NEUBERGER & BERMAN INCOME FUNDS, 485BPOS, 1996-02-23

NEUBERGER & BERMAN INCOME FUNDS
485BPOS, 1996-02-23

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<PAGE>

As filed with the Securities and Exchange Commission on February 23, 1996
1933 Act Registration No. 2-85229
1940 Act Registration No. 811-3802

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [__X__]

Pre-Effective Amendment No. [____] [_____]

Post-Effective Amendment No. [_21_] [__X__]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [__X__]

Amendment No. [__22_] [__X__]

(Check appropriate box or boxes)

NEUBERGER & BERMAN INCOME FUNDS
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue
New York, New York 10158-0180
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (212) 476-8800

Theresa A. Havell, President
Neuberger & Berman Income Funds
605 Third Avenue, 2nd Floor
New York, New York 10158-0180

Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)

Approximate Date of Proposed Public Offering: Continuous

It is proposed that this filing will become effective:

_____ immediately upon filing pursuant to paragraph (b)
__X__ on February 27, 1996, pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on __________ pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on __________ pursuant to paragraph (a)(2)
<PAGE>

Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended, and filed the notice required
by such Rule for its 1995 fiscal year on November 15, 1995.

Neuberger & Berman Income Funds is a "master/feeder fund." This
Post-Effective Amendment No. 21 includes a signature page for the master
fund, Income Managers Trust, and appropriate officers and trustees
thereof.

Page ______ of ______
Exhibit Index
Begins on Page _______
<PAGE>

NEUBERGER & BERMAN INCOME FUNDS

CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 21 ON FORM N-1A

This Post-Effective Amendment consists of the following papers and
documents.

Cover Sheet

Contents of Post-Effective Amendment No. 21 on Form N-1A

Cross Reference Sheet

Neuberger & Berman Government Money Fund
Neuberger & Berman Cash Reserves
Neuberger & Berman Ultra Short Bond Fund
Neuberger & Berman Limited Maturity Bond Fund
Neuberger & Berman Municipal Money Fund
Neuberger & Berman Municipal Securities Trust
Neuberger & Berman New York Insured Intermediate Fund
-----------------------------------------------------

Part A - Prospectus

Neuberger & Berman Government Money Fund
Neuberger & Berman Cash Reserves
Neuberger & Berman Ultra Short Bond Fund
Neuberger & Berman Limited Maturity Bond Fund
---------------------------------------------

Part B - Statement of Additional Information

Neuberger & Berman Municipal Money Fund
Neuberger & Berman Municipal Securities Trust
Neuberger & Berman New York Insured Intermediate Fund
-----------------------------------------------------

Part B - Statement of Additional Information

Part C - Other Information

Signature Pages

Exhibits
<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 21 ON FORM N-1A

Cross Reference Sheets

This cross reference sheet relates to the Prospectus for Neuberger &
Berman Cash Reserves, Neuberger & Berman Government Money Fund, Neuberger
& Berman Limited Maturity Bond Fund, Neuberger & Berman Ultra Short Bond
Fund, Neuberger & Berman Municipal Money Fund, Neuberger & Berman
Municipal Securities Trust, and Neuberger & Berman New York Insured
Intermediate Fund.
<TABLE>
<CAPTION>
Form N-1A Item No. Caption in Part A Prospectus
------------------ -----------------------------

Item 1. Cover Page Front Cover Page

Item 2. Synopsis Expense Information; Summary

Item 3. Condensed Financial Financial Highlights; Performance
Information Information

Item 4. General Description of Investment Programs; Description of
Registrant Investments; Special Information
Regarding Organization, Capitalization
and Other Matters

Item 5. Management of the Fund Management and Administration; Back
Cover Page

Item 6. Capital Stock and Other Front Cover Page; Dividends, Other
Securities Distributions, and Taxes; Special
Information Regarding Organization,
Capitalization, and Other Matters

Item 7. Purchase of Securities How to Buy Shares; Additional
Being Offered Information on Telephone Transactions;
Shareholder
Services; Share Prices and Net Asset
Value; Management and Administration

Item 8. Redemption or Repurchase How to Sell Shares; Additional
Information on Telephone Transactions;
Shareholder Services; Share Prices and
Net Asset Value

Item 9. Pending Legal Not Applicable
Proceedings
</TABLE>
<PAGE>

This cross reference sheet relates to the Statement of Additional
Information for Neuberger & Berman Cash Reserves, Neuberger & Berman
Government Money Fund, Neuberger & Berman Limited Maturity Bond Fund, and
Neuberger & Berman Ultra Short Bond Fund.
<TABLE>
<CAPTION>
Caption in Part B
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------

Item 10. Cover page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. General Information and Not Applicable
History

Item 13. Investment Objectives and Investment Information; Certain
Policies Risk Considerations

Item 14. Management of the Fund Trustees And Officers

Item 15. Control Persons and Control Persons And Principal
Principal Holders of Holders of Securities
Securities

Item 16. Investment Advisory and Investment Management and
Other Services Administration Services; Trustees
And Officers; Distribution
Arrangements; Reports To
Shareholders; Custodian And
Transfer Agent; Independent
Auditors

Item 17. Brokerage Allocation Portfolio Transactions

Item 18. Capital Stock and Other Investment Information; Additional
Securities Redemption Information; Dividends
and Other Distributions

Item 19. Purchase, Redemption and Valuation of Portfolio Securities;
Pricing of Securities Being Additional Purchase Information;
Offered Additional Exchange Information;
Additional Redemption Information;
Distribution Arrangements

Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
<PAGE>

Item 21. Underwriters Investment Management and
Administration Services;
Distribution Arrangements

Item 22. Calculation of Performance Performance Information
Data

Item 23. Financial Statements Financial Statements

</TABLE>
<PAGE>

This cross reference sheet relates to the Statement of Additional
Information for Neuberger & Berman Municipal Money Fund, Neuberger &
Berman Municipal Securities Trust, and Neuberger & Berman New York Insured
Intermediate Fund.
<TABLE>
<CAPTION>
Caption in Part B
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------

Item 10. Cover page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. General Information and Not applicable
History

Item 13. Investment Objectives and Investment Information; Certain Risk
Policies Considerations

Item 14. Management of the Fund Trustees And Officers

Item 15. Control Persons and Principal Control Persons And Principal Holders
Holders of Securities of Securities

Item 16. Investment Advisory and Other Investment Management and
Services Administration Services; Trustees And
Officers; Distribution Arrangements;
Reports To Shareholders; Custodian
And Transfer Agent; Independent
Auditors

Item 17. Brokerage Allocation Portfolio Transactions

Item 18. Capital Stock and Other Investment Information; Additional
Securities Redemption Information; Dividends and
Other Distributions

Item 19. Purchase, Redemption and Valuation of Portfolio Securities
Pricing of Securities Being (Municipal Money Portfolio);
Offered Additional Purchase Information;
Additional Exchange Information;
Additional Redemption Information;
Distribution Arrangements

Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information

Item 21. Underwriters Investment Management and
Administration Services; Distribution
Arrangements
<PAGE>

Item 22. Calculation of Performance Performance Information
Data

Item 23. Financial Statements Financial Statements

</TABLE>

Part C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment.
<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 LIMITED MATURITY BOND FUND

Neuberger&Berman MUNICIPAL MONEY FUND

Neuberger&Berman MUNICIPAL SECURITIES TRUST

Neuberger&Berman NEW YORK INSURED INTERMEDIATE FUND

INITIAL PURCHASE $2,000 MINIMUM Call 800-877-9700

Automatic Investing - $100 Minimum Per Month
__________________________________________________________________________

EACH OF THE ABOVE-NAMED FUNDS (A "FUND") INVESTS ALL OF ITS NET
INVESTABLE ASSETS IN A 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 DIRECTLY
CORRESPONDS 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 "SUMMARY" ON PAGE 3 AND "SPECIAL
INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS" ON
PAGE 23.

The Funds are no-load mutual funds, so you pay no sales commissions
or other charges when you buy or redeem shares. The Funds do not pay
"12b-1 fees" to promote or distribute their shares. The Funds declare
income dividends daily and pay them monthly.

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,
<PAGE>

1996, 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 NET
ASSET VALUES OF $1.00 PER SHARE, THERE IS NO ASSURANCE THEY WILL BE ABLE
TO DO SO. PROSPECTUS DATED MARCH 1, 1996

Shares of Neuberger&Berman NEW YORK INSURED INTERMEDIATE Fund are
registered for sale only to investors in New York and Florida. This Fund
is not being offered for sale to investors in any other state.

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.

<PAGE>

TABLE OF CONTENTS

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Funds and Portfolios . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . 4
Management . . . . . . . . . . . . . . . . . . . . . . . . . 5

EXPENSE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 5
Shareholder Transaction Expenses for Each Fund . . . . . . . . 5
Annual Fund Operating Expenses . . . . . . . . . . . . . . . . 5
Example . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 7
Government Money Fund . . . . . . . . . . . . . . . . . . . 8
Cash Reserves . . . . . . . . . . . . . . . . . . . . . . . 9
Ultra Short Bond Fund . . . . . . . . . . . . . . . . . . . . 10
Limited Maturity Bond Fund . . . . . . . . . . . . . . . . . 11
Municipal Money Fund . . . . . . . . . . . . . . . . . . . . . 12
Municipal Securities Trust . . . . . . . . . . . . . . . . . . 13
New York Insured Intermediate Fund . . . . . . . . . . . . . . 14

INVESTMENT PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . 18
Money Market Portfolios . . . . . . . . . . . . . . . . . . . 18
Bond Portfolios . . . . . . . . . . . . . . . . . . . . . . . 18
Municipal Portfolios . . . . . . . . . . . . . . . . . . . . . 19
Short-Term Trading; Portfolio Turnover . . . . . . . . . . . . 21
Ratings of Securities . . . . . . . . . . . . . . . . . . . 21
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 21
Other Investments . . . . . . . . . . . . . . . . . . . . . . 21

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 22
Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 22
Tax-Equivalent Yield . . . . . . . . . . . . . . . . . . . . . 22
Yield and Total Return Information . . . . . . . . . . . . . . 23

SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The Portfolios . . . . . . . . . . . . . . . . . . . . . . . . 24

HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . . . . . 25
By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
By Wire . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . 25
By Exchanging Shares . . . . . . . . . . . . . . . . . . . . . 26
Other Information . . . . . . . . . . . . . . . . . . . . . . 26

HOW TO SELL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 26
By Mail or Facsimile Transmission (Fax) . . . . . . . . . . . 27
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . 27

- i -
<PAGE>

By Check . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Other Information . . . . . . . . . . . . . . . . . . . . . . 28

ADDITIONAL INFORMATION ON TELEPHONE TRANSACTIONS . . . . . . . . . . 28

SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 28
Automatic Investing and Dollar Cost Averaging . . . . . . . . 28
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . 29
Systematic Withdrawal Plans . . . . . . . . . . . . . . . . . 29
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . 30

SHARE PRICES AND NET ASSET VALUE . . . . . . . . . . . . . . . . . . 30

DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES . . . . . . . . . . . . . . 30
Distribution Options . . . . . . . . . . . . . . . . . . . . . 30
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 31

MANAGEMENT AND ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 32
Trustees and Officers . . . . . . . . . . . . . . . . . . . . 32
Investment Manager, Administrator, Distributor, and Sub-
Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Transfer and Shareholder Servicing Arrangements . . . . . . . 34

DESCRIPTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 34

USE OF JOINT PROSPECTUS AND STATEMENTS OF ADDITIONAL INFORMATION . . 38

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Directory . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Funds Eligible for Exchange . . . . . . . . . . . . . . . . . 40

- ii -
<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. This is sometimes
called a master/feeder fund structure, because each Fund "feeds"
shareholders' investments into its corresponding Portfolio, a "master"
fund. The structure looks like this:

--------------------------------------
Shareholders
--------------------------------------
/ BUY SHARES IN
--------------------------------------
Funds
--------------------------------------
/ INVEST IN
--------------------------------------
Portfolios
--------------------------------------
/ INVEST IN
--------------------------------------
Debt Securities & Other Securities
--------------------------------------

The trustees who oversee the Funds believe that this structure may
benefit shareholders; investment in a Portfolio by investors in addition
to a Fund may enable the Portfolio to achieve economies of scale that
could reduce expenses. 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 23.

In this Prospectus, you will find information about three different
basic types of income mutual funds -- money market funds, bond funds, and
municipal funds.

The following table is a summary highlighting features of the Funds
and their corresponding Portfolios. You may want to invest in a variety of
Funds to fit your particular investment needs. Please see "Investment
Programs" on page 18. Of course, there can be no assurance that a Fund
will meet its investment objective.

<PAGE>

MONEY MARKET FUNDS

Government Money Maximum safety and liquidity U.S. Treasury obligations Seeks to maintain a
and the highest available and other money market constant share price of
current income instruments backed by the $1.00; dollar-weighted
full faith and credit of average portfolio maturity
the United States of up to 90 days
Cash Reserves Highest current income High-quality money market Seeks to maintain a
consistent with safety and instruments of government constant share price of
liquidity and non-government issuers $1.00; dollar-weighted
average portfolio maturity
of up to 90 days

BOND FUNDS

Ultra Short Higher total return than is High-quality money market Lower expected price
available from money market instruments and short-term fluctuation of Neuberger&
funds, with minimal risk to debt securities of Berman bond funds; dollar-
principal and liquidity government and non- weighted average portfolio
government issuers maturity of up to two years
Limited Maturity Highest current income Short- to intermediate-term More potential price
consistent with low risk to debt securities of at least fluctuation; dollar-
principal and liquidity; investment grade weighted average portfolio
and, secondarily, total maturity of up to five
return years

MUNICIPAL FUNDS

Municipal Money Maximum current tax-exempt High-quality, short-term Seeks to maintain a
income consistent with municipal securities constant share price of
safety and liquidity $1.00; dollar-weighted
average portfolio maturity
of up to 90 days
Municipal Securities High current tax-exempt Municipal securities rated More potential price
income with low risk to A or better fluctuation; dollar-
principal, limited price weighted average portfolio
fluctuation, and liquidity maturity of up to 12 years
and, secondarily, total
return

- 2 -
<PAGE>

Neuberger&Berman Income Principal Portfolio
Funds Investment Objective Investments Comparative Information
------------------------ -------------------- -------------------- -----------------------
New York Insured High level of current income At least 65% of total Dollar-weighted average
Intermediate exempt from federal income assets normally invested in portfolio maturity of up to
tax and New York State and New York Municipal 10 years
New York City personal Securities having the
income taxes, consistent highest ratings (Aaa/AAA)
with preservation of capital at the time of purchase,
whose interest and
principal payments are
guaranteed by private
insurance companies; the
remainder may be invested
in uninsured New York
Municipal Securities of
investment grade and
certain other instruments
</TABLE>

Risk Factors

An investment in any Fund involves certain risks, depending upon the
types of investments made by its corresponding Portfolio. The Portfolios
invest in fixed income securities, which are likely to decline in value in
times of rising market interest rates and to rise in value 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. Special risk factors apply to
investments, which may be made by certain Portfolios, in foreign
securities, residual interest bonds, municipal leases, options and futures
contracts, zero coupon bonds, and swap agreements. The value and yield of
New York Municipal Securities in which Neuberger&Berman NEW YORK INSURED
INTERMEDIATE Portfolio invests are subject to a variety of factors,
including political and economic conditions in New York State.
Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio may at times have
to rely on the private companies that insure municipal securities for
payment of principal and interest on a particular security. For more
details about each Portfolio, its investments and their risks, see
"Investment Programs" on page 18 and "Description of Investments" on
page 34.

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 32. If you want to know how to buy

- 3 -
<PAGE>

and sell shares of the Funds or exchange them for shares of other
Neuberger&Berman Funds[SERVICEMARK], see "How to Buy Shares" on page 25,
"How to Sell Shares" on page 26, and "Shareholder Services Exchange
Privilege" on page 29.

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.

Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE

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[SERVICEMARK] 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 daily net assets)

The following table shows annual Total Operating Expenses for each
Fund, which are paid out of the assets of the Funds 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 based on the Fund's average
daily net assets. 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.

- 4 -
<PAGE>

Management and
Neuberger&Berman Income Administration 12b-1 Other Total Operating
Funds Fees Fees Expenses Expenses

GOVERNMENT MONEY 0.52% None 0.13% 0.65%

CASH RESERVES 0.49%* None 0.16% 0.65%*

ULTRA SHORT 0.30%* None 0.35% 0.65%*

LIMITED MATURITY 0.51%* None 0.19% 0.70%*

MUNICIPAL MONEY 0.52% None 0.19% 0.71%

MUNICIPAL SECURITIES 0.19%* None 0.46% 0.65%*

NEW YORK INSURED 0.00%* None 0.65%* 0.65%*
INTERMEDIATE
</TABLE>

*(Reflects N&B Management's expense reimbursement undertaking described
below)

Total 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 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. The expenses and, accordingly, the returns of other funds
that may invest in the Portfolios 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, MUNICIPAL
SECURITIES and NEW YORK INSURED INTERMEDIATE 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) of the Fund's average daily net assets. Each

- 5 -
<PAGE>

undertaking can be terminated by N&B Management by giving a Fund at least
60 days' prior written notice. Absent the reimbursement, Management and
Administration Fees would be 0.52%, 0.52%, 0.52%, 0.52%, and 0.52%, and
Total Operating Expenses would be 0.68%, 0.87%, 0.71%, 0.98%, and 1.68%
per annum of the average daily net assets of CASH RESERVES, ULTRA SHORT,
LIMITED MATURITY, MUNICIPAL SECURITIES, and NEW YORK INSURED INTERMEDIATE,
respectively, based upon the expenses of each Fund for its 1995 fiscal
year. Absent the reimbursement, Other Expenses would be 1.16% per annum of
the average daily net assets of NEW YORK INSURED INTERMEDIATE.

For more information about the current expense reimbursement
undertakings, see "Expenses" on page 33.

Example

To illustrate the effect of Operating Expenses, let's assume that
each Fund's annual return is 5% and that it had Total 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:

Neuberger&Berman
Income Funds 1 Year 3 Years 5 Years 10 Years

GOVERNMENT MONEY $7 $21 $36 $81

CASH RESERVES $7 $21 $36 $81

ULTRA SHORT $7 $21 $36 $81

LIMITED MATURITY $7 $22 $39 $87

MUNICIPAL MONEY $7 $23 $40 $88

MUNICIPAL SECURITIES $7 $21 $36 $81

NEW YORK INSURED $7 $21 $36 $81
INTERMEDIATE

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.

FINANCIAL HIGHLIGHTS

- 6 -
<PAGE>

Selected Per Share Data and Ratios

The financial information in the following tables is for each Fund
as of October 31, 1995, and includes data related to each Fund before it
was converted into a series of the Trust on July 2, 1993 (except
Neuberger&Berman NEW YORK INSURED INTERMEDIATE Fund, which commenced
operations on February 1, 1994). This information has been audited by the
Funds' independent auditors. You may obtain, at no cost, further
information about the performance of the Funds in their annual reports to
shareholders. The annual reports contain the auditors' reports. Please
call 800-877-9700 for a free copy and for up-to-date information. Also,
see "Performance Information."

- 7 -
<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,

1995(1) 1994(1) 1993(1) 1992 1991 1990
------ ------ ------ ---- ---- ----

Net Asset Value, Beginning $1.0000 $1.0000 $1.0000 $1.0003 $1.0000 $ .9997
of Year

Income From Investment
Operations

Net Investment Income .0499 .0302 .0248 .0354 .0567 .0718

Net Gains or Losses on -- -- -- -- .0003 .0003
Securities

Total From Investment .0499 .0302 .0248 .0354 .0570 .0721
Operations

Less Distributions

Dividends (from net (.0499) (.0302) (.0248) (.0354) (.0567) (.0718)
investment income)

Distributions (from -- -- -- (.0003) -- --
capital gains)

Total Distributions (.0499) (.0302) (.0248) (.0357) (.0567) (.0718)

Net Asset Value, End of $1.0000 $1.0000 $1.0000 $1.0000 $1.0003 $1.0000
Year

Total Return* +5.10% +3.07% +2.51% +3.62% +5.82% +7.42%

Ratios/Supplemental Data

- 8 -
<PAGE>

Year Ended October 31,

1995(1) 1994(1) 1993(1) 1992 1991 1990
------ ------ ------ ---- ---- ----

Net Assets, End of Year $308.3 $251.5 $277.2 $301.1 $246.5 $234.6
(in millions)

Ratio of Expenses to .65% .72% .70% .66% .68% .74%
Average Net Assets

Ratio of Net Income to 5.00% 3.00% 2.48% 3.50% 5.66% 7.19%
Average Net Assets

See Notes to Financial Highlights

Year Ended October 31,

1989 1988 1987 1986(2)
---- ---- ---- ------

Net Asset Value, Beginning $1.0000 $1.0002 $1.0002 $1.0003
of Year

Income From Investment
Operations

Net Investment Income .0758 .0579 .0504 .0597

Net Gains or Losses on (.0002) -- .0002 .0002
Securities

Total From Investment .0756 .0579 .0506 .0599
Operations

Less Distributions

Dividends (from net (.0758) (.0579) (.0504) (.0597)
investment income)

Distributions (from (.0001) (.0002) (.0002) (.0003)
capital gains)

Total Distributions (.0759) (.0581) (.0506) (.0600)

- 9 -
<PAGE>

Year Ended October 31,

1989 1988 1987 1986(2)
---- ---- ---- ------

Net Asset Value, End of $.9997 $1.0000 $1.0002 $1.0002
Year

Total Return* +7.86% +5.97% +5.18% +6.17%

Ratios/Supplemental Data

Net Assets, End of Year $184.3 $173.2 $266.4 $156.1
(in millions)

Ratio of Expenses to .87% .79%(5) .75%(5) .75%(5)
Average Net Assets

Ratio of Net Income to 7.55% 5.73%(5) 5.11%(5) 5.80%(5)
Average Net Assets

See Notes to Financial Highlights

</TABLE>

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>

- 10 -
<PAGE>

Period from
April 12,
Year Ended October 31, 1988(3) to
______________________________________________________________________ October 31,

1995(1) 1994(1) 1993(1) 1992 1991 1990 1989 1988
------ ------ ------ ---- ---- ---- ---- ----

Net Asset Value, Beginning $1.0000 $1.0001 $1.0001 $1.0000 $1.0000 $1.0001 $1.0000 $1.0000
of Year

Income From Investment
Operations

Net Investment Income .0529 .0327 .0263 .0363 .0600 .0766 .0866 .0401

Net Gains or Losses on -- -- .0002 .0002 -- -- .0001 --
Securities

Total From .0529 .0327 .0265 .0365 .0600 .0766 .0867 .0401
Investment
Operations

Less Distributions

Dividends (from net (0.529) (.0327) (.0263) (.0363) (.0600) (.0766) (.0866) (.0401)
investment income)

Distributions (from -- (.0001) (.0002) (.0001) -- (.0001) -- --
capital gains)

Total Distributions (0.529) (.0328) (.0265) (.0364) (.0600) (.0767) (.0866) (.0401)

Net Asset Value, End of $1.0000 $1.0000 $1.0001 $1.0001 $1.0000 $1.0000 $1.0001 $1.0000
Year

Total Return* +5.42% +3.33% +2.68% +3.69% +6.17% +7.94% +9.01% +4.08%(4)

Ratios/Supplemental Data

Net Assets, End of Year $408.9 $311.9 $273.1 $261.7 $278.9 $278.2 $267.1 $140.9
(in millions)

Ratio of Expenses to .65% .65% .65% .65% .65% .65% .65% .60%(6)
Average Net Assets(5)
Ratio of Net Income to 5.30% 3.31% 2.63% 3.63% 6.00% 7.66% 8.70% 7.54%(6)
Average Net Assets(5)

</TABLE>

- 11 -
<PAGE>

See Notes to Financial Highlights

FINANCIAL HIGHLIGHTS
Neuberger&Berman

Ultra Short Bond Fund
-------------------------------------------------------------------------

1995(1) 1994(1) 1993(1) 1992 1991 1990 1989
------- ------- ------- ---- ---- ---- ----

Net Asset Value, Beginning of Year $9.47 $9.64 $9.70 $9.83 $9.79 $9.83 $9.87

Income From Investment Operations

Net Investment Income .52 .35 .40 .56 .68 .79 .89

Net Gains or Losses on Securities .06 (.17) (.06) (.13) .04 (.04) (.04)
(both realized and unrealized)

Total From Investment Operations .58 .18 .34 .43 .72 .75 .85

Less Distributions

Dividends (from net investment income) (.52) (.35) (.40) (.56) (.68) (.79) (.89)

Net Asset Value, End of Year $9.53 $9.47 $9.64 $9.70 $9.83 $9.79 $9.83

Total Return* +6.26% +1.96% +3.53% +4.44% +7.64% +7.98% +9.05%

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $100.5 $101.1 $104.4 $103.3 $97.9 $85.8 $103.3

Ratio of Expenses to Average Net Assets(5) .65% .65% .65% .65% .65% .65% .65%

Ratio of Net Income to Average Net Assets(5) 5.44% 3.72% 4.09% 5.70% 6.97% 8.14% 9.06%

- 12 -
<PAGE>

Portfolio Turnover Rate(7) -- -- 115% 66% 89% 120% 85%

See Notes to Financial Highlights

Period from
Period from Nov. 7,
March 1, 1988 Year Ended 1986(3) to
to Oct. 31, Feb. 29, Feb. 28,
------------- ----------- -------------

1988 1988 1987
---- ---- ----

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 (.06) (.05) (.01)
(both realized and unrealized)

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%(4) +6.31% +1.75%4/

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $101.0 $125.3 $66.7

Ratio of Expenses to Average Net Assets(5) .63%(6) .50% .50%6/

Ratio of Net Income to Average Net 7.01%(6) 6.72% 6.036/
Assets(5)
Portfolio Turnover Rate(7) 47% 121% 39%

</TABLE>

- 13 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

Limited Maturity Bond Fund
--------------------------------------------------------------------------

1995(1) 1994(1) 1993(1) 1992 1991 1990 1989
------- ------- ------- ---- ---- ---- ----

Net Asset Value, Beginning of Year $9.88 $10.49 $10.40 $10.24 $9.91 $9.96 $9.88

Income From Investment Operations

Net Investment Income .62 .56 .58 .63 .71 .80 .82

Net Gains or Losses on Securities .18 (.55) .14 .16 .33 (.05) .08
(both realized and unrealized)

Total From Investment Operations .80 .01 .72 .79 1.04 .75 .90

Less Distributions

Dividends (from net investment income) (.62) (.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) (.62) (.63) (.63) (.71) (.80) (.82)

Net Asset Value, End of Year $10.06 $9.88 $10.49 $10.40 $10.24 $9.91 $9.96

Total Return* +8.32% +.013% +7.09% +7.87% +10.89% +7.85% +9.56%

Ratios/Supplemental Data
Net Assets, End of Year (in millions) $307.4 $308.6 $357.3 $273.0 $163.2 $101.3 $107.7

- 14 -
<PAGE>

Year Ended October 31,
-----------------------------------------------------------------------

1995(1) 1994(1) 1993(1) 1992 1991 1990 1989
------- ------- ------- ---- ---- ---- ----

Ratio of Expenses to Average Net Assets(5) .70% .69% .65% .65% .65% .65% .65%

Ratio of Net Investment Income to Average Net 6.21% 5.53% 5.49% 6.02% 7.07% 8.09% 8.33%
Assets(5)

Portfolio Turnover Rate(7) -- -- 114% 113% 88% 88% 121%

See Notes to Financial Highlights

Period from Period from
March 1, 1988 Year Ended June 9, 1986(3)
to Oct. 31, Feb. 29, to Feb. 28,
------------- ----------- ---------------

1988 1988 1987
---- ---- ----

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 (.12) (.17) .17
(both realized and unrealized)

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

- 15 -
<PAGE>

Period from Period from
March 1, 1988 Year Ended June 9, 1986(3)
to Oct. 31, Feb. 29, to Feb. 28,
------------- ----------- ---------------

1988 1988 1987
---- ---- ----

Total Return* +3.76%(4) +5.39% +6.58%(4)

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $133.5 $107.3 $69.6

Ratio of Expenses to Average Net Assets(5) .63%(6) .50% .50%(6)

Ratio of Net Investment Income to Average Net 7.34%(6) 6.97% 6.71(6)
Assets(5)

Portfolio Turnover Rate(7) 68% 158% 41%

</TABLE>

See Notes to Financial Highlights

FINANCIAL HIGHLIGHTS
Neuberger&Berman

Municipal Money Fund
-------------------------------------------------------------------------

Year Ended October 31,
---------------------------------------------------------------

1995(1) 1994(1) 1993(1) 1992 1991 1990
------- ------- ------- ---- ---- ----

Net Asset Value, Beginning of Year $.9995 $.9996 $.9995 $.9989 $.9989 $.9989

Income From Investment Operations

- 16 -
<PAGE>

Year Ended October 31,
---------------------------------------------------------------

1995(1) 1994(1) 1993(1) 1992 1991 1990
------- ------- ------- ---- ---- ----

Net Investment Income .0324 .0204 .0184 .0263 .0432 .0539

Net Gains or Losses on Securities (.0001) (.0001) .0001 .0006 -- --

Total From Investment Operations .0323 .0203 .0185 .0269 .0432 .0539

Less Distributions

Dividends (from net investment income) (0.324) (.0204) (.0184) (.0263) (.0432) (.0539)

Net Asset Value, End of Year $.9994 $.9995 $.9996 $.9995 $.9989 $.9989

Total Return* +3.29% +2.06% +1.86% +2.66% +4.40% +5.53%

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $160.9 $150.3 $181.6 $195.6 $173.9 $190.6

Ratio of Expenses to Average Net .71% .73% .74% .67% .66% .67%
Assets

Ratio of Net Income to Average Net 3.24% 2.02% 1.85% 2.63% 4.34% 5.41%
Assets

See Notes to Financial Highlights

Year Ended October 31,
----------------------------------------------

1990 1989 1988 1987 1986
---- ---- ---- ---- ----

Net Asset Value, Beginning of Year $.9989 $.9993 $.9995 $1.0000 $1.0000
Income From Investment Operations

Net Investment Income .0539 .0591 .0478 .0388 .0447

Net Gains or Losses on Securities -- (.0004) (.0002) (.0005) --

Total From Investment Operations .0539 .0587 .0476 .0383 .0447

- 17 -
<PAGE>

Year Ended October 31,
----------------------------------------------

1990 1989 1988 1987 1986
---- ---- ---- ---- ----

Less Distributions

Dividends (from net investment income) (.0539) (.0591) (.0478) (.0388) (.0447)

Net Asset Value, End of Year $.9989 $.9989 $.9993 $.9995 $1.0000

Total Return* +5.53% +6.07% +4.89% +3.95% +4.56%

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $190.6 $204.8 $184.5 $226.1 $231.4

Ratio of Expenses to Average Net .67% .74% .69% .71% .72%
Assets

Ratio of Net Income to Average Net 5.41% 5.91% 4.76% 3.90% 4.29%
Assets

</TABLE>

See Notes to Financial Highlights

FINANCIAL HIGHLIGHTS
Neuberger&Berman

Municipal Securities Trust
-------------------------------------------------------------------------

- 18 -
<PAGE>

<TABLE>
<CAPTION>
Year ended October 31,
________________________________________________________

1995(1) 1994(1) 1993(1) 1992 1991 1990
------- ------- ------- ---- ---- ----

Net Asset Value, Beginning of Year $10.26 $11.12 $10.53 $10.39 $10.14 $10.09

Income From Investment Operations

Net Investment Income .47 .46 .48 .54 .58 .64

Net Gains or Losses on Securities .57 (.73) .68 .14 .25 .05
(both realized and unrealized)

Total From Investment Operations 1.04 (.27) 1.16 .68 .83 .69

Less Distributions

Dividends (from net investment income) (.47) (.46) (.48) (.54) (.58) (.64)

Distributions (from capital gains) -- (.12) (.09) -- -- --

Distributions (in excess of capital gains) -- (.01) -- -- -- --

Total Distributions (.47) (.59) (.57) (.54) (.58) (.64)

Net Asset Value, End of Year $10.83 $10.26 $11.12 $10.53 $10.39 $10.14

Total Return* +10.35% -2.57% +11.30% +6.72% +8.41% +6.99%

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $44.3% $51.1 $105.2 $37.0 $25.5 $14.1
Ratio of Expenses to Average Net Assets(5) .65% .65% .62% .50% .50% .50%

Ratio of Net Income to Average Net 4.45% 4.24% 4.33% 5.16% 5.61% 6.28%
Assets(5)

Portfolio Turnover Rate(7) -- -- 35% 46% 10% 42%

See Notes to Financial Highlights

- 19 -
<PAGE>

Period from
July 9, 1987(3)
to Oct. 31,

1989 1988 1987
---- ---- ----

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 .01 .35 (.27)
(both realized and unrealized)

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%(4)

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $10.5 $9.8 $6.7
Ratio of Expenses to Average Net Assets(5) .50% .50% .50%(6)

Ratio of Net Income to Average Net 6.26% 5.90% 5.29%(6)
Assets(5)

Portfolio Turnover Rate(7) 17% 23% 0%

</TABLE>

See Notes to Financial Highlights

- 20 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

New York Insured Intermediate 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
Year Ended February 1, 1994(3)
October 31, 1995 to October 31, 1994
---------------- -------------------

Net Asset Value, Beginning of Year $9.25 $10.00

Income From Investment Operations

Net Investment Income .41 .29

Net Gains or Losses on Securities .76 (.75)
(both realized and unrealized)

Total From Investment Operations 1.17 (.46)

Less Distributions

Dividends (from net investment income) (.41) (.29)

Net Asset Value, End of Year $10.01 $9.25

Total Return* +12.88% -4.63%(4)

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $11.5 $14.7

Ratio of Expenses to Average Net Assets(5) .66% .65%(6)

Ratio of Net Investment Income to Average 4.24% 4.10%(6)
Net Assets(5)
</TABLE>

- 21 -
<PAGE>

See Notes to Financial Highlights

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 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.

3) The date investment operations commenced.

4) Not annualized.

5) After reimbursement of expenses by N&B Management. Had N&B
Management not undertaken such action the annualized ratios to
average daily net assets would have been:

Year Ended October 31,
----------------------------

Neuberger&Berman Government
Money Fund
[S] [C] [C] [C]

1988 1987 1986
---- ---- ----

Expenses .83% .90% .95%

Net Investment Income 5.69% 4.96% 5.60%

- 22 -
<PAGE>

Period from
April 12,
Year Ended October 31, 1988 to
------------------------------------------------------------ Oct. 31,

Neuberger&Berman
Cash Reserves 1995 1994 1993 1992 1991 1990 1989 1988

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses .68% .71% .76% .69% .69% .72% .83% 1.03%

Net Investment 5.27% 3.25% 2.52% 3.59% 5.96% 7.59% 8.52% 7.11%
Income

Period
from
March 1, Period from
1988 to Year Ended Nov. 7, 1986
Year Ended October 31, Oct. 31, Feb. 29, to Feb. 28,
Neuberger&Berman
Ultra Short 1995 1994 1993 1992 1991 1990 1989 1988 1988 1987
Bond Fund ---- ---- ---- ---- ---- ---- ---- ---- ---- ----

Expenses .87% .86% .95% .87% .87% .81% .92% .89% .95% 1.50%
Net Investment 5.22% 3.51% 3.79% 5.48% 6.75% 7.98% 8.79% 6.75% 6.27% 5.03%
income

Period
from Year
March 1, Ended Period from
1988 to Feb. 29, June 9, 1986
Year Ended October 31, Oct. 31, 1988 to Feb. 28,

Neuberger&Berman
Limited Maturity 1995 1994 1993 1992 1991 1990 1989 1988 1988 1987
Bond Fund ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Expenses .71% .71% .73% .68% .72% .71% .77% .74% .78% 1.50%

Net Investment 6.20% 5.51% 5.42% 5.99% 7.00% 8.03% 8.21% 7.23% 6.69% 5.71%
income

- 23 -
<PAGE>

Period from
July 9,
1987 to
Year Ended October 31, Oct. 31,

Neuberger&Berman
Municipal 1995 1994 1993 1992 1991 1990 1989 1988 1987
Securities Trust ---- ---- ---- ---- ---- ---- ---- ---- ----
Expenses .98% .82% 1.04% 1.16% 1.38% 1.67% 2.50% 2.00% 1.50%

Net Investment Income 4.12% 4.07% 3.91% 4.50% 4.73% 5.11% 4.26% 4.40% 4.29%

Period from
February 1,
Neuberger&Berman Year Ended 1994 to
New York Insured Intermediate October 31, 1995 October 31, 1994
Fund ---------------- -----------------
Expenses 1.83% 1.53%

Net Investment Income 3.07% 3.22%

6) Annualized.

7) Neuberger&Berman Ultra Short Bond Fund, Neuberger&Berman Limited Maturity Bond Fund, and Neuberger&Berman Municipal
Securities Trust transferred all of their investment securities into their respective Portfolios on July 2, 1993.
After that date each Fund invested only in its corresponding Portfolio, and that Portfolio, rather than the Fund,
engaged in securities transactions. Therefore, after that date no Fund has calculated a portfolio turnover rate. The
portfolio turnover rates for each Portfolio were as follows:

Period from July 2,
Year Ended October 31, 1993 (Commencement of
Operations) to October
1995 1994 31, 1993
---- ---- ---------------------

Neuberger&Berman Ultra Short 148% 94% 46%
Bond Portfolio

Neuberger&Berman Limited 88% 102% 71%
Maturity Bond Portfolio
Neuberger&Berman Municipal 66% 127% 25%
Securities Portfolio

- 24 -
<PAGE>

Period from February 1, 1994
(Commencement of Operations) to
Year Ended October 31, 1995 October 31, 1994

Neuberger&Berman NEW YORK INSURED 17% 96%
INTERMEDIATE Portfolio

* Total return based on per share net asset value reflects the effects of changes in net asset value on the performance
of each Fund during each year or other fiscal period shown in the table, 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.
For each Fund (except Neuberger&Berman Government Money Fund and Neuberger&Berman Municipal Money Fund), total return
in recent years would have been lower if N&B Management had not reimbursed certain expenses.
</TABLE>

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 34.

Investment policies and limitations of the Funds and 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.

The investment objectives of the Funds and Portfolios are not
fundamental. The Funds have 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. 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 changes in the credit-
worthiness of the issuer.

- 25 -
<PAGE>

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 and Neuberger&Berman CASH RESERVES 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.

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.

Neuberger&Berman ULTRA SHORT Bond Portfolio and Neuberger&Berman
LIMITED MATURITY Bond 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.

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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 investment grade. 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 purchase and
sell covered call and put options, interest rate futures contracts, and
options on those futures contracts and may lend 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.

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. The investment objective of Neuberger&Berman NEW YORK INSURED
INTERMEDIATE Fund and Portfolio is to seek a high level of current income
exempt from federal income tax and New York State and New York City
personal income taxes, consistent with preservation of capital.

Each Portfolio may invest in municipal securities issued to finance
private activities, the interest on which is a tax-preference item for
purposes of the federal alternative minimum tax. To the extent a Portfolio
makes those investments and you are subject to that tax, a portion of your
dividends from the corresponding Fund will be subject to that tax. See
"Dividends, Other Distributions, and Taxes." Neuberger&Berman MUNICIPAL
MONEY Portfolio and Neuberger&Berman MUNICIPAL SECURITIES Portfolio each
normally invests only in municipal obligations with fixed and variable
interest rates. 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.

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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 ("S&P") or 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.

Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio invests in
municipal obligations issued by the State of New York, its authorities,
multi-state authorities, municipalities, counties, and any other political
subdivisions and in municipal obligations issued by territories or
possessions of the United States, such as the Virgin Islands, Guam, and
Puerto Rico, the interest income from which is exempt, in the opinion of
counsel for the issuer, from federal income tax and New York State and New
York City personal income taxes ("New York Municipal Securities"). At
least 65% of the Portfolio's total assets normally will be invested in the
highest rated New York Municipal Securities which are insured as to the
timely payment of principal and interest by municipal bond insurance
("Municipal Bond Insurance"). Municipal Bond Insurance provides an
unconditional and irrevocable guarantee that the insured bond's principal
and interest will be paid when due. The insurance is purchased from a
private, non-governmental insurance company. The insurance does not
guarantee the market value of the municipal bonds or the value of the
interests in the Portfolio. The insured bonds purchased by the Portfolio
must at the time of purchase have the highest credit rating available from
a nationally recognized statistical rating organization ("NRSRO"). For
such insured bonds to receive the highest credit rating, at least one
NRSRO must rate the claims-paying ability or financial strength of the
insurance company in the highest category (within which there may be
gradations). There is, of course, no guarantee that the claims-paying
ability or financial strength of the insurers will continue to receive the
highest credit ratings, or that the insurers will be able to pay all
claims when due.

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<PAGE>

The insured municipal bonds purchased by Neuberger&Berman NEW YORK
INSURED INTERMEDIATE Portfolio will carry Municipal Bond Insurance
obtained to improve the bond's credit rating. Once purchased Municipal
Bond Insurance cannot be canceled by the insurer, and the protection it
affords continues as long as the bonds are outstanding and the insurer
remains solvent. The Municipal Bond Insurance covering the municipal
securities purchased by the Portfolio will be either new issue insurance
("New Issue Insurance") or secondary insurance ("Secondary Insurance").
New Issue Insurance is purchased by the respective issuers of the
municipal securities at the time of the original issuance of those
securities. Secondary Insurance may be purchased by the broker, another
investor or the Portfolio after the municipal security is originally
issued. Generally, the Portfolio expects that municipal securities it
purchases will carry insurance obtained by another party.

Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio may
purchase bonds insured by AMBAC Indemnity Corporation, Municipal Bond
Investors Assurance Corporation or Financial Guaranty Insurance Company
(known as "AMBAC," "MBIA Corp." and "FGIC," respectively), or any other
insurance company that has received the highest credit rating. The
Portfolio may invest more than 25% of its assets in bonds insured by the
same insurance company. Further information regarding Municipal Bond
Insurance and insurance companies is included in the SAI.

Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio's remaining
assets normally will be invested in New York Municipal Securities that are
not so insured and are rated investment grade or better and in other
investments described in this Prospectus. The Portfolio may invest up to
100% of its assets in New York Municipal Securities and certain other
municipal securities issued to finance private activities whose interest
is a tax-preference item for purposes of the federal alternative minimum
tax. To the extent the Portfolio makes those investments and you are
subject to tax, a portion of your dividends from the Fund may not be
exempt from federal income tax. See "Dividends, Other Distributions, and
Taxes."

During seasonal variations or other shortages in the supply of
suitable New York Municipal Securities, Neuberger&Berman NEW YORK INSURED
INTERMEDIATE Portfolio may purchase uninsured New York Municipal
Securities; municipal securities the interest income on which is exempt
from federal income tax, but not New York State and New York City personal
income taxes; or taxable U.S. Government and Agency Securities. However,
as a fundamental policy, the Portfolio normally invests at least 80% of
its total assets in municipal obligations.

Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio's dollar-
weighted average portfolio maturity will not exceed ten years. The

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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 by buying or selling
interest rate futures contracts and options. Although the Portfolio is
"non-diversified" for federal securities law purposes, it will limit its
investments to meet federal tax requirements so that, as of the last day
of each quarter of its taxable year, not more than 25% of its total assets
are invested in the securities of a single issuer and, with respect to at
least 50% of its total assets, not more than 5% of those assets are
invested in the securities of a single issuer (other than, in each case,
U.S. Government and Agency Securities). The Portfolio may not invest 25%
or more of its total assets in revenue bonds related to a single industry
but may invest 25% or more of its total assets in securities that depend
on revenue from similar types of projects, e.g., transportation, electric
utilities, housing, or health care. Developments affecting a single issuer
or industry, or securities financing particular types of projects, could
thus have a significant effect on the Portfolio.

Because Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio
invests primarily in New York Municipal Securities, the Fund's yield and
share price are sensitive to political and economic developments within
the State of New York ("State") and to the financial condition of the
State, its public authorities, and political subdivisions, particularly
the City of New York ("City"). Both the State and the City have
experienced significant financial difficulties related to poor economic
performance, and no assurance can be given that the State or the City will
not experience future fiscal instabilities. Further information regarding
the financial condition of the State and the City may be found in the SAI.

New York Municipal Securities include general obligations of Puerto
Rico and its political subdivisions and public corporations. The economy
of Puerto Rico is closely linked with that of the United States and will
depend on several factors, including the condition of the U.S. economy,
the exchange rate for U.S. dollars, the price stability of oil imports,
and interest rates.

Short-Term Trading; Portfolio Turnover

Although none of the 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 rates of Neuberger&Berman
ULTRA SHORT Bond, LIMITED MATURITY Bond, MUNICIPAL SECURITIES and NEW YORK
INSURED INTERMEDIATE Portfolios for 1995 and earlier years are set forth
under "Notes to Financial Highlights." Turnover rates in excess of 100%
generally result in higher transaction costs (which are borne directly by
the Portfolio) and a possible increase in realized short-term capital
gains or losses.

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Ratings of Securities

High-Quality Debt Securities. High-quality debt securities are
securities that have received a rating from at least one 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 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
(including Neuberger&Berman MUNICIPAL MONEY Portfolio).

Investment Grade Debt Securities. 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 a
Money Market Portfolio, including Neuberger&Berman MUNICIPAL MONEY
Portfolio, or Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio)
deteriorates so that the securities would no longer satisfy that
Portfolio's 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 do not exceed 5% of its net
assets. The Money Market Portfolios (including Neuberger&Berman MUNICIPAL
MONEY Portfolio), in accordance with Rule 2a-7 under the Investment
Company Act of 1940 ("1940 Act"), will consider disposing of the
securities. Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio will
seek to dispose of the securities as soon as is reasonably practicable.
Further information regarding the ratings assigned to securities purchased
by the Portfolios and their meaning is included in the SAIs and in the
Funds' annual reports.

Borrowings

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 the 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.

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<PAGE>

Other Investments

For temporary defensive purposes, each Portfolio may invest up to
100% of its total assets in cash or cash equivalents, commercial paper
(except for Neuberger&Berman GOVERNMENT MONEY Portfolio), U.S. Government
and Agency Securities and certain other money market instruments, as well
as (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.

PERFORMANCE INFORMATION

The performance of the Funds can be measured as yield or as total
return. The 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.
Annualized yields for money market funds based on the return for a recent
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.

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Thus, total return reflects not only income earned but also variations in
share prices from the beginning to the end of a period.

An average annual total return is a hypothetical rate of return
that, if achieved annually, would result in the same cumulative total
return as was actually achieved for the period. This smooths out year-to-
year variations in actual performance. Past results do not, of course,
guarantee future performance. Share prices may vary, and your shares when
redeemed may be worth more or less than your original purchase price.

Tax-Equivalent Yield

STATE AND LOCAL TAXES. Substantially all of Neuberger&Berman
GOVERNMENT MONEY Fund's income dividends are not subject to income taxes
of most states and localities. Substantially all income dividends paid by
Neuberger&Berman New York Insured Intermediate Fund are exempt from
federal income tax and New York State and New York City personal income
taxes. For those states and localities where the income dividends are not
subject to income taxes, these Funds may measure their performance by a
tax-equivalent yield. This reflects the taxable yield that an individual
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 New York
Insured Intermediate Fund, taking into account that a portion of the
dividends paid by those Funds is tax-exempt. Of course, all dividends paid
by Neuberger&Berman GOVERNMENT MONEY Fund are subject to federal income
tax at applicable rates.

FEDERAL TAX. Substantially all income dividends paid by
Neuberger&Berman MUNICIPAL MONEY Fund, Neuberger&Berman MUNICIPAL
SECURITIES Trust and Neuberger&Berman NEW YORK INSURED INTERMEDIATE Fund
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 divide (1 .396 Tax Rate)
= 4% divide .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

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<PAGE>

taxable yields exceed 6.62%. This example assumes that all of the income
from the investment is exempt.

To calculate the after-tax yield for Neuberger&Berman NEW YORK
INSURED INTERMEDIATE Fund, divide the yield on the tax-free investment by
the decimal determined by subtracting from 1 the highest combination of
federal income tax and New York State and New York City personal income
tax rates you pay. For example, if the tax-free yield is 4% and your
maximum combined tax bracket is 46.6%, the computation is:

4% Tax-Free Yield divide (1 - .466 Tax Rate)
= 4% divide .534 = 7.49% 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 7.49%.
Conversely, the taxable investment would provide a higher yield when
taxable yields exceed 7.49%. This example assumes that all of the income
from the investment is exempt.

Yield and Total Return Information

You can obtain current performance information about each Fund by
calling N&B Management at 800-877-9700. N&B Management has reimbursed
certain Funds for certain expenses, which has the effect of increasing
their yields and total returns.

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 as of December 23,
1992. The Trust is registered under the 1940 Act as a diversified, open-
end management investment company, commonly known as a mutual fund. The
Trust has seven separate operating series. The predecessors of the Funds
(except Neuberger&Berman NEW YORK INSURED INTERMEDIATE 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 NEW YORK INSURED INTERMEDIATE Fund began operations on
February 1, 1994. Each Fund invests all of its net investable assets in
its corresponding Portfolio, in each case receiving a beneficial interest
in that Portfolio. 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).

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<PAGE>

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.

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 seven separate 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 is a "feeder fund" that
seeks to achieve its investment objective by investing all of its net
investable assets in its corresponding Portfolio, which is a "master
fund." The Portfolio, which has the same investment objective, policies,
and limitations as the Fund, in turn invests in securities; its
corresponding Fund thus acquires an indirect interest in those securities.
Historically, N&B Management, which is the administrator of each Fund and
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 21 master funds and 28 feeder funds. This "master/feeder fund"
structure is depicted in the "Summary" on page 1.

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. As of the date of this

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Prospectus, only Neuberger&Berman ULTRA SHORT Bond Fund and
Neuberger&Berman LIMITED MATURITY Bond Fund have institutional investors
which invest in their corresponding Portfolios. The two mutual funds that
are series of Neuberger&Berman Income Trust ("N&B Income Trust"),
Neuberger&Berman ULTRA SHORT Bond Trust and Neuberger&Berman LIMITED
MATURITY Bond Trust, invest all of their respective net investable assets
in the two corresponding Portfolios of Managers Trust. Each Portfolio may
also permit other investment companies and/or other institutional
investors to invest in the Portfolio. All investors will invest in a
Portfolio on the same terms and conditions as a Fund 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 are not required to sell their shares at the same public
offering price as a Fund, could have a different administration fee and
expenses than a 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.

The trustees of the Trust believe that investment in a Portfolio by
a series of N&B Income Trust or other potential investors in addition to a
Fund may enable the Portfolio to realize economies of scale that could
reduce its operating expenses, thereby producing higher returns and
benefitting all shareholders. However, 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 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

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<PAGE>

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. 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.

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 FundSM (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

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<PAGE>

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 name of 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, it may not be
accepted. Third party checks will not be accepted.

By Wire

Call 800-877-9700 for instructions on how to 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 Neuberger&Berman ULTRA SHORT Bond
Fund, Neuberger&Berman LIMITED MATURITY Bond Fund, Neuberger&Berman
Municipal Securities Trust, or Neuberger&Berman NEW YORK INSURED
INTERMEDIATE Fund. The minimum for a first purchase of shares of any of
these Funds by telephone is $2,000. The minimum for an additional purchase
is $1,000. Your order may be canceled 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 a 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 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. 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[SERVICEMARK] 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."

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Other Information

o 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.
o 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."

o If you pay by check and your check does not clear, or if you
order 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.

o 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).

o 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.

o 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 fax. If you lose
your certificate, you will have to pay the expense of
replacing it.

o You can invest as little as $100 each month under an
automatic investing plan. (See "Automatic Investing and
Dollar Cost Averaging" on page 28.)

HOW TO SELL SHARES

You can sell (redeem) all or some of your shares at any time by
mail, fax, 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

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<PAGE>

certificate by mail. You can also sell shares by exchanging them for
shares of other Neuberger&Berman Funds[SERVICEMARK]; 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. State Street
currently charges a fee of $8.00 for each wire. However, if you have one
or more accounts in the Neuberger&Berman Funds[SERVICEMARK] aggregating
$250,000 or more in value, you will not be charged for wire redemptions;
your $8.00 fee will be paid 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, some of which may charge you a fee.

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

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<PAGE>

or by fax, to redeem up to $50,000 worth of shares, to 212-476-8848.
If shares are issued in certificate form they are not eligible to be
redeemed by fax. If you have changed the record address by telephone or
fax, shares may not be redeemed by fax for 15 days after receipt of the
address change. Please call 800-877-9700 to confirm receipt and acceptance
of any order submitted by fax. 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, (2) you want the redemption check to be
made out to someone other than the record owner, (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 prior 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 fax, limited to not more than
$50,000, the redemption check may be made out only 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. In
addition, if you have changed the record address by telephone or fax,
shares may not be redeemed by telephone for 15 days after receipt of the
address change.

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

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<PAGE>

charge. Because the amount in your account varies daily, you cannot sell
all your shares and close your account by writing a check.

Other Information

o Usually, redemption proceeds will be mailed on the next
business day, but in any case within three business days.
(Under unusual circumstances, the Funds may take longer, as
permitted by law.) You may also call 800-877-9700 for
information on how to receive electronic transfers through
your bank.

o 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.

o 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.

o 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.

o 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 price on the
date of redemption and will send the redemption proceeds to
you.

ADDITIONAL INFORMATION ON TELEPHONE TRANSACTIONS

A Fund at any time can limit the number of its shares you can buy by
telephone or can stop accepting telephone orders. You can 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

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<PAGE>

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 fax, overnight courier,
or U.S. Express Mail.

Beginning in the Spring of 1996, you will be able to buy, sell or
exchange shares using an automated telephone service that will be
available 24 hours a day, every day, to investors using a touch tone
phone. Further information regarding this service, including use of a
Personal Identification Number (PIN) and a menu of features, will be sent
to all shareholders in advance.

SHAREHOLDER SERVICES

Several other services are available to assist you in making 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 Municipal Securities Trust, or Neuberger&Berman NEW YORK
INSURED INTERMEDIATE Fund 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
checks drawn on 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 would
generally be lower than if you bought a fixed number of shares at the same
intervals. 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.

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<PAGE>

Exchange Privilege

To exchange your shares in a Fund for shares in another
Neuberger&Berman Fund[SERVICEMARK], 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 10158-0180, Attention: [Name of
Fund], or by faxing the letter 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 any
order submitted by fax. If you have a certificate for your shares, you can
exchange them only by mailing the certificate with your letter requesting
the exchange. 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 Neuberger&Berman Fund[SERVICEMARK], it
must be for at least the minimum initial investment amount for that fund.
Shares are exchanged at the next price calculated on a day the NYSE is
open, after your exchange order is received and accepted. Please note the
following about the exchange privilege:

o You can exchange shares only between accounts registered in
the same name, address, and taxpayer ID number.

o A telephone exchange order cannot be modified or canceled.

o You can exchange only into a mutual fund whose shares are
eligible for sale in your state under applicable state
securities laws.

o An exchange may have tax consequences for you.

o 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.

o 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."

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Systematic Withdrawal Plans

If you own shares of a Fund worth at least $5,000, you can open a
Systematic Withdrawal Plan. Under such a 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, Neuberger&Berman Municipal
Securities Trust, and Neuberger&Berman NEW YORK INSURED INTERMEDIATE Fund.

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.

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.

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Neuberger&Berman ULTRA SHORT Bond and Neuberger&Berman LIMITED
MATURITY Bond 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 amortized 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, on each day the NYSE is open.

Neuberger&Berman Municipal Securities and Neuberger&Berman NEW YORK
INSURED INTERMEDIATE Portfolios use an independent pricing service to
determine the market value of their portfolio securities and periodically
verify the valuations. These Portfolios and their corresponding Funds
calculate their NAVs as of the close of regular trading on the NYSE on
each day the NYSE is open.

DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES

Each Fund distributes substantially all of its share of any net
investment income (net of the Fund's expenses) and net realized capital
gains earned by its corresponding Portfolio. 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 the Money Market Funds
(including Neuberger&Berman MUNICIPAL MONEY Fund) whose purchase orders
are converted to "federal funds" by noon Eastern time on any given day
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 other 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 other distribution 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 shares; when
you are at least 59-1/2 years old, you can receive distributions in cash
without incurring a premature distribution penalty tax.

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<PAGE>

DIVIDENDS IN CASH. You may elect to receive dividends in cash, with
other distributions being reinvested in additional Fund shares, by
checking that election box on your application.

ALL DISTRIBUTIONS IN CASH. You may elect to receive all dividends
and other distributions in cash, by checking that election box on your
application.

Checks for cash distributions usually will be mailed no later than
seven days after the payable date. 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.

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 (INCLUDING Neuberger&Berman MUNICIPAL MONEY Fund)
AND BOND FUNDS: TAXES ON DISTRIBUTIONS. Distributions 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 distributions were declared.

For federal income tax purposes, income dividends and distributions
of net short-term capital gain 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 gain, no matter how long you have owned your shares.
Distributions of net capital gain may include gains from the sale of
portfolio securities that appreciated in value before you bought your
shares.

Substantially all dividends paid by Neuberger&Berman GOVERNMENT
MONEY Fund generally are not expected to be subject to state and local

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income taxes; 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 shows the portion of those distributions that
generally are not taxable in certain states.

MUNICIPAL FUNDS: TAXES ON DISTRIBUTIONS. Substantially all dividends
paid by the Municipal Funds generally are expected to be exempt from
federal income tax (and New York State and New York City personal income
taxes in the case of Neuberger&Berman NEW YORK INSURED INTERMEDIATE Fund),
but may be subject to state or local taxes. 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 distributions were declared.

Neuberger&Berman New York Insured Intermediate, Neuberger&Berman
Municipal Securities, and Neuberger&Berman MUNICIPAL MONEY Portfolios each
may invest up to 100% of its assets in 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 that
constitutes a tax preference item.

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 redemption of Fund shares,
including redemptions in connection with exchanges to other
Neuberger&Berman Funds[SERVICEMARK], are subject to tax. A capital gain
(or loss) is the difference between the amount you paid for the shares
(including the amount of any dividends and 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

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<PAGE>

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 adviser.

MANAGEMENT AND ADMINISTRATION

Trustees and Officers

The trustees of the Trust and the trustees of Managers Trust, who
are currently the same individuals, have oversight 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 trustees and 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 between the Trust
and Managers Trust, 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 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 three investment companies. The mutual funds
managed by N&B Management and Neuberger&Berman had aggregate net assets of
approximately $11.9 billion as of December 31, 1995.

As sub-adviser, Neuberger&Berman furnishes N&B Management with
investment recommendations and research without added cost to the
Portfolios. Neuberger&Berman is a member firm of the NYSE and other
principal exchanges and may act as the Portfolios' principal broker to the
extent that a broker is used in the purchase and sale of portfolio
securities and the sale of covered call options. Neuberger&Berman and its
affiliates, including N&B Management, manage securities accounts that had
approximately $38.7 billion of assets as of December 31, 1995. All of the

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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 $11.1 billion of assets as of December 31, 1995. Ms. Havell
has had overall responsibility for the activities of the Fixed Income
Group since 1984.

The following members of the Fixed Income Group are, along with
Theresa Havell, 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. Ms. Mahaney, who has been a Senior
Portfolio Manager in the Fixed Income Group since 1984 and a Vice
President of N&B Management since November 1994, has been primarily
responsible for Neuberger&Berman GOVERNMENT MONEY Portfolio and
Neuberger&Berman CASH RESERVES Portfolio since January 1993, and
Neuberger&Berman ULTRA SHORT Bond Portfolio since July 1993. She was an
Assistant Vice President of N&B Management from 1986 to 1994.

Neuberger&Berman LIMITED MATURITY Bond Portfolio Thomas G. Wolfe.
Mr. Wolfe has been primarily responsible for Neuberger&Berman LIMITED
MATURITY Bond Portfolio since October 1, 1995. Mr. Wolfe has been a
Senior Portfolio Manager in the Fixed Income Group since July 1993,
Director of Fixed Income Credit Research since July 1993 and a Vice
President of N&B Management since October 1995. From November 1987 to June
1993 he was Vice President in the Corporate Finance Department of Standard
& Poor's.

Neuberger&Berman Municipal Money, Municipal Securities and New York
Insured Intermediate Portfolios Clara Del Villar. Ms. 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,
has been primarily responsible for Neuberger&Berman MUNICIPAL MONEY
Portfolio since August 1993, Neuberger&Berman MUNICIPAL SECURITIES
Portfolio since December 1991, and Neuberger&Berman NEW YORK INSURED
INTERMEDIATE Portfolio since October 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

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over $100 million of their own money in Neuberger&Berman
Funds[SERVICEMARK].

To mitigate the possibility that a Portfolio will be adversely
affected by employees' personal trading, the Trust, Managers Trust, N&B
Management, and Neuberger&Berman have adopted policies that restrict
securities trading in personal accounts of portfolio managers and others
who normally come into possession of information on portfolio
transactions.

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 and performing certain shareholder, shareholder-related and other
services. For such administrative services, each Fund pays N&B Management
a fee at the annual rate of 0.27% of that Fund's average daily net assets.
With a Fund's consent, N&B Management may subcontract to third parties
some of its responsibilities to that Fund under the administration
agreement. For investment management services, each 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. During the
fiscal year ended October 31, 1995, each Fund accrued administration fees,
and a pro rata portion of the corresponding Portfolio's management fees,
of 0.51% of the Fund's average daily net assets.

See "Expense Information--Annual Fund Operating Expenses" for
anticipated fees for the current fiscal year.

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, transfer agent
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, Municipal Securities and New York
Insured Intermediate for each Fund's Operating Expenses (including its
administration fees) and that Fund's pro rata share of its corresponding

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Portfolio's Operating Expenses (including its management fees) that
exceed, in the aggregate, 0.65% per annum (0.70% for Limited Maturity) 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. The effect of reimbursement by N&B Management is to reduce a
Fund's expenses and thereby increase its total return.

For the fiscal year ended October 31, 1995, each Fund bore Total
Operating Expenses as a percentage of its average daily net assets (after
taking into consideration N&B Management's expense reimbursements) as
follows:

Neuberger&Berman GOVERNMENT MONEY Fund 0.65%
Neuberger&Berman Cash Reserves 0.65%
Neuberger&Berman ULTRA SHORT Bond Fund 0.65%
Neuberger&Berman LIMITED MATURITY Bond Fund 0.70%
Neuberger&Berman MUNICIPAL MONEY Fund 0.71%
Neuberger&Berman MUNICIPAL SECURITIES Trust 0.65%
Neuberger&Berman NEW YORK INSURED INTERMEDIATE Fund 0.66%

Transfer and Shareholder Servicing Arrangements

The Funds' transfer and 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.

DESCRIPTION OF INVESTMENTS

In addition to the securities referred to in "Investment Programs"
herein, each Portfolio (except as noted) 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 which the
Portfolios may make, see the SAIs.

Certain investment techniques, such as futures and options,
securities loans, and repurchase agreements, may produce taxable income
and capital gains or losses if used by the Municipal Portfolios.

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 or
instrumentalities; by other U.S. Government-sponsored enterprises, such as

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the Government National Mortgage Association ("GNMA"), Federal National
Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation
("FHLMC"), Student Loan Marketing Association, and Tennessee Valley
Authority; and by various federally chartered or sponsored banks. Some
U.S. Government Agency 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, the Portfolios calculate 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 investment 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 general supervision of the trustees of Managers Trust.
Securities that are freely tradeable in their country of origin or in

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their principal market are not considered illiquid securities even if they
are not registered for sale in the U.S.

RESTRICTED SECURITIES AND RULE 144A SECURITIES (ALL PORTFOLIOS
EXCEPT Neuberger&Berman GOVERNMENT MONEY Portfolio). Each Portfolio 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 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 1933 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 AND Neuberger&Berman LIMITED MATURITY
Bond PORTFOLIOS). In a reverse repurchase agreement, a Portfolio sells
securities to a bank or securities dealer and simultaneously agrees to
repurchase the same securities at an agreed upon price on a specific date.
During the period before the repurchase, the Portfolio continues to
receive principal and interest payments on the securities. A Portfolio
will maintain a segregated account consisting of cash or high-grade,
liquid debt obligations to cover its obligations under reverse repurchase
agreements. 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.

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 at a
future date (generally within three months) in order to secure an
advantageous price and yield at the time of the commitment and pays for
the securities when they are delivered. 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

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<PAGE>

the period from the Portfolio's investment commitment to the settlement of
the purchase, which may magnify fluctuation in a Portfolio's and its
corresponding Fund's NAVs. None 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 AND Neuberger&Berman LIMITED MATURITY
Bond PORTFOLIOS). Mortgage-backed securities represent interests in, or
are secured by and payable from, pools of mortgage loans, including
collateralized mortgage obligations. These securities include 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. Private mortgage-backed
securities may be supported by U.S. Government mortgage-backed securities
or some form of non-governmental 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 market 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 NEW YORK INSURED INTERMEDIATE PORTFOLIOS). Asset-
backed securities represent interests in, or are secured by and payable
from, pools of assets, such as consumer loans, CARS[SERVICEMARK]
("Certificates for Automobile Receivables[SERVICEMARK]"), credit card
receivables, 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.

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<PAGE>

Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio may
purchase units of beneficial interest in pools of purchase contracts,
financing leases, and sales agreements entered into by municipalities.
These municipal obligations may be created when a municipality enters into
an installment purchase contract or lease with a vendor and may be secured
by the assets purchased or leased by the municipality. However, except in
very limited circumstances, there will be no recourse against the vendor
if the municipality stops making payments. Pools may also hold other types
of investments. The market for tax-exempt asset-backed securities is still
relatively new. Certain of these obligations are likely to involve
unscheduled prepayments of principal. In purchasing such securities, the
Portfolio typically relies on an opinion from the issuer's counsel that
interest on the asset-backed securities is exempt from income taxes.

FOREIGN INVESTMENTS (NEUBERGER&BERMAN CASH RESERVES, NEUBERGER&
BERMAN ULTRA SHORT BOND AND Neuberger&Berman LIMITED MATURITY Bond
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 investment 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 Portfolio may invest in foreign securities denominated in or
indexed to foreign currencies. Such securities may be affected by special
risks, such as governmental regulation of foreign exchange transactions
and the fluctuation of foreign currencies relative to the U.S. dollar,
which could result in losses 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
Portfolio 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 Portfolio from adverse exchange rate changes, they involve
a risk of loss if N&B Management fails to predict foreign currency values
correctly; see the discussion of Hedging Instruments, below.

PUT AND CALL OPTIONS, FUTURES CONTRACTS, AND OPTIONS ON FUTURES
CONTRACTS (Neuberger&Berman ULTRA SHORT Bond, Neuberger&Berman LIMITED
MATURITY Bond, NEUBERGER&BERMAN MUNICIPAL SECURITIES AND NEUBERGER&BERMAN
NEW YORK INSURED INTERMEDIATE 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 Portfolio also
may write covered call options and purchase put options on debt securities
in its portfolio or on foreign currencies for hedging purposes or for the

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<PAGE>

purpose of producing income. Neuberger&Berman NEW YORK INSURED
INTERMEDIATE Portfolio also may purchase and sell call options and put
options on debt securities in its portfolio for hedging purposes or for
the purpose of producing income. Neuberger&Berman LIMITED MATURITY Bond
and Neuberger&Berman NEW YORK INSURED INTERMEDIATE Portfolio will write a
call option 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. The 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,
options on futures contracts, forward foreign currency 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 a Portfolio and the prices of Hedging Instruments; (2)
possible lack of a liquid secondary market for Hedging Instruments and the
resulting inability to close out Hedging Instruments when desired; (3) the
fact that the skills needed to use Hedging Instruments are different from
those needed to select a Portfolio's securities; and (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.
When a Portfolio uses Hedging Instruments, the Portfolio will place cash
or high-grade, liquid debt securities in a segregated account to the
extent required by SEC staff policy. Another risk of Hedging Instruments
is the possible inability of a 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 a 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
considered "derivatives." Losses that may arise from certain futures
transactions are potentially unlimited.

MUNICIPAL OBLIGATIONS (NEUBERGER&BERMAN MUNICIPAL MONEY,
NEUBERGER&BERMAN MUNICIPAL SECURITIES, NEUBERGER&BERMAN NEW YORK INSURED
INTERMEDIATE, NEUBERGER&BERMAN CASH RESERVES, 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 generally
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 other 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

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<PAGE>

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 between the federal government and state and local
governments may impact adversely 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. Efforts are underway that may result in a "flat
tax" or other restructuring of the federal income tax system. These
developments could reduce the value of all municipal securities or the
securities of particular issuers. Neuberger&Berman Cash Reserves may
invest in taxable municipal obligations that otherwise meet its criteria
for quality and maturity.

