolio normally will not hold meetings
of investors except as required by the 1940 Act. Each investor in a Portfolio
will be entitled to vote in proportion to its relative beneficial interest in
the Portfolio. On most issues subjected to a vote of investors, as required by
the 1940 Act and other applicable law, a Fund will solicit proxies from its
shareholders and will vote its interest in the Portfolio in proportion to the
votes cast by the Fund's shareholders. If there are other investors in a
Portfolio, there can be no assurance that any issue that receives a majority of
the votes cast by Fund shareholders will receive a majority of votes cast by all
Portfolio investors; indeed, if other investors hold a majority interest in a
Portfolio, they could have voting control of the Portfolio.
CERTAIN PROVISIONS. Each investor in a Portfolio, including a Fund, will be
liable for all obligations of the Portfolio, but not of the other Portfolios.
However, the risk of an investor in a Portfolio incurring financial loss on
account of such liability would be limited to circumstances in which the
Portfolio had inadequate insurance and was unable to meet its obligations out of
its assets. Upon liquidation of a Portfolio, investors would be entitled to
share pro rata in the net assets of the Portfolio available for distribution to
investors.
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HOW TO BUY SHARES
You can buy shares of any Fund directly by mail, wire, or telephone, or through
an exchange of shares with another Neuberger&Berman Fund(SM). (See "Funds
Eligible for Exchange") Shares are purchased at the next price calculated on a
day the New York Stock Exchange ("NYSE") is open, after your order is received
and accepted. Prices for shares of Neuberger&Berman Government Money Fund,
Neuberger& Berman Cash Reserves, and Neuberger&Berman Municipal Money Fund are
calculated as of noon Eastern time; prices for shares of all other Funds are
usually calculated as of 4 p.m. Eastern time.
N&B Management may, in its discretion, waive the minimum investment
requirements.
By Mail
Send your check or money order payable to "Neuberger&Berman Funds" by mail to:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
or by overnight courier, U.S. Express Mail, or registered or certified
mail to:
Neuberger&Berman Funds
c/o State Street Bank and Trust Company
2 Heritage Drive
North Quincy, MA 02171
Be sure to specify the Fund whose shares you want to buy. If this is your
first purchase, please send a minimum of $2,000 for shares of each Fund you
want to buy. For an additional purchase, please send at least $100 for shares
of any Fund. Unless your check or money order is made payable on its face to
Neuberger&Berman Funds(SM), it may not be accepted.
By Wire
Call 800-877-9700 before you wire money to buy shares. Your wire goes to
State Street Bank and Trust Company ("State Street") and must include your
name, the name of the Fund whose shares you want to buy, and your account
number. The minimum for a first purchase of shares of a Fund is $2,000. For
an additional purchase, you should wire at least $1,000.
By Telephone
Call 800-877-9700 to buy shares of Ultra Short, Limited Maturity,
Government Income, or Municipal Securities. The minimum for a first purchase
of shares of any of these Funds by telephone is $2,000. The minimum for an
additional
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purchase is $1,000. Your order may be canceled if your payment is not received
by the fifth business day (third business day, effective June 1995) after your
order is placed; in that case you could be liable for any resulting losses or
fees a Fund or its agents have incurred. To recover those losses or fees, a Fund
has the right to redeem shares from your account. Please refer to "Additional
Information on Telephone Transactions."
By Exchanging Shares
Call 800-877-9700 for instructions on how to invest by exchanging shares of
another Neuberger&Berman Fund(SM) for shares of a Fund. To buy Fund shares by an
exchange, both fund accounts must be registered in the same name, address, and
taxpayer ID number. The minimum for a first purchase of shares of a Fund by an
exchange is $2,000 worth of shares of the other fund, and the minimum for an
additional purchase is $1,000. For more details, see "Shareholder
Services--Exchange Privilege" and "Funds Eligible for Exchange."
Other Information
* You can also buy shares of the Funds indirectly through certain
stockbrokers, banks, and other financial institutions, some of which may charge
you a fee.
* The Funds will not issue a certificate for your shares unless you write
to State Street and request it. Most shareholders do not want certificates,
because you must present the certificate to sell or exchange the shares it
represents. This means that you would be able to sell or exchange those shares
only by mail, and not by telephone or facsimile transmission. If you lose your
certificate, you will have to pay the expense of replacing it.
* You must pay for your shares in U.S. dollars by check or money order
(drawn on a U.S. bank), or by bank or federal funds wire transfer; cash cannot
be accepted.
* Each Fund has the right to suspend the offering of its shares for a
period of time. Each Fund also has the right to accept or reject a purchase
order in its sole discretion, including certain purchase orders using the
exchange privilege. See "Shareholder Services--Exchange Privilege."
* If you paid by check and your check does not clear, or if you ordered
shares by telephone and fail to pay for them, your purchase will be canceled and
you could be liable for any resulting losses or fees a Fund or its agents have
incurred. To recover those losses or fees, a Fund has the right to bill you or
to redeem shares from your account.
* When you sign your application for a new Fund account, you will be
certifying that your Social Security or other taxpayer ID number is correct and
whether you are subject to backup withholding. If you violate certain federal
income tax provisions, the Internal Revenue Service can require the Funds to
withhold 31% of your taxable distributions and redemptions (other than
redemptions from Neuberger&Berman Government Money Fund, Neuberger&Berman Cash
Reserves, and Neuberger& Berman Municipal Money Fund).
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HOW TO SELL SHARES
You can sell (redeem) all or some of your shares at any time by mail, telecopy,
or telephone, or by writing a check (for certain Funds only). HOWEVER, IF YOU
HAVE A CERTIFICATE FOR YOUR SHARES (INCLUDING SHARES OF A FUND'S PREDECESSOR),
YOU CAN REDEEM THOSE SHARES ONLY BY SENDING THE CERTIFICATE BY MAIL. You can
also sell shares by exchanging them for shares of other Neuberger&Berman
Funds(SM); see "Shareholder Services--Exchange Privilege" for details.
TO SELL SHARES HELD IN A RETIREMENT ACCOUNT OR BY A TRUST, ESTATE, GUARDIAN,
OR BUSINESS ORGANIZATION, PLEASE CALL 800-225-1596 FOR INSTRUCTIONS.
Your shares are sold at the next price calculated on a day the NYSE is open,
after your sales order is received and accepted. Prices for shares of
Neuberger&Berman Government Money Fund, Neuberger&Berman Cash Reserves, and
Neuberger& Berman Municipal Money Fund are calculated as of noon Eastern time;
prices for shares of all other Funds are usually calculated as of 4
p.m. Eastern time.
