As filed with the Securities and Exchange Commission on December 5, 1996
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. _76_ [_X_]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_X_]
Amendment No._31_ [_X_]
(Check appropriate box or boxes)
NEUBERGER & BERMAN EQUITY FUNDS
-------------------------------
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
(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 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W., 2nd Floor
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) _X_ on December 6,
1996 pursuant to paragraph (b) ___ 60 days after filing pursuant to
paragraph (a)(1) ___ on ________________ pursuant to paragraph (a)(1) ___
75 days after filing pursuant to paragraph (a)(2) ___ on __________
pursuant to paragraph (a)(2)
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 1996 fiscal year on October 25, 1996.
Neuberger & Berman Equity Funds is a "master/feeder fund." This
Post-Effective Amendment No. 76 includes signature pages for the master
funds, Equity Managers Trust and 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. 76 ON FORM N-1A
This post-effective amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 76 on Form N-1A
Cross Reference Sheet
Neuberger & Berman Focus Fund Neuberger & Berman Genesis Fund Neuberger &
Berman Guardian Fund Neuberger & Berman International Fund Neuberger &
Berman Manhattan Fund Neuberger & Berman Partners Fund
Neuberger & Berman Socially Responsive Fund
-------------------------------------------
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 76 ON FORM N-1A
Cross Reference Sheet
This cross reference sheet relates to the Prospectus
and Statement of Additional Information for
Neuberger & Berman Focus Fund,
Neuberger & Berman Genesis Fund,
Neuberger & Berman Guardian Fund,
Neuberger & Berman International Fund
Neuberger & Berman Manhattan Fund,
Neuberger & Berman Partners Fund, and
Neuberger & Berman Socially Responsive 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 Programs; Description of Investments;
Special Information Regarding Organization,
Capitalization, and Other Matters
Item 5. Management of the Fund Management and Administration; Other Information; 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
<PAGE>
Caption in Part B
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Organization
Item 13. Investment Objectives and Policies Investment Information; Certain Risk Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Principal Control Persons and Principal Holders of Securities
Holders of Securities
Item 16. Investment Advisory and Other Investment Management and Administration Services;
Services Trustees and Officers; Distribution Arrangements;
Reports to Shareholders; Custodian and Transfer Agent;
Independent Auditors/Accountants
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Securities Investment Information; Additional Redemption
Information; Dividends and Other Distributions
Item 19. Purchase and Redemption Additional Purchase Information; Additional Exchange
Information; Additional Redemption Information;
Distribution Arrangements
Item 20. Tax Status Dividends and Other Distributions; Additional Tax
Information
Item 21. Underwriters Investment Management and Administration Services;
Distribution Arrangements
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
</TABLE>
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. 76.
<PAGE>
PROSPECTUS
December 6, 1996
Neuberger&Berman
EQUITY FUNDS
Neuberger&Berman
FOCUS FUND
Neuberger&Berman
GENESIS FUND
Neuberger&Berman
GUARDIAN FUND
Neuberger&Berman
INTERNATIONAL FUND
Neuberger&Berman
MANHATTAN FUND
Neuberger&Berman
PARTNERS FUND
Neuberger&Berman
SOCIALLY RESPONSIVE FUND
No Sales Charges
No Redemption Fees
No 12b - 1 Fees
<PAGE>
<PAGE>
Neuberger&Berman
EQUITY FUNDS
No-Load Equity Funds
<TABLE>
<S> <C>
Neuberger&Berman FOCUS FUND(R) Neuberger&Berman MANHATTAN FUND(SM)
Neuberger&Berman GENESIS FUND(R) Neuberger&Berman PARTNERS FUND(SM)
Neuberger&Berman GUARDIAN FUND(SM) Neuberger&Berman SOCIALLY RESPONSIVE FUND(R)
Neuberger&Berman INTERNATIONAL FUND(R)
</TABLE>
Initial Purchase--$1,000 Minimum
Automatic Investing--$100 Minimum Per Month
Gift Programs and IRAs--$250 Minimum
Call 800-877-9700
EACH OF THE ABOVE-NAMED FUNDS (A "FUND") INVESTS ALL OF ITS NET INVESTABLE
ASSETS IN ITS CORRESPONDING PORTFOLIO OF EQUITY MANAGERS TRUST OR, IN THE
CASE OF NEUBERGER&BERMAN INTERNATIONAL FUND, IN THE CORRESPONDING PORTFOLIO
OF GLOBAL MANAGERS TRUST (EACH A "PORTFOLIO"). EQUITY MANAGERS TRUST AND
GLOBAL MANAGERS TRUST ("MANAGERS TRUSTS") ARE OPEN-END MANAGEMENT INVESTMENT
COMPANIES MANAGED BY NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B
MANAGEMENT"). EACH PORTFOLIO INVESTS IN SECURITIES IN ACCORDANCE WITH AN
INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS IDENTICAL TO THOSE OF ITS
CORRESPONDING FUND. THE INVESTMENT PERFORMANCE OF EACH FUND DIRECTLY
CORRESPONDS WITH THE INVESTMENT PERFORMANCE OF ITS CORRESPONDING PORTFOLIO.
THIS "MASTER/FEEDER FUND" STRUCTURE IS DIFFERENT FROM THAT OF MANY OTHER
INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS
OF SECURITIES. FOR MORE INFORMATION ON THIS UNIQUE STRUCTURE THAT YOU SHOULD
CONSIDER, SEE "SUMMARY" ON PAGE 3, AND "SPECIAL INFORMATION REGARDING
ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS" ON PAGE 31.
Please read this Prospectus before investing in any of the Funds and keep
it for future reference. It contains information about the Funds that a
prospective investor should know before investing. A Statement of Additional
Information ("SAI") about the Funds and Portfolios, dated December 6, 1996,
is on file with the Securities and Exchange Commission ("SEC"). 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
at 800-877-9700.
THE SEC MAINTAINS A WEBSITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE SAI,
MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE FUNDS
AND PORTFOLIOS.
PROSPECTUS DATED DECEMBER 6, 1996
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
SUMMARY 3
The Funds and Portfolios;
Risk Factors 3
Management 5
The Neuberger&Berman
Investment Approach 5
EXPENSE INFORMATION 7
Shareholder Transaction Expenses
for Each Fund 7
Annual Fund Operating Expenses 7
Example 9
FINANCIAL HIGHLIGHTS 10
Focus Fund 11
Genesis Fund 12
Guardian Fund 13
International Fund 14
Manhattan Fund 15
Partners Fund 16
Socially Responsive Fund 17
INVESTMENT PROGRAMS 21
Focus Portfolio 21
Genesis Portfolio 22
Guardian Portfolio 23
International Portfolio 23
Manhattan Portfolio 24
Partners Portfolio 25
Socially Responsive Portfolio 25
Short-Term Trading;
Portfolio Turnover 27
Borrowings 27
Other Investments 28
PERFORMANCE INFORMATION 29
Total Return Information 29
SPECIAL INFORMATION
REGARDING ORGANIZATION,
CAPITALIZATION,
AND OTHER MATTERS 31
The Funds 31
The Portfolios 31
HOW TO BUY SHARES 34
By Mail 34
By Wire 34
By Telephone 35
By Exchanging Shares 35
Other Information 35
HOW TO SELL SHARES 37
By Mail or Facsimile Transmission
(Fax) 37
By Telephone 38
Other Information 38
ADDITIONAL INFORMATION ON TELEPHONE
TRANSACTIONS 40
SHAREHOLDER SERVICES 41
Automatic Investing and Dollar
Cost Averaging 41
Exchange Privilege 41
Systematic Withdrawal Plans 42
Retirement Plans 42
Electronic Bank Transfers 43
Internet Access 43
SHARE PRICES AND
NET ASSET VALUE 44
DIVIDENDS, OTHER
DISTRIBUTIONS, AND TAXES 45
Distribution Options 45
Taxes 45
MANAGEMENT AND ADMINISTRATION 47
Trustees and Officers 47
Investment Manager, Administrator,
Distributor, and Sub-Adviser 47
Expenses 49
Transfer and Shareholder Servicing
Arrangements 51
DESCRIPTION OF INVESTMENTS 52
USE OF JOINT PROSPECTUS AND
STATEMENT OF ADDITIONAL
INFORMATION 59
OTHER INFORMATION 60
Directory 60
Funds Eligible for Exchange 60
<PAGE>
SUMMARY
The Funds and Portfolios; Risk Factors
- --------------------------------------------------------------------------------
Each Fund is a series of Neuberger&Berman Equity Funds (the "Trust") and
invests in its corresponding Portfolio which, in turn, invests in securities
in accordance with an investment objective, policies, and limitations that
are identical to those of the Fund. This is sometimes called a master/feeder
fund structure, because each Fund "feeds" shareholders' investments into its
corresponding Portfolio, a "master" fund. The structure looks like this:
SHAREHOLDERS
[arrow] BUY SHARES IN
FUNDS
[arrow] INVEST IN
PORTFOLIOS
[arrow] INVEST IN
STOCKS & OTHER SECURITIES
The trustees who oversee the Funds believe that this structure may benefit
shareholders; investment in a Portfolio by investors in addition to a Fund
may enable the Portfolio to achieve economies of scale that could reduce
expenses. For more information about the organization of the Funds and the
Portfolios, including certain features of the master/feeder fund structure,
see "Special Information Regarding Organization, Capitalization, and Other
Matters" on page 31. An investment in any Fund involves certain risks,
depending upon the types of investments made by its corresponding Portfolio.
For more details about each Portfolio, its investments and their risks, see
"Investment Programs" on page 21 and "Description of Investments" on page 52.
3
<PAGE>
The following table is a summary highlighting features of the Funds and
their corresponding Portfolios. You may want to invest in a variety of Funds
to fit your particular investment needs. Of course, there can be no assurance
that a Fund will meet its investment objective.
<TABLE>
<CAPTION>
Neuberger&Berman
Equity Funds Investment Style Portfolio Characteristics
- --------------------- ----------------------------- ------------------------------------------------------
<S> <C> <C>
GUARDIAN FUND Broadly diversified, A growth and income fund that invests primarily in
large-cap value fund. stocks of established, high- quality companies that
are not well followed on Wall Street or are
temporarily out of favor.
FOCUS FUND Large-cap value fund, more Invests principally in common stocks selected from 13
concentrated portfolio than multi-industry sectors of the economy. To maximize
Guardian. potential return, the Portfolio normally makes at
least 90% of its investments in not more than six
sectors of the economy believed by the portfolio
managers to be undervalued.
GENESIS FUND Broadly diversified, Invests primarily in stocks of companies with small
small-cap value fund. market capitalizations (usually up to $1.5 billion).
Portfolio manager seeks to buy the stocks of strong
companies with a history of solid performance and a
proven management team, which are selling at
attractive prices.
INTERNATIONAL FUND Broadly diversified, medium- Seeks long-term capital appreciation by investing
to large-cap international primarily in foreign stocks, both in developed
equity fund. Capitalization economies and in emerging markets. Portfolio manager
is determined in relation to seeks undervalued companies in countries with strong
the principal market in which potential for growth.
securities are traded.
MANHATTAN FUND Broadly diversified, small-, Invests in securities believed to have the maximum
medium- and large-cap growth potential for long-term capital appreciation.
fund. Portfolio manager follows a "growth at a reasonable
price" philosophy and searches for financially sound,
growing companies with a special competitive advantage
or a product that makes their stocks attractive.
PARTNERS FUND Broadly diversified, medium- Seeks capital growth through an approach that is
to large-cap value fund. intended to increase capital with reasonable risk.
Portfolio managers look at fundamentals, focusing
particularly on cash flow, return on capital, and
asset values.
SOCIALLY Broadly diversified, Seeks long-term capital appreciation by investing in
RESPONSIVE FUND large-cap value fund. common stocks of companies that meet both financial
and social criteria.
</TABLE>
4
<PAGE>
Management
- --------------------------------------------------------------------------------
N&B Management, with the assistance of Neuberger&Berman, LLC ("Neuberger&
Berman") as sub-adviser, selects investments for the Portfolios. N&B
Management also provides administrative services to the Portfolios and the
Funds and acts as distributor of Fund shares. See "Management and
Administration" on page 47. If you want to know how to buy and sell shares of
the Funds or exchange them for shares of other Neuberger&Berman Funds(R), see
"How to Buy Shares" on page 34, "How to Sell Shares" on page 37, and
"Shareholder Services -- Exchange Privilege" on page 41.
The Neuberger&Berman Investment Approach
- --------------------------------------------------------------------------------
While each Portfolio has its own investment objective, policies, and
limitations, each Portfolio is managed using one of two basic investment
approaches -- value or growth.
A value-oriented portfolio manager buys stocks that are selling for less
than their perceived market values. These include stocks that are currently
under-researched or are temporarily out of favor on Wall Street.
Portfolio managers identify value stocks in several ways. One of the most
common identifiers is a low price-to-earnings ratio -- that is, stocks
selling at multiples of earnings per share that are lower than that of the
market as a whole. Other criteria are high dividend yield, a strong balance
sheet and financial position, a recent company restructuring with the
potential to realize hidden values, strong management, and low price- to-book
value (net value of the company's assets).
While a value approach concentrates on securities that are undervalued in
relation to their fundamental economic values, a growth approach seeks stocks
of companies that are projected to grow at above-average rates and may appear
poised for a period of accelerated earnings.
The growth portfolio manager is willing to pay a higher share price in the
hope that the stock's earnings momentum will carry its price higher. As a
stock's price increases based on strong earnings, the stock's original price
appears low in relation to the growth rate of its earnings. Sometimes this
happens when a particular company or industry is temporarily out of favor
with the market or under-researched. This strategy is called "growth at a
reasonable price."
Neuberger&Berman believes that, over time, securities that are undervalued
are more likely to appreciate in price and be subject to less risk of price
decline than securities whose market prices have already reached their
perceived economic values. This approach also contemplates selling portfolio
securities when they are considered to have reached their potential.
In general, Neuberger&Berman FOCUS, Neuberger&Berman GENESIS,
Neuberger&Berman GUARDIAN, Neuberger&Berman PARTNERS and Neuberger& Berman
SOCIALLY RESPONSIVE Portfolios adhere to a value-oriented investment
approach. Neuberger&Berman Manhattan Portfolio places a greater emphasis on
5
<PAGE>
finding securities whose measures of fundamental value are low in relation to
the growth rates of their future earnings and cash flows, as projected by the
portfolio manager. Neuberger&Berman MANHATTAN Portfolio is therefore willing
to invest in securities with prices that have somewhat higher multiples of
earnings than securities purchased by the other Portfolios.
Neuberger&Berman INTERNATIONAL Portfolio uses an investment process that
includes a combination of country selection and individual security selection
primarily based on a value-oriented investment approach.
6
<PAGE>
EXPENSE INFORMATION
This section gives you certain information about the expenses of each Fund
and its corresponding Portfolio. See "Performance Information" for important
facts about the investment performance of each Fund, after taking expenses
into account.
Shareholder Transaction Expenses for Each Fund
- --------------------------------------------------------------------------------
As shown by this table, the Funds impose no transaction charges when you
buy or sell Fund shares.
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
If you want to redeem shares by wire transfer, the Funds' transfer agent
charges a fee (currently $8.00) for each wire redemption. Shareholders who
have one or more accounts in the Neuberger&Berman Funds aggregating $200,000
or more in value are not charged for wire redemptions; the $8.00 fee is borne
by N&B Management.
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
- --------------------------------------------------------------------------------
The following table shows annual Total Operating Expenses for each Fund,
which are paid out of the assets of the Fund and which include the Fund's pro
rata portion of the Operating Expenses of its corresponding Portfolio. Each
Fund pays N&B Management an administration fee based on the Fund's average
daily net assets. Each Portfolio pays N&B Management a management fee based
on the Portfolio's average daily net assets; a pro rata portion of this fee
is borne indirectly by the corresponding Fund. Therefore, the table combines
management and administration fees. The Funds and Portfolios also incur other
expenses for things such as accounting and legal fees, maintaining
shareholder records, and furnishing shareholder statements and Fund reports.
"Operating Expenses" exclude interest, taxes, brokerage commissions, and
extraordinary expenses. The Funds' expenses are factored into their share
prices and dividends and are not charged directly to Fund shareholders. For
more information, see "Management and Administration" and the SAI.
7
<PAGE>
NEUBERGER&BERMAN MANAGEMENT AND 12B-1 OTHER TOTAL OPERATING
EQUITY FUNDS ADMINISTRATION FEES FEES EXPENSES EXPENSES
- -------------------------- ------------------- ------ --------- -------------
FOCUS FUND 0.77% None 0.12% 0.89%
GENESIS FUND 1.01%+ None 0.27% 1.28%+
GUARDIAN FUND 0.70% None 0.12% 0.82%
INTERNATIONAL FUND* 0.46% None 1.24% 1.70%
MANHATTAN FUND 0.79% None 0.19% 0.98%
PARTNERS FUND 0.74% None 0.10% 0.84%
SOCIALLY RESPONSIVE FUND* 0.61% None 0.89% 1.50%
+(Reflects N&B Management's waiver of certain management fees, described
below)
*(Reflects N&B Management's expense reimbursement undertaking, described
below)
Total Operating Expenses for each Fund (except Neuberger&Berman
INTERNATIONAL Fund) are based upon administration fees incurred by the Fund
and management fees incurred by its corresponding Portfolio during the past
fiscal year and any expense reimbursement undertaking or fee waiver. Total
Operating Expenses for Neuberger&Berman INTERNATIONAL Fund have been restated
based on current administration fees for the Fund and management fees for its
corresponding Portfolio and the current expense reimbursement undertaking.
"Other Expenses" are based on each Fund's and Portfolio's expenses for the
past fiscal year. The trustees of the Trust believe that the aggregate per
share expenses of each Fund and its corresponding Portfolio will be
approximately equal to the expenses the Fund would incur if its assets were
invested directly in the type of securities held by its corresponding
Portfolio. The trustees of the Trust also believe that investment in a
Portfolio by investors in addition to a Fund may enable the Portfolio to
achieve economies of scale which could reduce expenses. The expenses and,
accordingly, the returns of other funds that may invest in the Portfolios may
differ from those of the Funds.
The previous table reflects N&B Management's voluntary undertaking until
December 31, 1997, to reimburse Neuberger&Berman SOCIALLY RESPONSIVE Fund for
its Operating Expenses and its pro rata share of Neuberger&Berman SOCIALLY
RESPONSIVE Portfolio's Operating Expenses which, in the aggregate, exceed
1.50% per annum of that Fund's average daily net assets. Absent the
reimbursement, Management and Administration Fees, Other Expenses, and Total
Operating Expenses would be 0.80%, 0.89%, and 1.69%, respectively, per annum
of the average daily net assets of Neuberger&Berman SOCIALLY RESPONSIVE Fund.
The previous table also reflects N&B Management's voluntary waiver of a
portion of the management fee borne directly by Neuberger&Berman GENESIS
Portfolio and indirectly by Neuberger&Berman GENESIS Fund to reduce the fee
by 0.10% per annum of the average daily net assets of Neuberger&Berman
GENESIS Portfolio. Absent the waiver, Management and Administration Fees
would be 1.11%, and Total Operating Expenses would be 1.38%, per annum of the
average daily net assets of Neuberger&Berman
8
<PAGE>
GENESIS Fund. The previous table also reflects N&B Management's voluntary
undertaking until December 31, 1997 to reimburse Neuberger&Berman
INTERNATIONAL Fund for its Operating Expenses and its pro rata share of the
Operating Expenses of Neuberger&Berman INTERNATIONAL Portfolio that, in the
aggregate, exceed 1.70% per annum of that Fund's average daily net assets.
Absent the reimbursement, Management and Administration Fees, Other Expenses,
and Total Operating Expenses would be 1.11%, 1.24%, and 2.35%, respectively,
per annum of the average daily net assets of Neuberger&Berman INTERNATIONAL
Fund.
For more information about the current expense reimbursement undertakings
and fee waiver, see "Expenses" on page 49.
Example
- --------------------------------------------------------------------------------
To illustrate the effect of Operating Expenses, let's assume that each
Fund's annual return is 5% and that it had Total Operating Expenses described
in the table above. For every $1,000 you invested in each Fund, you would
have paid the following amounts of total expenses if you closed your account
at the end of each of the following time periods:
NEUBERGER&BERMAN
EQUITY FUNDS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------- ------- -------- -------- ----------
FOCUS FUND $ 9 $28 $49 $110
GENESIS FUND $13 $41 $70 $155
GUARDIAN FUND $ 8 $26 $46 $101
INTERNATIONAL FUND $17 $54 $92 $201
MANHATTAN FUND $10 $31 $54 $120
PARTNERS FUND $ 9 $27 $47 $104
SOCIALLY RESPONSIVE FUND $15 $47 $82 $179
The assumption in this example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. THE INFORMATION IN THE
PREVIOUS TABLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE GREATER OR
LESS THAN THOSE SHOWN, AND MAY CHANGE IF EXPENSE REIMBURSEMENTS CHANGE.
9
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
- --------------------------------------------------------------------------------
The financial information in the following tables is for each Fund as of
August 31, 1996 and includes data related to each Fund (except
Neuberger&Berman INTERNATIONAL Fund and Neuberger&Berman SOCIALLY RESPONSIVE
Fund) before it was converted into a series of the Trust on August 2, 1993.
Neuberger&Berman SOCIALLY RESPONSIVE Fund commenced operations on March 16,
1994. Neuberger&Berman INTERNATIONAL Fund commenced operations on June 15,
1994. This information has been audited by the Funds' respective independent
auditors/accountants. You may obtain, at no cost, further information about
the performance of the Funds in their annual report to shareholders. The
auditors'/accountants' reports are incorporated in the SAI by reference to
the annual report. Please call 800-877-9700 for a free copy of the annual
report and for up-to-date information. Also, see "Performance Information."
10
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Focus Fund(1)
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. It should be read in conjunction with its corresponding
Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
October 1, 1992 Year Ended
Year Ended August 31, to August 31, September 30,
1996(2) 1995(2) 1994(2) 1993(2) 1992
-------------------------------------------- ----------- --------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 28.88 $ 24.42 $ 24.00 $ 19.31 $ 18.91
----------- --------- --------- --------------- ---------------
Income From Investment Operations
Net Investment Income .19 .17 .21 .23 .29
Net Gains or Losses on Securities
(both realized and unrealized) .85 5.97 2.16 4.65 2.62
----------- --------- --------- --------------- ---------------
Total From Investment Operations 1.04 6.14 2.37 4.88 2.91
----------- --------- --------- --------------- ---------------
Less Distributions
Dividends (from net investment income) (.11) (.20) (.25) (.04) (.31)
Distributions (from capital gains) (1.35) (1.48) (1.70) (.15) (2.20)
----------- --------- --------- --------------- ---------------
Total Distributions (1.46) (1.68) (1.95) (.19) (2.51)
----------- --------- --------- --------------- ---------------
Net Asset Value, End of Year $ 28.46 $ 28.88 $ 24.42 $ 24.00 $ 19.31
----------- --------- --------- --------------- ---------------
Total Return+ +3.70% +27.47% +10.35% +25.39%(3) +15.51%
----------- --------- --------- --------------- ---------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $1,071.4 $ 956.0 $ 643.9 $ 573.9 $ 439.2
----------- --------- --------- --------------- ---------------
Ratio of Expenses to Average Net Assets .89% .87% .85% .92%(4) .91%
----------- --------- --------- --------------- ---------------
Ratio of Net Investment Income to
Average Net Assets .69% .75% .89% 1.18%(4) 1.46%
----------- --------- --------- --------------- ---------------
Portfolio Turnover Rate(5) -- -- -- 52% 77%
----------- --------- --------- --------------- ---------------
Year Ended September 30,
1991 1990 1989 1988 1987
-------------------------------------------- --------- -------- --------- -------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 16.66 $19.01 $ 16.60 $ 20.10 $ 17.96
--------- -------- --------- -------------------
Income From Investment Operations
Net Investment Income .38 .44 .46 .46 .48
Net Gains or Losses on Securities
(both realized and unrealized) 2.96 (1.84) 4.83 (2.98) 5.46
--------- -------- --------- -------------------
Total From Investment Operations 3.34 (1.40) 5.29 (2.52) 5.94
--------- -------- --------- -------------------
Less Distributions
Dividends (from net investment income) (.37) (.39) (.49) (.47) (.49)
Distributions (from capital gains) (.72) (.56) (2.39) (.51) (3.31)
--------- -------- --------- -------------------
Total Distributions (1.09) (.95) (2.88) (.98) (3.80)
--------- -------- --------- -------------------
Net Asset Value, End of Year $ 18.91 $16.66 $ 19.01 $ 16.60 $ 20.10
--------- -------- --------- -------------------
Total Return+ +20.20% -7.54% +32.23% -12.44% +33.07%
--------- -------- --------- -------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 399.2 $368.6 $ 441.3 $ 375.2 $ 481.1
--------- -------- --------- -------------------
Ratio of Expenses to Average Net Assets .93% .92% .99% 1.01% .86%
--------- -------- --------- -------------------
Ratio of Net Investment Income to
Average Net Assets 2.01% 2.34% 2.39% 2.64% 2.21%
--------- -------- --------- -------------------
Portfolio Turnover Rate(5) 60% 66% 60% 66% 88%
--------- -------- --------- -------------------
</TABLE>
See Notes to Financial Highlights
11
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Genesis Fund
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. It should be read in conjunction with its corresponding
Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 1, 1993 Year Ended July
Year Ended August 31, to August 31, 31,
1996(2) 1995(2) 1994(2) 1993(2) 1993
--------------------------------------------- -------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 9.52 $ 8.27 $ 8.62 $ 8.30 $ 7.10
-------------- -------------- -------------- -------------- ---------------
Income From Investment Operations
Net Investment Income (Loss) (.01) -- (.01) -- .01
Net Gains or Losses on Securities
(both realized and unrealized) 1.95 1.56 .42 .32 1.19
-------------- -------------- -------------- -------------- ---------------
Total From Investment Operations 1.94 1.56 .41 .32 1.20
-------------- -------------- -------------- -------------- ---------------
Less Distributions
Dividends (from net investment income) -- -- (.01) -- --
Distributions (from capital gains) (.55) (.31) (.75) -- --
-------------- -------------- -------------- -------------- ---------------
Total Distributions (.55) (.31) (.76) -- --
-------------- -------------- -------------- -------------- ---------------
Net Asset Value, End of Year $ 10.91 $ 9.52 $ 8.27 $ 8.62 $ 8.30
-------------- -------------- -------------- -------------- ---------------
Total Return+ +21.32% +19.69% +4.77% +3.86%(3) +16.90%
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 195.4 $ 111.5 $135.6 $118.5 $ 113.5
-------------- -------------- -------------- -------------- ---------------
Ratio of Expenses to Average Net Assets 1.28%(7) 1.35%(7) 1.36% 1.51%(4) 1.65%
-------------- -------------- -------------- -------------- ---------------
Ratio of Net Investment Income (Loss) to
Average Net Assets (.18%)(7) (.16%)(7) (.20%) (.08%)(4) .15%
-------------- -------------- -------------- -------------- ---------------
Portfolio Turnover Rate(5) -- -- -- -- 54%
-------------- -------------- -------------- -------------- ---------------
Period from
September 27,
Year Ended July 31, 1988(6) to July 31,
1992 1991 1990 1989
--------------------------------------------- -------------- -------------- -------------- -------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 6.41 $ 5.78 $ 6.25 $ 5.00
-------------- -------------- -------------- -------------------
Income From Investment Operations
Net Investment Income (Loss) (.01) .03 .02 .02
Net Gains or Losses on Securities
(both realized and unrealized) .80 .64 (.35) 1.24
-------------- -------------- -------------- -------------------
Total From Investment Operations .79 .67 (.33) 1.26
-------------- -------------- -------------- -------------------
Less Distributions
Dividends (from net investment income) (.01) (.04) (.02) (.01)
Distributions (from capital gains) (.09) -- (.12) --
-------------- -------------- -------------- -------------------
Total Distributions (.10) (.04) (.14) (.01)
-------------- -------------- -------------- -------------------
Net Asset Value, End of Year $ 7.10 $ 6.41 $ 5.78 $ 6.25
-------------- -------------- -------------- -------------------
Total Return+ +12.38% +11.80% -5.33% +25.24%(3)
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 72.2 $ 27.8 $ 20.8 $ 18.1
-------------- -------------- -------------- -------------------
Ratio of Expenses to Average Net Assets 2.00%(7) 2.00%(7) 2.00%(7) 2.00%(4,7)
-------------- -------------- -------------- -------------------
Ratio of Net Investment Income (Loss) to
Average Net Assets (.14%)(7) .60%(7) .41%(7) .51%(4,7)
-------------- -------------- -------------- -------------------
Portfolio Turnover Rate(5) 23% 46% 37% 10%
-------------- -------------- -------------- -------------------
</TABLE>
See Notes to Financial Highlights
12
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Guardian Fund
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements(8). It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31,
1996(2) 1995(2) 1994(2) 1993(2) 1992
------------------------------------------------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 23.61 $ 19.52 $ 18.57 $ 15.73 $ 14.90
----------- ----------- ----------- ----------- ----------
Income From Investment Operations
Net Investment Income .31 .27 .24 .30 .29
Net Gains or Losses on Securities
(both realized and unrealized) .90 4.30 1.41 3.45 1.71
----------- ----------- ----------- ----------- ----------
Total From Investment Operations 1.21 4.57 1.65 3.75 2.00
----------- ----------- ----------- ----------- ----------
Less Distributions
Dividends (from net investment income) (.28) (.25) (.30) (.25) (.26)
Distributions (from capital gains) (.76) (.23) (.40) (.66) (.91)
----------- ----------- ----------- ----------- ----------
Total Distributions (1.04) (.48) (.70) (.91) (1.17)
----------- ----------- ----------- ----------- ----------
Net Asset Value, End of Year $ 23.78 $ 23.61 $ 19.52 $ 18.57 $ 15.73
----------- ----------- ----------- ----------- ----------
Total Return+ +5.27% +24.06% +9.12% +24.43% +13.88%
----------- ----------- ----------- ----------- ----------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $4,905.2 $3,947.5 $2,416.5 $1,787.0 $ 802.9
----------- ----------- ----------- ----------- ----------
Ratio of Expenses to Average
Net Assets .82% .80% .80% .81% .82%
----------- ----------- ----------- ----------- ----------
Ratio of Net Investment Income to
Average Net Assets 1.37% 1.40% 1.36% 2.01% 1.90%
----------- ----------- ----------- ----------- ----------
Portfolio Turnover Rate(5) -- -- -- 27% 41%
----------- ----------- ----------- ----------- ----------
Year Period from
Ended November 1, 1989
August 31, to August 31, Year Ended October 31,
1991 1990 1989 1988 1987
------------------------------------------- -------------- ---------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 11.90 $13.20 $ 12.31 $ 11.08 $13.17
------- ------ ------- ------- ------
Income From Investment Operations
Net Investment Income .32 .31 .35 .35 .40
Net Gains or Losses on Securities
(both realized and unrealized) 3.20 (1.36) 2.08 2.55 (.77)
------- ------ ------- ------- ------
Total From Investment Operations 3.52 (1.05) 2.43 2.90 (.37)
------- ------ ------- ------- ------
Less Distributions
Dividends (from net investment income) (.35) (.25) (.36) (.36) (.41)
Distributions (from capital gains) (.17) -- (1.18) (1.31) (1.31)
------- ------ ------- ------- ------
Total Distributions (.52) (.25) (1.54) (1.67) (1.72)
------- ------ ------- ------- ------
Net Asset Value, End of Year $ 14.90 $11.90 $ 13.20 $ 12.31 $11.08
------- ------ ------- ------- ------
Total Return+ +30.48% -8.08%(3) +19.91% +26.79% -3.05%
------- ------ ------- ------- ------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 628.6 $496.3 $ 569.3 $ 539.1 $461.1
------- ------ ------- ------- ------
Ratio of Expenses to Average
Net Assets .84% .86%(4) .84% .84% .74%
------- ------ ------- ------- ------
Ratio of Net Investment Income to
Average Net Assets 2.46% 2.89%(4) 2.59% 2.80% 2.72%
------- ------ ------- ------- ------
Portfolio Turnover Rate(5) 59% 58% 52% 73% 91%
------- ------ ------- ------- ------
</TABLE>
See Notes to Financial Highlights
13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
International Fund
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown
reflect income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in
conjunction with its corresponding Portfolio's Financial Statements and notes
thereto.
<TABLE>
<CAPTION>
Period from
Year Ended June 15, 1994(9)
August 31, to August 31,
1996 1995 1994
------------------------------------------------------------ --------- -------- ----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $10.70 $10.46 $10.00
------ ------ ------
Income From Investment Operations
Net Investment Income .01 .06 .01
Net Gains or Losses on Securities
(both realized and unrealized) 1.24 .21 .45
------ ------ ------
Total From Investment Operations 1.25 .27 .46
------ ------ ------
Less Distributions
Dividends (from net investment income) (.04) (.03) --
------ ------ ------
Net Asset Value, End of Year $11.91 $10.70 $10.46
------ ------ ------
Total Return+ +11.73% +2.60% +4.60%(3)
------ ------ ------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 57.0 $ 26.4 $ 6.2
------ ------ ------
Ratio of Expenses to Average Net Assets(7) 1.70% 1.70% 1.70%(4)
------ ------ ------
Ratio of Net Investment Income to Average Net Assets(7) .24% .73% .57%(4)
------ ------ ------
</TABLE>
See Notes to Financial Highlights
14
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Manhattan Fund
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. It should be read in conjunction with its corresponding
Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31,
1996(2) 1995(2) 1994(2) 1993(2) 1992
-------------------------------------------- -------- --------- -------- ------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.27 $ 11.28 $12.94 $ 11.59 $11.55
------ ------- ------ ------- ------
Income From Investment Operations
Net Investment Income (Loss) (.04) -- .02 .02 .06
Net Gains or Losses on Securities
(both realized and unrealized) (.33) 2.70 .40 3.06 .49
------ ------- ------ ------- ------
Total From Investment Operations (.37) 2.70 .42 3.08 .55
------ ------- ------ ------- ------
Less Distributions
Dividends (from net investment income) -- (.01) (.02) (.05) (.11)
Distributions (from capital gains) (.96) (.70) (2.06) (1.68) (.40)
------ ------- ------ ------- ------
Total Distributions (.96) (.71) (2.08) (1.73) (.51)
------ ------- ------ ------- ------
Net Asset Value, End of Year $11.94 $ 13.27 $11.28 $ 12.94 $11.59
------ ------- ------ ------- ------
Total Return+ -2.91% +26.00% +3.49% +27.76% +4.74%
------ ------- ------ ------- ------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $516.2 $ 612.0 $510.3 $ 537.6 $400.7
------ ------- ------ ------- ------
Ratio of Expenses to Average Net Assets .98% .98% .96% 1.04% 1.07%
------ ------- ------ ------- ------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.27%) .03% .16% .20% .57%
------ ------- ------ ------- ------
Portfolio Turnover Rate(5) -- -- -- 76%(4) 83%
------ ------- ------ ------- ------
Year Ended August 31, Year Ended December 31,
1991 1990(10) 1989 1988 1987
-------------------------------------------- --------------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 9.46 $10.44 $ 9.04 $ 7.81 $ 8.95
------- ------ ------- ------- ------
Income From Investment Operations
Net Investment Income (Loss) .13 .10 .18 .17 .14
Net Gains or Losses on Securities
(both realized and unrealized) 2.27 (1.08) 2.45 1.26 (.07)
------- ------ ------- ------- ------
Total From Investment Operations 2.40 (.98) 2.63 1.43 .07
------- ------ ------- ------- ------
Less Distributions
Dividends (from net investment income) (.16) -- (.18) (.16) (.26)
Distributions (from capital gains) (.15) -- (1.05) (.04) (.95)
------- ------ ------- ------- ------
Total Distributions (.31) -- (1.23) (.20) (1.21)
------- ------ ------- ------- ------
Net Asset Value, End of Year $ 11.55 $ 9.46 $ 10.44 $ 9.04 $ 7.81
------- ------ ------- ------- ------
Total Return+ +26.17% -9.39%(3) +29.09% +18.31% +0.43%
------- ------ ------- ------- ------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 429.0 $355.6 $ 404.7 $ 341.7 $329.0
------- ------ ------- ------- ------
Ratio of Expenses to Average Net Assets 1.09% 1.14%(4) 1.12% 1.18% .98%
------- ------ ------- ------- ------
Ratio of Net Investment Income
(Loss) to Average Net Assets 1.28% 1.44%(4) 1.60% 1.55% 1.58%
------- ------ ------- ------- ------
Portfolio Turnover Rate(5) 78% 91%(4) 77% 70% 111%
------- ------ ------- ------- ------
</TABLE>
See Notes to Financial Highlights
15
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Partners Fund
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. It should be read in conjunction with its corresponding
Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from Year
July 1, 1993 Ended
Year Ended August 31, to August 31, June 30,
1996(2) 1995(2) 1994(2) 1993(2) 1993
------------------------------------------- -------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 23.72 $ 21.32 $ 22.46 $ 20.98 $ 18.96
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income .22 .17 .10 .02 .16
Net Gains or Losses on Securities
(both realized and unrealized) 2.84 3.94 1.07 1.46 3.84
-------- -------- -------- -------- --------
Total From Investment Operations 3.06 4.11 1.17 1.48 4.00
-------- -------- ------- --------- --------
Less Distributions
Dividends (from net investment income) (.20) (.11) (.11) -- (.19)
Distributions (from capital gains) (2.70) (1.60) (2.20) -- (1.79)
-------- -------- -------- -------- --------
Total Distributions (2.90) (1.71) (2.31) -- (1.98)
-------- -------- -------- -------- --------
Net Asset Value, End of Year $ 23.88 $ 23.72 $ 21.32 $ 22.46 $ 20.98
-------- -------- -------- -------- --------
Total Return+ +13.86% +21.53% +5.56% +7.05%(3) +21.78%
-------- -------- -------- -------- --------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $1,871.9 $1,564.0 $1,335.9 $1,185.1 $1,085.6
-------- -------- -------- -------- --------
Ratio of Expenses to Average
Net Assets .84% .83% .81% .84%(4) .86%
-------- -------- -------- -------- --------
Ratio of Net Investment Income
to Average Net Assets .93% .83% .48% .59%(4) .83%
-------- -------- -------- -------- --------
Portfolio Turnover Rate(5) -- -- -- 6% 82%
-------- -------- -------- -------- --------
Year Ended June 30,
1992 1991 1990 1989 1988 1987
------------------------------------------- ------- ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 17.80 $18.11 $19.04 $ 16.84 $20.83 $ 20.63
------- ------ ------ ------- ------ -------
Income From Investment Operations
Net Investment Income .23 .50 .83 .71 .55 .44
Net Gains or Losses on Securities
(both realized and unrealized) 2.05 .27 .68 2.14 (1.05) 2.45
------- ------ ------ ------- ------ -------
Total From Investment Operations 2.28 .77 1.51 2.85 (.50) 2.89
------- ------ ------ ------- ------ -------
Less Distributions
Dividends (from net investment income) (.34) (.74) (.76) (.65) (.70) (.44)
Distributions (from capital gains) (.78) (.34) (1.68) -- (2.79) (2.25)
------- ------ ------ ------- ------ -------
Total Distributions (1.12) (1.08) (2.44) (.65) (3.49) (2.69)
------- ------ ------ ------- ------ -------
Net Asset Value, End of Year $ 18.96 $17.80 $18.11 $ 19.04 $16.84 $ 20.83
------- ------ ------ ------- ------ -------
Total Return+ +13.23% +5.14% +8.11% +17.59% -2.73% +16.98%
------- ------ ------ ------- ------ -------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 852.9 $823.5 $793.8 $ 743.0 $718.8 $ 757.7
------- ------ ------ ------- ------ -------
Ratio of Expenses to Average
Net Assets .86% .88% .91% .97% .95% .86%
------- ------ ------ ------- ------ -------
Ratio of Net Investment Income
to Average Net Assets 1.23% 2.84% 4.53% 3.96% 3.28% 2.93%
------- ------ ------ ------- ------ -------
Portfolio Turnover Rate(5) 97% 161% 136% 157% 210% 169%
------- ------ ------ ------- ------ -------
</TABLE>
See Notes to Financial Highlights
16
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Socially Responsive Fund
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown
reflect income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in
conjunction with its corresponding Portfolio's Financial Statements and notes
thereto.
<TABLE>
<CAPTION>
Period from
March 16,
Year Ended August 1994(6)
31, to August 31,
1996 1995 1994
------------------------------------------------------------ --------- --------- ---------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $ 11.84 $ 10.07 $10.00
------- ------- ------
Income From Investment Operations
Net Investment Income .02 .03 .01
Net Gains or Losses on Securities
(both realized and unrealized) 2.35 1.76 .06
------- ------- ------
Total From Investment Operations 2.37 1.79 .07
------- ------- ------
Less Distributions
Dividends (from net investment income) (.02) (.02) --
Distributions (from capital gains) (.31) -- --
------- ------- ------
Total Distributions (.33) (.02) --
------- ------- ------
Net Asset Value, End of Year $ 13.88 $ 11.84 $10.07
------- ------- ------
Total Return+ +20.19% +17.82% +0.70%(3)
------- ------- ------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 32.9 $ 8.2 $ 2.3
------- ------- ------
Ratio of Expenses to Average Net Assets(7) 1.50% 1.51% 1.50%(4)
------- ------- ------
Ratio of Net Investment Income to Average Net Assets(7) .19% .36% .50%(4)
------- ------- ------
</TABLE>
See Notes to Financial Highlights
17
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
1) Prior to January 1, 1995, the name of Neuberger&Berman FOCUS Fund was
Neuberger&Berman Selected Sectors Fund.
2) The per share amounts and ratios which are shown reflect income and
expenses, including each Fund's proportionate share of its corresponding
Portfolio's income and expenses.
3) Not annualized.
4) Annualized.
5) Each Fund (except Neuberger&Berman INTERNATIONAL Fund and Neuberger&
Berman SOCIALLY RESPONSIVE Fund) transferred all of its investment
securities into its corresponding Portfolio on August 2, 1993. After that
date each Fund has invested only in its corresponding Portfolio, and that
Portfolio, rather than the Fund, has engaged in securities transactions.
Therefore, after that date, no Fund has calculated a portfolio turnover
rate or paid any brokerage commissions. The portfolio turnover rates for
each Portfolio were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
AUGUST 31, AUGUST 2, 1993
1996 1995 1994 TO AUGUST 31, 1993
------------------------------------------ -------- -------- --------------------------------
<S> <C> <C> <C> <C>
Neuberger&Berman FOCUS Portfolio 39% 36% 52% 4%
Neuberger&Berman GENESIS Portfolio 21% 37% 63% 3%
Neuberger&Berman GUARDIAN Portfolio 37% 26% 24% 3%
Neuberger&Berman MANHATTAN Portfolio 53% 44% 50% 3%
Neuberger&Berman PARTNERS Portfolio 96% 98% 75% 8%
</TABLE>
The portfolio turnover rates for Neuberger&Berman INTERNATIONAL Portfolio for
the period June 15, 1994 (commencement of operations) to August 31, 1994 and
the years ended August 31, 1995 and 1996 were 5%, 41%, and 45%, respectively.
The portfolio turnover rates for Neuberger&Berman SOCIALLY RESPONSIVE Port-
folio for the period March 14, 1994 (commencement of operations) to August
31, 1994 and the years ended August 31, 1995 and 1996 were 14%, 58%, and 53%,
respectively.
The average commission rates paid by each Portfolio were as follows:
YEAR ENDED
AUGUST 31, 1996
Neuberger&Berman FOCUS Portfolio $0.0578
Neuberger&Berman GENESIS Portfolio $0.0576
Neuberger&Berman GUARDIAN Portfolio $0.0580
Neuberger&Berman INTERNATIONAL Portfolio $0.0150
Neuberger&Berman MANHATTAN Portfolio $0.0373
Neuberger&Berman PARTNERS Portfolio $0.0494
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio $0.0587
18
<PAGE>
6) The date investment operations commenced.
7) NEUBERGER&BERMAN GENESIS FUND. After reimbursement of expenses by N&B
Management. Had N&B Management not undertaken such action the annualized
ratios to average daily net assets would have been:
YEAR ENDED PERIOD FROM
JULY 31, SEPTEMBER 27, 1988
1991 1990 TO JULY 31, 1989
----------------------------- ------- ------- --------------------
Expenses 2.16% 2.40% 3.79%
Net Investment Income (Loss) .44% .01% (1.28%)
Had Neuberger&Berman GENESIS Fund not reimbursed N&B Management, the
annualized ratios to average daily net assets would have been:
YEAR ENDED
JULY 31, 1992
- ----------------------- ----------------
Expenses 1.65%
Net Investment Income .21%
Had N&B Management not waived a portion of the management fee borne directly
by Neuberger&Berman GENESIS Portfolio, and indirectly by Neuberger&Berman
GENESIS Fund, the annualized ratios to average daily net assets would have
been:
YEAR ENDED
AUGUST 31,
1996 1995
- --------------------- -------- --------
Expenses 1.38% 1.38%
Net Investment Loss (.28%) (.19%)
NEUBERGER&BERMAN INTERNATIONAL FUND. After reimbursement of expenses by N&B
Management or the then investment adviser to the Portfolio. Had N&B
Management or the then investment adviser to the Portfolio not undertaken
such action the annualized ratios to average daily net assets would have
been:
YEAR ENDED PERIOD FROM
AUGUST 31, JUNE 15, 1994 TO
1996 1995 AUGUST 31, 1994
- ---------------------------- ---- ---- -----------------
Expenses 2.40% 2.50% 2.50%
Net Investment Income (Loss) (.46%) (.07%) (.23%)
NEUBERGER&BERMAN SOCIALLY RESPONSIVE FUND. After reimbursement of expenses by
N&B Management. Had N&B Management not undertaken such action the annualized
ratios to average daily net assets would have been:
YEAR ENDED PERIOD FROM
AUGUST 31, MARCH 16, 1994
1996 1995 TO AUGUST 31, 1994
----------------------------- ------- -------- --------------------
Expenses 1.69% 2.50% 2.50%
Net Investment Income (Loss) .00% (.63%) (.50%)
19
<PAGE>
8) Adjusted for a 200% stock dividend effective January 20, 1993.
9) 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, served as investment adviser to Neuberger&Berman
INTERNATIONAL Portfolio from its inception until November 1, 1995.
10) For the eight-month period ended August 31, 1990.
+ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each
fiscal 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. For
Neuberger&Berman INTERNATIONAL Fund, Neuberger&Berman SOCIALLY RESPONSIVE
Fund, and Neuberger&Berman GENESIS Fund, total return would have been
lower if N&B Management had not reimbursed certain expenses or waived
certain fees.
20
<PAGE>
INVESTMENT PROGRAMS
The investment policies and limitations of each Fund are identical to
those of its corresponding Portfolio. Each Fund invests only in its
corresponding Portfolio. Therefore, the following shows you the kinds of
securities in which each Portfolio invests. For an explanation of some types
of investments, see "Description of Investments," on page 52.
Investment policies and limitations of the Funds and Portfolios are not
fundamental unless otherwise specified in this Prospectus or the SAI.
Fundamental policies may not be changed without shareholder approval. A
non-fundamental policy or limitation may be changed by the trustees of the
Trust or of the corresponding Managers Trust without shareholder approval.
The investment objectives of the Funds and Portfolios are not fundamental.
There can be no assurance that the Funds or Portfolios will achieve their
objectives. Each Fund, by itself, does not represent a comprehensive
investment program.
Additional investment techniques, features, and limitations concerning the
Portfolios' investment programs are described in the SAI.
Neuberger&Berman Focus Portfolio
The investment objective of Neuberger&Berman FOCUS Portfolio and
Neuberger&Berman FOCUS Fund is to seek long-term capital appreciation.
Neuberger&Berman FOCUS Portfolio invests principally in common stocks
selected from the following 13 multi-industry sectors of the economy:
Autos & Housing Health Care Technology
Consumer Goods & Services Heavy Industry Transportation
Defense & Aerospace Machinery & Equipment Utilities
Energy Media & Entertainment
Financial Services Retailing
To maximize potential return, the Portfolio normally makes at least 90% of
its investments in not more than six sectors it identifies as undervalued.