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 NEW YORK INSURED INTERMEDIATE 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. 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. The risks of swap
agreements depend upon the other party's creditworthiness and ability to

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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 considered "derivatives."

RESIDUAL INTEREST BONDS (NEUBERGER&BERMAN MUNICIPAL SECURITIES AND
NEUBERGER&BERMAN NEW YORK INSURED INTERMEDIATE PORTFOLIOS). The Portfolios
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 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
AND NEUBERGER&BERMAN NEW YORK INSURED INTERMEDIATE PORTFOLIOS). 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 Portfolios 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,
NEUBERGER&BERMAN MUNICIPAL SECURITIES AND NEUBERGER&BERMAN NEW YORK
INSURED INTERMEDIATE 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 AND
NEUBERGER&BERMAN NEW YORK INSURED INTERMEDIATE PORTFOLIOS). 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

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<PAGE>

payments or the bond's rating falls below investment grade. The tax
treatment of tender option bonds is unclear, and the Portfolios will not
invest in any such bonds unless N&B Management has assurances that the
interest thereon will be tax-exempt.

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 use of
a single combined Prospectus and combined SAIs.

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<PAGE>

OTHER INFORMATION

DIRECTORY

INVESTMENT MANAGER, ADMINISTRATOR,
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
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 LLP
1800 Massachusetts Avenue, NW, 2nd Floor
Washington, DC 20036-1800

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

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<PAGE>

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

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 1996 Neuberger&Berman Management Inc.

Neuberger&Berman Management Inc.
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800-877-9700

This wrapper is not part of the prospectus.

[logo] PRINTED ON RECYCLED PAPER WITH
SOY BASED INKS NBIP00010395

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<PAGE>

_________________________________________________________________
NEUBERGER & BERMAN INCOME FUNDS AND PORTFOLIOS

STATEMENT OF ADDITIONAL INFORMATION

DATED MARCH 1, 1996

Neuberger & Berman Neuberger & Berman
Government Money Fund Ultra Short Bond Fund
(and Neuberger & Berman (and Neuberger & Berman
Government Money Portfolio) Ultra Short Bond Portfolio)

Neuberger & Berman Neuberger & Berman
Cash Reserves Limited Maturity Bond Fund
(and Neuberger & Berman (and Neuberger & Berman
Cash Reserves Portfolio) Limited Maturity Bond Portfolio)

No-Load Mutual Funds
605 Third Avenue, 2nd floor, New York, NY 10158-0180
Toll-Free 800-877-9700
----------------------------------------------------------------------

Neuberger & Berman GOVERNMENT MONEY Fund ("GOVERNMENT
MONEY"), Neuberger & Berman Cash Reserves ("CASH RESERVES"), Neuberger &
Berman ULTRA SHORT Bond Fund ("ULTRA SHORT"), and Neuberger & Berman
LIMITED MATURITY Bond Fund ("LIMITED MATURITY") (each a "Fund") are no-
load mutual funds that offer shares pursuant to a Prospectus dated
March 1, 1996. The above-named Funds invest all of their net investable
assets in Neuberger & Berman GOVERNMENT MONEY Portfolio, Neuberger &
Berman CASH RESERVES Portfolio, Neuberger & Berman ULTRA SHORT Bond
Portfolio, and Neuberger & Berman LIMITED MATURITY Bond Portfolio (each a
"Portfolio"), respectively.

The Funds' Prospectus, which is also the prospectus for
certain municipal funds managed by Neuberger & Berman Management
Incorporated ("N&B Management"), provides the basic information that an
investor should know before investing. A copy of the Prospectus may be
obtained, without charge, from N&B Management, 605 Third Avenue, 2nd
Floor, New York, NY 10158-0180 or by calling 800-877-9700.

This Statement of Additional Information ("SAI") is not a
prospectus and should be read in conjunction with the Prospectus.

No person has been authorized to give any information or to
make any representations not contained in the Prospectus or in this SAI in
connection with the offering made by the Prospectus, and, if given or
made, such information or representations must not be relied upon as
having been authorized by a Fund or its distributor. The Prospectus and
this SAI do not constitute an offering by a Fund or its distributor in any
jurisdiction in which such offering may not lawfully be made.
<PAGE>

TABLE OF CONTENTS
-----------------

INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Policies and Limitations . . . . . . . . . . . . . 5
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . 11
Theresa A. Havell and Josephine P. Mahaney: Co-Portfolio
Managers of Neuberger & Berman ULTRA SHORT Bond Portfolio . . 11
Theresa A. Havell and Thomas G. Wolfe: Co-Portfolio
Managers of Neuberger & Berman LIMITED MATURITY Bond
Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 12
Additional Investment Information . . . . . . . . . . . . . . 12
Risks of Fixed Income Securities . . . . . . . . . . . . . . . 31

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 32
Yield Calculations . . . . . . . . . . . . . . . . . . . . . . 32
Tax Equivalent Yield - State and Local Taxes . . . . . . . . . 33
Total Return Computations . . . . . . . . . . . . . . . . . . 34
Comparative Information . . . . . . . . . . . . . . . . . . . 35
Other Performance Information . . . . . . . . . . . . . . . . 36

CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 37

TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 37

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . 43
Investment Manager and Administrator . . . . . . . . . . . . . 43
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 47
Investment Companies Managed . . . . . . . . . . . . . . . . . 48
Management and Control of N&B Management . . . . . . . . . . . 50

DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . 51

ADDITIONAL PURCHASE INFORMATION . . . . . . . . . . . . . . . . . . . 52
Automatic Investing and Dollar Cost Averaging . . . . . . . . 52

ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . 52

ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . 55
Suspension of Redemptions . . . . . . . . . . . . . . . . . . 55
Redemptions in Kind . . . . . . . . . . . . . . . . . . . . . 56

DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 56

ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . 57
Taxation of the Funds . . . . . . . . . . . . . . . . . . . . 57
Taxation of the Portfolios . . . . . . . . . . . . . . . . . . 58
Taxation of the Funds' Shareholders . . . . . . . . . . . . . 61

VALUATION OF PORTFOLIO SECURITIES . . . . . . . . . . . . . . . . . . 62

PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 62
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . 63
<PAGE>

REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 64

CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 64

INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . 64

LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . 64

REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 65

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 66

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . . 67

Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER . . . 70

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<PAGE>

INVESTMENT INFORMATION

Each Fund is a separate series of Neuberger & Berman Income
Funds ("Trust"), a Delaware business trust that is registered with the
Securities and Exchange Commission ("SEC") as an open-end management
investment company. Each Fund seeks its investment objective by investing
all of its net investable assets in a Portfolio of Income Managers Trust
("Managers Trust") that has an investment objective identical to, and a
name similar to, that of the Fund. Each Portfolio, in turn, invests in
accordance with an investment objective, policies, and limitations
identical to those of its corresponding Fund. (The Trust and Managers
Trust, which is an open-end management investment company managed by N&B
Management, are together referred to below as the "Trusts.")

The following information supplements the discussion in the
Prospectus of the investment objective, policies, and limitations of each
Fund and Portfolio. The investment objective and, unless otherwise
specified, the investment policies and limitations of each Fund and
Portfolio are not fundamental. Although any investment policy or
limitation that is not fundamental may be changed by the trustees of the
Trust ("Fund Trustees") or of Managers Trust ("Portfolio Trustees")
without shareholder approval, each Fund intends to notify its shareholders
before changing its investment objective or implementing any material
change in any non-fundamental policy or limitation. The fundamental
investment policies and limitations of a Fund or a Portfolio may not be
changed without the approval of the lesser of (1) 67% of the total units
of beneficial interest ("shares") of the Fund or Portfolio represented at
a meeting at which more than 50% of the outstanding Fund or Portfolio
shares are represented or (2) a majority of the outstanding shares of the
Fund or Portfolio. This vote is required by the Investment Company Act of
1940 ("1940 Act") and is referred to in this SAI as a "1940 Act majority
vote." Whenever a Fund is called upon to vote on a change in a
fundamental investment policy or limitation of its corresponding
Portfolio, the Fund casts its votes thereon in proportion to the votes of
its shareholders at a meeting thereof called for that purpose.

Investment Policies and Limitations
------------------------------------

Each Fund has the following fundamental investment policy, to
enable it to invest in its corresponding Portfolio:

Notwithstanding any other investment policy of the Fund, the
Fund may invest all of its investable assets (cash,
securities, and receivables relating to securities) in an
open-end management investment company having sub- stantially
the same investment objective, policies, and limitations as
the Fund.

following discusses the investment policies and limitations of the
Portfolios, it applies equally to their corresponding Funds.

For purposes of the investment limitation on concentration in
particular industries, N&B Management identifies the "issuer" of a
municipal obligation that is not a general obligation note or bond by the
obligation's characteristics. The most significant of these character-
istics is the source of funds for the payment of principal and interest on
the obligation. If an obligation is backed by an irrevocable letter of
credit or other guarantee, without which the obligation would not qualify
for purchase under Neuberger & Berman LIMITED MATURITY Bond Portfolio's
quality restrictions, the issuer of the letter of credit or the guarantee
is considered an issuer of the obligation. If an obligation meets the
Portfolio's quality restrictions without credit support, the Portfolio
treats the commercial developer or the industrial user, rather than the
governmental entity or the guarantor, as the only issuer of the
obligation, even if the obligation is backed by a letter of credit or
other guarantee.

Except for the limitation on borrowing and the limitation on
ownership of portfolio securities by officers and trustees, any investment
policy or limitation that involves a maximum percentage of securities or
assets will not be considered to be violated unless the percentage
limitation is exceeded immediately after, and because of, a transaction by
a Portfolio.

The fundamental investment policies and limitations of
Neuberger & Berman GOVERNMENT MONEY Portfolio are as follows:

1. BORROWING. The Portfolio may not borrow money, except
from banks for temporary or emergency purposes and not for leveraging or
investment, in an amount not exceeding 33-1/3% of the value of its total
assets (including the amount borrowed) less liabilities (other than
borrowings). If at any time borrowings exceed 33-1/3% of the value of the
Portfolio's total assets, it will reduce its borrowings within three days
(excluding Sundays and holidays) to the extent necessary to comply with
the 33-1/3% limitation.

2. COMMODITIES AND REAL ESTATE. The Portfolio may not
purchase or sell commodities, commodity contracts, foreign exchange, or
real estate, including interests in real estate investment trusts and real
estate mortgage loans, except securities issued by the Government National
Mortgage Association.

3. LENDING. The Portfolio may not make loans. The acqui-
sition of a portion of an issue of publicly distributed bonds, debentures,
notes, and other securities as permitted by Managers Trust's Declaration
of Trust shall not be deemed to be the making of loans.

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<PAGE>

4. SENIOR SECURITIES. The Portfolio may not issue senior
securities, except as permitted under the 1940 Act.

5. UNDERWRITING. The Portfolio may not underwrite securi-
ties of other issuers, except to the extent that the Portfolio, in
disposing of portfolio securities, may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 ("1933 Act").

6. SHORT SALES AND PUTS, CALLS, STRADDLES, OR SPREADS.
The Portfolio may not effect short sales of securities or write or
purchase any puts, calls, straddles, spreads, or any combination thereof.

The non-fundamental investment policies and limitations of
Neuberger & Berman GOVERNMENT MONEY Portfolio are as follows:

1. INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Port-
folio may not purchase securities of other investment companies, except to
the extent permitted by the 1940 Act and in the open market at no more
than customary brokerage commission rates. This limitation does not apply
to securities received or acquired as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.

2. BORROWING. The Portfolio may not purchase securities
if outstanding borrowings exceed 5% of its total assets.

3. MARGIN TRANSACTIONS. The Portfolio may not purchase
securities on margin from brokers or other lenders, except that the
Portfolio may obtain such short-term credits as are necessary for the
clearance of securities transactions.

4. INDUSTRY CONCENTRATION. The Portfolio may not purchase
any security if, as a result, 25% or more of its total assets (taken at
current value) would be invested in the securities of issuers having their
principal business activities in the same industry. This limitation does
not apply to (i) purchases of securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("U.S. Government and
Agency Securities") or (ii) investments in certificates of deposit ("CDs")
or banker's acceptances issued by domestic branches of U.S. banks.

The fundamental investment policies and limitations of
Neuberger & Berman CASH RESERVES Portfolio, Neuberger & Berman ULTRA SHORT
Bond Portfolio, and Neuberger & Berman LIMITED MATURITY Bond Portfolio are
as follows:

1. BORROWING. No Portfolio may borrow money, except that
a Portfolio may (i) borrow money from banks for temporary or emergency
purposes and not for leveraging or investment, and (ii) enter into reverse
repurchase agreements; provided that (i) and (ii) in combination do not
exceed 33-1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). If at any time
borrowings exceed 33-1/3% of the value of a Portfolio's total assets, that

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<PAGE>

Portfolio will reduce its borrowings within three days (excluding Sundays
and holidays) to the extent necessary to comply with the 33-1/3%
limitation.

2. COMMODITIES. Neuberger & Berman ULTRA SHORT Bond and
Neuberger & Berman LIMITED MATURITY Bond Portfolios may not purchase
physical commodities or contracts thereon, unless acquired as a result of
the ownership of securities or instruments, but this restriction shall not
prohibit a Portfolio from purchasing futures contracts or options
(including options on futures contracts, but excluding options or futures
contracts on physical commodities) or from investing in securities of any
kind. Neuberger & Berman CASH RESERVES Portfolio may not purchase
commodities or contracts thereon, but this restriction shall not prohibit
the Portfolio from purchasing the securities of issuers that own interests
in any of the foregoing.

3. DIVERSIFICATION. No Portfolio may, with respect to 75% of
the value of its total assets, purchase the securities of any issuer
(other than U.S. Government and Agency Securities) if, as a result,
(i) more than 5% of the value of the Portfolio's total assets would be
invested in the securities of that issuer or (ii) the Portfolio would hold
more than 10% of the outstanding voting securities of that issuer.

4. INDUSTRY CONCENTRATION. No Portfolio may purchase any
security if, as a result, 25% or more of its total assets (taken at
current value) would be invested in the securities of issuers having their
principal business activities in the same industry. This limitation does
not apply to (i) purchases of U.S. Government and Agency Securities, or
(ii) investments by Neuberger & Berman Cash Reserves Portfolio or
Neuberger & Berman ULTRA SHORT Bond Portfolio in CDs or banker's
acceptances issued by domestic branches of U.S. banks. Mortgage and
asset-backed securities are considered to be a single industry.

5. LENDING. No Portfolio may lend any security or make
any other loan if, as a result, more than 33-1/3% of its total assets
(taken at current value) would be lent to other parties, except, in
accordance with its investment objective, policies, and limitations, (i)
through the purchase of a portion of an issue of debt securities or (ii)
by engaging in repurchase agreements.

6. REAL ESTATE. No Portfolio may purchase real estate
unless acquired as a result of the ownership of securities or instruments,
but this restriction shall not prohibit a Portfolio from purchasing
securities issued by entities or investment vehicles that own or deal in
real estate or interests therein, or instruments secured by real estate or
interests therein.

7. SENIOR SECURITIES. No Portfolio may issue senior
securities, except as permitted under the 1940 Act.

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<PAGE>

8. UNDERWRITING. No Portfolio may underwrite securities
of other issuers, except to the extent that a Portfolio, in disposing of
portfolio securities, may be deemed to be an underwriter within the
meaning of the 1933 Act.

The non-fundamental investment policies and limitations of
Neuberger & Berman CASH RESERVES Portfolio, Neuberger & Berman ULTRA SHORT
Bond Portfolio, and Neuberger & Berman LIMITED MATURITY Bond Portfolio are
as follows:

1. INVESTMENTS IN ANY ONE ISSUER. Neuberger & Berman Cash
Reserves Portfolio and Neuberger & Berman ULTRA SHORT Bond Portfolio may
not purchase the securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 5% of the Portfolio's total
assets would be invested in the securities of that issuer.

2. ILLIQUID SECURITIES. No Portfolio may purchase any
security if, as a result, more than 10% of its net assets would be
invested in illiquid securities. Illiquid securities include securities
that cannot be sold within seven days in the ordinary course of business
for approximately the amount at which the Portfolio has valued the
securities, such as repurchase agreements maturing in more than seven
days.

3. UNSEASONED ISSUERS. No Portfolio may purchase the
securities of any issuer (other than securities issued or guaranteed by
domestic or foreign governments or political subdivisions thereof) if, as
a result, more than 5% of the Portfolio's total assets would be invested
in the securities of business enterprises that, including predecessors,
have a record of less than three years of continuous operation.

4. OWNERSHIP OF PORTFOLIO SECURITIES BY OFFICERS AND
TRUSTEES. No Portfolio may purchase or retain the securities of any
issuer if, to the knowledge of N&B Management, those officers and trustees
of Managers Trust and officers and directors of N&B Management who each
owns individually more than 1/2 of 1% of the outstanding securities of
such issuer, together own more than 5% of such securities.

5. INVESTMENTS IN OTHER INVESTMENT COMPANIES. No
Portfolio may purchase securities of other investment companies, except to
the extent permitted by the 1940 Act and in the open market at no more
than customary brokerage commission rates. This limitation does not apply
to securities received or acquired as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.

- 5 -
<PAGE>

6. OIL AND GAS PROGRAMS. No Portfolio may invest in
participations or other direct interests in oil, gas, or other mineral
exploration or development programs or leases.

7. BORROWING. No Portfolio may purchase securities if
outstanding borrowings, including any reverse repurchase agreements,
exceed 5% of its total assets.

8. LENDING. Except for the purchase of debt securities
and engaging in repurchase agreements, no Portfolio may make any loans
other than securities loans.

9. MARGIN TRANSACTIONS. No Portfolio may purchase
securities on margin from brokers or other lenders, except that a
Portfolio may obtain such short-term credits as are necessary for the
clearance of securities transactions. For Neuberger & Berman ULTRA SHORT
Bond Portfolio and Neuberger & Berman LIMITED MATURITY Bond Portfolio,
margin payments in connection with transactions in futures contracts and
options on futures contracts shall not constitute the purchase of
securities on margin and shall not be deemed to violate the foregoing
limitation.

10. SHORT SALES. No Portfolio may sell securities short,
unless it owns, or has the right to obtain without payment of additional
consideration, securities equivalent in kind and amount to the securities
sold. For Neuberger & Berman ULTRA SHORT Bond Portfolio and Neuberger &
Berman LIMITED MATURITY Bond Portfolio, transactions in forward contracts,
futures contracts and options shall not constitute selling securities
short.

11. PUTS, CALLS, STRADDLES, OR SPREADS. No Portfolio may
invest in puts, calls, straddles, spreads, or any combination thereof,
except that each of these Portfolios may (i) purchase securities with
rights to put the securities to the seller in accordance with its invest-
ment program and (ii) purchase call options and write (sell) put options
to close out options previously written by the Portfolio, and Neuberger &
Berman LIMITED MATURITY Bond Portfolio may write covered call options and
purchase put options. The Portfolios do not construe the foregoing
limitation to preclude them from purchasing or selling options on futures
contracts or from purchasing securities with rights to put the security to
the issuer or a guarantor.

12. REAL ESTATE LIMITED PARTNERSHIPS. No Portfolio may
invest in real estate limited partnerships.

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<PAGE>

Rating Agencies
---------------

As discussed in the Prospectus, the Portfolios may purchase
securities rated by Standard & Poor's ("S&P"), Moody's Investors Service,
Inc. ("Moody's"), or any other nationally recognized statistical rating
organization ("NRSRO"). The ratings of an NRSRO represent its opinion as
to the quality of securities it undertakes to rate. Ratings are not
absolute standards of quality; consequently, securities with the same
maturity, coupon, and rating may have different yields. Among the NRSROs,
the Portfolios rely primarily on ratings assigned by S&P and Moody's,
which are described in Appendix A to this SAI.

Theresa A. Havell and Josephine P. Mahaney: Co-Portfolio Managers of
Neuberger & Berman ULTRA SHORT Bond Portfolio
---------------------------------------------------------------------

Investors are accustomed to thinking of yield or interest
rate figures as the same as total return on their investment, because
savings accounts, conventional money market funds, and CDs almost always
do indeed return the stated yield. But bond funds are different-- bonds
not only pay interest, they also fluctuate in value. For example, a
decline in prevailing levels of interest rates generally increases the
value of debt securities in a bond fund's portfolio, while an increase in
rates usually reduces the value of those securities. As a result,
interest rate fluctuations will affect a bond fund's net asset value (and
total return) but not necessarily the income received by the fund from its
portfolio securities. Both the yield and risk to principal usually
increase as the maturity of the bond increases.

So looking at yield alone carries high risk because the
highest yielding bonds historically tend to be the ones with the longest
maturities. The risk to principal in these bonds can be nearly as great
as the risk in stocks and may not produce the same reward.

What advice does Ms. Theresa Havell, manager of the Fixed
Income Group of Neuberger & Berman, L.P. ("Neuberger & Berman"), have for
investors seeking the highest returns on their fixed income investments?
"Look beyond interest rates to total return," she states unequivocally.
Total return includes the yield from the bond and the increase or decrease
in the market value (price) of the bond.

"Once you consider the risk to principal, then total return
is the only concept that can measure what you are actually earning from
your fixed income securities," Ms. Havell says.

ULTRA SHORT is appropriate for investors who seek a higher
total return alternative to money market funds with minimal risk to
principal and liquidity.

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<PAGE>

Theresa A. Havell and Thomas G. Wolfe: Co-Portfolio Managers of Neuberger
& Berman LIMITED MATURITY Bond Portfolio

LIMITED MATURITY is intended for investors who seek the
highest current income with less net asset value fluctuations from
interest rate changes than that of a longer-term bond fund. Both the
yield and risk to principal usually increase as the maturity of the bond
increases. The Fund's corresponding Portfolio provides active fixed
income portfolio management through investment in securities with an
average weighted portfolio maturity of no longer than five years. Studies
of bond returns have shown total returns were best in bonds having
maturities of two to five years. These limited maturity bonds have
historically provided the best value in the bond market and outperformed
both shorter- and longer-term securities.

"Bonds of two-to-five year maturities have yields that have
historically captured up to 95% of yields of longer bonds, but with
substantially less price volatility," Ms. Havell explains. That's why
studies show that limited maturity bonds may provide the best value in the
bond market.

"Fixed income securities should preserve capital and provide
the highest total return consistent with preservation of capital," says
Mr. Wolfe, manager of the Neuberger & Berman LIMITED MATURITY Bond
Portfolio.

Additional Investment Information
---------------------------------

Some or all of the Portfolios, as indicated below, may make
the following investments, among others, although they may not buy all of
the types of securities or use all of the investment techniques that are
described.

REPURCHASE AGREEMENTS (ALL PORTFOLIOS EXCEPT NEUBERGER &
BERMAN GOVERNMENT MONEY PORTFOLIO). Repurchase agreements are agreements
under which a Portfolio purchases securities from a bank that is a member
of the Federal Reserve System or from a securities dealer that agrees to
repurchase the securities from the Portfolio at a higher price on a
designated future date. Repurchase agreements generally are for a short
period of time, usually less than a week. No Portfolio may enter into a
repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would then be
invested in such repurchase agreements and other illiquid securities. A
Portfolio may enter into a repurchase agreement only if (1) the underlying
securities are of the type (excluding maturity limitations) that the
Portfolio's investment policies and limitations would allow it to purchase
directly, (2) the market value of the underlying securities, including
accrued interest, at all times equals or exceeds the value of the repur-
chase agreement, and (3) payment for the underlying securities is made

- 8 -
<PAGE>

only upon satisfactory evidence that the securities are being held for the
Portfolio's account by its custodian or a bank acting as the Portfolio's
agent.

SECURITIES LOANS (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
GOVERNMENT MONEY PORTFOLIO). In order to realize income, the Portfolios
may lend portfolio securities with a value not exceeding 33-1/3% of its
total assets to banks, brokerage firms, or institutional investors judged
creditworthy by N&B Management. Borrowers are required continuously to
secure their obligations to return securities on loan from the Portfolio
by depositing collateral in a form determined to be satisfactory by the
Portfolio Trustees. The collateral, which must be marked to market daily,
must be equal to at least 100% of the market value of the loaned
securities, which will also be marked to market daily. N&B Management
believes the risk of loss on these transactions is slight because, if a
borrower were to default for any reason, the collateral should satisfy the
obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral
should the borrower fail financially.

RESTRICTED SECURITIES AND RULE 144A SECURITIES (ALL
PORTFOLIOS EXCEPT NEUBERGER & BERMAN GOVERNMENT MONEY PORTFOLIO). The
Portfolios may invest in restricted securities, which are securities that
may not be sold to the public without an effective registration statement
under the 1933 Act or, if they are unregistered, may be sold only in a
privately negotiated transaction or pursuant to an exemption from
registration. In recognition of the increased size and liquidity of the
institutional market for unregistered securities and the importance of
institutional investors in the formation of capital, the SEC has adopted
Rule 144A under the 1933 Act. Rule 144A is designed further to facilitate
efficient trading among institutional investors by permitting the sale of
certain unregistered securities to qualified institutional buyers. To the
extent privately placed securities held by a Portfolio qualify under Rule
144A, and an institutional market develops for those securities, the
Portfolio likely will be able to dispose of the securities without
registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of a
Portfolio's illiquidity. N&B Management, acting under guidelines
established by the Portfolio Trustees, may determine that certain
securities qualified for trading under Rule 144A are liquid. Foreign
securities that can be freely sold in the markets in which they are
principally traded are not considered to be restricted. Regulation S
under the 1933 Act permits the sale abroad of securities that are not
registered for sale in the United States.

- 9 -
<PAGE>

If, during such a period, adverse market conditions were to develop, the
Portfolio might obtain a less favorable price than prevailed when it
decided to sell. To the extent privately placed securities, including
Rule 144A securities, are illiquid, purchases thereof will be subject to
each Portfolio's 10% limit on investments in illiquid securities.
Restricted securities for which no market exists are priced at fair value
as determined in accordance with procedures approved and periodically
reviewed by the Portfolio Trustees.

COMMERCIAL PAPER (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
GOVERNMENT MONEY PORTFOLIO). Commercial paper is a short-term debt
security issued by a corporation, bank, municipality, or other issuer for
purposes such as financing current operations.

Each Portfolio may invest in commercial paper that cannot be
resold to the public without an effective registration statement under the
1933 Act. While restricted commercial paper normally is deemed illiquid,
N&B Management may in certain cases determine that such paper is liquid,
pursuant to guidelines established by the Portfolio Trustees.

REVERSE REPURCHASE AGREEMENTS (ALL PORTFOLIOS EXCEPT
NEUBERGER & BERMAN GOVERNMENT MONEY PORTFOLIO). In a reverse repurchase
agreement, a Portfolio sells portfolio securities subject to its agreement
to repurchase the securities at a later date for a fixed price reflecting
a market rate of interest; these agreements are considered borrowings for
purposes of the Portfolios' investment policies and limitations concerning
borrowings. While a reverse repurchase agreement is outstanding, a
Portfolio will maintain with its custodian in a segregated account cash,
U.S. Government or Agency Securities, or other liquid, high-grade debt
securities, marked to market daily, in an amount at least equal to the
Portfolio's obligations under the agreement. There is a risk that the
contra-party to a reverse repurchase agreement will be unable or unwilling
to complete the transaction as scheduled, which may result in losses to
the Portfolio.

BANKING AND SAVINGS INSTITUTION SECURITIES (ALL PORTFOLIOS
EXCEPT NEUBERGER & BERMAN GOVERNMENT MONEY PORTFOLIO). The Portfolios may
invest in banking and savings institution obligations, which include CDs,
time deposits, bankers' acceptances, and other short-term debt obligations
issued by commercial banks and savings institutions. CDs are receipts for
funds deposited for a specified period of time at a specified rate of
return; time deposits generally are similar to CDs, but are
uncertificated. Bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with international commercial
transactions. The CDs, time deposits, and bankers' acceptances in which
the Portfolios invest typically are not covered by deposit insurance.

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<PAGE>

The Portfolios may invest in securities issued by a
commercial bank or savings institution only if (1) the bank or institution
has total assets of at least $1,000,000,000, (2) the bank or institution
is on N&B Management's approved list, (3) in the case of a U.S. bank or
institution, its deposits are insured by the Federal Deposit Insurance
Corporation, and (4) in the case of a foreign bank or institution, the
securities are, in N&B Management's opinion, of an investment quality
comparable with other debt securities that may be purchased by the Port-
folio. These limitations do not prohibit investments in securities issued
by foreign branches of U.S. banks that meet the foregoing requirements.
These Portfolios do not currently intend to invest in any security issued
by a foreign savings institution.

VARIABLE OR FLOATING RATE SECURITIES; DEMAND AND PUT
FEATURES (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN GOVERNMENT MONEY
PORTFOLIO). Variable rate securities provide for automatic adjustment of
the interest rate at fixed intervals (e.g., daily, monthly, or semi-
annually); floating rate securities provide for automatic adjustment of
the interest rate whenever a specified interest rate index changes. The
interest rate on variable and floating rate securities (collectively,
"Variable Rate Securities") ordinarily is determined by reference to a
particular bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate
of return on commercial paper or bank CDs, an index of short-term tax-
exempt rates or some other objective measure.

The Variable Rate Securities in which the Portfolios invest
frequently permit the holder to demand payment of the obligations'
principal and accrued interest at any time or at specified intervals not
exceeding one year. The demand feature usually is backed by a credit
instrument (e.g., a bank letter of credit) from a creditworthy issuer and
sometimes by insurance from a creditworthy insurer. Without these credit
enhancements, the Variable Rate Securities might not meet the Portfolios'
quality standards. Accordingly, in purchasing these securities, each
Portfolio relies primarily on the creditworthiness of the credit
instrument issuer or the insurer. A Portfolio may not invest more than 5%
of its total assets in securities backed by credit instruments from any
one issuer or by insurance from any one insurer (excluding securities that
do not rely on the credit instrument or insurance for their rating, i.e.,
stand on their own credit).

A Portfolio can also buy fixed rate securities accompanied by
a demand feature or by a put option, which permits the Portfolio to sell
the security to the issuer or third party at a specified price. A
Portfolio may rely on the creditworthiness of issuers of puts in
purchasing these securities.

In calculating its maturity, each Portfolio is permitted to
treat certain Variable Rate Securities as maturing on a date prior to the

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<PAGE>

date on which principal is due to be paid. In applying such maturity
shortening devices, N&B Management considers whether the interest rate
reset is expected to cause the security to trade at approximately its par
value.

MORTGAGE-BACKED SECURITIES (ALL PORTFOLIOS EXCEPT NEUBERGER &
BERMAN GOVERNMENT MONEY PORTFOLIO). Mortgage-backed securities represent
direct or indirect participations in, or are secured by and payable from,
pools of mortgage loans. They may be 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 the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), and Federal Home Loan Mortgage Corporation
("FHLMC"), or may be issued by private issuers.

Mortgage-backed securities may be issued in the form of col-
lateralized mortgage obligations ("CMOs") or mortgage-backed bonds. CMOs
are obligations fully collateralized directly or indirectly by a pool of
mortgages; payments of principal and interest on the mortgages are passed
through to the holders of the CMOs, although not necessarily on a pro rata
basis, on the same schedule as they are received. Mortgage-backed bonds
are general obligations of the issuer fully collateralized directly or
indirectly by a pool of mortgages. The mortgages serve as collateral for
the issuer's payment obligations on the bonds, but interest and principal
payments on the mortgages are not passed through either directly (as with
mortgage-backed "pass-through" securities issued or guaranteed by U.S.
Government agencies or instrumentalities) or on a modified basis (as with
CMOs). Accordingly, a change in the rate of prepayments on the pool of
mortgages could change the effective maturity of a CMO but not that of a
mortgage-backed bond (although, like many bonds, mortgage-backed bonds may
be callable by the issuer prior to maturity).

Governmental, government-related, and private entities may
create mortgage loan pools to back mortgage pass-through and mortgage-
collateralized investments. Commercial banks, savings institutions,
private mortgage insurance companies, mortgage bankers, and other
secondary market issuers, including securities broker-dealers and special
purpose entities (which generally are affiliates of the foregoing estab-
lished to issue such securities), also create pass-through pools of
residential mortgage loans. Such issuers may be the originators and/or
servicers of the underlying mortgage loans, as well as the guarantors of
the mortgage-backed securities. Pools created by non-governmental issuers
generally offer a higher rate of interest than government and government-
related pools because of the absence of direct or indirect government or
agency guarantees. Various forms of insurance or guarantees, including
individual loan, title, pool, and hazard insurance, and letters of credit
may support timely payment of interest and principal of non-governmental
pools. Governmental entities, private insurers, and the mortgage poolers
issue these forms of insurance and guarantees. Such insurance and

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<PAGE>

guarantees, as well as the creditworthiness of the issuers thereof, are
considered in determining whether a mortgage-backed security meets a
Portfolio's investment quality standards. There can be no assurance that
the private insurers or guarantors can meet their obligations under the
insurance policies or guarantee arrangements.

A Portfolio may buy mortgage-backed securities without
insurance or guarantees, if N&B Management determines that the securities
meet the Portfolio's quality standards. A Portfolio may not purchase
mortgage-backed securities or any other assets that, in N&B Management's
opinion, are illiquid if, as a result, more than 10% of the value of the
Portfolio's net assets would be illiquid. N&B Management will, consistent
with the Portfolios' investment objective, policies and limitations and
quality standards, consider making investments in new types of mortgage-
backed securities as such securities are developed and offered to
investors.

Because many mortgages are repaid early, the actual maturity
of mortgage-backed securities may be shorter than their stated final
maturity. In calculating its maturity, a Portfolio may apply certain
industry conventions regarding the maturity of mortgage-backed
instruments.

ASSET-BACKED SECURITIES (ALL PORTFOLIOS EXCEPT NEUBERGER &
BERMAN GOVERNMENT MONEY PORTFOLIO). The Portfolios may purchase asset-
backed securities, including commercial paper. Asset-backed securities
represent direct or indirect participations in, or are secured by and
payable from, pools of assets such as motor vehicle installment sales
contracts, installment loan contracts, leases of various types of real and
personal property, and receivables from revolving credit (credit card)
agreements. These assets are securitized through the use of trusts and
special purpose corporations. Credit enhancements, such as various forms
of cash collateral accounts or letters of credit, may support payments or
distributions of principal and interest on asset-backed securities. Like
mortgage-backed securities, asset-backed securities are subject to the
risk of prepayment. The risk that recovery on repossessed collateral
might be unavailable or inadequate to support payments, however, is
greater for asset-backed securities than for mortgage-backed securities.

Certificates for Automobile Receivables ("CARS ") represent
undivided fractional interests in a trust whose assets consist of a pool
of motor vehicle retail installment sales contracts and security interests
in the vehicles securing those contracts. Payments of principal and
interest on the underlying contracts are "passed through" monthly to
certificate holders and are guaranteed up to specified amounts by a letter
of credit issued by a financial institution unaffiliated with the trustee
or originator of the trust. Underlying installment sales contracts are
subject to prepayment, which may reduce the overall return to certificate

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<PAGE>

holders. Certificate holders also may experience delays in payment or
losses on CARS if the trust does not realize the full amounts due on
underlying installment sales contracts because of unanticipated legal or
administrative costs of enforcing the contracts; depreciation, damage, or
loss of the vehicles securing the contracts; or other factors.

Credit card receivable securities are backed by receivables
from revolving credit card agreements ("Accounts"). Credit balances on
Accounts are generally paid down more rapidly than are automobile
contracts. Most of the credit card receivable securities issued publicly
to date have been pass-through certificates. In order to lengthen their
maturity, most such securities provide for a fixed period during which
only interest payments on the underlying Accounts are passed through to
the security holder; principal payments received on the Accounts are used
to fund the transfer of additional credit card charges made on the
Accounts to the pool of assets supporting the securities. Usually, the
initial fixed period may be shortened if specified events occur signaling
a potential deterioration in the quality of the assets backing the
security, such as the imposition of a cap on interest rates. An issuer's
ability to extend the life of an issue of credit card receivable
securities thus depends on the continued generation of principal amounts
in the underlying Accounts and the non-occurrence of the specified events.
The nondeductibility of consumer interest, as well as competitive and
general economic factors, could adversely affect the rate at which new
receivables are created in an Account and conveyed to an issuer, thereby
shortening the expected weighted average life of the related security and
reducing its yield. An acceleration in cardholders' payment rates or any
other event that shortens the period during which additional credit card
charges on an Account may be transferred to the pool of assets supporting
the related security could have a similar effect on its weighted average
life and yield.

Credit cardholders are entitled to the protection of state
and federal consumer credit laws. Many of those laws give a holder the
right to set off certain amounts against balances owed on the credit card,
thereby reducing amounts paid on Accounts. In addition, unlike most other
asset-backed securities, Accounts are unsecured obligations of the
cardholder.

U.S. DOLLAR-DENOMINATED FOREIGN DEBT SECURITIES (ALL PORTFO-
LIOS EXCEPT NEUBERGER & BERMAN GOVERNMENT MONEY PORTFOLIO). The Portfolios
may invest in U.S. dollar-denominated debt securities issued by foreign
issuers (including banks, governments and quasi-governmental
organizations) and foreign branches of U.S. banks, including negotiable
CDs, bankers' acceptances, and commercial paper. These investments are
subject to each Portfolio's quality and maturity standards. While
investments in foreign securities are intended to reduce risk by providing
further diversification, such investments involve sovereign and other
risks, in addition to the credit and market risks normally associated with

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<PAGE>

domestic securities. These additional risks include the possibility of
adverse political and economic developments (including political
instability) and the potentially adverse effects of unavailability of
public information regarding issuers, less governmental supervision and
regulation of financial markets, reduced liquidity of certain financial
markets, and the lack of uniform accounting, auditing, and financial
standards or the application of standards that are different or less
stringent than those applied in the United States.

FOREIGN CURRENCY DENOMINATED FOREIGN SECURITIES (NEUBERGER &
BERMAN LIMITED MATURITY BOND PORTFOLIO). The Portfolio may invest in debt
or other income-producing securities (of issuers in countries whose
governments are considered stable by N&B Management) that are denominated
in or indexed to foreign currencies, including (1) CDs, commercial paper,
fixed time deposits, and bankers' acceptances issued by foreign banks,
(2) obligations of other corporations, and (3) obligations of foreign
governments or their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities includes the special risks associated with
investing in non-U.S. issuers described in the preceding section and the
additional risks of (1) adverse changes in foreign exchange rates, (2)
nationalization, expropriation, or confiscatory taxation, (3) adverse
changes in investment or exchange control regulations (which could prevent
cash from being brought back to the United States), and (4) expropriation
or nationalization of foreign portfolio companies. Additionally,
dividends and interest payable on foreign securities may be subject to
foreign taxes, including taxes withheld from those payments.

Foreign securities often trade with less frequency and in
less volume than domestic securities and therefore may exhibit greater
price volatility. Additional costs associated with an investment in
foreign securities may include higher custodial fees than apply to
domestic custody arrangements, and transaction costs of foreign currency
conversions.

Interest rates prevailing in other countries may affect the
prices of foreign securities and exchange rates for foreign currencies.
Local factors, including the strength of the local economy, the demand for
borrowing, the government's fiscal and monetary policies, and the
international balance of payments often affect the interest rates in other
countries. Individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource self-
sufficiency, and balance of payments position.

Foreign markets also have different clearance and settlement
procedures, and, in certain markets, there have been times when
settlements have been unable to keep pace with the volume of securities

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<PAGE>

transactions, making it difficult to conduct such transactions. Such
delays in settlement could result in temporary periods when a portion of
the assets of a Portfolio are uninvested and no return is earned thereon.
The inability of a Portfolio to make intended security purchases due to
settlement problems could cause the Portfolio to miss attractive
investment opportunities. Inability to dispose of portfolio securities
due to settlement problems could result in losses to a Portfolio due to
subsequent declines in value of the portfolio securities, or, if the
Portfolio has entered into a contract to sell the securities, could result
in possible liability to the purchaser.

In order to limit the risk inherent in investing in foreign
currency denominated securities, the Portfolio may not purchase any such
security if, after such purchase, more than 25% of its net assets (taken
at market value) would be invested in foreign currency denominated
securities. Within that limitation, however, the Portfolio is not
restricted in the amount it may invest in securities denominated in any
one foreign currency.

DOLLAR ROLLS (NEUBERGER & BERMAN ULTRA SHORT BOND PORTFOLIO
AND NEUBERGER & BERMAN LIMITED MATURITY BOND PORTFOLIO). In a "dollar
roll," a Portfolio sells securities for delivery in the current month and
simultaneously agrees to repurchase substantially similar (same type and
coupon) securities on a specified future date from the same party. A
"covered roll" is a specific type of dollar roll in which the Portfolio
holds an offsetting cash position or a cash equivalent security position
that matures on or before the forward settlement date of the dollar roll
transaction. Dollar rolls are considered borrowings for purposes of the
Portfolios' investment policies and limitations concerning borrowings.
There is a risk that the contra-party will be unable or unwilling to
complete the transactions as scheduled, which may result in losses to the
Portfolio.

WHEN-ISSUED TRANSACTIONS (NEUBERGER & BERMAN ULTRA SHORT BOND
PORTFOLIO AND NEUBERGER & BERMAN LIMITED MATURITY BOND PORTFOLIO). The
Portfolios may purchase securities (including mortgage-backed securities
such as GNMA, FNMA, and FHLMC certificates) on a when-issued basis. In
such a transaction, a Portfolio commits to purchase securities (to secure
an advantageous price and yield at the time of the commitment) and
completes the purchase by making payment against delivery of the
securities at a future date. When-issued purchases are negotiated
directly with the other party, and such commitments are not traded on an
exchange.

In periods of falling interest rates and rising prices, a
Portfolio might purchase a security on a when-issued basis and sell a
similar security to settle such purchase, thereby obtaining the benefit of
currently higher yields.

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<PAGE>

The value of securities purchased on a when-issued basis and
any subsequent fluctuations in their value are reflected in the
computation of a Portfolio's net asset value ("NAV") starting on the date
of the agreement to purchase the securities. The Portfolio does not earn
interest on securities it has committed to purchase until the securities
are paid for and delivered on the settlement date. Settlement of when-
issued purchase transactions generally takes place within two months after
the date of the transaction, but a Portfolio may agree to a longer
settlement period.

A Portfolio will purchase securities on a when-issued basis
only with the intention of completing the transaction and actually
purchasing or selling the securities. If deemed advisable as a matter of
investment strategy, however, a Portfolio may dispose of or renegotiate a
commitment after it has been entered into. A Portfolio also may sell
securities it has committed to purchase before those securities are
delivered to the Portfolio on the settlement date. The Portfolio may
realize capital gains or losses in connection with these transactions.

When a Portfolio purchases securities on a when-issued basis,
it will maintain in a segregated account with its custodian, until payment
is made, cash, U.S. Government and Agency Securities, or other liquid,
high-grade debt securities having an aggregate market value (determined
daily) at least equal to the amount of the Portfolio's purchase
commitments. This procedure is designed to ensure that the Portfolio
maintains sufficient assets at all times to cover its obligations under
when-issued purchases.

FUTURES CONTRACTS AND OPTIONS THEREON (NEUBERGER & BERMAN
ULTRA SHORT BOND PORTFOLIO AND NEUBERGER & BERMAN LIMITED MATURITY BOND
PORTFOLIO). The Portfolios may purchase and sell interest-rate and bond
index futures contracts and options thereon, and Neuberger & Berman
LIMITED MATURITY Bond Portfolio may purchase and sell foreign currency
futures contracts (with interest-rate and bond index futures contracts,
"Futures" or "Futures Contracts") and options thereon. The Portfolios
engage in interest-rate Futures and options transactions in an attempt to
hedge against changes in securities prices resulting from expected changes
in prevailing interest rates; Neuberger & Berman LIMITED MATURITY Bond
Portfolio engages in foreign currency Futures and options transactions in
an attempt to hedge against expected changes in prevailing currency
exchange rates. Because the futures markets may be more liquid than the
cash markets, the use of Futures permits a Portfolio to enhance portfolio
liquidity and maintain a defensive position without having to sell
portfolio securities. The Portfolios do not engage in transactions in
Futures or options thereon for speculation. The Portfolios view invest-
ment in (1) interest-rate Futures and options thereon as a maturity
management device and/or a device to reduce risk and preserve total return

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<PAGE>

in an adverse interest rate environment and (2) foreign currency Futures
and options thereon as a means of establishing more definitely the
effective return on securities denominated in foreign currencies held or
intended to be acquired by them.

A "sale" of a Futures Contract (or a "short" Futures
position) entails the assumption of a contractual obligation to deliver
the securities or currency underlying the contract at a specified price at
a specified future time. A "purchase" of a Futures Contract (or a "long"
Futures position) entails the assumption of a contractual obligation to
acquire the securities or currency underlying the contract at a specified
price at a specified future time. Certain Futures, including bond index
Futures, are settled on a net cash payment basis rather than by the sale
and delivery of the securities underlying the Futures.

"Margin" with respect to Futures is the amount of assets that
must be deposited by a Portfolio with, or for the benefit of, a futures
commission merchant in order to initiate and maintain the Portfolio's
Futures positions. The margin deposit made by a Portfolio when it enters
into a Futures Contract ("initial margin") is intended to assure its
performance of the contract. If the price of the Futures Contract changes
-- increases in the case of a short (sale) position or decreases in the
case of a long (purchase) position -- so that the unrealized loss on the
contract causes the margin deposit not to satisfy margin requirements, the
Portfolio will be required to make an additional margin deposit ("vari-
ation margin"). However, if favorable price changes in the Futures
Contract cause the margin on deposit to exceed the required margin, the
excess will be paid to the Portfolio. In computing its daily NAV, each
Portfolio marks to market the current value of its open Futures positions.
A Portfolio also must make margin deposits with respect to options on
Futures that it has written. If the futures commission merchant holding
the deposit goes bankrupt, the Portfolio could suffer a delay in
recovering its funds and could ultimately suffer a loss.

U.S. Futures (except certain currency Futures) are traded on
exchanges that have been designated as "contract markets" by the Commodity
Futures Trading Commission ("CFTC"), an agency of the U.S. Government;
Futures transactions must be executed through a futures commission
merchant that is a member of the relevant contract market. The exchange's
affiliated clearing organization guarantees performance of the contracts
between the clearing members of the exchange.

Although Futures Contracts by their terms may require the
actual delivery or acquisition of the underlying securities or currency,
in most cases the contractual obligation is extinguished by being offset
before the expiration of the contract, without the parties having to make
or take delivery of the assets. A Futures position is offset by buying

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<PAGE>

(to offset an earlier sale) or selling (to offset an earlier purchase) an
identical Futures Contract calling for delivery in the same month.

Although each Portfolio believes that the use of Futures Con-
tracts will benefit it, if N&B Management's judgment about the general
direction of the markets is incorrect, a Portfolio's overall return would
be lower than if it had not entered into any such contracts. Moreover,
the spread between values in the cash and futures markets is subject to
distortion, due to differences in the character of those markets. Because
of the possibility of distortion, even a correct forecast of general
market trends by N&B Management may not result in a successful transac-
tion.

An option on a Futures Contract gives the purchaser the
right, in return for the premium paid, to assume a position in the
contract (a long position if the option is a call and a short position if
the option is a put) at a specified exercise price at any time during the
option exercise period. The writer of the option is required upon
exercise to assume a short Futures position (if the option is a call) or a
long Futures position (if the option is a put). Upon exercise of the
option, the assumption of offsetting Futures positions by the writer and
holder of the option is accompanied by delivery of the accumulated cash
balance in the writer's Futures margin account. That balance represents
the amount by which the market price of the Futures Contract at exercise
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option.

The prices of Futures are volatile and are influenced by,
among other things, actual and anticipated changes in interest or currency
exchange rates, which in turn are affected by fiscal and monetary policies
and by national and international political and economic events. At best,
the correlation between changes in prices of Futures and of the securities
and currencies being hedged can be only approximate. Decisions regarding
whether, when, and how to hedge involve skill and judgment. Even a well-
conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest rate or currency exchange rate trends, or lack
of correlation between the futures markets and the securities markets.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage; as a result, a relatively small price
movement in a Futures Contract may result in an immediate and substantial
loss, or gain, to the investor. Losses that may arise from certain
Futures transactions are potentially unlimited.

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<PAGE>

does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Prices can move to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing liquidation of Futures and options positions and subjecting
investors to substantial losses. If this were to happen with respect to a
position held by a Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.

COVERED CALL AND PUT OPTIONS (NEUBERGER & BERMAN LIMITED
MATURITY BOND PORTFOLIO). The Portfolio may write or purchase put and
call options on securities. Generally, the purpose of writing and
purchasing these options is to reduce the effect of price fluctuations of
securities held by the Portfolio on the Portfolio's and its corresponding
Fund's NAVs. The Portfolio may also write covered call options to earn
premium income.

The obligation under any option terminates upon expiration of
the option or, at an earlier time, when the writer offsets the option by
entering into a "closing purchase transaction" to purchase an option of
the same series. If an option is purchased by the Portfolio and is never
exercised, the Portfolio will lose the entire amount of the premium paid.

The Portfolio will receive a premium for writing a put
option, which obligates the Portfolio to acquire a certain security at a
certain price at any time until a certain date if the purchaser of the
option decides to sell such security. The Portfolio may be obligated to
purchase the underlying security at more than its current value.

When the Portfolio purchases a put option, it pays a premium
to the writer for the right to sell a security to the writer for a
specified amount at any time until a certain date. The Portfolio would
purchase a put option in order to protect itself against a decline in the
market value of a security it owns.

When the Portfolio writes a call option, it is obligated to
sell a security to a purchaser at a specified price at any time the
purchaser requests until a certain date, and receives a premium for
writing the option. The Portfolio writes only "covered" call options on
securities it owns. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it
to deliver the underlying security against payment of the exercise price.
The Portfolio may be obligated to deliver securities underlying an option
at less than the market price, thereby giving up any additional gain on
the security.

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<PAGE>

When the Portfolio purchases a call option, it pays a premium
for the right to purchase a security from the writer at a specified price
until a specified date. The Portfolio would purchase a call option in
order to protect against an increase in the price of securities it intends
to purchase or to offset a previously written call option.

Portfolio securities on which call and put options may be
written and purchased by the Portfolio are purchased solely on the basis
of investment considerations consistent with the Portfolio's investment
objective. The writing of covered call options is a conservative
investment technique that is believed to involve relatively little risk
(in contrast to the writing of "naked" or uncovered call options, which
the Portfolio will not do), but is capable of enhancing the Portfolio's
total return. When writing a covered call option, the Portfolio, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, but
conversely retains the risk of loss should the price of the security
decline. When writing a put option, the Portfolio, in return for the
premium, takes the risk that it must purchase the underlying security at
the exercise price, which may be higher than the current market price of
the security. If a call or put option that the Portfolio has written
expires unexercised, the Portfolio will realize a gain in the amount of
the premium; however, in the case of a call option, that gain may be
offset by a decline in the market value of the underlying security during
the option period. If the call option is exercised, the Portfolio will
realize a gain or loss from the sale of the underlying security.

Options are traded both on national securities exchanges and
in the over-the-counter ("OTC") market. Exchange-traded options in the
U.S. are issued by a clearing organization affiliated with the exchange on
which the option is listed; the clearing organization in effect guarantees
completion of every exchange-traded option. In contrast, OTC options are
contracts between the Portfolio and its counter-party with no clearing
organization guarantee. Thus, when the Portfolio sells (or purchases) an
OTC option, it generally will be able to "close out" the option prior to
its expiration only by entering into a "closing transaction" with the
dealer to whom (or from whom) the Portfolio originally sold (or purchased)
the option. There can be no assurance that the Portfolio would be able to
liquidate an OTC option at any time prior to expiration. Unless the
Portfolio is able to effect a closing purchase transaction in a covered
OTC call option it has written, it will not be able to liquidate
securities used as cover until the option expires or is exercised or until
different cover is substituted. In the event of the counter-party's
insolvency, the Portfolio may be unable to liquidate its options position
and the associated cover. N&B Management monitors the creditworthiness of
dealers with which the Portfolio may engage in OTC options transactions,
and limits the Portfolio's counter-parties in such transactions to dealers
with a net worth of at least $20 million as reported in their latest
financial statements.

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<PAGE>

The assets used as cover for OTC options written by the
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set
forth in the option agreement. The cover for an OTC call option written
subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.

The premium received (or paid) by the Portfolio when it
writes (or purchases) a call or put option is the amount at which the
option is currently traded on the applicable exchange, less (or plus) a
commission. The premium may reflect, among other things, the current
market price of the underlying security, the relationship of the exercise
price to the market price, the historical price volatility of the
underlying security, the length of the option period, the general supply
of and demand for credit, and the general interest rate environment. The
premium received by the Portfolio for writing a covered call or put option
is recorded as a liability on the Portfolio's statement of assets and
liabilities. This liability is adjusted daily to the option's current
market value, which is the sales price on the option's last reported trade
on that day before the time the Portfolio's NAV is computed or, in the
absence of any trades thereof on that day, the mean between the bid and
ask prices as of that time.

Closing transactions are effected in order to realize a
profit on an outstanding option, to prevent an underlying security from
being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits the Portfolio to
write another call option on the underlying security with either a
different exercise price or expiration date or both. If the Portfolio
desires to sell a security on which it has written a call option, it will
seek to effect a closing transaction prior to, or concurrently with, the
sale of the security. There is, of course, no assurance that the
Portfolio will be able to effect closing transactions at favorable prices.
If the Portfolio cannot enter into such a transaction, it may be required
to hold a security that it might otherwise have sold (or purchase a
security that it would not have otherwise bought), in which case it would
continue to be at market risk on the security.

The Portfolio will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than
the premium received from writing the call or put option. However,
because increases in the market price of a call option generally reflect
increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned by the
Portfolio.

- 22 -
<PAGE>

The Portfolio pays brokerage commissions in connection with
purchasing or writing options, including those used to close out existing
positions. These brokerage commissions normally are higher than those
applicable to purchases and sales of portfolio securities.

Options normally have expiration dates between three and nine
months from the date written. The exercise price of an option may be
below, equal to, or above the market value of the underlying security at
the time the option is written. From time to time, the Portfolio may
purchase an underlying security for delivery in accordance with an
exercise notice of a call option assigned to it, rather than delivering
the security from its portfolio. In those cases, additional brokerage
commissions are incurred.

OPTIONS ON FOREIGN CURRENCIES (NEUBERGER & BERMAN LIMITED
MATURITY BOND PORTFOLIO). The Portfolio may write and purchase covered
call and put options on foreign currencies. The Portfolio would engage in
such transactions to protect against declines in the U.S. dollar value of
portfolio securities or increases in the U.S. dollar cost of securities to
be acquired, or to protect the dollar equivalent of dividends, interest,
or other payments on those securities. As with other types of options,
however, writing an option on foreign currency constitutes only a partial
hedge, up to the amount of the premium received, and the Portfolio could
be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The risks of currency options
are similar to the risks of other options, discussed herein. Certain
options on foreign currencies are traded on the OTC market and involve
liquidity and credit risks that may not be present in the case of
exchange-traded currency options.

FORWARD FOREIGN CURRENCY CONTRACTS (NEUBERGER & BERMAN
LIMITED MATURITY BOND PORTFOLIO). The Portfolio may enter into contracts
for the purchase or sale of a specific foreign currency at a future date
at a fixed price ("Forward Contracts"). The Portfolio enters into Forward
Contracts in an attempt to hedge against expected changes in prevailing
currency exchange rates. The Portfolio does not engage in transactions in
Forward Contracts for speculation; it views investments in Forward
Contracts as a means of establishing more definitely the effective return
on securities denominated in foreign currencies that are held or intended
to be acquired by it. Forward Contract transactions include forward sales
or purchases of foreign currencies for the purpose of protecting the U.S.
dollar value of securities held or to be acquired by the Portfolio that
are denominated in a foreign currency or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.

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<PAGE>

N&B Management believes that the use of foreign currency
hedging techniques, including "cross-hedges," can help protect against
declines in the U.S. dollar value of income available for distribution and
declines in the Portfolio's NAV resulting from adverse changes in currency
exchange rates. For example, the return available from securities denomi-
nated in a particular foreign currency would diminish if the value of the
U.S. dollar increased against that currency. Such a decline could be
partially or completely offset by an increase in value of a hedge involv-
ing a Forward Contract to sell that foreign currency or a cross-hedge
involving a Forward Contract to sell a different foreign currency whose
behavior is expected to resemble the currency in which the securities
being hedged are denominated and which is available on more advantageous
terms. N&B Management believes that hedges and cross-hedges can,
therefore, provide significant protection of NAV in the event of a general
rise in the U.S. dollar against foreign currencies. However, a hedge or
cross-hedge cannot protect against exchange rate risks perfectly, and, if
N&B Management is incorrect in its judgment of future exchange rate
relationships, the Portfolio could be in a less advantageous position than
if such a hedge or cross-hedge had not been established. In addition,
because forward contracts are not traded on an exchange, the assets used
to cover such contracts may be illiquid. If the Portfolio uses cross-
hedging it may experience losses on both the currency in which it has
invested and the currency used for hedging if the two currencies do vary
with the expected degree of correlation.

General Considerations Involving Futures, Options on Futures,
Options on Securities and Foreign Currencies, and Forward
Contracts (collectively, "Hedging Instruments")

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS AND
FOREIGN CURRENCIES. To the extent a Portfolio sells or purchases Futures
Contracts and/or writes options thereon or options on foreign currencies
that are traded on an exchange regulated by the CFTC other than for bona
fide hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums on these positions (excluding the amount by which
options are "in-the-money") may not exceed 5% of the Portfolio's net
assets.

In addition, pursuant to state securities laws, (1) the
aggregate premiums paid by a Portfolio on all options (both exchange-
traded and OTC) held by it at any time may not exceed 20% of its net
assets and (2) the aggregate margin deposits required on all exchange-
traded Futures Contracts and related options held at any time by a Portfo-
lio may not exceed 5% of its total assets. Pursuant to an undertaking to
a state securities law administrator, Neuberger & Berman LIMITED MATURITY
Bond Portfolio may not purchase a put option if, as a result, more than 5%
of its total assets would be invested in put options.

- 24 -
<PAGE>

RISKS INVOLVED IN USING HEDGING INSTRUMENTS. The primary
risks in using Hedging Instruments are (1) imperfect correlation or no
correlation between changes in market value of the securities held or to
be acquired by a Portfolio and changes in market value of Hedging
Instruments; (2) possible lack of a liquid secondary market for Hedging
Instruments and the resulting inability to close out Hedging Instruments
when desired; (3) the fact that the skills needed to use Hedging Instru-
ments are different from those needed to select a 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 a Portfolio to
purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for a Portfolio to sell a
portfolio security at a disadvantageous time, due to its need to maintain
"cover" or to segregate securities in connection with its use of Hedging
Instruments. N&B Management intends to reduce the risk of imperfect
correlation by investing only in Hedging Instruments whose behavior is
expected to resemble or offset that of a Portfolio's underlying
securities. N&B Management intends to reduce the risk that a Portfolio
will be unable to close out Hedging Instruments by entering into such
transactions only if N&B Management believes there will be an active and
liquid secondary market. Hedging Instruments used by the Portfolios are
generally considered "derivatives." There can be no assurance that a
Portfolio's use of Hedging Instruments will be successful.

The Portfolios' use of Hedging Instruments may be limited by
the provisions of the Internal Revenue Code of 1986, as amended ("Code"),
with which each Portfolio must comply if its corresponding Fund is to
continue to qualify as a regulated investment company ("RIC"). See "Addi-
tional Tax Information -- Taxation of Portfolios."

COVER FOR HEDGING INSTRUMENTS. Each Portfolio will comply
with SEC guidelines regarding cover for Hedging Instruments and, if the
guidelines so require, set aside in a segregated account with its
custodian cash, U.S. Government or Agency Securities, or other liquid,
high-grade debt securities in the prescribed amount. Securities held in a
segregated account cannot be sold while the Futures, option, or forward
strategy covered by those securities is outstanding, unless they are
replaced with other suitable assets. As a result, segregation of a large
percentage of a Portfolio's assets could impede portfolio management or
the Portfolio's ability to meet current obligations. A Portfolio may be
unable promptly to dispose of assets which cover, or are segregated with
respect to, an illiquid Futures, options, or forward position; this
inability may result in a loss to the Portfolio.

- 25 -
<PAGE>

INDEXED SECURITIES (NEUBERGER & BERMAN LIMITED MATURITY BOND
PORTFOLIO). The Portfolio may invest in securities linked to foreign
currencies, interest rates, commodities, indices, or other financial
indicators ("indexed securities"). Most indexed securities are short- to
intermediate-term fixed income securities whose value at maturity or
interest rate rises or falls according to the change in one or more
specified underlying instruments. Indexed securities may be positively or
negatively indexed (i.e., their value may increase or decrease if the
underlying instrument appreciates) and may have return characteristics
similar to direct investments in the underlying instrument or to one or
more options thereon. Indexed securities may be more volatile than the
underlying instrument itself.

ZERO COUPON SECURITIES (ALL PORTFOLIOS). Each Portfolio may
invest in zero coupon securities, which are debt obligations that do not
entitle the holder to any periodic payment of interest prior to maturity
or that specify a future date when the securities begin to pay current
interest. Zero coupon securities are issued and traded at a discount from
their face amount or par value. This discount varies depending on
prevailing interest rates, the time remaining until cash payments begin,
the liquidity of the security, and the perceived credit quality of the
issuer.

The discount on zero coupon securities ("original issue dis-
count") is taken into account ratably by each Portfolio prior to the
receipt of any actual payments. Because each Fund must distribute
substantially all of its net income (including its pro rata share of its
corresponding Portfolio's original issue discount) to its shareholders
each year for income and excise tax purposes (see "Additional Tax Informa-
tion -- Taxation of the Funds"), a Portfolio may have to dispose of
portfolio securities under disadvantageous circumstances to generate cash,
or may be required to borrow, to satisfy its corresponding Fund's
distribution requirements.

The market prices of zero coupon securities generally are
more volatile than the prices of securities that pay interest periodi-
cally. Zero coupon securities are likely to respond to changes in
interest rates to a greater degree than other types of debt securities
having similar maturities and credit quality.

MUNICIPAL OBLIGATIONS (NEUBERGER & BERMAN LIMITED MATURITY
BOND PORTFOLIO). This Portfolio may invest up to 5% of its net assets in
municipal obligations which are issued by or on behalf of states (as used
herein, including the District of Columbia), territories, and possessions
of the United States and their political subdivisions, agencies, and
instrumentalities, and which pay interest that is exempt from federal
income tax. Municipal obligations include "general obligation"

- 26 -
<PAGE>

securities, which are backed by the full taxing power of a municipality,
and "revenue" securities, which are backed only by the income from a
specific project, facility, or tax. Municipal obligations also include
industrial development and private activity bonds which are issued by or
on behalf of public authorities, but 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.

The value of municipal obligations is dependent on the
continuing payment of interest and principal when due by the issuers of
the municipal obligations (or, in the case of industrial development
bonds, the revenues generated by the facility financed by the bonds or, in
certain other instances, the provider of the credit facility backing the
bonds). As with other fixed income securities, an increase in interest
rates generally will reduce the value of the Portfolio's investments in
municipal obligations, whereas a decline in interest rates generally will
increase that value. Current efforts to restructure the federal budget
and the relationship 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. Efforts are underway that may result in a "flat tax" or
other restructuring of the federal income tax system. Any of these
factors could affect the value of municipal securities.

Risks of Fixed Income Securities
--------------------------------

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.
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. Pricing of thinly traded securities requires
greater judgment than pricing of securities for which market transactions
are regularly reported.

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<PAGE>

Subsequent to its purchase by a Portfolio, an issue of debt
securities may cease to be rated or its rating may be reduced, so that the
securities would not be eligible for purchase by that Portfolio. In such
a case, with respect to the non-money market Portfolios, N&B Management
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 its net assets. With respect to the
money market Portfolios, N&B Management will consider the need to dispose
of such securities in accordance with the requirements of Rule 2a-7 under
the 1940 Act.

PERFORMANCE INFORMATION

Each Fund's performance figures are based on historical
earnings and are not intended to indicate future performance. The yield
and total return of each Fund will vary. The share prices of ULTRA SHORT
and LIMITED MATURITY will vary, and an investment in either of these
Funds, when redeemed, may be worth more or less than an investor's
original cost.

Yield Calculations
------------------

GOVERNMENT MONEY AND CASH RESERVES. Each of these Funds may
advertise its "current yield" and "effective yield" in the financial press
and other publications. A Fund's current yield is based on the return for
a recent seven-day period and is computed by determining the net change
(excluding capital changes) in the value of a hypothetical account having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of
the base period. The result is a "base period return," which is then
annualized -- that is, the amount of income generated during the seven-day
period is assumed to be generated each week over a 52-week period -- and
shown as an annual percentage of the investment.

The effective yield of these Funds is calculated similarly,
but the base period return is assumed to be reinvested. The assumed
reinvestment is calculated by adding 1 to the base period return, raising
the sum to a power equal to 365 divided by seven, and subtracting one from
the result, according to the following formula:

365/7
Effective Yield = [(Base Period Return + 1) ] - 1.

For the seven calendar days ended October 31, 1995, the
current yields of GOVERNMENT MONEY and CASH RESERVES were 4.91% and 5.14%,

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<PAGE>

respectively. For the same period, the effective yields were 5.03% and
5.27%, respectively.

ULTRA SHORT AND LIMITED MATURITY. Each of these Funds may
advertise its "yield" based on a 30-day period. This yield is computed by
dividing the net investment income per share earned during the period by
the maximum offering price per share on the last day of the period. The
result then is annualized and shown as an annual percentage of the invest-
ment.

The annualized yields for LIMITED MATURITY and ULTRA SHORT
for the 30-day period ended October 31, 1995, were 5.56% and 5.53%,
respectively.

Tax Equivalent Yield - State and Local Taxes
--------------------------------------------

GOVERNMENT MONEY. Substantially all of the dividends paid by
GOVERNMENT MONEY represent income received on direct obligations of the
U.S. Government and, as a result, are not subject to income tax in most
states and localities. This Fund may, from time to time, advertise a "tax
equivalent yield" for one or more of those states and localities that
reflects the taxable yield that an investor subject to the highest mar-
ginal rate of state or local income taxes would have had to receive in
order to realize the same level of after-tax yield that an investment in
the Fund produced. TAX EQUIVALENT YIELD is calculated according to the
following formula:

Tax Equivalent Yield = Y1 + Y2
------
1-MR

where Y1 equals that portion of a Fund's current or effective yield that
is not subject to state or local income tax, Y2 equals that portion of the
Fund's current or effective yield that is subject to that tax, and MR
equals the highest marginal tax rate of the state or locality for which
the tax equivalent yield is being calculated.

The calculation of tax equivalent yield can be illustrated by
the following example. If the yield for a 30-day period was 5%, and
during that period 100% of the income was attributable to interest on
direct obligations of the U.S. Government and, therefore, was not subject
to income taxation in most states and localities, a taxpayer residing in
New York (and subject to that state's highest marginal 1995 tax rate of
7.59375%) would have to have received a taxable current yield of 5.41% in
order to equal the 5% after-tax yield. Moreover, if that taxpayer also
were subject to income taxation by New York City at a marginal 1995 rate

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<PAGE>

of 4.46%, the taxpayer would have to have received a taxable yield of
5.69% to equal the 5% after-tax yield.

The use of a 5% yield in this example is for illustrative
purposes only and is not indicative of the Fund's future performance. Of
course, all dividends paid by GOVERNMENT MONEY are subject to federal
income taxation at applicable rates.

TOTAL RETURN COMPUTATIONS

Each Fund may advertise certain total return information. An
average annual compounded rate of return ("T") may be computed by using
the redeemable value at the end of a specified period ("ERV") of a
hypothetical initial investment of $1,000 ("P") over a period of time
("n") according to the formula:

n
P(1+T) = ERV

Average annual total return smooths out year-to-year
variations and, in that respect, differs from actual year-to-year results.

For the one- and five-year periods ended October 31, 1995,
and the period from June 9, 1986 (commencement of operations), through
October 31, 1995, the average annual total returns for LIMITED MATURITY
and its predecessor were +8.32%, +6.80%, and +7.15%, respectively. If an
investor had invested $10,000 in that predecessor's shares on June 9,
1986, and had reinvested all capital gain distributions and income
dividends, the NAV of that investor's holdings would have been $19,132 on
October 31, 1995.

For the one- and five-year periods ended October 31, 1995,
and for the period from November 7, 1986 (commencement of operations),
through October 31, 1995, the average annual total returns for ULTRA SHORT
and its predecessor were +6.26%, +4.75%, and +5.90%, respectively. If an
investor had invested $10,000 in that predecessor's shares on November 7,
1986, and had reinvested all capital gain distributions and income
dividends, the NAV of that investor's holdings would have been $16,736 on
October 31, 1995.

