SUPPLEMENT
Neuberger&Berman International Fund
This information supplements the Prospectus dated December 15, 1994
How to Buy Shares
You can invest as little as $50 each month under an automatic investing plan.
(See "Automatic Investing and Dollar Cost Averaging" on page 14.)
Due to a change in Securities and Exchange Commission rules regarding the
settlement period for securities transactions, your order may be cancelled if
your payment is not received by the third business day after your order is
placed. In that case, you could be liable for any resulting losses or fees
the Fund or its agents have incurred. To recover those losses or fees, a Fund
has the right to redeem shares from your account. To meet the new three day
deadline, you can wire payment, send a check through overnight mail, or call
800-877-9700 for information on how to make electronic transfers through your
bank.
How to Sell Shares
Usually, redemption proceeds will be mailed to you on the next business day
after receipt of your request, but in any case, within three business days.
(Under unusual circumstances, the Fund may take longer as permitted by law.)
You may also call 800-877-9700 for information on how to make and receive
electronic transfers through your bank.
In addition, if you have changed the record address by telephone or
facsimile, shares may not be redeemed by telephone or facsimile for 15 days
after receipt of the address change. Please call 800-877-9700 to confirm
receipt of your order submitted by facsimile.
(over please)
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If you purchased shares directly through certain stockbrokers, banks or other
financial institutions, you may sell those shares only through those
organizations.
The date of this Supplement is June 1, 1995.
PRINTED ON RECYCLED PAPER
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Neuberger&Berman
INTERNATIONAL FUND
PROSPECTUS
DECEMBER 15, 1994
No Sales Charges
No Redemption Fees
No 12b-1 Fees
Neuberger&Berman Management Inc.(SM)
605 Third Avenue 2nd Floor
New York, NY 10158-0006
Shareholder Services
800-877-9700
212-476-8946 Fax
Institutional Services
800-366-6264
[Recycled Logo] Printed on Recycled Paper
with Soy Based Inks NBEP00031294
<PAGE>
NEUBERGER&BERMAN INTERNATIONAL FUND
A No-Load Equity Fund
Neuberger&Berman International Fund (the "Fund") seeks long-term capital
appreciation by investing primarily in a diversified portfolio of equity
securities of foreign issuers.
MINIMUM INITIAL PURCHASE $1,000 -- FOR FURTHER INFORMATION CALL TOLL-FREE
1-800-877-9700.
THE FUND, A SERIES OF NEUBERGER&BERMAN EQUITY FUNDS, INVESTS ALL OF ITS NET
INVESTABLE ASSETS IN THE INTERNATIONAL PORTFOLIO (THE "PORTFOLIO") OF GLOBAL
MANAGERS TRUST ("MANAGERS TRUST"), AN OPEN-END MANAGEMENT INVESTMENT COMPANY
ADVISED BY BNP-N&B GLOBAL ASSET MANAGEMENT L.P. ("BNP-N&B GLOBAL"), A COMPANY
JOINTLY OWNED BY NEUBERGER&BERMAN, L.P. ("NEUBERGER&BERMAN") AND BANQUE
NATIONALE DE PARIS ("BNP"). THE PORTFOLIO INVESTS IN SECURITIES IN ACCORDANCE
WITH AN INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS IDENTICAL TO THOSE OF
THE FUND. THE INVESTMENT PERFORMANCE OF THE FUND DIRECTLY CORRESPONDS WITH THE
INVESTMENT PERFORMANCE OF THE 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
STRUCTURE THAT YOU SHOULD CONSIDER, SEE "SPECIAL INFORMATION REGARDING
ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS" ON PAGE 10.
The Portfolio seeks to achieve its objective by investing primarily in a
diversified portfolio of equity securities of foreign issuers. For a description
of the investment policies and techniques of the Portfolio, see "Investment
Program" and "Description of Investments."
The Fund is a no-load mutual fund, so you pay no sales commissions or other
charges when you buy or redeem shares. The Fund does not pay "12b-1 fees" to
promote or distribute its shares.
Please read this Prospectus before investing in the Fund and keep it for future
reference. It contains information about the Fund that a prospective investor
should know before investing. A Statement of Additional Information ("SAI")
about the Fund and Portfolio, dated December 15, 1994, is on file with the
Securities and Exchange Commission. The SAI is incorporated herein by reference
(so it is legally considered a part of this Prospectus). You can obtain a free
copy of the SAI by calling Neuberger&Berman Management Incorporated ("N&B
Management"), the Fund's distributor, at 1-800-877-9700.
Prospectus Dated December 15, 1994.
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.
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.
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Summary 3
*The Fund and Portfolio; Risk Factors 3
*Management 3
Expense Information 4
*Shareholder Transaction
Expenses 4
*Annual Fund Operating Expenses 4
*Example 5
Financial Highlights 6
Investment Program 7
*Short-Term Trading;
portfolio Turnover 8
*Borrowings 8
Performance Information 9
*Total Return Information 9
Special Information Regarding
Organization, Capitalization, and
Other Matters 10
*The Fund 10
*The Portfolio 10
How To Buy Shares 12
*By Mail 12
*By Wire 12
*By Telephone 12
*By Exchanging Shares 12
How To Sell Shares 13
*By Mail or Telecopy 13
*By Telephone 13
Shareholder Services 14
*Automatic Investing and Dollar
Cost Averaging 14
*Exchange Privilege 14
*Systematic Withdrawal Plan 15
*Retirement Plans 15
Account and Share
Information 16
*Share Prices and Net Asset Value 16
*Buying and Selling Shares 16
Dividends, Other Distributions,
and Taxes 18
*Distribution Options 18
*Taxes 18
Management and Administration 20
*Trustees and Officers 20
*Investment Adviser, Administrator,
and Distributor 20
*Expenses 21
*Shareholder Servicing Arrangements 22
Description of Investments 23
Directory & Funds Eligible for
Exchange 28
</TABLE>
2
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SUMMARY
The Fund and Portfolio;
Risk Factors
The Fund is a series of Neuberger&Berman Equity Funds (the "Trust") and invests
in the Portfolio that, in turn, invests in securities in accordance with an
investment objective, policies, and limitations identical to those of the Fund.
The trustees of the Trust believe that this "master/feeder fund" structure may
benefit shareholders. The Portfolio seeks long-term capital appreciation by
investing primarily in a diversified portfolio of equity securities of issuers
organized and doing business principally outside the U.S. The strategy of the
Portfolio's investment adviser, BNP-N&B Global, is to select attractive
investment opportunities outside the U.S., allocating the assets among
economically mature countries and emerging industrialized countries. The
Portfolio will invest primarily in equity securities of medium to large
capitalization companies traded on foreign exchanges. The Portfolio may invest
up to 50% of its total assets in Japan and is likely to invest at least 25% of
its total assets in Japan. Because the Fund, through the Portfolio, invests
primarily in foreign securities, it may be subject to greater risks and higher
expenses than equity funds that invest primarily in securities of U.S. issuers.
Such risks may be even greater in emerging industrialized and less developed
countries. The risks of investing in foreign securities include, but are not
limited to, possible adverse political and economic developments in a particular
country, differences between foreign and U.S. regulatory systems, and foreign
securities markets that are smaller and less well regulated than those in the
U.S. There is often less information publicly available about foreign issuers,
and many foreign countries do not follow the financial accounting standards used
in the U.S. Most of the securities held by the Portfolio are denominated in
foreign currencies, and the value of these investments can be adversely affected
by fluctuations in foreign currency values. Some foreign currencies can be
volatile and may be subject to governmental controls or intervention. The
Portfolio may use techniques such as options, futures, forward foreign currency
exchange contracts, and short selling, for hedging and in an attempt to realize
income. The Portfolio may also use leverage to facilitate transactions entered
into by the Portfolio for hedging purposes. The use of these strategies may
entail special risks. See "Borrowings" on page 8 and "Description of
Investments," on page 23.
