NEUBERGER & BERMAN INCOME FUNDS, 485APOS, 1996-11-15

NEUBERGER & BERMAN INCOME FUNDS
485APOS, 1996-11-15

Previous: WORLDCOM INC /MS/, 424B3, 1996-11-15

Next: MEDICAL DEVICE TECHNOLOGIES INC, 10QSB, 1996-11-15

<PAGE>
As filed with the Securities and Exchange Commission on November 15, 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. __22__ [__X__]

and/or

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

Amendment No. __ 23__ [__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

Theodore P. Giuliano, 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)
____ on _________________, pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
_X__ on February 3, 1997 pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on __________ pursuant to paragraph (a)(2)

Registrant has filed a declaration pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended, and the notice required by
such rule for its 1996 fiscal year will be filed on or about December 23,
1996.

Neuberger & Berman Income Funds is a "master/feeder fund." This
Post-Effective Amendment No. 22 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. 22 ON FORM N-1A

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

Cover Sheet

Contents of Post-Effective Amendment No. 22 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

- 2 -
<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 22 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 Information Financial Highlights; Performance Information

Item 4. General Description of Registrant Investment Programs; Description of 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 Being How to Buy Shares; Additional Information on
Offered 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 Proceedings Not Applicable

</TABLE>

- 3 -
<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
------------------ -----------------------------------
<S> <C> <C>

Item 10. Cover page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. General Information and History Not Applicable

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

Item 14. Management of the Fund Trustees And Officers

Item 15. Control Persons and Principal Control Persons And Principal Holders of Securities
Holders 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 Securities Investment Information; Additional Redemption
Information; Dividends and Other Distributions

Item 19. Purchase, Redemption and Pricing Valuation of Portfolio Securities;
of Securities Being 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 1.
Administration Services; Distribution Arrangements

Item 22. Calculation of Performance Data Performance Information

Item 23. Financial Statements Financial Statements

</TABLE>

- 4 -
<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 History Not applicable

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

Item 14. Management of the Fund Trustees And Officers

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

Item 16. Investment Advisory and Other Services Investment Management and
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 Securities Investment Information; Additional Redemption Information;
Dividends and Other Distributions

Item 19. Purchase, Redemption and Pricing of Valuation of Portfolio Securities
Securities Being Offered (Neuberger & Berman Municipal Money Portfolio);
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

Item 22. Calculation of Performance Data Performance Information

Item 23. Financial Statements Financial Statements

</TABLE>

- 5 -
<PAGE>

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
No. 22.

- 6 -
<PAGE>

Neuberger&Berman
INCOME FUNDS

No-Load Income Funds
__________________________________________________________________________

Neuberger&Berman GOVERNMENT MONEY FUND[Registered Trademark]

Neuberger&Berman CASH RESERVES[Registered Trademark]

Neuberger&Berman ULTRA SHORT BOND FUND[Registered Trademark]

Neuberger&Berman LIMITED MATURITY BOND FUND[Registered Trademark]

Neuberger&Berman MUNICIPAL MONEY FUND[Registered Trademark]

Neuberger&Berman MUNICIPAL SECURITIES TRUST[Registered Trademark]

Neuberger&Berman NEW YORK INSURED INTERMEDIATE FUND[Registered Trademark]

Initial Purchase $2,000 Minimum
Automatic Investing $100 Minimum Per Month
Call 800-877-9700
__________________________________________________________________________

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
February 3, 1997, are on file with the Securities and Exchange Commission
("SEC"). 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
<PAGE>

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.

The SEC maintains a Website (http://www.sec.gov) that contains the SAI,
material incorporated by reference, and other information regarding the
Funds and Portfolios. Prospectus Dated February 3, 1997

Shares of Neuberger&Berman New York Insured Intermediate Fund are
eligible 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.

- 2 -
<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
Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

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

INTERNET ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 17. Of course, there can be no assurance
that a Fund will meet its investment objective.

- 3 -
<PAGE>

Neuberger&Berman Income Investment Principal Portfolio Comparative
Funds Objective Investments Information
------------------------ ---------- ------------------- -----------

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 the average portfolio maturity
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 Current income with minimal Money market instruments and Lower expected price
risk to principal and investment grade debt fluctuation of Neuberger&
liquidity securities of government and Berman bond funds; maximum
non-government issuers average duration of two
years

Limited Maturity Highest current income Debt securities, primarily More potential price
consistent with low risk to investment grade, maximum fluctuation; maximum
principal and liquidity; and, 10% below investment grade, average duration of four
secondarily, total return but no lower than B* years

MUNICIPAL FUNDS

________________________

* Securities that are below investment grade will be purchased
only if rated B or higher by either Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's ("S&P") or, if unrated by either of
those entities, deemed by N&B Management to be of comparable quality.
See pages 26-27.

- 4 -
<PAGE>

Neuberger&Berman Income Investment Principal Portfolio Comparative
Funds Objective Investments Information
------------------------ ---------- ------------------- -----------

Municipal Money Maximum current tax-exempt High-quality, short-term Seeks to maintain a
income consistent with safety municipal securities constant share price of
and liquidity** $1.00; dollar-weighted
average portfolio maturity
of up to 90 days

Municipal Securities High current tax-exempt Investment grade municipal More potential price
income with low risk to securities fluctuation; maximum
principal, limited price average duration of 10
fluctuation, and liquidity; years
and secondarily, total
return**

New York Insured High level of current income At least 65% of total assets Maximum average duration
Intermediate exempt from federal income normally invested in New of 10 years
tax and New York State and York Municipal Securities
New York City personal income having the highest ratings
taxes, consistent with (Aaa/AAA) at the time of
preservation of capital** 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, debt securities rated below investment grade
and swap agreements. The value and yield of New York Municipal Securities

_________________________

** This Portfolio may invest in municipal securities that are
issued to finance private activities, the income on which may be
subject to the federal alternative minimum tax.

- 5 -
<PAGE>

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 the 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 17 and
"Description of Investments" on page 34.

Management

N&B Management, with the assistance of Neuberger&Berman, LLC
("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
and sell shares of the Funds or exchange them for shares of other
Neuberger&Berman Funds[Registered Trademark], 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[Registered Trademark] aggregating $200,000 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)

- 6 -
<PAGE>

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. A Fund's Total Operating Expenses are borne
indirectly by the Fund's 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.

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

GOVERNMENT MONEY __% None __% __%

CASH RESERVES __% None __% __%

ULTRA SHORT __% None __% __%

LIMITED MATURITY __% None __% __%

MUNICIPAL MONEY __% None __% __%

MUNICIPAL SECURITIES __% None __% __%

NEW YORK INSURED __% None __% __%
INTERMEDIATE

*(Reflects N&B Management's expense reimbursement undertaking described below)
</TABLE>

Total Operating Expenses for each Fund are based upon current
administration fees for the Fund and management fees for its corresponding
Portfolio and any current expense reimbursement undertakings. "Other
Expenses" are 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

- 7 -
<PAGE>

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 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 ____%, ____%, ____%, ____%, and ____% and
Total Operating Expenses would be ____%, ____%, ____%, ____% and ____% 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 1996 fiscal
year. Absent the reimbursement, Other Expenses would be ____% 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.

- 8 -
<PAGE>

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 $ $ $ $

CASH RESERVES

ULTRA SHORT

LIMITED MATURITY

MUNICIPAL MONEY

MUNICIPAL SECURITIES

NEW YORK INSURED
INTERMEDIATE

The assumption in this example of a 5% annual return is required
by regulations of the SEC applicable to all mutual funds. The information
in the previous tables 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

Selected Per Share Data and Ratios

The financial information in the following tables is for each
Fund as of October 31, 1996 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 auditors' reports are incorporated in the SAIs by
reference to the annual reports. Please call 800-877-9700 for free copies
of the annual reports and for up-to-date information. Also, see
"Performance Information."

- 9 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

Government Money Fund
--------------------------------------------------------------------------
The following table includes selected data for a share
outstanding throughout each year and other performance information derived
from the Financial Statements. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>

Year Ended October 31,

19961/ 19951/ 19941/ 19931/ 1992 1991

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

Income From Investment Operations

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

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

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

Less Distributions

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

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

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

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

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

Ratios/Supplemental Data

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

Ratio of Expenses to Average Net Assets .65% .72% .70% .66% .68%
Ratio of Net Income to Average Net Assets 5.00% 3.00% 2.48% 3.50% 5.66%

</TABLE>

See Notes to Financial Highlights.

- 10 -
<PAGE>

<TABLE>
<CAPTION>
Year ended October 31,

1990 1989 1988 1987

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

Income From Investment Operations

Net Investment Income .0718 .0758 .0579 .0504

Net Gains or Losses on Securities .0003 (.0002) -- .0002

Total From Investment Operations .0721 .0756 .0579 .0506

Less Distributions

Dividends (from net investment income) (.0718) (.0758) (.0579) (.0504)

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

Total Distributions (.0718) (.0759) (.0581) (.0506)

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

Total Return* +7.42% +7.86% +5.97% +5.18%

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $234.6 $184.3 $173.2 $266.4

Ratio of Expenses to Average Net Assets .74% .87% .79%5/ .75%5/
Ratio of Net Income to Average Net Assets 7.19% 7.55% 5.73%5/ 5.11%5/

</TABLE>
See Notes to Financial Highlights.

- 11 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

Cash Reserves
--------------------------------------------------------------------------

The following table includes selected data for a share outstand-
ing 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.

Year Ended October 31,

19961/ 19951/ 19941/ 19931/ 1992

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

Income From Investment Operations

Net Investment Income .0529 .0327 .0263 .0363

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

Total From Investment Operations .0529 .0327 .0265 .0365

Less Distributions

Dividends (from net investment income) (0.529) (.0327) (.0263) (.0363)

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

Total Distributions (0.529) (.0328) (.0265) (.0364)

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

Total Return* +5.42% +3.33% +2.68% +3.69%

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $408.9 $311.9 $273.1 $261.7

Ratio of Expenses to Average Net Assets5/ .65% .65% .65% .65%
Ratio of Net Income to Average Net Assets5/ 5.30% 3.31% 2.63% 3.63%

</TABLE>

See Notes to Financial Highlights.

- 12 -
<PAGE>

<TABLE>
<CAPTION>
Period from
April 12, 19883/
Year Ended October 31, to October 31,

1991 1990 1989 1988

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

Income From Investment Operations

Net Investment Income .0600 .0766 .0866 .0401

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

Total From Investment Operations .0600 .0766 .0867 .0401

Less Distributions

Dividends (from net investment income) (.0600) (.0766) (.0866) (.0401)

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

Total Distributions (.0600) (.0767) (.0866) (.0401)

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

Total Return* +6.17% +7.94% +9.01% +4.08%4/

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $278.9 $278.2 $267.1 $140.9

Ratio of Expenses to Average Net Assets5/ .65% .65% .65% .60%6/
Ratio of Net Income to Average Net Assets5/ 6.00% 7.66% 8.70% 7.54%6/

</TABLE>

See Notes to Financial Highlights.

- 13 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

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

The following table includes selected data for a share
outstanding throughout each year and other performance information derived
from the Financial Statements. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.

Year Ended October 31,

19961/ 19951/ 19941/ 19931/ 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 .65% .65% .65% .65% .65% .65% .65%
Assets5/

Ratio of Net Income to Average Net 5.44% 3.72% 4.09% 5.70% 6.97% 8.14% 9.06%
Assets5/

Portfolio Turnover Rate7/ -- -- 115% 66% 89% 120% 85%

</TABLE>

See Notes to Financial Highlights.

- 14 -
<PAGE>

<TABLE>
<CAPTION>
Period from Period from
March 1, 1988 Year Ended Nov. 7, 19863/
to Oct. 31, Feb. 29, to 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 .63%6/ .50% .50%6/
Assets5/

Ratio of Net Income to Average Net 7.01%6/ 6.72% 6.03%6/
Assets5/
Portfolio Turnover Rate7/ 47% 121% 39%

</TABLE>

See Notes to Financial Highlights.

- 15 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

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

Year Ended October 31,

19961/ 19951/ 19941/ 19931/ 1992 1991
<S> <C> <C> <C> <C> <C> <C>

Net Asset Value, Beginning of Year $9.88 $10.49 $10.40 $10.24 $9.91
Income From Investment Operations

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

Net Gains or Losses on Securities .18 (.55) .14 .16 .33
(both realized and unrealized)
Total From Investment Operations .80 .01 .72 .79 1.04

Less Distributions
Dividends (from net investment income) (.62) (.56) (.58) (.63) (.71)

Distributions (from capital gains) -- (.05) (.05) -- --

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

Total Distributions (.62) (.62) (.63) (.63) (.71)
Net Asset Value, End of Year $10.06 $9.88 $10.49 $10.40 $10.24

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

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

Ratio of Expenses to Average Net Assets5/ .70% .69% .65% .65% .65%
Ratio of Net Investment Income to Average Net 6.21% 5.53% 5.49% 6.02% 7.07%
Assets5/

Portfolio Turnover Rate7/ -- -- 114% 113% 88%

</TABLE>
See Notes to Financial Highlights.

- 16 -
<PAGE>

<TABLE>
<CAPTION>
Period from Period from
Year Ended March 1, 1988 Year Ended June 9, 19863/
October 31, to Oct. 31, Feb. 29, to Feb. 28,

1990 1989 1988 1988 1987
<S> <C> <C> <C> <C> <C>

Net Asset Value, Beginning of Year $9.96 $9.88 $10.00 $10.17 $10.00
Income From Investment Operations

Net Investment Income .80 .82 .48 .69 .48

Net Gains or Losses on Securities (.05) .08 (.12) (.17) .17
(both realized and unrealized)
Total From Investment Operations .75 .90 .36 .52 .65

Less Distributions
Dividends (from net investment income) (.80) (.82) (.48) (.69) (.48)

Distributions (from capital gains) -- -- -- -- --

Distributions (in excess of capital gains) -- -- -- -- --
Tax return of capital -- -- -- -- --

Total Distributions (.80) (.82) (.48) (.69) (.48)
Net Asset Value, End of Year $9.91 $9.96 $9.88 $10.00 $10.17

Total Return* +7.85% +9.56% +3.76%4/ +5.39% +6.58%4/

Ratios/Supplemental Data
Net Assets, End of Year (in millions) $101.3 $107.7 $133.5 $107.3 $69.6

Ratio of Expenses to Average Net Assets5/ .65% .65% .63%6/ .50% .50%6/
Ratio of Net Investment Income to Average Net 8.09% 8.33% 7.34%6/ 6.97% 6.716/
Assets5/

Portfolio Turnover Rate7/ 88% 121% 68% 158% 41%
</TABLE>

See Notes to Financial Highlights.

- 17 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

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

19961/ 19951/ 19941/ 19931/ 1992

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

Income From Investment Operations

Net Investment Income .0324 .0204 .0184 .0263

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

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

Less Distributions

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

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

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

Ratios/Supplemental Data

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

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

Ratio of Net Income to Average Net Assets 3.24% 2.02% 1.85% 2.63%
</TABLE>

See Notes to Financial Highlights.

- 18 -
<PAGE>

<TABLE>
<CAPTION>
Year Ended October 31,

1991 1990 1989 1988 1987

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

Income From Investment Operations

Net Investment Income .0432 .0539 .0591 .0478 .0388

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

Total From Investment Operations .0432 .0539 .0587 .0476 .0383

Less Distributions

Dividends (from net investment income) (.0432) (.0539) (.0591) (.0478) (.0388)

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

Total Return* +4.40% +5.53% +6.07% +4.89% +3.95%

Ratios/Supplemental Data

Net Assets, End of Year (in millions) $173.9 $190.6 $204.8 $184.5 $226.1

Ratio of Expenses to Average Net Assets .66% .67% .74% .69% .71%

Ratio of Net Income to Average Net Assets 4.34% 5.41% 5.91% 4.76% 3.90%
</TABLE>

See Notes to Financial Highlights.

