<PAGE>
As filed with the Securities and Exchange Commission on August 30, 1995
1933 Act Registration No. 2-11357
1940 Act Registration No. 811-582
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. _70__ [__X__]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [__X__]
Amendment No. __27__ [__X__]
(Check appropriate box or boxes)
NEUBERGER & BERMAN EQUITY FUNDS
-------------------------------
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue
New York, New York 10158-0006
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (212) 476-8800
Lawrence Zicklin, President
Neuberger & Berman Equity Funds
605 Third Avenue, 2nd Floor
New York, New York 10158-0006
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart
South Lobby - 9th Floor
1800 M Street, N.W.
Washington, D.C. 20036-5891
(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 November 1, 1995 pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on __________ pursuant to paragraph (a)(2)
<PAGE>
Registrant has filed a declaration pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended, and filed the notice
required by such Rule for its 1994 fiscal year on October 7, 1994.
Neuberger & Berman Equity Funds is a "master/feeder fund." This
Post-Effective Amendment No. 70 includes a signature page for the master
fund, Global Managers Trust, and appropriate officers and trustees
thereof.
Page ______ of ______
Exhibit Index Begins on
Page _______
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 70 ON FORM N-1A
This post-effective amendment consists of the following papers
and documents.
Cover Sheet
Contents of Post-Effective Amendment No. 70 on Form N-1A
Cross Reference Sheet
Neuberger & Berman International Fund
-------------------------------------
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
No change is intended to be made by this Post-Effective Amendment
No. 70 to the prospectus or statement of additional information for
Neuberger & Berman Focus Fund, Neuberger & Berman Genesis Fund, Neuberger
& Berman Guardian Fund, Neuberger & Berman Manhattan Fund, Neuberger &
Berman Partners Fund and Neuberger & Berman Socially Responsive Fund.
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 70 ON FORM N-1A
Cross Reference Sheet
This cross reference sheet relates to the Prospectus
and Statement of Additional Information for
Neuberger & Berman International Fund
<TABLE>
<CAPTION>
Form N-1A Item No. Caption in Part A Prospectus
------------------ ----------------------------
<S> <C> <C>
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 Program; 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 Securities Front Cover Page; Dividends, Other Distributions, and
Taxes; Special Information Regarding Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Being How to Buy Shares; Additional Information on Telephone
Offered 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>
<PAGE>
<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 Not Applicable
and History
Item 13. Investment Objectives Investment Information; Certain
and Policies Risk Considerations
Item 14. Management of the Fund Trustees And Officers
Item 15. Control Persons and Control Persons and
Principal Holders of Principal Holders of
Securities Securities
Item 16. Investment Advisory Investment Management and
and Other Services Administration Services; Trustees And Officers; Distribution
Arrangements; Reports To Shareholders; Custodian And
Transfer Agent; Independent Auditors
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Investment Information; Additional
Other Securities Redemption Information; Dividends and Other Distributions
Item 19. Purchase and Additional Purchase Information;
Redemption 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 Information
Performance Data
Item 23. Financial Statements Financial Statements
</TABLE>
Part C
------
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment
No. 70.
<PAGE>
[Neuberger&Berman Logo]
INTERNATIONAL FUND(SM)
[GlOBE GRAPHIC]
PROSPECTUS
NOVEMBER 1,1995
No Sales Charges
No Redemption Fees
No 12b-1 Fees
Neuberger&Berman
Management Inc.(SM)
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800-877-9700
INSTITUTIONAL SERVICES
800-366-6264
[LOGO] PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS
NBEPXXXXXXXX
<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
800-877-9700.
The Fund, a series of Neuberger&Berman Equity Funds (the "Trust"), 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 managed by Neuberger&Berman Management Incorporated ("N&B Management").
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 .
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 November 1, 1995, 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 N&B Management, the Fund's distributor, at
800-877-9700.
Prospectus Dated November 1, 1995.
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
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<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 4
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
. Other Information 12
How To Sell Shares 14
. By Mail or Facsimile Transmission (Fax) 14
. By Telephone 14
. Other Information 15
. Additional Information on Telephone Transactions 15
Shareholder Services 16
. Automatic Investing and Dollar Cost Averaging 16
. Exchange Privilege 16
. Systematic Withdrawal Plan 17
. Retirement Plans 17
Share Prices and Net Asset Value 18
Dividends, Other Distributions, and Taxes 19
. Distribution Options 19
. Taxes 19
Management and Administration 21
. Trustees and Officers 21
. Investment Manager, Administrator, Distributor, and Sub-Adviser 21
. Expenses 22
. Transfer and Shareholder Servicing Arrangements 22
Description of Investments 23
Directory & Funds Eligible for Exchange 28
</TABLE>
2
<PAGE>
SUMMARY
The Fund and Portfolio;
Risk Factors
The Fund is a series of 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 manager, N&B Management, is to select attractive investment
opportunities outside the U.S., allocating the assets among economically mature
countries and emerging industrialized countries. The Portfolio invests
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. Of course, there can be no assurance that the Fund will meet its
investment objective. 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 9 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 9, and "Description of
Investments" on page 23.
Investment Style. Broadly diversified medium-to- large-cap (in relation to each
national market) international equity fund.
Primary Characteristics. Invests in economically mature and emerging
industrialized markets.
Management
N&B Management, with the assistance of Neuberger&Berman, L.P.
("Neuberger&Berman") as sub-adviser, selects investments for the Portfolio. N&B
Management also provides administrative services to the Portfolio and the Fund
and acts as distributor of Fund shares. See "Management and Administration" on
page 21. If you want to know how to buy and sell shares or exchange them for
shares of other Neuberger&Berman Fundssm, see "How to Buy Shares" on page 12,
"How to Sell Shares" on page 14, and "Shareholder Services--Exchange Privilege"
on page 16.
3
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C>
Sales Charge Imposed on Purchases None
Sales Charge Imposed on Reinvested
Dividends None
Deferred Sales Charges None
Redemption Fees None
Exchange Fees None
</TABLE>
If you want to redeem shares by wire transfer, the 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 and
shareholder service fee, based on the Fund's net asset value. The Portfolio
pays N&B Management a management fee, based on the Portfolio's average daily
net assets. A pro rata portion of these fees is borne indirectly by the Fund.
Therefore, the table combines management and 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>
Management
and Total
Administration 12b-1 Other Operating
Fees Fees Expenses Expenses
- ---------------- ------- ---------- -----------
<S> <C> <C> <C>
%* None %* %*
</TABLE>
* (Reflects expense reimbursement undertaking described below)
Anticipated Annual Operating Expenses for the Fund have been restated based
upon current administration fees for the Fund and management fees for the
Portfolio, and the current expense reimbursement undertaking. 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 above table reflects 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, in the aggregate, exceed 1.70%
per annum of the Fund's average daily net assets. Absent the reimbursements,
total anticipated aggregate Annual Fund and Portfolio Operating Expenses would
be % 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
4
<PAGE>
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 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C>
$ $ $ $
</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
800-877-9700. The annual report contains the auditors' report. 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
Year Ended June 15, 1994((1))
August 31, 1995 to August 31, 1994
--------------- ------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $
-----------
Income From Investment Operations
Net Investment Income
Net Gains or Losses on Securities (both
realized and unrealized)
-----------
Total From Investment Operations
-----------
Net Asset Value, End of Period $
===========
Total Return+ + % %((3))
=========== ============
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $
===========
Ratio of Expenses to Average Net Assets( (2)) % %((3))
=========== ============
Ratio of Net Income to Average Net Assets((2)) % %((3))
=========== ============
</TABLE>
Notes:
(1) The date investment operations commenced. BNP-N&B Global Asset Management
L.P. ("BNP-N&B Global"), a joint venture of Neuberger&Berman and Banque
Nationale de Paris ("BNP"), served as investment adviser to the Portfolio
from its inception until November 1, 1995.
(2) After reduction of expenses by BNP-N&B Global and N&B Management as
administrator of the Fund 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 % and ( %), respectively,
for the year ended August 31, 1995 and % and ( %) respectively for the
period ended August 31, 1994.
(3) Annualized.
(4) The portfolio turnover rate for the Portfolio for the year ended August 31,
1995 was % and the period ended August 31, 1994 was %.
+ 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 other 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.
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 invests 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 issuers in at least three
foreign countries. The strategy of the Portfolio's investment adviser, N&B
Management, 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 increase 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 annual
turnover rate of the Portfolio is not expected to exceed 100%. The portfolio
turnover rate of the Portfolio can be found on page 8.
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, other 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 average annual total return for the period ended
August 31, 1995 (the most recent fiscal year end of the Fund) of a 1-year
investment in the Fund and of an investment in the Fund since its inception.
Had BNP-N&B Global and N&B Management 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 800-877-9700.
Average Annual Total Return
For Period Ended August 31, 1995
<TABLE>
<CAPTION>
1 Year Since Inception Inception Date
-------- ----------------- ----------------
<S> <C> <C> <C>
Neuberger&Berman
International Fund + % % 6/15/94*
</TABLE>
* BNP-N&B Global served as investment adviser to the Portfolio from its
inception until November 1, 1995.
Total Return Information
You can obtain current performance information about the Fund by calling N&B
Management at 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 investment manager of 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 master funds and feeder funds. 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 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
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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 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 the Fund
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.
Minimum investment requirements are shown below. In addition, you can invest as
little as $50 each month under an automatic investing plan (see "Automatic
Investing and Dollar Cost Averaging").
N&B Management, in its discretion, may waive the minimum investment
requirements.
By Mail
Send your check or money order payable to "Neuberger&Berman Funds" by mail to:
Neuberger&Berman Funds, Boston Service Center, P.O. Box 8403, Boston, MA
02266-8403
or by overnight courier, U.S. Express Mail, or registered or certified mail to:
Neuberger&Berman Funds, c/o State Street Bank and Trust Company, 2 Heritage
Drive, North Quincy, MA 02171.
Be sure to specify the name of the Fund and, 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 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 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 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, the Fund has the right to redeem shares from your
account.
To meet the three day deadline, you can wire payment, send a check through
overnight mail, or call 800-877-9700 for information on how to make electronic
transfers through your bank. Please refer to "Additional Information on
Telephone Transactions."
By Exchanging Shares
Call 800-877-9700 for instructions on how to invest by exchanging shares of
another Neuberger &Berman Fund((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."
Other Information
(bullet) 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.
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(bullet) The Fund has the right to suspend the offering of its shares for a
period of time.
(bullet) 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."
(bullet) If you paid by check and your check does not clear, or if you ordered
shares by telephone and fail to pay for them, your purchase will be canceled
and you could be liable for any resulting losses or fees 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.
(bullet) 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.
(bullet) You can also buy shares of the Fund indirectly through certain
stockbrokers, banks, and other financial institutions, some of which may charge
you a fee.
(bullet) 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 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.
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<PAGE>
HOW TO SELL SHARES
You can sell (redeem) all or some of your shares at any time by mail,
facsimile, 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 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 will be paid by N&B Management.
By Mail or Facsimile Transmission (Fax)
To redeem by mail, 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.
If you have changed the record address by telephone or fax, shares may not be
redeemed by facsimile for 15 days after receipt of the address change. Please
call 800-877-9700 to confirm receipt and acceptance of your 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, 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 fax, limited to not more than $50,000, the
redemption check may be made out only to the record owner and mailed to the
record address or the proceeds wired to a bank account named in your
application or in a written instruction from the record owner with a signature
guarantee.
By Telephone
To sell shares worth at least $500, call 800- 877-9700, giving your name and
account number, the name of the Fund, and the dollar amount or number of shares
you want to sell.
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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."
Other Information
(bullet) Usually, redemption proceeds will be mailed to you on the next
business day, but in any case within three calendar 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.
(bullet) 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.
(bullet) 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.
(bullet) 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.
(bullet) If you purchased shares indirectly through certain stock brokers,
banks, or other financial institutions, you may sell those shares only through
those organizations, some of which may charge you a fee.
Additional Information on Telephone Transactions
The 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 you
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 are 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 beleived 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.
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<PAGE>
SHAREHOLDER SERVICES
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 a minimum of $50 worth of 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 800-877-9700.
Exchange Privilege
To exchange your shares in the Fund for shares in another Neuberger&Berman
Fund((SM)) for which N&B Management is a distributor, 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 "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 faxing the letter to 212-476-8848,
giving your name and account number, the name of the Fund, the dollar amount or
number of shares you want to sell, and the name of the fund whose shares you
want to buy. 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. If you have a
certificate for your shares, you can exchange them only by mailing the
certificate with your letter requesting the exchange. 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:
(bullet) You can exchange shares only between accounts registered in the same
name, address, and taxpayer ID number.
(bullet) A telephone exchange order cannot be modified or canceled.
(bullet) You can exchange only into a mutual fund whose shares are eligible
for sale in your state under applicable state securities laws.
(bullet) An exchange may have tax consequences for you.
(bullet) 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.
(bullet) The Fund may impose other restrictions on the exchange privilege, or
modify or terminate the
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<PAGE>
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 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 800-877-9700 for more information.
Retirement Plans
Retirement plans permit you to defer paying taxes on investment income and
capital gains. Contributions to these plans may also be tax deductible. Please
call 800-877-9700 for information on a variety of retirement plans, including
individual retirement accounts, simplified employee pension plans,
self-employed individual retirement plans (so-called "Keogh Plans"), corporate
profit-sharing and money purchase pension plans, section 401(k) plans, and
section 403(b)(7) accounts offered by N&B Management. The assets of these plans
may be invested in the Fund.
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<PAGE>
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 on each day the NYSE is open. 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.
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<PAGE>
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES
The Fund distributes substantially all of its share of any net investment
income (net of the Fund's expenses), 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 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, 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 all 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 gains 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 sell 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 between the Trust and Managers Trust.
Investment Manager, Administrator,
Distributor, and Sub-Adviser
N&B Management serves as the investment manager of the Portfolio, as
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. In addition to serving the Portfolio, N&B
Management currently serves as investment manager or investment adviser of
other mutual funds. Neuberger&Berman, which acts as sub-adviser for the
Portfolio and other mutual funds managed by N&B Management, also serves as
investment adviser of two investment companies. These funds had aggregate net
assets of approximately $ billion as of , 1995.
As sub-adviser, Neuberger&Berman furnishes N&B Management with investment
recommendations and research information without added cost to the Portfolio.
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 $ billion of assets as of ,
1995.
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 has been primarily responsible for the day-to-day management of
the portfolio securities of the Portfolio since its inception. Mr. Rovelli is a
Vice President of N&B Management and was a Senior Vice President-Senior Equity
Portfolio Manager of BNP-N&B Global from May 1994 until October 1995. He
previously served as first vice president and portfolio manager of another
mutual fund that invested in international equity securities, 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 may act as broker 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, N&B Management, and
Neuberger&Berman have adopted policies that restrict securities trading in the
personal accounts of
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<PAGE>
portfolio managers and others who normally come into possession of information
on Portfolio transactions. These policies comply, in all material respects,
with the recommendations of the Investment Company Institute.
Expenses
N&B Management provides investment management services to the 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 the Fund that include furnishing
similar facilities and personnel for the Fund and performing certain
shareholder, shareholder-related, and other services. For such administrative
services, the Fund pays N&B Management a fee at the annual rate of 0.26% of the
Fund's average daily net assets. With the Fund's consent, N&B Management is
authorized to subcontract to third parties some of its responsibilities under
its administration agreement with the Fund. For investment management services,
the Portfolio pays N&B Management a fee at the annual rate of 0.85% of the
first $250 million of the Portfolio's average daily net assets; 0.825% of the
next $250 million; 0.80% of the next $250 million; 0.775% of the next $250
million; 0.75% of the next $500 million; and 0.725% of average daily net assets
in excess of $1.5 billion. During its 1995 fiscal year, the Fund accrued
management and administration fees, as an annualized percentage of its average
daily net assets, of %.
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 N&B
Management as investment manager 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 N&B Management; for
the Fund, transfer agent fees and costs of printing and sending reports and
proxy materials to shareholders; and for the Portfolio, custodial fees for
securities.
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"). 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 would be to reduce the Fund's expenses
and thereby increase its total return.
During its 1995 fiscal year, 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 %.
Transfer and 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.
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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 invests 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.
Factors affecting investments in foreign securities 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
23
<PAGE>
effects of this economic downturn may be felt for a considerable period and are
being exacerbated by the currency exchange rate. Japan is heavily dependent on
foreign oil. Japan is located in a seismically active area, and severe
earthquakes may damage important elements of the country's infrastructure.
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.
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 may be traded on U.S. or foreign
exchanges or over-the-counter. Options on foreign currencies which are traded
in the over-the- counter market may be considered illiquid and subject to the
restriction on illiquid securities. (See "Illiquid Securities," below.)
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
24
<PAGE>
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.
General Risks of Instruments
The primary risks in using put and call options, futures contracts, 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 the Instruments and the
resulting inability to close out an Instrument when desired; (3) the fact that
the skills needed to use the Instruments are different from those needed to
select the 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 the Portfolio uses such
Instruments, the Portfolio may place cash or high grade liquid debt securities
in a segregated account to the extent required by SEC staff policy. Another
risk of futures, options and forward contracts is 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
25
<PAGE>
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 the right to obtain without payment of
additional consideration. Short selling may defer recognition of gains or
losses to a later 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
26
<PAGE>
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. 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.
Not all agency securities are backed by the full faith and credit of the United
States. Forms are backed 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 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.
27
<PAGE>
DIRECTORY & FUNDS ELIGIBLE FOR EXCHANGE
DIRECTORY
Investment Manager, Administrator and Distributor
Neuberger&Berman Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
800-877-9700
Institutional Services 800-366-6264
Sub-Adviser
Neuberger&Berman, L.P.
605 Third Avenue
New York, NY 10158-3698
Custodian and Transfer Agent 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 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) 1995 Neuberger&Berman Management Inc.
28
[/TEXT]
<PAGE>
_________________________________________________________________
NEUBERGER & BERMAN INTERNATIONAL FUND AND INTERNATIONAL PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
Dated November 1, 1995
A No-Load Mutual Fund
605 Third Avenue, 2nd Floor, New York, NY 10158-0006
Toll-Free 800-877-9700
_________________________________________________________________
Neuberger & Berman International Fund (the "Fund"), a
series of Neuberger & Berman Equity Funds, is a no-load mutual fund that
offers shares pursuant to a Prospectus dated November 1, 1995. The Fund
invests all of its net investable assets in the International Portfolio of
Global Managers Trust (the "Portfolio").
The Fund's Prospectus provides the basic information that
an investor ought to know before investing. A copy of the Prospectus may
be obtained, without charge, from Neuberger & Berman Management
Incorporated ("N&B Management"), located at 605 Third Avenue, 2nd Floor,
New York, NY 10158-0006.
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 the Fund or its distributor. The Prospectus and
this SAI do not constitute an offering by the Fund or its distributor in
any jurisdiction in which such offering may not lawfully be made.
<PAGE>
Table of Contents
-----------------
Page
----
INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . 1
Investment Policies and Limitations . . . . . . . . 1
International Investing . . . . . . . . . . . . . . 5
An Interview with Felix Rovelli, Portfolio
Manager of the Portfolio . . . . . . . . . . . . . . 8
Timely Opportunity for Investors Looking
for International Bargains . . . . . . . . . . . . . . .
Additional Investment Information . . . . . . . . . 10
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . 33
Total Return Computations . . . . . . . . . . . . . 33
Comparative Information . . . . . . . . . . . . . . 34
Other Performance Information . . . . . . . . . . . 35
CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . 35
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . 36
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . 43
Investment Manager and Administrator . . . . . . . . 43
Sub-Adviser . . . . . . . . . . . . . . . . . . . . 46
Investment Companies Advised . . . . . . . . . . . . 47
Management and Control of N&B Management . . . . . . 49
DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . 49
ADDITIONAL PURCHASE INFORMATION . . . . . . . . . . . . . . 50
Automatic Investing and Dollar Cost Averaging . . . 50
ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . 51
ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . 55
Suspension of Redemptions . . . . . . . . . . . . . 55
Redemptions in Kind . . . . . . . . . . . . . . . . 55
DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . 55
ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . 56
Taxation of the Fund . . . . . . . . . . . . . . . . 56
Taxation of the Portfolio . . . . . . . . . . . . . 57
Taxation of the Fund's Shareholders . . . . . . . . 61
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . 61
Portfolio Turnover . . . . . . . . . . . . . . . . . 65
REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . 65
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . 66
i
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Page
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . 66
LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . 66
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . 66
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . 67
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 67
Appendix A:
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . 7_
ii
<PAGE>
INVESTMENT INFORMATION
The Fund is a separate series of Neuberger & Berman
Equity Funds (the "Trust"), a Delaware business trust that is registered
with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. The Fund seeks its investment objective by
investing all of its net investable assets in the Portfolio, which is a
portfolio of Global Managers Trust ("Managers Trust"), managed by N&B
Management that has an investment objective identical to that of the Fund.
The Portfolio, in turn, invests in accordance with investment policies and
limitations identical to those of the Fund. (The Trust and Managers
Trust, which also is an open-end management investment company, 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
the Fund and the Portfolio. That investment objective and, unless
otherwise specified, those investment policies and limitations, are not
fundamental. However, 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, the Fund intends to notify its shareholders before changing its
investment objective or implementing any material change in any non-
fundamental policy or limitation. Pursuant to an undertaking made to a
state securities commission, no changes may be made in the non-fundamental
policies numbered 3, 7 and 8 below, except upon 30 days' notice to the
Fund's shareholders. The fundamental policies and limitations of the Fund
or the Portfolio may not be changed without the approval of the lesser of
(1) 67% of the total units of beneficial interest ("shares") of the Fund
or Portfolio represented at a meeting at which more than 50% of the
outstanding Fund or Portfolio shares are represented or (2) a majority of
the outstanding shares of the Fund or Portfolio. This vote is required by
the Investment Company Act of 1940 ("1940 Act") and is referred to in this
SAI as a "1940 Act majority vote." Whenever the Fund is called upon to
vote on a change in a fundamental investment policy or limitation of the
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
-----------------------------------
The Fund has the following fundamental investment policy,
to enable it to invest in the Portfolio:
Notwithstanding any other investment policy of the Fund,
the Fund may invest all of its net investable assets in
an open-end management investment company having substan-
tially 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 the Fund and the Portfolio are identical. Therefore, although the
following discusses the investment policies and limitations of the
Portfolio, it applies equally to the Fund. Because the Fund invests all
<PAGE>
of its net investable assets in the Portfolio, however, the Portfolio's
investment policies and limitations govern the type of investments in
which the Fund has an indirect interest.
Except for the limitation on borrowing, any investment
policy or limitation that involves a maximum percentage of securities or
assets will not be considered to be violated unless the percentage is
exceeded immediately after, and because of, a transaction by the
Portfolio.
The Portfolio's fundamental investment policies and
limitations 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 for leveraging or investment and (ii) enter into
reverse repurchase agreements 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
the ownership of securities or instruments, but this restriction shall not
prohibit the Portfolio from purchasing futures contracts, options
(including options on futures contracts, but excluding options or futures
contracts on physical commodities), foreign currencies or forward
contracts, or from investing in securities of any kind.
3. Diversification. The Portfolio may not, with
respect to 75% of the value of its total assets, purchase the securities
of any issuer 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. This limitation does not apply to
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
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 securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
5. 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)
- 2 -
<PAGE>
through the purchase of a portion of an issue of debt securities or (ii)
by engaging in repurchase agreements.
6. Real Estate. The Portfolio may not invest any
part of its total assets in real estate or interests in real estate unless
acquired as a result of the ownership of securities or instruments, but
this restriction shall not prohibit the Portfolio from purchasing readily
marketable 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. The Portfolio may not issue
senior securities, except as permitted under the 1940 Act.
8. 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, as amended ("1933 Act").
The following non-fundamental investment policies and
limitations apply to the Portfolio:
1. Investments in Any One Issuer. At the close of
each quarter of the Portfolio's tax year, (a) no more than 25% of its
total assets will be invested in the securities of a single issuer, and
(b) with regard to 50% of its total assets, no more than 5% of total
assets will be invested in the securities of a single issuer. These
limitations do not apply to U.S. government securities, as defined for tax
purposes.
2. Lending. Except for the purchase of debt
securities and engaging in repurchase agreements, the Portfolio may not
make any loans other than securities loans.
3. 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.
4. Margin Transactions. The Portfolio may not
purchase securities on margin from brokers, 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.
5. Short Sales. The Portfolio will not engage in a
short sale (except a short sale against the box), if, as a result, the
dollar amount of all short sales will exceed 25% of its net assets, or if,
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<PAGE>
as a result, the value of securities of any one issuer in which the
Portfolio would be short will exceed 2.0% of the value of the Portfolio's
net assets or 2.0% of the securities of any class of any issuer.
Transactions in forward foreign currency contracts, futures contracts and
options are not considered short sales.
6. 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 the Trusts 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.
7. Unseasoned Issuers. The Portfolio may not
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.
8. Illiquid Securities. The Portfolio may not
purchase any security if, as a result, more than 10% of its net assets
would be invested in illiquid securities. Illiquid securities include
securities that cannot be sold within seven days in the ordinary course of
business for approximately the amount at which the Portfolio has valued
the securities, such as repurchase agreements maturing in more than seven
days.
9. Restricted Securities. The Portfolio may not
purchase a security restricted as to resale if, as a result thereof, more
than 10% of the Portfolio's total assets would be invested in restricted
securities. Securities that can be sold freely in the principal market in
which they are traded are not considered restricted, even if they cannot
be sold in the U.S.
10. Warrants. The Portfolio may not invest more than 5%
of its net assets in warrants, whether or not such warrants are listed on
the New York Stock Exchange ("NYSE") or the American Stock Exchange
("AmEx"), or more than 2% of its net assets in unlisted warrants. For
purposes of this limitation, warrants are valued at the lower of cost or
market value and warrants acquired by the Portfolio in units or attached
to securities are deemed to be without value, even if the warrants are
later separated from the unit.
11. Oil and Gas Programs. The Portfolio may not
invest in participations or other direct interests in oil, gas, or other
mineral leases or exploration or development programs, but the Portfolio
may purchase securities of companies that own interests in any of the
foregoing.
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<PAGE>
12. Real Estate. The Portfolio may not invest in
real estate limited partnerships.
International Investing
-----------------------
Equity portfolios consisting solely of domestic
investments have not enjoyed the higher returns foreign opportunities can
offer. For more than thirty years, for example, the growth rate of many
foreign economies has outpaced that of the U.S. While the U.S. accounted
for almost 66% of the world's total securities market capitalization in
1970, it accounted for less than 45% of that total at the end of 1993 - or
less than half of the world's available stocks and bonds today (source:
Morgan Stanley Capital International).
Over time, a number of international equity markets have
outperformed their U.S. counterparts. Although there are no guarantees,
foreign markets could continue to provide attractive investment
opportunities.
In addition, according to Morgan Stanley Capital
International, the leading companies in any given sector are not always
U.S.-based. For example, 22 of the largest 25 automobile companies are
based outside the U.S. as are 20 of the top 25 banks.
A principal advantage of investing overseas is diversi-
fication. A diversified portfolio gives investors the opportunity to
pursue increased overall return while reducing risk. It is prudent to
diversify by taking advantage of investment opportunities in more than one
country's stock or bond market. By investing in several countries through
a worldwide portfolio, investors can lower their exposure and
vulnerability to weakness in any one market. Investors should be aware,
however, that international investing is not a guarantee against market
risk and may be affected by economic factors described in the Prospectus,
such as the prospects of individual companies, and other risks such as
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation.
Furthermore, for the individual investor, buying foreign
stocks and bonds can be difficult, involving many decisions. Accessing
international markets is complicated; few individuals have the time or
resources to evaluate thoroughly foreign companies and markets, or the
ability to incur the high transaction costs of direct investment in such
markets. A mutual fund investing in foreign securities offers an investor
broad diversification at a relatively low cost.
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<PAGE>
The Portfolio invests primarily in equity securities of
companies located in developed foreign economies, as well as in the
"emerging markets." In all cases the investment process of N&B Management
includes a combination of "top-down country allocation" and "bottom-up
security selection."
Top-down approach to regional and country diversification
N&B Management uses extensive economic research to
identify countries that offer attractive investment opportunities, by
analyzing factors such as Gross Domestic Product growth rates, interest
rate trends, and currency exchange rates. Market valuations, combined
with correlation and volatility comparisons, provide N&B Management with a
target allocation across 20 or more countries.
Bottom-up approach to security selection
N&B Management's value-driven style seeks out
attractively priced issues, by concentrating on criteria such as a low
price-to-earnings ratio relative to earnings growth rate, balance sheet
strength, low price to cash flow, and management quality. Typically, over
100 individual issues will comprise the portfolio. The portfolio will be
comprised of medium- to large-capitalization companies in relation to each
individual national market.
Currency Risk Management
Exchange rate movements and volatility are important
factors in international investing. N&B Management believes in actively
managing the Portfolio's currency exposure, in an effort to capitalize on
foreign currency trends and to reduce overall portfolio volatility.
Currency risk management is performed separately from equity analysis.
N&B Management intends to use a combination of economic analysis to guide
the Portfolio's longer-term posture and quantitative trend analysis to
assist in timing decisions with respect to whether (or when) to invest in
instruments denominated in a particular foreign currency, or whether or
when to hedge particular foreign currencies in which liquid foreign
exchange markets exist.
An Interview with Felix Rovelli, Portfolio Manager of the Portfolio
-------------------------------------------------------------------
Q: Why should investors allocate a portion of their assets
to international markets?
A: First, an investor who does not invest internationally
misses out on more than two-thirds of the world's potential investment
opportunities. The U.S. stock market today represents less than one-half
of the world's stock market capitalization, and the U.S. portion continues
to shrink as other countries around the world introduce or expand the size
of their equity markets. Privatizations of government-owned corporations,
initial public offerings, and the occasional creation of official stock
- 6 -
<PAGE>
exchanges in emerging economies, continuously present new opportunities
for capital in an expanding global market.
Second, many foreign economies are in earlier stages of
development than ours and are growing fast. Economic growth can often
mean potential for investment growth.
Finally, international investing helps an investor
increase diversification and can reduce risk. Domestic and foreign
markets generally do not all move in the same direction, so gains in one
market may offset losses in another.
Q: Does international investing involve special risks?
A: Currency risk is one important risk presented by
international investing. Fluctuations in exchange rates can either add to
or reduce an investor's returns, a fact that anyone who invests in foreign
markets should keep in mind.
Other risks include, but are not limited to, greater
market volatility, less government supervision and availability of public
information and the possibility of adverse economic or political
developments. The special risks of foreign investing are discussed in
greater detail in the Prospectus.
Q: What are some of the advantages of investing in an
international fund?
A: An international mutual fund can be a convenient way to
invest internationally and diversify assets among several markets to
reduce risk.
Additionally, the considerable burden of obtaining
timely, accurate and comprehensive information about foreign economies and
securities is left to seasoned professional managers.
Q: What is your investment approach?
A: N&B Management seeks to capitalize on investments in
countries where positive economic and political factors are likely to
produce above-average returns. Studies have shown that the allocation of
assets among countries is typically the most important factor contributing
to portfolio performance. N&B Management believes that in the long term,
a nation's economic growth and the performance of its equity market are
highly correlated. Therefore, N&B Management will continuously evaluate
the global economic outlook as well as individual country data to guide
country allocation. Our process also leads to diversification across many
countries, typically 20 or more, in an effort to limit total portfolio
risk.
- 7 -
<PAGE>
N&B Management strives to invest in companies within the
selected countries that are in the best position to capitalize on such
positive developments or companies that are most attractively valued. N&B
Management will usually include in the Portfolio's investments the
securities of large-capitalization companies in relation to each
individual national market, as well as securities of faster-growing,
medium-sized companies that offer potentially higher returns but are often
associated with higher risk.
The criteria for security selection focuses on companies
with leadership in specific markets or niches within specific industries,
which appear to exhibit positive fundamentals, and seem undervalued
relative to their earnings potential or the worth of their assets.
Typically, in emerging markets, N&B Management will invest in relatively
large, established companies which N&B Management believes possess the
managerial, financial, and marketing strength to exploit successfully the
growth of a dynamic economy. In more developed markets, such as Europe
and Japan, the Portfolio may invest to a higher degree in medium-sized
companies. Medium-sized companies can often provide above average growth,
and are less followed by market analysts, a fact that sometimes leads to
inefficient valuation.
Finally, N&B Management will strive to limit total
portfolio volatility and increase returns by selectively hedging the
Portfolio's foreign currency exposure in times when N&B Management expects
the U.S. Dollar to strengthen.
Q: How do you perceive the current outlook?
A: There is still an abundance of exciting investment
opportunities around the world. Many equity markets still have not
reached the maturity stage of the U.S. market and have much more room to
grow. There are new markets opening up to foreign investment and many
changes are occurring in markets where equity investments have
traditionally commanded less attention than fixed income securities.
In addition, it appears that both Europe and Japan
recently passed the bottom of their economic cycles. In many economies,
the current recession has been the most severe of all recessions in the
last five decades. With global inflation still in check, many economies
should continue to have lower interest rates, which, coupled with a
forecast of recovery in profits, could positively impact stock market
returns.
Timely Opportunity for Investors Looking for International Bargains
-------------------------------------------------------------------
"IF YOU HAVE MOST OF YOUR MONEY IN U.S. STOCKS, NOW MAY
BE A GOOD TIME TO SHIFT PART OF YOUR PORTFOLIO ABROAD." THE WALL STREET
JOURNAL, JULY 25, 1995
- 8 -
<PAGE>
While the U.S. stock market has been reaching new highs
in recent months, you may be able to find more bargains in international
stocks than you may locate on Wall Street. "Today, we are finding a large
supply of excellent companies whose stocks are priced at very low levels,"
explains Felix Rovelli, portfolio manager for the Neuberger & Berman
International Fund, a fund that invests in the stocks of companies outside
the United States.
"For the past year," Rovelli continues, "the economies of
many countries have been growing, and the fundamentals of many selected
individual company stocks have looked strong. Yet because of concerns --
over Mexico and the falling U.S. dollar, among other things --
international stock prices have lagged. That is, until recently."
AFTER FACING SETBACKS IN 1994 AND EARLIER THIS YEAR,
PLENTY OF REGIONS OUTSIDE THE U.S. HAVE BEGUN TO BOUNCE BACK.
In its latest, June 1995 quarterly report on mutual
funds, The Wall Street Journal reported that stock markets in both
emerging areas and developed European countries rebounded strongly from
April 1st to June 30th.1/
What is causing this apparent turnaround? France, Italy,
and other European countries are recovering from recessions. In
developing countries like Thailand and Malaysia, the economies are moving
ahead at impressive growth rates of 6% to 10% annually -- over twice the
U.S. rate.
--------------
1/ July 7, 1995. Drawn from data supplied by Lipper Analytical
Services.
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<PAGE>
OVER THE PAST DECADE, INTERNATIONAL STOCKS HAVE
OUTPERFORMED U.S. STOCKS.
If you had invested $10,000 in both international and
U.S. stocks ten years ago, here's what your investments would have been
worth (as of June 30, 1995):2/
Value of Avg. annualized
investment total return
International stocks (EAFE) $45,587 16.38%
Domestic stocks (S&P 500) $39,131 14.62%
Of course, these historical results may not continue in
the future and cannot predict or reflect the performance of Neuberger &
Berman International Fund. In addition, investors should keep in mind the
greater risks inherent in foreign markets, such as currency exchange
fluctuations, interest rates, and economic and political conditions, all
of which can lead to a greater degree of volatility than funds that invest
primarily in U.S. stocks.
NEUBERGER & BERMAN INTERNATIONAL FUND SEARCHES FAR AND
WIDE FOR THE BEST BARGAINS OUTSIDE THE U.S.
Without restrictions as to regions, portfolio manager
Felix Rovelli can exploit investment opportunities wherever and whenever
they arise -- in both developed and emerging economies. He invests in the
stocks of companies with solid fundamentals that he believes are
undervalued and have above average potential for capital appreciation.
------------------
2/ Source: Ibbotson Associates. For the period ended June 30,
1995. International stocks are represented by the Morgan Stanley
Capital International European, Australia, Far East (EAFE) Index,
an unmanaged index of non-U.S. equity performance. Domestic
stocks are represented by the Standard & Poor's 500 Index, an
unmanaged index of U.S. equity performance. Indices do not take
into account any fees and expenses of investing in the individual
securities that they track, and that individuals cannot invest
directly in any index. Average annualized total returns are
measured in U.S. dollars and include changes in share price,
dividends paid and the gross effect of reinvesting dividends.
- 10 -
<PAGE>
International Fund's current top holdings include Nokia,
an international pioneer in cellular technology based in Finland ... Thai
Farmers Bank, a financial leader in Thailand, a country whose economy is
growing at a healthy 6% to 7% rate ... and Astra, a fast-growing Swedish
manufacturer of gastrointestinal and respiratory drugs.3/
Additional Investment Information
---------------------------------
The Portfolio may make the following investments, among
others. It may not buy all of the types of securities, or use all of the
investment techniques, that are described.
Repurchase Agreements. Repurchase agreements are agreements under which
the Portfolio purchases securities from a bank that is a member of the
Federal Reserve System, a foreign bank, or a U.S. branch or agency of a
foreign bank 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. The Portfolio will not enter into a repurchase
agreement with a maturity of more than seven business days if, as a
result, more than 10% of the value of its net assets would then be
invested in such repurchase agreements and other illiquid securities. The
Portfolio will enter into a repurchase agreement only if (1) the
underlying securities are of the type that the Portfolio's investment
policies and limitations would allow it to purchase directly, (2) the
market value of the underlying securities, including accrued interest, at
all times equals or exceeds the value of the repurchase agreement, 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
the custodian or a bank acting as the Portfolio's agent. If the Portfolio
enters into a repurchase agreement subject to foreign law and the counter-
party defaults, the Portfolio may not enjoy protections comparable to
those provided to certain repurchase agreements under U.S. bankruptcy law,
and may suffer delays and losses in disposing of the collateral as a
result.
--------------------
3/ International Fund's portfolio is invested in a wide array of
stocks, and no single stock makes up more than a small fraction
of the portfolio's total assets. Of course, the portfolio's
holdings are subject to change.
- 11 -
<PAGE>
Securities Loans. In order to realize income, the
Portfolio may lend portfolio securities with a value not exceeding 33-1/3%
of its total assets to banks, brokerage firms, or institutional investors
judged creditworthy by N&B Management. Borrowers are required
continuously to secure their obligations to return securities on loan from
the Portfolio by depositing collateral, which will be marked-to-market
daily, in a form determined to be satisfactory by the Portfolio Trustees
and 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. The
Portfolio may invest in restricted securities, which are securities that
may not be sold to the public without an effective registration statement
under the 1933 Act or, if they are unregistered, may be sold only in a
privately negotiated transaction or pursuant to an exemption from
registration. In recognition of the increased size and liquidity of the
institutional markets for unregistered securities and the importance of
institutional investors in the formation of capital, the SEC has adopted
Rule 144A under the 1933 Act, which is designed to further 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 the 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 regis-
tering 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 have the effect of increasing the level of
the Portfolio's illiquidity. N&B Management, acting under guidelines
established by the Portfolio Trustees, may determine that certain
securities qualified for trading under Rule 144A are liquid. Foreign
securities that can be freely sold in the markets in which they are
principally traded are not considered by the Portfolio to be restricted.
Regulation S under the 1933 Act permits the sale abroad of securities that
are not registered for sale in the U.S.
Where registration is required, the Portfolio may be
obligated to pay all or part of the registration expenses, and a
considerable period may elapse between the decision to sell and the time
the Portfolio may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market
conditions were to develop, the Portfolio might obtain a less favorable
price than prevailed when it decided to sell. To the extent privately
placed securities, including Rule 144A securities, are illiquid, purchases
thereof will be subject to the Portfolio's 10% limit on investments in
illiquid securities. Restricted securities for which no market exists are
- 12 -
<PAGE>
priced at fair value as determined in accordance with procedures approved
and periodically reviewed by the Portfolio Trustees.