Unless otherwise instructed, the Fund will mail a check for your sales
proceeds, payable to the owner(s) shown on your account ("record owner"), to the
address shown on your account ("record address"). You may designate in your Fund
application a bank account to which, at your request, State Street will wire
your sales proceeds of $1,000 or more. State Street currently charges a fee of
$8.00 for each wire. Shareholders who have one or more accounts in the
Neuberger&Berman Funds(SM) aggregating $250,000 or more in value are not charged
for wire redemptions; the $8.00 fee is borne by N&B Management.
If you purchased shares indirectly through certain stockbrokers, banks, or
other financial institutions, you may sell those shares only through those
organizations.
By Mail or Facsimile Transmission (Fax)
Write a redemption request letter with your name and account number, the Fund's
name, and the dollar amount or number of shares of the Fund you want to sell,
together with any other instructions, and send it by mail to:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
or by overnight courier, U.S. Express Mail, or registered or certified
mail to:
Neuberger&Berman Funds
c/o State Street Bank and Trust Company
2 Heritage Drive
North Quincy, MA 02171
or by facsimile, to redeem up to $50,000 worth of shares, to 212-476-8848.
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If shares are issued in certificate form they are not eligible to be redeemed by
facsimile. Please call 800-877-9700 to confirm receipt and acceptance of your
order submitted by facsimile.
Be sure to have all owners sign the request exactly as their names appear on
the account and include the certificate for your shares if you have one.
To protect you and the Fund against fraud, your signature on a redemption
request must have a signature guarantee if (1) you want to sell more than
$50,000 worth of shares, or (2) you want the redemption check to be made out to
someone other than the record owner, or (3) you want the check to be mailed
somewhere other than to the record address, or (4) you want the proceeds to be
wired to a bank account not named in your application or in your written
instruction with a signature guarantee. You can obtain a signature guarantee
from most banks, stockbrokers and dealers, credit unions, and financial
institutions, but not from a notary public.
For a redemption request sent by facsimile, limited to not more than $50,000,
the redemption check may only be made out to the record owner and mailed to the
record address or the proceeds wired to a bank account named in your application
or in a written instruction from the record owner with a signature guarantee.
By Telephone
To sell shares worth at least $500, call 800-877-9700, giving your name and
account number, the name of the Fund, and the dollar amount or number of shares
you want to sell.
You can sell shares by telephone unless (1) you have declined this service
either in your application or later by writing or by submitting an appropriate
form to State Street, (2) you have a certificate for such shares, or (3) you
want to sell shares from a retirement account.
Please refer to "Additional Information on Telephone Transactions."
By Check
For Neuberger&Berman Government Money Fund, Neuberger&Berman Cash Reserves, and
Neuberger&Berman Municipal Money Fund only, you may sell shares by writing a
check for at least $250 on your account. If you requested this service on your
application, you will receive a supply of checks. You may write an unlimited
number of checks, and there is no charge. Because the amount in your account
varies daily, you cannot sell all your shares and close your account by writing
a check. Shareholders of Neuberger&Berman Ultra Short Bond Fund who have
check-writing on their accounts on the date of this prospectus are advised that
after June 30, 1995, they will no longer be able to sell shares by writing
checks on their accounts. Such shareholders of Neuberger&Berman Ultra Short Bond
Fund should
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<PAGE>
be aware that if they sell shares of Neuberger&Berman Ultra Short Bond Fund by
writing a check, they may have a tax gain or loss, because the price of
Neuberger& Berman Ultra Short Bond Fund shares fluctuates.
Other Information
* Usually redemption proceeds will be mailed to you on the next business
day, but in any case within seven calendar days.
* Each Fund may delay paying for any redemption until it is reasonably
satisfied that the check used to buy shares has cleared, which may take up to 15
days after the purchase date. So if you plan to sell shares shortly after buying
them, you may want to pay for the purchase with a certified check or money order
or by wire transfer.
* Each Fund may suspend redemptions or postpone payments on days when the
NYSE is closed (besides weekends and holidays), when trading on the NYSE is
restricted, or as permitted by the Securities and Exchange Commission.
* If you sell shares by writing a check on your account for an amount
greater than the value of your shares, or if the check is for less than $250 or
has an irregularity (such as no signature), your check will be returned to you
and you may be charged $15 by redeeming shares with that value from your
account. The check writing redemption service may be modified or terminated at
any time, or other charges may be imposed on it.
* If, because you sold shares, your account balance with any Fund falls
below $2,000, the Fund has the right to close your account after giving you at
least 60 days' written notice to reestablish the minimum balance. If you do not
do so, the Fund may redeem your remaining shares at their per share NAV on the
date of redemption and will send the redemption proceeds to you.
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ADDITIONAL INFORMATION ON
TELEPHONE TRANSACTIONS
You can buy shares by telephone, but a Fund at any time can limit the number of
its shares that may be bought or can stop accepting telephone orders. You can
also sell or exchange shares by telephone, unless (1) you have declined these
services in your application or by written notice to N&B Management or State
Street, with your signature guaranteed, or (2) you have a certificate for such
shares. Each Fund or its agent follows reasonable procedures--requiring you to
provide a form of personal identification when you telephone, recording your
telephone call, and sending you a written confirmation of each telephone
transaction--designed to confirm that telephone instructions are genuine.
However, no Fund or its agent is responsible for the authenticity of telephone
instructions or for any losses caused by fraudulent or unauthorized telephone
instructions if the Fund or its agent reasonably believed that the instructions
were genuine.
If you are unable to reach N&B Management by telephone (which might be the
case, for example, during periods of unusual market activity), consider sending
your transaction instructions by facsimile, overnight courier, or U.S. Express
Mail.
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SHAREHOLDER SERVICES
Several other services are available to assist you in investing and managing
your investment in the Funds.
Automatic Investing and Dollar Cost Averaging
If you want to invest regularly, you may participate in a plan that lets you
automatically buy shares each month in Neuberger&Berman Ultra Short Bond Fund,
Neuberger&Berman Limited Maturity Bond Fund, Neuberger&Berman Government Income
Fund, or Neuberger&Berman Municipal Securities Trust using dollar cost
averaging. Under this plan, you buy a fixed dollar amount of shares in any of
these Funds at pre-set intervals. You may pay for the shares by automatic
transfers from your accounts in Neuberger&Berman Government Money Fund,
Neuberger&Berman Cash Reserves, or Neuberger&Berman Municipal Money Fund or by
pre-authorized drafts from your bank account. You buy more shares when a Fund's
share price is relatively low and fewer shares when a Fund's share price is
relatively high. Thus, under this plan your average cost of shares is generally
lower than if you did not use dollar cost averaging. To benefit from dollar cost
averaging, you should be financially prepared to continue your participation for
a long enough period to include times when Fund share prices are lower. Of
course, the plan does not guarantee a profit and will not protect you against
losses in a declining market. For further information, call 800-877-9700.