For more information about the organization of the Fund and the Portfolio,
including certain features of the master/feeder fund structure, see "Special
Information Regarding Organization, Capitalization, and Other Matters" on page
10. For more details about the Portfolio, its investments and their risks, see
"Investment Program" on page 7, "Borrowings" on page 8, and
"Description of Investments" on page 23.
Investment Objective. Long-term capital appreciation by investing primarily
in a diversified portfolio of equity securities of foreign issuers.
Principal Portfolio Investments. Equity securities of issuers organized and
doing business primarily outside the U.S.
Other Factors. Assets will be allocated among economically mature countries
and emerging industrialized countries.
Of course, there can be no assurance that the Fund will meet its investment
objective.
Management
BNP-N&B Global selects investments for the Portfolio. N&B Management provides
administrative services to the Portfolio and the Fund and acts as distributor of
Fund shares. See "Management and Administration" on page 20. If you want to know
how to buy and sell shares or exchange them for shares of other Neuberger&Berman
Fundssm distributed by N&B Management, see "How to Buy Shares" on page 12, "How
to Sell Shares" on page 13, and "Shareholder Services--Exchange Privilege" on
page 14.
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EXPENSE INFORMATION
This section gives you certain information about the expenses of the Fund and
the Portfolio. See "Performance Information" for important facts about the
investment performance of the Fund, after taking expenses into account.
Shareholder Transaction Expenses
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 Fund's transfer agent charges
a fee (currently $8.00) for each wire redemption.
Annual Fund Operating Expenses
(as a percentage of average net assets)
The following table shows anticipated Annual Operating Expenses, which are paid
out of the assets of the Fund and which include the Fund's pro rata portion of
the Operating Expenses of the Portfolio. These expenses are borne indirectly by
Fund shareholders. The Fund pays N&B Management an administration fee and a
shareholder service fee, each based on the Fund's net asset value. The Portfolio
pays BNP-N&B Global an investment advisory fee, based on the Portfolio's average
daily net assets, and pays N&B Management an administration fee, based on the
Portfolio's average daily net assets but with a minimum of $100,000 per annum; a
pro rata portion of these fees is borne indirectly by the Fund. Therefore, the
table combines investment advisory and all administration fees. The Fund and the
Portfolio 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 Fund's expenses are factored into
its share prices and dividends and are not charged directly to Fund
shareholders. For more information, see "Management and Administration" and the
SAI.
<TABLE>
<CAPTION>
Investment
Advisory
and Other Total
Administration 12b-1 Expenses Operating
Fees Fees (estimated) Expenses
<S> <C> <C> <C>
0.00%* None 1.70%* 1.70%*
</TABLE>
*(Reflects expense reimbursement undertakings described below)
Anticipated Annual Operating Expenses for the Fund are annualized projections
based upon current administration fees for the Fund and investment advisory and
administration fees for the Portfolio, with "Other Expenses" being estimated
amounts for the current fiscal year. The trustees of the Trust believe that the
aggregate per share expenses of the Fund and the Portfolio will be approximately
equal to the expenses the Fund would incur if its assets were invested directly
in the type of securities held by the Portfolio. The trustees of the Trust also
believe that investment in the Portfolio by investors in addition to the Fund
may enable the Portfolio to achieve economies of scale which could reduce
expenses. Other feeder funds may invest in the Portfolio, and such other funds'
expenses and, correspondingly, their returns, may differ from those of the Fund.
The table reflects BNP-N&B Global's voluntary undertaking to reimburse the
Portfolio for its Operating Expenses that exceed 0.70% of the Portfolio's
average daily net assets, and N&B Management's voluntary undertaking to
reimburse the Fund for its Operating Expenses (which include the Fund's pro rata
share of the Operating Expenses of the Portfolio) that exceed 1.70% of the
Fund's average daily net assets, after reimbursement, if any, by BNP-N&B Global
for the Portfolio's excess Operating Expenses. Absent the reimbursements, total
Management and Admin-
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<PAGE>
istration Fees would be 2.04% of the Fund's average daily net assets and total
anticipated aggregate Fund and Portfolio Operating Expenses would be 2.50% of
the average daily net assets of the Fund.
Example
To illustrate the effect of Operating Expenses, let's assume that the Fund's
annual return is 5% and that it had annual Total Operating Expenses described in
the table above. For every $1,000 you invested in the 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:
<TABLE>
<CAPTION>
1 year 3 years
<S> <C>
$17 $54
</TABLE>
The assumption in this example of a 5% annual return is required by regulations
of the Securities and Exchange Commission applicable to all mutual funds.
THE INFORMATION IN THE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE GREATER
OR LESS THAN THOSE SHOWN.
5
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman International Fund
The following information has been audited by the Fund's independent
auditors. You may obtain further information about the performance of the Fund
at no cost in the Fund's annual report to shareholders, which may be obtained by
calling 1-800-877-9700. Also, see "Performance Information."
The following table includes selected data for a share outstanding
throughout the period 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 Portfolio's
income and expenses. It should be read in conjunction with the Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
June 15, 1994(1)
to
August 31, 1994
<S> <C>
Net Asset Value, Beginning of Period $10.00
Income From Investment Operations
Net Investment Income .01
Net Gains or Losses on Securities (both
realized and unrealized) .45
Total From Investment Operations .46
Net Asset Value, End of Period $10.46
Total Return+ +4.60%
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 6.2
Ratio of Expenses to Average Net Assets(2) 1.70%
Ratio of Net Income to Average Net Assets(2) .57%
</TABLE>
Notes:
(1) The date investment operations commenced.
(2) Annualized. After reduction of expenses by the administrator as
described in Note B of Notes to Financial Statements. Had the adviser and the
administrator not undertaken such action, the annualized ratios of expenses and
investment income (loss)--net to average daily net assets would have been 2.50%
and (.23%), respectively, for the period ended August 31, 1994.
(3) The Portfolio turnover rate for the period from June 15, 1994 to August
31, 1994 was 5%.
+ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of the Fund during the period, 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. Had the adviser and the administrator not
absorbed certain expenses of the Fund, total return would have been lower.
6
<PAGE>
INVESTMENT PROGRAM
The investment policies and limitations of the Fund and the Portfolio are
identical. The Fund invests only in the Portfolio. Therefore, the following
shows you the kinds of securities in which the Portfolio invests. For an
explanation of some types of investments, see "Description of Investments,"
beginning on page 23.
Investment policies and limitations of the Fund and the Portfolio are not
fundamental unless otherwise specified in this Prospectus or the SAI. While a
non-fundamental policy or limitation may be changed by the trustees of the Trust
or of Managers Trust without shareholder approval, the Fund intends to notify
shareholders before making any material change to such policies or limitations.
Fundamental policies and limitations may not be changed without shareholder
approval.
Additional investment techniques, features, and limitations of the Portfolio's
investment program are described in the SAI.
The investment objective of the Fund and the Portfolio is to seek long-term
capital appreciation by investing primarily in a diversified portfolio of equity
securities of foreign issuers. Foreign issuers are issuers organized and doing
business principally outside the U.S. and include non-U.S. governments, their
agencies, and instrumentalities. This investment objective is non-fundamental.
The Fund intends to notify shareholders 30 days in advance of making any change
to the investment objective.
A change in the investment objective may result in the Fund having an objective
different from that which the shareholder considered appropriate at the time of
investment. There can be no assurance that the Fund and the Portfolio will
achieve their objective. By itself, the Fund does not represent a comprehensive
investment program.