Where a particular industry may fall within more than one sector, N&B
Management uses its judgment and experience to determine the placement of
that industry within a sector. The Portfolio uses the value-oriented
investment approach to identify stocks believed to be undervalued, including
stocks that are temporarily out of favor in the market. The Portfolio then
focuses its investments in the sectors in which the undervalued stocks are
clustered. These sectors are believed to offer the greatest potential for
capital growth. This investment approach is different from that of most other
mutual funds that emphasize sector investment. Those funds either invest in
only a single economic sector or choose a number of sectors by analyzing
general economic trends. Further information on the Portfolio's securities
holdings and their allocation by sector as of the end of the Fund's most
recent
21
<PAGE>
fiscal year is included in the Fund's annual report to shareholders, which is
available at no cost upon request. The sectors are more fully described in
the SAI.
The Portfolio may be affected more by any single economic, political, or
regulatory development than a more diversified mutual fund. The risk of
decline in the Portfolio's asset value due to an adverse development may be
partially offset by the value-oriented investment approach. To further reduce
this risk, the Portfolio may not purchase any security if, as a result, (1)
more than 50% of its total assets would be invested in any one sector, (2)
25% or more of its total assets would be invested in the securities of
companies having their principal business activities in any one industry
(this policy is fundamental), or (3) more than 5% of its total assets would
be invested in the securities of any one company.
Neuberger&Berman Genesis Portfolio
The investment objective of Neuberger&Berman GENESIS Portfolio and
Neuberger&Berman GENESIS Fund is to seek capital appreciation.
Neuberger&Berman GENESIS Portfolio invests primarily in common stocks of
companies with small market capitalizations ("small-cap companies"). Market
capitalization means the total market value of a company's outstanding common
stock. The Portfolio regards companies with market capitalizations of up to
$1.5 billion at the time of the Portfolio's investment as small-cap
companies. Companies whose market capitalizations exceed $1.5 billion after
purchase continue to be considered small-cap companies for purposes of the
Portfolio's investment policies. There is no necessary correlation between
market capitalization and the financial attributes -- such as levels of
assets, revenues or income -- commonly used to measure the size of a company.
Studies indicate that the market values of small-cap company stocks, such
as those included in the Russell 2000 Index and the Wilshire 1750 Index or
quoted on Nasdaq, have a cyclical relationship with larger capitalization
stocks. Over the last 30 years, small-cap company stocks have outperformed
larger capitalization stocks about two-thirds of the time, even though
small-cap stocks have usually declined more than larger capitalization stocks
in declining markets. There can be no assurance that this pattern will
continue.
Small-cap company stocks generally are considered to offer greater
potential for appreciation than securities of companies with larger market
capitalizations. Most small-cap company stocks pay low or no dividends, and
the Portfolio seeks long-term appreciation, rather than income. Small-cap
company stocks also have higher risk and volatility, because most are not as
broadly traded as stocks of companies with larger capitalizations and their
prices thus may fluctuate more widely and abruptly. Small-cap company
securities are also less researched and often overlooked and undervalued in
the market.
The Portfolio tries to enhance the potential for appreciation and limit
the risk of decline in the value of its securities by employing the
value-oriented investment approach. The Portfolio seeks securities that
appear to be underpriced and are issued by companies with proven management,
sound finances, and strong potential for market growth. To reduce risk, the
Portfolio diversifies its holdings among many companies and industries.
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<PAGE>
The Portfolio focuses on the fundamentals of each small-cap company, instead
of trying to anticipate what changes might occur in the stock market, the
economy, or the political environment. This approach differs from that used
by many other funds investing in small- cap company stocks. Those funds often
buy stocks of companies they believe will have above-average earnings growth,
based on anticipated future developments. In contrast, the Portfolio's
securities are generally selected with the belief that they are currently
undervalued, based on existing conditions.
Neuberger&Berman GUARDIAN Portfolio
The investment objective of Neuberger&Berman GUARDIAN Portfolio and
Neuberger&Berman GUARDIAN Fund is to seek capital appreciation and,
secondarily, current income.
Neuberger&Berman GUARDIAN Portfolio invests primarily in common stocks of
long-established, high-quality companies. The Portfolio uses the
value-oriented investment approach in selecting securities. Thus, N&B
Management looks for such factors as low price-to-earnings ratios, strong
balance sheets, solid managements, and consistent earnings.
The Fund and its predecessor have paid their shareholders an income
dividend every quarter and a capital gain distribution every year since the
predecessor's inception in 1950. Of course, this past record does not
necessarily predict the Fund's future practices.
Neuberger&Berman INTERNATIONAL Portfolio
The investment objective of Neuberger&Berman INTERNATIONAL Portfolio and
Neuberger&Berman INTERNATIONAL Fund 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 United States and include non-U.S. governments, their
agencies, and instrumentalities.
Neuberger&Berman International Portfolio invests primarily in equity
securities of medium- to large-capitalization companies traded on foreign
exchanges. A company's capitalization is determined in relation to the
principal market in which its securities are traded. The strategy of N&B
Management is to select attractive investment opportunities outside the
United States, allocating the Portfolio's assets among investments in
economically mature countries and emerging industrialized countries. The
criteria for security selection focus on companies with leadership in
specific markets or with niches in specific industries that appear to exhibit
positive fundamentals and seem undervalued relative to their earnings
potential or the worth of their assets. At least 65% of the Portfolio's total
assets normally are invested in equity securities of foreign issuers. The
Portfolio normally invests in issuers in at least three foreign countries.The
Portfolio may invest more heavily in certain countries than in others. From
time to time, the Portfolio may invest a significant portion of its assets in
Japan.
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The Portfolio may 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.
Because 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. 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.
The Portfolio may use techniques such as options, futures, forward foreign
currency exchange contracts ("forward contracts"), and short selling for
hedging purposes and in an attempt to realize income. The Portfolio may use
leverage to facilitate transactions it enters into for hedging purposes. The
use of these strategies may entail special risks.
For more information about these risks, see "Description of Investments"
on page 52.
Neuberger&Berman MANHATTAN Portfolio
The investment objective of Neuberger&Berman MANHATTAN Portfolio and
Neuberger&Berman MANHATTAN Fund is to seek capital appreciation without
regard to income.
Neuberger&Berman MANHATTAN Portfolio generally invests in securities of
small-, medium-, and large-capitalization companies believed to have the
maximum potential for long-term capital appreciation. It does not seek to
invest in securities that pay dividends or interest, and any such income is
incidental.
The Portfolio uses a "growth at a reasonable price" investment approach.
When N&B Management believes that particular securities have greater
potential for long-term capital appreciation, the Portfolio may purchase
such securities at prices with relatively higher multiples to measures of
economic value (such as earnings or cash flow) than other Portfolios. The
Portfolio focuses on companies with strong balance sheets and reasonable
valuations relative to their growth rates. It also diversifies its
investments among many companies and industries.
The Portfolio's growth investment program involves greater risks and share
price volatility than programs that invest in more undervalued securities.
Small-cap company stocks are subject to the risks described with respect to
the investment program of Neuberger&Berman GENESIS Portfolio. Moreover, the
Portfolio does not follow a policy of active trading for short-term profits.
Accordingly, the Portfolio may be more appropriate for investors with a
longer-range perspective.
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Neuberger&Berman Partners Portfolio
The investment objective of Neuberger&Berman PARTNERS Portfolio and
Neuberger&Berman PARTNERS Fund is to seek capital growth.
Neuberger&Berman PARTNERS Portfolio invests principally in common stocks
of medium- to large-capitalization established companies, using the
value-oriented investment approach. The Portfolio seeks capital growth
through an investment approach that is designed to increase capital with
reasonable risk. N&B Management looks for securities believed to be
undervalued based on strong fundamentals, including a low price-to-earnings
ratio, consistent cash flow, and the company's track record through all parts
of the market cycle.
The Portfolio considers additional factors when selecting securities,
including ownership by a company's management of the company's stock and the
dominance of a company in its particular field.
Neuberger&Berman Socially Responsive Portfolio
The investment objective of Neuberger&Berman SOCIALLY RESPONSIVE Portfolio
and Neuberger&Berman SOCIALLY RESPONSIVE Fund is to seek long-term capital
appreciation by investing primarily in securities of companies that meet both
financial criteria and the Social Policy.
In seeking capital appreciation, the Portfolio generally follows a
value-oriented investment approach to the selection of individual securities.
Prospective investments are first subjected to detailed financial analysis
and are not studied further unless N&B Management believes that they are
currently undervalued relative to the issuer's assets and potential earning
power.
The Portfolio expects to be nearly fully invested at all times, primarily
in common stock. It may also invest in convertible securities and preferred
stock and in foreign securities and ADRs of foreign companies that meet the
Social Policy. On occasion, deposits with community banks and credit unions
may be considered for investment. Under normal conditions, at least 65% of
the Portfolio's total assets are invested in accordance with the Social
Policy, and at least 65% of its total assets are invested in equity
securities.
The Portfolio may also engage in portfolio management techniques that are
not subject to the Social Policy, such as selling short against-the-box,
lending securities, and purchasing and selling put and call options on
securities and currencies, futures contracts, options on futures contracts,
and forward contracts.
SOCIAL POLICY. Companies deemed acceptable from a financial standpoint are
evaluated by N&B Management using a database that Neuberger&Berman has
designed to develop and monitor information on companies in various
categories of social criteria. N&B Management seeks to invest in issuers that
show leadership in the following major areas of social impact: environment,
and workplace diversity and employment. N&B Management also evaluates
investments based on companies' records in other areas of concern: public
health, type of products, and corporate citizenship.
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<PAGE>
The Portfolio's social orientation is predicated in part on the belief
that good corporate citizenship is good business; that is, good policies with
respect to such social criteria as employment and environmental practices may
often have a positive impact on the company's "bottom line." N&B Management
recognizes, however, that many social criteria represent goals rather than
achievements and that goals are often difficult to quantify. In each area,
N&B Management seeks to elicit and understand management's vision of the
company's social role and, in making investment decisions, gives weight to
enlightened, progressive policies. The information used by N&B Management in
evaluating prospective investments for conformity with the Social Policy is
obtained primarily from services that specialize in reporting information
from issuers or from agencies that oversee issuers' activities or compliance
with laws and regulations. Additionally, the information may come from public
interest groups and from N&B Management's discussions with company
representatives. N&B Management attempts to assess the objectivity of all
information that it receives. However, decisions made by N&B Management
inevitably involve some level of subjective judgment.
The Portfolio seeks to invest in companies that show leadership in
addressing environmental problems effectively and in promoting progressive
workplace policies, especially as they affect women and minorities. N&B
Management seeks to identify companies committed to improving their
environmental performance by examining their policies and programs in such
areas as energy conservation, pollution reduction and control, waste
management, recycling, and careful stewardship of natural resources. In a
similar manner, N&B Management seeks to identify companies whose policies and
practices recognize the importance of human resources to corporate
productivity and the centrality of the work experience to the quality of life
of all employees. The Portfolio seeks to invest in companies that demonstrate
leadership in such areas as providing and promoting equal opportunity,
investing in the training and re-training of workers, promoting a safe
working environment, providing family-oriented flexible benefits, and
involving workers in job and workflow engineering.
In making investment decisions, N&B Management takes into account a
company's record as a member of the various communities of which it is a part
and its commitment to product quality and value. Currently, the Social Policy
screens out any company that derives more than (i) 5% of its total annual
revenue from manufacturing and selling alcohol and/or tobacco, (ii) 5% of its
total annual revenue from sales in or services related to gambling, or (iii)
10% of its total annual revenue from the manufacturing of weapons systems.
Additionally, the Portfolio does not invest in any company that derives its
total annual revenue primarily from non-consumer sales to the military or
that owns or operates one or more nuclear power facilities or is a major
supplier of nuclear power services.
Not every issuer selected by N&B Management will demonstrate leadership in
each category of the Social Policy. The social records of most companies are
written in shades of gray. For example, a company may have a progressive
record in employee
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relations and community affairs but a poor one on product marketing issues.
Another company may have a mixed record within a single area. Finally, it is
often difficult to distinguish between substantive commitment and public
relations. This principle works both ways: there are many companies with
excellent records on social issues that maintain a low profile for one reason
or another. Taking these factors into consideration, N&B Management
emphasizes the overall approach that companies take toward the areas of
social impact and pays particular attention to progress achieved toward the
goals of the Social Policy.
If securities held by the Portfolio no longer satisfy the Social Policy,
the Portfolio will seek to dispose of the securities as soon as reasonably
practicable, which may cause the Portfolio to sell the securities at a time
not desirable from a purely financial standpoint.
Short-Term Trading; Portfolio Turnover
Although none of the Portfolios purchases securities with the intention of
profiting from short-term trading, each Portfolio may sell portfolio
securities when N&B Management believes that such action is advisable. The
portfolio turnover rates of each Portfolio for 1996 and earlier years are set
forth under "Notes to Financial Highlights." It is anticipated that the
annual turnover rate of Neuberger&Berman MANHATTAN Portfolio and of
Neuberger&Berman PARTNERS Portfolio may exceed 100% in some fiscal years.
Turnover rates in excess of 100% generally result in higher transaction costs
(which are borne directly by the Portfolio) and a possible increase in
realized short-term capital gains or losses. See "Dividends, Other
Distributions, and Taxes" on page 45 and the SAI.
Borrowings
Each Portfolio, except Neuberger&Berman INTERNATIONAL Portfolio, has a
fundamental policy that it may not borrow money, except that it may (1)
borrow money from banks for temporary or emergency purposes and not for
leveraging or investment and (2) enter into reverse repurchase agreements for
any purpose, so long as the aggregate amount of borrowings and reverse
repurchase agreements does not exceed one- third of the Portfolio's total
assets (including the amount borrowed) less liabilities (other than
borrowings). None of these Portfolios expects to borrow money or to enter
into reverse repurchase agreements. As a non-fundamental policy, none of
these Portfolios may purchase portfolio securities if its outstanding
borrowings, including reverse repurchase agreements, exceed 5% of its total
assets.
Neuberger&Berman INTERNATIONAL Portfolio has a fundamental policy that it
may not borrow money, except that it may (1) borrow money from banks for
temporary or emergency purposes and for leveraging or investment 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).
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<PAGE>
Neuberger&Berman INTERNATIONAL Portfolio may borrow money from banks to
facilitate transactions that it enters into for hedging purposes, which is a
form of leverage. This leverage may exaggerate the gains and losses on the
Portfolio's investments and changes in the net asset value of its
corresponding Fund's shares. Leverage also creates interest expenses; if
those expenses exceed the return on the transactions that the 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.
Other Investments
For temporary defensive purposes, each Portfolio (except Neuberger&Berman
SOCIALLY RESPONSIVE Portfolio and Neuberger&Berman INTERNATIONAL Portfolio)
may invest up to 100% of its total assets in cash and cash equivalents, U.S.
Government and Agency Securities, commercial paper and certain other money
market instruments, as well as repurchase agreements collateralized by the
foregoing.
Any part of Neuberger&Berman SOCIALLY RESPONSIVE Portfolio's assets may be
retained temporarily in investment grade fixed income securities of
non-governmental issuers, U.S. Government and Agency Securities, repurchase
agreements, money market instruments, commercial paper, and cash and cash
equivalents when N&B Management believes that significant adverse market,
economic, political, or other circumstances require prompt action to avoid
losses. In addition, the feeder funds that invest in Neuberger&Berman
SOCIALLY RESPONSIVE Portfolio deal with large institutional investors, and
the Portfolio may hold such instruments pending investment or payout when the
Portfolio has received a large influx of cash due to sales of
Neuberger&Berman SOCIALLY RESPONSIVE Fund shares, or shares of another fund
which invests in the Portfolio, or when it anticipates a substantial
redemption. Generally, the foregoing temporary investments for
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio are selected with a concern
for the social impact of each investment.
For temporary defensive purposes, Neuberger&Berman INTERNATIONAL 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. Neuberger&Berman INTERNATIONAL Portfolio may also invest in such
instruments to increase liquidity or to provide collateral to be held in
segregated accounts.
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PERFORMANCE INFORMATION
The performance of the Funds 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 dividends, other distributions, and variations in share
prices from the beginning to the end of a period.
An average annual total return is a hypothetical rate of return that, if
achieved annually, would result in the same cumulative total return as was
actually achieved for the period. This smooths out year-to-year variations in
actual performance. Past results do not, of course, guarantee future
performance. Share prices may vary, and your shares when redeemed may be
worth more or less than your original purchase price.
The following table shows the average annual total returns of each Fund
and its predecessor (except Neuberger&Berman SOCIALLY RESPONSIVE Fund and
Neuberger& Berman INTERNATIONAL Fund) for the 1-year, 5-year, and 10-year
periods ended August 31, 1996. The table also shows a comparison with the S&P
"500" Index for each Fund except Neuberger&Berman GENESIS Fund, which is
compared with the Russell 2000 Index, and Neuberger&Berman INTERNATIONAL
Fund, which is compared with the EAFE(r) Index. The S&P "500" Index is the
Standard & Poor's 500 Composite Stock Price Index, an unmanaged index
generally considered to be representative of overall stock market activity.
The Russell 2000 is an unmanaged index of the securities of the 2,000 issuers
having the smallest capitalization in the Russell 3000 Index, representing
about 11% of the Russell 3000's total market capitalization. The EAFE(r)
Index is the Morgan Stanley Capital International Europe, Australia, Far East
Index, an unmanaged index of non-U.S. equity market performance. Please note
that indices do not take into account any fees or expenses of investing in
the individual securities that they track. Further information regarding the
Funds' performance is presented in their annual report to shareholders, which
is available without charge by calling 800-877-9700.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
NEUBERGER&BERMAN SINCE INCEPTION
EQUITY FUNDS 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -------------------------- --------- --------- ----------- -----------------------
<S> <C> <C> <C> <C> <C>
FOCUS FUND +3.70% +15.90% +13.40% +11.75% 10/19/55
GUARDIAN FUND +5.27% +15.09% +13.32% +12.92% 6/1/50
MANHATTAN FUND -2.91% +11.12% +11.12% +16.39% 3/1/79*
PARTNERS FUND +13.86% +15.22% +12.59% +17.50% 1/20/75*
SOCIALLY RESPONSIVE FUND +20.19% N/A N/A +15.50% 3/16/94
S&P "500" +18.70% +13.59% +13.35% N/A N/A
GENESIS FUND +21.32% +14.71% N/A +13.61% 9/27/88
RUSSELL 2000 +10.82% +15.05% N/A N/A N/A
INTERNATIONAL FUND +11.73% N/A N/A +8.55% 6/15/94
EAFE(r) INDEX +8.19% N/A N/A N/A N/A
</TABLE>
*The dates when N&B Management became investment adviser to the predecessors
of these Funds.
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Prior to November 1991, the investment policies of the predecessor of
Neuberger&Berman FOCUS Fund required that a substantial percentage of its
assets be invested in the energy field; accordingly, performance results
prior to that time do not necessarily reflect the level of performance that
might have been achieved had the Fund's current policies been in effect
during that period. BNP-N&B Global served as the investment adviser to
Neuberger&Berman INTERNATIONAL Portfolio from its inception until November 1,
1995; however, the same individuals have been responsible for portfolio
management both before and after that date. Had N&B Management not reimbursed
certain expenses or waived certain fees, the total returns of
Neuberger&Berman INTERNATIONAL Fund, Neuberger&Berman SOCIALLY RESPONSIVE
Fund, and Neuberger&Berman GENESIS Fund would have been lower.
The following table lets you take a closer look at how each Fund (except
Neuberger&Berman SOCIALLY RESPONSIVE Fund and Neuberger&Berman INTERNATIONAL
Fund) and its predecessor performed year by year, in terms of an annual per
share total return for each calendar year (ending December 31). Please note
that the previous chart reflects information for periods ended on the Funds'
last fiscal year-end (that is, as of August 31, 1996).
TOTAL RETURNS FOR CALENDAR YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
NEUBERGER&BERMAN
EQUITY FUNDS 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
- ----------------- -------- ------- -------- -------- ------- -------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOCUS FUND +10.1% +0.6% +16.5% +29.8% -5.9% +24.7% +21.1% +16.3% +0.9% +36.2%
GUARDIAN
FUND +11.9 -1.0 +28.0 +21.5 -4.7 +34.3 +19.0 +14.5 +0.6 +32.1
MANHATTAN FUND +16.8 +0.4 +18.3 +29.1 -8.1 +30.9 +17.8 +10.0 -3.6 +31.0
PARTNERS
FUND +17.3 +4.3 +15.5 +22.8 -5.1 +22.4 +17.5 +16.5 -1.9 +35.2
S&P "500" +18.6 +5.2 +16.5 +31.6 -3.1 +30.3 +7.6 +10.0 +1.4 +37.5
GENESIS
FUND N/A N/A N/A +17.3 -16.2 +41.6 +15.6 +13.9 -1.8 +27.3
RUSSELL
2000 N/A N/A N/A +16.3 -19.5 +46.0 +18.4 +18.9 -1.8 +28.5
</TABLE>
TOTAL RETURN INFORMATION. You can obtain current performance information
about each Fund by calling N&B Management at 800-877-9700.
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SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS
The Funds
Each Fund is a separate operating series of the Trust, a Delaware business
trust organized pursuant to a Trust Instrument dated as of December 23, 1992.
The Trust is registered under the 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. Each Fund
invests all of its net investable assets in its corresponding Portfolio, in
each case receiving a beneficial interest in that Portfolio. The trustees of
the Trust may establish additional series or classes of shares without the
approval of shareholders. The assets of each series belong only to that
series, and the liabilities of each series are borne solely by that series
and no other.
DESCRIPTION OF SHARES. Each Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share). Shares
of each Fund represent equal proportionate interests in the assets of that
Fund only and have identical voting, dividend, redemption, liquidation, and
other rights. All shares issued are fully paid and non-assessable, and
shareholders have no preemptive or other rights to subscribe to any
additional shares.
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to hold
annual meetings of shareholders of the Funds. The trustees will call special
meetings of shareholders of a Fund only if required under the 1940 Act or in
their discretion or upon the written request of holders of 10% or more of the
outstanding shares of that Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of a Fund will not be personally liable for the obligations of
any Fund; a shareholder is entitled to the same limitation of personal
liability extended to shareholders of a corporation. To guard against the
risk that Delaware law might not be applied in other states, the Trust
Instrument requires that every written obligation of the Trust or a Fund
contain a statement that such obligation may be enforced only against the
assets of the Trust or Fund and provides for indemnification out of Trust or
Fund property of any shareholder nevertheless held personally liable for
Trust or Fund obligations, respectively.
The Portfolios
Each Portfolio (except Neuberger&Berman INTERNATIONAL Portfolio) is a
separate operating series of Equity Managers Trust, a New York common law
trust organized as of December 1, 1992. Neuberger&Berman INTERNATIONAL
Portfolio is a separate operating series of Global Managers Trust, a New York
common law trust organized as of March 18, 1994. The Managers Trusts are
registered under the 1940 Act as diver-
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sified, open-end management investment companies. Equity Managers Trust has
six separate Portfolios. Global Managers Trust currently has one Portfolio.
The assets of each Portfolio belong only to that Portfolio, and the
liabilities of each Portfolio are borne solely by that Portfolio and no
other.
FUNDS' INVESTMENTS IN PORTFOLIOS. Each Fund is a "feeder fund" that seeks
to achieve its investment objective by investing all of its net investable
assets in its corresponding Portfolio, which is a "master fund." The
Portfolio, which has the same investment objective, policies, and limitations
as the Fund, in turn invests in securities; its corresponding Fund thus
acquires an indirect interest in those securities. This "master/feeder fund"
structure is depicted in the "Summary" on page 3.
Each Fund's investment in its corresponding Portfolio is in the form of a
non-transferable beneficial interest. Members of the general public may not
purchase a direct interest in a Portfolio. Six mutual funds that are series
of Neuberger&Berman Equity Trust ("N&B Equity Trust") invest all of their
respective net investable assets in the six corresponding Portfolios of
Equity Managers Trust. Four mutual funds that are series of Neuberger&Berman
Equity Assets ("N&B Equity Assets") invest all of their respective net
investable assets in four corresponding Portfolios of Equity Managers Trust.
Each Portfolio may also permit other investment companies and/or other
institutional investors to invest in the Portfolio. All investors will invest
in a Portfolio on the same terms and conditions as a Fund and will pay a
proportionate share of the Portfolio's expenses. N&B Equity Trust and N&B
Equity Assets do not sell their shares directly to members of the general
public. Other investors in a Portfolio are not required to sell their shares
at the same public offering price as a Fund, could have a different
administration fee and expenses than a Fund, and (except N&B Equity Trust and
N&B Equity Assets) might charge a sales commission. Therefore, Fund
shareholders may have different returns than shareholders in another
investment company that invests exclusively in the Portfolio. There is
currently no such other investment company that offers its shares directly to
members of the general public. Information regarding any fund that may invest
in a Portfolio in the future will be available from N&B Management by calling
800-877-9700.
The trustees of the Trust believe that investment in a Portfolio by a
series of N&B Equity Trust or N&B Equity Assets or by other potential
investors in addition to a Fund may enable the Portfolio to realize economies
of scale that could reduce its operating expenses, thereby producing higher
returns and benefitting all shareholders. However, a Fund's investment in its
corresponding Portfolio may be affected by the actions of other large
investors in the Portfolio, if any. For example, if a large investor in a
Portfolio (other than a Fund) redeemed its interest in the Portfolio, the
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower
returns.
Each Fund may withdraw its entire investment from its corresponding
Portfolio at any time, if the trustees of the Trust determine that it is in
the best interests of the
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<PAGE>
Fund and its shareholders to do so. A Fund might withdraw, for example, if
there were other investors in a Portfolio with power to, and who did by a
vote of all investors (including the Fund), change the investment objective,
policies, or limitations of the Portfolio in a manner not acceptable to the
trustees of the Trust. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio to
the Fund. That distribution could result in a less diversified portfolio of
investments for the Fund and could affect adversely the liquidity of the
Fund's investment portfolio. If the Fund decided to convert those securities
to cash, it usually would incur brokerage fees or other transaction costs. If
a Fund withdrew its investment from a Portfolio, the trustees of the Trust
would consider what actions 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 manager to manage its assets in
accordance with its investment objective, policies, and limitations. The
inability of the Fund to find a suitable replacement could have a significant
impact on shareholders.
INVESTOR MEETINGS AND VOTING. Each Portfolio normally will not hold
meetings of investors except as required by the 1940 Act. Each investor in a
Portfolio will be entitled to vote in proportion to its relative beneficial
interest in the Portfolio. On most issues subjected to a vote of investors, a
Fund will solicit proxies from its shareholders and will vote its interest in
the Portfolio in proportion to the votes cast by the Fund's shareholders. If
there are other investors in a Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all Portfolio investors; indeed, if other
investors hold a majority interest in a Portfolio, they could have voting
control of the Portfolio.
CERTAIN PROVISIONS. Each investor in a Portfolio, including a Fund, will
be liable for all obligations of the Portfolio. However, the risk of an
investor in a Portfolio incurring financial loss beyond the amount of its
investment on account of such liability would be limited to circumstances in
which the Portfolio had inadequate insurance and was unable to meet its
obligations out of its assets. Upon liquidation of a Portfolio, investors
would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to investors.
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HOW TO BUY SHARES
You can buy shares of any Fund directly by mail, wire, or telephone or
through an exchange of shares of another Neuberger&Berman Fund (see "Funds
Eligible for Exchange"). Shares are purchased at the next price calculated on
a day the New York Stock Exchange ("NYSE") is open, after your purchase order
is received and accepted. Prices for shares of all Funds are usually
calculated as of 4 p.m. Eastern time.
Minimum investment requirements are shown below. In addition, you can
invest as little as $100 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 whose shares you want to buy. If
this is your FIRST PURCHASE of shares of a Fund, please complete and sign an
application for a new Fund account and send it along with a check or money
order for a minimum of $1,000. For each ADDITIONAL PURCHASE, please send at
least $100 for shares of any Fund. YOUR CHECK OR MONEY ORDER MUST BE MADE
PAYABLE ON ITS FACE TO NEUBERGER&BERMAN FUNDS, OTHERWISE IT CANNOT BE
ACCEPTED. THIRD PARTY CHECKS WILL NOT BE ACCEPTED.
By Wire
Call 800-877-9700 for instructions on how to wire money to buy shares.
Your wire goes to State Street Bank and Trust Company ("State Street") and
must include your name, the name of the Fund whose shares you want to buy,
and your account number. The minimum for a FIRST PURCHASE and for each
ADDITIONAL PURCHASE of shares of any Fund by wire is $1,000.
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By Telephone
Call 800-877-9700 to buy shares of any Fund. The minimum for a FIRST
PURCHASE and for each ADDITIONAL PURCHASE of shares of any 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 a Fund or its agents have incurred.
To recover those losses or fees, a Fund has the right to bill you or to
redeem shares from your account. To meet the three-day deadline, you can wire
payment, send a check through overnight mail, or call 800-877-9700 for
information on how to make an electronic transfer through your bank. Please
refer to "Additional Information on Telephone Transactions."
By Exchanging Shares
Call 800-877-9700 for instructions on how to invest by exchanging shares
of another Neuberger&Berman Fund for shares of a Fund. To buy Fund shares
through an exchange, both fund accounts must be registered in the same name,
address, and taxpayer ID number. The minimum for a FIRST PURCHASE and for
each ADDITIONAL PURCHASE of shares of any Fund by an exchange is $1,000 worth
of shares of the other fund. For more details, see "Shareholder Services --
Exchange Privilege" and "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), by bank or federal funds wire
transfer, or by electronic bank transfer; cash cannot be accepted.
[bullet] Each Fund has the right to suspend the offering of its shares for a
period of time. Each Fund also has the right to accept or reject a
purchase order in its sole discretion, including certain purchase
orders using the exchange privilege. See "Shareholder Services --
Exchange Privilege."
[bullet] If you pay by check and your check does not clear, or if you order
shares by telephone and fail to pay for them, your purchase will be
canceled and you could be liable for any resulting losses or fees a
Fund or its agents have incurred. To recover those losses or fees,
a Fund has the right to bill you or to redeem shares from your
account.
[bullet] When you sign your application for a new Fund account, you are
certifying that your Social Security or other taxpayer ID number is
correct and that you are not subject to backup withholding. If you
violate certain federal income tax provisions, the Internal Revenue
Service can require the Funds to withhold 31% of your distributions
and redemptions.
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[bullet] You can also buy shares of the Funds indirectly through certain
stockbrokers, banks, and other financial institutions, some of
which may charge you a fee.
[bullet] The Funds will not issue a certificate for your shares unless you
write to State Street and request one. Most shareholders do not
want a certificate because you must present the certificate to sell
or exchange the shares it represents. This means that you would be
able to sell or exchange those shares only by mail, and not by
telephone or fax. If you lose your certificate, you will have to
pay the expense of replacing it.
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HOW TO SELL SHARES
You can sell (redeem) all or some of your shares at any time by mail, fax,
or telephone. HOWEVER, IF YOU HAVE A CERTIFICATE FOR YOUR SHARES (INCLUDING
SHARES OF A FUND'S PREDECESSOR), YOU CAN REDEEM THOSE SHARES ONLY BY SENDING
THE CERTIFICATE BY MAIL. You can also sell shares by exchanging them for
shares of other Neuberger&Berman Funds; see "Shareholder Services -- Exchange
Privilege" for details.
TO SELL SHARES HELD IN A RETIREMENT ACCOUNT OR BY A TRUST, ESTATE,
GUARDIAN, OR BUSINESS ORGANIZATION, PLEASE CALL 800-877-9700 FOR
INSTRUCTIONS.
Shares are sold at the next price calculated on a day the NYSE is open,
after your sales order is received and accepted. Prices for shares of all
Funds are usually calculated as of 4 p.m. Eastern time.
Unless otherwise instructed, the Fund will mail a check for your sales
proceeds, payable to the owner(s) shown on your account ("record owner"), to
the address shown on your account ("record address"). You may designate in
your Fund application a bank account to which, at your request, State Street
will transfer your sales proceeds electronically (at no charge to you) or
will wire your sales proceeds. State Street currently charges a fee of $8.00
for each wire. However, if you have one or more accounts in the
Neuberger&Berman Funds aggregating $200,000 or more in value, you will not be
charged for wire redemptions; your $8.00 fee will be paid by N&B Management.
If you purchased shares indirectly through certain stockbrokers, banks, or
other financial institutions, you may sell those shares only through those
organizations, some of which may charge you a fee.
By Mail or Facsimile Transmission (Fax)
Write a redemption request letter with your name and account number, the
Fund's name, and the dollar amount or number of shares of the Fund you want
to sell, together with any other instructions, and send it by mail to:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
or by overnight courier, U.S. Express Mail, or registered or certified
mail to:
Neuberger&Berman Funds
c/o State Street Bank and Trust Company
2 Heritage Drive
North Quincy, MA 02171
or by fax, to redeem up to $50,000 worth of shares, to 212-476-8848. Be sure
to have all owners sign the request exactly as their names appear on the
account and include the certificate for your shares if you have one. If
shares are issued in certificate form, they are not eligible to be redeemed
by fax. If you have changed the record address
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by telephone or fax, shares may not be redeemed by fax for 15 days after
receipt of the address change. Please call 800-877-9700 to confirm receipt
and acceptance of any order submitted by fax.
To protect you and the Fund against fraud, your signature on a redemption
request must have a SIGNATURE GUARANTEE if (1) you want to sell more than
$50,000 worth of shares, (2) you want the redemption check to be made out to
someone other than the record owner, (3) you want the check to be mailed
somewhere other than the record address, or (4) you want the proceeds to be
wired or transferred electronically to a bank account not named in your
application or in your prior written instruction with a signature guarantee.
You can obtain a signature guarantee from most banks, stockbrokers and
dealers, credit unions, and other financial institutions, but not from a
notary public. A redemption request that requires a signature guarantee
should be sent by mail.
For a redemption request sent by fax, limited to not more than $50,000,
the redemption check may be made out only to the record owner and mailed to
the record address or the proceeds wired or transferred electronically to a
bank account named in your application or in a written instruction from the
record owner with a signature guarantee.
Please call 800-877-9700 for more specific information about the signature
guarantee requirement.
By Telephone
To sell shares worth at least $500, call 800-877-9700, giving your name
and account number, the name of the Fund, and the dollar amount or number of
shares you want to sell.
You can sell shares by telephone unless (1) you have declined this service
either in your application or later by writing or by submitting an
appropriate form to State Street, (2) you have a certificate for such shares,
or (3) you want to sell shares from a retirement account. In addition, if you
have changed the record address by telephone or fax, shares may not be
redeemed by telephone for 15 days after receipt of the address change.
Please refer to "Additional Information on Telephone Transactions."
Other Information
[bullet] Usually, redemption proceeds will be mailed on the next business
day, but in any case within three business days (under unusual
circumstances the Funds may take longer, as permitted by law). You
may also call 800-877-9700 for information on how to receive
electronic transfers through your bank.
[bullet] Each Fund may delay paying for any redemption until it is
reasonably satisfied that the check used to buy shares has cleared,
which may take up to 15 days after the
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<PAGE>
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] Each Fund may suspend redemptions or postpone payments on days when
the NYSE is closed (besides weekends and holidays), when trading on
the NYSE is restricted, or as permitted by the SEC.
[bullet] If, because you sold shares, your account balance with any 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 price on the date of redemption and will
send the redemption proceeds to you.
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<PAGE>
ADDITIONAL INFORMATION ON TELEPHONE
TRANSACTIONS
A Fund at any time can limit the number of its shares you can buy by
telephone or can stop accepting telephone orders. You can sell or exchange
shares by telephone, unless (1) you have declined these services in your
application or by written notice to N&B Management or State Street, with your
signature guaranteed, or (2) you have a certificate for such shares. Each
Fund or its agent follows reasonable procedures -- requiring you to provide a
form of personal identification when you telephone, recording your telephone
call, and sending you a written confirmation of each telephone transaction --
designed to confirm that telephone instructions are genuine. However, no Fund
or its agent is responsible for the authenticity of telephone instructions or
for any losses caused by fraudulent or unauthorized telephone instructions if
the Fund or its agent reasonably believed that the instructions were genuine.
If you are unable to reach N&B Management by telephone (which might be the
case, for example, during periods of unusual market activity), consider
sending your transaction instructions by fax, overnight courier, or U.S.
Express Mail.
You can buy, sell or exchange shares using an automated telephone service
that is available 24 hours a day, every day, to investors using a touch-tone
phone. Further information regarding this service, including use of a
Personal Identification Number (PIN) and a menu of features, is available
from N&B Management by calling 800-877-9700.
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<PAGE>
SHAREHOLDER SERVICES
Several services are available to assist you in making and managing your
investment in the Funds.
Automatic Investing and Dollar Cost Averaging
If you want to invest regularly, you may participate in a plan that lets
you automatically buy a minimum of $100 worth of shares in any Fund each
month using dollar cost averaging. Under this plan, you buy a fixed dollar
amount of shares in any of the Funds at pre-set intervals. You may pay for
the shares by automatic transfers from your account in any Neuberger&Berman
money market fund or by pre- authorized checks or electronic transfers drawn
on your bank account. You buy more shares when a Fund's share price is
relatively low and fewer shares when a Fund's share price is relatively high.
Thus, under this plan your average cost of shares would generally be lower
than if you bought a fixed number of shares at the same intervals. To benefit
from dollar cost averaging, you should be financially prepared to continue
your participation for a long enough period to include times when Fund share
prices are lower. Of course, the plan does not guarantee a profit and will
not protect you against losses in a declining market. For further
information, call 800-877-9700.
Exchange Privilege
To exchange your shares in a Fund for shares in another Neuberger&Berman
Fund, call 800-877-9700 between 8 a.m. and 4 p.m., Eastern time, on any
Monday through Friday (unless the NYSE is closed). See "Funds Eligible for
Exchange." You may also effect an exchange by sending a letter to
Neuberger&Berman Management Incorporated, 605 Third Avenue, 2nd Floor, New
York, NY 10158-0180, Attention: [Name of Fund], or by submitting the letter
by fax to 212-476-8848, giving your name and account number, the name of the
Fund, the dollar amount or number of shares you want to sell, and the name of
the Neuberger&Berman Fund whose shares you want to buy. Please call
800-877-9700 to confirm receipt and acceptance of any order submitted by fax.
If you have a certificate for your shares, you can exchange them only by
mailing the certificate with your letter requesting the exchange. You can use
the telephone exchange privilege unless (1) you have declined it in your
application or by later writing to N&B Management or State Street, or (2) you
have a certificate for such shares. An exchange must be for at least $1,000
worth of shares, and, if the exchange is your FIRST PURCHASE in another
Neuberger&Berman Fund, it must be for at least the minimum initial investment
amount for that fund. Shares are exchanged at the next price calculated on a
day the NYSE is open, after your exchange order is received and accepted.
Please note the following about the exchange privilege:
[bullet] You can exchange shares ONLY between accounts registered in the
same name, address, and taxpayer ID number.
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<PAGE>
[bullet] An exchange order cannot be modified or canceled.
[bullet] You can exchange only into a 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 a Fund's performance, each Fund may refuse any
exchange orders (1) if they appear to the Fund to be market-timing
transactions involving significant portions of the Fund's assets or
(2) from any shareholder account if the shareholder previously has
been notified by the Fund that the shareholder's 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] Each Fund may impose other restrictions on the exchange privilege,
or modify or terminate the privilege, but will try to give you
advance notice whenever it can reasonably do so.
Please refer to "Additional Information on Telephone Transactions."
Systematic Withdrawal Plans
If you own shares of a Fund worth at least $5,000, you can open a
Systematic Withdrawal Plan. Under such a plan, you arrange to withdraw a
specific amount (at least $50) on a monthly, quarterly, semi-annual, or
annual basis, or you can have your account completely paid out over a
specified period of time. You can also arrange for periodic cash withdrawals
from your Fund account to pay fees to your financial planner or investment
adviser. Because the price of shares of each Fund fluctuates, you may incur
capital gains or losses when you redeem shares of the Funds through a
Systematic Withdrawal Plan or by other methods. Call 800-877-9700 for more
information.
Retirement Plans
Retirement plans permit you to defer paying taxes on investment income and
capital gains. Contributions to these plans may also be tax deductible.
Please call 800-877-9700 for information on a variety of retirement plans
offered by N&B Management, 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, section 403(b)(7) accounts, and
beginning in 1997 savings incentive match plans for employees (SIMPLE
Retirement Plans)--IRA version only. The assets of these plans may be
invested in any of the Funds.
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Electronic Bank Transfers
You may designate, either in your application or later by writing or by
submitting an appropriate form to State Street, a bank account through which
State Street will electronically transfer monies to you or from you at
pre-set intervals (such as under a Systematic Withdrawal Plan or automatic
investing plan or for payment of cash distributions) or upon your request.
Please include a voided check with your application. This service is not
available for retirement accounts.
State Street does not charge a fee for this service; however, you should
contact your bank to ensure that it is able to process electronic transfers.
Please call 800-877-9700 for more information. If you wish to terminate this
service, you must call at least 10 calendar days before the next scheduled
electronic transfer.
Internet Access
N&B Management now maintains an Internet site on the World Wide Web at
HTTP://WWW.NBFUNDS.COM. Fund prices, informative articles and interactive
worksheets, and the prospectuses of certain other Neuberger&Berman Funds can
be accessed.
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SHARE PRICES AND NET ASSET VALUE
Each Fund's shares are bought or sold at a price that is the Fund's net
asset value ("NAV") per share. The NAVs for each Fund and its corresponding
Portfolio are calculated by subtracting liabilities from total assets (in the
case of a Portfolio, the market value of the securities the Portfolio holds
plus cash and other assets; in the case of a Fund, its percentage interest in
its corresponding Portfolio, multiplied by the Portfolio's NAV, plus any
other assets). Each Fund's per share NAV is calculated by dividing its NAV by
the number of Fund shares outstanding and rounding the result to the nearest
full cent. Each Fund and its corresponding 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.
Each Portfolio (except Neuberger&Berman INTERNATIONAL Portfolio) values
securities (including options) listed on the NYSE, the American Stock
Exchange or other national securities exchanges or quoted on Nasdaq, and
other securities for which market quotations are readily available, at the
last sale price on the day the securities are being valued. If there is no
reported sale of such a security on that day, the security is valued at the
mean between its closing bid and asked prices. These Portfolios value all
other securities and assets, including restricted securities, by a method
that the trustees of Equity Managers Trust believe accurately reflects fair
value.
Neuberger&Berman INTERNATIONAL Portfolio values equity securities 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 regular trading on the NYSE 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 Global Managers Trust believe accurately reflects fair value.
Neuberger&Berman INTERNATIONAL Portfolio's portfolio securities are traded
primarily in foreign markets which may be open on days when the NYSE is
closed. As a result, the NAV of Neuberger&Berman INTERNATIONAL Fund may be
significantly affected on days when shareholders have no access to that Fund.
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DIVIDENDS, OTHER DISTRIBUTIONS,
AND TAXES
Each Fund distributes, normally in December, substantially all of its
share of any net investment income (net of the Fund's expenses), net realized
capital gains, and net realized gains from foreign currency transactions
earned or realized by its corresponding Portfolio. In addition,
Neuberger&Berman GUARDIAN Fund distributes substantially all of its share of
Neuberger&Berman GUARDIAN Portfolio's net investment income, if any, near the
end of each calendar quarter.
Distribution Options
REINVESTMENT IN SHARES. All dividends and other distributions paid on
shares of a Fund are automatically reinvested in additional shares of that
Fund, unless you elect to receive them in cash. Dividends and other
distributions are reinvested at the Fund's per share NAV, usually as of the
date the dividend or other 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 elect to receive distributions in cash
without incurring a premature distribution penalty tax.
DIVIDENDS IN CASH. You may elect to receive dividends in cash, with other
distributions being reinvested in additional Fund shares, by checking that
election box on your application.
ALL DISTRIBUTIONS IN CASH. You may elect to receive all dividends and
other distributions in cash, by checking that election box on your
application.
Checks for cash dividends and other distributions usually will be mailed
no later than seven days after the payable date. However, if you purchased
your shares with a check, distributions on those shares may not be paid in
cash until the Fund is reasonably satisfied that your check has cleared,
which may take up to 15 days after the purchase date. Cash dividends and
other distributions also may be paid through an electronic transfer to a bank
account designated in your Fund application. Call 800-877-9700 for more
information. You can change any distribution election by writing to State
Street, the Funds' shareholder servicing agent.
Taxes
Each Fund intends to continue to qualify for treatment as a regulated
investment company for federal income tax purposes so that it will be
relieved of federal income tax on that part of its taxable income and
realized gains that it distributes to its shareholders.
Your investment has certain tax consequences, depending on the type of
your account. If you have a qualified RETIREMENT ACCOUNT, taxes are deferred.
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TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax
and may also be subject to state and local income taxes. Your distributions
are taxable when they are paid, whether in cash or by reinvestment in
additional Fund shares, except that distributions declared in December to
shareholders of record on a date in that month and paid in the following
January are taxable as if they were paid on December 31 of the year in
which the distributions were declared. If you buy Fund shares just before a
Fund deducts a dividend or other distribution from its NAV, you will pay the
full price for the shares and then receive a portion of the price back in the
form of a taxable distribution. Investors who are considering the purchase of
Fund shares in December (or, in the case of Neuberger&Berman GUARDIAN Fund,
near the end of a calendar quarter) should take this into account.
For federal income tax purposes, dividends and distributions of net
short-term capital gain and net 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. Distributions of net capital gain
may include gains from the sale of portfolio securities that appreciated in
value before you bought your shares.
Every January, your Fund will send you a statement showing the amount of
distributions paid (or deemed paid) to you in the previous year. Information
accompanying your statement will show the portion, if any, of those
distributions that generally are not taxable in certain states.
TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund
shares, including redemptions in connection with exchanges to other
Neuberger&Berman Funds, are subject to tax. A capital gain or loss is the
difference between the amount you paid for the shares (including the amount
of any dividends and other distributions that were reinvested) and the amount
you receive when you sell them.
When you sell shares, you will receive a confirmation statement showing
the number of shares you sold and the price. Every January, you will also
receive a consolidated transaction statement for the previous year. Be sure
to keep your statements; they will be useful to you and your tax preparer in
determining the capital gains and losses from your redemptions.
The foregoing is only a summary of some of the important income tax
considerations affecting each 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 the Managers Trusts have
oversight responsibility for the operations of each Fund and each Portfolio,
respectively. The SAI contains general background information about each
trustee and officer of the Trust and of the Managers Trusts. The trustees and
officers of the Trust and of the Managers Trusts who are officers and/or
directors of N&B Management and/or principals of Neuberger&Berman serve
without compensation from the Funds or the Portfolios. All trustees of the
Managers Trusts also serve as trustees of the Trust. The trustees of the
Trust and of the Managers Trusts, including a majority of those trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust or the
Managers Trusts, have adopted written procedures reasonably appropriate to
deal with potential conflicts of interest between the Trust and the Managers
Trusts, including, if necessary, creating a separate board of trustees of the
Managers Trusts.
Investment Manager, Administrator,
Distributor, and Sub-Adviser
N&B Management serves as the investment manager of each Portfolio, as
administrator of each Fund, and as distributor of the shares of each Fund.
N&B Management and its predecessor firms have specialized in the management
of no-load mutual funds since 1950. In addition to serving the seven
Portfolios, N&B Management currently serves as investment manager of other
mutual funds. Neuberger&Berman, which acts as sub-adviser for the Portfolios
and other mutual funds managed by N&B Management, also serves as investment
adviser of three other investment companies. The mutual funds managed by N&B
Management and Neuberger&Berman had aggregate net assets of approximately
$13.9 billion as of September 30, 1996.
As sub-adviser, Neuberger&Berman furnishes N&B Management with investment
recommendations and research without added cost to the Portfolios.
Neuberger&Berman is a member firm of the NYSE and other principal exchanges
and may act as the Portfolios' broker in the purchase and sale of their
securities. Neuberger&Berman and its affiliates, including N&B Management,
manage securities accounts that had approximately $42.9 billion of assets as
of September 30, 1996. All of the voting stock of N&B Management is owned by
individuals who are principals of Neuberger&Berman.
State Street Cayman Trust Company, Ltd., located in George Town, Grand
Cayman, Cayman Islands, British West Indies, provides certain administrative,
fund accounting and transfer agency services for Neuberger&Berman
INTERNATIONAL Portfolio, which has its principal offices in the Cayman
Islands.