N&B Management reimbursed the Funds and their predecessors
for certain expenses during the periods mentioned above, which has the
effect of increasing yield and total return. Of course, past performance
cannot guarantee future results.

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<PAGE>

Comparative Information
-----------------------

From time to time each Fund's performance may be compared
with:

(1) data (that may be expressed as rankings or ratings) published
by independent services or publications (including news-
papers, newsletters, and financial periodicals) that monitor
the performance of mutual funds, such as Lipper Analytical
Services, Inc., C.D.A. Investment Technologies, Inc.,
Wiesenberger Investment Companies Service, IBC/Donoghue's
Money Market Fund Report, Investment Company Data Inc.,
Morningstar Inc., Micropal Incorporated and quarterly mutual
fund rankings by Money, Fortune, Forbes, Business Week,
Personal Investor, and U.S. News & World Report magazines,
The Wall Street Journal, The New York Times, Kiplingers
Personal Finance, and Barron's Newspaper, or

(2) recognized bond, stock, and other indices such as the Shear-
son Lehman Bond Index, the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index"), Dow Jones Industrial
Average ("DJIA"), S&P/BARRA Index, Russell Index, and various
other domestic, international, and global indices and changes
in the Consumer Price Index. The S&P 500 Index is a broad
index of common stock prices, while the DJIA represents a
narrower segment of industrial companies. Each assumes
reinvestment of distributions and is calculated without
regard to tax consequences or the costs of investing. Each
Portfolio invests in different types of securities from those
included in these indices.

Each Fund's performance also may be compared from time to
time with the following specific indices and other measures of
performance:

GOVERNMENT MONEY'S and CASH RESERVES'S performance may be
compared, respectively, with IBC/Donoghue's Government Money
Market Funds average and Taxable General Purpose Money Market
Funds average.

ULTRA SHORT'S performance may be compared with the Merrill
Lynch 2-year Treasury Index and the Salomon Brothers 6-month
and 1-year Treasury Bill Indices, as well as the performance
of Treasury Securities and the Lipper Short Investment Grade
Debt Funds category.

LIMITED MATURITY'S performance may be compared with the
Merrill Lynch 1-3 year Treasury Index and the Lehman Brothers
Intermediate Government/Corporate Bond Index, as well as the

- 31 -
<PAGE>

performance of Treasury Securities, corporate bonds, and the
Lipper Short Investment Grade Debt Funds category.

In addition, each Fund's performance may be compared at times
with that of various bank instruments (including bank money market
accounts and CDs of varying maturities) as reported in publications such
as The Bank Rate Monitor. Any such comparisons may be useful to investors
who wish to compare a Fund's past performance with that of certain of its
competitors. Of course, past performance is not a guarantee of future
results. Unlike an investment in a Fund, bank CDs pay a fixed rate of
interest for a stated period of time and are insured up to $100,000.

Evaluations of the Funds' performance and their yield/total
returns and comparisons may be used in advertisements and in information
furnished to current and prospective shareholders (collectively,
"Advertisements"). The Funds may also be compared to individual asset
classes such as common stocks, small-cap stocks, or Treasury bonds, based
on information supplied by Ibbotson and Sinquefield.

Other Performance Information
-----------------------------

From time to time, information about a Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for its corresponding Fund. This information, for example,
may include the Portfolio's diversification by asset type. Information
used in Advertisements may include statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds that may be
employed to meet specific financial goals, such as (1) funding retirement,
(2) paying for children's education, and (3) financially supporting aging
parents.

Information (including charts and illustrations) showing the
effects of compounding interest may be included in Advertisements from
time to time. Compounding is the process of earning interest on principal
plus interest that was earned earlier. Interest can be compounded at
different intervals, such as annually, semi-annually, quarterly, monthly,
or daily; for example, $1,000 compounded annually at 9% will grow to
$1,090 at the end of the first year (an increase of $90) and $1,188 at the
end of the second year (an increase of $98). The extra $8 that was earned
on the $90 interest from the first year is the compound interest. One
thousand dollars compounded annually at 9% will grow to $2,367 at the end
of ten years and $5,604 at the end of twenty years. Other examples of
compounding are as follows: at 7% and 12% annually, $1,000 will grow to
$1,967 and $3,106, respectively, at the end of ten years and $3,870 and
$9,646, respectively, at the end of twenty years. All these examples are
for illustrative purposes only and are not indicative of any Fund's
performance.

- 32 -
<PAGE>

Information relating to inflation and its effects on the
dollar also may be included in Advertisements. For example, after ten
years, the purchasing power of $25,000 would shrink to $16,621, $14,968,
$13,465, and $12,100, respectively, if the annual rates of inflation
during that period were 4%, 5%, 6%, and 7%, respectively. (To calculate
the purchasing power, the value at the end of each year is reduced by the
inflation rate for the ten-year period.)

Information (including charts and illustrations) showing the
total return performance for government funds, 6-month CDs and money
market funds may be included in Advertisements from time to time.

Information regarding the effects of automatic investment and
systematic withdrawal plans, investing at market highs and/or lows, and
investing early versus late for retirement plans also may be included in
Advertisements, if appropriate.

From time to time the investment philosophy of N&B
Management's founder, Roy R. Neuberger, may be included in the Funds'
Advertisements. This philosophy is described in further detail in "The
Art of Investment: A Conversation with Roy Neuberger," attached as
Appendix B to this SAI.

CERTAIN RISK CONSIDERATIONS

Although each Portfolio seeks to reduce risk by investing in
a diversified portfolio, diversification does not eliminate all risk.
There can, of course, be no assurance that any Portfolio will achieve its
investment objective, and an investment in a Fund involves certain risks
that are described in the sections entitled "Investment Programs" and
"Description of Investments" in the Prospectus and "Investment
Information" in this SAI.

TRUSTEES AND OFFICERS

The following table sets forth information concerning the
trustees and officers of the Trusts, including their addresses and
principal business experience during the past five years. Some persons
named as trustees and officers also serve in similar capacities for other
funds, and (where applicable) their corresponding portfolios, administered
or managed by N&B Management and Neuberger & Berman.

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<PAGE>

Name, Address Positions Held
and Age(1) With the Trusts Principal Occupation(s)(2)
------------- --------------- --------------------------

John Cannon (66) Trustee of each Trust President, AMA Investment Advisers,
CDC Associates, Inc. Inc. (registered investment adviser)
620 Sentry Parkway (1976 - 1991); Senior Vice President
Suite 220 AMA Investment Advisers, Inc.
Blue Bell, PA 19422 (1991 - 1993); President of AMA
Family Funds (investment companies)
(1976 - 1991); Chairman and
Treasurer of CDC Associates, Inc.
(registered investment adviser)
(1993 - present)

Charles DeCarlo (74) Trustee of each Trust President Emeritus of Sarah Lawrence
33 West 67th Street College; Chief Executive Officer of
New York, NY 10023 Xicon Systems (animation company).

Stanley Egener* (61) Chairman of the Board, Partner of Neuberger & Berman;
Chief Executive Officer, President and Director of N&B Man-
and Trustee of each agement; Chairman of the Board,
Trust Chief Executive Officer and Trustee
of eight other mutual funds for
which N&B Management acts as invest-
ment manager or administrator.

Theresa A. Havell* (49) President and Trustee of Partner of Neuberger & Berman; Vice
each Trust President and Director of N&B
Management; President and Trustee of
one other mutual fund for which N&B
Management acts as administrator.

Barry Hirsch (62) Trustee of each Trust Senior Vice President, Secretary,
Loews Corporation and General Counsel of Loews Corpo-
667 Madison Avenue ration (diversified financial
7th Floor corporation).
New York, NY 10021

- 34 -
<PAGE>

Name, Address Positions Held
and Age(1) With the Trusts Principal Occupation(s)(2)
------------- --------------- --------------------------

Robert A. Kavesh (68) Trustee of each Trust Professor of Finance and Economics
110 Bleeker Street at Stern School of Business, New
Apt. 24B York University; Director of Del
New York, NY 10012 Laboratories, Inc. and Greater New
York Mutual Insurance Co.

William E. Rulon (63) Trustee of each Trust Senior Vice President and Secretary
Foodmaker, Inc. of Foodmaker, Inc. (operator and
9330 Balboa Avenue franchisor of restaurants).
San Diego, CA 92123

Candace L. Straight (48) Trustee of each Trust Managing Director of Head & Company,
LLC (limited liability company
Head & Company, LLC providing investment banking and
1330 Avenue of the consulting services to the insurance
Americas industry); President of Integon
12th Floor Corporation, (marketer of life
New York, NY 10019 insurance, annuities, and property
and casualty insurance), 1990-1992;
Director of Drake Holdings (U.K.
motor insurer).

Daniel J. Sullivan (56) Vice President of each Senior Vice President of N&B
Trust Management since 1992; prior
thereto, Vice President of N&B
Management; Vice President of eight
other mutual funds for which N&B
Management acts as investment
manager or administrator.

- 35 -
<PAGE>

Name, Address Positions Held
and Age(1) With the Trusts Principal Occupation(s)(2)
------------- --------------- --------------------------

Michael J. Weiner (49) Vice President and Senior Vice President of N&B
Principal Financial Management since 1992; Treasurer of
Officer of each Trust N&B Management from 1992 to 1996;
prior thereto, Vice President and
Treasurer of N&B Management and
Treasurer of certain mutual funds
for which N&B Management acted as
investment adviser; Vice President
and Principal Financial Officer of
eight other mutual funds for which
N&B Management acts as investment
manager or administrator.

Claudia A. Brandon (39) Secretary of each Trust Vice President of N&B Management;
Secretary of eight other mutual
funds for which N&B Management acts
as investment manager or
administrator.

Richard Russell (49) Treasurer and Principal Vice President of N&B Management
Accounting Officer of since 1993; prior thereto, Assistant
each Trust Vice President of N&B Management;
Treasurer and Principal Accounting
Officer of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.

C. Carl Randolph (58) Assistant Secretary of Partner of Neuberger & Berman since
each Trust 1992; prior thereto, employee of
Neuberger & Berman; Assistant
Secretary of eight other mutual
funds for which N&B Management acts
as investment manager or
administrator.

______________________________
</TABLE>

- 36 -
<PAGE>

(1) Unless otherwise indicated, the business address of each listed
person is 605 Third Avenue, 2nd Floor, New York, NY 10158-0180.

(2) Except as otherwise indicated, each individual has held the positions
shown for at least the last five years.

* Indicates a trustee who is an "interested person" of each Trust
within the meaning of the 1940 Act. Mr. Egener and Ms. Havell are
interested persons by virtue of the fact that they are officers and
directors of N&B Management and partners of Neuberger & Berman.

The Trust's Trust Instrument and Managers Trust's Declaration
of Trust each provides that it will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties
involved in the conduct of their offices. In the case of settlement, such
indemnification will not be provided unless it has been determined (by a
court or other body approving the settlement or other disposition, or by a
majority of disinterested trustees, based upon a review of readily
available facts, or in a written opinion of independent counsel) that such
officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.

For the fiscal year ended October 31, 1995, each Fund and
Portfolio paid the following fees and expenses to Fund and Portfolio
Trustees who were not affiliated with N&B Management or Neuberger &
Berman: Neuberger & Berman GOVERNMENT MONEY Fund and Portfolio - $55,340;
Neuberger & Berman CASH RESERVES and CASH RESERVES Portfolio - $61,964;
Neuberger & Berman ULTRA SHORT Bond Fund and Portfolio - $24,345; and
Neuberger & Berman LIMITED MATURITY Bond and Portfolio - $61,636.

The following table sets forth information concerning the
compensation of the trustees and officers of the Trust. None of the
Neuberger & Berman Funds[SERVICEMARK] has any retirement plan for its
trustees or officers.

- 37 -
<PAGE>

<TABLE>
<CAPTION>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/95
------------------------------

Name and Position with Aggregate Compen- Total Compensation from
the Trust sation from the Trust Trusts in the Neuberger &
Berman Fund Complex Paid
to Trustees

John Cannon $ 9,923 $20,500
Trustee (2 other investment
companies)

Charles DeCarlo $ 16,622 $33,500
Trustee (2 other investment
companies)

Stanley Egener $0 $ 0
Chairman of the Board, (9 other investment
Chief Executive Officer, companies)
and Trustee

Theresa Havell $0 $ 0
President and Trustee (2 other investment
companies)

Barry Hirsch $ 16,622 $33,500
Trustee (2 other investment
companies)

Robert A. Kavesh $ 14,887 $30,500
Trustee (2 other investment
companies)

Harold R. Logan $ 13,896 $28,000
Trustee (2 other investment
companies)

William E. Rulon $ 15,135 $30,500
Trustee (2 other investment
companies)

Candace L. Straight $ 15,631 $32,000
Trustee (2 other investment
companies)

- 38 -
<PAGE>

</TABLE>

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES

Investment Manager and Administrator
------------------------------------

The Management Agreement provides, in substance, that N&B
Management will make and implement investment decisions for the Portfolios
in its discretion and will continuously develop an investment program for
the Portfolios' assets. The Management Agreement permits N&B Management
to effect securities transactions on behalf of each Portfolio through
associated persons of N&B Management. The Management Agreement also
specifically permits N&B Management to compensate, through higher
commissions, brokers and dealers who provide investment research and
analysis to the Portfolios, although N&B Management has no current plans
to do so.

N&B Management provides to each Portfolio, without separate
cost, office space, equipment, and facilities and the personnel necessary
to perform executive, administrative, and clerical functions. N&B
Management pays all salaries, expenses, and fees of the officers,
trustees, and employees of Managers Trust who are officers, directors, or
employees of N&B Management. Two officers and directors of N&B Management
(who also are partners of Neuberger & Berman) presently serve as trustees
and officers of the Trusts. See "Trustees and Officers." Each Portfolio
pays N&B Management a management fee based on the Portfolio's average
daily net assets, as described in the Prospectus.

N&B Management provides similar facilities, services, and
personnel to each Fund pursuant to an administration agreement dated May
1, 1995 ("Administration Agreement"). For such administrative services,
each Fund pays N&B Management a fee based on the Fund's average daily net
assets, as described in the Prospectus.

- 39 -
<PAGE>

the shareholder servicing agent in the development and implementation of
specified programs and systems to enhance overall shareholder servicing
capabilities, solicits and gathers shareholder proxies, performs services
connected with the qualification of each Fund's shares for sale in various
states, and furnishes other services the parties agree from time to time
should be provided under the Administration Agreement.

From time to time, N&B Management or a Fund may enter into
arrangements with registered broker-dealers or other third parties
pursuant to which it pays the broker-dealer or third party a per account
fee or a fee based on a percentage of the aggregate net asset value of
Fund shares purchased by the broker-dealer or third party on behalf of its
customers, in payment for administrative and other services rendered to
such customers.

Each Fund listed below and its predecessor accrued advisory
or management and administration fees of the stated amounts (before any
reimbursement of the Funds, described below) for the fiscal years ended
October 31, 1995, 1994, and 1993:

1995 1994 1993
---- ---- ----

Government Money $1,521,937 $1,105,665 $1,550,490

Cash Reserves $1,738,424 $1,448,365 $1,322,719

Ultra Short $ 459,038 $ 532,340 $ 515,156

Limited Maturity $1,522,574 $1,655,333 $1,555,925

As noted in the Prospectus under "Management and Admini-
stration -- Expenses," N&B Management has voluntarily undertaken to
reimburse each Fund other than Government Money for its operating expenses
(including the fees under the Administration Agreement) and its pro rata
share of its corresponding Portfolio's operating expenses (including its
fees under the Management Agreement) -- in each instance excluding
interest, taxes, brokerage commissions, and extraordinary expenses -- that
exceed, in the aggregate, 0.65% per annum (0.70% per annum for LIMITED
MATURITY) of the Fund's average daily net assets. For the fiscal years
ended October 31, 1995, 1994, and 1993, N&B Management reimbursed the
Funds and their predecessors the following amounts: (1) Cash Reserves
$109,113, $171,012, and $284,626, respectively, (2) ULTRA SHORT $196,865,
$222,161, and $312,724, respectively, and (3) LIMITED MATURITY $32,042,
$77,866, and $239,882, respectively.

- 40 -
<PAGE>

N&B Management can terminate an expense limitation by giving
the Fund at least 60 days prior written notice.

Prior to May 1, 1995, the shareholder services described
above were provided pursuant to a separate agreement between the Trust and
N&B Management. As compensation for these services, each Fund paid N&B
Management a monthly fee calculated at the annual rate of 0.02% of the
average daily net assets of the Fund. Before February 1, 1994, the
monthly fee under the shareholder service agreement then in effect was
calculated at an annual rate of $6.00 per shareholder account. For these
services, each Fund listed below and its predecessor paid and accrued the
stated amounts for the period from November 1, 1994 to April 30, 1995 and
the fiscal years ended October 31, 1994 and 1993:

November 1, 1994
to April 30, 1995 1994 1993
----------------- ---- ----

Government Money $25,750 $39,595 $35,534

Cash Reserves $31,746 $55,583 $42,668

Ultra Short $ 9,038 $21,515 $23,790

Limited Maturity $29,447 $55,399 $27,213

The Management Agreement continues with respect to each
Portfolio for a period of two years after the date the Portfolio became
subject thereto. The Management Agreement is renewable thereafter from
year to year with respect to each Portfolio, so long as its continuance is
approved at least annually (1) by the vote of a majority of the Portfolio
Trustees who are not "interested persons" of N&B Management or Managers
Trust ("Independent Portfolio Trustees"), cast in person at a meeting
called for the purpose of voting on such approval, and (2) by the vote of
a majority of the Portfolio Trustees or by a 1940 Act majority vote of the
outstanding interests in that Portfolio. The Administration Agreement
continues with respect to each Fund for a period of two years after the
date the Fund became subject thereto. The Administration Agreement is
renewable from year to year with respect to a Fund, so long as its
continuance is approved at least annually (1) by the vote of the Fund
Trustees who are not "interested persons" of N&B Management or the Trust
("Independent Fund Trustees"), cast in person at a meeting called for the
purpose of voting on such approval and (2) by the vote of a majority of
the Fund Trustees or by a 1940 Act majority vote of the outstanding shares
in the Fund.

- 41 -
<PAGE>

The Management Agreement is terminable, without penalty, with
respect to a Portfolio on 60 days' written notice either by Managers Trust
or by N&B Management. The Administration Agreement is terminable, without
penalty, with respect to a Fund on 60 days' written notice either by N&B
Management or by the Trust if authorized by the Fund Trustees, including a
majority of the Independent Trustees. Each Agreement terminates
automatically if it is assigned.

In addition to the voluntary expense reimbursement noted
above and described in the Prospectus under "Management and
Administration--Expenses," N&B Management has agreed in the Management
Agreement to reimburse each Fund's expenses as follows. If, in any fiscal
year, a Fund's Aggregate Operating Expenses (as defined below) exceed the
most restrictive expense limitation imposed under the securities laws of
the states in which the Fund's shares are qualified for sale ("State
Expense Limitation"), then N&B Management will pay to the Fund the amount
of that excess, less the amount of any reduction of the administration fee
payable by the Fund under a similar State Expense Limitation contained in
the Administration Agreement. N&B Management will have no obligation to
pay a Fund, however, for any expenses that exceed the pro rata portion of
the advisory fees attributable to that Fund's interest in its corre-
sponding Portfolio. At the date of this SAI, the most restrictive expense
limitation to which the Funds expect to be subject is 2 1/2% of the first
$30 million of average net assets, 2% of the next $70 million of average
net assets, and 1 1/2% of average net assets over $100 million. For the
fiscal year ended October 31, 1995, there were no expense reimbursements
required of N&B Management because of the State Expense Limitation.

For purposes of the State Expense Limitation, the term
"Aggregate Operating Expenses" means a Fund's operating expenses plus its
pro rata portion of its corresponding Portfolio's operating expenses
(including any fees or expense reimbursements payable to N&B Management
and any compensation payable thereto pursuant to (1) the Administration
Agreement or (2) any other agreement or arrangement with Managers Trust in
regard to the Portfolio, but excluding (with respect to both the Fund and
the Portfolio) interest, taxes, brokerage commissions, litigation and
indemnification expenses, and other extraordinary expenses not incurred in
the ordinary course of business).

Sub-Adviser

- 42 -
<PAGE>

The Sub-Advisory Agreement provides in substance that
Neuberger & Berman will furnish to N&B Management, upon reasonable
request, such investment recommendations and research as Neuberger &
Berman, from time to time, provides to its partners and employees for use
in managing client accounts. In this manner, N&B Management expects to
have available to it, in addition to research from other professional
sources, the capability of the research staff of Neuberger & Berman. This
staff consists of approximately fourteen investment analysts, each of whom
specializes in studying one or more industries, under the supervision of
the Director of Research, who is also available for consultation with N&B
Management. The Sub-Advisory Agreement provides that N&B Management will
pay for the services rendered by Neuberger & Berman based on the direct
and indirect costs to Neuberger & Berman in connection with those
services. Neuberger & Berman also serves as a sub-adviser for all of the
other mutual funds managed by N&B Management.

The Sub-Advisory Agreement continues with respect to each
Portfolio for a period of two years after the date the Portfolio became
subject thereto, and is renewable thereafter from year to year, subject to
approval of its continuance in the same manner as the Management
Agreement. The Sub-Advisory Agreement is subject to termination, without
penalty, with respect to each Portfolio by the Portfolio Trustees, by a
1940 Act majority vote of the outstanding interests in the Portfolio, by
N&B Management, or by Neuberger & Berman on not less than 30 nor more than
60 days' written notice. The Sub-Advisory Agreement also terminates
automatically with respect to each Portfolio if it is assigned or if the
Management Agreement terminates with respect to that Portfolio.

Most money managers that come to the Neuberger & Berman
organization have at least fifteen years experience. Neuberger & Berman
and N&B Management employ experienced professionals that work in a
competitive environment.

Investment Companies Managed
----------------------------

N&B Management currently serves as investment manager of the
following investment companies. As of December 31, 1995, these companies,
along with three investment companies advised by Neuberger & Berman, had
aggregate net assets of approximately $11.9 billion, as shown in the
following list:

Approximate
Net Assets at
Name December 31, 1995
----- -----------------

Neuberger & Berman Cash Reserves Portfolio . . . . . . . . $ 433,504,363
(investment portfolio for Neuberger & Berman Cash Reserves)

- 43 -
<PAGE>

Neuberger & Berman Government Money Portfolio . . . . . . . $ 275,569,350
(investment portfolio for Neuberger & Berman Government Money
Fund)

Neuberger & Berman Limited Maturity Bond Portfolio . . . . $ 318,037,698
(investment portfolio for Neuberger & Berman Limited Maturity
Bond Fund and Neuberger & Berman Limited Maturity Bond Trust)

Neuberger & Berman Ultra Short Bond Portfolio . . . . . . . $102,724,936
(investment portfolio for Neuberger & Berman Ultra Short Bond
Fund and Neuberger & Berman Ultra Short Bond Trust)

Neuberger & Berman Municipal Money Portfolio . . . . . . . $ 152,876,653
(investment portfolio for Neuberger & Berman Municipal Money
Fund)

Neuberger & Berman Municipal Securities Portfolio . . . . . $ 43,859,557
(investment portfolio for Neuberger & Berman Municipal
Securities Trust)

Neuberger & Berman New York Insured Intermediate
Portfolio . . . . . . . . . . . . . . . . . . . $ 11,742,945
(investment portfolio for Neuberger & Berman New York Insured
Intermediate Fund)

Neuberger & Berman Focus Portfolio . . . . . . . . . . . $ 1,057,224,027
(investment portfolio for Neuberger & Berman Focus Fund,
Neuberger & Berman Focus Trust, and Neuberger & Berman Focus
Assets)

Neuberger & Berman Genesis Portfolio . . . . . . . . . . . $ 152,439,092
(investment portfolio for Neuberger & Berman Genesis Fund and
Neuberger & Berman Genesis Trust)

Neuberger & Berman Guardian Portfolio . . . . . . . . . $ 5,321,221,497
(investment portfolio for Neuberger & Berman Guardian Fund,
Neuberger & Berman Guardian Trust, and Neuberger & Berman
Guardian Assets)

Neuberger & Berman International Portfolio . . . . . . . $ 33,320,099
(investment portfolio for Neuberger & Berman International
Fund)

Neuberger & Berman Manhattan Portfolio . . . . . . . . . $ 638,295,408
(investment portfolio for Neuberger & Berman Manhattan Fund,
Neuberger & Berman Manhattan Trust, and Neuberger & Berman
Manhattan Assets)

Neuberger & Berman Partners Portfolio . . . . . . . . . . $ 1,741,742,815
(investment portfolio for Neuberger & Berman Partners Fund,
Neuberger & Berman Partners Trust, and Neuberger & Berman
Partners Assets)

- 44 -
<PAGE>

Neuberger & Berman Socially Responsive Portfolio . . . $ 115,240,931
(investment portfolio for Neuberger & Berman Socially
Responsive Fund, Neuberger & Berman Socially Responsive
Trust, and Neuberger & Berman NYCDC Socially Responsive
Trust)

Advisers Managers Trust (six series) . . . . . . . . . . $ 1,306,566,805

In addition, Neuberger & Berman serves as investment adviser
to three investment companies, Plan Investment Fund, Inc., AHA Ivestment
Fund, Inc., and AHA Full Maturity, with assets of
$64,302,128, $99,396,468 and $26,077,793, respectively, at December 31,
1995.

The investment decisions concerning the Portfolios and the
other funds and portfolios managed by N&B Management (collectively, "Other
N&B Funds") have been and will continue to be made independently of one
another. In terms of their investment objectives, most of the Other N&B
Funds differ from the Portfolios. Even where the investment objectives
are similar, however, the methods used by the Other N&B Funds and the
Portfolios to achieve their objectives may differ.

There may be occasions when a Portfolio and one or more of
the Other N&B Funds or other accounts managed by Neuberger & Berman are
contemporaneously engaged in purchasing or selling the same securities
from or to third parties. When this occurs, the transactions are averaged
as to price and allocated as to amounts in accordance with a formula
considered to be equitable to the funds involved. Although in some cases
this arrangement may have a detrimental effect on the price or volume of
the securities as to a Portfolio, in other cases it is believed that a
Portfolio's ability to participate in volume transactions may produce
better executions for it. In any case, it is the judgment of the
Portfolio Trustees that the desirability of the Portfolios' having their
advisory arrangements with N&B Management outweighs any disadvantages that
may result from contemporaneous transactions. The investment results
achieved by all of the funds managed by N&B Management have varied from
one another in the past and are likely to vary in the future.

Management and Control of N&B Management
----------------------------------------

- 45 -
<PAGE>

President; Clara Del Villar, Vice President; Mark R. Goldstein, Vice
President; Farha-Joyce Haboucha, Vice President; Michael M. Kassen, Vice
President; Michael Lamberti, Vice President; Josephine P. Mahaney, Vice
President; Lawrence Marx III, Vice President; Ellen Metzger, Vice
President and Secretary; Janet W. Prindle, Vice President; Felix Rovelli,
Vice President; Richard Russell, Vice President; Kent C. Simons, Vice
President; Frederick B. Soule, Vice President; Judith M. Vale, Vice
President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Patrick T. Byrne, Assistant Vice President; Stacy
Cooper-Shugrue, Assistant Vice President; Robert Cresci, Assistant Vice
President; Barbara DiGiorgio, Assistant Vice President; Roberta D'Orio,
Assistant Vice President; Robert I. Gendelman, Assistant Vice President;
Joseph G. Galli, Assistant Vice President; Leslie Holliday-Soto, Assistant
Vice President; Jody L. Irwin, Assistant Vice President; Carmen G.
Martinez, Assistant Vice President; Paul Metzger, Assistant Vice
President; Susan Switzer, Assistant Vice President; Susan Walsh, Assistant
Vice President; and Celeste Wischerth, Assistant Vice President. Messrs.
Cantor, Egener, Lainoff, Schwartz, Zicklin, Goldstein, Kassen, Marx, and
Simons and Mmes. Havell and Prindle are general partners of Neuberger &
Berman.

Ms. Havell and Mr. Egener are trustees and officers, and
Messrs. Sullivan, Weiner, and Russell and Mmes. Brandon and Cooper-Shugrue
are officers, of each Trust. C. Carl Randolph, a general partner of
Neuberger & Berman, also is an officer of each Trust.

All of the outstanding voting stock in N&B Management is
owned by persons who are also general partners of Neuberger & Berman.

DISTRIBUTION ARRANGEMENTS

N&B Management serves as the distributor ("Distributor") in
connection with the offering of each Fund's shares on a no-load basis. In
connection with the sale of its shares, each Fund has authorized the
Distributor to give only the information, and to make only the statements
and representations, contained in the Prospectus and this SAI or that
properly may be included in sales literature and advertisements in
accordance with the 1933 Act, the 1940 Act, and applicable rules of self-
regulatory organizations. Sales may be made only by the Prospectus, which
may be delivered either personally, through the mails, or by electronic
means. The Distributor is the Funds' "principal underwriter" within the
meaning of the 1940 Act and, as such, acts as agent in arranging for the
sale of each Fund's shares without sales commission or other compensation
and bears all advertising and promotion expenses incurred in the sale of
the Funds' shares.

- 46 -
<PAGE>

terms and conditions, if any, approved by a majority of the Independent
Fund Trustees. These lists will not be used to offer to the Funds'
shareholders any investment products or services other than those managed
or distributed by N&B Management or Neuberger & Berman.

The Trust, on behalf of each Fund, and the Distributor are
parties to a Distribution Agreement that continues until July 2, 1996.
The Distribution Agreement may be renewed annually if specifically
approved by (1) the vote of a majority of the Fund Trustees or a 1940 Act
majority vote of the Fund's outstanding shares and (2) the vote of a
majority of the Independent Fund Trustees, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution
Agreement may be terminated by either party and will automatically
terminate on its assignment, in the same manner as the Management
Agreement.

ADDITIONAL PURCHASE INFORMATION

Automatic Investing and Dollar Cost Averaging
---------------------------------------------

Shareholders may arrange to have a fixed amount automatically
invested in Fund shares each month. To do so, a shareholder must complete
an application, available from the Distributor, electing to have automatic
investments funded either through (1) redemptions from his or her account
in a money market fund for which N&B Management serves as investment
manager (subject to a minimum monthly investment of $100) or
(2) withdrawals from the shareholder's checking account (in which case the
minimum monthly investment is $100). A shareholder who elects to parti-
cipate in automatic investing through his or her checking account must
include a voided check with the completed application. A completed
application should be sent to Neuberger & Berman Management Incorporated,
605 Third Avenue, 2nd Floor, New York, NY 10158-0180.

Automatic investing enables a shareholder in ULTRA SHORT and
LIMITED MATURITY to take advantage of "dollar cost averaging." As a
result of dollar cost averaging, a shareholder's average cost of shares in
those Funds generally will be lower than it would be if the shareholder
purchased a fixed number of shares at pre-set intervals. Additional
information on dollar cost averaging may be obtained from the Distributor.

ADDITIONAL EXCHANGE INFORMATION

As more fully set forth in the section of the Prospectus
entitled "Exchanging Shares," shareholders may exchange at least $1,000
worth of a Fund's shares and invest the proceeds in shares of one or more
of the other Funds or the Other N&B Funds that are briefly described
below, provided that the minimum investment requirements of the other
fund(s) are met.

- 47 -
<PAGE>

- 48 -
<PAGE>

EQUITY FUNDS
-------------

Neuberger & Berman Seeks long-term capital appreciation through
Focus Fund investments principally in common stocks
selected from 13 multi-industry economic
sectors. The corresponding portfolio uses a
value-oriented approach to select individual
securities and then focuses its investments in
the sectors in which the undervalued stocks are
clustered. Through this approach, 90% or more
of the portfolio's investments are normally
made in not more than six sectors.

Neuberger & Berman Seeks capital appreciation through investments
Genesis Fund principally in common stocks of companies with
small market capitalizations, up to $750
million. The corresponding portfolio uses a
value-oriented approach to the selection of
individual securities.

Neuberger & Berman Seeks capital appreciation through investments
Guardian Fund primarily in a large number of common stocks of
long-established, high-quality companies that
N&B Management believes are well-managed. The
corresponding portfolio uses a value-oriented
approach to the selection of individual securi-
ties. Current income is a secondary objective.
The fund (or its predecessor) has paid its
shareholders an income dividend every quarter,
and a capital gain distribution every year,
since its inception in 1950, although there can
be no assurance that it will be able to con-
tinue to do so.

Neuberger & Berman Seek long-term capital appreciation through
International Fund investments primarily in a diversified
portfolio of equity securities of foreign
issuers. Assets will be allocated among
economically mature countries and emerging
industrialized countries.

- 49 -
<PAGE>

Neuberger & Berman Seeks capital appreciation, without regard to
Manhattan Fund income, through investments generally in
securities of medium- to large-capitalization
companies that N&B Management believes have the
maximum potential for increasing total NAV.
The corresponding portfolio's "growth at a
reasonable price" investment approach involves
greater risks and share price volatility than
programs that invest in more conservative
securities.

Neuberger & Berman Seeks capital growth through an investment
Partners Fund approach that is designed to increase capital
with reasonable risk. Its investment program
seeks securities believed to be undervalued
based on strong fundamentals such as low price-
to-earnings ratios, consistent cash flow and
the company's track record through all parts of
the market cycle. The corresponding portfolio
uses the value oriented investment approach to
the selection of individual securities.

Neuberger & Berman Seeks long-term capital appreciation by
Socially Responsive investing primarily in securities of companies
Fund that meet both financial and social criteria.

MUNICIPAL FUNDS
----------------

Neuberger & Berman A money market fund seeking the maximum current
Municipal Money Fund income exempt from federal income tax
consistent with safety and liquidity. Through
its corresponding portfolio, the fund invests
in high quality, short-term tax-exempt munici-
pal securities. It seeks to maintain a
constant purchase and redemption price of
$1.00.

Neuberger & Berman A short- to intermediate-term bond fund seeking
Municipal Securities high current tax-exempt income with low risk to
Trust principal, limited price fluctuation, and
liquidity; and secondarily, total return.
Through its corresponding portfolio, the fund
invests in municipal securities rated A or
better.

- 50 -
<PAGE>

Neuberger & Berman An intermediate-term bond fund which seeks a
New York Insured high level of current income exempt from
Intermediate Fund federal income tax and New York State and New
York City personal income taxes, consistent
with preservation of capital.

Any Fund described herein, and any of the Other N&B Funds,
may terminate or modify its exchange privilege in the future.

Fund shareholders who are considering exchanging shares into
any of the funds listed above should note that (1) like the Funds, the
Municipal Funds listed above are series of the Trust, (2) the Equity Funds
listed above are series of a Delaware business trust (named "Neuberger &
Berman Equity Funds") that is registered with the SEC as an open-end
management investment company, (3) each series of the Trust invests all
its net investable assets in the corresponding portfolio of Managers
Trust, (4) Neuberger & Berman International Fund is a series of
Neuberger & Berman Equity Funds that invests all of its net investable
assets in Neuberger & Berman International Portfolio, a series of Global
Managers Trust, an open-end management investment company that is managed
by N&B Management, and (5) each of the other series of Neuberger & Berman
Equity Funds invests all of its net investable assets in a corresponding
portfolio of Equity Managers Trust, an open-end management investment
company that is managed by N&B Management. Each such portfolio has an
investment objective identical to that of its corresponding fund and
invests in accordance with investment policies and limitations identical
to those of that fund.

Before effecting an exchange, Fund shareholders must obtain
and should review a currently effective prospectus of the fund into which
the exchange is to be made. In this regard, it should be noted that the
Municipal Funds (each of which is a separate series of the Trust) share a
prospectus with the Funds, while the Equity Funds share a separate
prospectus. An exchange is treated as a sale for federal income tax
purposes, and, depending on the circumstances, a short- or long-term
capital gain or loss may be realized.

There can be no assurance that CASH RESERVES, GOVERNMENT
MONEY, or MUNICIPAL MONEY, each of which is a money market fund that seeks
to maintain a constant purchase and redemption share price of $1.00, will
be able to maintain that price. An investment in any of the above-
referenced funds, as in any other mutual fund, is neither insured nor
guaranteed by the U.S. Government.

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<PAGE>

ADDITIONAL REDEMPTION INFORMATION

Suspension of Redemptions
-------------------------

The right to redeem a Fund's shares may be suspended or
payment of the redemption price postponed (1) when the New York Stock
Exchange ("NYSE") is closed (other than weekend and holiday closings),
(2) when trading on the NYSE is restricted, (3) when an emergency exists
as a result of which it is not reasonably practicable for the
corresponding Portfolio to dispose of securities it owns or fairly to
determine the value of its net assets, or (4) for such other period as the
SEC may by order permit for the protection of a Fund's shareholders; pro-
vided that applicable SEC rules and regulations shall govern whether the
conditions prescribed in (2) or (3) exist. If the right of redemption is
suspended, shareholders may withdraw their offers of redemption, or they
will receive payment at the NAV per share in effect at the close of
business on the first day the NYSE is open ("Business Day") after
termination of the suspension.

Redemptions in Kind
-------------------

Each Fund reserves the right, under certain conditions, to
honor any request for redemption, or a combination of requests from the
same shareholder in any 90-day period, totalling $250,000 or 1% of the net
assets of the Fund, whichever is less, by making payment in whole or in
part by securities valued as described under "Account and Share
Information -- Share Prices and Net Asset Value" in the Prospectus. If
payment is made in securities, a shareholder generally will incur
brokerage expenses in converting those securities into cash and will be
subject to fluctuations in the market price of those securities until they
are sold. The Funds do not redeem in kind under normal circumstances, but
would do so when the Fund Trustees determine that it would be in the best
interests of a Fund's shareholders as a whole. Redemptions in kind will
be made with readily marketable securities to the extent possible.

DIVIDENDS AND OTHER DISTRIBUTIONS

Each Fund distributes to its shareholders amounts equal to
substantially all of its proportionate share of any net investment income
(after deducting expenses incurred directly by the Fund), net capital
gains (both long-term and short-term), and net gains from foreign currency
transactions earned or realized by its corresponding Portfolio.
Government Money and Cash Reserves calculate their net investment income
and share price as of noon (Eastern time) on each Business Day; the other
Funds calculate their net investment income and share price as of the
close of regular trading on the NYSE on each Business Day (currently 4
p.m. Eastern time). Shares of Government Money and Cash Reserves begin

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<PAGE>

earning income dividends on the Business Day the proceeds of the purchase
order are converted into "federal funds" and continue to earn dividends
through the Business Day before they are redeemed; shares of the other
Funds begin earning income dividends on the Business Day after the
proceeds of the purchase order have been converted to "federal funds" and
continue to earn dividends through the Business Day they are redeemed.
Dividends declared for each month are paid on the last Business Day of the
month.

A Portfolio's net investment income consists of all income
accrued on portfolio assets less accrued expenses but does not include
realized gains and losses, which are reflected in a Portfolio's NAV (and,
hence, its corresponding Fund's NAV) until they are distributed.
Distributions of net realized capital and foreign currency gains, if any,
normally are paid once annually, in December. Income dividends are
declared daily and paid monthly.

Dividends and other distributions, if any, are automatically
reinvested in additional shares of the distributing Fund, unless and until
the shareholder elects to receive them in cash ("cash election"). Share-
holders may make a cash election on the original account application or at
a later date by writing to State Street Bank and Trust Company ("State
Street"), c/o Boston Service Center, P.O. Box 8403, Boston, MA 02266-8403.
To the extent dividends and other distributions are subject to federal,
state, or local income taxation, they are taxable to the shareholders
whether received in cash or reinvested in Fund shares.

A cash election with respect to any Fund remains in effect
until the shareholder notifies State Street in writing to discontinue the
election. If it is determined, however, that the U.S. Postal Service
cannot properly deliver Fund mailings to the shareholder, the Fund will
terminate the shareholder's cash election. Thereafter, the shareholder's
dividends and other distributions will be automatically reinvested in
additional Fund shares until the shareholder notifies State Street or the
Fund in writing of his or her correct address and requests in writing that
the cash election be reinstated.

ADDITIONAL TAX INFORMATION

Taxation of the Funds
---------------------

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<PAGE>

include the following: (1) the Fund must derive at least 90% of its gross
income each taxable year from dividends, interest, payments with respect
to securities loans, and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from
Hedging Instruments) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale
or other disposition of securities, or any of the following, that were
held for less than three months -- (i) Hedging Instruments (other than
those on foreign currencies) or (ii) foreign currencies or Hedging
Instruments thereon that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect
thereto) ("Short-Short Limitation"); and (3) at the close of each quarter
of the Fund's taxable year, (i) at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government
securities, and other securities limited, in respect of any one issuer, to
an amount that does not exceed 5% of the value of the Fund's total assets,
and (ii) not more than 25% of the value of its total assets may be
invested in securities (other than U.S. Government securities) of any one
issuer.

The Funds have received rulings from the Internal Revenue
Service ("Service") that each Fund, as an investor in its corresponding
Portfolio, will be deemed to own a proportionate share of the Portfolio's
assets and income for purposes of determining whether the Fund satisfies
all the requirements described above to qualify as a RIC. The Funds also
have received rulings from the Service that no Fund will recognize gain or
loss upon the transfer of property to a Portfolio in exchange for an
interest in the Portfolio.

Each Fund will be subject to a nondeductible 4% excise tax
("Excise Tax") to the extent it fails to distribute by the end of any
calendar year substantially all of its ordinary income for that year and
capital gain net income for the one-year period ending on October 31 of
that year, plus certain other amounts.

See the next section for a discussion of the tax consequences
to ULTRA SHORT and LIMITED MATURITY of hedging and certain other trans-
actions engaged in by their corresponding Portfolios.

Taxation of the Portfolios
--------------------------

The Portfolios have received rulings from the Service to the
effect that, among other things, each Portfolio will be treated as a
separate partnership for federal income tax purposes and will not be a
"publicly traded partnership." As a result, no Portfolio is subject to
federal income tax; instead, each investor in a Portfolio, such as a Fund,
will be required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses,
deductions, credits, and tax preference items, without regard to whether

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<PAGE>

it has received any cash distributions from the Portfolio. Each Portfolio
also will not be subject to Delaware or New York income or franchise tax.

Because each Fund will be deemed to own a proportionate share
of its corresponding Portfolio's assets and income for purposes of
determining whether the Fund satisfies the requirements to qualify as a
RIC, each Portfolio intends to continue to conduct its operations so that
its corresponding Fund will be able to continue to satisfy all those
requirements.

Distributions to a Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise) will
not result in the Fund's recognition of any gain or loss for federal
income tax purposes, except that (1) gain will be recognized to the extent
any cash that is distributed exceeds the Fund's basis for its interest in
the Portfolio before the distribution, (2) income or gain will be
recognized if the distribution is in liquidation of the Fund's entire
interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, (3) loss will be recognized
if a liquidation distribution consists solely of cash and/or unrealized
receivables and (4) gain (and, in certain situations, loss) may be
recognized on an in-kind distribution by the Portfolio. A Fund's basis
for its interest in its corresponding Portfolio generally equals the
amount of cash and the basis of any property the Fund invests in the
Portfolio, increased by the Fund's share of the Portfolio's net income and
gains and decreased by (1) the amount of cash and the basis of any
property the Portfolio distributes to the Fund and (2) the Fund's share of
the Portfolio's losses.

Dividends and interest received by a Portfolio may be subject
to income, withholding, or other taxes imposed by foreign countries and
U.S. possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign
investors.

The use by Neuberger & Berman ULTRA SHORT Bond Portfolio and
Neuberger & Berman LIMITED MATURITY Bond Portfolio of hedging strategies,
such as writing (selling) and purchasing Futures Contracts and options and
entering into Forward Contracts, involves complex rules that will
determine for income tax purposes the character and timing of recognition
of the gains and losses the Portfolios realize in connection therewith.
For each of these Portfolios, income from foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and
income from transactions in Hedging Instruments derived with respect to
its business of investing in securities or foreign currencies, will
qualify as permissible income for its corresponding Fund under the Income

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<PAGE>

Requirement. However, income from the disposition by a Portfolio of
Hedging Instruments (other than those on foreign currencies) will be
subject to the Short-Short Limitation for its corresponding Fund if they
are held for less than three months. Income from the disposition of
foreign currencies, and Hedging Instruments on foreign currencies, that
are not directly related to a Portfolio's principal business of investing
in securities (or options and Futures with respect thereto) also will be
subject to the Short-Short Limitation for its corresponding Fund if they
are held for less than three months.

If Neuberger & Berman ULTRA SHORT Bond Portfolio or Neuberger
& Berman LIMITED MATURITY Bond Portfolio satisfies certain requirements,
any increase in value of a position that is part of a "designated hedge"
will be offset by any decrease in value (whether realized or not) of the
offsetting hedging position during the period of the hedge for purposes of
determining whether its corresponding Fund satisfies the Short-Short
Limitation. Thus, only the net gain (if any) from the designated hedge
will be included in gross income for purposes of that limitation. Each of
these Portfolios will consider whether it should seek to qualify for this
treatment for its hedging transactions. To the extent a Portfolio does
not so qualify, it may be forced to defer the closing out of certain
Hedging Instruments beyond the time when it otherwise would be
advantageous to do so, in order for its corresponding Fund to continue to
qualify as a RIC.

Exchange-traded Futures Contracts and listed options thereon
constitute "Section 1256 contracts." Section 1256 contracts are required
to be marked to market (that is, treated as having been sold at market
value) at the end of a Portfolio's taxable year. Sixty percent of any
gain or loss recognized as a result of these "deemed sales," and 60% of
any net realized gain or loss from any actual sales, of Section 1256
contracts are treated as long-term capital gain or loss, and the remainder
is treated as short-term capital gain or loss.

Neuberger & Berman LIMITED MATURITY Bond Portfolio may invest
in municipal bonds that are purchased with market discount (that is, at a
price less than the bond's principal amount or, in the case of a bond that
was issued with original issue discount ("OID"), a price less than the
amount of the issue price plus accrued OID) ("municipal market discount
bonds"). If a bond's market discount is less than the product of
(1) 0.25% of the redemption price at maturity times (2) the number of
complete years to maturity after the taxpayer acquired the bond, then no
market discount is considered to exist. Gain on the disposition of a
municipal market discount bond purchased by the Portfolio (other than a
bond with a fixed maturity date within one year from its issuance), gener-
ally is treated as ordinary (taxable) income, rather than capital gain, to
the extent of the bond's accrued market discount at the time of
disposition. Market discount on such a bond generally is accrued ratably,
on a daily basis, over the period from the acquisition date to the date of

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<PAGE>

maturity. In lieu of treating the disposition gain as above, the
Portfolio may elect to include market discount in its gross income cur-
rently, for each taxable year to which it is attributable.

Each Portfolio may acquire zero coupon or other securities
issued with OID. As a holder of those securities, each Portfolio (and,
through it, its corresponding Fund) must take into account the OID that
accrues on the securities during the taxable year, even if it receives no
corresponding payment on the securities during the year. Because each
Fund annually must distribute substantially all of its investment company
taxable income (plus its share of its corresponding Portfolio's accrued
OID) to satisfy the Distribution Requirement and to avoid imposition of
the Excise Tax, a Fund may be required in a particular year to distribute
as a dividend an amount that is greater than its proportionate share of
the total amount of cash its corresponding Portfolio actually receives.
Those distributions will be made from a Fund's (or its proportionate share
of its corresponding Portfolio's) cash assets or, if necessary, from the
proceeds of sales of that Portfolio's securities. A Portfolio may realize
capital gains or losses from those sales, which would increase or decrease
its corresponding Fund's investment company taxable income and/or net
capital gain (the excess of net long-term capital gain over net short-term
capital loss). In addition, any such gains may be realized on the dispo-
sition of securities held for less than three months. Because of the
Short-Short Limitation, any such gains would reduce a Portfolio's ability
to sell other securities, or certain Hedging Instruments, held for less
than three months that it might wish to sell in the ordinary course of its
portfolio management.

Taxation of the Funds' Shareholders
-----------------------------------

If shares of ULTRA SHORT or LIMITED MATURITY are sold at a
loss after being held for six months or less, the loss will be treated as
long-term, instead of short-term, capital loss to the extent of any
capital gain distributions received on those shares. Investors also
should be aware that if shares of either of those Funds are purchased
shortly before the record date for a dividend or other distribution, the
purchaser will receive some portion of the purchase price back as a
taxable distribution.

Each Fund is required to withhold 31% of all dividends and
capital gain distributions, and each of ULTRA SHORT and LIMITED MATURITY
is required to withhold 31% of redemption proceeds payable to any
individuals and certain other noncorporate shareholders who do not provide
the Fund with a correct taxpayer identification number. Withholding at
that rate also is required from dividends and capital gain distributions
payable to such shareholders who otherwise are subject to backup
withholding.

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<PAGE>

As described under "How to Sell Shares" in the Prospectus, a
Fund may close a shareholder's account with the Fund and redeem the
remaining shares if the account balance falls below the specified minimum
and the shareholder fails to reestablish the minimum balance after being
given the opportunity to do so. If an account that is closed pursuant to
the foregoing was maintained for an individual retirement account or a
qualified retirement plan (including a simplified employee pension plan,
self-employed individual retirement plan (so-called "Keogh plan"),
corporate profit-sharing and money purchase pension plan, section 401(k)
plan, and section 403(b)(7) account), the Fund's payment of the redemption
proceeds to the accountholder may result in adverse tax consequences for
the accountholder. The accountholder should consult his or her tax
adviser regarding any such consequences.

VALUATION OF PORTFOLIO SECURITIES

Each of Neuberger & Berman Government Money Portfolio and
Neuberger & Berman Cash Reserves Portfolio relies on Rule 2a-7 under the
1940 Act to use the amortized cost method of valuation to enable its
corresponding Fund to stabilize the purchase and redemption price of its
shares at $1.00 per share. This method involves valuing portfolio securi-
ties at their cost at the time of purchase and thereafter assuming a
constant amortization (or accretion) to maturity of any premium (or
discount), regardless of the impact of interest rate fluctuations on the
market value of the securities. Although the Funds' reliance on Rule 2a-7
and the Portfolios' use of that valuation method should enable the Funds,
under most conditions, to maintain a stable $1.00 share price, there can
be no assurance they will be able to do so. An investment in these Funds,
as in any mutual fund, is neither insured nor guaranteed by the U.S.
Government.

PORTFOLIO TRANSACTIONS

Purchases and sales of portfolio securities generally are
transacted with issuers, underwriters, or dealers that serve as primary
market-makers, who act as principals for the securities on a net basis.
The Portfolios usually do not pay brokerage commissions for such purchases
and sales. Instead, the price paid for newly issued securities typically
includes a concession or discount paid by the issuer to the underwriter,
and the prices quoted by market-makers reflect a spread between the bid
and the asked prices from which the dealer derives a profit.

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<PAGE>

and operational capabilities of competing broker-dealers. N&B Management
also may consider the brokerage and research services that broker-dealers
provide to the Portfolio or N&B Management. Under certain conditions, a
Portfolio may pay higher brokerage commissions in return for brokerage and
research services, although no Portfolio has a current arrangement to do
so. In any case, each Portfolio may effect principal transactions with a
dealer who furnishes research services, designate any dealer to receive
selling concessions, discounts, or other allowances, or otherwise deal
with any dealer in connection with the acquisition of securities in
underwritings.

During the fiscal year ended October 31, 1995, Neuberger &
Berman ULTRA SHORT Bond Portfolio acquired securities of the following
"regular brokers or dealers" (as defined in the 1940 Act): Canadian
Imperial Bank of Commerce, Goldman, Sachs & Co., Merrill Lynch, Pierce,
Fenner & Smith Inc., and Morgan Stanley & Co. Inc. At October 31, 1995,
that Portfolio held none of the securities of its "regular brokers or
dealers."

During the fiscal year ended October 31, 1995, Neuberger &
Berman LIMITED MATURITY Bond Portfolio acquired securities of the
following "regular brokers or dealers": Canadian Imperial Bank of
Commerce. At October 31, 1995, that Portfolio held none of the securities
of its "regular brokers or dealers."

During the fiscal year ended October 31, 1995, Neuberger &
Berman Cash Reserves Portfolio acquired securities of the following
"regular brokers or dealers": Canadian Imperial Bank of Commerce,
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
and Morgan Stanley & Co. Inc.; at October 31, 1995, that Portfolio held
the securities of its "regular brokers or dealers" with an aggregate value
as follows: Goldman Sachs & Co.: $5,862,022 and Morgan Stanley & Co.
Inc.: $5,931,360.

During the fiscal year ended October 31, 1995, Neuberger &
Berman Government Money Portfolio acquired none of the securities of its
"regular brokers or dealers." At October 31, 1995, that Portfolio held
none of the securities of its "regular brokers or dealers."

No affiliate of any Portfolio receives give-ups or reciprocal
business in connection with its portfolio transactions. No Portfolio
effects transactions with or through broker-dealers in accordance with any
formula or for selling shares of any Fund. However, broker-dealers who
effect or execute portfolio transactions may from time to time effect
purchases of Fund shares for their customers. The 1940 Act generally
prohibits Neuberger & Berman from acting as principal in the purchase of

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<PAGE>

portfolio securities from, or the sale of portfolio securities to, a
Portfolio unless an appropriate exemption is available.

Portfolio Turnover
------------------

The portfolio turnover rate is the lesser of the cost of the
securities purchased or the value of the securities sold, excluding all
securities, including options, whose maturity or expiration date at the
time of acquisition was one year or less, divided by the average monthly
value of such securities owned during the year.

REPORTS TO SHAREHOLDERS

Shareholders of each Fund receive unaudited semi-annual
financial statements, as well as year-end financial statements audited by
the independent auditors for the Fund and for its corresponding Portfolio.
Each Fund's statements show the investments owned by its corresponding
Portfolio and the market values thereof and provide other information
about the Fund and its operations, including the Fund's beneficial
interest in its corresponding Portfolio.

CUSTODIAN AND TRANSFER AGENT

Each Fund and Portfolio has selected State Street Bank and
Trust Company, 225 Franklin Street, Boston, MA 02110 as custodian for its
securities and cash. All correspondence should be mailed to Neuberger &
Berman Funds, c/o Boston Service Center, P.O. Box 8403, Boston, MA 02266-
8403. That company also serves as each Fund's transfer agent and
shareholder servicing agent, administering purchases, redemptions, and
transfers of Fund shares and the payment of dividends and other distri-
butions through its Boston Service Center.

INDEPENDENT AUDITORS

Each Fund and Portfolio has selected Ernst & Young LLP, 200
Clarendon Street, Boston, MA 02116, as the independent auditors who will
audit its financial statements.

LEGAL COUNSEL

Each Fund and Portfolio has selected Kirkpatrick & Lockhart
LLP, 1800 Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036,
as its legal counsel.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following table sets forth the name, address, and
percentage of ownership of each person who was known by each Fund to own
beneficially or of record 5% or more of that Fund's outstanding shares at
January 31, 1996:

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<PAGE>

<TABLE>
<CAPTION>
Percentage of
Ownership at
Name and Address January 31, 1996
---------------- ----------------

GOVERNMENT MONEY: Neuberger & Berman* 72.65%
605 Third Avenue
New York, NY 10158-3698

CASH RESERVES: Neuberger & Berman* 56.41%
605 Third Avenue
New York, NY 10158-3698

ULTRA SHORT: Charles Schwab & Co., Inc.* 27.02%
101 Montgomery Street
San Francisco, CA 94104-4122

LIMITED MATURITY: Charles Schwab & Co., Inc.* 29.64%
101 Montgomery Street
San Francisco, CA 94104-4122

Nationwide Life Insurance Plan 8.60%
QPVA
c/o IPO CO 67
P.O. Box 182029
Columbus, Ohio 43218-2029
</TABLE>

__________________________________

* Charles Schwab & Co., Inc. and Neuberger & Berman hold these shares
of record for the accounts of certain of their clients and have
informed the Funds of their policies to maintain the confidentiality
of holdings in client accounts unless disclosure is expressly
required by law.

At January 31, 1996, the trustees and officers of the Trust, as a
group, owned beneficially or of record less than one percent of the
outstanding shares of each Fund.

REGISTRATION STATEMENT

This SAI and the Prospectus do not contain all the infor-
mation included in the Trust's registration statement filed with the SEC
under the 1933 Act with respect to the securities offered by the

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<PAGE>

Prospectus. Certain portions of the registration statement have been
omitted pursuant to SEC rules and regulations. The registration
statement, including the exhibits filed therewith, may be examined at the
SEC's offices in Washington, D.C.

Statements contained in this SAI and in the Prospectus as to
the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy
of the contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.

FINANCIAL STATEMENTS

The following financial statements and related documents are
incorporated herein by reference to the Funds' Annual Report to
Shareholders for the fiscal year ended October 31, 1995:

The audited financial statements of the Funds and Portfolios
and notes thereto for the fiscal year ended October 31, 1995,
and the reports of Ernst & Young LLP, independent auditors,
with respect to such audited financial statements.

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<PAGE>

Appendix A

RATINGS OF SECURITIES

S&P corporate bond ratings:

AAA - Bonds rated AAA have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.

AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small
degree.

A - Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in
higher rated categories.

BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in higher
rated categories.

BB, B - Bonds rated BB or B are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation. While these bonds will likely
have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.

BB - Bonds rated BB have less near-term vulnerability to default
than other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments. The BB rating category is used for debt
subordinated to senior debt that is assigned an actual or implied BBB-
rating.

B - Bonds rated B have a greater vulnerability to default but
currently have the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BB or BB- rating.

Plus (+) or Minus (-): The ratings above may be modified by the
addition of a plus or minus sign to show relative standing within major
categories.

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<PAGE>

Moody's corporate bond ratings:
-------------------------------

Aaa - Bonds rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or an
exceptionally stable margin, and principal is secure. Although the
various protective elements are likely to change, such changes that can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally
known as "high-grade bonds." They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa-rated
securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa-rated securities.

A - Bonds rated A possess many favorable investment attributes and
are considered to be upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment sometime in the
future.

Baa - Bonds which are rated Baa are considered as medium-grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. These bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.

MODIFIERS - Moody's may apply numerical modifiers 1, 2, and 3 in
each generic rating classification described above. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3

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<PAGE>

indicates that the company ranks in the lower end of its generic rating
category.

S&P commercial paper ratings:

A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+).

A-2 - This designation denotes satisfactory capacity for timely
payment. However, the relative degree of safety is not as high as for
issues designated A-1.

Moody's commercial paper ratings:

Issuers rated Prime-1 (or related supporting institutions), also
known as P-1, have a superior capacity for repayment of short-term promis-
sory obligations. Prime-1 repayment capacity will normally be evidenced
by the following characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.

- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.

- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions), also
known as P-2, have a strong capacity for repayment of short-term promis-
sory obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

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<PAGE>

Appendix B

THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER

- 66 -
<PAGE>

The Art of Investing:
A Conversation with Roy Neuberger

"I firmly believe that if you want
to manage your own money, you must
be a student of the market. If you
are unwilling or unable to do that,
find someone else to manage your
money for you."

NEUBERGER & BERMAN
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[THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE]
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[PICTURE OF ROY NEUBERGER]

During my more than sixty-five years of
buying and selling securities, I've been asked
many questions about my approach to investing.
On the pages that follow are a variety of my
thoughts, ideas and investment principles which
have served me well over the years. If you gain
useful knowledge in the pursuit of profit as well
as enjoyment from these comments, I shall be more
than content.

\s\ Roy R. Neuberger

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YOU'VE BEEN ABLE TO CONDENSE SOME OF THE
CHARACTERISTICS OF SUCCESSFUL INVESTING INTO
FIVE "RULES." WHAT ARE THEY?

Rule #1: Be flexible. My philosophy has
necessarily changed from time to time because
of events and because of mistakes. My views
change as economic, political, and
technological changes occur both on and
sometimes off our planet. It is imperative
that you be willing to change your thoughts to
meet new conditions.

Rule #2: Take your temperament into account.
Recognize whether you are by nature very
speculative or just the opposite - fearful,
timid of taking risks. But in any event --

Diversify your investments, Rule #3: Be broad-gauged. Diversify your
make sure that some of your investments, make sure that some of your
principal is kept safe, and principal is kept safe, and try to increase
try to increase your income your income as well as your capital.
as well as your capital.

[PICTURE OF ROY NEUBERGER]

Rule #4: Always remember there are many ways to
skin a cat! Ben Graham and David Dodd did it by
understanding basic values. Warren Buffet
invested his portfolio in a handful of long-
term holdings, while staying involved with the
companies' managements. Peter Lynch chose to
understand, first-hand, the products of many
hundreds of the companies he invested in.
George Soros showed his genius as a hedge fund
investor who could decipher world currency
trends. Each has been successful in his own
way. But to be successful, remember to

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Rule #5: Be skeptical. To repeat a few well-
worn useful phrases:

A. Dig for yourself.
B. Be from Missouri.
C. If it sounds too good to be true, it
probably is.

IN YOUR 65 YEARS OF INVESTING ARE THERE ANY
GENERAL PATTERNS YOU'VE OBSERVED AS TO HOW THE
MARKET BEHAVES?

Every decade that I've been involved with Wall
Street has a nuance of its own, an economic and
social climate that influences investors. But
generally, bull markets tend to be longer than
bear markets, and stock prices tend to go up
more slowly and erratically than they go down.
Bear markets tend to be shorter and of greater
intensity. The market rarely rises or declines
concurrently with business cycles longer than
six months.

AS A LEGENDARY "VALUE INVESTOR," HOW DO YOU
DEFINE VALUE INVESTING?

Value investing means finding the best values -
- either absolute or relative. Absolute means
a stock has a low market price relative to its
own fundamentals. Relative value means the
price is attractive relative to the market as a
whole.

COULD YOU DESCRIBE A STOCK WITH "GOOD VALUE"?

A classic example is a company that has a low
price to earnings ratio, a low price to book
ratio, free cash flow, a strong balance sheet,
undervalued corporate assets, unrecognized
earnings turnaround and is selling at a
discount to private market value.

These characteristics usually lead to companies
that are under-researched and have a high
degree of inside ownership and entrepreneurial
management.

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One of my colleagues at Neuberger & Berman says
he finds his value stocks either "under a
cloud" or "under a rock." "Under a cloud"
stocks are those Wall Street in general doesn't
like, because an entire industry is out of
favor and even the good stocks are being
dropped. "Under a rock" stocks are those Wall
Street is ignoring, so you have to uncover them
on your own.

ARE THERE OTHER KEY CRITERIA YOU USE TO JUDGE
STOCKS?

I'm more interested in longer-term trends in
earnings than short-term trends. Earnings
gains should be the product of long-term
strategies, superior management, taking
advantage of business opportunities and so on.
If these factors are in their proper place,
short-term earnings should not be of major
concern. Dividends are an important extra
because, if they're stable, they help support
the price of the stock.

WHAT ABOUT SELLING STOCKS?

Most individual investors should invest for the
long term but not mindlessly. A sell
discipline, often neglected by investors, is
vitally important.

"One should fall in love One should fall in love with ideas, with
with ideas, with people or people, or with idealism. But in my book, the
with idealism. But in my last thing to fall in love with is a particular
book, the last thing to security. It is after all just a sheet of paper
fall in love with is a indicating a part ownership in a corporation
particular security." and its use is purely mercenary. If you must
love a security, stay in love with it until it
gets overvalued; then let somebody else fall in
love.

[PICTURE OF ROY NEUBERGER]

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ANY OTHER ADVICE FOR INVESTORS?

I firmly believe that if you want to manage
your own money, you must be a student of the
market. If you're unwilling or unable to do
that, find someone else to manage your money
for you. Two options are a well-managed no-
load mutual fund or, if you have enough assets
for separate account management, a money
manager you trust with a good record.

HOW WOULD YOU DESCRIBE YOUR PERSONAL INVESTING
STYLE?

Every stock I buy is bought to be sold. The
market is a daily event, and I continually
review my holdings looking for selling
opportunities. I take a profit occasionally on
something that has gone up in price over what
was expected and simultaneously take losses
whenever misjudgment seems evident. This
creates a reservoir of buying power that can be
used to make fresh judgments on what are the
best values in the market at that time. My
active investing style has worked well for me
over the years, but for most investors I
recommend a longer-term approach.

I tend not to worry very must about the day to
day swings of the market, which are very hard
to comprehend. Instead, I try to be rather
clever in diagnosing values and trying to win
70 to 80 percent of the time.

YOU BEGAN INVESTING IN 1929. WHAT WAS YOUR
EXPERIENCE WITH THE "GREAT CRASH"?

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The only money I managed in the Panic of 1929
was my own. My portfolio was down about 12
percent, and I had an uneasy feeling about the
market and conditions in general. Those were
the days of 10 percent margin. I studied the
lists carefully for a stock that was overvalued
in my opinion and which I could sell short as a
hedge. I came across RCA at about $100 per
share. It had recently split 5 for 1 and
appeared overvalued. There were no dividends,
little income, a low net worth and a weak
financial position. I sold RCA short in the
amount equal to the dollar value of my long
portfolio. It proved to be a timely and
profitable move.

HOW DID THE CRASH OF 1929 AFFECT YOUR INVESTING
STYLE?

I am prematurely bearish when the market goes
up for a long time and everybody is happy
because they are richer. I am very bullish
when the market has gone down perceptibly and I
feel it has discounted any troubles we are
going to have.

HOW IMPORTANT ARE PSYCHOLOGICAL FACTORS TO
MARKET BEHAVIOR?

There are many factors in addition to economic
statistics or security analysis in a buy or
sell decision. I believe psychology plays an
important role in the Market. Some people
follow the crowd in hopes they'll be swept
along in the right direction, but if the crowd
is late in acting, this can be a bad move.

I like to be contrary. When things look bad, I
become optimistic. When everything looks rosy,
and the crowd is optimistic, I like to be a
seller. Sometimes I'm too early, but I
generally profit.

AS A RENOWNED ART COLLECTOR, DO YOU FIND
SIMILARITIES BETWEEN SELECTING STOCKS AND
SELECTING WORKS OF ART?

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Both are an art, although picking stocks is a
minor art compared with painting, sculpture or
"When things look bad, I literature. I started buying art in the 30s,
become optimistic. When and in the 40s it was a daily, almost hourly
everything looks rosy, and occurrence. My inclination to buy the works of
the crowd is optimistic, I living artists comes from Van Gogh, who sold
like to be a seller." only one painting during his lifetime. He died
in poverty, only then to become a legend and
have his work sold for millions of dollars.

[PICTURE OF ROY NEUBERGER]

There are more variables to consider now in
both buying art and picking stocks. In the
modern stock markets, the heavy use of futures
and options has changed the nature of the
investment world. In past times, the stock
market was much less complicated, as was the
art world.

Artists rose and fell on their own merits
without a lot of publicity and attention. As
more and more dealers are involved with
artists, the price of their work becomes
inflated. So I almost always buy works of
unknown, relatively undiscovered artists,
which, I suppose is similar to value investing.

But the big difference in my view of art and
stocks is that I buy a stock to sell it and
make money. I never bought paintings or
sculptures for investment in my life. The
objective is to enjoy their beauty.

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WHAT DO YOU CONSIDER THE BUSINESS MILESTONES IN
YOUR LIFE?

Being a founder of Neuberger & Berman and
creating one of the first no-load mutual funds.
I started on Wall Street in 1929, and during
the depression I managed my own money and that
of my clientele. We all prospered, but I
wanted to have my own firm. In 1939 I became a
founder of Neuberger & Berman, and for about 10
years we managed money for individuals with
substantial financial assets. But I also
wanted to offer the smaller investor the
benefits of professional money management, so
in 1950 I created the Guardian Mutual Fund (now
known as the Neuberger & Berman Guardian Fund).
The Fund was kind of an innovation in its time
because it didn't charge a sales commission. I
thought the public was being overcharged for
mutual funds, so I wanted to create a fund that
would be offered directly to the public without
a sales charge. Now of course the "no-load"
fund business is a huge industry. I managed
the Fund myself for over 28 years.

[PICTURE OF ROY NEUBERGER]

YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO
THE OFFICE EVERY DAY TO MANAGE YOUR
INVESTMENTS. WHY?

I like the fun of being nimble in the stock
market, and I'm addicted to the market's
fascinations.

WHAT CLOSING WORDS OF ADVICE DO YOU HAVE ABOUT
INVESTING?

Realize that there are opportunities at all
times for the adventuresome investor. And stay
in good physical condition. It's a strange
thing. You do not dissipate your energies by
using them. Exercise your body and your brain
every day, and you'll do better in investments
and in life.