The Portfolio will invest primarily in equity securities of medium-to-large
capitalization companies, in relation to each national market, traded on foreign
exchanges. The Portfolio normally invests in at least three foreign countries.
The strategy of the Portfolio's investment adviser, BNP-N&B Global, is to select
attractive investment opportunities outside the U.S., allocating the assets
among investments in economically mature countries and emerging industrialized
countries. At least 65% of the Portfolio's total assets normally will be
invested in equity securities of foreign issuers. The Portfolio may invest up to
50% of its total assets in Japan and is likely to invest at least 25% of its
total assets in Japan. Because the Fund, through the Portfolio, invests
primarily in foreign securities, it may be subject to greater risks and higher
expenses than equity funds that invest primarily in securities of U.S. issuers.
See "Description of Investments."
The Portfolio may also invest in foreign securities in the form of American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs), International Depositary Receipts (IDRs) or other
similar securities representing an interest in securities of foreign issuers.
In addition, the Portfolio may purchase and sell options on foreign currencies,
may buy and sell forward foreign currency exchange contracts and contracts for
the future delivery of foreign currencies, and may purchase and sell options on
such futures contracts both for hedging purposes and in an attempt to enhance
income. The Portfolio may write and purchase options on securities and
securities indices and purchase and sell futures contracts and related options
(1) in an effort to manage cash flow and remain fully invested, instead of, or
in addition to, buying and selling stocks, or (2) in an effort to hedge against
a decline in the value of securities owned by it or an increase in the price of
securities which it plans to purchase. The Portfolio may also purchase
securities on a when-issued or forward commitment basis and engage in portfolio
securities lending.
In addition, the Portfolio may purchase foreign corporate and government debt
securities. The Portfolio may also sell securities short for hedging purposes or
in an effort to realize gains. The Portfolio may enter
7
<PAGE>
into repurchase agreements with respect to any security in which it can
invest.
For temporary defensive purposes, the Portfolio may invest up to 100% of its
total assets in short-term foreign and U.S. investments such as cash or cash
equivalents, commercial paper, short-term bank obligations, government and
agency securities, and repurchase agreements. The Portfolio may also invest in
such instruments to ensure adequate liquidity or to provide collateral to be
held in segregated accounts.
For more details about the Portfolio's investments, see "Description of
Investments."
Short-Term Trading; Portfolio Turnover
Although the Portfolio does not purchase securities with the intention of
profiting from short-term trading, the Portfolio may sell portfolio securities
when the investment adviser believes that such action is advisable. The
estimated annual turnover rate of the Portfolio generally will not exceed 100%.
The portfolio turnover rate of the Portfolio can be found on page 6.
Borrowings
The Portfolio has a fundamental policy that it may not borrow money, except that
it may (1) borrow money from banks and (2) 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).
The Portfolio may borrow money from banks to facilitate transactions entered
into by it for hedging purposes, which is a form of leverage. This leverage may
exaggerate changes in the net asset value of the Fund's shares and the gains and
losses on the Portfolio's investments. Leverage also creates interest expenses;
if those expenses exceed the return on transactions that borrowings facilitate,
the Portfolio will be in a worse position than if it had not borrowed. The use
of derivatives in connection with leverage may create the potential for
significant losses. The Portfolio may pledge assets in connection with permitted
borrowings.
8
<PAGE>
PERFORMANCE INFORMATION
The performance of the Fund is commonly measured as 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 income dividends, capital gain distributions, and variations in share
prices from the beginning to the end of a period.
An average annualized total return is a hypothetical rate of return that, if
achieved annually, would result in the same cumulative total return for the
period as if performance had been constant over the entire period. This smooths
out variations in performance. Past results do not, of course, guarantee future
performance.
The following table shows the aggregate total return (not annualized) for
the period ended August 31, 1994 (the most recent fiscal year end of the Fund).
Had the adviser and the administrator not waived certain fees, the total return
would have been lower. Further information regarding the Fund's performance is
presented in the Fund and Portfolio's annual report to shareholders, which is
available without charge by calling 1-800-877-9700.
Aggregate Total Return
For Period Ended August 31, 1994
<TABLE>
<CAPTION>
1994 Inception Date
<S> <C> <C>
Neuberger&Berman
International Fund +4.60% 6/15/94
</TABLE>
Total Return Information
You can obtain current performance information about the Fund by calling N&B
Management at 1-800-877-9700.
9
<PAGE>
SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS
The Fund
The Fund is a separate series of the Trust, a Delaware business trust organized
pursuant to a Trust Instrument dated December 23, 1992. The Trust is registered
under the Investment Company Act of 1940 (the "1940 Act") as a diversified,
open-end management investment company, commonly known as a mutual fund. The
Trust has seven separate series. The Fund invests all of its net investable
assets in the Portfolio, receiving a beneficial interest in the Portfolio. The
trustees of the Trust may establish additional series or classes of shares,
without the approval of shareholders. The assets of each series belong only to
that series, and the liabilities of each series are borne solely by that series
and no other.
Description of Shares. The Fund is authorized to issue an unlimited number of
shares of beneficial interest (par value $0.001 per share). Shares of the Fund
represent equal proportionate interests in the assets of the Fund only and have
identical voting, dividend, redemption, liquidation, and other rights. All
shares issued are fully paid and non-assessable, and shareholders have no
preemptive or other right to subscribe to any additional shares.
Shareholder Meetings. The trustees of the Trust do not intend to hold annual
meetings of shareholders of the Fund. The trustees will call special meetings of
shareholders of the 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 the Fund entitled to vote.
Certain Provisions of the Trust Instrument. Under Delaware law, the shareholders
of the Fund will not be personally liable for the obligations of the Fund; a
shareholder is entitled to the same limitation of personal liability extended to
shareholders of corporations. To guard against the risk that Delaware law might
not be applied in other states, the Trust Instrument requires that every written
obligation of the Trust or the 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 Portfolio
The Portfolio is a separate series of Managers Trust, a New York common law
trust organized as of March 18, 1994. Managers Trust is registered under the
1940 Act as a diversified, open-end management investment company. Managers
Trust currently has only one portfolio. The assets of the Portfolio belong only
to the Portfolio, and the liabilities of the Portfolio are borne solely by the
Portfolio and no other.
Fund's Investment in the Portfolio. The Fund seeks to achieve its investment
objective by investing all of its net investable assets in the Portfolio, which
has the same investment objective, policies, and limitations as the Fund.
Accordingly, the Portfolio directly acquires its own securities and the Fund
acquires an indirect interest in those securities. Historically, N&B Management,
administrator to the Fund and the Portfolio, with Neuberger&Berman, has
sponsored traditionally structured funds since 1950. However, it has operated 12
master funds and 20 feeder funds since August 1993 and now operates 15 master
funds and 24 feeder funds. The fundamental investment policies of the Fund and
the Portfolio can be changed only with shareholder approval, and shareholders
will receive at least 30 days' prior notice of any material change in the
investment objective or any fundamental policy of the Portfolio. See "Summary,"
"Investment Program," "Description of Investments," "Management and
Administration," and "Expense Information" for a description of the Portfolio's
investment objective, policies, limitations, management, and expenses.
The Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. Members of the general public may not purchase a direct
interest
10
<PAGE>
in the Portfolio. The Portfolio may also permit other investment companies
and/or other institutional investors to invest in the Portfolio. All investors
will invest in the Portfolio on the same terms and conditions as the Fund and
will pay a proportionate share of the Portfolio's expenses. Other investors in
the Portfolio that might sell shares to members of the general public would not
be required to sell their shares at the same public offering price as the Fund,
could have a different administration fee and expenses than the Fund, and might
charge a sales commission. Therefore, Fund shareholders may have different
returns than shareholders in another investment company that invests exclusively
in the Portfolio. Information regarding any fund that may invest in the
Portfolio in the future will be available from N&B Management by calling
1-800-877-9700.