Exchange Privilege
To exchange your shares in a Fund for shares in another Neuberger&Berman
Fund(SM), call 800-877-9700 between 8 a.m. and 4 p.m., Eastern time, on any
Monday through Friday (unless the NYSE is closed). See "Funds Eligible for
Exchange." You may also effect an exchange by sending a letter to
Neuberger&Berman Management Incorporated, 605 Third Avenue, 2nd Floor, New York,
NY 10158-0006, Attention: [Name of Fund], or by sending the letter by facsimile
to 212-476-8848, giving your name and account number, the name of the Fund, the
dollar amount or number of shares you want to sell, and the name of the fund
whose shares you want to buy. Please call 800-877-9700 to confirm receipt and
acceptance of your order by facsimile. You can use the telephone exchange
privilege unless (1) you have declined it in your application or by later
writing to N&B Management or State Street, or (2) you have a certificate for
such shares. An exchange must be for at least $1,000 worth of shares, and if the
exchange is your first purchase in another mutual fund, it must be for at least
the minimum initial investment amount for that fund. Shares are exchanged at
their next prices calculated on a day the NYSE is open, after your exchange
order is received and accepted. Please note the following about the exchange
privilege:
* You can exchange shares only between accounts registered in the same name,
address, and taxpayer ID number.
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<PAGE>
* A telephone exchange order cannot be modified or canceled.
* You can exchange only into a mutual fund whose shares are eligible for
sale in your state under applicable state securities laws.
* An exchange may have tax consequences for you.
* Because excessive trading (including short-term "market timing" trading)
can hurt a Fund's performance, each Fund may refuse any exchange orders (1) if
they appear to be market-timing transactions involving significant portions of a
Fund's assets or (2) from any shareholder account if the shareholder has been
advised that previous use of the exchange privilege was considered excessive.
Accounts under common ownership or control, including those with the same
taxpayer ID number, will be considered one account for this purpose.
* Each Fund may impose other restrictions on the exchange privilege, or
modify or terminate the privilege, but will try to give you advance notice
whenever it can reasonably do so.
Please refer to "Additional Information on Telephone Transactions."
Systematic Withdrawal Plans
If you own shares of a Fund worth at least $5,000, you can open a Systematic
Withdrawal Plan. Under the Plan, you arrange to withdraw a specific amount (at
least $50) on a monthly, quarterly, semi-annual, or annual basis, or you can
have your account completely paid out over a specified period of time. You can
also arrange for periodic cash withdrawals from your Fund account to pay fees to
your financial planner or investment adviser. Because the price of shares of
each Fund (other than Neuberger& Berman Government Money Fund, Neuberger&Berman
Cash Reserves, and Neuberger&Berman Municipal Money Fund) fluctuates, you may
incur capital gains or losses when you redeem shares of the Funds through a
Systematic Withdrawal Plan or by other methods. Call 800-877-9700 for more
information.
Retirement Plans
Retirement plans permit you to defer paying taxes on investment income and
capital gains. Contributions to these plans may also be tax deductible. Please
call 800-877-9700 for information on a variety of retirement plans, including
individual retirement accounts, simplified employee pension plans, self-employed
individual retirement plans (so-called "Keogh Plans"), corporate profit-sharing
and money purchase pension plans, section 401(k) plans, and section 403(b)(7)
accounts offered by N&B Management. The assets of these plans may be invested in
any of the Funds, except Neuberger&Berman Municipal Money Fund and
Neuberger&Berman Municipal Securities Trust.
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SHARE PRICES AND NET ASSET VALUE
Each Fund's shares are bought or sold at a price that is the Fund's net asset
value ("NAV") per share. The NAVs for each Fund and its corresponding Portfolio
are calculated by subtracting liabilities from total assets (in the case of a
Portfolio, the market value of the securities the Portfolio holds plus cash and
other assets; in the case of a Fund, its percentage interest in its
corresponding Portfolio, multiplied by the Portfolio's NAV, plus any other
assets). Each Fund's per share NAV is calculated by dividing its NAV by the
number of Fund shares outstanding and rounding the result to the nearest full
cent. Each Fund and its corresponding Portfolio calculate their NAVs at the same
time and on the same days.
Neuberger&Berman Government Money Fund, Neuberger&Berman Cash Reserves, and
Neuberger&Berman Municipal Money Fund try to maintain stable NAVs of $1.00 per
share. Their corresponding Portfolios value their securities at their cost at
the time of purchase and assume a constant amortization to maturity of any
discount or premium. These Portfolios and their corresponding Funds calculate
their NAVs as of noon Eastern time on each day the NYSE is open for business.
Neuberger&Berman Ultra Short Bond, Neuberger&Berman Limited Maturity Bond,
and Neuberger&Berman Government Income Portfolios value their securities on the
basis of bid quotations from independent pricing services or principal market
makers, or, if quotations are not available, by a method that the trustees of
Managers Trust believe accurately reflects fair value. The Portfolios
periodically verify valuations provided by the pricing services. Short-term
securities with remaining maturities of less than 60 days are valued at cost
which, when combined with interest earned, approximates market value. These
Portfolios and their corresponding Funds calculate their NAVs as of the close of
regular trading on the NYSE, usually 4 p.m. Eastern time.
Neuberger&Berman Municipal Securities Portfolio uses an independent pricing
service to determine the market value of its portfolio securities and
periodically verifies the valuations. This Portfolio and its corresponding Fund
calculate their NAVs as of the close of regular trading on the NYSE, usually 4
p.m. Eastern time.
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DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES
Each Fund distributes substantially all of its share of its corresponding
Portfolio's net investment income (net of the Fund's expenses) and net realized
capital gains. Income dividends are declared daily for each Fund at the time its
NAV is calculated and are paid monthly, and net realized capital gains, if any,
are normally distributed annually in December. Investors who are considering the
purchase of Fund shares in December should take this into account because of the
tax consequences of such distributions. Investors in Money Market Funds whose
purchase orders are converted to "federal funds" by noon Eastern time will
accrue income dividends beginning that day. For other Funds, income dividends
will accrue beginning on the day after an investor's purchase order is converted
to "federal funds."
Distribution Options
REINVESTMENT IN SHARES. All dividends and capital gain distributions, if any,
paid on shares of a Fund are automatically reinvested in additional shares of
that Fund, unless you elect to receive them in cash. Dividends are reinvested at
the Fund's per share NAV on the last business day of each month. Each
distribution of capital gains is reinvested at the Fund's per share NAV, usually
as of the date the distribution is payable. For retirement accounts, all
distributions are automatically reinvested in Fund shares; when you are at least
59-1/2 years old, you can receive distributions in cash without incurring a
premature distribution penalty tax.