Reverse Repurchase Agreements. A reverse repurchase
agreement involves the Portfolio's sale of 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 Portfolio's investment
limitations and policies concerning borrowings. While a reverse
repurchase agreement is outstanding, the Portfolio will maintain with its
custodian in a segregated account cash or 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
counter-party will be unable or unwilling to complete the transaction as
scheduled, which may result in losses to the Portfolio.
Leverage. The Portfolio may make investments when
borrowings are outstanding. Leveraging the Portfolio creates an
opportunity for increased net income but, at the same time, creates
special risk considerations. For example, leveraging may exaggerate
changes in the net asset value of Fund shares and in the Fund's yield.
Although the principal of such borrowings will be fixed, the Portfolio's
assets may change in value during the time the borrowing is outstanding.
Leveraging will create interest expenses for the Portfolio which can
exceed the income from the assets obtained. To the extent the income
derived from securities purchased with borrowed funds exceeds the interest
the Portfolio will have to pay, the Portfolio's net income will be greater
than it would be if leveraging were not used. Conversely, if the income
from the assets obtained with borrowed funds is not sufficient to cover
the cost of leveraging, the net income of the Portfolio will be less than
it would be if leveraging were not used, and therefore the amount
available for distribution to stockholders as dividends will be reduced.
Reverse repurchase agreements which the Portfolio does not fully
collateralize create leverage, a speculative factor, and will also be
considered as borrowings for purposes of the Portfolio's investment
limitations.
Generally, the Portfolio does not intend to use leverage for
investment purposes. It may, however, use leverage to purchase securities
needed to close out short sales entered into for hedging purposes and to
facilitate other hedging transactions.
Foreign Securities. Investments in foreign securities
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 develop-
ments (including political instability) and the potentially adverse
effects of unavailability of public information regarding issuers, less
governmental supervision of financial markets, reduced liquidity of
certain financial markets, and the lack of uniform accounting, auditing,
and financial standards or the application of standards that are different
or less stringent than those applied in the U.S.
- 13 -
<PAGE>
The Portfolio may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including, but not limited to, (1) common and preferred
stocks, (2) convertible securities, (3) warrants (subject to non-
fundamental limitation number 10), (4) bank certificates of deposit
("CDs"), commercial paper, fixed-time deposits, and bankers' acceptances
issued by foreign banks, (5) obligations of other corporations, and
(6) obligations of foreign governments, or their subdivisions, agencies,
and instrumentalities, international agencies, and supranational entities.
Investing in these securities includes the special risks associated with
investing in non-U.S. issuers described in the preceding paragraph and the
additional risks of (1) nationalization, expropriation, or confiscatory
taxation, (2) adverse changes in investment or exchange control
regulations (which could prevent cash from being brought back to the
U.S.), and (3) expropriation or nationalization of foreign portfolio
companies. Additionally, dividends and interest payable on foreign
securities may be subject to foreign taxes, including taxes withheld from
those payments. Commissions on foreign securities exchanges are often at
fixed rates and are generally higher than negotiated commissions on U.S.
exchanges, although the Portfolio endeavors to achieve the most favorable
net results on portfolio transactions. There is generally less government
supervision and regulation of securities exchanges, brokers, dealers and
listed companies than in the U.S. Mail service between the U.S. and
foreign countries may be slower or less reliable than within the U.S.,
thus increasing the risk of delayed settlements of portfolio transactions
or loss of certificates for portfolio securities.
Prices of foreign securities and exchange rates for
foreign currencies may be affected by the interest rates prevailing in
other countries. The interest rates in other countries are often affected
by local factors, including the strength of the local economy, the demand
for borrowing, the government's fiscal and monetary policies, and the
international balance of payments.
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 custodian fees than apply to
domestic custodial arrangements, and the transaction costs of foreign
currency conversions. Changes in foreign exchange rates also will affect
the value of securities denominated or quoted in currencies other than the
U.S. dollar.
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
- 14 -
<PAGE>
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either 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. Moreover, 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.
The Portfolio may invest in U.S. dollar-denominated
securities issued by foreign issuers (including banks, governments and
quasi-governments) and foreign branches of U.S. banks, including
negotiable CDs, bankers' acceptances and commercial paper, subject to the
Portfolio's quality standards.
Forward Commitments and When-Issued Securities. The
Portfolio may purchase securities on a when-issued basis or purchase or
sell securities on a forward commitment basis. These transactions involve
a commitment by the Portfolio to purchase or sell securities at a future
date (ordinarily one or two months later). The price of the underlying
securities (usually expressed in terms of yield) and the date when the
securities will be delivered and paid for (the settlement date) are fixed
at the time the transaction is negotiated. When-issued purchases and
forward commitment transactions are negotiated directly with the other
party, and such commitments are not traded on exchanges.
When-issued purchases and forward commitment transactions
enable the Portfolio to "lock in" what N&B Management believes to be an
attractive price or yield on a particular security for a period of time,
regardless of future changes in interest rates. For instance, in periods
of rising interest rates and falling prices, the Portfolio might sell
securities it owns on a forward commitment basis to limit its exposure to
falling prices. In periods of falling interest rates and rising prices,
the Portfolio might purchase a security on a when-issued or forward
commitment basis and sell a similar security to settle such purchase,
thereby obtaining the benefit of currently higher yields.
The value of securities purchased on a when-issued or
forward commitment basis and any subsequent fluctuations in their value
are reflected in the computation of the Portfolio's net asset value
starting on the date of the agreement to purchase the securities. The
Portfolio does not earn interest on the securities it has committed to
purchase until they are paid for and delivered on the settlement date.
When the Portfolio makes a forward commitment to sell securities it owns,
the proceeds to be received upon settlement are included in the
Portfolio's assets. Fluctuations in the market value of the underlying
securities are not reflected in the Portfolio's NAV as long as the
commitment to sell remains in effect. Settlement of when-issued purchases
and forward commitment transactions generally takes place within two
months after the date of the transaction, but the Portfolio may agree to a
longer settlement period.
- 15 -
<PAGE>
The Portfolio will purchase securities on a when-issued
basis or purchase or sell securities on a forward commitment basis only
with the intention of completing the transaction and actually purchasing
or selling the securities. If deemed advisable as a matter of investment
strategy, however, the Portfolio may dispose of or renegotiate a
commitment after it has been entered into. The 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 a capital gain or loss in connection with these transactions.
When the Portfolio purchases securities on a when-issued
or forward commitment basis, the Portfolio's custodian bank will maintain
in a segregated account securities having a value (determined daily) at
least equal to the amount of the Portfolio's purchase commitments. In the
case of a forward commitment to sell portfolio securities, the custodian
will hold the portfolio securities themselves in a segregated account
while the commitment is outstanding. These procedures are designed to
ensure that the Portfolio will maintain sufficient assets at all times to
cover its obligations under when-issued purchases and forward commitments.
Put and Call Options on Individual Securities. The
Portfolio may write call options and purchase put options on securities in
order to hedge (i.e., write or purchase options to reduce the effect of
price fluctuations of securities held by the Portfolio that affect the
Fund's NAV). The Portfolio may also purchase or write put options,
purchase call options and write covered call options in an attempt to
enhance income.
The obligation under any option terminates upon
expiration of the option or at an earlier time, when the writer offsets
the option by entering into a "closing purchase transaction" to purchase
an option of the same series. If an option is purchased by the Portfolio
and is never exercised, the Portfolio will lose the entire amount of the
premium paid.
The Portfolio will receive a premium for writing a put
option, which will obligate the Portfolio to acquire a certain security at
a certain price at any time until a certain date if the purchaser of the
option decides to sell such security. The Portfolio may be obligated to
purchase the security at more than its current value.
When the Portfolio purchases a put option, it pays a
premium to the writer for the right to sell a security to the writer for a
specified amount at any time until a certain date. The Portfolio would
purchase a put option in order to protect itself against a decline in the
market value of a security it owns.
When the Portfolio writes a call option, it is obligated
to sell a security to a purchaser at a specified price at any time the
purchaser requests, until a certain date, and receives a premium for
writing the call option. 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.
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The Portfolio may be obligated to deliver securities underlying an option
at less than the market price thereby giving up any additional gain on the
security. The Portfolio intends to write only "covered" call options on
securities it owns.
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. A call option would be purchased
by the Portfolio in order to protect against an increase in the price of
the securities it intends to purchase or to offset a previously written
call option.
Portfolio securities on which call and put options may be
written and purchased by the Portfolio are purchased solely on the basis
of investment considerations consistent with the Portfolio's investment
objective. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk in
contrast to the writing of "naked" or uncovered call options, which the
Portfolio will not do. A covered call option, however, is capable of
enhancing the Portfolio's total return. When writing a covered call
option, the Portfolio, in return for the premium, gives up the opportunity
for profit from a price increase in the underlying security above the
exercise price, but conversely retains the risk of loss should the price
of the security decline. When writing a put option, the Portfolio, in
return for the premium, takes the risk that it must purchase the
underlying security at the exercise price, which may be more 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.
Securities options are traded both on exchanges and in
the over-the-counter ("OTC") market. Exchange-traded options are issued
by a clearing organization affiliated with the exchange on which the
option is listed; the clearing organization in effect guarantees
completion of every exchange-traded option. In contrast, OTC options are
contracts between the Portfolio and its counter-party with no clearing
organization guarantee. Thus, when the Portfolio sells or purchases an
OTC option, it generally will be able to "close out" the option prior to
its expiration only by entering into a "closing purchase 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
different cover is substituted. In the event of the counter-party's
insolvency, the Portfolio may be unable to liquidate its option position
and the associated cover. N&B Management monitors the creditworthiness of
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dealers with whom the Portfolio may engage in OTC options, and will limit
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 (and held in a segregated
account) for OTC options sold or written by the Portfolio will be
considered illiquid for purposes of the non-fundamental policies and
limitations of the Portfolio unless the OTC options are sold to qualified
dealers who agree that the Portfolio may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the
option agreement. The cover for an OTC call option written subject to
this procedure will be considered illiquid only to the extent that the
maximum repurchase price under the formula exceeds the intrinsic value of
the option.
The premium received (or paid) by the Portfolio when it
writes (or purchases) a call or put option is the amount at which the
option is currently traded on the applicable exchange, less (or plus) a
commission. The premium may reflect, among other things, the current
market price of the underlying security, the relationship of the exercise
price to the market price, the historical price volatility of the
underlying security, the length of the option period, the general supply
of and demand for credit, and the general interest rate environment. The
premium received by the Portfolio for writing a covered call or put option
is recorded as a liability on the Portfolio's statement of assets and
liabilities. This liability is adjusted daily to the option's current
market value, which is the sales price on the option's last reported trade
on that day before the time the Portfolio's NAV is computed or, in the
absence of any trades thereof on that day, the mean between the bid and
ask prices as of that time.
Closing transactions are effected in order to realize a
profit on an outstanding option, to prevent an underlying security from
being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits the Portfolio to
write another call option in the underlying security with either a
different exercise price or expiration date or both. If the Portfolio
desires to sell a particular security on which it has written a call
option (or if it desires to protect itself against having to purchase a
security on which it has written a put option), it will seek to effect a
closing transaction prior to, or concurrently with, the sale (or purchase)
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
subject to market risk on the security.
Options normally have expiration dates between three and
nine months from the date written. The Portfolio may purchase both
European-style options and American-style options. European-style options
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<PAGE>
are only exercisable immediately prior to their expiration. American-
style options, in contrast, are exercisable at any time prior to their
expiration date. The exercise price of an option may be below, equal to,
or above the current market value of the underlying security at the time
the option is written. From time to time, the Portfolio may purchase an
underlying security for delivery in accordance with an exercise notice of
a call option assigned to it, rather than delivering the security from its
portfolio. In those cases, additional brokerage commissions are incurred.
The Portfolio will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is less or
more than the premium received from writing the call or put option.
However, because increases in the market price of a call option generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned by the
Portfolio.
Put and Call Options on Securities Indices. The
Portfolio may write or purchase put and call options on securities indices
for the purpose of hedging against the risk of unfavorable price movements
adversely affecting the value of the Portfolio's securities or securities
the Portfolio intends to buy. However, the Portfolio currently does not
expect to invest a substantial portion of its assets in securities index
options. Unlike a securities option, which gives the holder the right to
purchase or sell a specified security at a specified price, an option on a
securities index gives the holder the right to receive a cash "exercise
settlement amount" equal to (i) the difference between the exercise price
of the option and the value of the underlying securities index on the
exercise date multiplied by (ii) a fixed "index multiplier."
A securities index fluctuates with changes in the market
values of the securities included in the index. Options on stock indexes
are currently traded on the Chicago Board Options Exchange, the NYSE, the
AmEx and foreign exchanges.
The Portfolio may purchase put options in order to hedge
against an anticipated decline in securities market prices that might
adversely affect the value of the Portfolio's portfolio securities. If
the Portfolio purchases a put option on a securities index, the amount of
the payment it would receive upon exercising the option would depend on
the extent of any decline in the level of the securities index below the
exercise price. Such payments would tend to offset a decline in the value
of the Portfolio's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the
put option is outstanding, the Portfolio will not be able to exercise the
option profitably and will lose the amount of the premium and any
transaction costs. Such loss may be partially offset by an increase in
the value of the Portfolio's portfolio securities.
The Portfolio may purchase call options on securities
indices in order to participate in an anticipated increase in securities
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<PAGE>
market prices. If the Portfolio purchases a call option on a securities
index, the amount of the payment it receives upon exercising the option
depends on the extent of any increase in the level of the securities index
above the exercise price. Such payments would, in effect, allow the
Portfolio to benefit from securities market appreciation even though it
may not have had sufficient cash to purchase the underlying securities.
Such payments may also offset increases in the price of securities that
the Portfolio intends to purchase. If, however, the level of the
securities index declines and remains below the exercise price while the
call option is outstanding, the Portfolio will not be able to exercise the
option profitably and will lose the amount of the premium and transaction
costs. Such loss may be partially offset by a reduction in the price the
Portfolio pays to buy additional securities for its portfolio.
The Portfolio may write securities index options in order
to close out positions in securities index options which it has purchased.
These closing sale transactions enable the Portfolio immediately to
realize gains or minimize losses on its options positions. If the
Portfolio is unable to effect a closing sale transaction with respect to
options that it has purchased, it would have to exercise the options in
order to realize any profit and may incur transaction costs upon the
purchase or sale of underlying securities.
The hours of trading for options may not conform to the
hours during which the underlying securities are traded. To the extent
that the options markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the options markets.
The effectiveness of hedging through the purchase of
securities index options will depend upon the extent to which price
movements in the portion of the securities portfolio being hedged
correlate with price movements in the selected securities index. Perfect
correlation is not possible because the securities held or to be acquired
by the Portfolio will not exactly match the composition of the securities
indices on which options are available. In addition, the purchase of
securities index options involves the risk that the premium and
transaction cost paid by the Portfolio in purchasing an option will be
lost as a result of unanticipated movements in prices of the securities
comprising the securities index on which the option is based.
Other Risks of Options Transactions. All securities
index options purchased by the Portfolio will be listed and traded on an
exchange. There is no assurance that a liquid secondary market on a
domestic or foreign options exchange will exist for any particular
exchange-traded option, or at any particular time, and for some options no
secondary market on an exchange or elsewhere may exist. If the Portfolio
is unable to effect a closing purchase transaction with respect to covered
options it has written, it will not be able to sell the underlying
securities or dispose of assets held in a segregated account until the
options expire or are exercised. The Portfolio may purchase and sell
options that are traded on both U.S. and foreign exchanges.
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<PAGE>
Reasons for the absence of a liquid secondary market on
an exchange include the following: (i) there may be insufficient interest
in trading certain options; (ii) restrictions may be imposed by an
exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or its
clearing organization may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which
event the secondary market on that exchange (or in that class or series of
options) would cease to exist, although outstanding options on that
exchange that had been issued by the clearing organization as a result of
trades on that exchange would continue to be exercisable in accordance
with their terms.
The writing and purchase of options is a highly
specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio securities
transactions. The writing of options on securities involves a risk that a
portfolio will be required to sell or purchase such securities at a price
less favorable than the current market price and will lose the benefit of
appreciation or depreciation in the market price of such securities.
The Portfolio would incur brokerage commissions or
spreads in connection with its options transactions as well as for
purchases and sales of underlying securities. Brokerage commissions from
options transactions may be higher or lower than for portfolio securities
transactions. The writing of options could result in a significant
increase in the Portfolio's turnover rate.
Futures Contracts. The Portfolio may enter into futures
contracts for the purchase or sale of individual securities and futures
contracts on securities indices which are traded on exchanges licensed and
regulated by the Commodity Futures Trading Commission ("CFTC") or on
foreign exchanges. Trading on foreign exchanges is subject to the legal
requirements of the jurisdiction in which the exchange is located and the
rules of such foreign exchange. The Portfolio may purchase and sell
futures for BONA FIDE hedging purposes and non-hedging purposes (i.e., in
an effort to enhance income) as defined in regulations of the CFTC.
A futures contract on a security is a binding contractual
commitment which, if held to maturity, will result in an obligation to
make or accept delivery of securities having a standardized face value and
rate of return during a particular month. By purchasing futures on
securities the Portfolio will legally obligate itself to accept delivery
of the underlying security and to pay the agreed price. By selling
futures on securities, the Portfolio will legally obligate itself to make
delivery of the security and receive payment of the agreed price.
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<PAGE>
Open futures positions on securities are valued at the
most recent settlement price, unless such price does not reflect the fair
value of the contract, in which case the position will be valued by or
under the direction of the Trustees of Managers Trust.
Futures contracts on securities are not normally held to
maturity but are instead liquidated through offsetting transactions which
may result in a profit or loss. While futures contracts on securities
entered into by the Portfolio will usually be liquidated in this manner,
the Portfolio may instead make or take delivery of the underlying
securities whenever it appears economically advantageous for it to do so.
A clearing corporation associated with the exchange on which futures on
securities are traded assumes responsibility for closing out and
guarantees that, if still open, the sale or purchase of securities will be
performed on the settlement date.
Similarly, a securities index futures contract does not
require the physical delivery of securities, but merely provides for
profits and losses resulting from changes in the market value of the
contract to be credited or debited at the close of each trading day to the
respective accounts of the parties to the contract. On the contract's
expiration date, a final cash settlement occurs and the futures positions
are simply closed out. Changes in the market value of a particular
securities index futures contract reflect changes in the specified index
of the securities on which the futures contract is based.
The Portfolio sells futures contracts in order to offset
a possible decline in the value of its securities. When a futures
contract is sold by the Portfolio, the value of the contract will tend to
rise when the value of the Portfolio's securities declines and will tend
to fall when the value of such securities increases. The Portfolio
purchases futures contracts in order to fix what is believed to be a
favorable price for securities the Portfolio intends to purchase. If a
futures contract is purchased by the Portfolio, the value of the contract
will tend to change together with changes in the value of such securities.
The Portfolio may also purchase put and call options on
futures contracts for BONA FIDE hedging and non-hedging purposes. A put
option purchased by the Portfolio would give it the right to assume a
position as the seller of a futures contract (assume a "short position").
A call option purchased by the Portfolio would give it the right to assume
a position as the purchaser of a futures contract (assume a "long
position"). The purchase of an option on a futures contract requires the
Portfolio to pay a premium. In exchange for the premium, the Portfolio
becomes entitled to exercise the benefits, if any, provided by the futures
contract, but is not required to take any actions under the contract. If
the option cannot be profitably exercised before it expires, the
Portfolio's loss will be limited to the amount of the premium and any
transaction costs.
In addition, the Portfolio may write (sell) put and call
options on futures contracts for BONA FIDE hedging and non-hedging
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<PAGE>
purposes. The writing of a put option on a futures contract generates a
premium, which may partially offset an increase in the price of securities
that the Portfolio intends to purchase. However, the Portfolio becomes
obligated to purchase a futures contract, which may have a value lower
than the exercise price. Conversely, the writing of a call option on a
futures contract generates a premium which may partially offset a decline
in the value of the Portfolio assets. By writing a call option, the
Portfolio becomes obligated, in exchange for the premium, to sell a
futures contract, which may have a value higher than the exercise price.
The Portfolio may enter into closing purchase or sale
transactions in order to terminate a futures contract. The Portfolio may
close out an option which it has purchased or written by selling or
purchasing an offsetting option of the same series. There is no guarantee
that such closing transactions can be effected. The Portfolio's ability
to enter into closing transactions depends on the development and
maintenance of a liquid market, which may not exist at all times.
Although futures and options transactions are intended to
enable the Portfolio to manage interest rate, stock market or currency
exchange risks, unanticipated changes in interest rates, market prices or
currency exchange rates could result in poorer performance than if the
Portfolio had not entered into these transactions. Even if N&B Management
correctly predicts interest rate, market price or currency rate movements,
a hedge could be unsuccessful if changes in the value of the Portfolio's
futures position did not correspond to changes in the value of its
investments. This lack of correlation between the Portfolio's futures and
securities or currency positions may be caused by differences between the
futures and securities or currency markets or by differences between the
securities underlying the Portfolio's futures position and the securities
held by or to be purchased for the Portfolio. N&B Management will attempt
to minimize these risks through careful selection and monitoring of the
Portfolio's futures and options positions. The ability to predict the
direction of the securities markets, interest rates and currency exchange
rates involves skills different from those used in selecting securities.
The prices of futures contracts depend primarily on the
value or level of the securities or indices on which they are based.
Because there is a limited number of types of futures contracts, it is
likely that the standardized futures contracts available to the Portfolio
will not exactly match the securities the Portfolio wishes to hedge or
intends to purchase, and consequently will not provide a perfect hedge
against all price fluctuation. To compensate for differences in
historical volatility between positions the Portfolio wishes to hedge and
the standardized futures contracts available to it, the Portfolio may
purchase or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase.
Foreign Currency Transactions. The Portfolio may engage
in foreign currency exchange transactions. Foreign currency exchange
transactions will be conducted either on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market, or through
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<PAGE>
entering into forward contracts to purchase or sell foreign currencies
("forward contracts"). The Portfolio may enter into forward contracts in
order to protect against uncertainty in the level of future foreign
currency exchange rates and may also enter forward contracts for non-
hedging purposes. A forward contract involves an obligation to purchase
or sell a specific currency at a future date, which may be any fixed
number of days (usually less than one year) from the date of the contract
agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly
between traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no commissions
are charged at any stage for trades. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the spread) between the price at which they are buying and
selling various currencies.
When the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may
wish to "lock in" the U.S. dollar price of the security. By entering into
a forward contract for the purchase or sale, for a fixed amount of U.S.
dollars, of the amount of foreign currency involved in the underlying
security transactions, the Portfolio will be able to protect itself
against a possible loss. Such loss would result from an adverse change in
the relationship between the U.S. dollar and the foreign currency during
the period between the date on which the security is purchased or sold and
the date on which payment is made or received.
When N&B Management believes that the currency of a
particular foreign country may suffer a substantial decline against the
U.S. dollar, it may also enter into a forward contract to sell the amount
of foreign currency for a fixed amount of dollars which approximates the
value of some or all of the portfolio securities denominated in such
foreign currency. The precise matching of the forward contract amounts
and the value of the securities involved will not generally be possible,
since the future value of such securities denominated in foreign
currencies will change as a consequence of market movements in the value
of those securities between the date the forward contract is entered into
and the date it matures.
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, when N&B
Management believes that there is a pattern of correlation between the two
currencies. The Portfolio may also purchase and sell forward contracts
for non-hedging purposes when N&B Management anticipates that the foreign
currency will appreciate or depreciate in value, but securities in that
currency do not present attractive investment opportunities and are not
held in the Portfolio's investment portfolio.
When the Portfolio engages in forward contracts for
hedging purposes, it will not enter into forward contracts to sell
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<PAGE>
currency or maintain a net exposure to such contracts if their
consummation would obligate the Portfolio to deliver an amount of foreign
currency in excess of the value of the Portfolio's portfolio securities or
other assets denominated in that currency. At the consummation of the
forward contract, the Portfolio may either make delivery of the foreign
currency or terminate its contractual obligation to deliver by purchasing
an offsetting contract obligating it to purchase the same amount of such
foreign currency at the same maturity date. If the Portfolio chooses to
make delivery of the foreign currency, it may be required to obtain such
currency through the sale of portfolio securities denominated in such
currency or through conversion of other assets of the Portfolio into such
currency. If the Portfolio engages in an offsetting transaction, it will
incur a gain or a loss to the extent that there has been a change in
forward contract prices. Closing purchase transactions with respect to
forward contracts are usually made with the currency trader who is a party
to the original forward contract.
The Portfolio is not required to enter into such
transactions and will not do so unless deemed appropriate by N&B
Management.
Using forward contracts to protect the value of the
Portfolio's securities against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange which can be achieved at some future
point in time. The precise projection of short-term currency market
movements is not possible, and short-term hedging provides a means of
fixing the dollar value of only a portion of the Portfolio's foreign
assets.
While the Portfolio may enter into forward contracts to
reduce currency exchange rate risks, transactions in such contracts
involve certain other risks. Thus, while the Portfolio may benefit from
such transactions, unanticipated changes in currency prices may result in
a poorer overall performance for the Portfolio than if it had not engaged
in any such transactions. Moreover, there may be imperfect correlation
between the Portfolio's holdings of securities denominated in a particular
currency and forward contracts entered into by the Portfolio. Such
imperfect correlation may cause the Portfolio to sustain losses which will
prevent the Portfolio from achieving a complete hedge or expose the
Portfolio to risk of foreign exchange loss.
An issuer of fixed income securities purchased by the
Portfolio may be domiciled in a country other than the country in whose
currency the instrument is denominated. The Portfolio may also invest in
debt securities denominated in the European Currency Unit ("ECU"), which
is a "basket" consisting of a specified amount of the currencies of
certain of the member states of the European Community. The specific
amounts of currencies comprising the ECU may be adjusted by the Council of
Ministers of the European Community from time to time to reflect changes
in relative values of the underlying currencies. In addition, the
Portfolio may invest in securities denominated in other currency
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<PAGE>
"baskets." The market for ECUs may become illiquid at times of
uncertainty or rapid change in the European currency markets, limiting the
Portfolio's ability to prevent potential losses.
Currency Futures and Related Options. The Portfolio may
enter into currency futures contracts and options on such futures
contracts in domestic and foreign markets. The Portfolio may sell a
currency futures contract or a call option, or it may purchase a put
option on such futures contract, if N&B Management anticipates that
exchange rates for a particular currency will fall. Such a transaction
will be used as a hedge (or, in the case of a sale of a call option, a
partial hedge) against a decrease in the value of the Portfolio's
securities denominated in such currency. If N&B Management anticipates
that a particular currency will rise, the Portfolio may purchase a
currency futures contract or a call option to protect against an increase
in the price of securities which are denominated in a particular currency
and which the Portfolio intends to purchase. The Portfolio may also
purchase a currency futures contract, or a call option thereon, for non-
hedging purposes when N&B Management anticipates that a particular
currency will appreciate in value, but securities denominated in that
currency do not present an attractive investment and are not included in
the Portfolio's portfolio. The Portfolio will use these futures contracts
and related options for hedging purposes or non-hedging purposes (i.e., in
an effort to enhance income) as defined in CFTC regulations.
The sale of a currency futures contract creates an
obligation by the Portfolio, as seller, to deliver the amount of currency
called for in the contract at a specified future time for a specified
price. The purchase of a currency futures contract creates an obligation
by the Portfolio, as purchaser, to take delivery of an amount of currency
at a specified future time at a specified price. Although the terms of
currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without
the making or taking of delivery of the currency. Closing out of a
currency futures contract is effected by entering into an offsetting
purchase or sale transaction. To close out a currency futures contract
sold by the Portfolio, the Portfolio may purchase a currency futures
contract for the same aggregate amount of currency and same delivery date.
If the price in the sale exceeds the price in the offsetting purchase, the
Portfolio is immediately paid the difference. Similarly, to close out a
currency futures contract purchased by the Portfolio, the Portfolio sells
a currency futures contract. If the offsetting sale price exceeds the
purchase price, the Portfolio realizes a gain. Likewise, if the
offsetting sale price is less than the purchase price, the Portfolio
realizes a loss.
Unlike a currency futures contract, which requires the
parties to buy and sell currency on a set date, an option on a futures
contract entitles its holder to decide on or before a future date whether
to enter into such a contract. If the holder decides not to enter into
the contract, the premium paid for the option is lost. For the holder of
an option, there are no daily payments of cash for "variation" or
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<PAGE>
"maintenance" margin payments to reflect the change in the value of the
underlying contract as there are by a purchaser or seller of a currency
futures contract.
A risk in employing currency futures contracts to protect
against price volatility of portfolio securities which are denominated in
a particular currency is that the prices of such securities subject to
currency futures contracts may not completely correlate with the behavior
of the cash prices of the Portfolio's securities. The correlation may be
distorted by the fact that the currency futures market may be dominated by
short-term traders seeking to profit from changes in exchange rates. This
would reduce the value of such contracts used for hedging purposes over a
short-term period. Such distortions are generally minor and would
diminish as the contract approached maturity. Another risk is that N&B
Management could be incorrect in its expectation as to the direction or
extent of various exchange rate movements or the time span within which
the movements take place. When the Portfolio engages in the purchase of
currency futures contracts, an amount equal to the market value of the
currency futures contract (minus any required margin) will be deposited in
a segregated account of securities, cash, or cash equivalents to
collateralize the position and thereby limit the use of such futures
contracts.
Put and call options on currency futures have
characteristics similar to those of other options. In addition to the
risks associated with investing in options on securities, however, there
are particular risks associated with transactions in options on currency
futures. In particular, the ability to establish and close out positions
on such options will be subject to the development and maintenance of a
liquid secondary market for such options.
Options on Foreign Currencies. The Portfolio may
purchase options on foreign currencies for hedging purposes in a manner
similar to that of transactions in currency futures contracts or forward
contracts. For example, a decline in the dollar value of a foreign
currency in which portfolio securities are denominated will reduce the
dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such decreases in
the value of portfolio securities, the Portfolio may purchase put options
on the foreign currency. If the value of the currency declines, the
Portfolio will have the right to sell such currency for a fixed amount of
dollars which exceeds the market value of such currency. This would
result in a gain that may offset, in whole or in part, the negative effect
of currency depreciation on the value of the Portfolio's securities
denominated in that currency.
Conversely, if a rise in the dollar value of a currency
is projected for those securities to be acquired, thereby increasing the
cost of such securities, the Portfolio may purchase call options on such
currency. If the value of such currency increases, the purchase of such
call options would enable the Portfolio to purchase currency for a fixed
amount of dollars which is less than the market value of such currency.
- 27 -
<PAGE>
Such a purchase would result in a gain that may offset, at least
partially, the effect of any currency-related increase in the price of
securities the Portfolio intends to acquire. As in the case of other
types of options transactions, however, the benefit the Portfolio derives
from purchasing foreign currency options will be reduced by the amount of
the premium and related transaction costs. In addition, if currency
exchange rates do not move in the direction or to the extent anticipated,
the Portfolio could sustain losses on transactions in foreign currency
options which would deprive it of a portion or all of the benefits of
advantageous changes in such rates.
The Portfolio may also write options on foreign
currencies for hedging purposes. For example, if the Portfolio
anticipated a decline in the dollar value of foreign currency denominated
securities because of declining exchange rates, it could, instead of
purchasing a put option, write a call option on the relevant currency. If
the expected decline occurs, the option will most likely not be exercised,
and the decrease in value of portfolio securities will be offset by the
amount of the premium received by the Portfolio.
Similarly, the Portfolio could write a put option on the
relevant currency, instead of purchasing a call option, to hedge against
an anticipated increase in the dollar cost of securities to be acquired.
If exchange rates move in the manner projected, the put option will expire
unexercised and allow the Portfolio to offset such increased cost up to
the amount of the premium. However, as in the case of other types of
options transactions, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only
if rates move in the expected direction. If unanticipated exchange rate
fluctuations occur, the option may be exercised and the Portfolio would be
required to purchase or sell the underlying currency at a loss which may
not be fully offset by the amount of the premium. As a result of writing
options on foreign currencies, the Portfolio also may be required to
forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in currency exchange rates.
The Portfolio may purchase call options on currency for
non-hedging purposes when N&B Management anticipates that the currency
will appreciate in value, but the securities denominated in that currency
do not present attractive investment opportunities and are not included in
the Portfolio's portfolio. The Portfolio may write (sell) put and covered
call options on any currency in order to realize greater income than would
be realized on portfolio securities alone. However, in writing covered
call options for additional income, the Portfolio may forego the
opportunity to profit from an increase in the market value of the
underlying currency. Also, when writing put options, the Portfolio
accepts, in return for the option premium, the risk that it may be
required to purchase the underlying currency at a price in excess of the
currency's market value at the time of purchase.
The Portfolio would normally purchase call options for
non-hedging purposes in anticipation of an increase in the market value of
- 28 -
<PAGE>
a currency. The Portfolio would ordinarily realize a gain if, during the
option period, the value of such currency exceeded the sum of the exercise
price, the premium paid and transaction costs. Otherwise the Portfolio
would realize either no gain or a loss on the purchase of the call option.
Put options may be purchased by the Portfolio for the purpose of
benefiting from a decline in the value of currencies which it does not
own. The Portfolio would ordinarily realize a gain if, during the option
period, the value of the underlying currency decreased below the exercise
price sufficiently to more than cover the premium and transaction costs.
Otherwise the Portfolio would realize either no gain or a loss on the
purchase of the put option.
A call option written on foreign currency by the
Portfolio is "covered" if the Portfolio owns the underlying foreign
currency subject to the call, or if it has an absolute and immediate right
to acquire that foreign currency without additional cash consideration.
This also would apply to additional cash consideration held in a
segregated account by its custodian, upon conversion or exchange of other
foreign currency held in its portfolio. A call option is also covered if
the Portfolio holds a call on the same foreign currency for the same
principal amount as the call written where the exercise price of the call
held is (a) equal to or less than the exercise price of the call written
or (b) greater than the exercise price of the call written if the amount
of the difference is maintained by the Portfolio in cash or liquid, high-
grade debt securities in a segregated account with its custodian.
Limitations on Transactions in Options, Futures Contracts
and Foreign Currency Transactions. The Portfolio is required to maintain
margin deposits with brokerage firms through which it effects futures
contracts, and must deposit "initial margin" each time it enters into a
futures contract. Such "initial margin" is usually equal to a percentage
of the contract's value. In addition, due to current industry practice,
daily variation margin payments in cash are required to reflect gains and
losses on open futures contracts. As a result, the Portfolio may be
required to make additional margin payments during the term of a futures
contract. The Portfolio may not purchase or sell futures contracts
(including currency futures contracts) or related options on foreign or
U.S. exchanges if immediately thereafter the sum of the amounts of initial
margin deposits on the Portfolio's existing futures contracts and premiums
paid for options on futures (excluding futures contracts and options on
futures entered into for bona fide hedging purposes and net of the amount
the positions are "in the money") would exceed 5% of the market value of
the Portfolio's total assets. In instances involving the purchase of
futures contracts or the writing of put options thereon by the Portfolio,
an amount of cash, cash equivalents or securities denominated in the
appropriate currency equal to the market value of the futures contracts
and options (less any related margin deposits) will be deposited in a
segregated account with its custodian to collateralize the position,
thereby limiting the use of such futures contracts. Pursuant to an
undertaking made to a state securities administrator, the Portfolio will
not invest more than 5% of its total assets in instruments commonly known
as options, financial futures, or stock index futures, other than hedging
- 29 -
<PAGE>
positions or positions that are covered by cash or securities. Also, the
Portfolio has undertaken that it will not invest more than 5% of its total
assets in puts, calls, straddles, spreads, or any combination thereof.
The extent to which the Portfolio may enter into futures
contracts and option transactions may be limited by the requirements of
federal income tax law applicable to the Fund for qualification as a
regulated investment company. See "Additional Tax Information." The
Portfolio generally will not enter into a forward contract with a term of
greater than one year. The Portfolio may experience delays in the
settlement of its foreign currency transactions.
When the Portfolio engages in forward contracts for the
sale or purchase of currencies, the Portfolio will either cover its
position or establish a segregated account. The Portfolio will consider
its position covered if it has securities in the currency subject to the
forward contract, or otherwise has the right to obtain that currency at no
additional cost. In the alternative, the Portfolio will place cash which
is not available for investment, liquid, high-grade debt securities or
other securities (denominated in the foreign currency subject to the
forward contract) in a separate account. The amounts in such separate
account will equal the value of the Portfolio's total assets which are
committed to the consummation of foreign currency exchange contracts. If
the value of the securities placed in the separate account declines, the
Portfolio will place additional cash or securities in the account on a
daily basis so that the value of the account will equal the amount of the
Portfolio's commitments with respect to such contracts.
Short Sales. The Portfolio may enter into short sales of
securities to the extent permitted by the Portfolio's non-fundamental
investment policies and limitations. Under applicable guidelines of the
staff of the SEC, if the Portfolio engages in a short sale of the type
referred to in the Prospectus, it must put in a segregated account (not
with the broker) an amount of cash or U.S. government securities equal to
the difference between (1) the market value of the securities sold short
at the time they were sold short and (2) any cash or U.S. government
securities required to be deposited as collateral with the broker in
connection with the short sale (not including the proceeds from the short
sale). In addition, until the Portfolio replaces the borrowed security,
it must daily maintain the segregated account at such a level that (3) the
amount deposited in it plus the amount deposited with the broker as
collateral will equal the current market value of the securities sold
short, and (4) the amount deposited in it plus the amount deposited with
the broker as collateral will not be less than the market value of the
securities at the time they were sold short.
The effect on the Portfolio of engaging in short selling
is similar to the effect of leverage. Short selling may exaggerate
changes in the Portfolio's and the Fund's NAVs and yield. Short selling
may also produce higher than normal portfolio turnover, which may result
in increased transaction costs to the Portfolio and may result in gains
from the sale of securities deemed to have been held for less than three
- 30 -
<PAGE>
months. Such gains must be limited in order for the Fund to continue to
qualify as a regulated investment company. See "Additional Tax
Information."
Foreign Corporate and Government Debt Securities. While
the emphasis of the Portfolio's investment program is on common stocks and
other equity securities, it may invest in foreign corporate bonds and
debentures and sovereign debt instruments issued or guaranteed by foreign
governments, their agencies or instrumentalities.
Foreign debt securities are subject to risks similar to
those of other foreign securities. In addition, foreign debt securities
are subject to the risk of an issuer's inability to meet principal and
interest payments on the obligations ("credit risk") and are also subject
to price volatility due to such factors as interest rate sensitivity,
market perception of the creditworthiness of the issuer, and general mar-
ket 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. Debt securities 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-
rated securities. Pricing of thinly traded securities requires greater
judgment than pricing of securities for which market transactions are
regularly reported. N&B Management will invest in such securities only
when it concludes that the anticipated return to the Portfolio and the
Fund on such an investment warrants exposure to the additional level of
risk. A further description of the ratings used by Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's ("S&P") is included in the
Appendix to the SAI. Subsequent to its purchase by the Portfolio, an
issue of securities may cease to be rated or its rating may be reduced.
In such a case, N&B Management will make a determination as to whether the
Portfolio should dispose of the downgraded securities.
The ratings of a nationally recognized statistical rating
organization represent its opinion as to the quality of securities it
undertakes to rate. Ratings are not absolute standards of quality;
consequently, securities with the same maturity, coupon, and rating may
have different yields.
Commercial Paper. Commercial paper is a short-term debt
security issued by a corporation or bank for purposes such as financing
current operations. The 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. It may invest in such
commercial paper as a defensive measure, to maintain adequate liquidity or
as needed for segregated accounts.