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The following is information about the individuals who are primarily
responsible for the day-to-day management of the Portfolios:
Neuberger&Berman FOCUS Portfolio and Neuberger&Berman GUARDIAN Portfolio
- -- Kent C. Simons, Lawrence Marx III, and Kevin L. Risen. Mr. Simons and Mr.
Marx are Vice Presidents of N&B Management and principals of
Neuberger&Berman. Mr. Simons has had responsibility for Neuberger&Berman
FOCUS Portfolio and Neuberger&Berman FOCUS Fund's predecessor since 1988, and
for Neuberger& Berman GUARDIAN Portfolio and Neuberger&Berman GUARDIAN Fund's
predecessor since 1983. Mr. Marx has had those responsibilities since 1988.
Mr. Risen has had those responsibilities since 1996. Mr. Risen has been an
Assistant Vice President of N&B Management since May 1996 and a portfolio
manager for Neuberger&Berman since 1995. He was a research analyst at
Neuberger&Berman from 1992 to 1995; from 1990 to 1992, he was a research
analyst at another prominent financial services firm.
Neuberger&Berman GENESIS Portfolio -- Judith M. Vale. Ms. Vale has been a
member of Neuberger&Berman's Small Cap Group since 1992, a Vice President of
N&B Management since November 1994 and a principal of Neuberger&Berman since
July 1996. She has been primarily responsible for the day-to-day management
of Neuberger&Berman GENESIS Portfolio since February 1994. Ms. Vale was a
portfolio manager for another investment management group from 1990 to 1992.
Neuberger&Berman INTERNATIONAL Portfolio -- Felix Rovelli and Robert
Cresci. Mr. Rovelli has been responsible for Neuberger&Berman INTERNATIONAL
Portfolio since its inception in June 1994. 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 served as
first vice president and portfolio manager of another mutual fund that
invested in international equity securities from April 1990 to April 1994.
Mr. Cresci is an Assistant Vice President of N&B Management and was an
Assistant Portfolio Manager of BNP-N&B Global from May 1994 until October
1995. He served as an assistant portfolio manager of another mutual fund that
invested in international equity securities from November 1992 until May 1994
and as an associate with a money manager from September 1989 until October
1992.
Neuberger&Berman MANHATTAN Portfolio -- Mark R. Goldstein and Susan
Switzer. Mr. Goldstein is a Vice President of N&B Management and a principal
of Neuberger&Berman. Previously he was a securities analyst and portfolio
manager with that firm. He has had responsibility for Neuberger&Berman
MANHATTAN Portfolio and Neuberger&Berman MANHATTAN Fund's predecessor since
June 1992. Ms. Switzer has been an Assistant Vice President of N&B Management
since March 1995 and a portfolio manager for Neuberger&Berman since January
1995. Ms. Switzer was a research analyst and assistant portfolio manager for
another money management firm from 1989 to 1994.
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Neuberger&Berman PARTNERS Portfolio -- Michael M. Kassen and Robert I.
Gendelman. Mr. Kassen is a Vice President of N&B Management and a principal
of Neuberger&Berman. He has had responsibility for Neuberger&Berman PARTNERS
Portfolio and Neuberger&Berman PARTNERS Fund's predecessor since June 1990.
Mr. Kassen was an employee of N&B Management from 1990 to December 1992. Mr.
Gendelman is a senior portfolio manager for Neuberger&Berman and an Assistant
Vice President of N&B Management. Mr. Gendelman has had responsibility for
Neuberger&Berman PARTNERS Portfolio since October 1994. He was a portfolio
manager for another mutual fund manager from 1992 to 1993 and was managing
partner of an investment partnership from 1988 to 1992.
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio -- Janet Prindle. Ms. Prindle,
a Vice President of N&B Management since November 1993, has been a principal of
Neuberger&Berman since 1983. Ms. Prindle is Director of Socially Responsive
Investment Services at Neuberger&Berman, and has been researching and developing
corporate responsibility criteria as they apply to investments since 1989. She
has been managing money using these criteria since 1990. Ms. Prindle has been
responsible for Neuberger&Berman SOCIALLY RESPONSIVE Portfolio since its
inception in March 1994.
Neuberger&Berman acts as the principal broker for the Portfolios (except
Neuberger&Berman INTERNATIONAL Portfolio), and may act as broker for
Neuberger& Berman INTERNATIONAL Portfolio, in the purchase and sale of
portfolio securities and in the purchase and sale of options, and for those
services receives brokerage commissions. In effecting securities
transactions, each Portfolio seeks to obtain the best price and execution of
orders. For more information, see the SAI.
The principals and employees of Neuberger&Berman and officers and
employees of N&B Management, together with their families, have invested over
$100 million of their own money in Neuberger&Berman Funds.
To mitigate the possibility that a Portfolio will be adversely affected by
employees' personal trading, the Trust, the Managers Trusts, N&B Management,
and Neuberger&Berman have adopted policies that restrict securities trading
in the personal accounts of the portfolio managers and others who normally
come into possession of information on portfolio transactions.
Expenses
N&B Management provides investment management services to each Portfolio
that include, among other things, making and implementing investment
decisions and providing facilities and personnel necessary to operate the
Portfolio. N&B Management provides administrative services to each Fund that
include furnishing similar facilities and personnel for the
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Fund and performing certain shareholder, shareholder-related, and other
services. For such administrative services, each Fund pays N&B Management a
fee at the annual rate of 0.26% of that Fund's average daily net assets. With
a Fund's consent, N&B Management may subcontract to third parties some of its
responsibilities to that Fund under the administration agreement. In
addition, a Fund may compensate such third parties for accounting and other
services. For investment management services, each Portfolio (except
Neuberger&Berman GENESIS Portfolio and Neuberger&Berman INTERNATIONAL
Portfolio) pays N&B Management a fee at the annual rate of 0.55% of the first
$250 million of that Portfolio's average daily net assets, 0.525% of the next
$250 million, 0.50% of the next $250 million, 0.475% of the next $250
million, 0.45% of the next $500 million, and 0.425% of average daily net
assets in excess of $1.5 billion. Neuberger&Berman GENESIS Portfolio pays N&B
Management a fee for investment management services at the annual rate of
0.85% of the first $250 million of the Portfolio's average daily net assets,
0.80% of the next $250 million, 0.75% of the next $250 million, 0.70% of the
next $250 million, and 0.65% of average daily net assets in excess of $1
billion. Neuberger&Berman INTERNATIONAL Portfolio pays N&B Management a fee
for investment management services 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 1996 fiscal year, each Fund accrued administration fees and a
pro rata portion of the corresponding Portfolio's management fees (prior to
any expense reimbursement or fee waiver), as a percentage of the Fund's
average daily net assets, as follows:
Neuberger&Berman FOCUS Fund 0.77%
Neuberger&Berman GENESIS Fund 1.11%
Neuberger&Berman GUARDIAN Fund 0.70%
Neuberger&Berman INTERNATIONAL Fund 1.11%
Neuberger&Berman MANHATTAN Fund 0.79%
Neuberger&Berman PARTNERS Fund 0.74%
Neuberger&Berman SOCIALLY RESPONSIVE Fund 0.80%
Each Fund bears all expenses of its operations other than those borne by
N&B Management as administrator of the Fund and as distributor of its shares.
Each Portfolio bears all expenses of its operations other than those borne by
N&B Management as investment manager of the Portfolio. These expenses
include, but are not limited to, for the Funds and Portfolios, legal and
accounting fees and compensation for trustees who are not affiliated with N&B
Management; for the Funds, transfer agent fees and the cost of printing and
sending reports and proxy materials to shareholders; and for the Portfolios,
custodial fees for securities.
See "Expense Information -- Annual Fund Operating Expenses" for
information about how these fees and expenses may affect the value of your
investment.
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N&B Management has voluntarily undertaken until December 31, 1997, to
reimburse Neuberger&Berman SOCIALLY RESPONSIVE Fund for its Operating
Expenses and its pro rata share of its corresponding Portfolio's Operating
Expenses which exceed, in the aggregate, 1.50% per annum of the Fund's
average daily net assets. The Fund has in turn agreed to repay N&B Management
through March 14, 1998, for the excess Operating Expenses that N&B Management
reimbursed to the Fund through March 14, 1996, so long as the Fund's annual
Operating Expenses during that period do not exceed the above expense
limitation. N&B Management has voluntarily agreed to waive a portion of the
management fee borne directly by Neuberger&Berman GENESIS Portfolio and
indirectly by Neuberger&Berman Genesis Fund to reduce the fee by 0.10% per
annum of the average daily net assets of Neuberger&Berman GENESIS Portfolio.
N&B Management has voluntarily undertaken until December 31, 1997 to
reimburse Neuberger&Berman INTERNATIONAL Fund for its Operating Expenses and
its pro rata share of the Operating Expenses of its corresponding Portfolio
that exceed, in the aggregate, 1.70% per annum of the Fund's average daily
net assets. The Fund has in turn agreed to repay N&B Management through
December 31, 1998, for the excess Operating Expenses that N&B Management
reimbursed to the Fund through December 31, 1996, so long as the Fund's
annual Operating Expenses during that period do not exceed the above expense
limitation. The effect of reimbursement or a waiver by N&B Management is to
reduce a Fund's expenses and thereby increase its total return.
During its 1996 fiscal year, each Fund bore total operating expenses as a
percentage of its average daily net assets (after taking into consideration
N&B Management's expense reimbursement for Neuberger&Berman SOCIALLY
RESPONSIVE Fund and for Neuberger&Berman INTERNATIONAL Fund and N&B
Management's waiver of a portion of the management fee borne indirectly by
Neuberger&Berman GENESIS Fund), as follows:
Neuberger&Berman FOCUS Fund 0.89%
Neuberger&Berman GENESIS Fund 1.28%
Neuberger&Berman GUARDIAN Fund 0.82%
Neuberger&Berman INTERNATIONAL Fund 1.70%
Neuberger&Berman MANHATTAN Fund 0.98%
Neuberger&Berman PARTNERS Fund 0.84%
Neuberger&Berman SOCIALLY RESPONSIVE Fund 1.50%
Transfer and Shareholder Servicing Arrangements
The Funds' transfer and shareholder servicing agent is State Street. State
Street administers purchases, redemptions, and transfers of Fund shares and
the payment of dividends and other distributions through its Boston Service
Center, P.O. Box 8403, Boston, MA 02266-8403.
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DESCRIPTION OF INVESTMENTS
In addition to common stocks and other securities referred to in
"Investment Programs" herein, each 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. For additional information on the
following investments and on other types of investments which the Portfolios
may make, see the SAI.
ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net assets
(5% in the case of Neuberger&Berman GENESIS Portfolio) in illiquid
securities, which are securities that cannot be expected to be sold within
seven days at approximately the price at which they are valued. Due to the
absence of an active trading market, a Portfolio may experience difficulty in
valuing or disposing of illiquid securities. N&B Management determines the
liquidity of the Portfolios' securities, under general supervision of the
trustees of the Managers Trusts.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. Each Portfolio may invest
in restricted securities and Rule 144A securities. Restricted securities
cannot be sold to the public without registration under the Securities Act of
1933 ("1933 Act"). Unless registered for sale, these securities can be sold
only in privately negotiated transactions or pursuant to an exemption from
registration. Rule 144A securities, although not registered, may be resold to
qualified institutional buyers in accordance with Rule 144A under the 1933
Act. Unregistered securities may also be sold abroad pursuant to Regulation S
under the 1933 Act. Foreign securities that are freely tradeable in their
principal market are not considered restricted securities even if they are
not registered for sale in the United States. Restricted securities are
generally considered illiquid. N&B Management, acting pursuant to guidelines
established by the trustees of the Managers Trusts, may determine that some
restricted or Rule 144A securities are liquid.
FOREIGN SECURITIES. Foreign securities are those of issuers organized and
doing business principally outside the United States, including non-U.S.
governments, their agencies, and instrumentalities. Each Portfolio (except
Neuberger&Berman INTERNATIONAL Portfolio) may invest up to 10% of the value
of its total assets in foreign securities. The 10% limitation does not apply
to foreign securities that are denominated in U.S. dollars, including ADRs.
Neuberger&Berman INTERNATIONAL Portfolio invests primarily in foreign
securities. The Portfolio may 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 sponsored ADRs, but not
unsponsored ADRs, are contractually obligated to disclose material
information in the United States. Therefore, the market value of unsponsored
ADRs may not reflect the effect of such information. EDRs and IDRs
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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, which may
cause delays and expose a Portfolio to the creditworthiness of a foreign
broker; difficulty in pricing some foreign securities; less public
information about issuers of securities; less governmental regulation and
supervision of 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,
nationalization, or confiscatory taxation; the imposition of foreign
withholding and other taxes; potentially adverse local political, economic,
social, or diplomatic developments; limitations on the movement of funds or
other assets of a Portfolio between different countries; difficulties in
invoking legal process and enforcing contractual obligations abroad; and the
difficulty of assessing economic trends in foreign countries. Investment in
foreign securities also may involve higher brokerage and custodial expenses
than investment in domestic securities.
In addition, investing in foreign securities 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) and devaluations of foreign currencies. Some foreign
currencies may be volatile. A decline in the exchange rate between the U.S.
dollar and another currency will reduce the value of portfolio securities
denominated in that currency irrespective of the performance of the
underlying investment. In addition, a Portfolio generally will 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.
All of the foregoing risks may be intensified in emerging industrialized
and less developed countries.
JAPANESE INVESTMENTS. As noted above, all of the Portfolios may invest in
foreign securities, including securities of Japanese issuers. From time to
time, Neuberger& Berman INTERNATIONAL Portfolio may invest a significant
portion of its assets in securities of Japanese issuers. The performance of
the Portfolio may therefore be significantly affected by events influencing
the Japanese economy and the exchange rate between the Japanese yen and the
U.S. dollar. Japan has experienced a severe recession, including a decline in
real estate values and other events that adversely affected the balance
sheets of many financial institutions and indicate that there may be
structural weaknesses in the Japanese financial system. The effects of this
economic downturn
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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. Japan's 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. Neuberger&Berman INTERNATIONAL 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 those 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
other funds may involve the payment of substantial premiums above the value
of such issuers' portfolio securities. Neuberger&Berman INTERNATIONAL
Portfolio does not intend to invest in such funds unless, in the judgment of
N&B Management, the potential benefits of such investment justify the payment
of any applicable premium or sales charge.
COVERED CALL OPTIONS. Each Portfolio may try to reduce the risk of
securities price changes (hedge) or generate income by writing (selling)
covered call options against portfolio securities having a market value not
exceeding 10% of its net assets and may purchase call options in related
closing transactions. The 10% limitation does not apply to Neuberger&Berman
INTERNATIONAL Portfolio. The purchaser of a call option acquires the right to
buy a portfolio security at a fixed price during a specified period. The
maximum price the Portfolio may realize on the security during the option
period is the fixed price; the Portfolio continues to bear the risk of a
decline in the security's price, although this risk is reduced, at least in
part, by the premium received for writing the option.
FOREIGN CURRENCY TRANSACTIONS. Neuberger&Berman INTERNATIONAL Portfolio
may enter into forward contracts in order to protect against adverse changes
in 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 the value of its foreign currency denominated portfolio securities
due to a decline in the value of foreign currencies against the U.S. dollar.
Neuberger&Berman INTERNATIONAL Portfolio may also enter into forward
contracts for non-hedging purposes when N&B Management anticipates that a
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 proxy-hedging by using forward contracts in one currency to hedge
against fluctuations in the value of securities denominated in a different
currency if N&B Management believes that there is a pattern of correlation
between the two currencies.
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Proxy-hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the securities are denominated.
PUT AND CALL OPTIONS ON FOREIGN CURRENCIES, SECURITIES, AND SECURITIES
INDICES. Neuberger&Berman INTERNATIONAL Portfolio may purchase and write put
and call options on foreign currencies to protect 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 proxy-hedge. In addition, the Portfolio
may purchase put and call options on currencies for non-hedging purposes when
N&B Management expects that a 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. Options on
foreign currencies 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.
To realize greater income than would be realized on portfolio securities
transactions alone, Neuberger&Berman INTERNATIONAL Portfolio may write put
and call options on any securities in which it may invest or options on any
securities index based on securities in which the Portfolio may invest.
The Portfolio will not write a call option on a security or currency
unless it owns the underlying security or currency or has the right to obtain
it at no additional cost. The Portfolio pays brokerage commissions or spreads
in connection with its options transactions, as well as for purchases and
sales of underlying securities or currencies. The writing of options could
result in significant increases in the Portfolio's turnover rate.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Neuberger&Berman
INTERNATIONAL Portfolio may enter into futures contracts on currencies, debt
securities, interest rates, and securities indices and may purchase and sell
options on such contracts on both U.S. and foreign exchanges. The Portfolio
may engage in such transactions for hedging or non-hedging purposes.
GENERAL RISKS OF OPTIONS, FUTURES AND FORWARD CONTRACTS. The primary risks
in using put and call options, futures contracts, options on futures
contracts, and forward contracts ("Financial Instruments") are (1) imperfect
correlation or no correlation between changes in market value of the
securities or currencies held by a Portfolio and the prices of Financial
Instruments; (2) possible lack of a liquid secondary market for Financial
Instruments and the resulting inability to close out Financial Instruments
when desired; (3) the fact that use of Financial Instruments is a highly
specialized activity that involves skills, techniques, and risks (including
price volatility and a high degree of leverage) different from those
associated with selection of a Portfolio's securities; and (4) the fact that,
although use of Financial Instruments for hedging purposes can reduce the
risk of loss, they also can reduce the opportunity for gain, or even result
in losses, by offsetting favorable price movements in hedged investments.
When a Portfolio uses Financial Instruments, the Portfolio will place cash or
appropriate liquid securities in a segregated account, or will
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"cover" its position, to the extent required by SEC staff policy. Another
risk of Financial Instruments is the possible inability of a Portfolio to
purchase or sell a security at a time that would otherwise be favorable for
it to do so, or the possible need for a Portfolio to sell a security at a
disadvantageous time, due to its need to maintain cover or to segregate
securities in connection with its use of Financial Instruments. Futures,
options and forward contracts are considered "derivatives." Losses that may
arise from certain futures transactions are potentially unlimited.
SHORT SALES AGAINST-THE-BOX. Each Portfolio may make short sales
against-the-box, in which it sells securities short only if it owns or has
the right to obtain without payment of additional consideration an equal
amount of the same type of securities sold. Short selling against-the-box may
defer recognition of gains or losses into a later tax period.
SHORT SALES. Neuberger&Berman INTERNATIONAL Portfolio may attempt to limit
exposure to a possible decline in the market value of portfolio securities
through short sales of securities that N&B Management believes possess
volatility characteristics similar to those being hedged. The Portfolio also
may use short sales in an attempt to realize gain. To effect a short sale,
the Portfolio borrows a security from a brokerage firm to make delivery to
the buyer. The Portfolio then is obligated to replace the borrowed security
by purchasing it at the market price at the time of replacement. Until the
security is replaced, the Portfolio is required to pay the lender any
dividends and may be required to pay a premium or interest.
Neuberger&Berman INTERNATIONAL 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 is required to pay in
connection with a short sale. A short position may be adversely affected by
imperfect correlation between movements in the price of the securities sold
short and the securities being hedged.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. In a when-issued or
forward commitment transaction, Neuberger&Berman INTERNATIONAL Portfolio
commits to purchase securities at a future date (generally within two months)
and pays for the securities when they are delivered. If the seller fails to
complete the sale, the Portfolio may lose the opportunity to obtain a
favorable price. When-issued securities or securities subject to a forward
commitment may decline or increase in value during the period from the
Portfolio's investment commitment to the settlement of the purchase, which
may magnify fluctuations in the Portfolio's and its corresponding Fund's
NAVs.
REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, a
Portfolio buys a security from a Federal Reserve member bank (or, in the case
of Neuberger& Berman INTERNATIONAL Portfolio, also a foreign bank or a 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
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fall within the Portfolio's investment policies and limitations. Each
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. N&B Management monitors
the creditworthiness of sellers and borrowers.
REVERSE REPURCHASE AGREEMENTS. Neuberger&Berman INTERNATIONAL 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 a higher price on a specific date. The Portfolio
will place cash or appropriate liquid securities in a segregated account to
cover its obligations under reverse repurchase agreements. Such transactions
may increase fluctuations in the Portfolio's and its corresponding Fund's
NAVs and may be viewed as a form of leverage.
OTHER INVESTMENTS. Although each Portfolio invests primarily in common
stocks, when market conditions warrant it may invest in preferred stocks,
securities convertible into or exchangeable for common stocks, U.S.
Government and Agency Securities, investment grade debt securities, or money
market instruments, or may retain assets in cash or cash equivalents.
"Investment grade" debt securities are those receiving one of the four
highest ratings from Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's ("S&P"), or another nationally recognized statistical rating
organization ("NRSRO") or, if unrated by any NRSRO, deemed comparable by N&B
Management to such rated securities ("Comparable Unrated Securities").
Securities rated by Moody's in its fourth highest category (Baa) or
Comparable Unrated Securities may be deemed to have speculative
characteristics. The value of the fixed income securities in which a
Portfolio may invest is likely to decline in times of rising market interest
rates. Conversely, when rates fall, the value of a Portfolio's fixed income
investments is likely to rise.
U.S. Government Securities are obligations of the U.S. Treasury backed by
the full faith and credit of the United States. U.S. Government Agency
Securities are issued or guaranteed by U.S. Government agencies or by
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, Federal National Mortgage Association, Federal Home
Loan Mortgage Corporation, Student Loan Marketing Association, and Tennessee
Valley Authority. Some U.S. Government Agency Securities are supported by the
full faith and credit of the United States, while others may be supported by
the issuer's ability to borrow from the U.S. Treasury, subject to the
Treasury's discretion in certain cases, or only by the credit of the issuer.
U.S. Government Agency Securities include U.S. Government mortgage-backed
securities. The market prices of U.S. Government Securities are not
guaranteed by the Government.
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio may invest up to 20% of its
net assets 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
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particular period of time at a specified price or formula. Convertible
securities generally have features of both common stocks and debt securities.
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio does not intend to purchase
any convertible securities that are not investment grade.
Neuberger&Berman INTERNATIONAL 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.
Neuberger&Berman INTERNATIONAL Portfolio may invest in debt securities of
any rating, including those rated below investment grade and Comparable
Unrated Securities. Neuberger&Berman PARTNERS Portfolio may invest up to 15%
of its net assets in debt securities rated below investment grade and
Comparable Unrated Securities. Such securities may be considered
predominantly speculative, although, as debt securities, they generally have
priority over equity securities of the same issuer and are generally better
secured. 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 issuer of such
securities to make principal and interest payments than is the case for
higher-grade debt securities. An economic downturn affecting the issuer may
result in an increased incidence of default. The market for lower-rated
securities may be thinner and less active than for higher-rated securities.
Neuberger&Berman INTERNATIONAL Portfolio and Neuberger&Berman PARTNERS
Portfolio will invest in such securities only when N&B Management concludes
that the anticipated return to the Portfolio 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.
Neuberger&Berman INTERNATIONAL Portfolio may invest in indexed securities
whose values are 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. The value of indexed securities may increase or
decrease if the underlying instrument appreciates, and they may have return
characteristics similar to direct investment in the underlying instrument or
to one or more options on the underlying instrument. Indexed securities may
be more volatile than the underlying instrument itself.
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USE OF JOINT PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
Each Fund and its corresponding Portfolio acknowledges that it is solely
responsible for all information or lack of information about that Fund and
Portfolio in this Prospectus or in the SAI, and no other Fund or Portfolio is
responsible therefor. The trustees of the Trust and of the Managers Trusts
have considered this factor in approving each Fund's use of a single combined
Prospectus and combined SAI.
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OTHER INFORMATION
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR,
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
SUB-ADVISER
Neuberger&Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
FUNDS ELIGIBLE FOR EXCHANGE
EQUITY FUNDS
Neuberger&Berman Focus Fund
Neuberger&Berman Genesis Fund
Neuberger&Berman Guardian Fund
Neuberger&Berman International Fund
Neuberger&Berman Manhattan Fund
Neuberger&Berman Partners Fund
Neuberger&Berman Socially
Responsive Fund
MONEY MARKET FUNDS
Neuberger&Berman Government
Money Fund
Neuberger&Berman Cash Reserves
BOND FUNDS
Neuberger&Berman Ultra Short Bond Fund
Neuberger&Berman Limited Maturity
Bond Fund
MUNICIPAL FUNDS
Neuberger&Berman Municipal Money Fund
Neuberger&Berman Municipal
Securities Trust
Neuberger&Berman New York Insured
Intermediate Fund (available to residents of New York and Florida only)
Neuberger&Berman, Neuberger&Berman Management Inc., and the above-named Funds
are registered trademarks or service marks of Neuberger&Berman Management
Inc.
(c)1996 Neuberger&Berman Management Inc.
60
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Neuberger&Berman Management Inc.
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
WWW.NBFUNDS.COM
This wrapper is not part of the Prospectus.
[Recycle logo] PRINTED ON RECYCLED PAPER
NBEP00031296
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_______________________________________________________________________________
NEUBERGER & BERMAN EQUITY FUNDS AND PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 6, 1996
Neuberger & Berman Neuberger & Berman
Manhattan Fund Genesis Fund
(and Neuberger & Berman (and Neuberger & Berman
Manhattan Portfolio) Genesis Portfolio)
Neuberger & Berman Neuberger & Berman
Focus Fund Guardian Fund
(and Neuberger & Berman (and Neuberger & Berman
Focus Portfolio) Guardian Portfolio)
Neuberger & Berman Neuberger & Berman
Partners Fund Socially Responsive Fund
(and Neuberger & Berman (and Neuberger & Berman
Partners Portfolio) Socially Responsive
Portfolio)
Neuberger & Berman
International Fund
(and Neuberger & Berman
International Portfolio)
No-Load Mutual Funds
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
_______________________________________________________________________________
Neuberger & Berman MANHATTAN Fund, Neuberger & Berman GENESIS
Fund, Neuberger & Berman FOCUS Fund, Neuberger & Berman GUARDIAN Fund, Neuberger
& Berman PARTNERS Fund, Neuberger & Berman SOCIALLY RESPONSIVE Fund, and
Neuberger & Berman INTERNATIONAL Fund (each a "Fund") are no-load mutual funds
that offer shares pursuant to a Prospectus dated December 6, 1996. The Funds
invest all of their net investable assets in Neuberger & Berman MANHATTAN
Portfolio, Neuberger & Berman GENESIS Portfolio, Neuberger & Berman FOCUS
Portfolio, Neuberger & Berman GUARDIAN Portfolio, Neuberger & Berman PARTNERS
Portfolio, Neuberger & Berman SOCIALLY RESPONSIVE Portfolio and Neuberger &
Berman INTERNATIONAL Portfolio (each a "Portfolio"), respectively.
The Funds' Prospectus provides basic information that an
investor should know before investing. A copy of the Prospectus may be obtained,
without charge, from Neuberger & Berman Management Incorporated ("N&B
Management"), 605 Third Avenue, 2nd Floor, New York, NY 10158-0180, or by
calling 800-877-9700.
This Statement of Additional Information ("SAI") is not a
prospectus and should be read in conjunction with the Prospectus.
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No person has been authorized to give any information or to
make any representations not contained in the Prospectus or in this SAI in
connection with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by a Fund or its distributor. The Prospectus and this SAI do not constitute an
offering by a Fund or its distributor in any jurisdiction in which such offering
may not lawfully be made.
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TABLE OF CONTENTS
Page
INVESTMENT INFORMATION..................................................... 1
Investment Policies and Limitations............................... 1
Mark R. Goldstein, Portfolio Manager of Neuberger &
Berman MANHATTAN Portfolio............................... 11
Judith M. Vale, Portfolio Manager of Neuberger & Berman
GENESIS Portfolio........................................ 11
Kent C. Simons, Lawrence Marx III and Kevin L. Risen,
Portfolio Co-Managers of Neuberger & Berman FOCUS
and Neuberger & Berman GUARDIAN Portfolios............... 14
Michael M. Kassen and Robert I. Gendelman, Portfolio Co-
Managers of Neuberger & Berman PARTNERS Portfolio........ 15
Janet W. Prindle, Portfolio Manager of Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio............................ 16
Felix Rovelli, Portfolio Manager of Neuberger & Berman
INTERNATIONAL Portfolio.................................. 19
Additional Investment Information................................. 23
Neuberger & Berman FOCUS Portfolio - Description of
Economic Sectors......................................... 57
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio -
Description of Social Policy............................. 60
PERFORMANCE INFORMATION.................................................... 63
Total Return Computations......................................... 63
Comparative Information........................................... 65
Other Performance Information..................................... 67
CERTAIN RISK CONSIDERATIONS................................................ 68
TRUSTEES AND OFFICERS...................................................... 68
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES.......................... 78
Investment Manager and Administrator.............................. 78
Sub-Adviser....................................................... 82
Investment Companies Managed...................................... 83
Management and Control of N&B Management.......................... 85
DISTRIBUTION ARRANGEMENTS.................................................. 86
ADDITIONAL PURCHASE INFORMATION............................................ 87
Automatic Investing and Dollar Cost Averaging..................... 87
ADDITIONAL EXCHANGE INFORMATION............................................ 88
ADDITIONAL REDEMPTION INFORMATION.......................................... 90
Suspension of Redemptions......................................... 90
Redemptions in Kind............................................... 91
DIVIDENDS AND OTHER DISTRIBUTIONS.......................................... 91
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PAGE
ADDITIONAL TAX INFORMATION................................................. 92
Taxation of the Funds............................................. 92
Taxation of the Portfolios........................................ 93
Taxation of the Funds' Shareholders............................... 97
PORTFOLIO TRANSACTIONS..................................................... 97
Portfolio Turnover................................................106
REPORTS TO SHAREHOLDERS....................................................106
ORGANIZATION...............................................................106
CUSTODIAN AND TRANSFER AGENT...............................................107
INDEPENDENT AUDITORS/ACCOUNTANTS...........................................107
LEGAL COUNSEL..............................................................107
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES........................107
REGISTRATION STATEMENT.....................................................110
FINANCIAL STATEMENTS.......................................................110
Appendix A -- RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER..............111
Appendix B -- PERFORMANCE DATA.............................................114
Appendix C -- THE ART OF INVESTMENT: A CONVERSATION WITH
ROY NEUBERGER...............................................115
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INVESTMENT INFORMATION
Each Fund is a separate operating series of Neuberger & Berman Equity
Funds ("Trust"), a Delaware business trust that is registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company. Each Fund seeks its investment objective by investing all of its net
investable assets in a Portfolio of Equity Managers Trust or, in the case of
Neuberger & Berman INTERNATIONAL Fund, in a Portfolio of Global Managers Trust
that has an investment objective identical to, and a name similar to, that of
the Fund. Each Portfolio, in turn, invests in securities in accordance with an
investment objective, policies, and limitations identical to those of its
corresponding Fund. (Equity Managers Trust and Global Managers Trust ("Managers
Trusts") are open-end management investment companies managed by N&B Management;
the Managers Trusts, together with the Trust, are referred to below as the
"Trusts.")
The following information supplements the discussion in the Prospectus
of the investment objective, policies, and limitations of each Fund and
Portfolio. The investment objective and, unless otherwise specified, the
investment policies and limitations of each Fund and Portfolio are not
fundamental. Any investment policy or limitation that is not fundamental may be
changed by the trustees of the Trust ("Fund Trustees") or of the corresponding
Managers Trust ("Portfolio Trustees") without shareholder approval. The
fundamental investment policies and limitations of a Fund or a Portfolio may not
be changed without the approval of the lesser of (1) 67% of the total units of
beneficial interest ("shares") of the Fund or Portfolio represented at a meeting
at which more than 50% of the outstanding Fund or Portfolio shares are
represented or (2) a majority of the outstanding shares of the Fund or
Portfolio. These percentages are required by the Investment Company Act of 1940
("1940 Act") and are referred to in this SAI as a "1940 Act majority vote."
Whenever a Fund is called upon to vote on a change in a fundamental investment
policy or limitation of its corresponding Portfolio, the Fund casts its votes in
proportion to the votes of its shareholders at a meeting thereof called for that
purpose.
INVESTMENT POLICIES AND LIMITATIONS
Each Fund (except Neuberger & Berman SOCIALLY RESPONSIVE and Neuberger
& Berman INTERNATIONAL Funds) has the following fundamental investment policy,
to enable it to invest in its corresponding Portfolio:
Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its investable assets (cash, securities, and receivables
relating to securities) in an open-end management investment company
having substantially the same investment objective, policies, and
limitations as the Fund.
Neuberger & Berman SOCIALLY RESPONSIVE Fund has the following
fundamental investment policy, to enable it to invest in its corresponding
Portfolio:
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Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its net investable assets (cash, securities, and
receivables relating to securities) in an open-end management
investment company having substantially the same investment objective,
policies, and limitations as the Fund.
Neuberger & Berman INTERNATIONAL Fund has the following fundamental
investment policy, to enable it to invest in its corresponding Portfolio:
Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its net investable assets in an open-end management
investment company having substantially the same investment objective,
policies, and limitations as the Fund.
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of each Fund are identical
to those of its corresponding Portfolio. Therefore, although the following
discusses the investment policies and limitations of the Portfolios, it applies
equally to their corresponding Funds.
Except for the limitation on borrowing and the limitation on ownership
of portfolio securities by officers and trustees, any investment policy or
limitation that involves a maximum percentage of securities or assets will not
be considered to be violated unless the percentage limitation is exceeded
immediately after, and because of, a transaction by a Portfolio.
The following fundamental investment policies and limitations apply to
all Portfolios (except Neuberger & Berman INTERNATIONAL Portfolio):
1. BORROWING. No Portfolio may borrow money, except that a Portfolio
may (i) borrow money from banks for temporary or emergency purposes and not for
leveraging or investment and (ii) enter into reverse repurchase agreements for
any purpose; provided that (i) and (ii) in combination do not exceed 33-1/3% of
the value of its total assets (including the amount borrowed) less liabilities
(other than borrowings). If at any time borrowings exceed 33-1/3% of the value
of a Portfolio's total assets, that Portfolio will reduce its borrowings within
three days (excluding Sundays and holidays) to the extent necessary to comply
with the 33-1/3% limitation.
2. COMMODITIES. No Portfolio may purchase physical commodities or
contracts thereon, unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit a Portfolio from purchasing
futures contracts or options (including options on futures contracts, but
excluding options or futures contracts on physical commodities) or from
investing in securities of any kind.
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3. DIVERSIFICATION. No Portfolio may, with respect to 75% of the value
of its total assets, purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, (i) more than 5% of the value of the
Portfolio's total assets would be invested in the securities of that issuer or
(ii) the Portfolio would hold more than 10% of the outstanding voting securities
of that issuer.
4. INDUSTRY CONCENTRATION. No Portfolio may purchase any security if,
as a result, 25% or more of its total assets (taken at current value) would be
invested in the securities of issuers having their principal business activities
in the same industry. This limitation does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
5. LENDING. No Portfolio may lend any security or make any other loan
if, as a result, more than 33-1/3% of its total assets (taken at current value)
would be lent to other parties, except, in accordance with its investment
objective, policies, and limitations, (i) through the purchase of a portion of
an issue of debt securities or (ii) by engaging in repurchase agreements.
6. REAL ESTATE. No Portfolio may purchase real estate unless acquired
as a result of the ownership of securities or instruments, but this restriction
shall not prohibit a Portfolio from purchasing securities issued by entities or
investment vehicles that own or deal in real estate or interests therein or
instruments secured by real estate or interests therein.
7. SENIOR SECURITIES. No Portfolio may issue senior securities, except
as permitted under the 1940 Act.
8. UNDERWRITING. No Portfolio may underwrite securities of other
issuers, except to the extent that a Portfolio, in disposing of portfolio
securities, may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 ("1933 Act").
The following non-fundamental investment policies and limitations apply
to all Portfolios (except Neuberger & Berman SOCIALLY RESPONSIVE and Neuberger &
Berman INTERNATIONAL Portfolios):
1. BORROWING. No Portfolio may purchase securities if outstanding
borrowings, including any reverse repurchase agreements, exceed 5% of its total
assets.
2. LENDING. Except for the purchase of debt securities and
engaging in repurchase agreements, no Portfolio may make any loans other
than securities loans.
3. INVESTMENTS IN OTHER INVESTMENT COMPANIES. No Portfolio may purchase
securities of other investment companies, except to the extent permitted by the
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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. No Portfolio may purchase securities on margin
from brokers or other lenders, except that a Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions. 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. No Portfolio may sell securities short unless it owns,
or has the right to obtain without payment of additional consideration,
securities equivalent in kind and amount to the securities sold. Transactions in
forward contracts, futures contracts and options shall not constitute selling
securities short.
6. OWNERSHIP OF PORTFOLIO SECURITIES BY OFFICERS AND TRUSTEES. No
Portfolio may purchase or retain the securities of any issuer if, to the
knowledge of N&B Management, those officers and trustees of Equity Managers
Trust and officers and directors of N&B Management who each owns individually
more than 1/2 of 1% of the outstanding securities of such issuer, together own
more than 5% of such securities.
7. UNSEASONED ISSUERS. No Portfolio may purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than 5% of
the Portfolio's total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three years
of continuous operation. For purposes of this limitation, pass-through entities
and other special purpose vehicles or pools of financial assets are not
considered to be business enterprises.
8. PUTS, CALLS, STRADDLES, OR SPREADS. No Portfolio may invest in puts,
calls, straddles, spreads, or any combination thereof, except that each
Portfolio may (i) write (sell) covered call options against portfolio securities
having a market value not exceeding 10% of its net assets and (ii) purchase call
options in related closing transactions. The Portfolios do not construe the
foregoing limitation to preclude them from purchasing or writing options on
futures contracts or from purchasing securities with rights to put the
securities to the issuer or a guarantor.
9. ILLIQUID SECURITIES. No Portfolio may purchase any security if, as a
result, more than 10% (5% in the case of Neuberger & Berman GENESIS Portfolio)
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.
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10. FOREIGN SECURITIES. No Portfolio may invest more than 10% of the
value of its total assets in securities of foreign issuers, provided that this
limitation shall not apply to foreign securities denominated in U.S. dollars,
including American Depositary Receipts ("ADRs").
11. OIL AND GAS PROGRAMS. No Portfolio may invest in participations or
other direct interests in oil, gas, or other mineral leases or exploration or
development programs, but each Portfolio may purchase securities of companies
that own interests in any of the foregoing.
12. REAL ESTATE. No Portfolio may purchase or sell real property
(including partnership or similar interests in real estate limited partnerships,
but excluding readily marketable interests in real estate investment trusts and
readily marketable securities of companies that invest in real estate); provided
that no Portfolio may purchase any security if, as a result, more than 10% of
its total assets would be invested in securities of real estate investment
trusts.
In addition to the foregoing non-fundamental investment policies and
limitations, which apply to each Portfolio (except Neuberger & Berman SOCIALLY
RESPONSIVE and Neuberger & Berman INTERNATIONAL Portfolios), the following
non-fundamental investment policies and limitations apply to the indicated
Portfolios:
13. INVESTMENTS IN ANY ONE ISSUER (NEUBERGER & BERMAN GENESIS,
NEUBERGER & BERMAN FOCUS, AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS). None of
these Portfolios may purchase the securities of any one issuer (other than
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 5% of the Portfolio's total assets
would be invested in the securities of that issuer.
14. WARRANTS (NEUBERGER & BERMAN GENESIS, NEUBERGER & BERMAN FOCUS, AND
NEUBERGER & BERMAN GUARDIAN PORTFOLIOS). None of these Portfolios may invest
more than 5% of its net assets in warrants, including warrants that are listed
on the New York Stock Exchange ("NYSE") or American Stock Exchange ("AmEx"), or
more than 2% of its net assets in warrants that are not so listed. For purposes
of this limitation, warrants are valued at the lower of cost or market value,
and warrants acquired by a Portfolio in units or attached to securities may be
deemed to be without value.
15. PLEDGING (NEUBERGER & BERMAN GENESIS AND NEUBERGER & BERMAN
GUARDIAN PORTFOLIOS). Neither of these Portfolios may pledge or hypothecate any
of its assets, except that (i) for Neuberger & Berman GENESIS Portfolio, this
limitation does not apply to the deposit of portfolio securities as collateral
in connection with short sales against- the-box, and the Portfolio may pledge or
hypothecate up to 15% of its total assets to collateralize a borrowing permitted
under fundamental policy 1 above or a letter of credit issued for a purpose set
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forth in that policy and (ii) each Portfolio may pledge or hypothecate up to 5%
of its total assets in connection with its entry into any agreement or
arrangement pursuant to which a bank furnishes a letter of credit to
collateralize a capital commitment made by the Portfolio to a mutual insurance
company of which the Portfolio is a member. The other Portfolios (including
Neuberger & Berman SOCIALLY RESPONSIVE and INTERNATIONAL Portfolios) are not
subject to any restrictions on their ability to pledge or hypothecate assets and
may do so in connection with permitted borrowings.
16. SECTOR CONCENTRATION (NEUBERGER & BERMAN FOCUS PORTFOLIO). This
Portfolio may not invest more than 50% of its total assets in any one economic
sector.
Each Portfolio (except Neuberger & Berman SOCIALLY RESPONSIVE and
Neuberger & Berman INTERNATIONAL Portfolios), as an operating policy, does not
intend to invest in futures contracts and options thereon during the coming
year.
The following non-fundamental investment policies and limitations apply
to Neuberger & Berman SOCIALLY RESPONSIVE Portfolio:
1. BORROWING. The Portfolio may not purchase securities if
outstanding borrowings, including any reverse repurchase agreements,
exceed 5% of its total assets.
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 or other lenders, except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions. Margin payments in connection with transactions in futures
contracts and options on futures contracts shall not constitute the purchase of
securities on margin and shall not be deemed to violate the foregoing
limitation.
5. SHORT SALES. The Portfolio may not sell securities short unless it
owns, or has the right to obtain without payment of additional consideration,
securities equivalent in kind and amount to the securities sold. Transactions in
forward contracts, futures contracts, and options shall not constitute selling
securities short.
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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 Equity Managers
Trust and officers and directors of N&B Management who each owns individually
more than 1/2 of 1% of the outstanding securities of such issuer, together own
more than 5% of such securities.
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. For purposes of this limitation, pass-through entities
and other special purpose vehicles or pools of financial assets are not
considered to be business enterprises.
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. FOREIGN SECURITIES. The Portfolio may not invest more than 10% of
the value of its total assets in securities of foreign issuers, provided that
this limitation shall not apply to foreign securities denominated in U.S.
dollars, including ADRs.
10. 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.
11. REAL ESTATE. The Portfolio may not invest in partnership or similar
interests in real estate limited partnerships.
12. WARRANTS. The Portfolio does not intend to invest in warrants (but
may hold warrants obtained in units or attached to securities).
The following fundamental investment policies and limitations apply to
Neuberger & Berman INTERNATIONAL Portfolio:
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)
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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) 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 securi- ties of other
issuers, except to the extent that the Portfolio, in disposing of portfolio
securities, may be deemed to be an underwriter within the meaning of the 1933
Act.
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The following non-fundamental investment policies and limitations apply
to Neuberger & Berman INTERNATIONAL Portfolio:
1. INVESTMENTS IN ANY ONE ISSUER. At the close of each quarter of the
Portfolio's tax year, (i) no more than 25% of its total assets may be invested
in the securities of a single issuer, and (ii) with regard to 50% of its total
assets, no more than 5% of total assets may 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 or other lenders, except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions. Margin payments in connection with transactions in futures
contracts and options on futures contracts shall not constitute the purchase of
securities on margin and shall not be deemed to violate the foregoing
limitation.
5. SHORT SALES. The Portfolio may not engage in a short sale (except a
short sale against-the-box) if, as a result, the dollar amount of all short
sales would exceed 25% of its net assets or if, as a result, the value of
securities of any one issuer in which the Portfolio would be short would exceed
2% of the value of the Portfolio's net assets or 2% of the securities of any
class of any issuer. Transactions in forward 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 Global Managers
Trust and officers and directors of N&B Management who each owns individually
more than 1/2 of 1% of the outstanding securities of such issuer, together own
more than 5% of such securities.
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. For purposes of this limitation, pass-through entities
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<PAGE>
and other special purpose vehicles or pools of financial assets are not
considered to be business enterprises.
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, more than 10% of the Portfolio's total
assets would be invested in restricted securities. Foreign securities that are
freely tradeable in their principal market are not considered restricted, even
if they are not registered for sale in the United States.
10. WARRANTS. The Portfolio may not invest more than 5% of its net
assets in warrants, including warrants that are listed on the NYSE or the AmEx,
or more than 2% of its net assets in warrants that are not so listed. 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.
12. REAL ESTATE. The Portfolio may not invest in partnership
or similar interests in real estate limited partnerships.
MARK R. GOLDSTEIN, PORTFOLIO MANAGER OF NEUBERGER & BERMAN MANHATTAN
PORTFOLIO
Neuberger & Berman MANHATTAN Portfolio's objective is capital
appreciation, without regard to income. "The Portfolio differs from the other
Portfolios in its willingness to invest in stocks with price/earnings ratios or
price-to-cash-flow ratios that are reasonable relative to a company's growth
prospects and that of the general market," says Mark Goldstein, its portfolio
manager. Mr. Goldstein has consistently followed this approach as a portfolio
manager at N&B Management. He looks for stocks of financially sound companies
with a special market capability, a competitive advantage or a product that
makes them particularly attractive over the long term, but likes to purchase
them at a reasonable price relative to their growth rate. Mr. Goldstein calls
this approach "GARP" -- growth at a reasonable price. "An investor shouldn't try
to beat the market by trading funds like stocks. The hardest thing to do -- but
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the best thing to do -- is to put in some money when the market is down and keep
it there. That's how one really builds wealth over the long term. A mutual fund
can be a great long-term investment."
"We view value on both a relative and an absolute basis, so we may buy
stocks with somewhat above-market historical growth rates," Mr. Goldstein
explains. "We tend to stay more fully invested when we think the market is
attractive for quality growth companies. But we will get out of stocks and into
cash when we think there are no reasonable values available."
JUDITH M. VALE, PORTFOLIO MANAGER OF NEUBERGER & BERMAN GENESIS PORTFOLIO
- -------------------------------------------------------------------------
The predecessor of Neuberger & Berman GENESIS Fund was established in
1988. A fund dedicated to small-capitalization stocks (companies with total
market value of outstanding common stock of up to $1.5 billion at the time the
Portfolio invests), Neuberger & Berman GENESIS Portfolio is devoted to the same
value principles as the other equity funds managed by N&B Management. "I buy
small-cap stocks with solid earnings today, not just promises for tomorrow,"
says its portfolio manager Judith Vale.
"Many people think that small-capitalization stock funds are
predominantly invested in high-risk companies. That is not necessarily the case.
Neuberger & Berman GENESIS Portfolio looks for the same fundamentals in
small-capitalization stocks as our other funds look for in stocks of larger
companies. We stick to the areas we understand. I'm looking for the most
persistent earnings growth at the lowest multiple." Ms. Vale looks for
well-established companies with entrepreneurial management and sound finances.
She also looks for catalysts to exposing value, such as management changes and
new product lines. Often, these are firms that have suffered temporary setbacks
or undergone a restructuring.
"Our motto is 'boring is beautiful,'" explains Ms. Vale. "Instead of
investing in trendy, high-priced stocks that tend to hurt shareholders on the
downside, we look for little-known, solid, growing companies whose stocks we
believe are wonderful bargains."
AN INTERVIEW WITH JUDITH VALE
Q: If I already own a large-cap stock fund, why should I consider
investing in a small-cap fund as well?
A: Look at how fast a sapling grows compared to, say, a mature tree.
Much of the same can be true about companies. It's possible for a smaller
company to grow 50% faster than an IBM or a Coca-Cola.
So, many small-cap stocks offer superior growth potential. Consider the
cereal you eat, the detergent you use, the coffee you drink - - and imagine if
you had invested in these products BEFORE they became household names. If you
had invested only in the blue-chip companies of the day, you would have missed
out on these opportunities.