The Fund's investment in the Portfolio may be affected by the actions of other
large investors in the Portfolio, if any. For example, if a large investor in
the Portfolio other than the 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.
The Fund may withdraw its entire investment from the 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. The Fund might withdraw, for example, if there
were other investors in the 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. 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 the Fund withdrew its
investment from the Portfolio, the trustees would consider what action might be
taken, including the investment of all of the Fund's net investable assets in
another pooled investment entity having substantially the same investment
objective as the Fund or the retention by the Fund of its own investment adviser
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. The Portfolio normally will not hold meetings of
investors except as required by the 1940 Act. Each investor in the 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, the 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 the
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 the
Portfolio, they could have voting control of the Portfolio.
Certain Provisions. Each investor in the Portfolio, including the Fund, will be
liable for all obligations of the Portfolio. However, the risk of an investor in
the Portfolio incurring financial loss on account of such liability would be
limited to circumstances in which the Portfolio had inadequate insurance and was
unable to meet its obligations out of its assets. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
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HOW TO BUY SHARES
You can buy shares of the Fund directly by mail, wire, or telephone, or through
an exchange of shares of other Neuberger&Berman Funds.(SM) (See "Directory &
Funds Eligible for Exchange"). Shares are purchased at the next price calculated
on a day the New York Stock Exchange ("NYSE") is open, after your order is
received and accepted. Prices for shares of the Fund are usually calculated as
of 4 p.m. Eastern time.
By Mail
Send your check or money order payable to "Neuberger&Berman Funds" by mail to:
Neuberger&Berman Funds, Boston Service Center, P.O. Box 8403, Boston, MA
02266-8403
or by overnight courier, U.S. Express Mail, or registered or certified mail
to:
Neuberger&Berman Funds, c/o State Street Bank and Trust Company, 2 Heritage
Drive, North Quincy, MA 02171.
This fee to specify the name of the Fund and, if this is your first purchase of
Fund shares, please include a completed and signed application (call 1-800-225-
1596 if you need one). If this is your first purchase, please send a minimum of
$1,000 for shares of the Fund. For an additional purchase, please send at least
$100 for shares of the Fund. Unless your check or money order is made payable on
its face to Neuberger&Berman Funds, it may not be accepted.
By Wire
Call 1-800-877-9700 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, and your account number. The minimum
for a first purchase and for each additional purchase of shares of the Fund by
wire is $1,000.
By Telephone
Call 1-800-877-9700 to buy shares of the Fund. The minimum for a first purchase
and for each additional purchase of shares of the Fund by telephone is $1,000.
Your order may be canceled if your payment is not received by the fifth business
day after your order is placed; in that case you could be liable for any
resulting losses or fees the Fund or its agents have incurred. To recover those
losses or fees, the Fund has the right to redeem shares from your account.
By Exchanging Shares
Call 1-800-877-9700 for instructions on how to invest by exchanging shares of
another Neuberger &Berman Fund(SM) for shares of the Fund. To buy Fund shares
by an exchange, both fund accounts must be registered in the same name, address,
and taxpayer ID number. The minimum for a first purchase and for each additional
purchase of shares of the Fund is $1,000 worth of shares of the other fund. For
more details, see "Shareholder Services--Exchange Privilege" and "Directory &
Funds Eligible for Exchange."
You can also buy shares of the Fund indirectly through certain stock brokers and
other financial institutions, some of which may charge you a fee.
The Fund will not issue a certificate for your shares unless you write to State
Street and request it. Most shareholders do not want certificates, because one
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 telecopy. If you lose your certificate, you will have to pay
the expense of replacing it.
N&B Management may, in its discretion, waive the $1,000 minimum investment
requirement.
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HOW TO SELL SHARES
You can sell (redeem) all or some of your shares at any time by mail, telecopy,
or telephone. However, if you have a certificate for your shares, you can redeem
those shares only by sending the certificate by mail. You can also sell shares
by exchanging them for shares of other Neuberger&Berman Funds(SM); see
"Shareholder Services--Exchange Privilege" for details.
To sell shares held in a retirement account or by a trust, estate, guardian, or
business organization, please call 1-800-225-1596 for instructions.
Your shares are sold at the next price calculated on a day the NYSE is open,
after your sales order is received and accepted. Prices for shares of the Fund
are usually calculated as of 4 p.m. Eastern time.
Unless otherwise instructed, the Fund will mail a check for your sales proceeds,
payable to the owner(s) shown on your account ("record owner"), to the address
shown on your account ("record address"). You may designate in your Fund
application a bank account to which, at your request, State Street will wire
your sales proceeds of $1,000 or more. State Street currently charges a fee of
$8.00 for each wire. Shareholders who have one or more accounts in the
Neuberger&Berman Funds(SM) aggregating $250,000 or more in value are not
charged for wire redemptions; the $8.00 fee is borne by N&B Management.
By Mail or Telecopy
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 telecopy (send by facsimile) the request, 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 facsimile.
Be sure to have all owners sign the request exactly as their names appear on the
account and include the certificate for your shares if you have one.
To protect you and the Fund against fraud, your signature on a redemption
request must have a signature guarantee if (1) you want to sell more than
$50,000 worth of shares, or (2) you want the redemption check to be made out to
someone other than the record owner, or (3) you want the check to be mailed
somewhere other than to the record address, or (4) you want the proceeds to be
wired to a bank account not named in your application or in your written
instruction with a signature guarantee. You can obtain a signature guarantee
from most banks, stock brokers and dealers, credit unions, and financial
institutions, but not from a notary public.
For a redemption request sent by telecopy (send by facsimile), limited to not
more than $50,000, the redemption check may only be made out to the record owner
and mailed to the record address or the proceeds wired to a bank account named
in your application or in a written instruction from the record owner with a
signature guarantee.
By Telephone
To sell shares worth at least $500, call 1-800-877-9700, 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.
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<PAGE>
SHAREHOLDER SERVICES
If you purchased shares indirectly through certain stock brokers, or other
financial institutions, you may sell those shares only through those
organizations. Several other services are available to assist you in investing
and managing your investment in the Fund.
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 the Fund using dollar cost averaging.
Under this plan, you buy a fixed dollar amount of shares in the Fund at pre-set
intervals. You may pay for the shares by automatic transfers from your account
in a Neuberger&Berman money market fund or by pre-authorized checks drawn on
your bank account. You buy more shares when the Fund's share price is relatively
low and fewer shares when the Fund's share price is relatively high. Thus, under
this plan your average cost of shares over a period of time is generally lower
than if you did not use dollar cost averaging. To benefit from dollar cost
averaging, you should be financially prepared to continue your participation for
a long enough period to include times when Fund share prices are lower. Of
course, the plan does not guarantee a profit and will not protect you against
losses in a declining market. For further information, call 1-800-877-9700.
Exchange Privilege
To exchange your shares in the Fund for shares in another Neuberger&Berman
FundSM for which N&B Management is a distributor, call 1-800-877-9700 between 8
a.m. and 4 p.m., Eastern time, on any Monday through Friday (unless the NYSE is
closed ). See "Directory & Funds Eligible for Exchange." You may also effect an
exchange by sending a letter to Neuberger&Berman Management Incorporated, 605
Third Avenue, 2nd Floor, New York, NY 10158-0006, Attention: Neuberger&Berman
International Fund, or by telecopying (sending by facsimile) the letter to
212-476-8848, giving your name and account number, the name of the Fund, the
dollar amount or number of shares you want to sell, and the name of the fund
whose shares you want to buy. You can use the telephone exchange privilege
unless (1) you have declined it in your application or by later writing to N&B
Management or State Street, or (2) you have a certificate for such shares. An
exchange must be for at least $1,000 worth of shares, and if the exchange is
your first purchase in another mutual fund, it must be for at least the minimum
initial investment amount for that fund. Shares are exchanged at their next
prices calculated on a day the NYSE is open, after your exchange order is
received and accepted.