- 31 -
<PAGE>
The Portfolio may invest in commercial paper that cannot
be resold to the public without an effective registration statement under
the 1933 Act. While such restricted securities are normally deemed
illiquid, N&B Management may in certain cases determine that such paper is
liquid, pursuant to guidelines established by Managers Trust's Board of
Trustees.
Convertible Securities. A convertible security entitles
the holder to receive interest paid or accrued on debt or the dividend
paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Before conversion, convertible
securities ordinarily provide a stream of income with generally higher
yields than those of common stocks of the same or similar issuers, but
lower than the yield on non-convertible debt. Convertible securities are
usually subordinated to comparable tier nonconvertible securities but rank
senior to common stock in a corporation's capital structure. The value of
a convertible security is a function of (1) its yield in comparison with
the yields of other securities of comparable maturity and quality that do
not have a conversion privilege and (2) its worth, at market value, if
converted into the underlying common stock.
Convertible securities are typically issued by smaller
capitalized companies whose stock prices may be volatile. The price of a
convertible security often reflects such variations in the price of the
underlying common stock in a way that non-convertible debt does not. A
convertible security may be subject to redemption at the option of the
issuer at a price established in the security's governing instrument. If
a convertible security held by the Portfolio is called for redemption, the
Portfolio will be required to convert it into the underlying common stock,
sell it to a third party or permit the issuer to redeem the security. Any
of these actions could have an adverse effect on the Portfolio's and the
Fund's ability to achieve their investment objective.
Preferred Stock. Unlike interest payments on debt
securities, dividends on preferred stock are generally payable at the
discretion of the issuer's board of directors, although preferred
shareholders may have certain rights if dividends are not paid.
Shareholders may suffer a loss of value if dividends are not paid, and
generally have no legal recourse against the issuer. The market prices of
preferred stocks are generally more sensitive to changes in the issuer's
creditworthiness than are the prices of debt securities.
PERFORMANCE INFORMATION
The Fund's performance figures are based on historical
earnings and are not intended to indicate future performance. The share
price and total return of the Fund will vary, and an investment in the
Fund, when redeemed, may be worth more or less than the original purchase
price.
- 32 -
<PAGE>
Total Return Computations
-------------------------
The Fund may advertise certain total return information.
An average annual compounded rate of return ("T") may be computed by using
the redeemable value at the end of a specified period ("ERV") of a
hypothetical initial investment of $1,000 ("P") over a period of time
("n") according to the formula:
n
P(1+T) = ERV
The average annual total return smooths out year-to-year variations and,
in that respect, differs from actual year-to-year results.
The aggregate total return (not annualized) for the
period from June 15, 1994 (commencement of operations) to August 31, 1994
was 4.60%. The aggregate total return for the fiscal year ended August
31, 1995 was ____%. During those periods, the Portfolio's investment
adviser and the Fund's administrator reimbursed certain expenses of the
Portfolio and the Fund, respectively. Such action has the effect of
increasing total return.
BNP-N&B Global Asset Management L.P. ("BNP-N&B Global"), a joint
venture of Banque Nationale de Paris ("BNP") and Neuberger & Berman, L.P.
("Neuberger & Berman"), served as the investment adviser to the Portfolio
from its inception until November 1, 1995. On that date, N&B Management
became the Portfolio's investment manager; there has been no change in the
personnel responsible for daily management of the Portfolio.
Comparative Information
-----------------------
From time to time the 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 periodicals) that monitor the performance of
mutual funds, such as Lipper Analytical Services, Inc.
("Lipper"), C.D.A. Investment Technologies, Inc.
("C.D.A."), Wiesenberger Investment Companies Service
("Wiesenberger"), Investment Company Data Inc., Morn-
ingstar, Inc. ("Morningstar"), 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 News-
paper, or
(2) recognized stock and other indices, such as
the S&P 500 Composite Stock Price Index ("S&P 500
Index"), S&P Small Cap 600 ("S&P 600"), S&P Mid Cap 400
- 33 -
<PAGE>
("S&P 400"), Russell 2000 Stock Index, Dow Jones
Industrial Average ("DJIA"), Wilshire 1750, the Nasdaq
stock market, Value Line Index, U.S. Department of Labor
Consumer Price Index ("Consumer Price Index"), College
Board Survey of Colleges Annual Increases of College
Costs, Kanon Bloch's Family Performance Index, the Barra
Growth Index, the Barra Value Index, the EAFE(REGISTERED
TRADEMARK) Index, the Financial Times World XUS Index,
and various other domestic, international, and global
indices. The S&P 500 Index is a broad index of common
stock prices, while the DJIA represents a narrower
segment of industrial companies. The S&P 600 includes
stocks that range in market value from $27 million to
$880 million, with an average of $302 million. The S&P
400 measures mid-sized companies with an average market
capitalization of $1.2 billion. The EAFE(REGISTERED
TRADEMARK) Index is an unmanaged index of common stock
prices of more than 900 companies from Europe, Australia,
and the Far East translated into U.S. dollars. The
Financial Times World XUS Index is an index of 24
international markets, excluding the U.S. market. Each
assumes reinvestment of distributions and is calculated
without regard to tax consequences or the costs of
investing. The Portfolio invests in different types of
securities from those included in some of these indices.
Evaluations of the Fund's performance and the Fund's
total return and comparisons may be used in advertisements and in
information furnished to present and prospective shareholders
(collectively, "Advertisements"). The Fund 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 the Portfolio's
portfolio allocation and holdings as of a particular date may be included
in Advertisements. 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.
The cost of a college education is rapidly approaching the cost
of the average family home. Four years' tuition, room and board at a top
private institution can already cost over $80,000. If college expenses
continue to increase at current rates, by the time today's pre-schooler
enters the "ivy-covered halls" in 2009, four years at a private college
- 34 -
<PAGE>
may easily cost $200,000. (Source: College Board, 1994, 1995 Annual
Survey of Colleges, Princeton, NJ, assuming an average 6% increase in
annual expenses.
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 such 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 regarding the effects of automatic invest-
ment, 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.
CERTAIN RISK CONSIDERATIONS
Although the 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 the Portfolio will achieve its
investment objective, and an investment in the Fund involves certain risks
that are described in the sections entitled "Investment Program" and
"Description of Investments" in the Prospectus and "Investment
Information" in this SAI.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the
trustees and officers of the Trusts, including their addresses and
principal business experience during the past five years. Some persons
named as trustees and officers also serve in similar capacities for other
funds, and (where applicable) their corresponding portfolios, advised by
N&B Management and Neuberger & Berman.
- 35 -
<PAGE>
<TABLE>
<CAPTION>
Positions Held with
Name, Age, and Address(1) Managers Trust Principal Occupation(s)(2)
------------------------- ------------------- --------------------------
<S> <C> <C>
Stanley Egener* (61) Chairman of the Board, Chief (See below)
Executive Officer, and Trustee
Howard A. Mileaf (57) Trustee (See below)
Wheeling Pittsburgh Corporation
110 East 59th Street
New York, NY 10022
John T. Patterson, Jr. (67) Trustee (See below)
90 Riverside Drive
Apartment 1B
New York, NY 10024
John P. Rosenthal (62) Trustee (See below)
Burnham Securities Inc.
Burnham Asset Management Corp.
1325 Avenue of the Americas
17th Floor
New York, NY 10019
Lawrence Zicklin* (59) President (See below)
Daniel J. Sullivan (55) Vice President (See below)
Michael J. Weiner (48) Vice President and Principal (See below)
Financial Officer
Richard Russell (48) Treasurer and Principal (See below)
Accounting Officer
Claudia A. Brandon (38) Secretary (See below)
Stacy Cooper-Shugrue (32) Assistant Secretary (See below)
C. Carl Randolph (57) Assistant Secretary (See below)
Jacqueline Henning (__) Assistant Treasurer Managing Director, State Street Cayman Trust
Co., Ltd.; Assistant Managing Director, Morgan
Grenfell, 1993-94; Bank of Nova Scotia Trust
Co. (Cayman) Ltd., Managing Director, 1989-93,
General Manager, International Trust Group,
1984-89.
- 36 -
<PAGE>
Lenore Joan McCabe (__) Assistant Secretary Operations Supervisor, State Street Cayman
Trust Co., Ltd.; Project Manager, State Street
Canada, Inc., 1992-94; employee, Boston
Financial Data Services, 1984-92.
Positions Held with
Name, Age, and Address(1) the Trust Principal Occupation(s)(2)
------------------------- ------------------- --------------------------
Faith Colish (59) Trustee Attorney at Law, Faith Colish, A Professional
63 Wall Street Corporation.
24th Floor
New York, NY 10005
Donald M. Cox (72) Trustee Retired. Formerly Senior Vice President and
435 East 52nd Street Director of Exxon Corporation; Director of
New York, NY 10022 Emigrant Savings Bank.
Stanley Egener* (61) Chairman of the Board, Chief Partner of Neuberger & Berman; President and
Executive Officer, and Trustee Director of N&B Management; Chairman of the
Board, Chief Executive Officer and Trustee of
Managers Trust; Chairman of the Board, Chief
Executive Officer, and Trustee of eight other
mutual funds for which N&B Management acts as
investment adviser, manager, or administrator.
Alan R. Gruber (67) Trustee Chairman and Chief Executive Officer of Orion
Orion Capital Corporation Capital Corporation (property and casualty
600 Fifth Avenue, 24th Floor insurance); Director of Trenwick Group, Inc.
New York, NY 10020 (property and casualty reinsurance); Chairman
of the Board and Director of Guaranty National
Corporation (property and casualty insurance);
formerly Director of Ketema, Inc. (diversified
manufacturer).
Howard A. Mileaf (57) Trustee Vice President and Special Counsel to Wheeling
Wheeling Pittsburgh Corporation Pittsburgh Corporation (holding company) since
110 East 59th Street 1992; formerly Vice President and General
New York, NY 10022 Counsel of Keene Corporation (manufacturer of
industrial products); Director of Kevlin
Corporation (manufacturer of microwave and
other products).
- 37 -
<PAGE>
Positions Held with
Name, Age, and Address(1) the Trust Principal Occupation(s)(2)
------------------------- ------------------- --------------------------
Edward I. O'Brien* (66) Trustee Until 1993, President of the Securities
12 Woods Lane Industry Association ("SIA") (securities
Scarsdale, NY 10583 industry's representative in government
relations and regulatory matters at the
federal and state levels); until November
1993, employee of the SIA; Director of Legg
Mason, Inc.
John T. Patterson, Jr. (67) Trustee President of SOBRO (South Bronx Overall
90 Riverside Drive Economic Development Corporation).
Apartment 1B
New York, NY 10024
John P. Rosenthal (62) Trustee Senior Vice President of Burnham Securities
Burnham Securities Inc. Inc. (a registered broker-dealer) since 1991;
Burnham Asset Management Corp. formerly Partner of Silberberg, Rosenthal &
1325 Avenue of the Americas Co. (member of National Association of
17th Floor Securities Dealers, Inc.); Director, Cancer
New York, NY 10019 Treatment Holdings, Inc.
Cornelius T. Ryan (63) Trustee General Partner of Oxford Partners and Oxford
Oxford Bioscience Partners Bioscience Partners (venture capital
315 Post Road West partnerships) and President of Oxford Venture
Westport, CT 06880 Corporation; Director of Capital Cash
Management Trust (money market fund);
Cognitive Systems, Inc. (case-based
reasoning); and Micro General Corporation
(manufacturer of electronic parcel and postage
shipping systems).
- 38 -
<PAGE>
Positions Held with
Name, Age, and Address(1) the Trust Principal Occupation(s)(2)
------------------------- ------------------- --------------------------
Gustave H. Shubert (66) Trustee Senior Fellow/Corporate Advisor and Advisory
13838 Sunset Boulevard Trustee of Rand (a non-profit public interest
Pacific Palisades, CA 90272 research institution) since 1989; Member of
the Board of Overseers of the Institute for
Civil Justice, the Policy Advisory Committee
of the Clinical Scholars Program at the
University of California, the American
Association for the Advancement of Science,
the Counsel on Foreign Relations, and the
Institute for Strategic Studies (London);
advisor to the Program Evaluation and
Methodology Division of the U.S. General
Accounting Office; formerly Senior Vice
President and Trustee of Rand.
Lawrence Zicklin* (59) President and Trustee Partner of Neuberger & Berman; Director of N&B
Management; President of Managers Trust;
President and Trustee of five other mutual
funds for which N&B Management acts as
investment adviser, manager or administrator.
Daniel J. Sullivan (55) Vice President Senior Vice President of N&B Management since
1992; prior thereto, Vice President of N&B
Management; Vice President of nine other
mutual funds for which N&B Management acts as
investment adviser, manager, or administrator.
Michael J. Weiner (48) Vice President and Principal Senior Vice President and Treasurer of N&B
Financial Officer Management since 1992; prior thereto, Vice
President and Treasurer of N&B Management and
Treasurer of other mutual funds for which N&B
management acts or acted as investment
adviser, manager, or administrator; Vice
President and Principal Financial Officer of
nine other mutual funds for which N&B
Management acts as investment adviser,
manager, or administrator.
Claudia A. Brandon (38) Secretary Vice President of N&B Management; Secretary of
nine other mutual funds for which N&B
Management acts as investment adviser,
manager, or administrator.
- 39 -
<PAGE>
Positions Held with
Name, Age, and Address(1) the Trust Principal Occupation(s)(2)
------------------------- ------------------- --------------------------
Richard Russell (48) Treasurer and Principal Vice President of N&B Management since 1993;
Accounting Officer prior thereto, Assistant Vice President of N&B
Management; Treasurer and Principal Accounting
Officer of nine other mutual funds for which
N&B Management acts as investment adviser,
manager, or administrator.
Stacy Cooper-Shugrue (32) Assistant Secretary Assistant Vice President of N&B Management
since 1993; employee of N&B Management since
August 1989; Assistant Secretary of nine other
mutual funds for which N&B Management acts as
investment adviser, manager, or administrator.
C. Carl Randolph (57) Assistant Secretary Partner of Neuberger & Berman since 1992;
employee thereof since 1971; Assistant
Secretary of nine other mutual funds for which
N&B Management acts as investment adviser,
manager, or administrator.
</TABLE>
____________________
(1) Unless otherwise indicated, the business address of each listed
person is 605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the
position shown for at least the last five years.
* Indicates an "interested person" of each Trust within the meaning
of the 1940 Act. Messrs. Egener and Zicklin are interested
persons by virtue of the fact that they are officers and/or
directors of N&B Management and partners of Neuberger & Berman.
Mr. O'Brien is an interested person by virtue of the fact that he
is a director of Legg Mason, Inc., a wholly owned subsidiary of
which from time to time serves as a broker or dealer to the
Portfolio and other funds for which N&B Management serves as
investment manager or investment adviser.
For the fiscal year ended August 31, 1995, trustees' fees
and expenses aggregating $_______ were paid by the Fund and the Portfolio
- 40 -
<PAGE>
to Fund and Portfolio Trustees who were not affiliated with N&B Management
or Neuberger & Berman.
The following table sets forth information concerning the
compensation of the trustees and officers of the Trusts. None of the
Neuberger & Berman Funds(SERVICEMARK) has any retirement plan for its
trustees or officers.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/95
-----------------------------
Total Compensation
from the Trusts and
Aggregate Other Neuberger &
Compensation Berman
Name and Position with the from the Funds(SERVICEMARK)
Trusts Trusts Paid to Directors
------------------------- ------------ -----------------
Faith Colish
Trustee of the Trust
Donald M. Cox
Trustee of the Trust
Stanley Egener
Chairman of the Board, Chief
Executive Officer, and
Trustee of Managers Trust
and the Trust
Alan R. Gruber
Trustee of the Trust
Howard A. Mileaf
Trustee of Managers Trust
and the Trust
Edward I. O'Brien
Trustee of the Trust
John T. Patterson, Jr.
Trustee of Managers Trust
and the Trust
- 41 -
<PAGE>
Total Compensation
from the Trusts and
Aggregate Other Neuberger &
Compensation Berman
Name and Position with the from the Funds(SERVICEMARK)
Trusts Trusts Paid to Directors
------------------------- ------------ -----------------
John P. Rosenthal
Trustee of Managers Trust
and the Trust
Cornelius T. Ryan
Trustee of the Trust
Gustave H. Shubert
Trustee of the Trust
Lawrence Zicklin
President and Trustee of the
Trust
Each Trust's Declaration of Trust provides that it will
indemnify the Trustees and its officers against liabilities and expenses
reasonably incurred in connection with litigation in which they may be
involved because of their offices with the Trust, unless it is adjudicated
that they engaged in bad faith, wilful misfeasance, gross negligence, or
reckless disregard of the duties involved in their offices. In the case
of settlement, such indemnification will not be provided unless it has
been determined -- by a court or other body approving the settlement or
other disposition, or by a majority of disinterested Trustees, based upon
a review of readily available facts, or in a written opinion of inde-
pendent counsel -- that such officers or Trustees have not engaged in
wilful misfeasance, bad faith, gross negligence, or reckless disregard of
their duties.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
Investment Manager and Administrator
------------------------------------
- 42 -
<PAGE>
Because the Fund's net investable assets are invested in
the Portfolio, the Fund does not need an investment adviser. N&B
Management serves as the Portfolio's investment manager pursuant to a
management agreement with Managers Trust, on behalf of the Portfolio,
dated as of November 1, 1995 ("Management Agreement"), that was approved
by the holders of the interests in the Portfolio on October __, 1995 and
the Fund's shareholders on October 24, 1995.
The Management Agreement provides in substance that N&B
Management will make and implement investment decisions for the Portfolio
in its discretion and will continuously develop an investment program for
the Portfolio's assets. The Management Agreement permits N&B Management
to effect securities transactions on behalf of the 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 Portfolio, but N&B Management has no current plans to do
so.
N&B Management provides to the Portfolio, without
separate cost, office space, equipment, and facilities and personnel
necessary to perform executive, administrative, and clerical functions and
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 directors of N&B Management (who also are partners of
Neuberger & Berman), one of whom also serves as an officer of N&B
Management, presently serve as trustees and officers of the Trust and as
trustees and/or officers of Managers Trust. See "Trustees and Officers."
N&B Management provides similar facilities, services and personnel to the
Fund and also assists the Fund's shareholder servicing agent pursuant to
an administration agreement dated November 1, 1995 ("Administration Agree-
ment"). The Fund was authorized to become subject to the Administration
Agreement by vote of the Fund Trustees on August 11, 1995, and became
subject to it on November 1, 1995. Prior to November 1, 1995, N&B
Management provided such services to the Fund pursuant to an
administration agreement dated June 15, 1994 and amended May 1, 1995
("Fund Administration Agreement").
Managers Trust has entered into an Administrative
Services Agreement with State Street Cayman Trust Company Ltd. ("State
Street Cayman"), Elizabethan Square, P.O. Box 1984, George Town, Grand
Cayman, Cayman Islands, effective August 31, 1994. Under the
Administrative Services Agreement, State Street Cayman provides sufficient
personnel and suitable facilities for the principal offices of Managers
Trust, and provides Managers Trust with certain administrative, fund
accounting and transfer agency services with respect to the Portfolio.
The Administrative Services Agreement terminates if assigned by State
Street Cayman; however, State Street Cayman is permitted to, and does,
- 43 -
<PAGE>
employ an affiliate, State Street Canada, Inc., to perform certain
accounting functions.
From the commencement of operations until November 1,
1995, the Portfolio was advised by BNP-N&B Global pursuant to an
investment advisory agreement dated June 15, 1994 ("Investment Advisory
Agreement"). During that period, BNP-N&B Global voluntarily reimbursed
the Portfolio to the extent that its operating expenses (excluding
interest, taxes, brokerage commissions, and extraordinary expenses)
exceeded 0.70% per annum of the Portfolio's average daily net assets.
Prior to November 1, 1995, N&B Management provided the Portfolio with
administrative services pursuant to a separate administration agreement
dated June 15, 1994 ("Portfolio Administration Agreement").
For the fiscal year ended August 31, 1995 and for the
period from June 15, 1994 (commencement of operations) through August 31,
1994, the Portfolio paid to BNP-N&B Global a fee of $______ and $4,167,
respectively, under the Investment Advisory Agreement. During those same
periods, BNP-N&B Global reimbursed the Portfolio for $ _______ and
$70,114, respectively, in expenses.
For the fiscal year ended August 31, 1995 and for the
period from June 15, 1994 (commencement of operations) through August 31,
1994, the Portfolio paid to N&B Management a fee of $_________ and
$21,370, respectively, under the Portfolio Administration Agreement.
For the fiscal year ended August 31, 1995 and for the
period from June 15, 1994 (commencement of operations) through August 31,
1994, the Fund paid to N&B Management a fee of $_______ and $5,390,
respectively, under the Fund Administration Agreement. During those same
periods, N&B Management reimbursed the Fund for $_______ and $24,132,
respectively, in expenses.
Prior to May 1, 1995, shareholder services were provided
pursuant to a separate agreement between the Trust and N&B Management. As
compensation for these services, the Fund paid N&B Management a monthly
fee calculated at the annual rate of 0.04% of the Fund's average daily net
assets. For the period from September 1, 1995 to April 30, 1995 and for
the period from June 15, 1994 (commencement of operations) to August 31,
1994, the Fund paid N&B Management $____ and $342, respectively, for these
services.
The Management Agreement continues as to the 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 the Portfolio, so long as its continuance is approved
- 44 -
<PAGE>
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 the Portfolio.
The Administration Agreement continues as to the Fund for
a period of two years after the date the Fund became subject thereto.
After the first two years, the Administration Agreement is renewable from
year to year, 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 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 with respect to the Portfolio without penalty on
60 days' written notice either by Managers Trust or by N&B Management.
The Administration Agreement is terminable with respect to the Fund
without penalty on 60 days' written notice either by N&B Management or by
the Fund if authorized by the Trustees, including a majority of the
Independent Trustees. All of the agreements discussed above will
terminate automatically if they are assigned.
In addition to the voluntary expense reimbursement
described in the Prospectus under "Management and Administration -
Expenses," N&B Management has agreed in the Management Agreement to
reimburse the Fund's expenses as follows. If, in any fiscal year, the
Fund's Aggregate Operating Expenses (as defined below) exceed the most
restrictive expense limitation imposed under the securities laws of the
states in which the Fund's shares are qualified for sale ("State Expense
Limitation"), then N&B Management will pay the Fund the amount of that
excess, less the amount of any reduction of the administration fee payable
by the Fund under a similar State Expense Limitation contained in its
Administration Agreement. N&B Management will have no obligation to pay
the Fund, however, for any expenses that exceed the pro rata portion of
the advisory fees attributable to the Fund's interest in the Portfolio.
At the date of this SAI, the most restrictive State Expense Limitation to
which the Fund expects to be subject is 2 1/2% of the first $30 million of
average net assets, 2% of the next $70 million of average net assets, and
1 1/2% of average net assets over $100 million.
For purposes of the State Expense Limitation, the term
"Aggregate Operating Expenses" means the Fund's operating expenses plus
its pro rata portion of the Portfolio's operating expenses (including any
fees or expense reimbursements payable to N&B Management and any
compensation payable thereto pursuant to (1) the Administration Agreement
or (2) any other agreement or arrangement with Manager's Trust with
respect to the Fund, but excluding (with respect to both the Fund and the
- 45 -
<PAGE>
Portfolio) interest, taxes, brokerage commissions, litigation and
indemnification expenses, and other extraordinary expenses not incurred in
the ordinary course of business).
Sub-Adviser
-----------
N&B Management retains Neuberger & Berman, 605 Third
Avenue, New York, NY 10158, as a sub-adviser with respect to the Portfolio
pursuant to a sub-advisory agreement dated November 1, 1995 ("Sub-Advisory
Agreement"). The Sub-Advisory Agreement was authorized by the holders of
the interests in the Portfolio on October ___, 1995 and the Fund
shareholders on October 24, 1995.
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
information that Neuberger & Berman, from time to time, provides to its
partners and employees for use in managing client accounts.
In this manner, N&B Management expects to have available to it, in
addition to research from other professional sources, the capability of
the research staff of Neuberger & Berman. This research staff consists of
approximately fourteen investment analysts, each of whom specializes in
studying one or more industries, under the supervision of research
partners who are also available for consultation with N&B Management. The
Sub-Advisory Agreement provides that the services rendered by Neuberger &
Berman will be paid for by N&B Management on the basis of 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 advised by N&B Management.
The Sub-Advisory Agreement continues for a period of two
years following its effective date, unless sooner terminated, and is
renewable 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 the Portfolio by
the Portfolio Trustees, by a 1940 Act majority vote of the outstanding
Portfolio shares, 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 the Portfolio if it is
assigned or if the Management Agreement terminates with respect to the
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.
- 46 -
<PAGE>
Investment Companies Advised
----------------------------
N&B Management currently serves as investment adviser or
manager of the following investment companies. At August 31, 1995, these
Funds had aggregate net assets of approximately $_____ billion, as shown
in the following list:
Approximate
Net Assets at
Name August 31, 1995
---- ---------------
Neuberger & Berman Cash Reserves Portfolio . . . . . . . . $
(investment portfolio for
Neuberger & Berman Cash Reserves)
Neuberger & Berman Government Income Portfolio . . . . . . $
(investment portfolio for
Neuberger & Berman Government Income
Fund and Neuberger & Berman Government
Income Trust)
Neuberger & Berman Government Money Portfolio . . . . . . . $
(investment portfolio for
Neuberger & Berman Government Money Fund)
Neuberger & Berman Limited Maturity Bond Portfolio . . . . $
(investment portfolio for
Neuberger & Berman Limited Maturity
Bond Fund and Neuberger & Berman
Limited Maturity Bond Trust)
Neuberger & Berman Ultra Short Bond Portfolio . . . . . . . $
(investment portfolio for
Neuberger & Berman Ultra Short Bond
Fund and Neuberger & Berman Ultra Short
Bond Trust)
Neuberger & Berman Municipal Money Portfolio . . . . . . . $
(investment portfolio for
Neuberger & Berman Municipal Money Fund)
Neuberger & Berman Municipal Securities Portfolio . . . . . $
(investment portfolio for
Neuberger & Berman Municipal Securities
Trust)
- 47 -
<PAGE>
Approximate
Net Assets at
Name August 31, 1995
---- ---------------
Neuberger & Berman New York Insured . . . . . . . . . . . . $
Intermediate Portfolio (investment
portfolio for Neuberger & Berman New York
Insured Intermediate Fund)
Neuberger & Berman Genesis Portfolio . . . . . . . . . . . $
(investment portfolio for Neuberger
& Berman Genesis Fund and Neuberger
& Berman Genesis Trust)
Neuberger & Berman Guardian Portfolio . . . . . . . . . . . $
(investment portfolio for Neuberger
& Berman Guardian Fund and Neuberger
& Berman Guardian Trust)
Neuberger & Berman Manhattan Portfolio . . . . . . . . . . . $
(investment portfolio for Neuberger
& Berman Manhattan Fund and Neuberger
& Berman Manhattan Trust)
Neuberger & Berman Partners Portfolio . . . . . . . . . . . . $
(investment portfolio for Neuberger
& Berman Partners Fund and Neuberger
& Berman Partners Trust)
Neuberger & Berman Focus Portfolio . . . . . . . . . . . . . $
(investment portfolio for
Neuberger & Berman Focus Fund
and Neuberger & Berman Focus
Trust)
Neuberger & Berman Socially Responsive Portfolio . . . . . $
(investment portfolio for
Neuberger & Berman Socially Responsive
Fund, Neuberger & Berman Socially
Responsive Trust, and Neuberger &
Berman NYCDC Socially Responsive Trust)
Neuberger & Berman Advisers Managers
Trust (six series) . . . . . . . . . . . . . . . . . $
- 48 -
<PAGE>
Neuberger & Berman serves as investment adviser to two
investment companies, Plan Investment Fund, Inc. and AHA Investment Fund,
Inc., with assets of $____________ and $_______________, respectively, at
August 31, 1995.
The investment decisions concerning the Portfolio and the
other funds and portfolios referred to above (collectively, "Other N&B
Funds") have been and will continue to be made independently of one
another. In terms of their investment objectives, all of the Other N&B
Funds differ from the Portfolio.
There may be occasions when the Portfolio and one or more
of the Other N&B Funds or other accounts managed by Neuberger & Berman
will be contemporaneously engaged in purchasing or selling the same
securities from or to third parties. When this occurs, the transactions
will be 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 could have a detrimental effect on the
price or volume of the securities as to the Portfolio, in other cases it
is believed that the Portfolio's ability to participate in volume transac-
tions may produce better executions. In any case, it is the judgment of
the Portfolio Trustees that the desirability of the Portfolio's having its
advisory arrangements with N&B Management outweighs any disadvantages that
may result from contemporaneous transactions. The investment results
achieved by all of the funds advised by N&B Management have varied from
one another in the past and are likely to vary in the future.
Management and Control of N&B Management
----------------------------------------
The directors and officers of N&B Management, all of whom
have offices at the same address as N&B Management, are Richard A. Cantor,
Chairman of the Board and director; Stanley Egener, President and
director; Theresa A. Havell, Vice President and director; Irwin Lainoff,
director; Marvin C. Schwartz, director; Lawrence Zicklin, director; Daniel
J. Sullivan, Senior Vice President; Michael J. Weiner, Senior Vice
President and Treasurer; Claudia A. Brandon, Vice President; Clara Del
Villar, Vice President; Mark R. Goldstein, Vice President; Farha-Joyce
Haboucha, Vice President; Michael M. Kassen, Vice President; Josephine P.
Mahaney, Vice President; Lawrence Marx III, Vice President; Ellen Metzger,
Vice President and Secretary; Stephen E. Milman, Vice President; 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; Margaret Didi Weinblatt, Vice
President; Stephen A. White, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Patrick T. Byrne, Assistant Vice President; Robert
Conti, Assistant Vice President; Stacy Cooper-Shugrue, Assistant Vice
President; Barbara DiGiorgio, Assistant Vice President; Roberta D'Orio,
Assistant Vice President; Robert Gendelman, Assistant Vice President;
- 49 -
<PAGE>
Leslie Holliday-Soto, Assistant Vice President; Carmen G. Martinez,
Assistant Vice President; Paul Metzger, Assistant Vice President; Susan
Switzer, Assistant Vice President; Susan Walsh, Assistant Vice President;
and Celeste Wischerth, Assistant Vice President. Messrs. Cantor, Egener,
Lainoff, Schwartz, Zicklin, Goldstein, Kassen, Marx, Milman, and Simons
and Mmes. Havell and Prindle are general partners of Neuberger & Berman.
Mr. Egener is a trustee and officer of each Trust; Mr. Zicklin is
a trustee of the Trust and an officer of each Trust. Messrs. Sullivan,
Weiner, and Russell and Mmes. Brandon and Cooper-Shugrue are officers of
each Trust. C. Carl Randolph, a general partner of Neuberger & Berman,
also is an officer of each Trust.
All of the outstanding voting stock in N&B Management is owned by
persons who are also general partners of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
N&B Management serves as the distributor ("Distributor")
in connection with the offering of the Fund's shares on a no-load basis.
In connection with the sale of its shares, the Fund has authorized the
Distributor to give only the information, and to make only the statements
and representations, contained in the Prospectus and this SAI or that
properly may be included in sales literature and advertisements in
accordance with the 1933 Act, the 1940 Act, and applicable rules of self-
regulatory organizations. Sales may be made only by the Prospectus, which
may be delivered either personally or through the mails. The Distributor
is the Fund's "principal underwriter" within the meaning of the 1940 Act
and, as such, acts as agent in arranging for the sale of the Fund's shares
without sales commission or other compensation and bears all advertising
and promotion expenses incurred in the sale of the Fund's shares.
The Trust, on behalf of the Fund, and the Distributor are
parties to a Distribution Agreement dated June 15, 1994, that continues
until June 15, 1996. The Distribution Agreement may be renewed annually
thereafter 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
Investment Advisory Agreement.
- 50 -
<PAGE>
The Distributor or one of its affiliates may from time to
time deem it desirable to offer to the 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 Fund's 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 Fund's
shareholders any investment products or services other than those managed
or distributed by N&B Management or Neuberger & Berman.
ADDITIONAL PURCHASE INFORMATION
Automatic Investing and Dollar Cost Averaging
---------------------------------------------
Shareholders may arrange to have a fixed amount automa-
tically invested in Fund shares each month. To do so, a shareholder must
complete an application, available from the Distributor, electing to have
automatic investments funded either through (1) redemptions from his or
her account in a money market fund for which N&B Management serves as
investment manager (subject to a minimum monthly investment of $100) or
(2) withdrawals from the shareholder's checking account (in which case the
minimum monthly investment is $50). A shareholder who elects to parti-
cipate in automatic investing through his or her checking account must
include a voided check with the completed application.
Automatic investing enables a shareholder to take advan-
tage of "dollar cost averaging." As a result of dollar cost averaging, a
shareholder's average cost of Fund shares generally will be lower than it
would be if the shareholder purchased a fixed number of shares at pre-set
intervals. Additional information on dollar cost averaging may be
obtained from the Distributor.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus
entitled "Shareholder Services -- Exchange Privilege," shareholders may
redeem at least $1,000 worth of Fund shares and invest the proceeds in
shares of one or more of the funds managed by N&B Management that are
briefly described below, provided that the minimum investment requirements
of the other fund(s) are met.
- 51 -
<PAGE>
EQUITY FUNDS
------------
Neuberger & Berman Seeks capital appreciation through investments
Genesis Fund primarily in common stocks of companies with
small market capitalization, up to $750 million.
The fund uses a value-oriented approach to the
selection of individual securities.
Neuberger & Berman Seeks capital appreciation through investments
Guardian Fund generally in a large number of common stocks of
long-established, high quality companies that
N&B Management believes are well-managed. The
fund uses a value-oriented approach to the
selection of individual securities. Current
income is a secondary objective. The fund has
paid its shareholders an income dividend every
quarter, and a capital gain distribution every
year, since its inception in 1950, although
there can be no assurance that it will be able
to continue to do so.
Neuberger & Berman Seeks capital appreciation, without regard to
Manhattan Fund income, through investments principally in
securities that N&B Management believes offer a
potential for long-term capital appreciation.
The fund's policy of investing in securities
believed to have a maximum potential for growth
means that its assets generally will be subject
to greater risk than may be involved in
investing in securities that do not have those
growth characteristics.
Neuberger & Berman Seeks capital growth through an investment
Partners Fund approach that is designed to increase capital
with reasonable risk. Its investment program
seeks securities believed to be undervalued
based on strong fundamentals such as low price-
to-earnings ratios, consistent cash flow and
support from asset values. It is a conservative
growth fund which uses the value- oriented
investment approach.
- 52 -
<PAGE>
Neuberger & Berman Seeks long-term capital appreciation through
Focus Fund investments primarily in common stocks selected
from 13 economic sectors. N&B Management
identifies and focuses the fund's investments in
a limited number of these sectors by using a
value-oriented approach to the selection of
individual stocks. Through this approach, 90%
or more of the fund's investments are normally
focused in not more than six sectors.
Neuberger & Berman Seeks long-term capital appreciation by
Socially Responsive investing primarily in securities of companies
Fund that meet both financial and social criteria.
INCOME FUNDS
------------
Neuberger & Berman A U.S. Government securities money market fund
Government Money seeking maximum safety and liquidity and the
Fund highest available current income. The fund
invests only in U.S. Treasury obligations and
other money market instruments backed by the
full faith and credit of the United States. It
seeks to maintain a constant purchase and
redemption price of $1.00.
Neuberger & Berman A money market fund seeking the highest current
Cash Reserves income consistent with safety and liquidity. The
fund invests in a diversified portfolio of high
quality money market instruments. It seeks to
maintain a constant purchase and redemption
price of $1.00.
Neuberger & Berman Seeks a higher total return than is available
Ultra Short Bond from money market funds, with minimal risk to
Fund principal and liquidity. The fund invests in a
diversified portfolio consisting of high quality
money market instruments and short-term debt
securities.
Neuberger & Berman Seeks the highest current income consistent with
Limited Maturity low risk to principal and liquidity, and second-
Bond Fund arily, total return. The fund invests in a
diversified portfolio of short- to intermediate-
term debt securities, at least investment grade.
- 53 -
<PAGE>
Neuberger & Berman Seeks a high level of current income and total
Government Income return, consistent with safety of principal. At
Fund least 65% of the fund's investments are in U.S.
Government securities that are issued or
guaranteed as to principal and interest by the
U.S. Government or its agencies, including U.S.
Government mortgage-backed securities; at least
25% of its investments are in mortgage-backed
and asset-backed securities.
MUNICIPAL FUNDS
----------------
Neuberger & Berman A money market fund seeking the maximum current
Municipal Money income exempt from federal income tax consistent
Fund with safety and liquidity. The fund invests in
high quality, short-term tax-exempt municipal
securities. It seeks to maintain a constant
purchase and redemption price of $1.00.
Neuberger & Berman A short- to intermediate-term bond fund seeking
Municipal high current tax-exempt income with low risk to
Securities Trust principal, limited price fluctuation, and
liquidity; and secondarily, total return. The
fund invests in municipal securities rated A or
better.
Neuberger & Berman An intermediate-term bond fund which seeks a
New York Insured high level of current income exempt from federal
Intermediate Fund income tax and New York State and New York City
personal income taxes, consistent with
preservation of capital.
Any Fund described herein may terminate or modify its
exchange privilege in the future.
Fund shareholders who are considering exchanging shares
into one of the funds listed above should note that (1) the Income and
Municipal Funds listed above are series of a Delaware business trust
(named "Neuberger & Berman Income Funds") that is registered with the SEC
as an open-end management investment company, (2) like the Fund, the
Equity Funds listed above are other series of the Trust, (3) each series
of Neuberger & Berman Income Funds invests all its net investable assets
in a portfolio of Income Managers Trust, an open-end investment management
company managed by N&B Management, and (4) each such other series of the
- 54 -
<PAGE>
Trust invests all of its net investable assets in a portfolio of Equity
Managers Trust, also an open-end management investment company managed by
N&B Management. Each such portfolio has an investment objective identical
to that of its corresponding fund and invests in accordance with invest-
ment policies identical to those of that fund.
Before effecting an exchange, Fund shareholders must
obtain and should review a currently effective prospectus of the fund into
which the exchange is to be made. In this regard, it should be noted that
the Income and Municipal Funds share a prospectus, except for the
Neuberger & Berman New York Insured Intermediate Fund which has its own
prospectus; and the Equity Funds share a 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 Neuberger & Berman Govern-
ment Money Fund, Neuberger & Berman Cash Reserves, or Neuberger & Berman
Municipal Money Fund, each a money market fund that seeks to maintain a
constant purchase and redemption price of $1.00, will be able to maintain
that price. An investment in any of those funds, or 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 the Fund's shares may be suspended or
payment of the redemption price postponed (1) when the 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 disposal by
the Portfolio of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Portfolio 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 the Fund's shareholders; provided
that applicable SEC rules and regulations shall govern as to 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
-------------------
The Fund reserves the right, under certain conditions, to
honor any request for redemption, or a combination of requests from the
same shareholder in any 90-day period, totalling $250,000 or 1% of the net
assets of the Fund, whichever is less, by making payment in whole or in
part in securities valued as described under "Account and Share
Information -- Share Prices and Net Asset Value" in the Prospectus. If
- 55 -
<PAGE>
payment is made in securities, a shareholder generally will incur
brokerage expenses in converting those securities into cash and will be
subject to fluctuations in the market price of those securities until they
are sold. The Fund does not redeem in kind under normal circumstances,
but would do so when the Fund Trustees determine that it would be in the
best interests of the Fund's shareholders as a whole. Redemptions in kind
will be made with readily marketable securities to the extent possible.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund distributes to its shareholders amounts equal to
substantially all of its proportionate share of the Portfolio's net
investment income (after deducting expenses incurred directly by the
Fund), net capital gains (both long-term and short-term), if any, and
gains from foreign currency transactions, if any. The Fund calculates its
net investment income and NAV per share as of the close of regular trading
on the NYSE on each Business Day (usually 4:00 p.m. Eastern time). The
Portfolio's net investment income consists of all income accrued on
portfolio assets less accrued expenses; net investment income and realized
gains and losses are reflected in the Portfolio's NAV (and, hence, the
Fund's NAV) until they are distributed. Realized gains and losses are not
included in net investment income. Dividends from net investment income
and distributions of net realized capital gains, if any, normally are paid
once annually, in December.