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ROY NEUBERGER: A BRIEF BIOGRAPHY

Roy Neuberger is a founder of the investment
management firm Neuberger & Berman, and a
renowned value investor. He is also a
recognized collector of contemporary American
art, much of which he has given away to museums
and colleges across the country.

During the 1920s, Roy studied art in
Paris. When he realized he didn't possess the
talent to become an artist, he decided to
collect art, and to support this passion, Roy
turned to investing -- a pursuit for which his
talents have proven more than adequate.

A TALENT FOR INVESTING

Roy began his investment career by
joining a brokerage firm in 1929, seven months
before the "Great Crash." Just weeks before
"Black Monday," he shorted the stock of RCA,
thinking it was overvalued. He profited from
the falling market and gained a reputation for
market prescience and stock selection that has
lasted his entire career.

NEUBERGER & BERMAN'S FOUNDING

Roy's investing acumen attracted many
people who wished to have him manage their
money. In 1939, at the age of 36, after
purchasing a seat on the New York Stock
Exchange, Roy founded Neuberger & Berman to
provide money management services to people who
lacked the time, interest or expertise to
manage their own assets.

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NEUBERGER & BERMAN -- OVER FIVE DECADES OF
GROWTH

Neuberger & Berman has grown through the
years and now manages approximately $30 billion
of equity and fixed income assets, both
domestic and international, for individuals,
institutions, and its family of no-load mutual
funds. Today, as when the firm was founded,
Neuberger & Berman follows a value approach to
investing, designed to enable clients to
advance in good markets and minimize losses
when conditions are less favorable.

For more complete information about the
Neuberger & Berman Guardian Fund,
including fees and expenses, call
Neuberger & Berman Management at 800-
877-9700 for a free prospectus. Please
read it carefully, before you invest or
send money.

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<PAGE>

Neuberger & Berman Management
Inc.[SERVICE MARK]

605 Third Avenue, 2nd Floor
New York, NY 10158-0006
Shareholder Services
(800) 877-9700

[COPYRIGHT SYMBOL]1995
Neuberger & Berman

PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS

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_________________________________________________________________

NEUBERGER & BERMAN MUNICIPAL FUNDS AND PORTFOLIOS

STATEMENT OF ADDITIONAL INFORMATION

DATED MARCH 1, 1996

</TABLE>
<TABLE>
<CAPTION>

<S> <C>
Neuberger & Berman Neuberger & Berman
Municipal Money Fund Municipal Securities Trust
(and Neuberger & Berman Municipal Money Portfolio) (and Neuberger & Berman Municipal Securities
Portfolio)

Neuberger & Berman
New York Insured Intermediate Fund
(and Neuberger & Berman New York
Insured Intermediate Portfolio)

</TABLE>

No-Load Mutual Funds
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700

_________________________________________________________________

Neuberger & Berman Municipal Money Fund ("Municipal Money"),
Neuberger & Berman Municipal Securities Trust ("Municipal Securities"),
and Neuberger & Berman New York Insured Intermediate Fund ("New York
Insured Intermediate") (each a "Fund") are no-load mutual funds that offer
shares pursuant to a Prospectus dated March 1, 1996. The above-named Funds
invest all of their net investable assets in Neuberger & Berman Municipal
Money Portfolio, Neuberger & Berman Municipal Securities Portfolio, and
Neuberger & Berman New York Insured Intermediate Portfolio (each a
"Portfolio"), respectively.

The Funds' Prospectus, which is also the prospectus for
certain taxable fixed income funds managed by Neuberger & Berman
Management Incorporated ("N&B Management"), provides the basic information
that an investor should know before investing. A copy of the Prospectus
may be obtained, without charge, from N&B Management, 605 Third Avenue,
2nd Floor, New York, NY 10158-0180 or by calling 800-877-9700.

<PAGE>

This Statement of Additional Information ("SAI") is not a
prospectus and should be read in conjunction with the Prospectus.

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<PAGE>

TABLE OF CONTENTS

INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Policies and Limitations . . . . . . . . . . . . 5
Investment Programs of Both Neuberger & Berman Municipal
Money Portfolio and Neuberger & Berman Municipal
Securities Portfolio . . . . . . . . . . . . . . . . . 12
Investment Program of Neuberger & Berman Municipal Securities
Portfolio . . . . . . . . . . . . . . . . . . . . . . 13
Investment Approach of Neuberger & Berman Municipal
Securities Portfolio and Neuberger & Berman New York
Insured Intermediate Portfolio . . . . . . . . . . . . 14
Municipal Bond Insurance (Neuberger & Berman New York Insured
Intermediate Portfolio). . . . . . . . . . . . . . . . . 15
Theresa A. Havell and Clara Del Villar - Co-Portfolio
Managers of the Portfolios . . . . . . . . . . . . . . . 16
Types of Municipal Obligations . . . . . . . . . . . . . . . . 17
Yield and Price Characteristics of Municipal Obligations . . . 20
Investment in Taxable Securities . . . . . . . . . . . . . . . 21
Additional Techniques for Purchasing and Selling Municipal
Obligations and Taxable Securities . . . . . . . . . . . 23
Risks of Fixed Income Securities . . . . . . . . . . . . . . . 33

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 35
Yield Calculations . . . . . . . . . . . . . . . . . . . . . . 35
Tax Equivalent Yield . . . . . . . . . . . . . . . . . . . . . 36
Total Return Computations . . . . . . . . . . . . . . . . . . 37
Comparative Information . . . . . . . . . . . . . . . . . . . 38
Other Performance Information . . . . . . . . . . . . . . . . 39

CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . 40
New York City . . . . . . . . . . . . . . . . . . . . . . . . 42
New York State . . . . . . . . . . . . . . . . . . . . . . . . 43
Puerto Rico . . . . . . . . . . . . . . . . . . . . . . . . . 44

TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 44

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . . . 50
Investment Manager and Administrator . . . . . . . . . . . . . 50
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 53
Investment Companies Managed . . . . . . . . . . . . . . . . . 55
Management and Control of N&B Management . . . . . . . . . . . 57

DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 58

ADDITIONAL PURCHASE INFORMATION . . . . . . . . . . . . . . . . . . . . . 58
Automatic Investing and Dollar Cost Averaging . . . . . . . . 58

ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . . . 59

ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . 62
Suspension of Redemptions . . . . . . . . . . . . . . . . . . 62

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Redemptions in Kind . . . . . . . . . . . . . . . . . . . . . 63

DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 63

ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 64
Taxation of the Funds . . . . . . . . . . . . . . . . . . . . 64
Taxation of the Portfolios . . . . . . . . . . . . . . . . . . 65
Taxation of the Funds' Shareholders . . . . . . . . . . . . . 68

VALUATION OF PORTFOLIO SECURITIES
(Municipal Money) . . . . . . . . . . . . . . . . . . . . . . 70

PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . 71

REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 71

CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . 71

INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . . . 72

REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 73

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
RATINGS OF MUNICIPAL OBLIGATIONS AND COMMERCIAL PAPER . . . . 74

Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
THE ART OF INVESTMENT:
A CONVERSATION WITH ROY NEUBERGER . . . . . . . 77

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INVESTMENT INFORMATION

Investment Policies and Limitations
-----------------------------------

Municipal Money and Municipal Securities have the following
fundamental investment policy, to enable them to invest in their
corresponding Portfolios:

Notwithstanding any other investment policy of the Fund, the
Fund may invest all of its investable assets (cash,
securities, and receivables relating to securities) in an
open-end management investment company having substantially
the same investment objective, policies, and limitations as
the Fund.

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New York Insured Intermediate has the following fundamental
investment policy, to enable it to invest in its corresponding Portfolio:

Notwithstanding any other investment policy or limitation of
the Fund, the Fund may invest all of its investable assets in
an open-end management investment company having substan-
tially the same investment objective, policies, and limita-
tions as the Fund.

All other fundamental investment policies and limitations and
the non-fundamental investment policies and limitations of each Fund and
its corresponding Portfolio are identical. Therefore, although the
following discusses the investment policies and limitations of the
Portfolios, it applies equally to their corresponding Funds.

For purposes of the investment limitation on concentration in
particular industries, N&B Management identifies the "issuer" of a
municipal obligation that is not a general obligation note or bond by the
obligation's characteristics. The most significant of these character-
istics is the source of funds for the payment of principal and interest on
the obligation. If an obligation is backed by an irrevocable letter of
credit or other guarantee, without which the obligation would not qualify
for purchase under a Portfolio's quality restrictions, the issuer of the
letter of credit or the guarantee is considered an issuer of the
obligation. If an obligation meets a Portfolio's quality restrictions
without credit support, the Portfolio treats the commercial developer or
the industrial user, rather than the governmental entity or the guarantor,
as the only issuer of the obligation, even if the obligation is backed by
a letter of credit or other guarantee.

The fundamental investment policies and limitations of
Neuberger & Berman Municipal Money and Neuberger & Berman Municipal
Securities Portfolios are as follows:

1. Borrowing. Neither Portfolio may borrow money, except
that a Portfolio may (i) borrow money from banks for temporary or
emergency purposes and not for leveraging or investment and (ii) enter
into reverse repurchase transactions for any purpose; provided that (i)
and (ii) in combination do not exceed 33-1/3% of the value of its total
assets (including the amount borrowed) less liabilities (other than

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<PAGE>

borrowings). If at any time borrowings exceed 33-1/3% of the value of a
Portfolio's total assets, the Portfolio will reduce its borrowings within
three days (excluding Sundays and holidays) to the extent necessary to
comply with the 33-1/3% limitation.

2. Commodities. Neuberger & Berman Municipal Money
Portfolio may not purchase commodities or contracts thereon, except that
it may purchase the securities of issuers that own interests in any of the
foregoing. Neuberger & Berman Municipal Securities Portfolio may not
purchase physical commodities or contracts thereon, unless acquired as a
result of the ownership of securities or instruments, but this restriction
shall not prohibit Neuberger & Berman Municipal Securities Portfolio from
purchasing futures contracts or options (including options on futures con-
tracts, but excluding options or future contracts on physical commodities)
or from investing in securities of any kind.

3. Diversification. Neither Portfolio may, with respect
to 75% of the value of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities ("U.S. Government and Agency
Securities")) if, as a result, (i) more than 5% of the value of the
Portfolio's total assets would be invested in the securities of that
issuer or (ii) the Portfolio would hold more than 10% of the outstanding
voting securities of that issuer.

4. Industry Concentration. Neither Portfolio may invest
25% or more of its total assets in the securities of issuers having their
principal business activities in the same industry, except that this
limitation does not apply to (i) U.S. Government and Agency Securities,
(ii) municipal securities, or (iii) certificates of deposit ("CDs") or
bankers' acceptances issued by domestic banks.

5. Lending. Neither Portfolio may lend any securities or
make any other loan if, as a result, more than 33-1/3% of its total assets
(taken at current value) would be lent to other parties, except, in
accordance with its investment objective, policies, and limitations (i)
through the purchase of a portion of an issue of debt securities and (ii)
by engaging in repurchase agreements.

6. Real Estate. Neither Portfolio may purchase real
estate unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit a Portfolio from
purchasing securities issued by entities or investment vehicles that own
or deal in real estate or interests therein, or instruments secured by
real estate or interests therein.

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<PAGE>

7. Senior Securities. Neither Portfolio may issue senior
securities, except as permitted under the 1940 Act.

8. Underwriting. Neither Portfolio may underwrite securi-
ties of other issuers, except to the extent that a Portfolio, in disposing
of portfolio securities, may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 ("1933 Act").

The non-fundamental investment policies and limitations of
Neuberger & Berman Municipal Money and Neuberger & Berman Municipal
Securities Portfolios are as follows:

1. Geographic Concentration. Neither Portfolio will
invest 25% or more of its total assets in securities issued by govern-
mental units located in any one state, territory, or possession of the
United States (but this limitation does not apply to project notes backed
by the full faith and credit of the United States).

2. Illiquid Securities. Neither Portfolio may purchase
any security if, as a result, more than 10% of its net assets would be
invested in illiquid securities. Illiquid securities include securities
that cannot be sold within seven days in the ordinary course of business
for approximately the amount at which the Portfolio has valued the
securities, such as repurchase agreements maturing in more than seven
days.

3. Unseasoned Issuers. Neither Portfolio currently
intends to purchase the securities of any issuer (other than securities
issued or guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of a Portfolio's total
assets would be invested in the securities of business enterprises that,
including predecessors, have a record of less than three years of
continuous operation. This restriction does not apply to asset-backed
securities.

4. Ownership of Portfolio Securities by Officers and
Trustees. Neither Portfolio may purchase or retain the securities of any
issuer if, to the knowledge of N&B Management, those officers and trustees
of Managers Trust and officers and directors of N&B Management who each
owns individually more than 1/2 of 1% of the outstanding securities of
such issuer, together own more than 5% of such securities.

5. Investments in Other Investment Companies. Neither
Portfolio may purchase securities of other investment companies, except to
the extent permitted by the 1940 Act and in the open market at no more
than customary brokerage commission rates. This limitation does not apply
to securities received or acquired as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.

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<PAGE>

6. Oil and Gas Programs. Neither Portfolio may invest in
participations or other direct interests in oil, gas, or other mineral
exploration or development programs or leases.

7. Borrowing. Neither Portfolio may purchase securities
if outstanding borrowings, including any reverse repurchase agreements,
exceed 5% of its total assets.

8. Lending. Except for the purchase of debt securities
and engaging in repurchase agreements, neither Portfolio may make any
loans other than securities loans.

9. Margin Transactions. Neither Portfolio may purchase
securities on margin from brokers or other lenders, except that a
Portfolio may obtain such short-term credits as are necessary for the
clearance of securities transactions. For Neuberger & Berman Municipal
Securities Portfolio, margin payments in connection with transactions in
futures contracts and options on futures contracts shall not constitute
the purchase of securities on margin and shall not be deemed to violate
the foregoing limitation.

10. Short Sales. Neither Portfolio may sell securities
short, unless it owns, or has the right to obtain without payment of
additional consideration, securities equivalent in kind and amount to the
securities sold. For Neuberger & Berman Municipal Securities Portfolio,
transactions in futures contracts and options shall not constitute selling
securities short.

11. Puts, Calls, Straddles, or Spreads. Neither Portfolio
may invest in puts, calls, straddles, spreads, or any combination thereof,
except that a Portfolio may purchase securities with rights to put the
securities to the seller in accordance with its investment program, and
Neuberger & Berman Municipal Securities Portfolio may purchase options on
interest-rate futures contracts. Neuberger & Berman Municipal Securities
Portfolio does not construe the foregoing limitation to preclude it from
purchasing or selling options on futures contracts, and neither Portfolio
construes the limitation to preclude it from purchasing securities with
rights to put the security to the issuer or a guarantor.

12. Real Estate Limited Partnerships. Neither Portfolio may
invest in real estate limited partnerships.

The fundamental investment policies and limitations of
Neuberger & Berman New York Insured Intermediate Portfolio are as follows:

1. Borrowing. The Portfolio may not borrow money, except
that the Portfolio may (i) borrow money from banks for temporary or
emergency purposes and not for leveraging or investment and (ii) enter
into reverse repurchase transactions for any purpose; provided that (i)

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<PAGE>

and (ii) in combination do not exceed 33-1/3% of the value of its total
assets (including the amount borrowed) less liabilities (other than
borrowings). If at any time borrowings exceed 33-1/3% of the value of the
Portfolio's total assets, the Portfolio will reduce its borrowings within
three days (excluding Sundays and holidays) to the extent necessary to
comply with the 33-1/3% limitation.

2. Commodities. The Portfolio may not purchase physical
commodities or contracts thereon, unless acquired as a result of the
ownership of securities or instruments, but this restriction shall not
prohibit the Portfolio from purchasing futures contracts or options
(including options on futures contracts, but excluding options or futures
contracts on physical commodities) or from investing in securities of any
kind.

3. Industry Concentration. The Portfolio may not purchase
any security if, as a result, 25% or more of its total assets (taken at
current value) would be invested in the securities of issuers having their
principal business activities in the same industry. This limitation does
not apply to U.S. Government and Agency Securities. State and local
governments, their agencies and instrumentalities, including multi-state
agencies, are not considered part of any "industry."

4. Lending. The Portfolio may not lend any security or
make any other loan if, as a result, more than 33-1/3% of its total assets
(taken at current value) would be lent to other parties, except, in
accordance with its investment objective, policies, and limitations (i)
through the purchase of debt securities and (ii) by engaging in repurchase
agreements.

5. Real Estate. The Portfolio may not purchase real
estate unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit the Portfolio from
purchasing securities issued by entities or investment vehicles that own
or deal in real estate or interests therein, or instruments secured by
real estate or interests therein.

6. Senior Securities. The Portfolio may not issue senior
securities, except as permitted under the 1940 Act.

7. Underwriting. The Portfolio may not engage in the
business of underwriting securities of other issuers, except to the extent
that the Portfolio, in disposing of portfolio securities, may be deemed to
be an underwriter within the meaning of the 1933 Act.

- 10 -
<PAGE>

The non-fundamental investment policies and limitations of
Neuberger & Berman New York Insured Intermediate Portfolio are as follows:

1. Diversification. At the close of each quarter of the
Portfolio's taxable year, (i) not more than 25% of its total assets may be
invested in the securities of a single issuer and (ii) with regard to at
least 50% of its total assets, not more than 5% of its total assets may be
invested in the securities of a single issuer. These limitations do not
apply to U.S. Government and Agency Securities.

2. Illiquid Securities. The Portfolio may not purchase
any security if, as a result, more than 10% of its net assets would be
invested in illiquid securities. Illiquid securities include securities
that cannot be sold within seven days in the ordinary course of business
for approximately the amount at which the Portfolio has valued the
securities, such as repurchase agreements maturing in more than seven
days.

3. Unseasoned Issuers. The Portfolio currently does not
intend to purchase the securities of any issuer (other than securities
issued or guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of business enterprises
that, including predecessors, have a record of less than three years of
continuous operation. This restriction does not apply to asset-backed
securities.

4. Ownership of Portfolio Securities by Officers and
Trustees. The Portfolio may not purchase or retain the securities of any
issuer if, to the knowledge of N&B Management, those officers and trustees
of Managers Trust, and officers and directors of N&B Management who each
owns individually more than 1/2 of 1% of the outstanding securities of
such issuer, together own more than 5% of such securities.

5. Investments in Other Investment Companies. The
Portfolio may not purchase securities of other investment companies,
except to the extent permitted by the 1940 Act and in the open market at
no more than customary brokerage commission rates. This limitation does
not apply to securities received or acquired as dividends, through offers
of exchange, or as a result of a reorganization, consolidation, or merger.

6. Oil and Gas Programs. The Portfolio may not invest in
participations or other direct interests in oil, gas, or other mineral
exploration or development programs or leases.

- 11 -
<PAGE>

7. Borrowing. The Portfolio may not purchase securities
if outstanding borrowings, including any reverse repurchase agreements,
exceed 5% of its total assets.

8. Lending. Except for the purchase of debt securities
and engaging in repurchase agreements, the Portfolio may not make any
loans other than securities loans.

9. Margin Transactions. The Portfolio may not purchase
securities on margin from brokers or other lenders, except that the
Portfolio may obtain such short-term credits as are necessary for the
clearance of securities transactions. Margin payments in connection with
transactions in futures contracts and options on futures contracts shall
not constitute the purchase of securities on margin and shall not be
deemed to violate the foregoing limitation.

10. Short Sales. The Portfolio may not sell securities
short, unless it owns, or has the right to obtain without payment of
additional consideration, securities equivalent in kind and amount to the
securities sold. Transactions in futures contacts and options shall not
constitute selling securities short.

11. Real Estate Limited Partnerships. The Portfolio may not
invest in real estate limited partnerships.

Investment Programs of Both Neuberger & Berman Municipal Money Portfolio
and Neuberger & Berman Municipal Securities Portfolio
------------------------------------------------------------------------

Neuberger & Berman Municipal Money Portfolio and Neuberger &
Berman Municipal Securities Portfolio invest in municipal obligations
which are issued by or on behalf of states (as used herein, including the
District of Columbia), territories, and possessions of the United States
and their political subdivisions, agencies, and instrumentalities, and
which pay interest that is exempt from federal income tax.

Ordinarily, Neuberger & Berman Municipal Money Portfolio
invests only in high-quality municipal obligations with remaining
maturities of 397 days or less. Neuberger & Berman Municipal Securities
Portfolio, as a fundamental policy, invests at least 80%, and intends to
invest substantially all, of its total assets in municipal obligations.
Each Portfolio, however, temporarily may invest any part of its total
assets in taxable securities to maintain a "defensive" posture when, in
N&B Management's opinion, market conditions warrant. See "Investment
Information -- Investment in Taxable Securities."

- 12 -
<PAGE>

Investment Program of Neuberger & Berman Municipal Securities Portfolio.
------------------------------------------------------------------------

Neuberger & Berman Municipal Securities Portfolio invests in
(1) municipal bonds, notes, and instruments receiving any of the three
highest ratings assigned by Standard & Poor's ("S&P"), Moody's Investors
Service, Inc. ("Moody's"), or any other nationally recognized statistical
rating organization ("NRSRO"), (2) unrated municipal obligations that N&B
Management determines are of comparable quality to rated municipal
obligations of the same type in which the Portfolio may invest, and
(3) municipal obligations backed by the full faith and credit of the
United States. During periods of rising or falling interest rates, the
Portfolio may seek to hedge all or part of its portfolio against related
changes in securities prices by buying or selling interest-rate futures
contracts (with bond index futures contracts, "Futures" or "Futures
Contracts") and options thereon. See "Investment Information -- Futures
Contracts and Options Thereon (Neuberger & Berman Municipal Securities
Portfolio and Neuberger & Berman New York Insured Intermediate
Portfolio)."

The dollar-weighted average maturity of the Portfolio's
investment portfolio will not exceed twelve years. For this purpose,
variable or floating rate securities are deemed to mature at their next
interest adjustment date, and securities accompanied by a put are deemed
to mature at the next put exercise date. See "Investment Information --
Variable or Floating Rate Securities; Demand Features." Positions in
Futures Contracts (long or short) are reflected in average portfolio
maturity on the basis of the maturities of the securities comprising the
municipal securities index or securities underlying the Futures Contracts.

Investment Program of Neuberger & Berman New York Insured Intermediate
Portfolio
----------------------------------------------------------------------

Generally, Neuberger & Berman New York Insured Intermediate
Portfolio invests at least 65% of its total assets in (1) municipal
obligations issued by the State of New York, its authorities, multi-state
authorities, municipalities, counties, and any other political
subdivisions (including New York City), or (2) municipal obligations
issued by territories or possessions of the U.S., such as the Virgin
Islands, Guam, and Puerto Rico, that are exempt from federal income tax
and New York State and New York City personal income taxes (collectively,
"New York Municipal Securities") that are insured as to the timely payment
of principal and interest by private insurance companies having the
highest rating available from S&P, Moody's or any other NRSRO at the time
of purchase ("Municipal Bond Insurance"). The Portfolio invests the
remainder, up to 35% of its total assets, in (1) uninsured New York

- 13 -
<PAGE>

Municipal Securities that receive any of the four highest ratings assigned
by at least one NRSRO, (2) unrated municipal obligations that N&B
Management determines are of comparable quality to rated municipal
obligations of the same type in which the Portfolio may invest and (3)
other instruments described in the Prospectus or this SAI. During
seasonal variations or other shortages in the supply of suitable New York
Municipal Securities or when, in N&B Management's opinion, market
conditions warrant, the Portfolio may invest in municipal securities which
are exempt from federal income tax, but not New York State and New York
City personal income taxes, or may invest in high-quality taxable U.S.
Government obligations. See "Investment Information--Investment in
Taxable Securities." However, as a fundamental policy, the Portfolio
will, under normal conditions, invest at least 80% of its total assets in
municipal obligations. The remaining 20% may invest in non-municipal
securities, including U.S. Government and Agency Securities, bank
obligations, repurchase agreements, securities loans, commercial paper
receiving the highest rating from S&P or Moody's, put and call options,
and futures and options on futures.

For temporary defensive purposes only, the Portfolio may
invest up to 100% of its total assets in cash that is not earning interest
and in U.S. Government and Agency Securities, the interest on which may be
subject to federal income tax and New York State and New York City
personal income taxes. During periods of rising or falling interest
rates, the Portfolio may seek to hedge all or part of its portfolio
against related changes in securities prices by buying or selling Futures
Contracts and options thereon. See "Investment Information -- Futures
Contracts and Options Thereon (Neuberger & Berman Municipal Securities
Portfolio and Neuberger & Berman New York Insured Intermediate
Portfolio)."

The dollar-weighted average maturity of the Portfolio's
investment portfolio will not exceed ten years. For this purpose,
variable or floating rate securities are deemed to mature at their next
interest adjustment date, and securities accompanied by a put are deemed
to mature at the next put exercise date. See "Investment Information --
Variable or Floating Rate Securities; Demand Features." Put and call
options, Futures Contracts (long or short), and options thereon are
reflected in average portfolio maturity on the basis of the maturities of
the securities comprising the municipal securities index or securities
underlying those instruments and the remaining life of the instruments.

Investment Approach of Neuberger & Berman Municipal Securities Portfolio
and Neuberger & Berman New York Insured Intermediate Portfolio.
------------------------------------------------------------------------

Neuberger & Berman Municipal Securities Portfolio is managed
in accordance with an investment approach developed by its sub-adviser,

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<PAGE>

Neuberger & Berman, L.P. ("Neuberger & Berman"), and currently used by
that firm in managing taxable and tax-exempt fixed income portfolios with
an aggregate value of approximately $11.1 billion. In the tax-exempt
area, the approach is based, in part, on market studies that compared the
yield and price volatility of short- to intermediate-term municipal
obligations -- securities having maturities of five to ten years -- with
the yield and price volatility of long-term municipal bonds -- securities
having maturities of up to thirty years. The studies showed that munici-
pal obligations with maturities of five to ten years have generally
produced from 80% to 90% of the yield but have been subject to only one-
half to two-thirds of the price volatility of 30-year municipal bonds.
The average maturity of the Portfolio's portfolio is actively managed and
may vary from as long as twelve years to as short as one year.

Municipal Bond Insurance (Neuberger & Berman New York Insured Intermediate
Portfolio).
--------------------------------------------------------------------------

Neuberger & Berman New York Insured Intermediate Portfolio
will purchase insured bonds only if, at the time of purchase, they have
the highest credit rating available from an NRSRO. For an insured bond to
receive the highest credit rating, an NRSRO must rate the claims-paying
ability or financial strength of the insurance company in the highest
category. There is, of course, no guarantee that the insurance company
will continue to receive the highest credit rating or that it will be able
to meet its obligation to the Portfolio. See Appendix A for a summary of
the highest ratings of Municipal Bond Insurance companies by S&P and
Moody's.

The Municipal Bond Insurance covering the New York Municipal
Securities purchased by the Portfolio may be either new issue insurance
("New Issue Insurance") or secondary insurance ("Secondary Insurance").
New Issue Insurance is purchased by the issuer of the municipal security
at the time of the original issuance of such security. Secondary
Insurance may be purchased by the selling broker, a prior investor or the
Portfolio after the municipal security is issued. Generally, the
Portfolio expects to purchase New York Municipal Securities that have been
insured by a prior party.

The Portfolio may purchase bonds insured by AMBAC Indemnity
Corporation ("AMBAC"), Municipal Bond Investors Assurance Corporation
("MBIA Corp."), Financial Guaranty Insurance Company ("FGIC"), or any
other insurance company that has received the highest credit rating from
at least one NRSRO. The Portfolio may invest more than 25% of its assets
in bonds insured by the same insurance company. AMBAC, FGIC and MBIA
Corp. collectively hold a market share in excess of 90% of the Municipal
Bond Insurance market.

- 15 -
<PAGE>

AMBAC is a wholly-owned subsidiary of AMBAC Inc. and is
licensed to do insurance business in all 50 states, the District of
Columbia, and Puerto Rico. AMBAC is the successor to the business of the
oldest Municipal Bond Insurance company, which wrote the first Municipal
Bond Insurance policy in 1971. AMBAC is a Wisconsin-domiciled stock
insurance corporation with admitted assets of approximately $2,060,000,000
(unaudited) and statutory capital of approximately $1,178,000,000
(unaudited) as of June 30, 1994. Statutory capital consists of AMBAC
Indemnity's policyholders' surplus and statutory contingency reserve.
AMBAC primarily provides New Issue Insurance.

MBIA Corp. is a wholly-owned subsidiary of MBIA Inc. and is
licensed to do insurance business in all 50 states, the District of
Columbia, Guam, the Northern Mariana Islands, the U.S. Virgin Islands, and
Puerto Rico. MBIA Corp. primarily provides New Issue Insurance and
Secondary Insurance. It also provides surety bonds for debt service
reserve funds. MBIA Corp. also insures other types of obligations, such
as asset-backed securities, debt of investor-owned utilities and municipal
deposits in approved financial institutions. As of September 30, 1995
MBIA Corp. had admitted assets of $3.7 billion (unaudited), total
liabilities of $2.5 billion (unaudited), and total capital and surplus of
1.2 billion (unaudited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities. As
of December 31, 1994, MBIA Corp. had admitted assets of $3.4 billion
(audited), total liabilities of $2.3 billion (audited), and total capital
and surplus of $1.1 billion (audited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance
regulatory authorities.

FGIC is a wholly-owned subsidiary of FGIC Corporation, which
is a wholly-owned subsidiary of General Electric Capital Corporation.
FGIC writes New Issue Insurance and Secondary Insurance on bonds held in
unit investment trusts and mutual funds. FGIC also guarantees certain
structured debt issues in the taxable market. As of June 30, 1994, the
total capital and surplus of FGIC was approximately $850,000,000.
Approximately 90% of the business written to date by FGIC has been
Municipal Bond Insurance.

Theresa A. Havell and Clara Del Villar - Co-Portfolio Managers of the
Portfolios
---------------------------------------------------------------------

Ms. Del Villar notes: "NEUBERGER & BERMAN MUNICIPAL MONEY
PORTFOLIO invests only in high-quality, short-term municipal obligations
and uses the amortized cost method of valuation to enable Municipal Money
to maintain a constant share price of $1.00. Because this Portfolio
invests exclusively in short-term municipal obligations, Municipal Money's

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<PAGE>

shareholders avoid the market fluctuations and risk that come with
investment in longer-term municipal bonds and still receive dividends that
are exempt from federal income tax."

Ms. Del Villar states: "NEUBERGER & BERMAN MUNICIPAL
SECURITIES PORTFOLIO seeks high tax-exempt current income at reduced risk
by investing primarily in short- to intermediate-term municipal
obligations. This Portfolio also seeks to reduce the risk to principal.
Based on our studies, we've determined that the risk-reward tradeoffs in
the municipal bond market occur a little further out on the yield curve.
So the average maturity in this Portfolio is managed accordingly. We also
actively manage this Portfolio to try to enhance the investors' total
return on a risk-adjusted basis in both bull and bear markets. Of course,
we can't guarantee such returns."

Ms. Del Villar notes: "NEUBERGER & BERMAN NEW YORK INSURED
INTERMEDIATE PORTFOLIO seeks high triple tax-exempt current income at
reduced risk by maintaining a dollar-weighted average maturity of ten
years or less. The Portfolio also seeks to reduce the risk to principal
by predominately purchasing insured New York Municipal Securities. The
Portfolio seeks to maximize total return by identifying municipal
obligations that are undervalued due to temporary dislocations of supply
and demand. Also, the Portfolio is actively managed to enhance the
investments' return through optional yield curve allocation."

Types of Municipal Obligations
------------------------------

The tax-exempt status of any issue of municipal obligations
is determined on the basis of an opinion of the issuer's bond counsel at
the time the obligations are issued. Except as otherwise provided in the
Prospectus and this SAI, the Portfolios' investment portfolios may consist
of any combination of the types of municipal obligations described below,
and others as set forth in the Prospectus or in this SAI. The proportions
in which each Portfolio invests in various types of municipal obligations
will vary from time to time.

General Obligation Bonds. A general obligation bond is
backed by the governmental issuer's pledge of its full faith and credit
and power to raise taxes for payment of principal and interest under the
bond. The taxes or special assessments that can be levied for the payment
of debt service may be limited or unlimited as to rate or amount. Many
jurisdictions face political and economic constraints on their ability to
raise taxes. These limitations and constraints may adversely affect the
ability of the governmental issuer to meet its obligations under the bonds
in a timely manner.

- 17 -
<PAGE>

Revenue Bonds. Revenue bonds are issued to finance a wide
variety of public projects, including (1) housing, (2) electric, gas,
water, and sewer systems, (3) highways, bridges, and tunnels, (4) port and
airport facilities, (5) colleges and universities, and (6) hospitals. In
some cases, repayment of these bonds depends upon annual legislative
appropriations; in other cases, if the issuer is unable to meet its legal
obligation to repay the bond, repayment becomes an unenforceable "moral
commitment" of a related governmental unit (subject, however, to
appropriations). Revenue bonds issued by housing finance authorities are
backed by a wider range of security, including partially or fully insured
mortgages, rent subsidized and/or collateralized mortgages, and net
revenues from housing projects.

Most industrial development bonds are revenue bonds, in that
principal and interest are payable only from the net revenues of the
facility financed by the bonds. These bonds generally do not constitute a
pledge of the general credit of the public or private operator or user of
the facility. In some cases, however, payment may be secured by a pledge
of real and personal property constituting the facility.

MUNICIPAL LEASE OBLIGATIONS (NEUBERGER & BERMAN MUNICIPAL
SECURITIES PORTFOLIO AND NEUBERGER & BERMAN NEW YORK INSURED INTERMEDIATE
PORTFOLIO). These obligations, which may take the form of a lease, an
installment purchase, or a conditional sale contract, are issued by a
state or local government or authority to acquire land and a wide variety
of equipment and facilities. A Portfolio will usually invest in municipal
lease obligations through certificates of participation ("COPs"), which
give the Portfolio a specified, undivided interest in the obligation. For
example, a COP may be created when long-term revenue bonds are issued by a
governmental corporation to pay for the acquisition of property. The
payments made by the municipality under the lease are used to repay
interest and principal on the bonds. Once these lease payments are
completed, the municipality gains ownership of the property. These
obligations are distinguished from general obligation or revenue bonds in
that they typically are not backed fully by the municipality's credit, and
their interest may become taxable if the lease is assigned. The lease
subject to the transaction usually contains a "non-appropriation" clause.
A non-appropriation clause states that, while the municipality will use
its best efforts to make lease payments, the municipality may terminate
the lease without penalty if the municipality's appropriating body does
not allocate necessary funds. Such termination would result in a
significant loss to a Portfolio.

Municipal Notes. Municipal notes include the following:
---------------

1. Project notes are issued by local issuing
agencies created under the laws of a state, territory, or possession of
the United States to finance low-income housing, urban redevelopment, and
similar projects. These notes are backed by an agreement between the
local issuing agency and the Department of Housing and Urban Development
("HUD"). Although the notes are the primary obligations of the local

- 18 -
<PAGE>

issuing agency, the HUD agreement provides the full faith and credit of
the U.S. as additional security.

2. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of future seasonal tax revenues, such as from income, sales,
use, and business taxes, and are payable from these future revenues.

3. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as that available
under federal revenue-sharing programs. Because of proposed measures to
reform the federal budget and alter the relative obligations of federal,
state, and local governments, many revenue-sharing programs are in a state
of uncertainty.

4. Bond anticipation notes are issued to provide
interim financing until long-term bond financing can be arranged. In most
cases, the long-term bonds provide the funds for the repayment of the
notes.

5. Construction loan notes are sold to provide con-
struction financing. After completion of construction, many projects
receive permanent financing from the Federal National Mortgage Association
("FNMA" or "Fannie Mae") or the Government National Mortgage Association
("GNMA" or "Ginnie Mae").

6. Tax-exempt commercial paper is a short-term
obligation issued by state or local governments or their agencies to
finance seasonal working capital needs or as short-term financing in
anticipation of longer-term financing.

7. Pre-refunded and "escrowed" municipal bonds are
bonds with respect to which the issuer has deposited, in an escrow
account, an amount of securities and cash, if any, that will be sufficient
to pay the periodic interest on and principal amount of the bonds, either
at their stated maturity date or on the date the issuer may call the bonds
for payment. This arrangement gives the investment a quality equal to the
securities in the account, usually U.S. Government securities. The
Portfolios can also purchase bonds issued to refund earlier issues. The
proceeds of these refunding bonds are often used for escrow to support
refunding.

Zero Coupon Securities. Zero coupon securities are debt
obligations that do not entitle the holder to any periodic payment of
interest prior to maturity or that specify a future date when the
securities begin to pay current interest. Zero coupon securities are
issued and traded at a discount from their face amount or par value. This
discount varies depending on prevailing interest rates, the time remaining
until cash payments begin, the liquidity of the securities, and the
perceived credit quality of the issuer.

- 19 -
<PAGE>

The discount on zero coupon securities ("original issue
discount") is taken into account ratably by each Portfolio prior to the
receipt of any actual payments. Because each Fund must distribute
substantially all of its net income (including its pro rata share of its
corresponding Portfolio's tax-exempt original issue discount) to its
shareholders each year for income tax purposes (see "Additional Tax
Information -- Taxation of the Funds"), a Portfolio may have to dispose of
portfolio securities under disadvantageous circumstances to generate cash,
or may be required to borrow, to satisfy its corresponding Fund's
distribution requirements.

The market prices of zero coupon securities generally are
more volatile than the prices of securities that pay interest
periodically. Zero coupon securities are likely to respond to changes in
interest rates to a greater degree than other types of debt securities
having similar maturities and credit quality.

Tender Option Bonds (Neuberger & Berman Municipal Securities
Portfolio and Neuberger & Berman New York Insured Intermediate Portfolio).
Tender option bonds are created by coupling an intermediate- or long-term
fixed rate tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, the Portfolio effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. N&B Management considers the creditworthiness of the issuer of the
underlying bond, the custodian, and the third party provider of the tender
option. In certain instances, a sponsor may terminate a tender option if,
for example, the issuer of the underlying bond defaults on interest
payments.

Yield and Price Characteristics of Municipal Obligations
--------------------------------------------------------

Municipal obligations generally have the same yield and price
characteristics as other debt securities. Yields depend on a variety of
factors, including general conditions in the money and bond markets and,
in the case of any particular securities issue, its amount, maturity, and
rating. Market prices of fixed income securities usually vary upward or
downward in inverse relationship to market interest rates.

Municipal obligations with longer maturities tend to produce
higher yields. They are generally subject to potentially greater price

- 20 -
<PAGE>

fluctuations, and thus greater appreciation or depreciation in value, than
obligations with shorter maturities and lower yields. An increase in
interest rates generally will reduce the value of a Portfolio's
investments, whereas a decline in interest rates generally will increase
that value. The ability of each Portfolio to achieve its investment
objective also is dependent on the continuing ability of the issuers of
the municipal obligations in which the Portfolios invest (or, in the case
of industrial development bonds, the revenues generated by the facility
financed by the bonds or, in certain other instances, the provider of the
credit facility backing the bonds) to pay interest and principal when due.

Investment in Taxable Securities
--------------------------------

The types of taxable securities in which each Portfolio
temporarily may invest are limited to the following short-term (maturing
in one year or less from the time of purchase) fixed income securities:

U.S. Government and Agency Securities. U.S. Government and
Agency Securities are direct obligations of the U.S. Government, its
agencies and instrumentalities, and obligations issued or guaranteed by
U.S. Government-sponsored enterprises and federal agencies. Many agency
securities are not backed by the full faith and credit of the United
States.

Bank Obligations. Bank obligations include CDs, bankers'
acceptances, and other short-term debt obligations issued by U.S. banks
with total assets of $1 billion or more.

Repurchase Agreements. Repurchase agreements are agreements
under which a Portfolio purchases securities from a bank that is a member
of the Federal Reserve System or a securities dealer that agrees to
repurchase the securities from the Portfolio at a higher price on a
designated future date. Repurchase agreements generally are for a short
period of time, usually less than a week. No Portfolio may enter into a
repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would then be
invested in such repurchase agreements and other illiquid securities. A
Portfolio may enter into a repurchase agreement only if (1) the underlying
securities are of the type (excluding maturity limitations) that the
Portfolio's investment policies and limitations would allow it to purchase
directly, except that Neuberger & Berman Municipal Money Portfolio may
invest only in repurchase agreements with respect to securities rated in
the highest rating category by S&P, Moody's, or any other NRSRO, (2) the
market value of the underlying securities, including accrued interest, at
all times equals or exceeds the value of the repurchase agreement, and
(3) payment for the underlying securities is made only upon satisfactory

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<PAGE>

evidence that the securities are being held for the Portfolio's account by
its custodian or a bank acting as the Portfolio's agent.

Securities Loans. In order to realize income, each Portfolio
may lend portfolio securities with a value not exceeding 33-1/3% of its
total assets to banks, brokerage firms, or institutional investors judged
creditworthy by N&B Management. Borrowers are required continuously to
secure their obligations to return securities on loan from the Portfolio
by depositing collateral in a form determined to be satisfactory by the
Portfolio Trustees. The collateral, which must be marked to market daily,
must be equal to at least 100% of the market value of the loaned
securities, which will also be marked to market daily. N&B Management
believes the risk of loss on these transactions is slight because, if a
borrower were to default for any reason, the collateral should satisfy the
obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral
should the borrower fail financially.

Commercial Paper. Commercial paper is a short-term debt
security issued by a corporation, bank, municipality, or other issuer for
purposes such as financing current operations. Each Portfolio may invest
only in commercial paper receiving the highest rating from S&P (A-1) or
Moody's (P-1), or deemed by N&B Management to be of equivalent quality.

SWAP AGREEMENTS (NEUBERGER & BERMAN MUNICIPAL SECURITIES
TRUST AND NEW YORK INSURED INTERMEDIATE PORTFOLIO). To help enhance the
value of its portfolio or manage its exposure to different types of
investments, the Portfolio may enter into interest rate and mortgage swap
agreements and may purchase and sell interest rate "caps," "floors," and
"collars." In accordance with SEC staff requirements, the Portfolio will
segregate cash or liquid high-grade debt securities in an amount equal to
its obligations under swap agreements; when an agreement provides for
netting of the payments by the two parties, the Portfolio will segregate
only the amount of its net obligation, if any.

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<PAGE>

Additional Techniques for Purchasing and Selling Municipal Obligations and
Taxable Securities
--------------------------------------------------------------------------

The Portfolios' investments in municipal obligations and
taxable securities may take the form of the following types of
investments:

Variable or Floating Rate Securities; Demand and Put Features
-------------------------------------------------------------

Variable rate securities provide for automatic adjustment of
the interest rate at fixed intervals (e.g., daily, monthly, or semi-
annually); floating rate securities provide for automatic adjustment of
the interest rate whenever a specified interest rate index changes. The
interest rate on variable and floating rate securities (collectively,
"Variable Rate Securities") ordinarily is determined by reference to a
particular bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate
of return on commercial paper or bank CDs, an index of short-term tax-
exempt rates, or some other objective measure.

The Variable Rate Securities in which the Portfolios invest
are municipal obligations which frequently permit the holder to demand
payment of the obligations' principal and accrued interest at any time or
at specified intervals not exceeding one year. The demand feature usually
is backed by a credit instrument (e.g., a bank letter of credit) from a
creditworthy issuer and sometimes by municipal bond insurance from a
creditworthy insurer. Without these credit enhancements, the Variable
Rate Securities might not meet the Portfolios' quality standards.
Accordingly, in purchasing these securities, each Portfolio relies
primarily on the creditworthiness of the credit instrument issuer or the
insurer. Neither Neuberger & Berman Municipal Money Portfolio nor
Neuberger & Berman Municipal Securities Portfolio may invest more than 5%
of its total assets in securities backed by credit instruments from any
one issuer or by insurance from any one insurer (excluding securities that
do not rely on the credit instrument or insurance for their rating, i.e.,
stand on their own credit).

In calculating its maturity, each Portfolio is permitted to
treat certain Variable Rate Securities as maturing on a date prior to the
date on which principal is due to be paid. In applying such maturity
shortening devices, N&B Management considers whether the interest rate

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<PAGE>

reset is expected to cause the security to trade at approximately its par
value.

Purchases with a Standby Commitment to Repurchase
-------------------------------------------------

When a may Portfolio purchases municipal obligations, it also
may acquire a standby commitment obligating the seller to repurchase the
obligations at an agreed price on a specified date or within a specified
period. A standby commitment is the equivalent of a nontransferable "put"
option held by a Portfolio that terminates if the Portfolio sells the
obligations to a third party.

The Portfolios may enter into standby commitments only with
banks and (if permitted under the 1940 Act) securities dealers determined
to be creditworthy. A Portfolio's ability to exercise a standby
commitment depends on the ability of the bank or securities dealer to pay
for the obligations on exercise of the commitment. If a bank or
securities dealer defaults on its commitment to repurchase such
obligations, a Portfolio may be unable to recover all or even part of any
loss it may sustain from having to sell the obligations elsewhere.

Although none of the Portfolios currently intends to invest
in standby commitments, each reserves the right to do so. No Portfolio
will invest in standby commitments unless it receives an opinion of its
counsel or a ruling of the Internal Revenue Service ("Service")
satisfactory to the Portfolio Trustees that interest earned by the
Portfolio on municipal obligations subject to standby commitments is
exempt from federal income tax. No Portfolio will acquire standby
commitments with a view to exercising them when the exercise price exceeds
the current value of the underlying obligations; a Portfolio will do so
only to facilitate portfolio liquidity. By enabling a Portfolio to
dispose of municipal obligations at a predetermined price prior to
maturity, this investment technique allows the Portfolio to be fully
invested while preserving flexibility to make commitments for when-issued
securities, take advantage of other buying opportunities, and meet
redemptions.

Standby commitments are valued at zero in determining net
asset value ("NAV"). The maturity of municipal obligations purchased by a
Portfolio is not shortened by a standby commitment. Therefore, standby
commitments do not affect the average maturity of the Portfolio's
investment portfolio.

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<PAGE>

Participation Interests
-----------------------

The Portfolios may purchase from banks participation
interests in all or part of specific holdings of short-term municipal
obligations. Each participation interest is backed by an irrevocable
letter of credit issued by a selling bank determined to be creditworthy.
A Portfolio has the right to sell the participation interest back to the
bank, usually after seven days' notice, for the full principal amount of
its participation, plus accrued interest, but only (1) to provide
portfolio liquidity, (2) to maintain portfolio quality, or (3) to avoid
loss when the underlying municipal obligations are in default. Although
no Portfolio currently intends to acquire participation interests, each
reserves the right to do so in the future. No Portfolio will purchase
participation interests unless it receives an opinion of its counsel or a
ruling of the Service satisfactory to the Portfolio Trustees that interest
earned by the Portfolio on municipal obligations in which it holds
participation interests is exempt from federal income tax.

Restricted Securities and Rule 144A Securities
----------------------------------------------

The Portfolios may invest in restricted securities, which are
securities that may not be sold to the public without an effective
registration statement under the 1933 Act or, if they are unregistered,
may be sold only in a privately negotiated transaction or pursuant to an
exemption from registration. In recognition of the increased size and
liquidity of the institutional market for unregistered securities and the
importance of institutional investors in the formation of capital, the SEC
has adopted Rule 144A under the 1933 Act. Rule 144A is designed further
to facilitate efficient trading among institutional investors by
permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by a
Portfolio qualify under Rule 144A, and an institutional market develops
for those securities, the Portfolio likely will be able to dispose of the
securities without registering them under the 1933 Act. To the extent
that institutional buyers become, for a time, uninterested in purchasing
these securities, investing in Rule 144A securities could increase the
level of a Portfolio's illiquidity. N&B Management, acting under
guidelines established by the Portfolio Trustees, may determine that
certain securities qualified for trading under Rule 144A are liquid.

Where registration is required, a Portfolio may be obligated
to pay all or part of the registration expenses, and a considerable period
may elapse between the decision to sell and the time the Portfolio may be
permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the
Portfolio might obtain a less favorable price than prevailed when it
decided to sell. To the extent privately placed securities, including
Rule 144A securities, are illiquid, purchases thereof will be subject to

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<PAGE>

each Portfolio's 10% limit on investments in illiquid securities.
Restricted securities for which no market exists are priced at fair value
as determined in accordance with procedures approved and periodically
reviewed by the Portfolio Trustees.

When-Issued Transactions
------------------------

The Portfolios may purchase securities on a when-issued
basis. In such a transaction, a Portfolio commits to purchase securities
(to secure an advantageous price and yield at the time of the commitment)
and completes the purchase by making payment against delivery of the
securities at a future date. When a Portfolio purchases securities on a
when-issued basis, it will maintain in a segregated account with its
custodian, until payment is made, cash, U.S. Government and Agency
Securities, or other liquid, high-grade debt securities having an
aggregate market value (determined daily) at least equal to the amount of
its purchase commitments.

Futures Contracts and Options Thereon (Neuberger & Berman Municipal
Securities Portfolio and Neuberger & Berman New York Insured
Intermediate Portfolio).
--------------------------------------------------------------

Neuberger & Berman Municipal Securities and Neuberger &
Berman New York Insured Intermediate Portfolios may purchase and sell
Futures Contracts and options thereon in an attempt to hedge against
changes in the prices of municipal obligations resulting from expected
changes in prevailing interest rates. Because the futures markets may be
more liquid than the cash markets, the use of Futures permits a Portfolio
to enhance portfolio liquidity and maintain a defensive position without
having to sell portfolio securities. The Portfolios do not engage in
transactions in Futures or options thereon for speculation. The
Portfolios view investment in Futures and options thereon as a maturity
management device and/or a device to reduce risk and preserve total return
in an adverse interest rate environment.

A "sale" of a Futures Contract (or a "short" Futures
position) entails the assumption of a contractual obligation to deliver
the securities underlying the contract at a specified price at a specified
future time. A "purchase" of a Futures Contract (or a "long" Futures
position) entails the assumption of a contractual obligation to acquire
the securities underlying the contract at a specified price at a specified
future time. Certain Futures, including bond index Futures, are settled
on a net cash payment basis rather than by the sale and delivery of the
securities underlying the Futures.

- 26 -
<PAGE>

Futures positions. The margin deposit made by a Portfolio when it enters
into a Futures Contract ("initial margin") is intended to assure its
performance of the contract. If the price of the Futures Contract changes
-- increases in the case of a short (sale) position or decreases in the
case of a long (purchase) position -- so that the unrealized loss on the
contract causes the margin deposit not to satisfy margin requirements, the
Portfolio will be required to make an additional margin deposit ("vari-
ation margin"). However, if favorable price changes in the Futures
Contract cause the margin deposit to exceed the required margin, the
excess will be paid to the Portfolio. In computing its daily NAV, each
Portfolio marks to market the current value of its open Futures positions.
A Portfolio also must make margin deposits with respect to options on
Futures that it has written. If the futures commission merchant holding
the deposit goes bankrupt, the Portfolio could suffer a delay in
recovering its funds and could ultimately suffer a loss.

U.S. Futures are traded on exchanges that have been
designated as "contract markets" by the Commodity Futures Trading
Commission ("CFTC"), an agency of the U.S. Government; Futures
transactions must be executed through a futures commission merchant that
is a member of the relevant contract market. The exchange's affiliated
clearing organization guarantees performance of the contracts between the
clearing members of the exchange.

Although Futures Contracts by their terms may require the
actual delivery or acquisition of the underlying securities, in most cases
the contractual obligation is extinguished by being offset before the
expiration of the contract, without the parties having to make or take
delivery of the assets. A Futures position is offset by buying (to offset
an earlier sale) or selling (to offset an earlier purchase) an identical
Futures Contract calling for delivery in the same month.

Although each Portfolio believes that the use of Futures
Contracts will benefit it, if N&B Management's judgment about the general
direction of the markets is incorrect, a Portfolio's overall return would
be lower than if it had not entered into any such contracts. Moreover,
the spread between values in the cash and futures markets is subject to
distortion, due to differences in the character of those markets. Because
of the possibility of distortion, even a correct forecast of general mar-
ket trends by N&B Management may not result in a successful transaction.

- 27 -
<PAGE>

option, the assumption of offsetting Futures positions by the writer and
holder of the option is accompanied by delivery of the accumulated cash
balance in the writer's Futures margin account. That balance represents
the amount by which the market price of the Futures Contract at exercise
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option.

The prices of Futures are volatile and are influenced by,
among other things, actual and anticipated changes in interest rates,
which in turn are affected by fiscal and monetary policies and by national
and international political and economic events. At best, the correlation
between changes in prices of Futures and of the securities being hedged
can be only approximate. Decisions regarding whether, when, and how to
hedge involve skill and judgment. Even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or
interest rate trends, or lack of correlation between the futures markets
and the securities markets. Because of the low margin deposits required,
Futures trading involves an extremely high degree of leverage; as a
result, a relatively small price movement in a Futures Contract may result
in an immediate and substantial loss, or gain, to the investor. Losses
that may arise from certain Futures transactions are potentially
unlimited.

Most U.S. futures exchanges limit the amount of fluctuation
in the price of a Futures Contract or option thereon during a single
trading day; once the daily limit has been reached, no trades thereof may
be made on that day at a price beyond that limit. The daily limit governs
only price movements during a particular trading day, however; it thus
does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Prices can move to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing liquidation of Futures and option positions and subjecting
investors to substantial losses. If this were to happen with respect to a
position held by a Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.

PUT AND CALL OPTIONS (NEUBERGER & BERMAN NEW YORK INSURED
INTERMEDIATE PORTFOLIO). Neuberger & Berman New York Insured Intermediate
Portfolio may write or purchase put and call options on municipal
securities and other securities. Generally, the purpose of writing and
purchasing these options is to reduce the effect of price fluctuations of
securities held by the Portfolio on the Portfolio's and its corresponding
Fund's NAVs. The Portfolio may also write covered call options to earn
premium income.

The obligation under any option terminates upon expiration of
the option or, at an earlier time, when the writer offsets the option by

- 28 -
<PAGE>

entering into a "closing purchase transaction" to purchase an option of
the same series. If an option is purchased by the Portfolio and is never
exercised, the Portfolio will lose the entire amount of the premium paid.

When the Portfolio purchases a call option, it pays a premium
for the right to purchase a security from the writer at a specified price
until a specified date. The Portfolio would purchase a call option to
protect against an increase in the price of securities it intends to
purchase or to offset a previously written call option.

- 29 -
<PAGE>

the exercise price, which may be higher than the current market price of
the security. If a call or put option that the Portfolio has written
expires unexercised, the Portfolio will realize a gain in the amount of
the premium; however, in the case of a call option, that gain may be
offset by a decline in the market value of the underlying security during
the option period. If the call option is exercised, the Portfolio will
realize a gain or loss from the sale of the underlying security.

- 30 -
<PAGE>

premium received by the Portfolio for writing a covered call or put option
is recorded as a liability on the Portfolio's statement of assets and
liabilities. This liability is adjusted daily to the option's current
market value, which is the sales price on the option's last reported trade
on that day before the time the Portfolio's NAV is computed or, in the
absence of any trades thereof on that day, the mean between the closing
bid and ask prices.

- 31 -
<PAGE>

GENERAL CONSIDERATIONS INVOLVING FUTURES, OPTIONS THEREON,
AND OPTIONS ON SECURITIES (COLLECTIVELY, "HEDGING
INSTRUMENTS")

Futures Contracts and Options on Futures Contracts. To the
extent a Portfolio sells or purchases Futures Contracts and/or writes
options thereon other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums on these positions
(excluding the amount by which options are "in-the-money") may not exceed
5% of the Portfolio's net assets.

Risks Involved in Using Hedging Instruments. The primary
risks in using Hedging Instruments are (1) imperfect correlation or no
correlation between changes in market value of the securities held or to
be acquired by a Portfolio and changes in market value of Hedging
Instruments; (2) possible lack of a liquid secondary market for Hedging
Instruments and the resulting inability to close out Hedging Instruments
when desired; (3) the fact that the skills needed to use Hedging
Instruments are different from those needed to select a 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 a
Portfolio to purchase or sell a portfolio security at a time that would
otherwise be favorable for it to do so, or the possible need for a
Portfolio to sell a portfolio security at a disadvantageous time, due to
its need to maintain "cover" or to segregate securities in connection with
its use of Hedging Instruments. N&B Management intends to reduce the risk
of imperfect correlation by investing only in those Hedging Instruments
whose behavior is expected to resemble or offset that of a Portfolio's
underlying securities. N&B Management intends to reduce the risk that a
Portfolio will be unable to close out Hedging Instruments by entering into
such transactions only if N&B Management believes there will be an active
and liquid secondary market. The Hedging Instruments used by the
Portfolios are generally considered "derivatives." There can be no
assurance that a Portfolio's use of Hedging Instruments will be
successful.

Neuberger & Berman Municipal Securities and Neuberger &
Berman New York Insured Intermediate Portfolios' use of Hedging
Instruments may be limited by provisions of the Internal Revenue Code of

- 32 -
<PAGE>

1986, as amended ("Code"), with which each of those Portfolios must comply
if its corresponding Fund is to continue to qualify as a regulated
investment company ("RIC"). See "Additional Tax Information."

Cover for Hedging Instruments. Neuberger & Berman Municipal
Securities and Neuberger & Berman New York Insured Intermediate Portfolios
will comply with SEC guidelines regarding cover for Hedging Instruments
and, if the guidelines so require, set aside in a segregated account with
its custodian cash, U.S. Government or Agency Securities, or other liquid,
high-grade debt securities in the prescribed amount. Securities held in a
segregated account cannot be sold while the Futures or option strategy
covered by those securities is outstanding, unless they are replaced with
other suitable assets. As a result, segregation of a large percentage of
a Portfolio's assets could impede portfolio management or the Portfolio's
ability to meet current obligations. A Portfolio may be unable promptly
to dispose of assets which cover, or are segregated with respect to, an
illiquid Futures or options position; this inability may result in a loss
to the Portfolio.

Reverse Repurchase Agreements
-----------------------------

In a reverse repurchase agreement, a Portfolio sells
portfolio securities subject to its agreement to repurchase the securities
at a later date for a fixed price reflecting a market rate of interest;
these agreements are considered borrowings for purposes of the Portfolios'
investment policies and limitations concerning borrowings. While a
reverse repurchase agreement is outstanding, a Portfolio will maintain
with its custodian in a segregated account cash, U.S. Government or Agency
Securities or other liquid, high-grade debt securities, marked to market
daily, in an amount at least equal to the Portfolio's obligations under
the agreement. There is a risk that the contra-party to a reverse
repurchase agreement will be unable or unwilling to complete the
transaction as scheduled, which may result in losses to the Portfolio.

Risks of Fixed Income Securities
--------------------------------

Subsequent to its purchase by a Portfolio, an issue of debt
securities may cease to be rated or its rating may be reduced, so that the

- 33 -
<PAGE>

securities would not be eligible for purchase by that Portfolio. In such
a case, N&B Management will engage in an orderly disposition of the
downgraded securities to the extent necessary to ensure that Neuberger &
Berman Municipal Securities or Neuberger & Berman New York Insured
Intermediate Portfolio's holdings of such securities will not exceed 5% of
its net assets. With respect to Neuberger & Berman Municipal Money
Portfolio, N&B Management will consider the need to dispose of such
securities in accordance with the requirements of Rule 2a-7 under the 1940
Act.

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<PAGE>

PERFORMANCE INFORMATION

Each Fund's performance figures are based on historical
earnings and are not intended to indicate future performance. The yield
and total return of each Fund will vary. The share prices of Municipal
Securities and New York Insured Intermediate will vary, and an investment
in either of these Funds, when redeemed, may be worth more or less than an
investor's original cost.

Yield Calculations
------------------

Municipal Money may advertise its "current yield" and
"effective yield" in the financial press and other publications. The
Fund's current yield is based on the return for a recent seven-day period
and is computed by determining the net change (excluding capital changes)
in the value of a hypothetical account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the
value of the account at the beginning of the base period. The result is a
"base period return," which is then annualized -- that is, the amount of
income generated during the seven-day period is assumed to be generated
each week over a 52-week period -- and shown as an annual percentage of
the investment.

The effective yield of Municipal Money is calculated simi-
larly, but the base period return is assumed to be reinvested. The
assumed reinvestment is calculated by adding 1 to the base period return,
raising the sum to a power equal to 365 divided by seven, and subtracting
one from the result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1

For the seven calendar days ended October 31, 1995, the
current yield and effective yield of Municipal Money were 3.35% and 3.41%,
respectively.

Each of Municipal Securities and New York Insured
Intermediate may advertise its "yield" based on a 30-day period. This
yield is computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last day
of the period. The result then is annualized and shown as an annual
percentage of the investment. For the 30-day period ended October 31,
1995, the annualized yields of Municipal Securities and New York Insured
Intermediate were 4.11% and 3.98%, respectively.

- 35 -
<PAGE>

Tax Equivalent Yield
--------------------

Each of Municipal Money and Municipal Securities may
advertise a "tax equivalent yield" that reflects the taxable yield that an
investor subject to the highest marginal rate of federal income tax
(currently 39.6%) would have had to receive in order to realize the same
level of after-tax yield that an investment in a Fund produced. Tax
equivalent yield is calculated according to the following formula:

Tax Equivalent Yield = Y1 + Y2
----
1-MR

where Y1 equals that portion of a Fund's current or effective yield that
is not subject to federal income tax, Y2 equals that portion of the Fund's
current or effective yield that is subject to that tax, and MR equals the
highest marginal federal tax rate.

For example, if the tax-free yield is 4%, there is no income
subject to federal income tax, and the maximum tax rate is 39.6%, the
computation is:

4% divide (1 - .396) = 4 divide .604 = 6.62% Tax Equivalent Yield

In this example, the after-tax yield will be lower than the 4% tax-free
investment if available taxable yields are below 6.62%; conversely, the
taxable investment will provide a higher after-tax yield, when taxable
yields exceed 6.62%. The tax equivalent current yield and tax-equivalent
effective yield of Municipal Money for the 7-day period ended October 31,
1995, were 5.55% and 5.70%, respectively. The tax-equivalent yield of
Municipal Securities for the 30-day period ended that date was 6.80%,
assuming a marginal tax rate of 39.4%.

The use of a 4% yield in these examples is for illustrative
purposes only and is not indicative of the Funds' future performance.

New York Insured Intermediate also may advertise a "tax
equivalent yield" that reflects the taxable yield that an investor subject
to the highest marginal rates of federal individual, and New York State
and New York City personal, income taxes (currently totaling 46.6%) would
have had to receive in order to realize the same level of after-tax yield
that an investment in the Fund produced. This tax-equivalent yield is
calculated by dividing the Fund's yield (calculated as described above) by
the decimal resulting from subtracting the combined maximum income tax
rate from one.

- 36 -
<PAGE>

For example, if the tax-free yield is 4%, there is no income subject
to federal income tax, and the maximum combined tax rate is 46.6%, the
computation is:

4 divide (1 - .466) = 4 divide .534 = 7.49% Tax-Equivalent Yield

In this example, the after-tax yield will be higher from the 4% tax-free
investment if available taxable yields are below 7.49%; conversely, the
taxable investment will provide a higher after-tax yield when taxable
yields exceed 7.49%. This example assumes that all of the Fund's
dividends are exempt from federal income tax and New York State and New
York City personal income taxes.

The tax-equivalent yield of New York Insured Intermediate for
the 30-day period ended October 31, 1995 was 7.49%, assuming a combined
tax rate of 46.6%.

Total Return Computations
-------------------------

Municipal Securities and New York Insured Intermediate may
advertise certain total return information. An average annual compounded
rate of return ("T") may be computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of time ("n") according to the formula:

n
P (1+T) = ERV

Average annual total return smooths out year-to-year
variations and, in that respect, differs from actual year-to-year results.

For the one- and five-year periods ended October 31, 1995,
and the period from July 9, 1987 (commencement of operations) through
October 31, 1995, the average annual total returns for Municipal
Securities and its predecessor were +10.35%, +6.72%, and +6.70%,
respectively. If an investor had invested $10,000 in that predecessor's
shares on July 9, 1987, and had reinvested all distributions and income
dividends, the NAV of that investor's holdings would have been $17,141 on
October 31, 1995.

For the one-year period ended October 31, 1995 and for the
period from February 1, 1994 (commencement of operations) to October 31,
1995, the average annual total returns for New York Insured Intermediate

- 37 -
<PAGE>

were +12.88% and +4.30%, respectively. If an investor had invested $10,000
in Fund shares on February 1, 1994, and had reinvested all distributions,
the NAV of that investor's holdings would have been $10,765 on October 31,
1995.

N&B Management has reimbursed the Funds and, in the case of
Municipal Securities, its predecessor for certain expenses during the
periods mentioned above, which has the effect of increasing yield and
total return.

Comparative Information
-----------------------

From time to time each Fund's performance may be compared
with:

(1) data (that may be expressed as rankings or ratings) published
by independent services or publications (including news-
papers, newsletters, and financial periodicals) that monitor
the performance of mutual funds, such as Lipper Analytical
Services, Inc., C.D.A. Investment Technologies, Inc.,
Wiesenberger Investment Companies Service, IBC/Donoghue's
Money Market Fund Report, Investment Company Data Inc.,
Morningstar Inc., Micropal Incorporated and quarterly mutual
fund rankings by Money, Fortune, Forbes, Business Week,
Personal Investor, and U.S. News & World Report magazines,
The Wall Street Journal, New York Times, Kiplingers Personal
Finance, and Barron's Newspaper, or

(2) recognized bond, stock, and other indices such as the
Municipal Bond Buyers Indices (and other indices of municipal
obligations), Shearson Lehman Bond Index, the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500 Index"), Dow
Jones Industrial Average ("DJIA"), S&P/BARRA Index, Russell
Index, and various other domestic, international, and global
indices and changes in the Consumer Price Index. The S&P 500
Index is a broad index of common stock prices, while the DJIA
represents a narrower segment of industrial companies. Each
assumes reinvestment of distributions and is calculated
without regard to tax consequences or the costs of investing.
Each Portfolio invests in different types of securities from
those included in these indices.

Each Fund's performance also may be compared from time to
time with the following specific indices and other measures of
performance:

- 38 -
<PAGE>

Municipal Money's performance may be compared with the
IBC/Donoghue's Tax-Free General Purpose Money Market Funds
average.

Municipal Securities' and New York Insured Intermediate's
performance may be compared with the Lehman Brothers 3-year
G.O. and 5-year G.O. Bond Indices, 3-year and 5-year general
obligation bonds, and the Lipper Intermediate Municipal Debt
Funds category.

Other Performance Information
-----------------------------

From time to time, information about a Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for its corresponding Fund. This information, for example,
may include the Portfolio's portfolio diversification by asset type.
Information used in Advertisements may include statements or illustrations
relating to the appropriateness of types of securities and/or mutual funds
that may be employed to meet specific financial goals, such as (1) funding
retirement, (2) paying for children's education, and (3) financially
supporting aging parents.

- 39 -
<PAGE>

compounding are as follows: at 7% and 12% annually, $1,000 will grow to
$1,967 and $3,106, respectively, at the end of ten years and $3,870 and
$9,646, respectively, at the end of twenty years. All these examples are
for illustrative purposes only and are not indicative of any Fund's
performance.

Information relating to how much you would have to earn with
a taxable investment in order to match the tax-exempt yield of a municipal
bond fund also may be included in Advertisements. The chart below
illustrates this.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Federal Tax Bracket 31.0% 36.0% 39.6%

Municipal Bond Yield 4.0% 4.0% 4.0%
Equivalent Taxable Yield 5.8% 6.3% 6.6%

</TABLE>

Information regarding the effects of automatic investment and
systematic withdrawal plans, and investing at market highs and/or lows
also may be included in Advertisements, if appropriate.

From time to time the investment philosophy of N&B Manage-
ment's founder, Roy R. Neuberger, may be included in the Funds'
Advertisements. This philosophy is described in further detail in "The
Art of Investment: A Conversation with Roy Neuberger," attached as
Appendix B to this SAI.

CERTAIN RISK CONSIDERATIONS

Although each Portfolio seeks to reduce risk by investing in
a diversified portfolio, diversification does not eliminate all risk.
There can, of course, be no assurance any Portfolio will achieve its
investment objective, and an investment in a Fund involves certain risks
that are described in the sections entitled "Investment Programs" and
"Description of Investments" in the Prospectus and "Investment
Information" in this SAI. In addition, each Portfolio's ability to
achieve its investment objective is dependent on the continuing ability of

- 40 -
<PAGE>

the issuers of municipal obligations in which the Portfolio invests (and,
in certain circumstances, of banks issuing letters of credit or insurers
issuing insurance backing those obligations) to pay interest and principal
when due.