- 19 -
<PAGE>

FINANCIAL HIGHLIGHTS
Neuberger&Berman

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

Year Ended October 31,

19961/ 19951/ 19941/ 19931/ 1992 1991
<S> <C> <C> <C> <C> <C> <C>

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

Income From Investment Operations
Net Investment Income .47 .46 .48 .54 .58

Net Gains or Losses on Securities .57 (.73) .68 .14 .25
(both realized and unrealized)
Total From Investment Operations 1.04 (.27) 1.16 .68 .83

Less Distributions

Dividends (from net investment income) (.47) (.46) (.48) (.54) (.58)
Distributions (from capital gains) -- (.12) (.09) -- --

Distributions (in excess of capital gains) -- (.01) -- -- --
Total Distributions (.47) (.59) (.57) (.54) (.58)

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

Total Return* +10.35% -2.57% +11.30% +6.72% +8.41%
Ratios/Supplemental Data

Net Assets, End of Year (in millions) $44.3% $51.1 $105.2 $37.0 $25.5
Ratio of Expenses to Average Net Assets5/ .65% .65% .62% .50% .50%

Ratio of Net Income to Average Net Assets5/ 4.45% 4.24% 4.33% 5.16% 5.61%

Portfolio Turnover Rate7/ -- -- 35% 46% 10%
</TABLE>

See Notes to Financial Highlights.

- 20 -
<PAGE>

<TABLE>
<CAPTION>
Period from
July 9, 19873/
to Oct. 31,

1990 1989 1988 1987

Net Asset Value, Beginning of Year $10.09 $10.08 $9.73 $10.00
Income From Investment Operations

Net Investment Income .64 .63 .59 .15
Net Gains or Losses on Securities .05 .01 .35 (.27)
(both realized and unrealized)

Total From Investment Operations .69 .64 .94 (.12)

Less Distributions
Dividends (from net investment income) (.64) (.63) (.59) (.15)

Distributions (from capital gains) -- -- -- --
Distributions (in excess of capital gains) -- -- -- --

Total Distributions (.64) (.63) (.59) (.15)

Net Asset Value, End of Year $10.14 $10.09 $10.08 $9.73
Total Return* +6.99% +6.55% +9.88% -1.15%4/

Ratios/Supplemental Data
Net Assets, End of Year (in millions) $14.1 $10.5 $9.8 $6.7

Ratio of Expenses to Average Net Assets5/ .50% .50% .50% .50%6/

Ratio of Net Income to Average Net Assets5/ 6.28% 6.26% 5.90% 5.29%6/
Portfolio Turnover Rate7/ 42% 17% 23% 0%
</TABLE>

See Notes to Financial Highlights.

- 21 -
<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.

Year Ended October 31, Period from February 1,
19943/ to October 31, 1994

1996 1995

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 Assets5/ .66% .65%6/

Ratio of Net Investment Income to Average 4.24% 4.10%6/
Net Assets5/
</TABLE>
See Notes to Financial Highlights.

- 22 -
<PAGE>

NOTES TO FINANCIAL HIGHLIGHTS

1) The per share amounts and ratios which are shown reflect income
and expenses including each Fund's proportionate share of its
corresponding Portfolio's income and expenses.

2) Data for the year ended October 31, 1986 includes the combined
operations of the Neuberger&Berman Government Money Fund and of
Sentry Cash Management Fund for the period from the date of the
merger of the two funds (March 3, 1986). The merger was accounted
for under the purchase method of accounting.

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:

Neuberger&Berman Government Year Ended October 31
Money Fund

1988 1987

Expenses .83% .90%

Net Investment Income 5.69% 4.96%

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

Neuberger&Berman
Cash Reserves 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Expenses .68% .71% .76% .69% .69% .72% .83% 1.03%

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

</TABLE>

- 23 -
<PAGE>

<TABLE>
<CAPTION>
Period Period
from from
March 1, Year Nov. 7,
1988 to Ended 1986 to
Year Ended October 31, Oct. 31, Feb. 29, Feb. 28,

Neuberger&Berman
Ultra Short 1996 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
</TABLE>

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

Neuberger&Berman
Municipal 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Securities Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

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%

</TABLE>

- 24 -
<PAGE>

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

Neuberger&Berman
Limited Maturity 1996 1995 1994 1993 1992 1991 1990 1989 1988 1988 1987
Bond Fund

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>

Period from
February 1,
1994 to
Neuberger&Berman Year Ended October 31, October 31,
New York Insured Intermediate Fund 1996 1995 1994
<S> <C> <C> <C>

Expenses 1.83% 1.53%
Net Investment Income 3.07% 3.22%
</TABLE>

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:

- 25 -
<PAGE>

Year Ended October 31, Period from July 2,
1993 (Commencement
of Operations) to
1996 1995 1994 October 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
</TABLE>

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

Neuberger&Berman New York 17% 96%
Insured 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 would have been lower if N&B Management had not reimbursed
certain expenses.

- 26 -
<PAGE>

INVESTMENT PROGRAMS

The investment policies and limitations of each Fund are
identical to those of its corresponding Portfolio. 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. 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 creditworthiness of the issuer.

Money Market Portfolios

The investment objective of Neuberger&Berman Government Money
Fund and Portfolio is to provide maximum safety and liquidity with the
highest available current income. The investment objective of
Neuberger&Berman Cash Reserves 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

- 27 -
<PAGE>

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. The Portfolio may also invest in
municipal obligations that otherwise meet its criteria for quality and
maturity.

Bond Portfolios

The investment objective of Neuberger&Berman Ultra Short Bond
Fund and Portfolio is to provide current income 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
duration 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
investment grade debt securities issued by financial institutions,
corporations, and others. The Portfolio's dollar-weighted average
duration will not exceed two years, although the Portfolio may invest in
individual securities of any duration. Securities in which the Portfolio
may invest 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 enter into futures contracts and purchase
and sell 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.

Neuberger&Berman Limited Maturity Bond Portfolio invests in a
diversified portfolio consisting primarily of U.S. Government and Agency
Securities and investment grade debt securities issued by financial
institutions, corporations, and others. The dollar-weighted average
duration of the Portfolio will not exceed four years, although the
Portfolio may invest in individual securities of any duration. The
Portfolio's dollar-weighted average maturity may range up to five years.

- 28 -
<PAGE>

Securities in which the Portfolio may invest include mortgage-backed and
asset-backed securities, repurchase agreements with respect to U.S.
Government and Agency Securities, and foreign investments. The Portfolio
may invest up to 10% of its net assets in fixed income securities that are
below investment grade, including unrated securities deemed by N&B
Management to be of comparable quality. The Portfolio will not invest in
such securities unless they are rated at least B by Moody's or S&P or, if
unrated by either of those entities, deemed by N&B Management to be of
comparable quality. For information on the risks associated with
investments in securities rated below investment grade, see "Ratings of
Securities." The Portfolio may purchase and sell covered call and put
options, interest-rate futures contracts, and options on those futures
contracts and may lend portfolio 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.

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.
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.

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 normally invests
in investment grade municipal securities. As a fundamental policy, the
Portfolio invests at least 80% of its total assets in municipal

- 29 -
<PAGE>

obligations. The Portfolio's dollar-weighted average duration will not
exceed ten years. The Portfolio seeks to increase income and preserve or
enhance total return by actively managing the average portfolio duration
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 of the obligation, 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.

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.

- 30 -
<PAGE>

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 investment grade New York
Municipal Securities that are not so insured 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
that 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 duration will not exceed ten years. The Portfolio
seeks to increase income and preserve or enhance total return by actively
managing average portfolio duration 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. For purposes of complying with the above limitations
regarding investments in the securities of a single issuer or a single
industry, the Portfolio identifies the "issuer" of a municipal obligation

- 31 -
<PAGE>

that is not a general obligation note or bond by the obligation's
characteristics; the most significant of these characteristics is the
source of funds for the payment of principal and interest on the
obligation. 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. A new law will phase out favorable tax
treatment that has been available to businesses located in Puerto Rico.
The Portfolio is not able to predict the ultimate impact of this change on
the Puerto Rican economy.

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 1996 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.

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).

- 32 -
<PAGE>

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.

LOWER RATED DEBT SECURITIES (Neuberger&Berman Limited Maturity
Bond Portfolio). Securities rated below investment grade are described as
speculative by both Moody's and S&P. Securities rated B are judged to be
predominantly speculative with respect to their capacity to pay interest
and repay principal in accordance with the terms of the obligations.
Changes in economic conditions or developments regarding the individual
issuer are more likely to cause price volatility and weaken the capacity
of the issuer of such securities to make principal and interest payments
than is the case for higher grade debt securities. An economic downturn
affecting the issuer may result in an increased incidence of default. The
market for lower-rated securities may be thinner and less active than for
higher-rated securities. N&B Management seeks to reduce the risks
associated with investing in such securities by limiting the Portfolio's
holdings in them and by extensively analyzing the potential benefits of
such an investment in relation to the associated risks.

The following table shows the ratings of debt securities held by
Neuberger&Berman Limited Maturity Bond Portfolio for the year ended
October 31, 1996. These percentages are historical only and are not
necessarily representative of the ratings of current and future holdings.

Neuberger & Berman Limited Maturity Bond Portfolio's
Holdings of Debt Securities, by Rating for the Year Ended October 31, 1996

Moody's
Investors Service, Inc. Standard & Poor's
(as a % of investments) (as a % of investments)

Rating Average Rating Average

Investment Grade

Highest quality Aaa _____% AAA _____%
High quality Aa _____% AA _____%

Upper-medium grade A _____% A _____%

- 33 -
<PAGE>

Neuberger & Berman Limited Maturity Bond Portfolio's
Holdings of Debt Securities, by Rating for the Year Ended October 31, 1996

Moody's
Investors Service, Inc. Standard & Poor's
(as a % of investments) (as a % of investments)

Rating Average Rating Average

Medium grade Baa _____% BBB _____%

Lower Quality
Moderately speculative Ba _____% BB _____%

Speculative B _____% B _____%

Highly Speculative Caa _____% CCC _____%

Poor Quality Ca _____% CC _____%

Lowest quality, no interest C _____% C _____%

In default, in arrears - _____% D _____%
_____% _____%

</TABLE>

(as a % of investments)

Securities not Rated by Moody's or S&P+

Investment Grade++ _____%

Lower Quality++ _____%

Total _____%

+ The dollar-weighted average percentages reflected in the table may
include securities rated by other NRSROs, as well as unrated securities.

++ As determined by N&B Management

- 34 -
<PAGE>

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 or
to enter into reverse repurchase agreements. 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.

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
than normal weighted average maturities or durations.

Duration

Duration is a measure of the sensitivity of debt securities to
changes in market interest rates, based on the entire cash flow associated
with the securities, including payments occurring before the final
repayment of principal. For all Portfolios except the money market
portfolios, N&B Management utilizes duration as a tool in portfolio
selection instead of the more traditional measure known as "term to
maturity." "Term to maturity" measures only the time until a debt
security provides its final payment, taking no account of the pattern of
the security's payments prior to maturity. Duration incorporates a bond's
yield, coupon interest payments, final maturity and call features into one
measure. Duration therefore provides a more accurate measurement of a
bond's likely price change in response to a given change in market
interest rates. The longer the duration, the greater the bond's price
movement will be as interest rates change. For any fixed income security
with interest payments occurring prior to the payment of principal,
duration is always less than maturity.

Futures, options and options on futures have durations which are
generally related to the duration of the securities underlying them.

- 35 -
<PAGE>

Holding long futures or call option positions will lengthen a Portfolio's
duration by approximately the same amount as would holding an equivalent
amount of the underlying securities. Short futures or put options have
durations roughly equal to the negative duration of the securities that
underlie these positions, and have the effect of reducing portfolio
duration by approximately the same amount as would selling an equivalent
amount of the underlying securities.

There are some situations where even the standard duration
calculation does not properly reflect the interest rate exposure of a
security. For example, floating and variable rate securities often have
final maturities of ten or more years; however, their interest rate
exposure corresponds to the frequency of the coupon reset. Another example
where the interest rate exposure is not properly captured by duration is
the case of mortgage-backed securities. The stated final maturity of such
securities is generally 30 years, but current and expected prepayment
rates are critical in determining the securities' interest rate exposure.
In these and other similar situations, N&B Management, where permitted,
will use more sophisticated analytical techniques that incorporate the
economic life of a security into the determination of its interest rate
exposure.

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 for 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

- 36 -
<PAGE>

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. 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:

- 37 -
<PAGE>

4% Tax-Free Yield / (1 - .396 Tax Rate)
= 4% /.604 = 6.62% Tax-Equivalent Yield

In this example, your after-tax return would be higher from the
4% tax-free investment if available taxable yields are below 6.62%.
Conversely, the taxable investment would provide a higher yield when
taxable yields exceed 6.62%. This example assumes that all of the income
from the investment is exempt.

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 / (1 - .466 Tax Rate)
= 4% /.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 operating 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

- 38 -
<PAGE>

the liabilities of each series are borne solely by that series and no
other.

DESCRIPTION OF SHARES. Each Fund is authorized to issue an
unlimited number of shares of beneficial interest (par value $0.001 per
share). Shares of each Fund represent equal proportionate interests in the
assets of that Fund only and have identical voting, dividend, redemption,
liquidation, and other rights. All shares issued are fully paid and non-
assessable, and shareholders have no preemptive or other rights 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 a corporation. 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 operating 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 11 master funds and 18 feeder funds since August 1993 and now
operates 20 master funds and 32 feeder funds. This "master/feeder fund"
structure is depicted in the "Summary" on page 1.

- 39 -
<PAGE>

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 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 by 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
portfolio securities (as opposed to a cash distribution) by the Portfolio
to the Fund. 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 of the Trust would consider what action might be

- 40 -
<PAGE>

taken, including the investment of all of the Fund's net investable assets
in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment manager to manage its assets in accordance with its investment
objective, policies, and limitations. The inability of the Fund to find a
suitable replacement could have a significant impact on shareholders.

INVESTOR MEETINGS AND VOTING. Each Portfolio normally will not
hold meetings of investors except as required by the 1940 Act. Each
investor in a Portfolio will be entitled to vote in proportion to its
relative beneficial interest in the Portfolio. On most issues subjected to
a vote of investors, as required by the 1940 Act and other applicable law,
a Fund will solicit proxies from its shareholders and will vote its
interest in the Portfolio in proportion to the votes cast by the Fund's
shareholders. If there are other investors in a Portfolio, there can be no
assurance that any issue that receives a majority of the votes cast by
Fund shareholders will receive a majority of votes cast by all Portfolio
investors; indeed, if other investors hold a majority interest in a
Portfolio, they could have voting control of the Portfolio.

CERTAIN PROVISIONS. Each investor in a Portfolio, including a
Fund, will be liable for all obligations of the Portfolio. However, the
risk of an investor in a Portfolio incurring financial loss beyond the
amount of its investment 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
Fund[Registered Trademark] (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 purchase 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

- 41 -
<PAGE>

Boston, MA 02266-8403

or by overnight courier, U.S. Express Mail, or registered or
certified mail to:

Neuberger&Berman Funds
c/o State Street Bank and Trust Company
2 Heritage Drive
North Quincy, MA 02171

Be sure to specify the name of the Fund whose shares you want to
buy. If this is your first purchase of shares of a Fund, please complete
and sign an application for a new Fund account and send it along with a
check or money order for a minimum of $2,000. For each additional
purchase, please send at least $100 for shares of any Fund. Your check or
money order must be made payable on its face to Neuberger&Berman Funds,
otherwise it cannot 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 an electronic transfer 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[Registered Trademark] for shares
of a Fund. To buy Fund shares through 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."

- 42 -
<PAGE>

Other Information

o You must pay for your shares in U.S. dollars by check or
money order (drawn on a U.S. bank), by bank or federal
funds wire transfer, or by electronic bank 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 that you are not
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 one. Most
shareholders do not want a certificate, because you must
present the certificate to sell or exchange the shares it
represents. This means that you would be able to sell or
exchange those shares only by mail, and not by telephone
or facsimile transmission. If you lose your certificate,
you will have to pay the expense of replacing it.

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.)

- 43 -
<PAGE>

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
certificate by mail. You can also sell shares by exchanging them for
shares of other Neuberger&Berman Funds[Registered Trademark]; 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 800-877-9700 for
instructions.

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 transfer your sales proceeds electronically (at
no charge to you) or 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[Registered Trademark] aggregating
$200,000 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.

- 44 -
<PAGE>

By Mail or Facsimile Transmission (Fax)

Write a redemption request letter with your name and account
number, the Fund's name, and the dollar amount or number of shares of the
Fund you want to sell, together with any other instructions, and send it
by mail to:

Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403

or by overnight courier, U.S. Express Mail, or registered or certified
mail to:

Neuberger&Berman Funds
c/o State Street Bank and Trust Company
2 Heritage Drive
North Quincy, MA 02171

or by 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. 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. 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 the record address, or (4) you want the
proceeds to be wired or transferred electronically 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. A redemption request that requires a signature
guarantee should be sent by mail.