Please note the following about the exchange privilege:
* You can exchange shares only between accounts registered in the same
name, address, and taxpayer ID number.
* A telephone exchange order cannot be modified or canceled.
* You can exchange only into a mutual fund whose shares are eligible for
sale in your state under applicable state securities laws.
* An exchange may have tax consequences for you.
* Because excessive trading (including short-term "market-timing" trading)
can hurt the Fund's performance, the Fund may refuse any exchange orders (1) if
they appear to be market-timing transactions involving significant portions of
the 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.
* The 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.
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Systematic Withdrawal Plan
If you own shares of the Fund worth at least $5,000, you can open a Systematic
Withdrawal Plan. Under the Plan, you arrange to withdraw a specific amount (at
least $50) on a monthly, quarterly, semi-annual, or annual basis, or you can
have your account completely paid out over a specified period of time. You can
also arrange for periodic cash withdrawals from your Fund account to pay fees to
your financial planner or investment adviser. Because the price of shares of the
Fund fluctuates, you may incur capital gains or losses when you redeem shares of
the Fund through a Systematic Withdrawal Plan or by other methods. Call
1-800-877-9700 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 1-800-877-9700 for information on a variety of retirement plans, including
individual retirement accounts, simplified employee pension plans, self-employed
individual retirement plans (so-called "Keogh Plans"), corporate profit-sharing
and money purchase pension plans, section 401(k) plans, and section 403(b)(7)
accounts offered by N&B Management. The assets of these plans may be invested in
the Fund.
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<PAGE>
ACCOUNT AND SHARE INFORMATION
Share Prices and Net Asset Value
The Fund's shares are bought or sold at a price that is the Fund's net asset
value ("NAV") per share. The NAVs for the Fund and the Portfolio are calculated
by subtracting liabilities from total assets (in the case of the Portfolio, the
market value of the securities the Portfolio holds plus cash and other assets;
in the case of the Fund, its percentage interest in the Portfolio, multiplied by
the Portfolio's NAV, plus any other assets). The 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. The Fund and the Portfolio
calculate their NAVs as of the close of regular trading on the NYSE, usually 4
p.m. Eastern time. Equity securities are valued at the last sale price on the
principal exchange or in the principal over-the-counter market in which such
securities are traded, as of the close of business on the day the securities are
being valued or, if there are no sales, at the last available bid price. Debt
obligations are valued at the last available bid price for such securities or,
if such prices are not available, at prices for securities of comparable
maturity, quality, and type. Foreign securities are translated from the local
currency into U.S. dollars using current exchange rates. The Portfolio values
all other types of securities and assets, including restricted securities and
securities for which market quotations are not readily available, by a method
that the trustees of Managers Trust believe accurately reflects fair value.
The Portfolio's portfolio securities are listed primarily on foreign exchanges
which may trade on days when the NYSE is closed. As a result, the NAV of the
Fund may be significantly affected on days when shareholders have no access to
the Fund.
Buying and Selling Shares
Application. When you sign your application for a new Fund account, you will be
certifying that your Social Security or other taxpayer ID number is correct and
whether you are subject to backup withholding. If you violate certain federal
income tax provisions, the Internal Revenue Service can require the Fund to
withhold 31% of your taxable distributions and redemptions.
Telephone Transactions. You can buy shares by telephone, but the Fund at any
time can limit the number of its shares that may be bought or can stop accepting
telephone orders. You can also sell or exchange shares by telephone, unless (1)
you have declined these services in your application or by written notice to N&B
Management or State Street, with your signature guaranteed, or (2) you have a
certificate for such shares. The 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, neither the Fund nor 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 telecopy, overnight courier, or U.S.
Express Mail.
Buying Shares. You must pay for your shares in U.S. dollars by check or money
order (drawn on a U.S. bank), or by bank or federal funds wire transfer; cash
cannot be accepted.
* The Fund has the right to suspend the offering of its shares for a period
of time. The Fund also has the right to accept or reject a purchase order in its
sole discretion, including certain purchase orders using the exchange privilege.
See "Shareholder Services--Exchange Privilege."
* If you paid by check and your check does not clear, or if you ordered
shares by telephone and
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<PAGE>
fail to pay for them, your purchase will be canceled and you could be liable for
any resulting losses or fees the Fund or its agents have incurred. To recover
those losses or fees, the Fund has the right to bill you or to redeem shares
from your account.
Selling Shares. Your shares will be sold at the Fund's per share NAV next
calculated after your sales (redemption) order is received and accepted.
* Usually redemption proceeds will be mailed to you on the next business
day, but in any case within seven calendar days.
* The 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.
* The Fund may suspend redemptions or postpone payments on days when the
NYSE is closed (besides weekends and holidays), when trading on the NYSE is
restricted, or as permitted by the Securities and Exchange Commission.
* If, because you sold shares, your account balance with the Fund falls
below $1,000, the Fund has the right to close your account after giving you at
least 60 days' written notice to reestablish the minimum balance. If you do not
do so, the Fund may redeem your remaining shares at their per share NAV on the
date of redemption and will send the redemption proceeds to you.
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<PAGE>
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES
The Fund annually distributes substantially all of its share of any net
investment income (net of the Fund's expenses) and net realized capital gains
and realized gains from foreign currency transactions earned by the Portfolio,
normally 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.
Distribution Options
Reinvestment in Shares. All dividends and other distributions, if any, paid on
Fund shares are automatically reinvested in additional Fund shares, unless you
elect to receive them in cash. Each dividend and capital gain 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, if any, being reinvested in additional Fund shares, by checking
that election box on your application.
All Distributions in Cash. You may elect to receive dividends and other
distributions in cash, by checking that election box on your application.
Checks for cash distributions will be mailed no later than seven days after the
payable date. However, if you purchased your shares with a check, distributions
on those shares may not be paid in cash until the Fund is reasonably satisfied
that your check has cleared, which may take up to 15 days after the purchase
date. You can change any distribution election by writing to State Street, the
Fund's shareholder servicing agent.
Taxes
The 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 income and realized gains that it distributes to
its shareholders. Your investment has certain tax consequences, depending on the
type of your account.
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. If you have a retirement account, taxes are deferred.
For federal income tax purposes, dividends and distributions of net short-term
capital gains and gain from certain foreign currency transactions 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.
Every January the Fund will send you a statement showing the amount of
distributions paid to you in the previous year.
Taxes on Redemptions. Capital gains realized on redemptions of Fund shares,
including exchanges to other Neuberger&Berman Funds(SM), are subject to tax. A
capital gain (or loss) is the difference between the amount you paid for shares
(including the value of any dividends or other distributions that were
reinvested) and the amount you receive when you redeem them.
When you redeem shares you will receive a confirmation statement showing the
number of shares you
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<PAGE>
redeemed and the price. Every January you also will 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 federal tax
considerations affecting the Fund and its shareholders. See the SAI for
additional tax information. There may be other federal, state, local, or foreign
tax considerations applicable to a particular investor. Therefore, you should
consult your tax adviser.
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MANAGEMENT AND ADMINISTRATION
Trustees and Officers
The trustees of the Trust and the trustees of Managers Trust have overall
responsibility for the operations of the Fund and the Portfolio, respectively.
The SAI contains general background information about each trustee and officer
of the Trust and of Managers Trust. The officers of the Trust and of Managers
Trust who are officers and/or directors of N&B Management and/or partners of
Neuberger&Berman serve without compensation from the Fund or the Portfolio. Each
Trustee of Managers Trust is also a Trustee of the Trust. 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 Fund, have adopted
written procedures reasonably appropriate to deal with potential conflicts of
interest.