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<PAGE>
Of course, I'm not advocating investing in a portfolio consisting only
of small-cap stock funds. It pays to diversify. Let's look back 25 years. While
past performance cannot indicate future performance, small- cap stocks have
outperformed larger-cap stocks 16 out of the 25 years. Which means larger-cap
stocks have done better the rest of the time.1
Q: Neuberger & Berman GENESIS Fund is classified as a
"small-cap value fund." To many people, "small-cap value" is an oxymoron.
Can you clarify the Portfolio's investment approach?
A: I understand the confusion. After all, a lot of people equate
"small-cap" with "growth." They also equate "value" with "cheap." At Neuberger &
Berman GENESIS Portfolio, I'm 100% behind finding GROWING small-cap companies --
what I believe are highly profitable companies with solid records and promising
futures. So where do I part company with managers who follow a "small-cap
growth" style? It comes down to how much growth and at what price. Small-cap
growth investors seem willing to pay a premium for vastly superior growth. This
results in two problems: a) growth tends to be discounted by the premium
valuations, and b) the growth expectations are so high as to be unsustainable.
In my opinion, superior yet more stable returns can be purchased at significant
discounts. They may be found in mundane, perhaps even boring, industries.
Remember, the same glamorous appeal that attracts so many growth investors also
attracts competitors.
In that respect, I'm a "value" manager. Yet I'd like to make this point
clear: Low price-to-earnings multiples, in and of themselves, cannot justify a
"buy" decision. When I search for growing, high-quality small-cap companies
selling at what I feel are bargain prices, I ask myself: Is the company cheap
for a good reason? Or, does it have the financial muscle and the management
talent to make it into the big leagues?
Q: Let's turn to specifics. What criteria do you use to decide which
small-cap companies make the cut -- and which ones don't?
- ---------------------
1 Results are on a total return basis and include reinvestment of all dividends
and capital gain distributions. Small-cap stocks are represented by the fifth
capitalization quintile of stocks on the NYSE from 1971 to 1981 and performance
of the Dimensional Fund Advisors (DFA) Small Company Fund from 1982 to present.
Larger-cap stocks are represented by the S&P "500" Index, an unmanaged group of
stocks. Please note that indices do not take into account any fees or expenses
of investing in the individual securities that they track. Data about these
indices are prepared or obtained by N&B Management. The Portfolio may invest in
many securities not included in the above-described indices. Source: STOCKS,
BONDS, BILL AND INFLATION 1996 YEARBOOKTM, Ibbotson Associates, Chicago
(annually updates work by Roger G. Ibbotson and Rex A. Sinquefield). Used with
permission. All rights reserved.
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<PAGE>
A: Over the course of my involvement with small-cap companies for 16
years, I've seen hundreds that flourished and just as many that failed to
deliver on their early promises. What made the difference? While every case is
unique, here are a few important traits of the winners.
First of all, a successful small-cap company normally produces high
returns. In practice, this means the business has a number of barriers to entry.
Perhaps the company has a technology that's hard to duplicate. Or maybe it can
make a product at a substantially lower cost than anyone else. Unlike most
businesses, it has an advantage that allows it to continue earning above-market
returns.
In addition to having a competitive edge, a successful small-cap
company should generate healthy cash flow. With excess cash, a company has the
ability to finance its own growth without diluting the ownership stake of
existing stockholders by issuing more shares.
No small-cap company can grow without having the right people on board.
That's why I spend so much time meeting the CEOs and CFOs of small-cap
companies. While I question the managers about future plans and strategies, I
spend as much time evaluating them as people. Do they seem honest and capable?
Or do they puff up their case? Making portfolio decisions is a lot about making
character judgments -- who has the stuff to manage a growing company, and who
doesn't.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS
PRIMARILY IN COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE
PROSPECTUS.
KENT C. SIMONS, LAWRENCE MARX III AND KEVIN L. RISEN, PORTFOLIO CO-
MANAGERS OF NEUBERGER & BERMAN FOCUS AND NEUBERGER & BERMAN GUARDIAN PORT-
FOLIOS
Neuberger & Berman FOCUS Portfolio's investment objective is long-term
capital appreciation. Like the other Portfolios that use a value-oriented
investment approach, it seeks to buy undervalued securities that offer
opportunities for growth, but then it focuses its assets in those sectors where
undervalued stocks are clustered. "We begin by looking for stocks that are
selling for less than we think they're worth, a 'bottom-up approach'" says Mr.
Simons. "More often than not, such stocks are in a few economic sectors that are
out of favor and are undervalued as a group. We think 90% of cheap stocks
deserve to be cheap.
Our job is to find the 10% that don't."
"We don't pick sectors for Neuberger & Berman FOCUS Portfolio based on
our perception of how the economy is going to do. Nor do we engage in making
economic or currency predictions. We look for stocks with either low relative or
low absolute valuations," explains Mr. Marx. "Often, these stocks will be found
in a particular sector, but we didn't start out being bullish on that sector.
It's just where we happened to find the values. We find that if one company
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<PAGE>
comes under a cloud, it tends to happen to its whole industry. If an investment
manager rotates the sectors in a portfolio by buying sectors when they are
undervalued and selling them when they become fully valued, the manager would be
able to achieve above-average performance."
Neuberger & Berman GUARDIAN Portfolio subscribes to the same
stock-picking philosophy followed since Roy R. Neuberger founded Neuberger &
Berman GUARDIAN Fund's predecessor in 1950.
It's no great trick for a mutual fund to make money when the market is
rising. The tide that lifts stock values will carry most funds along. The true
test of management is its ability to make money even when the market is flat or
declining. By that measure, Neuberger & Berman GUARDIAN Fund and its predecessor
have served shareholders well and have paid a dividend every quarter and a
capital gain distribution EVERY YEAR since 1950. Of course, there can be no
assurance that this trend will continue.
Messrs. Simons, Marx and Risen place a high premium on being
knowledgeable about the companies whose stocks they buy. That knowledge is
important, because sometimes it takes courage to buy stocks that the rest of the
market has forsaken. Says Mr. Marx, "We're usually early in and early out. We'd
rather buy an undervalued stock because we expect it to become fairly valued
than buy one fairly valued and hope it becomes overvalued. We like a stock
'under a rock' or with a cloud over it; you are not going to get great companies
at great valuations when the market perception is great."
"People who switch around a lot are not going to benefit from our
approach. They're following the market -- we're looking at fundamentals."
MICHAEL M. KASSEN AND ROBERT I. GENDELMAN, PORTFOLIO CO-MANAGERS OF
NEUBERGER & BERMAN PARTNERS PORTFOLIO
- --------------------------------------------------------------------
"Neuberger & Berman PARTNERS Portfolio's objective is capital growth,"
say its portfolio co-managers Michael Kassen and Robert Gendelman. "We want to
make money in good markets and not give up those gains during rough times."
"Our investors seek consistent performance and have a moderate risk
tolerance. They do know, however, that stock investments can provide the
long-term upside potential essential to meeting their long-term investment
goals, particularly a comfortable retirement and planning for a college
education."
"We look for stocks that are undervalued in the marketplace either in
relation to strong current fundamentals, such as a low price-to- earnings ratio,
consistent cash flow, and support from asset values, or in relation to our
projection of the growth of their future earnings. If the market goes down,
those stocks we elect to hold, historically, go down less."
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<PAGE>
The portfolio co-managers monitor stocks of medium- to large- sized
companies that often are not closely scrutinized by other investors. The
managers research these companies in order to determine if they are likely to
produce a new product, become an acquisition target, or undergo a financial
restructuring.
What else catches Mr. Kassen's and Mr. Gendelman's eyes? "We like
managements that own their own stock. These companies usually seek to build
shareholder wealth by buying back shares or making acquisitions that have a
swift and positive impact on the bottom line."
To increase the upside potential, the managers zero in on companies
that dominate their industries or their specialized niches. The managers'
reasoning? "Market leaders tend to earn higher levels of profits."
Neuberger & Berman PARTNERS Portfolio invests 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.
JANET W. PRINDLE, PORTFOLIO MANAGER OF NEUBERGER & BERMAN SOCIALLY
RESPONSIVE PORTFOLIO
- ------------------------------------------------------------------
How does Janet Prindle manage Neuberger & Berman SOCIALLY RESPONSIVE
Portfolio? "We select securities through a two-phase detection process. The
first is financial. We analyze a universe of companies according to N&B
Management's value-oriented philosophy and look for stocks which are undervalued
for any number of reasons. We focus on financial fundamentals including balance
sheet ratios and cash flow analysis, and we meet with company management in an
effort to understand how those unrecognized values might be realized in the
market.
"The second part of the process is social screening. Our social
research is based on the same kind of philosophy that governs our financial
approach: we believe that first-hand knowledge and experience are our most
important tools. Utilizing a database, we do careful, in-depth tracking, and we
analyze a large number of companies on some eighty issues in six broad social
categories. We use a wide variety of sources to determine company practices and
policies in these areas, and we analyze performance in light of our knowledge of
the issues and of the best practices in each industry.
"We understand that, for many issues and in many industries, absolute
standards are elusive and often counterproductive. Thus, in addition to
quantitative measurements, we place value on such indicators as management
commitment, progress, direction, and industry leadership."
AN INTERVIEW WITH JANET PRINDLE
Q: First things first. How do you begin your stock selection process?
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<PAGE>
A: Our first question is always: On financial grounds
alone, is a company a smart investment? For a company's stock to meet our
financial test, it must pass a number of hurdles.
We look for bargains, just like the portfolio managers of the other
Portfolios. More specifically, we search for companies that we believe have
terrific products, excellent customer service, and solid balance sheets -- but
because they may have missed quarterly earnings expectations by a few pennies,
because their sectors are currently out of favor, because Wall Street
overreacted to a temporary setback, or because the company's merits aren't
widely known, their stocks are selling at a discount.
While we look at the stock's fundamentals carefully, that's not all we
examine. We meet an awful lot of CEOs and CFOs. Top officers of over 400
companies visit Neuberger & Berman each year, and I'm also frequently on the
road visiting dozens of corporations. From Neuberger & Berman SOCIALLY
RESPONSIVE Fund's inception, we've met with representatives of every company we
own.
When I'm face to face with a CEO, I'm searching for answers to two
crucial questions: "Does the company have a vision of where it wants to go?" and
"Can the management team make it happen?" I've analyzed companies for over three
decades, and I always look for companies that have both clear strategies and
management talent.
Q: When you evaluate a company's balance sheet, what matters
the most to you?
A: Definitely a company's "free cash flow." Compare it to your
household's discretionary income -- the money you have left over each month
after you pay off your monthly debt and other expenses. With ample free cash
flow, a company can do any number of things. It can buy back its stock. Make
important acquisitions. Expand its research and development spending. Or
increase its dividend payments.
When a company generates lots of excess cash flow, it has growth
capital at its disposal. It can invest for higher profits down the line and
improve shareholder value. Determining exactly HOW a company intends to spend
its excess cash is an entirely different matter -- and that's where the
information learned in our company meetings comes in. Still, you've got to have
the extra cash in the first place. Which is why we pay so much attention to it.
Q: So you take a hard look at a company's balance sheet and its
management. After a company passes your financial test, what do you do next?
A: After we're convinced of a company's merits on financial grounds
alone, we review its record as a corporate citizen. In particular, we look for
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<PAGE>
evidence of leadership in three key areas: concern for the environment,
workplace diversity, and enlightened employment practices.
It should be clear that our social screening always takes place after
we search far and wide for what we believe are the best investment opportunities
available. This is a crucial point, and I'll use an analogy to explain it. Let's
assume you're looking to fill a vital position in your company. What you'd pay
attention to first is the candidate's competence: Can he or she do the job? So
after interviewing a number of candidates, you'd narrow your list to those that
are highly qualified. To choose from this smaller group, you might look at the
candidate's personality: Can he or she get along with everyone in your group?
Obviously, you wouldn't hire an unqualified person simply because he or
she is likable. What you'd probably do is give the job to a highly qualified
person who is ALSO compatible with your group.
Now, let's turn to the companies that do make our financial cuts. How
do we decide whether they meet our social criteria? Once again, our regular
meetings with CEOs are key. We look for top management's support of programs
that put more women and minorities in the pipeline to be future officers and
board members; that minimize emissions, reduce waste, conserve energy, and
protect natural resources; and that enable employees to balance work and family
life with benefits such as flextime and generous maternal AND paternal leave.
We realize that companies are not all good or all bad. Instead of
looking for ethical perfection, we analyze how a company responds to troublesome
problems. If a company is cited for breaking a pollution law, we evaluate its
reaction. We also ask: Is it the first time? Do its top executives have a plan
for making sure it doesn't happen again -- and how committed are they?
If we're satisfied with the answers, a company makes it into our
portfolio. When all is said and done, we invest in companies that have diverse
work forces, strong CEOs, tough environmental standards, AND terrific balance
sheets. In our judgment, financially strong companies that are also good
corporate citizens are more likely to enjoy a competitive advantage. These days,
more and more people won't buy a product unless they know it's environmentally
friendly. In a similar vein, companies that treat their workers well may be more
productive and profitable.
Q: Why have investors been attracted to Neuberger & Berman
SOCIALLY RESPONSIVE Fund?
A: Our shareholders are looking to invest for the future in more ways
than one. While they care deeply about their own financial futures, they're
equally passionate about the world they leave to later generations. They want to
be able to meet their college bills and leave a world where the air is a little
cleaner and where the doors to the executive suite are a little more open.
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FELIX ROVELLI, PORTFOLIO MANAGER OF NEUBERGER & BERMAN INTERNATIONAL
PORTFOLIO
- --------------------------------------------------------------------
INTERNATIONAL INVESTING
Equity portfolios consisting solely of domestic investments generally
have not enjoyed the higher returns foreign opportunities can offer. Over the
past thirty years, for example, the average growth rates of many foreign
economies have outpaced that of the United States. While the United States
accounted for almost 66% of the world's total securities market capitalization
in 1970, it accounted for less than 37% of that total at the end of 1994 -- or
less than half of the dollar value of the world's available stocks and bonds.2
Over time, a number of international equity markets have outperformed
their U.S. counterpart. 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,
all ten of the largest construction companies, nine of the ten largest banks and
seven of the ten largest automobile companies are based outside of the United
States.
A principal advantage of investing overseas is diversification. 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 the economic and other
factors described in the Prospectus. These include the prospects of individual
companies and other risks such as currency fluctuations or controls,
expropriation, nationalization and confiscatory taxation.
Furthermore, buying foreign stocks and bonds can be difficult for the
individual investor and involves 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.
- ---------------------
2 Source: Morgan Stanley Capital International.
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<PAGE>
The Portfolio invests primarily in equity securities of companies
located in developed foreign economies, as well as in "emerging markets." In all
cases, N&B Management's investment process 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
growth rates of gross domestic product, interest rate trends, and currency
exchange rates. Market valuations, combined with correlation and volatility
comparisons, provide N&B Management with a target allocation across twenty or
more countries.
BOTTOM-UP APPROACH TO SECURITY SELECTION
N&B Management's value-oriented approach 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, the Portfolio's investment portfolio is
comprised of over 100 different securities issues, primarily of medium- to
large-capitalization companies (determined in relation to the principal market
in which a company's securities are traded).
CURRENCY RISK MANAGEMENT
Exchange rate movements and volatility are important factors in
international investing. The portfolio manager 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. The portfolio manager uses 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
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
about 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 exchanges in emerging economies
continuously present new opportunities for capital in an expanding global
market.
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<PAGE>
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, which 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. Anyone who invests in foreign markets
should keep that fact 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. Additional special
risks of foreign investing are discussed 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: We seek to capitalize on investments in countries where we believe
that 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. We
believe that, in the long term, a nation's economic growth and the performance
of its equity market are highly correlated. Therefore, we 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 twenty or more, in an effort to limit total portfolio risk.
We strive 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. We usually include in the Portfolio's
investments the securities of large-capitalization companies, determined in
relation to the appropriate national market, as well as securities of
faster-growing, medium-sized companies that offer potentially higher returns but
are often associated with higher risk.
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<PAGE>
The criteria for security selection focus on companies with leadership
in specific markets or with niches in 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, we
invest in relatively large, established companies that we believe 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, which sometimes leads to inefficient valuation.
Finally, we strive to limit total portfolio volatility and protect the
value of portfolio securities by selectively hedging the Portfolio's foreign
currency exposure in times when we expect 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 to us 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.
Q: Compared to the stock market in the United States, are there more
anomalies in security pricing abroad?
A: Well, the rest of the world is not as well followed as the United
States. So you'll find more anomalies. At the same time, though, the level of
analysis of companies around the world is improving every day, and the gap in
coverage is narrowing.
What never changes is the psychology of the investor -- you regularly
see either despair or euphoria in different sectors of every international
market. That, I think, creates opportunities to find undiscovered gems at
extraordinarily cheap prices.
These opportunities can come from, say, uncertainty over an election
going one way or another. Investors may see the outcome as totally disastrous
for a country -- or as totally euphoric. Then, reality sets in, and things are
never as bleak or as wonderful as they had been painted.
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Q: Do you integrate ideas from Neuberger & Berman's research and the
domestic portfolio managers?
A: Oh, sure. As everyone knows, the world is becoming smaller, and
certain industries are becoming global (or have become global). Whether one
thinks about technology, pharmaceuticals, medical devices, or the automobile
industry, it's really become one world market. So it's crucial for me to have
good knowledge about BOTH the United States and the areas outside the United
States where these companies dominate.
ADDITIONAL INVESTMENT INFORMATION
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Some or all of the Portfolios, as indicated below, may make the
following investments, among others, although they may not buy all of the types
of securities or use all of the investment techniques that are described.
REPURCHASE AGREEMENTS (ALL PORTFOLIOS). In a repurchase agreement, a
Portfolio purchases securities from a bank that is a member of the Federal
Reserve System (or, in the case of Neuberger & Berman INTERNATIONAL Portfolio,
also from a foreign bank or a U.S. branch or agency of a foreign bank) or from a
securities dealer that agrees to repurchase the securities from the Portfolio at
a higher price on a designated future date. Repurchase agreements generally are
for a short period of time, usually less than a week. Repurchase agreements with
a maturity of more than seven days are considered to be illiquid securities. No
Portfolio may enter into such a repurchase agreement if, as a result, more than
10% (5% in the case of Neuberger & Berman GENESIS Portfolio) of the value of its
net assets would then be invested in such repurchase agreements and other
illiquid securities. A Portfolio may enter into a repurchase agreement only if
(1) the underlying securities are of a 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 repurchase price, and (3) payment for the underlying
securities is made only upon satisfactory evidence that the securities are being
held for the Portfolio's account by its custodian or a bank acting as the
Portfolio's agent. If Neuberger & Berman INTERNATIONAL Portfolio enters into a
repurchase agreement subject to foreign law and the counter-party defaults, that
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.
SECURITIES LOANS (ALL PORTFOLIOS). In order to realize income, each
Portfolio may lend portfolio securities with a value not exceeding 33-1/3% of
its total assets to banks, brokerage firms, or other institutional investors
judged creditworthy by N&B Management. Borrowers are required continuously to
secure their obligations to return securities on loan from a Portfolio by
depositing collateral in a form determined to be satisfactory by the Portfolio
Trustees. The collateral, which must be marked to market daily, must be equal to
at least 100% of the market value of the loaned securities, which will also be
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marked to market daily. N&B Management believes the risk of loss on these
transactions is slight because, if a borrower were to default for any reason,
the collateral should satisfy the obligation. However, as with other extensions
of secured credit, loans of portfolio securities involve some risk of loss of
rights in the collateral should the borrower fail financially.
RESTRICTED SECURITIES AND RULE 144A SECURITIES (ALL PORTFOLIOS). Each
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. Before they are registered, such securities may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed to facilitate efficient trading among institutional investors
by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by a
Portfolio qualify under Rule 144A and an institutional market develops for those
securities, the Portfolio likely will be able to dispose of the securities
without registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of a Portfolio's
illiquidity. N&B Management, acting under guidelines established by the
Portfolio Trustees, may determine that certain securities qualified for trading
under Rule 144A are liquid. Foreign securities that are freely tradeable in
their principal market are not considered to be restricted. Regulation S under
the 1933 Act permits the sale abroad of securities that are not registered for
sale in the United States.
Where registration is required, a Portfolio may be obligated to pay all
or part of the registration expenses, and a considerable period may elapse
between the decision to sell and the time the Portfolio may be permitted to sell
a security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might obtain a less
favorable price than prevailed when it decided to sell. To the extent restricted
securities, including Rule 144A securities, are illiquid, purchases thereof will
be subject to each Portfolio's 10% (5% in the case of Neuberger & Berman GENESIS
Portfolio) limit on investments in illiquid securities. Restricted securities
for which no market exists are priced by a method that the Portfolio Trustees
believe accurately reflects fair value.
REVERSE REPURCHASE AGREEMENTS (ALL PORTFOLIOS). In a reverse repurchase
agreement, a Portfolio sells portfolio securities subject to its agreement to
repurchase the securities at a later date for a fixed price reflecting a market
rate of interest; these agreements are considered borrowings for purposes of
each Portfolio's investment policies and limitations concerning borrowings.
While a reverse repurchase agreement is outstanding, a Portfolio will deposit in
a segregated account with its custodian cash or appropriate liquid securities,
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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 to a
reverse repurchase agreement will be unable or unwilling to complete the
transaction as scheduled, which may result in losses to the Portfolio.
LEVERAGE (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). The Portfolio
may make investments while borrowings are outstanding. Leverage creates an
opportunity for increased net income but, at the same time, creates special risk
considerations. For example, leverage may exaggerate changes in the Portfolio's
and its corresponding Fund's net asset values ("NAVs"). Although the principal
of such borrowings will be fixed, the Portfolio's assets may change in value
during the time the borrowing is outstanding. Leverage creates interest expenses
for the Portfolio. 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 leverage 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 leverage were not used, and therefore the
amount available for distribution to stockholders as dividends will be reduced.
Reverse repurchase agreements create leverage and are considered 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 (ALL PORTFOLIOS). Each Portfolio may invest in U.S.
dollar-denominated securities of foreign issuers (including banks, governments,
and quasi-governmental organizations) and foreign branches of U.S. banks,
including negotiable certificates of deposit ("CDs"), bankers' acceptances and
commercial paper. These investments are subject to each Portfolio's quality
standards. While investments in foreign securities are intended to reduce risk
by providing further diversification, such investments involve sovereign and
other risks, in addition to the credit and market risks normally associated with
domestic securities. These additional risks include the possibility of adverse
political and economic developments (including political instability) and the
potentially adverse effects of unavailability of public information regarding
issuers, less governmental supervision and regulation of financial markets,
reduced liquidity of certain financial markets, and the lack of uniform
accounting, auditing, and financial reporting standards or the application of
standards that are different or less stringent than those applied in the United
States.
Each Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
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(3) obligations of other corporations, and (4) obligations of foreign
governments and their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities involves the special risks associated with
investing in non-U.S. issuers, as described in the preceding paragraph, and the
additional risks of (1) adverse changes in foreign exchange rates, (2)
nationalization, expropriation, or confiscatory taxation, and (3) adverse
changes in investment or exchange control regulations (which could prevent cash
from being brought back to the United States). Additionally, dividends and
interest payable on foreign securities may be subject to foreign taxes,
including taxes withheld from those payments. Commissions on foreign securities
exchanges are often at fixed rates and are generally higher than negotiated
commissions on U.S. exchanges, although the Portfolios endeavor to achieve the
most favorable net results on portfolio transactions. Each Portfolio (except
Neuberger & Berman INTERNATIONAL Portfolio) may invest only in securities of
issuers in countries whose governments are considered stable by N&B Management.
Foreign securities often trade with less frequency and in less volume
than domestic securities and therefore may exhibit greater price volatility.
Additional costs associated with an investment in foreign securities may include
higher custodial fees than apply to domestic custody arrangements and
transaction costs of foreign currency conversions.
Foreign markets also have different clearance and settlement
procedures. 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. Delays in settlement could result in
temporary periods when a portion of the assets of a Portfolio are uninvested and
no return is earned thereon. The inability of a Portfolio to make intended
security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to a Portfolio due
to subsequent declines in value of the securities or, if the Portfolio has
entered into a contract to sell the securities, could result in possible
liability to the purchaser.
Interest rates prevailing in other countries may affect the prices of
foreign securities and exchange rates for foreign currencies. Local factors,
including the strength of the local economy, the demand for borrowing, the
government's fiscal and monetary policies, and the international balance of
payments, often affect interest rates in other countries. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
In order to limit the risks inherent in investing in foreign currency
denominated securities, a Portfolio (except Neuberger & Berman INTERNATIONAL
Portfolio) may not purchase any such security if, as a result, more than 10% of
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its total assets (taken at market value) would be invested in foreign currency
denominated securities. Within that limitation, however, no Portfolio is
restricted in the amount it may invest in securities denominated in any one
foreign currency.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES (NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). The Portfolio may purchase securities on a when-issued
basis and may 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 within two months, although the
Portfolio may agree to a longer settlement period). 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 NAV starting on the date of the agreement to
purchase the securities. Because the Portfolio has not yet paid for the
securities, this produces an effect similar to leverage. The Portfolio does not
earn interest on securities it has committed to purchase until the securities
are paid for and delivered on the settlement date. 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.
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 capital gains or losses in connection with these
transactions.
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<PAGE>
When the Portfolio purchases securities on a when-issued or forward
commitment basis, the Portfolio will deposit in a segregated account with its
custodian, until payment is made, appropriate liquid 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 maintains sufficient assets at all times to cover its
obligations under when-issued purchases and forward commitment transactions.
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "FINANCIAL INSTRUMENTS")
(ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO)
FUTURES CONTRACTS AND OPTIONS THEREON (NEUBERGER & BERMAN SOCIALLY
RESPONSIVE PORTFOLIO). The Portfolio may purchase and sell interest rate futures
contracts, stock and bond index futures contracts, and foreign currency futures
contracts and may purchase and sell options thereon in an attempt to hedge
against changes in the prices of securities or, in the case of foreign currency
futures and options thereon, to hedge against changes in prevailing currency
exchange rates. Because the futures markets may be more liquid than the cash
markets, the use of futures contracts permits the Portfolio to enhance portfolio
liquidity and maintain a defensive position without having to sell portfolio
securities. The Portfolio does not engage in transactions in futures or options
on futures for speculation. The Portfolio views investment in (i) interest rate
and securities index futures and options thereon as a maturity management device
and/or a device to reduce risk or preserve total return in an adverse
environment for the hedged securities, and (ii) foreign currency futures and
options thereon as a means of establishing more definitely the effective return
on, or the purchase price of, securities denominated in foreign currencies that
are held or intended to be acquired by the Portfolio.
A "sale" of a futures contract (or a "short" futures position) entails
the assumption of a contractual obligation to deliver the securities or currency
underlying the contract at a specified price at a specified future time. A
"purchase" of a futures contract (or a "long" futures position) entails the
assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are traded on
exchanges that have been designated as "contract markets" by the Commodity
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<PAGE>
Futures Trading Commission ("CFTC"); futures transactions must be executed
through a futures commission merchant that is a member of the relevant contract
market. The exchange's affiliated clearing organization guarantees performance
of the contracts between the clearing members of the exchange.
Although futures contracts by their terms may require the actual
delivery or acquisition of the underlying securities or currency, in most cases
the contractual obligation is extinguished by being offset before the expiration
of the contract, without the parties having to make or take delivery of the
assets. A futures position is offset by buying (to offset an earlier sale) or
selling (to offset an earlier purchase) an identical futures contract calling
for delivery in the same month.
"Margin" with respect to a futures contract is the amount of assets
that must be deposited by the Portfolio with, or for the benefit of, a futures
commission merchant in order to initiate and maintain the Portfolio's futures
positions. The margin deposit made by the Portfolio when it enters into a
futures contract ("initial margin") is intended to assure its performance of the
contract. If the price of the futures contract changes -- increases in the case
of a short (sale) position or decreases in the case of a long (purchase)
position -- so that the unrealized loss on the contract causes the margin
deposit not to satisfy margin requirements, the Portfolio will be required to
make an additional margin deposit ("variation margin"). However, if favorable
price changes in the futures contract cause the margin deposit to exceed the
required margin, the excess will be paid to the Portfolio. In computing its NAV,
the Portfolio marks to market the value of its open futures positions. The
Portfolio also must make margin deposits with respect to options on futures that
it has written. If the futures commission merchant holding the margin deposit
goes bankrupt, the Portfolio could suffer a delay in recovering its funds and
could ultimately suffer a loss.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume a short futures
position (if the option is a call) or a long futures position (if the option is
a put). Upon exercise of the option, the accumulated cash balance in the
writer's futures margin account is delivered to the holder of the option. That
balance represents the amount by which the market price of the futures contract
at exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option.
Although the Portfolio believes that the use of futures contracts will
benefit it, if N&B Management's judgment about the general direction of the
markets is incorrect, the Portfolio's overall return would be lower than if it
had not entered into any such contracts. The prices of futures contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest or currency exchange rates, which in turn are affected by
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fiscal and monetary policies and by national and international political and
economic events. At best, the correlation between changes in prices of futures
contracts and of the securities and currencies being hedged can be only
approximate. Decisions regarding whether, when, and how to hedge involve skill
and judgment. Even a well- conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest rate or currency exchange rate
trends or lack of correlation between the futures markets and the securities
markets. Because of the low margin deposits required, futures trading involves
an extremely high degree of leverage; as a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, or
gain, to the investor. Losses that may arise from certain futures transactions
are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation in the
price of a futures contract or option thereon during a single trading day; once
the daily limit has been reached, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.
COVERED CALL OPTIONS (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). Neuberger & Berman SOCIALLY RESPONSIVE Portfolio may
write covered call options and may purchase call options. Each of the other
Portfolios may write covered call options on portfolio securities valued at up
to 10% of its net assets and may purchase call options in related closing
transactions. Generally, the purpose of writing and purchasing these options is
to reduce, at least in part, the effect of price fluctuations of securities held
by the Portfolio on the Portfolio's and its corresponding Fund's NAVs. Neuberger
& Berman SOCIALLY RESPONSIVE Portfolio may also write covered call options to
earn premium income. Portfolio securities on which call options may be written
and purchased by a Portfolio are purchased solely on the basis of investment
considerations consistent with the Portfolio's investment objective.
When a Portfolio writes a call option, it is obligated to sell a
security to a purchaser at a specified price at any time until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the 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. The
Portfolio may be obligated to deliver securities underlying an option at less
than the market price, thereby giving up any additional gain on the security.
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Each Portfolio writes only "covered" call options on securities it
owns. The writing of covered call options is a conservative investment technique
that is believed to involve relatively little risk (in contrast to the writing
of "naked" or uncovered call options, which the Portfolios will not do) but is
capable of enhancing the Portfolios' total return. When writing a covered call
option, a 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.
If a call option that a Portfolio has written expires unexercised, the
Portfolio will realize a gain in the amount of the premium; however, 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.
When a 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 Portfolio would purchase a call option to offset a previously
written call option. Neuberger & Berman SOCIALLY RESPONSIVE Portfolio also may
purchase a call option to protect against an increase in the price of the
securities it intends to purchase.
PUT OPTIONS (NEUBERGER & BERMAN SOCIALLY RESPONSIVE PORTFOLIO). The
Portfolio may write and purchase put options on securities. Generally, the
purpose of writing and purchasing these options is to reduce, at least in part,
the effect of price fluctuations of securities held by the Portfolio on the
Portfolio's and its corresponding Fund's NAVs.
The Portfolio will receive a premium for writing a put option, which
obligates the Portfolio to acquire a security at a certain price at any time
until a certain date if the purchaser of the option decides to exercise the
option. The Portfolio may be obligated to purchase the underlying security at
more than its current value.
When the Portfolio purchases a put option, it pays a premium to the
writer for the right to sell a security to the writer for a specified amount at
any time until a certain date. The Portfolio would purchase a put option in
order to protect itself against a decline in the market value of a security it
owns.
Portfolio securities on which 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. When writing a put option,
the Portfolio, in return for the premium, takes the risk that it must purchase
the underlying security at a price that may be higher than the current market
price of the security. If a put option that the Portfolio has written expires
unexercised, the Portfolio will realize a gain in the amount of the premium.
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PUT AND CALL OPTIONS (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). The exercise price of an option may be below, equal
to, or above the market value of the underlying security at the time the option
is written. Options normally have expiration dates between three and nine months
from the date written. The obligation under any option terminates upon
expiration of the option or, at an earlier time, when the writer offsets the
option by entering into a "closing purchase transaction" to purchase an option
of the same series. If an option is purchased by a Portfolio and is never
exercised, the Portfolio will lose the entire amount of the premium paid.
Options are traded both on national securities exchanges and in the
over-the-counter ("OTC") market. Exchange-traded options in the United States
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 a
Portfolio and a counter- party, with no clearing organization guarantee. Thus,
when a Portfolio sells (or purchases) an OTC option, it generally will be able
to "close out" the option prior to its expiration only by entering into a
closing transaction with the dealer to whom (or from whom) the Portfolio
originally sold (or purchased) the option. There can be no assurance that the
Portfolio would be able to liquidate an OTC option at any time prior to
expiration. Unless a Portfolio is able to effect a closing purchase transaction
in a covered OTC call option it has written, it will not be able to liquidate
securities used as cover until the option expires or is exercised or until
different cover is substituted. In the event of the counter-party's insolvency,
a Portfolio may be unable to liquidate its options position and the associated
cover. N&B Management monitors the creditworthiness of dealers with which a
Portfolio may engage in OTC options transactions, and limits the Portfolios'
counter-parties in such transactions to dealers with a net worth of at least $20
million as reported in their latest financial statements.
The assets used as cover for OTC options written by a Portfolio will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Portfolio may repurchase any OTC option it writes at a maximum
price to be calculated by a formula set forth in the option agreement. The cover
for an OTC call option written subject to this procedure will be considered
illiquid only to the extent that the maximum repurchase price under the formula
exceeds the intrinsic value of the option.
The premium received (or paid) by a Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable exchange, less (or plus) a commission. The premium may reflect,
among other things, the current market price of the underlying security, the
relationship of the exercise price to the market price, the historical price
volatility of the underlying security, the length of the option period, the
general supply of and demand for credit, and the interest rate environment. The
premium received by a Portfolio for writing an option is recorded as a liability
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on the Portfolio's statement of assets and liabilities. This liability is
adjusted daily to the option's current market value, which is the last sales
price on the day the option is being valued or, in the absence of any trades
thereof on that day, the mean between the closing bid and asked prices.
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 Neuberger & Berman SOCIALLY RESPONSIVE Portfolio to
write another call option on the underlying security with a different exercise
price or expiration date or both. If a Portfolio desires to sell a security on
which it has written a call option, it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that a Portfolio will be able to effect closing transactions at
favorable prices. If a Portfolio cannot enter into such a transaction, it may be
required to hold a security that it might otherwise have sold (or purchase a
security that it would not have otherwise bought), in which case it would
continue to be at market risk on the security.
A Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from writing the call or put option. Because increases in the market
price of a call option generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset, in whole or in part, by appreciation of the underlying
security owned by the Portfolio; however, the Portfolio could be in a less
advantageous position than if it had not written the call option.
A Portfolio pays brokerage commissions in connection with purchasing or
writing options, including those used to close out existing positions. These
brokerage commissions normally are higher than those applicable to purchases and
sales of portfolio securities. From time to time, Neuberger & Berman SOCIALLY
RESPONSIVE 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.
FORWARD FOREIGN CURRENCY CONTRACTS (ALL PORTFOLIOS EXCEPT NEUBERGER &
BERMAN INTERNATIONAL PORTFOLIO). Each of these Portfolios may enter into
contracts for the purchase or sale of a specific currency at a future date at a
fixed price ("forward contracts") in amounts not exceeding 5% of its net assets.
The Portfolios enter into forward contracts in an attempt to hedge against
changes in prevailing currency exchange rates. The Portfolios do not engage in
transactions in forward contracts for speculation; they view investments in
forward contracts as a means of establishing more definitely the effective
return on, or the purchase price of, securities denominated in foreign
currencies that are held or intended to be acquired by them. Forward contract
transactions include forward sales or purchases of foreign currencies for the
purpose of protecting the U.S. dollar value of securities held or to be acquired
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by a Portfolio or protecting the U.S. dollar equivalent of dividends, interest,
or other payments on those securities.
N&B Management believes that the use of foreign currency hedging
techniques, including "proxy-hedges," can provide significant protection of NAV
in the event of a general rise in the U.S. dollar against foreign currencies.
For example, the return available from securities denominated in a particular
foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a hedge involving a forward contract to sell that
foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated and which is available on
more advantageous terms. However, a hedge or proxy-hedge cannot protect against
exchange rate risks perfectly, and, if N&B Management is incorrect in its
judgment of future exchange rate relationships, a Portfolio could be in a less
advantageous position than if such a hedge had not been established. If a
Portfolio uses proxy- hedging, it may experience losses on both the currency in
which it has invested and the currency used for hedging if the two currencies do
not vary with the expected degree of correlation. Because forward contracts are
not traded on an exchange, the assets used to cover such contracts may be
illiquid.
OPTIONS ON FOREIGN CURRENCIES (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). Each of these Portfolios may write and purchase
covered call and put options on foreign currencies in amounts not exceeding 5%
of its net assets. A Portfolio would engage in such transactions to protect
against declines in the U.S. dollar value of portfolio securities or increases
in the U.S. dollar cost of securities to be acquired or to protect the U.S.
dollar equivalent of dividends, interest, or other payments on those securities.
As with other types of options, however, writing an option on foreign currency
constitutes only a partial hedge, up to the amount of the premium received. A
Portfolio could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The risks of currency
options are similar to the risks of other options, as discussed herein. Certain
options on foreign currencies are traded on the OTC market and involve liquidity
and credit risks that may not be present in the case of exchange-traded currency
options.
REGULATORY LIMITATIONS ON USING FINANCIAL INSTRUMENTS (ALL PORTFOLIOS
EXCEPT NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). To the extent a Portfolio
sells or purchases futures contracts or writes options thereon or options on
foreign currencies that are traded on an exchange regulated by the CFTC other
than for BONA FIDE hedging purposes (as defined by the CFTC), the aggregate
initial margin and premiums on those positions (excluding the amount by which
options are "in-the-money") may not exceed 5% of the Portfolio's net assets. As
noted above, these Portfolios (except Neuberger & Berman SOCIALLY RESPONSIVE
Portfolio) do not intend to invest in futures contracts and options thereon
during the coming year.
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In addition, for each of these Portfolios, (1) the aggregate premiums
paid by the Portfolio on all options (both exchange-traded and OTC) held by it
at any time may not exceed 20% of its net assets, and (2) the aggregate margin
deposits required on all exchange-traded futures contracts and related options
held by the Portfolio at any time may not exceed 5% of its total assets.
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio does not currently intend to
purchase puts, calls, straddles, spreads, or any combination thereof if, by
reason of such purchase, the value of its aggregate investment in such
instruments will exceed 5% of its total assets.
COVER FOR FINANCIAL INSTRUMENTS (ALL PORTFOLIOS EXCEPT NEUBERGER &
BERMAN INTERNATIONAL PORTFOLIO). Each Portfolio will comply with SEC guidelines
regarding "cover" for Financial Instruments and, if the guidelines so require,
set aside in a segregated account with its custodian the prescribed amount of
cash or appropriate liquid securities. Securities held in a segregated account
cannot be sold while the futures, options, or forward strategy covered by those
securities is outstanding, unless they are replaced with other suitable assets.
As a result, segregation of a large percentage of a Portfolio's assets could
impede portfolio management or the Portfolio's ability to meet current
obligations. A Portfolio may be unable promptly to dispose of assets which
cover, or are segregated with respect to, an illiquid futures, options, or
forward position; this inability may result in a loss to the Portfolio.
GENERAL RISKS OF FINANCIAL INSTRUMENTS (ALL PORTFOLIOS EXCEPT NEUBERGER
& BERMAN INTERNATIONAL PORTFOLIO). The primary risks in using Financial
Instruments are (1) imperfect correlation or no correlation between changes in
market value of the securities or currencies held or to be acquired by a
Portfolio and the prices of Financial Instruments; (2) possible lack of a liquid
secondary market for Financial Instruments and the resulting inability to close
out Financial Instruments when desired; (3) the fact that the skills needed to
use Financial Instruments are different from those needed to select a
Portfolio's securities; (4) the fact that, although use of Financial Instruments
for hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in hedged investments; and (5) the possible inability of a Portfolio
to purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for a Portfolio to sell a
portfolio security at a disadvantageous time, due to its need to maintain cover
or to segregate securities in connection with its use of Financial Instruments.
N&B Management intends to reduce the risk of imperfect correlation by investing
only in Financial Instruments whose behavior is expected to resemble or offset
that of a Portfolio's underlying securities or currency. N&B Management intends
to reduce the risk that a Portfolio will be unable to close out Financial
Instruments by entering into such transactions only if N&B Management believes
there will be an active and liquid secondary market. Financial Instruments used
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by the Portfolios are generally considered "derivatives." There can be no
assurance that a Portfolio's use of Financial Instruments will be successful.
Each Portfolio's use of Financial Instruments may be limited by the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
it must comply if its corresponding Fund is to continue to qualify as a
regulated investment company ("RIC"). See "Additional Tax Information."
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES AND
INDICES, FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "FINANCIAL INSTRUMENTS")
(NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO ONLY)
PUT AND CALL OPTIONS ON SECURITIES (NEUBERGER & BERMAN INTERNATIONAL
PORTFOLIO). The Portfolio may write call options and purchase put options on
securities in order to hedge (I.E., to reduce, at least in part, the effect of
price fluctuations of securities held by the Portfolio on the Portfolio's and
its corresponding Fund's NAVs). The Portfolio may also purchase or write put
options, purchase call options and write covered call options in an attempt to
earn premium income.
The obligation under any option terminates upon expiration of the
option or, at an earlier time, when the writer offsets the option by entering
into a "closing purchase transaction" to purchase an option of the same series.
If an option is purchased by the Portfolio and is never exercised, the Portfolio
will lose the entire amount of the premium paid.
The Portfolio will receive a premium for writing a put option, which
obligates the Portfolio to acquire a security at a certain price at any time
until a certain date if the purchaser of the option decides to exercise the
option. The Portfolio may be obligated to purchase the underlying security at
more than its current value.
When the Portfolio purchases a put option, it pays a premium to the
writer for the right to sell a security to the writer for a specified amount at
any time until a certain date. The Portfolio might purchase a put option in
order to protect itself against a decline in the market value of a security it
owns.
When the Portfolio writes a call option, it is obligated to sell a
security to a purchaser at a specified price at any time until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the 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. 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.
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When the Portfolio purchases a call option, it pays a premium for the
right to purchase a security from the writer at a specified price until a
specified date. The Portfolio might purchase a call option in order to protect
against an increase in the price of securities it intends to purchase or to
offset a previously written call option.
Portfolio securities on which call and put options may be written and
purchased by the Portfolio are purchased solely on the basis of investment
considerations consistent with the Portfolio's investment objective. The writing
of covered call options is a conservative investment technique that is believed
to involve relatively little risk (in contrast to the writing of "naked" or
uncovered call options, which the Portfolio will not do) but is capable of
enhancing the Portfolio's total return. When writing a covered call option, the
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security above the exercise price, but
conversely retains the risk of loss should the price of the security decline.
When writing a put option, the Portfolio, in return for the premium, takes the
risk that it must purchase the underlying security at a price that may be higher
than the current market price of the security.
If a call or put option that the Portfolio has written expires
unexercised, the Portfolio will realize a gain in the amount of the premium;
however, in the case of a call option, that gain may be offset by a decline in
the market value of the underlying security during the option period. If the
call option is exercised, the Portfolio will realize a gain or loss from the
sale of the underlying security.
Securities options are traded both on exchanges and in the 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 a counter-party, with no clearing
organization guarantee. Thus, when the Portfolio sells (or purchases) an OTC
option, it generally will be able to close out the option prior to its
expiration only by entering into a closing transaction with the dealer to whom
(or from whom) the Portfolio originally sold (or purchased) the option. There
can be no assurance that the Portfolio would be able to liquidate an OTC option
at any time prior to expiration. Unless the Portfolio is able to effect a
closing purchase transaction in a covered OTC call option it has written, it
will not be able to liquidate securities used as cover until the option expires
or is exercised or until different cover is substituted. In the event of the
counter-party's insolvency, the Portfolio may be unable to liquidate its options
position and the associated cover. N&B Management monitors the creditworthiness
of dealers with which the Portfolio may engage in OTC options transactions, and
limits the Portfolio's counter-parties in such transactions to dealers with a
net worth of at least $20 million as reported in their latest financial
statements.
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The assets used as cover (or held in a segregated account) for OTC
options written by the Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC call option
written subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic value
of the option.
The premium received (or paid) by the Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable exchange, less (or plus) a commission. The premium may reflect,
among other things, the current market price of the underlying security, the
relationship of the exercise price to the market price, the historical price
volatility of the underlying security, the length of the option period, the
general supply of and demand for credit, and the interest rate environment. The
premium received by the Portfolio for writing an option is recorded as a
liability on the Portfolio's statement of assets and liabilities. This liability
is adjusted daily to the option's current market value, which is the 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 last
available bid price.
Closing transactions are effected in order to realize a profit on an
outstanding option, to prevent an underlying security from being called, or to
permit the sale or the put of the underlying security. Furthermore, effecting a
closing transaction permits the Portfolio to write another call option on the
underlying security with a different exercise price or expiration date or both.
If the Portfolio desires to sell a security on which it has written a call
option, it will seek to effect a closing transaction prior to, or concurrently
with, the sale of the security. There is, of course, no assurance that the
Portfolio will be able to effect closing transactions at favorable prices. If
the Portfolio cannot enter into such a transaction, it may be required to hold a
security that it might otherwise have sold (or purchase a security that it would
not have otherwise bought), in which case it would continue to be subject to
market risk on the security.
The Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from writing the call or put option. Because increases in the market
price of a call option generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset, in whole or in part, by appreciation of the underlying
security owned by the Portfolio; however, the Portfolio could be in a less
advantageous position than if it had not written the call option.
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 are exercisable only
immediately prior to their expiration date. American- style options, in
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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 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.
PUT AND CALL OPTIONS ON SECURITIES INDICES (NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). The Portfolio may write and purchase put and call
options on securities indices for the purpose of hedging against the risk of
price movements that would adversely affect 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 (1) the difference between the exercise price of the
option and the value of the underlying securities index on the exercise date (2)
multiplied by a fixed "index multiplier."
A securities index fluctuates with changes in the market values of the
securities included in the index. Options on stock indices are currently traded
on the Chicago Board Options Exchange, the NYSE, the AmEx, and other U.S. and
foreign exchanges. All securities index options purchased by the Portfolio will
be listed and traded on an exchange.
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 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 portfolio
securities.
The Portfolio may purchase call options on securities indices in order
to participate in an anticipated increase in securities market prices. If the
Portfolio purchases a call option on a securities index, the amount of the
payment it would receive upon exercising the option would depend 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
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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 any transaction
costs. Such loss may be partially offset by a reduction in the price the
Portfolio pays to buy additional securities.
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.
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 portfolio
securities 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 costs 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 (NEUBERGER & BERMAN INTERNATIONAL
PORTFOLIO). The Portfolio may purchase and sell options that are traded on both
U.S. and foreign exchanges. 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 may exist. If the Portfolio is unable to effect
a closing purchase transaction with respect to covered call options it has
written, it will not be able to sell the underlying securities until the options
expire or are exercised or until different cover is substituted.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (1) there may be insufficient interest in trading certain
options; (2) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (3) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (4) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (5) the facilities of an exchange or
its clearing organization may not at all times be adequate to handle current
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trading volume; or (6) 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 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 the Portfolio will be required to sell or
purchase such securities at a price that is 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 for 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 (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). The
Portfolio may enter into futures contracts on individual securities and futures
contracts on securities indices which are traded on exchanges regulated by the
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 to
the rules of such foreign exchange. The Portfolio may purchase and sell futures
for BONA FIDE hedging 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 during a particular month of securities having a standardized face
value and rate of return. 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.
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 that case, the position will be valued at fair value, as determined
by or under the general direction of the Portfolio Trustees. Additional
information regarding volatility of prices of futures contracts, the high degree
of leverage and potential losses associated with futures trading, and the effect
of a daily limit on price fluctuations is provided with respect to Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio's investments in futures contracts and
options thereon.
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Futures contracts on securities normally are not 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 the futures are traded assumes responsibility for
closing out open futures positions and guarantees that, if a position is still
open, the sale or purchase of securities will be performed on the settlement
date.