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 or transferred
electronically to a bank account named in your application or in a written
instruction from the record owner with a signature guarantee.

- 45 -
<PAGE>

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
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 SEC.

o If you sell shares by writing a check on your account for
an amount greater than the value of your shares, or if

- 46 -
<PAGE>

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 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.

You can buy, sell or exchange shares using an automated telephone
service that is 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, is
available from N&B Management by calling 800-877-9700.

INTERNET ACCESS

N&B Management now maintains an Internet site on the World Wide
Web at http://www.nbfunds.com. Fund prices and yields, informative
articles and interactive worksheets, and the prospectuses of certain other
Neuberger&Berman Funds can be accessed.

- 47 -
<PAGE>

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 or electronic transfers 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.

Exchange Privilege

To exchange your shares in a Fund for shares in another
Neuberger&Berman Fund[Registered Trademark], 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 Neuberger&Berman 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[Registered Trademark], 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:

- 48 -
<PAGE>

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

o An exchange order cannot be modified or canceled.

o You can exchange only into a 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."

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

- 49 -
<PAGE>

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.

Electronic Bank Transfers

You may designate, either in your application or later by writing
or by submitting an appropriate form to State Street, a bank account
through which State Street will electronically transfer monies to you or
from you at pre-set intervals (such as under a Systematic Withdrawal Plan
or automatic investing plan or for payment of cash distributions) or upon
your request. Please include a voided check with your application. This
service is not available for retirement accounts.

State Street does not charge a fee for this service; however, you
should contact your bank to ensure that it is able to process electronic
transfers. Please call 800-877-9700 for more information. If you wish to
terminate this service, you must call at least 10 days before the next
scheduled electronic transfer.

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.

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

- 50 -
<PAGE>

at cost which, when combined with interest earned, approximates market
value. These Portfolios and their corresponding Funds calculate their NAVs
as of the close of regular trading on the NYSE, usually 4 p.m. Eastern
time, 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 any 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
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.

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 dividends and other 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

- 51 -
<PAGE>

cleared, which may take up to 15 days after the purchase date. Cash
dividends and other distributions may be paid through an electronic
transfer to a bank account designated in your Fund application. Call 800-
877-9700 for more information. 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
qualified 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. Each of Neuberger&Berman Cash Reserves Portfolio and
Neuberger&Berman Limited Maturity Bond Portfolio may invest in municipal
securities. Any distributions of income derived from these securities,
however, are not tax-exempt, because neither Portfolio is permitted to
invest the percentage of its assets in municipal securities that is
required under federal tax law in order for its corresponding Fund to be
eligible to distribute tax-free income.

Substantially all dividends paid by Neuberger&Berman Government
Money Fund generally are not expected to be subject to state and local
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.

- 52 -
<PAGE>

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 Portfolio,
Neuberger&Berman Municipal Money Portfolio, and Neuberger&Berman Municipal
Securities Portfolio 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.

If you buy shares of a Municipal Fund or a Bond Fund just before
it deducts a distribution from its NAV, you will pay the full price for
the shares and then receive a portion of the price back in the form of a
taxable distribution.

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 redemptions of Fund
shares, including redemptions in connection with exchanges to other
Neuberger&Berman Funds[Registered Trademark], 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
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 each Fund and its shareholders. See the SAIs for
additional tax information. There may be other federal, state, local, or

- 53 -
<PAGE>

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
principals 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 the Trust or of Managers Trust, 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 other investment companies. The
mutual funds managed by N&B Management and Neuberger&Berman had aggregate
net assets of approximately $____ billion as of __________, 1996.

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 $_____ billion of assets as of _____________, 1996. All of
the voting stock of N&B Management is owned by individuals who are
principals of Neuberger&Berman.

Theodore P. Giuliano, the President and a Trustee of the Trust
and of Managers Trust, is a principal of Neuberger&Berman and a director
and Vice President of N&B Management. Mr. Giuliano is the Manager of the
Fixed Income Group of Neuberger&Berman, which he helped to establish in

- 54 -
<PAGE>

1984. The Fixed Income Group manages fixed income accounts that had
approximately $____ billion of assets as of ____________, 1996.

The following members of the Fixed Income Group are, along with
Theodore Giuliano, primarily responsible for the day-to-day management of
the listed Portfolios:

Neuberger&Berman Government Money, Cash Reserves, and Ultra Short
Bond Portfolios Josephine P. 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 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 Trust
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 principals and employees of Neuberger&Berman and officers and
employees of N&B Management, together with their families, have invested
over $100 million of their own money in Neuberger&Berman Funds[Registered
Trademark].

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 the personal accounts of the portfolio managers and
others who normally come into possession of information on portfolio
transactions.

- 55 -
<PAGE>

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. In addition, a Fund may compensate such third parties for
accounting and other services. 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 its 1996 fiscal year, each Fund accrued administration
fees, and a pro rata portion of the corresponding Portfolio's management
fees, of ______% of the Fund's average daily net assets.

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.

See "Expense Information Annual Fund Operating Expenses" for
information about how these fees and expenses may affect the value of your
investment.

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 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.

- 56 -
<PAGE>

For the fiscal year ended October 31, 1996, 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 ___%
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 ___%

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 by
instrumentalities of the U.S. Government, such as 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. 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 inversely with changing interest rates.

- 57 -
<PAGE>

VARIABLE AND FLOATING RATE SECURITIES (ALL PORTFOLIOS EXCEPT
NEUBERGER&BERMAN GOVERNMENT MONEY PORTFOLIO). Variable and floating rate
securities have interest rate adjustment formulas that may help to
stabilize their market value. Many of these instruments carry a demand
feature which permits a Portfolio to sell them during a determined time
period at par value plus accrued interest. The demand feature is often
backed by a credit instrument, such as a letter of credit, or by a
creditworthy insurer. A Portfolio may rely on the credit instrument or the
creditworthiness of the insurer in purchasing a variable or floating rate
security. For purposes of determining its dollar-weighted average
maturity, each Portfolio calculates the remaining maturity of variable
and floating rate instruments as provided in Rule 2a-7 under the 1940 Act.

REPURCHASE AGREEMENTS/SECURITIES LOANS (ALL PORTFOLIOS EXCEPT
NEUBERGER&BERMAN GOVERNMENT MONEY PORTFOLIO). In a repurchase agreement, a
Portfolio buys a security from a Federal Reserve member bank or a
securities dealer and simultaneously agrees to sell it back at a higher
price, at a specified date, usually less than a week later. The underlying
securities must fall within the Portfolio's investment policies and
limitations (but not limitations as to maturity or duration). The
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.

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. 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. Foreign
Securities that are freely tradeable in their principal market are not
considered restricted securities even if they are not registered for sale
in the United States. Restricted securities are generally considered

- 58 -
<PAGE>

illiquid. N&B Management, acting pursuant to guidelines established by
the trustees of Managers Trust, may determine that some restricted or Rule
144A 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 a higher 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 appropriate
liquid securities 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
fluctuations in a Portfolio's and its corresponding Fund's NAVs and may be
viewed as 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
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

- 59 -
<PAGE>

private issuers, generally originators of and investors in mortgage loans.
These issuers include 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, increasing their
sensitivity to interest rate changes.

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, CARSSM ("Certificates for
Automobile ReceivablesSM"), credit card receivables securities, and
installment loan contracts. Although these securities may be supported by
letters of credit or other credit enhancements, payment of interest and
principal ultimately depends upon individuals paying the underlying loans,
which may be affected adversely by general downturns in the economy. The
risk that recovery on repossessed collateral might be unavailable or
inadequate to support payments on asset-backed securities is greater than
in the case of mortgage-backed securities.

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

- 60 -
<PAGE>

BOND PORTFOLIOS). The Portfolios may invest in U.S. dollar-denominated
foreign securities. Foreign securities may be affected by potentially
adverse local, political, economic, social or diplomatic 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 or to enforce contractual obligations abroad. Neuberger&Berman
Limited Maturity Bond Portfolio may also 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. In addition, 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 Portfolio may try to reduce the
risk of securities price changes (hedge) or manage portfolio duration 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 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 Portfolio and
Neuberger&Berman New York Insured Intermediate Portfolio each 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)

- 61 -
<PAGE>

imperfect correlation or no correlation between changes in market value of
the securities or currencies 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 use of Hedging Instruments is a highly
specialized activity that involves skills, techniques, and risks
(including price volatility and a high degree of leverage) 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 appropriate liquid securities in a segregated account, or will "cover"
its position, 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
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 adversely 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
restructuring of the federal income tax system. These developments could
reduce the value of all municipal securities, or the securities of
particular issuers.

- 62 -
<PAGE>

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 MUNICIPAL SECURITIES AND
NEUBERGER&BERMAN NEW YORK INSURED INTERMEDIATE PORTFOLIOS). To help
enhance the value of their investments or manage their exposure to
different types of investments, the Portfolios may enter into interest
rate, currency, and mortgage swap agreements and may purchase and sell
interest-rate "caps," "floors," and "collars."

In a typical interest rate swap agreement, one party agrees to
make regular payments equal to a floating interest rate on a specified
amount (the "notional principal amount") in return for payments equal to a
fixed interest rate on the same amount for a specified period. If a swap
agreement provides for payment in different currencies, the parties may
agree to exchange the principal amount. Mortgage swap agreements are
similar to interest rate swap agreements, except the notional principal
amount is tied to a reference pool of mortgages.

In a cap or floor, one party agrees, usually in return for a fee,
to make payments under particular circumstances. For example, the
purchaser of an interest rate cap has the right to receive payments to the
extent a specified interest rate exceeds an agreed level; the purchaser of
an interest rate floor has the right to receive payments to the extent a
specified interest rate falls below an agreed level. A collar entitles the
purchaser to receive payments to the extent a specified interest rate
falls outside an agreed range.

Swap agreements, including caps and floors, may involve leverage
and may be highly volatile; depending on how they are used, they may have
a considerable impact on a Portfolio's performance. The risks of swap
agreements depend upon the other party's creditworthiness and ability to
perform, as well as a Portfolio's ability to terminate its swap agreements
or reduce its exposure through offsetting transactions. Swap agreements
may be illiquid. The swap market is relatively new and is largely
unregulated. Swap agreements are 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

- 63 -
<PAGE>

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
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.

- 64 -
<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, LLC
605 Third Avenue
New York, NY 10158-3698

Custodian and Shareholder
Servicing Agent
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110

Address correspondence to:
Neuberger&Berman Funds
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

- 65 -
<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 registered trademarks or service marks of Neuberger&Berman
Management Inc.

[COPYRIGHT]1996 Neuberger&Berman Management Inc.

This wrapper is not part of the prospectus.

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

- 66 -
<PAGE>

_________________________________________________________________
NEUBERGER & BERMAN INCOME FUNDS AND PORTFOLIOS

STATEMENT OF ADDITIONAL INFORMATION

DATED FEBRUARY 3, 1997

Neuberger & Berman Neuberger & Berman
Government Money Fund Ultra Short Bond Fund
(and Neuberger & Berman (and Neuberger & Berman
Government Money Ultra Short Bond Portfolio)
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 (y"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
February 3, 1997. 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 administered by Neuberger & Berman Management
Incorporated ("N&B Management"), provides 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 . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Policies and Limitations . . . . . . . . . . . . 1
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . 7
Theodore P. Giuliano and Josephine P. Mahaney: Portfolio
Co-Managers of Neuberger & Berman Ultra Short
Bond Portfolio . . . . . . . . . . . . . . . . . . . 7
Theodore P. Giuliano and Thomas G. Wolfe: Portfolio
Co-Managers of Neuberger & Berman Limited Maturity
Bond Portfolio . . . . . . . . . . . . . . . . . . . 8
Additional Investment Information . . . . . . . . . . . . . 9
Risks of Fixed Income Securities . . . . . . . . . . . . . . 28

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 29
Yield Calculations . . . . . . . . . . . . . . . . . . . . . 29
Tax Equivalent Yield - State and Local Taxes . . . . . . . . 30
Total Return Computations . . . . . . . . . . . . . . . . . 31
Comparative Information . . . . . . . . . . . . . . . . . . 32
Other Performance Information . . . . . . . . . . . . . . . 33

CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 35

TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 35

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . 41
Investment Manager and Administrator . . . . . . . . . . . . 41
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . 44
Investment Companies Managed . . . . . . . . . . . . . . . . 45
Management and Control of N&B Management . . . . . . . . . . 47

DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . 48

ADDITIONAL PURCHASE INFORMATION . . . . . . . . . . . . . . . . . . . 49
Automatic Investing and Dollar Cost Averaging . . . . . . . 49

ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . 49

ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . 53
Suspension of Redemptions . . . . . . . . . . . . . . . . . 53
Redemptions in Kind . . . . . . . . . . . . . . . . . . . . 53

DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 53

ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . 54
Taxation of the Funds . . . . . . . . . . . . . . . . . . . 54
Taxation of the Portfolios . . . . . . . . . . . . . . . . . 55
Taxation of the Funds' Shareholders . . . . . . . . . . . . 58

VALUATION OF PORTFOLIO SECURITIES . . . . . . . . . . . . . . . . . . 59

PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 59

- ii -
<PAGE>

Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . 61

REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 61

CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 61

INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . 61

LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . 61

REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 62

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 63

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . 64

Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER . . 67

- iii -
<PAGE>

INVESTMENT INFORMATION

Each Fund is a separate operating series of Neuberger &
Berman Income Funds ("Trust"), a Delaware business trust that is regis-
tered 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 iden-
tical to, and a name similar to, that of the Fund. Each Portfolio, in
turn, invests in securities 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. These percentages are required by the Investment
Company Act of 1940 ("1940 Act") and are 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
substantially the same investment objective, policies,
and limitations as the Fund.

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 concentra-
tion in a particular industry, N&B Management determines the "issuer" of a
municipal obligation that is not a general obligation note or bond based
on the obligation's characteristics. The most significant of these
characteristics 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 or Neuberger & Berman Cash Reserves 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.

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 lever-
aging 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
acquisition 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.

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

- 2 -
<PAGE>

5. Underwriting. The Portfolio may not underwrite
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 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
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.

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

- 3 -
<PAGE>

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.

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.

- 4 -
<PAGE>

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
U.S. Government and Agency Securities) 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. For purposes of this limitation, pass-through entities and
other special purpose vehicles or pools of financial assets are not
considered to be business enterprises.

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.

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.

- 5 -
<PAGE>

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 addi-
tional 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 Portfolio may (i) purchase securities with rights to put
the securities to the seller in accordance with its investment 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 partnership or similar interests in real estate limited
partnerships.

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, duration, coupon, and rating may have different yields.
Although the Portfolios may rely on the ratings of any NRSRO, the
Portfolios primarily refer to ratings assigned by S&P and Moody's, which
are described in Appendix A to this SAI.

- 6 -
<PAGE>

Theodore P. Giuliano and Josephine P. Mahaney: Portfolio Co-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 always 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
duration 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
durations. The risk to principal in these bonds can be nearly as great as
the risk in stocks and may not produce the same reward.

Ultra Short is appropriate for investors who seek current
income with minimal risk to principal and liquidity.

Theodore P. Giuliano and Thomas G. Wolfe: Portfolio Co-Managers of
Neuberger & Berman Limited Maturity Bond Portfolio

Limited Maturity is intended for investors who seek the
highest current income with less volatility and risk than that of a
longer-term bond fund. The Fund's corresponding Portfolio provides active
fixed income portfolio management through investments in securities with
an average portfolio duration of no longer than four years. Studies of
historical bond returns have shown that risk-adjusted total returns were
best in bonds having durations of two to five years. The bonds in this
duration range have provided significantly higher returns than shorter-
term securities and nearly the same return as longer-term fixed income
securities with far less volatility. The portfolio managers attempt to
increase the Portfolio's value by actively managing duration in response
to interest rate trends and fundamental economic developments. They seek
to protect principal by shortening duration when interest rates are rising
and enhance returns by lengthening duration in a falling interest rate
market.

- 7 -
<PAGE>

Limited Maturity also enhances return and limits risk by
following a broadly diversified investment program across the various
sectors of the fixed income market. Over long periods of time, corporate,
mortgage- and asset-backed bonds have provided higher returns than
Treasury securities. Relying on extensive internal research, the
portfolio managers attempt to increase the value of the Portfolio by
purchasing securities at significant yield premiums to Treasury bonds.
Neuberger & Berman uses sector weightings, which are based on an analysis
of the key factors that it believes will impact the relative value and
risk for each sector. These factors include the economic cycle, credit
quality trends and supply/demand analysis for each security type. Within
the sectors found attractive, individual bonds are rigorously analyzed for
credit, cash flow and liquidity risk. Those that appear to offer
attractive risk reward ratios are purchased. While overall portfolio
quality is high, Neuberger & Berman believes that, by careful evaluation
of credit risk, the Portfolio benefits from the inclusion of lower-rated
bonds with only moderate incremental increase in risk.