Investment Adviser, Administrator,
and Distributor
BNP-N&B Global, a partnership jointly owned by BNP and Neuberger&Berman, serves
as investment adviser of the Portfolio. BNP-N&B Global was formed as a joint
venture of BNP and Neuberger&Berman in May, 1994, combining the experience of
two long-established firms, to provide investment advisory services. The
investment adviser will benefit from the expertise available to it from
Neuberger&Berman and BNP. Such expertise includes economic analysis, foreign
exchange analysis, securities analysis, and portfolio management. BNP-N&B Global
has its headquarters in New York. The partnership, which is registered as an
investment adviser with the U.S. Securities and Exchange Commission, was formed
to provide asset management services to institutions and high net worth
individuals.
BNP is one of the largest banks in the world. BNP (and its predecessor firms)
have engaged in commercial banking since 1848. BNP is one of the world's leading
comprehensive service commercial banks. As of October 31, 1994, BNP had
consolidated assets of approximately $7.7 billion. BNP has recently been
privatized and enjoys an AA rating from all major credit rating agencies.
Neuberger&Berman was established in 1939 as a money management firm.
Neuberger&Berman is a member firm of the NYSE and other principal exchanges.
Neuberger&Berman and its affiliates, including N&B Management, manage securities
accounts that had approximately $30 billion of assets as of September 30, 1994.
N&B Management performs certain administrative functions for the Portfolio,
serves as the administrator of the Fund and as distributor of the shares of the
Fund. N&B Management and its predecessor firms have specialized in the
management of no-load mutual funds since 1950. N&B Management currently serves
as investment manager or investment adviser of other mutual funds.
Neuberger&Berman, which acts as sub-adviser for the mutual funds managed by N&B
Management, also serves as investment adviser of two investment companies. These
funds had aggregate net assets of approximately $7.5 billion as of October 31,
1994.
All of the voting stock of N&B Management is owned by individuals who are
general partners of Neuberger&Berman.
State Street Cayman Trust Company, Ltd., ("State Street Cayman"), located in
George Town, Grand Cayman, provides certain administrative, fund accounting
and transfer agency services for the Portfolio.
Felix Rovelli is primarily responsible for the day-to-day management of the
portfolio securities of the Portfolio. Mr. Rovelli has been a Senior Vice
President- Senior Equity Portfolio Manager of BNP-N&B Global since May 1994. He
previously served as first vice president and portfolio manager of another
mutual fund that invested in international equity securities,
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<PAGE>
from April 1990 to April 1994. Prior thereto, he was associated with another
investment firm where he managed a registered investment company from July 1988
to March 1990.
Neuberger&Berman and BNP-International Financial Services Corporation may act as
brokers for the Portfolio in the purchase and sale of portfolio securities and
in the purchase and sale of options, and for those services would receive
brokerage commissions. In effecting securities transactions, the Portfolio seeks
to obtain the best price and execution of orders. For more information, see the
SAI.
The partners and employees of Neuberger&Berman and officers and employees of N&B
Management, together with their families, have invested over $100 million of
their own money in Neuberger&Berman Funds.(SM)
To mitigate the possibility that the Portfolio will be adversely affected by
employees' personal trading, the Trust, Managers Trust, BNP-N&B Global, and N&B
Management have adopted policies that restrict securities trading in the
personal accounts of portfolio managers and others who normally come into
possession of information on Portfolio transactions. These policies comply, in
all material respects, with the recommendations of the Investment Company
Institute.
Expenses
BNP-N&B Global provides investment advisory services to the Portfolio that
include, among other things, making and implementing investment decisions. N&B
Management provides administrative services and facilities and personnel
necessary to operate the Portfolio and the Fund. N&B Management provides these
administrative services to the Portfolio and the Fund under administration
agreements. For such administrative services, the Fund pays N&B Management a fee
at the annual rate of 0.63% of the Fund's average daily net assets. With the
Fund's consent, N&B Management is authorized to subcontract some of its
responsibilities under its administration agreement with the Fund to third
parties. For such administrative services, the Portfolio pays N&B Management a
fee at the annual rate of 0.10% of the first $250 million of the Portfolio's
average daily net assets, 0.08% of the next $250 million; 0.06% of the next $250
million; and 0.04% of average net assets in excess of $750 million. The minimum
fee is $100,000 per annum. For investment advisory services, the Portfolio pays
BNP-N&B Global a fee at the annual rate of 0.50% of the first $250 million of
the Portfolio's average daily net assets; 0.475% of the next $250 million; 0.45%
of the next $250 million; and 0.425% of average daily net assets in excess of
$750 million. From June 15, 1994 (commencement of operations) to August 31,
1994, the Fund accrued advisory and administration fees, as an annualized
percentage of its average daily net assets, of 3.61%.
The 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. The
Portfolio bears all expenses of its operations other than those borne by BNP-N&B
Global as investment adviser of the Portfolio and by N&B Management as
administrator of the Portfolio. These expenses include, but are not limited to,
for the Fund and the Portfolio, legal and accounting fees, and compensation for
trustees who are not affiliated with BNP-N&B Global or N&B Management; for the
Fund, transfer agent fees and printing and sending reports and proxy materials
to shareholders; and for the Portfolio, custodial fees for securities.
For a period of over two years commencing June 15, 1994 and ending December
31, 1996, BNP-N&B Global has voluntarily undertaken to reimburse the Portfolio
for its Operating Expenses that exceed 0.70% per annum of the Portfolio's
average daily net assets ("Portfolio Expense Limitation"). The Portfolio has in
turn agreed to repay BNP-N&B Global through December 31, 1998, for the excess
Operat-
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ing Expenses BNP-N&B Global previously reimbursed to the Portfolio, so long as
neither the Fund Expense Limitation nor the Portfolio Expense Limitation is
exceded. Commencing June 15, 1994 and ending December 31, 1996, N&B Management
has voluntarily undertaken to reimburse the Fund for its Operating Expenses
(which include the Fund's pro rata share of the Operating Expenses of the
Portfolio) that exceed 1.70% per annum of the Fund's average daily net assets
("Fund Expense Limitation"), after reimbursement, if any, by BNP-N&B Global for
the Portfolio's excess Operating Expenses. The Fund has in turn agreed to repay
N&B Management through December 31, 1998, for the excess Operating Expenses N&B
Management previously reimbursed to the Fund, so long as the Fund's annual
Operating Expenses during that period do not exceed the Fund Expense Limitation.
The effect of any reimbursement of the Fund or Portfolio would be to reduce the
Fund's expenses and thereby increase its total return.
From June 15, 1994 to August 31, 1994, the Fund had Operating Expenses as an
annualized percentage of its average daily net assets, after taking into
consideration N&B Management's expense reimbursement, of 1.70%.
Shareholder Servicing Arrangements
The Fund's 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. State Street Cayman provides similar services to
the Portfolio as the Portfolio's transfer agent. State Street also acts as the
custodian of the Portfolio's and the Fund's assets.
The Fund retains N&B Management under a Service Agreement to provide certain
shareholder, shareholder-related, and other services not furnished by State
Street. As compensation for such services, the Fund pays N&B Management a
monthly fee at the annual rate of 0.04% of the average daily net assets of the
Fund. With the Fund's consent, N&B Management may subcontract some or all of its
responsibilities under the Service Agreement to third parties.
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DESCRIPTION OF INVESTMENTS
The Portfolio 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. These
investments may be limited by the requirements with which the Portfolio must
comply if the Fund is to qualify as a regulated investment company for tax
purposes. For additional information on the following investments and on other
types of investments the Portfolio may make, see the SAI.