Dividends and/or other distributions, if any, are
automatically reinvested in additional shares of the Fund, unless and
until the shareholder elects to receive them in cash ("cash election").
Shareholders may make a cash election on the original account application
or at a later date by writing to State Street Bank and Trust Company
("State Street"), c/o Boston Service Center, P.O. Box 8403, Boston, MA
02266-8403. To the extent dividends and other distributions are subject
to federal, state, or local income taxation, they are taxable to the
shareholders whether received in cash or reinvested in Fund shares.
A cash election 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.
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ADDITIONAL TAX INFORMATION
Taxation of the Fund
--------------------
In order to continue to qualify for treatment as a regu-
lated investment company ("RIC") under the Internal Revenue Code of 1986,
as amended ("Code"), the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income
(consisting generally of net investment income, net short-term capital
gain, and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional require-
ments. 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 options, futures and forward contracts
(collectively, "Hedging Instruments")) derived with respect to its
business of investing in securities or those currencies ("Income Require-
ment"); (2) the Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of securities, or any of
the following, that were held for less than three months -- Hedging
Instruments (other than those on foreign currencies), or foreign
currencies (or Hedging Instruments thereon) that are not directly related
to the Fund's principal business of investing in securities (or options
and futures with respect thereto) ("Short-Short Limitation"); and (3) at
the close of each quarter of the Fund's taxable year, (i) at least 50% of
the value of its total assets must be represented by cash and cash items,
U.S. government securities, and other securities limited, in respect of
any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and does not represent more than 10% of the issuer's
outstanding voting securities, and (ii) not more than 25% of the value of
its total assets may be invested in securities (other than U.S. government
securities) of any one issuer.
Certain funds, including the other series of the Trust
(except Neuberger & Berman Socially Responsive Fund), that invest in
portfolios of Equity Managers Trust and Income Managers Trust --
investment companies that are managed by N&B Management (see "Additional
Exchange Information") and are similar to Managers Trust -- have received
rulings from the Internal Revenue Service ("Service") that each such fund,
as an investor in a portfolio with an identical investment objective, 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. Although these rulings
may not be relied on as precedent by the Fund, N&B Management believes
that the reasoning thereof, and hence this conclusion, apply to the Fund
as well.
The 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
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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 the Fund of investments in foreign securities and hedging
transactions engaged in by the Portfolio.
Taxation of the Portfolio
-------------------------
Certain portfolios of Equity Managers Trust and Income
Managers Trust have received rulings from the Service to the effect that,
among other things, each such portfolio will be treated as a separate
partnership for federal income tax purposes and will not be a "publicly
traded partnership." Although these rulings may not be relied on as
precedent by the Portfolio, N&B Management believes the reasoning thereof,
and hence this conclusion, apply to the Portfolio as well. As a result,
the Portfolio is not subject to federal income tax; instead, each investor
in the Portfolio, such as the Fund, is required to take into account in
determining its federal income tax liability its share of the Portfolio's
income, gains, losses, deductions, and credits, without regard to whether
it has received any cash distributions from the Portfolio. The Portfolio
also is not subject to Delaware or New York income or franchise tax.
Because the Fund is deemed to own a proportionate share
of the Portfolio's assets and income for purposes of determining whether
the Fund satisfies the requirements to qualify as a RIC, the Portfolio
intends to continue to conduct its operations so that the Fund will be
able to continue to satisfy all those requirements.
Distributions to the Fund from the 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, and (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized
receivables. The Fund's basis for its interest in the Portfolio generally
will equal the amount of cash and the basis of any property the Fund
invests in the Portfolio, increased by the Fund's share of the Portfolio's
net income and gains and decreased by (a) the amount of cash and the basis
of any property the Portfolio distributes to the Fund and (b) the Fund's
share of the Portfolio's losses.
Dividends and interest received by the 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
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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. If more than 50% of the value of the
Fund's total assets (including its share of the Portfolio's total assets)
at the close of its taxable year consists of securities of foreign corpo-
rations, the Fund will be eligible to, and may, file an election with the
Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign and U.S.
possessions income taxes paid by the Portfolio that are treated as paid by
the Fund. Pursuant to the election, the Fund will treat those taxes as
dividends paid to its shareholders and each shareholder will be required
to (1) include in gross income, and treat as paid by such taxpayer, his or
her proportionate share of those taxes, (2) treat his or her share of
those taxes and of any dividend paid by the Fund that represents income
from foreign or U.S. possessions sources as his or her own income from
those sources and (3) either deduct the taxes deemed paid by him or her in
computing his or her taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his or her
federal income tax. The Fund will report to its shareholders shortly
after each taxable year their respective shares of the income from sources
within, and taxes paid to, foreign countries and U.S. possessions if it
makes this election.
The Portfolio may invest in the stock of "passive foreign
investment companies" ("PFICs"). A PFIC is a foreign corporation that, in
general, meets either of the following tests: (1) at least 75% of its
gross income is passive or (2) an average of at least 50% of its assets
produce, or are held for the production of, passive income. Under certain
circumstances, if the Portfolio holds stock of a PFIC, the Fund
(indirectly through its interest in the Portfolio) will be subject to
federal income tax on a portion of any "excess distribution" received on
the stock or of any gain on disposition of the stock (collectively, "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC
income as a taxable dividend to its shareholders. The balance of the PFIC
income will be included in the Fund's investment company taxable income
and, accordingly, will not be taxable to it to the extent that income is
distributed to its shareholders.
If the Portfolio invests in a PFIC and elects to treat
the PFIC as a "qualified electing fund," then in lieu of the Fund's
incurring the foregoing tax and interest obligation, the Fund would be
required to include in income each year its pro rata share of the
Portfolio's pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain (the excess of net long-term
capital gain over net short-term capital loss) -- which most likely would
have to be distributed by the Fund to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Portfolio. In most instances it will be
very difficult, if not impossible, to make this election because of
certain requirements thereof.
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Pursuant to proposed regulations, open-end RICs, such as
the Fund, would be entitled to elect to mark-to-market their stock in
certain PFICs. Marking-to-market, in this context, means recognizing as
gain for each taxable year the excess, as of the end of that year, of the
fair market value of each such PFIC's stock over the adjusted basis in
that stock (including mark-to-market gain for each prior year for which an
election was in effect).
The Portfolio's use of hedging strategies, such as
writing (selling) and purchasing options and futures contracts 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 it realizes in connection therewith. Income from
foreign currencies (except certain gains therefrom that may be excluded by
future regulations), and income from transactions in Hedging Instruments
derived by the Portfolio with respect to its business of investing in
securities or foreign currencies, will qualify as permissible income for
the Fund under the Income Requirement. However, income from the dispo-
sition by the Portfolio of Hedging Instruments (other than those on
foreign currencies) will be subject to the Short-Short Limitation for the
Fund if they are held for less than three months. Income from the
disposition of foreign currencies, and Hedging Instruments thereon, that
are not directly related to the 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 the Fund if they are
held for less than three months.
If the 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 the 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. The Portfolio will consider
whether it should seek to qualify for this treatment for its hedging
transactions. To the extent the 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 the
Fund to continue to qualify as a RIC.
Exchange-traded futures contracts and listed options
thereon ("Section 1256 contracts") are required to be marked-to-market
(that is, treated as having been sold at market value) at the end of the
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
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capital gain or loss, and the remainder is treated as short-term capital
gain or loss.
Taxation of the Fund's Shareholders
-----------------------------------
If Fund shares are sold at a loss after being held for
six months or less, the loss will be treated as long-term, instead of
short-term, capital loss to the extent of any capital gain distributions
received on those shares. Investors also should be aware that if Fund
shares are purchased shortly before the record date for a dividend or
other distribution, the purchaser will receive some portion of the
purchase price back as a taxable distribution.
The Fund is required to withhold 31% of all dividends,
capital gain distributions, and 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 from dividends and capital gain distributions also is required
for such shareholders who otherwise are subject to backup withholding.
As described under "Account and Share Information -
Selling Shares" in the Prospectus, the Fund may close a shareholder's
account with the Fund and redeem the remaining shares if the account
balance falls below the specified minimum and the shareholder fails to
reestablish the minimum balance after being given the opportunity to do
so. If an account that is closed pursuant to the foregoing was maintained
for an individual retirement account or a qualified retirement plan
(including a simplified employee pension plan, self-employed individual
retirement plan (so-called "Keogh plan"), corporate profit-sharing and
money purchase pension plan, Code section 401(k) plan, or Code 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.
PORTFOLIO TRANSACTIONS
Neuberger & Berman and BNP-International Financial
Services Corporation ("BNP-International"), a wholly-owned subsidiary of
BNP, may act as the Portfolio's broker in the purchase and sale of
portfolio securities and in connection with the writing of options on its
securities. Neuberger & Berman acts as the principal broker in the
purchase and sale of the portfolio securities of the portfolios managed or
advised by N&B Management. Transactions in portfolio securities for which
Neuberger & Berman, BNP-International, or any other affiliated broker or
dealer serves as broker will be effected in accordance with Rule 17e-1
under the 1940 Act.
For the fiscal year ended August 31, 1995 and for the
period June 15, 1994 (commencement of operations) through August 31, 1994,
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the Portfolio paid brokerage commissions of $______ and $24,554,
respectively. During those periods, the Portfolio paid commissions of
$______ and $330, respectively, to Neuberger & Berman and $______ and
$______, respectively, to BNP-International. During the fiscal year ended
August 31, 1995, transactions in which the Portfolio used Neuberger &
Berman as broker comprised ___% of the aggregate dollar amount of
transactions involving the payment of commissions, and ___% of the
aggregate brokerage commissions. During the fiscal year ended August 31,
1995, transactions in which the Portfolio used BNP-International as broker
comprised ___% of the aggregate dollar amount of transactions involving
the payment of commissions, and ___% of the aggregate brokerage
commissions. Of the $______ paid to other brokers by the Portfolio during
the fiscal year ended August 31, 1995, $______ (representing commissions
on transactions involving approximately $_________) was directed to those
brokers because of research services they provided. During that period,
the Portfolio acquired securities of the following of its "regular brokers
or dealers" (as defined in the 1940 Act) ("Regular B/Ds"): HSBC
Securities, Inc. and Nomura Securities International; as of August 31,
1995, the Portfolio held the securities of its Regular B/Ds with an
aggregate value as follows: HSBC Securities, Inc., $__________ and Nomura
Securities International, $_________.
Portfolio securities are from time to time loaned by the
Portfolio to Neuberger & Berman in accordance with the terms and
conditions of an order issued by the Securities and Exchange Commission,
exempting such transactions from certain provisions of the 1940 Act which
would otherwise prohibit such transactions, subject to certain conditions.
Among the conditions of the order, securities loans made by the Portfolio
to Neuberger & Berman must be fully secured by cash collateral. Under the
order, the portion of the income on cash collateral from securities loans
involving Neuberger & Berman which may be shared with that firm is
determined with reference to the concurrent arrangements between Neuberger
& Berman and other non-affiliated lenders with which it engages in similar
transactions. In addition, where Neuberger & Berman borrows securities
from the Portfolio in order to relend them to others, Neuberger & Berman
is required to pay over to the Portfolio, on a quarterly basis, certain
"excess earnings" that Neuberger & Berman otherwise has derived from the
relending of securities borrowed from the Portfolio. When Neuberger &
Berman desires to borrow a security which the Portfolio has indicated a
willingness to lend, Neuberger & Berman must borrow such security from the
Portfolio rather than from an unaffiliated lender unless an unaffiliated
lender is willing to lend such security on more favorable terms (as
specified in the order) than the Portfolio. If the Portfolio's expenses
exceed its income in any securities loan transaction with Neuberger &
Berman, Neuberger & Berman must reimburse the Portfolio for such loss.
During the period ended August 31, 1994 and the fiscal
year ended August 31, 1995, the Portfolio earned no interest income from
the collateralization of securities loans.
The Portfolio may also lend securities to unaffiliated
entities, including brokers or dealers, banks and other recognized
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institutional borrowers of securities, provided that cash or equivalent
collateral, equal to at least 100% of the market value of the securities
loaned, is continuously maintained by the borrower with the Portfolio.
During the time securities are on loan, the borrower will pay the
Portfolio an amount equivalent to any dividends or interest paid on such
securities, and the Portfolio may invest the cash collateral and earn
income, or it may receive an agreed upon amount of interest income from
the borrower who has delivered equivalent collateral. These loans are
subject to termination at the option of the Portfolio or the borrower.
The Portfolio may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the interest
earned on the cash or equivalent collateral to the borrower or placing
broker. The Portfolio does not have the right to vote securities on loan,
but would terminate the loan and regain the right to vote if that were
considered important with respect to the investment.
A committee of non-interested trustees has been appointed
to review from time to time, among other things, information relating to
securities loans by the Portfolio.
In effecting securities transactions, the Portfolio gen-
erally seeks to obtain the best price and execution of orders. Commission
rates, being a component of price, are considered along with other
relevant factors. The Portfolio may use Neuberger & Berman and BNP-
International as its brokers where, in the judgment of N&B Management
(which is affiliated with the brokers), these firms are able to obtain a
price and execution at least as favorable as other qualified brokers. To
the Portfolio's knowledge, however, no affiliate of the Portfolio receives
give-ups or reciprocal business in connection with its securities
transactions.
The use of Neuberger & Berman and other affiliates as
brokers for the Portfolio is subject to the requirements of Section 11(a)
of the Securities Exchange Act of 1934 ("Section 11(a)"). Section 11(a)
prohibits members of national securities exchanges from executing exchange
transactions for accounts which they or their affiliates manage, except in
situations where they have the authorization of the persons authorized to
transact business for the account and comply with certain annual reporting
requirements. The Portfolio Trustees have expressly authorized Neuberger
& Berman and other affiliates to execute exchange transactions for the
Portfolio, and Neuberger & Berman and other affiliates comply with the
reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by the Portfolio to
Neuberger & Berman and BNP-International in connection with a purchase or
sale of securities offered on a securities exchange may not exceed the
usual and customary broker's commission. Accordingly, it is the
Portfolio's policy that the commissions to be paid to Neuberger & Berman
and BNP-International must, in N&B Management's judgment, be (1) at least
as favorable as those that would be charged by other brokers having
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comparable execution capability and (2) at least as favorable as
commissions contemporaneously charged by Neuberger & Berman or BNP-
International, respectively, on comparable transactions for their most
favored unaffiliated customers, except for accounts for which Neuberger &
Berman or BNP-International acts as a clearing broker for another bro-
kerage firm and customers of Neuberger & Berman considered by a majority
of the Independent Portfolio Trustees not to be comparable to the
Portfolio. The Portfolio does not deem it practicable and in its best
interest to solicit competitive bids for commissions on each transaction
effected by Neuberger & Berman or BNP-International. However,
consideration regularly is given to information concerning the prevailing
level of commissions charged on comparable transactions by other brokers
during comparable periods of time. The 1940 Act generally prohibits
Neuberger & Berman or BNP-International from acting as principal in the
purchase or sale of securities for the Portfolio's account, unless an
appropriate exemption is available.
A committee of Independent Portfolio Trustees from time
to time reviews, among other things, information relating to the
commissions charged by Neuberger & Berman to the Portfolio and to its
other customers and information concerning the prevailing level of
commissions charged by other brokers having comparable execution
capability. In addition, the procedures pursuant to which Neuberger &
Berman effects brokerage transactions for the Portfolio must be reviewed
and approved no less often than annually by a majority of the Independent
Portfolio Trustees.
The Portfolio expects that it will continue to execute
transactions through brokers other than Neuberger & Berman and BNP-
International Financial Services Corporation. In selecting those brokers,
N&B Management will consider the quality and reliability of brokerage
services, including execution capability and performance and financial
responsibility, and may consider the research and other investment
information provided by, and sale of Fund shares effected through, those
brokers.
A committee comprised of officers of N&B Management and
partners of Neuberger & Berman who are portfolio managers of funds advised
by N&B Management ("N&B Funds") and some of Neuberger & Berman's managed
accounts ("Managed Accounts") evaluates semi-annually the nature and
quality of the brokerage and research services provided by other brokers.
Based on this evaluation, the committee establishes a list and projected
ranking of preferred brokers for use in determining the relative amounts
of commissions to be allocated to those brokers. Ordinarily, the brokers
on the list effect a large portion of the brokerage transactions for the
N&B Funds and the Managed Accounts that are not effected by Neuberger &
Berman. However, in any semi-annual period, brokers not on the list may
be used, and the relative amounts of brokerage commissions paid to the
brokers on the list may vary substantially from the projected rankings.
These variations reflect the following factors, among others: (1) brokers
not on the list or ranking below other brokers on the list may be selected
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for particular transactions because they provide better price and/or
execution, which is the primary consideration in allocating brokerage;
(2) adjustments may be required because of periodic changes in the exe-
cution or research capabilities of particular brokers, or in the execution
or research needs of the N&B Funds and/or the Managed Accounts; and (3)
the aggregate amount of brokerage commissions generated by transactions
for the N&B Funds and the Managed Accounts may change substantially from
one semi-annual period to the next.
The commissions charged by a broker other than Neuberger
& Berman or BNP-International Financial Services Corporation may be
greater than the amount another firm might charge if N&B Management
determines in good faith that the amount of those commissions is
reasonable in relation to the value of the brokerage and research services
provided by the broker. N&B Management believes that those research
services provide the Portfolio with benefits by supplementing the research
otherwise available to it. That research information may be used by N&B
Management in servicing Other N&B Funds, and in some cases, by Neuberger &
Berman in servicing managed accounts. On the other hand, research infor-
mation received by N&B Management from brokers effecting portfolio
transactions on behalf of Other N&B Funds and by Neuberger & Berman from
brokers effecting portfolio transactions on behalf of the Managed Accounts
may be used for the Portfolio's benefit.
Felix Rovelli, a Vice President of N&B Management, is the
person primarily responsible for making decisions as to specific action to
be taken with respect to the Portfolio. He has full authority to take
action with respect to portfolio transactions and may or may not consult
with other personnel of N&B Management prior to taking such action.
Portfolio Turnover
------------------
The portfolio turnover rate is the lesser of the cost of
the securities purchased or the value of the securities sold, excluding
all securities, including options, whose maturity or expiration date at
the time of acquisition was one year or less, divided by the average
monthly value of such securities owned during the year.
REPORTS TO SHAREHOLDERS
Shareholders of the Fund receive unaudited semi-annual
financial statements and audited year-end financial statements certified
by the Fund's independent auditors. The Fund's statements show the
investments owned by the Portfolio and the market values thereof and
provide other information about the Fund and its operations.
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CUSTODIAN AND TRANSFER AGENT
The Fund and Portfolio have selected State Street Bank
and Trust Company, 225 Franklin Street, Boston, MA 02110, as custodian for
their securities and cash. All correspondence should be mailed to
Neuberger & Berman Funds, c/o Boston Service Center, P.O. Box 8403,
Boston, MA 02266-8403. That company also serves as the Fund's transfer
agent 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. State Street
Cayman Trust Company serves as transfer agent to the Portfolio.
INDEPENDENT AUDITORS
The Fund and Portfolio have selected Ernst & Young LLP,
200 Clarendon Street, Boston, Massachusetts, and Ernst & Young, One
Capital Place, George Town, Grand Cayman, Cayman Islands, respectively, as
the independent auditors who will audit their financial statements.
LEGAL COUNSEL
The Fund and Portfolio have selected Kirkpatrick &
Lockhart LLP, 1800 M Street, N.W., Washington, D.C. 20036, as 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 owned of record, or who was
known by the Fund to own beneficially or of record, 5% or more of the
Fund's outstanding shares at September 30, 1995:
Name and Address Percentage Ownership
---------------- --------------------
Town of Cheshire Retirement Plan ____%
Town of Cheshire
84 South Main St.
Cheshire, CT 06410-3108
Attn: Director of Finance
Neuberger & Berman* ____%
605 Third Avenue
New York, NY 10158-3698
Charles Schwab & Co., Inc.* ____%
101 Montgomery Street
San Francisco, CA 94104-4122
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<PAGE>
* 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 its client accounts unless
disclosure is expressly required by law.
At September 30, 1995, the trustees and officers of the
Trusts, as a group, owned beneficially or of record less than 1% of the
outstanding shares of the Fund.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the infor-
mation included in the Trust's registration statement filed with the SEC
under the 1933 Act with respect to the securities offered by the
Prospectus. Certain portions of the registration statement have been
omitted pursuant to SEC rules and regulations. The registration
statement, including the exhibits filed therewith, may be examined at the
SEC's offices in Washington, D.C.
Statements contained in this SAI and in the Prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy
of the contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.
FINANCIAL STATEMENTS
The following financial statements and related documents
are incorporated herein by reference from the Fund's Annual Report to
Shareholders for the fiscal period ended August 31, 1995: the audited
financial statements of the Fund and Portfolio and notes thereto for the
fiscal year ended August 31, 1995, and the reports of Ernst & Young LLP
and Ernst & Young, independent auditors for the Fund and Portfolio,
respectively, with respect to such audited financial statements.
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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, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C 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 and C
the highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
CI - The rating CI is reserved for income bonds on which
no interest is being paid.
D - Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
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 corporate 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
A-1
<PAGE>
visualized are most unlikely to impair the fundamentally strong position
of the issuer.
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
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds 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 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.
Caa - Bonds rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
Ca - Bonds rated Ca represent obligations that are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Modifiers - Moody's may apply numerical modifiers 1, 2,
and 3 in each generic rating classification described above. The modifier
1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the
A-2
<PAGE>
modifier 3 indicates that the issuer ranks in the lower end of its generic
rating category.
S&P commercial paper ratings:
A-1 - This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+).
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 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.
A-3
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 70 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
------- ---------------------------------
(a) Financial Statements:
Audited financial statements for Neuberger & Berman International
Fund will be filed by amendment to Registrant's registration
statement.
Included in Part A of this Post-Effective Amendment:
Form of FINANCIAL HIGHLIGHTS, to be
filed by amendment to Registrant's
registration statement, for the period
indicated therein for the Fund and the
Portfolio.
(b) Exhibits:
Exhibit
Number Description
-------- -----------
(1) (a) Certificate of Trust. Filed Herewith.
(b) Trust Instrument of Neuberger & Berman
Equity Funds. Filed Herewith.
(c) Schedule A - Current Series of Neuberger
& Berman Equity Funds. Filed Herewith.
(2) By-laws of Neuberger & Berman Equity
Funds. Filed Herewith.
(3) Voting Trust Agreement. None.
(4) Specimen Share Certificate.
Incorporated by Reference to Post-
Effective Amendment No. 66 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582.
(5) (a) (i) Management Agreement Between
Equity Managers Trust and
C-1
<PAGE>
Neuberger & Berman Management
Incorporated. Filed Herewith.
(ii) Schedule A - Series of Equity
Managers Trust Currently Subject
to the Management Agreement.
Filed Herewith.
(iii) Schedule B - Schedule of
Compensation Under the
Management Agreement. Filed
Herewith.
(b) (i) Sub-Advisory Agreement Between
Neuberger & Berman Management
Incorporated and Neuberger &
Berman, L.P. with Respect to
Equity Managers Trust. Filed
Herewith.
(ii) Schedule A - Series of Equity
Managers Trust Currently Subject
to the Sub-Advisory Agreement.
Filed Herewith.
(c) (i) Form of Management Agreement
Between Global Managers Trust
and Neuberger & Berman
Management Incorporated. Filed
Herewith.
(ii) Form of Schedule A - Series of
Global Managers Trust Subject to
the Management Agreement. Filed
Herewith.
(iii) Form of Schedule B - Schedule of
Compensation Under the
Management Agreement. Filed
Herewith.
(d) (i) Form of Sub-Advisory Agreement
Between Neuberger & Berman
Management Incorporated and
Neuberger & Berman, L.P. with
Respect to Global Managers
Trust. Filed Herewith.
(ii) Form of Schedule A - Series of
Global Managers Trust Subject to
the Sub-Advisory Agreement.
Filed Herewith.
C-2
<PAGE>
(6) (a) Distribution Agreement Between Neuberger
& Berman Equity Funds and Neuberger &
Berman Management Incorporated. Filed
Herewith.
(b) Schedule A - Series of Neuberger &
Berman Equity Funds Currently Subject to
the Distribution Agreement. Filed
Herewith.
(7) Bonus, Profit Sharing or Pension Plans.
None.
(8) (a) Custodian Contract Between Neuberger &
Berman Equity Funds and State Street
Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment
No. 66 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-
582.
(b) Schedule A - Approved Foreign Banking
Institutions and Securities Depositories
Under the Custodian Contract.
Incorporated by Reference to Post-
Effective Amendment No. 66 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582.
(9) (a) (i) Transfer Agency Agreement
Between Neuberger & Berman
Equity Funds and State Street
Bank and Trust Company. Filed
Herewith.
(ii) Agreement Between Neuberger &
Berman Equity Funds and State
Street Bank and Trust Company
Adding Neuberger & Berman
International Fund as a
Portfolio Governed by the
Transfer Agency Agreement.
Filed Herewith.
(iii) First Amendment to Transfer
Agency and Service Agreement
between Neuberger & Berman
Equity Funds and State Street
Bank and Trust Company. Filed
Herewith.
C-3
<PAGE>
(b) (i) Administration Agreement Between
Neuberger & Berman Equity Funds
and Neuberger & Berman
Management Incorporated. Filed
Herewith.
(ii) Form of Schedule A - Series of
Neuberger & Berman Equity Funds
Subject to the Administration
Agreement. Filed Herewith.
(iii) Schedule B - Schedule of
Compensation Under the
Administration Agreement. Filed
Herewith.
(10) Opinion and Consent of Kirkpatrick &
Lockhart LLP on Securities Matters.
Incorporated by Reference to Post-
Effective Amendment No. 66 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582.
(11) (a) Consent of Ernst & Young LLP,
Independent Auditors. To Be Filed by
Amendment.
(b) Consent of Ernst & Young, Independent
Auditors. To Be Filed by Amendment
(12) Financial Statements Omitted from
Prospectus. None.
(13) Letter of Investment Intent. None.
(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 Nos. 61 and
67 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-
582.
(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.
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<PAGE>
------- -------------------------------------------------------------
No person is controlled by or under common control with the
Registrant. (Registrant is organized in a master fund/feeder fund
structure, and technically may be considered to control the master fund in
which it invests, Global Managers Trust.)
Item 26. Number of Holders of Securities.
------- -------------------------------
The following information is given as of July 31, 1995.
Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:
Neuberger & Berman Focus Fund 31,731
Neuberger & Berman Genesis Fund 7,060
Neuberger & Berman Guardian Fund 108,687
Neuberger & Berman International Fund 1,856
Neuberger & Berman Manhattan Fund 46,058
Neuberger & Berman Partners Fund 54,193
Neuberger & Berman Socially Responsive Fund 574
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 in connection with any claim,
action, suit or proceeding ("Action") in which he becomes involved as a
party or otherwise by virtue of his being or having been a Covered Person
and against amounts paid or incurred by him in 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
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, of the
C-5
<PAGE>
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 being or having
been a shareholder and not because of his acts or omissions or for some
other reason, the present or former shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of any
entity, its general successor) shall be entitled out of the assets
belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
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 Global Managers Trust
("Managers Trust") and Neuberger & 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 the series
of Managers Trust 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 series in connection with any matter to which
the Agreement relates; provided, that nothing in the Agreement shall be
construed (i) to protect N&B Management against any liability to Managers
Trust or any series thereof or its interest holders 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 any series thereof or its
interest holders 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 any liability for any act or omission or any loss
suffered by any series of Managers Trust or its interest holders in
connection with the matter 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
C-6
<PAGE>
or its employees, agents or contractors in carrying out the provisions of
the Agreement if such action was taken or omitted in good faith and
without negligence or misconduct on the part of N&B Management, or its
employees, agents or contractors. Section 13 of the Administration
Agreement provides that the Registrant shall indemnify N&B Management and
hold it harmless from and against any and all losses, damages and
expenses, including reasonable attorneys' fees and expenses, incurred by
N&B Management that result from: (i) any claim, action, suit or
proceeding in connection with N&B Management's entry into or performance
of the Agreement; or (ii) any action taken or omission to act committed by
N&B Management in the performance of its obligations under the Agreement;
or (iii) any action of N&B Management upon instructions believed in good
faith by it to have been executed by a duly authorized officer or
representative of a Series; provided, that N&B Management will not be
entitled to such indemnification in respect of actions or omissions
constituting negligence or misconduct on the part of N&B Management, or
its employees, agents or contractors. Amounts payable by the Registrant
under this provision shall be payable solely out of assets belonging to
that Series, and not from assets belonging to any other Series of the
Registrant. Section 14 of the Administration Agreement provides that N&B
Management will indemnify the Registrant and hold it harmless from and
against any and all losses, damages and expenses, including reasonable
attorneys' fees and expenses, incurred by the Registrant that result from:
(i) N&B Management's failure to comply with the terms of the Agreement; or
(ii) N&B Management's lack of good faith in performing its obligations
under the Agreement; or (iii) the negligence or misconduct of N&B
Management, or its employees, agents or contractors in connection with the
Agreement. The Registrant shall not be entitled to such indemnification
in respect of actions or omissions constituting negligence or misconduct
on the part of the Registrant or its employees, agents or contractors
other than N&B Management, unless such negligence or misconduct results
from or is accompanied by negligence or misconduct on the part of N&B
Management, any affiliated person of N&B Management, or any affiliated
person of an affiliated person of N&B Management.
Section 11 of the Distribution Agreement between the Registrant and
N&B Management provides that N&B Management shall look only to the assets
of a Series for the Registrant's performance of the Agreement by the
Registrant on behalf of such Series, and neither the Trustees nor any of
the Registrant's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
C-7
<PAGE>
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 the 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.
C-8
<PAGE>
<TABLE>
<CAPTION>
Name BUSINESS AND OTHER CONNECTIONS
-------------------------------- -------------------------------------------------------
<S> <C>
Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management Trust
Vice President, N&B (Delaware business trust); Secretary, Advisers Managers
Management Trust; Secretary, Neuberger & Berman Advisers Management
Trust (Massachusetts business trust) (1); Secretary,
Neuberger & Berman Income Funds; Secretary, Neuberger &
Berman Income Trust; Secretary, Neuberger & Berman
Equity Funds; Secretary, Neuberger & Berman Equity
Trust; Secretary, Income Managers Trust; Secretary,
Equity Managers Trust; Secretary, Global Managers Trust;
Secretary, Neuberger & Berman Equity Assets.
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business trust); Assistant
N&B Management 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.
Stanley Egener Chairman of the Board and Trustee, Neuberger & Berman
President and Director, Advisers Management Trust (Delaware business trust);
N&B Management; General Partner, Chairman of the Board and Trustee, Advisers Managers
Neuberger & Berman Trust; Chairman of the Board and Trustee, Neuberger &
Berman Advisers Management Trust (Massachusetts business
trust) (1); Chairman of the Board and Trustee,
Neuberger & Berman Income Funds; Chairman of the Board
and Trustee, Neuberger & Berman Income Trust; Chairman
of the Board and Trustee, Neuberger & Berman Equity
Funds; Chairman of the Board and Trustee, Neuberger &
Berman Equity Trust; Chairman of the Board and Trustee,
Income Managers Trust; Chairman of the Board and
Trustee, Equity Managers Trust; Chairman of the Board
and Trustee, Global Managers Trust; Chairman of the
Board and Trustee, Neuberger & Berman Equity Assets.
C-9
<PAGE>
Name BUSINESS AND OTHER CONNECTIONS
-------------------------------- -------------------------------------------------------
Theodore P. Giuliano Vice President, Neuberger & Berman Advisers Management
Vice President, N&B Trust (Massachusetts business trust) (3); Executive Vice
Management (2); General Partner, President and Trustee, Neuberger & Berman Income Funds
Neuberger & Berman (4); Executive Vice President and Trustee, Neuberger &
Berman Income Trust (4); Executive Vice President and
Trustee, Income Managers Trust (4).
Mark R. Goldstein Vice President, Neuberger & Berman Advisers Management
Vice President, N&B Management; Trust (Massachusetts business trust) (3).
General Partner, Neuberger & Berman
Theresa A. Havell Vice President, Neuberger & Berman Advisers Management
Vice President and Trust (Massachusetts business trust) (3); President and
Director, N&B Management; Trustee, Neuberger & Berman Income Funds; President and
General Partner, Neuberger & Berman Trustee, Neuberger & Berman Income Trust; President and
Trustee, Income Managers Trust
Josephine Mahaney Assistant Vice President, Neuberger & Berman Advisers
Assistant Vice President (2), Management Trust (Massachusetts business trust) (3).
Vice President, N&B Management
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers
General Partner, Neuberger & Berman 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.
Richard Russell Treasurer, Neuberger & Berman Advisers Management Trust
Vice President, (Delaware business trust); Treasurer, Advisers Managers
N&B Management Trust; Assistant Treasurer (3), 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.
C-10
<PAGE>
Name BUSINESS AND OTHER CONNECTIONS
-------------------------------- -------------------------------------------------------
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers Management
Senior Vice President, N&B Management Trust (Delaware 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.
Michael J. Weiner Vice President, Neuberger & Berman Advisers Management
Senior Vice President and Trust (Delaware business trust); Vice President,
Treasurer, N&B Management Advisers Managers Trust; Treasurer (3), Vice President,
Neuberger & Berman Advisers Management Trust
(Massachusetts business trust) (1); Vice President,
Neuberger & Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice President, Income
Managers Trust; Vice President, Equity Managers Trust;
Vice President, Global Managers Trust; Vice President,
Neuberger & Berman Equity Assets.
Lawrence Zicklin President and Trustee, Neuberger & Berman Advisers
Director, N&B Management; Management Trust (Delaware business trust); President
General Partner, Neuberger & 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
</TABLE>
The principal address of N&B Management, Neuberger & Berman, and
of each of the companies or other entities named above, is 605 Third
Avenue, New York, New York 10158-0006.
(1) Until April 30, 1995.
(2) Until November 4, 1994.
(3) Until December 2, 1993.
(4) Until June 22, 1994.
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<PAGE>
Item 29. Principal Underwriters.
------- ----------------------
(a) Neuberger & Berman Management Incorporated, the principal
underwriter distributing securities of the Registrant, is also the
principal underwriter and distributor for each of the following investment
companies:
Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Assets
Neuberger & Berman Equity Trust
Neuberger & Berman Income Funds
Neuberger & Berman Income Trust
Neuberger & Berman Management Incorporated 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, which is also the address of the Registrant's
principal underwriter.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- --------------------- -----------------------
<S> <C> <C>
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Assistant Vice President None
Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Assistant Vice President None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Barbara DiGiorgio Assistant Vice President None
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board of
Trustees
(Chief Executive Officer)
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<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- --------------------- -----------------------
Robert I. Gendleman Assistant Vice President None
Mark R. Goldstein Vice President None
Farha-Joyce Haboucha Vice President None
Theresa A. Havell Vice President and Director None
Leslie Holliday-Soto Assistant Vice President None
Michael M. Kassen Vice President None
Irwin Lainoff Director None
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Lawrence Marx III Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Assistant Vice President None
Stephen E. Milman Vice President None
Janet W. Prindle Vice President None
Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Marvin C. Schwartz Director None
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Susan Switzer Assistant Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
C-13
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- --------------------- -----------------------
Clara Del Villar Vice President None
Susan Walsh Assistant Vice President None
Margaret Didi Weinblatt Vice President None
Michael J. Weiner Senior Vice President and Vice President
Treasurer (Principal Financial Officer)
Stephen A. White Vice President None
Celeste Wischerth Assistant Vice President None
Lawrence Zicklin Director Trustee and President
</TABLE>
Item 30. Location of Accounts and Records.
------- --------------------------------
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940, 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 Bylaws, 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.
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules promulgated thereunder with respect to Global
Managers Trust are maintained at the offices of State Street Cayman Trust
Company, Ltd., Elizabethan Square, P.O. Box 1984, George Town, Grand
Cayman, Cayman Islands, BWI.
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.
C-14
<PAGE>
Item 32. Undertakings
------- ------------
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report
to shareholders, upon request and without charge.
C-15
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN
EQUITY FUNDS has duly caused this Post-Effective Amendment No. 70 to its
Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City and State of New York on the 30th day
of August, 1995.
NEUBERGER & BERMAN EQUITY FUNDS
/s/ Lawrence Zicklin
By:-----------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 70 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- -----
/s/ Faith Colish Trustee August 30, 1995
---------------------
Faith Colish
/s/ Donald M. Cox Trustee August 30, 1995
-------------------------
Donald M. Cox
/s/ Stanley Egener Chairman of the Board August 30, 1995
-------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee August 30, 1995
--------------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee August 30, 1995
--------------------------
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee August 30, 1995
--------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee August 30, 1995
--------------------------
John P. Rosenthal
<PAGE>
Signature Title Date
--------- ----- -----
/s/ Cornelius T. Ryan Trustee August 30, 1995
--------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee August 30, 1995
--------------------------
Gustave H. Shubert
/s/ Alan R. Gruber Trustee August 30, 1995
--------------------------
Alan R. Gruber
/s/ Lawrence Zicklin President and Trustee August 30, 1995
--------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President August 30, 1995
-------------------------- (Principal
Michael J. Weiner Financial Officer)
/s/ Richard Russell Treasurer (Principal August 30, 1995
-------------------------- Accounting Officer)
Richard Russell
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, GLOBAL MANAGERS TRUST has duly caused
Post-Effective Amendment No. 70 to be signed on its behalf by the
undersigned, thereto duly authorized, at Paradise Island, the Bahamas, on
the 30th day of August, 1995.
GLOBAL MANAGERS TRUST
/s/ Stanley Egener
By:------------------
Stanley Egener
Chairman of the Board
(Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, Post-
Effective Amendment No. 70 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Stanley Egener Chairman of the Board August 30, 1995
-------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee August 30, 1995
--------------------------
Howard A. Mileaf
/s/ John T. Patterson, Jr. Trustee August 30, 1995
--------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee August 30, 1995
--------------------------
John P. Rosenthal
/s/ Michael J. Weiner Vice President August 30, 1995
-------------------------- (Principal Financial
Michael J. Weiner Officer)
-------------------------- Treasurer (Principal
Richard Russell Accounting Officer)
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, GLOBAL MANAGERS TRUST has duly caused
Post-Effective Amendment No. 70 to be signed on its behalf by the
undersigned, thereto duly authorized, at Paget, Bermuda, on the 30th day
of August, 1995.
GLOBAL MANAGERS TRUST
/s/ Stanley Egener
By:------------------
Stanley Egener
Chairman of the Board
(Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, Post-
Effective Amendment No. 70 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Stanley Egener Chairman of the Board August 30, 1995
-------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee August 30, 1995
--------------------------
Howard A. Mileaf
/s/ John T. Patterson, Jr. Trustee August 30, 1995
--------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee August 30, 1995
---------------------------
John P. Rosenthal
/s/ Richard Russell Treasurer (Principal August 30, 1995
--------------------------- Accounting Officer)
Richard Russell
___________________________ Vice President
Michael J. Weiner (Principal Financial
Officer)
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 70 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----------
<S> <C> <C>
(1) (a) Certificate of Trust. Filed Herewith.
(b) Trust Instrument of Neuberger & Berman Equity Funds. Filed
Herewith.
(c) Schedule A - Current Series of Neuberger & Berman Equity
Funds. Filed Herewith.