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 generally 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 portfolio 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 securities declines and will tend to fall when the value
of such securities increases. The Portfolio purchases futures contracts in order
to fix what N&B Management believes 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 Portfolio pays a premium when it
purchases an option on a futures contract. In exchange for the premium, the
Portfolio becomes entitled to exercise the option, but is not required to do so.
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 purposes. Writing 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, writing a call
option on a futures contract generates a premium, which may partially offset a
decline in the value of the Portfolio's assets. By writing a call option, the
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Portfolio becomes obligated 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 or stock market risks, unanticipated changes
in interest rates or market prices could result in poorer performance than if
the Portfolio had not entered into such transactions. Even if N&B Management
correctly predicts interest rate or market price movements, a hedge could be
unsuccessful if changes in the value of the Portfolio's futures position do not
correspond to changes in the value of its investments. This lack of correlation
between the Portfolio's futures and securities positions may be caused by
differences between the futures and securities 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 attempts 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 and interest 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 are 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 fluctuations. 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 (NEUBERGER & BERMAN INTERNATIONAL
PORTFOLIO). The Portfolio may engage in foreign currency exchange transactions.
Such transactions are conducted either on a spot (I.E., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through forward
contracts to purchase or sell foreign currencies. 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 into 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
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(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 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; foreign
exchange dealers realize a profit based on the difference (the spread) between
the prices 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 securities transaction, 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 a particular foreign currency may
suffer a substantial decline against the U.S. dollar, the Portfolio may also
enter into a forward contract to sell, for a fixed amount of dollars, an amount
of foreign currency 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 Portfolio's foreign currency
denominated securities will not generally be possible, since the value of such
securities will change as a consequence of market movements between the date the
forward contract is entered into and the date it matures.
The Portfolio may also engage in proxy-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 a 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 foreign currency transactions for hedging
purposes, it will not enter into forward contracts to sell currency or maintain
a net exposure to such contracts if their consummation would obligate the
Portfolio to deliver an amount of foreign currency materially in excess of the
value of the portfolio securities or other assets denominated in that currency.
At the consummation of a forward contract to sell currency, the Portfolio may
either make delivery of the foreign currency or terminate its contractual
obligation to deliver by purchasing an offsetting contract that obligates it to
purchase the same amount of such foreign currency at the same maturity date. If
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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.
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 prices of the underlying 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 exchange rates 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 or may prevent the Portfolio from achieving a complete hedge.
Proxy-hedging presents additional risks, as discussed with respect to the other
Portfolios' investments in forward contracts. The Portfolio may experience
delays in the settlement of its foreign currency transactions. The Portfolio is
not required to enter into transactions in forward contracts and will not do so
unless deemed appropriate by N&B Management.
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 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 Union.
The specific amounts of currencies comprising the ECU may be adjusted by the
Council of Ministers of the European Union from time to time to reflect changes
in relative values of the underlying currencies. 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. In
addition, the Portfolio may invest in securities denominated in other currency
baskets.
CURRENCY FUTURES AND OPTIONS THEREON (NEUBERGER & BERMAN INTERNATIONAL
PORTFOLIO). The Portfolio may enter into currency futures contracts and options
on such futures contracts in domestic and foreign markets and may do so for
hedging or non-hedging purposes (I.E., in an effort to enhance income) as
defined in CFTC regulations. The Portfolio may sell a currency futures contract
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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 portfolio
securities denominated in that 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 that 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.
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 parties making or taking delivery of the currency. A
currency futures contract is closed out by entering into an offsetting purchase
or sale transaction. To close out a currency futures contract sold by the
Portfolio, the Portfolio purchases a currency futures contract for the same
aggregate amount of currency and same delivery date. If the price of the sale
exceeds the price of 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.
A risk in employing currency futures contracts to protect against price
volatility of portfolio securities denominated in a particular currency is
imperfect correlation between the prices of such currency futures contracts and
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 approaches
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 such movements will take place. When the Portfolio
purchases currency futures contracts, it will deposit an amount of cash or
appropriate liquid securities equal to the market value of the currency futures
contract (minus any required margin) in a segregated account to collateralize
the position and thereby limit the use of such futures contracts.
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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 margin to reflect changes in the value of the underlying
contract, as there are by a purchaser or seller of a currency futures contract.
Put and call options on currency futures have characteristics similar
to those of other options. 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 (NEUBERGER & BERMAN INTERNATIONAL
PORTFOLIO). The Portfolio may purchase options on foreign currencies for hedging
purposes in a manner similar to 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 is projected in the dollar value of a currency in
which securities to be acquired by the Portfolio are denominated, thereby
increasing the cost of such securities, the Portfolio may purchase call options
on that currency. If the value of the currency increases sufficiently, the
Portfolio will have the right to purchase that currency for a fixed amount of
dollars which is less than the market value of that currency. 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 the Portfolio of all or a portion of the
benefits of advantageous changes in such rates.
The Portfolio may also write options on foreign currencies for hedging
purposes. For example, if N&B Management anticipates a decline in the dollar
value of foreign currency denominated securities because of declining exchange
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rates, the Portfolio could, instead of purchasing a put option, write a call
option on the relevant currency. If the expected decline occurs, the call option
most likely will not be exercised, and the decrease in value of portfolio
securities will be offset, at least in part, 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 most likely will not be exercised, and
such increased cost will be offset, at least in part, by the amount of the
premium received by the Portfolio.
If unanticipated exchange rate fluctuations occur, a put or call option
may be exercised, and the Portfolio could 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 foreign currencies for
non-hedging purposes when N&B Management anticipates that a currency will
appreciate in value, but securities denominated in that currency do not present
attractive investment opportunities and are not included in the 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 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 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 on foreign currency written by the Portfolio is "covered"
if the Portfolio owns the underlying foreign currency or if it has an absolute
and immediate right to acquire that foreign currency without additional cash
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consideration. 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 (1) equal to or less than the
exercise price of the call written or (2) greater than the exercise price of the
call written if the amount of the difference is maintained by the Portfolio in
cash or appropriate liquid securities in a segregated account with its
custodian.
The risks of currency options are similar to the risks of other
options, as discussed herein.
LIMITATIONS ON USING FINANCIAL INSTRUMENTS (NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). The Portfolio is required to maintain margin deposits
with, or for the benefit of, futures commission merchants through which it
effects futures transactions. The Portfolio 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, daily variation margin
payments in cash are required to reflect gains and losses on open futures
positions. As a result, the Portfolio may be required to make additional margin
payments during the term of a futures contract. Additional information regarding
margin payments, including the risks if the futures commission merchant holding
the deposit goes bankrupt, is provided with respect to Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio's investments in futures contracts and options
thereon.
The Portfolio may not purchase or sell futures contracts (including
currency futures contracts) or related options (including certain options on
foreign currencies) on foreign or U.S. exchanges if immediately thereafter the
aggregate amount of initial margin deposits and premiums paid on the Portfolio's
existing positions (excluding futures contracts and options entered into for
BONA FIDE hedging purposes and net of the amount options are "in the money")
would exceed 5% of the market value of the Portfolio's net assets. When the
Portfolio purchases futures contracts or writes put options thereon, the
Portfolio will deposit an amount of cash or appropriate liquid securities equal
to the market value of the futures contracts and options (less any related
margin deposits) in a segregated account with its custodian to collateralize the
position, thereby limiting the use of such futures contracts. The Portfolio does
not currently intend to invest more than 5% of its total assets in instruments
commonly known as options, financial futures, or stock index futures, other than
hedging positions or positions that are covered by cash or securities. Also, the
Portfolio does not currently intend to invest more than 5% of its total assets
in puts, calls, straddles, spreads, or any combination thereof.
When the Portfolio enters into 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 owns securities in the currency subject to the forward contract, which are
at least equal in value to the amount of currency the Portfolio is obligated to
deliver, or if it otherwise has the right to obtain that currency at no
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additional cost. In the alternative, the Portfolio will place cash which is not
available for investment or appropriate liquid securities in a segregated
account. The amounts in such segregated account will equal the value of the
Portfolio's assets which are committed to the consummation of foreign currency
exchange contracts. If the value of the securities placed in the segregated
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.
The Portfolio's use of Financial Instruments may be limited by the
provisions of the Code with which it must comply if Neuberger & Berman
INTERNATIONAL Fund is to continue to qualify as a RIC. See "Additional Tax
Information."
SHORT SALES (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). The Portfolio
may enter into short sales of securities to the extent permitted by its
non-fundamental investment policies and limitations. Under applicable guidelines
of the SEC staff, if the Portfolio engages in a short sale (other than a short
sale against-the-box), it must put in a segregated account (not with the broker)
an amount of cash or appropriate liquid 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 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 (1)
the amount deposited in it plus the amount deposited with the broker as
collateral equals the current market value of the securities sold short, and (2)
the amount deposited in it plus the amount deposited with the broker as
collateral is not less than the market value of the securities at the time they
were sold short.
The effect of short selling on the Portfolio is similar to the effect
of leverage. Short selling may exaggerate changes in the Portfolio's and
Neuberger & Berman INTERNATIONAL Fund's NAVs. Short selling may also produce
higher than normal portfolio turnover, which may result in increased transaction
costs to the Portfolio and gains from the sale of securities deemed to have been
held for less than three months. Such gains must be limited in order for
Neuberger & Berman INTERNATIONAL Fund to continue to qualify as a RIC. See
"Additional Tax Information."
FIXED INCOME SECURITIES (ALL PORTFOLIOS). While the emphasis of the
Portfolios' investment programs is on common stocks and other equity securities,
the Portfolios may also invest in money market instruments, U.S. Government and
Agency Securities, and other fixed income securities. Each Portfolio may invest
in corporate bonds and debentures receiving one of the four highest ratings from
Standard & Poor's ("S&P"), Moody's Investors Service, Inc. ("Moody's"), or any
other nationally recognized statistical rating organization ("NRSRO") or, if not
rated by any NRSRO, deemed comparable by N&B Management to such rated securities
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("Comparable Unrated Securities"). In addition, Neuberger & Berman PARTNERS
Portfolio may invest up to 15% of its net assets in corporate debt securities
rated below investment grade or Comparable Unrated Securities.
Neuberger & Berman INTERNATIONAL Portfolio may invest up to 5% of its
net assets in foreign corporate bonds and debentures and sovereign debt
instruments issued or guaranteed by foreign governments, their agencies or
instrumentalities. Neuberger & Berman INTERNATIONAL Portfolio may invest in debt
securities of any rating, including those rated below investment grade and
Comparable Unrated Securities. Foreign debt securities are subject to risks
similar to those of other foreign securities.
The ratings of an NRSRO represent its opinion as to the quality of
securities it undertakes to rate. Ratings are not absolute standards of quality;
consequently, securities with the same maturity, coupon, and rating may have
different yields. Although the Portfolios may rely on the ratings of any NRSRO,
the Portfolios primarily refer to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). Lower-rated securities are more likely to react to
developments affecting market and credit risk than are more highly rated
securities, which react primarily to movements in the general level of interest
rates. 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 issuer of such securities to make
principal and interest payments than is the case for higher-grade debt
securities. An economic downturn affecting the issuer may result in an increased
incidence of default. The market for lower-rated securities may be thinner and
less active than for higher-rated securities. Pricing of thinly traded
securities requires greater judgment than pricing of securities for which market
transactions are regularly reported. N&B Management will invest in lower-rated
securities only when it concludes that the anticipated return on such an
investment to Neuberger & Berman PARTNERS Portfolio or Neuberger & Berman
INTERNATIONAL Portfolio warrants exposure to the additional level of risk.
Subsequent to its purchase by a Portfolio, an issue of debt securities
may cease to be rated or its rating may be reduced, so that the securities would
no longer be eligible for purchase by that Portfolio. In such a case, Neuberger
& Berman SOCIALLY RESPONSIVE Portfolio will engage in an orderly disposition of
the downgraded securities. Each other Portfolio (except Neuberger & Berman
INTERNATIONAL Portfolio) will engage in an orderly disposition of the downgraded
securities to the extent necessary to ensure that the Portfolio's holdings of
securities rated below investment grade and Comparable Unrated Securities will
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not exceed 5% of its net assets (15% in the case of Neuberger & Berman PARTNERS
Portfolio). N&B Management will make a determination as to whether Neuberger &
Berman INTERNATIONAL Portfolio should dispose of the downgraded securities.
COMMERCIAL PAPER (ALL PORTFOLIOS). Commercial paper is a short-term
debt security issued by a corporation or bank, usually for purposes such as
financing current operations. The Portfolios 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 comparable quality. Neuberger & Berman INTERNATIONAL
Portfolio may invest in such commercial paper as a defensive measure, to
increase liquidity, or as needed for segregated accounts.
Each Portfolio may invest in commercial paper that cannot be resold to
the public without an effective registration statement under the 1933 Act. While
restricted commercial paper normally is deemed illiquid, N&B Management may in
certain cases determine that such paper is liquid, pursuant to guidelines
established by the Portfolio Trustees.
ZERO COUPON SECURITIES (NEUBERGER & BERMAN PARTNERS AND NEUBERGER &
BERMAN SOCIALLY RESPONSIVE PORTFOLIOS). Each of these Portfolios may invest up
to 5% of its net assets in zero coupon securities, which are debt obligations
that do not entitle the holder to any periodic payment of interest prior to
maturity or that specify a future date when the securities begin to pay current
interest. Zero coupon securities are issued and traded at a discount from their
face amount or par value. This discount varies depending on prevailing interest
rates, the time remaining until cash payments begin, the liquidity of the
security, and the perceived credit quality of the issuer.
The discount on zero coupon securities ("original issue discount") is
taken into account ratably by each such Portfolio prior to the receipt of any
actual payments. Because its corresponding Fund must distribute substantially
all of its net income (including its share of the Portfolio's original issue
discount) to its shareholders each year for income and excise tax purposes, each
such Portfolio may have to dispose of portfolio securities under disadvantageous
circumstances to generate cash, or may be required to borrow, to satisfy its
corresponding Fund's distribution requirements. See "Additional Tax
Information."
The market prices of zero coupon securities generally are more volatile
than the prices of securities that pay interest periodically. Zero coupon
securities are likely to respond to changes in interest rates to a greater
degree than other types of debt securities having similar maturity and credit
quality.
CONVERTIBLE SECURITIES (ALL PORTFOLIOS). Each Portfolio may invest in
convertible securities. A convertible security entitles the holder to receive
the interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
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Before conversion, such securities ordinarily provide a stream of income with
generally higher yields than 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 non-convertible 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 to the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege and (2) its worth if converted into the underlying common stock.
Convertible debt securities are subject to each Portfolio's investment policies
and limitations concerning fixed income securities.
The price of a convertible security often reflects variations in the
price of the underlying common stock in a way that non-convertible debt may not.
Convertible securities are typically issued by smaller capitalization companies
whose stock prices may be volatile. 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 a 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 its corresponding Fund's ability to achieve their investment objective.
PREFERRED STOCK (ALL PORTFOLIOS). Each Portfolio may invest in
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. Preferred shareholders may have certain rights if dividends are not
paid but generally have no legal recourse against the issuer. Shareholders may
suffer a loss of value if dividends are not paid. The market prices of preferred
stocks are generally more sensitive to changes in the issuer's creditworthiness
than are the prices of debt securities.
NEUBERGER & BERMAN FOCUS PORTFOLIO - DESCRIPTION OF ECONOMIC SECTORS.
Neuberger & Berman FOCUS Portfolio seeks to achieve its investment
objective by investing principally in common stocks in the following thirteen
multi-industry economic sectors, normally making at least 90% of its investments
in not more than six such sectors:
(1) AUTOS AND HOUSING SECTOR: Companies engaged in design, production,
or sale of automobiles, automobile parts, mobile homes, or related products
("automobile industries") or design, construction, renovation, or refurbishing
of residential dwellings. The value of securities of companies in the automobile
industries is affected by, among other things, foreign competition, the level of
consumer confidence and consumer debt, and installment loan rates. The housing
construction industry may be affected by the level of consumer confidence and
consumer debt, mortgage rates, tax laws, and the inflation outlook.
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(2) CONSUMER GOODS AND SERVICES SECTOR: Companies engaged in providing
consumer goods or services, including design, processing, production, sale, or
storage of packaged, canned, bottled, or frozen foods and beverages and design,
production, or sale of home furnishings, appliances, clothing, accessories,
cosmetics, or perfumes. Certain of these companies are subject to government
regulation affecting the use of various food additives and production methods,
which could affect profitability. Also, the success of food- and fashion-related
products may be strongly affected by fads, marketing campaigns, health concerns,
and other factors affecting supply and demand.
(3) DEFENSE AND AEROSPACE SECTOR: Companies engaged in research,
manufacture, or sale of products or services related to the defense or aerospace
industries, including air transport; data processing or computer-related
services; communications systems; military weapons or transportation; general
aviation equipment, missiles, space launch vehicles, or spacecraft; machinery
for guidance, propulsion, or control of flight vehicles; and airborne or
ground-based equipment essential to the test, operation, or maintenance of
flight vehicles. Because these companies rely largely on U.S. (and foreign)
governmental demand for their products and services, their financial conditions
are heavily influenced by defense spending policies.
(4) ENERGY SECTOR: Companies involved in the production, transmission,
or marketing of energy from oil, gas, or coal, as well as nuclear, geothermal,
oil shale, or solar sources of energy (but excluding public utility companies).
Also included are companies that provide component products or services for
those activities. The value of these companies' securities varies based on the
price and supply of energy fuels and may be affected by international politics,
energy conservation, the success of exploration projects, environmental
considerations, and the tax and other regulatory policies of various
governments.
(5) FINANCIAL SERVICES SECTOR: Companies providing financial services
to consumers or industry, including commercial banks and savings and loan
associations, consumer and industrial finance companies, securities brokerage
companies, leasing companies, and insurance companies. These companies are
subject to extensive governmental regulations. Their profitability may fluctuate
significantly as a result of volatile interest rates, concerns about particular
banks and savings institutions, and general economic conditions.
(6) HEALTH CARE SECTOR: Companies engaged in design, manufacture, or
sale of products or services used in connection with the provision of health
care, including pharmaceutical companies; firms that design, manufacture, sell,
or supply medical, dental, or optical products, hardware, or services; companies
involved in biotechnology, medical diagnostic, or biochemical research and
development; and companies that operate health care facilities. Many of these
companies are subject to government regulation and potential health care
reforms, which could affect the price and availability of their products and
services. Also, products and services of these companies could quickly become
obsolete.
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(7) HEAVY INDUSTRY SECTOR: Companies engaged in research, development,
manufacture, or marketing of products, processes, or services related to the
agriculture, chemicals, containers, forest products, non-ferrous metals, steel,
or pollution control industries, including synthetic and natural materials (for
example, chemicals, plastics, fertilizers, gases, fibers, flavorings, or
fragrances), paper, wood products, steel, and cement. Certain of these companies
are subject to state and federal regulation, which could require alteration or
cessation of production of a product, payment of fines, or cleaning of a
disposal site. Furthermore, because some of the materials and processes used by
these companies involve hazardous components, there are additional risks
associated with their production, handling, and disposal. The risk of product
obsolescence also is present.
(8) MACHINERY AND EQUIPMENT SECTOR: Companies engaged in the research,
development, or manufacture of products, processes, or services relating to
electrical equipment, machinery, pollution control, or construction services,
including transformers, motors, turbines, hand tools, earth-moving equipment,
and waste disposal services. The profitability of most of these companies may
fluctuate significantly in response to capital spending and general economic
conditions. As is the case for the heavy industry sector, there are risks
associated with the production, handling, and disposal of materials and
processes that involve hazardous components and the risk of product
obsolescence.
(9) MEDIA AND ENTERTAINMENT SECTOR: Companies engaged in design,
production, or distribution of goods or services for the media industries
(including television or radio broadcasting or manufacturing, publishing,
recordings and musical instruments, motion pictures, and photography) and the
entertainment industries (including sports arenas, amusement and theme parks,
gaming casinos, sporting goods, camping and recreational equipment, toys and
games, travel-related services, hotels and motels, and fast food and other
restaurants). Many products produced by companies in this sector -- for example,
video and electronic games -- may become obsolete quickly. Additionally,
companies engaged in television and radio broadcast are subject to government
regulation.
(10) RETAILING SECTOR: Companies engaged in retail distribution of home
furnishings, food products, clothing, pharmaceuticals, leisure products, or
other consumer goods, including department stores, supermarkets, and retail
chains specializing in particular items such as shoes, toys, or pharmaceuticals.
The value of these companies' securities fluctuates based on consumer spending
patterns, which depend on inflation and interest rates, the level of consumer
debt, and seasonal shopping habits. The success or failure of a company in this
highly competitive sector depends on its ability to predict rapidly changing
consumer tastes.
(11) TECHNOLOGY SECTOR: Companies that are expected to have or develop
products, processes, or services that will provide, or will benefit
significantly from, technological advances and improvements or future automation
trends, including semiconductors, computers and peripheral equipment, scientific
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instruments, computer software, telecommunications equipment, and electronic
components, instruments, and systems. These companies are sensitive to foreign
competition and import tariffs. Also, many of their products may become obsolete
quickly.
(12) TRANSPORTATION SECTOR: Companies involved in providing
transportation of people and products, including airlines, railroads, and
trucking firms. Revenues of these companies are affected by fluctuations in fuel
prices and government regulation of fares.
(13) UTILITIES SECTOR: Companies in the public utilities industry and
companies that derive a substantial majority of their revenues through supplying
public utilities (including companies engaged in the manufacture, production,
generation, transmission, or sale of gas and electric energy) and that provide
telephone, telegraph, satellite, microwave, and other communication facilities
to the public. The gas and electric public utilities industries are subject to
various uncertainties, including the outcome of political issues concerning the
environment, prices of fuel for electric generation, availability of natural
gas, and risks associated with the construction and operation of nuclear power
facilities.
NEUBERGER & BERMAN SOCIALLY RESPONSIVE PORTFOLIO - DESCRIPTION OF SOCIAL
POLICY
BACKGROUND INFORMATION ON SOCIALLY RESPONSIVE INVESTING
In an era when many people are concerned about the relationship between
business and society, socially responsive investing ("SRI") is a mechanism for
assuring that investors' social values are reflected in their investment
decisions. As such, SRI is a direct descendent of the successful effort begun in
the early 1970's to encourage companies to divest their South African operations
and subscribe to the Sullivan Principles. Today, a growing number of individuals
and institutions are applying similar strategies to a broad range of problems.
Although there are many strategies available to the socially responsive
investor, including proxy activism, below-market loans to community projects,
and venture capital, the SRI strategies used by the Portfolio generally fall
into two categories:
AVOIDANCE INVESTING. Most socially responsive investors seek to avoid
holding securities of companies whose products or policies are seen as being at
odds with the social good. The most common exclusions historically have involved
tobacco companies and weapons manufacturers.
LEADERSHIP INVESTING. A growing number of investors actively look for
companies with progressive programs that are exemplary or companies which make
it their business to try to solve some of the problems of today's society.
- 55 -
<PAGE>
The marriage of social and financial objectives would not have
surprised Adam Smith, who was, first and foremost, a moral philosopher. THE
WEALTH OF NATIONS is firmly rooted in the Enlightenment conviction that the
purpose of capital is the social good and the related belief that idle capital
is both wasteful and unethical. But, what very likely would have surprised Smith
is the sheer complexity of the social issues we face today and the diversity of
our attitudes toward the social good. War and peace, race and gender, the
distribution of wealth, and the conservation of natural resources -- the social
agenda is long and compelling. It is also something about which reasonable
people differ. What should society's priorities be? What can and should be done
about them? And what is the role of business in addressing them? Since
corporations are on the front lines of so many key issues in today's world, a
growing number of investors feel that a corporation's role cannot be ignored.
This is true of some of the most important issues of the day such as equal
opportunity and the environment.
THE SOCIALLY RESPONSIVE DATABASE
Neuberger & Berman, LLC ("Neuberger & Berman"), the Portfolio's
sub-adviser, maintains a database of information about the social impact of the
companies it follows. N&B Management uses the database to evaluate social issues
after it deems a stock acceptable from a financial standpoint for acquisition by
the Portfolio. The aim of the database is to be as comprehensive as possible,
given that much of the information concerning corporate responsibility comes
from subjective sources. Information for the database is gathered by Neuberger &
Berman in many categories and then analyzed by N&B Management in the following
six categories of corporate responsibility:
WORKPLACE DIVERSITY AND EMPLOYMENT. N&B Management looks for companies
that show leadership in areas such as employee training and promotion policies
and benefits, such as flextime, generous profit sharing, and parental leave. N&B
Management looks for active programs to promote women and minorities and takes
into account their representation among the officers of an issuer and members of
its board of directors. As a basis for exclusion, N&B Management looks for Equal
Employment Opportunity Act infractions and Occupational Safety and Health Act
violations; examines each case in terms of severity, frequency, and time elapsed
since the incident; and considers actions taken by the company since the
violation. N&B Management also monitors companies' progress and attitudes toward
these issues.
ENVIRONMENT. A company's impact on the environment depends largely on
the industry. Therefore, N&B Management examines a company's environmental
record vis-a-vis those of its peers in the industry. All companies operating in
an industry with inherently high environmental risks are likely to have had
problems in such areas as toxic chemical emissions, federal and state fines, and
Superfund sites. For these companies, N&B Management examines their problems in
terms of severity, frequency, and elapsed time. N&B Management then balances the
record against whatever leadership the company may have demonstrated in terms of
- 56 -
<PAGE>
environmental policies, procedures, and practices. N&B Management defines an
environmental leadership company as one that puts into place strong affirmative
programs to minimize emissions, promote safety, reduce waste at the source,
insure energy conservation, protect natural resources, and incorporate recycling
into its processes and products. N&B Management looks for the commitment and
active involvement of senior management in all these areas. Several major
manufacturers which still produce substantial amounts of pollution are among the
leaders in developing outstanding waste source reduction and remediation
programs.
PRODUCT. N&B Management considers company announcements, press reports,
and public interest publications relating to the health, safety, quality,
labeling, advertising, and promotion of both consumer and industrial products.
N&B Management takes note of companies with a strong commitment to quality and
with marketing practices which are ethical and consumer-friendly. N&B Management
pays particular attention to companies whose products and services promote
progressive solutions to social problems.
PUBLIC HEALTH. N&B Management measures the participation of companies
in such industries and markets as alcohol, tobacco, gambling and nuclear power.
N&B Management also considers the impact of products and marketing activities
related to those products on nutritional and other health concerns, both
domestically and in foreign markets.
WEAPONS. N&B Management keeps track of domestic military sales and,
whenever possible, foreign military sales and categorizes them as nuclear
weapons related, other weapons related, and non-weapon military supplies, such
as micro-chip manufacturers and companies that make uniforms for military
personnel.
CORPORATE CITIZENSHIP. N&B Management gathers information about a
company's participation in community affairs, its policies with respect to
charitable contributions, and its support of education and the arts. N&B
Management looks for companies with a focus, dealing with issues not just by
making financial contributions, but also by asking the questions: What can we do
to help? What do we have to offer? Volunteerism, high- school mentoring
programs, scholarships and grants, and in-kind donations to specific groups are
just a few ways that companies have responded to these questions.
IMPLEMENTATION OF SOCIAL POLICY
Companies deemed acceptable by N&B Management from a financial
standpoint are analyzed using Neuberger & Berman's database. The companies are
then evaluated by the portfolio managers to determine if the companies'
policies, practices, products, and services withstand scrutiny in the following
major areas of concern: the environment and workplace diversity and employment.
Companies are then further evaluated to determine their track record in issues
and areas of concern such as public health, weapons, product, and corporate
citizenship.
- 57 -
<PAGE>
The issues and areas of concern that are tracked lend themselves to
objective analysis in varying degrees. Few, however, can be resolved entirely on
the basis of scientifically demonstrable facts. Moreover, a substantial amount
of important information comes from sources that do not purport to be
disinterested. Thus, the quality and usefulness of the information in the
database depend on Neuberger & Berman's ability to tap a wide variety of sources
and on the experience and judgment of the people at N&B Management who interpret
the information.
In applying the information in the database to stock selection for the
Portfolio, N&B Management considers several factors. N&B Management examines the
severity and frequency of various infractions, as well as the time elapsed since
their occurrence. N&B Management also takes into account any remedial action
which has been taken by the company relating to these infractions. N&B
Management notes any quality innovations made by the company in its effort to
create positive change and looks at the company's overall approach to social
issues.
PERFORMANCE INFORMATION
Each Fund's performance figures are based on historical results and are
not intended to indicate future performance. The share price and total return of
each Fund will vary, and an investment in a Fund, when redeemed, may be worth
more or less than an investor's original cost.
TOTAL RETURN COMPUTATIONS
Each Fund may advertise certain total return information. An average
annual compounded rate of return ("T") may be computed by using the redeemable
value at the end of a specified period ("ERV") of a hypothetical initial
investment of $1,000 ("P") over a period of time ("n") according to the formula:
P(1+T)(SUPERSCRIPT)n = ERV
Average annual total return smooths out year-to-year variations in
performance and, in that respect, differs from actual year-to-year results.
The average annual total returns for Neuberger & Berman MANHATTAN Fund
and its predecessor for the one-, five-, and ten-year periods ended August 31,
1996, were -2.91%, +11.12%, and +11.12%, respectively. If an investor had
invested $1,000 in the Fund's or its predecessor's shares on September 1, 1995,
September 1, 1991, and September 1, 1986, the NAV of that investor's holdings
would have been $971, $1,694, and $2,871, respectively, on August 31, 1996.
Appendix B to this SAI includes a table showing the results of an investment in
the Fund's predecessor of $100,000 on March 1, 1979, when N&B Management became
its investment adviser, and a systematic withdrawal plan under which 8% of the
initial investment was withdrawn each year, on a monthly basis, through August
31, 1996, plus other tables.
- 58 -
<PAGE>
The average annual total returns for Neuberger & Berman GENESIS Fund
and its predecessor for the one- and five-year periods ended August 31, 1996,
and for the period from September 27, 1988 (commencement of operations) through
August 31, 1996, were +21.32%, +14.71%, and +13.61%, respectively. If an
investor had invested $1,000 in that predecessor's shares on September 27, 1988,
the NAV of that investor's holdings would have been $2,752 on August 31, 1996.
Appendix B to this SAI incorporates by reference a table showing the growth of
an investment in the Fund's predecessor of $10,000 on September 27, 1988 through
August 31, 1996.
The average annual total returns for Neuberger & Berman FOCUS Fund and
its predecessor for the one-, five-, and ten-year periods ended August 31, 1996,
were +3.70%, +15.90%, and +13.40%, respectively. Appendix B to this SAI includes
a table showing the results of an investment in the Fund's predecessor of
$200,000 on October 19, 1955, the date of its inception, and a systematic
withdrawal plan under which 10% of the initial investment was withdrawn each
year, on a monthly basis, through August 31, 1996, plus other tables.
The average annual total returns for Neuberger & Berman GUARDIAN Fund
and its predecessor for the one-, five-, and ten-year periods ended August 31,
1996, were +5.27%, +15.09%, and +13.32%, respectively. Appendix B to this SAI
includes tables showing (1) the results of an investment of $200,000 in the
Fund's predecessor on June 1, 1950, the date of its inception, and a systematic
withdrawal plan under which 10% of the initial investment was withdrawn each
year, on a monthly basis, and (2) the results of investing $5,000 in the Fund or
its predecessor at the highest and lowest prices per share during each year
since 1981, plus other tables.
The average annual total returns for Neuberger & Berman PARTNERS Fund
and its predecessor for the one-, five-, and ten-year periods ended August 31,
1996, were +13.86%, +15.22%, and +12.59%, respectively. Appendix B to this SAI
includes tables showing (1) the results of an investment of $100,000 in the
Fund's predecessor on January 20, 1975, when N&B Management became its
investment adviser, and a systematic withdrawal plan under which 8% of the
initial investment was withdrawn each year, on a monthly basis, and (2) the
results of investing $5,000 in the Fund or its predecessor at the highest and
lowest prices per share during each year since 1981, plus other tables.
The average annual total returns for Neuberger & Berman SOCIALLY
RESPONSIVE Fund for the one-year period ended August 31, 1996, and for the
period from March 16, 1994 (commencement of operations) through August 31, 1996,
were +20.19% and +15.50%, respectively.
The average annual total returns for Neuberger & Berman INTERNATIONAL
Fund for the one-year period ended August 31, 1996, and for the period from June
15, 1994 (commencement of operations) through August 31, 1996, were +11.73% and
+8.55%, respectively. During the period from June 15, 1994 through November 1,
- 59 -
<PAGE>
1995, the then investment adviser to Neuberger & Berman INTERNATIONAL Portfolio
and N&B Management, as the Fund's administrator, reimbursed certain expenses of
the Portfolio and the Fund, respectively. Such action had the effect of
increasing total return. If an investor had invested $10,000 in the Fund's
shares on June 15, 1994, the NAV of that investor's holdings would have been
$11,991 on August 31, 1996.
BNP-N&B Global Asset Management L.P. ("BNP-N&B Global"), a joint
venture of Banque Nationale de Paris ("BNP") and Neuberger & Berman, served as
the investment adviser to Neuberger & Berman INTERNATIONAL Portfolio from its
inception until November 1, 1995. On that date, N&B Management became that
Portfolio's investment manager, and Neuberger & Berman became its sub-adviser;
there has been no change in the personnel responsible for daily management of
the Portfolio.
Prior to January 5, 1989, the investment policies of the predecessor of
Neuberger & Berman FOCUS Fund required that at least 80% of its investments
normally be in energy-related investments; prior to November 1, 1991, those
investment policies required that at least 25% of its investments normally be in
the energy sector. Neuberger & Berman FOCUS Fund may be required, under
applicable law, to include information reflecting the predecessor's performance
and expenses for periods before November 1, 1991, in its advertisements, sales
literature, financial statements, and other documents filed with the SEC and/or
provided to current and prospective shareholders. Investors should be aware that
such information may not accurately reflect the level of performance and
expenses that would have been experienced had the predecessor been operating
under the Fund's current investment policies.
COMPARATIVE INFORMATION
From time to time each Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings)
published by independent services or publications (including
newspapers, newsletters, and financial periodicals) that monitor the
performance of mutual funds, such as Lipper Analytical Services, Inc.,
C.D.A. Investment Technologies, Inc., Wiesenberger Investment Companies
Service, Investment Company Data Inc., Morningstar, Inc., Micropal
Incorporated, and quarterly mutual fund rankings by Money, Fortune,
Forbes, Business Week, Personal Investor, and U.S. News & World Report
magazines, The Wall Street Journal, The New York Times, Kiplinger's
Personal Finance, and Barron's Newspaper, 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 Index
("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"), Russell
2000 Stock Index, Dow Jones Industrial Average ("DJIA"), Wilshire
- 60 -
<PAGE>
1750 Index, Nasdaq Composite Index, Value Line Index, U.S. Department
of Labor Consumer Price Index ("Consumer Price Index"), College Board
Annual Survey of Colleges, Kanon Bloch's Family Performance Index, the
Barra Growth Index, the Barra Value Index, the EAFE(R) 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 Index includes stocks that range in
market value from $40 million to $2.3 billion, with an average of $451
million. The S&P 400 Index measures mid-sized companies that have an
average market capitalization of $1.6 billion. The EAFE(R) 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. Each Portfolio may invest in different types of
securities from those included in some of the above indices.
Neuberger & Berman SOCIALLY RESPONSIVE Fund's performance may also be
compared to various socially responsive indices. These include The Domini Social
Index and the indices developed by the quantitative department of Prudential
Securities, such as that department's Large and Mid-Cap portfolio indices for
various breakdowns ("Sin" Stock Free, Cigarette-Stock Free, S&P Composite,
etc.).
Evaluations of the Funds' performance, their total returns, and
comparisons may be used in advertisements and in information furnished to
current and prospective shareholders (collectively, "Advertisements"). The Funds
may also be compared to individual asset classes such as common stocks,
small-cap stocks, or Treasury bonds, based on information supplied by Ibbotson
and Sinquefield.
OTHER PERFORMANCE INFORMATION
From time to time, information about a Portfolio's portfolio allocation
and holdings as of a particular date may be included in Advertisements for the
corresponding Fund. This information may include the Portfolio's portfolio
diversification by asset type or, in the case of Neuberger & Berman SOCIALLY
RESPONSIVE Portfolio, by the social characteristics of companies owned.
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.
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<PAGE>
N&B Management believes that many of its common stock funds may be
attractive investment vehicles for conservative investors who are interested in
long-term appreciation from stock investments, but who have a moderate tolerance
for risk. Such investors may include, for example, individuals (1) planning for
or facing retirement, (2) receiving or expecting to receive lump-sum
distributions from individual retirement accounts ("IRAs"), self-employed
individual retirement plans ("Keogh plans"), or other retirement plans, (3)
anticipating rollovers of CDs or IRAs, Keogh plans, or other retirement plans,
and (4) receiving a significant amount of money as a result of inheritance, sale
of a business, or termination of employment.
Investors who may find Neuberger & Berman PARTNERS Fund, Neuberger &
Berman GUARDIAN Fund or Neuberger & Berman FOCUS Fund to be an attractive
investment vehicle also include parents saving to meet college costs for their
children. For instance, the cost of a college education is rapidly approaching
the cost of the average family home. Estimates of total four-year costs
(tuition, room and board, books and other expenses) for students starting
college in various years may be included in Advertisements, based on the College
Board Annual Survey of Colleges.
Information relating to inflation and its effects on the dollar also
may be included in Advertisements. For example, after ten years, the purchasing
power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100,
respectively, if the annual rates of inflation during that period were 4%, 5%,
6%, and 7%, respectively. (To calculate the purchasing power, the value at the
end of each year is reduced by the inflation rate for the ten-year period.)
Information regarding the effects of automatic investing and systematic
withdrawal plans, investing at market highs and/or lows, and investing early
versus late for retirement plans also may be included in Advertisements, if
appropriate.
From time to time the investment philosophy of N&B Management's
founder, Roy R. Neuberger, may be included in the Funds' Advertisements. This
philosophy is described in further detail in "The Art of Investing: A
Conversation with Roy Neuberger," attached as Appendix C to this SAI.
CERTAIN RISK CONSIDERATIONS
Although each Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
risk. There can, of course, be no assurance any Portfolio will achieve its
investment objective.
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<PAGE>
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 their
corresponding portfolios administered or managed by N&B Management and Neuberger
& Berman.
THE TRUST AND EQUITY MANAGERS TRUST:
<TABLE>
<CAPTION>
Positions Held
With the Trust
Name, Age, and and Equity
Address(1) Managers Trust Principal Occupation(s)(2)
<S> <C> <C>
Faith Colish (61) Trustee of each Trust Attorney at Law, Faith Colish, A
63 Wall Street Professional Corporation.
24th Floor
New York, NY 10005
Donald M. Cox (74) Trustee of each Trust Retired. Formerly Senior Vice
435 East 52nd Street President and Director of Exxon
New York, NY 10022 Corporation; Director of Emigrant
Savings Bank.
Stanley Egener* (62) Chairman of the Board, Chief Principal of Neuberger & Berman;
Executive Officer, and President and Director of N&B
Trustee of each Trust Management; Chairman of the Board,
Chief Executive Officer and
Trustee of eight other mutual
funds for which N&B Management
acts as investment manager or
administrator.
Alan R. Gruber (69) Trustee of each Trust Chairman and Chief Executive Officer
Orion Capital of Orion Capital Corporation (property
Corporation and casualty insurance);
600 Fifth Avenue Director of Trenwick Group, Inc.
24th Floor (property and casualty reinsurance);
New York, NY 10020 Chairman of the Board and Director
of Guaranty National Corporation
(property and casualty insurance);
formerly Director of Ketema, Inc.
(diversified manufacturer).
- 63 -
<PAGE>
Howard A. Mileaf (59) Trustee of each Trust Vice President and Special Counsel to
WHX Corporation WHX Corporation (holding company) since
110 East 59th Street 1992; formerly Vice President and
30th Floor General Counsel of Keene Corporation
New York, NY 10022 (manufacturer of industrial products);
Director of Kevlin Corporation
(manufacturer of microwave and other
products).
Edward I. O'Brien* (68) Trustee of each Trust Until 1993, President of the Securities
12 Woods Lane Industry Association ("SIA")
Scarsdale, NY 10583 (securities 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. (68) Trustee of each Trust Retired. Formerly, President of SOBRO
183 Ledge Drive (South Bronx Overall Economic
Torrington, CT 06790 Development Corporation).
John P. Rosenthal (63) Trustee of each Trust Senior Vice President of Burnham
Burnham Securities Inc. Securities Inc. (a registered broker-
Burnham Asset Management dealer) since 1991; formerly Partner of
Corp. Silberberg, Rosenthal & Co. (member of
1325 Avenue of the Americas National Association of Securities
17th Floor Dealers, Inc.); Director, Cancer
New York, NY 10019 Treatment Holdings, Inc.
Cornelius T. Ryan (65) Trustee of each Trust General Partner of Oxford Partners and
Oxford Bioscience Partners Oxford Bioscience Partners (venture
315 Post Road West capital partnerships) and President of
Westport, CT 06880 Oxford Venture Corporation; Director of
Capital Cash Management Trust (money
market fund) and Prime Cash Fund.
- 64 -
<PAGE>
Gustave H. Shubert (67) Trustee of each Trust Senior Fellow/Corporate Advisor and
13838 Sunset Boulevard Advisory Trustee of Rand (a non-profit
Pacific Palisades, CA 90272 public interest research institution)
since 1989; Honorary 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* (60) President and Trustee Principal of Neuberger & Berman;
of each Trust Director of N&B Management; President
and/or Trustee of five other mutual
funds for which N&B Management acts
as investment manager or administrator.
Daniel J. Sullivan (56) Vice President of each Senior Vice President of N&B Management
Trust since 1992; prior thereto, Vice
President of N&B Management; Vice
President of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
Michael J. Weiner (49) Vice President and Senior Vice President of N&B Management
Principal Financial since 1992; Treasurer of N&B Management
Officer of each Trust from 1992 to 1996; prior thereto, Vice
President and Treasurer of N&B Management
and Treasurer of certain mutual funds
for which N&B Management acted as
investment adviser; Vice President and
Principal Financial Officer of eight
other mutual funds for which N&B
Management acts as investment
manager or administrator.
Claudia A. Brandon (40) Secretary of each Vice President of N&B Management;
Trust Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
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<PAGE>
Richard Russell (49) Treasurer and Princi- Vice President of N&B Management since
pal Accounting Officer 1993; prior thereto, Assistant Vice
of each Trust President of N&B Management; Treasurer
and Principal Accounting Officer of
eight other mutual funds for which N&B
Management acts as investment manager
or administrator.
Stacy Cooper-Shugrue (33) Assistant Secretary of Assistant Vice President of N&B
each Trust Management since 1993; prior thereto,
employee of N&B Management;
Assistant Secretary of eight other
mutual funds for which N&B
Management acts as investment
manager or administrator.
C. Carl Randolph (59) Assistant Secretary of Principal of Neuberger & Berman since
each Trust 1992; prior thereto, employee of
Neuberger & Berman; Assistant
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
Barbara DiGiorgio (37) Assistant Treasurer of Assistant Vice President of N&B
each Trust Management since 1993; prior thereto,
employee of N&B Management;
Assistant Treasurer of eight other
mutual funds for which N&B
Management acts as investment
manager or administrator
since 1996.
Celeste Wischerth (35) Assistant Treasurer of Assistant Vice President of N&B
each Trust Management since 1994; prior thereto,
employee of N&B Management;
Assistant Treasurer of eight other
mutual funds for which N&B
Management acts as investment
manager or administrator
since 1996.
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<PAGE>
GLOBAL MANAGERS TRUST:
Positions Held
Name, Age, and with Global
Address(1) Managers Trust Principal Occupation(s)(2)
- --------------- -------------- --------------------------
Stanley Egener* (62) Chairman of the (See above)
Board, Chief
Executive Officer
and Trustee
Howard A. Mileaf (59) Trustee (See above)
WHX Corporation
110 East 59th Street
30th Floor
New York, NY 10022
John T. Patterson, Jr. (68) Trustee (See above)
183 Ledge Drive
Torrington, CT 06790
John P. Rosenthal (63) Trustee (See above)
Burnham Securities
Inc.
Burnham Asset
Management Corp.
1325 Avenue of the
Americas
17th Floor
New York, NY 10019
Lawrence Zicklin (60) President (See above)
Daniel J. Sullivan (56) Vice President (See above)
Michael J. Weiner (49) Vice President and (See above)
Principal Financial
Officer
Richard Russell (49) Treasurer and (See above)
Principal Accounting
Officer
Claudia A. Brandon (40) Secretary (See above)
Stacy Cooper-Shugrue (33) Assistant Secretary (See above)
C. Carl Randolph (59) Assistant Secretary (See above)
Barbara DiGiorgio (37) Assistant Treasurer (See above)
Celeste Wischerth (35) Assistant Treasurer (See above)
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<PAGE>
Jacqueline Henning (54) Assistant Treasurer Managing Director, State
Street Cayman Trust Co.,
Ltd. since 1994; Assistant
Director, Morgan Grenfell,
1993-94; Bank of Nova
Scotia Trust Co. (Cayman)
Ltd., Managing Director,
1988-93.
Lenore Joan McCabe (35) 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.
</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 positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" within the meaning of the
1940 Act. Messrs. Egener and Zicklin are interested persons of each Trust by
virtue of the fact that they are officers and/or directors of N&B Management and
principals of Neuberger & Berman. Mr. O'Brien is an interested person of the
Trust and Equity Managers Trust 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 Portfolios and other funds for which N&B Management
serves as investment manager.
The Trust's Trust Instrument and each Managers Trust's Declaration of
Trust provide that each such Trust will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties involved in
the conduct of their offices, or (b) did not act in good faith in the reasonable
belief that their action was in the best interest of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined (by a court or other body approving the settlement or other
disposition, by a majority of disinterested trustees based upon a review of
readily available facts, or in a written opinion of independent counsel) that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.
- 68 -
<PAGE>
For the fiscal year ended August 31, 1996, each Fund and Portfolio paid
and accrued the following fees and expenses to Fund and Portfolio Trustees who
were not affiliated with N&B Management or Neuberger & Berman: Neuberger &
Berman MANHATTAN Fund and Portfolio - $24,158; Neuberger & Berman GENESIS Fund
and Portfolio -$10,657; Neuberger & Berman FOCUS Fund and Portfolio - $39,194;
Neuberger & Berman GUARDIAN Fund and Portfolio - $117,485; Neuberger & Berman
PARTNERS Fund and Portfolio - $53,236; Neuberger & Berman SOCIALLY RESPONSIVE
Fund and Portfolio - $1,773; and Neuberger & Berman INTERNATIONAL Fund and
Portfolio - $44,610.
The following table sets forth information concerning the compensation
of the trustees and officers of the Trust. None of the Neuberger & Berman
Funds(R) has any retirement plan for its trustees or officers.