Foreign Securities. The Portfolio will invest in foreign securities. Foreign
securities are those of issuers organized and doing business principally
outside the U.S., including non-U.S. governments, their agencies, and
instrumentalities. The Portfolio may also invest in ADRs, EDRs, GDRs, and
IDRs. ADRs (sponsored or unsponsored) are receipts typically issued by a U.S.
bank or trust company evidencing its ownership of the underlying foreign
securities. Most ADRs are denominated in U.S. dollars and are traded on a
U.S. stock exchange. Issuers of the securities underlying unsponsored ADRs
are not contractually obligated to disclose material information in the U.S.
and, therefore, there may not be a correlation between such information and
the market value of the unsponsored ADR. EDRs and IDRs are receipts typically
issued by a European bank or trust company evidencing its ownership of the
underlying foreign securities. GDRs are receipts issued by either a U.S. or
non-U.S. banking institution evidencing its ownership of the underlying
foreign securities and are often denominated in U.S. dollars.
Investments in foreign securities are affected by factors generally not thought
to be present in the U.S. Such factors include, but are not limited to, varying
custody, brokerage and settlement practices; difficulty in pricing some foreign
securities; less public information about issuers of securities; less
governmental regulation and supervision over issuance and trading of securities;
the unavailability of financial information or the difficulty of interpreting
financial information prepared under foreign accounting standards; less
liquidity and more volatility in foreign securities markets; the possibility of
expropriation; the imposition of foreign withholding and other taxes; political,
social, or diplomatic developments; limitations on the movement of funds or
other assets of the Portfolio between different countries; difficulties in
invoking legal process abroad and enforcing contractual obligations; and the
difficulty of assessing economic trends in foreign countries. Investment in
foreign securities also involves higher brokerage and custodian expenses than
does investment in domestic securities.
In addition, investing in securities of foreign companies and governments may
involve other risks which are not ordinarily associated with investing in
domestic securities. These risks include changes in currency exchange rates and
currency exchange control regulations or other foreign or U.S. laws or
restrictions applicable to such investments or devaluations of foreign
currencies. A decline in the exchange rate would reduce the value of certain
portfolio securities irrespective of the performance of the underlying
investment. In addition, the Portfolio may incur costs in connection with
conversion between various currencies. Investments in depositary receipts
(whether or not denominated in U.S. dollars) may be subject to exchange controls
and changes in rates of exchange with the U.S. dollar because the underlying
security is usually denominated in foreign currency. The foregoing risks may be
intensified in emerging industrialized and less developed countries.
Japanese Investments. The Portfolio may invest a substantial portion of its
assets in securities of Japanese issuers. The performance of the Fund will
therefore be significantly affected by events affecting the Japanese economy
and the exchange rate between the Japanese yen and the U.S. dollar. Japan has
recently experienced a severe recession, including a decline in real estate
values that adversely affected the balance sheets of many financial
institutions. The
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effects of this economic downturn may be felt for a considerable period. Japan
is undergoing a period of political instability, which may undercut its ability
to resolve promptly trading disputes with the U.S. Japan is heavily dependent on
foreign oil. Japanese economic prospects may be affected by the political and
military situations of its near neighbors, notably North and South Korea, China
and Russia.
Other Investment Companies. The Portfolio may invest up to 10% of its total
assets in the shares of other investment companies. Such investment may be the
most practical or only manner in which the Portfolio can participate in certain
foreign markets because of the expenses involved or because other vehicles for
investing in certain countries may not be available at the time the Portfolio is
ready to make an investment. As a shareholder in an investment company, the
Portfolio would bear its pro rata share of that investment company's expenses.
Investment in investment companies may involve the payment of substantial
premiums above the value of such issuers' portfolio securities. The Portfolio
does not intend to invest in such funds unless, in the judgment of the
investment adviser, the potential benefits of such investment justify the
payment of any applicable premium or sales charge.
Foreign Currency Transactions. The Portfolio may enter into forward foreign
currency exchange contracts in order to protect against adverse changes in
future foreign currency exchange rates. The Portfolio may enter into contracts
to purchase foreign currencies to protect against an anticipated rise in the
U.S. dollar price of securities it intends to purchase. The Portfolio may also
enter into contracts to sell foreign currencies to protect against a decline in
value of its foreign currency denominated portfolio securities due to a decline
in the value of foreign currencies against the U.S. dollar. Contracts to sell
foreign currency could limit any potential gain which might be realized by the
Portfolio if the value of the hedged currency increased.
The Portfolio may also enter into forward foreign currency exchange contracts
for non-hedging purposes when the investment adviser anticipates that the
foreign currency will appreciate or depreciate in value, but securities
denominated in that currency do not present attractive investment opportunities
and are not held in the Portfolio. The Portfolio may also engage in
cross-hedging by using forward contracts in one currency to hedge against
fluctuations in the value of securities denominated in a different currency if
the investment adviser believes that there is a pattern of correlation between
the two currencies.
If the Portfolio enters into a forward currency exchange contract to sell
foreign currency, the Portfolio may be required to place cash or high grade
liquid debt securities in a segregated account of the Portfolio in an amount
equal to the value of the Portfolio's total assets committed to the consummation
of the forward contract.
Put and Call Options on Foreign Currencies, Securities, and Securities Indices.
The Portfolio may purchase and write put and call options on foreign currencies
for the purpose of protecting against declines in the dollar value of foreign
portfolio securities and against increases in the U.S. dollar cost of foreign
securities to be acquired. The Portfolio may also use options on foreign
currencies to cross-hedge. In addition, the Portfolio may purchase call or put
options on currencies for non-hedging purposes when the investment adviser
expects that the currency will appreciate or depreciate in value, but the
securities denominated in that currency do not present attractive investment
opportunities and are not held in the Portfolio. Options on foreign currencies
to be written or purchased by the Portfolio will be traded on U.S. and foreign
exchanges or over-the-counter. Options on foreign currencies which are traded in
the over-the-counter market may be considered to be illiquid securities and
subject to the restriction on illiquid securities. (See "Illiquid Securities,"
below.)
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To realize greater income than would be realized on portfolio securities
transactions alone, the Portfolio may write call and put options on any
securities in which it may invest or options on any securities index based on
securities in which the Portfolio may invest. The Portfolio will not write a
call option on a security or currency unless it owns the underlying security or
currency or has the right to obtain it at no additional cost.
The writing and purchasing of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions including price volatility and a high
degree of leverage. The Portfolio pays brokerage commissions or spreads in
connection with its options transactions, as well as for purchases and sales of
underlying securities or currency. The writing of options could result in
significant increases in the Portfolio's turnover rate.
Futures Contracts and Options on Futures Contracts. The Portfolio may enter into
futures contracts and purchase and sell options on such contracts on both the
U.S. and foreign exchanges for hedging and non-hedging purposes. The Portfolio
may (1) enter into futures contracts on debt securities, interest rates,
securities indices and currencies and (2) purchase and write options on futures
contracts.
The primary risks in using put and call options, futures contracts and options
on futures contracts, and foreign currency forward contracts ("Instruments") are
(1) imperfect correlation or no correlation between changes in market value of
the securities held by the Portfolio and the prices of the Instruments; (2)
possible lack of a liquid secondary market for Instruments and the resulting
inability to close out an Instrument when desired; (3) the fact that the skills
needed to use Instruments are different from those needed to select the
Portfolio's securities; (4) the fact that, although use of these Instruments for
hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in hedged investments; and (5) the possible inability of the Portfolio
to purchase or sell a security at a time that would otherwise be favorable for
it to do so, or the possible need for the Portfolio to sell a security at a
disadvantageous time, due to its need to maintain "cover" or to segregate
securities in connection with its use of these Instruments. Futures, options and
forward contracts are considered "derivatives." Losses that may arise from
certain futures transactions are potentially unlimited.