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. Repurchase agreements with a
maturity of more than seven days are considered to be illiquid securities.
No Portfolio may enter into such a repurchase agreement 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 and duration 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 repurchase price, and
(3) payment for the underlying securities is made 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, each of
these 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

- 8 -
<PAGE>

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. Before they are registered, such securities 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 guide-
lines established by the Portfolio Trustees, may determine that certain
securities qualified for trading under Rule 144A are liquid. Foreign
securities that are freely tradeable in their principal market 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.

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 restricted
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 by a method that the Portfolio Trustees believe accurately reflects
fair value.

- 9 -
<PAGE>

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,
usually 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 Portfo-
lios except Neuberger & Berman Government Money Portfolio). The Port-
folios 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.

A Portfolio 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.

- 10 -
<PAGE>

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 or index changes.
The interest rate on variable and floating rate securities (collectively,
"Adjustable 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 Adjustable 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, some Adjustable 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 accompa-
nied 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 the credit
enhancements in purchasing these securities.

In calculating its maturity and duration, each Portfolio
is permitted to treat certain Adjustable Rate Securities as maturing on a
date prior to the date on which the final repayment of principal must
unconditionally be made. 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 (such as the
Government National Mortgage Association ("GNMA"), Federal National
Mortgage Association ("FNMA"), and Federal Home Loan Mortgage Corporation

- 11 -
<PAGE>

("FHLMC")), though not necessarily backed by the full faith and credit of
the United States, or may be issued by private issuers.

Because many mortgages are repaid early, the actual
maturity and duration of mortgage-backed securities are typically shorter
than their stated final maturity and their duration calculated solely on
the basis of the stated life and payment schedule. In calculating its
maturity and duration, a Portfolio may apply certain industry conventions
regarding the maturity and duration of mortgage-backed instruments.
Different analysts use different models and assumptions in making these
determinations. The Portfolios use an approach that N&B Management
believes is reasonable in light of all relevant circumstances.

Mortgage-backed securities may be issued in the form of
collateralized mortgage obligations ("CMOs") or mortgage-backed bonds.
CMOs are obligations that are 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
that are 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 or the duration 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). To the extent that rising
interest rates cause prepayments to occur at a slower than expected rate,
a CMO could be converted into a longer-term security that is subject to
greater risk of price volatility.

Governmental, government-related, and private entities
(such as commercial banks, savings institutions, private mortgage
insurance companies, mortgage bankers, and other secondary market issuers,
including securities broker-dealers and special purpose entities that
generally are affiliates of the foregoing established to issue such secu-
rities) may create mortgage loan pools to back mortgage pass-through and
mortgage-collateralized investments. 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
governmental 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 mortgage poolers issue these forms of insurance and

- 12 -
<PAGE>

guarantees. N&B Management considers such insurance and guarantees, as
well as the creditworthiness of the issuers thereof, in determining
whether a mortgage-backed security meets a Portfolio's investment quality
standards. There can be no assurance that private insurers or guarantors
can meet their obligations under 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 that, in N&B Management's opinion, are illiquid
if, as a result, more than 10% of the Portfolio's net assets would be
invested in illiquid securities. 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.

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 of principal and interest on asset-backed securities.
Asset-backed securities are subject to the same risk of prepayment
described with respect to mortgage-backed securities. 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[SERVICEMARK]
("CARS[SERVICEMARK]") 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 holders. Certificate holders also may
experience delays in payment or losses on CARS[SERVICEMARK] if the trust
does not realize the full amounts due on underlying installment sales
contracts because of unanticipated legal or administrative costs of

- 13 -
<PAGE>

enforcing the contracts; depreciation, damage, or loss of the vehicles
securing the contracts; or other factors.

Credit card receivable securities are backed by receiv-
ables 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 or duration, 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 which signal 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 non-deductibility 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 the
collateral for most other asset-backed securities, Accounts are unsecured
obligations of the cardholder.

U.S. Dollar-Denominated Foreign Debt Securities (All
Portfolios except Neuberger & Berman Government Money Portfolio). The
Portfolios may invest in U.S. dollar-denominated debt securities of
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, maturity, and duration 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 domestic securities. These additional risks include the
possibility of adverse political and economic developments (including
political instability) and the potentially adverse effects of unavailabil-
ity of public information regarding issuers, less governmental supervision

- 14 -
<PAGE>

and regulation of financial markets, reduced liquidity of certain finan-
cial markets, and the lack of uniform accounting, auditing, and financial
reporting 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 instrumentali-
ties, international agencies, and supranational entities. Investing in
foreign currency denominated securities includes the special risks asso-
ciated 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 taxa-
tion, and (3) adverse changes in investment or exchange control
regulations (which could prevent cash from being brought back to the
United States). 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.

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
transactions, making it difficult to conduct such transactions. Such
delays in settlement could result in temporary periods when a portion of
the assets of the Portfolio are uninvested and no return is earned
thereon. The inability of the 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 the
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.

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,

- 15 -
<PAGE>

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.

In order to limit the risks 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 (i.e.,
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
securities 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 transaction 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
at a future date (to secure what N&B Management believes to be an
advantageous price and yield at the time of the commitment) and pays for
the securities when they are delivered. For instance, 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. When-
issued purchases are negotiated directly with the other party, and such
commitments are not traded on an exchange.

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

- 16 -
<PAGE>

of the agreement to purchase the securities. Because the Portfolio has
not yet paid for the securities, this produces an effect similar to
leverage. 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, although 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 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 or appropriate liquid 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 and bond index Futures and options transactions in
an attempt to hedge against changes in securities prices resulting from
changes in prevailing interest rates; Neuberger & Berman Limited Maturity
Bond Portfolio engages in foreign currency Futures and options trans-
actions in an attempt to hedge against 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 and bond index Futures and options thereon as a
maturity or duration management device and/or a device to reduce risk and
preserve total return in an adverse interest rate environment for the
hedged securities and (2) foreign currency Futures and options thereon as
a means of establishing more definitely the effective return on, or the
purchase price of, securities denominated in foreign currencies held or
intended to be acquired by them.

- 17 -
<PAGE>

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.

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

"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 ("variation 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 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.

An option on a Futures Contract gives the purchaser the
right, in return for the premium paid, to assume a position in the

- 18 -
<PAGE>

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.

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. 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.

Most U.S. futures exchanges limit the amount of fluctua-
tion in the price of a Futures Contract or option thereon during a single
trading day; once the daily limit has been reached, no trades 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. In fact, it may increase the risk of loss,
because prices can move to the daily limit for several consecutive trading
days with little or no trading, thereby preventing liquidation of
unfavorable 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.

Put and Call Options (Neuberger & Berman Limited Maturity
Bond Portfolio). The Portfolio may write and 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

- 19 -
<PAGE>

income. 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 Portfolio will receive a premium for writing a put
option, which obligates the Portfolio to acquire a security at a certain
price at any time until a certain date if the purchaser of the option
decides to exercise the option. 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 until a
certain date if the purchaser decides to exercise the option. The
Portfolio 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 a call option at less than the market price, thereby
giving up any additional gain on the security.

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.

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 a
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.

- 20 -
<PAGE>

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. Options normally have expiration dates between three
and nine months from the date written. 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.

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 a 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.

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.

- 21 -
<PAGE>

Portfolio for writing an 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 last
sales price before the time the Portfolio's NAV is computed on the day the
option is being valued or, in the absence of any trades thereof on that
day, the mean between the bid and asked 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 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.
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; however, the Portfolio could be in a less advantageous position
than if it had not written the call option.

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. 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

- 22 -
<PAGE>

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 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, or the
purchase price of, 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.

N&B Management believes that the use of foreign currency
hedging techniques, including "proxy-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 proxy-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 proxy-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
proxy-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 proxy-hedge had not been established. If the Portfolio
uses proxy-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
not vary with the expected degree of correlation. Because forward
contracts are not traded on an exchange, the assets used to cover such
contracts may be illiquid.

- 23 -
<PAGE>

Regulatory Limitations on Using Futures, Options on
Futures, Options on Securities and Foreign Currencies, and Forward
Contracts (collectively, "Hedging Instruments"). 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, (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 Portfolio may not exceed 5% of its total
assets. Neuberger & Berman Limited Maturity Bond Portfolio does not
currently intend to purchase a put option if, as a result, more than 5% of
its total assets would be invested in put options.

General Risks of Hedging Instruments. The primary risks
in using Hedging Instruments are (1) imperfect correlation or no
correlation between changes in market value of the securities or currency
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 Hedging Instruments whose behavior is expected to
resemble or offset that of a Portfolio's underlying securities or
currency. N&B Management intends to reduce the risk that a Portfolio will
be unable to close out Hedging Instruments by entering into such transac-
tions 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
"Additional Tax Information -- Taxation of Portfolios."

- 24 -
<PAGE>

Cover for Hedging Instruments. Each Portfolio will com-
ply with SEC guidelines regarding cover for Hedging Instruments and, if
the guidelines so require, set aside in a segregated account with its
custodian the prescribed amount of cash or appropriate liquid securities.
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.

Indexed Securities (Neuberger & Berman Limited Maturity
Bond Portfolio). The Portfolio may invest in securities whose value is
linked to interest rates, commodities, foreign currencies, indices, or
other financial indicators ("indexed securities"). Most indexed secu-
rities are short- to intermediate-term fixed income securities whose
values at maturity or interest rate rise or fall according to the change
in one or more specified underlying instruments. The value of indexed
securities may increase or decrease if the underlying instrument
appreciates, and they may have return characteristics similar to direct
investment in the underlying instrument or to one or more options thereon.
An indexed security 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
discount") is taken into account ratably by a 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

- 25 -
<PAGE>

interest rates to a greater degree than other types of debt securities
having similar maturities and credit quality.

Municipal Obligations (Neuberger & Berman Cash Reserves
Portfolio and Neuberger & Berman Limited Maturity Bond Portfolio).
Neuberger & Berman Limited Maturity Bond Portfolio may invest up to 5% of
its net assets in municipal obligations, which are securities 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. Neuberger & Berman Cash
Reserves Portfolio may invest in municipal obligations that otherwise meet
its criteria for quality and maturity. Municipal obligations include
"general obligation" 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 a Portfolio's investments in
municipal obligations, whereas a decline in interest rates generally will
increase that value. Efforts are underway that may result in a
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

- 26 -
<PAGE>

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.

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 no longer 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
results 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 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, 1996, the
current yields of Government Money and Cash Reserves were _____% and

- 27 -
<PAGE>

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

Ultra Short and Limited Maturity. Each of these Funds
may advertise its "yield" based on a 30-day (or one-month) 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.

The annualized yields for Limited Maturity and Ultra
Short for the 30-day period ended October 31, 1996, were _____% and
_____%, 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. From time to time, this Fund may advertise a
"tax equivalent yield" for one or more of those states or localities that
reflects the taxable yield that an investor subject to the highest mar-
ginal rate of state or local income tax would have had to receive in order
to realize the same level of after-tax yield produced by an investment in
the Fund. Tax equivalent yield is calculated according to the following
formula:

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

where Y1 equals that portion of the 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 illustrat-
ed by the following example. If the current yield for a 7-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 1996
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 1996 rate of 4.46%, the taxpayer would have to have received a
taxable current yield of 5.69% to equal the 5% after-tax yield.

- 28 -
<PAGE>

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

Limited Maturity and Ultra Short 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 in performance and, in that respect, differs from actual year-
to-year results.

For the one-, five-, and ten-year periods ended
October 31, 1996, the average annual total returns for Limited Maturity
and its predecessor were _____%, _____%, and _____%, 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 $______ on
October 31, 1996.

For the one- and five-year periods ended October 31,
1996, and for the period from November 7, 1986 (commencement of
operations) through October 31, 1996, the average annual total returns for
Ultra Short and its predecessor were _____%, _____%, and _____%, respec-
tively. 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
$______ on October 31, 1996.

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.

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 newspapers, newsletters, and financial

- 29 -
<PAGE>

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
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 U.S. Department of
Labor 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 some of the above 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 performance of Treasury Securities, corporate
bonds, and the Lipper Short Investment Grade Debt Funds
category.

- 30 -
<PAGE>

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, 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 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.

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.

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.

- 31 -
<PAGE>

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.

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.

- 32 -
<PAGE>

<TABLE>

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

Charles DeCarlo (75) Trustee of each Trust President Emeritus of Sarah Lawrence
33 West 67th Street College; Chief Executive Officer of Xicon
New York, NY 10023 Systems (animation company).

Stanley Egener* (62) Chairman of the Board, Principal of Neuberger & Berman; President
Chief Executive Officer, and Director of N&B Management; Chairman of
and Trustee of each Trust the Board, Chief Executive Officer and
Trustee of eight other mutual funds for
which N&B Management acts as investment
manager or administrator.

Theodore P. Giuliano* (___) President and Trustee of Principal 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 (63) 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 (69) Trustee of each Trust Professor of Finance and Economics at Stern
110 Blecker Street School of Business, New York University;
Apt. 24B Director of Del Laboratories, Inc. and
New York, NY 10012 Greater New York Mutual Insurance Co.

Harold R. Logan (75) Trustee of each Trust Chairman of Comstock Resources, Inc.
19 Norfield Road (natural resources company); Vice Chairman,
Weston, CT 06883 Retired, of W.R. Grace & Co. (chemicals,
natural resources, and selected consumer
services).

- 33 -
<PAGE>

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

William E. Rulon (64) Trustee of each Trust Senior Vice President and Secretary of
Foodmaker, Inc. Foodmaker, Inc. (operator and franchisor of
9330 Balboa Avenue restaurants).
San Diego, CA 92123

Candace L. Straight (49) Trustee of each Trust Private investor and consultant
518 E. Passaic Avenue specializing in the insurance industry;
Bloomfield, NJ 07003 Principal of Head & Company, LLC (limited
liability company providing investment
banking and consulting services to the
insurance industry) until March 1996;
President of Integon Corporation,
(marketer of life insurance, annuities, and
property and casualty insurance), 1990-
1992; Director of Drake Holdings (U.K.
motor insurer) until June 1996.

Daniel J. Sullivan (57) Vice President of each Senior Vice President of N&B Management
Trust 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.

Michael J. Weiner (49) Vice President and Senior Vice President of N&B Management
Principal Financial since 1992; Treasurer of N&B Management
Officer of each Trust 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 (40) 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 (50) Treasurer and Principal Vice President of N&B Management since
Accounting Officer of 1993; prior thereto, Assistant Vice
each Trust 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.

- 34 -
<PAGE>

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

Stacy Cooper-Shugrue (33) Assistant Secretary of Assistant Vice President of N&B Management
each Trust 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 (59) Assistant Secretary of Principal of Neuberger & Berman since 1992;
each Trust prior thereto, employee of Neuberger &
Berman; Assistant Secretary of eight other
mutual funds for which N&B Management acts
as investment manager or administrator.

Barbara DiGiorgio (38) Assistant Treasurer of Assistant Vice President of N&B Management
each Trust since 1993; prior thereto, employee of N&B
Management; Assistant Treasurer of eight
other mutual funds for which N&B Management
acts as investment manager or
administrator.

Celeste Wischerth (35) Assistant Treasurer of Assistant Vice President of N&B Management
each Trust since 1994; prior thereto, employee of N&B
Management; Assistant Treasurer 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, New York, NY 10158.

(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. Messrs. Egener and Giuliano are
interested persons by virtue of the fact that they are officers and
directors of N&B Management and principals of Neuberger & Berman.

- 35 -
<PAGE>

bad faith, willful misfeasance, gross negligence, or reckless disregard of
the duties involved in the conduct of their offices, or (b) did not act in
good faith in the reasonable belief that their action was in the best
interest of the Trust. 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, 1996, each Fund and
Portfolio paid and accrued 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 - $______; Neuberger & Berman Cash Reserves and Cash Reserves
Portfolio - $______; Neuberger & Berman Ultra Short Bond Fund and
Portfolio - $______; and Neuberger & Berman Limited Maturity Bond and
Portfolio - $______.