DIVIDENDS IN CASH. You may elect to receive dividends in cash, with capital
gain distributions, if any, being reinvested in additional Fund shares, by
checking that election box on your application.
ALL DISTRIBUTIONS IN CASH. You may elect to receive dividends and capital
gain distributions in cash, by checking that election box on your application.
Checks for cash distributions will be mailed no later than seven days after
the last day of the month. However, if you purchased your shares with a check,
distributions on those shares may not be paid in cash until the Fund is
reasonably satisfied that your check has cleared, which may take up to 15 days
after the purchase date. You can change any distribution election by writing to
State Street, the Funds' shareholder servicing agent.
Taxes
Each Fund intends to continue to qualify for treatment as a regulated investment
company for federal income tax purposes so that it will be relieved of federal
income tax on that part of its taxable income and realized gains that it
distributes to its shareholders.
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Your investment has certain tax consequences, depending on the type of account
and the type of Fund in which you invest. If you have a retirement account,
taxes are deferred.
MONEY MARKET FUNDS AND BOND FUNDS: Taxes on Distributions. Distributions of
net realized capital gains are subject to federal income tax and may also be
subject to state and local income taxes. Your distributions are taxable when
they are paid, whether in cash or by reinvestment in additional Fund shares,
except that distributions declared in December to shareholders of record on a
date in that month and paid in the following January are taxable as if they were
paid on December 31 of the year in which the distribution was declared.
For federal income tax purposes, income dividends and net short-term capital
gain distributions are taxed as ordinary income. Distributions of net capital
gain (the excess of net long-term capital gain over net short-term capital
loss), when designated as such, are generally taxed as long-term capital gains,
no matter how long you have owned your shares.
Substantially all dividends paid by Neuberger&Berman Government Money Fund
and part of the dividends paid by Neuberger&Berman Government Income Fund
generally are not expected to be subject to state and local income taxes in most
states; however, distributions of net realized capital gains are fully subject
to those taxes. You should consult your tax adviser to determine the taxability
of those dividends and other distributions in your state and locality.
Every January, your Fund will send you a statement showing the amount of
distributions paid to you in the previous year. Information accompanying your
statement will show the portion of those distributions that generally are not
subject to state and local income taxes.
MUNICIPAL FUNDS: TAXES ON DISTRIBUTIONS. Substantially all dividends
generally are expected to be exempt from federal income tax, but may be subject
to state or local taxes; however, distributions of net realized capital gains
generally are subject to all such taxes. Those distributions that are not
tax-exempt are taxable when they are paid, whether in cash or by reinvestment in
additional Fund shares, except that distributions declared in December to
shareholders of record on a date in that month and paid in the following January
are taxable as if they were paid on December 31 of the year in which the
distribution was declared.
Neuberger&Berman Municipal Money Portfolio and Neuberger&Berman Municipal
Securities Portfolio may purchase private activity bonds. Distributions to you
attributable to the interest on these bonds may be a tax preference item for
purposes of calculating your federal alternative minimum taxable income.
Every January, your Municipal Fund will send you a statement showing the
amounts of tax-exempt and taxable distributions in the previous year, including
the portion of any dividends paid to individuals which constitutes a tax
preference item.
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All Funds except NEUBERGER&BERMAN Government Money Fund, NEUBERGER& BERMAN Cash
Reserves, and NEUBERGER&BERMAN Municipal Money Fund: Taxes on Redemptions.
Capital gains realized on your redemptions, including redemptions in connection
with exchanges to other Neuberger&Berman Funds(SM), are subject to tax. A
capital gain (or loss) is the difference between the amount you paid for the
shares (including the value of any dividends or other distributions that were
reinvested) and the amount you receive when you sell them.
When you sell shares you will receive a confirmation statement showing the
number of shares you sold and the price. Every January you will also receive a
consolidated transaction statement for the previous year. Be sure to keep your
statements; they will be useful to you and your tax preparer in determining the
capital gains and losses from your redemptions.
The foregoing is only a summary of some of the important tax considerations
affecting the Funds and their shareholders. See the SAIs for additional tax
information. There may be other federal, state, local, or foreign tax
considerations applicable to a particular investor. Therefore, you should
consult your tax advisers.
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<PAGE>
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
The trustees of the Trust and the trustees of Managers Trust, who are currently
the same individuals, have overall responsibility for the operations of each
Fund and each Portfolio, respectively. The SAIs contain general background
information about each trustee and officer of the Trust and of Managers Trust.
The officers of the Trust and of Managers Trust who are officers and/or
directors of N&B Management and/or partners of Neuberger&Berman serve without
compensation from the Funds or the Portfolios. The trustees of the Trust and of
Managers Trust, including a majority of those trustees who are not "interested
persons" (as defined in the 1940 Act) of any Fund, have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest,
including, if necessary, creating a separate board of trustees of Managers
Trust.
Investment Manager, Administrator,
Distributor, and Sub-Adviser
N&B Management serves as the investment manager of each Portfolio, as
administrator of each Fund, and as distributor of the shares of each Fund. N&B
Management and its predecessor firms have specialized in the management of
no-load mutual funds since 1950. In addition to serving the seven Portfolios,
N&B Management currently serves as investment manager or investment adviser of
other mutual funds. Neuberger& Berman, which acts as sub-adviser for the
Portfolios and other mutual funds managed by N&B Management, also serves as
investment adviser of two other investment companies. These funds had aggregate
net assets of approximately $7.4 billion as of December 31, 1994.
As sub-adviser, Neuberger&Berman furnishes N&B Management with investment
recommendations and research information without added cost to the Portfolios.
Neuberger&Berman is a member firm of the NYSE and other principal exchanges and
acts as the Portfolios' principal broker to the extent that a broker is used in
the purchase and sale of their portfolio securities. Neuberger&Berman and its
affiliates, including N&B Management, manage securities accounts that had
approximately $29 billion of assets as of December 31, 1994. All of the voting
stock of N&B Management is owned by individuals who are general partners of
Neuberger&Berman.
Theresa A. Havell, the President and a Trustee of the Trust and of Managers
Trust, is a general partner of Neuberger&Berman and a director and Vice
President of N&B Management. Ms. Havell is the Manager of the Fixed Income Group
of Neuberger& Berman, which she established in 1984. The Fixed Income Group
manages fixed income accounts that had approximately $9.9 billion of assets as
of December 31,
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1994. Ms. Havell has overall responsibility for the activities of the Fixed
Income Group, providing guidance and reviewing portfolio strategy and
structure.
The following members of the Fixed Income Group are primarily responsible for
the day-to-day management of the listed Portfolios:
Neuberger&Berman Government Money, Cash Reserves, and Ultra Short Bond
Portfolios -- Josephine Mahaney, who has been a Senior Portfolio Manager in the
Fixed Income Group since 1990 and a Vice President of N&B Management since
November 1994.