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TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/96
Total Compensation
Aggregate from Trusts in the
Name and Position with Compensation Neuberger & Berman Fund
the Trust from the Trust Complex Paid to Trustees
Faith Colish $ 12,958 $ 38,500
Trustee (5 other investment
companies)
Donald M. Cox $ 12,958 $ 31,000
Trustee (3 other investment
companies)
Stanley Egener $ 0 $ 0
Chairman of the Board, (9 other investment
Chief Executive companies)
Officer, and Trustee
Alan R. Gruber $ 11,885 $ 28,000
Trustee (3 other investment
companies)
Howard A. Mileaf $ 13,178 $ 37,000
Trustee (4 other investment
companies)
Edward I. O'Brien $ 13,618 $ 31,500
Trustee (3 other investment
companies)
John T. Patterson, Jr. $ 14,691 $ 40,500
Trustee (4 other investment
companies)
John P. Rosenthal $ 12,958 $ 36,500
Trustee (4 other investment
companies)
Cornelius T. Ryan $ 13,178 $ 30,500
Trustee (3 other investment
companies)
Gustave H. Shubert $ 13,178 $ 30,500
Trustee (3 other investment
companies)
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Total Compensation
Aggregate from Trusts in the
Name and Position with Compensation Neuberger & Berman Fund
the Trust from the Trust Complex Paid to Trustees
Lawrence Zicklin $ 0 $ 0
President and Trustee (5 other investment
companies)
At November 20, 1996, the trustees and officers of the Trust and the
corresponding Managers Trust, as a group, owned beneficially or of record less
than 1% of the outstanding shares of each Fund (except Neuberger & Berman
INTERNATIONAL Fund). As of that date, the trustees and officers of the Trust and
Global Managers Trust, as a group, owned 1.18% of the outstanding shares of
Neuberger & Berman INTERNATIONAL Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
INVESTMENT MANAGER AND ADMINISTRATOR
Because all of the Funds' net investable assets are invested in their
corresponding Portfolios, the Funds do not need an investment manager. N&B
Management serves as the investment manager to all the Portfolios (except
Neuberger & Berman INTERNATIONAL Portfolio) pursuant to a management agreement
with Equity Managers Trust, dated as of August 2, 1993 ("EMT Management
Agreement"). The EMT Management Agreement was approved by the holders of the
interests in all the Portfolios (except Neuberger & Berman SOCIALLY RESPONSIVE
Portfolio) on August 2, 1993, and by the holders of the interests in Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio on March 9, 1994. That Portfolio was
authorized to become subject to the EMT Management Agreement by vote of the
Portfolio Trustees on October 20, 1993, and became subject to it on March 14,
1994. N&B Management serves as the investment manager to Neuberger & Berman
INTERNATIONAL Portfolio pursuant to a management agreement with Global Managers
Trust, dated as of November 1, 1995 ("GMT Management Agreement"). The GMT
Management Agreement was approved by the holders of the interests in Neuberger &
Berman INTERNATIONAL Portfolio on October 26, 1995. That Portfolio was
authorized to become subject to the GMT Management Agreement by vote of the
Portfolio Trustees on August 8, 1995, and became subject to it on November 1,
1995.
The EMT Management Agreement and GMT Management Agreement ("Management
Agreements") provide, in substance, that N&B Management will make and implement
investment decisions for the Portfolios in its discretion and will continuously
develop an investment program for the Portfolios' assets. The Management
Agreements permit N&B Management to effect securities transactions on behalf of
each Portfolio through associated persons of N&B Management. The Management
Agreements also specifically permit N&B Management to compensate, through higher
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commissions, brokers and dealers who provide investment research and analysis to
the Portfolios, although N&B Management has no current plans to pay a material
amount of such compensation.
N&B Management provides to each Portfolio, without separate cost,
office space, equipment, and facilities and the personnel necessary to perform
executive, administrative, and clerical functions. N&B Management pays all
salaries, expenses, and fees of the officers, trustees, and employees of the
Managers Trusts who are officers, directors, or employees of N&B Management. Two
directors of N&B Management (who also are principals of Neuberger & Berman), one
of whom also serves as an officer of N&B Management, presently serve as trustees
and/or officers of the Trusts. See "Trustees and Officers." Each Portfolio pays
N&B Management a management fee based on the Portfolio's average daily net
assets, as described in the Prospectus.
N&B Management provides similar facilities, services, and personnel to
each Fund pursuant to an administration agreement with the Trust, dated May 1,
1995 ("Administration Agreement"). Neuberger & Berman INTERNATIONAL 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. For
such administrative services, each Fund pays N&B Management a fee based on the
Fund's average daily net assets, as described in the Prospectus.
Under the Administration Agreement, N&B Management also provides to
each Fund and its shareholders certain shareholder, shareholder- related, and
other services that are not furnished by the Fund's shareholder servicing agent.
N&B Management provides the direct shareholder services specified in the
Administration Agreement, assists the shareholder servicing agent in the
development and implementation of specified programs and systems to enhance
overall shareholder servicing capabilities, solicits and gathers shareholder
proxies, performs services connected with the qualification of each Fund's
shares for sale in various states, and furnishes other services the parties
agree from time to time should be provided under the Administration Agreement.
From time to time, N&B Management or a Fund may enter into arrangements
with registered broker-dealers or other third parties pursuant to which it pays
the broker-dealer or third party a per account fee or a fee based on a
percentage of the aggregate net asset value of Fund shares purchased by the
broker-dealer or third party on behalf of its customers, in payment for
administrative and other services rendered to such customers.
Because Neuberger & Berman INTERNATIONAL Portfolio has its principal
offices in the Cayman Islands, Global 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, British West Indies, effective August 31, 1994. Under
the Administrative Services Agreement, State Street Cayman provides sufficient
personnel and suitable facilities for the principal offices of Neuberger &
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Berman INTERNATIONAL Portfolio and provides certain administrative, fund
accounting, and transfer agency services with respect to that Portfolio. The
Administrative Services Agreement terminates if assigned by State Street Cayman;
however, State Street Cayman is permitted to, and does, employ an affiliate,
State Street Canada, Inc., to perform certain accounting functions.
Prior to November 1, 1995, Neuberger & Berman INTERNATIONAL Portfolio
was advised by BNP-N&B Global pursuant to an investment advisory agreement dated
June 15, 1994. 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. N&B Management provided the Portfolio
with administrative services pursuant to a separate administration agreement
dated June 15, 1994. Prior to November 1, 1995, N&B Management provided similar
services to the Fund pursuant to an administration agreement dated June 15, 1994
and amended May 1, 1995.
During the fiscal years ended August 31, 1996, 1995 and 1994, Neuberger
& Berman MANHATTAN Fund accrued management and administration fees of
$4,716,468, $3,685,282 and $3,512,058, respectively. During the fiscal years
ended August 31, 1996, 1995 and 1994, Neuberger & Berman GENESIS Fund accrued
management and administration fees of $1,535,678, $1,155,623 and $1,245,944,
respectively. During the fiscal year ended August 31, 1996 and the period from
May 1, 1995 to August 31, 1995, N&B Management waived $138,187 and $35,769,
respectively, of management fees that otherwise would have been borne indirectly
by Neuberger & Berman GENESIS Fund. During the fiscal years ended August 31,
1996, 1995 and 1994, Neuberger & Berman FOCUS Fund accrued management and
administration fees of $8,144,099, $5,114,879 and $4,066,847, respectively.
During the fiscal years ended August 31, 1996, 1995 and 1994, Neuberger & Berman
GUARDIAN Fund accrued management and administration fees of $32,628,373,
$18,549,364 and $12,798,776, respectively. During the fiscal years ended August
31, 1996, 1995 and 1994, Neuberger & Berman PARTNERS Fund accrued management and
administration fees of $13,049,313, $9,233,615 and $8,090,161, respectively.
During the fiscal years ended August 31, 1996 and 1995 and the period
from March 16, 1994 (commencement of operations) to August 31, 1994, Neuberger &
Berman SOCIALLY RESPONSIVE Fund accrued management and administration fees of
$145,742, $37,197 and $3,082, respectively. For those same periods, N&B
Management reimbursed that Fund for $34,074, $78,940 and $25,172, respectively,
of expenses. During the fiscal years ended August 31, 1996 and 1995 and the
period from June 15, 1994 (commencement of operations) through August 31, 1994,
Neuberger & Berman INTERNATIONAL Fund accrued advisory or management and
administration fees of $469,310, $317,147 and $30,926, respectively. For those
same periods, BNP-N&B Global and N&B Management reimbursed that Fund for
$282,021, $407,108 and $94,246, respectively, in expenses.
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Prior to May 1, 1995, the shareholder services described above were
provided pursuant to a separate agreement between the Trust and N&B Management.
As compensation for these services, each Fund paid N&B Management a monthly fee
calculated at the annual rate of 0.04% of the average daily net assets of that
Fund. Before February 1, 1994, the monthly fee under the shareholder service
agreement then in effect was at the annual rate of $6 per shareholder account.
During the period from September 1, 1994 to April 30, 1995, and the fiscal year
ended August 31, 1994, Neuberger & Berman MANHATTAN Fund paid and accrued
$127,079 and $238,777, respectively, for these services. During the period from
September 1, 1994 to April 30, 1995, and the fiscal year ended August 31, 1994,
Neuberger & Berman GENESIS Fund paid and accrued $29,930 and $51,345,
respectively, for these services. During the period from September 1, 1994 to
April 30, 1995, and the fiscal year ended August 31, 1994, Neuberger & Berman
FOCUS Fund paid and accrued $169,437 and $208,303, respectively, for these
services. During the period from September 1, 1994 to April 30, 1995, and the
fiscal year ended August 31, 1994, Neuberger & Berman GUARDIAN Fund paid and
accrued $670,627 and $714,032, respectively, for these services. During the
period from September 1, 1994 to April 30, 1995, and the fiscal year ended
August 31, 1994, Neuberger & Berman PARTNERS Fund paid and accrued $340,751 and
$430,948, respectively, for these services. For the period from September 1,
1994 to April 30, 1995, and for the period from March 16, 1994 (commencement of
operations) until August 31, 1994, Neuberger & Berman SOCIALLY RESPONSIVE Fund
paid and accrued $1,085 and $174, respectively, for these services. 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, Neuberger & Berman
INTERNATIONAL Fund paid and accrued $4,178 and $342, respectively, for these
services.
The Management Agreements continue with respect to each Portfolio for a
period of two years after the date the Portfolio became subject thereto. The
Management Agreements are renewable thereafter from year to year with respect to
each Portfolio, so long as their continuance is approved at least annually (1)
by the vote of a majority of the Portfolio Trustees who are not "interested
persons" of N&B Management or the corresponding Managers Trust ("Independent
Portfolio Trustees"), cast in person at a meeting called for the purpose of
voting on such approval, and (2) by the vote of a majority of the Portfolio
Trustees or by a 1940 Act majority vote of the outstanding interests in that
Portfolio. The Administration Agreement continues with respect to each Fund for
a period of two years after the date the Fund became subject thereto. The
Administration Agreement is renewable from year to year with respect to a Fund,
so long as its continuance is approved at least annually (1) by the vote of a
majority of the Fund Trustees who are not "interested persons" of N&B Management
or the Trust ("Independent Fund Trustees"), cast in person at a meeting called
for the purpose of voting on such approval, and (2) by the vote of a majority of
the Fund Trustees or by a 1940 Act majority vote of the outstanding shares in
that Fund.
The Management Agreements are terminable, without penalty, with respect
to a Portfolio on 60 days' written notice either by the corresponding Managers
Trust or by N&B Management. The Administration Agreement is terminable, without
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penalty, with respect to a Fund on 60 days' written notice either by N&B
Management or by the Trust. Each Agreement terminates automatically if it is
assigned.
SUB-ADVISER
N&B Management retains Neuberger & Berman, 605 Third Avenue, New York,
NY 10158-3698, as sub-adviser with respect to each Portfolio (except Neuberger &
Berman INTERNATIONAL Portfolio) pursuant to a sub-advisory agreement dated
August 2, 1993 ("EMT Sub-Advisory Agreement"). The EMT Sub-Advisory Agreement
was approved by the holders of the interests in the Portfolios (except Neuberger
& Berman SOCIALLY RESPONSIVE Portfolio) on August 2, 1993, and by the holders of
the interests in Neuberger & Berman SOCIALLY RESPONSIVE Portfolio on March 9,
1994. That Portfolio was authorized to become subject to the EMT Sub-Advisory
Agreement by vote of the Portfolio Trustees on October 20, 1993, and became
subject to it on March 14, 1994. N&B Management retains Neuberger & Berman as
sub-adviser with respect to Neuberger & Berman INTERNATIONAL Portfolio pursuant
to a sub-advisory agreement dated November 1, 1995 ("GMT Sub-Advisory
Agreement"). The GMT Sub-Advisory Agreement was approved by the holders of the
interests in the Neuberger & Berman INTERNATIONAL Portfolio on October 26, 1995.
That Portfolio was authorized to become subject to the GMT Sub-Advisory
Agreement by vote of the Portfolio Trustees on August 8, 1995, and became
subject to it on November 1, 1995.
The EMT Sub-Advisory Agreement and GMT Sub-Advisory Agreement
("Sub-Advisory Agreements") provide in substance that Neuberger & Berman will
furnish to N&B Management, upon reasonable request, the same type of investment
recommendations and research that Neuberger & Berman, from time to time,
provides to its principals and employees for use in managing client accounts. In
this manner, N&B Management expects to have available to it, in addition to
research from other professional sources, the capability of the research staff
of Neuberger & Berman. This staff consists of approximately fourteen investment
analysts, each of whom specializes in studying one or more industries, under the
supervision of the Director of Research, who is also available for consultation
with N&B Management. The Sub-Advisory Agreements provide that N&B Management
will pay for the services rendered by Neuberger & Berman based on the direct and
indirect costs to Neuberger & Berman in connection with those services.
Neuberger & Berman also serves as sub-adviser for all of the other mutual funds
managed by N&B Management.
The Sub-Advisory Agreements continue with respect to each Portfolio for
a period of two years after the date the Portfolio became subject thereto and
are renewable from year to year, subject to approval of their continuance in the
same manner as the Management Agreements. The Sub-Advisory Agreements are
subject to termination, without penalty, with respect to each Portfolio by the
Portfolio Trustees or a 1940 Act majority vote of the outstanding interests in
that Portfolio, by N&B Management, or by Neuberger & Berman on not less than 30
nor more than 60 days' written notice. The Sub-Advisory Agreements also
terminate automatically with respect to each Portfolio if they are assigned or
if the Management Agreement terminates with respect to that Portfolio.
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Most money managers that come to the Neuberger & Berman organization
have at least fifteen years experience. Neuberger & Berman and N&B Management
employ experienced professionals that work in a competitive environment.
INVESTMENT COMPANIES MANAGED
- ----------------------------
N&B Management currently serves as investment manager of the following
investment companies. As of September 30, 1996, these companies, along with
three other investment companies advised by Neuberger & Berman, had aggregate
net assets of approximately $13.9 billion, as shown in the following list:
Approximate
Net Assets at
NAME SEPTEMBER 30, 1996
Neuberger & Berman Cash Reserves Portfolio........................$527,447,493
(investment portfolio for Neuberger & Berman Cash
Reserves)
Neuberger & Berman Government Money Portfolio.....................$319,705,018
(investment portfolio for Neuberger & Berman Government
Money Fund)
Neuberger & Berman Limited Maturity Bond Portfolio................$268,892,148
(investment portfolio for Neuberger & Berman Limited
Maturity Bond Fund and Neuberger & Berman Limited
Maturity Bond Trust)
Neuberger & Berman Municipal Money Portfolio......................$141,116,062
(investment portfolio for Neuberger & Berman Municipal
Money Fund)
Neuberger & Berman Municipal Securities Portfolio..................$38,416,801
(investment portfolio for Neuberger & Berman Municipal
Securities Trust)
Neuberger & Berman New York Insured Intermediate ...................$9,575,489
Portfolio
(investment portfolio for Neuberger & Berman New York
Insured Intermediate Fund)
Neuberger & Berman Ultra Short Bond Portfolio......................$96,306,004
(investment portfolio for Neuberger & Berman Ultra Short Bond
Fund and Neuberger & Berman Ultra Short Bond Trust)
Neuberger & Berman Focus Portfolio..............................$1,174,138,341
(investment portfolio for Neuberger & Berman Focus Fund,
Neuberger & Berman Focus Trust and Neuberger & Berman Focus
Assets)
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Neuberger & Berman Genesis Portfolio..............................$287,653,131
(investment portfolio for Neuberger & Berman Genesis Fund and
Neuberger & Berman Genesis Trust)
Neuberger & Berman Guardian Portfolio......................... $6,513,577,557
(investment portfolio for Neuberger & Berman Guardian Fund,
Neuberger & Berman Guardian Trust and Neuberger & Berman Guardian
Assets)
Neuberger & Berman International Portfolio.........................$59,969,278
(investment portfolio for Neuberger & Berman International Fund)
Neuberger & Berman Manhattan Portfolio............................$592,681,290
(investment portfolio for Neuberger & Berman Manhattan Fund,
Neuberger & Berman Manhattan Trust and Neuberger & Berman
Manhattan Assets)
Neuberger & Berman Partners Portfolio...........................$2,112,475,324
(investment portfolio for Neuberger & Berman Partners Fund,
Neuberger & Berman Partners Trust and Neuberger & Berman Partners
Assets)
Neuberger & Berman Socially Responsive............................$167,005,429
Portfolio
(investment portfolio for Neuberger & Berman Socially Responsive
Fund and Neuberger & Berman NYCDC Socially Responsive Trust)
Advisers Managers Trust.........................................$1,468,727,224
(six series)
In addition, Neuberger & Berman serves as investment adviser to three
investment companies, Plan Investment Fund, Inc., AHA Investment Fund, Inc., and
AHA Full Maturity, with assets of $61,738,329, $77,498,236, and $26,954,887,
respectively, at September 30, 1996.
The investment decisions concerning the Portfolios and the other mutual
funds managed by N&B Management (collectively, "Other N&B Funds") have been and
will continue to be made independently of one another. In terms of their
investment objectives, most of the Other N&B Funds differ from the Portfolios.
Even where the investment objectives are similar, however, the methods used by
the Other N&B Funds and the Portfolios to achieve their objectives may differ.
The investment results achieved by all of the mutual funds managed by N&B
Management have varied from one another in the past and are likely to vary in
the future.
There may be occasions when a Portfolio and one or more of the Other
N&B Funds or other accounts managed by Neuberger & Berman are contemporaneously
engaged in purchasing or selling the same securities from or to third parties.
When this occurs, the transactions are averaged as to price and allocated, in
terms of amount, in accordance with a formula considered to be equitable to the
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funds involved. Although in some cases this arrangement may have a detrimental
effect on the price or volume of the securities as to a Portfolio, in other
cases it is believed that a Portfolio's ability to participate in volume
transactions may produce better executions for it. In any case, it is the
judgment of the Portfolio Trustees that the desirability of the Portfolios'
having their advisory arrangements with N&B Management outweighs any
disadvantages that may result from contemporaneous transactions.
The Portfolios are subject to certain limitations imposed on all
advisory clients of Neuberger & Berman (including the Portfolios, the Other N&B
Funds, and other managed accounts) and personnel of Neuberger & Berman and its
affiliates. These include, for example, limits that may be imposed in certain
industries or by certain companies, and policies of Neuberger & Berman that
limit the aggregate purchases, by all accounts under management, of the
outstanding shares of public companies.
MANAGEMENT AND CONTROL OF N&B MANAGEMENT
The directors and officers of N&B Management, all of whom have offices
at the same address as N&B Management, are Richard A. Cantor, Chairman of the
Board and director; Stanley Egener, President and director; Theodore P.
Giuliano, Vice President and director; Michael M. Kassen, Vice President and
director; Irwin Lainoff, director; Lawrence Zicklin, director; Daniel J.
Sullivan, Senior Vice President; Peter E. Sundman, Senior Vice President;
Michael J. Weiner, Senior Vice President; Claudia A. Brandon, Vice President;
Patrick T. Byrne, Vice President; William Cunningham, Vice President; Clara Del
Villar, Vice President; Mark R. Goldstein, Vice President; Farha-Joyce Haboucha,
Vice President; Michael Lamberti, Vice President; Josephine P. Mahaney, Vice
President; Lawrence Marx III, Vice President; Ellen Metzger, Vice President and
Secretary; Janet W. Prindle, Vice President; Felix Rovelli, Vice President;
Richard Russell, Vice President; Kent C. Simons, Vice President; Frederick B.
Soule, Vice President; Judith M. Vale, Vice President; Susan Walsh, Vice
President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice President of
Marketing; Robert Conti, Treasurer; Stacy Cooper-Shugrue, Assistant Vice
President; Robert Cresci, Assistant Vice President; Barbara DiGiorgio, Assistant
Vice President; Roberta D'Orio, Assistant Vice President; Joseph G. Galli,
Assistant Vice President; Robert I. Gendelman, Assistant Vice President; Leslie
Holliday- Soto, Assistant Vice President; Jody L. Irwin, Assistant Vice
President; Carmen G. Martinez, Assistant Vice President; Paul Metzger, Assistant
Vice President; Joseph S. Quirk, Assistant Vice President; Kevin L. Risen,
Assistant Vice President; Susan Switzer, Assistant Vice President; Celeste
Wischerth, Assistant Vice President; KimMarie Zamot, Assistant Vice President;
and Loraine Olavarria, Assistant Secretary. Messrs. Cantor, Egener, Giuliano,
Lainoff, Zicklin, Goldstein, Kassen, Marx, and Simons and Mmes. Prindle and Vale
are principals of Neuberger & Berman.
Mr. Egener is a trustee and officer of the Trust and the Managers
Trusts. Mr. Zicklin is a trustee of the Trust and Equity Managers Trust and an
officer of the Trust and the Managers Trusts. Messrs. Sullivan, Weiner, and
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Russell and Mmes. Brandon, Cooper-Shugrue, DiGiorgio, and Wischerth are officers
of each Trust. C. Carl Randolph, a principal of Neuberger & Berman, also is an
officer of each Trust.
All of the outstanding voting stock in N&B Management is owned by
persons who are also principals of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
N&B Management serves as the distributor ("Distributor") in connection
with the offering of each Fund's shares on a no-load basis. In connection with
the sale of its shares, each Fund has authorized the Distributor to give only
the information, and to make only the statements and representations, contained
in the Prospectus and this SAI or that properly may be included in sales
literature and advertisements in accordance with the 1933 Act, the 1940 Act, and
applicable rules of self-regulatory organizations. Sales may be made only by the
Prospectus, which may be delivered personally, through the mails, or by
electronic means. The Distributor is the Funds' "principal underwriter" within
the meaning of the 1940 Act and, as such, acts as agent in arranging for the
sale of each Fund's shares without sales commission or other compensation and
bears all advertising and promotion expenses incurred in the sale of the Funds'
shares.
The Distributor or one of its affiliates may, from time to time, deem
it desirable to offer to shareholders of the Funds, through use of their
shareholder lists, the shares of other mutual funds for which the Distributor
acts as distributor or other products or services. Any such use of the Funds'
shareholder lists, however, will be made subject to terms and conditions, if
any, approved by a majority of the Independent Fund Trustees. These lists will
not be used to offer the Funds' shareholders any investment products or services
other than those managed or distributed by N&B Management or Neuberger & Berman.
The Trust, on behalf of each Fund, and the Distributor are parties to a
Distribution Agreement that continues until August 2, 1997. The Distribution
Agreement may be renewed annually if specifically approved by (1) the vote of a
majority of the Fund Trustees or a 1940 Act majority vote of the Fund's
outstanding shares and (2) the vote of a majority of the Independent Fund
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated by either party and will
terminate automatically on its assignment, in the same manner as the Management
Agreements.
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ADDITIONAL PURCHASE INFORMATION
AUTOMATIC INVESTING AND DOLLAR COST AVERAGING
Shareholders may arrange to have a fixed amount automatically invested
in Fund shares each month. To do so, a shareholder must complete an application,
available from the Distributor, electing to have automatic investments funded
either through (1) redemptions from his or her account in a money market fund
for which N&B Management serves as investment manager or (2) withdrawals from
the shareholder's checking account. In either case, the minimum monthly
investment is $100. A shareholder who elects to participate in automatic
investing through his or her checking account must include a voided check with
the completed application. A completed application should be sent to Neuberger &
Berman Management Incorporated, 605 Third Avenue, 2nd Floor, New York, NY
10158-0180.
Automatic investing enables a shareholder to take advantage of "dollar
cost averaging." As a result of dollar cost averaging, a shareholder's average
cost of Fund shares generally would be lower than if the shareholder purchased a
fixed number of shares at the same pre-set intervals. Additional information on
dollar cost averaging may be obtained from the Distributor.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus entitled
"Shareholder Services -- Exchange Privilege," shareholders may redeem at least
$1,000 worth of a Fund's shares and invest the proceeds in shares of one or more
of the other Funds or the Income and Municipal Funds that are briefly described
below, provided that the minimum investment requirements of the other fund(s)
are met.
INCOME FUNDS
- ------------
Neuberger & Berman A U.S. Government money market fund
Government Money Fund seeking maximum safety and liquidity and
the highest available current income. The
corresponding portfolio 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.
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Neuberger & Berman A money market fund seeking the highest
Cash Reserves current income consistent with safety
and liquidity. The corresponding
portfolio invests in high-quality money
market instruments. It seeks to
maintain a constant purchase and
redemption price of $1.00.
Neuberger & Berman Seeks current income with minimal risk
Ultra Short Bond Fund to principal and liquidity. The
corresponding portfolio invests in money
market instruments and investment grade debt
securities of government and non-government
issuers. Maximum average duration of two
years.
Neuberger & Berman Seeks the highest current income con-
Limited Maturity Bond Fund sistent with low risk to principal and
liquidity and, secondarily, total return. The
corresponding portfolio invests in debt
securities, primarily investment grade;
maximum 10% below investment grade, but no
lower than B.*/ Maximum average duration of
four years.
MUNICIPAL FUNDS
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Neuberger & Berman A money market fund seeking the maximum
Municipal Money Fund current income exempt from federal
income tax, consistent with safety and
liquidity. The corresponding portfolio
invests in high-quality, short-term municipal
securities. It seeks to maintain a constant
purchase and redemption price of $1.00.
Neuberger & Berman Seeks high current tax-exempt income
Municipal Securities Trust with low risk to principal, limited
price fluctuation, and liquidity and,
secondarily, total return. The corresponding
portfolio invests in investment grade
municipal securities. Maximum average
duration of 10 years.
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Neuberger & Berman Seeks a high level of current income
New York Insured exempt from federal income tax and New
Intermediate Fund York State and New York City
personal income taxes, consistent with
preservation of capital. Maximum
average duration of 10 years.
- ---------------------------
*/ As rated by Moody's or S&P or, if unrated by either of those entities,
determined by N&B Management to be of comparable quality.
Any Fund described herein, and any of the Income or Municipal Funds,
may terminate or modify its exchange privilege in the future.
Fund shareholders who are considering exchanging shares into any of the
Income or Municipal Funds should note that each such fund (1) is a series of a
Delaware business trust (named "Neuberger & Berman Income Funds") that is
registered with the SEC as an open-end management investment company, and (2)
invests all of its net investable assets in a corresponding portfolio that has
an investment objective, policies, and limitations identical to those of the
fund.
Before effecting an exchange, Fund shareholders must obtain and should
review a currently effective prospectus of the fund into which the exchange is
to be made. The Income and Municipal 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 Government Money
Fund, Neuberger & Berman Cash Reserves, or Neuberger & Berman Municipal Money
Fund, each of which is 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 the above-referenced funds, as in any other mutual fund, is
neither insured nor guaranteed by the U.S. Government.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
The right to redeem a Fund's shares may be suspended or payment of the
redemption price postponed (1) when the NYSE is closed (other than weekend and
holiday closings), (2) when trading on the NYSE is restricted, (3) when an
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emergency exists as a result of which it is not reasonably practicable for its
corresponding Portfolio to dispose of securities it owns or fairly to determine
the value of its net assets, or (4) for such other period as the SEC may by
order permit for the protection of the Fund's shareholders. Applicable SEC rules
and regulations shall govern whether the conditions prescribed in (2) or (3)
exist. If the right of redemption is suspended, shareholders may withdraw their
offers of redemption, or they will receive payment at the NAV per share in
effect at the close of business on the first day the NYSE is open ("Business
Day") after termination of the suspension.
REDEMPTIONS IN KIND
Each Fund reserves the right, under certain conditions, to honor any
request for redemption (or a combination of requests from the same shareholder
in any 90-day period) exceeding $250,000 or 1% of the net assets of the Fund,
whichever is less, by making payment in whole or in part in securities valued as
described under "Share Prices and Net Asset Value" in the Prospectus. If payment
is made in securities, a shareholder generally will incur brokerage expenses or
other transaction costs in converting those securities into cash and will be
subject to fluctuation in the market prices of those securities until they are
sold. The Funds do not redeem in kind under normal circumstances, but would do
so when the Fund Trustees determined that it was in the best interests of a
Fund's shareholders as a whole.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes to its shareholders amounts equal to
substantially all of its share of any net investment income (after deducting
expenses incurred directly by the Fund), any net realized capital gains (both
long-term and short-term), and any net realized gains from foreign currency
transactions earned or realized by its corresponding Portfolio. Each 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).
A Portfolio's net investment income consists of all income accrued on
portfolio assets less accrued expenses, but does not include capital and foreign
currency gains and losses. Net investment income and realized gains and losses
are reflected in a Portfolio's NAV (and, hence, its corresponding Fund's NAV)
until they are distributed. Dividends from net investment income and
distributions of net realized capital and foreign currency gains, if any,
normally are paid once annually, in December, except that Neuberger & Berman
GUARDIAN Fund distributes substantially all of its share of Neuberger & Berman
GUARDIAN Portfolio's net investment income, if any, near the end of each
calendar quarter.
Dividends and other distributions are automatically reinvested in
additional shares of the distributing Fund, unless the shareholder elects to
receive them in cash ("cash election"). Shareholders may make a cash election on
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the original account application or at a later date by writing to State Street
Bank and Trust Company ("State Street"), c/o Boston Service Center, P.O. Box
8403, Boston, MA 02266-8403. Cash distributions can be paid through an
electronic transfer to a bank account designated in the shareholder's original
account application. To the extent dividends and other distributions are subject
to federal, state, or local income taxation, they are taxable to the
shareholders whether received in cash or reinvested in Fund shares.
A cash election with respect to any Fund remains in effect until the
shareholder notifies State Street in writing to discontinue the election. If it
is determined, however, that the U.S. Postal Service cannot properly deliver
Fund mailings to the shareholder or if checks remain uncashed for 180 days, the
Fund will terminate the shareholder's cash election. Thereafter, the
shareholder's dividends and other distributions will automatically be reinvested
in additional Fund shares until the shareholder notifies State Street or the
Fund in writing of his or her correct address and requests in writing that the
cash election be reinstated.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS
In order to continue to qualify for treatment as a RIC under the Code,
each Fund must distribute to its shareholders for each taxable year at least 90%
of 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
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from Financial Instruments) derived
with respect to its business of investing in securities or those currencies
("Income Requirement"); (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities, or
any of the following, that were held for less than three months -- (i) Financial
Instruments (other than those on foreign currencies), or (ii) foreign currencies
or Financial Instruments thereon that are not directly related to the Fund's
principal business of investing in securities (or options and futures with
respect thereto) ("Short-Short Limitation"); and (3) at the close of each
quarter of the Fund's taxable year, (i) at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs, and other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that 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 or
securities of other RICs) of any one issuer.
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The Funds (except Neuberger & Berman SOCIALLY RESPONSIVE and Neuberger
& Berman INTERNATIONAL Funds) have received rulings from the Internal Revenue
Service ("Service") that each such Fund, as an investor in its corresponding
Portfolio, will be deemed to own a proportionate share of the Portfolio's assets
and income for purposes of determining whether the Fund satisfies all the
requirements described above to qualify as a RIC. Although these rulings may not
be relied on as precedent by Neuberger & Berman SOCIALLY RESPONSIVE and
Neuberger & Berman INTERNATIONAL Funds, N&B Management believes that the
reasoning thereof and, hence, their conclusion apply to those Funds as well.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ended on October 31 of that year, plus certain
other amounts.
See the next section for a discussion of the tax consequences to the
Funds of distributions to them from the Portfolios, investments by the
Portfolios in certain securities, and hedging transactions engaged in by the
Portfolios.
TAXATION OF THE PORTFOLIOS
The Portfolios (except Neuberger & Berman SOCIALLY RESPONSIVE and
Neuberger & Berman INTERNATIONAL Portfolios) 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 Neuberger & Berman SOCIALLY RESPONSIVE and Neuberger & Berman
INTERNATIONAL Portfolios, N&B Management believes the reasoning thereof and,
hence, their conclusion apply to those Portfolios as well. As a result, no
Portfolio is subject to federal income tax; instead, each investor in a
Portfolio, such as a Fund, is required to take into account in determining its
federal income tax liability its share of the Portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also is not subject to Delaware
or New York income or franchise tax.
Because each Fund is deemed to own a proportionate share of its
corresponding Portfolio's assets and income for purposes of determining whether
the Fund qualifies as a RIC, each Portfolio intends to continue to conduct its
operations so that its corresponding Fund will be able to continue to satisfy
all those requirements.
Distributions to a Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result in
the Fund's recognition of any gain or loss for federal income tax purposes,
except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in the Portfolio before
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the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio, (3)
loss will be recognized if a liquidation distribution consists solely of cash
and/or unrealized receivables, and (4) gain or loss may be recognized on a
distribution to a Fund that contributed property to a Portfolio (all Funds other
than Neuberger & Berman SOCIALLY RESPONSIVE and Neuberger & Berman INTERNATIONAL
Funds). A Fund's basis for its interest in its corresponding Portfolio generally
equals the amount of cash and the basis of any property the Fund invests in the
Portfolio, increased by the Fund's share of the Portfolio's net income and
capital gains and decreased by (1) the amount of cash and the basis of any
property the Portfolio distributes to the Fund and (2) the Fund's share of the
Portfolio's losses.
Dividends and interest received by a Portfolio may be subject to
income, withholding, or other taxes imposed by foreign countries and U.S.
possessions ("foreign taxes") that would reduce the yield on its securities. Tax
treaties between certain countries and the United States may reduce or eliminate
these foreign taxes, however, and many foreign countries do not impose taxes on
capital gains in respect of investments by foreign investors.
If more than 50% of the value of Neuberger & Berman INTERNATIONAL
Fund's total assets (taking into account its share of Neuberger & Berman
INTERNATIONAL Portfolio's total assets) at the close of its taxable year
consists of securities of foreign corporations, that 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 the
Fund's share of any foreign taxes paid by the Portfolio ("Fund's foreign
taxes"). Pursuant to the election, Neuberger & Berman INTERNATIONAL Fund would
treat those taxes as dividends paid to its shareholders and each shareholder
would be required to (1) include in gross income, and treat as paid by such
taxpayer, his or her share of those taxes, (2) treat his or her share of those
taxes and of any dividend paid by the Fund that represents its share of the
Portfolio's 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. Neuberger & Berman INTERNATIONAL Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's foreign taxes and income (taking into account its share of the
Portfolio's income) from sources within foreign countries and U.S.
possessions if it makes this election.
A 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 a Portfolio holds
stock of a PFIC, its corresponding Fund (indirectly through its interest in the
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Portfolio) will be subject to federal income tax on its share of a portion of
any "excess distribution" received by the Portfolio on the stock or of any gain
on the Portfolio's disposition of the stock (collectively, "PFIC income"), plus
interest thereon, even if the Fund distributes its share of the PFIC income as a
taxable dividend to its shareholders. The balance of the Fund's share of the
PFIC income will be included in its investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders.
If a Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund," then in lieu of its corresponding Fund's incurring
the foregoing tax and interest obligation, the Fund would be required to include
in income each year its 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 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.
Pursuant to proposed regulations, open-end RICs, such as the Funds,
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 Portfolios' 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 the Portfolios
realize in connection therewith. Gains from the disposition of foreign
currencies (except certain gains that may be excluded by future regulations),
and gains from Financial Instruments derived by the Portfolio with respect to
its business of investing in securities or foreign currencies, will qualify as
permissible income for its corresponding Fund under the Income Requirement.
However, income from the disposition by a Portfolio of Financial Instruments
(other than those on foreign currencies) will be subject to the Short-Short
Limitation for its corresponding Fund if they are held for less than three
months. Income from the disposition of foreign currencies, and Financial
Instruments on foreign currencies, that are not directly related to a
Portfolio's principal business of investing in securities (or options and
futures with respect thereto) also will be subject to the Short-Short Limitation
for its corresponding Fund if they are held for less than three months.
If a Portfolio satisfies certain requirements, any increase in value of
a position that is part of a "designated hedge" will be offset by any decrease
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in value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether its corresponding Fund
satisfies the Short-Short Limitation. Thus, only the net gain (if any) from the
designated hedge will be included in gross income for purposes of that
limitation. Each Portfolio will consider whether it should seek to satisfy those
requirements to enable its corresponding Fund to qualify for this treatment for
hedging transactions. To the extent a Portfolio does not do so, it may be forced
to defer the closing out of certain Financial Instruments or foreign currency
positions beyond the time when it otherwise would be advantageous to do so, in
order for its corresponding Fund to continue to qualify as a RIC.
Exchange-traded futures contracts and listed options thereon ("Section
1256 contracts") are required to be marked to market (that is, treated as having
been sold at market value) at the end of a Portfolio's taxable year. Sixty
percent of any gain or loss recognized as a result of these "deemed sales," and
60% of any net realized gain or loss from any actual sales, of Section 1256
contracts are treated as long-term capital gain or loss; the remainder is
treated as short-term capital gain or loss.
Each of Neuberger & Berman PARTNERS and Neuberger & Berman SOCIALLY
RESPONSIVE Portfolios may acquire zero coupon securities or other securities
issued with original issue discount ("OID"). As a holder of those securities,
each such Portfolio (and, through it, its corresponding Fund) must take into
account the OID that accrues on the securities during the taxable year, even if
it receives no corresponding payment on the securities during the year. Because
each such Fund annually must distribute substantially all of its investment
company taxable income (including its share of its corresponding Portfolio's
accrued OID) to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax, the Fund may be required in a particular year to distribute as a
dividend an amount that is greater than its share of the total amount of cash
its corresponding Portfolio actually receives. Those distributions will be made
from a Fund's (or its share of its corresponding Portfolio's) cash assets or, if
necessary, from the proceeds of sales of that Portfolio's securities. A
Portfolio may realize capital gains or losses from those sales, which would
increase or decrease its corresponding Fund's investment company taxable income
and/or net capital gain. In addition, any such gains may be realized on the
disposition of securities held for less than three months. Because of the
Short-Short Limitation, any such gains would reduce a Portfolio's ability to
sell other securities, or certain Financial Instruments or foreign currency
positions, held for less than three months that it might wish to sell in the
ordinary course of its portfolio management.
TAXATION OF THE FUNDS' SHAREHOLDERS
If 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.
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Each Fund is required to withhold 31% of all dividends, other
distributions, and redemption proceeds payable to any individuals and certain
other non-corporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Withholding at that rate also is required from
dividends and other distributions payable to such shareholders who otherwise are
subject to backup withholding.
As described under "How to Sell Shares" in the Prospectus, a Fund may
close a shareholder's account with the Fund and redeem the remaining shares if
the account balance falls below the specified minimum and the shareholder fails
to reestablish the minimum balance after being given the opportunity to do so.
If an account that is closed pursuant to the foregoing was maintained for an IRA
or a qualified retirement plan (including a simplified employee pension plan,
Keogh plan, corporate profit-sharing and money purchase pension plan, Code
section 401(k) plan, and Code section 403(b)(7) account), the Fund's payment of
the redemption proceeds 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 acts as principal broker for each Portfolio (except
Neuberger & Berman INTERNATIONAL Portfolio) in the purchase and sale of its
portfolio securities (other than the substantial portion of the portfolio
transactions of Neuberger & Berman GENESIS Portfolio that involves securities
traded on the OTC market; that Portfolio purchases and sells OTC securities in
principal transactions with dealers who are the principal market makers for such
securities) and in connection with the purchase and sale of options on its
securities. Neuberger & Berman may act as broker for Neuberger & Berman
INTERNATIONAL Portfolio.
During the fiscal year ended August 31, 1994, Neuberger & Berman
MANHATTAN Portfolio paid brokerage commissions of $655,640, of which $525,610
was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995,
that Portfolio paid brokerage commissions of $654,982, of which $436,568 was
paid to Neuberger & Berman.
During the fiscal year ended August 31, 1996, Neuberger & Berman
MANHATTAN Portfolio paid brokerage commissions of $940,324, of which $543,020
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 65.36% of the aggregate dollar amount of
transactions involving the payment of commissions, and 57.75% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. 85.38% of the $397,304 paid to other brokers by that Portfolio during
that fiscal year (representing commissions on transactions involving
approximately $144,595,529) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, that
Portfolio acquired securities of the following of its "regular brokers or
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dealers" (as defined in the 1940 Act) ("Regular B/Ds"): Bear Stearns & Co. Inc.,
Exxon Credit Corp., General Electric Capital Corp., and Morgan Stanley & Co.,
Inc.; at that date, that Portfolio held the securities of its Regular B/Ds with
an aggregate value as follows: Bear Stearns & Co. Inc., $5,142,500 and Morgan
Stanley & Co., Inc., $10,266,250.
During the fiscal year ended August 31, 1994, Neuberger & Berman
GENESIS Portfolio paid brokerage commissions of $287,587, of which $170,883 was
paid to Neuberger & Berman. During the fiscal year ended August 31, 1995, that
Portfolio paid brokerage commissions of $199,718, of which $118,014 was paid to
Neuberger & Berman.
During the fiscal year ended August 31, 1996, Neuberger & Berman
GENESIS Portfolio paid brokerage commissions of $206,150, of which $95,999 was
paid to Neuberger & Berman. Transactions in which that Portfolio used Neuberger
& Berman as broker comprised 47.65% of the aggregate dollar amount of
transactions involving the payment of commissions, and 46.57% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. 85.22% of the $110,151 paid to other brokers by that Portfolio during
that fiscal year (representing commissions on transactions involving
approximately $32,575,132) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, that
Portfolio acquired securities of the following of its Regular B/Ds: Exxon Credit
Corp., General Electric Capital Corp., and State Street Bank and Trust Company,
N.A.; at that date, that Portfolio held the securities of its Regular B/Ds with
an aggregate value as follows: General Electric Capital Corp., $2,200,000.
During the fiscal year ended August 31, 1994, Neuberger & Berman FOCUS
Portfolio paid brokerage commissions of $719,994, of which $567,972 was paid to
Neuberger & Berman. During the fiscal year ended August 31, 1995, that Portfolio
paid brokerage commissions of $1,031,245, of which $617,957 was paid to
Neuberger & Berman.
During the fiscal year ended August 31, 1996, Neuberger & Berman FOCUS
Portfolio paid brokerage commissions of $1,165,851, of which $583,212 was paid
to Neuberger & Berman. Transactions in which that Portfolio used Neuberger &
Berman as broker comprised 56.27% of the aggregate dollar amount of transactions
involving the payment of commissions, and 50.02% of the aggregate brokerage
commissions paid by the Portfolio, during the fiscal year ended August 31, 1996.
89.49% of the $582,639 paid to other brokers by that Portfolio during that
fiscal year (representing commissions on transactions involving approximately
$257,981,759) was directed to those brokers because of research services they
provided. During the fiscal year ended August 31, 1996, that Portfolio acquired
securities of the following of its Regular B/Ds: Exxon Credit Corp., General
Electric Capital Corp., and State Street Bank and Trust Company, N.A.; at that
date, that Portfolio held the securities of its Regular B/Ds with an aggregate
value as follows: Merrill Lynch, Pierce, Fenner & Smith, Inc., $15,312,000 and
General Electric Capital Corp., $29,400,000.
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During the fiscal year ended August 31, 1994, Neuberger & Berman
GUARDIAN Portfolio paid brokerage commissions of $2,207,401, of which $1,647,807
was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995,
that Portfolio paid brokerage commissions of $3,751,206, of which $2,521,523 was
paid to Neuberger & Berman.
During the fiscal year ended August 31, 1996, Neuberger & Berman
GUARDIAN Portfolio paid brokerage commissions of $6,886,590, of which $3,542,127
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 54.13% of the aggregate dollar amount of
transactions involving the payment of commissions, and 51.44% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. 83.78% of the $3,344,463 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,568,004,886) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, that
Portfolio acquired securities of the following of its Regular B/Ds: General
Electric Capital Corp., Merrill Lynch, Pierce, Fenner & Smith, Inc., and State
Street Bank and Trust Company, N.A.; at that date, that Portfolio held the
securities of its Regular B/Ds with an aggregate value as follows: Merrill
Lynch, Pierce, Fenner & Smith, Inc., $76,562,500.
During the fiscal year ended August 31, 1994, Neuberger & Berman
PARTNERS Portfolio paid brokerage commissions of $2,994,540, of which $2,031,570
was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995,
that Portfolio paid brokerage commissions of $4,608,156, of which $3,092,789 was
paid to Neuberger & Berman.
During the fiscal year ended August 31, 1996, Neuberger & Berman
PARTNERS Portfolio paid brokerage commissions of $4,697,854, of which $2,741,666
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 61.16% of the aggregate dollar amount of
transactions involving the payment of commissions, and 58.36% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. 93.84% of the $1,956,188 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,078,447,908) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, that
Portfolio acquired securities of the following of its Regular B/Ds: Exxon Credit
Corp., General Electric Capital Corp., and State Street Bank and Trust Company,
N.A.; at that date, that Portfolio held the securities of its Regular B/Ds with
an aggregate value as follows: General Electric Capital Corp., $30,000,000.
During the period from March 14, 1994 (commencement of operations)
through August 31, 1994, and the fiscal years ended August 31, 1995 and 1996,
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio paid brokerage commissions of
$46,374, $138,378 and $208,834, respectively, of which $46,050, $95,964 and
$124,879, respectively, were paid to Neuberger & Berman. Transactions in which
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that Portfolio used Neuberger & Berman as broker comprised 59.67% of the
aggregate dollar amount of transactions involving the payment of commissions,
and 59.80% of the aggregate brokerage commissions paid by the Portfolio, during
the fiscal year ended August 31, 1996. 90.09% of the $83,955 paid to other
brokers by that Portfolio during that fiscal year (representing commissions on
transactions involving approximately $38,877,483) was directed to those brokers
because of research services they provided. During the fiscal year ended August
31, 1996, that Portfolio acquired securities of the following of its Regular
B/Ds: None; at that date, that Portfolio held the securities of its Regular B/Ds
with an aggregate value as follows: None.
During the period June 15, 1994 (commencement of operations) through
August 31, 1994, and the fiscal years ended August 31, 1995 and 1996, Neuberger
& Berman INTERNATIONAL Portfolio paid brokerage commissions of $24,554, $128,324
and $183,335, respectively. During those periods, that Portfolio paid
commissions of $330, $4,110 and $5,485, respectively, to Neuberger & Berman and
$0, $0 and $0, respectively, to BNP-International Financial Services Corporation
(a wholly owned subsidiary of BNP that previously was an affiliate of an
affiliate of Neuberger & Berman). Transactions in which the Portfolio used
Neuberger & Berman as broker comprised 6.34% of the aggregate dollar amount of
transactions involving the payment of commissions, and 2.99% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. Of the $177,850 paid to other brokers by that Portfolio during that
fiscal year, 100% (representing commissions on transactions involving
approximately $43,383,896) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, that
Portfolio acquired securities of the following of its Regular B/Ds: HSBC
Holdings PLC and State Street Bank and Trust Company, N.A.; at that date, the
Portfolio held the securities of its Regular B/Ds with an aggregate value as
follows: HSBC Holdings PLC, $379,850.
Insofar as portfolio transactions of Neuberger & Berman PARTNERS
Portfolio result from active management of equity securities, and insofar as
portfolio transactions of Neuberger & Berman MANHATTAN Portfolio result from
seeking capital appreciation by selling securities whenever sales are deemed
advisable without regard to the length of time the securities may have been
held, it may be expected that the aggregate brokerage commissions paid by those
Portfolios to brokers (including Neuberger & Berman where it acts in that
capacity) may be greater than if securities were selected solely on a long-term
basis.
Portfolio securities are, from time to time, loaned by a Portfolio to
Neuberger & Berman in accordance with the terms and conditions of an order
issued by the SEC. The order exempts such transactions from provisions of the
1940 Act that would otherwise prohibit such transactions, subject to certain
conditions. Among the conditions of the order, securities loans made by a
Portfolio to Neuberger & Berman must be fully secured by cash collateral. The
portion of the income on the cash collateral which may be shared with Neuberger
& Berman is determined by reference to concurrent arrangements between Neuberger
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& Berman and non-affiliated lenders with which it engages in similar
transactions. In addition, where Neuberger & Berman borrows securities from a
Portfolio in order to re-lend them to others, Neuberger & Berman is required to
pay that Portfolio, on a quarterly basis, certain "excess earnings" that
Neuberger & Berman otherwise has derived from the re-lending of the borrowed
securities. When Neuberger & Berman desires to borrow a security that a
Portfolio has indicated a willingness to lend, Neuberger & Berman must borrow
such security from that Portfolio, rather than from an unaffiliated lender,
unless the unaffiliated lender is willing to lend such security on more
favorable terms (as specified in the order) than that Portfolio. If a
Portfolio's expenses exceed its income in any securities loan transaction with
Neuberger & Berman, Neuberger & Berman must reimburse that Portfolio for such
loss.