(2) By-laws of Neuberger & Berman Equity Funds. Filed Herewith.
(3) Voting Trust Agreement. None.
(4) Specimen Share Certificate. Incorporated by Reference to Post-
Effective Amendment No. 66 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582.
(5) (a) (i) Management Agreement Between Equity Managers Trust
and Neuberger & Berman Management Incorporated.
Filed Herewith
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Management Agreement. Filed
Herewith.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Filed Herewith.
(b) (i) Sub-Advisory Agreement Between Neuberger & Berman
Management Incorporated and Neuberger & Berman, L.P.
with Respect to Equity Managers Trust. Filed
Herewith.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Sub-Advisory Agreement.
Filed Herewith.
(c) (i) Form of Management Agreement Between Global Managers
Trust and Neuberger & Berman Management Incorporated.
Filed Herewith.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----------
(ii) Form of Schedule A - Series of Global Managers Trust
Subject to the Management Agreement. Filed Herewith.
(iii) Form of Schedule B - Schedule of Compensation Under
the Management Agreement. Filed Herewith.
(d) (i) Form of Sub-Advisory Agreement Between Neuberger &
Berman Management Incorporated and Neuberger &
Berman, L.P. with respect to Global Managers Trust.
Filed Herewith.
(ii) Form of Schedule A - Series of Global Managers Trust
Subject to Sub-Advisory Agreement. Filed Herewith.
(6) (a) Distribution Agreement Between Neuberger & Berman Equity Funds
and Neuberger & Berman Management Incorporated. Filed
Herewith.
(b) Schedule A - Series of Neuberger & Berman Equity Funds
Currently Subject to the Distribution Agreement. Filed
Herewith.
(7) Bonus, Profit Sharing or Pension Plans. None.
(8) (a) Custodian Contract Between Neuberger & Berman Equity Funds and
State Street Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 66 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582.
(b) Schedule A - Approved Foreign Banking Institutions and
Securities Depositories Under the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment No. 66
to Registrant's Registration Statement, File Nos. 2-11357 and
811-582.
(9) (a) (i) Transfer Agency Agreement Between Neuberger & Berman
Equity Funds and State Street Bank and Trust Company.
Filed Herewith.
(ii) Agreement Between Neuberger & Berman Equity Funds and
State Street Bank and Trust Company Adding Neuberger
& Berman International Fund as a Portfolio Governed
by the Transfer Agency Agreement. Filed Herewith.
(iii) First Amendment to Transfer Agency and Service
Agreement Between Neuberger & Berman Equity Funds and
State Street Bank and Trust Company. Filed Herewith.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----------
(b) (i) Administration Agreement Between Neuberger & Berman
Equity Funds and Neuberger & Berman Management
Incorporated. Filed Herewith.
(ii) Form of Schedule A - Series of Neuberger & Berman
Equity Funds Subject to the Administration Agreement.
Filed Herewith.
(iii) Schedule B - Schedule of Compensation Under the
Administration Agreement. Filed Herewith.
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters. Incorporated by Reference to Post-
Effective Amendment No. 66 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(11) (a) Consent of Ernst & Young LLP, Independent Auditors. To Be
Filed by Amendment.
(b) Consent of Ernst & Young, Independent Auditors. To Be Filed
by Amendment.
(12) Financial Statements Omitted from Prospectus. None.
(13) Letter of Investment Intent. None.
(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 Nos. 61 and 67 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582.
(17) Financial Data Schedule. To Be Filed by Amendment.
(18) Plan Pursuant to Rule 18f-3. None.
</TABLE>
<PAGE>
CERTIFICATE OF TRUST
OF
NEUBERGER & BERMAN EQUITY FUNDS
This Certificate of Trust ("Certificate") is filed in accordance
with the provisions of the Delaware Business Trust Act (12 Del. Code Ann.
Tit. 12 Section 3801 et seq.) and sets forth the following:
1. The name of the trust is: Neuberger & Berman Equity Funds
("Trust").
2. The business address of the registered office of the
Trust and of the registered agent of the Trust is:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
3. This Certificate is effective upon filing.
4. The Trust is a Delaware business trust to be registered
under the Investment Company Act of 1940. Notice is
hereby given that the Trust shall consist of one or more
series. The debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with
respect to a particular series of the Trust shall be
enforceable against the assets of such series only, and
not against the assets of the Trust generally or any
other series.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees,
have executed this Certificate on this 23rd day of December, 1992.
/s/ Claudia A. Brandon
---------------------------------------
Claudia A. Brandon, as
Trustee and not individually
/s/ Ellen Metzger
---------------------------------------
Ellen Metzger, as
Trustee and not individually
/s/ Daniel J. Sullivan
---------------------------------------
Daniel J. Sullivan, as
Trustee and not individually
Address: 605 Third Avenue
New York, NY 10158
<PAGE>
STATE OF NEW YORK
CITY OF NEW YORK
Before me this 23rd day of December, 1992, personally appeared the
above-named Claudia A. Brandon, Ellen Metzger, and Daniel J. Sullivan,
known to me to be the persons who executed the foregoing instrument and
who acknowledged that they executed the same.
/s/ Loraine Olavarria
---------------------------------------
Notary Public
My commission expires April 15, 1993
- 2 -
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
------------------------------
TRUST INSTRUMENT
----------------
This TRUST INSTRUMENT is made on December 23, 1992, by the
Trustees, to establish a business trust for the investment and
reinvestment of funds contributed to the Trust by investors. The Trustees
declare that all money and property contributed to the Trust shall be held
and managed in trust pursuant to this Trust Instrument. The name of the
Trust created by this Trust Instrument is Neuberger & Berman Equity Funds.
ARTICLE I
---------
DEFINITIONS
-----------
Unless otherwise provided or required by the context:
(a) "By-laws" means the By-laws of the Trust adopted by the
Trustees, as amended from time to time;
(b) "Class" means the class of Shares of a Series established
pursuant to Article IV;
(c) "Commission," "Interested Person," and "Principal
Underwriter" have the meanings provided in the 1940 Act;
(d) "Covered Person" means a person so defined in Article IX,
Section 2;
(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as amended from
time to time;
(f) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" as defined in the 1940 Act;
(g) "Net Asset Value" means the net asset value of each Series
of the Trust, determined as provided in Article V, Section 3;
(h) "Outstanding Shares" means Shares shown in the books of the
Trust or its transfer agent as then issued and outstanding, but does not
include Shares which have been repurchased or redeemed by the Trust and
which are held in the treasury of the Trust;
(i) "Series" means a series of Shares established pursuant to
Article IV;
- 1 -
<PAGE>
(j) "Shareholder" means a record owner of Outstanding Shares;
(k) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is
divided from time to time (including whole Shares and fractions of
Shares);
(l) "Trust" means Neuberger & Berman Equity Funds established
hereby, and reference to the Trust, when applicable to one or more Series,
refers to that Series;
(m) "Trustees" means the persons who have signed this Trust
Instrument, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with Article II, in all
cases in their capacities as Trustees hereunder;
(n) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
Trust or any Series or the Trustees on behalf of the Trust or any Series;
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time.
ARTICLE II
----------
THE TRUSTEES
------------
Section 1. Management of the Trust. The business and affairs of
the Trust shall be managed by or under the direction of the Trustees, and
they shall have all powers necessary or desirable to carry out that
responsibility. The Trustees may execute all instruments and take all
action they deem necessary or desirable to promote the interests of the
Trust. Any determination made by the Trustees in good faith as to what is
in the interests of the Trust shall be conclusive.
Section 2. Initial Trustees; Election and Number of Trustees.
The initial Trustees shall be the persons initially signing this Trust
Instrument. The number of Trustees (other than the initial Trustees)
shall be fixed from time to time by a majority of the Trustees; provided,
that there shall be at least two (2) Trustees. The Shareholders shall
elect the Trustees (other than the initial Trustees) on such dates as the
Trustees may fix from time to time.
Section 3. Term of Office of Trustees. Each Trustee shall hold
office for life or until his successor is elected or the Trust terminates;
except that (a) any Trustee may resign by delivering to the other Trustees
or to any Trust officer a written resignation effective upon such delivery
or a later date specified therein; (b) any Trustee may be removed with or
without cause at any time by a written instrument signed by at least
- 2 -
<PAGE>
two-thirds of the other Trustees, specifying the effective date of
removal; (c) any Trustee who requests to be retired, or who has become
physically or mentally incapacitated or is otherwise unable to serve, may
be retired by a written instrument signed by a majority of the other
Trustees, specifying the effective date of retirement; and (d) any Trustee
may be removed at any meeting of the Shareholders by a vote of at least
two-thirds of the Outstanding Shares.
Section 4. Vacancies; Appointment of Trustees. Whenever a
vacancy shall exist in the Board of Trustees, regardless of the reason for
such vacancy, the remaining Trustees shall appoint any person as they
determine in their sole discretion to fill that vacancy, consistent with
the limitations under the 1940 Act. Such appointment shall be made by a
written instrument signed by a majority of the Trustees or by a resolution
of the Trustees, duly adopted and recorded in the records of the Trust,
specifying the effective date of the appointment. The Trustees may
appoint a new Trustee as provided above in anticipation of a vacancy
expected to occur because of the retirement, resignation, or removal of a
Trustee, or an increase in number of Trustees, provided that such
appointment shall become effective only at or after the expected vacancy
occurs. As soon as any such Trustee has accepted his appointment in
writing, the trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he shall
be deemed a Trustee hereunder. The power of appointment is subject to
Section 16(a) of the 1940 Act.
Section 5. Temporary Vacancy or Absence. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, or while
any Trustee is absent from his domicile (unless that Trustee has made
arrangements to be informed about, and to participate in, the affairs of
the Trust during such absence), or is physically or mentally
incapacitated, the remaining Trustees shall have all the powers hereunder
and their certificate as to such vacancy, absence, or incapacity shall be
conclusive. Any Trustee may, by power of attorney, delegate his powers as
Trustee for a period not exceeding six (6) months at any one time to any
other Trustee or Trustees.
Section 6. Chairman. The Trustees shall appoint one of their
number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the
execution of policies established by the Trustees and the administration
of the Trust, and may be the chief executive, financial and/or accounting
officer of the Trust.
Section 7. Action by the Trustees. The Trustees shall act by
majority vote at a meeting duly called (including at a telephonic meeting,
unless the 1940 Act requires that a particular action be taken only at a
meeting of Trustees in person) at which a quorum is present or by written
consent of a majority of Trustees (or such greater number as may be
required by applicable law) without a meeting. A majority of the Trustees
shall constitute a quorum at any meeting. Meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or by
- 3 -
<PAGE>
any two other Trustees. Notice of the time, date and place of all
Trustees meetings shall be given to each Trustee by telephone, facsimile
or other electronic mechanism sent to his home or business address at
least twenty-four hours in advance of the meeting or by written notice
mailed to his home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who signs a
waiver of notice either before or after the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate
to any Trustee or Trustees authority to approve particular matters or take
particular actions on behalf of the Trust. Any written consent or waiver
may be provided and delivered to the Trust by facsimile or other similar
electronic mechanism.
Section 8. Ownership of Trust Property. The Trust Property of
the Trust and of each Series shall be held separate and apart from any
assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the Trust
Property and legal title thereto shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees
may cause legal title to any Trust Property to be held by or in the name
of the Trust, or in the name of any person as nominee. No Shareholder
shall be deemed to have a severable ownership in any individual asset of
the Trust or of any Series or any right of partition or possession
thereof, but each Shareholder shall have, as provided in Article IV, a
proportionate undivided beneficial interest in the Trust or Series
represented by Shares.
Section 9. Effect of Trustees Not Serving. The death,
resignation, retirement, removal, incapacity, or inability or refusal to
serve of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of
this Trust Instrument.
Section 10. Trustees, etc. as Shareholders. Subject to any
restrictions in the By-laws, any Trustee, officer, agent or independent
contractor of the Trust may acquire, own and dispose of Shares to the same
extent as any other Shareholder; the Trustees may issue and sell Shares to
and buy Shares from any such person or any firm or company in which such
person is interested, subject only to any general limitations herein.
ARTICLE III
POWERS OF THE TRUSTEES
----------------------
Section 1. Powers. The Trustees in all instances shall act as
principals, free of the control of the Shareholders. The Trustees shall
have full power and authority to take or refrain from taking any action
and to execute any contracts and instruments that they may consider
necessary or desirable in the management of the Trust. The Trustees shall
- 4 -
<PAGE>
not in any way be bound or limited by current or future laws or customs
applicable to trust investments, but shall have full power and authority
to make any investments which they, in their sole discretion, deem proper
to accomplish the purposes of the Trust. The Trustees may exercise all of
their powers without recourse to any court or other authority. Subject to
any applicable limitation herein or in the By-laws or resolutions of the
Trust, the Trustees shall have power and authority, without limitation:
(a) To invest and reinvest cash and other property, and to hold
cash or other property uninvested, without in any event being bound or
limited by any current or future law or custom concerning investments by
trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the Trust Property; to invest in
obligations and securities of any kind, and without regard to whether they
may mature before the possible termination of the Trust; and without
limitation to invest all or any part of its cash and other property in
securities issued by a registered investment company or series thereof,
subject to the provisions of the 1940 Act;
(b) To operate as and carry on the business of a registered
investment company, and exercise all the powers necessary and proper to
conduct such a business;
(c) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent such right is not reserved to the Shareholders;
(d) To elect and remove such officers and appoint and terminate
such agents as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to
any provisions herein or in the By-laws, one or more banks, trust
companies or companies that are members of a national securities exchange,
or other entities permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder
servicing agents, or both;
(g) To provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both,
or pursuant to a distribution plan of any kind;
(h) To set record dates in the manner provided for herein or in
the By-laws;
(i) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
investment adviser, custodian or underwriter;
(j) To sell or exchange any or all of the assets of the Trust,
subject to Article X, Section 4;
- 5 -
<PAGE>
(k) To vote or give assent, or exercise any rights of ownership,
with respect to other securities or property; and to execute and deliver
powers of attorney delegating such power to other persons;
(l) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(m) To hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form, or (ii) either in the Trust's or Trustees' own name or in
the name of a custodian or a nominee or nominees, subject to safeguards
according to the usual practice of business trusts or investment
companies;
(n) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment
purposes, and with separate Shares representing beneficial interests in
such Series, and to establish separate Classes, all in accordance with the
provisions of Article IV;
(o) To the full extent permitted by Section 3804 of the Delaware
Act, to allocate assets, liabilities and expenses of the Trust to a
particular Series and liabilities and expenses to a particular Class or to
apportion the same between or among two or more Series or Classes,
provided that any liabilities or expenses incurred by a particular Series
or Class shall be payable solely out of the assets belonging to that
Series or Class as provided for in Article IV, Section 4;
(p) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern
whose securities are held by the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern;
and to pay calls or subscriptions with respect to any security held in the
Trust;
(q) To compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(r) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(s) To borrow money;
(t) To establish, from time to time, a minimum total investment
for Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder;
(u) To establish committees for such purposes, with such
membership, and with such responsibilities as the Trustees may consider
proper, including a committee consisting of fewer than all of the Trustees
- 6 -
<PAGE>
then in office, which may act for and bind the Trustees and the Trust with
respect to the institution, prosecution, dismissal, settlement, review or
investigation of any legal action, suit or proceeding, pending or
threatened;
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire,
hold, resell, reissue, dispose of and otherwise deal in Shares; to
establish terms and conditions regarding the issuance, sale, repurchase,
redemption, cancellation, retirement, acquisition, holding, resale,
reissuance, disposition of or dealing in Shares; and, subject to Articles
IV and V, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust
or of the particular Series with respect to which such Shares are issued;
and
(w) To carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary or
desirable to accomplish any purpose or to further any of the foregoing
powers, and to take every other action incidental to the foregoing
business or purposes, objects or powers.
The clauses above shall be construed as objects and powers, and
the enumeration of specific powers shall not limit in any way the general
powers of the Trustees. Any action by one or more of the Trustees in
their capacity as such hereunder shall be deemed an action on behalf of
the Trust or the applicable Series, and not an action in an individual
capacity. No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order. In construing this Trust Instrument, the
presumption shall be in favor of a grant of power to the Trustees.
Section 2. Certain Transactions. Except as prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any
securities from or sell any securities to, or lend any assets of the Trust
to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such
dealings with any investment adviser, administrator, distributor or
transfer agent for the Trust or with any Interested Person of such person.
The Trust may employ any such person or entity in which such person is an
Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing
agent, custodian or in any other capacity upon customary terms.
ARTICLE IV
----------
SERIES; CLASSES; SHARES
-----------------------
Section 1. Establishment of Series or Class. The Trust shall
consist of one or more Series. The Trustees hereby establish the Series
listed in Schedule A attached hereto and made a part hereof. Each
- 7 -
<PAGE>
additional Series shall be established by the adoption of a resolution of
the Trustees. The Trustees may designate the relative rights and
preferences of the Shares of each Series. The Trustees may divide the
Shares of any Series into Classes. In such case each Class of a Series
shall represent interests in the assets of that Series and have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that expenses allocated to a Class may be borne solely
by such Class as determined by the Trustees and a Class may have exclusive
voting rights with respect to matters affecting only that Class. The
Trust shall maintain separate and distinct records for each Series and
hold and account for the assets thereof separately from the other assets
of the Trust or of any other Series. A Series may issue any number of
Shares and need not issue Shares. Each Share of a Series shall represent
an equal beneficial interest in the net assets of such Series. Each
holder of Shares of a Series shall be entitled to receive his pro rata
share of all distributions made with respect to such Series. Upon
redemption of his Shares, such Shareholder shall be paid solely out of the
funds and property of such Series. The Trustees may change the name of
any Series or Class.
Section 2. Shares. The beneficial interest in the Trust shall
be divided into Shares of one or more separate and distinct Series or
Classes established by the Trustees. The number of Shares of each Series
and Class is unlimited and each Share shall have a par value of $0.001 per
Share. All Shares issued hereunder shall be fully paid and nonassessable.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. The Trustees
shall have full power and authority, in their sole discretion and without
obtaining Shareholder approval: to issue original or additional Shares at
such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares and Shares held in the treasury; to establish and
to change in any manner Shares of any Series or Classes with such
preferences, terms of conversion, voting powers, rights and privileges as
the Trustees may determine (but the Trustees may not change Outstanding
Shares in a manner materially adverse to the Shareholders of such Shares);
to divide or combine the Shares of any Series or Classes into a greater or
lesser number; to classify or reclassify any unissued Shares of any Series
or Classes into one or more Series or Classes of Shares; to abolish any
one or more Series or Classes of Shares; to issue Shares to acquire other
assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses; and to take such other action
with respect to the Shares as the Trustees may deem desirable. Shares
held in the treasury shall not confer any voting rights on the Trustees
and shall not be entitled to any dividends or other distributions declared
with respect to the Shares.
Section 3. Investment in the Trust. The Trustees shall accept
investments in any Series from such persons and on such terms as they may
from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or
securities in which that Series is authorized to invest, valued as
provided in Article V, Section 3. Investments in a Series shall be
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credited to each Shareholder's account in the form of full Shares at the
Net Asset Value per Share next determined after the investment is received
or accepted as may be determined by the Trustees; provided, however, that
the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, or (c)
determine the Net Asset Value per Share of the initial capital
contribution. The Trustees shall have the right to refuse to accept
investments in any Series at any time without any cause or reason therefor
whatsoever.
Section 4. Assets and Liabilities of Series. All consideration
received by the Trust for the issue or sale of Shares of a particular
Series, together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits, and proceeds thereof
(including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be), shall be held and
accounted for separately from the other assets of the Trust and every
other Series and are referred to as "assets belonging to" that Series.
The assets belonging to a Series shall belong only to that Series for all
purposes, and to no other Series, subject only to the rights of creditors
of that Series. Any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series shall be allocated by the Trustees
between and among one or more Series as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, earnings,
income, profits or funds, or payments and proceeds thereof shall be
referred to as assets belonging to that Series. The assets belonging to a
Series shall be so recorded upon the books of the Trust, and shall be held
by the Trustees in trust for the benefit of the Shareholders of that
Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses
allocated solely to a particular Class shall be borne by that Class. Any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among
any one or more of the Series or Classes in such manner as the Trustees
deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or
reserves as herein provided, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such Series
only, and not against the assets of the Trust generally or of any other
Series. Notice of this contractual limitation on liabilities among Series
may, in the Trustees' discretion, be set forth in the certificate of trust
of the Trust (whether originally or by amendment) as filed or to be filed
in the Office of the Secretary of State of the State of Delaware pursuant
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to the Delaware Act, and upon the giving of such notice in the certificate
of trust, the statutory provisions of Section 3804 of the Delaware Act
relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the certificate
of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against
any Series may look only to the assets of that Series to satisfy or
enforce any debt, with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust shall
maintain a register containing the names and addresses of the Shareholders
of each Series and Class thereof, the number of Shares of each Series and
Class held by such Shareholders, and a record of all Share transfers. The
register shall be conclusive as to the identity of Shareholders of record
and the number of Shares held by them from time to time. The Trustees may
authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer
of Shares, whether or not represented by certificates.
Section 6. Status of Shares; Limitation of Shareholder
Liability. Shares shall be deemed to be personal property giving
Shareholders only the rights provided in this Trust Instrument. Every
Shareholder, by virtue of having acquired a Share, shall be held expressly
to have assented to and agreed to be bound by the terms of this Trust
Instrument and to have become a party hereto. No Shareholder shall be
personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the
Trust or any Series. Neither the Trust nor the Trustees shall have any
power to bind any Shareholder personally or to demand payment from any
Shareholder for anything, other than as agreed by the Shareholder.
Shareholders shall have the same limitation of personal liability as is
extended to shareholders of a private corporation for profit incorporated
in the State of Delaware. Every written obligation of the Trust or any
Series shall contain a statement to the effect that such obligation may
only be enforced against the assets of the Trust or such Series; however,
the omission of such statement shall not operate to bind or create
personal liability for any Shareholder or Trustee.
ARTICLE V
---------
DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
Section 1. Distributions. The Trustees may declare and pay
dividends and other distributions, including dividends on Shares of a
particular Series and other distributions from the assets belonging to
that Series. The amount and payment of dividends or distributions and
their form, whether they are in cash, Shares or other Trust Property,
shall be determined by the Trustees. Dividends and other distributions
may be paid pursuant to a standing resolution adopted once or more often
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as the Trustees determine. All dividends and other distributions on
Shares of a particular Series shall be distributed pro rata to the
Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except
that such dividends and distributions shall appropriately reflect expenses
allocated to a particular Class of such Series. The Trustees may adopt
and offer to Shareholders such dividend reinvestment plans, cash dividend
payout plans or similar plans as the Trustees deem appropriate.
Section 2. Redemptions. Each Shareholder of a Series shall have
the right at such times as may be permitted by the Trustees to require the
Series to redeem all or any part of his Shares at a redemption price per
Share equal to the Net Asset Value per Share at such time as the Trustees
shall have prescribed by resolution. In the absence of such resolution,
the redemption price per Share shall be the Net Asset Value next
determined after receipt by the Series of a request for redemption in
proper form less such charges as are determined by the Trustees and
described in the Trust's Registration Statement for that Series under the
Securities Act of 1933. The Trustees may specify conditions, prices, and
places of redemption, and may specify binding requirements for the proper
form or forms of requests for redemption. Payment of the redemption price
may be wholly or partly in securities or other assets at the value of such
securities or assets used in such determination of Net Asset Value, or may
be in cash. Upon redemption, Shares may be reissued from time to time.
The Trustees may require Shareholders to redeem Shares for any reason
under terms set by the Trustees, including the failure of a Shareholder to
supply a personal identification number if required to do so, or to have
the minimum investment required, or to pay when due for the purchase of
Shares issued to him. To the extent permitted by law, the Trustees may
retain the proceeds of any redemption of Shares required by them for
payment of amounts due and owing by a Shareholder to the Trust or any
Series or Class. Notwithstanding the foregoing, the Trustees may postpone
payment of the redemption price and may suspend the right of the
Shareholders to require any Series or Class to redeem Shares during any
period of time when and to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall
cause the Net Asset Value of Shares of each Series or Class to be
determined from time to time in a manner consistent with applicable laws
and regulations. The Trustees may delegate the power and duty to
determine Net Asset Value per Share to one or more Trustees or officers of
the Trust or to a custodian, depository or other agent appointed for such
purpose. The Net Asset Value of Shares shall be determined separately for
each Series or Class at such times as may be prescribed by the Trustees
or, in the absence of action by the Trustees, as of the close of trading
on the New York Stock Exchange on each day for all or part of which such
Exchange is open for unrestricted trading.
Section 4. Suspension of Right of Redemption. If, as referred
to in Section 2 of this Article, the Trustees postpone payment of the
redemption price and suspend the right of Shareholders to redeem their
Shares, such suspension shall take effect at the time the Trustees shall
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specify, but not later than the close of business on the business day next
following the declaration of suspension. Thereafter Shareholders shall
have no right of redemption or payment until the Trustees declare the end
of the suspension. If the right of redemption is suspended, a Shareholder
may either withdraw his request for redemption or receive payment based on
the Net Asset Value per Share next determined after the suspension
terminates.
Section 5. Redemptions Necessary for Qualification as Regulated
Investment Company. If the Trustees shall determine that direct or
indirect ownership of Shares of any Series has or may become concentrated
in any person to an extent which would disqualify any Series as a
regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other
means they deem equitable to (a) call for redemption by any such person of
a number, or principal amount, of Shares sufficient to maintain or bring
the direct or indirect ownership of Shares into conformity with the
requirements for such qualification and (b) refuse to transfer or issue
Shares to any person whose acquisition of Shares in question would, in the
Trustees' judgment, result in such disqualification. Any such redemption
shall be effected at the redemption price and in the manner provided in
this Article. Shareholders shall upon demand disclose to the Trustees in
writing such information concerning direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the requirements of
any taxing authority.
ARTICLE VI
----------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Section 1. Voting Powers. The Shareholders shall have power to
vote only with respect to (a) the election of Trustees as provided in
Section 2 of this Article; (b) the removal of Trustees as provided in
Article II, Section 3(d); (c) any investment advisory or management
contract as provided in Article VII, Section 1; (d) any termination of the
Trust as provided in Article X, Section 4; (e) the amendment of this Trust
Instrument to the extent and as provided in Article X, Section 8; and (f)
such additional matters relating to the Trust as may be required or
authorized by law, this Trust Instrument, or the By-laws or any
registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series or Class, except (a) when required by
the 1940 Act, Shares shall be voted in the aggregate and not by individual
Series or Class, and (b) when the Trustees have determined that the matter
affects the interests of more than one Series or Class, then the
Shareholders of all such Series or Classes shall be entitled to vote
thereon. Each whole Share shall be entitled to one vote as to any matter
on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no cumulative
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voting in the election of Trustees. Shares may be voted in person or by
proxy or in any manner provided for in the By-laws. The By-laws may
provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any
Series or Class, or if there is a proxy contest or proxy solicitation or
proposal in opposition to any proposal by the officers or Trustees, Shares
may be voted only in person or by written proxy. Until Shares of a Series
are issued, as to that Series the Trustees may exercise all rights of
Shareholders and may take any action required or permitted to be taken by
Shareholders by law, this Trust Instrument or the By-laws.
Section 2. Meetings of Shareholders. The first Shareholders'
meeting shall be held to elect Trustees at such time and place as the
Trustees designate. Special meetings of the Shareholders of any Series or
Class may be called by the Trustees and shall be called by the Trustees
upon the written request of Shareholders owning at least ten percent of
the Outstanding Shares of such Series or Class entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting, given as determined by the Trustees.
Section 3. Quorum; Required Vote. One-third of the Outstanding
Shares of each Series or Class, or one-third of the Outstanding Shares of
the Trust, entitled to vote in person or by proxy shall be a quorum for
the transaction of business at a Shareholders' meeting with respect to
such Series or Class, or with respect to the entire Trust, respectively.
Any lesser number shall be sufficient for adjournments. Any adjourned
session of a Shareholders' meeting may be held within a reasonable time
without further notice. Except when a larger vote is required by law,
this Trust Instrument or the By-laws, a majority of the Outstanding Shares
voted in person or by proxy shall decide any matters to be voted upon with
respect to the entire Trust and a plurality of such Outstanding Shares
shall elect a Trustee; provided, that if this Trust Instrument or
applicable law permits or requires that Shares be voted on any matter by
individual Series or Classes, then a majority of the Outstanding Shares of
that Series or Class (or, if required by law, a Majority Shareholder Vote
of that Series or Class) voted in person or by proxy voted on the matter
shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by
applicable law) of the Outstanding Shares of the Trust or of such Series
or Class, as the case may be.
ARTICLE VII
-----------
CONTRACTS WITH SERVICE PROVIDERS
--------------------------------
Section 1. Investment Adviser. Subject to a Majority
Shareholder Vote, the Trustees may enter into one or more investment
advisory contracts on behalf of the Trust or any Series, providing for
investment advisory services, statistical and research facilities and
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services, and other facilities and services to be furnished to the Trust
or Series on terms and conditions acceptable to the Trustees. Any such
contract may provide for the investment adviser to effect purchases, sales
or exchanges of portfolio securities or other Trust Property on behalf of
the Trustees or may authorize any officer or agent of the Trust to effect
such purchases, sales or exchanges pursuant to recommendations of the
investment adviser. The Trustees may authorize the investment adviser to
employ one or more sub-advisers.
Section 2. Principal Underwriter. The Trustees may enter into
contracts on behalf of the Trust or any Series or Class, providing for the
distribution and sale of Shares by the other party, either directly or as
sales agent, on terms and conditions acceptable to the Trustees. The
Trustees may adopt a plan or plans of distribution with respect to Shares
of any Series or Class and enter into any related agreements, whereby the
Series or Class finances directly or indirectly any activity that is
primarily intended to result in sales of its Shares, subject to the
requirements of Section 12 of the 1940 Act, Rule 12b-1 thereunder, and
other applicable rules and regulations.
Section 3. Transfer Agency, Shareholder Services, and
Administration Agreements. The Trustees, on behalf of the Trust or any
Series or Class, may enter into transfer agency agreements, Shareholder
service agreements, and administration and management agreements with any
party or parties on terms and conditions acceptable to the Trustees.
Section 4. Custodian. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust and of each
Series in custody meeting the requirements of Section 17(f) of the 1940
Act and the rules thereunder. The Trustees, on behalf of the Trust or any
Series, may enter into an agreement with a custodian on terms and
conditions acceptable to the Trustees, providing for the custodian, among
other things, to (a) hold the securities owned by the Trust or any Series
and deliver the same upon written order or oral order confirmed in
writing, (b) to receive and receipt for any moneys due to the Trust or any
Series and deposit the same in its own banking department or elsewhere,
(c) to disburse such funds upon orders or vouchers, and (d) to employ one
or more sub-custodians.
Section 5. Parties to Contracts with Service Providers. The
Trustees may enter into any contract referred to in this Article with any
entity, although one more of the Trustees or officers of the Trust may be
an officer, director, trustee, partner, shareholder, or member of such
entity, and no such contract shall be invalidated or rendered void or
voidable because of such relationship. No person having such a
relationship shall be disqualified from voting on or executing a contract
in his capacity as Trustee and/or Shareholder, or be liable merely by
reason of such relationship for any loss or expense to the Trust with
respect to such a contract or accountable for any profit realized directly
or indirectly therefrom; provided, that the contract was reasonable and
fair and not inconsistent with this Trust Instrument or the By-laws.
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Any contract referred to in Sections 1 and 2 of this Article
shall be consistent with and subject to the applicable requirements of
Section 15 of the 1940 Act and the rules and orders thereunder with
respect to its continuance in effect, its termination, and the method of
authorization and approval of such contract or renewal. No amendment to a
contract referred to in Section 1 of this Article shall be effective
unless assented to in a manner consistent with the requirements of Section
15 of the 1940 Act, and the rules and orders thereunder.
ARTICLE VIII
-------------
EXPENSES OF THE TRUST AND SERIES
--------------------------------
Subject to Article IV, Section 4, the Trust or a particular
Series shall pay, or shall reimburse the Trustees from the Trust estate or
the assets belonging to the particular Series, for their expenses and
disbursements, including, but not limited to, interest charges, taxes,
brokerage fees and commissions; expenses of issue, repurchase and
redemption of Shares; certain insurance premiums; applicable fees,
interest charges and expenses of third parties, including the Trust's
investment advisers, managers, administrators, distributors, custodians,
transfer agents and fund accountants; fees of pricing, interest, dividend,
credit and other reporting services; costs of membership in trade
associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
its Series and maintaining its existence; costs of preparing and printing
the prospectuses of the Trust and each Series, statements of additional
information and Shareholder reports and delivering them to Shareholders;
expenses of meetings of Shareholders and proxy solicitations therefor;
costs of maintaining books and accounts; costs of reproduction, stationery
and supplies; fees and expenses of the Trustees; compensation of the
Trust's officers and employees and costs of other personnel performing
services for the Trust or any Series; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust
or a Series (or a Trustee or officer of the Trust acting as such) is a
party, and for all losses and liabilities by them incurred in
administering the Trust. The Trustees shall have a lien on the assets
belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Shareholders thereto, for the
reimbursement to them of such expenses, disbursements, losses and
liabilities.
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ARTICLE IX
---------
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
Section 1. Limitation of Liability. All persons contracting
with or having any claim against the Trust or a particular Series shall
look only to the assets of the Trust or such Series for payment under such
contract or claim; and neither the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on
behalf of the Trust or any Series shall contain a statement to the
foregoing effect, but the absence of such statement shall not operate to
make any Trustee or officer of the Trust liable thereunder. Provided they
have exercised reasonable care and have acted under the reasonable belief
that their actions are in the best interest of the Trust, the Trustees and
officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent,
employee, investment adviser or independent contractor of the Trust, but
nothing contained in this Trust Instrument or in the Delaware Act shall
protect any Trustee or officer of the Trust against liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
Section 2. Indemnification. (a) Subject to the exceptions and
limitations contained in subsection (b) below:
(i) every person who is, or has been, a Trustee or an
officer, employee or agent of the Trust ("Covered
Person") shall be indemnified by the Trust or the
appropriate Series to the fullest extent permitted by law
against liability and against all expenses reasonably
incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved
as a party or otherwise by virtue of his being or having
been a Covered Person and against amounts paid or
incurred by him in the settlement thereof;
(ii) as used herein, the words "claim," "action," "suit,"
or "proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal or other, including
appeals), actual or threatened, and the words "liability"
and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable
to the Trust or its Shareholders by reason of willful
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misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office, or (B) not to have acted in good faith in the
reasonable belief that his action was in the best
interest of the Trust; or
(ii) in the event of a settlement, unless there has been
a determination that such Covered Person did not engage
in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of his office; (A) by the court or other body approving
the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust
nor are parties to the matter based upon a review of
readily available facts (as opposed to a full trial-type
inquiry); or (C) by written opinion of independent legal
counsel based upon a review of readily available facts
(as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, and shall inure to the benefit of the heirs,
executors and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses
in connection with the preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in subsection
(a) of this Section may be paid by the Trust or applicable Series from
time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will
be paid over by him to the Trust or applicable Series if it is ultimately
determined that he is not entitled to indemnification under this Section;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured
against losses arising out of any such advance payments or (iii) either a
majority of the Trustees who are neither Interested Persons of the Trust
nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to
believe that such Covered Person will not be disqualified from
indemnification under this Section.
(e) Any repeal or modification of this Article IX by the
Shareholders of the Trust, or adoption or modification of any other
provision of the Trust Instrument or By-laws inconsistent with this
Article, shall be prospective only, to the extent that such repeal or
modification would, if applied retrospectively, adversely affect any
limitation on the liability of any Covered Person or indemnification
available to any Covered Person with respect to any act or omission which
occurred prior to such repeal, modification or adoption.
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<PAGE>
Section 3. Indemnification of Shareholders. If any Shareholder
or former Shareholder of any Series shall be held personally liable solely
by reason of his being or having been a Shareholder and not because of his
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall
be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising
from such liability. The Trust, on behalf of the affected Series, shall,
upon request by such Shareholder, assume the defense of any claim made
against such Shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
ARTICLE X
---------
MISCELLANEOUS
-------------
Section 1. Trust Not a Partnership. This Trust Instrument
creates a trust and not a partnership. No Trustee shall have any power to
bind personally either the Trust's officers or any Shareholder.
Section 2. Trustee Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder in
good faith and with reasonable care under the circumstances then
prevailing shall be binding upon everyone interested. Subject to the
provisions of Article IX, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Trust Instrument, and subject to the provisions of Article IX, shall not
be liable for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is obtained.
Section 3. Record Dates. The Trustees may fix in advance a date
up to ninety (90) days before the date of any Shareholders' meeting, or
the date for the payment of any dividends or other distributions, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect as a record date for
the determination of the Shareholders entitled to notice of, and to vote
at, any such meeting, or entitled to receive payment of such dividend or
other distribution, or to receive any such allotment of rights, or to
exercise such rights in respect of any such change, conversion or exchange
of Shares.
Section 4. Termination of the Trust. (a) This Trust shall have
perpetual existence. Subject to a Majority Shareholder Vote of the Trust
or of each Series to be affected, the Trustees may
(i) sell and convey all or substantially all of the
assets of the Trust or any affected Series to another
Series or to another entity which is an open-end
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investment company as defined in the 1940 Act, or is a
series thereof, for adequate consideration, which may
include the assumption of all outstanding obligations,
taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include
shares of or interests in such Series, entity, or series
thereof; or
(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any
affected Series.
Upon making reasonable provision for the payment of all known liabilities
of the Trust or any affected Series in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining
proceeds or assets (as the case may be) ratably among the Shareholders of
the Trust or any affected Series; however, the payment to any particular
Class of such Series may be reduced by any fees, expenses or charges
allocated to that Class.
(b) The Trustees may take any of the actions specified in
subsection (a) (i) and (ii) above without obtaining a Majority Shareholder
Vote of the Trust or any Series if a majority of the Trustees determines
that the continuation of the Trust or Series is not in the best interests
of the Trust, such Series, or their respective Shareholders as a result of
factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable
manner. Such factors and events may include the inability of the Trust or
a Series to maintain its assets at an appropriate size, changes in laws or
regulations governing the Trust or the Series or affecting assets of the
type in which the Trust or Series invests, or economic developments or
trends having a significant adverse impact on the business or operations
of the Trust or such Series.
(c) Upon completion of the distribution of the remaining proceeds
or assets pursuant to subsection (a), the Trust or affected Series shall
terminate and the Trustees and the Trust shall be discharged of any and
all further liabilities and duties hereunder with respect thereto and the
right, title and interest of all parties therein shall be canceled and
discharged. Upon termination of the Trust, following completion of
winding up of its business, the Trustees shall cause a certificate of
cancellation of the Trust's certificate of trust to be filed in accordance
with the Delaware Act, which certificate of cancellation may be signed by
any one Trustee.
Section 5. Reorganization. Notwithstanding anything else
herein, to change the Trust's form of organization the Trustees may,
without Shareholder approval, (a) cause the Trust to merge or consolidate
with or into one or more entities, if the surviving or resulting entity is
the Trust or another open-end management investment company under the 1940
Act, or a series thereof, that will succeed to or assume the Trust's
registration under the 1940 Act, or (b) cause the Trust to incorporate
- 19 -
<PAGE>
under the laws of Delaware. Any agreement of merger or consolidation or
certificate of merger may be signed by a majority of Trustees and
facsimile signatures conveyed by electronic or telecommunication means
shall be valid.
Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, an agreement of merger or consolidation
approved by the Trustees in accordance with this Section 5 may effect any
amendment to the Trust Instrument or effect the adoption of a new trust
instrument of the Trust if it is the surviving or resulting trust in the
merger or consolidation.