Neuberger&Berman Limited Maturity Bond Portfolio -- Margaret Didi Weinblatt,
who has been a Senior Portfolio Manager in the Fixed Income Group since 1990 and
a Vice President of N&B Management since November 1994.
Neuberger&Berman Government Income Portfolio -- Stephen A. White, who has
been a Senior Portfolio Manager in the Fixed Income Group since April 1993 and a
Vice President of N&B Management since November 1994. Prior to April 1993, he
was a portfolio manager of several large mutual funds managed by another
prominent investment adviser.
Neuberger&Berman Municipal Money and Municipal Securities Portfolios -- Clara
Del Villar, who has been a Senior Portfolio Manager in the Fixed Income Group
since December 1991 and a Vice President of N&B Management since November 1994.
From April 1991 to December 1991 she worked for a charitable organization; from
January 1990 to April 1991 she was a consultant for a commodities trading
adviser.
The partners and employees of Neuberger&Berman and officers and employees of
N&B Management, together with their families, have invested over $100 million of
their own money in Neuberger&Berman Funds(SM).
To mitigate the possibility that a Portfolio will be adversely affected by
personal trading of employees, the Trust, Managers Trust, N&B Management, and
Neuberger&Berman have adopted policies that restrict securities trading in
personal accounts of the portfolio managers and others who normally come into
possession of information on portfolio transactions. These policies comply, in
all material respects, with the recommendations of the Investment Company
Institute.
Expenses
N&B Management provides investment management services to each Portfolio that
include, among other things, making and implementing investment decisions and
providing facilities and personnel necessary to operate the Portfolio. N&B
Management provides administrative services to each Fund that include furnishing
similar facilities and personnel for the Fund. For such administrative services,
each Fund pays N&B Management a fee at the annual rate of 0.25% of that Fund's
average daily net assets. With a Fund's consent, N&B Management may subcontract
some of its respon-
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sibilities under the Administration Agreement to third parties. For investment
management services, each Portfolio (except Neuberger&Berman Government Income
Portfolio) pays N&B Management a fee at the annual rate of 0.25% of the first
$500 million of that Portfolio's average daily net assets, 0.225% of the next
$500 million, 0.20% of the next $500 million, 0.175% of the next $500 million,
and 0.15% of average daily net assets in excess of $2 billion. Neuberger&Berman
Government Income Portfolio pays N&B Management a fee for investment management
services at the annual rate of 0.35% of the first $500 million of that
Portfolio's average daily net assets, 0.325% of the next $500 million, 0.30% of
the next $500 million, 0.275% of the next $500 million, and 0.25% of average
daily net assets in excess of $2 billion. During the fiscal year ended October
31, 1994, each Fund accrued management and administration fees, as an annualized
percentage of each Fund's average daily net assets, as follows:
<TABLE>
<CAPTION>
<S> <C>
Neuberger&Berman Government Money Fund 0.50%
Neuberger&Berman Cash Reserves 0.50%
Neuberger&Berman Ultra Short Bond Fund 0.50%
Neuberger&Berman Limited Maturity Bond Fund 0.50%
Neuberger&Berman Government Income Fund 0.60%
Neuberger&Berman Municipal Money Fund 0.50%
Neuberger&Berman Municipal Securities Trust 0.50%
</TABLE>
Each Fund bears all expenses of its operations other than those borne by N&B
Management as administrator of the Fund and as distributor of its shares. Each
Portfolio bears all expenses of its operations other than those borne by N&B
Management as investment manager of the Portfolio. These expenses include, but
are not limited to, for the Funds and Portfolios, legal and accounting fees, and
compensation for trustees who are not affiliated with N&B Management; for the
Funds, shareholder servicing fees and the cost of printing and sending reports
and proxy materials to shareholders; and for the Portfolios, custodial fees for
securities.
N&B Management has voluntarily undertaken to reimburse Cash Reserves, Ultra
Short, Limited Maturity, Government Income, and Municipal Securities for each
Fund's Operating Expenses and that Fund's pro rata share of its corresponding
Portfolio's Operating Expenses (including its management fees) that exceed, in
the aggregate, 0.65% per annum (0.70% for Limited Maturity; 0.75% for Government
Income) of the Fund's average daily net assets. N&B Management may terminate
this undertaking to any Fund by giving at least 60 days' prior written notice to
the Fund.
For the fiscal year ended October 31, 1994, each Fund bore Operating Expenses
as an annualized percentage of its average daily net assets, after taking into
consideration N&B Management's expense reimbursements, as follows:
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Neuberger&Berman Government Money Fund 0.72%
Neuberger&Berman Cash Reserves 0.65%
Neuberger&Berman Ultra Short Bond Fund 0.65%
Neuberger&Berman Limited Maturity Bond Fund 0.69%
Neuberger&Berman Government Income Fund 0.75%
Neuberger&Berman Municipal Money Fund 0.73%
Neuberger&Berman Municipal Securities Trust 0.65%
</TABLE>
Shareholder Servicing Arrangements
The Funds' shareholder servicing agent is State Street. State Street administers
purchases, redemptions, and transfers of Fund shares and the payment of
dividends and other distributions through its Boston Service Center, P.O. Box
8403, Boston, MA 02266-8403.
Each Fund retains N&B Management under a Service Agreement to provide certain
shareholder, shareholder-related, and other services not furnished by State
Street. As compensation for such services, each Fund pays N&B Management a
monthly fee at the annual rate of 0.02% of the average daily net assets of that
Fund. With a Fund's consent, N&B Management may subcontract some or all of its
responsibilities under the Service Agreement to third parties.
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<PAGE>
DESCRIPTION OF INVESTMENTS
In addition to the securities referred to in "Investment Programs" herein, each
Portfolio, as indicated below, may make the following investments, among others,
individually or in combination, although it may not necessarily buy all of the
types of securities or use all of the investment techniques that are described.
For additional information on the following investments or other types of
investments in which the Portfolios may invest, see the SAIs.
Certain investment techniques, such as futures and options, securities loans,
and repurchase agreements, if used by the Municipal Portfolios, may produce
taxable income and capital gains (or losses).
U.S. GOVERNMENT AND AGENCY SECURITIES (ALL PORTFOLIOS). U.S. Government
securities are obligations of the U.S. Treasury backed by the full faith and
credit of the United States. U.S. Government Agency securities are issued or
guaranteed by U.S. Government agencies, instrumentalities, or other U.S.
