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NEUBERGER & BERMAN INCOME FUNDS
Supplement to the Prospectus dated March 1, 1996
The table on page 4 is amended to read as follows:
LIMITED MATURITY
INVESTMENT OBJECTIVE: Highest current income consistent
with low risk to principal and liquidity; and
secondarily, total return
PRINCIPAL PORTFOLIO INVESTMENTS: Short- to intermediate-term
debt securities, primarily investment grade; maximum 10% below
investment grade, but no lower than B*
COMPARATIVE INFORMATION: More potential price fluctuation;
maximum average duration of four years
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* Securities that are below investment grade will be purchased
only if rated B or higher by either Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's ("S&P") or, if unrated by
either of those entities, deemed by N&B Management to be of
comparable quality. See pages 26-27.
The following language is inserted in place of the carryover paragraph on
pages 22-23:
Neuberger & Berman LIMITED MATURITY Bond
Portfolio invests in a diversified portfolio consisting
primarily of short- to intermediate-term U.S. Government
and Agency Securities and investment grade debt
securities issued by financial institutions,
corporations, and others. The dollar-weighted average
duration of the Portfolio will not exceed four years.
The Portfolio's dollar-weighted average maturity may
range up to five years. Securities in which the
Portfolio may invest include mortgage-backed and asset-
backed securities, repurchase agreements with respect to
U.S. Government and Agency Securities, and foreign
investments. The Portfolio may invest up to 10% of its
net assets in fixed income securities that are below
investment grade, including unrated securities deemed by
N&B Management to be of comparable quality. The
Portfolio will not invest in such securities unless they
are rated at least B by Moody's or S&P or, if unrated by
either of those entities, deemed by N&B Management to be
of comparable quality. For information on the risks
associated with investments in securities rated below
investment grade, see "Ratings of Securities." The
Portfolio may purchase and sell covered call and put
options, interest-rate futures contracts, and options on
those futures contracts and may lend portfolio
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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 following language is inserted in place of the carryover paragraph on
pages 26-27:
Neuberger & Berman LIMITED MATURITY Bond
Portfolio may invest up to 10% of its net assets in fixed
income securities that are below investment grade,
including unrated securities deemed by N&B Management to
be of comparable quality. The Portfolio will not invest
in such securities unless they are rated at least B by
Moody's or S&P or, if unrated by either of those
entities, deemed by N&B Management to be of comparable
quality. Securities rated below investment grade are
described as speculative by both Moody's and S&P.
Securities rated B are judged to be predominantly
speculative with respect to their capacity to pay
interest and repay principal in accordance with the terms
of the obligations. Changes in economic conditions or
developments regarding the individual issuer are more
likely to cause price volatility and weaken the capacity
of the issuer of such securities to make principal and
interest payments than is the case for higher grade debt
securities. An economic downturn affecting the issuer
may result in an increased incidence of default. The
market for lower-rated securities may be thinner and less
active than for higher-rated securities. N&B Management
seeks to reduce the risks associated with investing in
such securities by limiting the Portfolio's holdings in
them and by extensively analyzing the potential benefits
of such an investment in relation to the associated
risks.
The date of this supplement is June 5, 1996.
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NEUBERGER & BERMAN INCOME FUNDS
Supplement to the Statement of Additional Information
dated March 1, 1996
The first paragraph under the heading "Risks of Fixed Income Securities"
is amended to read as follows:
Fixed income securities are subject to the risk of an
issuer's inability to meet principal and interest payments on its
obligations ("credit risk") and are subject to price volatility due to
such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer, and general market liquidity ("market
risk"). Lower-rated securities are more likely to react to developments
affecting market and credit risk than are more highly rated securities,
which react primarily to movements in the general level of interest rates.
Neuberger&Berman Limited Maturity Bond Portfolio may invest up to 10% of
its net assets in fixed income securities that are below investment grade.
The Portfolio will not invest in such securities unless they are rated at
least B by Moody's or S&P or, if unrated by either of those entities,
deemed by N&B Management to be of comparable quality. Securities rated
below investment grade are described as "speculative" by both Moody's and
S&P. Moody's also deems securities rated Baa to have speculative
characteristics. Securities rated B are judged to be predominantly
speculative with respect to their capacity to pay interest and repay
principal in accordance with the terms of the obligations.
The date of this supplement is June 5, 1996.
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