During the fiscal years ended August 31, 1996 and 1995, Neuberger &
Berman MANHATTAN Portfolio earned interest income of $301,788 and $507,239,
respectively, from the collateralization of securities loans, from which
Neuberger & Berman was paid $186,163 and $270,594, respectively. During the
fiscal year ended August 31, 1994, that Portfolio earned no interest income from
the collateralization of securities loans.
During the fiscal years ended August 31, 1996, 1995 and 1994, Neuberger
& Berman GENESIS Portfolio earned no interest income from the collateralization
of securities loans.
During the fiscal years ended August 31, 1996, 1995 and 1994, Neuberger
& Berman GUARDIAN Portfolio earned interest income of $2,427,096, $1,430,672 and
$147,103, respectively, from the collateralization of securities loans, from
which Neuberger & Berman was paid $2,129,341, $1,252,190 and $119,620,
respectively.
During the fiscal years ended August 31, 1996, 1995 and 1994, Neuberger
& Berman FOCUS Portfolio earned interest income of $368,663, $327,447 and
$38,627, respectively, from the collateralization of securities loans, from
which Neuberger & Berman was paid $330,001, $291,207 and $33,225, respectively.
During the fiscal years ended August 31, 1996, 1995 and 1994, Neuberger
& Berman PARTNERS Portfolio earned interest income of $173,908, $52,410 and
$16,085, respectively, from the collateralization of securities loans, from
which Neuberger & Berman was paid $118,041, $48,736 and $13,880, respectively.
During the fiscal years ended August 31, 1996 and 1995, and the period
March 14, 1994 (commencement of operations) to August 31, 1994, Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio earned no interest income from the
collateralization of securities loans.
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<PAGE>
During the fiscal years ended August 31, 1996 and 1995, and the period
June 15, 1994 (commencement of operations) to August 31, 1994, Neuberger &
Berman INTERNATIONAL Portfolio earned no interest income from the
collateralization of securities loans.
Each Portfolio may also lend securities to unaffiliated entities,
including banks, brokerage firms, and other institutional investors judged
creditworthy by N&B Management, provided that cash or equivalent collateral,
equal to at least 100% of the market value of the loaned securities, is
continuously maintained by the borrower with the Portfolio. The Portfolio may
invest the cash collateral and earn income, or it may receive an agreed upon
amount of interest income from a borrower who has delivered equivalent
collateral. 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. 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 Independent Portfolio Trustees from time to time
reviews, among other things, information relating to securities loans by the
Portfolios.
In effecting securities transactions, each Portfolio generally seeks to
obtain the best price and execution of orders. Commission rates, being a
component of price, are considered along with other relevant factors. Each
Portfolio plans to continue to use Neuberger & Berman (or any other affiliated
broker or dealer) as its broker where, in the judgment of N&B Management (the
Portfolio's investment manager and an affiliate of the broker), that firm is
able to obtain a price and execution at least as favorable as other qualified
brokers. To the Portfolios' knowledge, no affiliate of any Portfolio receives
give-ups or reciprocal business in connection with their securities
transactions.
The use of Neuberger & Berman as a broker for each Portfolio is subject
to the requirements of Section 11(a) of the Securities Exchange Act of 1934.
Section 11(a) prohibits members of national securities exchanges from retaining
compensation for executing exchange transactions for accounts which they or
their affiliates manage, except 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 to retain such compensation, and Neuberger & Berman complies
with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by a Portfolio to Neuberger &
Berman in connection with a purchase or sale of securities on a securities
exchange may not exceed the usual and customary broker's commission.
Accordingly, it is each Portfolio's policy that the commissions paid to
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Neuberger & Berman must, in N&B Management's judgment, be (1) at least as
favorable as those charged by other brokers having comparable execution
capability and (2) at least as favorable as commissions contemporaneously
charged by Neuberger & Berman on comparable transactions for its most favored
unaffiliated customers, except for accounts for which Neuberger & Berman acts as
a clearing broker for another brokerage firm and customers of Neuberger & Berman
considered by a majority of the Independent Portfolio Trustees not to be
comparable to the Portfolio. The Portfolios do not deem it practicable and in
their best interests to solicit competitive bids for commissions on each
transaction effected by Neuberger & Berman. However, consideration regularly is
given to information concerning the prevailing level of commissions charged by
other brokers on comparable transactions during comparable periods of time. The
1940 Act generally prohibits Neuberger & Berman from acting as principal in the
purchase of portfolio securities from, or the sale of portfolio securities to, a
Portfolio unless an appropriate exemption is available.
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 Portfolios 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 Portfolios must be
reviewed and approved no less often than annually by a majority of the
Independent Portfolio Trustees.
To ensure that accounts of all investment clients, including a
Portfolio, are treated fairly in the event that Neuberger & Berman receives
transaction instructions regarding a security for more than one investment
account at or about the same time, Neuberger & Berman may combine orders placed
on behalf of clients, including advisory accounts in which affiliated persons
have an investment interest, for the purpose of negotiating brokerage
commissions or obtaining a more favorable price. Where appropriate, securities
purchased or sold may be allocated, in terms of amount, to a client according to
the proportion that the size of the order placed by that account bears to the
aggregate size of orders simultaneously placed by the other accounts, subject to
de minimis exceptions. All participating accounts will pay or receive the same
price.
Each Portfolio expects that it will continue to execute a portion of
its transactions through brokers other than Neuberger & Berman. In selecting
those brokers, N&B Management considers the quality and reliability of brokerage
services, including execution capability, performance, and financial
responsibility, and may consider 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 principals of
Neuberger & Berman who are portfolio managers of some of the Portfolios and
Other N&B Funds (collectively, "N&B Funds") and some of Neuberger & Berman's
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<PAGE>
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 rankings 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 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 execution capabilities of or research provided by 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 paid to a broker other than Neuberger & Berman may be
higher 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 benefit the Portfolios by
supplementing the information otherwise available to N&B Management. That
research may be used by N&B Management in servicing Other N&B Funds and, in some
cases, by Neuberger & Berman in servicing the Managed Accounts. On the other
hand, research received by N&B Management from brokers effecting portfolio
transactions on behalf of the Other N&B Funds and by Neuberger & Berman from
brokers effecting portfolio transactions on behalf of the Managed Accounts may
be used for the Portfolios' benefit.
Mark R. Goldstein; Judith M. Vale; Lawrence Marx III, Kent C. Simons,
and Kevin L. Risen; Michael M. Kassen and Robert I. Gendelman; Janet W. Prindle;
and Felix Rovelli, each of whom is a Vice President of N&B Management (except
for Mr. Risen and Mr. Gendelman, who are Assistant Vice Presidents) and a
principal of Neuberger & Berman (except for Mr. Risen, Mr. Gendelman, and Mr.
Rovelli), are the persons primarily respon- sible for making decisions as to
specific action to be taken with respect to the investment portfolios of
Neuberger & Berman MANHATTAN, Neuberger & Berman GENESIS, Neuberger & Berman
FOCUS and Neuberger & Berman GUARDIAN, Neuberger & Berman PARTNERS, Neuberger &
Berman SOCIALLY RESPONSIVE and Neuberger & Berman INTERNATIONAL Portfolios,
respectively. Each of them 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. If Mr. Goldstein is unavailable to
perform his responsibilities, Susan Switzer, who is an Assistant Vice President
of N&B Management, will assume responsibility for the portfolio of Neuberger &
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Berman MANHATTAN Portfolio. If Mr. Rovelli is unavailable to perform his
responsibilities, Robert Cresci, who is an Assistant Vice President of N&B
Management, will assume responsibility for the portfolio of Neuberger & Berman
INTERNATIONAL Portfolio.
PORTFOLIO TURNOVER
A Portfolio's portfolio turnover rate is calculated by dividing (1) the
lesser of the cost of the securities purchased or the proceeds from the
securities sold by the Portfolio during the fiscal year (other than securities,
including options, whose maturity or expiration date at the time of acquisition
was one year or less) by (2) the month-end average of the value of such
securities owned by the Portfolio during the fiscal year.
REPORTS TO SHAREHOLDERS
Shareholders of each Fund receive unaudited semi-annual financial
statements, as well as year-end financial statements audited by the independent
auditors or independent accountants for the Fund and its corresponding
Portfolio. Each Fund's statements show the investments owned by its
corresponding Portfolio and the market values thereof and provide other
information about the Fund and its operations, including the Fund's beneficial
interest in its corresponding Portfolio.
ORGANIZATION
The ultimate predecessor of Neuberger & Berman FOCUS Fund was a
Maryland corporation named "Energy Fund Incorporated." Its name was changed to
"Neuberger & Berman Selected Sectors Plus Energy, Inc." on January 5, 1989; to
"Neuberger & Berman Selected Sectors Fund, Inc." on November 1, 1991; to
"Neuberger & Berman Selected Sectors Fund" on August 2, 1993; and to Neuberger &
Berman FOCUS Fund" on January 1, 1995. Prior to January 1, 1995, the name of
Neuberger & Berman FOCUS Portfolio was Neuberger & Berman Selected Sectors
Portfolio.
Before August 2, 1993, the respective names of Neuberger & Berman
MANHATTAN Fund, Neuberger & Berman GENESIS Fund, Neuberger & Berman GUARDIAN
Fund and Neuberger & Berman PARTNERS Fund were Neuberger & Berman Manhattan
Fund, Inc., Neuberger & Berman Genesis Fund, Inc., Neuberger & Berman Guardian
Fund, Inc., and Neuberger & Berman Partners Fund, Inc. Prior to November 17,
1995, the name of Neuberger & Berman INTERNATIONAL Portfolio was International
Portfolio.
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<PAGE>
CUSTODIAN AND TRANSFER AGENT
Each Fund and Portfolio has selected State Street, 225 Franklin Street,
Boston, MA 02110, as custodian for its securities and cash. State Street also
serves as each Fund's transfer and shareholder servicing agent, administering
purchases, redemptions, and transfers of Fund shares and the payment of
dividends and other distributions through its Boston Service Center. All
correspondence should be mailed to Neuberger & Berman Funds, c/o Boston Service
Center, P.O. Box 8403, Boston, MA 02266-8403. In addition, State Street serves
as transfer agent for each Portfolio (except Neuberger & Berman INTERNATIONAL
Portfolio). State Street Cayman serves as transfer agent for Neuberger & Berman
INTERNATIONAL Portfolio.
INDEPENDENT AUDITORS/ACCOUNTANTS
Each Fund and Portfolio (other than Neuberger & Berman INTERNATIONAL
Portfolio, Neuberger & Berman MANHATTAN Fund and Portfolio, and Neuberger &
Berman SOCIALLY RESPONSIVE Fund and Portfolio) has selected Ernst & Young LLP,
200 Clarendon Street, Boston, MA 02116, as the independent auditors who will
audit its financial statements. Neuberger & Berman INTERNATIONAL Portfolio has
selected Ernst & Young, Shedden Road, George Town, Grand Cayman, Cayman Islands,
British West Indies as the independent auditors who will audit its financial
statements. Neuberger & Berman MANHATTAN Fund and Portfolio and Neuberger &
Berman SOCIALLY RESPONSIVE Fund and Portfolio have selected Coopers & Lybrand
L.L.P., One Post Office Square, Boston, MA 02109, as the independent accountants
who will audit their financial statements.
LEGAL COUNSEL
Each Fund and Portfolio has selected Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036-1800, as its legal
counsel.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth the name, address, and percentage of
ownership of each person who was known by each Fund to own beneficially or of
record 5% or more of that Fund's outstanding shares at November 20, 1996:
Percentage of
Ownership at
NAME AND ADDRESS November 20,
1996
Neuberger & Berman Charles Schwab & Co., Inc.* 7.27%
MANHATTAN Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Charles Schwab & Co., Inc.* 15.46%
GENESIS Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Union Central Life 6.77%
Insurance Co.
Attn: Mutual Funds Dept.
Station 3
P.O. Box 40888
Cincinnati, OH 45240-0888
Neuberger & Berman Charles Schwab & Co., Inc.* 26.53%
GUARDIAN Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Charles Schwab & Co., Inc.* 12.05%
PARTNERS Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Nationwide Life Insurance Co. 6.93%
QPVA
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
Neuberger & Berman Charles Schwab & Co., Inc.* 31.76%
SOCIALLY RESPONSIVE Attn: Mutual Funds Dept.
Fund 101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman* 5.35%
Attn: Steve Gallaro
Operations Control
11 Broadway, 12th Floor
New York, NY 10004-1303
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<PAGE>
Neuberger & Berman Charles Schwab & Co., Inc.* 13.66%
FOCUS Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Neuberger & Berman* 13.05%
INTERNATIONAL Fund 11 Broadway, 12th Floor
New York, NY 10004-1303
Attn: Steve Gallaro
Operations Control
Town of Cheshire 7.98%
Retirement Plan
Attn: Michael A. Milone
Director of Finance
Town of Cheshire
84 South Main St.
Cheshire, CT 06410-3108
Charles Schwab & Co., Inc.* 6.58%
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Nations Bank of VA 5.02%
FBO Inova Health Systems
Building Fund
Attn: SAS 40088006534663
P.O. Box 831575
Dallas, TX 75283-1575
- ---------------------------
* 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 their client accounts unless disclosure is expressly required by
law.
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<PAGE>
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included
in the Trust's registration statement filed with the SEC under the 1933 Act with
respect to the securities offered by the Prospectus. The registration statement,
including the exhibits filed therewith, may be examined at the SEC's offices in
Washington, D.C. The SEC maintains a Website (http://www.sec.gov) that contains
this SAI, material incorporated by reference, and other information regarding
the Funds and Portfolios.
Statements contained in this SAI and in the Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete. In each instance where reference is made to the copy of any contract
or other document filed as an exhibit to the registration statement, each such
statement is qualified in all respects by such reference.
FINANCIAL STATEMENTS
The following financial statements and related documents are
incorporated herein by reference from the Funds' Annual Report to shareholders
for the fiscal year ended August 31, 1996:
The audited financial statements of the Funds and Portfolios and notes
thereto for the fiscal year ended August 31, 1996, and the reports of
Ernst & Young LLP, independent auditors, with respect to such audited
financial statements of Neuberger & Berman GENESIS Fund and Portfolio,
Neuberger & Berman GUARDIAN Fund and Portfolio, Neuberger & Berman
PARTNERS Fund and Portfolio, Neuberger & Berman FOCUS Fund and
Portfolio, and Neuberger & Berman INTERNATIONAL Fund; the report of
Ernst & Young, independent auditors, with respect to such audited
financial statements of Neuberger & Berman INTERNATIONAL Portfolio; and
the reports of Coopers & Lybrand L.L.P., independent accountants, with
respect to such audited financial statements of Neuberger & Berman
MANHATTAN Fund and Portfolio, and Neuberger & Berman SOCIALLY
RESPONSIVE Fund and Portfolio.
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Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
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 quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or an exceptionally stable
margin, and principal is secure. Although the various protective elements are
likely to change, the changes that can be visualized are most unlikely to impair
the fundamentally strong position of the issuer.
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<PAGE>
AA - Bonds rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as "high
grade bonds." They are rated lower than the best bonds because margins of
protection may not be as large as in AAA-rated securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in AAA-rated
securities.
A - Bonds rated A possess many favorable investment attributes and are
considered to be upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
BAA - Bonds which are rated BAA are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
BA - Bonds 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 modifier 3 indicates that the issuer
ranks in the lower end of its generic rating category.
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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.
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Appendix B
PERFORMANCE DATA
The following documents are incorporated herein by reference from the
Funds' Annual Report to shareholders for the fiscal year ended August 31, 1996:
The Growth of a Dollar Charts for the Funds and the notes
thereto, comparing the results of a $10,000 investment in each
Fund with an appropriate index for the ten-year period (or the
period since the Fund's inception) ended August 31, 1996.
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FOCUS FUND HYPOTHETICAL ILLUSTRATIONS:
Comparison of $5,000 invested at the highest and lowest Net Asset Values
from 1981 through 1996.
<TABLE>
<CAPTION>
HIGHS LOWS
Date Cumulative Total Date Cumulative Total
Investment Value Investment Value
<S> <C> <C> <C> <C> <C>
4/27/81 $ 5,000 $ 4,748 9/25/81 $ 5,000 $ 5,527
12/27/82 $10,000 9,251 8/12/82 $10,000 11,842
11/29/83 $15,000 17,001 1/3/83 $15,000 20,642
1/6/84 $20,000 22,963 7/24/84 $20,000 27,155
12/16/85 $25,000 33,112 1/4/85 $25,000 39,452
12/2/86 $30,000 41,282 1/22/86 $30,000 49,119
8/25/87 $35,000 45,333 10/19/87 $35,000 54,477
10/21/88 $40,000 57,784 1/20/88 $40,000 69,279
10/9/89 $45,000 79,987 1/3/89 $45,000 96,434
7/16/90 $50,000 79,787 10/11/90 $50,000 96,122
12/31/91 $55,000 104,463 1/9/91 $55,000 126,403
6/1/92 $60,000 132,222 10/9/92 $60,000 158,836
12/29/93 $65,000 158,820 1/20/93 $65,000 190,559
1/31/94 $70,000 165,057 4/4/94 $70,000 197,513
12/13/95 $75,000 229,677 1/30/95 $75,000 275,839
8/31/96 $234,035 8/31/96 $281,073
Average Annual Returns (9/30/96)
1-year 5-year 10-year Inception
(10/19/55)
6.04% 17.27% 14.28% 11.86%
</TABLE>
<PAGE>
INITIAL INVESTMENT OF $200,000
--------------------------------------------------------------------------
NEUBERGER&BERMAN FOCUS FUND
The following table* indicates the results over a 41-year period (in 5-year
increments) if an investor had invested $200,000 in Focus Fund's
predecessor on October 19, 1955, the date of its inception, and had
implemented a systematic withdrawal plan under which he or she withdrew 10%
of the initial investment each year, on a monthly basis.
Total Value of Remaining Cumulative Amounts
Date Shares At Year End Withdrawn
---- ------------------------ ------------------
Made initial $200,000
October 19, 1955 investment
December 31, 1955 $ 224,392 $ 3,333
1960 305,371 103,333
1965 370,787 203,333
1970 342,828 303,333
1975 308,201 403,333
1980 736,101 503,333
1985 901,167 603,333
1990 1,298,782 703,333
1995 2,975,406 803,333
August 31, 1996 $3,018,657 $816,666
Source: Hypo[REGISTERED TRADEMARK] Towers Data Systems, Bethesda, MD.
* Shows reinvestment of all dividends and capital gain distributions.
Results represent past performance. Investment returns and principal
fluctuate.
<PAGE>
GUARDIAN FUND HYPOTHETICAL ILLUSTRATIONS:
Comparison of $5,000 invested at the highest and lowest Net Asset Values
from 1981 through 1996.
<TABLE>
<CAPTION>
HIGHS LOWS
Date Cumulative Total Date Cumulative Total
Investment Value Investment Value
<S> <C> <C> <C> <C> <C>
4/27/81 $ 5,000 $ 4,740 9/25/81 $ 5,000 $ 5,514
12/27/82 $10,000 11,036 8/12/82 $10,000 14,162
11/29/83 $15,000 18,766 1/3/83 $15,000 24,079
1/6/84 $20,000 25,344 7/24/84 $20,000 31,794
12/16/85 $25,000 36,692 1/4/85 $25,000 46,100
12/2/86 $30,000 45,768 1/22/86 $30,000 57,258
8/25/87 $35,000 48,914 10/19/87 $35,000 61,798
10/21/88 $40,000 67,562 1/20/88 $40,000 85,416
10/9/89 $45,000 86,848 1/3/89 $45,000 109,911
7/16/90 $50,000 87,321 10/11/90 $50,000 110,553
12/31/91 $55,000 122,300 1/9/91 $55,000 155,562
6/1/92 $60,000 151,172 10/9/92 $60,000 190,799
12/29/93 $65,000 178,018 1/20/93 $65,000 224,064
1/31/94 $70,000 183,972 4/4/94 $70,000 230,657
12/13/95 $75,000 248,014 1/30/95 $75,000 311,360
8/31/96 $257,164 8/31/96 $322,847
Average Annual Returns (9/30/96)
1-year 5-year 10-year Inception
(6/1/50)
7.15% 16.18% 14.64% 13.00%
</TABLE>
<PAGE>
INITIAL INVESTMENT OF $200,000
--------------------------------------------------------------------------
NEUBERGER&BERMAN GUARDIAN FUND
The following table* indicates the results over a 46-year period (in 5-year
increments) if an investor had invested $200,000 in Guardian's predecessor
on June 1, 1950, the date of its inception, and had implemented a
systematic withdrawal plan under which he or she withdrew 10% of the
initial investment each year, on a monthly basis.
Total Value of Remaining Cumulative Amounts
Date Shares At Year End Withdrawn
---- ------------------------ ------------------
Made initial $200,000
June 1, 1950 investment
December 31, 1950 $ 205,803 $ 11,667
1955 278,238 111,667
1960 339,656 211,667
1965 477,405 311,667
1970 505,793 411,667
1975 572,380 511,667
1980 1,293,959 611,667
1985 2,495,091 711,667
1990 3,978,117 811,667
1995 9,552,504 911,667
August 31, 1996 $9,860,475 $925,000
Source: Hypo[REGISTERED TRADEMARK] Towers Data Systems, Bethesda, MD.
* Shows reinvestment of all dividends and capital gain distributions.
Results represent past performance. Investment returns and principal
fluctuate.
<PAGE>
MANHATTAN FUND HYPOTHETICAL ILLUSTRATIONS:
Comparison of $5,000 invested at the highest and lowest Net Asset Values
from 1981 through 1996.
<TABLE>
<CAPTION>
HIGHS LOWS
Date Cumulative Total Date Cumulative Total
Investment Value Investment Value
<S> <C> <C> <C> <C> <C>
4/27/81 $ 5,000 $ 4,625 9/25/81 $ 5,000 $ 5,596
12/27/82 $10,000 10,938 8/12/82 $10,000 14,406
11/29/83 $15,000 18,905 1/3/83 $15,000 24,717
1/6/84 $20,000 22,455 7/24/84 $20,000 32,364
12/16/85 $25,000 39,840 1/4/85 $25,000 51,369
12/2/86 $30,000 51,305 1/22/86 $30,000 65,957
8/25/87 $35,000 55,085 10/19/87 $35,000 71,536
10/21/88 $40,000 69,833 1/20/88 $40,000 90,335
10/9/89 $45,000 94,913 1/3/89 $45,000 123,121
7/16/90 $50,000 91,644 10/11/90 $50,000 118,822
12/31/91 $55,000 124,955 1/9/91 $55,000 162,463
6/1/92 $60,000 153,144 10/9/92 $60,000 197,188
12/29/93 $65,000 173,479 1/20/93 $65,000 222,361
1/31/94 $70,000 171,947 4/4/94 $70,000 219,421
12/13/95 $75,000 230,149 1/30/95 $75,000 293,985
8/31/96 $226,357 8/31/96 $289,142
Average Annual Returns (9/30/96)
1-year 5-year 10-year Inception
(3/1/79)
0.26% 13.01% 12.76% 16.72%
</TABLE>
<PAGE>
INITIAL INVESTMENT OF $100,000
--------------------------------------------------------------------------
NEUBERGER&BERMAN MANHATTAN FUND
The following table* indicates the results over a 17-1/2-year period if an
investor had invested $100,000 in Manhattan's predecessor on March 1, 1979,
the date of its inception, and had implemented a systematic withdrawal plan
under which he or she withdrew 8% of the initial investment each year, on a
monthly basis.
Total Value of Remaining Cumulative Amounts
Date Shares At Year End Withdrawn
---- ------------------------ ------------------
Made initial $100,000
March 1, 1979 investment
December 31, 1979 $127,622 $ 6,667
1980 164,831 14,667
1981 145,245 22,667
1982 177,074 30,667
1983 216,209 38,667
1984 222,819 46,667
1985 296,292 54,667
1986 338,049 62,667
1987 332,625 70,667
1988 383,670 78,667
1989 486,685 86,667
1990 439,685 94,667
1991 566,522 102,667
1992 657,943 110,667
1993 715,308 118,667
<PAGE>
Total Value of Remaining Cumulative Amounts
Date Shares At Year End Withdrawn
---- ------------------------ ------------------
1994 681,664 126,667
1995 884,298 134,667
August 31, 1996 $864,662 $140,000
Source: Hypo[REGISTERED TRADEMARK] Towers Data Systems, Bethesda, MD.
* Shows reinvestment of all dividends and capital gain distributions.
Results represent past performance. Investment returns and principal
fluctuate.
<PAGE>
PARTNERS FUND HYPOTHETICAL ILLUSTRATIONS:
Comparison of $5,000 invested at the highest and lowest Net Asset Values
from 1981 through 1996.
<TABLE>
<CAPTION>
HIGHS LOWS
Date Cumulative Total Date Cumulative Total
Investment Value Investment Value
<S> <C> <C> <C> <C> <C>
4/27/81 $ 5,000 $ 5,020 9/25/81 $ 5,000 $ 5,418
12/27/82 $10,000 11,314 8/12/82 $10,000 13,085
11/29/83 $15,000 18,429 1/3/83 $15,000 21,612
1/6/84 $20,000 25,180 7/24/84 $20,000 29,102
12/16/85 $25,000 37,688 1/4/85 $25,000 44,411
12/2/86 $30,000 48,988 1/22/86 $30,000 58,046
8/25/87 $35,000 55,057 10/19/87 $35,000 65,753
10/21/88 $40,000 68,519 1/20/88 $40,000 81,702
10/9/89 $45,000 89,010 1/3/89 $45,000 106,472
7/16/90 $50,000 89,063 10/11/90 $50,000 106,489
12/31/91 $55,000 113,979 1/9/91 $55,000 136,646
6/1/92 $60,000 139,512 10/9/92 $60,000 166,254
12/29/93 $65,000 167,513 1/20/93 $65,000 199,353
1/31/94 $70,000 169,116 4/4/94 $70,000 200,807
12/13/95 $75,000 233,699 1/30/95 $75,000 278,298
8/31/96 $252,066 8/31/96 $300,170
Average Annual Returns (9/30/96)
1-year 5-year 10-year Inception
(1/20/75)
17.54% 16.65% 13.88% 17.70%
</TABLE>
<PAGE>
INITIAL INVESTMENT OF $100,000
--------------------------------------------------------------------------
NEUBERGER&BERMAN PARTNERS FUND
The following table* indicates the results over a 21 year period if an
investor had invested $100,000 in Partner's predecessor on January 20, 1975
the date of its inception, and had implemented a systematic withdrawal plan
under which he or she withdrew, on a monthly basis, 8% of the initial
investment each year.
Total Value of Remaining Cumulative Amounts
Date Shares At Year End Withdrawn
---- ------------------------ -------------------
Made initial $100,000
January 20, 1975 investment
December 31, 1975 $ 110,735 $ 7,333
1976 136,496 15,333
1977 137,660 23,333
1978 151,644 31,333
1979 207,206 39,333
1980 267,821 47,333
1981 276,300 55,333
1982 340,287 63,333
1983 397,084 71,333
1984 420,373 79,333
1985 537,198 87,333
1986 621,869 95,333
1987 641,390 103,333
1988 732,193 111,333
1989 890,413 119,333
1990 836,951 127,333
1991 1,015,530 135,333
1992 1,184,616 143,333
<PAGE>
Total Value of Remaining Cumulative Amounts
Date Shares At Year End Withdrawn
---- ------------------------ -------------------
1993 1,370,964 151,333
1994 1,337,121 159,333
1995 1,798,751 167,333
August 31, 1996 $1,934,785 $172,666
Source: Hypo[REGISTERED TRADEMARK] Towers Data Systems, Bethesda, MD.
* Shows reinvestment of all dividends and capital gain distributions.
Results represent past performance. Investment returns and principal
fluctuate.
<PAGE>
Appendix C
The Art of Investing:
A Conversation with Roy Neuberger
"I firmly believe that if you want to manage your own
money, you must be a student of the market. If you
are unwilling or unable to do that, find someone else
to manage your money for you."
NEUBERGER & BERMAN
<PAGE>
[THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE]
<PAGE>
[PICTURE OF ROY NEUBERGER]
During my more than sixty-five years of buying and selling
securities, I've been asked many questions about my approach to
investing. On the pages that follow are a variety of my thoughts,
ideas and investment principles which have served me well over the
years. If you gain useful knowledge in the pursuit of profit as well
as enjoyment from these comments, I shall be more than content.
\s\ Roy R. Neuberger
- 1 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
YOU'VE BEEN ABLE TO CONDENSE SOME OF THE
CHARACTERISTICS OF SUCCESSFUL INVESTING INTO
FIVE "RULES." WHAT ARE THEY?
Rule #1: Be flexible. My philosophy has
necessarily changed from time to time because
of events and because of mistakes. My views
change as economic, political, and
technological changes occur both on and
sometimes off our planet. It is imperative
that you be willing to change your thoughts
to meet new conditions.
Rule #2: Take your temperament into account.
Recognize whether you are by nature very
speculative or just the opposite -- fearful,
timid of taking risks. But in any event --
Diversify your investments, Rule #3: Be broad-gauged. Diversify your
make sure that some of your investments, make sure that some of your
principal is kept safe, and principal is kept safe, and try to increase
try to increase your income your income as well as your capital.
as well as your capital.
[PICTURE OF ROY NEUBERGER]
Rule #4: Always remember there are many ways
to skin a cat! Ben Graham and David Dodd did
it by understanding basic values. Warren
Buffet invested his portfolio in a handful of
long-term holdings, while staying involved
with the companies' managements. Peter Lynch
chose to understand, first-hand, the products
of many hundreds of the companies he invested
in. George Soros showed his genius as a hedge
fund investor who could decipher world
currency trends. Each has been successful in
his own way. But to be successful, remember
to-
- 2 -
<PAGE>
Rule #5: Be skeptical. To repeat a few well-
worn useful phrases:
A. Dig for yourself.
B. Be from Missouri.
C. If it sounds too good to be true, it
probably is.
IN YOUR 65 YEARS OF INVESTING ARE THERE ANY
GENERAL PATTERNS YOU'VE OBSERVED AS TO HOW
THE MARKET BEHAVES?
Every decade that I've been involved with
Wall Street has a nuance of its own, an
economic and social climate that influences
investors. But generally, bull markets tend
to be longer than bear markets, and stock
prices tend to go up more slowly and
erratically than they go down. Bear markets
tend to be shorter and of greater intensity.
The market rarely rises or declines
concurrently with business cycles longer than
six months.
AS A LEGENDARY "VALUE INVESTOR," HOW DO YOU
DEFINE VALUE INVESTING?
Value investing means finding the best values
- - either absolute or relative. Absolute
means a stock has a low market price relative
to its own fundamentals. Relative value means
the price is attractive relative to the
market as a whole.
COULD YOU DESCRIBE A STOCK WITH "GOOD VALUE"?
A classic example is a company that has a low
price to earnings ratio, a low price to book
ratio, free cash flow, a strong balance
sheet, undervalued corporate assets,
unrecognized earnings turnaround and is
selling at a discount to private market
value.
These characteristics usually lead to
companies that are under-researched and have
a high degree of inside ownership and
entrepreneurial management.
- 3 -
<PAGE>
One of my colleagues at Neuberger & Berman
says he finds his value stocks either "under
a cloud" or "under a rock." "Under a cloud"
stocks are those Wall Street in general
doesn't like, because an entire industry is
out of favor and even the good stocks are
being dropped. "Under a rock" stocks are
those Wall Street is ignoring, so you have to
uncover them on your own.
ARE THERE OTHER KEY CRITERIA YOU USE TO JUDGE
STOCKS?
I'm more interested in longer-term trends in
earnings than short-term trends. Earnings
gains should be the product of long-term
strategies, superior management, taking
advantage of business opportunities and so
on. If these factors are in their proper
place, short-term earnings should not be of
major concern. Dividends are an important
extra because, if they're stable, they help
support the price of the stock.
WHAT ABOUT SELLING STOCKS?
Most individual investors should invest for
the long term but not mindlessly. A sell
discipline, often neglected by investors, is
vitally important.
"One should fall in love One should fall in love with ideas, with
with ideas, with people or people, or with idealism. But in my book, the
with idealism. But in my last thing to fall in love with is a particular
book, the last thing to security. It is after all just a sheet of paper
fall in love with is a indicating a part ownership in a corporation
particular security." and its use is purely mercenary. If you must
love a security, stay in love with it until
it gets overvalued; then let somebody else
fall in love
[PICTURE OF ROY NEUBERGER]
- 4 -
<PAGE>
ANY OTHER ADVICE FOR INVESTORS?
I firmly believe that if you want to manage
your own money, you must be a student of the
market. If you're unwilling or unable to do
that, find someone else to manage your money
for you. Two options are a well-managed
no-load mutual fund or, if you have enough
assets for separate account management, a
money manager you trust with a good record.
HOW WOULD YOU DESCRIBE YOUR PERSONAL INVESTING
STYLE?
Every stock I buy is bought to be sold. The
market is a daily event, and I continually
review my holdings looking for selling
opportunities. I take a profit occasionally
on something that has gone up in price over
what was expected and simultaneously take
losses whenever misjudgment seems evident.
This creates a reservoir of buying power that
can be used to make fresh judgments on what
are the best values in the market at that
time. My active investing style has worked
well for me over the years, but for most
investors I recommend a longer-term approach.
I tend not to worry very must about the day
to day swings of the market, which are very
hard to comprehend. Instead, I try to be
rather clever in diagnosing values and trying
to win 70 to 80 percent of the time.
YOU BEGAN INVESTING IN 1929. WHAT WAS YOUR
EXPERIENCE WITH THE "GREAT CRASH"?
- 5 -
<PAGE>
The only money I managed in the Panic of 1929
was my own. My portfolio was down about 12
percent, and I had an uneasy feeling about
the market and conditions in general. Those
were the days of 10 percent margin. I studied
the lists carefully for a stock that was
overvalued in my opinion and which I could
sell short as a hedge. I came across RCA at
about $100 per share. It had recently split 5
for 1 and appeared overvalued. There were no
dividends, little income, a low net worth and
a weak financial position. I sold RCA short
in the amount equal to the dollar value of my
long portfolio. It proved to be a timely and
profitable move.
HOW DID THE CRASH OF 1929 AFFECT YOUR INVESTING
STYLE?
I am prematurely bearish when the market goes
up for a long time and everybody is happy
because they are richer. I am very bullish
when the market has gone down perceptibly and
I feel it has discounted any troubles we are
going to have.
HOW IMPORTANT ARE PSYCHOLOGICAL FACTORS TO
MARKET BEHAVIOR?
There are many factors in addition to
economic statistics or security analysis in a
buy or sell decision. I believe psychology
plays an important role in the Market. Some
people follow the crowd in hopes they'll be
swept along in the right direction, but if
the crowd is late in acting, this can be a
bad move.
I like to be contrary. When things look bad,
I become optimistic. When everything looks
rosy, and the crowd is optimistic, I like to
be a seller. Sometimes I'm too early, but I
generally profit.
AS A RENOWNED ART COLLECTOR, DO YOU FIND
SIMILARITIES BETWEEN SELECTING STOCKS AND
SELECTING WORKS OF ART?
- 6 -
<PAGE>
Both are an art, although picking stocks is a
minor art compared with painting, sculpture or
"When things look bad, I literature. I started buying art in the 30s,
become optimistic. When and in the 40s it was a daily, almost hourly
everything looks rosy, and occurrence. My inclination to buy the works of
the crowd is optimistic, I living artists comes from Van Gogh, who sold
like to be a seller." only one painting during his lifetime. He died
in poverty, only then to become a legend and
have his work sold for millions of dollars.
[PICTURE OF ROY NEUBERGER]
There are more variables to consider now in
both buying art and picking stocks. In the
modern stock markets, the heavy use of
futures and options has changed the nature of
the investment world. In past times, the
stock market was much less complicated, as
was the art world.
Artists rose and fell on their own merits
without a lot of publicity and attention. As
more and more dealers are involved with
artists, the price of their work becomes
inflated. So I almost always buy works of
unknown, relatively undiscovered artists,
which, I suppose is similar to value
investing.
But the big difference in my view of art and
stocks is that I buy a stock to sell it and
make money. I never bought paintings or
sculptures for investment in my life. The
objective is to enjoy their beauty.
- 7 -
<PAGE>
WHAT DO YOU CONSIDER THE BUSINESS MILESTONES
IN YOUR LIFE?
Being a founder of Neuberger & Berman and
creating one of the first no-load mutual
funds. I started on Wall Street in 1929, and
during the depression I managed my own money
and that of my clientele. We all prospered,
but I wanted to have my own firm. In 1939 I
became a founder of Neuberger & Berman, and
for about 10 years we managed money for
individuals with substantial financial
assets. But I also wanted to offer the
smaller investor the benefits of professional
money management, so in 1950 I created the
Guardian Mutual Fund (now known as the
Neuberger & Berman Guardian Fund). The Fund
was kind of an innovation in its time because
it didn't charge a sales commission. I
thought the public was being overcharged for
mutual funds, so I wanted to create a fund
that would be offered directly to the public
without a sales charge. Now of course the
"no-load" fund business is a huge industry. I
managed the Fund myself for over 28 years.
[PICTURE OF ROY NEUBERGER]
YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO
THE OFFICE EVERY DAY TO MANAGE YOUR
INVESTMENTS. WHY?
I like the fun of being nimble in the stock
market, and I'm addicted to the market's
fascinations.
WHAT CLOSING WORDS OF ADVICE DO YOU HAVE
ABOUT INVESTING?
Realize that there are opportunities at all
times for the adventuresome investor. And
stay in good physical condition. It's a
strange thing. You do not dissipate your
energies by using them. Exercise your body
and your brain every day, and you'll do
better in investments and in life.
- 8 -
<PAGE>
ROY NEUBERGER: A BRIEF BIOGRAPHY
Roy Neuberger is a founder of the investment
management firm Neuberger & Berman, and a
renowned value investor. He is also a
recognized collector of contemporary American
art, much of which he has given away to
museums and colleges across the country.
During the 1920s, Roy studied art in
Paris. When he realized he didn't possess the
talent to become an artist, he decided to
collect art, and to support this passion, Roy
turned to investing -- a pursuit for which
his talents have proven more than adequate.
A TALENT FOR INVESTING
Roy began his investment career by
joining a brokerage firm in 1929, seven
months before the "Great Crash." Just weeks
before "Black Monday," he shorted the stock
of RCA, thinking it was overvalued. He
profited from the falling market and gained a
reputation for market prescience and stock
selection that has lasted his entire career.
NEUBERGER & BERMAN'S FOUNDING
Roy's investing acumen attracted many
people who wished to have him manage their
money. In 1939, at the age of 36, after
purchasing a seat on the New York Stock
Exchange, Roy founded Neuberger & Berman to
provide money management services to people
who lacked the time, interest or expertise to
manage their own assets.
- 9 -
<PAGE>
NEUBERGER & BERMAN -- OVER FIVE DECADES OF
GROWTH
Neuberger & Berman has grown through
the years and now manages approximately $30
billion of equity and fixed income assets,
both domestic and international, for
individuals, institutions, and its family of
no-load mutual funds. Today, as when the firm
was founded, Neuberger & Berman follows a
value approach to investing, designed to
enable clients to advance in good markets and
minimize losses when conditions are less
favorable.
For more complete information about the
Neuberger & Berman Guardian Fund,
including fees and expenses, call
Neuberger & Berman Management at
800-877- 9700 for a free prospectus.
Please read it carefully, before you
invest or send money.
- 10 -
<PAGE>
Neuberger & Berman Management
Inc.[SERVICE MARK]
605 Third Avenue, 2nd Floor
New York, NY 10158-0006
Shareholder Services
(800) 877-9700
[COPYRIGHT SYMBOL]1995
Neuberger & Berman
PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS
=========================================================================================
</TABLE>
- 11 -
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 76 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
------- ---------------------------------
(a) Financial Statements:
The audited financial statements contained in the Annual Report
to Shareholders of the Registrant for the fiscal year ended
August 31, 1996, for Neuberger & Berman Equity Funds (with
respect to Neuberger & Berman Focus Fund, Neuberger & Berman
Genesis Fund, Neuberger & Berman Guardian Fund, Neuberger &
Berman International Fund, Neuberger & Berman Manhattan Fund,
Neuberger & Berman Partners Fund, and Neuberger & Berman
Socially Responsive Fund), Equity Managers Trust (with respect
to Neuberger & Berman Focus Portfolio, Neuberger & Berman
Genesis Portfolio, Neuberger & Berman Guardian Portfolio,
Neuberger & Berman Manhattan Portfolio, Neuberger & Berman
Partners Portfolio, and Neuberger & Berman Socially Responsive
Portfolio) and Global Managers Trust (with respect to Neuberger
& Berman International Portfolio) and the reports of the
independent auditors/accountants are incorporated into the
Statement of Additional Information by reference.
Included in Part A of this Post-Effective Amendment:
FINANCIAL HIGHLIGHTS for Neuberger & Berman Focus Fund,
Neuberger & Berman Genesis Fund, Neuberger & Berman
Guardian Fund, Neuberger & Berman International Fund,
Neuberger & Berman Manhattan Fund, Neuberger & Berman
Partners Fund, and Neuberger & Berman Socially Responsive
Fund, for the periods indicated therein.
C-1
<PAGE>
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit Description
Number -----------
-------
<S> <C> <C> <C>
(1) (a) Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(b) Trust Instrument of Neuberger & Berman
Equity Funds. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000314.
(c) Schedule A - Current Series of Neuberger &
Berman Equity Funds. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(2) By-laws of Neuberger & Berman Equity Funds.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357
and 811-582, Edgar Accession No.
0000898432-95-000314.
(3) Voting Trust Agreement. None.
(4) (a) Trust Instrument of Neuberger & Berman
Equity Funds, Articles IV, V, and VI.
Incorporated by Reference to Post-Effective
No. 70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582,
Edgar Accession No. 0000898432-95-000314.
C-2
<PAGE>
Exhibit Description
Number -----------
-------
(b) By-Laws of Neuberger & Berman Equity Funds,
Articles V, VI, and VIII. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(5) (a) (i) Management Agreement Between Equity
Managers Trust and Neuberger & Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers
Trust Currently Subject to the Management
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000314.
(iii) Schedule B - Schedule of Compensation Under
the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger &
Berman Management Incorporated and
Neuberger & Berman, LLC with Respect to
Equity Managers Trust. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers
Trust Currently Subject to the Sub-Advisory
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000314.
C-3
<PAGE>
Exhibit Description
Number -----------
-------
(c) (i) Management Agreement Between Global
Managers Trust and Neuberger & Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No.
74 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000426.
(ii) Schedule A - Series of Global Managers
Trust Currently Subject to the Management
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 74 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000426.
(iii) Schedule B - Schedule of Compensation Under
the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No.
74 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000426.
(d) (i) Sub-Advisory Agreement Between Neuberger &
Berman Management Incorporated and
Neuberger & Berman, LLC with Respect to
Global Managers Trust. Incorporated by
Reference to Post-Effective Amendment No.
74 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000426.
(ii) Schedule A - Series of Global Managers
Trust Currently Subject to the Sub-Advisory
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 74 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000426.
(6) (a) Distribution Agreement Between Neuberger & Berman
Equity Funds and Neuberger & Berman Management
Incorporated. Incorporated by Reference to Post-
Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-000314.
C-4
<PAGE>
Exhibit Description
Number -----------
-------
(b) Schedule A - Series of Neuberger & Berman Equity
Funds Currently Subject to the Distribution
Agreement. Incorporated by Reference to Post-
Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-000314.
(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. 74 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-000426.
(b) Schedule A - Approved Foreign Banking Institutions
and Securities Depositories Under the Custodian
Contract. Incorporated by Reference to Post-
Effective Amendment No. 3 to the Registration
Statement of Neuberger & Berman Equity Assets, File
Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-95-000426.
(c) Schedule B - Approved Foreign Banking Institutions
and Securities Depositories under the Custodian
Contract with Respect to Neuberger & Berman
International Fund. To Be Filed By Amendment.
(d) Schedule of Compensation under the Custodian
Contract. Filed Herewith.
(9) (a) (i) Transfer Agency and Service Agreement
Between Neuberger & Berman Equity Funds and
State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357
and 811-582, Edgar Accession No.
0000898432-95-000314.
C-5
<PAGE>
Exhibit Description
Number -----------
-------
(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 and Service
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000314.
(iii) First Amendment to Transfer Agency and
Service Agreement Between Neuberger &
Berman Equity Funds and State Street Bank
and Trust Company. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(iv) Schedule of Compensation under the Transfer
Agency and Service Agreement. Filed
Herewith.
(b) (i) Administration Agreement Between Neuberger
& Berman Equity Funds and Neuberger &
Berman Management Incorporated.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357
and 811-582, Edgar Accession No.
0000898432-95-000314.
(ii) Schedule A - Series of Neuberger & Berman
Equity Funds Currently Subject to the
Administration Agreement. Incorporated by
Reference to Post-Effective Amendment No.
71 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000347.
(iii) Schedule B - Schedule of Compensation Under
the Administration Agreement. Incorporated
by Reference to Post-Effective Amendment
No. 70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582,
Edgar Accession No. 0000898432-95-000314.
C-6
<PAGE>
Exhibit Description
Number -----------
-------
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters. Incorporated by Reference
to Registrant's Rule 24f-2 Notice for the Fiscal
Year Ended August 31, 1996, File Nos. 2-11357 and
811-582, Edgar Accession No. 0000898432-96-000464.
(11) (a) Consent of Ernst & Young LLP, Independent Auditors.
Filed Herewith.
(b) Consent of Ernst & Young, Independent Auditors.
Filed Herewith.
(c) Consent of Coopers & Lybrand L.L.P., Independent
Accountants. Filed Herewith.
(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
Amendments Nos. 61 and 67 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582.
(17) Financial Data Schedule. Filed Herewith.
(18) Plan Pursuant to Rule 18f-3. None.
</TABLE>
Item 25. Persons Controlled By or Under Common Control with Registrant.
------- -------------------------------------------------------------
No person is controlled by or under common control with the
Registrant. (Registrant is organized in a master/feeder fund structure, and
technically may be considered to control the master funds in which it
invests, Equity Managers Trust and Global Managers Trust.)
C-7
<PAGE>
Item 26. Number of Holders of Securities.
------- --------------------------------
The following information is given as of October 31, 1996.
Number of
Title of Class Record Holders
--------------- --------------
Shares of beneficial interest, $0.001 par value, of:
Neuberger & Berman Focus Fund 41,638
Neuberger & Berman Genesis Fund 13,467
Neuberger & Berman Guardian Fund 137,141
Neuberger & Berman International Fund 3,600
Neuberger & Berman Manhattan Fund 43,007
Neuberger & Berman Partners Fund 63,299
Neuberger & Berman Socially 2,719
Responsive Fund
Item 27. Indemnification.
------- ---------------
A Delaware business trust may provide in its governing
instrument for indemnification of its officers and trustees from and
against any and all claims and demands whatsoever. Article IX, Section 2 of
the Trust Instrument provides that the Registrant shall indemnify any
present or former trustee, officer, employee or agent of the Registrant
("Covered Person") to the fullest extent permitted by law against liability
and all expenses reasonably incurred or paid by him or her in connection
with any claim, action, suit or proceeding ("Action") in which he or she
becomes involved as a party or otherwise by virtue of his or her being or
having been a Covered Person and against amounts paid or incurred by him or
her in settlement thereof. Indemnification will not be provided to a person
adjudged by a court or other body to be liable to the Registrant or its
shareholders by reason of "willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office"
("Disabling Conduct"), or not to have acted in good faith in the reasonable
belief that his or her action was in the best interest of the Registrant.
In the event of a settlement, no indemnification may be provided unless
there has been a determination that the officer or trustee did not engage
in Disabling Conduct (i) by the court or other body approving the
settlement; (ii) by at least a majority of those trustees who are neither
interested persons, as that term is defined in the Investment Company Act
of 1940 ("1940 Act"), of the Registrant ("Independent Trustees"), nor
parties to the matter based upon a review of readily available facts; or
(iii) by written opinion of independent legal counsel based upon a review
of readily available facts.
C-8
<PAGE>
Pursuant to Article IX, Section 3 of the Trust Instrument, if
any present or former shareholder of any series ("Series") of the
Registrant shall be held personally liable solely by reason of his or her
being or having been a shareholder and not because of his or her acts or
omissions or for some other reason, the present or former shareholder (or
his or her heirs, executors, administrators or other legal representatives
or in the case of any entity, its general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from
and indemnified against all loss and expense arising from such liability.