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

- 36 -
<PAGE>

TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/96
------------------------------

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

John Cannon $ $
Trustee (2 other investment
companies)

Charles DeCarlo $ $
Trustee (2 other investment
companies)

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

Theodore P. Giuliano $ 0 $ 0
President and Trustee (2 other investment
companies)

Barry Hirsch $ $
Trustee (2 other investment
companies)

Robert A. Kavesh $ $
Trustee (2 other investment
companies)

Harold R. Logan $ $
Trustee (2 other investment
companies)

William E. Rulon $ $
Trustee (2 other investment
companies)

Candace L. Straight $ $
Trustee (2 other investment
companies)

- 37 -
<PAGE>

At __________, the trustees and officers of the Trust and
Managers Trust, as a group, owned beneficially or of record less than 1%
of the outstanding shares of each Fund.

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 principals 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.

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

- 38 -
<PAGE>

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 accrued management and administration fees of
the following amounts (before any reimbursement of the Funds, described
below) for the fiscal years ended October 31, 1996, 1995, and 1994:

1996 1995 1994
---- ---- ----
Government Money $_______ $1,521,937 $1,105,665

Cash Reserves $_______ $1,738,424 $1,448,365

Ultra Short $_______ $ 459,038 $ 532,340

Limited Maturity $_______ $1,522,574 $1,655,333

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 fees under the Administration Agreement) and the Fund's pro
rata share of the corresponding Portfolio's Operating Expenses (including
fees under the Management Agreement) that exceed, in the aggregate, 0.65%
per annum (0.70% per annum for Limited Maturity) of the Fund's average
daily net assets. Operating Expenses exclude interest, taxes, brokerage
commissions, and extraordinary expenses. N&B Management can terminate
each undertaking by giving the Fund at least 60 days' prior written
notice. For the fiscal years ended October 31, 1996, 1995, and 1994, N&B
Management reimbursed the Funds the following amounts of expenses:
(1) Cash Reserves $_______, $109,113, and $171,012, respectively,
(2) Ultra Short $_______, $196,865, and $222,161, respectively, and
(3) Limited Maturity $_______, $32,042, and $77,866, respectively.

- 39 -
<PAGE>

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 paid and accrued the following amounts for the period
from November 1, 1994 to April 30, 1995 and the fiscal year ended
October 31, 1994:

November 1, 1994
to April 30, 1995 1994
----------------- ----
Government Money $25,750 $39,595

Cash Reserves $31,746 $55,583

Ultra Short $ 9,038 $21,515

Limited Maturity $29,447 $55,399

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 shares 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 a majority 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.

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. Each Agreement terminates
automatically if it is assigned.

- 40 -
<PAGE>

Sub-Adviser

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 principals 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 or a
1940 Act majority vote of the outstanding interests in that 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 September 30, 1996, these
companies, along with three other investment companies advised by
Neuberger & Berman, had aggregate net assets of approximately $13.9
billion, as shown in the following list:

- 41 -
<PAGE>

Name Approximate
September 30, 1996 Net Assets at
------------------ -------------

Neuberger & Berman Cash Reserves Portfolio . . . . . . . . $ 527,447,493
(investment portfolio for Neuberger & Berman Cash Reserves)

Neuberger & Berman Government Money Portfolio . . . . . . . $ 319,705,018
(investment portfolio for Neuberger & Berman Government Money
Fund)

Neuberger & Berman Limited Maturity Bond Portfolio . . . . $ 268,892,148
(investment portfolio for Neuberger & Berman Limited Maturity
Bond Fund and Neuberger & Berman Limited Maturity Bond Trust)

Neuberger & Berman Ultra Short Bond Portfolio . . . . . . . . $ 96,306,004
(investment portfolio for Neuberger & Berman Ultra Short Bond
Fund and Neuberger & Berman Ultra Short Bond Trust)

Neuberger & Berman Municipal Money Portfolio . . . . . . . $ 141,116,062
(investment portfolio for Neuberger & Berman Municipal Money
Fund)

Neuberger & Berman Municipal Securities Portfolio . . . . . $ 38,416,801
(investment portfolio for Neuberger & Berman Municipal Securities
Trust)

Neuberger & Berman New York Insured Intermediate
Portfolio . . . . . . . . . . . . . . . . . . $ 9,575,489
(investment portfolio for Neuberger & Berman New York Insured
Intermediate Fund)

Neuberger & Berman Focus Portfolio . . . . . . . . . . . $ 1,174,138,341
(investment portfolio for Neuberger & Berman Focus Fund,
Neuberger & Berman Focus Trust, and Neuberger & Berman Focus
Assets)

Neuberger & Berman Genesis Portfolio . . . . . . . . . . . $ 287,653,131
(investment portfolio for Neuberger & Berman Genesis Fund and
Neuberger & Berman Genesis Trust)

Neuberger & Berman Guardian Portfolio . . . . . . . . . $ 6,513,577,557
(investment portfolio for Neuberger & Berman Guardian Fund,
Neuberger & Berman Guardian Trust, and Neuberger & Berman
Guardian Assets)

Neuberger & Berman International Portfolio . . . . . . . $ 59,969,278
(investment portfolio for Neuberger & Berman International Fund)

- 42 -
<PAGE>

Neuberger & Berman Manhattan Portfolio . . . . . . . . . $ 592,681,290
(investment portfolio for Neuberger & Berman Manhattan Fund,
Neuberger & Berman Manhattan Trust, and Neuberger & Berman
Manhattan Assets)

Neuberger & Berman Partners Portfolio . . . . . . . . . . $ 2,112,475,324
(investment portfolio for Neuberger & Berman Partners Fund,
Neuberger & Berman Partners Trust, and Neuberger & Berman
Partners Assets)

Neuberger & Berman Socially Responsive
Portfolio . . . . . . . . . . . . . . . . . . $ 167,005,429
(investment portfolio for Neuberger & Berman Socially Responsive
Fund and Neuberger & Berman NYCDC Socially Responsive Trust)

Advisers Managers Trust (six series) . . . . . . . . . . $ 1,468,727,224

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 $61,738,329,
$77,498,236 and $26,954,887, respectively, at September 30, 1996.

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. 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.

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.

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,

- 43 -
<PAGE>

Chairman of the Board and director; Stanley Egener, President and
director; Theodore P. Giuliano, Vice President and director; Michael M.
Kassen, Vice President and director; Irwin Lainoff, 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; Patrick T. Byrne, 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 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; Susan Walsh, Vice President; Thomas Wolfe, Vice President;
Andrea Trachtenberg, Vice President of Marketing; Stacy Cooper-Shugrue,
Assistant Vice President; Robert Cresci, Assistant Vice President; Barbara
DiGiorgio, Assistant Vice President; Roberta D'Orio, Assistant Vice
President; Joseph G. Galli, Assistant Vice President; Robert I. Gendelman,
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; Joseph S. Quirk,
Assistant Vice President; Kevin L. Risen, Assistant Vice President; Susan
Switzer, Assistant Vice President; Celeste Wischerth, Assistant Vice
President; KimMarie Zamot, Assistant Vice President; and Loraine
Olavarria, Assistant Secretary. Messrs. Cantor, Egener, Giuliano,
Lainoff, Zicklin, Goldstein, Kassen, Marx, and Simons and Mmes. Prindle
and Vale are principals of Neuberger & Berman.

Mr. Giuliano and Mr. Egener are trustees and officers,
and Messrs. Sullivan, Weiner, and Russell and Mmes. Brandon, Cooper-
Shugrue, DiGiorgio and Wischerth are officers, of each Trust. C. Carl
Randolph, a principal 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 principals 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 personally, through the mails, or by electronic means.
The Distributor is the Funds' "principal underwriter" within the meaning

- 44 -
<PAGE>

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, 1997.
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 shares of Ultra Short or Limited Maturity 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 or (2) withdrawals from the
shareholder's checking account. In either case, the minimum monthly
investment is $100. A shareholder who elects to participate 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
or 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 would be lower than if the shareholder purchased a
fixed number of shares at the same pre-set intervals. Additional
information on dollar cost averaging may be obtained from the Distributor.

- 45 -
<PAGE>

ADDITIONAL EXCHANGE INFORMATION

As more fully set forth in the section of the Prospectus
entitled "Shareholder Services -- Exchange Privilege," shareholders may
redeem 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.

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
Genesis Fund investments primarily in common stocks of
companies with small market capitalizations
(i.e., up to $1.5 billion) at the time of the
Portfolio's investment. The corresponding
portfolio uses a value-oriented approach to
the selection of individual securities.

Neuberger & Berman Seeks capital appreciation through
Guardian Fund investments primarily in 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.

- 46 -
<PAGE>

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.

Neuberger & Berman Seeks capital appreciation, without regard to
Manhattan Fund income, through investments generally in
securities of small-, medium- and 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 securities thought to be
undervalued.

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

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

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

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

- 47 -
<PAGE>

Neuberger & Berman Seeks high current tax-exempt income with low
Municipal Securities risk to principal, limited price fluctuation,
Trust and liquidity; and secondarily, total return.
The corresponding portfolio invests in
investment grade municipal securities.
Maximum average duration of 10 years.

Neuberger & Berman Seeks a high level of current income exempt
New York Insured from federal income tax and New York State
Intermediate Fund and New York City personal income taxes,
consistent with preservation of capital.
Maximum average duration of 10 years.

Any Fund described herein, and any of the Equity or
Municipal 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 are series of the Trust, (2) the Equity Funds 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 of the Equity and Municipal Funds invests all
of its net investable assets in a corresponding portfolio that has an
investment objective, policies, and limitations identical to those of the
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 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 Neuberger & Berman Municipal Money Fund, 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

The right to redeem a Fund's shares may be suspended or
payment of the redemption price postponed (1) when the New York Stock

- 48 -
<PAGE>

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

Ultra Short and Limited Maturity reserve 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 in securities valued as described under "Share
Prices and Net Asset Value" in the Prospectus. Government Money and Cash
Reserves also reserve the right, under certain conditions, to honor any
request for redemption by making payment in whole or in part in
securities. If payment is made in securities, a shareholder generally
will incur brokerage expenses or other transaction costs in converting
those securities into cash and will be subject to fluctuation in the
market prices 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 determined that it was 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), any net
realized capital gains (both long-term and short-term), and any net
realized 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 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.

- 49 -
<PAGE>

A Portfolio's net investment income consists of all
income accrued on portfolio assets less accrued expenses but does not
include realized capital and foreign currency gains and losses. Net
investment income and realized gains and losses 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 are automatically
reinvested in additional shares of the distributing Fund, unless 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.
Cash distributions can be paid through an electronic transfer to a bank
account designated in the shareholder's original account application. 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 net investment income, net short-term
capital gain, and, for Limited Maturity, net gains from certain foreign
currency transactions) ("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 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

- 50 -
<PAGE>

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, securities of other RICs 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. Govern-
ment 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 conse-
quences to Ultra Short and Limited Maturity of hedging and certain other
transactions 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
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 qualifies 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.

- 51 -
<PAGE>

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
capital 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 regula-
tions), 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 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

- 52 -
<PAGE>

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
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 securi-
ties 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

- 53 -
<PAGE>

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 disposition 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.

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.

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 retire-
ment 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 Portfolios' reliance on Rule
2a-7 and use of the amortized cost valuation method should enable the
Funds, under most conditions, to maintain a stable $1.00 share price,

- 54 -
<PAGE>

there can be no assurance they will be able to do so. An investment in
either of these Funds, as in any mutual fund, is neither insured nor guar-
anteed 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 typically do not pay brokerage commissions for such
purchases and sales. Instead, the price paid for newly issued securities
usually 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.

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, may designate any dealer to
receive selling concessions, discounts, or other allowances, or otherwise
may deal with any dealer in connection with the acquisition of securities
in underwritings.

During the fiscal year ended October 31, 1996, Neuberger
& Berman Ultra Short Bond Portfolio acquired securities of the following
of its "regular brokers or dealers" (as defined in the 1940 Act):
_____________________________________________. At October 31, 1996, that
Portfolio held the securities of its "regular brokers or dealers" with an
aggregate value as follows: _____.

During the fiscal year ended October 31, 1996,
Neuberger & Berman Limited Maturity Bond Portfolio acquired securities of
the following of its "regular brokers or dealers":
_______________________________. At October 31, 1996, that Portfolio held
the securities of its "regular brokers or dealers" with an aggregate value
as follows: _____.

- 55 -
<PAGE>

During the fiscal year ended October 31, 1996, Neuberger
& Berman Cash Reserves Portfolio acquired securities of the following of
its "regular brokers or dealers": _________________
__________________________; at October 31, 1996, that Portfolio held the
securities of its "regular brokers or dealers" with an aggregate value as
follows: _____________________________, $_______.

During the fiscal year ended October 31, 1996, Neuberger
& Berman Government Money Portfolio acquired none of the securities of its
"regular brokers or dealers." At October 31, 1996, that Portfolio held
the securities of its "regular brokers or dealers" with an aggregate value
as follows: _______.

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
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

Neuberger & Berman Ultra Short Bond Portfolio and
Neuberger & Berman Limited Maturity Bond Portfolio calculate a portfolio
turnover rate by dividing (1) the lesser of the cost of the securities
purchased or the value of the securities sold by the Portfolio during the
fiscal year (other than securities, including options, whose maturity or
expiration date at the time of acquisition was one year or less) by (2)
the monthly average of the value of such securities owned by the Portfolio
during the fiscal 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, 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

- 56 -
<PAGE>

Street also serves as each Fund's transfer and shareholder servicing
agent, administering purchases, redemptions, and transfers of Fund shares
and the payment of dividends and other distributions through its Boston
Service Center.

- 57 -
<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.
20036-1800, 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
___________:

Percentage of
Name and Address Ownership at
---------------- -------------

Government Money : Neuberger & Berman* _____
---------------- 605 Third Avenue
New York, NY 10158-3698

Cash Reserves: Neuberger & Berman* _____%
------------- 605 Third Avenue
New York, NY 10158-3698

Ultra Short: Charles Schwab & Co., Inc.* _____%
----------- 101 Montgomery Street
San Francisco, CA 94104-4122

Limited Maturity: Charles Schwab & Co., Inc.* _____%
---------------- 101 Montgomery Street
San Francisco, CA 94104-4122

Nationwide Life Insurance Plan ____%
QPVA
c/o IPO CO 67
P.O. Box 182029
Columbus, Ohio 43218-2029
___________________________

* 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.

- 58 -
<PAGE>

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. The registration statement, including the exhibits filed
therewith, may be examined at the SEC's offices in Washington, D.C. The
SEC maintains a Website (http://www.sec.gov) that contains this SAI,
material incorporated by reference, and other information regarding the
Funds and Portfolios.

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 any 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, 1996:

[To be filed by amendment to the Trust's registration
statement]

- 59 -
<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.

- 60 -
<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
indicates that the company ranks in the lower end of its generic rating
category.

- 61 -
<PAGE>

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.

- 62 -
<PAGE>

Appendix B

THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER

[To be filed by amendment to the Trust's registration statement]

- 63 -
<PAGE>

_________________________________________________________________

NEUBERGER & BERMAN MUNICIPAL FUNDS AND PORTFOLIOS

STATEMENT OF ADDITIONAL INFORMATION

DATED FEBRUARY 3, 1997

Neuberger & Berman Neuberger & Berman
Municipal Money Fund Municipal Securities Trust
(and Neuberger & Berman (and Neuberger & Berman
Municipal Money Portfolio) Municipal Securities Portfolio)

Neuberger & Berman
New York Insured Intermediate Fund
(and Neuberger & Berman New York
Insured Intermediate Portfolio)
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 February 3, 1997. 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. Shares of New York Insured
Intermediate are registered for sale only to investors in New York and
Florida. New York Insured Intermediate is not being offered for sale to
investors in any other state.

The Funds' Prospectus, which is also the prospectus for
certain taxable fixed income funds administered by Neuberger & Berman
Management Incorporated ("N&B Management"), provides 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.