Government-sponsored enterprises, such as the Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA"), Federal
Home Loan Mortgage Corporation ("FHLMC"), Student Loan Marketing Association,
Tennessee Valley Authority, and various federally chartered banks. Some of
these securities are supported by the full faith and credit of the United
States, while others may be supported by the issuer's ability to borrow from
the U.S. Treasury, subject to the Treasury's discretion in certain cases, or
only by the credit of the issuer. U.S. Government Agency securities include
U.S. Government mortgage-backed securities. The market prices of U.S.
Government securities are not guaranteed by the government and generally
fluctuate with changing interest rates.
VARIABLE AND FLOATING RATE SECURITIES (ALL PORTFOLIOS EXCEPT NEUBERGER&BERMAN
GOVERNMENT MONEY PORTFOLIO). Variable and floating rate securities have interest
rate adjustment formulas that may help to stabilize their market value. Many of
these instruments carry a demand feature which permits a Portfolio to sell them
during a determined time period at par value plus accrued interest. The demand
feature is often backed by a credit instrument, such as a letter of credit, or
by a creditworthy insurer. A Portfolio may rely on the credit instrument or the
creditworthiness of the insurer in purchasing a variable or floating rate
security. For purposes of determining its dollar- weighted average maturity,
each Portfolio calculates the remaining maturity of variable and floating rate
instruments as provided in Rule 2a-7 under the 1940 Act.
REPURCHASE AGREEMENTS/SECURITIES LOANS (ALL PORTFOLIOS EXCEPT
NEUBERGER&BERMAN GOVERNMENT MONEY PORTFOLIO). In a repurchase agreement, a
Portfolio buys a security from a Federal Reserve member bank or a securities
dealer and simultaneously agrees to sell it back at a higher price, at a
specified date, usually less than a week later. The underlying securities must
fall within the Portfolio's invest-
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<PAGE>
ment policies and limitations (but not limitations as to maturity). These
Portfolios also may lend portfolio securities to banks, brokerage firms or
institutional investors to earn income. Costs, delays, or losses could result if
the selling party to a repurchase agreement or the borrower of portfolio
securities becomes bankrupt or otherwise defaults. N&B Management monitors the
creditworthiness of sellers and borrowers.
ILLIQUID SECURITIES (ALL PORTFOLIOS EXCEPT NEUBERGER&BERMAN GOVERNMENT MONEY
PORTFOLIO). Each Portfolio may invest up to 10% of its net assets in illiquid
securities, which are securities that cannot be expected to be sold within seven
days at approximately the price at which they are valued. Due to the absence of
an active trading market, a Portfolio may experience difficulty in valuing or
disposing of illiquid securities. N&B Management determines the liquidity of the
Portfolios' securities, under supervision of the trustees of Managers Trust.
RESTRICTED SECURITIES AND RULE 144A SECURITIES (ALL PORTFOLIOS EXCEPT
NEUBERGER&BERMAN GOVERNMENT MONEY PORTFOLIO). The Portfolios may invest in
restricted securities and Rule 144A securities. Restricted securities cannot be
sold to the public without registration under the Securities Act of 1933 ("1933
Act"). Unless registered for sale, these securities can be sold only in
privately negotiated transactions or pursuant to an exemption from registration.
Restricted securities are generally considered illiquid. Rule 144A securities,
although not registered, may be resold only to qualified institutional buyers in
accordance with Rule 144A under the 1933 Act. Unregistered securities may also
be sold abroad pursuant to Regulation S under the 1993 Act. N&B Management,
acting pursuant to guidelines established by the trustees of Managers Trust, may
determine that some restricted securities are liquid.
REVERSE REPURCHASE AGREEMENTS (ALL PORTFOLIOS EXCEPT NEUBERGER&BERMAN
GOVERNMENT MONEY PORTFOLIO) AND DOLLAR ROLLS (NEUBERGER&BERMAN ULTRA SHORT BOND,
NEUBERGER&BERMAN LIMITED MATURITY BOND, AND NEUBERGER&BERMAN GOVERNMENT INCOME
PORTFOLIOS). In a reverse repurchase agreement, a Portfolio sells securities and
at the same time agrees to repurchase the same securities at a later date at a
fixed price. During the period before the repurchase, the Portfolio continues to
receive principal and interest payments on the securities. Dollar rolls are
similar to reverse repurchase agreements. In a dollar roll, a Portfolio sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type and coupon) securities on a
specified future date from the same party. During the period before the
repurchase, the Portfolio forgoes principal and interest payments on the
securities. The Portfolio is compensated by the difference between the current
sales price and the forward price for the future purchase (often referred to as
the "drop"), as well as by the interest earned on the cash proceeds of the
initial sale. Reverse repurchase agreements and dollar rolls may increase the
fluctuation in the market value of a Portfolio's assets and are a form of
leverage. N&B Management monitors the creditworthiness of parties to reverse
repurchase agreements and dollar rolls.
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<PAGE>
WHEN-ISSUED TRANSACTIONS (ALL PORTFOLIOS EXCEPT NEUBERGER&BERMAN GOVERNMENT
MONEY AND NEUBERGER&BERMAN CASH RESERVES PORTFOLIOS). In a when-issued
transaction, a Portfolio commits to purchase securities in order to secure an
advantageous price and yield at the time of the commitment and pays for the
securities when they are delivered at a future date (generally within three
months). If the seller fails to complete the sale, a Portfolio may lose the
opportunity to obtain a favorable price and yield. When-issued securities may
decline or increase in value during the period from the Portfolio's investment
commitment to the settlement of the purchase, which may magnify fluctuation in a
Fund's NAV. Neither of the Municipal Portfolios may invest more than 10% of its
total assets in when-issued securities.
MORTGAGE-BACKED SECURITIES (NEUBERGER&BERMAN CASH RESERVES, NEUBERGER&BERMAN
ULTRA SHORT BOND, NEUBERGER&BERMAN LIMITED MATURITY BOND, AND NEUBERGER&BERMAN
GOVERNMENT INCOME PORTFOLIOS). Mortgage-backed securities represent interests
in, or are secured by and payable from, pools of mortgage loans, including
collateralized mortgage obligations. These securities may be U.S. Government
mortgage-backed securities, which are issued or guaranteed by a U.S. Government
agency or instrumentality (though not necessarily backed by the full faith and
credit of the United States), such as GNMA, FNMA, and FHLMC certificates. Other
mortgage-backed securities are issued by private issuers, generally originators
of and investors in mortgage loans, including savings associations, mortgage
bankers, commercial banks, investment bankers, and special purpose entities.
These private mortgage-backed securities may be supported by U.S. Government
mortgage-backed securities or some form of non-government credit enhancement.
Mortgage-backed securities may have either fixed or adjustable interest rates.
Tax or regulatory changes may adversely affect the mortgage securities market.