Section 6. Trust Instrument. The original or a copy of this
Trust Instrument and of each amendment hereto or Trust Instrument
supplemental shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by a Trustee or an officer of the Trust as to the authenticity
of the Trust Instrument or any such amendments or supplements and as to
any matters in connection with the Trust. The masculine gender herein
shall include the feminine and neuter genders. Headings herein are for
convenience only and shall not affect the construction of this Trust
Instrument. This Trust Instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
Section 7. Applicable Law. This Trust Instrument and the Trust
created hereunder are governed by and construed and administered according
to the Delaware Act and the applicable laws of the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the
Trustees or this Trust Instrument (a) the provisions of Section 3540 of
Title 12 of the Delaware Code, or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware
Act) pertaining to trusts which relate to or regulate (i) the filing with
any court or governmental body or agency of trustee accounts or schedules
of trustee fees and charges, (ii) affirmative requirements to post bonds
for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning
the acquisition, holding or disposition of real or personal property,
(iv) fees or other sums payable to trustees, officers, agents or employees
of a trust, (v) the allocation of receipts and expenditures to income or
principal, (vi) restrictions or limitations on the permissible nature,
amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii)
the establishment of fiduciary or other standards of responsibilities or
limitations on the acts or powers of trustees, which are inconsistent with
the limitations or liabilities or authorities and powers of the Trustees
set forth or referenced in this Trust Instrument. The Trust shall be of
the type commonly called a Delaware business trust, and, without limiting
the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts
under the Delaware Act, and the absence of a specific reference herein to
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<PAGE>
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 8. Amendments. The Trustees may, without any
Shareholder vote, amend or otherwise supplement this Trust Instrument by
making an amendment, a Trust Instrument supplemental hereto or an amended
and restated trust instrument; provided, that Shareholders shall have the
right to vote on any amendment (a) which would affect the voting rights of
Shareholders granted in Article VI, Section 1, (b) to this Section 8, (c)
required to be approved by Shareholders by law or by the Trust's
registration statement(s) filed with the Commission, and (d) submitted to
them by the Trustees in their discretion. Any amendment submitted to
Shareholders which the Trustees determine would affect the Shareholders of
any Series shall be authorized by vote of the Shareholders of such Series
and no vote shall be required of Shareholders of a Series not affected.
Notwithstanding anything else herein, any amendment to Article IX which
would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust
or to Shareholders or former Shareholders, and any repeal or amendment of
this sentence shall each require the affirmative vote of the holders of
two-thirds of the Outstanding Shares of the Trust entitled to vote
thereon.
Section 9. Fiscal Year. The fiscal year of the Trust shall end
on a specified date as set forth in the By-Laws. The Trustees may change
the fiscal year of the Trust without Shareholder approval.
Section 10. Severability. The provisions of this Trust
Instrument are severable. If the Trustees determine, with the advice of
counsel, that any provision hereof conflicts with the 1940 Act, the
regulated investment company provisions of the Internal Revenue Code or
with other applicable laws and regulations, the conflicting provision
shall be deemed never to have constituted a part of this Trust Instrument;
provided, however, that such determination shall not affect any of the
remaining provisions of this Trust Instrument or render invalid or
improper any action taken or omitted prior to such determination. If any
provision hereof shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to
such provision only in such jurisdiction and shall not affect any other
provision of this Trust Instrument.
IN WITNESS WHEREOF, the undersigned, being the initial
Trustees, have executed this Trust Instrument as of the date first above
written.
/s/ Claudia A. Brandon
----------------------------
Claudia A. Brandon, as
Trustee and not individually
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<PAGE>
/s/ Ellen Metzger
-----------------------------
Ellen Metzger, as Trustee
and not individually
/s/ Daniel J. Sullivan
-----------------------------
Daniel J. Sullivan, as
Trustee and not individually
Address: 605 Third Avenue
New York, New York 10058
STATE OF NEW YORK ss
CITY OF NEW YORK
Before me this 23rd day of December, 1992, personally appeared
the above-named Claudia A. Brandon, Ellen Metzger, and Daniel J. Sullivan,
known to me to be the persons who executed the foregoing instrument and
who acknowledged that they executed the same.
/s/ Loraine Olavarria
----------------------
Loraine Olavarria
Notary Public
My Commission expires 4-15-93 ____________________________.
LORAINE OLAVARRIA
Notary Public, State of New
York
No. 03-4979399
Qualified in Bronx County
Commission Expires 4-15-93
- 22 -
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I--Definitions . . . . . . . . . . . . . . . . . . . 1
ARTICLE II--The Trustees . . . . . . . . . . . . . . . . . . 2
Section 1. Management of the Trust . . . . . . 2
Section 2. Initial Trustees; Election and
Number of Trustees . . . . . . . . 2
Section 3. Term of Office of Trustees . . . . 3
Section 4. Vacancies; Appointment of
Trustees . . . . . . . . . . . . . 3
Section 5. Temporary Vacancy or Absence . . . 3
Section 6. Chairman . . . . . . . . . . . . . 3
Section 7. Action by the Trustees . . . . . . 4
Section 8. Ownership of Trust Property . . . . 4
Section 9. Effect of Trustees Not Serving . . 4
Section 10. Trustees, etc. as Shareholders . . 4
ARTICLE III--Powers of the Trustees . . . . . . . . . . . . 5
Section 1. Powers . . . . . . . . . . . . . . 5
Section 2. Certain Transactions . . . . . . . 8
ARTICLE IV--Series; Classes; Shares . . . . . . . . . . . . 8
Section 1. Establishment of Series or Class . 8
Section 2. Shares . . . . . . . . . . . . . . 8
Section 3. Investment in the Trust . . . . . . 9
Section 4. Assets and Liabilities of Series . 9
Section 5. Ownership and Transfer of Shares . 10
Section 6. Status of Shares; Limitation of
Shareholder Liability . . . . . . 11
ARTICLE V--Distributions and Redemptions . . . . . . . . . . 11
Section 1. Distributions . . . . . . . . . . . 11
Section 2. Redemptions . . . . . . . . . . . . 11
Section 3. Determination of Net Asset Value . 12
Section 4. Suspension of Right of
Redemption . . . . . . . . . . . . 12
Section 5. Redemptions Necessary for
Qualification as Regulated
Investment Company . . . . . . . . 12
ARTICLE VI--Shareholders' Voting Powers and Meetings . . . . 13
Section 1. Voting Powers . . . . . . . . . . . 13
Section 2. Meetings of Shareholders . . . . . 14
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<PAGE>
Section 3. Quorum; Required Vote . . . . . . . 14
ARTICLE VII--Contracts With Service Providers . . . . . . . 14
Section 1. Investment Adviser . . . . . . . . 14
Section 2. Principal Underwriter . . . . . . . 15
Section 3. Transfer Agency, Shareholder
Services, and Administration
Agreements . . . . . . . . . . . . 15
Section 4. Custodian . . . . . . . . . . . . . 15
Section 5. Parties to Contracts with
Service Providers . . . . . . . . . 15
ARTICLE VIII--Expenses of the Trust and Series . . . . . . . 16
ARTICLE IX--Limitation of Liability and Indemnification . . 16
Section 1. Limitation of Liability . . . . . . 16
Section 2. Indemnification . . . . . . . . . . 17
Section 3. Indemnification of Shareholders . . 18
ARTICLE X-Miscellaneous . . . . . . . . . . . . . . . . . . 19
Section 1. Trust Not a Partnership . . . . . . 19
Section 2. Trustee Action; Expert Advice;
No Bond or Surety . . . . . . . . . 19
Section 3. Record Dates . . . . . . . . . . . 19
Section 4. Termination of the Trust . . . . . 19
Section 5. Reorganization . . . . . . . . . . 20
Section 6. Trust Instrument . . . . . . . . . 21
Section 7. Applicable Law . . . . . . . . . . 21
Section 8. Amendments . . . . . . . . . . . . 22
Section 9. Fiscal Year . . . . . . . . . . . . 22
Section 10. Severability . . . . . . . . . . . . 22
- ii -
<PAGE>
SCHEDULE A
INITIAL SERIES
Neuberger & Berman Genesis Fund
Neuberger & Berman Guardian Fund
Neuberger & Berman Manhattan Fund
Neuberger & Berman Partners Fund
Neuberger & Berman Focus Fund
ADDITIONAL SERIES
Neuberger & Berman Socially Responsive Fund
Neuberger & Berman International Fund
DATED: March 17, 1994
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
BY-LAWS
January 13, 1993
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
PRINCIPAL OFFICE AND SEAL . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Principal Office . . . . . . . . . . . . 1
Section 2. Seal . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MEETINGS OF TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Action by Trustees . . . . . . . . . . . 1
Section 2. Compensation of Trustees . . . . . . . . 1
ARTICLE III
COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Establishment . . . . . . . . . . . . . 1
Section 2. Proceedings; Quorum; Action . . . . . . 2
Section 3. Executive Committee . . . . . . . . . . 2
Section 4. Nominating Committee . . . . . . . . . . 2
Section 5. Audit Committee . . . . . . . . . . . . 2
Section 6. Compensation of Committee Members . . . 2
ARTICLE IV
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1. General . . . . . . . . . . . . . . . . 2
Section 2. Election, Tenure and Qualifications
of Officers . . . . . . . . . . . . . . 2
Section 3. Vacancies and Newly Created Offices . . 3
Section 4. Removal and Resignation . . . . . . . . 3
Section 5. Chairman . . . . . . . . . . . . . . . . 3
Section 6. President . . . . . . . . . . . . . . . 3
Section 7. Vice President(s) . . . . . . . . . . . 3
Section 8. Treasurer and Assistant Treasurer(s) . . 4
Section 9. Secretary and Assistant Secretaries . . 4
Section 10. Compensation of Officers . . . . . . . . 4
Section 11. Surety Bond . . . . . . . . . . . . . . 4
ARTICLE V
MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 5
Section 1. No Annual Meetings . . . . . . . . . . . 5
Section 2. Special Meetings . . . . . . . . . . . . 5
Section 3. Notice of Meetings; Waiver . . . . . . . 5
Section 4. Adjourned Meetings . . . . . . . . . . . 6
Section 5. Validity of Proxies . . . . . . . . . . 6
Section 6. Record Date . . . . . . . . . . . . . . 7
Section 7. Action Without a Meeting . . . . . . . . 7
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<PAGE>
ARTICLE VI
SHARES OF BENEFICIAL INTEREST . . . . . . . . . . . . . . . . . . . . 7
Section 1. No Share Certificates . . . . . . . . . 7
Section 2. Transfer of Shares . . . . . . . . . . . 7
ARTICLE VII
FISCAL YEAR AND ACCOUNTANT . . . . . . . . . . . . . . . . . . . . . 7
Section 1. Fiscal Year . . . . . . . . . . . . . . 7
Section 2. Accountant . . . . . . . . . . . . . . . 7
ARTICLE VIII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. General . . . . . . . . . . . . . . . . 8
Section 2. By Shareholders Only . . . . . . . . . . 8
ARTICLE IX
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE X
CONFLICT OF INTEREST PROCEDURES . . . . . . . . . . . . . . . . . . . 9
Section 1. Monitoring and Reporting Conflicts . . . 9
Section 2. Annual Report . . . . . . . . . . . . . 9
Section 3. Resolution of Conflicts . . . . . . . . 9
Section 4. Annual Review . . . . . . . . . . . . . 9
- ii -
<PAGE>
BY-LAWS
OF
NEUBERGER & BERMAN EQUITY FUNDS
These By-laws of Neuberger & Berman Equity Funds (the "Trust"), a
Delaware business trust, are subject to the Trust Instrument of the Trust
dated as of December 23, 1992, as from time to time amended, supplemented
or restated (the "Trust Instrument"). Capitalized terms used herein have
the same meanings as in the Trust Instrument.
ARTICLE I
---------
PRINCIPAL OFFICE AND SEAL
-------------------------
Section 1. Principal Office. The principal office of the Trust shall be
located in New York, New York, or such other location as the Trustees
determine. The Trust may establish and maintain other offices and places
of business as the Trustees determine.
Section 2. Seal. The Trustees may adopt a seal for the Trust in such
form and with such inscription as the Trustees determine. Any Trustee or
officer of the Trust shall have authority to affix the seal to any
document.
ARTICLE II
----------
MEETINGS OF TRUSTEES
--------------------
Section 1. Action by Trustees. Trustees may take actions at meetings
held at such places and times as the Trustees may determine, or without
meetings, all as provided in Article II, Section 7, of the Trust
Instrument.
Section 2. Compensation of Trustees. Each Trustee who is neither an
employee of an investment adviser of the Trust or any Series nor an
employee of an entity affiliated with the investment adviser may receive
such compensation from the Trust for services and reimbursement for
expenses as the Trustees may determine.
ARTICLE III
-----------
COMMITTEES
----------
Section 1. Establishment. The Trustees may designate one or more
committees of the Trustees, which shall include an Executive Committee, a
Nominating Committee, and an Audit Committee (collectively, the
<PAGE>
"Established Committees"). The Trustees shall determine the number of
members of each committee and its powers and shall appoint its members and
its chair. Each committee member shall serve at the pleasure of the
Trustees. The Trustees may abolish any committee, other than the
Established Committees, at any time. Each committee shall maintain
records of its meetings and report its actions to the Trustees. The
Trustees may rescind any action of any committee, but such rescission
shall not have retroactive effect. The Trustees may delegate to any
committee any of its powers, subject to the limitations of applicable law.
Section 2. Proceedings; Quorum; Action. Each committee may adopt such
rules governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable. In the absence of such rules, a majority of
any committee shall constitute a quorum, and a committee shall act by the
vote of a majority of a quorum.
Section 3. Executive Committee. The Executive Committee shall have all
the powers of the Trustees when the Trustees are not in session. The
Chairman shall be a member and the chair of the Executive Committee. A
majority of the members of the Executive Committee shall be trustees who
are not "interested persons" of the Trust, as defined in the 1940 Act
("Disinterested Trustees").
Section 4. Nominating Committee. The Nominating Committee shall nominate
individuals to serve as Trustees (including Disinterested Trustees), as
members of committees, and as officers of the Trust. The members of the
Committee shall be Disinterested Trustees.
Section 5. Audit Committee. The Audit Committee shall review and
evaluate the audit function, including recommending the selection of
independent certified public accountants for each Series. The members of
the Committee shall be Disinterested Trustees.
Section 6. Compensation of Committee Members. Each committee member who
is a Disinterested Trustee may receive such compensation from the Trust
for services and reimbursement for expenses as the Trustees may determine.
ARTICLE IV
----------
OFFICERS
--------
Section 1. General. The officers of the Trust shall be a Chairman, a
President, one or more Vice Presidents, a Treasurer, and a Secretary, and
may include one or more Assistant Treasurers or Assistant Secretaries and
such other officers ("Other Officers") as the Trustees may determine.
Section 2. Election, Tenure and Qualifications of Officers. The Trustees
shall elect the officers of the Trust, except those appointed as provided
in Section 9 of this Article. Each officer elected by the Trustees shall
hold office until his or her successor shall have been elected and
- 2 -
<PAGE>
qualified or until his or her earlier death, inability to serve, or
resignation. Any person may hold one or more offices, except that the
Chairman and the Secretary may not be the same individual. A person who
holds more than one office in the Trust may not act in more than one
capacity to execute, acknowledge, or verify an instrument required by law
to be executed, acknowledged, or verified by more than one officer. No
officer other than the Chairman need be a Trustee or Shareholder.
Section 3. Vacancies and Newly Created Offices. Whenever a vacancy shall
occur in any office or if any new office is created, the Trustees may fill
such vacancy or new office.
Section 4. Removal and Resignation. Officers serve at the pleasure of
the Trustees and may be removed at any time with or without cause. The
Trustees may delegate this power to the Chairman or President with respect
to any Other Officer. Such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer may resign
from office at any time by delivering a written resignation to the
Trustees, Chairman, or the President. Unless otherwise specified therein,
such resignation shall take effect upon delivery.
Section 5. Chairman. The Chairman shall be the chief executive officer
of the Trust. Subject to the direction of the Trustees, the Chairman
shall have general charge, supervision and control over the Trust's
business affairs and shall be responsible for the management thereof and
the execution of policies established by the Trustees. The Chairman shall
preside at any Shareholders' meetings and at all meetings of the Trustees
and shall in general exercise the powers and perform the duties of the
Chairman of the Trustees. Except as the Trustees may otherwise order, the
Chairman shall have the power to grant, issue, execute or sign such powers
of attorney, proxies, agreements or other documents. The Chairman also
shall have the power to employ attorneys, accountants and other advisers
and agents for the Trust. The Chairman shall exercise such other powers
and perform such other duties as the Trustees may assign to the Chairman.
Section 6. President. The President shall have such powers and perform
such duties as the Trustees or the Chairman may determine. At the request
or in the absence or disability of the Chairman, the President shall
perform all the duties of the President and, when so acting, shall have
all the powers of the President.
Section 7. Vice President(s). The Vice President(s) shall have such
powers and perform such duties as the Trustees or the Chairman may
determine. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice
Presidents, then the senior of the Vice Presidents present and able to
act) shall perform all the duties of the President and, when so acting,
shall have all the powers of the President. The Trustees may designate a
Vice President as the principal financial officer of the Trust or to serve
one or more other functions. If a Vice President is designated as
principal financial officer of the Trust, he or she shall have general
charge of the finances and books of the Trust and shall report to the
- 3 -
<PAGE>
Trustees annually regarding the financial condition of each Series as soon
as possible after the close of such Series's fiscal year. The Trustees
also may designate one of the Vice Presidents as Executive Vice President.
Section 8. Treasurer and Assistant Treasurer(s). The Treasurer may be
designated as the principal financial officer or as the principal
accounting officer of the Trust. If designated as principal financial
officer, the Treasurer shall have general charge of the finances and books
of the Trust, and shall report to the Trustees annually regarding the
financial condition of each Series as soon as possible after the close of
such Series' fiscal year. The Treasurer shall be responsible for the
delivery of all funds and securities of the Trust to such company as the
Trustees shall retain as Custodian. The Treasurer shall furnish such
reports concerning the financial condition of the Trust as the Trustees
may request. The Treasurer shall perform all acts incidental to the
office of Treasurer, subject to the Trustees' supervision, and shall
perform such additional duties as the Trustees may designate.
Any Assistant Treasurer may perform such duties of the Treasurer
as the Trustees or the Treasurer may assign, and, in the absence of the
Treasurer, may perform all the duties of the Treasurer.
Section 9. Secretary and Assistant Secretaries. The Secretary shall
record all votes and proceedings of the meetings of Trustees and
Shareholders in books to be kept for that purpose. The Secretary shall be
responsible for giving and serving notices of the Trust. The Secretary
shall have custody of any seal of the Trust and shall be responsible for
the records of the Trust, including the Share register and such other
books and documents as may be required by the Trustees or by law. The
Secretary shall perform all acts incidental to the office of Secretary,
subject to the supervision of the Trustees, and shall perform such
additional duties as the Trustees may designate.
Any Assistant Secretary may perform such duties of the Secretary
as the Trustees or the Secretary may assign, and, in the absence of the
Secretary, may perform all the duties of the Secretary.
Section 10. Compensation of Officers. Each officer may receive such
compensation from the Trust for services and reimbursement for expenses as
the Trustees may determine.
Section 11. Surety Bond. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Securities
and Exchange Commission ("Commission")) to the Trust in such sum and with
such surety or sureties as the Trustees may determine, conditioned upon
the faithful performance of his or her duties to the Trust, including
responsibility for negligence and for the accounting of any of the Trust's
property, funds or securities that may come into his or her hands.
ARTICLE V
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<PAGE>
---------
MEETINGS OF SHAREHOLDERS
------------------------
Section 1. No Annual Meetings. There shall be no annual Shareholders'
meetings, unless required by law.
Section 2. Special Meetings. The Secretary shall call a special meeting
of Shareholders of any Series or Class whenever ordered by the Trustees.
The Secretary also shall call a special meeting of Shareholders
of any Series or Class upon the written request of Shareholders owning at
least ten percent of the Outstanding Shares of such Series or Class
entitled to vote at such meeting; provided, that (1) such request shall
state the purposes of such meeting and the matters proposed to be acted
on, and (2) the Shareholders requesting such meeting shall have paid to
the Trust the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
Shareholders. If the Secretary fails for more than thirty days to call a
special meeting when required to do so, the Trustees or the Shareholders
requesting such a meeting may, in the name of the Secretary, call the
meeting by giving the required notice. The Secretary shall not call a
special meeting upon the request of Shareholders of any Series or Class to
consider any matter that is substantially the same as a matter voted upon
at any special meeting of Shareholders of such Series or Class held during
the preceding twelve months, unless requested by the holders of a majority
of the Outstanding Shares of such Series or Class entitled to be voted at
such meeting.
A special meeting of Shareholders of any Series or Class shall be
held at such time and place as is determined by the Trustees and stated in
the notice of that meeting.
Section 3. Notice of Meetings; Waiver. The Secretary shall call a
special meeting of Shareholders by giving written notice of the place,
date, time, and purposes of that meeting at least fifteen days before the
date of such meeting. The Secretary may deliver or mail, postage prepaid,
the written notice of any meeting to each Shareholder entitled to vote at
such meeting. If mailed, notice shall be deemed to be given when
deposited in the United States mail directed to the Shareholder at his or
her address as it appears on the records of the Trust.
Section 4. Adjourned Meetings. A Shareholders' meeting may be adjourned
one or more times for any reason, including the failure of a quorum to
attend the meeting. No notice of adjournment of a meeting to another time
or place need be given to Shareholders if such time and place are
announced at the meeting at which the adjournment is taken or reasonable
notice is given to persons present at the meeting, and if the adjourned
meeting is held within a reasonable time after the date set for the
original meeting. Any business that might have been transacted at the
original meeting may be transacted at any adjourned meeting. If after the
adjournment a new record date is fixed for the adjourned meeting, the
- 5 -
<PAGE>
Secretary shall give notice of the adjourned meeting to Shareholders of
record entitled to vote at such meeting. Any irregularities in the notice
of any meeting or the nonreceipt of any such notice by any of the
Shareholders shall not invalidate any action otherwise properly taken at
any such meeting.
Section 5. Validity of Proxies. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by
proxy; provided, that either (1) the Shareholder or his or her duly
authorized attorney has signed and dated a written instrument authorizing
such proxy to act, or (2) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act, but if a proposal by anyone other
than the officers or Trustees is submitted to a vote of the Shareholders
of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy. Unless
the proxy provides otherwise, it shall not be valid for more than eleven
months before the date of the meeting. All proxies shall be delivered to
the Secretary or other person responsible for recording the proceedings
before being voted. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by one of them unless at or
prior to exercise of such proxy the Trust receives a specific written
notice to the contrary from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the Shareholder
to vote at any adjournment of a Shareholders' meeting. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. At every meeting of
Shareholders, unless the voting is conducted by inspectors, the chairman
of the meeting shall decide all questions concerning the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes.
Subject to the provisions of the Delaware Business Trust Act, the Trust
Instrument, or these By-laws, the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder
shall govern all matters concerning the giving, voting or validity of
proxies, as if the Trust were a Delaware corporation and the Shareholders
were shareholders of a Delaware corporation.
Section 6. Record Date. The Trustees may fix in advance a date up to
ninety days before the date of any Shareholders' meeting as a record date
for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting. The Shareholders of record entitled to vote at
a Shareholders' meeting shall be deemed the Shareholders of record at any
meeting reconvened after one or more adjournments, unless the Trustees
have fixed a new record date. If the Shareholders' meeting is adjourned
for more than sixty days after the original date, the Trustees shall
establish a new record date.
Section 7. Action Without a Meeting. Shareholders may take any action
without a meeting if a majority (or such greater amount as may be required
by law) of the Outstanding Shares entitled to vote on the matter consent
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<PAGE>
to the action in writing and such written consents are filed with the
records of Shareholders' meetings. Such written consent shall be treated
for all purposes as a vote at a meeting of the Shareholders.
ARTICLE VI
----------
SHARES OF BENEFICIAL INTEREST
-----------------------------
Section 1. No Share Certificates. Neither the Trust nor any Series or
Class shall issue certificates certifying the ownership of Shares, unless
the Trustees may otherwise specifically authorize such certificates.
Section 2. Transfer of Shares. Shares shall be transferable only by a
transfer recorded on the books of the Trust by the Shareholder of record
in person or by his or her duly authorized attorney or legal
representative. Shares may be freely transferred and the Trustees may,
from time to time, adopt rules and regulations regarding the method of
transfer of such Shares.
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ARTICLE VII
-----------
FISCAL YEAR AND ACCOUNTANT
-------------------------
Section 1. Fiscal Year. The fiscal year of the Trust shall end on August
31.
Section 2. Accountant. The Trust shall employ independent certified
public accountants as its Accountant to examine the accounts of the Trust
and to sign and certify financial statements filed by the Trust. The
Accountant's certificates and reports shall be addressed both to the
Trustees and to the Shareholders. A majority of the Disinterested
Trustees shall select the Accountant at any meeting held within ninety
days before or after the beginning of the fiscal year of the Trust, acting
upon the recommendation of the Audit Committee. The Trust shall submit
the selection for ratification or rejection at the next succeeding
Shareholders' meeting, if such a meeting is to be held within the Trust's
fiscal year. If the selection is rejected at that meeting, the Accountant
shall be selected by majority vote of the Trust's outstanding voting
securities, either at the meeting at which the rejection occurred or at a
subsequent meeting of Shareholders called for the purpose of selecting an
Accountant. The employment of the Accountant shall be conditioned upon
the right of the Trust to terminate such employment without any penalty by
vote of a Majority Shareholder Vote at any Shareholders' meeting called
for that purpose.
ARTICLE VIII
------------
AMENDMENTS
----------
Section 1. General. Except as provided in Section 2 of this Article,
these By-laws may be amended by the Trustees, or by the affirmative vote
of a majority of the Outstanding Shares entitled to vote at any meeting.
Section 2. By Shareholders Only. After the issue of any Shares, this
Article may only be amended by the affirmative vote of the holders of the
lesser of (a) at least two-thirds of the Outstanding Shares present and
entitled to vote at any meeting, or (b) at least fifty percent of the
Outstanding Shares.
ARTICLE IX
----------
NET ASSET VALUE
---------------
The term "Net Asset Value" of any Series shall mean that amount
by which the assets belonging to that Series exceed its liabilities, all
as determined by or under the direction of the Trustees. Net Asset Value
per Share shall be determined separately for each Series and shall be
determined on such days and at such times as the Trustees may determine.
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The Trustees shall make such determination with respect to securities for
which market quotations are readily available, at the market value of such
securities, and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees; provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act
and the rules, regulations and interpretations thereof promulgated or
issued by the SEC or insofar as permitted by any order of the SEC
applicable to the Series. The Trustees may delegate any of their powers
and duties under this Article X with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the Net Asset Value per
Share last determined to be determined again in a similar manner and may
fix the time when such redetermined values shall become effective.
ARTICLE X
---------
CONFLICT OF INTEREST PROCEDURES
-------------------------------
Section 1. Monitoring and Reporting Conflicts. The trustees of Equity
Managers Trust and the Trust (collectively, the "Trusts") are the same
individuals. Set forth in this Article are procedures established to
address potential conflicts of interest that may arise between the Trusts.
On an ongoing basis, the investment adviser ("Manager") of Equity Managers
Trust shall be responsible for monitoring the Trusts for the existence of
any material conflicts of interest between the Trusts. The Manager shall
be responsible for reporting any potential or existing conflicts to
trustees of the Trusts as they may develop.
Section 2. Annual Report. The Manager shall report to the trustees of
the Trusts annually regarding its monitoring of the Trusts for conflicts
of interest.
Section 3. Resolution of Conflicts. If a potential conflict of interest
arises, the Trustees shall take such action as is reasonably appropriate
to deal with the conflict, up to and including recommending a change in
the trustees and implementing such recommendation, consistent with
applicable law.
Section 4. Annual Review. The Trustees, including a majority of the
Disinterested Trustees, shall determine no less frequently than annually
that the operating structure is in the best interest of Shareholders. The
Trustees shall consider, among other things, whether the expenses incurred
by the Trust are approximately the same or less than the expenses that the
Trust would incur if it invested directly in the type of securities being
held by Equity Managers Trust. The Trustees, including a majority of the
Disinterested Trustees, shall review no less frequently than annually
these procedures for their continuing appropriateness.
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MANAGEMENT AGREEMENT
This Agreement is made as of August 2, 1993, between
Equity Managers Trust, a New York common law trust ("Managers Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation
("Manager").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Managers Trust is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end, diversified
management investment company and has established several separate series
of shares ("Series"), with each Series having its own assets and
investment policies; and
WHEREAS, Managers Trust desires to retain the Manager as
investment adviser to furnish investment advisory and portfolio management
services to each Series listed in Schedule A attached hereto, to such
other Series of Managers Trust hereinafter established as agreed to from
time to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by Managers Trust on behalf of the Series), and the Manager is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. SERVICES OF THE MANAGER.
1.1 INVESTMENT MANAGEMENT SERVICES. The Manager shall
act as the investment adviser to the Series and, as such, shall (i) obtain
and evaluate such information relating to the economy, industries,
businesses, securities markets and securities as it may deem necessary or
useful in discharging its responsibilities hereunder, (ii) formulate a
continuing program for the investment of the assets of the Series in a
manner consistent with its investment objectives, policies and
restrictions, and (iii) determine from time to time securities to be
purchased, sold, retained or lent by the Series, and implement those
decisions, including the selection of entities with or through which such
purchases, sales or loans are to be effected; PROVIDED, that the Manager
will place orders pursuant to its investment determinations either
directly with the issuer or with a broker or dealer, and if with a broker
or dealer, (a) will attempt to obtain the best net price and most
favorable execution of its orders, and (b) may nevertheless in its
discretion purchase and sell portfolio securities from and to brokers and
dealers who provide the Manager with research, analysis, advice and
similar services and pay such brokers and dealers in return a higher
commission or spread than may be charged by other brokers or dealers.
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The Series hereby authorizes any entity or person
associated with the Manager which is a member of a national securities
exchange to effect any transaction on the exchange for the account of the
Series which is permitted by Section 11(a) of the Securities Exchange Act
of 1934 and Rule 11a2-2(T) thereunder, and the Series hereby consents to
the retention of compensation for such transactions in accordance with
Rule
11a2-2(T)(a)(iv).
The Manager shall carry out its duties with respect to
the Series's investments in accordance with applicable law and the
investment objectives, policies and restrictions of the Series adopted by
the trustees of Managers Trust ("Trustees"), and subject to such further
limitations as the Series may from time to time impose by written notice
to the Manager.
1.2 ADMINISTRATIVE SERVICES. The Manager shall
supervise the Series's business and affairs and shall provide such
services required for effective administration of the Series as are not
provided by employees or other agents engaged by the Series; PROVIDED,
that the Manager shall not have any obligation to provide under this
Agreement any direct or indirect services to the holders of interests in
the Series ("Interestholders"), any services related to the sale of
interests in the Series, or any other services which are the subject of a
separate agreement or arrangement between the Series and the Manager.
Subject to the foregoing, in providing administrative services hereunder,
the Manager shall:
1.2.1 OFFICE SPACE, EQUIPMENT AND FACILITIES.
Furnish without cost to the Series, or pay the cost of, such office space,
office equipment and office facilities as are adequate for the Series's
needs.
1.2.2 PERSONNEL. Provide, without remuneration
from or other cost to Managers Trust or the Series, the services of
individuals competent to perform all of the Series's executive,
administrative and clerical functions which are not performed by employees
or other agents engaged by the Series or by the Manager acting in some
other capacity pursuant to a separate agreement or arrangement with the
Series.
1.2.3 AGENTS. Assist the Series in selecting
and coordinating the activities of the other agents engaged by the Series,
including the Series's custodian, independent auditors and legal counsel.
1.2.4 TRUSTEES AND OFFICERS. Authorize and
permit the Manager's directors, officers and employees who may be elected
or appointed as trustees or officers of Managers Trust to serve in such
capacities, without remuneration from or other cost to Managers Trust or
the Series.
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<PAGE>
1.2.5 BOOKS AND RECORDS. Assure that all
financial, accounting and other records required to be maintained and
preserved by Managers Trust and/or the Series are maintained and preserved
by it or on its behalf in accordance with applicable laws and regulations.
1.2.6 REPORTS AND FILINGS. Assist in the
preparation of (but not pay for) all periodic reports by Managers Trust or
the Series to Interestholders of the Series and all reports and filings
required to maintain the registration and qualification of the Series, or
to meet other regulatory or tax requirements applicable to the Series,
under federal and state securities and tax laws.
2. EXPENSES OF THE SERIES.
2.1 EXPENSES TO BE PAID BY THE MANAGER. The Manager
shall pay all salaries, expenses and fees of the officers, trustees and
employees of the Managers Trust who are officers, directors or employees
of the Manager.
In the event that the Manager pays or assumes any
expenses of Managers Trust or a Series not required to be paid or assumed
by the Manager under this Agreement, the Manager shall not be obligated
hereby to pay or assume the same or any similar expense in the future;
PROVIDED, that nothing herein contained shall be deemed to relieve the
Manager of any obligation to Managers Trust or to a Series under any
separate agreement or arrangement between the parties.
2.2 EXPENSES TO BE PAID BY THE SERIES. Each Series
shall bear all expenses of its operation, except those specifically
allocated to the Manager under this Agreement or under any separate
agreement between a Series and the Manager. Expenses to be borne by a
Series shall include both expenses directly attributable to the operation
of the Series and the placement of interests therein, as well as the
portion of any expenses of Managers Trust that is properly allocable to
the Series in a manner approved by the trustees of Managers Trust. Subject
to any separate agreement or arrangement between Managers Trust or a
Series and the Manager, the expenses hereby allocated to each Series, and
not to the Manager, include, but are not limited to:
2.2.1 CUSTODY. All charges of depositories,
custodians, and other agents for the transfer, receipt, safekeeping, and
servicing of its cash, securities, and other property.
2.2.2 INTERESTHOLDER SERVICING. All expenses of
maintaining and servicing Interestholder accounts, including but not
limited to the charges of any Interestholder servicing agent, dividend
disbursing agent or other agent engaged by a Series to service
Interestholder accounts.
2.2.3 INTERESTHOLDER REPORTS. All expenses of
preparing, setting in type, printing and distributing reports and other
communications to Interestholders of a Series.
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<PAGE>
2.2.4 PRICING AND PORTFOLIO VALUATION. All
expenses of computing a Series's net asset value per share, including any
equipment or services obtained for the purpose of pricing shares or
valuing the Series's investment portfolio.
2.2.5 COMMUNICATIONS. All charges for equipment
or services used for communications between the Manager or the Series and
any custodian, Interestholder servicing agent, portfolio accounting
services agent, or other agent engaged by a Series.
2.2.6 LEGAL AND ACCOUNTING FEES. All charges
for services and expenses of a Series's legal counsel and independent
auditors.
2.2.7 TRUSTEES' FEES AND EXPENSES. With respect
to each Series, all compensation of Trustees other than those affiliated
with the Manager, all expenses incurred in connection with such
unaffiliated Trustees' services as Trustees, and all other expenses of
meetings of the Trustees or committees thereof.
2.2.8 INTERESTHOLDER MEETINGS. All expenses
incidental to holding meetings of Interestholders, including the printing
of notices and proxy materials, and proxy solicitation therefor.
2.2.9 BONDING AND INSURANCE. All expenses of
bond, liability, and other insurance coverage required by law or
regulation or deemed advisable by the Trustees, including, without
limitation, such bond, liability and other insurance expense that may from
time to time be allocated to the Series in a manner approved by the
Trustees.
2.2.10 BROKERAGE COMMISSIONS. All brokers'
commissions and other charges incident to the purchase, sale or lending of
a Series's portfolio securities.
2.2.11 TAXES. All taxes or governmental fees
payable by or with respect to a Series to federal, state or other
governmental agencies, domestic or foreign, including stamp or other
transfer taxes.
2.2.12 TRADE ASSOCIATION FEES. All fees, dues
and other expenses incurred in connection with a Series's membership in
any trade association or other investment organization.
2.2.13 NONRECURRING AND EXTRAORDINARY EXPENSES.
Such nonrecurring and extraordinary expenses as may arise, including the
costs of actions, suits, or proceedings to which the Series is a party and
the expenses a Series may incur as a result of its legal obligation to
provide indemnification to Managers Trust's officers, Trustees and agents.
2.2.14 ORGANIZATIONAL EXPENSES. Any and all
organizational expenses of a Series paid by the Manager shall be
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<PAGE>
reimbursed by such Series at such time or times agreed by such Series and
the Manager.
3. ADVISORY FEE.
3.1 FEE. As compensation for all services rendered,
facilities provided and expenses paid or assumed by the Manager under this
Agreement, each Series shall pay the Manager an annual fee as set out in
Schedule B to this Agreement.
3.2 COMPUTATION AND PAYMENT OF FEE. The advisory fee
shall accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The daily fee
accruals shall be computed by multiplying the fraction of one divided by
the number of days in the calendar year by the applicable annual advisory
fee rate (as set forth in Schedule B hereto), and multiplying this product
by the net assets of the Series, determined in the manner established by
the Trustees, as of the close of business on the last preceding business
day on which the Series's net asset value was determined.
3.3 STATE EXPENSE LIMITATION. If in any fiscal year the
operating expenses of any Interestholder in a Series plus such
Interestholder's pro rata portion of the Series' operating expenses in
such fiscal year ("Aggregate Operating Expenses", which includes any fees
or expense reimbursements payable to the Manager pursuant to this
Agreement and any compensation payable to the Manager pursuant to (i) the
Administration Agreement between such Interestholder and the Manager or
(ii) any other Agreement or arrangement with Managers Trust with respect
to that Interestholder, but excludes interest, taxes, brokerage
commissions, litigation and indemnification expenses, and other
extraordinary expenses not incurred in the ordinary course of business)
exceed the lowest applicable percentage expense limitation imposed under
the securities law and regulations of any state in which such
Interestholder's shares are qualified for sale (the "State Expense
Limitation"), then the Manager shall pay such Interestholder the amount of
such excess, less the amount of any reduction of the administration fee
referred to below; PROVIDED, that the Manager shall have no obligation
hereunder to pay such Interestholder for any such expenses which exceed
the pro rata portion of such advisory fee attributable to such
Interestholder's interest in that Series.
No payment shall be made to such Interestholder hereunder
unless and until the administration fee payable by such Interestholder
under a similar State Expense Limitation of its Administration Agreement
with the Manager has been reduced to zero. Any payment to an
interestholder hereunder shall be made monthly, by annualizing the
Aggregate Operating Expenses for each month as of the last day of such
month. An adjustment shall be made on or before the last day of the first
month of the next succeeding fiscal year if Aggregate Operating Expenses
for such fiscal year do not exceed the State Expense Limitation or if for
such fiscal year there is no applicable State Expense Limitation.
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<PAGE>
4. OWNERSHIP OF RECORDS.
All records required to be maintained and preserved by
the Series pursuant to the provisions or rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the 1940 Act and
maintained and preserved by the Manager on behalf of the Series are the
property of the Series and shall be surrendered by the Manager promptly on
request by the Series; PROVIDED, that the Manager may at its own expense
make and retain copies of any such records.
5. REPORTS TO MANAGER.
The series shall furnish or otherwise make available to
the Manager such copies of that Series's financial statements, proxy
statements, reports, and other information relating to its business and
affairs as the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this Agreement.
6. REPORTS TO THE SERIES.
The Manager shall prepare and furnish to the Series such
reports, statistical data and other information in such form and at such
intervals as the Series may reasonably request.