TABLE OF CONTENTS

INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Policies and Limitations . . . . . . . . . . . . 1
Investment Program of Neuberger & Berman Municipal Money
Portfolio . . . . . . . . . . . . . . . . . . . . . . 8
Investment Program of Neuberger & Berman Municipal
Securities Portfolio . . . . . . . . . . . . . . . . . 9
Investment Approaches of Neuberger & Berman Municipal
Securities Portfolio and Neuberger & Berman New York
Insured Intermediate Portfolio . . . . . . . . . . . 11
Municipal Bond Insurance (Neuberger & Berman New York
Insured Intermediate Portfolio). . . . . . . . . . . 11
Theodore P. Giuliano and Clara Del Villar - Portfolio Co-
Managers of the Portfolios . . . . . . . . . . . . . 13
Types of Municipal Obligations . . . . . . . . . . . . . . . 13
Yield and Price Characteristics of Municipal Obligations . . 17
Investment in Taxable Securities . . . . . . . . . . . . . . 17
Additional Investment Information . . . . . . . . . . . . . 19
Risks of Fixed Income Securities . . . . . . . . . . . . . . 30

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 31
Yield Calculations . . . . . . . . . . . . . . . . . . . . . 31
Tax Equivalent Yield . . . . . . . . . . . . . . . . . . . . 32
Total Return Computations . . . . . . . . . . . . . . . . . 33
Comparative Information . . . . . . . . . . . . . . . . . . 34
Other Performance Information . . . . . . . . . . . . . . . 35

CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 36
New York City . . . . . . . . . . . . . . . . . . . . . . . 38
New York State . . . . . . . . . . . . . . . . . . . . . . . 39
Puerto Rico . . . . . . . . . . . . . . . . . . . . . . . . 40

TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 41

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . 47
Investment Manager and Administrator . . . . . . . . . . . . 47
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . 50
Investment Companies Managed . . . . . . . . . . . . . . . . 52
Management and Control of N&B Management . . . . . . . . . . 54

DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . 55

ADDITIONAL PURCHASE INFORMATION . . . . . . . . . . . . . . . . . . . 55
Automatic Investing and Dollar Cost Averaging . . . . . . . 55

ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . 56

ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . 59
Suspension of Redemptions . . . . . . . . . . . . . . . . . 59
Redemptions in Kind . . . . . . . . . . . . . . . . . . . . 60

- i -
<PAGE>

DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 60

ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . 61
Taxation of the Funds . . . . . . . . . . . . . . . . . . . 61
Taxation of the Portfolios . . . . . . . . . . . . . . . . . 62
Taxation of the Funds' Shareholders . . . . . . . . . . . . 65

VALUATION OF PORTFOLIO SECURITIES
(Neuberger & Berman Municipal Money Portfolio) . . . . . . . 67

PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 67
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . 68

REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 68

CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 68

INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . 69

LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . 69

REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 70

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 70

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
RATINGS OF MUNICIPAL OBLIGATIONS AND COMMERCIAL PAPER . . . 72

Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
THE ART OF INVESTMENT:
A CONVERSATION WITH ROY NEUBERGER . . . . . . . . . 76

- ii -
<PAGE>

INVESTMENT INFORMATION

Each Fund is a separate operating 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 securities 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.")

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 substan-
tially the same investment objective, policies, and limi-
tations as the Fund.

- 1 -
<PAGE>

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 substantially the same investment objective,
policies, and limitations as the Fund.

All other fundamental investment policies and limitations
and the non-fundamental investment policies and limitations of each Fund
are identical to those of its corresponding Portfolio. 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 concentra-
tion in a particular industry, N&B Management determines the "issuer" of a
municipal obligation that is not a general obligation note or bond based
on the obligation's characteristics. The most significant of these
characteristics 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
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

- 2 -
<PAGE>

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.

7. Senior Securities. Neither Portfolio may issue
senior securities, except as permitted under the 1940 Act.

8. Underwriting. Neither 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 Securities Act of 1933 ("1933 Act").

- 3 -
<PAGE>

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. For purposes of this limitation, pass-through
entities and other special purpose vehicles or pools of financial assets
are not considered to be business enterprises.

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.

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.

- 4 -
<PAGE>

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 combina-
tion 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 partnership or similar interests 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)
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

- 5 -
<PAGE>

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.

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

- 6 -
<PAGE>

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. For purposes of this limitation, pass-through
entities and other special purpose vehicles or pools of financial assets
are not considered to be business enterprises.

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.

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.

- 7 -
<PAGE>

11. Real Estate Limited Partnerships. The Portfolio may
not invest in partnership or similar interests in real estate limited
partnerships.

Investment Approaches of Neuberger & Berman Municipal Securities Portfolio
and Neuberger & Berman New York Insured Intermediate Portfolio

Neuberger & Berman Municipal Securities Portfolio and
Neuberger & Berman New York Insured Intermediate Portfolio are managed in
accordance with an investment approach developed by their sub-adviser,
Neuberger & Berman, LLC ("Neuberger & Berman"), and currently used by that
firm in managing taxable and tax-exempt fixed income portfolios with an
aggregate value of approximately $______ 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 obliga-
tions -- 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 duration of each Portfolio is actively
managed and may not exceed ten years. Futures, options and options on
futures have durations which are generally related to the duration of the
securities underlying them. There are some situations where even the
standard duration calculation does not properly reflect the interest rate
exposure of a security. For example, variable or floating rate securities
often have final maturities of ten or more years; however, their interest
rate exposure corresponds to the frequency of the coupon reset. See
"Investment Information -- Variable or Floating Rate Securities; Demand
and Put Features." In this and other, similar situations, N&B Management,
where permitted, will use more sophisticated analytical techniques that
incorporate the economic life of a security into the determination of its
interest rate exposure.

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

- 8 -
<PAGE>

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 broker, another investor or
the Portfolio after the municipal security is originally issued.
Generally, the Portfolio expects to purchase New York Municipal Securities
that have been insured by another 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.

AMBAC is a wholly-owned subsidiary of AMBAC Inc. and is
licensed to do 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. According to its shareholder or other reports,
AMBAC is a Wisconsin-domiciled stock insurance corporation with admitted
assets of approximately $2,421,000,000 (unaudited) and statutory capital
of approximately $1,359,000,000 (unaudited) as of December 31, 1995.
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 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. According to its shareholder or other
reports, as of June 30, 1996, MBIA Corp. had admitted assets of $4.2
billion (unaudited), total liabilities of $2.8 billion (unaudited), and
total capital and surplus of $1.4 billion (unaudited) determined in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. According to its shareholder or other
reports, as of December 31, 1995, MBIA Corp. had admitted assets of $3.8

- 9 -
<PAGE>

billion (audited), total liabilities of $2.5 billion (audited), and total
capital and surplus of $1.3 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 subsidiary of General Electric Capital Corporation. FGIC is
licensed to do business in all 50 states, the District of Columbia, the
United Kingdom and France. FGIC is a leading insurer of municipal bonds,
and also insures a variety of structured debt issues in the taxable
market. According to its shareholder or other reports, as of September
30, 1996, the total capital and surplus of FGIC was approximately
$1,097,000,000. Approximately 86% of the business written to date by FGIC
has been Municipal Bond Insurance.

Theodore P. Giuliano and Clara Del Villar - Portfolio Co-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
shareholders avoid the market fluctuations and risk that come with
investment in longer-term municipal bonds and still receive dividends that
are generally 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 duration of 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 duration 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."

- 10 -
<PAGE>

Types of Municipal Obligations

The tax-exempt status of any issue of municipal obliga-
tions 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 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.

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

- 11 -
<PAGE>

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 the 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 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 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 construction financing. After completion of construction, many
projects receive permanent financing from the Federal National Mortgage
Association ("FNMA") or the Government National Mortgage Association
("GNMA").

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.

- 12 -
<PAGE>

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 qual-
ity 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.

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 or the bond's rating falls below investment grade.

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, duration, 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 or durations
tend to produce higher yields. They are generally subject to potentially
greater price fluctuations, and thus greater appreciation or depreciation
in value, than obligations with shorter maturities or durations 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

- 13 -
<PAGE>

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 fixed
income securities, which mature in one year or less from the time of
purchase:

U.S. Government and Agency Securities. U.S. Government
and Agency Securities are direct obligations of the U.S. Government, or
its agencies and instrumentalities. Many agency securities are not backed
by the full faith and credit of the United States.

Banking Securities. The Portfolios may invest in banking
obligations, which include CDs, time deposits, bankers' acceptances, and
other short-term debt obligations issued by U.S. commercial banks. 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.

A Portfolio may invest in securities issued by a U.S.
commercial bank only if (1) the bank has total assets of at least
$1,000,000,000, (2) the bank or institution is on N&B Management's
approved list, and (3) its deposits are insured by the Federal Deposit
Insurance Corporation.

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. Repurchase agreements
with a maturity of more than seven days are considered to be illiquid
securities. No Portfolio may enter into such a repurchase agreement 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 and duration limitations)
that the Portfolio's investment policies and limitations would allow it to

- 14 -
<PAGE>

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 repurchase price, and
(3) payment for the underlying securities is made 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. In order to realize income, each Port-
folio 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 continu-
ously 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,
usually 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. 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.

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.

Additional Investment Information

The Portfolios' investments in municipal obligations and
taxable securities may take the form of the following types of
investments:

- 15 -
<PAGE>

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 or index changes.
The interest rate on variable and floating rate securities (collectively,
"Adjustable 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 Adjustable 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, some
Adjustable 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).

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 the
credit enhancements in purchasing these securities.

Purchases with a Standby Commitment to Repurchase. When
a 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.

- 16 -
<PAGE>

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 Port-
folio will invest in standby commitments unless it receives an opinion of
counsel or a ruling of the Internal Revenue Service ("Service")
satisfactory to the Portfolio Trustees that the interest earned by the
Portfolio on municipal obligations subject to a standby commitment will be
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 the 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 or duration of municipal obligations
purchased by a Portfolio is not shortened by a standby commitment. There-
fore, standby commitments do not affect the average maturity or duration
of the Portfolio's investment portfolio.

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
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.

- 17 -
<PAGE>

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. Before they are registered, such securities 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 obli-
gated 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 restricted 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 by a method
that the Portfolio Trustees believe accurately reflects fair value.

When-Issued Transactions. Each Portfolio may purchase
securities on a when-issued basis. In such a transaction, a Portfolio
commits to purchase securities at a future date (to secure what N&B
Management believes to be an advantageous price and yield at the time of
the commitment) and pays for the securities when they are delivered. For
instance, 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. When-issued purchases are negotiated directly
with the other party, and such commitments are not traded on an exchange.

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. Because the Portfolio has

- 18 -
<PAGE>

not yet paid for the securities, this produces an effect similar to
leverage. 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, although a Portfolio may agree to
a longer settlement period.

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.

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 a 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 the same or similar maturities, durations, and credit quality.

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 and other
securities resulting from 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 Port-
folios do not engage in transactions in Futures or options thereon for
speculation. The Portfolios view investment in Futures and options
thereon as a duration management device and/or a device to reduce risk and
preserve total return in an adverse interest rate environment for the
hedged securities.

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.

U.S. Futures are traded on exchanges that have been
designated as "contract markets" by the Commodity Futures Trading
Commission ("CFTC"); 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.

- 20 -
<PAGE>

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.

"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 ("variation 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 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.

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.

- 21 -
<PAGE>

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 fluctua-
tion in the price of a Futures Contract or option thereon during a single
trading day; once the daily limit has been reached, no trades 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. In fact, it may increase the risk of loss,
because prices can move to the daily limit for several consecutive trading
days with little or no trading, thereby preventing liquidation of
unfavorable 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 and 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. 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.

- 22 -
<PAGE>

When the Portfolio writes a call option, it is obligated
to sell a security to a purchaser at a specified price at any time until a
certain date, if the purchaser decides to exercise 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 a call option at less than the
market price, thereby giving up any additional gain on the security.

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.

- 23 -
<PAGE>

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.

The premium received (or paid) by the Portfolio when it
writes (or purchases) an 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 interest rate environment. The premium received by the
Portfolio for writing an 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 last
sales price before the time the Portfolio's NAV is computed on the day the
option is being valued or, in the absence of any trades thereof on that
day, the mean between the closing bid and asked prices as of that time.

- 24 -
<PAGE>

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.

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.

Regulatory Limitations on Using Futures, Options on
Futures, and Options on Securities (collectively, "Hedging Instruments").
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.

- 25 -
<PAGE>

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
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 or appropriate liquid 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 out-
standing, 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.

Risks of Fixed Income Securities

- 26 -
<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 no longer 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.

- 27 -
<PAGE>

PERFORMANCE INFORMATION

Each Fund's performance figures are based on historical
results 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
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:

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

For the seven calendar days ended October 31, 1996, the
current yield and effective yield of Municipal Money were ____% and ____%,
respectively.

Each of Municipal Securities and New York Insured
Intermediate may advertise its "yield" based on a 30-day (or one-month)
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, 1996, the annualized yields of Municipal Securities and New York
Insured Intermediate were ____% and ____%, respectively.

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

- 28 -
<PAGE>

level of after-tax yield produced by an investment in a Fund. 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%/(1 - .396) = 4/.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,
1996, were ____% and ____%, 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 39.6%.

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.

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/(1 - .466) = 4/.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.

- 29 -
<PAGE>

The tax-equivalent yield of New York Insured Intermediate
for the 30-day period ended October 31, 1996 was _____%, 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 in performance and, in that respect, differs from actual year-
to-year results.

For the one- and five-year periods ended October 31,
1996, and the period from July 9, 1987 (commencement of operations)
through October 31, 1996, the average annual total returns for Municipal
Securities and its predecessor were +_____%, +_____%, and +____%,
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 $______ on
October 31, 1996

For the one-year period ended October 31, 1996 and for
the period from February 1, 1994 (commencement of operations) to October
31, 1996 the average annual total returns for New York Insured
Intermediate were +_____% and +____%, 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
$______ on October 31, 1996.

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 newspapers, newsletters, and financial

- 30 -
<PAGE>

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 domes-
tic, international, and global indices and changes in the
U.S. Department of Labor 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 some
of the above indices.

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

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.

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

- 31 -
<PAGE>

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

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.

- 32 -
<PAGE>

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%

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 Man-
agement'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. Each Portfolio's ability to achieve its investment
objective is dependent on the continuing ability of 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, duration, coupon, and rating may have
different yields. There are variations in municipal obligations and in
bond insurers, both within a particular classification and between classi-
fications. 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

- 33 -
<PAGE>

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, has affected the availability of municipal obligations for invest-
ment 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.

- 34 -
<PAGE>

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
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."

- 35 -
<PAGE>

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.

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.

- 36 -
<PAGE>

Puerto Rico

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 have enjoyed a
federal tax advantage from locating certain of their operations in Puerto
Rico. However, this program will be phased out over the next several
years, with uncertain effect on the Puerto Rican economy.

TRUSTEES AND OFFICERS

<TABLE>

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

John Cannon (67) Trustee of each Trust President, AMA Investment Advisers, Inc.
CDC Associates, Inc. (registered investment adviser) (1976 -
620 Sentry Parkway 1991); Senior Vice President AMA
Suite 220 Investment Advisers, Inc. (1991- 1993);
Blue Bell, PA 19422 President of AMA Family of Funds
(investment companies) (1976 - 1991);
Chairman and Treasurer of CDC
Associates, Inc. (registered investment
adviser) (1993 - present)

Charles DeCarlo (75) 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* (62) Chairman of the Board, Principal 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.

- 37 -
<PAGE>

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

Theodore P. Giuliano*(__) President and Trustee of Principal 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.

Robert A. Kavesh (69) 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 (75) 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 (64) Trustee of each Trust Senior Vice President and Secretary of
Foodmaker, Inc. Foodmaker, Inc. (operator and franchisor
9330 Balboa Avenue of restaurants).
San Diego, CA 92123

Candace L. Straight (49) Trustee of each Trust Private investor and consultant
518 E. Passaic Avenue specializing in the insurance industry;
Bloomfield, NJ 07003 Principal of Head & Company, LLC
(limited liability company providing
investment banking and consulting
services to the insurance industry)
until March 1996; President of Integon
Corporation (marketer of life insurance,
annuities, and property and casualty
insurance), 1990-1992; Director of Drake
Holdings (U.K. motor insurer) until June
1996.

- 38 -
<PAGE>

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

Daniel J. Sullivan (57) Vice President of each Senior Vice President of N&B Management
Trust since 1992; prior thereto, Vice Presi-
dent of N&B Management; Vice President
of eight other mutual funds for which
N&B Management acts as investment
manager or administrator.

Michael J. Weiner (49) Vice President and Senior Vice President of N&B Management
Principal Financial since 1992; Treasurer of N&B Management
Officer of each Trust 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 (40) 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 (50) Treasurer and Principal Vice President of N&B Management since
Accounting Officer of each 1993; prior thereto, Assistant Vice
Trust 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.