The ratings of New York Municipal Securities and other
municipal securities by S&P, Moody's, and other NRSROs, as well as their
ratings of municipal bond insurers, represent their opinions as to the
quality of municipal obligations and companies they undertake to rate.
Ratings are not absolute standards of quality; consequently, municipal
obligations with the same maturity, coupon, and rating may have different
yields. There are variations in municipal obligations and in bond
insurers, both within a particular classification and between classifica-
tions. These variations result from numerous factors, each of which could
affect the obligation's or insurer's rating. See Appendix A to this SAI
for ratings by S&P and Moody's of municipal obligations and claims-paying
ability or financial strength of municipal bond insurers.

Unlike other types of investments, municipal obligations have
traditionally not been subject to the registration requirements of the
federal securities laws, although there have been proposals to provide for
such registration in the future. This lack of SEC regulation has
adversely affected the quantity and quality of information available to
the bond markets about issuers and their financial condition. The SEC has
responded to the need for such information by recently amending Rule 15c2-
12 of the Securities Exchange Act of 1934, as amended (the "Rule"). The
Rule requires that underwriters must reasonably determine that an issuer
of municipal securities undertakes in a written agreement for the benefit
of the holders of such securities to file with a nationally recognized
municipal securities information repository certain information regarding
the financial condition of the issuer and material events relating to such
securities. The SEC's intent in adopting the Rule was to provide holders
and potential holders of municipal securities with more adequate financial
information concerning issuers of municipal securities. The Rule provides
exemptions for issuances with a principal amount of less than $1,000,000
and certain privately placed issuances.

The federal bankruptcy statutes provide that, in certain
circumstances, political subdivisions and authorities of states may initi-
ate bankruptcy proceedings without prior notice to or consent of their
creditors, which proceedings could result in material and adverse changes
in the rights of holders of their obligations. In addition, there have
been lawsuits challenging the issuance of pollution control revenue bonds
and certain general obligation bonds of New York City and the validity of
their issuance under state or federal law that could ultimately affect the
validity of such bonds or the tax-free nature of the interest thereon.

The Tax Reform Act of 1986 eliminated the federal income tax
exemption for interest on certain municipal obligations and, as a result,

- 41 -
<PAGE>

has affected the availability of municipal obligations for investment by
each Portfolio. There can be no assurance that similar legislation
affecting the tax-exempt status of other municipal obligations will not be
enacted in the future. In the event such legislation is enacted, each
Fund and its corresponding Portfolio will reevaluate its investment
objective, policies and limitations.

The following information as to certain New York City
("City"), New York State ("State"), and Puerto Rico risk factors is given
to investors in view of the policy of Neuberger & Berman New York Insured
Intermediate Portfolio of concentrating its investments in New York
Municipal Securities. Such information constitutes only a brief
discussion, does not purport to be a complete description, and is based on
information from sources believed to be reliable, including official
statements relating to securities offerings of the State and municipal
issuers, and periodic publications by national ratings organizations.
Such information, however, has not been independently verified by
Neuberger & Berman New York Insured Intermediate Fund or Portfolio.

New York City
-------------

The City faces potential economic problems which could
seriously affect its ability to meet its financial obligations.

The national economic downturn which began in July 1990
adversely affected the City's economy, which had been declining since late
1989. The City's current four-year financial plan assumes that, after
noticeable improvements in the City's economy during calendar year 1994,
economic growth will slow in calendar years 1995 and 1996 with local
employment increasing modestly.

For each of the 1981 through 1995 fiscal years, the City
achieved balanced operating results as reported in accordance with then-
applicable generally accepted accounting principles ("GAAP"). The City
was required to close substantial budget gaps in recent years in order to
maintain balanced operating results. The City is currently trying to
close a substantial budget gap in fiscal year 1996 and projects
substantial budget gaps for each of the 1997 through 1999 fiscal years.
There can be no assurance that the City will continue to maintain a
balanced budget, as required by New York State law, without additional tax
or other revenue increases or reductions in City services or entitlement
programs, which could adversely affect the City's economic base.

Pursuant to the laws of the State, the City prepares a four-
year annual financial plan, which is reviewed and revised on a quarterly
basis and which includes the City's capital, revenue and expense

- 42 -
<PAGE>

projections and outlines proposed gap-closing programs for years with
projected budget gaps. The City submitted to the New York State Financial
Control Board ("Control Board") on July 11, 1995 a financial plan for the
1996 through 1999 fiscal years (the "Financial Plan") which was
subsequently reissued on November 29, 1995 to reflect actual receipts and
expenditures since the release of the Financial Plan. A modification to
the Financial Plan for the City's 1996 through 1999 fiscal years and a
preliminary budget for the City's 1997 fiscal year are expected to be
published in the beginning of 1996. The City's projections set forth in
the Financial Plan are based on various assumptions and contingencies
which are uncertain and which may not materialize. Changes in major
assumptions could significantly affect the City's ability to balance its
budget as required by State law and meet its annual cash flow and
financing requirements.

From 1975 to 1986, the City's financial condition was subject
to oversight and review by the Control Board. As of 1986, the Control
Board's supervisory power was suspended due to the City's satisfaction of
certain statutory conditions required under the Financial Emergency Act
("Financial Emergency Act"). The City is still required to submit its
four-year financial plan to the Control Board for the Control Board's
limited review until the expiration of the Financial Emergency Act on July
1, 2008.

In 1975, S&P suspended its A rating of City bonds. This
suspension remained in effect until March 1981, at which time the City
received an investment grade rating of BBB from S&P. On July 2, 1985, S&P
revised its rating of City bonds upward to BBB+ and on November 19, 1987,
to A-. On January 17, 1995, S&P placed the City's general obligation
bonds on CreditWatch with negative implications. On July 10, 1995, S&P
revised downward its rating in City general obligation bonds from A- to
BBB+ and removed City bonds from CreditWatch. Moody's ratings of City
bonds were revised in November 1981 from B (in effect since 1977) to Ba1,
in November 1983 to Baa, in December 1985 to Baa1, in May 1988 to A and
again in February 1991, to Baa1. Since July 15, 1993, Fitch has rated
City bonds A-. On July 12, 1995, Fitch stated that the City's credit
trend remains "declining."

New York State
--------------

As of December 15, 1995, the State's general operating fund
("General Fund"), the major operating fund of the State, projects a
positive margin of $172 million. In addition, the State's economy, as
measured by employment, started to recover near the start of the 1993
calendar year, and the State completed its 1994 fiscal year with a cash-
basis balanced budget in the General Fund.

- 43 -
<PAGE>

The State's 1995-1996 Financial Plan projects a balanced
General Fund. The State's second quarterly update which was released on
October 27, 1995, projects continued balance in the State's 1995-1996
Financial Plan. The State Division of the Budget, however, cautioned that
these projections were subject to various risks, including current tax
regulation under consideration by Congress and the President. It also has
been reported that the State could face a revenue shortfall for its 1995-
1996 fiscal year, and for fiscal year 1996-1997. The Governor has
proposed closing the 1996-1997 fiscal year imbalance primarily through
General Fund expenditure reductions. The State Division of Budget also
predicts budget gaps for fiscal years 1997-1998 and 1998-1999 of $1.4
billion and $2.5 billion, respectively. As a result of such budget gaps,
the State would be required to take actions to increase receipts and/or
reduce disbursements from current projected levels. The Governor
submitted a proposed budget for the State's 1996-1997 fiscal year on
December 15, 1995. There can be no assurances that the Budget will be
enacted before April 1, 1996.

There can be no assurance that the State's economy will not
experience worse-than-predicted results in the 1995-1996 fiscal year, or
that the State will not face substantial budget gaps in the future. Such
incidents could cause material and adverse effects on the State's
projections of receipts and disbursements.

New York State's economy is expected to expand modestly
during 1996, but slower than during 1995. On an average annual basis, the
State's employment growth will be about half the rate estimated for 1995.
State personal income and wages are expected to record moderate gains in
1996.

Certain State agencies and local governments require State
assistance to meet their financial obligations. The ability of the State
to meet its own obligations or to obtain additional financing could be
adversely affected if there is an increased need for assistance by State
agencies and local governments.

On June 6, 1990, Moody's changed its ratings on all of the
State's outstanding general obligation bonds from A1 to A. On March 26,
1990 and January 13, 1992, S&P changed its ratings on all of the State's
outstanding general obligation bonds from AA- to A and from A to A-,
respectively.

Puerto Rico
-----------

- 44 -
<PAGE>

The economy of Puerto Rico is closely linked with that of the
U.S. and will depend on several factors, including the condition of the
U.S. economy, the exchange rate for the U.S. dollar, the price stability
of oil imports, and interest rates. Businesses may enjoy a federal tax
advantage from locating certain of their operations in Puerto Rico.
However, this program may be phased out over the next several years, with
uncertain effect on the Puerto Rican economy.

TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
Name, Address Positions Held Principal
and Age(1) With the Trusts Occupation(s) (2)
------------- --------------- -----------------

<S> <C> <C>
John Cannon (66) Trustee of each Trust President, AMA Investment Advisers,
CDC Associates, Inc. Inc. (registered investment adviser)
620 Sentry Parkway (1976 - 1991); Senior Vice President
Suite 220 AMA Investment Advisers, Inc. (1991-
Blue Bell, PA 19422 1993); President of AMA Family of
Funds (investment companies) (1976 -
1991); Chairman and Treasurer of CDC
Associates, Inc. (registered
investment adviser) (1993 - present)

Charles DeCarlo (74) Trustee of each Trust President Emeritus of Sarah Lawrence
33 West 67th Street College; Chief Executive Officer of
New York, NY 10023 Xicon Systems (animation company).

Stanley Egener* (61) Chairman of the Board, Partner of Neuberger & Berman;
Chief Executive Officer, President and Director of N&B Manage-
and Trustee of each Trust ment; Chairman of the Board, Chief
Executive Officer and Trustee of
eight other mutual funds for which
N&B Management acts as investment
manager or administrator.

- 45 -
<PAGE>

Name, Address Positions Held Principal
and Age(1) With the Trusts Occupation(s) (2)
------------- --------------- -----------------

Theresa A. Havell* (49) President and Trustee of Partner of Neuberger & Berman; Vice
each Trust President and Director of N&B Manage-
ment; President and Trustee of one
other mutual fund for which N&B
Management acts as administrator.
Barry Hirsch (62) Trustee of each Trust Senior Vice President, Secretary, and
Loews Corporation General Counsel of Loews Corporation
667 Madison Avenue (diversified financial corporation).
7th Floor
New York, NY 10021

Robert A. Kavesh (68) Trustee of each Trust Professor of Finance and Economics at
110 Blecker Street Stern School of Business, New York
Apt. 24B University; Director of Del
New York, NY 10012 Laboratories, Inc. and Greater New
York Mutual Insurance Co.

Harold R. Logan (74) Trustee of each Trust Chairman of Comstock Resources, Inc.
19 Norfield Road (natural resources company); Vice
Weston, CT 06883 Chairman, Retired, of W.R. Grace &
Co. (chemicals, natural resources,
and selected consumer services).
William E. Rulon (63) Trustee of each Trust Senior Vice President and Secretary
Foodmaker, Inc. of Foodmaker, Inc. (operator and
9330 Balboa Avenue franchisor of restaurants).
San Diego, CA 92123

Candace L. Straight (48) Head & Trustee of each Trust Principal of Head & Company, LLC
Company, LLC (limited liability company providing
1330 Avenue of the investment banking and consulting
Americas services to the insurance industry);
12th Floor President of Integon Corporation
New York, NY 10019 (marketer of life insurance,
annuities, and property and casualty
insurance), 1990-1992; Director of
Drake Holdings (U.K. motor insurer).
Daniel J. Sullivan (56) Vice President of each Senior Vice President of N&B
Trust Management since 1992; prior thereto,
Vice President of N&B Management;
Vice President of eight other mutual
funds for which N&B Management acts
as investment manager or
administrator.

- 46 -
<PAGE>

Name, Address Positions Held Principal
and Age(1) With the Trusts Occupation(s) (2)
------------- --------------- -----------------

Michael J. Weiner (49) Vice President and Senior Vice President of N&B Manage-
Principal Financial ment since 1992; Treasurer of N&B
Officer of each Trust Management from 1992 to 1996; prior
thereto, Vice President and Treasurer
of N&B Management and Treasurer of
certain mutual funds for which N&B
Management acted as investment
adviser; Vice President and Principal
Financial Officer of eight other
mutual funds for which N&B Management
acts as investment manager or
administrator.
Claudia A. Brandon (39) Secretary of each Trust Vice President of N&B Management;
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.

Stacy Cooper-Shugrue (33) Assistant Secretary of Assistant Vice President of N&B
each Trust Management since 1993; prior thereto,
employee of N&B Management; Assistant
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
C. Carl Randolph (58) Assistant Secretary of Partner of Neuberger & Berman since
each Trust 1992; prior thereto, employee of
Neuberger & Berman; Assistant
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.

</TABLE>

____________________

(1) Unless otherwise indicated, the business address of each listed
person is 605 Third Avenue, 2nd Floor, New York, NY 10158-0180.

- 47 -
<PAGE>

(2) Except as otherwise indicated, each individual has held the positions
shown for at least the last five years.

The Trust's Trust Instrument and Managers Trust's Declaration
of Trust each provides that it will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties
involved in the conduct of their offices. In the case of settlement, such
indemnification will not be provided unless it has been determined (by a
court or other body approving the settlement or other disposition, or by a
majority of disinterested trustees based upon a review of readily
available facts, or in a written opinion of independent counsel) that such
officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.

For the fiscal year ended October 31, 1995, trustees' fees
and expenses aggregating $31,710 and $15,487 were paid by Neuberger &
Berman Municipal Money Fund and Portfolio and Neuberger & Berman Municipal
Securities Trust and Portfolio, respectively, to Fund and Portfolio
Trustees who were not affiliated with N&B Management or Neuberger &
Berman.

For the fiscal year ending October 31, 1995, trustees' fees
and expenses aggregating $11,469 were paid by Neuberger & Berman New York
Insured Intermediate Fund and Portfolio to Fund and Portfolio Trustees who
were not affiliated with N&B Management or Neuberger & Berman.

The following table sets forth information concerning the
compensation of the trustees and officers of the Trust. None of the
Neuberger & Berman Funds(SERVICEMARK) has any retirement plan for its
trustees or officers.

<TABLE>
<CAPTION>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/95
------------------------------

- 48 -
<PAGE>

Total Compensation from Trusts
Aggregate Compensation from in the Neuberger & Berman
Name and Position with the Trust the Trust Funds Complex Paid to Trustees
-------------------------------- --------------------------- ------------------------------
John Cannon $9,923 $ 20,500
Trustee (2 other investment companies)

Charles DeCarlo $16,622 $ 33,500
Trustee (2 other investment companies)

Stanley Egener $ 0 $ 0
Chairman of the Board, Chief Executive (9 other investment companies)
Officer, and Trustee
Theresa Havell $ 0 $ 0
President and Trustee (2 other investment companies)

Barry Hirsch $16,622 $ 33,500
Trustee (2 other investment companies)
Robert A. Kavesh $14,887 $ 30,500
Trustee (2 other investment companies)

Harold R. Logan $13,896 $ 28,000
Trustee (2 other investment companies)

William E. Rulon $15,135 $ 30,500
Trustee (2 other investment companies)
Candace L. Straight $15,631 $ 32,000
Trustee (2 other investment companies)

</TABLE>

- 49 -
<PAGE>

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES

Investment Manager and Administrator
------------------------------------

Because all of the Funds' net investable assets are invested
in their corresponding Portfolios, the Funds do not need an investment
manager. N&B Management serves as the Portfolios' investment manager
pursuant to a management agreement with Managers Trust, on behalf of the
Portfolios, dated as of July 2, 1993 ("Management Agreement"). The
Management Agreement was approved by the holders of the interests in the
Portfolios (except Neuberger & Berman New York Insured Intermediate
Portfolio) on July 2, 1993, and by the holders of the interests in
Neuberger & Berman New York Insured Intermediate Portfolio on February 1,
1994. Neuberger & Berman New York Insured Intermediate Portfolio was
authorized to become subject to the Management Agreement by vote of the
Portfolio Trustees on September 30, 1993, and became subject to it on
February 1, 1994.

N&B Management provides similar facilities, services, and
personnel to each Fund pursuant to an administration agreement dated July
2, 1993 ("Administration Agreement"). New York Insured Intermediate was
authorized to become subject to the Administration Agreement by vote of
the Fund Trustees on September 30, 1993, and became subject to it on
February 1, 1994. For such administrative services, each Fund pays N&B
Management a fee based on the Fund's average daily net assets, as
described in the Prospectus.

- 50 -
<PAGE>

Under the Administration Agreement, N&B Management also
provides to each Fund and its shareholders certain shareholder,
shareholder-related, and other services that are not furnished by the
Fund's shareholder servicing agent. N&B Management provides the direct
shareholder services specified in the Administration Agreement, assists
the shareholder servicing agent in the development and implementation of
specified programs and systems to enhance overall shareholder servicing
capabilities, solicits and gathers shareholder proxies, performs services
connected with the qualification of each Fund's shares for sale in various
states, and furnishes other services the parties agree from time to time
should be provided under the Administration Agreement.

Prior to July 2, 1993, N&B Management provided investment
advisory and administrative services to the predecessors of Municipal
Money and Municipal Securities under an Investment Advisory Agreement
("Prior Agreement") with that predecessor. As compensation for these
services, each of these Fund's predecessors paid N&B Management a fee at
the annual rate of .50% of its average daily net assets.

For the fiscal years ended October 31, 1995, 1994, and 1993,
(1) Municipal Securities and its predecessor accrued advisory or
management and administration fees of $225,079, $407,968, and $307,120,
respectively, and (2) Municipal Money Fund and its predecessor accrued
advisory or management and administration fees of $772,483, $823,482, and
$946,851, respectively. For the fiscal year ended October 31, 1995 and
the fiscal period from February 1, 1994 (commencement of operations)
through October 31, 1994, New York Insured Intermediate accrued management
and administration fees of $58,306 and $56,483, respectively.

For the fiscal years ended October 31, 1995, 1994, and 1993,
Municipal Securities and its predecessor were reimbursed for their
expenses by N&B Management pursuant to its undertaking in the amounts of
$145,086, $140,055, and $253,701, respectively. For the fiscal year ended
October 31, 1995 and for the fiscal period ended October 31, 1994, N&B
Management reimbursed New York Insured Intermediate $134,191 and $100,692,
respectively, pursuant to the undertaking.

Prior to May 1, 1995, the shareholder services described
above were provided pursuant to a separate agreement between the Trust and
N&B Management. As compensation for these services, each Fund paid N&B
Management a monthly fee calculated at the annual rate of 0.02% of the
average daily net assets of the Fund. Before February 1, 1994, the
monthly fee paid by Municipal Money and Municipal Securities to N&B
Management was calculated at an annual rate of $6.00 per shareholder
account. For the period November 1, 1994 to April 30, 1995 and for the

- 51 -
<PAGE>

fiscal years ended October 31, 1994 and 1993, Municipal Money and its
predecessor paid $15,415, $26,499, and $8,511, respectively, and Municipal
Securities and its predecessor paid $4,376, $12,704, and $6,169,
respectively, for these services. For the fiscal period ended October 31,
1994 and for the period from November 1, 1994 to April 30, 1995, New York
Insured Intermediate paid $2,257 and $1,226, respectively, for these
services.

The Management Agreement is terminable, without penalty, with
respect to a Portfolio on 60 days' written notice either by Managers Trust
or by N&B Management. The Administration Agreement is terminable, without
penalty, with respect to a Fund on 60 days' written notice either by N&B
Management or by the Trust if authorized by the Fund Trustees, including a
majority of the Independent Fund Trustees. Each Agreement terminates
automatically if it is assigned.

In addition to the voluntary expense reimbursement N&B Man-
agement has undertaken with respect to Municipal Securities and New York
Insured Intermediate (noted above and described in the Prospectus under
"Management and Administration -- Expenses"), N&B Management has agreed in
the Management Agreement to reimburse each Fund's expenses as follows.
If, in any fiscal year, a Fund's Aggregate Operating Expenses (as defined
below) exceed the most restrictive expense limitation imposed under the
securities laws of the states in which the Fund's shares are qualified for
sale ("State Expense Limitation"), then N&B Management will pay to the
Fund the amount of that excess, less the amount of any reduction of the
administration fee payable by the Fund under a similar State Expense
Limitation contained in the Administration Agreement. N&B Management will
have no obligation to pay a Fund, however, for any expenses that exceed

- 52 -
<PAGE>

the pro rata portion of the advisory fees attributable to that Fund's
interest in its corresponding Portfolio. At the date of this SAI, the
most restrictive expense limitation to which the Funds expect to be
subject is 2 1/2% of the first $30 million of average net assets, 2% of
the next $70 million of average net assets, and 1 1/2% of average net
assets over $100 million. For the fiscal year ended October 31, 1995,
there were no expense reimbursements required of N&B Management because of
the State Expense Limitation. Shares of Neuberger&Berman New York Insured
Intermediate Fund are registered only in New York and Florida. Neither of
these states imposes an expense limitation.

Sub-Adviser
-----------

N&B Management retains Neuberger & Berman, 605 Third Avenue,
New York, NY 10158-3698, as sub-adviser with respect to each Portfolio
pursuant to a sub-advisory agreement dated July 2, 1993 ("Sub-Advisory
Agreement"). The Sub-Advisory Agreement was approved by the holders of
the interests in the Portfolios (except Neuberger & Berman New York
Insured Intermediate Portfolio) on July 2, 1993 and by the holders of the
interests in Neuberger & Berman New York Insured Intermediate Portfolio on
February 1, 1994. Neuberger & Berman New York Insured Intermediate
Portfolio was authorized to become subject to the Sub-Advisory Agreement
by vote of the Portfolio Trustees on September 30, 1993, and became
subject to it on February 1, 1994.

The Sub-Advisory Agreement provides in substance that
Neuberger & Berman will furnish to N&B Management, upon reasonable
request, the same type of investment recommendations and research that
Neuberger & Berman, from time to time, provides to its partners and
employees for use in managing client accounts. In this manner, N&B
Management expects to have available to it, in addition to research from
other professional sources, the capability of the research staff of
Neuberger & Berman. This staff consists of approximately fourteen
investment analysts, each of whom specializes in studying one or more
industries, under the supervision of the Director of Research, who is also
available for consultation with N&B Management. The Sub-Advisory
Agreement provides that N&B Management will pay for the services rendered

- 53 -
<PAGE>

by Neuberger & Berman based on the direct and indirect costs to Neuberger
& Berman in connection with those services. Neuberger & Berman also
serves as a sub-adviser for all of the other mutual funds managed by N&B
Management.

Investment Companies Managed
----------------------------

Approximate
Net Assets at
Name December 31, 1995
---- -----------------

Neuberger & Berman Cash Reserves Portfolio . . . . . . . . $ 433,504,363
(investment portfolio for Neuberger & Berman Cash Reserves)

Neuberger & Berman Government Money Portfolio . . . . . . . $ 275,569,350
(investment portfolio for Neuberger & Berman Government Money Fund)

- 54 -
<PAGE>

Neuberger & Berman Limited Maturity Bond Portfolio . . . . $ 318,037,698
(investment portfolio for Neuberger & Berman Limited Maturity Bond
Fund and Neuberger & Berman Limited Maturity Bond Trust)

Neuberger & Berman Ultra Short Bond Portfolio . . . . . . . $ 102,724,936
(investment portfolio for Neuberger & Berman Ultra Short Bond Fund
and Neuberger & Berman Ultra Short Bond Trust)

Neuberger & Berman Municipal Money Portfolio . . . . . . . $ 152,876,653
(investment portfolio for Neuberger & Berman Municipal Money Fund)

Neuberger & Berman Municipal Securities Portfolio . . . . . $ 43,859,557
(investment portfolio for Neuberger & Berman Municipal Securities
Trust)

Neuberger & Berman New York Insured Intermediate
Portfolio . . . . . . . . . . . . . . . . . . . $ 11,742,945
(investment portfolio for Neuberger & Berman New York Insured
Intermediate Fund)

Neuberger & Berman Focus Portfolio . . . . . . . . . . . $ 1,057,224,027
(investment portfolio for Neuberger & Berman Focus Fund, Neuberger &
Berman Focus Trust, and Neuberger & Berman Focus Assets)

Neuberger & Berman Genesis Portfolio . . . . . . . . . . . $ 152,439,092
(investment portfolio for Neuberger & Berman Genesis Fund and
Neuberger & Berman Genesis Trust)

Neuberger & Berman International Portfolio . . . . . . . $ 33,320,099
(investment portfolio for Neuberger & Berman International Fund)

- 55 -
<PAGE>

Neuberger & Berman Socially Responsive
Portfolio . . . . . . . . . . . . . . . . . . . $ 115,240,931
(investment portfolio for Neuberger & Berman Socially Responsive
Fund, Neuberger & Berman Socially Responsive Trust, and Neuberger &
Berman NYCDC Socially Responsive Trust)

Advisers Managers Trust (six series) . . . . . . . . . . $ 1,306,566,805

In addition, Neuberger & Berman serves as investment
adviser to three investment companies, Plan Investment Fund, Inc., AHA
Investment Fund, Inc., and AHA Full Maturity, with assets of $64,302,128,
$99,396,468, and $26,077,793, respectively, at December 31, 1995.

The investment decisions concerning the Portfolios and
the other funds and portfolios managed by N&B Management (collectively,
"Other N&B Funds") have been and will continue to be made independently of
one another. In terms of their investment objectives, most of the Other
N&B Funds differ from the Portfolios. Even where the investment
objectives are similar, however, the methods used by the Other N&B Funds
and the Portfolios to achieve their objectives may differ.

There may be occasions when a Portfolio and one or more
of the Other N&B Funds or other accounts managed by Neuberger & Berman are
contemporaneously engaged in purchasing or selling the same securities
from or to third parties. When this occurs, the transactions are averaged
as to price and allocated as to amounts in accordance with a formula
considered to be equitable to the funds involved. Although in some cases
this arrangement may have a detrimental effect on the price or volume of
the securities as to a Portfolio, in other cases it is believed that a
Portfolio's ability to participate in volume transactions may produce
better executions for it. In any case, it is the judgment of the
Portfolio Trustees that the desirability of the Portfolios' having their
advisory arrangements with N&B Management outweighs any disadvantages that
may result from contemporaneous transactions. The investment results
achieved by all of the funds managed by N&B Management have varied from
one another in the past and are likely to vary in the future.

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<PAGE>

Management and Control of N&B Management
----------------------------------------

The directors and officers of N&B Management, all of whom
have offices at the same address as N&B Management, are Richard A. Cantor,
Chairman of the Board and director; Stanley Egener, President and
director; Theresa A. Havell, Vice President and director; Irwin Lainoff,
director; Marvin C. Schwartz, director; Lawrence Zicklin, director; Daniel
J. Sullivan, Senior Vice President; Peter E. Sundman, Senior Vice
President; Michael J. Weiner, Senior Vice President; Claudia A. Brandon,
Vice President; Robert Conti, Treasurer; William Cunningham, Vice
President; Clara Del Villar, Vice President; Mark R. Goldstein, Vice
President; Farha-Joyce Haboucha, Vice President; Michael M. Kassen, Vice
President; Michael Lamberti, Vice President; Josephine P. Mahaney, Vice
President; Lawrence Marx III, Vice President; Ellen Metzger, Vice
President and Secretary; Janet W. Prindle, Vice President; Felix Rovelli,
Vice President; Richard Russell, Vice President; Kent C. Simons, Vice
President; Frederick B. Soule, Vice President; Judith M. Vale, Vice
President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Patrick T. Byrne, Assistant Vice President; Stacy
Cooper-Shugrue, Assistant Vice President; Robert Cresci, Assistant Vice
President; Barbara DiGiorgio, Assistant Vice President; Roberta D'Orio,
Assistant Vice President; Robert I. Gendelman, Assistant Vice President;
Joseph G. Galli, Assistant Vice President; Leslie Holliday-Soto, Assistant
Vice President; Jody L. Irwin, Assistant Vice President; Carmen G.
Martinez, Assistant Vice President; Paul Metzger, Assistant Vice
President; Susan Switzer, Assistant Vice President; Susan Walsh, Assistant
Vice President; and Celeste Wischerth, Assistant Vice President. Messrs.
Cantor, Egener, Lainoff, Schwartz, Zicklin, Goldstein, Kassen, Marx, and
Simons and Mmes. Havell and Prindle are general partners of Neuberger &
Berman.

All of the outstanding voting stock in N&B Management is
owned by persons who are also general partners of Neuberger & Berman.

DISTRIBUTION ARRANGEMENTS

N&B Management serves as the distributor ("Distributor")
in connection with the offering of each Fund's shares on a no-load basis.
In connection with the sale of its shares, each Fund has authorized the
Distributor to give only the information, and to make only the statements
and representations, contained in the Prospectus and this SAI or that
properly may be included in sales literature and advertisements in
accordance with the 1933 Act, the 1940 Act, and applicable rules of self-
regulatory organizations. Sales may be made only by the Prospectus, which
may be delivered either personally, through the mails, or by electronic
means. The Distributor is the Funds' "principal underwriter" within the

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<PAGE>

meaning of the 1940 Act and, as such, acts as agent in arranging for the
sale of each Fund's shares without sales commission or other compensation
and bears all advertising and promotion expenses incurred in the sale of
the Funds' shares.

The Distributor or one of its affiliates may, from time
to time, deem it desirable to offer to a Fund's shareholders, through use
of its shareholder list, the shares of other mutual funds for which the
Distributor acts as distributor or other products or services. Any such
use of the Funds' shareholder lists, however, will be made subject to
terms and conditions, if any, approved by a majority of the Independent
Fund Trustees. These lists will not be used to offer to the Funds'
shareholders any investment products or services other than those managed
or distributed by N&B Management or Neuberger & Berman.

The Trust, on behalf of each Fund, and the Distributor
are parties to a Distribution Agreement that continues until July 2, 1996.
The Distribution Agreement may be renewed annually if specifically
approved by (1) the vote of a majority of the Fund Trustees or a 1940 Act
majority vote of the Fund's outstanding shares and (2) the vote of a
majority of the Independent Fund Trustees, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution
Agreement may be terminated by either party and will automatically
terminate on its assignment, in the same manner as the Management
Agreement.

ADDITIONAL PURCHASE INFORMATION

Automatic Investing and Dollar Cost Averaging
---------------------------------------------

Shareholders may arrange to have a fixed amount automa-
tically invested in Fund shares each month. To do so, a shareholder must
complete an application, available from the Distributor, electing to have
automatic investments funded either through (1) redemptions from his or
her account in a money market fund for which N&B Management serves as
investment manager (subject to a minimum monthly investment of $100) or
(2) withdrawals from the shareholder's checking account (in which case the
minimum monthly investment is $100). A shareholder who elects to partici-
pate in automatic investing through his or her checking account must
include a voided check with the completed application. A completed
application should be sent to Neuberger & Berman Management Incorporated,
605 Third Avenue, 2nd Floor, New York, NY 10158-0180.

Automatic investing enables a shareholder in Municipal
Securities and New York Insured Intermediate to take advantage of "dollar
cost averaging." As a result of dollar cost averaging, a shareholder's
average cost of shares in those Funds generally will be lower than it
would be if the shareholder purchased a fixed number of shares at pre-set

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<PAGE>

intervals. Additional information on dollar cost averaging may be
obtained from the Distributor.

ADDITIONAL EXCHANGE INFORMATION

As more fully set forth in the section of the Prospectus
entitled "Exchanging Shares," shareholders may exchange at least $1,000
worth of a Fund's shares and invest the proceeds in one or more of the
other Funds or Other N&B Funds that are briefly described below, provided
that the minimum investment requirements of the other fund(s) are met.

EQUITY FUNDS
------------

<S> <C>

Neuberger & Berman Seeks long-term capital appreciation through investments
Focus Fund principally in common stocks selected from 13 multi-industry eco-
nomic sectors. The corresponding portfolio uses a value-oriented
approach to select individual securities and then focuses its
investments in the sectors in which the undervalued stocks are
clustered. Through this approach, 90% or more of the portfolio's
investments are normally made in not more than six sectors.

Neuberger & Berman Seeks capital appreciation through investments principally in
Genesis Fund common stocks of companies with small market capitalizations, up to
$750 million. The corresponding portfolio uses a value-oriented
approach to the selection of individual securities.

Neuberger & Berman Seeks capital appreciation through investments primarily in a large
Guardian Fund number of common stocks of long-established, high-quality companies
that N&B Management believes are well-managed. The corresponding
portfolio uses a value-oriented approach to the selection of
individual securities. Current income is a secondary objective.
The fund (or its predecessor) has paid its shareholders an income
dividend every quarter, and a capital gain distribution every year,
since its inception in 1950, although there can be no assurance
that it will be able to continue to do so.

Neuberger & Berman Seeks long-term capital appreciation through investments primarily
International Fund in a diversified portfolio of equity securities of foreign issuers.
Assets will be allocated among economically mature countries and
emerging industrialized countries.

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<PAGE>

Neuberger & Berman Seeks capital appreciation, without regard to income, through
Manhattan Fund investments generally in securities of medium- to large-
capitalization companies that N&B Management believes have the
maximum potential for increasing total NAV. The corresponding
portfolio's "growth at a reasonable price" investment approach
involves greater risks and share price volatility than programs
that invest in more conservative securities.

Neuberger & Berman Seeks capital growth through an investment approach that is
Partners Fund designed to increase capital with reasonable risk. Its investment
program seeks securities believed to be undervalued based on strong
fundamentals such as low price-to-earnings ratios, consistent cash
flow and the company's track record through all parts of the market
cycle. The corresponding portfolio uses the value oriented
investment approach to the selection of individual securities.

Neuberger & Berman Socially Seeks long-term capital appreciation through investments primarily
Responsive Fund in securities of companies that meet both financial and social
criteria.

INCOME FUNDS
------------

Neuberger & Berman A money market fund seeking maximum safety and liquidity and the
Government Money Fund highest available current income. Through its corresponding
portfolio, the fund invests only in U.S. Treasury obligations and
other money market instruments backed by the full faith and credit
of the United States. It seeks to maintain a constant purchase and
redemption price of $1.00.

Neuberger & Berman A money market fund seeking the highest current income consistent
Cash Reserves with safety and liquidity. Through its corresponding portfolio, the
fund invests in a diversified portfolio of high quality money
market instruments. It seeks to maintain a constant purchase and
redemption price of $1.00.

Neuberger & Berman Seeks a higher total return than is available from money market
Ultra Short Bond Fund funds, with minimal risk to principal and liquidity. Through its
corresponding portfolio, the fund invests in a diversified
portfolio consisting of high quality money market instruments and
short-term debt securities.

Neuberger & Berman Seeks the highest current income consistent with low risk to
Limited Maturity Bond Fund principal and liquidity; and secondarily, total return. Through
its corresponding portfolio, the fund invests in a diversified
portfolio of short- to intermediate-term debt securities of at
least investment grade.

</TABLE>

- 60 -
<PAGE>

Any Fund described herein, and any of the Other N&B
Funds, may terminate or modify its exchange privilege in the future.

Fund shareholders who are considering exchanging shares
into any of the funds listed above should note that (1) like the Funds,
the Income Funds listed above are series of the Trust, (2) the Equity
Funds listed above are series of a Delaware business trust (named "Neuber-
ger & Berman Equity Funds") that is registered with the SEC as an open-end
management investment company, (3) each series of the Trust invests all
its net investable assets in the corresponding portfolio of Managers
Trust, (4) Neuberger & Berman International Fund is a series of Neuberger
& Berman Equity Funds that invests all of its net investable assets in
Neuberger & Berman International Portfolio, a series of Global Managers
Trust, an open-end management investment company that is managed by N&B
Management, and (5) each of the other series of Neuberger & Berman Equity
Funds invests all of its net investable assets in a corresponding
portfolio of Equity Managers Trust, an open-end management investment
company that is managed by N&B Management. Each such portfolio has an
investment objective identical to that of its corresponding fund and
invests in accordance with investment policies and limitations identical
to those of that fund.

Before effecting an exchange, Fund shareholders must
obtain and should review a currently effective prospectus of the fund into
which the exchange is to be made. In this regard, it should be noted that
the Income Funds (each of which is a separate series of the Trust) share a
prospectus with the Funds, while the Equity Funds share a separate
prospectus. An exchange is treated as a sale for federal income tax
purposes, and, depending on the circumstances, a short- or long-term
capital gain or loss may be realized.

There can be no assurance that Municipal Money, Cash
Reserves, or Government Money, each of which is a money market fund that
seeks to maintain a constant purchase and redemption share price of $1.00,
will be able to maintain that price. An investment in any of the above-
referenced funds, as in any other mutual fund, is neither insured nor
guaranteed by the U.S. Government.

ADDITIONAL REDEMPTION INFORMATION

Suspension of Redemptions
-------------------------

- 61 -
<PAGE>

corresponding Portfolio to dispose of securities it owns or fairly to
determine the value of its net assets, or (4) for such other period as the
SEC may by order permit for the protection of a Fund's shareholders; pro-
vided that applicable SEC rules and regulations shall govern whether the
conditions prescribed in (2) or (3) exist. If the right of redemption is
suspended, shareholders may withdraw their offers of redemption, or they
will receive payment at the NAV per share in effect at the close of
business on the first day the NYSE is open ("Business Day") after
termination of the suspension.

Redemptions in Kind
-------------------

Each Fund reserves the right, under certain conditions,
to honor any request for redemption, or a combination of requests from the
same shareholder in any 90-day period, totaling $250,000 or 1% of the net
assets of the Fund, whichever is less, by making payment in whole or in
part by securities valued as described under "Account and Share
Information -- Share Prices and Net Asset Value" in the Prospectus. If
payment is made in securities, a shareholder generally will incur
brokerage expenses in converting those securities into cash and will be
subject to fluctuations in the market price of those securities until they
are sold. The Funds do not redeem in kind under normal circumstances, but
would do so when the Fund Trustees determine that it would be in the best
interests of a Fund's shareholders as a whole. Redemptions in kind will
be made with readily marketable securities to the extent possible.

DIVIDENDS AND OTHER DISTRIBUTIONS

Each Fund distributes to its shareholders amounts equal
to substantially all of its proportionate share of any net investment
income (after deducting expenses incurred directly by the Fund) and net
capital gains (both long-term and short-term) earned by its corresponding
Portfolio. Municipal Money calculates its net investment income and share
price as of noon (Eastern time) on each Business Day; Municipal Securities
and New York Insured Intermediate calculate their net investment income
and share price as of the close of regular trading on the NYSE on each
Business Day (usually 4 p.m. Eastern time). Shares of Municipal Money
begin earning income dividends on the Business Day the proceeds of the
purchase order are converted into "federal funds" and continue to earn
dividends through the Business Day before they are redeemed; shares of
Municipal Securities and New York Insured Intermediate begin earning
income dividends on the Business Day after the proceeds of the purchase
order have been converted to "federal funds" and continue to earn
dividends through the Business Day they are redeemed. Dividends declared
for each month are paid on the last Business Day of the month.

A Portfolio's net investment income consists of all
income accrued on portfolio assets less accrued expenses but does not

- 62 -
<PAGE>

include realized gains and losses, which are reflected in a Portfolio's
NAV (and, hence, its corresponding Fund's NAV) until they are distributed.
Distributions of net realized capital gains, if any, normally are paid by
Municipal Securities and New York Insured Intermediate once annually, in
December. Income dividends are declared daily and paid monthly

Dividends and other distributions, if any, are
automatically reinvested in additional shares of the distributing Fund,
unless and until the shareholder elects to receive them in cash ("cash
election"). Shareholders may make a cash election on the original account
application or at a later date by writing to State Street Bank and Trust
Company ("State Street"), c/o Boston Service Center, P.O. Box 8403,
Boston, MA 02266-8403. To the extent dividends and other distributions
are subject to federal, state, or local income taxation, they are taxable
to the shareholders whether received in cash or reinvested in Fund shares.

A cash election with respect to any Fund remains in
effect until the shareholder notifies State Street in writing to
discontinue the election. If it is determined, however, that the U.S.
Postal Service cannot properly deliver Fund mailings to the shareholder,
the Fund will terminate the shareholder's cash election. Thereafter, the
shareholder's dividends and other distributions will be automatically
reinvested in additional Fund shares until the shareholder notifies State
Street or the Fund in writing of his or her correct address and requests
in writing that the cash election be reinstated.

ADDITIONAL TAX INFORMATION

Taxation of the Funds
---------------------

In order to continue to qualify for treatment as a RIC
under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of the sum of its investment company taxable
income (consisting generally of taxable net investment income and net
short-term capital gain) plus its net interest income excludable from
gross income under section 103(a) of the Code ("Distribution Requirement")
and must meet several additional requirements. With respect to each Fund,
these requirements include the following: (1) the Fund must derive at
least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, and gains from the sale or
other disposition of securities, or other income (including gains from
Hedging Instruments) derived with respect to its business of investing in
securities ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition
of securities or Hedging Instruments that were held for less than three
months ("Short-Short Limitation"); and (3) at the close of each quarter of
the Fund's taxable year, (i) at least 50% of the value of its total assets
must be represented by cash and cash items, U.S. Government securities,

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<PAGE>

and other securities limited, in respect of any one issuer, to an amount
that does not exceed 5% of the value of the Fund's total assets, and
(ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities) of any one issuer.

In addition, in order to be able to pay "exempt-interest
dividends" to its shareholders, each Fund must (and intends to continue
to) satisfy the additional requirement that, at the close of each quarter
of its taxable year, at least 50% of the value of its total assets
consists of securities the interest on which is excludable from gross
income under section 103(a) of the Code. "Exempt-interest" dividends
constitute the portion of the aggregate dividends (not including capital
gain distributions), as designated by a Fund, equal to the excess of the
Fund's excludable interest over certain amounts disallowed as deductions.
The shareholders' treatment of dividends from a Fund under local and state
income tax laws may differ from the treatment thereof under the Code.

Municipal Money and Municipal Securities have received
rulings from the Service that each Fund, as an investor in its
corresponding Portfolio, will be deemed to own a proportionate share of
the Portfolio's assets and income for purposes of determining whether the
Fund satisfies all the requirements described above to qualify as a RIC
and to pay "exempt-interest" dividends to its shareholders. The Funds
also have received rulings from the Service that neither Fund will
recognize gain or loss upon the transfer of property to a Portfolio in
exchange for an interest in the Portfolio. Although these rulings may not
be relied on as precedent by New York Insured Intermediate, N&B Management
believes that the reasoning thereof, and hence this conclusion, apply to
this Fund as well.

Each Fund will be subject to a nondeductible 4% excise
tax ("Excise Tax") to the extent it fails to distribute by the end of any
calendar year substantially all of its (taxable) ordinary income for that
year and capital gain net income for the one-year period ending on October
31 of that year, plus certain other amounts.

See the next section for a discussion of the tax conse-
quences to Municipal Securities and New York Insured Intermediate of
hedging and certain other transactions engaged in by their corresponding
Portfolios.

Taxation of the Portfolios
--------------------------

Neuberger & Berman Municipal Money Portfolio and
Neuberger & Berman Municipal Securities Portfolio have received rulings
from the Service to the effect that, among other things, each Portfolio

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<PAGE>

will be treated as a separate partnership for federal income tax purposes
and will not be a "publicly traded partnership." Although this ruling may
not be relied on as precedent by Neuberger & Berman New York Insured
Intermediate Portfolio, N&B Management believes the reasoning thereof and,
hence, this conclusion apply to that Portfolio as well. As a result, no
Portfolio is subject to federal income tax; instead, each investor in a
Portfolio, such as a Fund, is required to take into account in determining
its federal income tax liability its share of the Portfolio's income,
gains, losses, deductions, credits, and tax preference items, without
regard to whether it has received any cash distributions from the
Portfolio. Each Portfolio also is not subject to Delaware or New York
income or franchise tax.

Because each Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets and income for purposes of
determining whether the Fund satisfies the requirements to qualify as a
RIC and to pay "exempt-interest" dividends to its shareholders, each
Portfolio intends to continue to conduct its operations so that its
corresponding Fund will be able to continue to satisfy all those
requirements.

Distributions to a Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise) will
not result in the Fund's recognition of any gain or loss for federal
income tax purposes, except that (1) gain will be recognized to the extent
any cash that is distributed exceeds the Fund's basis for its interest in
the Portfolio before the distribution, (2) income or gain will be
recognized if the distribution is in liquidation of the Fund's entire
interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, (3) loss will be recognized
if a liquidation distribution consists solely of cash and/or unrealized
receivables, and (4) gain (and, in certain situations, loss) may be
recognized on an in-kind distribution by the Portfolio. A Fund's basis
for its interest in its corresponding Portfolio generally equals the
amount of cash and the basis of any property the Fund invests in the
Portfolio, increased by the Fund's share of the Portfolio's net income
(including tax-exempt income) and gains and decreased by (1) the amount of
cash and the basis of any property the Portfolio distributes to the Fund
and (2) the Fund's share of the Portfolio's losses.

The use by Neuberger & Berman Municipal Securities
Portfolio and New York Insured Intermediate Portfolio of hedging strate-
gies, such as writing (selling) and purchasing Hedging Instruments,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Portfolios
realize in connection therewith. For each of these Portfolios, income
from transactions in Hedging Instruments derived with respect to its
business of investing in securities will qualify as permissible income for
its corresponding Fund under the Income Requirement. However, income from

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<PAGE>

the disposition by a Portfolio of Hedging Instruments will be subject to
the Short-Short Limitation for its corresponding Fund if they are held for
less than three months.

If Neuberger & Berman Municipal Securities Portfolio or
Neuberger & Berman New York Insured Intermediate Portfolio satisfies
certain requirements, any increase in value of a position that is part of
a "designated hedge" will be offset by any decrease in value (whether
realized or not) of the offsetting hedging position during the period of
the hedge for purposes of determining whether its corresponding Fund
satisfies the Short-Short Limitation. Thus, only the net gain (if any)
from the designated hedge will be included in gross income for purposes of
that limitation. Each of these Portfolios will consider whether it should
seek to qualify for this treatment for its hedging transactions. To the
extent a Portfolio does not so qualify, it may be forced to defer the
closing out of certain Hedging Instruments beyond the time when it
otherwise would be advantageous to do so, in order for its corresponding
Fund to continue to qualify as a RIC.

Exchange-traded Futures Contracts and listed options
thereon constitute "Section 1256 contracts." Section 1256 contracts are
required to be marked to market (that is, treated as having been sold at
market value) at the end of a Portfolio's taxable year. Sixty percent of
any gain or loss recognized as a result of these "deemed sales," and 60%
of any net realized gain or loss from any actual sales, of Section 1256
contracts are treated as long-term capital gain or loss, and the remainder
are treated as short-term capital gain or loss.

Each Portfolio may invest in municipal bonds that are
purchased with market discount (that is, at a price less than the bond's
principal amount or, in the case of a bond that was issued with original
issue discount ("OID"), at a price less than the amount of the issue price
plus accrued OID) ("municipal market discount bonds"). If a bond's market
discount is less than the product of (1) 0.25% of the redemption price at
maturity times (2) the number of complete years to maturity after the
taxpayer acquired the bond, then no market discount is considered to
exist. Gain on the disposition of a municipal market discount bond pur-
chased by a Portfolio (other than a bond with a fixed maturity date within
one year from its issuance), generally is treated as ordinary (taxable)
income, rather than capital gain, to the extent of the bond's accrued
market discount at the time of disposition. Market discount on such a
bond generally is accrued ratably, on a daily basis, over the period from
the acquisition date to the date of maturity. In lieu of treating the
disposition gain as above, a Portfolio may elect to include market dis-
count in its gross income currently, for each taxable year to which it is
attributable.

- 66 -
<PAGE>

Each Portfolio may acquire zero coupon or other municipal
securities issued with OID. As a holder of those securities, each Portfo-
lio (and, through it, its corresponding Fund) must take into account the
OID that accrues on the securities during the taxable year, even if it
receives no corresponding payment on the securities during the year.
Because each Fund annually must distribute substantially all of its
investment company taxable income plus its share of its corresponding
Portfolio's accrued tax-exempt OID to satisfy the Distribution
Requirement, a Fund may be required in a particular year to distribute as
a dividend an amount that is greater than its proportionate share of the
total amount of cash its corresponding Portfolio actually receives. Those
distributions will be made from a Fund's (or its proportionate share of
its corresponding Portfolio's) cash assets or, if necessary, from the
proceeds of sales of that Portfolio's securities. A Portfolio may realize
capital gains or losses from those sales, which would increase or decrease
its corresponding Fund's investment company taxable income and/or net
capital gain (the excess of net long-term capital gain over net short-term
capital loss). In addition, any such gains may be realized on the dispo-
sition of securities held for less than three months. Because of the
Short-Short Limitation, any such gains would reduce a Portfolio's ability
to sell other securities, or certain Hedging Instruments, held for less
than three months, that it might wish to sell in the ordinary course of
its portfolio management.

Taxation of the Funds' Shareholders
-----------------------------------

Interest on indebtedness incurred or continued by a
shareholder to purchase or carry Fund shares is not deductible.
Furthermore, entities or persons who are "substantial users" (or related
persons) of facilities financed by industrial development bonds or private
activity bonds should consult their tax advisers before purchasing shares
of a Fund because, for users of certain of these facilities, the interest
on those bonds is not exempt from federal income tax. For these purposes,
the term "substantial user" is defined generally to include a non-exempt
person who regularly uses in trade or business a part of a facility
financed from the proceeds of those bonds.

If Municipal Securities or New York Insured Intermediate
shares are sold at a loss after being held for six months or less, the
loss will be disallowed to the extent of any exempt-interest dividends
received on those shares, and the allowed portion of the loss, if any,
will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares.

Up to 85% of social security and railroad retirement
benefits may be included in taxable income for recipients whose adjusted
gross income (including income from tax-exempt sources such as a Fund)
plus 50% of their benefits exceeds certain base amounts. Exempt-interest
dividends from a Fund still are tax-exempt to the extent described above;

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<PAGE>

they are only included in the calculation of whether a recipient's income
exceeds the established amounts.

If a Portfolio invests in any instruments that generate
taxable interest income, under the circumstances described in the Prospec-
tus, distributions by its corresponding Fund attributable to that interest
will be taxable to the Fund's shareholders as ordinary income to the
extent of the Fund's earnings and profits. Similarly, if a Portfolio
realizes capital gain as a result of market transactions, any distribution
by its corresponding Fund attributable to that gain will be taxable to the
Fund's shareholders. Investors also should be aware that if shares of a
Fund are purchased shortly before the record date for a distribution of
taxable interest income or capital gain, the purchaser will receive some
portion of the purchase price back as a taxable distribution. There may
be additional federal income tax consequences regarding the receipt of
tax-exempt dividends by shareholders such as "S" corporations, financial
institutions, and property and casualty insurance companies and
individuals otherwise eligible for the earned income credit. A share-
holder falling into any such category should consult its tax adviser
concerning its investment in shares of a Fund.

Each Fund is required to withhold 31% of all taxable
dividends, and Municipal Securities and New York Insured Intermediate are
required to withhold 31% of all capital gain distributions and redemption
proceeds, payable to any individuals and certain other non-corporate
shareholders who do not provide the Fund with a correct taxpayer
identification number. Withholding at that rate also is required from
taxable dividends and capital gain distributions payable to such share-
holders who otherwise are subject to backup withholding.

New York State and New York City Income Taxes. The
portion of New York Insured Intermediate's exempt-interest dividends equal
to the proportion which the Fund's interest on New York Municipal
Securities bears to all of the Fund's tax-exempt interest (whether or not
distributed) also will be exempt from New York State and New York City
personal income taxes. Shareholders subject to income taxation in states
other than New York will realize a lower after-tax rate of return than New
York shareholders because the dividends distributed by the Fund generally
will not be exempt, to any significant degree, from income taxation by
such other states.

Interest on indebtedness incurred or continued to
purchase or carry the Fund's shares is not deductible for New York State
and New York City personal income tax purposes to the extent attributable

- 68 -
<PAGE>

to interest income exempt from New York State and New York City personal
income taxes. Tax-exempt dividends paid to a corporate shareholder will
be subject to the New York State corporate franchise tax and New York City
general corporation tax.

VALUATION OF PORTFOLIO SECURITIES
(Municipal Money)

Municipal Money relies on Rule 2a-7 under the 1940 Act to
use the amortized cost method of valuation to enable its corresponding
Fund to stabilize the purchase and redemption price of its shares at $1.00
per share. This method involves valuing portfolio securities at their cost
at the time of purchase and thereafter assuming a constant amortization
(or accretion) to maturity of any premium (or discount), regardless of the
impact of interest rate fluctuations on the market value of the
securities. Although Municipal Money's reliance on Rule 2a-7 and Neube-
rger & Berman Municipal Money Portfolio's use of that method should enable
the Fund, under most conditions, to maintain a stable $1.00 share price,
there can be no assurance it will be able to do so. An investment in the
Fund, as in any mutual fund, is neither insured nor guaranteed by the U.S.
Government.

PORTFOLIO TRANSACTIONS

In purchasing and selling portfolio securities other than
as described above (for example, in the secondary market), each Portfolio
seeks to obtain best execution at the most favorable prices through
responsible broker-dealers and, in the case of agency transactions, at
competitive commission rates. In selecting broker-dealers to execute
transactions, N&B Management considers such factors as the price of the
security, the rate of commission, the size and difficulty of the order,
and the reliability, integrity, financial condition, and general execution
and operational capabilities of competing broker-dealers. N&B Management
also may consider the brokerage and research services that broker-dealers
provide to the Portfolio or N&B Management. Under certain conditions, a
Portfolio may pay higher brokerage commissions in return for brokerage and
research services, although no Portfolio has a current arrangement to do
so. In any case, each Portfolio may effect principal transactions with a
dealer who furnishes research services, designate any dealer to receive
selling concessions, discounts, or other allowances, or otherwise deal

- 69 -
<PAGE>

with any dealer in connection with the acquisition of securities in
underwritings.

During the fiscal year ended October 31, 1995, no
Portfolio acquired securities of its "regular brokers or dealers" (as
defined in the 1940 Act). At October 31, 1995, no Portfolio held any
securities of its "regular brokers or dealers."

No affiliate of any Portfolio receives give-ups or
reciprocal business in connection with its portfolio transactions. No
Portfolio effects transactions with or through broker-dealers in
accordance with any formula or for selling shares of a Fund. However,
broker-dealers who effect or execute portfolio transactions may from time
to time effect purchases of Fund shares for their customers. The 1940 Act
generally prohibits Neuberger & Berman from acting as principal in the
purchase of portfolio securities from, or the sale of portfolio securities
to, a Portfolio unless an appropriate exemption is available.

Portfolio Turnover
------------------

The portfolio turnover rate is the lesser of the cost of
the securities purchased or the value of the securities sold, excluding
all securities, including options, whose maturity or expiration date at
the time of acquisition was one year or less, divided by the average
monthly value of such securities owned during the year.

REPORTS TO SHAREHOLDERS

CUSTODIAN AND TRANSFER AGENT

Each Fund and Portfolio has selected State Street Bank
and Trust Company, 225 Franklin Street, Boston, MA 02110 as custodian for
its securities and cash. All correspondence should be mailed to Neuberger
& Berman Funds, c/o Boston Service Center, P.O. Box 8403, Boston, MA
02266-8403. State Street also serves as each Fund's transfer agent and
shareholder servicing agent, administering purchases, redemptions, and
transfers of Fund shares and the payment of dividends and other distri-
butions through its Boston Service Center.

- 70 -
<PAGE>

INDEPENDENT AUDITORS

Each Fund and Portfolio has selected Ernst & Young LLP,
200 Clarendon Street, Boston, MA 02116, as the independent auditors who
will audit its financial statements.

LEGAL COUNSEL

Each Fund and Portfolio has selected Kirkpatrick &
Lockhart LLP, 1800 Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C.
20036, as its legal counsel.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following table sets forth the name, address, and percentage
of ownership of each person who was known by each Fund to own beneficially
or of record 5% or more of that Fund's outstanding shares at January 31,
1996:

Percentage of
Ownership at
Name and Address: January 31, 1996
---------------- ----------------
<S> <C> <C>

Municipal Money: Neuberger & Berman* 86.85%
--------------- 605 Third Avenue
New York, NY 10158-3698

Municipal Securities: Charles Schwab & Co., Inc.* 26.65%
-------------------- Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122

Neuberger & Berman* 16.45%
605 Third Avenue
New York, NY 10158-3698

New York Insured Intermediate: Neuberger & Berman* 34.56%
----------------------------- 11 Broadway
Attn: Operations Control
New York, NY 10004-1303

Stanley Egener 13.39%
605 Third Avenue
New York, NY 10158

- 71 -
<PAGE>

Neuberger & Berman 10.41%
Management Inc.
Attn: M. Weiner
605 Third Avenue
New York, NY 10158-0180

Charles Schwab & Co., Inc.* 9.01%
101 Montgomery Street
San Francisco, CA 94104-4122

</TABLE>

_________________________

* Charles Schwab & Co., Inc. and Neuberger & Berman hold these
shares of record for the accounts of certain of their clients and
have informed the Funds of their policy to maintain the
confidentiality of holdings in client accounts unless disclosure
is expressly required by law.

At January 31, 1996, the trustees and officers of the
Trust, as a group, owned beneficially or of record less than 1% of the
outstanding shares of each Fund (except New York Insured Intermediate).
As of that date, such trustees and officers, as a group, owned 13.39% of
New York Insured Intermediate.

REGISTRATION STATEMENT

This SAI and the Prospectus do not contain all the infor-
mation included in the Trust's registration statement filed with the SEC
under the 1933 Act with respect to the securities offered by the
Prospectus. Certain portions of the registration statement have been
omitted pursuant to SEC rules and regulations. The registration state-
ment, including the exhibits filed therewith, may be examined at the SEC's
offices in Washington, D.C.

Statements contained in this SAI and in the Prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy
of the contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.

- 72 -
<PAGE>

FINANCIAL STATEMENTS

The following financial statements and related documents
are incorporated herein by reference to the Funds' Annual Report to
Shareholders for the fiscal year ended October 31, 1995:

The audited financial statements of the Funds and
Portfolios and notes thereto for the fiscal year ended
October 31, 1995, and the reports of Ernst & Young LLP,
independent auditors, with respect to such audited
financial statements.

- 73 -
<PAGE>

Appendix A

RATINGS OF MUNICIPAL OBLIGATIONS AND COMMERCIAL PAPER

S&P municipal bond ratings:
--------------------------

AAA - Bonds rated AAA have the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely strong.

AA - Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the higher rated issues only
in small degree.

A - Bonds rated A have a strong capacity to pay interest
and repay principal, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
bonds in higher rated categories.

Moody's municipal bond ratings:
------------------------------

Aaa - Bonds rated Aaa are judged to be of the best qual-
ity. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
an exceptionally stable margin, and principal is secure. Although the
various protective elements are likely to change, the changes that can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa - Bonds rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as "high grade bonds." They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa-rated
securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa-rated securities.

A - Bonds rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present that suggest a susceptibility to impairment
sometime in the future.

Modifiers - Moody's may apply numerical modifiers 1, 2, and 3 in
each generic rating classification described above. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the company ranks in the lower end of its generic rating
category.

- 74 -
<PAGE>

S&P municipal note ratings:
--------------------------

SP-1 - This designation denotes very strong or strong
capacity to pay principal and interest. Those issuers determined to
possess overwhelming safety characteristics are given a plus (+)
designation.

SP-2 - This designation denotes satisfactory capacity to
pay principal and interest.

SP-3 - This designation denotes speculative capacity to
pay principal and interest.

Moody's municipal note ratings:
------------------------------

MIG 1/VMIG 1 - This designation denotes best quality.
There is present strong protection by established cash flows, superior
liquidity support, or demonstrated broad-based access to the market for
refinancing.

MIG 2/VMIG 2 - This designation denotes high quality.
Margins of protection are ample, although not so large as in the preceding
group.

MIG 3/VMIG 3 - This designation denotes favorable
quality. All security elements are accounted for, but there is lacking
the undeniable strength of the preceding grades. Liquidity and cash flow
protection may be narrow, and market access for refinancing is likely to
be less well established.

The designation VMIG indicates a variable rate demand
note.

S&P commercial paper ratings:
----------------------------

A-1 - This highest category indicates that the degree of
safety regarding timely payment is strong. Those issuers determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+).

A-2 - This designation denotes satisfactory capacity for
timely payment. However, the relative degree of safety is not as high as
for issues designated A-1.

Moody's commercial paper ratings:
--------------------------------

Issuers rated PRIME-1 (or related supporting institu-
tions), also known as P-1, have a superior capacity for repayment of

- 75 -
<PAGE>

short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structures with moderate
reliance on debt and ample asset protection.

- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.

- Well-established access to a range of financial markets
and assured sources of alternate liquidity.

Issuers rated PRIME-2 (or related supporting institu-
tions), also known as P-2, have a strong capacity for repayment of short-
term promissory obligations. This will normally be evidenced by many of
the characteristics cited above, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

- 76 -
<PAGE>

Appendix B

THE ART OF INVESTMENT:
A CONVERSATION WITH ROY NEUBERGER

- 77 -
<PAGE>

The Art of Investing:
A Conversation with Roy Neuberger

"I firmly believe that
if you want to manage
your own money, you
must be a student of
the market. If you are
unwilling or unable to
do that, find someone
else to manage your
money for you."

NEUBERGER & BERMAN
<PAGE>

[THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE]
<PAGE>

[PICTURE OF ROY NEUBERGER]

During my more than sixty-five
years of buying and selling securities,
I've been asked many questions about my
approach to investing. On the pages
that follow are a variety of my
thoughts, ideas and investment
principles which have served me well
over the years. If you gain useful
knowledge in the pursuit of profit as
well as enjoyment from these comments, I
shall be more than content.

\s\ Roy R.
Neuberger

- 1 -
<PAGE>

<S> <C>
YOU'VE BEEN ABLE TO CONDENSE SOME OF THE
CHARACTERISTICS OF SUCCESSFUL INVESTING INTO
FIVE "RULES." WHAT ARE THEY?

Rule #2: Take your temperament into account.
Recognize whether you are by nature very
speculative or just the opposite - fearful,
timid of taking risks. But in any event --

[PICTURE OF ROY NEUBERGER]

- 2 -
<PAGE>

Rule #5: Be skeptical. To repeat a few well-
worn useful phrases:

A. Dig for yourself.
B. Be from Missouri.
C. If it sounds too good to be true,
it probably is.

IN YOUR 65 YEARS OF INVESTING ARE THERE ANY
GENERAL PATTERNS YOU'VE OBSERVED AS TO HOW THE
MARKET BEHAVES?

AS A LEGENDARY "VALUE INVESTOR," HOW DO YOU
DEFINE VALUE INVESTING?

COULD YOU DESCRIBE A STOCK WITH "GOOD VALUE"?

These characteristics usually lead to companies
that are under-researched and have a high
degree of inside ownership and entrepreneurial
management.

- 3 -
<PAGE>

ARE THERE OTHER KEY CRITERIA YOU USE TO JUDGE
STOCKS?

WHAT ABOUT SELLING STOCKS?

Most individual investors should invest for the
long term but not mindlessly. A sell
discipline, often neglected by investors, is
vitally important.

[PICTURE OF ROY NEUBERGER]

- 4 -
<PAGE>

ANY OTHER ADVICE FOR INVESTORS?

HOW WOULD YOU DESCRIBE YOUR PERSONAL INVESTING
STYLE?

YOU BEGAN INVESTING IN 1929. WHAT WAS YOUR
EXPERIENCE WITH THE "GREAT CRASH"?

- 5 -
<PAGE>

HOW DID THE CRASH OF 1929 AFFECT YOUR INVESTING
STYLE?

HOW IMPORTANT ARE PSYCHOLOGICAL FACTORS TO
MARKET BEHAVIOR?

I like to be contrary. When things look bad, I
become optimistic. When everything looks rosy,
and the crowd is optimistic, I like to be a
seller. Sometimes I'm too early, but I
generally profit.

AS A RENOWNED ART COLLECTOR, DO YOU FIND
SIMILARITIES BETWEEN SELECTING STOCKS AND
SELECTING WORKS OF ART?

- 6 -
<PAGE>

[PICTURE OF ROY NEUBERGER]

- 7 -
<PAGE>

WHAT DO YOU CONSIDER THE BUSINESS MILESTONES IN
YOUR LIFE?

[PICTURE OF ROY NEUBERGER]

YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO
THE OFFICE EVERY DAY TO MANAGE YOUR
INVESTMENTS. WHY?

I like the fun of being nimble in the stock
market, and I'm addicted to the market's
fascinations.

WHAT CLOSING WORDS OF ADVICE DO YOU HAVE ABOUT
INVESTING?

- 8 -
<PAGE>

ROY NEUBERGER: A BRIEF BIOGRAPHY

A TALENT FOR INVESTING

NEUBERGER & BERMAN'S FOUNDING

- 9 -
<PAGE>

NEUBERGER & BERMAN -- OVER FIVE DECADES OF
GROWTH

Neuberger & Berman has grown through
the years and now manages approximately $30
billion of equity and fixed income assets, both
domestic and international, for individuals,
institutions, and its family of no-load mutual
funds. Today, as when the firm was founded,
Neuberger & Berman follows a value approach to
investing, designed to enable clients to
advance in good markets and minimize losses
when conditions are less favorable.

For more complete information about
the Neuberger & Berman Guardian Fund,
including fees and expenses, call
Neuberger & Berman Management at 800-
877-9700 for a free prospectus.
Please read it carefully, before you
invest or send money.

- 10 -
<PAGE>

Neuberger & Berman Management
Inc.[SERVICE MARK]

605 Third Avenue, 2nd
Floor
New York, NY 10158-
0006
Shareholder Services
(800) 877-9700

[COPYRIGHT
SYMBOL]1995 Neuberger
& Berman

PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS

- 11 -
<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 21 ON FORM N-1A

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits
---------------------------------

(a) Financial Statements:

The audited financial statements contained in the Annual Report
to Shareholders of the Registrant for the fiscal year ended
October 31, 1995 for Neuberger & Berman Income Funds (with
respect to Neuberger & Berman Government Money Fund, Neuberger &
Berman Cash Reserves, Neuberger & Berman Ultra Short Bond Fund,
and Neuberger & Berman Limited Maturity Bond Fund) and Income
Managers Trust (with respect to Neuberger & Berman Government
Money Portfolio, Neuberger & Berman Cash Reserves Portfolio,
Neuberger & Berman Ultra Short Bond Portfolio, and Neuberger &
Berman Limited Maturity Bond Portfolio) and the reports of the
independent auditors are incorporated into the Statement of
Additional Information for such series by reference.

The audited financial statements contained in the Annual Report
to Shareholders of the Registrant for the fiscal year ended
October 31, 1995 for Neuberger & Berman Income Funds (with
respect to Neuberger & Berman Municipal Money Fund, Neuberger &
Berman Municipal Securities Trust and Neuberger & Berman New York
Insured Intermediate Fund) and Income Managers Trust (with
respect to Neuberger & Berman Municipal Money Portfolio,
Neuberger & Berman Municipal Securities Portfolio and Neuberger &
Berman New York Insured Intermediate Portfolio) and the reports
of the independent auditors are incorporated into the Statement
of Additional Information for such series by reference.

Included in Part A of this Post-Effective Amendment:

FINANCIAL HIGHLIGHTS for the periods
indicated therein for Neuberger & Berman
Government Money Fund, Neuberger &
Berman Cash Reserves, Neuberger & Berman
Ultra Short Bond Fund, Neuberger &
Berman Limited Maturity Bond Fund,
Neuberger & Berman Municipal Money Fund,
Neuberger & Berman Municipal Securities
Trust, and Neuberger & Berman New York
Insured Intermediate Fund.
<PAGE>

(b) Exhibits:

</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------

(1) (a) Certificate of Trust. Filed
herewith.

(b) Trust Instrument of Neuberger &
Berman Income Funds. Filed
herewith.

(2) By-Laws of Neuberger & Berman Income Funds.
Filed herewith.

(3) Voting Trust Agreement. None.

(4) Specimen Share Certificate. None.

(5) (a) (i) Management Agreement
Between Income Managers
Trust and Neuberger &
Berman Management
Incorporated. Filed
herewith.

(ii) Schedule A - Portfolios of
Income Managers Trust
Currently Subject to the
Management Agreement.
Filed herewith.

(iii) Schedule B - Schedule of
Compensation under the
Management Agreement.
Filed herewith.

(b) (i) Sub-Advisory Agreement
Between Neuberger & Berman
Management Incorporated and
Neuberger & Berman, L.P.
with respect to Income
Managers Trust. Filed
herewith.
<PAGE>

(ii) Schedule A - Portfolios of
Income Managers Trust
Currently Subject to the
Sub-Advisory Agreement.
Filed herewith.