Short Selling. The Portfolio may attempt to limit exposure to a possible market
decline in the value of portfolio securities through short sales of securities
which the investment adviser believes possess volatility characteristics similar
to those being hedged and may use short sales in an attempt to realize gain. To
effect such a transaction, the Portfolio will borrow a security from a brokerage
firm to make delivery to the buyer. The Portfolio then is obligated to replace
the security borrowed by purchasing it at the market price at the time of
replacement. Until the security is replaced, the Portfolio is required to pay to
the lender any accrued interest or dividend and may be required to pay a
premium.
The Portfolio will realize a gain if the security declines in price between the
date of the short sale and the date on which the Portfolio replaces the borrowed
security. The Portfolio will incur a loss if the price of the security increases
between those dates. The amount of any gain will be decreased, and the amount of
any loss increased, by the amount of any premium or interest the Portfolio may
be required to pay in connection with a short sale. The successful use of short
selling may be adversely affected by imperfect correlation between movements in
the price of the security sold short and the securities being hedged.
The Portfolio may also make short sales against-the-box, in which it sells
short securities it owns or has
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the right to obtain without payment of additional consideration. Short selling
may defer recognition of gains or losses to another tax period.
Forward Commitments and When-Issued Securities. In a when-issued transaction,
the Portfolio commits to purchase securities at a future date (generally within
two months) and pays for them when they are delivered. If the seller fails to
complete the sale, the 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.
Indexed Securities. The Portfolio may invest in indexed securities whose value
is linked to currencies, interest rates, commodities, indices, or other
financial indicators. Most indexed securities are short-to-intermediate term
fixed-income securities whose values at maturity or interest rates rise or fall
according to the change in one or more specified underlying instruments. Indexed
securities may be positively or negatively indexed (i.e., their value may
increase or decrease if the underlying instrument appreciates), and may have
return characteristics similar to direct investments in the underlying
instrument or to one or more options on the underlying instrument. Indexed
securities may be more volatile than the underlying instrument itself.
Illiquid Securities. The Portfolio may invest up to 10% of its net assets in
securities that are illiquid, in that they 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, the Portfolio may experience difficulty in
valuing or disposing of illiquid securities. The investment adviser determines
the liquidity of the Portfolio's securities, under supervision of the trustees
of Managers Trust. Securities which are freely tradeable in their country of
origin or in their principal market will not be considered illiquid securities
even if they are not registered for sale in the U.S.
Restricted Securities and Rule 144A Securities. The Portfolio may invest in
restricted securities and Rule 144A securities. Restricted securities cannot be
sold to the public without registration under the Securities Act of 1933 ("1933
Act"). Unless registered for sale, these securities can be sold only in
privately negotiated transactions or pursuant to an exemption from registration.
Restricted securities are generally considered illiquid. Rule 144A securities
although not registered, may be resold only to qualified institutional buyers in
accordance with Rule 144A under the 1933 Act. Unregistered securities may also
be sold abroad pursuant to Regulation S under the 1933 Act. The investment
adviser, acting pursuant to guidelines established by the trustees of Managers
Trust, may determine that some restricted securities are liquid.
Foreign Corporate and Government Debt Securities. The Portfolio may invest up
to 5% of its net assets in U.S. dollar-denominated and non-U.S.
dollar-denominated corporate and government debt securities of foreign
issuers.
The Portfolio may invest in debt securities of any rating, including those rated
below investment grade and unrated securities. Securities rated below investment
grade ("junk bonds") are deemed by Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's Ratings Group ("S&P") (or foreign statistical rating
organizations) to be predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal. Those in the lowest rating
categories may involve a substantial risk of default or may be in default.
Changes in economic conditions or developments regarding the individual issuer
are more likely to cause price volatility and weaken the capacity of the issuers
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-
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rated securities. The investment adviser will invest in such securities only
when it concludes that the anticipated return to the Fund on such an investment
warrants exposure to the additional level of risk. A further description of
Moody's and S&P's ratings is included in the Appendix to the SAI.
The value of the fixed income securities in which the Portfolio may invest,
measured in the currency in which they are denominated, is likely to decline in
times of rising interest rates. Conversely, when rates fall, the value of the
Portfolio's fixed income investments may rise.
Convertible Securities. The Portfolio may invest in convertible securities. A
convertible security is a bond, debenture, note, preferred stock, or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. Many convertible securities are rated
below investment grade or are unrated.
Repurchase Agreements/Securities Loans. The Portfolio may enter into repurchase
agreements and lend securities from its portfolio. In a repurchase agreement,
the Portfolio buys a security from a Federal Reserve member bank, foreign bank,
U.S. branch or agency of a foreign 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. The Portfolio 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. The investment adviser monitors the creditworthiness of
sellers and borrowers.
Reverse Repurchase Agreements. The Portfolio may enter into reverse repurchase
agreements. In such a transaction, the Portfolio sells a security to a bank or
securities dealer and simultaneously agrees to repurchase it at an agreed upon
price on a specific date. The Portfolio will maintain a segregated account
consisting of cash or high-grade, liquid debt obligations, to cover its
obligations under reverse repurchase agreements.
U.S. Government and Agency Securities. The Portfolio may purchase U.S.
Government and Agency Securities. U.S. Government securities are obligations of
the U.S. Treasury backed by the full faith and credit of the United States.
Agency securities are issued by U.S. Government agencies, instrumentalities, or
other U.S. Government-sponsored enterprises, such as the Government National
Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA"),
Federal Home Loan Mortgage Corporation ("FHLMC"), Student Loan Marketing
Association, Tennessee Valley Authority, and certain federally-sponsored banks.
Agency securities are backed by other agencies, the full faith and credit of the
United States, 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 and Agency securities include certain mortgage-backed
securities. The market prices of U.S. Government securities are not guaranteed
by the government and generally fluctuate with changing interest rates. The
value of fixed income securities in which the Portfolio may invest is likely to
decline in times of rising interest rates. Conversely, when rates fall, the
value of the Portfolio's fixed income investments may rise.
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DIRECTORY & FUNDS ELIGIBLE FOR EXCHANGE
DIRECTORY
Investment Adviser
BNP-N&B Global Asset Management L.P.
605 Third Avenue, 39th Floor
New York, NY 10158
(212) 476-5529
Administrator and Distributor
Neuberger&Berman Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0006
1-800-877-9700
Institutional Services 1-800-366-6264
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
1-800-225-1596
Legal Counsel
Kirkpatrick & Lockhart
1800 M Street, NW
Washington, DC 20036-5891
FUNDS ELIGIBLE FOR EXCHANGE*
Equity Funds
Neuberger&Berman Partners Fund
Neuberger&Berman Guardian Fund
Neuberger&Berman Focus Fund
Neuberger&Berman Manhattan Fund
Neuberger&Berman Genesis Fund
Neuberger&Berman Socially Responsive Fund
Money Market Funds
Neuberger&Berman Government Money Fund
Neuberger&Berman Cash Reserves
Bond Funds
Neuberger&Berman Ultra Short Bond Fund
Neuberger&Berman Limited Maturity Bond Fund
Neuberger&Berman Government Income Fund
Municipal Funds
Neuberger&Berman Municipal Money Fund
Neuberger&Berman Municipal Securities Trust
Neuberger&Berman New York Insured
Intermediate Fund (available only to
residents of NY and FL)
* Neuberger&Berman Management Inc., Neuberger&Berman International Fund, and the
above-named funds are service marks of Neuberger&Berman Management Inc.
(C) 1994 Neuberger&Berman Management Inc.
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