7. RETENTION OF SUB-ADVISER.
Subject to a Series obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act, the Manager may
retain a sub-adviser, at the Manager's own cost and expense, for the
purpose of making investment recommendations and research information
available to the Manager. Retention of a sub-adviser shall in no way
reduce the responsibilities or obligations of the Manager under this
Agreement and the Manager shall be responsible to Managers Trust and the
Series for all acts or omissions of the sub-adviser in connection with the
performance of the Manager's duties hereunder.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the
Manager or any affiliated person of the Manager to render investment
management and administrative services to other investment companies, to
act as investment adviser or investment counselor to other persons, firms
or corporations, or to engage in other business activities.
9. LIMITATION OF LIABILITY OF MANAGER AND ITS PERSONNEL.
Neither the Manager nor any director, officer or employee
of the Manager performing services for the Series at the direction or
request of the Manager in connection with the Manager's discharge of its
obligations hereunder shall be liable for any error of judgment or mistake
of law or for any loss suffered by a Series in connection with any matter
to which this Agreement relates; PROVIDED, that nothing herein contained
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shall be construed (i) to protect the Manager against any liability to
Managers Trust or a Series or its Interestholders to which the Manager
would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of the Manager's duties, or by reason
of the Manager's reckless disregard of its obligations and duties under
this Agreement, or (ii) to protect any director, officer or employee of
the Manager who is or was a Trustee or officer of Managers Trust against
any liability to Managers Trust or a Series or its Interestholders to
which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office with Managers
Trust.
10. NO LIABILITY OF OTHER SERIES.
This Agreement is made by each Series pursuant to
authority granted by the Trustees, and the obligations created hereby are
not binding on any of the Trustees or Interestholders of the Series
individually, but bind only the property of that Series and no other.
11. EFFECT OF AGREEMENT.
Nothing herein contained shall be deemed to require the
Series to take any action contrary to the Declaration of Trust or By-Laws
of Managers Trust, any actions of the Trustees binding upon the Series, or
any applicable law, regulation or order to which the Series is subject or
by which it is bound, or to relieve or deprive the Trustees of their
responsibility for and control of the conduct of the business and affairs
of the Series or Managers Trust.
12. TERM OF AGREEMENT.
The term of this Agreement shall begin on the date first
above written with respect to each Series listed in Schedule A on the date
hereof and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect through August 2, 1995. With respect to
each Series added by execution of an Addendum to Schedule A, the term of
this Agreement shall begin on the date of such execution and, unless
sooner terminated as hereinafter provided, this Agreement shall remain in
effect to the date two years after such execution. Thereafter, in each
case this Agreement shall continue in effect with respect to each Series
from year to year, subject to the termination provisions and all other
terms and conditions hereof; PROVIDED, such continuance with respect to a
Series is approved at least annually by vote or written consent of the
Trustees, including a majority of the Trustees who are not interested
persons of either party hereto ("Disinterested Trustees"); and PROVIDED
FURTHER, that the Manager shall not have notified a Series in writing at
least sixty days prior to the first expiration date hereof or at least
sixty days prior to any expiration date in any year thereafter that it
does not desire such continuation. The Manager shall furnish any Series,
promptly upon its request, such information as may reasonably be necessary
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to evaluate the terms of this Agreement or any extension, renewal or
amendment thereof.
13. AMENDMENT OR ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing
signed by the parties hereto; PROVIDED, that no such amendment shall be
effective unless authorized on behalf of any Series (i) by resolution of
the Trustees, including the vote or written consent of a majority of the
Trustees who are not parties to this Agreement or interested persons of
either party hereto, and (ii) by vote of a majority of the outstanding
voting securities of the Series. This Agreement shall terminate
automatically and immediately in the event of its assignment.
14. TERMINATION OF AGREEMENT.
This Agreement may be terminated at any time by either
party hereto, without the payment of any penalty, upon sixty (60) days'
prior written notice to the other party; PROVIDED, that in the case of
termination by any Series, such action shall have been authorized (i) by
resolution of the Trustees, including the vote or written consent of a
majority of Trustees who are not parties to this Agreement or interested
persons of either party hereto, or (ii) by vote of a majority of the
outstanding voting securities of the Series.
15. NAME OF THE SERIES.
Each Series hereby agrees that if the Manager shall at
any time for any reason cease to serve as investment adviser to a Series,
the Series shall, if and when requested by the Manager, eliminate from the
Series's name the name "Neuberger & Berman" and thereafter refrain from
using the name "Neuberger & Berman" or the initials "N&B" in connection
with its business or activities, and the foregoing agreement of a Series
shall survive any termination of this Agreement and any extension or
renewal thereof.
16. INTERPRETATION AND DEFINITION OF TERMS.
Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term
or provision of the 1940 Act shall be resolved by reference to such term
or provision of the 1940 Act and to interpretation thereof, if any, by the
United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the 1940 Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested persons," "assignment" and "affiliated person," as used in
this Agreement shall have the meanings assigned to them by Section 2(a) of
the 1940 Act. In addition, when the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is modified, interpreted
or relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision
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shall be deemed to incorporate the effect of such rule, regulation or
order.
17. CHOICE OF LAW
This Agreement is made and to be principally performed in
the State of New York, and except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed
by, and construed and enforced in accordance with, the internal laws of
the State of New York.
18. CAPTIONS.
The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
19. EXECUTION IN COUNTERPARTS.
This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized and their respective seals to be hereunto affixed, as of the
day and year first above written.
EQUITY MANAGERS TRUST
Attest: By Michael J. Weiner
---------------------------
/s/ Claudia A. Brandon Vice President
---------------------- ---------------------------
Claudia A. Brandon Title
Secretary
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
Attest: By /s/ Stanley Egener
---------------------------
Stanley Egener
/s/ Ellen Metzger President
-------------------------- ---------------------------
Ellen Metzger Title
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Secretary
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<PAGE>
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
MANAGEMENT AGREEMENT
SCHEDULE A
The Series of Equity Managers Trust currently subject to this
Agreement are as follows:
INITIAL SERIES
Neuberger & Berman Genesis Portfolio
Neuberger & Berman Guardian Portfolio
Neuberger & Berman Manhattan Portfolio
Neuberger & Berman Partners Portfolio
Neuberger & Berman Focus Portfolio
ADDITIONAL SERIES
Neuberger & Berman Socially Responsive Portfolio
March 11, 1994
<PAGE>
EQUITY MANAGERS TRUST
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Paragraph 3 of the Equity Managers Trust
Management Agreement shall be calculated in accordance with the following
schedules:
NEUBERGER & BERMAN GUARDIAN PORTFOLIO
NEUBERGER & BERMAN MANHATTAN PORTFOLIO
NEUBERGER & BERMAN PARTNERS PORTFOLIO
NEUBERGER & BERMAN FOCUS PORTFOLIO
NEUBERGER & BERMAN SOCIALLY RESPONSIVE PORTFOLIO
0.55% on the first $250 million of average daily net assets
0.525% on the next $250 million of average daily net assets
0.50% on the next $250 million of average daily net assets
0.475% on the next $250 million of average daily net assets
0.45% on the next $500 million of average daily net assets
0.425% on average daily net assets in excess of $1.5 billion
NEUBERGER & BERMAN GENESIS PORTFOLIO
0.85% on the first $250 million of average daily net assets
0.80% on the next $250 million of average daily net assets
0.75% on the next $250 million of average daily net assets
0.70% on the next $250 million of average daily net assets
0.65% on average daily net assets in excess of $1 billion
March 11, 1994
<PAGE>
SUB-ADVISORY AGREEMENT
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
605 Third Avenue
New York, New York 10158-0006
August 2, 1993
Neuberger & Berman
605 Third Avenue
New York, New York 10158-3698
Dear Sirs:
We have entered into a Management Agreement with Equity
Managers Trust ("Managers Trust"), with respect several of its series
("Series"), as set forth in Schedule A hereto, pursuant to which we are to
act as investment adviser to such Series. We hereby agree with you as
follows:
1. You agree for the duration of this Agreement to furnish
us with such investment recommendations and research information, of the
same type as that which you from time to time provide to your partners and
employees for use in managing client accounts, all as we shall reasonably
request. In the absence of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or of reckless disregard of
your duties and obligations hereunder, you shall not be subject to
liability for any act or omission or any loss suffered by any Series or
its security holders in connection with the matters to which this
Agreement relates.
2. In consideration of your agreements set forth in
paragraph 1 above, we agree to pay you on the basis of direct and indirect
costs to you of performing such agreements. Indirect costs shall be
allocated on a basis mutually satisfactory to you and us.
3. As used in this Agreement, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a)(4) and 2(a)(42), respectively, of
the Investment Company Act of 1940, as amended.
This Agreement shall terminate automatically in the event
of its assignment, or upon termination of the Management Agreement between
Managers Trust and the undersigned.
This Agreement may be terminated at any time, without the
payment of any penalty, (a) with respect to any Series by the Trustees of
Managers Trust or by vote of a majority of the outstanding voting
securities of such Series or by the undersigned on not less than thirty
nor more than sixty days' written notice addressed to you at your
principal place of business; and (b) by you, without the payment of any
penalty, on not less than thirty nor more than sixty days' written notice
<PAGE>
addressed to Managers Trust and the undersigned at Managers Trust's
principal place of business.
This Agreement shall remain in full force and effect with
respect to each Series listed in Schedule A on the date hereof through
August 2, 1995 (unless sooner terminated as provided above) and from year
to year thereafter only so long as its continuance is approved in the
manner required by the Investment Company Act of 1940, as from time to
time amended.
Schedule A to this Agreement may be modified from time to
time to reflect the addition or deletion of a Series from the terms of
this Agreement. With respect to each Series added by execution of an
addendum to Schedule A, the term of this Agreement shall begin on the date
of such execution and, unless sooner terminated as provided above, this
Agreement shall remain in effect to the date two years after such
execution and from year to year thereafter only so long as its continuance
is approved in the manner required by the Investment Company Act of 1940,
as from time to time amended.
If you are in agreement with the foregoing, please sign
the form of acceptance on the enclosed counterpart hereof and return the
same to us.
Very truly yours,
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
By: /s/ Stanley Egener
---------------------
Stanley Egener
President
The foregoing agreement is
hereby accepted as of the date
first above written.
NEUBERGER & BERMAN
By: /s/ Lawrence Zicklin
---------------------
Lawrence Zicklin
- 2 -
<PAGE>
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
SUB-ADVISORY AGREEMENT
SCHEDULE A
The Series of Equity Managers Trust currently subject to this
Agreement are as follows:
INITIAL SERIES
Neuberger & Berman Genesis Portfolio
Neuberger & Berman Guardian Portfolio
Neuberger & Berman Manhattan Portfolio
Neuberger & Berman Partners Portfolio
Neuberger & Berman Focus Portfolio
ADDITIONAL SERIES
Neuberger & Berman Socially Responsive Portfolio
March 11, 1994
<PAGE>
MANAGEMENT AGREEMENT
This Agreement is made as of November 1, 1995, between Global
Managers Trust, a New York common law trust ("Managers Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation
("Manager").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Managers Trust is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end, diversified
management investment company and has established a series of shares known
as International Portfolio and has the authority to establish additional
series in the future (each a "Series"), with each Series having its own
assets and investment policies; and
WHEREAS, Managers Trust desires to retain the Manager as
investment adviser to furnish investment advisory and portfolio management
services to each Series listed in Schedule A attached hereto and to such
other Series of Managers Trust hereinafter established as agreed to from
time to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by Managers Trust on behalf of the Series), and the Manager is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. Services of the Manager.
1.1 Investment Management Services. The Manager shall act as
the investment adviser to the Series and, as such, shall (i) obtain and
evaluate such information relating to the economy, industries, businesses,
securities markets and securities as it may deem necessary or useful in
discharging its responsibilities hereunder, (ii) formulate a continuing
program for the investment of the assets of the Series in a manner
consistent with its investment objectives, policies and restrictions, and
(iii) determine from time to time securities to be purchased, sold,
retained or lent by the Series, and implement those decisions, including
the selection of entities with or through which such purchases, sales or
loans are to be effected; provided, that the Manager will place orders
pursuant to its investment determinations either directly with the issuer
or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best net price and most favorable execution of its
orders, and (b) may nevertheless in its discretion purchase and sell
portfolio securities from and to brokers and dealers who provide the
Manager with research, analysis, advice and similar services and pay such
- 1 -
<PAGE>
brokers and dealers in return a higher commission or spread than may be
charged by other brokers or dealers.
The Series hereby authorizes any entity or person associated with
the Manager which is a member of a national securities exchange to effect
any transaction on the exchange for the account of the Series which is
permitted by Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder, and the Series hereby consents to the retention of
compensation for such transactions in accordance with said Section 11(a)
or Rule 11a2-2(T)(a)(iv).
The Series hereby authorizes the Manager, to the extent permitted
by the 1940 Act or any rule, regulation, order or Securities and Exchange
Commission staff interpretation thereunder, to purchase for the Series any
security for which any one or more of the following is acting as an
underwriter, dealer, member of a syndicate, or syndicate manager: the
Manager, its affiliates, the affiliates of any holders of interests in the
Series (any such holder of interests in the Series to be referred to
hereinafter as an "Interestholder"), the principal underwriter of any
Interestholder, or any affiliate of any of the foregoing.
The Manager shall carry out its duties with respect to the
Series' investments in accordance with applicable law and the investment
objectives, policies and restrictions of the Series adopted by the
trustees of Managers Trust ("Trustees"), and subject to such further
limitations as the Series may from time to time impose by written notice
to the Manager.
1.2 Administrative Services. The Manager shall supervise the
Series' business and affairs and shall provide such services required for
effective administration of the Series as are not provided by employees or
other agents engaged by the Series; provided, that the Manager shall not
have any obligation to provide under this Agreement any direct or indirect
services to Interestholders, any services related to the sale of interests
in the Series, or any other services which are the subject of a separate
agreement or arrangement between the Series and the Manager. Subject to
the foregoing, in providing administrative services hereunder, the Manager
shall:
1.2.1 Office Space, Equipment and Facilities. Furnish without
cost to the Series, or pay the cost of, such office space, office
equipment and office facilities as are adequate for the Series' needs.
1.2.2 Personnel. Provide, without remuneration from or other
cost to Managers Trust or the Series, the services of individuals
competent to perform all of the Series' executive, administrative and
clerical functions which are not performed by employees or other agents
engaged by the Series or by the Manager acting in some other capacity
pursuant to a separate agreement or arrangement with the Series.
1.2.3 Agents. Assist the Series in selecting and coordinating
the activities of the other agents engaged by the Series, including the
Series' custodian, independent auditors and legal counsel.
<PAGE>
1.2.4 Trustees and Officers. Authorize and permit the Manager's
directors, officers and employees who may be elected or appointed as
trustees or officers of Managers Trust to serve in such capacities,
without remuneration from or other cost to Managers Trust or the Series.
1.2.5 Books and Records. Assure that all financial, accounting
and other records required to be maintained and preserved by Managers
Trust and/or the Series are maintained and preserved by it or on its
behalf in accordance with applicable laws and regulations.
1.2.6 Reports and Filings. Assist in the preparation of (but
not pay for) all periodic reports by Managers Trust or the Series to
Interestholders of the Series and all reports and filings required to
maintain the registration and qualification of the Series, or to meet
other regulatory or tax requirements applicable to the Series, under
federal and state securities and tax laws.
2. Expenses of the Series.
2.1 Expenses to be Paid by the Manager. The Manager shall pay
all salaries, expenses and fees of the officers, trustees and employees of
the Managers Trust who are officers, directors or employees of the
Manager.
In the event that the Manager pays or assumes any expenses of
Managers Trust or a Series not required to be paid or assumed by the
Manager under this Agreement, the Manager shall not be obligated hereby to
pay or assume the same or any similar expense in the future; provided,
that nothing herein contained shall be deemed to relieve the Manager of
any obligation to Managers Trust or to a Series under any separate
agreement or arrangement between the parties.
2.2 Expenses to be Paid by the Series. Each Series shall bear
all expenses of its operation, except those specifically allocated to the
Manager under this Agreement or under any separate agreement between a
Series and the Manager. Expenses to be borne by a Series shall include
both expenses directly attributable to the operation of the Series and the
placement of interests therein, as well as the portion of any expenses of
Managers Trust that is properly allocable to the Series in a manner
approved by the trustees of Managers Trust. Subject to any separate
agreement or arrangement between Managers Trust or a Series and the
Manager, the expenses hereby allocated to each Series, and not to the
Manager, include, but are not limited to:
2.2.1 Custody. All charges of depositories, custodians, and
other agents for the transfer, receipt, safekeeping, and servicing of its
cash, securities, and other property.
2.2.2 Interestholder Servicing. All expenses of maintaining and
servicing Interestholder accounts, including but not limited to the
charges of any Interestholder servicing agent, dividend disbursing agent
or other agent engaged by a Series to service Interestholder accounts.
- 3 -
<PAGE>
2.2.3 Interestholder Reports. All expenses of preparing,
setting in type, printing and distributing reports and other
communications to Interestholders of a Series.
2.2.4 Pricing and Portfolio Valuation. All expenses of
computing a Series' net asset value per share, including any equipment or
services obtained for the purpose of pricing shares or valuing the Series'
investment portfolio.
2.2.5 Communications. All charges for equipment or services
used for communications between the Manager or the Series and any
custodian, Interestholder servicing agent, portfolio accounting services
agent, or other agent engaged by a Series.
2.2.6 Legal and Accounting Fees. All charges for services and
expenses of a Series' legal counsel and independent auditors.
2.2.7 Trustees' Fees and Expenses. With respect to each Series,
all compensation of Trustees other than those affiliated with the Manager,
all expenses incurred in connection with such unaffiliated Trustees'
services as Trustees, and all other expenses of meetings of the Trustees
or committees thereof.
2.2.8 Interestholder Meetings. All expenses incidental to
holding meetings of Interestholders, including the printing of notices and
proxy materials, and proxy solicitation therefor.
2.2.9 Bonding and Insurance. All expenses of bond, liability,
and other insurance coverage required by law or regulation or deemed
advisable by the Trustees, including, without limitation, such bond,
liability and other insurance expense that may from time to time be
allocated to the Series in a manner approved by the Trustees.
2.2.10 Brokerage Commissions. All brokers' commissions and
other charges incident to the purchase, sale or lending of a Series'
portfolio securities.
2.2.11 Taxes. All taxes or governmental fees payable by or with
respect to a Series to federal, state or other governmental agencies,
domestic or foreign, including stamp or other transfer taxes.
2.2.12 Trade Association Fees. All fees, dues and other
expenses incurred in connection with a Series' membership in any trade
association or other investment organization.
2.2.13 Nonrecurring and Extraordinary Expenses. Such
nonrecurring and extraordinary expenses as may arise, including the costs
of actions, suits, or proceedings to which the Series is a party and the
expenses a Series may incur as a result of its legal obligation to provide
indemnification to Managers Trust's officers, Trustees and agents.
- 4 -
<PAGE>
2.2.14 Organizational Expenses. Any and all organizational
expenses of a Series paid by the Manager shall be reimbursed by such
Series at such time or times agreed by such Series and the Manager.
3. Advisory Fee.
3.1 Fee. As compensation for all services rendered, facilities
provided and expenses paid or assumed by the Manager under this Agreement,
each Series shall pay the Manager an annual fee as set out in Schedule B
to this Agreement.
3.2 Computation and Payment of Fee. The advisory fee shall
accrue on each calendar day, and shall be payable monthly on the first
business day of the next succeeding calendar month. The daily fee
accruals shall be computed by multiplying the fraction of one divided by
the number of days in the calendar year by the applicable annual advisory
fee rate (as set forth in Schedule B hereto), and multiplying this product
by the net assets of the Series, determined in the manner established by
the Trustees, as of the close of business on the last preceding business
day on which the Series' net asset value was determined.
3.3 State Expense Limitation. If in any fiscal year the
operating expenses of any Interestholder in a Series plus such
Interestholder's pro rata portion of the Series' operating expenses in
such fiscal year ("Aggregate Operating Expenses", which includes any fees
or expense reimbursements payable to the Manager pursuant to this
Agreement and any compensation payable to the Manager pursuant to (i) the
Administration Agreement between such Interestholder and the Manager or
(ii) any other Agreement or arrangement with Managers Trust with respect
to that Interestholder, but excludes interest, taxes, brokerage
commissions, litigation and indemnification expenses, and other
extraordinary expenses not incurred in the ordinary course of business)
exceed the lowest applicable percentage expense limitation imposed under
the securities law and regulations of any state in which such
Interestholder's shares are qualified for sale (the "State Expense
Limitation"), then the Manager shall pay such Interestholder the amount of
such excess, less the amount of any reduction of the administration fee
referred to below; provided, that the Manager shall have no obligation
hereunder to pay such Interestholder for any such expenses which exceed
the pro rata portion of such advisory fee attributable to such
Interestholder's interest in that Series.
No payment shall be made to such Interestholder hereunder unless
and until the administration fee payable by such Interestholder under a
similar State Expense Limitation of its Administration Agreement with the
Manager has been reduced to zero. Any payment to an interestholder
hereunder shall be made monthly, by annualizing the Aggregate Operating
Expenses for each month as of the last day of such month. An adjustment
shall be made on or before the last day of the first month of the next
succeeding fiscal year if Aggregate Operating Expenses for such fiscal
year do not exceed the State Expense Limitation or if for such fiscal year
there is no applicable State Expense Limitation.
- 5 -
<PAGE>
4. Ownership of Records.
All records required to be maintained and preserved by the Series
pursuant to the provisions or rules or regulations of the Securities and
Exchange Commission under Section 31(a) of the 1940 Act and maintained and
preserved by the Manager on behalf of the Series are the property of the
Series and shall be surrendered by the Manager promptly on request by the
Series; provided, that the Manager may at its own expense make and retain
copies of any such records.
5. Reports to Manager.
The Series shall furnish or otherwise make available to the
Manager such copies of that Series' financial statements, proxy
statements, reports, and other information relating to its business and
affairs as the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this Agreement.
6. Reports to the Series.
The Manager shall prepare and furnish to the Series such reports,
statistical data and other information in such form and at such intervals
as the Series may reasonably request.
7. Retention of Sub-Adviser.
Subject to a Series obtaining the initial and periodic approvals
required under Section 15 of the 1940 Act, the Manager may retain a
sub-adviser, at the Manager's own cost and expense, for the purpose of
making investment recommendations and research information available to
the Manager. Retention of a sub-adviser shall in no way reduce the
responsibilities or obligations of the Manager under this Agreement and
the Manager shall be responsible to Managers Trust and the Series for all
acts or omissions of the sub-adviser in connection with the performance of
the Manager's duties hereunder.
8. Services to Other Clients.
Nothing herein contained shall limit the freedom of the Manager
or any affiliated person of the Manager to render investment management
and administrative services to other investment companies, to act as
investment adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities.
9. Limitation of Liability of Manager and its Personnel.
Neither the Manager nor any director, officer or employee of the
Manager performing services for the Series at the direction or request of
the Manager in connection with the Manager's discharge of its obligations
hereunder shall be liable for any error of judgment or mistake of law or
for any loss suffered by a Series in connection with any matter to which
this Agreement relates; provided, that nothing herein contained shall be
- 6 -
<PAGE>
construed (i) to protect the Manager against any liability to Managers
Trust or a Series or its Interestholders to which the Manager would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Manager's duties, or by reason of the
Manager's reckless disregard of its obligations and duties under this
Agreement, or (ii) to protect any director, officer or employee of the
Manager who is or was a Trustee or officer of Managers Trust against any
liability to Managers Trust or a Series or its Interestholders to which
such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of such person's office with Managers Trust.
10. No Liability of Other Series.
This Agreement is made by Managers Trust on behalf of each Series
pursuant to authority granted by the Trustees, and the obligations created
hereby bind only the property of that Series and are not binding on any of
the Trustees or Interestholders of the Series individually or on any other
Series.
11. Effect of Agreement.
Nothing herein contained shall be deemed to require the Series to
take any action contrary to the Declaration of Trust or By-Laws of
Managers Trust, any actions of the Trustees binding upon the Series, or
any applicable law, regulation or order to which the Series is subject or
by which it is bound, or to relieve or deprive the Trustees of their
responsibility for and control of the conduct of the business and affairs
of the Series or Managers Trust.
12. Term of Agreement.
The term of this Agreement shall begin on the date first above
written with respect to each Series listed in Schedule A on the date
hereof and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect through November 1, 1997. With respect
to each Series added by execution of an Addendum to Schedule A, the term
of this Agreement shall begin on the date of such execution and, unless
sooner terminated as hereinafter provided, this Agreement shall remain in
effect to the date two years after such execution. Thereafter, in each
case this Agreement shall continue in effect with respect to each Series
from year to year, subject to the termination provisions and all other
terms and conditions hereof; provided, such continuance with respect to a
Series is approved at least annually by (1) a vote or written consent of
the holders of a majority of the outstanding voting securities of such
Series, or by a vote of the Trustees, and (2) by a majority of the
Trustees who are not interested persons of either party hereto
("Disinterested Trustees"); and provided further, that the Manager shall
not have notified a Series in writing at least sixty days prior to the
first expiration date hereof or at least sixty days prior to any
expiration date in any year thereafter that it does not desire such
continuation. The Manager shall furnish any Series, promptly upon its
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<PAGE>
request, such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal or amendment thereof.
13. Amendment or Assignment of Agreement.
Any amendment to this Agreement shall be in writing signed by the
parties hereto; provided, that no such amendment shall be effective unless
authorized on behalf of any Series (i) by resolution of the Trustees,
including the vote or written consent of a majority of the Trustees who
are not parties to this Agreement or interested persons of either party
hereto, and (ii) by vote of a majority of the outstanding voting
securities of the Series. This Agreement shall terminate automatically
and immediately in the event of its assignment.
14. Termination of Agreement.
This Agreement may be terminated at any time by either party
hereto, without the payment of any penalty, upon sixty (60) days' prior
written notice to the other party; provided, that in the case of
termination by any Series, such action shall have been authorized (i) by
resolution of the Trustees, including the vote or written consent of a
majority of Trustees who are not parties to this Agreement or interested
persons of either party hereto, or (ii) by vote of a majority of the
outstanding voting securities of the Series.
15. Name of the Series.
Each Series hereby agrees that if the Manager shall at any time
for any reason cease to serve as investment adviser to a Series, the
Series shall, if and when requested by the Manager, eliminate from the
Series' name the name "Neuberger & Berman" and thereafter refrain from
using the name "Neuberger & Berman" or the initials "N&B" in connection
with its business or activities, and the foregoing agreement of a Series
shall survive any termination of this Agreement and any extension or
renewal thereof.
16. Interpretation and Definition of Terms.
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the
United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the 1940 Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested persons," "assignment" and "affiliated person," as used in
this Agreement shall have the meanings assigned to them by Section 2(a) of
the 1940 Act. In addition, when the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is modified, interpreted
or relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision
- 8 -
<PAGE>
shall be deemed to incorporate the effect of such rule, regulation or
order.
17. Choice of Law
This Agreement is made and to be principally performed in the
State of New York, and except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed
by, and construed and enforced in accordance with, the internal laws of
the State of New York.
18. Captions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
19. Execution in Counterparts.
This Agreement may be executed simultaneously in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized and
their respective seals to be hereunto affixed, as of the day and year
first above written.
GLOBAL MANAGERS TRUST
Attest: By ___________________________
_______________________ ___________________________
Secretary Title
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
Attest: By ___________________________
_______________________ ___________________________
Secretary Title
- 9 -
<PAGE>
GLOBAL MANAGERS TRUST
MANAGEMENT AGREEMENT
SCHEDULE A
The Series of Global Managers Trust currently subject to this
Agreement are as follows:
Initial Series
International Portfolio
Dated: November 1, 1995
<PAGE>
GLOBAL MANAGERS TRUST
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Paragraph 3 of the Global Managers Trust
Management Agreement shall be calculated in accordance with the following
schedules:
International Portfolio
0.85% of the first $250 million of average daily net assets
0.825% of the next $250 million of average daily net assets
0.80% of the next $250 million of average daily net assets
0.775% of the next $250 million of average daily net assets
0.75% of the next $500 million of average daily net assets
0.725% of average daily net assets in excess of $1.5 billion
Dated: November 1, 1995
<PAGE>
SUB-ADVISORY AGREEMENT
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
605 Third Avenue
New York, New York 10158
November 1, 1995
Neuberger & Berman, L.P.
605 Third Avenue
New York, New York 10158
Dear Sirs:
We have entered into a Management Agreement with Global
Managers Trust ("Managers Trust"), with respect to its series ("Series"),
as set forth in Schedule A hereto, pursuant to which we are to act as
investment adviser to such Series. We hereby agree with you as follows:
1. You agree for the duration of this Agreement to furnish
us with such investment recommendations and research information, of the
same type as that which you from time to time provide to your partners and
employees for use in managing client accounts, all as we shall reasonably
request. In the absence of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or of reckless disregard of
your duties and obligations hereunder, you shall not be subject to
liability for any act or omission or any loss suffered by any Series or
its security holders in connection with the matters to which this
Agreement relates.
2. In consideration of your agreements set forth in
paragraph 1 above, we agree to pay you on the basis of direct and indirect
costs to you of performing such agreements. Indirect costs shall be
allocated on a basis mutually satisfactory to you and us.
3. As used in this Agreement, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a)(4) and 2(a)(42), respectively, of
the Investment Company Act of 1940, as amended.
This Agreement shall terminate automatically in the event
of its assignment, or upon termination of the Management Agreement between
Managers Trust and the undersigned.
This Agreement may be terminated at any time, without the
payment of any penalty, (a) with respect to any Series by the Trustees of
Managers Trust or by vote of a majority of the outstanding voting
securities of such Series or by the undersigned on not less than thirty
nor more than sixty days' written notice addressed to you at your
principal place of business; and (b) by you, without the payment of any
penalty, on not less than thirty nor more than sixty days' written notice
<PAGE>
addressed to Managers Trust and the undersigned at Managers Trust's
principal place of business.
This Agreement shall remain in full force and effect with
respect to each Series listed in Schedule A on the date hereof through
November 1, 1997 (unless sooner terminated as provided above) and from
year to year thereafter only so long as its continuance is approved in the
manner required by the Investment Company Act of 1940, as from time to
time amended.
Schedule A to this Agreement may be modified from time to
time to reflect the addition or deletion of a Series from the terms of
this Agreement. With respect to each Series added by execution of an
addendum to Schedule A, the term of this Agreement shall begin on the date
of such execution and, unless sooner terminated as provided above, this
Agreement shall remain in effect to the date two years after such
execution and from year to year thereafter only so long as its continuance
is approved in the manner required by the Investment Company Act of 1940,
as from time to time amended.
If you are in agreement with the foregoing, please sign
the form of acceptance on the enclosed counterpart hereof and return the
same to us.
Very truly yours,
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
By: _____________________________
President
The foregoing agreement is
hereby accepted as of the date
first above written.
NEUBERGER & BERMAN, L.P.
By: _________________________
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<PAGE>
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
SUB-ADVISORY AGREEMENT
SCHEDULE A
The Series of Global Managers Trust currently subject to this
Agreement are as follows:
Initial Series
International Portfolio
Dated: November 1, 1995
<PAGE>
DISTRIBUTION AGREEMENT
This Agreement is made as of August 2, 1993, between
Neuberger & Berman Equity Funds, a Delaware business trust ("Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation (the
"Distributor").
WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has established several separate series of shares
("Series"), with each Series having its own assets and investment
policies; and
WHEREAS, the Trust desires to retain the Distributor to furnish
distribution services to each Series listed in Schedule A attached hereto,
and to such other Series of the Trust hereinafter established as agreed to
from time to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by a Series shall be made or taken by the Trust on behalf of the
Series), and the Distributor is willing to furnish such services,
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. The Trust hereby appoints the Distributor as agent
to sell the shares of beneficial interest of each Series (the "Shares")
and the Distributor hereby accepts such appointment. All sales by the
Distributor shall be expressly subject to acceptance by the Trust, acting
on behalf of the Series.
2. (a) The Distributor agrees that (i) all Shares
sold by the Distributor shall be sold at the net asset value ("NAV")
thereof as described in Section 3 hereof, and (ii) the Series shall
receive 100% of such NAV.
(b) The Distributor may enter into agreements, in form
and substance satisfactory to the Trust, with dealers selected by the
Distributor, providing for the sale to such dealers and resale by such
dealers of Shares at their NAV.
3. The Trust agrees to supply to the Distributor,
promptly after the time or times at which NAV is determined, on each day
on which the New York Stock Exchange is open for business and on such
other days as the Board of Trustees of the Trust ("Trustees") may from
time to time determine (each such day being hereinafter called a "business
day"), a statement of the NAV of each Series having been determined in the
manner set forth in the then-current Prospectus and Statement of
Additional Information ("SAI") of each Series. Each determination of NAV
shall take effect as of such time or times on each business day as set
forth in the then-current Prospectus of each Series and shall prevail
until the time as of which the next determination is made.
<PAGE>
4. Upon receipt by the Trust at its principal place of
business of a written order from the Distributor, together with delivery
instructions, the Trust shall, if it elects to accept such order, as
promptly as practicable, cause the Shares purchased by such order to be
delivered in such amounts and in such names as the Distributor shall
specify, against payment therefor in such manner as may be acceptable to
the Trust. The Trust may, in its discretion, refuse to accept any order
for the purchase of Shares that the Distributor may tender to it.
5. (a) All sales literature and advertisements used
by the Distributor in connection with sales of Shares shall be subject to
approval by the Trust. The Trust authorizes the Distributor, in
connection with the sale or arranging for the sale of Shares of any
Series, to provide only such information and to make only such statements
or representations as are contained in the Series's then-current
Prospectus and SAI or in such financial and other statements furnished to
the Distributor pursuant to the next paragraph or as may properly be
included in sales literature or advertisements in accordance with the
provisions of the Securities Act of 1933 (the "1933 Act"), the 1940 Act
and applicable rules of self-regulatory organizations. Neither the Trust
nor any Series shall be responsible in any way for any information
provided or statements or representations made by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.
(b) Each Series shall keep the Distributor fully
informed with regard to its affairs, shall furnish the Distributor with a
certified copy of all of its financial statements and a signed copy of
each report prepared for it by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell
Shares of such Series and in the Distributor's performance of all its
duties under this Agreement.
6. The Distributor, as agent of each Series and for the
account and risk of each Series, is authorized, subject to the direction
of the Trust, to redeem outstanding Shares of such Series when properly
tendered by shareholders pursuant to the redemption right granted to such
Series's shareholders by the Trust Instrument of the Trust, as from time
to time in effect, at a redemption price equal to the NAV per Share of
such Series next determined after proper tender and acceptance. The Trust
has delivered to the Distributor a copy of the Trust's Trust Instrument as
currently in effect and agrees to deliver to the Distributor any
amendments thereto promptly upon filing thereof with the Office of the
Secretary of State of the State of Delaware.
7. The Distributor shall assume and pay or reimburse
each Series for the following expenses of such Series: (i) costs of
preparing, printing and distributing reports, prospectuses and SAIs used
by such Series in connection with the sale or offering of its Shares and
all advertising and sales literature relating to such Series printed at
the instruction of the Distributor; and (ii) counsel fees and expenses in
- 2 -
<PAGE>
connection with the foregoing. The Distributor shall also pay all its own
costs and expenses connected with the sale of Shares.
8. Each Series shall maintain a currently effective
Registration Statement on Form N-1A with respect to such Series and shall
file with the Securities and Exchange Commission (the "SEC") such reports
and other documents as may be required under the 1933 Act and the 1940 Act
or by the rules and regulations of the SEC thereunder.
Each Series represents and warrants that the Registration
Statement, post-effective amendments, Prospectus and SAI (excluding
statements relating to the Distributor and the services it provides that
are based upon written information furnished by the Distributor expressly
for inclusion therein) of such Series shall not contain any untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that all statements or information furnished to the
Distributor, pursuant to Section 5(b) hereof, shall be true and correct in
all material respects.
9. (a) This Agreement shall become effective on the
date hereof and shall remain in full force and effect until August 2, 1995
and may be continued from year to year thereafter; PROVIDED, that such
continuance shall be specifically approved each year by the Trustees or by
a majority of the outstanding voting securities of the Series, and in
either case, also by a majority of the Trustees who are not interested
persons of the Trust or the Distributor ("Disinterested Trustees"). This
Agreement may be amended as to any Series with the approval of the
Trustees or of a majority of the outstanding voting securities of such
Series; PROVIDED, that in either case, such amendment also shall be
approved by a majority of the Disinterested Trustees.
(b) Either party may terminate this Agreement
without the payment of any penalty, upon not more than sixty days' nor
less than thirty days' written notice delivered personally or mailed by
registered mail, postage prepaid, to the other party; PROVIDED, that in
the case of termination by any Series, such action shall have been
authorized (i) by resolution of the Trustees, or (ii) by vote of a
majority of the outstanding voting securities of such Series, or (iii) by
written consent of a majority of the Disinterested Trustees.
(c) This Agreement shall automatically terminate
if it is assigned by the Distributor.
(d) Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretation
thereof, if any, by the United States courts or, in the absence of any
controlling decision of any such court, by rules, regulations or orders of
the SEC validly issued pursuant to the 1940 Act. Specifically, the terms
- 3 -
<PAGE>
"interested persons," "assignment" and "vote of a majority of the
outstanding voting securities," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In addition,
when the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. The Trust and the Distributor may from
time to time agree on such provisions interpreting or clarifying the
provisions of this Agreement as, in their joint opinion, are consistent
with the general tenor of this Agreement and with the specific provisions
of this Section 9(d). Any such interpretations or clarifications shall be
in writing signed by the parties and annexed hereto, but no such
interpretation or clarification shall be effective if in contravention of
any applicable federal or state law or regulations, and no such
interpretation or clarification shall be deemed to be an amendment of this
Agreement.
No term or provision of this Agreement shall be
construed to require the Distributor to provide distribution services to
any series of the Trust other than the Series, or to require any Series to
pay any compensation or expenses that are properly allocable, in a manner
approved by the Trustees, to a series of the Trust other than such Series.
(e) This Agreement is made and to be principally
performed in the State of New York, and except insofar as the 1940 Act or
other federal laws and regulations may be controlling, this Agreement
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of New York.
(f) This Agreement is made by the Trust solely
with respect to the Series, and the obligations created hereby are not
binding on any other series of the Trust, but bind only assets belonging
to the Series.
10. The Distributor or one of its affiliates may from
time to time deem it desirable to offer to the list of shareholders of
each Series the shares of other mutual funds for which it acts as
Distributor, including other series of the Trust or other products or
services; however, any such use of the list of shareholders of any Series
shall be made subject to such terms and conditions, if any, as shall be
approved by a majority of the Disinterested Trustees.
11. The Distributor shall look only to the assets of
a Series for the performance of this Agreement by the Trust on behalf of
such Series, and neither the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally
liable therefor.
- 4 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed by their duly authorized officers and under
their respective seals.