(6) (a) Distribution Agreement between
Neuberger & Berman Income Funds and
Neuberger & Berman Management
Incorporated. Filed herewith.

(b) Schedule A - Series of Neuberger &
Berman Income Funds Currently
Subject to the Distribution
Agreement. Filed herewith.

(7) Bonus, Profit Sharing or Pension Plans.
None.

(8) (a) Custodian Contract Between
Neuberger & Berman Income Funds and
State Street Bank and Trust
Company. Filed herewith.

(b) Schedule A - Approved Foreign
Banking Institutions and Securities
Depositories Under the Custodian
Contract. Filed herewith.

(9) (a) (i) Transfer Agency Agreement
Between Neuberger & Berman
Income Funds and State
Street Bank and Trust
Company. Filed herewith.

(ii) Agreement between Neuberger
& Berman Income Funds and
State Street Bank and Trust
Company Adding Neuberger &
Berman New York Insured
Intermediate Fund as a
Portfolio Governed by the
Transfer Agency Agreement.
Filed herewith.

(iii) First Amendment to Transfer
Agency and Service
Agreement between Neuberger
& Berman Income Funds and
State Street Bank and Trust
Company. Filed herewith.
<PAGE>

(b) (i) Administration Agreement
Between Neuberger & Berman
Income Funds and Neuberger
& Berman Management
Incorporated. Filed
herewith.

(ii) Schedule A - Series of
Neuberger & Berman Income
Funds Currently Subject to
the Administration
Agreement. Filed herewith.

(iii) Schedule B - Schedule of
Compensation Under the
Administration Agreement.
Filed herewith.

(10) Opinion and Consent of Kirkpatrick &
Lockhart on Securities Matters. None.

(11) Other Opinions, Appraisals, Rulings and
Consents:

Consents of Ernst & Young LLP,
Independent Auditors. Filed
Herewith.

(12) Financial Statements Omitted from
Prospectus. None.

(13) Letter of Investment Intent. Incorporated
by Reference to Pre-Effective Amendment No.
1 to the Registration Statement of
Neuberger & Berman Multi-Series Fund, Inc.,
File Nos. 33-19951 and 811-5467.

(14) Prototype Retirement Plan. None.

(15) Plan Pursuant to Rule 12b-1. None.

(16) Schedule of Computation of Performance
Quotations. Incorporated by Reference to
Post-Effective Amendment No. 17 to
Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.

(17) Financial Data Schedule. Filed herewith.

(18) Plan Pursuant to Rule 18f-3. None.

Item 25. Persons Controlled By or Under Common Control with
Registrant.
<PAGE>

No person is controlled by or under common control with the
Registrant. (Registrant is organized in a master/feeder fund structure,
and technically may be considered to control the master fund in which it
invests, Income Managers Trust.)

Item 26. Number of Holders of Securities.
--------------------------------

The following information is given as of December 29, 1995.

Number of
Title of Class Record Holders
Shares of beneficial
interest, $0.001 par value, of:

Neuberger & Berman Government 4,770
Money Fund
Neuberger & Berman Cash Reserves 9,492
Neuberger & Berman Ultra Short 2,472
Bond Fund
Neuberger & Berman Limited 3,551
Maturity Bond Fund
Neuberger & Berman Municipal 1,278
Money Fund
Neuberger & Berman Municipal 946
Securities Trust
Neuberger & Berman New York 161
Insured
Intermediate Fund

Item 27. Indemnification.
---------------

A Delaware business trust may provide in its governing instrument
for indemnification of its officers and trustees from and against any and
all claims and demands whatsoever. Article IX, Section 2 of the Trust
Instrument provides that the Registrant shall indemnify any present or
former trustee, officer, employee or agent of the Registrant ("Covered
Person") to the fullest extent permitted by law against liability and all
expenses reasonably incurred or paid by him or her in connection with any
claim, action, suit or proceeding ("Action") in which he or she becomes
involved as a party or otherwise by virtue of his or her being or having
been a Covered Person and against amounts paid or incurred by him or her
in settlement thereof. Indemnification will not be provided to a person
adjudged by a court or other body to be liable to the Registrant or its
shareholders by reason of "willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office" ("Disabling Conduct"), or not to have acted in good faith in
the reasonable belief that his or her action was in the best interest of
the Registrant. In the event of a settlement, no indemnification may be
provided unless there has been a determination that the officer or trustee
did not engage in Disabling Conduct (i) by the court or other body
approving the settlement; (ii) by at least a majority of those trustees
<PAGE>

who are neither interested persons, as that term is defined in the
Investment Company Act of 1940 ("1940 Act"), of the Registrant
("Independent Trustees"), nor parties to the matter based upon a review of
readily available facts; or (iii) by written opinion of independent legal
counsel based upon a review of readily available facts.

Pursuant to Article IX, Section 3 of the Trust Instrument, if any
present or former shareholder of any series ("Series") of the Registrant
shall be held personally liable solely by reason of his or her being or
having been a shareholder and not because of his or her acts or omissions
or for some other reason, the present or former shareholder (or his or her
heirs, executors, administrators or other legal representatives or in the
case of any entity, its general successor) shall be entitled out of the
assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Registrant, on behalf of the affected Series, shall, upon request by such
shareholder, assume the defense of any claim made against such shareholder
for any act or obligation of the Series and satisfy any judgment thereon
from the assets of the Series.

Section 9 of the Management Agreement between Income Managers
Trust ("Managers Trust") and Neuberger and Berman Management Incorporated
("N&B Management") provides that neither N&B Management nor any director,
officer or employee of N&B Management performing services for any series
of Managers Trust (each a "Portfolio") at the direction or request of N&B
Management in connection with N&B Management's discharge of its
obligations under the Agreement shall be liable for any error of judgment
or mistake of law or for any loss suffered by a Portfolio in connection
with any matter to which the Agreement relates; provided, that nothing in
the Agreement shall be construed (i) to protect N&B Management against any
liability to Managers Trust or a Portfolio or its interestholders to which
N&B Management would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of N&B Management's reckless disregard of its
obligations and duties under the Agreement, or (ii) to protect any
director, officer or employee of N&B Management who is or was a trustee or
officer of Managers Trust against any liability to Managers Trust or a
Portfolio or its interestholders to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such person's
office with Managers Trust.

Section 1 of the Sub-Advisory Agreement between N&B Management
and Neuberger & Berman, L.P. ("Neuberger & Berman") with respect to
Managers Trust provides that, in the absence of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or of reckless
disregard of its duties and obligations under the Agreement, Neuberger &
Berman will not be subject to liability for any act or omission or any
loss suffered by any Portfolio or its interestholders in connection with
the matters to which the Agreement relates.

Section 12 of the Administration Agreement between the Registrant
and N&B Management provides that N&B Management will not be liable to the
Registrant for any action taken or omitted to be taken by N&B Management
<PAGE>

or its employees, agents or contractors in carrying out the provisions of
the Agreement if such action was taken or omitted in good faith and
without negligence or misconduct on the part of N&B Management, or its
employees, agents or contractors. Section 13 of the Administration
Agreement provides that the Registrant shall indemnify N&B Management and
hold it harmless from and against any and all losses, damages and
expenses, including reasonable attorneys' fees and expenses, incurred by
N&B Management that result from: (i) any claim, action, suit or
proceeding in connection with N&B Management's entry into or performance
of the Agreement; or (ii) any action taken or omission to act committed by
N&B Management in the performance of its obligations under the Agreement;
or (iii) any action of N&B Management upon instructions believed in good
faith by it to have been executed by a duly authorized officer or
representative of a Series; provided, that N&B Management will not be
entitled to such indemnification in respect of actions or omissions
constituting negligence or misconduct on the part of N&B Management, or
its employees, agents or contractors. Amounts payable by the Registrant
under this provision shall be payable solely out of assets belonging to
that Series, and not from assets belonging to any other Series of the
Registrant. Section 14 of the Administration Agreement provides that N&B
Management will indemnify the Registrant and hold it harmless from and
against any and all losses, damages and expenses, including reasonable
attorneys' fees and expenses, incurred by the Registrant that result from:
(i) N&B Management's failure to comply with the terms of the Agreement; or
(ii) N&B Management's lack of good faith in performing its obligations
under the Agreement; or (iii) the negligence or misconduct of N&B
Management, or its employees, agents or contractors in connection with the
Agreement. The Registrant shall not be entitled to such indemnification
in respect of actions or omissions constituting negligence or misconduct
on the part of the Registrant or its employees, agents or contractors
other than N&B Management, unless such negligence or misconduct results
from or is accompanied by negligence or misconduct on the part of N&B
Management, any affiliated person of N&B Management, or any affiliated
person of an affiliated person of N&B Management.

Section 11 of the Distribution Agreement between the Registrant
and N&B Management provides that N&B Management shall look only to the
assets of a Series for the Registrant's performance of the Agreement by
the Registrant on behalf of such Series, and neither the trustees nor any
of the Registrant's officers, employees or agents, whether past, present
or future, shall be personally liable therefor.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
<PAGE>

precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the 1933 Act and will be governed by the final adjudication of such
issue.

Item 28. Business and Other Connections of Adviser and
Sub-Adviser.
---------------------------------------------------------

There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each partner of Neuberger &
Berman is, or at any time during the past two years has been, engaged for
his or her own account or in the capacity of director, officer, employee,
partner or trustee.

NAME BUSINESS AND OTHER CONNECTIONS
------------------- ------------------------------

Claudia A. Brandon Secretary, Neuberger & Berman Advisers
Vice President, N&B Management Trust (Delaware business trust);
Management Secretary, Advisers Managers Trust;
Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Secretary, Neuberger & Berman
Income Funds; Secretary, Neuberger & Berman
Income Trust; Secretary, Neuberger & Berman
Equity Funds; Secretary, Neuberger & Berman
Equity Trust; Secretary, Income Managers
Trust; Secretary, Equity Managers Trust;
Secretary, Global Managers Trust;
Secretary, Neuberger & Berman Equity
Assets.

Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman
Assistant Vice Advisers Management Trust (Delaware
President, business trust); Assistant Secretary,
N&B Management Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Assistant Secretary,
Neuberger & Berman Income Funds; Assistant
Secretary, Neuberger & Berman Income Trust;
Assistant Secretary, Neuberger & Berman
Equity Funds; Assistant Secretary,
Neuberger & Berman Equity Trust; Assistant
Secretary, Income Managers Trust; Assistant
Secretary, Equity Managers Trust; Assistant
Secretary, Global Managers Trust; Assistant
Secretary, Neuberger & Berman Equity
Assets.
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
------------------- ------------------------------

Robert Cresci Assistant Portfolio Manager, BNP-N&B Global
Assistant Vice Asset Management L.P. (joint venture of
President, Neuberger & Berman and Banque Nationale de
N&B Management Paris) (2); Assistant Portfolio Manager,
Vontobel (Swiss bank) (3).

Stanley Egener Chairman of the Board and Trustee,
President and Director, Neuberger & Berman Advisers Management
N&B Management; General Trust (Delaware business trust); Chairman
Partner, Neuberger & of the Board and Trustee, Advisers Managers
Berman Trust; Chairman of the Board and Trustee,
Neuberger & Berman Advisers Management
Trust (Massachusetts business trust) (1);
Chairman of the Board and Trustee,
Neuberger & Berman Income Funds; Chairman
of the Board and Trustee, Neuberger &
Berman Income Trust; Chairman of the Board
and Trustee, Neuberger & Berman Equity
Funds; Chairman of the Board and Trustee,
Neuberger & Berman Equity Trust; Chairman
of the Board and Trustee, Income Managers
Trust; Chairman of the Board and Trustee,
Equity Managers Trust; Chairman of the
Board and Trustee, Global Managers Trust;
Chairman of the Board and Trustee,
Neuberger & Berman Equity Assets.

Theodore P. Giuliano Executive Vice President and Trustee,
Vice President, N&B Neuberger & Berman Income Funds (5);
Management (4); General Executive Vice President and Trustee,
Partner, Neuberger & Neuberger & Berman Income Trust (5);
Berman Executive Vice President and Trustee,
Income Managers Trust (5).

Theresa A. Havell President and Trustee, Neuberger & Berman
Vice President and Income Funds; President and Trustee,
Director, N&B Neuberger & Berman Income Trust; President
Management; and Trustee, Income Managers Trust
General Partner,
Neuberger & Berman
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
------------------- ------------------------------

C. Carl Randolph Assistant Secretary, Neuberger & Berman
General Partner, Advisers Management Trust (Delaware
Neuberger & Berman business trust); Assistant Secretary,
Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Assistant Secretary,
Neuberger & Berman Income Funds; Assistant
Secretary, Neuberger & Berman Income Trust;
Assistant Secretary, Neuberger & Berman
Equity Funds; Assistant Secretary,
Neuberger & Berman Equity Trust; Assistant
Secretary, Income Managers Trust; Assistant
Secretary, Equity Managers Trust; Assistant
Secretary, Global Managers Trust; Assistant
Secretary, Neuberger & Berman Equity
Assets.

Felix Rovelli Senior Vice President-Senior Equity
Vice President, Portfolio Manager, BNP-N&B Global Asset
N&B Management Management L.P. (joint venture of Neuberger
& Berman and Banque Nationale de Paris)
(2); Portfolio Manager, Vontobel (Swiss
bank) (6).

Richard Russell Treasurer, Neuberger & Berman Advisers
Vice President, Management Trust (Delaware business trust);
N&B Management Treasurer, Advisers Managers Trust;
Treasurer, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Treasurer, Neuberger & Berman
Income Funds; Treasurer, Neuberger & Berman
Income Trust; Treasurer, Neuberger & Berman
Equity Funds; Treasurer, Neuberger & Berman
Equity Trust; Treasurer, Income Managers
Trust; Treasurer, Equity Managers Trust;
Treasurer, Global Managers Trust;
Treasurer, Neuberger & Berman Equity
Assets.

Susan Switzer Portfolio Manager, Mitchell Hutchins Asset
Assistant Vice Management Inc. (7).
President,
N&B Management
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
------------------- ------------------------------

Daniel J. Sullivan Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust (Delaware business trust);
N&B Management Vice President, Advisers Managers Trust;
Vice President, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Vice President, Neuberger &
Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice
President, Neuberger & Berman Equity Funds;
Vice President, Neuberger & Berman Equity
Trust; Vice President, Income Managers
Trust; Vice President, Equity Managers
Trust; Vice President, Global Managers
Trust; Vice President, Neuberger & Berman
Equity Assets.

Michael J. Weiner Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust (Delaware business trust);
N&B Management Vice President, Advisers Managers Trust;
Vice President, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Vice President, Neuberger &
Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice
President, Neuberger & Berman Equity Funds;
Vice President, Neuberger & Berman Equity
Trust; Vice President, Income Managers
Trust; Vice President, Equity Managers
Trust; Vice President, Global Managers
Trust; Vice President, Neuberger & Berman
Equity Assets.

Lawrence Zicklin President and Trustee, Neuberger & Berman
Director, N&B Advisers Management Trust (Delaware
Management; business trust); President and Trustee,
General Partner, Advisers Managers Trust; President and
Neuberger & Berman Trustee, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); President and Trustee,
Neuberger & Berman Equity Funds; President
and Trustee, Neuberger & Berman Equity
Trust; President and Trustee, Equity
Managers Trust; President, Global Managers
Trust; President and Trustee, Neuberger &
Berman Equity Assets
<PAGE>

The principal address of N&B Management, Neuberger & Berman, BNP-
N&B Global Asset Management L.P. and of each of the investment companies
named above, is 605 Third Avenue, New York, New York 10158. Other
addresses to be provided by amendment.
_______________________________

(1) Until April 30, 1995.
(2) Until October 31, 1995.
(3) Until May 1994.
(4) Until November 4, 1994.
(5) Until June 22, 1994.
(6) Until April 1994.
(7) Until 1994.

Item 29. Principal Underwriters.
----------------------

(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and
distributor for each of the following investment companies and any series
thereof:

Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Assets
Neuberger & Berman Equity Funds
Neuberger & Berman Equity Trust
Neuberger & Berman Income Trust

N&B Management is also the investment manager to the
master funds in which the above-named investment companies invest.

(b) Set forth below is information concerning the directors
and
officers of the Registrant's principal underwriter. The principal
business address of each of the persons listed is 605 Third Avenue, New
York, New York 10158-0180, which is also the address of the Registrant's
principal underwriter.

</TABLE>
<TABLE>
<CAPTION>

POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
--------------------------

<S> <C> <C>
Claudia A. Brandon Vice President Secretary

Patrick T. Byrne Assistant Vice President None

Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Treasurer None
<PAGE>

POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
--------------------------

Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert Cresci Assistant Vice President None

William Cunningham Vice President None

Barbara DiGiorgio Assistant Vice President None
Roberta D'Orio Assistant Vice President None

Stanley Egener President and Director Chairman of the Board of
Trustees (Chief Executive
Officer)
Joseph G. Galli Assistant Vice President None

Robert I. Gendelman Assistant Vice President None

Mark R. Goldstein Vice President None
Farha-Joyce Haboucha Vice President None

Theresa A. Havell Vice President and Director None
Leslie Holliday-Soto Assistant Vice President None

Jody L. Irwin Assistant Vice President None

Michael M. Kassen Vice President None
Irwin Lainoff Director None

Michael Lamberti Vice President None
Josephine Mahaney Vice President None

Carmen G. Martinez Assistant Vice President None

Lawrence Marx III Vice President None
Ellen Metzger Vice President and Secretary None

Paul Metzger Assistant Vice President None
Janet W. Prindle Vice President None

Felix Rovelli Vice President None

Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Marvin C. Schwartz Director None

Kent C. Simons Vice President None
Frederick B. Soule Vice President None

Susan Switzer Assistant Vice President None

Daniel J. Sullivan Senior Vice President Vice President
<PAGE>

POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
--------------------------

Peter E. Sundman Senior Vice President None
Andrea Trachtenberg Vice President of Marketing None

Judith M. Vale Vice President None

Clara Del Villar Vice President None
Susan Walsh Assistant Vice President None

Michael J. Weiner Senior Vice President Vice President
(Principal Financial
Officer)
Celeste Wischerth Assistant Vice President None

Thomas Wolfe Vice President None

Lawrence Zicklin Director Trustee and President
</TABLE>

(c) No commissions or other compensation were received
directly or indirectly from the Registrant by any principal underwriter
who was not an affiliated person of the Registrant.

Item 30. Location of Accounts and Records.

All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to the Registrant are maintained at
the offices of State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, except for the Registrant's Trust Instrument
and By-Laws, minutes of meetings of the Registrant's Trustees and
shareholders and the Registrant's policies and contracts, which are
maintained at the offices of the Registrant, 605 Third Avenue, New York,
New York 10158.

Item 31. Management Services

Other than as set forth in Parts A and B of this
Registration Statement, the Registrant is not a party to any management-
related service contract.

Item 32. Undertakings

Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN
INCOME FUNDS has duly caused this Post-Effective Amendment No. 21 to its
Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City and State of New York on the 22nd day
of February, 1996.

NEUBERGER & BERMAN INCOME FUNDS

By: /s/ Stanley Egener
---------------------------
Stanley Egener
Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 21 has been signed below by the following
persons in the capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

/s/ Charles De Carlo* Trustee February 22, 1996
---------------------
Charles DeCarlo

/s/ Stanley Egener Chairman of the Board February 22, 1996
---------------------- of Trustee (Chief
Stanley Egener Executive Officer)

Trustee February 22, 1996
----------------------
John Cannon

/s/ Theresa A. Havell President and Trustee February 22, 1996
----------------------
Theresa A. Havell

(signatures continued on next page)
<PAGE>

Signature Title Date
--------- ----- ----

/s/ Barry Hirsch* Trustee February 22, 1996
----------------------
Barry Hirsch

/s/ Robert A. Kavesh* Trustee February 22, 1996
---------------------
Robert A. Kavesh

Trustee February 22, 1996
---------------------
Harold R. Logan

/s/ William E. Rulon* Trustee February 22, 1996
---------------------
William E. Rulon

Trustee February 22, 1996
-----------------------
Candace L. Straight

/s/ Michael J. Weiner Vice President February 22, 1996
----------------------- (Principal Financial
Michael J. Weiner Officer)

/s/ Richard Russell Treasurer (Principal February 22, 1996
----------------------- Accounting Officer)
Richard Russell

</TABLE>

* Signatures affixed by Dana L. Platt pursuant to a power of
attorney dated June 24, 1993, and filed herewith.

- 2 -
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, INCOME MANAGERS TRUST certifies that
it meets all of the requirements for effectiveness of Post-Effective
Amendment No. 21 to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City and State of New York on
the 22nd day of February, 1996.

INCOME MANAGERS TRUST

By: /s/ Stanley Egener
------------------------
Stanley Egener
Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, Post-
Effective Amendment No. 21 has been signed below by the following persons
in the capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

/s/ Charles De Carlo* Trustee February 22, 1996
---------------------
Charles DeCarlo

/s/ Stanley Egener Chairman of the Board February 22, 1996
---------------------- of Trustee (Chief
Stanley Egener Executive Officer)

Trustee February 22, 1996
----------------------
John Cannon

(signatures continued on next page)
<PAGE>

Signature Title Date
--------- ----- ----

/s/ Theresa A. Havell President and Trustee February 22, 1996
----------------------
Theresa A. Havell

/s/ Barry Hirsch* Trustee February 22, 1996
----------------------
Barry Hirsch

/s/ Robert A. Kavesh* Trustee February 22, 1996
---------------------
Robert A. Kavesh

/s/ Harold R. Logan* Trustee February 22, 1996
---------------------
Harold R. Logan

/s/ William E. Rulon* Trustee February 22, 1996
---------------------
William E. Rulon

/s/ Candace L. Straight* Trustee February 22, 1996
-----------------------
Candace L. Straight

/s/ Michael J. Weiner Vice President February 22, 1996
----------------------- (Principal Financial
Michael J. Weiner Officer)

/s/ Richard Russell Treasurer (Principal February 22, 1996
----------------------- Accounting Officer)
Richard Russell
</TABLE>
* Signatures affixed by Dana L. Platt pursuant to a power of
attorney dated December 20, 1994, and filed herewith.

- 2 -
<PAGE>

POWER OF ATTORNEY
-----------------

NEUBERGER & BERMAN INCOME FUNDS, a Delaware business trust (the
"Trust"), and each of its undersigned officers and trustees hereby
nominates, constitutes and appoints Theresa A. Havell, Michael J. Weiner,
Richard M. Phillips, Alan R. Dynner and Dana L. Platt (with full power to
each of them to act alone) its/his/her true and lawful attorney-in-fact
and agent, for it/him/her and on its/his/her behalf and in its/his/her
name, place and stead in any and all capacities, to make, execute and sign
any and all amendments to the Trust's Registration Statement on Form N-1A
under the Securities Act of 1933 and the Investment Company Act of 1940,
any registration statements on Form N-14, and to file with the Securities
and Exchange Commission, and any other regulatory authority having
jurisdiction over the offer and sale of shares of the Beneficial Interest
of the Trust, any such amendment, and any and all supplements thereto or
to any prospectus or statement of additional information forming a part
thereof, and any and all exhibits and other documents requisite in
connection therewith, granting unto said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises as fully to
all intents and purposes as the Trust and the undersigned officers and
trustees itself/themselves might or could do.

IN WITNESS WHEREOF, NEUBERGER & BERMAN INCOME FUNDS has caused
this power of attorney to be executed in its name by its President, and
attested by its Secretary, and the undersigned officers and trustees have
hereunto set their hands and seals this 24th day of June, 1993.

NEUBERGER & BERMAN INCOME FUNDS

By: /s/ Theresa A. Havell
----------------------------
Theresa A. Havell, President

[SEAL]

ATTEST:

/s/ Claudia A. Brandon
-----------------------------
Claudia A. Brandon,
Secretary

[Signatures Continued on Next Page]
<PAGE>

Signature Title
--------- -----

/s/ Stanley Egener Chairman of the Board, Chief
________________________ Executive Officer, and
Stanley Egener Trustee

/s/ Theresa A. Havell President and Trustee
________________________
Theresa A. Havell

------------------------ Executive Vice President and
Theodore P. Giuliano (Crossed Out) Trustee (Crossed Out)
(Resigned)

/s/ Michael J. Weiner Vice President and Principal
------------------------ Financial Officer
Michael J. Weiner

/s/ Richard Russell Treasurer and Principal
------------------------ Accounting Officer
Richard Russell

/s/ Claudia A. Brandon Secretary
------------------------
Claudia A. Brandon

/s/ Charles DeCarlo Trustee
------------------------
Charles DeCarlo

------------------------ Trustee (Crossed Out)
A. Leon Ferguson (Crossed Out) (Retired)

------------------------ Trustee (Crossed Out)
Ann Maynard Gray (Crossed Out) (Retired)

[Signatures Continued on Next Page]

- 2 -
<PAGE>

Signature Title
--------- -----

/s/ Barry Hirsch Trustee
------------------------
Barry Hirsch

------------------------ Trustee (Crossed Out)
Leslie A. Jacobson (Crossed Out) (Resigned)

/s/ Robert A. Kavesh Trustee
------------------------
Robert A. Kavesh

Trustee
------------------------
Harold R. Logan

/s/ William E. Rulon Trustee
------------------------
William E. Rulon

------------------------ Trustee (Crossed Out)
Herbert R. Silverman (Crossed Out) (Resigned)

Trustee
------------------------
Candace L. Straight

- 3 -
<PAGE>

POWER OF ATTORNEY
-----------------

INCOME MANAGERS TRUST, a New York trust (the "Trust"), and each
of its undersigned officers and trustees hereby nominates, constitutes and
appoints Theresa A. Havell, Michael J. Weiner, Alan R. Dynner, Richard M.
Phillips, Dana L. Platt, and Arthur C. Delibert (with full power to each
of them to act alone) its/his/her true and lawful attorney-in-fact and
agent, for it/him/her and on its/his/her behalf and in its/his/her name,
place and stead in any and all capacities, to make, execute and sign any
and all amendments to the Registration Statements of the Trust and any
"feeder fund" on Form N-1A under the Securities Act of 1933 and the
Investment Company Act of 1940, and any registration statements on Form N-
14, and to file with the Securities and Exchange Commission, and any other
regulatory authority having jurisdiction over the offer and sale of
interests in the Trust, any such amendment, and any and all supplements
thereto or to any prospectus or statement of additional information
forming a part thereof, and any and all exhibits and other documents
requisite in connection therewith, granting unto said attorneys, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises as
fully to all intents and purposes as the Trust and the undersigned
officers and trustees itself/themselves might or could do.

IN WITNESS WHEREOF, INCOME MANAGERS TRUST has caused this power
of attorney to be executed in its name by its President, and attested by
its Secretary, and the undersigned officers and trustees have hereunto set
their hands and seals this 20th day of December, 1994.

INCOME MANAGERS TRUST

By: /s/ Theresa A. Havell
--------------------------------
Theresa A. Havell, President

[SEAL]

ATTEST:

/s/ Claudia A. Brandon
______________________________
Claudia A. Brandon,
Secretary

[Signatures Continued on Next Page]
<PAGE>

Signature Title
--------- -----

/s/ Stanley Egener Chairman of the Board, Chief
________________________ Executive Officer, and Trustee
Stanley Egener

/s/ Theresa A. Havell President and Trustee
________________________
Theresa A. Havell

/s/ Michael J. Weiner Vice President and Principal
------------------------ Financial Officer
Michael J. Weiner

/s/ Richard Russell Treasurer and Principal
------------------------ Accounting Officer
Richard Russell

/s/ Claudia A. Brandon Secretary
------------------------
Claudia A. Brandon

/s/ Charles DeCarlo Trustee
------------------------
Charles DeCarlo

------------------------ Trustee (Retired)
A. Leon Fergenson (Crossed Out)

______________________________ Trustee
John Cannon

/s/Barry Hirsch Trustee
------------------------
Barry Hirsch

------------------------ Trustee (Crossed Out)
Leslie A. Jacobson (Crossed Out)

[Signatures Continued on Next Page]

- 5 -
<PAGE>

Signature Title
--------- -----

/s/ Robert A. Kavesh Trustee
------------------------
Robert A. Kavesh

/s/ Harold R. Logan Trustee
------------------------
Harold R. Logan

/s/ William E. Rulon Trustee
------------------------
William E. Rulon

------------------------ Trustee (Retired)
Herbert R. Silverman (Crossed Out)

/s/ Candace L. Straight Trustee
______________________________
Candace L. Straight

- 6 -
<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 21 ON FORM N-1A

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Sequentially
Exhibit Description Numbered
Number Page
------- --------------------------------------------- -----------

<S> <C> <C>
(1) (a) Certificate of Trust. Filed herewith. ____

(b) Trust Instrument of Neuberger & Berman ____
Income Funds. Filed herewith.

(c) Schedule A - Current Series of ____
Neuberger & Berman Income Funds.
Filed herewith.
(2) By-Laws of Neuberger & Berman Income Funds. ____
Filed herewith.

(3) Voting Trust Agreement. None. N.A.
(4) Specimen Share Certificate. None. N.A.

(5) (a) (i) Management Agreement Between ____
Income Managers Trust and
Neuberger & Berman Management
Incorporated. Filed
herewith.

(ii) Schedule A - Portfolios of ____
Income Managers Trust
Currently Subject to the
Management Agreement. Filed
herewith.
(iii) Schedule B - Schedule of ____
Compensation Under the
Management Agreement. Filed
herewith.

(b) (i) Sub-Advisory Agreement ____
Between Neuberger & Berman
Management Incorporated and
Neuberger & Berman, L.P. with
Respect to Income Managers
Trust. Filed herewith.
<PAGE>

Sequentially
Exhibit Description Numbered
Number Page
------- --------------------------------------------- -----------

(ii) Schedule A - Portfolios of ____
Income Managers Trust
Currently Subject to the Sub-
Advisory Agreement. Filed
herewith.
(6) (a) Distribution Agreement Between ____
Neuberger & Berman Income Funds and
Neuberger & Berman Management
Incorporated. Filed herewith.

(b) Schedule A - Series of Neuberger & ____
Berman Income Funds Currently Subject
to the Distribution Agreement. Filed
herewith.

(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & ____
Berman Income Funds and State Street
Bank and Trust Company.

(b) Schedule A - Approved Foreign Banking ____
Institutions and Securities
Depositories Under the Custodian
Contract. Filed Herewith.
(9) (a) (i) Transfer Agency Agreement ____
Between Neuberger & Berman
Income Funds and State Street
Bank and Trust Company.
Filed Herewith.

(ii) Agreement between Neuberger & ____
Berman Income Funds and State
Street Bank and Trust Company
Adding Neuberger & Berman New
York Insured Intermediate
Fund as a Portfolio Governed
by the Transfer Agency
Agreement. Filed herewith.

(iii) First Amendment to Transfer ____
Agency and Service Agreement
between Neuberger & Berman
Income Funds and State Street
Bank and Trust Company.
Filed herewith.
<PAGE>

Sequentially
Exhibit Description Numbered
Number Page
------- --------------------------------------------- -----------

(b) (i) Administration Agreement ____
Between Neuberger & Berman
Income Funds and Neuberger &
Berman Management
Incorporated. Filed
herewith.
(ii) Schedule A - Series of ____
Neuberger & Berman Income
Funds Currently Subject to
the Administration Agreement.
Filed herewith.

(iii) Schedule B - Schedule of ____
Compensation Under the
Administration Agreement.
Filed herewith.

(10) Opinion and Consent of Kirkpatrick & Lockhart N.A.
on Securities Matters. None.
(11) Other Opinions, Appraisals, Rulings and ____
Consents:

Consent of Ernst & Young LLP,
Independent Auditors. Filed Herewith.
(12) Financial Statements Omitted from Prospectus. N.A.
None.

(13) Letter of Investment Intent. Incorporated by N.A.
Reference to Pre-Effective Amendment No. 1 to
the Registration Statement of Neuberger &
Berman Multi-Series Fund, Inc., File Nos. 33-
19951 and 811-5467.

(14) Prototype Retirement Plan. None. N.A.
(15) Plan Pursuant to Rule 12b-1. None. N.A.

(16) Schedule of Computation Performance N.A.
Quotations. Incorporated by Reference to
Post-Effective Amendment No. 17 to
Registrant's Registration Statement, File Nos.
2-85229 and 811-3802.
(17) Financial Data Schedule. Filed herewith. ____

(18) Plan Pursuant to Rule 18f-3. None. N.A.

</TABLE>
<PAGE>

<PAGE>

CERTIFICATE OF TRUST
OF
NEUBERGER & BERMAN INCOME FUNDS

This Certificate of Trust ("Certificate") is filed in accordance
with the provisions of the Delaware Business Trust Act (12 Del. Code Ann.
Tit. 12 Section 3801 et seq.) and sets forth the following:

1. The name of the trust is: Neuberger & Berman Income Funds
("Trust").

2. The business address of the registered office of the
Trust and of the registered agent of the Trust is:

The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801

3. This Certificate is effective upon filing.

4. The Trust is a Delaware business trust to be registered
under the Investment Company Act of 1940. Notice is
hereby given that the Trust shall consist of one or more
series. The debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with
respect to a particular series of the Trust shall be
enforceable against the assets of such series only, and
not against the assets of the Trust generally or any
other series.

IN WITNESS WHEREOF, the undersigned, being the initial Trustees,
have executed this Certificate on this 23rd day of December, 1992.

/s/ Claudia A. Brandon
---------------------------------------
Claudia A. Brandon, as
Trustee and not individually

/s/ Ellen Metzger
---------------------------------------
Ellen Metzger, as
Trustee and not individually

/s/ Daniel J. Sullivan
---------------------------------------
Daniel J. Sullivan, as
Trustee and not individually

Address: 605 Third Avenue
New York, NY 10158
<PAGE>

STATE OF NEW YORK
CITY OF NEW YORK

Before me this 23rd day of December, 1992, personally appeared the
above-named Claudia A. Brandon, Ellen Metzger, and Daniel J. Sullivan,
known to me to be the persons who executed the foregoing instrument and
who acknowledged that they executed the same.

/s/ Loraine Olavarria
---------------------------------------
Notary Public

My commission expires April 15, 1993

- 2 -
<PAGE>

<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
-------------------------------
TRUST INSTRUMENT
----------------

This TRUST INSTRUMENT is made on December 23, 1992, by the Trustees,
to establish a business trust for the investment and reinvestment of funds
contributed to the Trust by investors. The Trustees declare that all
money and property contributed to the Trust shall be held and managed in
trust pursuant to this Trust Instrument. The name of the Trust created by
this Trust Instrument is Neuberger & Berman Income Funds.

ARTICLE I
---------

DEFINITIONS
----------

Unless otherwise provided or required by the context:

(a) "By-laws" means the By-laws of the Trust adopted by the
Trustees, as amended from time to time;

(b) "Class" means the class of Shares of a Series established
pursuant to Article IV;

(d) "Covered Person" means a person so defined in Article IX,
Section 2;

(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as amended from
time to time;

(f) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" as defined in the 1940 Act;

(g) "Net Asset Value" means the net asset value of each Series of
the Trust, determined as provided in Article V, Section 3;

(h) "Outstanding Shares" means Shares shown in the books of the
Trust or its transfer agent as then issued and outstanding, but does not
include Shares which have been repurchased or redeemed by the Trust and
which are held in the treasury of the Trust;

(i) "Series" means a series of Shares established pursuant to
Article IV;

(j) "Shareholder" means a record owner of Outstanding Shares;
<PAGE>

(k) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is
divided from time to time (including whole Shares and fractions of
Shares);

(l) "Trust" means Neuberger & Berman Income Funds established
hereby, and reference to the Trust, when applicable to one or more Series,
refers to that Series;

(m) "Trustees" means the persons who have signed this Trust
Instrument, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with Article II, in all
cases in their capacities as Trustees hereunder;

(n) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
Trust or any Series or the Trustees on behalf of the Trust or any Series;

(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time.

ARTICLE II
----------

THE TRUSTEES
------------

Section 1. MANAGEMENT OF THE TRUST. The business and affairs of
the Trust shall be managed by or under the direction of the Trustees, and
they shall have all powers necessary or desirable to carry out that
responsibility. The Trustees may execute all instruments and take all
action they deem necessary or desirable to promote the interests of the
Trust. Any determination made by the Trustees in good faith as to what is
in the interests of the Trust shall be conclusive.

Section 2. INITIAL TRUSTEES; ELECTION AND NUMBER OF TRUSTEES. The
initial Trustees shall be the persons initially signing this Trust
Instrument. The number of Trustees (other than the initial Trustees)
shall be fixed from time to time by a majority of the Trustees; provided,
that there shall be at least two (2) Trustees. The Shareholders shall
elect the Trustees (other than the initial Trustees) on such dates as the
Trustees may fix from time to time.

Section 3. TERM OF OFFICE OF TRUSTEES. Each Trustee shall hold
office for life or until his successor is elected or the Trust terminates;
except that (a) any Trustee may resign by delivering to the other Trustees
or to any Trust officer a written resignation effective upon such delivery
or a later date specified therein; (b) any Trustee may be removed with or
without cause at any time by a written instrument signed by at least
two-thirds of the other Trustees, specifying the effective date of

- 2 -
<PAGE>

removal; (c) any Trustee who requests to be retired, or who has become
physically or mentally incapacitated or is otherwise unable to serve, may
be retired by a written instrument signed by a majority of the other
Trustees, specifying the effective date of retirement; and (d) any Trustee
may be removed at any meeting of the Shareholders by a vote of at least
two-thirds of the Outstanding Shares.

Section 4. VACANCIES; APPOINTMENT OF TRUSTEES. Whenever a vacancy
shall exist in the Board of Trustees, regardless of the reason for such
vacancy, the remaining Trustees shall appoint any person as they determine
in their sole discretion to fill that vacancy, consistent with the
limitations under the 1940 Act. Such appointment shall be made by a
written instrument signed by a majority of the Trustees or by a resolution
of the Trustees, duly adopted and recorded in the records of the Trust,
specifying the effective date of the appointment. The Trustees may
appoint a new Trustee as provided above in anticipation of a vacancy
expected to occur because of the retirement, resignation, or removal of a
Trustee, or an increase in number of Trustees, provided that such
appointment shall become effective only at or after the expected vacancy
occurs. As soon as any such Trustee has accepted his appointment in
writing, the trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he shall
be deemed a Trustee hereunder. The power of appointment is subject to
Section 16(a) of the 1940 Act.

Section 5. TEMPORARY VACANCY OR ABSENCE. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, or while
any Trustee is absent from his domicile (unless that Trustee has made
arrangements to be informed about, and to participate in, the affairs of
the Trust during such absence), or is physically or mentally
incapacitated, the remaining Trustees shall have all the powers hereunder
and their certificate as to such vacancy, absence, or incapacity shall be
conclusive. Any Trustee may, by power of attorney, delegate his powers as
Trustee for a period not exceeding six (6) months at any one time to any
other Trustee or Trustees.

Section 6. CHAIRMAN. The Trustees shall appoint one of their
number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the
execution of policies established by the Trustees and the administration
of the Trust, and may be the chief executive, financial and/or accounting
officer of the Trust.

Section 7. ACTION BY THE TRUSTEES. The Trustees shall act by
majority vote at a meeting duly called (including at a telephonic meeting,
unless the 1940 Act requires that a particular action be taken only at a
meeting of Trustees in person) at which a quorum is present or by written
consent of a majority of Trustees (or such greater number as may be
required by applicable law) without a meeting. A majority of the Trustees
shall constitute a quorum at any meeting. Meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or by
any two other Trustees. Notice of the time, date and place of all

- 3 -
<PAGE>

Trustees meetings shall be given to each Trustee by telephone, facsimile
or other electronic mechanism sent to his home or business address at
least twenty-four hours in advance of the meeting or by written notice
mailed to his home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who signs a
waiver of notice either before or after the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate
to any Trustee or Trustees authority to approve particular matters or take
particular actions on behalf of the Trust. Any written consent or waiver
may be provided and delivered to the Trust by facsimile or other similar
electronic mechanism.

Section 8. OWNERSHIP OF TRUST PROPERTY. The Trust Property of the
Trust and of each Series shall be held separate and apart from any assets
now or hereafter held in any capacity other than as Trustee hereunder by
the Trustees or any successor Trustees. All of the Trust Property and
legal title thereto shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal
title to any Trust Property to be held by or in the name of the Trust, or
in the name of any person as nominee. No Shareholder shall be deemed to
have a severable ownership in any individual asset of the Trust or of any
Series or any right of partition or possession thereof, but each
Shareholder shall have, as provided in Article IV, a proportionate
undivided beneficial interest in the Trust or Series represented by
Shares.

Section 9. EFFECT OF TRUSTEES NOT SERVING. The death,
resignation, retirement, removal, incapacity, or inability or refusal to
serve of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of
this Trust Instrument.

Section 10. TRUSTEES, ETC. AS SHAREHOLDERS. Subject to any
restrictions in the By-laws, any Trustee, officer, agent or independent
contractor of the Trust may acquire, own and dispose of Shares to the same
extent as any other Shareholder; the Trustees may issue and sell Shares to
and buy Shares from any such person or any firm or company in which such
person is interested, subject only to any general limitations herein.

ARTICLE III
-----------

POWERS OF THE TRUSTEES
----------------------

Section 1. POWERS. The Trustees in all instances shall act as
principals, free of the control of the Shareholders. The Trustees shall
have full power and authority to take or refrain from taking any action
and to execute any contracts and instruments that they may consider
necessary or desirable in the management of the Trust. The Trustees shall

- 4 -
<PAGE>

not in any way be bound or limited by current or future laws or customs
applicable to trust investments, but shall have full power and authority
to make any investments which they, in their sole discretion, deem proper
to accomplish the purposes of the Trust. The Trustees may exercise all of
their powers without recourse to any court or other authority. Subject to
any applicable limitation herein or in the By-laws or resolutions of the
Trust, the Trustees shall have power and authority, without limitation:

(a) To invest and reinvest cash and other property, and to hold
cash or other property uninvested, without in any event being bound or
limited by any current or future law or custom concerning investments by
trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the Trust Property; to invest in
obligations and securities of any kind, and without regard to whether they
may mature before the possible termination of the Trust; and without
limitation to invest all or any part of its cash and other property in
securities issued by a registered investment company or series thereof,
subject to the provisions of the 1940 Act;

(b) To operate as and carry on the business of a registered
investment company, and exercise all the powers necessary and proper to
conduct such a business;

(c) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent such right is not reserved to the Shareholders;

(d) To elect and remove such officers and appoint and terminate
such agents as they deem appropriate;

(e) To employ as custodian of any assets of the Trust, subject to
any provisions herein or in the By-laws, one or more banks, trust
companies or companies that are members of a national securities exchange,
or other entities permitted by the Commission to serve as such;

(f) To retain one or more transfer agents and Shareholder
servicing agents, or both;

(g) To provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both,
or pursuant to a distribution plan of any kind;

(h) To set record dates in the manner provided for herein or in
the By-laws;

(i) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
investment adviser, custodian or underwriter;

(j) To sell or exchange any or all of the assets of the Trust,
subject to Article X, Section 4;

- 5 -
<PAGE>

(k) To vote or give assent, or exercise any rights of ownership,
with respect to other securities or property; and to execute and deliver
powers of attorney delegating such power to other persons;

(l) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;

(m) To hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form, or (ii) either in the Trust's or Trustees' own name or in
the name of a custodian or a nominee or nominees, subject to safeguards
according to the usual practice of business trusts or investment
companies;

(n) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment
purposes, and with separate Shares representing beneficial interests in
such Series, and to establish separate Classes, all in accordance with the
provisions of Article IV;

(o) To the full extent permitted by Section 3804 of the Delaware
Act, to allocate assets, liabilities and expenses of the Trust to a
particular Series and liabilities and expenses to a particular Class or to
apportion the same between or among two or more Series or Classes,
provided that any liabilities or expenses incurred by a particular Series
or Class shall be payable solely out of the assets belonging to that
Series or Class as provided for in Article IV, Section 4;

(p) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern
whose securities are held by the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern;
and to pay calls or subscriptions with respect to any security held in the
Trust;

(q) To compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy including, but not
limited to, claims for taxes;

(r) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;

(s) To borrow money;

(t) To establish, from time to time, a minimum total investment
for Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder;

(u) To establish committees for such purposes, with such
membership, and with such responsibilities as the Trustees may consider
proper, including a committee consisting of fewer than all of the Trustees

- 6 -
<PAGE>

then in office, which may act for and bind the Trustees and the Trust with
respect to the institution, prosecution, dismissal, settlement, review or
investigation of any legal action, suit or proceeding, pending or
threatened;

(v) To issue, sell, repurchase, redeem, cancel, retire, acquire,
hold, resell, reissue, dispose of and otherwise deal in Shares; to
establish terms and conditions regarding the issuance, sale, repurchase,
redemption, cancellation, retirement, acquisition, holding, resale,
reissuance, disposition of or dealing in Shares; and, subject to Articles
IV and V, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust
or of the particular Series with respect to which such Shares are issued;
and

(w) To carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary or
desirable to accomplish any purpose or to further any of the foregoing
powers, and to take every other action incidental to the foregoing
business or purposes, objects or powers.

The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general
powers of the Trustees. Any action by one or more of the Trustees in
their capacity as such hereunder shall be deemed an action on behalf of
the Trust or the applicable Series, and not an action in an individual
capacity. No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order. In construing this Trust Instrument, the
presumption shall be in favor of a grant of power to the Trustees.

Section 2. CERTAIN TRANSACTIONS. Except as prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any
securities from or sell any securities to, or lend any assets of the Trust
to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such
dealings with any investment adviser, administrator, distributor or
transfer agent for the Trust or with any Interested Person of such person.
The Trust may employ any such person or entity in which such person is an
Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing
agent, custodian or in any other capacity upon customary terms.

- 7 -
<PAGE>

ARTICLE IV
----------

SERIES; CLASSES; SHARES
-----------------------

Section 1. ESTABLISHMENT OF SERIES OR CLASS. The Trust shall
consist of one or more Series. The Trustees hereby establish the Series
listed in Schedule A attached hereto and made a part hereof. Each
additional Series shall be established by the adoption of a resolution of
the Trustees. The Trustees may designate the relative rights and
preferences of the Shares of each Series. The Trustees may divide the
Shares of any Series into Classes. In such case each Class of a Series
shall represent interests in the assets of that Series and have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that expenses allocated to a Class may be borne solely
by such Class as determined by the Trustees and a Class may have exclusive
voting rights with respect to matters affecting only that Class. The
Trust shall maintain separate and distinct records for each Series and
hold and account for the assets thereof separately from the other assets
of the Trust or of any other Series. A Series may issue any number of
Shares and need not issue Shares. Each Share of a Series shall represent
an equal beneficial interest in the net assets of such Series. Each
holder of Shares of a Series shall be entitled to receive his pro rata
share of all distributions made with respect to such Series. Upon
redemption of his Shares, such Shareholder shall be paid solely out of the
funds and property of such Series. The Trustees may change the name of
any Series or Class.

Section 2. SHARES. The beneficial interest in the Trust shall be
divided into Shares of one or more separate and distinct Series or Classes
established by the Trustees. The number of Shares of each Series and
Class is unlimited and each Share shall have a par value of $0.001 per
Share. All Shares issued hereunder shall be fully paid and nonassessable.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. The Trustees
shall have full power and authority, in their sole discretion and without
obtaining Shareholder approval: to issue original or additional Shares at
such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares and Shares held in the treasury; to establish and
to change in any manner Shares of any Series or Classes with such
preferences, terms of conversion, voting powers, rights and privileges as
the Trustees may determine (but the Trustees may not change Outstanding
Shares in a manner materially adverse to the Shareholders of such Shares);
to divide or combine the Shares of any Series or Classes into a greater or
lesser number; to classify or reclassify any unissued Shares of any Series
or Classes into one or more Series or Classes of Shares; to abolish any
one or more Series or Classes of Shares; to issue Shares to acquire other
assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses; and to take such other action
with respect to the Shares as the Trustees may deem desirable. Shares
held in the treasury shall not confer any voting rights on the Trustees

- 8 -
<PAGE>

and shall not be entitled to any dividends or other distributions declared
with respect to the Shares.

Section 3. INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series from such persons and on such terms as they may
from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or
securities in which that Series is authorized to invest, valued as
provided in Article V, Section 3. Investments in a Series shall be
credited to each Shareholder's account in the form of full Shares at the
Net Asset Value per Share next determined after the investment is received
or accepted as may be determined by the Trustees; provided, however, that
the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, or (c)
determine the Net Asset Value per Share of the initial capital
contribution. The Trustees shall have the right to refuse to accept
investments in any Series at any time without any cause or reason therefor
whatsoever.

Section 4. ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular
Series, together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits, and proceeds thereof
(including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be), shall be held and
accounted for separately from the other assets of the Trust and every
other Series and are referred to as "assets belonging to" that Series.
The assets belonging to a Series shall belong only to that Series for all
purposes, and to no other Series, subject only to the rights of creditors
of that Series. Any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series shall be allocated by the Trustees
between and among one or more Series as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, earnings,
income, profits or funds, or payments and proceeds thereof shall be
referred to as assets belonging to that Series. The assets belonging to a
Series shall be so recorded upon the books of the Trust, and shall be held
by the Trustees in trust for the benefit of the Shareholders of that
Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses
allocated solely to a particular Class shall be borne by that Class. Any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among
any one or more of the Series or Classes in such manner as the Trustees
deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series or Classes for all purposes.

- 9 -
<PAGE>

Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or
reserves as herein provided, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such Series
only, and not against the assets of the Trust generally or of any other
Series. Notice of this contractual limitation on liabilities among Series
may, in the Trustees' discretion, be set forth in the certificate of trust
of the Trust (whether originally or by amendment) as filed or to be filed
in the Office of the Secretary of State of the State of Delaware pursuant
to the Delaware Act, and upon the giving of such notice in the certificate
of trust, the statutory provisions of Section 3804 of the Delaware Act
relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the certificate
of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against
any Series may look only to the assets of that Series to satisfy or
enforce any debt, with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.

Section 5. OWNERSHIP AND TRANSFER OF SHARES. The Trust shall
maintain a register containing the names and addresses of the Shareholders
of each Series and Class thereof, the number of Shares of each Series and
Class held by such Shareholders, and a record of all Share transfers. The
register shall be conclusive as to the identity of Shareholders of record
and the number of Shares held by them from time to time. The Trustees may
authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer
of Shares, whether or not represented by certificates.

Section 6. STATUS OF SHARES; LIMITATION OF SHAREHOLDER LIABILITY.
Shares shall be deemed to be personal property giving Shareholders only
the rights provided in this Trust Instrument. Every Shareholder, by
virtue of having acquired a Share, shall be held expressly to have
assented to and agreed to be bound by the terms of this Trust Instrument
and to have become a party hereto. No Shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to, the Trust or any
Series. Neither the Trust nor the Trustees shall have any power to bind
any Shareholder personally or to demand payment from any Shareholder for
anything, other than as agreed by the Shareholder. Shareholders shall
have the same limitation of personal liability as is extended to
shareholders of a private corporation for profit incorporated in the State
of Delaware. Every written obligation of the Trust or any Series shall
contain a statement to the effect that such obligation may only be
enforced against the assets of the Trust or such Series; however, the
omission of such statement shall not operate to bind or create personal
liability for any Shareholder or Trustee.

- 10 -
<PAGE>

ARTICLE V
---------

DISTRIBUTIONS AND REDEMPTIONS
-----------------------------

Section 1. DISTRIBUTIONS. The Trustees may declare and pay
dividends and other distributions, including dividends on Shares of a
particular Series and other distributions from the assets belonging to
that Series. The amount and payment of dividends or distributions and
their form, whether they are in cash, Shares or other Trust Property,
shall be determined by the Trustees. Dividends and other distributions
may be paid pursuant to a standing resolution adopted once or more often
as the Trustees determine. All dividends and other distributions on
Shares of a particular Series shall be distributed pro rata to the
Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except
that such dividends and distributions shall appropriately reflect expenses
allocated to a particular Class of such Series. The Trustees may adopt
and offer to Shareholders such dividend reinvestment plans, cash dividend
payout plans or similar plans as the Trustees deem appropriate.

Section 2. REDEMPTIONS. Each Shareholder of a Series shall have
the right at such times as may be permitted by the Trustees to require the
Series to redeem all or any part of his Shares at a redemption price per
Share equal to the Net Asset Value per Share at such time as the Trustees
shall have prescribed by resolution. In the absence of such resolution,
the redemption price per Share shall be the Net Asset Value next
determined after receipt by the Series of a request for redemption in
proper form less such charges as are determined by the Trustees and
described in the Trust's Registration Statement for that Series under the
Securities Act of 1933. The Trustees may specify conditions, prices, and
places of redemption, and may specify binding requirements for the proper
form or forms of requests for redemption. Payment of the redemption price
may be wholly or partly in securities or other assets at the value of such
securities or assets used in such determination of Net Asset Value, or may
be in cash. Upon redemption, Shares may be reissued from time to time.
The Trustees may require Shareholders to redeem Shares for any reason
under terms set by the Trustees, including the failure of a Shareholder to
supply a personal identification number if required to do so, or to have
the minimum investment required, or to pay when due for the purchase of
Shares issued to him. To the extent permitted by law, the Trustees may
retain the proceeds of any redemption of Shares required by them for
payment of amounts due and owing by a Shareholder to the Trust or any
Series or Class. Notwithstanding the foregoing, the Trustees may postpone
payment of the redemption price and may suspend the right of the
Shareholders to require any Series or Class to redeem Shares during any
period of time when and to the extent permissible under the 1940 Act.

Section 3. DETERMINATION OF NET ASSET VALUE. The Trustees shall
cause the Net Asset Value of Shares of each Series or Class to be
determined from time to time in a manner consistent with applicable laws

- 11 -
<PAGE>

and regulations. The Trustees may delegate the power and duty to
determine Net Asset Value per Share to one or more Trustees or officers of
the Trust or to a custodian, depository or other agent appointed for such
purpose. The Net Asset Value of Shares shall be determined separately for
each Series or Class at such times as may be prescribed by the Trustees
or, in the absence of action by the Trustees, as of the close of trading
on the New York Stock Exchange on each day for all or part of which such
Exchange is open for unrestricted trading.

Section 4. SUSPENSION OF RIGHT OF REDEMPTION. If, as referred to
in Section 2 of this Article, the Trustees postpone payment of the
redemption price and suspend the right of Shareholders to redeem their
Shares, such suspension shall take effect at the time the Trustees shall
specify, but not later than the close of business on the business day next
following the declaration of suspension. Thereafter Shareholders shall
have no right of redemption or payment until the Trustees declare the end
of the suspension. If the right of redemption is suspended, a Shareholder
may either withdraw his request for redemption or receive payment based on
the Net Asset Value per Share next determined after the suspension
terminates.

Section 5. REDEMPTIONS NECESSARY FOR QUALIFICATION AS REGULATED
INVESTMENT COMPANY. If the Trustees shall determine that direct or
indirect ownership of Shares of any Series has or may become concentrated
in any person to an extent which would disqualify any Series as a
regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other
means they deem equitable to (a) call for redemption by any such person of
a number, or principal amount, of Shares sufficient to maintain or bring
the direct or indirect ownership of Shares into conformity with the
requirements for such qualification and (b) refuse to transfer or issue
Shares to any person whose acquisition of Shares in question would, in the
Trustees' judgment, result in such disqualification. Any such redemption
shall be effected at the redemption price and in the manner provided in
this Article. Shareholders shall upon demand disclose to the Trustees in
writing such information concerning direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the requirements of
any taxing authority.

ARTICLE VI
-----------

SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------

Section 1. VOTING POWERS. The Shareholders shall have power to
vote only with respect to (a) the election of Trustees as provided in
Section 2 of this Article; (b) the removal of Trustees as provided in
Article II, Section 3(d); (c) any investment advisory or management
contract as provided in Article VII, Section 1; (d) any termination of the
Trust as provided in Article X, Section 4; (e) the amendment of this Trust

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<PAGE>

Instrument to the extent and as provided in Article X, Section 8; and (f)
such additional matters relating to the Trust as may be required or
authorized by law, this Trust Instrument, or the By-laws or any
registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.

On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series or Class, except (a) when required by
the 1940 Act, Shares shall be voted in the aggregate and not by individual
Series or Class, and (b) when the Trustees have determined that the matter
affects the interests of more than one Series or Class, then the
Shareholders of all such Series or Classes shall be entitled to vote
thereon. Each whole Share shall be entitled to one vote as to any matter
on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by
proxy or in any manner provided for in the By-laws. The By-laws may
provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any
Series or Class, or if there is a proxy contest or proxy solicitation or
proposal in opposition to any proposal by the officers or Trustees, Shares
may be voted only in person or by written proxy. Until Shares of a Series
are issued, as to that Series the Trustees may exercise all rights of
Shareholders and may take any action required or permitted to be taken by
Shareholders by law, this Trust Instrument or the By-laws.

Section 2. MEETINGS OF SHAREHOLDERS. The first Shareholders'
meeting shall be held to elect Trustees at such time and place as the
Trustees designate. Special meetings of the Shareholders of any Series or
Class may be called by the Trustees and shall be called by the Trustees
upon the written request of Shareholders owning at least ten percent of
the Outstanding Shares of such Series or Class entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting, given as determined by the Trustees.

Section 3. QUORUM; REQUIRED VOTE. One-third of the Outstanding
Shares of each Series or Class, or one-third of the Outstanding Shares of
the Trust, entitled to vote in person or by proxy shall be a quorum for
the transaction of business at a Shareholders' meeting with respect to
such Series or Class, or with respect to the entire Trust, respectively.
Any lesser number shall be sufficient for adjournments. Any adjourned
session of a Shareholders' meeting may be held within a reasonable time
without further notice. Except when a larger vote is required by law,
this Trust Instrument or the By-laws, a majority of the Outstanding Shares
voted in person or by proxy shall decide any matters to be voted upon with
respect to the entire Trust and a plurality of such Outstanding Shares
shall elect a Trustee; provided, that if this Trust Instrument or
applicable law permits or requires that Shares be voted on any matter by
individual Series or Classes, then a majority of the Outstanding Shares of
that Series or Class (or, if required by law, a Majority Shareholder Vote
of that Series or Class) voted in person or by proxy voted on the matter

- 13 -
<PAGE>

shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by
applicable law) of the Outstanding Shares of the Trust or of such Series
or Class, as the case may be.

ARTICLE VII
-----------

CONTRACTS WITH SERVICE PROVIDERS
--------------------------------

Section 1. INVESTMENT ADVISER. Subject to a Majority Shareholder
Vote, the Trustees may enter into one or more investment advisory
contracts on behalf of the Trust or any Series, providing for investment
advisory services, statistical and research facilities and services, and
other facilities and services to be furnished to the Trust or Series on
terms and conditions acceptable to the Trustees. Any such contract may
provide for the investment adviser to effect purchases, sales or exchanges
of portfolio securities or other Trust Property on behalf of the Trustees
or may authorize any officer or agent of the Trust to effect such
purchases, sales or exchanges pursuant to recommendations of the
investment adviser. The Trustees may authorize the investment adviser to
employ one or more sub-advisers.

Section 2. PRINCIPAL UNDERWRITER. The Trustees may enter into
contracts on behalf of the Trust or any Series or Class, providing for the
distribution and sale of Shares by the other party, either directly or as
sales agent, on terms and conditions acceptable to the Trustees. The
Trustees may adopt a plan or plans of distribution with respect to Shares
of any Series or Class and enter into any related agreements, whereby the
Series or Class finances directly or indirectly any activity that is
primarily intended to result in sales of its Shares, subject to the
requirements of Section 12 of the 1940 Act, Rule 12b-1 thereunder, and
other applicable rules and regulations.

Section 3. TRANSFER AGENCY, SHAREHOLDER SERVICES, AND
ADMINISTRATION AGREEMENTS. The Trustees, on behalf of the Trust or any
Series or Class, may enter into transfer agency agreements, Shareholder
service agreements, and administration and management agreements with any
party or parties on terms and conditions acceptable to the Trustees.

Section 4. CUSTODIAN. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust and of each
Series in custody meeting the requirements of Section 17(f) of the 1940
Act and the rules thereunder. The Trustees, on behalf of the Trust or any
Series, may enter into an agreement with a custodian on terms and
conditions acceptable to the Trustees, providing for the custodian, among
other things, to (a) hold the securities owned by the Trust or any Series
and deliver the same upon written order or oral order confirmed in
writing, (b) to receive and receipt for any moneys due to the Trust or any

- 14 -
<PAGE>

Series and deposit the same in its own banking department or elsewhere,
(c) to disburse such funds upon orders or vouchers, and (d) to employ one
or more sub-custodians.

Section 5. PARTIES TO CONTRACTS WITH SERVICE PROVIDERS. The
Trustees may enter into any contract referred to in this Article with any
entity, although one more of the Trustees or officers of the Trust may be
an officer, director, trustee, partner, shareholder, or member of such
entity, and no such contract shall be invalidated or rendered void or
voidable because of such relationship. No person having such a
relationship shall be disqualified from voting on or executing a contract
in his capacity as Trustee and/or Shareholder, or be liable merely by
reason of such relationship for any loss or expense to the Trust with
respect to such a contract or accountable for any profit realized directly
or indirectly therefrom; provided, that the contract was reasonable and
fair and not inconsistent with this Trust Instrument or the By-laws.

Any contract referred to in Sections 1 and 2 of this Article shall
be consistent with and subject to the applicable requirements of Section
15 of the 1940 Act and the rules and orders thereunder with respect to its
continuance in effect, its termination, and the method of authorization
and approval of such contract or renewal. No amendment to a contract
referred to in Section 1 of this Article shall be effective unless
assented to in a manner consistent with the requirements of Section 15 of
the 1940 Act, and the rules and orders thereunder.

ARTICLE VIII
------------

EXPENSES OF THE TRUST AND SERIES
--------------------------------

Subject to Article IV, Section 4, the Trust or a particular Series
shall pay, or shall reimburse the Trustees from the Trust estate or the
assets belonging to the particular Series, for their expenses and
disbursements, including, but not limited to, interest charges, taxes,
brokerage fees and commissions; expenses of issue, repurchase and
redemption of Shares; certain insurance premiums; applicable fees,
interest charges and expenses of third parties, including the Trust's
investment advisers, managers, administrators, distributors, custodians,
transfer agents and fund accountants; fees of pricing, interest, dividend,
credit and other reporting services; costs of membership in trade
associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
its Series and maintaining its existence; costs of preparing and printing
the prospectuses of the Trust and each Series, statements of additional
information and Shareholder reports and delivering them to Shareholders;
expenses of meetings of Shareholders and proxy solicitations therefor;
costs of maintaining books and accounts; costs of reproduction, stationery
and supplies; fees and expenses of the Trustees; compensation of the
Trust's officers and employees and costs of other personnel performing

- 15 -
<PAGE>

services for the Trust or any Series; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust
or a Series (or a Trustee or officer of the Trust acting as such) is a
party, and for all losses and liabilities by them incurred in
administering the Trust. The Trustees shall have a lien on the assets
belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Shareholders thereto, for the
reimbursement to them of such expenses, disbursements, losses and
liabilities.

ARTICLE IX
----------

LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------

Section 1. LIMITATION OF LIABILITY. All persons contracting with
or having any claim against the Trust or a particular Series shall look
only to the assets of the Trust or such Series for payment under such
contract or claim; and neither the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on
behalf of the Trust or any Series shall contain a statement to the
foregoing effect, but the absence of such statement shall not operate to
make any Trustee or officer of the Trust liable thereunder. Provided they
have exercised reasonable care and have acted under the reasonable belief
that their actions are in the best interest of the Trust, the Trustees and
officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent,
employee, investment adviser or independent contractor of the Trust, but
nothing contained in this Trust Instrument or in the Delaware Act shall
protect any Trustee or officer of the Trust against liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.

Section 2. INDEMNIFICATION. (a) Subject to the exceptions and
limitations contained in subsection (b) below:

(i) every person who is, or has been, a Trustee or an
officer, employee or agent of the Trust ("Covered Person")
shall be indemnified by the Trust or the appropriate Series
to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue
of his being or having been a Covered Person and against
amounts paid or incurred by him in the settlement thereof;

- 16 -
<PAGE>

(ii) as used herein, the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals),
actual or threatened, and the words "liability" and
"expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.

(b) No indemnification shall be provided hereunder to a Covered
Person:

(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to
the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office, or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of
the Trust; or

(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office; (A) by the court or other body approving the
settlement; (B) by at least a majority of those Trustees who
are neither Interested Persons of the Trust nor are parties
to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written
opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type
inquiry).

(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, and shall inure to the benefit of the heirs,
executors and administrators of a Covered Person.

(d) To the maximum extent permitted by applicable law, expenses
in connection with the preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in subsection
(a) of this Section may be paid by the Trust or applicable Series from
time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will
be paid over by him to the Trust or applicable Series if it is ultimately
determined that he is not entitled to indemnification under this Section;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured
against losses arising out of any such advance payments or (iii) either a
majority of the Trustees who are neither Interested Persons of the Trust
nor parties to the matter, or independent legal counsel in a written

- 17 -
<PAGE>

opinion, shall have determined, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to
believe that such Covered Person will not be disqualified from
indemnification under this Section.

(e) Any repeal or modification of this Article IX by the
Shareholders of the Trust, or adoption or modification of any other
provision of the Trust Instrument or By-laws inconsistent with this
Article, shall be prospective only, to the extent that such repeal or
modification would, if applied retrospectively, adversely affect any
limitation on the liability of any Covered Person or indemnification
available to any Covered Person with respect to any act or omission which
occurred prior to such repeal, modification or adoption.

Section 3. INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his being or having been a Shareholder and not because of his
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall
be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising
from such liability. The Trust, on behalf of the affected Series, shall,
upon request by such Shareholder, assume the defense of any claim made
against such Shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.

ARTICLE X
---------

MISCELLANEOUS
-------------

Section 1. TRUST NOT A PARTNERSHIP. This Trust Instrument creates
a trust and not a partnership. No Trustee shall have any power to bind
personally either the Trust's officers or any Shareholder.

Section 2. TRUSTEE ACTION; EXPERT ADVICE; NO BOND OR SURETY. The
exercise by the Trustees of their powers and discretion hereunder in good
faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of
Article IX, the Trustees shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Trust
Instrument, and subject to the provisions of Article IX, shall not be
liable for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is obtained.

Section 3. RECORD DATES. The Trustees may fix in advance a date
up to ninety (90) days before the date of any Shareholders' meeting, or

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<PAGE>

the date for the payment of any dividends or other distributions, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect as a record date for
the determination of the Shareholders entitled to notice of, and to vote
at, any such meeting, or entitled to receive payment of such dividend or
other distribution, or to receive any such allotment of rights, or to
exercise such rights in respect of any such change, conversion or exchange
of Shares.

Section 4. TERMINATION OF THE TRUST. (a) This Trust shall have
perpetual existence. Subject to a Majority Shareholder Vote of the Trust
or of each Series to be affected, the Trustees may

(i) sell and convey all or substantially all of the assets
of the Trust or any affected Series to another Series or to
another entity which is an open-end investment company as
defined in the 1940 Act, or is a series thereof, for adequate
consideration, which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued
or contingent, of the Trust or any affected Series, and which
may include shares of or interests in such Series, entity, or
series thereof; or

(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any affected
Series.

Upon making reasonable provision for the payment of all known liabilities
of the Trust or any affected Series in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining
proceeds or assets (as the case may be) ratably among the Shareholders of
the Trust or any affected Series; however, the payment to any particular
Class of such Series may be reduced by any fees, expenses or charges
allocated to that Class.

(b) The Trustees may take any of the actions specified in
subsection (a) (i) and (ii) above without obtaining a Majority Shareholder
Vote of the Trust or any Series if a majority of the Trustees determines
that the continuation of the Trust or Series is not in the best interests
of the Trust, such Series, or their respective Shareholders as a result of
factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable
manner. Such factors and events may include the inability of the Trust or
a Series to maintain its assets at an appropriate size, changes in laws or
regulations governing the Trust or the Series or affecting assets of the
type in which the Trust or Series invests, or economic developments or
trends having a significant adverse impact on the business or operations
of the Trust or such Series.

(c) Upon completion of the distribution of the remaining proceeds
or assets pursuant to subsection (a), the Trust or affected Series shall
terminate and the Trustees and the Trust shall be discharged of any and

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<PAGE>

all further liabilities and duties hereunder with respect thereto and the
right, title and interest of all parties therein shall be canceled and
discharged. Upon termination of the Trust, following completion of
winding up of its business, the Trustees shall cause a certificate of
cancellation of the Trust's certificate of trust to be filed in accordance
with the Delaware Act, which certificate of cancellation may be signed by
any one Trustee.