In addition, changes in the market's perception of the issuer may affect the
value of mortgage-backed securities. The rate of return on mortgage-backed
securities may be affected by prepayments of principal on the underlying loans,
which generally increase as interest rates decline; as a result, when interest
rates decline, holders of these securities normally do not benefit from
appreciation in market value to the same extent as holders of other non-callable
debt securities. N&B Management determines the effective life of mortgage-backed
securities based on industry practice and current market conditions. If N&B
Management's determination is not borne out in practice, it could positively or
negatively affect the value of the Portfolio when market interest rates change.
Increasing market interest rates generally extend the effective maturities of
mortgage-backed securities.
ASSET-BACKED SECURITIES (NEUBERGER&BERMAN CASH RESERVES, NEUBERGER& BERMAN
ULTRA SHORT BOND, NEUBERGER&BERMAN LIMITED MATURITY BOND, AND NEUBERGER&BERMAN
GOVERNMENT INCOME PORTFOLIOS). Asset-backed securities represent interests in,
or are secured by and payable from, pools of assets, such as consumer
49
<PAGE>
loans, CARS(SM) ("Certificates for Automobile Receivables(SM)"), credit card
receivable securities, and installment loan contracts. Although these securities
may be supported by letters of credit or other credit enhancements, payment of
interest and principal ultimately depends upon individuals paying the underlying
loans, which may be affected adversely by general downturns in the economy. The
risk that recovery on repossessed collateral might be unavailable or inadequate
to support payments on asset- backed securities is greater than in the case of
mortgage-backed securities.
FOREIGN INVESTMENTS (NEUBERGER&BERMAN CASH RESERVES, NEUBERGER& BERMAN ULTRA
SHORT BOND, NEUBERGER&BERMAN LIMITED MATURITY BOND AND NEUBERGER&BERMAN
GOVERNMENT INCOME PORTFOLIOS). These Portfolios may invest in U.S.
dollar-denominated foreign securities. Foreign securities may be affected by
political or economic developments in foreign countries, the significance of
which may be difficult to discern. Foreign companies may not be subject to
accounting standards or governmental supervision comparable to U.S. companies,
and there may be less public information about their operations. In addition,
foreign markets may be less liquid or more volatile than U.S. markets and may
offer less protection to investors. It may be difficult to invoke legal process
abroad. Neuberger&Berman Limited Maturity Bond and Neuberger&Berman Government
Income Portfolios may also invest in foreign securities denominated in or
indexed to foreign currencies, which may also be affected by special risks, such
as governmental regulation of foreign exchange transactions and the fluctuation
of the foreign currencies relative to the U.S. dollar, irrespective of the
performance of the underlying investment. N&B Management considers these factors
in making investments for the Portfolios. Neuberger& Berman Limited Maturity
Bond and Neuberger&Berman Government Income Portfolios may enter into forward
foreign currency contracts or futures contracts (agreements to exchange one
currency for another at a specified price at a future date) and related options
to manage currency risks and to facilitate transactions in foreign securities.
Although these contracts can protect the Portfolios from adverse exchange rate
changes, they involve a risk of loss if N&B Management fails to predict foreign
currency values correctly.
PUT AND CALL OPTIONS, FUTURES CONTRACTS, AND OPTIONS ON FUTURES CONTRACTS
(NEUBERGER&BERMAN ULTRA SHORT BOND, NEUBERGER&BERMAN LIMITED MATURITY BOND,
NEUBERGER&BERMAN GOVERNMENT INCOME, AND NEUBERGER&BERMAN MUNICI- PAL SECURITIES
PORTFOLIOS). Each of these Portfolios may try to reduce the risk of securities
price changes (hedge) or manage portfolio maturity by (1) entering into
interest-rate futures contracts traded on futures exchanges and (2) purchasing
and writing options on futures contracts. Neuberger&Berman Limited Maturity Bond
and Neuberger&Berman Government Income Portfolios also may write covered call
options and purchase put options on debt securities in their portfolios or on
foreign currencies for hedging purposes or for the purpose of producing income.
Neuberger&
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<PAGE>
Berman Limited Maturity Bond and Neuberger&Berman Government Income Portfolios
will write call options on a security or currency only if it holds that security
or currency or has the right to obtain the security or currency at no additional
cost. These investment practices involve certain risks, including price
volatility and a high degree of leverage. These Portfolios may engage in
transactions in futures contracts and related options only as permitted by
regulations of the Commodity Futures Trading Commission.
The primary risks in using put and call options, futures contracts and
options on futures contracts, and foreign currency forward contracts or options
on foreign currencies ("Hedging Instruments") are (1) imperfect correlation or
no correlation between changes in market value of the securities held by the
Portfolio and the prices of the Hedging Instruments; (2) possible lack of a
liquid secondary market for Hedging Instruments and the resulting inability to
close out a Hedging Instrument when desired; (3) the fact that the skills needed
to use Hedging Instruments are different from those needed to select the
Portfolio's securities; (4) the fact that, although use of these instruments for
hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in hedged investments; and (5) the possible inability of the Portfolio
to purchase or sell a security at a time that would otherwise be favorable for
it to do so, or the possible need for the Portfolio to sell a security at a
disadvantageous time, due to its need to maintain "cover" or to segregate
securities in connection with its use of these instruments. Futures, options,
and forward contracts are generally considered "derivatives." Losses that may
arise from certain futures contracts are potentially unlimited.
MUNICIPAL OBLIGATIONS (NEUBERGER&BERMAN MUNICIPAL MONEY, NEUBERGER&BERMAN
MUNICIPAL SECURITIES, AND NEUBERGER&BERMAN LIMITED MATURITY BOND PORTFOLIOS).
Municipal obligations are issued by or on behalf of states, the District of
Columbia, and U.S. territories and possessions and their political subdivisions,
agencies, and instrumentalities. The interest on municipal obligations is exempt
from federal income tax. Municipal obligations include "general obligation"
securities, which are backed by the full taxing power of a municipality, and
"revenue" securities, which are backed by the income from a specific project,
facility, or tax. Municipal obligations also include industrial development and
private activity bonds--the interest on which may be a tax preference item for
purposes of the federal alternative minimum tax--which are issued by or on
behalf of public authorities and are not backed by the credit of any
governmental or public authority. "Anticipation notes" are issued by
municipalities in expectation of future proceeds from the issuance of bonds, or
from taxes or other revenues, and are payable from those bond proceeds, taxes,
or revenues. Municipal obligations also include tax-exempt commercial paper,
which is issued by municipalities to help finance short-term capital or
operating requirements. Current efforts to restructure the federal budget and
the relationship
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<PAGE>
between the federal government and state and local governments may impact the
financing of some issuers of municipal securities. Some states and localities
are experiencing substantial deficits and may find it difficult for political or
economic reasons to increase taxes. Both of these factors could affect the
ability of an issuer of municipal securities to meet its obligations.