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 (59) Assistant Secretary of Principal 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.

- 39 -
<PAGE>

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

Barbara DiGiorgio (38) Assistant Treasurer of Assistant Vice President of N&B
each Trust Management since 1993; prior thereto,
employee of N&B Management; Assistant
Treasurer of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.

Celeste Wischerth (35) Assistant Treasurer of Assistant Vice President of N&B
each Trust Management since 1994; prior thereto,
employee of N&B Management; Assistant
Treasurer 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, New York, NY 10158.

(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 (a) engaged in
bad faith, willful misfeasance, gross negligence, or reckless disregard of
the duties involved in the conduct of their offices, or (b) did not act in
good faith in the reasonable belief that their action was in the best
interest of the Trust. 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.

- 40 -
<PAGE>

For the fiscal year ended October 31, 1996, trustees'
fees and expenses aggregating $_______ and $______ were paid and accrued
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, 1996, trustees'
fees and expenses aggregating $______ were paid and accrued 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.

TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/96
------------------------------

Total Compensation
from Trusts in the
Aggregate Neuberger & Berman
Name and Position with Compensation Funds Complex Paid
the Trust from the Trust to Trustees
---------------------- -------------- ------------------
<S> <C> <C>

John Cannon $ $
Trustee (2 other investment
companies)

Charles DeCarlo $ $
Trustee (2 other investment
companies)
Stanley Egener $ 0 $ 0
Chairman of the Board, (9 other investment
Chief Executive Officer, companies)
and Trustee

Theodore P. Giuliano $ 0 $ 0
President and Trustee (2 other investment
companies)

- 41 -
<PAGE>

TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/96
------------------------------

Robert A. Kavesh $ $
Trustee (2 other investment
companies)

Harold R. Logan $ $
Trustee (2 other investment
companies)
William E. Rulon $ $
Trustee (2 other investment
companies)

Candace L. Straight $ $
Trustee (2 other investment
companies)

</TABLE>
<TABLE>

At _____________, 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 ___% of New
York Insured Intermediate.

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

- 42 -
<PAGE>

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.

- 43 -
<PAGE>

For the fiscal years ended October 31, 1996, 1995, and
1994, (1) Municipal Securities accrued advisory or management and
administration fees of ________, $225,079, and $407,968, respectively, and
(2) Municipal Money Fund accrued advisory or management and administration
fees of _______, $772,483, and $823,482, respectively. For the fiscal
years ended October 31, 1996 and 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.

As noted in the Prospectus under "Management and
Administration -- Expenses," N&B Management has voluntarily undertaken to
reimburse each of Municipal Securities and New York Insured Intermediate
for its Operating Expenses (including fees under the Administration
Agreement) and the pro rata share of its corresponding Portfolio's
Operating Expenses (including fees under the Management Agreement) that
exceed, in the aggregate 0.65% per annum of the Fund's average daily net
assets. Operating Expenses exclude interest, taxes, brokerage
commissions, and extraordinary expenses. N&B Management can terminate
each undertaking by giving the Fund at least 60 days' prior written
notice. For the fiscal years ended October 31, 1996, 1995, and 1994,
Municipal Securities was reimbursed for its expenses in the amounts of
$_______, $145,086, and $140,055, respectively. For the fiscal years
ended October 31, 1996, and 1995, and for the fiscal period ended October
31, 1994, N&B Management reimbursed New York Insured Intermediate
$_______, $134,191, and $100,692, respectively.

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
fiscal year ended October 31, 1994, Municipal Money paid $15,415, and
$26,499, respectively, and Municipal Securities paid $4,376, and $12,704,
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.

- 44 -
<PAGE>

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 a majority 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.

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.

- 45 -
<PAGE>

& 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
Name at September 30, 1996
---- ----------------------

Neuberger & Berman Cash Reserves Portfolio . . . . . . . . $ 527,447,493
(investment portfolio for Neuberger & Berman Cash Reserves)

Neuberger & Berman Government Money Portfolio . . . . . . . $ 319,705,018
(investment portfolio for Neuberger & Berman Government Money
Fund)

Neuberger & Berman Limited Maturity Bond Portfolio . . . . $ 268,862,148
(investment portfolio for Neuberger & Berman Limited Maturity
Bond Fund and Neuberger & Berman Limited Maturity Bond Trust)

Neuberger & Berman Ultra Short Bond Portfolio . . . . . . . $ 96,306,004
(investment portfolio for Neuberger & Berman Ultra Short Bond
Fund and Neuberger & Berman Ultra Short Bond Trust)

- 46 -
<PAGE>

Neuberger & Berman Municipal Money Portfolio . . . . . . . $ 141,116,062
(investment portfolio for Neuberger & Berman Municipal Money
Fund)

Neuberger & Berman Municipal Securities Portfolio . . . . . $ 38,416,801
(investment portfolio for Neuberger & Berman Municipal Securities
Trust)

Neuberger & Berman New York Insured Intermediate
Portfolio . . . . . . . . . . . . . . . . . . . . $ 9,575,489
(investment portfolio for Neuberger & Berman New York Insured
Intermediate Fund)

Neuberger & Berman Focus Portfolio . . . . . . . . . . . $ 1,174,138,341
(investment portfolio for Neuberger & Berman Focus Fund,
Neuberger & Berman Focus Trust, and Neuberger & Berman Focus
Assets)

Neuberger & Berman Genesis Portfolio . . . . . . . . . . . $ 287,653,131
(investment portfolio for Neuberger & Berman Genesis Fund and
Neuberger & Berman Genesis Trust)

Neuberger & Berman International Portfolio . . . . . . . . $ 59,969,278
(investment portfolio for Neuberger & Berman International Fund)

Advisers Managers Trust (six series) . . . . . . . . . . $ 1,468,727,224

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 $61,738,329,
$77,498,236, and $26,954,887, respectively, at September 30, 1996.

- 47 -
<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; Theodore P. Giuliano, Vice President and director; Michael M.
Kassen, Vice President and director; Irwin Lainoff, 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; Patrick T. Byrne, 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 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; Susan Walsh, Vice President, Thomas Wolfe, Vice President;
Andrea Trachtenberg, Vice President of Marketing; Stacy Cooper-Shugrue,
Assistant Vice President; Robert Cresci, Assistant Vice President; Barbara
DiGiorgio, Assistant Vice President; Roberta D'Orio, Assistant Vice
President; Joseph G. Galli, Assistant Vice President; Robert I. Gendelman,
Assistant Vice President; Leslie Holliday-Soto, Assistant Vice President;
Jody L. Irwin, Assistant Vice President; Carmen G. Martinez, Assistant

- 48 -
<PAGE>

Vice President; Paul Metzger, Assistant Vice President; Joseph S. Quirk,
Assistant Vice President; Kevin L. Risen, Assistant Vice President; Susan
Switzer, Assistant Vice President; Assistant Vice President; and Celeste
Wischerth, Assistant Vice President, KimMarie Zamot, Assistant Vice
President; and Loraine Olavarria, Assistant Secretary. Messrs. Cantor,
Egener, Lainoff, Zicklin, Goldstein, Kassen, Marx, and Simons and Mmes.
Prindle and Vale are principals of Neuberger & Berman.

Mr. Giuliano 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 principal 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 principals of Neuberger & Berman.

DISTRIBUTION ARRANGEMENTS

- 49 -
<PAGE>

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 or (2) withdrawals from the shareholder's checking
account. In either case, the minimum monthly investment is $100. A
shareholder who elects to participate 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 would be lower than it
would be if the shareholder purchased a fixed number of shares at the same
pre-set intervals. Additional information on dollar cost averaging may be
obtained from the Distributor.

ADDITIONAL EXCHANGE INFORMATION

- 50 -
<PAGE>

EQUITY FUNDS

Neuberger & Berman Seeks capital appreciation through
Guardian Fund investments primarily 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 distribu-
tion 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
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.

- 51 -
<PAGE>

Neuberger & Berman Seeks capital appreciation, without regard to
Manhattan Fund income, through investments generally in
securities of small-, medium-, and 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 securities thought to be
undervalued.

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 a low
price-to-earnings ratio, 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 through
Socially Responsive investments primarily in securities of
Fund companies that meet both financial and social
criteria.

INCOME FUNDS
------------

Neuberger & Berman A U.S. Government money market fund seeking
Government Money Fund maximum safety and liquidity and the highest
available current income. The corresponding
portfolio invests only in U.S. Treasury obli-
gations and other money market instruments
backed by the full faith and credit of the
United States. It seeks to maintain a con-
stant purchase and redemption price of $1.00.

Neuberger & Berman A money market fund seeking the highest
Cash Reserves current income consistent with safety and
liquidity. The corresponding portfolio
invests in high-quality money market instru-
ments. It seeks to maintain a constant
purchase and redemption price of $1.00.

- 52 -
<PAGE>

Neuberger & Berman Seeks current income, with minimal risk to
Ultra Short Bond Fund principal and liquidity. The corresponding
portfolio invests in money market instru-
ments and investment grade debt securities of
government and non-government issuers.
Maximum average duration of two years.

Neuberger & Berman Seeks the highest current income consistent
Limited Maturity Bond with low risk to principal and liquidity; and
Fund secondarily, total return. The corresponding
portfolio invests in debt securities, pri-
marily investment grade; maximum 10% below
investment grade, but no lower than B.***
Maximum average duration of four years.

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 are series of the Trust, (2) the Equity Funds 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 of the Equity and Income Funds invests all of its net
investable assets in a corresponding portfolio that has an investment
objective, policies, and limitations identical to those of the 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 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.

________________________

*** As rated by Moody's or S&P or, if unrated by either of those
entities, deemed by N&B Management to be of comparable quality.

- 53 -
<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 correspond-
ing 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; provided 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 "Share Prices and Net Asset
Value" in the Prospectus. If payment is made in securities, a
shareholder generally will incur brokerage expenses or other transactions
costs in converting those securities into cash and will be subject to
fluctuation in the market prices 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 determined that it was 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 any
net realized 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

- 54 -
<PAGE>

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 capital and foreign currency gains and losses. Net
investment income and 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

ADDITIONAL TAX INFORMATION

Taxation of the Funds

- 55 -
<PAGE>

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,
securities of other RICs 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 securi-
ties) 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
consequences to Municipal Securities and New York Insured Intermediate of
hedging and certain other transactions engaged in by their corresponding
Portfolios.

- 56 -
<PAGE>

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
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 qualifies 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 capital 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

- 57 -
<PAGE>

business of investing in securities will qualify as permissible income for
its corresponding Fund under the Income Requirement. However, income from
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.

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.

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

- 58 -
<PAGE>

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;
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

- 59 -
<PAGE>

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. 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 casu-
alty insurance companies and individuals otherwise eligible for the earned
income credit. A shareholder 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
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
(Neuberger & Berman Municipal Money Portfolio)

Neuberger & Berman Municipal Money Portfolio relies on
Rule 2a-7 under the 1940 Act to use the amortized cost method of valuation

- 60 -
<PAGE>

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 Neuberger & Berman Municipal
Money Portfolio's reliance on Rule 2a-7 and use of the amortized cost
valuation 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

During the fiscal year ended October 31, 1996, ________
Portfolio acquired securities of its "regular brokers or dealers" (as
defined in the 1940 Act). At October 31, 1996, ________ 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

- 61 -
<PAGE>

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

Neuberger & Berman Municipal Securities Portfolio and
Neuberger & Berman New York Insured Intermediate Portfolio calculate a
portfolio turnover rate by dividing (1) the lesser of the cost of the
securities purchased or the value of the securities sold by the Portfolio
during the fiscal year other than securities, including options, whose
maturity or expiration date at the time of acquisition was one year or
less by (2) the monthly average value of such securities owned by the
Portfolio during the fiscal year.

REPORTS TO SHAREHOLDERS

CUSTODIAN AND TRANSFER AGENT

Each Fund and Portfolio has selected State Street Bank
and Trust Company ("State Street"), 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 and shareholder servicing agent, administering purchases,
redemptions, and transfers of Fund shares and the payment of dividends and
other distributions 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.
20036-1800, as its legal counsel.

- 62 -
<PAGE>

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 _________:

Percentage of
Name and Address: Ownership at
----------------- __________

Municipal Money: Neuberger & Berman* _____%
--------------- 605 Third Avenue
New York, NY 10158-3698

Municipal Securities: Charles Schwab & Co., Inc.* _____%
-------------------- Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122

Neuberger & Berman* _____%
605 Third Avenue
New York, NY 10158-3698

New York Insured Neuberger & Berman* _____%
Intermediate: 11 Broadway
---------------- Attn: Operations Control
New York, NY 10004-1303

Stanley Egener _____%
605 Third Avenue
New York, NY 10158

Neuberger & Berman _____%
Management Inc.
Attn: M. Weiner
605 Third Avenue
New York, NY 10158-0180

Charles Schwab & Co., Inc.* ____%
101 Montgomery Street
San Francisco, CA 94104-4122

* 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.

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

- 63 -
<PAGE>

Prospectus. The registration statement, including the exhibits filed
therewith, may be examined at the SEC's offices in Washington, D.C. The
SEC maintains a Website (http://www.sec.gov) that contains this SAI,
material incorporated by reference, and other information regarding the
Funds and Portfolios.

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:

[To be filed by amendment to the Trust's registration
statement.]

- 64 -
<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.

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.

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

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

- 65 -
<PAGE>

lack outstanding investment characteristics and in fact have speculative
characteristics as well.

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.

MIG 4/VMIG 4 - This designation denotes adequate quality,
carrying specific risk but having protection and not distinctly or
predominantly speculative.
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.

- 66 -
<PAGE>

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
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.

S&P Claims-Paying Ability Ratings of Insurance Companies:

AAA - Insurers rated AAA offer superior financial
security on both an absolute and relative basis. They possess the highest
safety and have an overwhelming capacity to meet policyholder obligations.

Moody's Financial Strength Ratings of Insurance
Companies:

Aaa - Insurers rated Aaa offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong positions.

- 67 -
<PAGE>

Appendix B

THE ART OF INVESTMENT:
A CONVERSATION WITH ROY NEUBERGER

[To be filed by amendment to the Trust's registration statement.]

- 68 -
<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 22 ON FORM N-1A

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits
-------- ---------------------------------

(a) Financial Statements:

Audited financial statements for the fiscal year ended October
31, 1996 for Neuberger & Berman Income Funds (with respect to
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) and Income
Managers Trust (with respect to Neuberger & Berman Government
Money Portfolio, Neuberger & Berman Cash Reserves Portfolio,
Neuberger & Berman Ultra Short Bond Portfolio, Neuberger & Berman
Limited Maturity Bond Portfolio, Neuberger & Berman Municipal
Money Portfolio, Neuberger & Berman Municipal Securities
Portfolio and Neuberger & Berman New York Insured Intermediate
Portfolio) will be filed by amendment to Registrant's
Registration Statement.

Included in Part A of this Post-Effective Amendment:

Form of 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, to be filed by
amendment to the Registrant's
Registration Statement, for the periods
indicated therein.

(b) Exhibits:
<PAGE>

Exhibit Number Description
-------------- -----------

(1) (a) Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No.
21 to Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-000117.

(b) Trust Instrument of Neuberger & Berman
Income Funds. Incorporated by Reference to
Post-Effective Amendment No. 21 to
Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802, EDGAR Accession
No. 0000898432-96-000117.

(c) Schedule A - Current Series of Neuberger &
Berman Income Funds. Incorporated by
Reference to Post-Effective Amendment No.
21 to Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-000117.

(2) By-Laws of Neuberger & Berman Income Funds.
Incorporated by Reference to Post-Effective
Amendment No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-000117.

(3) Voting Trust Agreement. None.

(4) Specimen Share Certificate. None.

(5) (a) (i) Management Agreement Between
Income Managers Trust and
Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

- 2 -
<PAGE>

(ii) Schedule A - Portfolios of Income
Managers Trust Currently Subject
to the Management Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
0000898432-96-00017.

(iii) Schedule B - Schedule of
Compensation under the Management
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(b) (i) Sub-Advisory Agreement Between
Neuberger & Berman Management
Incorporated and Neuberger &
Berman, L.P. with respect to
Income Managers Trust.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
0000898432-96-00017.

(ii) Schedule A - Portfolios of Income
Managers Trust Currently Subject
to the Sub-Advisory Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
0000898432-96-00017.