Section 5. REORGANIZATION. Notwithstanding anything else herein,
to change the Trust's form of organization the Trustees may, without
Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more entities, if the surviving or resulting entity is the
Trust or another open-end management investment company under the 1940
Act, or a series thereof, that will succeed to or assume the Trust's
registration under the 1940 Act, or (b) cause the Trust to incorporate
under the laws of Delaware. Any agreement of merger or consolidation or
certificate of merger may be signed by a majority of Trustees and
facsimile signatures conveyed by electronic or telecommunication means
shall be valid.

Pursuant to and in accordance with the provisions of Section 3815(f)
of the Delaware Act, an agreement of merger or consolidation approved by
the Trustees in accordance with this Section 5 may effect any amendment to
the Trust Instrument or effect the adoption of a new trust instrument of
the Trust if it is the surviving or resulting trust in the merger or
consolidation.

Section 6. TRUST INSTRUMENT. The original or a copy of this Trust
Instrument and of each amendment hereto or Trust Instrument supplemental
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by a
Trustee or an officer of the Trust as to the authenticity of the Trust
Instrument or any such amendments or supplements and as to any matters in
connection with the Trust. The masculine gender herein shall include the
feminine and neuter genders. Headings herein are for convenience only and
shall not affect the construction of this Trust Instrument. This Trust
Instrument may be executed in any number of counterparts, each of which
shall be deemed an original.

Section 7. APPLICABLE LAW. This Trust Instrument and the Trust
created hereunder are governed by and construed and administered according
to the Delaware Act and the applicable laws of the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the
Trustees or this Trust Instrument (a) the provisions of Section 3540 of
Title 12 of the Delaware Code, or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware
Act) pertaining to trusts which relate to or regulate (i) the filing with
any court or governmental body or agency of trustee accounts or schedules
of trustee fees and charges, (ii) affirmative requirements to post bonds
for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning
the acquisition, holding or disposition of real or personal property,

- 20 -
<PAGE>

(iv) fees or other sums payable to trustees, officers, agents or employees
of a trust, (v) the allocation of receipts and expenditures to income or
principal, (vi) restrictions or limitations on the permissible nature,
amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii)
the establishment of fiduciary or other standards of responsibilities or
limitations on the acts or powers of trustees, which are inconsistent with
the limitations or liabilities or authorities and powers of the Trustees
set forth or referenced in this Trust Instrument. The Trust shall be of
the type commonly called a Delaware business trust, and, without limiting
the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts
under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.

Section 8. AMENDMENTS. The Trustees may, without any Shareholder
vote, amend or otherwise supplement this Trust Instrument by making an
amendment, a Trust Instrument supplemental hereto or an amended and
restated trust instrument; provided, that Shareholders shall have the
right to vote on any amendment (a) which would affect the voting rights of
Shareholders granted in Article VI, Section 1, (b) to this Section 8, (c)
required to be approved by Shareholders by law or by the Trust's
registration statement(s) filed with the Commission, and (d) submitted to
them by the Trustees in their discretion. Any amendment submitted to
Shareholders which the Trustees determine would affect the Shareholders of
any Series shall be authorized by vote of the Shareholders of such Series
and no vote shall be required of Shareholders of a Series not affected.
Notwithstanding anything else herein, any amendment to Article IX which
would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust
or to Shareholders or former Shareholders, and any repeal or amendment of
this sentence shall each require the affirmative vote of the holders of
two-thirds of the Outstanding Shares of the Trust entitled to vote
thereon.

Section 9. FISCAL YEAR. The fiscal year of the Trust shall end on
a specified date as set forth in the By-Laws. The Trustees may change the
fiscal year of the Trust without Shareholder approval.

Section 10. SEVERABILITY. The provisions of this Trust Instrument
are severable. If the Trustees determine, with the advice of counsel,
that any provision hereof conflicts with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or with other
applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided,
however, that such determination shall not affect any of the remaining
provisions of this Trust Instrument or render invalid or improper any
action taken or omitted prior to such determination. If any provision
hereof shall be held invalid or unenforceable in any jurisdiction, such

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<PAGE>

invalidity or unenforceability shall attach only to such provision only in
such jurisdiction and shall not affect any other provision of this Trust
Instrument.

IN WITNESS WHEREOF, the undersigned, being the initial
Trustees, have executed this Trust Instrument as of the date first above
written.

/s/ Claudia A. Brandon
----------------------------
Claudia A. Brandon, as
Trustee and not individually

/s/ Ellen Metzger
----------------------------
Ellen Metzger, as Trustee
and not individually

/s/ Daniel J. Sullivan
-----------------------------
Daniel J. Sullivan, as Trustee
and not individually

Address: 605 Third Avenue
New York, New York 10058

STATE OF NEW YORK ss
CITY OF NEW YORK

/s/ Loraine Olavarria
---------------------------------
Notary Public

My Commission expires 4-15-93
-------------------------------
LORAINE OLAVARRIA
Notary Public, State of New York
No. 03-4979399
Qualified in Bronx County
Commission Expires 4-15-93

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TABLE OF CONTENTS

PAGE
----

ARTICLE I--Definitions . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II--The Trustees . . . . . . . . . . . . . . . . . . . 2

Section 1. Management of the Trust . . . . . . . . . . 2
Section 2. Initial Trustees; Election and Number of
Trustees . . . . . . . . . . . . . . 2
Section 3. Term of Office of Trustees . . . . . . . . 3
Section 4. Vacancies; Appointment of Trustees . . . . 3
Section 5. Temporary Vacancy or Absence . . . . . . . 3
Section 6. Chairman . . . . . . . . . . . . . . . . . 3
Section 7. Action by the Trustees . . . . . . . . . . 4
Section 8. Ownership of Trust Property . . . . . . . . 4
Section 9. Effect of Trustees Not Serving . . . . . . 4
Section 10. Trustees, etc. as Shareholders . . . . . . 4

ARTICLE III--Powers of the Trustees . . . . . . . . . . . . . 5

Section 1. Powers . . . . . . . . . . . . . . . . . . 5
Section 2. Certain Transactions . . . . . . . . . . . 8

ARTICLE IV--Series; Classes; Shares . . . . . . . . . . . . . 8

Section 1. Establishment of Series or Class . . . . . 8
Section 2. Shares . . . . . . . . . . . . . . . . . . 8
Section 3. Investment in the Trust . . . . . . . . . . 9
Section 4. Assets and Liabilities of Series . . . . . 9
Section 5. Ownership and Transfer of Shares . . . . . 10
Section 6. Status of Shares; Limitation of
Shareholder Liability . . . . . . . . 11

ARTICLE V--Distributions and Redemptions . . . . . . . . . . . 11

Section 1. Distributions . . . . . . . . . . . . . . . 11
Section 2. Redemptions . . . . . . . . . . . . . . . . 11
Section 3. Determination of Net Asset Value . . . . . 12
Section 4. Suspension of Right of Redemption . . . . . 12
Section 5. Redemptions Necessary for Qualification as
Regulated Investment Company . . . . 12

ARTICLE VI--Shareholders' Voting Powers and Meetings . . . . . 13

Section 1. Voting Powers . . . . . . . . . . . . . . . 13
Section 2. Meetings of Shareholders . . . . . . . . . 14
Section 3. Quorum; Required Vote . . . . . . . . . . . 14

- i -

ARTICLE VII--Contracts With Service Providers . . . . . . . . 14

Section 1. Investment Adviser . . . . . . . . . . . . 14
Section 2. Principal Underwriter . . . . . . . . . . . 15
Section 3. Transfer Agency, Shareholder Services, and
Administration Agreements . . . . . . 15
Section 4. Custodian . . . . . . . . . . . . . . . . . 15
Section 5. Parties to Contracts with Service
Providers . . . . . . . . . . . . . . 15

ARTICLE VIII--Expenses of the Trust and Series . . . . . . . . 16

ARTICLE IX--Limitation of Liability and Indemnification . . . 16

Section 1. Limitation of Liability . . . . . . . . . . 16
Section 2. Indemnification . . . . . . . . . . . . . . 17
Section 3. Indemnification of Shareholders . . . . . . 18

ARTICLE X--Miscellaneous . . . . . . . . . . . . . . . . . . . 19

Section 1. Trust Not a Partnership . . . . . . . . . . 19
Section 2. Trustee Action; Expert Advice; No Bond or
Surety . . . . . . . . . . . . . . . 19
Section 3. Record Dates . . . . . . . . . . . . . . . 19
Section 4. Termination of the Trust . . . . . . . . . 19
Section 5. Reorganization . . . . . . . . . . . . . . 20
Section 6. Trust Instrument . . . . . . . . . . . . . 21
Section 7. Applicable Law . . . . . . . . . . . . . . 21
Section 8. Amendments . . . . . . . . . . . . . . . . 22
Section 9. Fiscal Year . . . . . . . . . . . . . . . . 22
Section 10. Severability . . . . . . . . . . . . . . . 22

- ii -

NEUBERGER & BERMAN INCOME FUNDS
SCHEDULE A

INITIAL SERIES
--------------

ADDITIONAL SERIES
-----------------

Neuberger & Berman New York Insured Intermediate Fund

DATED: December 20, 1995

NEUBERGER & BERMAN INCOME FUNDS

BY-LAWS

TABLE OF CONTENTS

Page

ARTICLE I
PRINCIPAL OFFICE AND SEAL . . . . . . . . . . . . . . . . . . 1
Section 1. Principal Office . . . . . . . . . . . . . . 1
Section 2. Seal . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
MEETINGS OF TRUSTEES . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Action by Trustees . . . . . . . . . . . . . 1
Section 2. Compensation of Trustees . . . . . . . . . . 1

ARTICLE III
COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Establishment . . . . . . . . . . . . . . . 1
Section 2. Proceedings; Quorum; Action . . . . . . . . 2
Section 3. Executive Committee . . . . . . . . . . . . 2
Section 4. Nominating Committee . . . . . . . . . . . . 2
Section 5. Audit Committee . . . . . . . . . . . . . . 2
Section 6. Compensation of Committee Members . . . . . 2

ARTICLE IV
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1. General . . . . . . . . . . . . . . . . . . 2
Section 2. Election, Tenure and Qualifications
of Officers . . . . . . . . . . . . . . . . . 2
Section 3. Vacancies and Newly Created Offices . . . . 3
Section 4. Removal and Resignation . . . . . . . . . . 3
Section 5. Chairman . . . . . . . . . . . . . . . . . . 3
Section 6. President . . . . . . . . . . . . . . . . . 3
Section 7. Vice President(s) . . . . . . . . . . . . . 3
Section 8. Treasurer and Assistant Treasurer(s) . . . . 4
Section 9. Secretary and Assistant Secretaries . . . . 4
Section 10. Compensation of Officers . . . . . . . . . . 4
Section 11. Surety Bond . . . . . . . . . . . . . . . . 4

ARTICLE V
MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . 5
Section 1. No Annual Meetings . . . . . . . . . . . . . 5
Section 2. Special Meetings . . . . . . . . . . . . . . 5
Section 3. Notice of Meetings; Waiver . . . . . . . . . 5
Section 4. Adjourned Meetings . . . . . . . . . . . . . 6
Section 5. Validity of Proxies . . . . . . . . . . . . 6
Section 6. Record Date . . . . . . . . . . . . . . . . 7
Section 7. Action Without a Meeting . . . . . . . . . . 7

ARTICLE VI
SHARES OF BENEFICIAL INTEREST . . . . . . . . . . . . . . . . 7
Section 1. No Share Certificates . . . . . . . . . . . 7
Section 2. Transfer of Shares . . . . . . . . . . . . . 7

- i -

ARTICLE VII
FISCAL YEAR AND ACCOUNTANT . . . . . . . . . . . . . . . . . . 7
Section 1. Fiscal Year . . . . . . . . . . . . . . . . 7
Section 2. Accountant . . . . . . . . . . . . . . . . . 7

ARTICLE VIII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. General . . . . . . . . . . . . . . . . . . 8
Section 2. By Shareholders Only . . . . . . . . . . . . 8

ARTICLE IX
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE X
CONFLICT OF INTEREST PROCEDURES . . . . . . . . . . . . . . . 9
Section 1. Monitoring and Reporting Conflicts . . . . . 9
Section 2. Annual Report . . . . . . . . . . . . . . . 9
Section 3. Resolution of Conflicts . . . . . . . . . . 9
Section 4. Annual Review . . . . . . . . . . . . . . . 9

- ii -

BY-LAWS

NEUBERGER & BERMAN INCOME FUNDS

These By-laws of Neuberger & Berman Income Funds (the "Trust"), a
Delaware business trust, are subject to the Trust Instrument of the Trust
dated December 23, 1992, as from time to time amended, supplemented or
restated (the "Trust Instrument"). Capitalized terms used herein have the
same meanings as in the Trust Instrument.

ARTICLE I
---------
PRINCIPAL OFFICE AND SEAL
--------------------------

Section 1. Principal Office. The principal office of the Trust shall be
located in New York, New York, or such other location as the Trustees
determine. The Trust may establish and maintain other offices and places
of business as the Trustees determine.

Section 2. Seal. The Trustees may adopt a seal for the Trust in such
form and with such inscription as the Trustees determine. Any Trustee or
officer of the Trust shall have authority to affix the seal to any
document.

ARTICLE II
----------
MEETINGS OF TRUSTEES
--------------------

Section 1. Action by Trustees. Trustees may take actions at meetings
held at such places and times as the Trustees may determine, or without
meetings, all as provided in Article II, Section 7, of the Trust
Instrument.

Section 2. Compensation of Trustees. Each Trustee who is neither an
employee of an investment adviser of the Trust or any Series nor an
employee of an entity affiliated with the investment adviser may receive
such compensation from the Trust for services and reimbursement for
expenses as the Trustees may determine.

ARTICLE III
-----------
COMMITTEES
----------

Section 1. Establishment. The Trustees may designate one or more
committees of the Trustees, which shall include an Executive Committee, a
Nominating Committee, and an Audit Committee (collectively, the

"Established Committees"). The Trustees shall determine the number of
members of each committee and its powers and shall appoint its members and
its chair. Each committee member shall serve at the pleasure of the
Trustees. The Trustees may abolish any committee, other than the
Established Committees, at any time. Each committee shall maintain
records of its meetings and report its actions to the Trustees. The
Trustees may rescind any action of any committee, but such rescission
shall not have retroactive effect. The Trustees may delegate to any
committee any of its powers, subject to the limitations of applicable law.

Section 2. Proceedings; Quorum; Action. Each committee may adopt such
rules governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable. In the absence of such rules, a majority of
any committee shall constitute a quorum, and a committee shall act by the
vote of a majority of a quorum.

Section 3. Executive Committee. The Executive Committee shall have all
the powers of the Trustees when the Trustees are not in session. The
Chairman shall be a member and the chair of the Executive Committee. A
majority of the members of the Executive Committee shall be trustees who
are not "interested persons" of the Trust, as defined in the 1940 Act
("Disinterested Trustees").

Section 4. Nominating Committee. The Nominating Committee shall nominate
individuals to serve as Trustees (including Disinterested Trustees), as
members of committees, and as officers of the Trust. The members of the
Committee shall be Disinterested Trustees.

Section 5. Audit Committee. The Audit Committee shall review and
evaluate the audit function, including recommending the selection of
independent certified public accountants for each Series. The members of
the Committee shall be Disinterested Trustees.

Section 6. Compensation of Committee Members. Each committee member who
is a Disinterested Trustee may receive such compensation from the Trust
for services and reimbursement for expenses as the Trustees may determine.

ARTICLE IV
----------

OFFICERS
--------

Section 1. General. The officers of the Trust shall be a Chairman, a
President, one or more Vice Presidents, a Treasurer, and a Secretary, and
may include one or more Assistant Treasurers or Assistant Secretaries and
such other officers ("Other Officers") as the Trustees may determine.

Section 2. Election, Tenure and Qualifications of Officers. The Trustees
shall elect the officers of the Trust, except those appointed as provided
in Section 9 of this Article. Each officer elected by the Trustees shall

- 2 -

hold office until his or her successor shall have been elected and
qualified or until his or her earlier death, inability to serve, or
resignation. Any person may hold one or more offices, except that the
Chairman and the Secretary may not be the same individual. A person who
holds more than one office in the Trust may not act in more than one
capacity to execute, acknowledge, or verify an instrument required by law
to be executed, acknowledged, or verified by more than one officer. No
officer other than the Chairman need be a Trustee or Shareholder.

Section 3. Vacancies and Newly Created Offices. Whenever a vacancy shall
occur in any office or if any new office is created, the Trustees may fill
such vacancy or new office.

Section 4. Removal and Resignation. Officers serve at the pleasure of
the Trustees and may be removed at any time with or without cause. The
Trustees may delegate this power to the Chairman or President with respect
to any Other Officer. Such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer may resign
from office at any time by delivering a written resignation to the
Trustees, Chairman, or the President. Unless otherwise specified therein,
such resignation shall take effect upon delivery.

Section 5. Chairman. The Chairman shall be the chief executive officer
of the Trust. Subject to the direction of the Trustees, the Chairman
shall have general charge, supervision and control over the Trust's
business affairs and shall be responsible for the management thereof and
the execution of policies established by the Trustees. The Chairman shall
preside at any Shareholders' meetings and at all meetings of the Trustees
and shall in general exercise the powers and perform the duties of the
Chairman of the Trustees. Except as the Trustees may otherwise order, the
Chairman shall have the power to grant, issue, execute or sign such powers
of attorney, proxies, agreements or other documents. The Chairman also
shall have the power to employ attorneys, accountants and other advisers
and agents for the Trust. The Chairman shall exercise such other powers
and perform such other duties as the Trustees may assign to the Chairman.

Section 6. President. The President shall have such powers and perform
such duties as the Trustees or the Chairman may determine. At the request
or in the absence or disability of the Chairman, the President shall
perform all the duties of the President and, when so acting, shall have
all the powers of the President.

Section 7. Vice President(s). The Vice President(s) shall have such
powers and perform such duties as the Trustees or the Chairman may
determine. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice
Presidents, then the senior of the Vice Presidents present and able to
act) shall perform all the duties of the President and, when so acting,
shall have all the powers of the President. The Trustees may designate a
Vice President as the principal financial officer of the Trust or to serve
one or more other functions. If a Vice President is designated as
principal financial officer of the Trust, he or she shall have general

- 3 -

charge of the finances and books of the Trust and shall report to the
Trustees annually regarding the financial condition of each Series as soon
as possible after the close of such Series's fiscal year. The Trustees
also may designate one of the Vice Presidents as Executive Vice President.

Section 8. Treasurer and Assistant Treasurer(s). The Treasurer may be
designated as the principal financial officer or as the principal
accounting officer of the Trust. If designated as principal financial
officer, the Treasurer shall have general charge of the finances and books
of the Trust, and shall report to the Trustees annually regarding the
financial condition of each Series as soon as possible after the close of
such Series' fiscal year. The Treasurer shall be responsible for the
delivery of all funds and securities of the Trust to such company as the
Trustees shall retain as Custodian. The Treasurer shall furnish such
reports concerning the financial condition of the Trust as the Trustees
may request. The Treasurer shall perform all acts incidental to the
office of Treasurer, subject to the Trustees' supervision, and shall
perform such additional duties as the Trustees may designate.

Any Assistant Treasurer may perform such duties of the Treasurer as
the Trustees or the Treasurer may assign, and, in the absence of the
Treasurer, may perform all the duties of the Treasurer.

Section 9. Secretary and Assistant Secretaries. The Secretary shall
record all votes and proceedings of the meetings of Trustees and
Shareholders in books to be kept for that purpose. The Secretary shall be
responsible for giving and serving notices of the Trust. The Secretary
shall have custody of any seal of the Trust and shall be responsible for
the records of the Trust, including the Share register and such other
books and documents as may be required by the Trustees or by law. The
Secretary shall perform all acts incidental to the office of Secretary,
subject to the supervision of the Trustees, and shall perform such
additional duties as the Trustees may designate.

Any Assistant Secretary may perform such duties of the Secretary as
the Trustees or the Secretary may assign, and, in the absence of the
Secretary, may perform all the duties of the Secretary.

Section 10. Compensation of Officers. Each officer may receive such
compensation from the Trust for services and reimbursement for expenses as
the Trustees may determine.

Section 11. Surety Bond. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Securities
and Exchange Commission ("Commission")) to the Trust in such sum and with
such surety or sureties as the Trustees may determine, conditioned upon
the faithful performance of his or her duties to the Trust, including
responsibility for negligence and for the accounting of any of the Trust's
property, funds or securities that may come into his or her hands.

- 4 -

ARTICLE V
----------
MEETINGS OF SHAREHOLDERS
------------------------

Section 1. No Annual Meetings. There shall be no annual Shareholders'
meetings, unless required by law.

Section 2. Special Meetings. The Secretary shall call a special meeting
of Shareholders of any Series or Class whenever ordered by the Trustees.

The Secretary also shall call a special meeting of Shareholders of
any Series or Class upon the written request of Shareholders owning at
least ten percent of the Outstanding Shares of such Series or Class
entitled to vote at such meeting; provided, that (1) such request shall
state the purposes of such meeting and the matters proposed to be acted
on, and (2) the Shareholders requesting such meeting shall have paid to
the Trust the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
Shareholders. If the Secretary fails for more than thirty days to call a
special meeting when required to do so, the Trustees or the Shareholders
requesting such a meeting may, in the name of the Secretary, call the
meeting by giving the required notice. The Secretary shall not call a
special meeting upon the request of Shareholders of any Series or Class to
consider any matter that is substantially the same as a matter voted upon
at any special meeting of Shareholders of such Series or Class held during
the preceding twelve months, unless requested by the holders of a majority
of the Outstanding Shares of such Series or Class entitled to be voted at
such meeting.

A special meeting of Shareholders of any Series or Class shall be
held at such time and place as is determined by the Trustees and stated in
the notice of that meeting.

Section 3. Notice of Meetings; Waiver. The Secretary shall call a
special meeting of Shareholders by giving written notice of the place,
date, time, and purposes of that meeting at least fifteen days before the
date of such meeting. The Secretary may deliver or mail, postage prepaid,
the written notice of any meeting to each Shareholder entitled to vote at
such meeting. If mailed, notice shall be deemed to be given when
deposited in the United States mail directed to the Shareholder at his or
her address as it appears on the records of the Trust.

Section 4. Adjourned Meetings. A Shareholders' meeting may be adjourned
one or more times for any reason, including the failure of a quorum to
attend the meeting. No notice of adjournment of a meeting to another time
or place need be given to Shareholders if such time and place are
announced at the meeting at which the adjournment is taken or reasonable
notice is given to persons present at the meeting, and if the adjourned
meeting is held within a reasonable time after the date set for the
original meeting. Any business that might have been transacted at the
original meeting may be transacted at any adjourned meeting. If after the

- 5 -

adjournment a new record date is fixed for the adjourned meeting, the
Secretary shall give notice of the adjourned meeting to Shareholders of
record entitled to vote at such meeting. Any irregularities in the notice
of any meeting or the nonreceipt of any such notice by any of the
Shareholders shall not invalidate any action otherwise properly taken at
any such meeting.

Section 5. Validity of Proxies. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by
proxy; provided, that either (1) the Shareholder or his or her duly
authorized attorney has signed and dated a written instrument authorizing
such proxy to act, or (2) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act, but if a proposal by anyone other
than the officers or Trustees is submitted to a vote of the Shareholders
of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy. Unless
the proxy provides otherwise, it shall not be valid for more than eleven
months before the date of the meeting. All proxies shall be delivered to
the Secretary or other person responsible for recording the proceedings
before being voted. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by one of them unless at or
prior to exercise of such proxy the Trust receives a specific written
notice to the contrary from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the Shareholder
to vote at any adjournment of a Shareholders' meeting. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. At every meeting of
Shareholders, unless the voting is conducted by inspectors, the chairman
of the meeting shall decide all questions concerning the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes.
Subject to the provisions of the Delaware Business Trust Act, the Trust
Instrument, or these By-laws, the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder
shall govern all matters concerning the giving, voting or validity of
proxies, as if the Trust were a Delaware corporation and the Shareholders
were shareholders of a Delaware corporation.

Section 6. Record Date. The Trustees may fix in advance a date up to
ninety days before the date of any Shareholders' meeting as a record date
for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting. The Shareholders of record entitled to vote at
a Shareholders' meeting shall be deemed the Shareholders of record at any
meeting reconvened after one or more adjournments, unless the Trustees
have fixed a new record date. If the Shareholders' meeting is adjourned
for more than sixty days after the original date, the Trustees shall
establish a new record date.

Section 7. Action Without a Meeting. Shareholders may take any action
without a meeting if a majority (or such greater amount as may be required

- 6 -

by law) of the Outstanding Shares entitled to vote on the matter consent
to the action in writing and such written consents are filed with the
records of Shareholders' meetings. Such written consent shall be treated
for all purposes as a vote at a meeting of the Shareholders.

ARTICLE VI
----------
SHARES OF BENEFICIAL INTEREST
-----------------------------

Section 1. No Share Certificates. Neither the Trust nor any Series or
Class shall issue certificates certifying the ownership of Shares, unless
the Trustees may otherwise specifically authorize such certificates.

Section 2. Transfer of Shares. Shares shall be transferable only by a
transfer recorded on the books of the Trust by the Shareholder of record
in person or by his or her duly authorized attorney or legal
representative. Shares may be freely transferred and the Trustees may,
from time to time, adopt rules and regulations regarding the method of
transfer of such Shares.

ARTICLE VII
------------
FISCAL YEAR AND ACCOUNTANT
--------------------------

Section 1. Fiscal Year. The fiscal year of the Trust shall end on
October 31.

Section 2. Accountant. The Trust shall employ independent certified
public accountants as its Accountant to examine the accounts of the Trust
and to sign and certify financial statements filed by the Trust. The
Accountant's certificates and reports shall be addressed both to the
Trustees and to the Shareholders. A majority of the Disinterested
Trustees shall select the Accountant at any meeting held within ninety
days before or after the beginning of the fiscal year of the Trust, acting
upon the recommendation of the Audit Committee. The Trust shall submit
the selection for ratification or rejection at the next succeeding
Shareholders' meeting, if such a meeting is to be held within the Trust's
fiscal year. If the selection is rejected at that meeting, the Accountant
shall be selected by majority vote of the Trust's outstanding voting
securities, either at the meeting at which the rejection occurred or at a
subsequent meeting of Shareholders called for the purpose of selecting an
Accountant. The employment of the Accountant shall be conditioned upon
the right of the Trust to terminate such employment without any penalty by
vote of a Majority Shareholder Vote at any Shareholders' meeting called
for that purpose.

- 7 -

ARTICLE VIII
------------
AMENDMENTS
----------

Section 1. General. Except as provided in Section 2 of this Article,
these By-laws may be amended by the Trustees, or by the affirmative vote
of a majority of the Outstanding Shares entitled to vote at any meeting.

Section 2. By Shareholders Only. After the issue of any Shares, this
Article may only be amended by the affirmative vote of the holders of the
lesser of (a) at least two-thirds of the Outstanding Shares present and
entitled to vote at any meeting, or (b) at least fifty percent of the
Outstanding Shares.

ARTICLE IX
----------
NET ASSET VALUE
---------------

The term "Net Asset Value" of any Series shall mean that amount by
which the assets belonging to that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. Net Asset Value per
Share shall be determined separately for each Series and shall be
determined on such days and at such times as the Trustees may determine.
The Trustees shall make such determination with respect to securities for
which market quotations are readily available, at the market value of such
securities, and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees; provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act
and the rules, regulations and interpretations thereof promulgated or
issued by the SEC or insofar as permitted by any order of the SEC
applicable to the Series. The Trustees may delegate any of their powers
and duties under this Article X with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the Net Asset Value per
Share last determined to be determined again in a similar manner and may
fix the time when such redetermined values shall become effective.

ARTICLE X
----------
CONFLICT OF INTEREST PROCEDURES
-------------------------------

Section 1. Monitoring and Reporting Conflicts. The trustees of Income
Managers Trust and the Trust (collectively, the "Trusts") are the same
individuals. Set forth in this Article are procedures established to
address potential conflicts of interest that may arise between the Trusts.
On an ongoing basis, the investment adviser ("Manager") of Income Managers
Trust shall be responsible for monitoring the Trusts for the existence of

- 8 -

any material conflicts of interest between the Trusts. The Manager shall
be responsible for reporting any potential or existing conflicts to
trustees of the Trusts as they may develop.

Section 2. Annual Report. The Manager shall report to the trustees of
the Trusts annually regarding its monitoring of the Trusts for conflicts
of interest.

Section 3. Resolution of Conflicts. If a potential conflict of interest
arises, the Trustees shall take such action as is reasonably appropriate
to deal with the conflict, up to and including recommending a change in
the trustees and implementing such recommendation, consistent with
applicable law.

Section 4. Annual Review. The Trustees, including a majority of the
Disinterested Trustees, shall determine no less frequently than annually
that the operating structure is in the best interest of Shareholders. The
Trustees shall consider, among other things, whether the expenses incurred
by the Trust are approximately the same or less than the expenses that the
Trust would incur if it invested directly in the type of securities being
held by Income Managers Trust. The Trustees, including a majority of the
Disinterested Trustees, shall review no less frequently than annually
these procedures for their continuing appropriateness.

- 9 -

MANAGEMENT AGREEMENT

This Agreement is made as of July 2, 1993, between Income
Managers Trust, a New York common law trust ("Managers Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation
("Manager").

W I T N E S S E T H :
- - - - - - - - - -

WHEREAS, Managers Trust is registered under the Investment Company
Act of 1940, as amended ("1940 Act"), as an open-end, diversified
management investment company and has established several separate series
of shares ("Series"), with each Series having its own assets and
investment policies; and

WHEREAS, Managers Trust desires to retain the Manager as investment
adviser to furnish investment advisory and portfolio management services
to each Series listed in Schedule A attached hereto, to such other Series
of Managers Trust hereinafter established as agreed to from time to time
by the parties, evidenced by an addendum to Schedule A (hereinafter
"Series" shall refer to each Series which is subject to this Agreement and
all agreements and actions described herein to be made or taken by
Managers Trust on behalf of the Series), and the Manager is willing to
furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:

1. SERVICES OF THE MANAGER.

1.1 INVESTMENT MANAGEMENT SERVICES. The Manager shall act
as the investment adviser to the Series and, as such, shall (i) obtain and
evaluate such information relating to the economy, industries, businesses,
securities markets and securities as it may deem necessary or useful in
discharging its responsibilities hereunder, (ii) formulate a continuing
program for the investment of the assets of the Series in a manner
consistent with its investment objectives, policies and restrictions, and
(iii) determine from time to time securities to be purchased, sold,
retained or lent by the Series, and implement those decisions, including
the selection of entities with or through which such purchases, sales or
loans are to be effected; PROVIDED, that the Manager will place orders
pursuant to its investment determinations either directly with the issuer
or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best net price and most favorable execution of its
orders, and (b) may nevertheless in its discretion purchase and sell
portfolio securities from and to brokers and dealers who provide the
Manager with research, analysis, advice and similar services and pay such
brokers and dealers in return a higher commission or spread than may be
charged by other brokers or dealers.

The Series hereby authorizes any entity or person associated
with the Manager which is a member of a national securities exchange to
effect any transaction on the exchange for the account of the Series which
is permitted by Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-2(T) thereunder, and the Series hereby consents to the retention
of compensation for such transactions in accordance with Rule
11a2-2(T)(a)(iv).

The Manager shall carry out its duties with respect to the
Series's investments in accordance with applicable law and the investment
objectives, policies and restrictions of the Series adopted by the
trustees of Managers Trust ("Trustees"), and subject to such further
limitations as the Series may from time to time impose by written notice
to the Manager.

1.2 ADMINISTRATIVE SERVICES. The Manager shall supervise
the Series's business and affairs and shall provide such services required
for effective administration of the Series as are not provided by
employees or other agents engaged by the Series; PROVIDED, that the
Manager shall not have any obligation to provide under this Agreement any
direct or indirect services to the holders of interests in the Series
("Interestholders"), any services related to the sale of interests in the
Series, or any other services which are the subject of a separate
agreement or arrangement between the Series and the Manager. Subject to
the foregoing, in providing administrative services hereunder, the Manager
shall:

1.2.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish
without cost to the Series, or pay the cost of, such office space, office
equipment and office facilities as are adequate for the Series's needs.

1.2.2 PERSONNEL. Provide, without remuneration from or
other cost to Managers Trust or the Series, the services of individuals
competent to perform all of the Series's executive, administrative and
clerical functions which are not performed by employees or other agents
engaged by the Series or by the Manager acting in some other capacity
pursuant to a separate agreement or arrangement with the Series.

1.2.3 AGENTS. Assist the Series in selecting and
coordinating the activities of the other agents engaged by the Series,
including the Series's custodian, independent auditors and legal counsel.

1.2.4 TRUSTEES AND OFFICERS. Authorize and permit the
Manager's directors, officers and employees who may be elected or
appointed as trustees or officers of Managers Trust to serve in such
capacities, without remuneration from or other cost to Managers Trust or
the Series.

1.2.5 BOOKS AND RECORDS. Assure that all financial,
accounting and other records required to be maintained and preserved by
Managers Trust and/or the Series are maintained and preserved by it or on
its behalf in accordance with applicable laws and regulations.

- 2 -

1.2.6 REPORTS AND FILINGS. Assist in the preparation
of (but not pay for) all periodic reports by Managers Trust or the Series
to Interestholders of the Series and all reports and filings required to
maintain the registration and qualification of the Series, or to meet
other regulatory or tax requirements applicable to the Series, under
federal and state securities and tax laws.

2. EXPENSES OF THE SERIES.

2.1 EXPENSES TO BE PAID BY THE MANAGER. The Manager shall
pay all salaries, expenses and fees of the officers, trustees and
employees of the Managers Trust who are officers, directors or employees
of the Manager.

In the event that the Manager pays or assumes any expenses of
Managers Trust or a Series not required to be paid or assumed by the
Manager under this Agreement, the Manager shall not be obligated hereby to
pay or assume the same or any similar expense in the future; PROVIDED,
that nothing herein contained shall be deemed to relieve the Manager of
any obligation to Managers Trust or to a Series under any separate
agreement or arrangement between the parties.

2.2 EXPENSES TO BE PAID BY THE SERIES. Each Series shall
bear all expenses of its operation, except those specifically allocated to
the Manager under this Agreement or under any separate agreement between a
Series and the Manager. Expenses to be borne by a Series shall include
both expenses directly attributable to the operation of the Series and the
placement of interests therein, as well as the portion of any expenses of
Managers Trust that is properly allocable to the Series in a manner
approved by the trustees of Managers Trust. Subject to any separate
agreement or arrangement between Managers Trust or a Series and the
Manager, the expenses hereby allocated to each Series, and not to the
Manager, include, but are not limited to:

2.2.1 CUSTODY. All charges of depositories,
custodians, and other agents for the transfer, receipt, safekeeping, and
servicing of its cash, securities, and other property.

2.2.2 INTERESTHOLDER SERVICING. All expenses of
maintaining and servicing Interestholder accounts, including but not
limited to the charges of any Interestholder servicing agent, dividend
disbursing agent or other agent engaged by a Series to service
Interestholder accounts.

2.2.3 INTERESTHOLDER REPORTS. All expenses of
preparing, setting in type, printing and distributing reports and other
communications to Interestholders of a Series.

2.2.4 PRICING AND PORTFOLIO VALUATION. All expenses of
computing a Series's net asset value per share, including any equipment or
services obtained for the purpose of pricing shares or valuing the
Series's investment portfolio.

- 3 -

2.2.5 COMMUNICATIONS. All charges for equipment or
services used for communications between the Manager or the Series and any
custodian, Interestholder servicing agent, portfolio accounting services
agent, or other agent engaged by a Series.

2.2.6 LEGAL AND ACCOUNTING FEES. All charges for
services and expenses of a Series's legal counsel and independent
auditors.

2.2.7 TRUSTEES' FEES AND EXPENSES. With respect to
each Series, all compensation of Trustees other than those affiliated with
the Manager, all expenses incurred in connection with such unaffiliated
Trustees' services as Trustees, and all other expenses of meetings of the
Trustees or committees thereof.

2.2.8 INTERESTHOLDER MEETINGS. All expenses incidental
to holding meetings of Interestholders, including the printing of notices
and proxy materials, and proxy solicitation therefor.

2.2.9 BONDING AND INSURANCE. All expenses of bond,
liability, and other insurance coverage required by law or regulation or
deemed advisable by the Trustees, including, without limitation, such
bond, liability and other insurance expense that may from time to time be
allocated to the Series in a manner approved by the Trustees.

2.2.10 BROKERAGE COMMISSIONS. All brokers'
commissions and other charges incident to the purchase, sale or lending of
a Series's portfolio securities.

2.2.11 TAXES. All taxes or governmental fees payable
by or with respect to a Series to federal, state or other governmental
agencies, domestic or foreign, including stamp or other transfer taxes.

2.2.12 TRADE ASSOCIATION FEES. All fees, dues and
other expenses incurred in connection with a Series's membership in any
trade association or other investment organization.

2.2.13 NONRECURRING AND EXTRAORDINARY EXPENSES. Such
nonrecurring and extraordinary expenses as may arise, including the costs
of actions, suits, or proceedings to which the Series is a party and the
expenses a Series may incur as a result of its legal obligation to provide
indemnification to Managers Trust's officers, Trustees and agents.

2.2.14 ORGANIZATIONAL EXPENSES. Any and all
organizational expenses of a Series paid by the Manager shall be
reimbursed by such Series at such time or times agreed by such Series and
the Manager.

3. ADVISORY FEE.

3.1 FEE. As compensation for all services rendered,
facilities provided and expenses paid or assumed by the Manager under this

- 4 -

Agreement, each Series shall pay the Manager an annual fee as set out in
Schedule B to this Agreement.

3.2 COMPUTATION AND PAYMENT OF FEE. The advisory fee shall
accrue on each calendar day, and shall be payable monthly on the first
business day of the next succeeding calendar month. The daily fee
accruals shall be computed by multiplying the fraction of one divided by
the number of days in the calendar year by the applicable annual advisory
fee rate (as set forth in Schedule B hereto), and multiplying this product
by the net assets of the Series, determined in the manner established by
the Trustees, as of the close of business on the last preceding business
day on which the Series's net asset value was determined.

3.3 STATE EXPENSE LIMITATION. If in any fiscal year the
operating expenses of any Interestholder in a Series plus such
Interestholder's pro rata portion of the Series' operating expenses in
such fiscal year ("Aggregate Operating Expenses", which includes any fees
or expense reimbursements payable to the Manager pursuant to this
Agreement and any compensation payable to the Manager pursuant to (i) the
Administration Agreement between such Interestholder and the Manager or
(ii) any other Agreement or arrangement with Managers Trust with respect
to that Interestholder, but excludes interest, taxes, brokerage
commissions, litigation and indemnification expenses, and other
extraordinary expenses not incurred in the ordinary course of business)
exceed the lowest applicable percentage expense limitation imposed under
the securities law and regulations of any state in which such
Interestholder's shares are qualified for sale (the "State Expense
Limitation"), then the Manager shall pay such Interestholder the amount of
such excess, less the amount of any reduction of the administration fee
referred to below; PROVIDED, that the Manager shall have no obligation
hereunder to pay such Interestholder for any such expenses which exceed
the pro rata portion of such advisory fee attributable to such
Interestholder's interest in that Series.

No payment shall be made to such Interestholder hereunder
unless and until the administration fee payable by such Interestholder
under a similar State Expense Limitation of its Administration Agreement
with the Manager has been reduced to zero. Any payment to an
interestholder hereunder shall be made monthly, by annualizing the
Aggregate Operating Expenses for each month as of the last day of such
month. An adjustment shall be made on or before the last day of the first
month of the next succeeding fiscal year if Aggregate Operating Expenses
for such fiscal year do not exceed the State Expense Limitation or if for
such fiscal year there is no applicable State Expense Limitation.

4. OWNERSHIP OF RECORDS.

All records required to be maintained and preserved by the
Series pursuant to the provisions or rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the 1940 Act and
maintained and preserved by the Manager on behalf of the Series are the
property of the Series and shall be surrendered by the Manager promptly on

- 5 -

request by the Series; PROVIDED, that the Manager may at its own expense
make and retain copies of any such records.

5. REPORTS TO MANAGER.

The Series shall furnish or otherwise make available to the
Manager such copies of that Series's financial statements, proxy
statements, reports, and other information relating to its business and
affairs as the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this Agreement.

6. REPORTS TO THE SERIES.

The Manager shall prepare and furnish to the Series such
reports, statistical data and other information in such form and at such
intervals as the Series may reasonably request.

7. RETENTION OF SUB-ADVISER.

Subject to a Series obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act, the Manager may
retain a sub-adviser, at the Manager's own cost and expense, for the
purpose of making investment recommendations and research information
available to the Manager. Retention of a sub-adviser shall in no way
reduce the responsibilities or obligations of the Manager under this
Agreement and the Manager shall be responsible to Managers Trust and the
Series for all acts or omissions of the sub-adviser in connection with the
performance of the Manager's duties hereunder.

8. SERVICES TO OTHER CLIENTS.

Nothing herein contained shall limit the freedom of the
Manager or any affiliated person of the Manager to render investment
management and administrative services to other investment companies, to
act as investment adviser or investment counselor to other persons, firms
or corporations, or to engage in other business activities.

9. LIMITATION OF LIABILITY OF MANAGER AND ITS PERSONNEL.

Neither the Manager nor any director, officer or employee of
the Manager performing services for the Series at the direction or request
of the Manager in connection with the Manager's discharge of its
obligations hereunder shall be liable for any error of judgment or mistake
of law or for any loss suffered by a Series in connection with any matter
to which this Agreement relates; PROVIDED, that nothing herein contained
shall be construed (i) to protect the Manager against any liability to
Managers Trust or a Series or its Interestholders to which the Manager
would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of the Manager's duties, or by reason
of the Manager's reckless disregard of its obligations and duties under
this Agreement, or (ii) to protect any director, officer or employee of
the Manager who is or was a Trustee or officer of Managers Trust against

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any liability to Managers Trust or a Series or its Interestholders to
which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office with Managers
Trust.

10. NO LIABILITY OF OTHER SERIES.

This Agreement is made by each Series pursuant to authority
granted by the Trustees, and the obligations created hereby are not
binding on any of the Trustees or Interestholders of the Series
individually, but bind only the property of that Series and no other.

11. EFFECT OF AGREEMENT.

Nothing herein contained shall be deemed to require the
Series to take any action contrary to the Declaration of Trust or By-Laws
of Managers Trust, any actions of the Trustees binding upon the Series, or
any applicable law, regulation or order to which the Series is subject or
by which it is bound, or to relieve or deprive the Trustees of their
responsibility for and control of the conduct of the business and affairs
of the Series or Managers Trust.

12. TERM OF AGREEMENT.

The term of this Agreement shall begin on the date first
above written with respect to each Series listed in Schedule A on the date
hereof and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect through July 2, 1995. With respect to
each Series added by execution of an Addendum to Schedule A, the term of
this Agreement shall begin on the date of such execution and, unless
sooner terminated as hereinafter provided, this Agreement shall remain in
effect to the date two years after such execution. Thereafter, in each
case this Agreement shall continue in effect with respect to each Series
from year to year, subject to the termination provisions and all other
terms and conditions hereof; PROVIDED, such continuance with respect to a
Series is approved at least annually by vote or written consent of the
Trustees, including a majority of the Trustees who are not interested
persons of either party hereto ("Disinterested Trustees"); and PROVIDED
FURTHER, that the Manager shall not have notified a Series in writing at
least sixty days prior to the first expiration date hereof or at least
sixty days prior to any expiration date in any year thereafter that it
does not desire such continuation. The Manager shall furnish any Series,
promptly upon its request, such information as may reasonably be necessary
to evaluate the terms of this Agreement or any extension, renewal or
amendment thereof.

13. AMENDMENT OR ASSIGNMENT OF AGREEMENT.

Any amendment to this Agreement shall be in writing signed by
the parties hereto; PROVIDED, that no such amendment shall be effective
unless authorized on behalf of any Series (i) by resolution of the

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Trustees, including the vote or written consent of a majority of the
Trustees who are not parties to this Agreement or interested persons of
either party hereto, and (ii) by vote of a majority of the outstanding
voting securities of the Series. This Agreement shall terminate
automatically and immediately in the event of its assignment.

14. TERMINATION OF AGREEMENT.

This Agreement may be terminated at any time by either party
hereto, without the payment of any penalty, upon sixty (60) days' prior
written notice to the other party; PROVIDED, that in the case of
termination by any Series, such action shall have been authorized (i) by
resolution of the Trustees, including the vote or written consent of a
majority of Trustees who are not parties to this Agreement or interested
persons of either party hereto, or (ii) by vote of a majority of the
outstanding voting securities of the Series.

15. NAME OF THE SERIES.

Each Series hereby agrees that if the Manager shall at any
time for any reason cease to serve as investment adviser to a Series, the
Series shall, if and when requested by the Manager, eliminate from the
Series's name the name "Neuberger & Berman" and thereafter refrain from
using the name "Neuberger & Berman" or the initials "N&B" in connection
with its business or activities, and the foregoing agreement of a Series
shall survive any termination of this Agreement and any extension or
renewal thereof.

16. INTERPRETATION AND DEFINITION OF TERMS.

Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the
United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the 1940 Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested persons," "assignment" and "affiliated person," as used in
this Agreement shall have the meanings assigned to them by Section 2(a) of
the 1940 Act. In addition, when the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is modified, interpreted
or relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or
order.

17. CHOICE OF LAW

This Agreement is made and to be principally performed in the
State of New York, and except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed

- 8 -

by, and construed and enforced in accordance with, the internal laws of
the State of New York.

18. CAPTIONS.

The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.

19. EXECUTION IN COUNTERPARTS.

This Agreement may be executed simultaneously in counter-
parts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized and their respective seals to be hereunto affixed, as of the
day and year first above written.

INCOME MANAGERS TRUST

By /s/ Daniel J. Sullivan
--------------------------

Vice President
---------------------------
Title

NEUBERGER & BERMAN
MANAGEMENT INCORPORATED

By /s/ Michael J. Weiner
---------------------------

Senior Vice President
---------------------------
Title

Attest:

/s/ Claudia A. Brandon
-----------------------
Secretary

- 9 -

NEUBERGER & BERMAN MANAGEMENT INCORPORATED
MANAGEMENT AGREEMENT

SCHEDULE A

The Series of Income Managers Trust currently subject to this
Agreement are as follows:

Neuberger & Berman Cash Reserves Portfolio
Neuberger & Berman Government Money Portfolio
Neuberger & Berman Limited Maturity Bond Portfolio
Neuberger & Berman Municipal Money Portfolio
Neuberger & Berman Municipal Securities Portfolio
Neuberger & Berman New York Insured Intermediate Portfolio
Neuberger & Berman Ultra Short Bond Portfolio

DATED: February 2, 1996

INCOME MANAGERS TRUST
MANAGEMENT AGREEMENT

SCHEDULE B

Compensation pursuant to Paragraph 3 of the Income Managers Trust
Management Agreement shall be calculated in accordance with the following
schedules:

.25% on the first $500 million of average daily net assets
.225% on the next $500 million of average daily net assets
.20% on the next $500 million of average daily net assets
.175% on the next $500 million of average daily net assets
.15% of average daily net assets in excess of $2 billion

DATED: February 2, 1996

SUB-ADVISORY AGREEMENT

NEUBERGER & BERMAN MANAGEMENT INCORPORATED
605 Third Avenue
New York, New York 10158-0006

July 2, 1993

Neuberger & Berman
605 Third Avenue
New York, New York 10158-3698

Dear Sirs:

We have entered into a Management Agreement with Income
Managers Trust ("Managers Trust"), with respect several of its series
("Series"), as set forth in Schedule A hereto, pursuant to which we are to
act as investment adviser to such Series. We hereby agree with you as
follows:

1. You agree for the duration of this Agreement to furnish us
with such investment recommendations and research information, of the same
type as that which you from time to time provide to your partners and
employees for use in managing client accounts, all as we shall reasonably
request. In the absence of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or of reckless disregard of
your duties and obligations hereunder, you shall not be subject to
liability for any act or omission or any loss suffered by any Series or
its security holders in connection with the matters to which this
Agreement relates.

2. In consideration of your agreements set forth in paragraph 1
above, we agree to pay you on the basis of direct and indirect costs to
you of performing such agreements. Indirect costs shall be allocated on a
basis mutually satisfactory to you and us.

3. As used in this Agreement, the terms "assignment" and "vote
of a majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a)(4) and 2(a)(42), respectively, of
the Investment Company Act of 1940, as amended.

This Agreement shall terminate automatically in the event of
its assignment, or upon termination of the Management Agreement between
Managers Trust and the undersigned.

This agreement may be terminated at any time, without the
payment of any penalty, (a) with respect to any Series by the Trustees of
Managers Trust or by vote of a majority of the outstanding voting
securities of such Series or by the undersigned on not less than thirty
nor more than sixty days' written notice addressed to you at your
principal place of business; and (b) by you, without the payment of any
penalty, on not less than thirty nor more than sixty days' written notice

addressed to Managers Trust and the undersigned at Managers Trust's
principal place of business.

This Agreement shall remain in full force and effect with
respect to each Series listed in Schedule A on the date hereof through
July 2, 1995, unless sooner terminated as provided above, and from year to
year thereafter only so long as its continuance is approved in the manner
required by the Investment Company Act of 1940, as from time to time
amended.

Schedule A to this Agreement may be modified from time to
time to reflect the addition or deletion of a Series from the terms of
this Agreement. With respect to each Series added by execution of an
addendum to Schedule A, the term of this Agreement shall begin on the date
of such execution and, unless sooner terminated as provided above, this
Agreement shall remain in effect to the date two years after such
execution and from year to year thereafter only so long as its continuance
is approved in the manner required by the Investment Company Act of 1940,
as from time to time amended.

If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterpart hereof and return the same
to us.

Very truly yours,

NEUBERGER & BERMAN
MANAGEMENT INCORPORATED

By: /s/ Stanley Edegner
---------------------
President

The foregoing agreement is
hereby accepted as of the date
first above written.

NEUBERGER & BERMAN

By: /s/ Lawrence Zicklin
--------------------

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NEUBERGER & BERMAN MANAGEMENT INCORPORATED
SUB-ADVISORY AGREEMENT

SCHEDULE A

The Series of Income Managers Trust currently subject to this
Agreement are as follows:

DATED: February 2, 1996

DISTRIBUTION AGREEMENT

This Agreement is made as of July 2, 1993, between Neuberger
& Berman Income Funds, a Delaware business trust ("Trust"), and Neuberger
& Berman Management Incorporated, a New York corporation (the
"Distributor").

WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has established several separate series of shares
("Series"), with each Series having its own assets and investment
policies; and

WHEREAS, the Trust desires to retain the Distributor to furnish
distribution services to each Series listed in Schedule A attached hereto,
and to such other Series of the Trust hereinafter established as agreed to
from time to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by a Series shall be made or taken by the Trust on behalf of the
Series), and the Distributor is willing to furnish such services,

NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:

1. The Trust hereby appoints the Distributor as agent to
sell the shares of beneficial interest of each Series (the "Shares") and
the Distributor hereby accepts such appointment. All sales by the
Distributor shall be expressly subject to acceptance by the Trust, acting
on behalf of the Series.

2. (a) The Distributor agrees that (i) all Shares sold
by the Distributor shall be sold at the net asset value ("NAV") thereof as
described in Section 3 hereof, and (ii) the Series shall receive 100% of
such NAV.

(b) The Distributor may enter into agreements, in
form and substance satisfactory to the Trust, with dealers selected by the
Distributor, providing for the sale to such dealers and resale by such
dealers of Shares at their NAV.

3. The Trust agrees to supply to the Distributor, promptly
after the time or times at which NAV is determined, on each day on which
the New York Stock Exchange is open for business and on such other days as
the Board of Trustees of the Trust ("Trustees") may from time to time
determine (each such day being hereinafter called a "business day"), a
statement of the NAV of each Series having been determined in the manner
set forth in the then-current Prospectus and Statement of Additional
Information ("SAI") of each Series. Each determination of NAV shall take
effect as of such time or times on each business day as set forth in the
then-current Prospectus of each Series and shall prevail until the time as
of which the next determination is made.

4. Upon receipt by the Trust at its principal place of
business of a written order from the Distributor, together with delivery
instructions, the Trust shall, if it elects to accept such order, as
promptly as practicable, cause the Shares purchased by such order to be
delivered in such amounts and in such names as the Distributor shall
specify, against payment therefor in such manner as may be acceptable to
the Trust. The Trust may, in its discretion, refuse to accept any order
for the purchase of Shares that the Distributor may tender to it.

5. (a) All sales literature and advertisements used by
the Distributor in connection with sales of Shares shall be subject to
approval by the Trust. The Trust authorizes the Distributor, in
connection with the sale or arranging for the sale of Shares of any
Series, to provide only such information and to make only such statements
or representations as are contained in the Series's then-current
Prospectus and SAI or in such financial and other statements furnished to
the Distributor pursuant to the next paragraph or as may properly be
included in sales literature or advertisements in accordance with the
provisions of the Securities Act of 1933 (the "1933 Act"), the 1940 Act
and applicable rules of self-regulatory organizations. Neither the Trust
nor any Series shall be responsible in any way for any information
provided or statements or representations made by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.

(b) Each Series shall keep the Distributor fully
informed with regard to its affairs, shall furnish the Distributor with a
certified copy of all of its financial statements and a signed copy of
each report prepared for it by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell
Shares of such Series and in the Distributor's performance of all its
duties under this Agreement.

6. The Distributor, as agent of each Series and for the
account and risk of each Series, is authorized, subject to the direction
of the Trust, to redeem outstanding Shares of such Series when properly
tendered by shareholders pursuant to the redemption right granted to such
Series's shareholders by the Trust Instrument of the Trust, as from time
to time in effect, at a redemption price equal to the NAV per Share of
such Series next determined after proper tender and acceptance. The Trust
has delivered to the Distributor a copy of the Trust's Trust Instrument as
currently in effect and agrees to deliver to the Distributor any
amendments thereto promptly upon filing thereof with the Office of the
Secretary of State of the State of Delaware.

7. The Distributor shall assume and pay or reimburse each
Series for the following expenses of such Series: (i) costs of preparing,
printing and distributing reports, prospectuses and SAIs used by such
Series in connection with the sale or offering of its Shares and all
advertising and sales literature relating to such Series printed at the
instruction of the Distributor; and (ii) counsel fees and expenses in

- 2 -

connection with the foregoing. The Distributor shall also pay all its own
costs and expenses connected with the sale of Shares.

8. Each Series shall maintain a currently effective
Registration Statement on Form N-1A with respect to such Series and shall
file with the Securities and Exchange Commission (the "SEC") such reports
and other documents as may be required under the 1933 Act and the 1940 Act
or by the rules and regulations of the SEC thereunder.

Each Series represents and warrants that the Registration
Statement, post-effective amendments, Prospectus and SAI (excluding
statements relating to the Distributor and the services it provides that
are based upon written information furnished by the Distributor expressly
for inclusion therein) of such Series shall not contain any untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that all statements or information furnished to the
Distributor, pursuant to Section 5(b) hereof, shall be true and correct in
all material respects.

9. (a) This Agreement shall become effective on the date
hereof and shall remain in full force and effect until July 2, 1995 and
may be continued from year to year thereafter; PROVIDED, that such
continuance shall be specifically approved each year by the Trustees or by
a majority of the outstanding voting securities of the Series, and in
either case, also by a majority of the Trustees who are not interested
persons of the Trust or the Distributor ("Disinterested Trustees"). This
Agreement may be amended as to any Series with the approval of the
Trustees or of a majority of the outstanding voting securities of such
Series; PROVIDED, that in either case, such amendment also shall be
approved by a majority of the Disinterested Trustees.

(b) Either party may terminate this Agreement without
the payment of any penalty, upon not more than sixty days' nor less than
thirty days' written notice delivered personally or mailed by registered
mail, postage prepaid, to the other party; PROVIDED, that in the case of
termination by any Series, such action shall have been authorized (i) by
resolution of the Trustees, or (ii) by vote of a majority of the
outstanding voting securities of such Series, or (iii) by written consent
of a majority of the Disinterested Trustees.

(d) Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to
such term or provision of the 1940 Act and to interpretation thereof, if
any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations or orders of the SEC
validly issued pursuant to the 1940 Act. Specifically, the terms
"interested persons," "assignment" and "vote of a majority of the

- 3 -

outstanding voting securities," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In addition,
when the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. The Trust and the Distributor may from
time to time agree on such provisions interpreting or clarifying the
provisions of this Agreement as, in their joint opinion, are consistent
with the general tenor of this Agreement and with the specific provisions
of this Section 9(d). Any such interpretations or clarifications shall be
in writing signed by the parties and annexed hereto, but no such
interpretation or clarification shall be effective if in contravention of
any applicable federal or state law or regulations, and no such
interpretation or clarification shall be deemed to be an amendment of this
Agreement.

No term or provision of this Agreement shall be
construed to require the Distributor to provide distribution services to
any series of the Trust other than the Series, or to require any Series to
pay any compensation or expenses that are properly allocable, in a manner
approved by the Trustees, to a series of the Trust other than such Series.

(e) This Agreement is made and to be principally
performed in the State of New York, and except insofar as the 1940 Act or
other federal laws and regulations may be controlling, this Agreement
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of New York.

(f) This Agreement is made by the Trust solely with
respect to the Series, and the obligations created hereby are not binding
on any other series of the Trust, but bind only assets belonging to the
Series.

10. The Distributor or one of its affiliates may from time
to time deem it desirable to offer to the list of shareholders of each
Series the shares of other mutual funds for which it acts as Distributor,
including other series of the Trust or other products or services;
however, any such use of the list of shareholders of any Series shall be
made subject to such terms and conditions, if any, as shall be approved by
a majority of the Disinterested Trustees.

11. The Distributor shall look only to the assets of a
Series for the performance of this Agreement by the Trust on behalf of
such Series, and neither the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally
liable therefor.

- 4 -

IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed by their duly authorized officers and under
their respective seals.

NEUBERGER & BERMAN
INCOME FUNDS

Attest: By: /s/ Daniel J. Sullivan
-----------------------

/s/ Claudia A. Brandon Title: Vice President
----------------------- ---------------------
Secretary

NEUBERGER & BERMAN
MANAGEMENT INCORPORATED

Attest: By: /s/ Stanley Egener
-----------------------

/s/ Ellen Metzger Title: President
------------------- -----------------------
Secretary

- 5 -

NEUBERGER & BERMAN INCOME FUNDS
DISTRIBUTION AGREEMENT

SCHEDULE A

The Series of Neuberger & Berman Income Funds currently subject
to this Agreement are as follows:

Neuberger & Berman Cash Reserves
Neuberger & Berman Government Money Fund
Neuberger & Berman Limited Maturity Bond Fund
Neuberger & Berman Municipal Money Fund
Neuberger & Berman Municipal Securities Fund
Neuberger & Berman New York Insured Intermediate Fund
Neuberger & Berman Ultra Short Bond Fund

Dated: December 20, 1995

CUSTODIAN CONTRACT
Between
NEUBERGER & BERMAN INCOME FUNDS
and
STATE STREET BANK AND TRUST COMPANY

TABLE OF CONTENTS

Page

1. Employment of Custodian and Property to be Held
By It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the
United States . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . 5
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . 6
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . . . . . . . . . 8
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . 8
2.10 Deposit of Fund Assets in Securities System . . . . . . . 8
2.11 Fund Assets Held in the Custodian's Direct Paper
System . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . 10
2.13 Ownership Certificates for Tax Purposes . . . . . . . . . 11
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Communications Relating to Portfolio Securities . . . . . 11

3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . . 12

3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . 12
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . 12
3.3 Foreign Securities Depositories . . . . . . . . . . . . . 12
3.4 Agreements with Foreign Banking Institutions . . . . . . . 12
3.5 Access of Independent Accountants of the Fund . . . . . . 13
3.6 Reports by Custodian . . . . . . . . . . . . . . . . . . . 13
3.7 Transactions in Foreign Custody Account . . . . . . . . . 13
3.8 Liability of Foreign Sub-Custodians . . . . . . . . . . . 14
3.9 Liability of Custodian . . . . . . . . . . . . . . . . . . 14
3.10 Reimbursement for Advances . . . . . . . . . . . . . . . . 15
3.11 Monitoring Responsibilities . . . . . . . . . . . . . . . 16
3.12 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . 16
3.13 Goreign Exchange Transactions . . . . . . . . . . . . . . 17
3.13 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . 17

4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . 18

5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . 19

6. Actions Permitted Without Express Authority . . . . . . . . . . 19

7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . 20

8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . . . . . . 20

9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

10. Opinion of Fund's Independent Accountants . . . . . . . . . . . 21

11. Reports to Fund by Independent Public Accountants . . . . . . . 21

12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . 21

13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . 22

14. Effective Period, Termination and Amendment . . . . . . . . . . 23

15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . 24

16. Interpretive and Additional Provisions . . . . . . . . . . . . . 24

17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . 25

18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . 25

19. Limitation of Trustee, Officer and Shareholder Liability . . . . 25

20. No Liability of Other Portfolios . . . . . . . . . . . . . . . . 26

21. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 26

22. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

23. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 26

24. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . 26

25. Shareholder Communications Election . . . . . . . . . . . . . . 26

CUSTODIAN CONTRACT

This Contract between Neuberger & Berman Income Funds, a business
trust organized and existing under the laws of Delaware, having its
principal place of business at 605 Third Avenue, New York, New York 10158
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",

WITNESSETH:

WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and

WHEREAS, the Fund intends to initially offer shares in eight
series, Neuberger & Berman Cash Reserves, Neuberger & Berman Government
Money Fund, Neuberger & Berman Limited Maturity Bond Fund, Neuberger &
Berman Government Income Fund, Neuberger & Berman Ultra Short Bond Fund,
Neuberger & Berman Municipal Money Fund, and Neuberger & Berman Municipal
Securities Trust (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance
with paragraph 17, being herein referred to as the "Portfolio(s)");

NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:

1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT

The Fund hereby employs the Custodian as the custodian of the assets
of each Portfolio, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the
United States ("foreign securities") pursuant to the provisions of the
Trust Instrument. The Fund on behalf of each Portfolio agrees to deliver
to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Portfolio(s)
from time to time, and the cash consideration received by it for such new
or treasury shares of beneficial interest of the Fund representing
interests in the Portfolios, ("Shares") as may be issued or sold from time
to time. The Custodian shall not be responsible for any property of a
Portfolio held or received by the Portfolio and not delivered to the
Custodian.

Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians, located in the United
States but only in accordance with an applicable vote by the Board of
Trustees of the Fund on behalf of the applicable Portfolio(s), and

provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the
Custodian. The Custodian may employ as sub-custodian for the Fund's
foreign securities on behalf of the applicable Portfolio(s) the foreign
banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.

2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES

2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property,
to be held by it in the United States including all domestic
securities owned by such Portfolio, other than (a) securities which
are maintained pursuant to Section 2.10 in a clearing agency which
acts as a securities depository or in a book-entry system authorized
by the U.S. Department of the Treasury, collectively referred to
herein as "Securities System" and (b) commercial paper of an issuer
for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian pursuant to
Section 2.11.

2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in
a Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System
Account") only upon receipt of Proper Instructions from the Fund on
behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in the
following cases:

1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;

2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;

3) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.10 hereof;

4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;

5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;

- 2 -

6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; PROVIDED that, in
any such case, the new securities are to be delivered to the
Custodian;

7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment
for such securities except as may arise from the Custodian's
own negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;

9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided
that, in any such case, the new securities and cash, if any,
are to be delivered to the Custodian;

10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;

11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of

- 3 -

assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;

12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;

13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;

14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for a Portfolio, for delivery to such
Transfer Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and

15) For any other proper corporate purpose, BUT ONLY upon receipt
of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, specifying the
securities of the Portfolio to be delivered, setting forth
the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall
be made.

2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the
name of the Portfolio or in the name of any nominee of the Fund on
behalf of the Portfolio or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Portfolio, UNLESS the
Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having the
same investment adviser as the Portfolio, or in the name or nominee

- 4 -

name of any agent appointed pursuant to Section 2.9 or in the name
or nominee name of any sub-custodian appointed pursuant to Article
1. All securities accepted by the Custodian on behalf of the
Portfolio under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian
shall utilize its best efforts only to timely collect income due the
Fund on such securities and to notify the Fund on a best efforts
basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange
offers.

2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of each
Portfolio of the Fund which shall contain only property held by the
Custodian as custodian for that Portfolio, subject only to draft or
order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account
of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem
necessary or desirable; PROVIDED, however, that every such bank or
trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be approved by
vote of a majority of the Board of Trustees of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.

2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the
Fund on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Portfolio, make federal funds available to such
Portfolio as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in payment
for Shares of such Portfolio which are deposited into the
Portfolio's account.

2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held
hereunder to which each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on
a timely basis all income and other payments with respect to bearer
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent and shall credit
such income, as collected, to such Portfolio's custodian account.

- 5 -

Without limiting the generality of the foregoing, the Custodian
shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Collection
of income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the
Custodian so long as the securities are registered and remain in the
name of the Fund, the Custodian, or its nominee, or in the
Depository Trust Company account of the Custodian, but otherwise
shall be the responsibility of the Fund and the Custodian will have
no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary
to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.

2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of a Portfolio in the following cases
only:

1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian
(or any bank, banking firm or trust company doing business in
the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set
forth in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against delivery
of the receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such
securities from the Portfolio or (e) for transfer to a time
deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank

- 6 -

pursuant to Proper Instructions from the Fund as defined in
Article 5;

2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;

3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;

4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest, taxes,
management, accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not such expenses
are to be in whole or part capitalized or treated as deferred
expenses;

5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;

6) For payment of the amount of dividends received in respect of
securities sold short;

7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of
the Portfolio, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee of the Fund signed
by an officer of the Fund and certified by its Secretary or
an Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to
be made.

2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific
written instructions from the Fund on behalf of such Portfolio to so
pay in advance, the Custodian shall be absolutely liable to the Fund
for such securities to the same extent as if the securities had been
received by the Custodian.

2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the Investment
Company Act of 1940, as amended, and its rules or regulations to act
as a custodian, as its agent to carry out such of the provisions of
this Article 2 as the Custodian may from time to time direct;
PROVIDED, however, that the appointment of any agent shall not

- 7 -

relieve the Custodian of its responsibilities or liabilities
hereunder.

2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any,
and subject to the following provisions:

1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

2) The records of the Custodian with respect to securities of
the Portfolio which are maintained in a Securities System
shall identify by book-entry those securities belonging to
the Portfolio;

3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer
for the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio
upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of
the Custodian to reflect such transfer and payment for the
account of the Portfolio. Copies of all advices from the
Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the
Fund at its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio confirmation of
each transfer to or from the account of the Portfolio in the
form of a written advice or notice and shall furnish to the
Fund on behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transactions in the Securities
System for the account of the Portfolio;

4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian (or by any agent
appointed by the Custodian pursuant to Section 2.9) on the

- 8 -

Securities System's accounting system, internal accounting
control and procedures for safeguarding securities deposited
in the Securities System;

5) The Custodian shall have received from the Fund on behalf of
the Portfolio the certificate required by Article 14 hereof;

6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for the benefit of
the Portfolio for any loss or damage to the Portfolio
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian with respect to
any claim against the Securities System or any other person
which the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Portfolio has
not been made whole for any such loss or damage.

2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to the
following provisions:

1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;

2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented
in an account ("Account") of the Custodian in the Direct
Paper System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

3) The records of the Custodian with respect to securities of
the Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to
the Portfolio;

4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;

- 9 -

5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio, in the form of a written advice or
notice, of Direct Paper on the next business day following
such transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of
the Portfolio;

6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on the Custodian's system of
internal accounting control as the Fund may reasonably
request from time to time.

2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.10 hereof, (i)
in accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to
the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, BUT ONLY, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and certified
by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.

2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of income
or other payments with respect to domestic securities of each
Portfolio held by it and in connection with transfers of securities.

- 10 -

2.14 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a nominee
of the Portfolio, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to
the Portfolio such proxies, all proxy soliciting materials and all
notices relating to such securities.

2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to
the Fund for each Portfolio all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With
respect to tender or exchange offers, the Custodian shall transmit
promptly to the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender or
exchange offer. If the Portfolio desires to take action with
respect to any tender offer, exchange offer or any other similar
transaction, the Portfolio shall when reasonably possible notify the
Custodian at least three business days prior to the date on which
the Custodian is to take such action.