ZERO COUPON SECURITIES (ALL PORTFOLIOS). Zero coupon securities do not pay
interest currently; instead, they are sold at a deep discount from their face
value and are redeemed at face value when they mature. Because zero coupon
securities do not pay current income, their prices can be very volatile when
interest rates change. In calculating their daily income, the Portfolios accrue
a portion of the difference between a zero coupon security's purchase price and
its face value.
SWAP AGREEMENTS (NEUBERGER&BERMAN GOVERNMENT INCOME AND NEUBERGER&BERMAN
MUNICIPAL SECURITIES PORTFOLIOS). To help enhance the value of their investments
or manage their exposure to different types of investments, the Portfolios may
enter into interest rate, currency, and mortgage swap agreements and may
purchase and sell interest rate "caps," "floors," and "collars."
In a typical interest rate swap agreement, one party agrees to make regular
payments equal to a floating interest rate on a specified amount (the "notional
principal amount") in return for payments equal to a fixed interest rate on the
same amount for a specified period. If a swap agreement provides for payment in
different currencies, the parties may also agree to exchange the notional
principal amount. Mortgage swap agreements are similar to interest rate swap
agreements, except the notional principal amount is tied to a reference pool of
mortgages.
In a cap or floor, one party agrees, usually in return for a fee, to make
payments under particular circumstances. For example, the purchaser of an
interest rate cap has the right to receive payments to the extent a specified
interest rate exceeds an agreed level; the purchaser of an interest rate floor
has the right to receive payments to the extent a specified interest rate falls
below an agreed level. A collar entitles the purchaser to receive payments to
the extent a specified interest rate falls outside an agreed range.
Swap agreements, including caps and floors, may involve leverage and may be
highly volatile; depending on how they are used, they may have a considerable
impact on a Portfolio's performance. Swap agreements involve risks depending
upon the other party's creditworthiness and ability to perform, as well as a
Portfolio's ability to terminate its swap agreements or reduce its exposure
through offsetting transactions. Swap agreements may be illiquid. The swap
market is relatively new and is largely unregulated. Swap agreements are
generally considered "derivatives."
RESIDUAL INTEREST BONDS (NEUBERGER&BERMAN MUNICIPAL SECURITIES PORTFOLIO).
The Portfolio may purchase one component of a municipal security that is
structured in two parts: a variable rate security and a residual interest
bond. The interest rate for the variable rate security is determined by an
index or an auction process held approximately every
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35 days, while the residual interest bond holder receives the balance of the
income less an auction fee. These instruments are also known as inverse floaters
because the income received on the residual interest bond is inversely related
to the market rates. The market prices of residual interest bonds are highly
sensitive to changes in market rates and may decrease significantly when market
rates increase.
MUNICIPAL LEASE OBLIGATIONS (NEUBERGER&BERMAN MUNICIPAL SECURITIES
PORTFOLIO). These obligations are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities. The
obligations typically are not fully backed by the municipality's credit. If
funds are not appropriated for the following year's lease payments, the lease
may terminate, with the possibility of default on the lease obligations and
significant loss to the Portfolio. The Portfolio may also purchase certificates
of participation in municipal lease obligations or installment sales contracts,
which entitle the holder to a proportionate interest in lease-purchase payments
made.
RESOURCE RECOVERY BONDS (NEUBERGER&BERMAN MUNICIPAL MONEY AND
NEUBERGER&BERMAN MUNICIPAL SECURITIES PORTFOLIOS). Resource recovery bonds are a
type of revenue bond issued to build facilities such as solid waste incinerators
or waste- to-energy plants. Typically, a private corporation will be involved on
a temporary basis during the construction of the facility, and the revenue
stream will be secured by fees or rents paid by municipalities for use of the
facilities. The credit and quality of resource recovery bonds may be affected by
the viability of the project itself, tax incentives for the project, and
changing environmental regulations or interpretations thereof.
TENDER OPTION BONDS (NEUBERGER&BERMAN MUNICIPAL SECURITIES PORTFOLIO). Tender
option bonds are created by coupling an intermediate-term or long-term, fixed
rate tax-exempt bond with a tender agreement that gives the holder the option to
tender the bond at its face value. A sponsor, such as a bank, broker-dealer or
other financial institution, in return for providing the tender option, receives
periodic fees equal to the difference between the bond's fixed coupon rate and
the rate that would cause the bond, with the tender option, to trade at par
value. A sponsor may terminate the tender option if, for example, the issuer of
the bond defaults on interest payments or the bond's rating falls below
investment grade. The tax treatment of tender option bonds is unclear, and the
Portfolio will not invest in any such bonds unless N&B Management has assurances
that the interest thereon will be tax-exempt.
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USE OF JOINT PROSPECTUS AND STATEMENTS OF ADDITIONAL INFORMATION
Each Fund and its corresponding Portfolio acknowledges that it is solely
responsible for all information or lack of information about that Fund and
Portfolio in this Prospectus or in the SAIs, and no other Fund or Portfolio is
responsible therefor. The trustees of the Trust and of Managers Trust have
considered this factor in approving each Fund's and Portfolio's use of a single
combined Prospectus and combined SAIs.
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DIRECTORY
Investment Manager, Administrator,
and Distributor
Neuberger&Berman Management Incorporated
605 Third Avenue, 2nd Floor
New York, NY 10158-0006
800-877-9700
Institutional Services 800-366-6264
Sub-Adviser
Neuberger&Berman, L.P.
605 Third Avenue
New York, NY 10158-3698
Custodian and Shareholder
Servicing Agent
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Address correspondence to:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
800-225-1596
Legal Counsel
Kirkpatrick & Lockhart
1800 M Street, NW
Washington, DC 20036-5891
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FUNDS ELIGIBLE FOR EXCHANGE
Equity Funds
Neuberger&Berman Focus Fund
Neuberger&Berman Genesis Fund
Neuberger&Berman Guardian Fund
Neuberger&Berman International Fund
Neuberger&Berman Manhattan Fund
Neuberger&Berman Partners Fund
Neuberger&Berman Socially Responsive Fund
Money Market Funds
Neuberger&Berman Government Money Fund
Neuberger&Berman Cash Reserves
Bond Funds
Neuberger&Berman Ultra Short Bond Fund
Neuberger&Berman Limited Maturity Bond Fund
Neuberger&Berman Government Income Fund
Municipal Funds
Neuberger&Berman Municipal Money Fund
Neuberger&Berman Municipal Securities Trust
Neuberger&Berman New York Insured
Intermediate Fund (available to residents
of New York and Florida only)
Neuberger&Berman, Neuberger&Berman Management Inc., and the above-named Funds
are service marks of Neuberger&Berman Management Inc.
(c) 1995 Neuberger&Berman Management Inc.
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