(6) (a) Distribution Agreement between Neuberger &
Berman Income Funds and Neuberger & Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No.
21 to Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

- 3 -
<PAGE>

(b) Schedule A - Series of Neuberger & Berman
Income Funds Currently Subject to the
Distribution Agreement. Incorporated by
Reference to Post-Effective Amendment No.
21 to Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(7) Bonus, Profit Sharing or Pension Plans. None.

(8) (a) Custodian Contract Between Neuberger &
Berman Income Funds and State Street Bank
and Trust Company. Incorporated by
Reference to Post-Effective Amendment No.
21 to Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(b) Schedule A - Approved Foreign Banking
Institutions and Securities Depositories
Under the Custodian Contract. Incorporated
by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802,
EDGAR Accession No. 0000898432-96-00017.

(9) (a) (i) Transfer Agency Agreement Between
Neuberger & Berman Income Funds
and State Street Bank and Trust
Company. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(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. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

- 4 -
<PAGE>

(iii) First Amendment to Transfer Agency
and Service Agreement between
Neuberger & Berman Income Funds
and State Street Bank and Trust
Company. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(b) (i) Administration Agreement Between
Neuberger & Berman Income Funds
and Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(ii) Schedule A - Series of Neuberger &
Berman Income Funds Currently
Subject to the Administration
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(iii) Schedule B - Schedule of
Compensation Under the
Administration Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
0000898432-96-00017.

(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. To be Filed by Amendment.

- 5 -
<PAGE>

(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. To be Filed by Amendment.

(18) Plan Pursuant to Rule 18f-3. None.

Item 25. Persons Controlled By or Under Common Control with
Registrant.
--------------------------------------------------

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 ________ __, 1996.

Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:

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

- 6 -
<PAGE>

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
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

- 7 -
<PAGE>

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
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

- 8 -
<PAGE>

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
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.

- 9 -
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------

<S> <C>
Claudia A. Brandon Secretary, Neuberger & Berman Advisers
Vice President, Management Trust (Delaware business
N&B Management trust); 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 &
Assistant Vice President, Berman Advisers Management Trust
N&B Management (Delaware 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.

Robert Cresci Assistant Portfolio Manager, BNP-N&B
Assistant Vice President, Global Asset Management L.P. (joint
N&B Management venture of Neuberger & Berman and
Banque Nationale de Paris) (2).

- 10 -
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------

Barbara DiGiorgio, Assistant Treasurer, Neuberger &
Assistant Vice President, Berman Advisers Management Trust
N&B Management (Delaware business trust); Assistant
Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger &
Berman Income Funds; Assistant
Treasurer, Neuberger & Berman Income
Trust; Assistant Treasurer,
Neuberger & Berman Equity Funds;
Assistant Treasurer, Neuberger &
Berman Equity Trust; Assistant
Treasurer, Income Managers Trust;
Assistant Treasurer, Equity Managers
Trust; Assistant Treasurer, Global
Managers Trust; Assistant Treasurer,
Neuberger & Berman Equity Assets.

Stanley Egener Chairman of the Board and Trustee,
President and Director, Neuberger & Berman Advisers Management
N&B Management; Principal, Trust (Delaware business trust);
Neuberger & Berman Chairman of the Board and Trustee,
Advisers Managers 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 President and Trustee, Neuberger &
Vice President and Director, Berman Income Funds; President and
N&B Management; Principal, Trustee, Neuberger & Berman Income
Neuberger & Berman Trust; President and Trustee, Income
Managers Trust.

- 11 -
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------

C. Carl Randolph Assistant Secretary, Neuberger &
Principal, Neuberger & Berman Berman Advisers Management Trust
(Delaware 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, N&B Management Portfolio Manager, BNP-N&B Global
Asset Management L.P. (joint venture
of Neuberger & Berman and Banque
Nationale de Paris) (2).

Richard Russell Treasurer, Neuberger & Berman Advisers
Vice President, N&B Management Management Trust (Delaware business
trust); 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.

- 12 -
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------

Daniel J. Sullivan Vice President, Neuberger & Berman
Senior Vice President, Advisers Management Trust (Delaware
N&B Management business trust); 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.
Susan Switzer Portfolio Manager, Mitchell Hutchins
Assistant Vice President, Asset Management Inc., 1285 Avenue of
N&B Management the Americas, New York, New York 10019
(3).

Michael J. Weiner Vice President, Neuberger & Berman
Senior Vice President, Advisers Management Trust (Delaware
N&B Management business trust); 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.

- 13 -
<PAGE>

NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------

Celeste Wischerth, Assistant Treasurer, Neuberger &
Assistant Vice President, Berman Advisers Management Trust
N&B Management (Delaware business trust); Assistant
Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger &
Berman Income Funds; Assistant
Treasurer, Neuberger & Berman Income
Trust; Assistant Treasurer,
Neuberger & Berman Equity Funds;
Assistant Treasurer, Neuberger &
Berman Equity Trust; Assistant
Treasurer, Income Managers Trust;
Assistant Treasurer, Equity Managers
Trust; Assistant Treasurer, Global
Managers Trust; Assistant Treasurer,
Neuberger & Berman Equity Assets.
Lawrence Zicklin President and Trustee, Neuberger &
Director, N&B Management; Berman Advisers Management Trust
Principal, Neuberger & (Delaware business trust); President
Berman and Trustee, Advisers Managers Trust;
President and 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

The principal address of N&B Management, Neuberger & Berman, and
of each of the investment companies named above, is 605 Third Avenue, New
York, New York 10158.

---------------
(1) Until April 30, 1995.
(2) Until October 31, 1995.
(3) Until 1994.

Item 29. Principal Underwriters.
------- ----------------------

(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and

- 14 -
<PAGE>

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
NAME WITH UNDERWRITER WITH REGISTRANT
---- --------------------- ---------------------

Claudia A. Brandon Vice President Secretary

Patrick T. Byrne Vice President None

Richard A. Cantor Chairman of the Board and None
Director

Robert Conti Treasurer None

Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary

Robert Cresci Assistant Vice President None

William Cunningham Vice President None

Barbara DiGiorgio Assistant Vice President Assistant Treasurer

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

- 15 -
<PAGE>

POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- --------------------- ---------------------

Robert I. Gendelman Assistant Vice President None

Mark R. Goldstein Vice President None

Theodore P. Giuliano Vice President and Director None

Farha-Joyce Haboucha Vice President None

Leslie Holliday-Soto Assistant Vice President None

Jody L. Irwin Assistant Vice President None

Michael M. Kassen Vice President and Director 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

Loraine Olavarria Assistant Secretary None

Janet W. Prindle Vice President None

Joseph S. Quirk Assistant Vice President None

Kevin L. Risen Assistant Vice President None

Felix Rovelli Vice President None

Richard Russell Vice President Treasurer (Principal
Accounting Officer)

Kent C. Simons Vice President None

Frederick B. Soule Vice President None

Daniel J. Sullivan Senior Vice President Vice President

- 16 -
<PAGE>

POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- --------------------- ---------------------

Peter E. Sundman Senior Vice President None

Susan Switzer Assistant Vice President None

Andrea Trachtenberg Vice President of Marketing None

Judith M. Vale Vice President None

Clara Del Villar Vice President None

Susan Walsh Vice President None

Michael J. Weiner Senior Vice President Vice President
(Principal Financial Officer)

Celeste Wischerth Assistant Vice President Assistant Treasurer

Thomas Wolfe Vice President None

KimMarie Zamot Assistant 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.

- 17 -
<PAGE>

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.

- 18 -
<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, NEUBERGER & BERMAN INCOME FUNDS has
duly caused the Post-Effective Amendment No. 22 to be signed on its behalf
by the undersigned, thereto duly authorized, in the City and State of New
York on the 14th day of November, 1996.

NEUBERGER & BERMAN INCOME FUNDS

By: /s/ Theodore P. Giuliano
-------------------------
Theodore P. Giuliano
President

Pursuant to the requirements of the Securities Act of 1933, the
Post-Effective Amendment No. 22 has been signed below by the following
persons in the capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

/s/ John Cannon Trustee November 14, 1996
---------------------------
John Cannon

/s/ Charles DeCarlo Trustee November 14, 1996
---------------------------
Charles DeCarlo

<PAGE>

Signature Title Date
--------- ----- ----

/s/ Stanley Egener Chairman of the Board, November 14, 1996
--------------------------- Chief Executive Officer
Stanley Egener and Trustee

/s/ Theodore P. Giuliano President and Trustee November 14, 1996
---------------------------
Theodore P. Giuliano

/s/ Barry Hirsch Trustee November 14, 1996
---------------------------
Barry Hirsch

(signatures continued on next page)

/s/ Robert A. Kavesh Trustee November 14, 1996
---------------------------
Robert A. Kavesh

/s/ Harold R. Logan Trustee November 14, 1996
---------------------------
Harold R. Logan

/s/ William E. Rulon Trustee November 14, 1996
---------------------------
William E. Rulon

/s/ Richard Russell Treasurer and November 14, 1996
--------------------------- Principal Accounting Officer
Richard Russell

/s/ Candace L. Straight Trustee November 14, 1996
---------------------------
Candace L. Straight

/s/ Michael J. Weiner Vice President and November 14, 1996
--------------------------- Principal Financial Officer
Michael J. Weiner

</TABLE>
<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, INCOME MANAGERS TRUST has duly caused
the Post-Effective Amendment No. 22 to be signed on its behalf by the
undersigned, thereto duly authorized, in the City and State of New York on
the 14th day of November, 1996.

INCOME MANAGERS TRUST

By: /s/ Theodore P. Giuliano
--------------------------
Theodore P. Giuliano
President

Pursuant to the requirements of the Securities Act of 1933, the
Post-Effective Amendment No. 22 has been signed below by the following
persons in the capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

/s/ John Cannon Trustee November 14, 1996
---------------------------
John Cannon

/s/ Charles DeCarlo Trustee November 14, 1996
---------------------------
Charles DeCarlo

/s/ Stanley Egener Chairman of the Board, November 14, 1996
--------------------------- Chief Executive Officer
Stanley Egener and Trustee

/s/ Theodore P. Giuliano President and Trustee November 14, 1996
---------------------------
Theodore P. Giuliano

/s/ Barry Hirsch Trustee November 14, 1996
---------------------------
Barry Hirsch

(signatures continued on next page)
<PAGE>

Signature Title Date
--------- ----- ----

/s/ Robert A. Kavesh Trustee November 14, 1996
---------------------------
Robert A. Kavesh

/s/ Harold R. Logan Trustee November 14, 1996
---------------------------
Harold R. Logan

/s/ William E. Rulon Trustee November 14, 1996
---------------------------
William E. Rulon

/s/ Richard Russell Treasurer and November 14, 1996
--------------------------- Principal Accounting Officer
Richard Russell

/s/ Candace L. Straight Trustee November 14, 1996
---------------------------
Candace L. Straight

/s/ Michael J. Weiner Vice President and November 14, 1996
--------------------------- Principal Financial Officer
Michael J. Weiner
</TABLE>
<PAGE>

NEUBERGER & BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 22 ON FORM N-1A

INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----------

(1) (a) Certificate of Trust. Incorporated by Reference to Post- N.A.
Effective Amendment No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802, EDGAR Accession No.
0000898432-96-00017.

(b) Trust Instrument of Neuberger & Berman Income Funds. N.A.
Incorporated by Reference to Post-Effective Amendment No. 21
to Registrant's Registration Statement, File Nos. 2-85229 and
811-3802, EDGAR Accession No. 0000898432-96-00017.

(c) Schedule A - Current Series of Neuberger & Berman Income N.A
Funds. Incorporated by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration Statement, File Nos. 2-
85229 and 811-3802, EDGAR Accession No. 0000898432-96-00017.

(2) By-Laws of Neuberger & Berman Income Funds. Incorporated by Reference N.A.
to Post-Effective Amendment No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802, EDGAR Accession No.
0000898432-96-00017.

(3) Voting Trust Agreement. None. N.A.

(4) Specimen Share Certificate. None. N.A.

(5) (a) (i) Management Agreement Between Income Managers Trust N.A.
and Neuberger & Berman Management Incorporated.
Incorporated by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802, EDGAR Accession No.
0000898432-96-00017.

(ii) Schedule A - Portfolios of Income Managers Trust N.A.
Currently Subject to the Management Agreement.
Incorporated by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802, EDGAR Accession No.
0000898432-96-00017.
<PAGE>

Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----------

(iii) Schedule B - Schedule of Compensation Under the N.A.
Management Agreement. Incorporated by Reference to
Post-Effective Amendment No. 21 to Registrant's
Registration Statement, File Nos. 2-85229 and 811-
3802, EDGAR Accession No. 0000898432-96-00017.

(b) (i) Sub-Advisory Agreement Between Neuberger & Berman N.A.
Management Incorporated and Neuberger & Berman, L.P.
with Respect to Income Managers Trust. Incorporated
by Reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement, File Nos. 2-
85229 and 811-3802, EDGAR Accession No. 0000898432-
96-00017.

(ii) Schedule A - Portfolios of Income Managers Trust N.A
Currently Subject to the Sub-Advisory Agreement.
Incorporated by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802, EDGAR Accession No.
0000898432-96-00017.

(6) (a) Distribution Agreement Between Neuberger & Berman Income Funds N.A.
and Neuberger & Berman Management Incorporated. Incorporated
by Reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement, File Nos. 2-85229 and
811-3802, EDGAR Accession No. 0000898432-96-00017.

(b) Schedule A - Series of Neuberger & Berman Income Funds N.A.
Currently Subject to the Distribution Agreement. Incorporated
Reference to Post-Effective Amendment No. 21 to Registrant's
Registration Statement, File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(7) Bonus, Profit Sharing or Pension Plans. None. N.A.

(8) (a) Custodian Contract Between Neuberger & Berman Income Funds and N.A.
State Street Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 21 to Registrant's
Registration Statement, File Nos. 2-85229 and 811-3802, EDGAR
Accession No. 0000898432-96-00017.

(b) Schedule A - Approved Foreign Banking Institutions and N.A.
Securities Depositories Under the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment No. 21
to Registrant's Registration Statement, File Nos. 2-85229 and
811-3802, EDGAR Accession No. 0000898432-96-00017.
<PAGE>

Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----------

(9) (a) (i) Transfer Agency Agreement Between Neuberger & Berman N.A.
Income Funds and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802, EDGAR Accession No.
0000898432-96-00017.

(ii) Agreement between Neuberger & Berman Income Funds and N.A.
State Street Bank and Trust Company Adding Neuberger
& Berman New York Insured Intermediate Fund as a
Portfolio Governed by the Transfer Agency Agreement.
Incorporated by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802, EDGAR Accession No.
0000898432-96-00017.

(iii) First Amendment to Transfer Agency and Service N.A.
Agreement between Neuberger & Berman Income Funds and
State Street Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement, File Nos. 2-
85229 and 811-3802, EDGAR Accession No. 0000898432-
96-00017.

(b) (i) Administration Agreement Between Neuberger & Berman N.A.
Income Funds and Neuberger & Berman Management
Incorporated. Incorporated by Reference to Post-
Effective Amendment No. 21 to Registrant's
Registration Statement, File Nos. 2-85229 and 811-
3802, EDGAR Accession No. 0000898432-96-00017.

(ii) Schedule A - Series of Neuberger & Berman Income N.A.
Funds Currently Subject to the Administration
Agreement. Incorporated by Reference to Post-
Effective Amendment No. 21 to Registrant's
Registration Statement, File Nos. 2-85229 and 811-
3802, EDGAR Accession No. 0000898432-96-00017.

(iii) Schedule B - Schedule of Compensation Under the N.A.
Administration Agreement. Incorporated by Reference
to Post-Effective Amendment No. 21 to Registrant's
Registration Statement, File Nos. 2-85229 and 811-
3802, EDGAR Accession No. 0000898432-96-00017.

(10) Opinion and Consent of Kirkpatrick & Lockhart on Securities Matters. N.A.
None.

(11) Other Opinions, Appraisals, Rulings and Consents: N.A.
<PAGE>

Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----------

Consent of Ernst & Young LLP, Independent Auditors. To be
Filed by Amendment.

(12) Financial Statements Omitted from Prospectus. None. N.A.

(13) Letter of Investment Intent. Incorporated by Reference to Pre- N.A.
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 Quotations. Incorporated by N.A.
Reference to Post-Effective Amendment No. 17 to Registrant's
Registration Statement, File Nos. 2-85229 and 811-3802.

(17) Financial Data Schedule. To be Filed by Amendment. N.A.

(18) Plan Pursuant to Rule 18f-3. None. N.A.

</TABLE>
<PAGE>