3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES

3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes
and instructs the Custodian to employ as sub-custodians for each
Portfolio's securities and other assets maintained outside the
United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined
in Section 5 of this Contract, together with a certified resolution
of the Fund's Board of Trustees, the Custodian and the Fund may
agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of a Portfolio's assets.

3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign sub-custodians
to: (a) "foreign securities", as defined in paragraph (c)(1) of
Rule 17f-5 under the Investment Company Act of 1940, and (b) cash
and cash equivalents in such amounts as the Custodian or the Fund

- 11 -

may determine to be reasonably necessary to effect a Portfolio's
foreign securities transactions. The Custodian shall identify on
its books as belonging to each Portfolio, the foreign securities of
the Portfolio held by each foreign sub-custodian.

3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of each
Portfolio shall be maintained in foreign securities depositories
only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof.
Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.4
hereof.

3.4 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for
the assets of each Portfolio will be freely transferable without the
payment of money or value other than for custody or administration;
(c) adequate records will be maintained identifying the assets as
belonging to each applicable Portfolio; (d) officers of or auditors
employed by, or other representatives of the Custodian, including to
the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of each
Portfolio held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.

3.5 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to
the performance of such foreign banking institution under its
agreement with the Custodian.

3.6 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of each Portfolio held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of each Portfolio's securities and other
assets and advices or notifications of any transfers of securities
to or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity
of the entity having physical possession of such securities.

- 12 -

3.7 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, MUTATIS MUTANDIS
to the foreign securities of the Fund held outside the United States
by foreign sub-custodians.

(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of
each applicable Portfolio and delivery of securities maintained for
the account of each applicable Portfolio may be effected in
accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction
or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer.

(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same
extent as set forth in Section 2.3 of this Contract, and the Fund
agrees to hold any such nominee harmless from any liability as a
holder of record of such securities.

3.8 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and the Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations.
At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that
the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.

3.9 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as
set forth with respect to sub-custodians generally in this Contract
and, regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 3.9, in
delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss
due to such delegation, except such loss as may result from (a)

- 13 -

political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd.
not caused by political risk) due to Acts of God, nuclear incident
or the like, in each case under circumstances where the Custodian
and State Street London Ltd. have exercised reasonable care.

3.10 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange ("Advance"), or in the event that the
Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection
with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act
or willful misconduct ("Liability") then in such event property
equal in value to not more than 125% of such Advance and accrued
interest on the Advance or the anticipated amount of such Liability,
held at any time for the account of the appropriate Portfolio by the
Custodian or sub-custodian may be held as security for such
Liability or for such Advance and accrued interest on the Advance.
The Custodian shall designate the security or securities
constituting security for an Advance or Liability (the "Designated
Securities") by notice in writing to the Fund (which may be sent by
tested telefax or telex). In the event the value of the Designated
Securities shall decline to less than 110% of the amount of such
Advance and accrued interest on the Advance or the anticipated
amount of such Liability, then the Custodian may designate in the
same manner an additional security for such obligation ("Additional
Securities"), but the aggregate value of the Designated Securities
and Additional Securities shall not be in excess of 125% of the
amount of such Advance and the accrued interest on the Advance or
the anticipated amount of such Liability. At the request of the
Fund, on behalf of a Portfolio, the Custodian shall agree to
substitution of a security or securities which have a value equal to
the value of the Designated or Additional Securities which the Fund
desires be released from their status as security, and such release
from status as security shall be effective upon the Custodian and
the Fund agreeing in writing as to the identity of the substituted
security or securities, which shall thereupon become Designated
Securities.

Notwithstanding the above, the Custodian shall, at the request of
the Fund, on behalf of a Portfolio, immediately release from their
status as security any or all of the Designated Securities or
Additional Securities upon the Custodian's receipt from such of
Portfolio cash or cash equivalents in an amount equal to 100% of the
value of the Designated Securities or Additional Securities that the
Fund desires to be released from their status as security pursuant
to this Section. The applicable Portfolio shall reimburse or
indemnify the Custodian in respect of a Liability and shall pay any

- 14 -

Advances upon demand; provided, however, that the Custodian first
notified the Fund on behalf of the Portfolio of such demand for
repayment, reimbursement or indemnification. If, upon notification,
the Portfolio shall fail to pay such Advance or interest when due or
shall fail to reimburse or indemnify the Custodian promptly in
respect of a Liability, the Custodian shall be entitled to dispose
of the Designated Securities and Additional Securities to the extent
necessary to obtain repayment, reimbursement or indemnification.
Interest, dividends and other distributions paid or received on the
Designated Securities and Additional Securities, other than payments
of principal or payments upon retirement, redemption or repurchase,
shall remain the property of the Portfolio, and shall not be subject
to this Section. To the extent that the disposition of the
Portfolio's property, designated as security for such Advance or
Liability, results in an amount less than necessary to obtain
repayment, reimbursement or indemnification, the Portfolio shall
continue to be liable to the Custodian for the differences between
the proceeds of the disposition of the Portfolio's property,
designated as security for such Advance or Liability, and the amount
of the repayment, reimbursement or indemnification due to the
Custodian and the Custodian shall have the right to designate in the
same manner described above an additional security for such
obligation which shall constitute Additional Securities hereunder.

3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually
to the Fund, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Fund in
connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not
the subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).

3.12 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
a Portfolio's assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth
in Section 26(a) of said Act. The appointment of any such branch as
a sub-custodian shall be governed by paragraph 1 of this Contract.

(b) Cash held for each Portfolio of the Fund in the United Kingdom
shall be maintained in an interest bearing account established for
the Fund with the Custodian's London branch, which account shall be

- 15 -

subject to the direction of the Custodian, State Street London Ltd.
or both.

3.13 FOREIGN EXCHANGE TRANSACTIONS. (a) Upon receipt of Proper
Instructions, the Custodian shall settle foreign exchange contracts
or options to purchase and sell foreign currencies for spot and
future delivery on behalf of and for the account of a Portfolio with
such brokers, banks or trust companies other than the Custodian
("Currency Brokers") as the Fund may determine and direct pursuant
to Proper Instructions or as the Custodian may select ("Transactions
Other Than As Principal").

(b). The Custodian shall not be obligated to enter into foreign
exchange transactions as principal ("Transactions As Principal").
However, if the Custodian has made available to the Fund its
services as a principal in foreign exchange transactions and subject
to any separate agreement between the parties relating to such
transactions, the Custodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for
spot and future delivery on behalf of and for the account of a
Portfolio, with the Custodian as principal.

(c) If, in a Transaction Other Than As Principal, a Currency
Broker is selected by the Fund, on behalf of a Portfolio, the
Custodian shall have no duty with respect to the selection of the
Currency Broker, or, so long as the Custodian acts in accordance
with Proper Instructions, for the failure of such Currency Broker to
comply with the terms of any contract or option. If, in a
Transaction Other Than As Principal, the Currency Broker is selected
by the Custodian or if the Custodian enters into a Transaction As
Principal, the Custodian shall be responsible for the selection of
the Currency Broker and the failure of such Currency Broker to
comply with the terms of nay contract or option.

(d) In Transactions Other Than As Principal and Transactions As
Principal, the Custodian shall be responsible for any transfer of
cash, the transmission of instructions to and from a Currency
Broker, if any, the safekeeping of all certificates and other
documents and agreements evidencing or relating to such foreign
exchange transactions and the maintenance of proper records as set
forth in Section 9 of this Contract.

3.14 TAX LAW. Except to the extent that imposition of any tax liability
arises from State Street's failure to perform in accordance with the
terms of this Section 3.14 or from the failure of any sub-custodian
to perform in accordance with the terms of the applicable subcustody
agreement, State Street shall have no responsibility or liability
for any obligations now or hereafter imposed on each Portfolio by
the tax law of the domicile of each Portfolio or of any jurisdiction
in which each Portfolio is invested or any political subdivision
thereof. It shall be the responsibility of State Street to use due
care to perform such steps as are required to collect any tax

- 16 -

refund, to ascertain the appropriate rate of tax withholding and to
provide such information and documents as may be required to enable
each Portfolio to receive appropriate tax treatment under applicable
tax laws and any applicable treaty provisions. Unless otherwise
informed by each Portfolio, State Street, in performance of its
duties under this Section, shall be entitled to apply categorical
treatment of each Portfolio according to the nationality of each
Portfolio, the particulars of its organization and other relevant
details that shall be supplied by each Portfolio. State Street
shall be entitled to rely on any information supplied by each
Portfolio. State Street may engage reasonable professional advisors
disclosed to each Portfolio by State Street, which may include
attorneys, accountants or financial institutions in the regular
business of investment administration and may rely upon advice
received therefrom. It shall be the duty of each Portfolio to
inform State Street of any change in the organization, domicile or
other relevant fact concerning tax treatment of each Portfolio and
further to inform State Street if each Portfolio is or becomes the
beneficiary of any special ruling or treatment not applicable to the
general nationality and category of entity of which each Portfolio
is a part under general laws and treaty provisions.

4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE
FUND

The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian
will provide timely notification to the Fund on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of payments for
Shares of such Portfolio.

From such funds as may be available for the purpose but subject to
the limitations of the Trust Instrument and any applicable votes of the
Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection with
the redemption or repurchase of Shares of a Portfolio, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares
of the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.

- 17 -

5. PROPER INSTRUCTIONS

Proper Instructions as used throughout this Contract means a writing
signed or initialled by two or more person or persons as the Board of
Trustees shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if
the Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board
of Trustees, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that
the Fund and the Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolios' assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three - party agreement which requires a
segregated asset account in accordance with Section 2.12.

6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY

The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:

1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund on behalf of the
Portfolio;

2) surrender securities in temporary form for securities in
definitive form;

3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and

4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Trustees of the Fund.

7. EVIDENCE OF AUTHORITY

The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or on

- 18 -

behalf of the Fund. The Custodian may receive and accept a certified copy
of a vote of the Board of Trustees of the Fund as conclusive evidence (a)
of the authority of any person to act in accordance with such vote or (b)
of any determination or of any action by the Board of Trustees pursuant to
the Trust Instrument as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.

8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME

If, and to the extent requested by the Fund, the Custodian shall
cooperate with and supply necessary information to the entity or entities
appointed by the Board of Trustees of the Fund to keep the books of
account of each Portfolio and/or compute the net asset value per share of
the outstanding shares of each Portfolio or, if directed in writing to do
so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed,
the Custodian shall also calculate daily the net income of the Portfolio
as described in the Fund's currently effective prospectus related to such
Portfolio and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent periodically
of the division of such net income among its various components. The
calculations of the net asset value per share and the daily income of each
Portfolio shall be made at the time or times described from time to time
in the Fund's currently effective prospectus related to such Portfolio.

9. RECORDS

The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31
thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be
the property of the Fund and shall at all times during the regular
business hours of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by
the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.

10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT

The Custodian shall take all reasonable action, as the Fund on
behalf of each applicable Portfolio may from time to time request, to
obtain from year to year favorable opinions from the Fund's independent

- 19 -

accountants with respect to its activities hereunder in connection with
the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.

11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS

The Custodian shall provide the Fund, on behalf of each Portfolio at
such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control
and procedures for safeguarding securities, futures contracts and options
on futures contracts, including securities deposited and/or maintained in
a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by
such examination, and, if there are no such inadequacies, the reports
shall so state.

12. COMPENSATION OF CUSTODIAN

The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Fund on behalf of each applicable Portfolio and the Custodian.

13. RESPONSIBILITY OF CUSTODIAN

So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Contract and shall be
held harmless in acting upon any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and to be signed
by the proper party or parties, including any futures commission merchant
acting pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be
counsel for the Fund) on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice.

As a condition to the indemnification provided for in this
Section 13, if in any case the indemnifying party is asked to indemnify
and hold the indemnified party harmless, the indemnified party shall fully
and promptly advise the indemnifying party of all pertinent facts
concerning the situation in question, and shall use all reasonable care to
identify, and promptly notify the indemnifying party of, any situation

- 20 -

which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party. The indemni-
fying party shall be entitled, at its own expense, to participate in the
investigation and to be consulted as to the defense of any such claim, and
in such event, the indemnified party shall keep the indemnifying party
fully and currently informed of all developments relating to such investi-
gation or defense. At any time, the indemnifying party shall be entitled
at its own expense to conduct the defense of any such claim, provided that
the indemnifying party: (a) reasonably demonstrates to the other party
its ability to pay the full amount of potential liability in connection
with such claim and (b) first admits in writing to the other party that
such claim is one in respect of which the indemnifying party is obligated
to indemnify the other party hereunder. Upon satisfaction of the
foregoing conditions, the indemnifying party shall take over complete
defense of the claim, and the indemnified party shall initiate no further
legal or other expenses for which it shall seek indemnification. The
indemnified party shall in no case confess any claim or make any
compromise in any case in which the indemnifying party may be asked to
indemnify the indemnified party, except with the indemnifying party's
prior written consent.

If the Fund on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment
of money or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund or the Portfolio being
liable for the payment of money or incurring liability of some other form,
the Fund on behalf of the Portfolio, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in
an amount and form satisfactory to it.

14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT

This Contract shall become effective as of its execution, shall
continue in full force and effect with respect to each Portfolio until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by
an instrument in writing delivered or mailed, postage prepaid to the other
party, such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; PROVIDED, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10
hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the
Fund has approved the use of a particular Securities System by such
Portfolio as required by Rule 17f-4 under the Investment Company Act of
1940, as amended and that the Custodian shall not with respect to a
Portfolio act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has approved the initial use of the Direct Paper System
by such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has
reviewed the use by such Portfolio of the Direct Paper System; PROVIDED

- 21 -

FURTHER, however, that the Fund shall not amend or terminate this Contract
in contravention of any applicable federal or state regulations, or any
provision of the Trust Instrument, and further provided, that the Fund on
behalf of one or more of the Portfolios may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the
Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.

Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may
be due as of the date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements. Termination of the
Contract with respect to one Portfolio (but less than all of the
Portfolios) will not constitute termination of the Contract, and the terms
of the Contract continue to apply to the other Portfolios.

15. SUCCESSOR CUSTODIAN

If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Trustees of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer,
all securities of each applicable Portfolio then held by it hereunder and
shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.

If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Trustees of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with
such vote.

In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Trustees shall have been
delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of
each applicable Portfolio and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on
behalf of each applicable Portfolio and to transfer to an account of such
successor custodian all of the securities of each such Portfolio held in
any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.

- 22 -

In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing
to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Contract relating to the
duties and obligations of the Custodian shall remain in full force and
effect.

16. INTERPRETIVE AND ADDITIONAL PROVISIONS

In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree
on such provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with the general
tenor of this Contract. Any such interpretive or additional provisions
shall be in a writing signed by both parties and shall be annexed hereto,
PROVIDED that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of
the Trust Instrument of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to
be an amendment of this Contract.

17. ADDITIONAL FUNDS

In the event that the Fund establishes one or more series of Shares
in addition to Neuberger & Berman Cash Reserves, Neuberger & Berman
Government Money Fund, Neuberger & Berman Limited Maturity Bond Fund,
Neuberger & Berman Government Income Fund, Neuberger & Berman Ultra Short
Bond Fund, Neuberger & Berman Municipal Money Fund, and Neuberger & Berman
Municipal Securities Trust with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio
hereunder.

18. MASSACHUSETTS LAW TO APPLY

This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.

19. LIMITATION OF TRUSTEE, OFFICER AND SHAREHOLDER LIABILITY

It is expressly agreed that the obligations of the Fund and each
Portfolio hereunder shall not be binding upon any of the Trustees,
officers, agents or employees of the Fund or upon the shareholders of any

- 23 -

Portfolio personally, but shall only bind the assets and property of the
Fund, as provided in its Trust Instrument. The execution and delivery of
this Contract have been authorized by the Trustees of the Fund, and this
Contract has been executed and delivered by an authorized officer of the
Fund acting as such; neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Fund, as
provided in its Trust Instrument.

20. NO LIABILITY OF OTHER PORTFOLIOS

Notwithstanding any other provision of this Contract, the parties
agree that the assets and liabilities of each Portfolio are separate and
distinct from the assets and liabilities of each other Portfolio and that
no Portfolio shall be liable or shall be charged for any debt, obligation
or liability of any other Portfolio, whether arising under this Contract
or otherwise.

21. CONFIDENTIALITY

The Custodian agrees that all books, records, information and data
pertaining to the business of the Fund which are exchanged or received
pursuant to the negotiation or carrying out of this Contract shall remain
confidential, shall not be voluntarily disclosed to any other person,
except as may be required by law, and shall not be used by the Custodian
for any purpose not directly related to the business of the Fund, except
with the Fund's written consent.

22. ASSIGNMENT

Neither the Fund nor the Custodian shall have the right to assign
any of its rights or obligations under this Contract without the prior
written consent of the other party.

23. SEVERABILITY

If any provision of this Contract is held to be unenforceable as a
matter of law, the other terms and provisions hereof shall not be affected
thereby and shall remain in full force and effect.

24. PRIOR CONTRACTS

This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios, or
any predecessor(s) thereto, and the Custodian relating to the custody of
the Fund's assets.

- 24 -

25. SHAREHOLDER COMMUNICATIONS ELECTION

Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by
issuers of securities for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank unless the beneficial
owner has expressly objected to disclosure of this information. In order
to comply with the rule, the Custodian needs the Fund to indicate whether
it authorizes the Custodian to provide the Fund's name, address, and share
position to requesting companies whose securities the Fund owns. If the
Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian
"yes" or does not check either "yes" or "no" below, the Custodian is
required by the rule to treat the Fund as consenting to disclosure of this
information for all securities owned by the Fund or any funds or accounts
established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below
whether the Fund consents or objects by checking one of the alternatives
below.

YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.

NO [X ] The Custodian is not authorized to release the Fund's
name, address, and share positions.

IN WITNESS WHEREOF, each of the parties has caused this instrument
to be executed in its name and behalf by its duly authorized representa-
tive and its seal to be hereunder affixed as of the 2nd day of July, 1993.

ATTEST NEUBERGER & BERMAN INCOME FUNDS

/s/ Claudia A. Brandon By: /s/ Stanley Egener
------------------------- ----------------------------
CEO

ATTEST STATE STREET BANK AND TRUST COMPANY

/s/ E. Solomon By: /s/ Ronald E. Logue
------------------------- -------------------------------
Executive Vice President

- 25 -

<PAGE>

SCHEDULE A
INCOME MANAGERS TRUST
NEUBERGER & BERMAN INCOME FUNDS
(Cash Reserves, Limited
Maturity Bond, and Ultra Short Bond Series)
NEUBERGER & BERMAN INCOME TRUST
(Limited Maturity Bond and Ultra Short Bond Series)

The following foreign banking institutions and foreign securities
depositories have been approved by the boards of trustees of the above-
mentioned trusts for use by the indicated series of the trust as sub-
custodians for the securities and other assets:

Westpac Banking Corp. (Austraclear/RITS) (Australia)

GiroCredit Bank Aktiengesellschaft der Sparkassen (OEKB)
(Austria)

Generale Bank (C.I.K./Banque Nationale de Belgique) (Belgium)

Canada Trustco Mortgage Company (CDS) (Canada)

Merita Bank Limited (Central Share Register) (Finland)

Banque Paribas (SICOVAM/Banque de France) (France)

BHF Bank Aktiengesellschaft (Kassenverein) (Germany)

Standard Chartered Bank Hong Kong (CCASS) (Hong Kong)

Bank of Ireland (Central Bank of Ireland/GSO) (Ireland)

Morgan Guaranty Trust Company (Monte Titoli S.p.A./Banca
d'Italia) (Italy)

Daiwa Bank, Limited and Sumitomo Trust & Banking Company
(JASDEC/Bank of Japan) (Japan)

Euroclear (Luxembourg)

Euroclear (Malaysia)

Citibank Mexico, S.A. (INDEVAL/Banco de Mexico) (Mexico)

MeesPierson N.V. (NECIGEF) (The Netherlands)

ANZ Banking Group (NZ) Ltd. (Austraclear N.Z.) (New Zealand)

Christiania Bank Og Kreditkasse (VPS) (Norway)

Deutsche Bank AG (Pakistan)

- 1 -
<PAGE>

Euroclear (Portugal)

Euroclear (Singapore)

Banco Santander, S.A. (SCLV/Banco de Espana) (Spain)

Skandinaviska Enskilda Banken (VPC) (Sweden)

Union Bank of Switzerland (SEGA) (Switzerland)

State Street Bank and Trust Co. London Limited (CGO/CMO) (United
Kingdom)

- 2 -
<PAGE>

<PAGE>

TRANSFER AGENCY AND SERVICE AGREEMENT

between

NEUBERGER & BERMAN INCOME FUNDS

and

STATE STREET BANK AND TRUST COMPANY
<PAGE>

TABLE OF CONTENTS
-----------------

Page
----

1. Terms of Appointment; Duties of the Bank . . . . . . . . . . 1

2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 4

3. Representations and Warranties of the Bank . . . . . . . . . 4

4. Representations and Warranties of the Fund . . . . . . . . . 5

5. Data Access and Proprietary Information . . . . . . . . . . 5

6. Indemnification . . . . . . . . . . . . . . . . . . . . . . 7

7. Covenants of the Fund and the Bank . . . . . . . . . . . . . 8

8. Termination of Agreement . . . . . . . . . . . . . . . . . . 9

9. Additional Funds . . . . . . . . . . . . . . . . . . . . . . 10

10. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 10

11. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 10

12. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . 10

13. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . 11

14. Consequential Damages . . . . . . . . . . . . . . . . . . . 11

15. Merger of Agreement . . . . . . . . . . . . . . . . . . . . 11

16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent . . . . . . . . . . . . . . . 11

17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 11

18. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>

TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------

AGREEMENT made as of the 2nd day of July, 1993, by and between NEUBERGER &
BERMAN INCOME FUNDS, a Delaware business trust, having its principal
office and place of business at 605 Third Avenue, New York, New York 10158
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company having its principal office and place of business at 225
Franklin Street, Boston, Massachusetts 02110 (the "Bank").

WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of
securities and other assets; and

WHEREAS, the Fund intends to initially offer shares in seven series,
Neuberger & Berman Cash Reserves, Neuberger & Berman Government Income,
Neuberger & Berman Government Money Fund, Neuberger & Berman Limited
Maturity Bond Fund, Neuberger & Berman Municipal Money Fund, Neuberger &
Berman Municipal Securities Trust, and Neuberger & Berman Ultra-Short Bond
Fund (each such series, together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance
with Article 9, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");

WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank
as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities,
and the Bank desires to accept such appointment;

NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

1. Terms of Appointment; Duties of the Bank

1.1 Subject to the terms and conditions set forth in this Agreement,
the Fund, on behalf of the Portfolios, hereby employs and
appoints the Bank to act as, and the Bank agrees to act as its
transfer agent for the Fund's authorized and issued shares of
beneficial interest of the Fund representing interests in each of
the respective Portfolios ("Shares"), dividend disbursing agent,
custodian of certain retirement plans and agent in connection
with any accumulation, open-account or similar plans provided to
the shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective
prospectus and statement of additional information ("prospectus")
of the Fund on behalf of the applicable Portfolio, including
without limitation any periodic investment plan or periodic
withdrawal program.

1.2 The Bank agrees that it will perform the following services:
<PAGE>

(a) In accordance with procedures established from time to
time by agreement between the Fund on behalf of each of
the Portfolios, as applicable and the Bank, the Bank
shall:

(i) Receive for acceptance, orders for the purchase
of Shares, and promptly deliver payment and
appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the
Trust Instrument of the Fund (the "Custodian");

(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares
in the appropriate Shareholder account;

(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;

(iv) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect
to any redemption, pay over or cause to be paid
over in the appropriate manner such monies as
instructed by the redeeming Shareholders;

(v) Effect transfers of Shares by the registered
owners thereof upon receipt of appropriate
instructions;

(vi) Prepare and transmit (or credit the appropriate
shareholder account) payments for dividends and
distributions declared by the Fund on behalf of
the applicable Portfolio;

(vii) Issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at
its option, may issue replacement certificates in
place of mutilated stock certificates upon
presentation thereof and without such indemnity;

(viii) Maintain records of account for and advise the
Fund and its Shareholders as to the foregoing;
and

(ix) Record the issuance of shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record
of the total number of shares of the Fund which
are authorized, based upon data provided to it by
the Fund, and issued and outstanding. The Bank

- 2 -
<PAGE>

shall also provide the Fund on a regular basis
with the total number of shares which are
authorized and issued and outstanding and shall
have no obligation, when recording the issuance
of shares, to monitor the issuance of such Shares
or to take cognizance of any laws relating to the
issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund.

(b) In addition to and neither in lieu nor in contravention
of the services set forth in the above paragraph (a), the
Bank shall: (i) perform the customary services of a
transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic invest-
ment plan or periodic withdrawal program), including but
not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department
Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information and (ii) provide a system which will enable
the Fund to monitor the total number of Shares sold in
each State.

(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as
exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor
the daily activity for each State. The responsibility of
the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment
of transactions subject to blue sky compliance by the
Fund and the reporting of such transactions to the Fund
as provided above.

(d) Procedures as to who shall provide certain of these
services in Section 1 may be established from time to
time by agreement between the Fund on behalf of each
Portfolio and the Bank per the attached service
responsibility schedule. The Bank may at times perform

- 3 -
<PAGE>

only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.

(e) The Bank shall provide additional services on behalf of
the Fund (i.e., escheatment services) which may be agreed
upon in writing between the Fund and the Bank.

2. Fees and Expenses

2.1 For the performance by the Bank pursuant to this Agreement, the
Fund, on behalf of each Portfolio agrees to pay the Bank an
annual maintenance fee for each Shareholder account as set out in
the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.2
below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.

2.2 In addition to the fee paid under Section 2.1 above, the Fund, on
behalf of the applicable Portfolio, agrees to reimburse the Bank
for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances
incurred by the Bank for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Portfolio.

2.3 The Fund, on behalf of the applicable Portfolio, agrees to pay
all fees and reimbursable expenses within five days following the
mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to the Bank by the Fund at
least seven (7) days prior to the mailing date of such materials.

3. Representations and Warranties of the Bank

The Bank represents and warrants to the Fund that:

3.1 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.

3.2 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.

3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.

3.4 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.

- 4 -
<PAGE>

3.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.

4. Representations and Warranties of the Fund

The Fund represents and warrants to the Bank that:

4.1 It is a business trust duly organized and existing and in good
standing under the laws of Delaware.

4.2 It is empowered under applicable laws and by its Trust Instrument
and By-Laws to enter into and perform this Agreement.

4.3 All corporate proceedings required by said Trust Instrument and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.

4.4 It is an open-end management investment company registered under
the Investment Company Act of 1940, as amended.

4.5 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for
sale.

5. Data Access and Proprietary Information

5.1 The Fund acknowledges that the computer programs, screen formats,
report formats (except such screen formats and report formats as
may be necessary to respond to shareholder problems or
inquiries), interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's
ability to access certain Fund-related data ("Customer Data")
maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access
Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary
Information") of substantial value to the Bank or other third
party. In no event shall Proprietary Information be deemed
Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it
shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its
employees and agents:

(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in
accordance with the Bank's applicable user documentation;

- 5 -
<PAGE>

(b) to refrain from copying or duplicating in any way the
Proprietary Information;

(c) to refrain from obtaining unauthorized access to any
portion of the Proprietary Information, and if such
access is inadvertently obtained, to inform in a timely
manner of such fact and dispose of such information in
accordance with the Bank's instructions;

(d) to honor all reasonable written requests made by the Bank
to protect at the Bank's expense the rights of the Bank
in Proprietary Information at common law, under federal
copyright law and under other federal or state law.

Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section
shall survive any earlier termination of this Agreement.

5.2 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most
recently issued user documentation for such services, the Bank
shall endeavor in a timely manner to correct such failure.
Organizations from which the Bank may obtain certain data
included in the Data Access Services are solely responsible for
the contents of such data and the Fund agrees to make no claim
against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS
IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.

5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i)
effect the transfer or movement of cash or Shares or (ii)
transmit Shareholder information or other information (such
transactions constituting a "COEFI"), then in such event the Bank
shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long
as such instruction is undertaken in conformity with security
procedures established by the Bank from time to time.

6. Indemnification

6.1 The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising
out of or attributable to:

- 6 -
<PAGE>

(a) All actions of the Bank or its agents or subcontractors
required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without
negligence or willful misconduct.

(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any
representation or warranty of the Fund hereunder.

(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or
services which (i) are received by the Bank or its agents
or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person
or firm on behalf of the Fund including but not limited
to any previous transfer agent or registrar.

(d) The reasonable reliance on, or the carrying out by the
Bank or its agents or subcontractors of any instructions
or requests of the Fund on behalf of the applicable
Portfolio.

(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in
violation of any stop order or other determination or
ruling by any federal agency or any state with respect to
the offer or sale of such Shares in such state.

6.2 The Bank shall indemnify and hold the Fund and each Portfolio
thereof harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability
arising out of or attributed to any action or failure or omission
to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.

6.3 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its
agents or subcontractors shall not be liable and shall be
indemnified by the Fund on behalf of the applicable Portfolio for
any action taken or omitted by it in reasonable reliance upon
such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of
the Fund, reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its
agents or subcontractors by machine readable input, telex, CRT
data entry or other similar means authorized by the Fund, and

- 7 -
<PAGE>

shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the
Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.

6.4 In order that the indemnification provisions contained in this
Section 6 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the Fund of such
assertion, and shall keep the other party advised with respect to
all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with
the party seeking indemnification in the defense of such claim or
to defend against said claim in its own name or in the name of
the other party. The party seeking indemnification shall in no
case confess any claim or make any compromise in any case in
which the other party may be required to indemnify it except with
the other party's prior written consent.

7. Covenants of the Fund and the Bank

7.1 The Fund shall on behalf of each Portfolio promptly furnish to
the Bank the following:

(a) A certified copy of the resolution of the Trustees of the
Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.

(b) A copy of the Trust Instrument and By-Laws of the Fund
and all amendments thereto.

7.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and
for keeping account of, such certificates, forms and devices.

7.3 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem
advisable. To the extent required by Section 31 of the
Investment Company Act of 1940, as amended, and the Rules
thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed
by the Bank hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Fund
on and in accordance with its request.

- 8 -
<PAGE>

7.4 The Bank and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying
out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be
required by law.

7.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify
the Fund and to secure instructions from an authorized officer of
the Fund as to such inspection. The Bank reserves the right,
however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such
person.

7.6 Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each Portfolio
of the Fund are separate and distinct from the assets and
liabilities of each other Portfolio and that no Portfolio shall
be liable or shall be charged for any debt, obligation or
liability of any other Portfolio, whether arising under this
Agreement or otherwise.

8. Termination of Agreement

8.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.

8.2 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund on behalf of the
applicable Portfolio(s). Additionally, the Bank reserves the
right to charge for any other reasonable expenses associated with
such termination.

9. Additional Funds

In the event that the Fund establishes one or more series of
Shares in addition to Neuberger & Berman Cash Reserves, Neuberger
& Berman Government Income, Neuberger & Berman Government Money
Fund, Neuberger & Berman Limited Maturity Bond Fund, Neuberger &
Berman Municipal Money Fund, Neuberger & Berman Municipal
Securities Trust, and Neuberger & Berman Ultra-Short Bond Fund
with respect to which it desires to have the Bank render services
as transfer agent under the terms hereof, it shall so notify the
Bank in writing, and if the Bank agrees in writing to provide
such services, such series of Shares shall become a Portfolio
hereunder.

- 9 -
<PAGE>

10. Assignment

10.1 Except as provided in Section 10.3 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.

10.2 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and
assigns.

10.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial
Data Services, Inc., a Massachusetts corporation ("BFDS") which
is duly registered as a transfer agent pursuant to Section
17A(c)(l) of the Securities Exchange Act of 1934, as amended
("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as
a transfer agent pursuant to Section 17A(c)(l) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.

11. Amendment

This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a
resolution of the Trustees of the Fund.

12. Massachusetts Law to Apply

This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.

13. Force Majeure

In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its
control, such party shall not be liable for damages to the other
for any damages resulting from such failure to perform or
otherwise from such causes.

14. Consequential Damages

Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this
Agreement.

15. Merger of Agreement

- 10 -
<PAGE>

This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.

16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent

A copy of the Trust Instrument of the Fund is on file with the
Secretary of the State Of Delaware. The parties agree that
neither the Shareholders, Trustees, officers, employees nor any
agent of the Fund shall be liable hereunder and that the parties
to this Agreement other than the Fund shall look solely to the
Fund property for the performance of this Agreement or payment of
any claim under this Agreement.

17. Counterparts

This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument.

18. Notices

All notices, requests, consents and other communications
hereunder (collectively "communications") shall be in writing and
shall be personally delivered or mailed, first class postage
prepaid,

(a) if to the Fund, to

Neuberger & Berman Income Funds
605 Third Avenue
New York, N.Y. 10158
Attention: Michael J. Weiner
Vice President

(b) if to the Bank, to

Boston Financial Data Services, Inc.
Two Heritage Drive
North Quincy, MA 02171
Attn: Paul Alsama

or such other address as either party shall have furnished to the
other in writing; provided that any communication may be sent by
"tested" telex or any other form of electronic transmission
capable of producing a permanent record and agreed upon by the
parties in writing.

- 11 -
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.

NEUBERGER & BERMAN INCOME FUNDS

BY: /s/ Michael Weiner
------------------------------
Michael Weiner

ATTEST:

/s/ Claudia A. Brandon
-----------------------
Claudia A. Brandon

STATE STREET BANK AND TRUST COMPANY

BY: /s/ Ronald E. Logue
------------------------------
Ronald E. Logue
Executive Vice President

ATTEST:

/s/ [Officer]
----------------------

- 12 -
<PAGE>

STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES

Service Performed Responsibility

Bank Fund

1. Receives orders for the X X
purchase of Shares. (if in writing) (if by phone)

2. Issue Shares and hold Shares X
in Shareholders accounts.

3. Receive redemption requests. X X
(if in writing) (if by phone)

4. Effect transactions 1-3 X
above directly with broker- (2 is always
dealers. BFDS)

5. Pay over monies to redeeming X
Shareholders.

6. Effect transfers of Shares. X

7. Prepare and transmit X
dividends and distributions.

8. Issue Replacement X
Certificates.

9. Reporting of abandoned X
property.

10. Maintain records of account. X

11. Maintain and keep a current X
and accurate control book
for each issue of
securities.

12. Mail proxies. X

13. Mail Shareholder reports. X

14. Mail prospectuses to current X
Shareholders.

15. Withhold taxes on U.S. X
resident and non-resident
alien accounts.
16. Prepare and file U.S. X
Treasury Department forms.

- 13 -
<PAGE>

Service Performed Responsibility

Bank Fund

17. Prepare and mail account and X
confirmation statements for
Shareholders.

18. Provide Shareholder account X
information.

19. Blue Sky reporting. X
* Such services are more fully described in Section 1.2 (a), (b) and
(c) of the Agreement.

NEUBERGER & BERMAN INCOME FUNDS

BY: /s/ Michael Weiner
---------------------------------
Michael Weiner
ATTEST:

/s/ Claudia A. Brandon
---------------------------
Claudia A. Brandon
STATE STREET BANK AND TRUST COMPANY

BY: /s/ Ronald E. Logue
---------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:

/s/ [Officer]
------------------------

- 14 -
<PAGE>

<PAGE>

VIA FEDERAL EXPRESS
-------------------

Sharon Baker Morin, Esq.
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171-2197

Dear Sharon:

Pursuant to section 9 of the transfer agency contract between
State Street Bank and Trust Company ("State Street") and Neuberger &
Berman Income Funds dated as of July 2, 1993, we request that Neuberger &
Berman New York Insured Intermediate Fund ("NY Insured") be added as a
Portfolio governed by that transfer agency contract. The addition of NY
Insured is effective as of January 24, 1994. Please indicate State
Street's acceptance of this request by having a duly authorized officer of
State Street sign in the space indicated below.

Sincerely,

/s/ Michael J. Weiner
---------------------------
Name:
Title: Michael J. Weiner, V.P.
------------------------
Neuberger & Berman Income Funds

Accepted by State Street
Bank and Trust Company

/s/ Ronald E. Logue
--------------------------------
Name: Ronald E. Logue
Title: Executive Vice President
------------------------
<PAGE>

<PAGE>

FIRST AMENDMENT TO THE
TRANSFER AGENCY AND SERVICE AGREEMENT

This First Amendment dated as of March 1, 1995 between
Neuberger & Berman Income Funds, a Delaware business trust, having its
principal office and place of business at 605 Third Avenue, 2nd Floor, New
York, NY 10158-0006 (the "Fund") and State Street Bank and Trust Company,
a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, MA 02110 (the "Bank") is made to
the Transfer Agency and Service Agreement dated as of July 2, 1993 between
the Fund and the Bank (the "Agreement").

WHEREAS, pursuant to Section 10.3 of the Agreement, the
Bank has subcontracted certain of its duties, such as the receipt of net
orders for Fund shares (the "Shares"), to Boston Financial Data Services,
Inc. ("BFDS"); and

WHEREAS, BFDS provides its services through the DST
System and certain subsystems of DST, such as DFE (collectively, "DST");
and

WHEREAS, the Bank and the Fund desire to amend the terms
and conditions of the Agreement to provide for changes related to the use
of DST by the Fund and recordkeepers performing services for the Fund.

NOW, THEREFORE, in consideration of the promises and
mutual covenants hereinafter contained, the parties agree as follows:

Article 1. Duties of the Bank

The parties hereto agree that the Agreement is amended to
add Section 1.2(f) as follows:

Net orders may be transmitted to the Bank on DST or by
facsimile or telephone. The Bank is not authorized to
receive orders transmitted on DST from any party other
than (i) NBMI and (ii) those parties set forth on
Schedule A attached hereto, which shall be updated from
time to time by the Fund (the "Designated Parties").

The Bank shall receive written approval from the Fund
prior to authorizing any additional Designated Parties to
use DST to place orders for Fund Shares. A Designated
Party shall only be authorized to use DST to (i) transmit
net orders for the purchase and redemption of Shares and
(ii) review the account of that Designated Party's
historical transactions. NBMI and the Designated Parties
are authorized to place orders for trades received before
4:00 p.m. EST on a business day the New York Stock
Exchange is open for business ("Business Day"), up to
9:30 p.m. EST that Business Day. No transactions
occurring on a given Business Day are authorized to be
transmitted on DST on the next Business Day.
<PAGE>

Article 2. Miscellaneous

(a) All other terms and conditions of the Agreement remain in
full force and effect.

(b) Terms used herein but not defined herein shall have the
meanings set forth in the Agreement.

(c) This First Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same First Amendment.

Attest: NEUBERGER & BERMAN INCOME FUNDS

/s/ Stacy Cooper-Shugrue By: /s/ Daniel J. Sullivan
---------------------------- _____________________________
Assistant Secretary Title: V.P.

Attest: STATE STREET BANK AND TRUST COMPANY

/s/ S. Cesso By: /s/ Ronald E. Logue
----------------------------- --------------------------
S. Cesso Title: Exec. V.P.

- 2 -
<PAGE>

SCHEDULE A

DESIGNATED PARTIES

HEWITT ASSOCIATES

CHARLES SCHWAB & CO.

- 3 -
<PAGE>

<PAGE>

ADMINISTRATION AGREEMENT

This Agreement is made as of July 2, 1993, between
Neuberger & Berman Income Funds, a Delaware business trust ("Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation
("Administrator"), and is amended as of May 1, 1995.

WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has established several separate series of shares
("Series"), with each Series having its own assets and investment
policies; and

WHEREAS, the Trust desires to retain the Administrator to furnish
administrative services and certain shareholder and shareholder-related
services not generally available from banks and other institutions that
act as servicing agents for investment companies ("institutional servicing
agents") to each Series listed in Schedule A attached hereto, and to such
other Series of the Trust hereinafter established as agreed to from time
to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by a Series shall be made or taken by the Trust on behalf of the
Series), and the Administrator is willing to furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:

1. SERVICES OF THE ADMINISTRATOR.
------------------------------

1.1 ADMINISTRATIVE SERVICES. The Administrator shall
supervise each Series's business and affairs and shall provide such
services required for effective administration of such Series as are not
provided by employees or other agents engaged by such Series; PROVIDED,
that the Administrator shall not have any obligation to provide under this
Agreement any direct or indirect services to a Series's shareholders
except those described in this Agreement, any services related to the
distribution of a Series's shares, or any other services that are the
subject of a separate agreement or arrangement between a Series and the
Administrator. Subject to the foregoing, in providing administrative
services hereunder, the Administrator shall:

1.1.1 OFFICE SPACE, EQUIPMENT AND FACILITIES.
Furnish without cost to each Series, or pay the cost of, such office
space, office equipment and office facilities as are adequate for the
Series's needs.

1.1.2 PERSONNEL. Provide, without remuneration
from or other cost to each Series, the services of individuals competent
to perform all of the Series's executive, administrative and clerical
functions that are not performed by employees or other agents engaged by
<PAGE>

the Series or by the Administrator acting in some other capacity pursuant
to a separate agreement or arrangement with the Series.

1.1.3 AGENTS. Assist each Series in selecting
and coordinating the activities of the other agents engaged by the Series,
including the Series's shareholder servicing agent, custodian, independent
auditors and legal counsel.

1.1.4 TRUSTEES AND OFFICERS. Authorize and
permit the Administrator's directors, officers or employees who may be
elected or appointed as trustees or officers of the Trust to serve in such
capacities, without remuneration from or other cost to the Trust or any
Series.

1.1.5 BOOKS AND RECORDS. Assure that all
financial, accounting and other records required to be maintained and
preserved by each Series are maintained and preserved by it or on its
behalf in accordance with applicable laws and regulations.

1.1.6 REPORTS AND FILINGS. Assist in the
preparation of (but not pay for) all periodic reports by each Series to
shareholders of such Series and all reports and filings required to
maintain the registration and qualification of the Series and the Series's
shares, or to meet other regulatory or tax requirements applicable to the
Series, under federal and state securities and tax laws.

1.2 SHAREHOLDER AND RELATED SERVICES. The Administrator shall
provide such of the following services as are required by any Series or
its shareholders:

1.2.1 Direct shareholder services, consisting of:

(a) Processing Series share purchase and
redemption requests transmitted or delivered to the office of the
Administrator;

(b) Coordinating and implementing bank-to-bank
wire transfers in connection with Series share purchases and redemptions;

(c) Executing exchange orders involving
concurrent purchases and redemptions of shares of a Series and shares of
other Series or of other investment companies or series thereof;

(d) Responding to telephonic and in-person
inquiries from existing shareholders or their representatives requesting
information regarding matters such as shareholder account or transaction
status, net asset value ("NAV") of Series shares, and Series performance,
Series services, plans and options, Series investment policies, Series
portfolio holdings, and Series distributions and classification thereof
for tax purposes;

- 2 -
<PAGE>

(e) Dealing with shareholder complaints and
correspondence directed to or brought to the attention of the
Administrator; and

(f) Generating or developing and distributing
special data, notices, reports, programs and literature required by large
shareholders, by shareholders with specialized informational needs, or by
shareholders generally in light of developments, such as changes in tax
laws.

1.2.2 Assisting any institutional servicing agent
engaged by the Series in the development, implementation and maintenance
of the following special programs and systems to enhance overall Series
shareholder servicing capability, consisting of:

(a) Training programs for personnel of such
institutional servicing agent;

(b) Joint programs with such institutional
servicing agent for the development of systems software, shareholder
information reports, and other special reports;

(d) Automated clearinghouse transfer
procedures between shareholders and such institutional servicing agent;
and

(e) Touch-tone telephone information and
transaction systems for shareholders.

1.2.3 Soliciting and gathering shareholder proxies.

1.2.4 Such other shareholder and shareholder-related
services, whether similar to or different from those described in
Subparagraphs 1.2.1, 1.2.2 and 1.2.3 of this Paragraph 1.2, as the parties
may from time to time agree in writing.

1.3 BLUE SKY SERVICES. The Administrator shall maintain
under this Agreement the registration or qualification of a Series and its
shares under state Blue Sky or securities laws and regulations, as
necessary; provided that such Series shall pay all related filing fees and
registration or qualification fees.

1.4 OTHER SERVICES. The Administrator shall provide
such other services required by a Series as the parties may from time to
time agree in writing are appropriate to be provided under this Agreement.

- 3 -
<PAGE>

2. EXPENSES OF EACH SERIES.
------------------------

2.1 EXPENSES TO BE PAID BY THE ADMINISTRATOR. The
Administrator shall pay all salaries, expenses and fees of the officers,
trustees, or employees of the Trust who are officers, directors or
employees of the Administrator. In the event that the Administrator pays
or assumes any expenses of the Trust or a Series not required to be paid
or assumed by the Administrator under this Agreement, the Administrator
shall not be obligated hereby to pay or assume the same or any similar
expense in the future; PROVIDED, that nothing herein contained shall be
deemed to relieve the Administrator of any obligation to the Trust or to a
Series under any separate agreement or arrangement between the parties.

2.2 EXPENSES TO BE PAID BY THE SERIES. Each Series
shall bear all expenses of its operation, except those specifically
allocated to the Administrator under this Agreement or under any separate
agreement between such Series and the Administrator. Expenses to be borne
by such Series shall include both expenses directly attributable to the
operation of that Series and the offering of its shares, as well as the
portion of any expense of the Trust that is properly allocable to such
Series in a manner approved by the trustees of the Trust ("Trustees").
Subject to any separate agreement or arrangement between the Trust or a
Series and the Administrator, the expenses hereby allocated to each
Series, and not to the Administrator, include, but are not limited to:

2.2.1 CUSTODY. All charges of depositories,
custodians, and other agents for the transfer, receipt, safekeeping, and
servicing of its cash, securities, and other property.

2.2.2 SHAREHOLDER SERVICING. All expenses of
maintaining and servicing shareholder accounts, including but not limited
to the charges of any shareholder servicing agent, dividend disbursing
agent or other agent engaged by a Series to service shareholder accounts;
except those expenses specifically allocated to the Administrator in
Subparagraph 1.2 hereof, and those which may in the future be specifically
allocated to the Administrator under subparagraph 1.4 hereof.

2.2.3 SHAREHOLDER REPORTS. All expenses of
preparing, setting in type, printing and distributing reports and other
communications to shareholders of a Series.

2.2.4 PROSPECTUSES. All expenses of preparing,
setting in type, printing and mailing annual or more frequent revisions of
a Series's Prospectus and Statement of Additional Information ("SAI") and
any supplements thereto and of supplying them to shareholders of the
Series.

2.2.5 PRICING AND PORTFOLIO VALUATION. All
expenses of computing a Series's net asset value ("NAV") per share,

- 4 -
<PAGE>

including any equipment or services obtained for the purpose of pricing
shares or valuing the Series's investment portfolio.

2.2.6 COMMUNICATIONS. All charges for equipment
or services used for communications between the Administrator or the
Series and any custodian, shareholder servicing agent, portfolio
accounting services agent, or other agent engaged by a Series.

2.2.7 LEGAL AND ACCOUNTING FEES. All charges
for services and expenses of a Series's legal counsel and independent
auditors.

2.2.8 TRUSTEES' FEES AND EXPENSES. All
compensation of Trustees other than those affiliated with the
Administrator, all expenses incurred in connection with such unaffiliated
Trustees' services as Trustees, and all other expenses of meetings of the
Trustees or committees thereof.

2.2.9 SHAREHOLDER MEETINGS. All expenses
incidental to holding meetings of shareholders, including the printing of
notices and proxy materials, and proxy solicitation therefor.

2.2.10 FEDERAL REGISTRATION FEES. All fees and
expenses of registering and maintaining the registration of the Trust and
each Series under the 1940 Act and the registration of each Series's
shares under the Securities Act of 1933 (the "1933 Act"), including all
fees and expenses incurred in connection with the preparation, setting in
type, printing, and filing of any Registration Statement, Prospectus and
SAI under the 1933 Act or the 1940 Act, and any amendments or supplements
that may be made from time to time.

2.2.11 STATE REGISTRATION FEES. All fees and
expenses of qualifying and maintaining the qualification of the Trust and
each Series and of each Series's shares for sale under securities laws of
various states or jurisdictions, and of registration and qualification of
each Series under all other laws applicable to a Series or its business
activities (including registering the Series as a broker-dealer, or any
officer of the Series or any person as agent or salesman of the Series in
any state).

2.2.12 SHARE CERTIFICATES. All expenses of
preparing and transmitting a Series's share certificates, if any.

2.2.13 CONFIRMATIONS. All expenses incurred in
connection with the issue and transfer of a Series's shares, including the
expenses of confirming all share transactions.

2.2.14 BONDING AND INSURANCE. All expenses of
bond, liability, and other insurance coverage required by law or
regulation or deemed advisable by the Trustees, including, without
limitation, such bond, liability and other insurance expense that may from

- 5 -
<PAGE>

time to time be allocated to the Series in a manner approved by the
Trustees.

2.2.15 BROKERAGE COMMISSIONS. All brokers'
commissions and other charges incident to the purchase, sale or lending of
a Series's portfolio securities.

2.2.16 TAXES. All taxes or governmental fees
payable by or with respect to a Series to federal, state or other
governmental agencies, domestic or foreign, including stamp or other
transfer taxes.

2.2.17 TRADE ASSOCIATION FEES. All fees, dues
and other expenses incurred in connection with a Series's membership in
any trade association or other investment organization.

2.2.18 NONRECURRING AND EXTRAORDINARY EXPENSES.
Such nonrecurring and extraordinary expenses as may arise, including the
costs of actions, suits, or proceedings to which the Series is a party and
the expenses a Series may incur as a result of its legal obligation to
provide indemnification to the Trust's officers, Trustees and agents.

2.2.19 ORGANIZATIONAL EXPENSES. All
organizational expenses of each Series paid or assessed by the
Administrator, which such Series shall reimburse to the Administrator at
such time or times and subject to such condition or conditions as shall be
specified in the Prospectus and SAI pursuant to which such Series makes
the initial public offering of its shares.

2.2.20 INVESTMENT ADVISORY SERVICES. Any fees
and expenses for investment advisory services that may be incurred or
contracted for by a Series.

3. ADMINISTRATION FEE.
------------------

3.1 FEE. As compensation for all services rendered,
facilities provided and expenses paid or assumed by the Administrator to
or for each Series under this Agreement, such Series shall pay the
Administrator an annual fee as set out in Schedule B to this Agreement.

3.2 COMPUTATION AND PAYMENT OF FEE. The administration
fee shall accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The daily fee
accruals for each Series shall be computed by multiplying the fraction of
one divided by the number of days in the calendar year by the applicable
annual administration fee rate (as set forth in Schedule B hereto), and
multiplying this product by the NAV of such Series, determined in the
manner set forth in such Series's then-current Prospectus, as of the close
of business on the last preceding business day on which such Series's NAV
was determined.

- 6 -
<PAGE>

3.3 STATE EXPENSE LIMITATION. If in any fiscal year a
Series's operating expenses plus such Series's pro rata portion of the
operating expenses of any portfolio of Income Managers Trust in which such
Series invests all or substantially all of its assets ("Aggregate
Operating Expenses"), which includes any fees or expense reimbursements
payable to the Administrator pursuant to this Agreement and any
compensation payable to the Administrator pursuant to (i) the Management
Agreement between such portfolio and the Administrator, or (ii) any other
agreement or arrangement with respect to such Series, but excluding
interest, taxes, brokerage commissions, litigation and indemnification
expenses, and other extraordinary expenses not incurred in the ordinary
course of such Series's business) exceed the lowest applicable percentage
expense limitation imposed under the securities law and regulations of any
state in which such Series's shares are qualified for sale (the "State
Expense Limitation"), then the administration fee payable to the
Administrator under this Agreement by such Series shall be reduced by the
amount of such excess; PROVIDED, that the Administrator shall have no
obligation hereunder to reimburse the Series for any such expenses which
exceed such administration fee.

Any reduction in the administration fee shall be made
monthly, by annualizing the Aggregate Operating Expenses of such Series
for each month as of the last day of such month. An adjustment shall be
made on or before the last day of the first month of the next succeeding
fiscal year if Aggregate Operating Expenses for such Series's fiscal year
do not exceed the State Expense Limitation or if for such fiscal year
there is no applicable State Expense Limitation.

4. OWNERSHIP OF RECORDS. All records required to be maintained
and preserved by each Series pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission ("SEC") under
Section 31(a) of the 1940 Act and maintained and preserved by the
Administrator on behalf of such Series, including any such records
maintained by the Administrator in connection with the performance of its
obligations hereunder, are the property of such Series and shall be
surrendered by the Administrator promptly on request by the Series;
PROVIDED, that the Administrator may at its own expense make and retain
copies of any such records.

5. REPORTS TO ADMINISTRATOR. Each Series shall furnish or
otherwise make available to the Administrator such copies of that Series's
Prospectus, SAI, financial statements, proxy statements, reports, and
other information relating to its business and affairs as the
Administrator may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.

6. REPORTS TO EACH SERIES. The Administrator shall prepare and
furnish to each Series such reports, statistical data and other
information in such form and at such intervals as such Series may
reasonably request.

- 7 -
<PAGE>

7. ADMINISTRATOR'S OWNERSHIP OF SOFTWARE AND RELATED MATERIALS.
All computer programs, written procedures and similar items developed or
acquired and used by the Administrator in performing its obligations under
this Agreement shall be the property of the Administrator, and no Series
will acquire any ownership interest therein or property rights with
respect thereto.

8. CONFIDENTIALITY. The Administrator agrees, on its own behalf
and on behalf of its employees, agents and contractors, to keep
confidential any and all records maintained and other information obtained
hereunder which relates to any Series or to any of a Series's former,
current or prospective shareholders, EXCEPT that the Administrator may
deliver records or divulge information (a) when requested to do so by duly
constituted authorities after prior notification to and approval in
writing by such Series (which approval will not be unreasonably withheld
and may not be withheld by such Series where the Administrator advises
such Series that the Administrator may be exposed to civil or criminal
contempt proceedings or other penalties for failure to comply with such
request) or (b) whenever requested in writing to do so by such Series.

9. SERVICES TO OTHER CLIENTS. Nothing herein shall limit the
freedom of the Administrator or any affiliated person of the Administrator
to render services of the types contemplated hereby to other persons,
firms or corporations, including but not limited to other investment
companies, or to engage in other business activities.

10. LIMITATION OF LIABILITY REGARDING THE TRUST. The
Administrator shall look only to the assets of each Series for performance
of this Agreement by the Trust on behalf of such Series, and neither the
Trustees nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor, nor shall
any other Series by liable therefor.

11. ADMINISTRATOR'S ACTIONS IN RELIANCE ON SERIES'S
INSTRUCTIONS, LEGAL OPINIONS, ETC.; SERIES'S COMPLIANCE WITH LAWS.
-------------------------------------------------------------------

11.1 The Administrator may at any time apply to an
officer of the Trust for instructions, and may consult with legal counsel
for a Series or with the Administrator's own legal counsel, in respect of
any matter arising in connection with this Agreement; and the
Administrator shall not be liable for any action taken or omitted to be
taken in good faith and with due care in accordance with such instructions
or with the advice or opinion of such legal counsel. The Administrator
shall be protected in acting upon any such instructions, advice or opinion
and upon any other paper or document delivered by a Series or such legal
counsel which the Administrator believes to be genuine and to have been
signed by the proper person or persons.

- 8 -
<PAGE>

11.2 Except as otherwise provided in this Agreement or
in any separate agreement between the parties and except for the accuracy
of information furnished to each Series by the Administrator, each Series
assumes full responsibility for the preparation, contents, filing and
distribution of its Prospectus and SAI, and full responsibility for other
documents or actions required for compliance with all applicable
requirements of the 1940 Act, the Securities Exchange Act of 1934, the
1933 Act, and any other applicable laws, rules and regulations of
governmental authorities having jurisdiction over such Series.

12. LIABILITY OF ADMINISTRATOR. The Administrator shall not be
liable to any Series for any action taken or omitted to be taken by the
Administrator or its employees, agents or contractors in carrying out the
provisions of this Agreement if such action was taken or omitted in good
faith and without negligence or misconduct on the part of the
Administrator, or its employees, agents or contractors.

13. INDEMNIFICATION BY SERIES. Each Series shall indemnify the
Administrator and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by the Administrator that result from: (i) any claim, action,
suit or proceeding in connection with the Administrator's entry into or
performance of this Agreement with respect to such Series; or (ii) any
action taken or omission to act committed by the Administrator in the
performance of its obligations hereunder with respect to such Series; or
(iii) any action of the Administrator upon instructions believed in good
faith by it to have been executed by a duly authorized officer or
representative of the Trust with respect to such Series; PROVIDED, that
the Administrator shall not be entitled to such indemnification in respect
of actions or omissions constituting negligence or misconduct on the part
of the Administrator or its employees, agents or contractors. Before
confessing any claim against it which may be subject to indemnification by
a Series hereunder, the Administrator shall give such Series reasonable
opportunity to defend against such claim in its own name or in the name of
the Administrator.

14. INDEMNIFICATION BY THE ADMINISTRATOR. The Administrator
shall indemnify each Series and hold it harmless from and against any and
all losses, damages and expenses, including reasonable attorneys' fees and
expenses, incurred by such Series which result from: (i) the
Administrator's failure to comply with the terms of this Agreement with
respect to such Series; or (ii) the Administrator's lack of good faith in
performing its obligations hereunder with respect to such Series; or (iii)
the negligence or misconduct of the Administrator or its employees, agents
or contractors in connection herewith with respect to such Series. A
Series shall not be entitled to such indemnification in respect of actions
or omissions constituting negligence or misconduct on the part of that
Series or its employees, agents or contractors other than the
Administrator unless such negligence or misconduct results from or is
accompanied by negligence or misconduct on the part of the Administrator,
any affiliated person of the Administrator, or any affiliated person of an

- 9 -
<PAGE>

affiliated person of the Administrator. Before confessing any claim
against it which may be subject to indemnification hereunder, a Series
shall give the Administrator reasonable opportunity to defend against such
claim in its own name or in the name of the Trust on behalf of such
Series.

15. EFFECT OF AGREEMENT. Nothing herein contained shall be
deemed to require the Trust or any Series to take any action contrary to
the Trust Instrument or Bylaws of the Trust or any applicable law,
regulation or order to which it is subject or by which it is bound, or to
relieve or deprive the Trustees of their responsibility for and control of
the conduct of the business and affairs of the Series or the Trust.

16. TERM OF AGREEMENT. The term of this Agreement shall begin
on the date first above written with respect to each Series listed in
Schedule A on the date hereof and, unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect through July 2, 1995.
With respect to each Series added by execution of an Addendum to Schedule
A, the term of this Agreement shall begin on the date of such execution
and, unless sooner terminated as hereinafter provided, this Agreement
shall remain in effect to the date two years after such execution.
Thereafter, in each case this Agreement shall continue in effect with
respect to each Series from year to year, subject to the termination
provisions and all other terms and conditions hereof; PROVIDED, such
continuance with respect to a Series is approved at least annually by vote
or written consent of the Trustees, including a majority of the Trustees
who are not interested persons of either party hereto ("Disinterested
Trustees"); and PROVIDED FURTHER, that the Administrator shall not have
notified a Series in writing at least sixty days prior to the first
expiration date hereof or at least sixty days prior to any expiration date
in any year thereafter that it does not desire such continuation. The
Administrator shall furnish any Series, promptly upon its request, such
information (including the Administrator's costs of delivering the
services provided to such Series hereunder) as may reasonably be necessary
to evaluate the terms of this Agreement or any extension, renewal or
amendment thereof. The Administrator shall permit the Trust and/or the
Series and their accountants, counsel or other representatives to review
its books and records relating to the services provided hereunder at
reasonable intervals during normal business hours upon reasonable notice
requesting such review.

17. AMENDMENT OR ASSIGNMENT OF AGREEMENT. Any amendment to this
Agreement shall be in writing signed by the parties hereto. The
Administrator may not assign this Agreement or any interest hereunder
voluntarily, by operation of law, or otherwise, without the prior written
consent of any Series affected thereby. Any amendment hereof or
assignment or transfer of any interest hereunder by the Administrator
shall not be effective with respect to a Series unless and until
authorized (i) by resolution of the Trustees, including the vote or
written consent of a majority of the Disinterested Trustees or (ii) by
vote of a majority of the outstanding voting securities of such Series.

- 10 -
<PAGE>

18. TERMINATION OF AGREEMENT. This Agreement may be terminated
at any time by either party hereto, without the payment of any penalty,
upon sixty days' prior written notice to the other party; PROVIDED, that
in the case of termination by any Series, such action shall have been
authorized (i) by resolution of the Trustees, including the vote or
written consent of the Disinterested Trustees, or (ii) by vote of a
majority of the outstanding voting securities of such Series. This
agreement shall automatically and immediately terminate as to any Series
in the event of its assignment by the Administrator, or the
Administrator's assignment or transfer of any interest hereunder, without
prior written consent of the affected Series as provided in Paragraph 17
hereof; PROVIDED that with the consent of a Series, the Administrator may
subcontract to another person any of its responsibilities under this
Agreement with respect to any such Series.

19. NAME OF A SERIES. Each Series hereby agrees that if the
Administrator shall at any time for any reason cease to serve as
administrator to a Series, such Series shall, if and when requested by the
Administrator, eliminate from such Series's name the name "Neuberger &
Berman" and thereafter refrain from using the name "Neuberger & Berman" or
the initials "N&B" in connection with its business or activities, and the
foregoing agreement of each Series shall survive any termination of this
Agreement and any extension or renewal thereof.

20. INTERPRETATION AND DEFINITION OF TERMS. Any question of
interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940
Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretation thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC validly issued pursuant to the 1940 Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested person," "assignment" and "affiliated person" as
used in this Agreement shall have the meanings assigned to them by Section
2(a) of the 1940 Act. In addition, when the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is modified,
interpreted or relaxed by a rule, regulation or order of the SEC, whether
of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. The Trust and
the Administrator may from time to time agree on such provisions
interpreting or clarifying the provisions of this Agreement as, in their
joint opinion, are consistent with the general tenor of this Agreement and
with the specific provisions of this Paragraph 20. Any such
interpretations or clarifications shall be in writing signed by the
parties and annexed hereto, but no such interpretation or clarification
shall be effective if in contravention of any applicable federal or state
law or regulations, and no such interpretation or clarification shall be
deemed to be an amendment to this Agreement.

21. CHOICE OF LAW. This Agreement is made and to be principally
performed in the State of New York, and except insofar as the 1940 Act or

- 11 -
<PAGE>

other federal laws and regulations may be controlling, this Agreement
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of New York.

22. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.

23. EXECUTION IN COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

NEUBERGER & BERMAN INCOME FUNDS

Attest: By /s/ Stanley Egener
---------------------------

/s/ Claudia A. Brandon Chairman
------------------------ ----------------------------
Secretary Title

NEUBERGER & BERMAN
MANAGEMENT INCORPORATED

Attest: By /s/ Daniel J. Sullivan
---------------------------

/s/ Ellen Metzger Sr. V.P.
------------------------- ---------------------------
Secretary Title

- 12 -
<PAGE>

<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
ADMINISTRATION AGREEMENT

SCHEDULE A

The Series of Neuberger & Berman Income Funds currently subject
to this Agreement are as follows:

Dated: December 20, 1995
<PAGE>

<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
ADMINISTRATION AGREEMENT

SCHEDULE B

Compensation pursuant to Paragraph 3 of the Neuberger & Berman
Income Funds Administration Agreement shall be .27% per annum of the
average daily net assets of each Series.

Dated: May 1, 1995
<PAGE>

<PAGE>

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Reports to Shareholders," "Independent
Auditors" and "Financial Statements" in the Statement of Additional
Information in Post-Effective Amendment Number 21 to the Registration
Statement (Form N-1A No. 2-85229) of Neuberger&Berman Income Funds, and to
the incorporation by reference of our reports dated December 1, 1995 on
the Neuberger&Berman Cash Reserves, Neuberger&Berman Government Money
Fund, Neuberger&Berman Limited Maturity Bond Fund, Neuberger&Berman Ultra
Short Bond Fund, Neuberger&Berman Municipal Money Fund, Neuberger&Berman
Municipal Securities Trust, and Neuberger&Berman New York Insured
Intermediate Fund, and on Neuberger&Berman Cash Reserves Portfolio,
Neuberger&Berman Government Money Portfolio, Neuberger&Berman Limited
Maturity Bond Portfolio, Neuberger&Berman Ultra Short Bond Portfolio,
Neuberger&Berman Municipal Money Portfolio, Neuberger&Berman Municipal
Securities Portfolio, and Neuberger&Berman New York Insured Intermediate
Portfolio included in the 1995 Annual Report to Shareholders of
Neuberger&Berman Income Funds.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

Boston, Massachusetts
February 22, 1996
<PAGE>

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Government Money Fund Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<CIK> 0000723620
<NAME> NEUBERGER&BERMAN INCOME FUNDS
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN GOVERNMENT MONEY FUND
<MULTIPLIER> 1,000

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Cash Reserves Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<CIK> 0000723620
<NAME> NEUBERGER&BERMAN INCOME FUNDS
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN CASH RESERVES
<MULTIPLIER> 1,000

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Ultra Short Bond Fund Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<CIK> 0000723620
<NAME> NEUBERGER&BERMAN INCOME FUNDS
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN ULTRA SHORT BOND FUND
<MULTIPLIER> 1,000

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Limited Maturity Bond Fund Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000723620
<NAME> NEUBERGER&BERMAN INCOME FUNDS
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN LIMITED MATURITY BOND FUND
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 307,911
<RECEIVABLES> 305
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 308,216
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 805
<TOTAL-LIABILITIES> 805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 315,409
<SHARES-COMMON-STOCK> 30,567
<SHARES-COMMON-PRIOR> 31,244
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (148)
<ACCUMULATED-NET-GAINS> (8,471)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 621
<NET-ASSETS> 307,411
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 20,587
<OTHER-INCOME> 0
<EXPENSES-NET> (2,087)
<NET-INVESTMENT-INCOME> 18,500
<REALIZED-GAINS-CURRENT> (3,613)
<APPREC-INCREASE-CURRENT> 8,911
<NET-CHANGE-FROM-OPS> 23,798
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (18,500)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,271
<NUMBER-OF-SHARES-REDEEMED> (11,509)
<SHARES-REINVESTED> 1,561
<NET-CHANGE-IN-ASSETS> (1,158)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,773)
<OVERDISTRIB-NII-PRIOR> (76)<F1>
<OVERDIST-NET-GAINS-PRIOR> (116)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,119
<AVERAGE-NET-ASSETS> 298,014
<PER-SHARE-NAV-BEGIN> 9.88
<PER-SHARE-NII> .62
<PER-SHARE-GAIN-APPREC> .18
<PER-SHARE-DIVIDEND> (.62)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.06
<EXPENSE-RATIO> .70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Tax Return of Capital
</FN>
<PAGE>

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Municipal Money Fund Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> MEUBERGER&BERMAN INCOME FUNDS
<SERIES>
<NUMBER> 08
<NAME> NEUBERGER&BERMAN MUNICIPAL MONEY FUND
<MULTIPLIER> 1,000

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Municipal Securities Trust Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000723620
<NAME> NEUBERGER&BERMAN INCOME FUNDS
<SERIES>
<NUMBER> 09
<NAME> NEUBERGER&BERMAN MUNICIPAL SECURITIES TRUST
<MULTIPLIER> 1,000

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman New York Intermediate Fund Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000723620
<NAME> NEUBERGER&BERMAN INCOME FUNDS
<SERIES>
<NUMBER> 10
<NAME> NEUBERGER&BERMAN NEW YORK INSURED INTERMEDIATE FUND
<MULTIPLIER> 1,000

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Government Money Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN GOVERNMENT MONEY PORTFOLIO
<MULTIPLIER> 1,000

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Cash Reserves Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN CASH RESERVES PORTFOLIO
<MULTIPLIER> 1,000

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger& Berman Ultra Short Bond Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN ULTRA SHORT BOND PORTFOLIO
<MULTIPLIER> 1,000

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Limited Maturity Bond Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN LIMITED MATURITY BOND PORTFOLIO
<MULTIPLIER> 1,000

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Municipal Money Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 08
<NAME> NEUBERGER&BERMAN MUNICIPAL MONEY PORTFOLI
<MULTIPLIER> 1,000

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Municipal Securities Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 09
<NAME> NEUBERGER&BERMAN MUNICIPAL SECURITIES PORTFOLIO
<MULTIPLIER> 1,000

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman New York Insured Intermediate Portfolio Annual Report
and is qualified in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 10
<NAME> NEUBERGER&BERMAN NEW YORK INSURED INTERMEDIATE PORTFOLIO
<MULTIPLIER> 1,000

</TABLE>