NEUBERGER & BERMAN
EQUITY FUNDS
Attest: By: /s/ Daniel J. Sullivan
-----------------------
Daniel J. Sullivan
/s/ Claudia A. Brandon Title: Vice President
----------------------- --------------------
Claudia A. Brandon
Secretary
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
Attest: By: /s/ Stanley Egener
------------------------
Stanley Egener
/s/ Ellen Metzger Title: President
---------------------- ---------------------
Ellen Metzger
Secretary
- 5 -
<PAGE>
DISTRIBUTION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Funds currently subject
to this Agreement are as follows:
INITIAL SERIES
Neuberger & Berman Genesis Fund
Neuberger & Berman Guardian Fund
Neuberger & Berman Manhattan Fund
Neuberger & Berman Partners Fund
Neuberger & Berman Focus Fund
ADDITIONAL SERIES
Neuberger & Berman Socially Responsive Fund
Neuberger & Berman International Fund
DATED: June 15, 1994
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
NEUBERGER & BERMAN EQUITY FUNDS
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Terms of Appointment; Duties of the Bank . . . . . . . . . . 1
2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties of the Bank . . . . . . . . . 4
4. Representations and Warranties of the Fund . . . . . . . . . 5
5. Data Access and Proprietary Information . . . . . . . . . . 5
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . 7
7. Covenants of the Fund and the Bank . . . . . . . . . . . . . 8
8. Termination of Agreement . . . . . . . . . . . . . . . . . . 9
9. Additional Funds . . . . . . . . . . . . . . . . . . . . . . 10
10. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . 10
13. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . 11
14. Consequential Damages . . . . . . . . . . . . . . . . . . . 11
15. Merger of Agreement . . . . . . . . . . . . . . . . . . . . 11
16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent . . . . . . . . . . . . . . . 11
17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 11
18. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 2nd day of August, 1993, by and between NEUBERGER
& BERMAN EQUITY FUNDS, a Delaware business trust, having its principal
office and place of business at 605 Third Avenue, New York, New York 10158
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company having its principal office and place of business at 225
Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in five series,
Neuberger & Berman Genesis Fund, Neuberger & Berman Guardian Fund,
Neuberger & Berman Partners Fund, Neuberger & Berman Manhattan Fund, and
Neuberger & Berman Selected Sectors Fund, (each such series, together with
all other series subsequently established by the Fund and made subject to
this Agreement in accordance with Article 9, being herein referred to as a
"Portfolio", and collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank
as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement,
the Fund, on behalf of the Portfolios, hereby employs and
appoints the Bank to act as, and the Bank agrees to act as its
transfer agent for the Fund's authorized and issued shares of
beneficial interest of the Fund representing interests in each of
the respective Portfolios ("Shares"), dividend disbursing agent,
custodian of certain retirement plans and agent in connection
with any accumulation, open-account or similar plans provided to
the shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective
prospectus and statement of additional information ("prospectus")
of the Fund on behalf of the applicable Portfolio, including
without limitation any periodic investment plan or periodic
withdrawal program.
1.2 The Bank agrees that it will perform the following services:
<PAGE>
(a) In accordance with procedures established from time to
time by agreement between the Fund on behalf of each of
the Portfolios, as applicable and the Bank, the Bank
shall:
(i) Receive for acceptance, orders for the
purchase of Shares, and promptly deliver
payment and appropriate documentation
thereof to the Custodian of the Fund
authorized pursuant to the Trust
Instrument of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and hold
such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption
requests and redemption directions and
deliver the appropriate documentation
thereof to the Custodian;
(iv) At the appropriate time as and when it
receives monies paid to it by the
Custodian with respect to any
redemption, pay over or cause to be paid
over in the appropriate manner such
monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the
registered owners thereof upon receipt
of appropriate instructions;
(vi) Prepare and transmit (or credit the
appropriate shareholder account)
payments for dividends and distributions
declared by the Fund on behalf of the
applicable Portfolio;
(vii) Issue replacement certificates for
those certificates alleged to have been
lost, stolen or destroyed upon receipt
by the Bank of indemnification
satisfactory to the Bank and protecting
the Bank and the Fund, and the Bank at
its option, may issue replacement
certificates in place of mutilated
stock certificates upon presentation
thereof and without such indemnity;
2
<PAGE>
(viii) Maintain records of account for and
advise the Fund and its Shareholders as
to the foregoing; and
(ix) Record the issuance of shares of the
Fund and maintain pursuant to SEC Rule
17Ad-10(e) a record of the total number
of shares of the Fund which are
authorized, based upon data provided to
it by the Fund, and issued and
outstanding. The Bank shall also
provide the Fund on a regular basis with
the total number of shares which are
authorized and issued and outstanding
and shall have no obligation, when
recording the issuance of shares, to
monitor the issuance of such Shares or
to take cognizance of any laws relating
to the issue or sale of such Shares,
which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention
of the services set forth in the above paragraph (a), the
Bank shall: (i) perform the customary services of a
transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing
proxies, receiving and tabulating proxies, mailing
Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate
forms required with respect to dividends and
distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms
and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and
providing Shareholder account information and (ii)
provide a system which will enable the Fund to monitor
the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as
exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State
3
<PAGE>
on the system prior to activation and thereafter monitor
the daily activity for each State. The responsibility of
the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment
of transactions subject to blue sky compliance by the
Fund and the reporting of such transactions to the Fund
as provided above.
(d) Procedures as to who shall provide certain of these
services in Section 1 may be established from time to
time by agreement between the Fund on behalf of each
Portfolio and the Bank per the attached service
responsibility schedule. The Bank may at times perform
only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of
the Fund (i.e., escheatment services) which may be agreed
upon in writing between the Fund and the Bank.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Fund, on behalf of each Portfolio agrees to pay the Bank an
annual maintenance fee for each Shareholder account as set out in
the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.2
below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund, on
behalf of the applicable Portfolio, agrees to reimburse the Bank
for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances
incurred by the Bank for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Portfolio.
2.3 The Fund, on behalf of the applicable Portfolio, agrees to pay
all fees and reimbursable expenses within five days following the
mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to the Bank by the Fund at
least seven (7) days prior to the mailing date of such materials.
3. Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
4
<PAGE>
3.1 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
4. Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
4.2 It is empowered under applicable laws and by its Trust Instrument
and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Trust Instrument and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.4 It is an open-end management investment company registered under
the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for
sale.
5. Data Access and Proprietary Information
5.1 The Fund acknowledges that the computer programs, screen formats,
report formats (except such screen formats and report formats as
may be necessary to respond to shareholder problems or
inquiries), interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's
ability to access certain Fund-related data ("Customer Data")
maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access
Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary
5
<PAGE>
Information") of substantial value to the Bank or other third
party. In no event shall Proprietary Information be deemed
Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it
shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its
employees and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in
accordance with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any
portion of the Proprietary Information, and if such
access is inadvertently obtained, to inform in a timely
manner of such fact and dispose of such information in
accordance with the Bank's instructions;
(d) to honor all reasonable written requests made by the Bank
to protect at the Bank's expense the rights of the Bank
in Proprietary Information at common law, under federal
copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section
shall survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most
recently issued user documentation for such services, the Bank
shall endeavor in a timely manner to correct such failure.
Organizations from which the Bank may obtain certain data
included in the Data Access Services are solely responsible for
the contents of such data and the Fund agrees to make no claim
against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS
IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i)
effect the transfer or movement of cash or Shares or (ii)
transmit Shareholder information or other information (such
transactions constituting a "COEFI"), then in such event the Bank
6
<PAGE>
shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long
as such instruction is undertaken in conformity with security
procedures established by the Bank from time to time.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors
required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without
negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any
representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or
services which (i) are received by the Bank or its agents
or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person
or firm on behalf of the Fund including but not limited
to any previous transfer agent or registrar.
(d) The reasonable reliance on, or the carrying out by the
Bank or its agents or subcontractors of any instructions
or requests of the Fund on behalf of the applicable
Portfolio.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in
violation of any stop order or other determination or
ruling by any federal agency or any state with respect to
the offer or sale of such Shares in such state.
6.2 The Bank shall indemnify and hold the Fund and each Portfolio
thereof harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability
arising out of or attributed to any action or failure or omission
to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
6.3 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to
7
<PAGE>
any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its
agents or subcontractors shall not be liable and shall be
indemnified by the Fund on behalf of the applicable Portfolio for
any action taken or omitted by it in reasonable reliance upon
such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of
the Fund, reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its
agents or subcontractors by machine readable input, telex, CRT
data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the
Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.4 In order that the indemnification provisions contained in this
Section 6 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the Fund of such
assertion, and shall keep the other party advised with respect to
all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with
the party seeking indemnification in the defense of such claim or
to defend against said claim in its own name or in the name of
the other party. The party seeking indemnification shall in no
case confess any claim or make any compromise in any case in
which the other party may be required to indemnify it except with
the other party's prior written consent.
7. Covenants of the Fund and the Bank
7.1 The Fund shall on behalf of each Portfolio promptly furnish to
the Bank the following:
(a) A certified copy of the resolution of the Trustees of the
Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.
(b) A copy of the Trust Instrument and By-Laws of the Fund
and all amendments thereto.
7.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature
8
<PAGE>
imprinting devices, if any; and for the preparation or use, and
for keeping account of, such certificates, forms and devices.
7.3 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem
advisable. To the extent required by Section 31 of the
Investment Company Act of 1940, as amended, and the Rules
thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed
by the Bank hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Fund
on and in accordance with its request.
7.4 The Bank and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying
out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be
required by law.
7.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify
the Fund and to secure instructions from an authorized officer of
the Fund as to such inspection. The Bank reserves the right,
however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such
person.
7.6 Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each Portfolio
of the Fund are separate and distinct from the assets and
liabilities of each other Portfolio and that no Portfolio shall
be liable or shall be charged for any debt, obligation or
liability of any other Portfolio, whether arising under this
Agreement or otherwise.
8. Termination of Agreement
8.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
8.2 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund on behalf of the
applicable Portfolio(s). Additionally, the Bank reserves the
right to charge for any other reasonable expenses associated with
such termination.
9. Additional Funds
9
<PAGE>
In the event that the Fund establishes one or more series of
Shares in addition to Neuberger & Berman Genesis Fund, Neuberger
& Berman Guardian Fund, Neuberger & Berman Partners Fund,
Neuberger & Berman Manhattan Fund, and Neuberger & Berman
Selected Sectors Fund, with respect to which it desires to have
the Bank render services as transfer agent under the terms
hereof, it shall so notify the Bank in writing, and if the Bank
agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.
10. Assignment
10.1 Except as provided in Section 10.3 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
10.2 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and
assigns.
10.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial
Data Services, Inc., a Massachusetts corporation ("BFDS") which
is duly registered as a transfer agent pursuant to Section
17A(c)(l) of the Securities Exchange Act of 1934, as amended
("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as
a transfer agent pursuant to Section 17A(c)(l) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
11. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a
resolution of the Trustees of the Fund.
12. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.
13. Force Majeure
In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its
control, such party shall not be liable for damages to the other
for any damages resulting from such failure to perform or
otherwise from such causes.
10
<PAGE>
14. Consequential Damages
Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this
Agreement.
15. Merger of Agreement
This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent
A copy of the Trust Instrument of the Fund is on file with the
Secretary of the State Of Delaware. The parties agree that
neither the Shareholders, Trustees, officers, employees nor any
agent of the Fund shall be liable hereunder and that the parties
to this Agreement other than the Fund shall look solely to the
Fund property for the performance of this Agreement or payment of
any claim under this Agreement.
17. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument.
18. Notices
All notices, requests, consents and other communications
hereunder (collectively "communications") shall be in writing and
shall be personally delivered or mailed, first class postage
prepaid,
(a) if to the Fund, to
Neuberger & Berman Equity Funds
605 Third Avenue
New York, N.Y. 10158
Attention: Michael J. Weiner
Vice President
(b) if to the Bank, to
Boston Financial Data Services, Inc.
Two Heritage Drive
North Quincy, MA 02171
Attn: Paul Alsama
11
<PAGE>
or such other address as either party shall have furnished to the
other in writing; provided that any communication may be sent by
"tested" telex or any other form of electronic transmission
capable of producing a permanent record and agreed upon by the
parties in writing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
NEUBERGER & BERMAN EQUITY FUNDS
BY: /s/ Michael Weiner
------------------------------
Michael Weiner
ATTEST:
/s/ Claudia A. Brandon
-----------------------
Claudia A. Brandon
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
/s/
----------------------
12
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES
Service Performed Responsibility
Bank Fund
1. Receives orders for X X
the purchase of (if in (if by
Shares. writing) phone)
2. Issue Shares and hold X
Shares in
Shareholders
accounts.
3. Receive redemption X X
requests. (if in (if by
writing) phone)
4. Effect transactions X
1-3 above directly (2 is always
with broker-dealers. BFDS)
5. Pay over monies to X
redeeming
Shareholders.
6. Effect transfers of X
Shares.
7. Prepare and transmit X
dividends and
distributions.
8. Issue Replacement X
Certificates.
9. Reporting of X
abandoned property.
10. Maintain records of X
account.
11. Maintain and keep a X
current and accurate
control book for each
issue of securities.
12. Mail proxies. X
13. Mail Shareholder X
reports.
13
<PAGE>
Service Performed Responsibility
Bank Fund
14. Mail prospectuses to X
current Shareholders.
15. Withhold taxes on X
U.S. resident and
non-resident alien
accounts.
16. Prepare and file U.S. X
Treasury Department
forms.
17. Prepare and mail X
account and
confirmation
statements for
Shareholders.
18. Provide Shareholder X
account information.
19. Blue Sky reporting. X
* Such services are more fully described in Section 1.2 (a), (b) and
(c) of the Agreement.
NEUBERGER & BERMAN EQUITY FUNDS
BY: /s/ Michael Weiner
---------------------------------
Michael Weiner
ATTEST:
/s/ Claudia A. Brandon
---------------------------
Claudia A. Brandon
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
---------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
/s/ [Officer]
------------------------
14
<PAGE>
VIA FEDERAL EXPRESS
-------------------
Sharon Baker Morin, Esq.
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171-2197
Dear Sharon:
Pursuant to section 9 of the transfer agency contract between
State Street Bank and Trust Company ("State Street") and Neuberger &
Berman Equity Funds dated as of August 2, 1993, we request that Neuberger
& Berman International Fund ("IF") be added as a Portfolio governed by
that transfer agency contract. The addition of IF is effective as of May
23, 1994. Please indicate State Street's acceptance of this request by
having a duly authorized officer of State Street sign in the space
indicated below.
Sincerely,
/s/ Michael J. Weiner
___________________________________
Name: Michael J. Weiner
Title: V.P.
Neuberger & Berman Equity Funds
Accepted by State Street
Bank and Trust Company
/s/ Ronald E. Logue
_______________________________
Name: Ronald E. Logue
Title: Executive Vice President
<PAGE>
FIRST AMENDMENT TO THE
TRANSFER AGENCY AND SERVICE AGREEMENT
This First Amendment dated as of March 1, 1995 between NEUBERGER
& BERMAN EQUITY FUNDS, a Delaware business trust, having its principal
office and place of business at 605 Third Avenue, 2nd Floor, New York, NY
10158-0006 (the "Fund") and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, having its principal office and place of
business at 225 Franklin Street, Boston, MA 02110 (the "Bank") is made to
the Transfer Agency and Service Agreement dated as of August 2, 1993
between the Fund and the Bank (the "Agreement").
WHEREAS, pursuant to Section 10.3 of the Agreement, the Bank has
subcontracted certain of its duties, such as the receipt of net orders for
Fund shares (the "Shares"), to Boston Financial Data Services, Inc.
("BFDS"); and
WHEREAS, BFDS provides its services through the DST System and
certain subsystems of DST, such as DFE (collectively, "DST"); and
WHEREAS, the Bank and the Fund desire to amend the terms and
conditions of the Agreement to provide for changes related to the use of
DST by the Fund and recordkeepers performing services for the Fund.
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the parties agree as follows:
Article 1. Duties of the Bank
The parties hereto agree that the Agreement is amended to add
Section 1.2(f) as follows:
Net orders may be transmitted to the Bank on DST or by
facsimile or telephone. The Bank is not authorized to
receive orders transmitted on DST from any party other
than (i) NBMI and (ii) those parties set forth on
Schedule A attached hereto, which shall be updated from
time to time by the Fund (the "Designated Parties").
The Bank shall receive written approval from the Fund
prior to authorizing any additional Designated Parties to
use DST to place orders for Fund Shares. A Designated
Party shall only be authorized to use DST to (i) transmit
net orders for the purchase and redemption of Shares and
(ii) review the account of that Designated Party's
historical transactions. NBMI and the Designated Parties
are authorized to place orders for trades received before
4:00 p.m. EST on a business day the New York Stock
Exchange is open for business ("Business Day"), up to
9:30 p.m. EST that Business Day. No transactions
occurring on a given Business Day are authorized to be
transmitted on DST on the next Business Day.
<PAGE>
Article 2. Miscellaneous
(a) All other terms and conditions of the Agreement remain in
full force and effect.
(b) Terms used herein but not defined herein shall have the
meanings set forth in the Agreement.
(c) This First Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same First Amendment.
Attest: NEUBERGER & BERMAN EQUITY FUNDS
/s/ Stacy Cooper-Shugrue /s/ Daniel J. Sullivan
Stacy Cooper-Shugrue By: Daniel J. Sullivan
------------------------- ----------------------------
Assistant Secretary Title: Vice President
Attest: STATE STREET BANK AND TRUST COMPANY
/s/ S. Cesso /s/ Ronald E. Logue
______________________ By: -------------------------------
S. Cesso Ronald E. Logue
Title: Executive Vice President
- 2 -
<PAGE>
SCHEDULE A
DESIGNATED PARTIES
HEWITT ASSOCIATES
CHARLES SCHWAB & CO.
- 3 -
<PAGE>
ADMINISTRATION AGREEMENT
This Agreement is made as of August 2, 1993, between
Neuberger & Berman Equity Funds, a Delaware business trust ("Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation
("Administrator"), and is amended as of May 1, 1995.
WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has established several separate series of shares
("Series"), with each Series having its own assets and investment
policies; and
WHEREAS, the Trust desires to retain the Administrator to furnish
administrative services and certain shareholder and shareholder-related
services not generally available from banks and other institutions that
act as servicing agents for investment companies ("institutional servicing
agents") to each Series listed in Schedule A attached hereto, and to such
other Series of the Trust hereinafter established as agreed to from time
to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by a Series shall be made or taken by the Trust on behalf of the
Series), and the Administrator is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Services of the Administrator.
1.1 Administrative Services. The Administrator shall
supervise each Series's business and affairs and shall provide such
services required for effective administration of such Series as are not
provided by employees or other agents engaged by such Series; provided,
that the Administrator shall not have any obligation to provide under this
Agreement any direct or indirect services to a Series's shareholders
except those described in this Agreement, any services related to the
distribution of a Series's shares, or any other services that are the
subject of a separate agreement or arrangement between a Series and the
Administrator. Subject to the foregoing, in providing administrative
services hereunder, the Administrator shall:
1.1.1 Office Space, Equipment and Facilities. Furnish
without cost to each Series, or pay the cost of, such office space, office
equipment and office facilities as are adequate for the Series's needs.
1.1.2 Personnel. Provide, without remuneration from
or other cost to each Series, the services of individuals competent to
perform all of the Series's executive, administrative and clerical
functions that are not performed by employees or other agents engaged by
the Series or by the Administrator acting in some other capacity pursuant
to a separate agreement or arrangement with the Series.
<PAGE>
1.1.3 Agents. Assist each Series in selecting and
coordinating the activities of the other agents engaged by the Series,
including the Series's shareholder servicing agent, custodian, independent
auditors and legal counsel.
1.1.4 Trustees and Officers. Authorize and permit
the Administrator's directors, officers or employees who may be elected or
appointed as trustees or officers of the Trust to serve in such
capacities, without remuneration from or other cost to the Trust or any
Series.
1.1.5 Books and Records. Assure that all financial,
accounting and other records required to be maintained and preserved by
each Series are maintained and preserved by it or on its behalf in
accordance with applicable laws and regulations.
1.1.6 Reports and Filings. Assist in the preparation
of (but not pay for) all periodic reports by each Series to shareholders
of such Series and all reports and filings required to maintain the
registration and qualification of the Series and the Series's shares, or
to meet other regulatory or tax requirements applicable to the Series,
under federal and state securities and tax laws.
1.2 Shareholder and Related Services. The Administrator shall
provide such of the following services as are required by any Series or
its shareholders:
1.2.1 Direct shareholder services, consisting of:
(a) Processing Series share purchase and redemption
requests transmitted or delivered to the office of the Administrator;
(b) Coordinating and implementing bank-to-bank wire
transfers in connection with Series share purchases and redemptions;
(c) Executing exchange orders involving concurrent
purchases and redemptions of shares of a Series and shares of other Series
or of other investment companies or series thereof;
(d) Responding to telephonic and in-person inquiries
from existing shareholders or their representatives requesting information
regarding matters such as shareholder account or transaction status, net
asset value ("NAV") of Series shares, and Series performance, Series
services, plans and options, Series investment policies, Series portfolio
holdings, and Series distributions and classification thereof for tax
purposes;
(e) Dealing with shareholder complaints and
correspondence directed to or brought to the attention of the
Administrator; and
- 2 -
<PAGE>
(f) Generating or developing and distributing special
data, notices, reports, programs and literature required by large
shareholders, by shareholders with specialized informational needs, or by
shareholders generally in light of developments, such as changes in tax
laws.
1.2.2 Assisting any institutional servicing agent engaged by
the Series in the development, implementation and maintenance of the
following special programs and systems to enhance overall Series
shareholder servicing capability, consisting of:
(a) Training programs for personnel of such
institutional servicing agent;
(b) Joint programs with such institutional servicing
agent for the development of systems software, shareholder information
reports, and other special reports;
(c) Automatic data exchange facilities with
shareholders and such institutional servicing agent;
(d) Automated clearinghouse transfer procedures
between shareholders and such institutional servicing agent; and
(e) Touch-tone telephone information and
transaction systems for shareholders.
1.2.3 Soliciting and gathering shareholder proxies.
1.2.4 Such other shareholder and shareholder-related
services, whether similar to or different from those described in
Subparagraphs 1.2.1, 1.2.2 and 1.2.3 of this Paragraph 1.2, as the parties
may from time to time agree in writing.
1.3 Blue Sky Services. The Administrator shall maintain under this
Agreement the registration or qualification of a Series and its shares
under state Blue Sky or securities laws and regulations, as necessary;
provided that such Series shall pay all related filing fees and
registration or qualification fees.
1.4 Other Services. The Administrator shall provide such
other services required by a Series as the parties may from time to time
agree in writing are appropriate to be provided under this Agreement.
2. Expenses of each Series.
2.1 Expenses to be Paid by the Administrator. The
Administrator shall pay all salaries, expenses and fees of the officers,
trustees, or employees of the Trust who are officers, directors or
employees of the Administrator. In the event that the Administrator pays
or assumes any expenses of the Trust or a Series not required to be paid
or assumed by the Administrator under this Agreement, the Administrator
- 3 -
<PAGE>
shall not be obligated hereby to pay or assume the same or any similar
expense in the future; provided, that nothing herein contained shall be
deemed to relieve the Administrator of any obligation to the Trust or to a
Series under any separate agreement or arrangement between the parties.
2.2 Expenses to be Paid by the Series. Each Series shall
bear all expenses of its operation, except those specifically allocated to
the Administrator under this Agreement or under any separate agreement
between such Series and the Administrator. Expenses to be borne by such
Series shall include both expenses directly attributable to the operation
of that Series and the offering of its shares, as well as the portion of
any expense of the Trust that is properly allocable to such Series in a
manner approved by the trustees of the Trust ("Trustees"). Subject to any
separate agreement or arrangement between the Trust or a Series and the
Administrator, the expenses hereby allocated to each Series, and not to
the Administrator, include, but are not limited to:
2.2.1 Custody. All charges of depositories,
custodians, and other agents for the transfer, receipt, safekeeping, and
servicing of its cash, securities, and other property.
2.2.2 Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts, including but not limited
to the charges of any shareholder servicing agent, dividend disbursing
agent or other agent engaged by a Series to service shareholder accounts;
except those expenses specifically allocated to the Administrator in
Subparagraph 1.2 hereof, and those which may in the future be specifically
allocated to the Administrator under subparagraph 1.4 hereof.
2.2.3 Shareholder Reports. All expenses of
preparing, setting in type, printing and distributing reports and other
communications to shareholders of a Series.
2.2.4 Prospectuses. All expenses of preparing,
setting in type, printing and mailing annual or more frequent revisions of
a Series's Prospectus and Statement of Additional Information ("SAI") and
any supplements thereto and of supplying them to shareholders of the
Series.
2.2.5 Pricing and Portfolio Valuation. All expenses
of computing a Series's net asset value ("NAV") per share, including any
equipment or services obtained for the purpose of pricing shares or
valuing the Series's investment portfolio.
2.2.6 Communications. All charges for equipment or
services used for communications between the Administrator or the Series
and any custodian, shareholder servicing agent, portfolio accounting
services agent, or other agent engaged by a Series.
- 4 -
<PAGE>
2.2.7 Legal and Accounting Fees. All charges for
services and expenses of a Series's legal counsel and independent
auditors.
2.2.8 Trustees' Fees and Expenses. All compensation
of Trustees other than those affiliated with the Administrator, all
expenses incurred in connection with such unaffiliated Trustees' services
as Trustees, and all other expenses of meetings of the Trustees or
committees thereof.
2.2.9 Shareholder Meetings. All expenses incidental
to holding meetings of shareholders, including the printing of notices and
proxy materials, and proxy solicitation therefor.
2.2.10 Federal Registration Fees. All fees and
expenses of registering and maintaining the registration of the Trust and
each Series under the 1940 Act and the registration of each Series's
shares under the Securities Act of 1933 (the "1933 Act"), including all
fees and expenses incurred in connection with the preparation, setting in
type, printing, and filing of any Registration Statement, Prospectus and
SAI under the 1933 Act or the 1940 Act, and any amendments or supplements
that may be made from time to time.
2.2.11 State Registration Fees. All fees and
expenses of qualifying and maintaining the qualification of the Trust and
each Series and of each Series's shares for sale under securities laws of
various states or jurisdictions, and of registration and qualification of
each Series under all other laws applicable to a Series or its business
activities (including registering the Series as a broker-dealer, or any
officer of the Series or any person as agent or salesman of the Series in
any state).
2.2.12 Share Certificates. All expenses of preparing
and transmitting a Series's share certificates, if any.
2.2.13 Confirmations. All expenses incurred in
connection with the issue and transfer of a Series's shares, including the
expenses of confirming all share transactions.
2.2.14 Bonding and Insurance. All expenses of bond,
liability, and other insurance coverage required by law or regulation or
deemed advisable by the Trustees, including, without limitation, such
bond, liability and other insurance expense that may from time to time be
allocated to the Series in a manner approved by the Trustees.
2.2.15 Brokerage Commissions. All brokers'
commissions and other charges incident to the purchase, sale or lending of
a Series's portfolio securities.
- 5 -
<PAGE>
2.2.16 Taxes. All taxes or governmental fees payable
by or with respect to a Series to federal, state or other governmental
agencies, domestic or foreign, including stamp or other transfer taxes.
2.2.17 Trade Association Fees. All fees, dues and
other expenses incurred in connection with a Series's membership in any
trade association or other investment organization.
2.2.18 Nonrecurring and Extraordinary Expenses. Such
nonrecurring and extraordinary expenses as may arise, including the costs
of actions, suits, or proceedings to which the Series is a party and the
expenses a Series may incur as a result of its legal obligation to provide
indemnification to the Trust's officers, Trustees and agents.
2.2.19 Organizational Expenses. All organizational
expenses of each Series paid or assessed by the Administrator, which such
Series shall reimburse to the Administrator at such time or times and
subject to such condition or conditions as shall be specified in the
Prospectus and SAI pursuant to which such Series makes the initial public
offering of its shares.
2.2.20 Investment Advisory Services. Any fees and
expenses for investment advisory services that may be incurred or
contracted for by a Series.
3. Administration Fee.
3.1 Fee. As compensation for all services rendered,
facilities provided and expenses paid or assumed by the Administrator to
or for each Series under this Agreement, such Series shall pay the
Administrator an annual fee as set out in Schedule B to this Agreement.
3.2 Computation and Payment of Fee. The administration fee
shall accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The daily fee
accruals for each Series shall be computed by multiplying the fraction of
one divided by the number of days in the calendar year by the applicable
annual administration fee rate (as set forth in Schedule B hereto), and
multiplying this product by the NAV of such Series, determined in the
manner set forth in such Series's then-current Prospectus, as of the close
of business on the last preceding business day on which such Series's NAV
was determined.
3.3 State Expense Limitation. If in any fiscal year a
Series's operating expenses plus such Series's pro rata portion of the
operating expenses of any portfolio of Equity Managers Trust in which such
Series invests all or substantially all of its assets ("Aggregate
Operating Expenses"), which includes any fees or expense reimbursements
payable to the Administrator pursuant to this Agreement and any
compensation payable to the Administrator pursuant to (i) the Management
Agreement between such portfolio and the Administrator, or (ii) any other
agreement or arrangement with respect to such Series, but excluding
- 6 -
<PAGE>
interest, taxes, brokerage commissions, litigation and indemnification
expenses, and other extraordinary expenses not incurred in the ordinary
course of such Series's business) exceed the lowest applicable percentage
expense limitation imposed under the securities law and regulations of any
state in which such Series's shares are qualified for sale (the "State
Expense Limitation"), then the administration fee payable to the
Administrator under this Agreement by such Series shall be reduced by the
amount of such excess; provided, that the Administrator shall have no
obligation hereunder to reimburse the Series for any such expenses which
exceed such administration fee.
Any reduction in the administration fee shall be made monthly,
by annualizing the Aggregate Operating Expenses of such Series for each
month as of the last day of such month. An adjustment shall be made on or
before the last day of the first month of the next succeeding fiscal year
if Aggregate Operating Expenses for such Series's fiscal year do not
exceed the State Expense Limitation or if for such fiscal year there is no
applicable State Expense Limitation.
4. Ownership of Records. All records required to be maintained and
preserved by each Series pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission ("SEC") under
Section 31(a) of the 1940 Act and maintained and preserved by the
Administrator on behalf of such Series, including any such records
maintained by the Administrator in connection with the performance of its
obligations hereunder, are the property of such Series and shall be
surrendered by the Administrator promptly on request by the Series;
provided, that the Administrator may at its own expense make and retain
copies of any such records.
5. Reports to Administrator. Each Series shall furnish or otherwise
make available to the Administrator such copies of that Series's
Prospectus, SAI, financial statements, proxy statements, reports, and
other information relating to its business and affairs as the
Administrator may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
6. Reports to each Series. The Administrator shall prepare and
furnish to each Series such reports, statistical data and other
information in such form and at such intervals as such Series may
reasonably request.
7. Administrator's Ownership of Software and Related Materials. All
computer programs, written procedures and similar items developed or
acquired and used by the Administrator in performing its obligations under
this Agreement shall be the property of the Administrator, and no Series
will acquire any ownership interest therein or property rights with
respect thereto.
8. Confidentiality. The Administrator agrees, on its own behalf and
on behalf of its employees, agents and contractors, to keep confidential
- 7 -
<PAGE>
any and all records maintained and other information obtained hereunder
which relates to any Series or to any of a Series's former, current or
prospective shareholders, except that the Administrator may deliver
records or divulge information (a) when requested to do so by duly
constituted authorities after prior notification to and approval in
writing by such Series (which approval will not be unreasonably withheld
and may not be withheld by such Series where the Administrator advises
such Series that the Administrator may be exposed to civil or criminal
contempt proceedings or other penalties for failure to comply with such
request) or (b) whenever requested in writing to do so by such Series.
9. Services to Other Clients. Nothing herein shall limit the freedom
of the Administrator or any affiliated person of the Administrator to
render services of the types contemplated hereby to other persons, firms
or corporations, including but not limited to other investment companies,
or to engage in other business activities.
10. Limitation of Liability Regarding the Trust. The Administrator
shall look only to the assets of each Series for performance of this
Agreement by the Trust on behalf of such Series, and neither the Trustees
nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor, nor shall any
other Series by liable therefor.
11. Administrator's Actions in Reliance on Series's Instructions,
Legal Opinions, etc.; Series's Compliance with Laws.
11.1 The Administrator may at any time apply to an officer of
the Trust for instructions, and may consult with legal counsel for a
Series or with the Administrator's own legal counsel, in respect of any
matter arising in connection with this Agreement; and the Administrator
shall not be liable for any action taken or omitted to be taken in good
faith and with due care in accordance with such instructions or with the
advice or opinion of such legal counsel. The Administrator shall be
protected in acting upon any such instructions, advice or opinion and upon
any other paper or document delivered by a Series or such legal counsel
which the Administrator believes to be genuine and to have been signed by
the proper person or persons.
11.2 Except as otherwise provided in this Agreement or in any
separate agreement between the parties and except for the accuracy of
information furnished to each Series by the Administrator, each Series
assumes full responsibility for the preparation, contents, filing and
distribution of its Prospectus and SAI, and full responsibility for other
documents or actions required for compliance with all applicable
requirements of the 1940 Act, the Securities Exchange Act of 1934, the
1933 Act, and any other applicable laws, rules and regulations of
governmental authorities having jurisdiction over such Series.
12. Liability of Administrator. The Administrator shall not be
liable to any Series for any action taken or omitted to be taken by the
- 8 -
<PAGE>
Administrator or its employees, agents or contractors in carrying out the
provisions of this Agreement if such action was taken or omitted in good
faith and without negligence or misconduct on the part of the
Administrator, or its employees, agents or contractors.
13. Indemnification by Series. Each Series shall indemnify the
Administrator and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by the Administrator that result from: (i) any claim, action,
suit or proceeding in connection with the Administrator's entry into or
performance of this Agreement with respect to such Series; or (ii) any
action taken or omission to act committed by the Administrator in the
performance of its obligations hereunder with respect to such Series; or
(iii) any action of the Administrator upon instructions believed in good
faith by it to have been executed by a duly authorized officer or
representative of the Trust with respect to such Series; provided, that
the Administrator shall not be entitled to such indemnification in respect
of actions or omissions constituting negligence or misconduct on the part
of the Administrator or its employees, agents or contractors. Before
confessing any claim against it which may be subject to indemnification by
a Series hereunder, the Administrator shall give such Series reasonable
opportunity to defend against such claim in its own name or in the name of
the Administrator.
14. Indemnification by the Administrator. The Administrator shall
indemnify each Series and hold it harmless from and against any and all
losses, damages and expenses, including reasonable attorneys' fees and
expenses, incurred by such Series which result from: (i) the
Administrator's failure to comply with the terms of this Agreement with
respect to such Series; or (ii) the Administrator's lack of good faith in
performing its obligations hereunder with respect to such Series; or (iii)
the negligence or misconduct of the Administrator or its employees, agents
or contractors in connection herewith with respect to such Series. A
Series shall not be entitled to such indemnification in respect of actions
or omissions constituting negligence or misconduct on the part of that
Series or its employees, agents or contractors other than the
Administrator unless such negligence or misconduct results from or is
accompanied by negligence or misconduct on the part of the Administrator,
any affiliated person of the Administrator, or any affiliated person of an
affiliated person of the Administrator. Before confessing any claim
against it which may be subject to indemnification hereunder, a Series
shall give the Administrator reasonable opportunity to defend against such
claim in its own name or in the name of the Trust on behalf of such
Series.
15. Effect of Agreement. Nothing herein contained shall be deemed to
require the Trust or any Series to take any action contrary to the Trust
Instrument or Bylaws of the Trust or any applicable law, regulation or
order to which it is subject or by which it is bound, or to relieve or
deprive the Trustees of their responsibility for and control of the
conduct of the business and affairs of the Series or the Trust.
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<PAGE>
16. Term of Agreement. The term of this Agreement shall begin on the
date first above written with respect to each Series listed in Schedule A
on the date hereof and, unless sooner terminated as hereinafter provided,
this Agreement shall remain in effect through August 2, 1995. With
respect to each Series added by execution of an Addendum to Schedule A,
the term of this Agreement shall begin on the date of such execution and,
unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect to the date two years after such execution. Thereafter,
in each case this Agreement shall continue in effect with respect to each
Series from year to year, subject to the termination provisions and all
other terms and conditions hereof; provided, such continuance with respect
to a Series is approved at least annually by vote or written consent of
the Trustees, including a majority of the Trustees who are not interested
persons of either party hereto ("Disinterested Trustees"); and provided
further, that the Administrator shall not have notified a Series in
writing at least sixty days prior to the first expiration date hereof or
at least sixty days prior to any expiration date in any year thereafter
that it does not desire such continuation. The Administrator shall
furnish any Series, promptly upon its request, such information (including
the Administrator's costs of delivering the services provided to such
Series hereunder) as may reasonably be necessary to evaluate the terms of
this Agreement or any extension, renewal or amendment thereof. The
Administrator shall permit the Trust and/or the Series and their
accountants, counsel or other representatives to review its books and
records relating to the services provided hereunder at reasonable
intervals during normal business hours upon reasonable notice requesting
such review.
17. Amendment or Assignment of Agreement. Any amendment to this
Agreement shall be in writing signed by the parties hereto. The
Administrator may not assign this Agreement or any interest hereunder
voluntarily, by operation of law, or otherwise, without the prior written
consent of any Series affected thereby. Any amendment hereof or
assignment or transfer of any interest hereunder by the Administrator
shall not be effective with respect to a Series unless and until
authorized (i) by resolution of the Trustees, including the vote or
written consent of a majority of the Disinterested Trustees or (ii) by
vote of a majority of the outstanding voting securities of such Series.
18. Termination of Agreement. This Agreement may be terminated at
any time by either party hereto, without the payment of any penalty, upon
sixty days' prior written notice to the other party; provided, that in the
case of termination by any Series, such action shall have been authorized
(i) by resolution of the Trustees, including the vote or written consent
of the Disinterested Trustees, or (ii) by vote of a majority of the
outstanding voting securities of such Series. This agreement shall
automatically and immediately terminate as to any Series in the event of
its assignment by the Administrator, or the Administrator's assignment or
transfer of any interest hereunder, without prior written consent of the
affected Series as provided in Paragraph 17 hereof; provided that with the
consent of a Series, the Administrator may subcontract to another person
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<PAGE>
any of its responsibilities under this Agreement with respect to any such
Series.
19. Name of a Series. Each Series hereby agrees that if the
Administrator shall at any time for any reason cease to serve as
administrator to a Series, such Series shall, if and when requested by the
Administrator, eliminate from such Series's name the name "Neuberger &
Berman" and thereafter refrain from using the name "Neuberger & Berman" or
the initials "N&B" in connection with its business or activities, and the
foregoing agreement of each Series shall survive any termination of this
Agreement and any extension or renewal thereof.
20. Interpretation and Definition of Terms. Any question of
interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940
Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretation thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC validly issued pursuant to the 1940 Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested person," "assignment" and "affiliated person" as
used in this Agreement shall have the meanings assigned to them by Section
2(a) of the 1940 Act. In addition, when the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is modified,
interpreted or relaxed by a rule, regulation or order of the SEC, whether
of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. The Trust and
the Administrator may from time to time agree on such provisions
interpreting or clarifying the provisions of this Agreement as, in their
joint opinion, are consistent with the general tenor of this Agreement and
with the specific provisions of this Paragraph 20. Any such
interpretations or clarifications shall be in writing signed by the
parties and annexed hereto, but no such interpretation or clarification
shall be effective if in contravention of any applicable federal or state
law or regulations, and no such interpretation or clarification shall be
deemed to be an amendment to this Agreement.
21. Choice of Law. This Agreement is made and to be principally
performed in the State of New York, and except insofar as the 1940 Act or
other federal laws and regulations may be controlling, this Agreement
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of New York.
22. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
23. Execution in Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized and their respective seals to be hereunto affixed, as of the
day and year first above written.
NEUBERGER & BERMAN EQUITY FUNDS
Attest: By __________________________________
________________________ __________________________________
Secretary Title
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
Attest: By __________________________________
_________________________ __________________________________
Secretary Title
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<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
ADMINISTRATION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Funds currently subject
to this Agreement are as follows:
INITIAL SERIES
Neuberger & Berman Genesis Fund
Neuberger & Berman Guardian Fund
Neuberger & Berman Manhattan Fund
Neuberger & Berman Partners Fund
Neuberger & Berman Focus Fund
Neuberger & Berman Socially Responsive Fund
ADDITIONAL SERIES
Neuberger & Berman International Fund
Dated: November 1, 1995
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
ADMINISTRATION AGREEMENT
SCHEDULE B
Compensation pursuant to Paragraph 3 of the Neuberger & Berman
Equity Funds Administration Agreement shall be .26% per annum of the
average daily net assets of each Series.
Dated: November 1, 1995