The Registrant, on behalf of the affected Series, shall, upon request by
such shareholder, assume the defense of any claim made against such
shareholder for any act or obligation of the Series and satisfy any
judgment thereon from the assets of the Series.
Section 9 of the Management Agreements between Neuberger &
Berman Management Incorporated ("N&B Management") and Equity Managers Trust
and Global Managers Trust (Equity Managers Trust and Global Managers Trust
are collectively referred to as the "Managers Trusts") provide that neither
N&B Management nor any director, officer or employee of N&B Management
performing services for the series of the Managers Trusts at the direction
or request of N&B Management in connection with N&B Management's discharge
of its obligations under the Agreements 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 Agreements relates; provided, that
nothing in the Agreements shall be construed (i) to protect N&B Management
against any liability to the Managers Trusts or any series thereof or their
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 Agreements, or (ii) to
protect any director, officer or employee of N&B Management who is or was a
trustee or officer of the Managers Trusts against any liability to the
Managers Trusts 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 Trusts.
Section 1 of the Sub-Advisory Agreements between N&B Management
and Neuberger & Berman, LLC ("Neuberger & Berman") with respect to the
Managers Trusts 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 the Managers Trusts or their interest
holders in connection with the matters to which the Agreements relate.
Section 12 of the Administration Agreement between the
Registrant and N&B Management provides that N&B Management will not be
liable to the Registrant for any action taken or omitted to be taken by N&B
Management or its employees, agents or contractors in carrying out the
provisions of the Agreement if such action was taken or omitted in good
C-9
<PAGE>
faith and without negligence or misconduct on the part of N&B Management,
or its employees, agents or contractors. Section 13 of the Administration
Agreement provides that the Registrant shall indemnify N&B Management and
hold it harmless from and against any and all losses, damages and expenses,
including reasonable attorneys' fees and expenses, incurred by N&B
Management that result from: (i) any claim, action, suit or proceeding in
connection with N&B Management's entry into or performance of the
Agreement; or (ii) any action taken or omission to act committed by N&B
Management in the performance of its obligations under the Agreement; or
(iii) any action of N&B Management upon instructions believed in good faith
by it to have been executed by a duly authorized officer or representative
of a Series; provided, that N&B Management will not be entitled to such
indemnification in respect of actions or omissions constituting negligence
or misconduct on the part of N&B Management, or its employees, agents or
contractors. Amounts payable by the Registrant under this provision shall
be payable solely out of assets belonging to that Series, and not from
assets belonging to any other Series of the Registrant. Section 14 of the
Administration Agreement provides that N&B Management will indemnify the
Registrant and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by the Registrant that result from: (i) N&B Management's failure
to comply with the terms of the Agreement; or (ii) N&B Management's lack of
good faith in performing its obligations under the Agreement; or (iii) the
negligence or misconduct of N&B Management, or its employees, agents or
contractors in connection with the Agreement. The Registrant shall not be
entitled to such indemnification in respect of actions or omissions
constituting negligence or misconduct on the part of the Registrant or its
employees, agents or contractors other than N&B Management, unless such
negligence or misconduct results from or is accompanied by negligence or
misconduct on the part of N&B Management, any affiliated person of N&B
Management, or any affiliated person of an affiliated person of N&B
Management.
Section 11 of the Distribution Agreement between the Registrant
and N&B Management provides that N&B Management shall look only to the
assets of a Series for the Registrant's performance of the Agreement by the
Registrant on behalf of such Series, and neither the Trustees nor any of
the Registrant's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
C-10
<PAGE>
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Adviser and Sub-Adviser.
------- ---------------------------------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each principal of Neuberger &
Berman is, or at any time during the past two years has been, engaged for
his or her own account or in the capacity of director, officer, employee,
partner or trustee.
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
<S> <C>
Claudia A. Brandon Secretary, Neuberger & Berman Advisers
Vice President, Management Trust (Delaware business trust);
N&B Management Secretary, Advisers Managers Trust; Secretary,
Neuberger & Berman Advisers Management
Trust (Massachusetts business trust) (1);
Secretary, Neuberger & Berman Income
Funds; Secretary, Neuberger & Berman
Income Trust; Secretary, Neuberger &
Berman Equity Funds; Secretary, Neuberger
& Berman Equity Trust; Secretary, Income
Managers Trust; Secretary, Equity
Managers Trust; Secretary, Global
Managers Trust; Secretary, Neuberger &
Berman Equity Assets.
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business trust);
N&B Management 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.
C-11
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
Robert Cresci Assistant Portfolio Manager, BNP-N&B Global
Assistant Vice President, Asset Management L.P. (joint venture of
N&B Management Neuberger & Berman and Banque Nationale de
Paris) (2).
Barbara DiGiorgio, Assistant Treasurer, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business trust);
N&B Management Assistant Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger & Berman
Income Funds; Assistant Treasurer,
Neuberger & Berman Income Trust;
Assistant Treasurer, Neuberger & Berman
Equity Funds; Assistant Treasurer,
Neuberger & Berman Equity Trust;
Assistant Treasurer, Income Managers
Trust; Assistant Treasurer, Equity
Managers Trust; Assistant Treasurer,
Global Managers Trust; Assistant
Treasurer, Neuberger & Berman Equity
Assets.
Stanley Egener Chairman of the Board and Trustee, Neuberger &
President and Director, Berman Advisers Management Trust (Delaware
N&B Management; Principal, business trust); Chairman of the Board and
Neuberger & Berman Trustee, Advisers Managers Trust; Chairman of
the Board and Trustee, Neuberger & Berman
Advisers Management Trust (Massachusetts
business trust) (1); Chairman of the Board and
Trustee, Neuberger & Berman Income Funds;
Chairman of the Board and Trustee, Neuberger &
Berman Income Trust; Chairman of the Board and
Trustee, Neuberger & Berman Equity Funds;
Chairman of the Board and Trustee, Neuberger &
Berman Equity Trust; Chairman of the Board and
Trustee, Income Managers Trust; Chairman of the
Board and Trustee, Equity Managers Trust;
Chairman of the Board and Trustee, Global
Managers Trust; Chairman of the Board and
Trustee, Neuberger & Berman Equity Assets.
Theodore P. Giuliano President and Trustee, Neuberger & Berman Income
Vice President and Director, Funds; President and Trustee, Neuberger &
Berman N&B Management; Principal, Income Trust; President and Trustee,
Income Neuberger & Berman Managers Trust.
C-12
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers
Principal, Management Trust (Delaware business trust);
Neuberger & Berman Assistant Secretary, Advisers Managers Trust;
Assistant Secretary, Neuberger & Berman
Advisers Management Trust (Massachusetts
business trust) (1); Assistant Secretary,
Neuberger & Berman Income Funds;
Assistant Secretary, Neuberger & Berman
Income Trust; Assistant Secretary,
Neuberger & Berman Equity Funds;
Assistant Secretary, Neuberger & Berman
Equity Trust; Assistant Secretary, Income
Managers Trust; Assistant Secretary,
Equity Managers Trust; Assistant
Secretary, Global Managers Trust;
Assistant Secretary, Neuberger & Berman
Equity Assets.
Felix Rovelli Senior Vice President-Senior Equity Portfolio
Vice President, Manager, BNP-N&B Global Asset Management L.P.
N&B Management (joint venture of Neuberger & Berman and Banque
Nationale de Paris) (2).
Richard Russell Treasurer, Neuberger & Berman Advisers
Vice President, Management Trust (Delaware business trust);
N&B Management Treasurer, Advisers Managers Trust; Treasurer,
Neuberger & Berman Advisers Management
Trust (Massachusetts business trust) (1);
Treasurer, Neuberger & Berman Income
Funds; Treasurer, Neuberger & Berman
Income Trust; Treasurer, Neuberger &
Berman Equity Funds; Treasurer, Neuberger
& Berman Equity Trust; Treasurer, Income
Managers Trust; Treasurer, Equity
Managers Trust; Treasurer, Global
Managers Trust; Treasurer, Neuberger &
Berman Equity Assets.
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust (Delaware business trust); Vice
N&B Management 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.
C-13
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
Susan Switzer Portfolio Manager, Mitchell Hutchins Asset
Assistant Vice President, Management Inc., 1285 Avenue of the Americas,
N&B Management New York, New York 10019 (3).
Michael J. Weiner Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust (Delaware business trust); Vice
N&B Management 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.
Celeste Wischerth, Assistant Treasurer, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business trust);
N&B Management Assistant Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger & Berman
Income Funds; Assistant Treasurer,
Neuberger & Berman Income Trust;
Assistant Treasurer, Neuberger & Berman
Equity Funds; Assistant Treasurer,
Neuberger & Berman Equity Trust;
Assistant Treasurer, Income Managers
Trust; Assistant Treasurer, Equity
Managers Trust; Assistant Treasurer,
Global Managers Trust; Assistant
Treasurer, Neuberger & Berman Equity
Assets.
Lawrence Zicklin President and Trustee, Neuberger & Berman
Director, N&B Management; Advisers Management Trust (Delaware business
Principal, Neuberger & Berman trust); President 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>
C-14
<PAGE>
The principal address of N&B Management, Neuberger & Berman,
LLC, and of each of the investment companies named above, is 605 Third
Avenue, New York, New York 10158.
-----------------------------
(1) Until April 30, 1995.
(2) Until October 31, 1995.
(3) Until 1994.
Item 29. Principal Underwriters.
------- ----------------------
(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and
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
N&B Management is also the investment manager to the master
funds in which the above-named investment companies invest.
(b) Set forth below is information concerning the directors and
officers of the Registrant's principal underwriter. The principal business
address of each of the persons listed is 605 Third Avenue, New York, New
York 10158-0180, which is also the address of the Registrant's principal
underwriter.
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
<S> <C> <C>
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
C-15
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
Robert Cresci Assistant Vice President None
William Cunningham Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board of
Trustees
(Chief Executive Officer)
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Assistant Vice President None
Mark R. Goldstein Vice President None
Theodore P. Giuliano Vice President and Director None
Farha-Joyce Haboucha Vice President None
Leslie Holliday-Soto Assistant Vice President None
Jody L. Irwin Assistant Vice President None
Michael M. Kassen Vice President and Director None
Irwin Lainoff Director None
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Lawrence Marx III Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Assistant Vice President None
Loraine Olavarria Assistant Secretary None
Janet W. Prindle Vice President None
C-16
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Assistant Vice President None
Felix Rovelli Vice President None
Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Susan Switzer Assistant Vice President None
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
Susan Walsh Vice President None
Michael J. Weiner Senior Vice President Vice President
(Principal Financial
Officer)
Celeste Wischerth Assistant Vice President Assistant Treasurer
Thomas Wolfe Vice President None
KimMarie Zamot Assistant Vice President None
Lawrence Zicklin Director Trustee and President
</TABLE>
(c) No commissions or other compensation were received directly
or indirectly from the Registrant by any principal underwriter who was not
an affiliated person of the Registrant.
Item 30. Location of Accounts and Records.
------- --------------------------------
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
C-17
<PAGE>
promulgated thereunder with respect to the Registrant are maintained at the
offices of State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, except for the Registrant's Trust Instrument
and By-laws, minutes of meetings of the Registrant's Trustees and
shareholders and the Registrant's policies and contracts, which are
maintained at the offices of the Registrant, 605 Third Avenue, New York,
New York 10158.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to Equity Managers Trust are maintained
at the offices of State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, except for Equity Managers Trust's Declaration
of Trust and By-laws, minutes of meetings of Equity Managers Trust's
Trustees and interest holders and Equity Managers Trust's policies and
contracts, which are maintained at the offices of the Equity Managers
Trust, 605 Third Avenue, New York, New York 10158.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to 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 Post-Effective
Amendment, the Registrant is not a party to any management-related service
contract.
Item 32. Undertakings
------- ------------
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
C-18
<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 certifies that it meets all of the requirements for effectiveness of
this Post-Effective Amendment No. 76 to its Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment 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 4th day of December, 1996.
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. 76 has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Faith Colish
____________________ Trustee December 4, 1996
Faith Colish
/s/Donald M. Cox
____________________ Trustee December 4, 1996
Donald M. Cox
/s/Stanley Egener Chairman of the Board
____________________ and Trustee (Chief December 4, 1996
Stanley Egener Executive Officer)
/s/Howard A. Mileaf
____________________ Trustee December 4, 1996
Howard A. Mileaf
/s/Edward I. O'Brien
____________________ Trustee December 4, 1996
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
Signature Title Date
--------- ----- ----
/s/John T. Patterson, Jr.
_________________________ Trustee December 4, 1996
John T. Patterson, Jr.
/s/John P. Rosenthal
____________________ Trustee December 4, 1996
John P. Rosenthal
/s/Cornelius T. Ryan
____________________ Trustee December 4, 1996
Cornelius T. Ryan
/s/Gustave H. Shubert
____________________ Trustee December 4, 1996
Gustave H. Shubert
/s/Alan R. Gruber
____________________ Trustee December 4, 1996
Alan R. Gruber
/s/Lawrence Zicklin
____________________ President and Trustee December 4, 1996
Lawrence Zicklin
/s/Michael J. Weiner Vice President
____________________ (Principal December 4, 1996
Michael J. Weiner Financial Officer)
/s/Richard Russell Treasurer (Principal
____________________ Accounting Officer) December 4, 1996
Richard Russell
</TABLE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, EQUITY MANAGERS TRUST certifies that it meets
all of the requirements for effectiveness of the Post-Effective Amendment No. 76
to the Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City and State of New York on the 4th day of December, 1996.
EQUITY MANAGERS TRUST
/s/ Lawrence Zicklin
By: -------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, the
Post-Effective Amendment No. 76 has been signed below by the following persons
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Faith Colish
___________________ Trustee December 4, 1996
Faith Colish
/s/Donald M. Cox
___________________ Trustee December 4, 1996
Donald M. Cox
/s/Stanley Egener
___________________ Chairman of the Board December 4, 1996
Stanley Egener and Trustee (Chief
Executive Officer)
/s/Howard A. Mileaf
___________________ Trustee December 4, 1996
Howard A. Mileaf
/s/Edward I. O'Brien
___________________ Trustee December 4, 1996
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
Signature Title Date
--------- ----- ----
/s/John T. Patterson, Jr.
_________________________ Trustee December 4, 1996
John T. Patterson, Jr.
/s/John P. Rosenthal
_________________________ Trustee December 4, 1996
John P. Rosenthal
/s/Cornelius T. Ryan
_________________________ Trustee December 4, 1996
Cornelius T. Ryan
/s/Gustave H. Shubert
_________________________ Trustee December 4, 1996
Gustave H. Shubert
/s/Alan R. Gruber
_________________________ Trustee December 4, 1996
Alan R. Gruber
/s/Lawrence Zicklin
________________________ President and Trustee December 4, 1996
Lawrence Zicklin
/s/Michael J. Weiner
________________________ Vice President December 4, 1996
Michael J. Weiner (Principal
Financial Officer)
/s/Richard Russell
________________________ Treasurer (Principal December 4, 1996
Richard Russell Accounting Officer)
</TABLE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, GLOBAL MANAGERS TRUST certifies that it meets
all of the requirements for effectiveness of Post-Effective Amendment No. 76 to
the Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, at Grand Cayman, British West Indies, on the 15th day of November,
1996.
GLOBAL MANAGERS TRUST
By:/s/ Stanley Egener
-------------------------------------
Stanley Egener, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
Post-Effective Amendment No. 76 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 November 15, 1996
-------------------------- Board and Trustee
Stanley Egener (Chief Executive
Officer
/s/ Howard A. Mileaf Trustee November 15, 1996
--------------------------
Howard A. Mileaf
/s/ John T. Patterson, Jr. Trustee November 15, 1996
--------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee November 15, 1996
--------------------------
John P. Rosenthal
/s/ Michael J. Weiner Vice President November 15, 1996
-------------------------- (Principal
Michael J. Weiner Financial Officer
<PAGE>
/s/ Richard Russell Treasurer November 15, 1996
-------------------------- (Principal
Richard Russell*/ Accounting
Officer)
*/ Signed at Grand Cayman, BWI, by Arthur C. Delibert, pursuant to a
power of attorney executed at Paget, Bermuda, On May 5, 1996.
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 76 ON FORM N-1A
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
<S> <C> <C>
(1) (a) Certificate of Trust. Incorporated by Reference N.A.
to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, Edgar Accession No.
0000898432-95-000314.
(b) Trust Instrument of Neuberger & Berman Equity N.A.
Funds. Incorporated by Reference to Post-
Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, Edgar Accession No. 0000898432-95-
000314.
(c) Schedule A - Current Series of Neuberger & N.A.
Berman Equity Funds. Incorporated by Reference
to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, Edgar Accession No.
0000898432-95-000314.
(2) By-laws of Neuberger & Berman Equity Funds. Incorporated N.A.
by Reference to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File Nos. 2-11357
and 811-582, Edgar Accession No. 0000898432-95-000314.
(3) Voting Trust Agreement. None. N.A.
(4) (a) Trust Instrument of Neuberger & Berman Equity N.A.
Funds, Articles IV, V, and VI. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, Edgar Accession No.
0000898432-95-000314.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
(b) By-laws of Neuberger & Berman Equity Funds, N.A.
Articles V, VI, and VIII. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, Edgar Accession No.
0000898432-95-000314.
(5) (a) (i) Management Agreement Between Equity N.A.
Managers Trust and Neuberger & Berman
Management Incorporated. Incorporated
by Reference to Post-Effective
Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-
11357 and 811-582, Edgar Accession No.
0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers N.A.
Trust Currently Subject to the
Management Agreement. Incorporated by
Reference to Post-Effective Amendment
No. 70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-
000314.
(iii) Schedule B - Schedule of Compensation N.A.
Under the Management Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 70 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between N.A.
Neuberger & Berman Management
Incorporated and Neuberger & Berman,
LLC with Respect to Equity Managers
Trust. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
(ii) Schedule A - Series of Equity Managers N.A.
Trust Currently Subject to the Sub-
Advisory Agreement. Incorporated by
Reference to Post-Effective Amendment
No. 70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-
000314.
(c) (i) Management Agreement Between Global N.A.
Managers Trust and Neuberger & Berman
Management Incorporated. Incorporated
by Reference to Post-Effective
Amendment No. 74 to Registrant's
Registration Statement, File Nos. 2-
11357 and 811-582, Edgar Accession
No. 0000898432-95-000426.
(ii) Schedule A - Series of Global Managers N.A.
Trust Currently Subject to the
Management Agreement. Incorporated by
Reference to Post-Effective Amendment
No. 74 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-
000426.
(iii) Schedule B - Schedule of Compensation N.A.
Under the Management Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 74 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000426.
(d) (i) Sub-Advisory Agreement Between N.A.
Neuberger & Berman Management
Incorporated and Neuberger & Berman,
LLC with respect to Global Managers
Trust. Incorporated by Reference to
Post-Effective Amendment No. 74 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000426.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
(ii) Schedule A - Series of Global Managers N.A.
Trust Currently Subject to Sub-Advisory
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 74 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000426.
(6) (a) Distribution Agreement Between Neuberger & N.A.
Berman Equity Funds and Neuberger & Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession No.
0000898432-95-000314.
(b) Schedule A - Series of Neuberger & Berman Equity N.A.
Funds Currently Subject to the Distribution
Agreement. Incorporated by Reference to Post-
Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, Edgar Accession No. 0000898432-95-
000314.
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & Berman N.A.
Equity Funds and State Street Bank and Trust
Company. Incorporated by Reference to Post-
Effective Amendment No. 74 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, Edgar Accession No. 0000898432-95-
000426.
(b) Schedule A - Approved Foreign Banking N.A.
Institutions and Securities Depositories Under
the Custodian Contract. Incorporated by
Reference to Post-Effective Amendment No. 3 to
the Registration Statement of Neuberger & Berman
Equity Assets, File Nos. 33-82568 and 811-8106,
Edgar Accession No. 0000898432-95-000426.
(c) Schedule B - Approved Foreign Banking ____
Institutions and Securities Depositories under
the Custodian Contract with Respect to Neuberger
& Berman International Fund. To Be Filed by
Amendment.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
(d) Schedule of Compensation under the Custodian ____
Contract. Filed Herewith.
(9) (a) (i) Transfer Agency and Service Agreement N.A.
Between Neuberger & Berman Equity Funds
and State Street Bank and Trust
Company. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(ii) Agreement Between Neuberger & Berman N.A.
Equity Funds and State Street Bank and
Trust Company Adding Neuberger & Berman
International Fund as a Portfolio
Governed by the Transfer Agency and
Service Agreement. Incorporated by
Reference to Post-Effective Amendment
No. 70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-
000314.
(iii) First Amendment to Transfer Agency and N.A.
Service Agreement Between Neuberger &
Berman Equity Funds and State Street
Bank and Trust Company. Incorporated
by Reference to Post-Effective
Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-
11357 and 811-582, Edgar Accession No.
0000898432-95-000314.
(iv) Schedule of Compensation under the _____
Transfer Agency and Service Agreement.
Filed Herewith.
(b) (i) Administration Agreement Between N.A.
Neuberger & Berman Equity Funds and
Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective Amendment
No. 70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-
582, Edgar Accession No. 0000898432-95-
000314.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
(ii) Schedule A - Series of Neuberger & N.A.
Berman Equity Funds Currently Subject
to the Administration Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 71 to
Registrant's Statement File Nos. 2-
11357 and 911-582, Edgar Accession No.
0000898432-95-000347.
(iii) Schedule B - Schedule of Compensation N.A.
Under the Administration Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 70 to
Registrant's Registration Statement,
File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-95-000314.
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart N.A.
LLP on Securities Matters. Incorporated by
Reference to Registrant's Rule 24f-2 Notice for
the Fiscal Year Ended August 31, 1996, File Nos.
2-11357 and 811-582, Edgar Accession No.
0000898432-96-000464.
(11) (a) Consent of Ernst & Young LLP, Independent ____
Auditors. Filed Herewith.
(b) Consent of Ernst & Young, Independent Auditors. ____
Filed Herewith.
(c) Consent of Coopers & Lybrand LLP, Independent ____
Accountants. Filed Herewith.
(12) Financial Statements Omitted from Prospectus. None. N.A.
(13) Letter of Investment Intent. None. N.A.
(14) Prototype Retirement Plan. None. N.A.
(15) Plan Pursuant to Rule 12b-1. None. N.A.
(16) Schedule of Computation of Performance Quotations. N.A.
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. Filed Herewith. ____
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
(18) Plan Pursuant to Rule 18f-3. None. N.A.
</TABLE>
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
NEUBERGER AND BERMAN FUND COMPLEX
Equity Managers Trust:
---------------------
. Neuberger and Berman Focus Portfolio
. Neuberger and Berman Genesis Portfolio
. Neuberger and Berman Guardian Portfolio
. Neuberger and Berman Manhattan Portfolio
. Neuberger and Berman Partners Portfolio
. Neuberger and Berman Socially Responsive Portfolio
Income Managers Trust:
---------------------
. Neuberger and Berman Cash Reserves Portfolio
. Neuberger and Berman Government Money Portfolio
. Neuberger and Berman Limited Maturity Bond Portfolio
. Neuberger and Berman Municipal Money Portfolio
. Neuberger and Berman Municipal Securities Portfolio
. Neuberger and Berman New York Insured Intermediate Portfolio.
. Neuberger and Berman Ultra Short Bond
Advisers Managers Trust:
-----------------------
. AMT Balanced Investments
. AMT Government Income Investments
. AMT Growth Investments
. AMT International Investments
. AMT Limited Maturity Bond Investments
. AMT Liquid Asset Investments
. AMT Partners Investments
-----------------------------------------------------------------------
I. ADMINISTRATION
-----------------------------------------------------------------------
Custody, Portfolio and Fund Accounting Service: Maintain custody of
fund assets. Settle portfolio purchases and sales. Report buy and
sell fails. Determine and collect portfolio income. Make cash
disbursements and report cash transactions. Maintain investment
ledgers, provide selected portfolio transactions, position and
income reports. Maintain general ledger and capital stock accounts.
Prepare daily trial balance. Calculate net asset value daily.
Provide selected general ledger reports. Securities yield or market
value quotations will be provided to State Street by sources
authorized by the funds.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average monthly net assets.
<PAGE>
Neuberger & Berman Fund Complex
Custodian Fee Schedule
Page: 2
ANNUAL FEES PER PORTFOLIO
Custody, Portfolio
Fund Net Assets and Fund Accounting
--------------- -------------------
$0 - $ 20 million .075%
$20 - $100 million .037%
$100 - $200 million .028%
$200 - $500 million .014%
Over $500 million .013%
-----------------------------------------------------------------------
II. GLOBAL CUSTODY
-----------------------------------------------------------------------
These fees are divided into two categories: Transaction Charges and
Holdings Charges which are calculated based on the following
country groups:
A. Country Grouping
----------------
<TABLE>
<CAPTION>
Group A Group B Group C Group D Group E Group F
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
USA Austria Australia Denmark Indonesia Argentina
Canada Belgium Finland Malaysia Bangladesh
Euroclear Hong Kong France Philippines Brazil
Germany Netherlands Ireland Portugal Chile
Japan New Zealand Italy So. Korea China
Singapore Luxembourg Spain Columbia
Switzerland Mexico Sri Lanka Czech Republic
Norway Sweden Cyprus
Thailand Taiwan Greece
U.K. Hungary
India
Israel
Morocco
Pakistan
Peru
Poland
So. Africa
Turkey
Uruguay
Venezuela
</TABLE>
<PAGE>
Neuberger & Berman Fund Complex
Custodian Fee Schedule
Page: 3
B. Transactions Charges
--------------------
<TABLE>
<CAPTION>
Group A Group B Group C Group D Group E Group F
<S> <C> <C> <C> <C> <C>
State Street Bank $25 $50 $60 $70 $150
Repos or Euros - $7.00
DTC or Fed Book
Entry - $12.00
All Other - $25.00
C. Holdings Charges
----------------
Group A Group B Group C Group D Group E Group F
1.5 5.0 6.0 10.0 25.0 40.0
</TABLE>
----------------------------------------------------------------------
III. Portfolio Trades - For Each Line Item Processed
----------------------------------------------------------------------
State Street Bank Repos $ 7.00
DTC of Fed Book Entry $12.00
New York Physical Settlements $25.00
Maturity Collection (NY Physical Items Only) $ 8.00
All Other Trades $16.00
----------------------------------------------------------------------
IV. Options
----------------------------------------------------------------------
Option charge for each option written or closing contract, per
issue, per broker $25.00 Option expiration charge, per issue, per
broker $15.00 Option exercised charge, per issue, per broker
$15.00
----------------------------------------------------------------------
V. Lending of Securities
----------------------------------------------------------------------
Deliver loaned securities versus cash collateral Deliver loaned
securities versus securities collateral Receive/deliver
additional cash collateral Substitutions of securities collateral
Deliver cash collateral versus receipt of loaned securities
<PAGE>
Neuberger & Berman Fund Complex
Custodian Fee Schedule
Page: 4
Deliver securities collateral versus receipt of loaned securities
Loan administration mark-to-market per day, per loan
----------------------------------------------------------------------
VI. Interest Rate Futures
----------------------------------------------------------------------
Transactions no security movement $ 8.00
----------------------------------------------------------------------
VII. Pricing Service
----------------------------------------------------------------------
Monthly Quote Charge (based on average number of $ 6.00
positions in portfolio)
----------------------------------------------------------------------
VIII. Holding Charge
----------------------------------------------------------------------
For each issue maintained - monthly charge $ 5.00
----------------------------------------------------------------------
IX. Principal Reduction Payments
----------------------------------------------------------------------
Per Paydown $10.00
----------------------------------------------------------------------
X. Dividend/Interest Collection Charges
----------------------------------------------------------------------
For items held at the request of traders over $50.00
record date in street form
<PAGE>
Neuberger & Berman Fund Complex
Custodian Fee Schedule
Page: 5
----------------------------------------------------------------------
XI. Spoke Configuration
----------------------------------------------------------------------
Annual fee of $10,000 per each series in each Spoke Entity.
Spoke Entities:
--------------
Neuberger and Berman Equity Funds (except N & B International
Fund) Neuberger and Berman Equity Trust Neuberger and Berman
Income Funds Neuberger and Berman Income Trust Neuberger and
Berman Advisers Management Trust Neuberger and Berman Equity
Assets
----------------------------------------------------------------------
XII. Special Service
----------------------------------------------------------------------
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security
shipments and the preparation of special reports will be subject
to negotiation. Yield calculation and other special items will be
negotiated separately.
----------------------------------------------------------------------
XIII. Out-of-Pocket Expenses
----------------------------------------------------------------------
A billing for the recovery of applicable out-of-pocket expenses
will be made as of the end of each month. Out-of-pocket expenses
include, but are not limited to the following:
. Wire charges relative to custodian
functions ($5.25 per wire in and $5.00
out)
. Postage and Insurance
. Courier Service
. Duplicating
<PAGE>
Neuberger & Berman Fund Complex
Custodian Fee Schedule
Page: 6
. Legal fees in jointly agreed upon
situations
. Supplies related to fund records
. Rush transfer -- $8.00 each
. Transfer fees
. Sub-custodian charges
. Price Waterhouse audit letter
. Federal Reserve fee for return check
items over $2,500 - $4.25
. GNMA Transfer - $15 each
----------------------------------------------------------------------
XIV. Payment and Earnings Credit
----------------------------------------------------------------------
The above fees will be charged against the fund's custodian
checking account five (5) days after the invoice is mailed to the
fund's offices, contingent on fund approval.
An earnings credit of 75% of the 90 Day T-Bill rate will be
applied for fund balances.
NEUBERGER & BERMAN FUND COMPLEX STATE STREET BANK AND TRUST CO.
By: /s/ Michael J. Weiner By: /s/ K. Griffin
-------------------------- -----------------------
Title: Vice President Neuberger
& Berman Equity Funds Title: Vice President
------------------------ -----------------------
Date: 7-31-96 Date: July 31, 1996
------------------------ -----------------------
<PAGE>
FEE SCHEDULE
FOR
TRANSFER AGENCY AGREEMENT
BETWEEN
STATE STREET BANK AND TRUST COMPANY
AND
NEUBERGER & BERMAN EQUITY FUNDS
The Portfolios within the Neuberger & Berman Equity Funds will be charged
an annual fee of $7.30 per account:
International Fund
Socially Responsive Fund
Genesis Fund
Guardian Fund
Partners Fund
Manhattan Fund
Focus Fund
There will be an Account Charge of $1.00 per closed account or zero
balance, and out of pocket expenses which will be billed on a monthly basis
as incurred, and determined by product and related expense.
NEUBERGER & BERMAN STATE STREET BANK AND
EQUITY FUNDS TRUST COMPANY
Name: /s/ Michael J. Weiner Name: /s/ Ronald E. Logue
--------------------- -----------------------------
Title: Vice President Title: Executive Vice President
-------------------- --------------------------
Date: 9-10-96 Date: 9-16-96
--------------------- --------------------------
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Reports to Shareholders", "Independent
Auditors/Accountants" and "Financial Statements" in the Statement of
Additional Information in Post-Effective Amendment Number 76 to the
Registration Statement (Form N-1A No. 2-11357) of Neuberger & Berman Equity
Funds, and to the incorporation by reference of our reports dated October
3, 1996 on the Neuberger & Berman Genesis Fund, Neuberger & Berman Focus
Fund, Neuberger & Berman Guardian Fund, Neuberger & Berman Partners Fund
and Neuberger & Berman International Fund, five of the series comprising
Neuberger & Berman Equity Funds, and on Neuberger & Berman Genesis
Portfolio, Neuberger & Berman Focus Portfolio, Neuberger & Berman Guardian
Portfolio and Neuberger & Berman Partners Portfolio, four of the series
comprising Equity Managers Trust, included in the 1996 Annual Report to
Shareholders of Neuberger & Berman Equity Funds.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
December 3, 1996
<PAGE>
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Reports to Shareholders", "Independent
Auditors/Accountants" and "Financial Statements" in the Statement of
Additional Information in Post-Effective Amendment Number 76 to the
Registration Statement (Form N-1A No. 2-11357) of Neuberger & Berman Equity
Funds, and to the incorporation by reference to our report dated October 3,
1996 on the Neuberger & Berman International Portfolio (a separate series
of Global Managers Trust) included in the 1996 Annual Report to
Shareholders of Neuberger & Berman Equity Funds.
/s/ Ernst & Young
ERNST & YOUNG
Grand Cayman,
Cayman Islands
December 3, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Boards of Trustees of
Neuberger & Berman Equity Funds and Equity Managers Trust:
We consent to the incorporation by reference in Part B. Statement of
Additional Information in Post-Effective Amendment No. 76 to the
Registration Statement on Form N-1A of Neuberger & Berman Equity Funds of
our reports dated October 4, 1996, on our audits of the financial
statements and financial highlights of the Neuberger & Berman Manhattan
Fund and Portfolio and Neuberger & Berman Socially Responsive Fund and
Portfolio which reports are included in the Annual Report to Shareholders
for the fiscal year ended August 31, 1996.
We also consent to the reference to our Firm with respect to the Neuberger
& Berman Manhattan Fund and Portfolio and Neuberger & Berman Socially
Responsive Fund and Portfolio under the captions "Independent
Auditors/Accountants" and "Financial Statements" in Part B of the
Registration Statement.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 2, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Focus Fund Annual Report and is qualified in its entirety
by reference to such document.
</LEGEND>
<CIK> 0000044402
<NAME> NEUBERGER&BERMAN EQUITY FUNDS
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN FOCUS FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 1,068,206
<RECEIVABLES> 4,316
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,072,522
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,142
<TOTAL-LIABILITIES> 1,142
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 728,762
<SHARES-COMMON-STOCK> 37,641
<SHARES-COMMON-PRIOR> 33,104
<ACCUMULATED-NII-CURRENT> 7,155
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 51,474
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 283,989
<NET-ASSETS> 1,071,380
<DIVIDEND-INCOME> 15,166
<INTEREST-INCOME> 1,550
<OTHER-INCOME> 0
<EXPENSES-NET> (9,416)
<NET-INVESTMENT-INCOME> 7,300
<REALIZED-GAINS-CURRENT> 52,014
<APPREC-INCREASE-CURRENT> (22,215)
<NET-CHANGE-FROM-OPS> 37,099
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,873)
<DISTRIBUTIONS-OF-GAINS> (47,524)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,148
<NUMBER-OF-SHARES-REDEEMED> (9,219)
<SHARES-REINVESTED> 1,608
<NET-CHANGE-IN-ASSETS> 115,341
<ACCUMULATED-NII-PRIOR> 3,728
<ACCUMULATED-GAINS-PRIOR> 47,083
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,416
<AVERAGE-NET-ASSETS> 1,063,011
<PER-SHARE-NAV-BEGIN> 28.88
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> .85
<PER-SHARE-DIVIDEND> (.11)
<PER-SHARE-DISTRIBUTIONS> (1.35)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 28.46
<EXPENSE-RATIO> .89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Genesis Fund Annual Report and is qualified in its entirety
by reference to such document.
</LEGEND>
<CIK> 0000044402
<NAME> NEUBERGER&BERMAN EQUITY FUNDS
<SERIES>
<NUMBER> 03
<NAME> NEUBERGER&BERMAN GENESIS FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 194,678
<RECEIVABLES> 1,399
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 196,077
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 698
<TOTAL-LIABILITIES> 698
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 142,475
<SHARES-COMMON-STOCK> 17,908
<SHARES-COMMON-PRIOR> 11,720
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,230
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 49,674
<NET-ASSETS> 195,379
<DIVIDEND-INCOME> 1,334
<INTEREST-INCOME> 206
<OTHER-INCOME> 0
<EXPENSES-NET> (1,784)
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 4,476
<APPREC-INCREASE-CURRENT> 21,117
<NET-CHANGE-FROM-OPS> 25,349
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (6,609)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,855
<NUMBER-OF-SHARES-REDEEMED> (5,295)
<SHARES-REINVESTED> 628
<NET-CHANGE-IN-ASSETS> 83,858
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,591
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,784
<AVERAGE-NET-ASSETS> 138,880
<PER-SHARE-NAV-BEGIN> 9.52
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 1.95
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.55)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.91
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Guardian Fund Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<CIK> 0000044402
<NAME> NEUBERGER&BERMAN EQUITY FUNDS
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN GUARDIAN FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 4,897,929
<RECEIVABLES> 13,047
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,910,976
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,807
<TOTAL-LIABILITIES> 5,807
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,704,319
<SHARES-COMMON-STOCK> 206,284
<SHARES-COMMON-PRIOR> 167,221
<ACCUMULATED-NII-CURRENT> 24,429
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 249,689
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 926,732
<NET-ASSETS> 4,905,169
<DIVIDEND-INCOME> 68,206
<INTEREST-INCOME> 33,250
<OTHER-INCOME> 0
<EXPENSES-NET> (37,957)
<NET-INVESTMENT-INCOME> 63,499
<REALIZED-GAINS-CURRENT> 283,379
<APPREC-INCREASE-CURRENT> (119,590)
<NET-CHANGE-FROM-OPS> 227,288
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (53,306)
<DISTRIBUTIONS-OF-GAINS> (139,952)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 74,621
<NUMBER-OF-SHARES-REDEEMED> (43,128)
<SHARES-REINVESTED> 7,570
<NET-CHANGE-IN-ASSETS> 957,649
<ACCUMULATED-NII-PRIOR> 13,763
<ACCUMULATED-GAINS-PRIOR> 108,394
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 37,957
<AVERAGE-NET-ASSETS> 4,651,209
<PER-SHARE-NAV-BEGIN> 23.61
<PER-SHARE-NII> .31
<PER-SHARE-GAIN-APPREC> .90
<PER-SHARE-DIVIDEND> (.28)
<PER-SHARE-DISTRIBUTIONS> (.76)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.78
<EXPENSE-RATIO> .82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman International Fund Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000044402
<NAME> NEUBERGER&BERMAN EQUITY FUNDS
<SERIES>
<NUMBER> 07
<NAME> NEUBERGER&BERMAN INTERNATIONAL FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 56,983
<RECEIVABLES> 40
<ASSETS-OTHER> 56
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57,079
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 91
<TOTAL-LIABILITIES> 91
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,917
<SHARES-COMMON-STOCK> 4,784
<SHARES-COMMON-PRIOR> 2,471
<ACCUMULATED-NII-CURRENT> 23
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (596)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,644
<NET-ASSETS> 56,988
<DIVIDEND-INCOME> 605
<INTEREST-INCOME> 183
<OTHER-INCOME> 0
<EXPENSES-NET> (691)
<NET-INVESTMENT-INCOME> 97
<REALIZED-GAINS-CURRENT> 609
<APPREC-INCREASE-CURRENT> 3,964
<NET-CHANGE-FROM-OPS> 4,670
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (125)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,475
<NUMBER-OF-SHARES-REDEEMED> (1,172)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 30,552
<ACCUMULATED-NII-PRIOR> 99
<ACCUMULATED-GAINS-PRIOR> (1,253)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 925
<AVERAGE-NET-ASSETS> 40,632
<PER-SHARE-NAV-BEGIN> 10.70
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 1.24
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.91
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Manhattan Fund Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<CIK> 0000044402
<NAME> NEUBERGER&BERMAN EQUITY FUNDS
<SERIES>
<NUMBER> 02
<NAME> NEUBERGER&BERMAN MANHATTAN FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 517,214
<RECEIVABLES> 190
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 517,404
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,165
<TOTAL-LIABILITIES> 1,165
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 386,612
<SHARES-COMMON-STOCK> 42,230
<SHARES-COMMON-PRIOR> 46,104
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49,542
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 80,085
<NET-ASSETS> 516,239
<DIVIDEND-INCOME> 3,989
<INTEREST-INCOME> 231
<OTHER-INCOME> 0
<EXPENSES-NET> (5,843)
<NET-INVESTMENT-INCOME> (1,623)
<REALIZED-GAINS-CURRENT> 57,804
<APPREC-INCREASE-CURRENT> (70,811)
<NET-CHANGE-FROM-OPS> (14,630)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (43,799)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,683
<NUMBER-OF-SHARES-REDEEMED> (16,906)
<SHARES-REINVESTED> 3,349
<NET-CHANGE-IN-ASSETS> (95,729)
<ACCUMULATED-NII-PRIOR> 54
<ACCUMULATED-GAINS-PRIOR> 36,002
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,843
<AVERAGE-NET-ASSETS> 597,907
<PER-SHARE-NAV-BEGIN> 13.27
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> (.33)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.96)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.94
<EXPENSE-RATIO> .98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Partners Fund Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<CIK> 0000044402
<NAME> NEUBERGER&BERMAN EQUITY FUNDS
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN PARTNERS FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 1,870,987
<RECEIVABLES> 2,767
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,873,754
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,810
<TOTAL-LIABILITIES> 1,810
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,458,594
<SHARES-COMMON-STOCK> 78,380
<SHARES-COMMON-PRIOR> 65,930
<ACCUMULATED-NII-CURRENT> 11,934
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 181,185
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 220,231
<NET-ASSETS> 1,871,944
<DIVIDEND-INCOME> 27,762
<INTEREST-INCOME> 3,478
<OTHER-INCOME> 0
<EXPENSES-NET> (14,756)
<NET-INVESTMENT-INCOME> 16,484
<REALIZED-GAINS-CURRENT> 232,938
<APPREC-INCREASE-CURRENT> (30,428)
<NET-CHANGE-FROM-OPS> 218,994
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13,359)
<DISTRIBUTIONS-OF-GAINS> (180,347)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,230
<NUMBER-OF-SHARES-REDEEMED> (14,990)
<SHARES-REINVESTED> 8,210
<NET-CHANGE-IN-ASSETS> 307,984
<ACCUMULATED-NII-PRIOR> 8,809
<ACCUMULATED-GAINS-PRIOR> 128,665
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,756
<AVERAGE-NET-ASSETS> 1,766,719
<PER-SHARE-NAV-BEGIN> 23.72
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> 2.84
<PER-SHARE-DIVIDEND> (.20)
<PER-SHARE-DISTRIBUTIONS> (2.70)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.88
<EXPENSE-RATIO> .84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Socially Responsive Fund Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000044402
<NAME> NEUBERGER&BERMAN EQUITY FUNDS
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN SOCIALLY RESPONSIVE FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 32,856
<RECEIVABLES> 84
<ASSETS-OTHER> 40
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,980
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56
<TOTAL-LIABILITIES> 56
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,966
<SHARES-COMMON-STOCK> 2,372
<SHARES-COMMON-PRIOR> 694
<ACCUMULATED-NII-CURRENT> 28
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 951
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,979
<NET-ASSETS> 32,924
<DIVIDEND-INCOME> 258
<INTEREST-INCOME> 47
<OTHER-INCOME> 0
<EXPENSES-NET> (271)
<NET-INVESTMENT-INCOME> 34
<REALIZED-GAINS-CURRENT> 1,075
<APPREC-INCREASE-CURRENT> 962
<NET-CHANGE-FROM-OPS> 2,071
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17)
<DISTRIBUTIONS-OF-GAINS> (268)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,843
<NUMBER-OF-SHARES-REDEEMED> (184)
<SHARES-REINVESTED> 19
<NET-CHANGE-IN-ASSETS> 24,701
<ACCUMULATED-NII-PRIOR> 11
<ACCUMULATED-GAINS-PRIOR> 131
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 305
<AVERAGE-NET-ASSETS> 18,011
<PER-SHARE-NAV-BEGIN> 11.84
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 2.35
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> (.31)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.88
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Focus Portfolio Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<CIK> 0000910055
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN FOCUS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 838,502
<INVESTMENTS-AT-VALUE> 1,124,592
<RECEIVABLES> 2,059
<ASSETS-OTHER> 52
<OTHER-ITEMS-ASSETS> 95
<TOTAL-ASSETS> 1,126,798
<PAYABLE-FOR-SECURITIES> 3,863
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 564
<TOTAL-LIABILITIES> 4,427
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 669,742
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 26,529
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 140,010
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 286,090
<NET-ASSETS> 1,122,371
<DIVIDEND-INCOME> 15,705
<INTEREST-INCOME> 1,599
<OTHER-INCOME> 0
<EXPENSES-NET> (5,914)
<NET-INVESTMENT-INCOME> 11,390
<REALIZED-GAINS-CURRENT> 51,701
<APPREC-INCREASE-CURRENT> (21,728)
<NET-CHANGE-FROM-OPS> 41,363
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 153,198
<ACCUMULATED-NII-PRIOR> 15,139
<ACCUMULATED-GAINS-PRIOR> 88,309
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,565
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,914
<AVERAGE-NET-ASSETS> 1,097,714
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Guardian Portfolio Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<CIK> 0000910055
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN GUARDIAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 5,252,479
<INVESTMENTS-AT-VALUE> 6,277,499
<RECEIVABLES> 10,961
<ASSETS-OTHER> 229
<OTHER-ITEMS-ASSETS> 69
<TOTAL-ASSETS> 6,288,758
<PAYABLE-FOR-SECURITIES> 18,006
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,210
<TOTAL-LIABILITIES> 56,216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,562,830
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 189,659
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 455,033
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,025,020
<NET-ASSETS> 6,232,542
<DIVIDEND-INCOME> 83,718
<INTEREST-INCOME> 40,556
<OTHER-INCOME> 0
<EXPENSES-NET> (26,340)
<NET-INVESTMENT-INCOME> 97,934
<REALIZED-GAINS-CURRENT> 307,410
<APPREC-INCREASE-CURRENT> (111,192)
<NET-CHANGE-FROM-OPS> 294,152
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,619,347
<ACCUMULATED-NII-PRIOR> 91,725
<ACCUMULATED-GAINS-PRIOR> 147,623
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25,172
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26,340
<AVERAGE-NET-ASSETS> 5,687,441
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Manhattan Portfolio Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<CIK> 0000910055
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 02
<NAME> NEUBERGER&BERMAN MANHATTAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 497,389
<INVESTMENTS-AT-VALUE> 580,025
<RECEIVABLES> 133
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 580,199
<PAYABLE-FOR-SECURITIES> 1,618
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 365
<TOTAL-LIABILITIES> 10,790
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 342,686
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6,019
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136,085
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,636
<NET-ASSETS> 567,426
<DIVIDEND-INCOME> 4,288
<INTEREST-INCOME> 246
<OTHER-INCOME> 0
<EXPENSES-NET> (3,705)
<NET-INVESTMENT-INCOME> 829
<REALIZED-GAINS-CURRENT> 59,509
<APPREC-INCREASE-CURRENT> (74,167)
<NET-CHANGE-FROM-OPS> (13,829)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (77,980)
<ACCUMULATED-NII-PRIOR> 5,190
<ACCUMULATED-GAINS-PRIOR> 76,576
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,402
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,705
<AVERAGE-NET-ASSETS> 642,838
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Partners Portfolio Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<CIK> 0000910055
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN PARTNERS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 1,776,910
<INVESTMENTS-AT-VALUE> 2,004,866
<RECEIVABLES> 5,471
<ASSETS-OTHER> 107
<OTHER-ITEMS-ASSETS> 49
<TOTAL-ASSETS> 2,010,493
<PAYABLE-FOR-SECURITIES> 9,975
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 915
<TOTAL-LIABILITIES> 10,890
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,211,965
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 49,438
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 510,244
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227,956
<NET-ASSETS> 1,999,603
<DIVIDEND-INCOME> 29,211
<INTEREST-INCOME> 3,659
<OTHER-INCOME> 0
<EXPENSES-NET> (9,376)
<NET-INVESTMENT-INCOME> 23,394
<REALIZED-GAINS-CURRENT> 240,765
<APPREC-INCREASE-CURRENT> (30,217)
<NET-CHANGE-FROM-OPS> 233,942
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 376,077
<ACCUMULATED-NII-PRIOR> 26,044
<ACCUMULATED-GAINS-PRIOR> 269,479
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,868
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,376
<AVERAGE-NET-ASSETS> 1,851,251
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Socially Responsive Portfolio Annual Report and is
qualified in its qualified in its entirety by reference to such document.
</LEGEND>
<RESTATED>
<CIK> 0000910055
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN SOCIALLY RESPONSIVE PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 135,153
<INVESTMENTS-AT-VALUE> 158,396
<RECEIVABLES> 168
<ASSETS-OTHER> 20
<OTHER-ITEMS-ASSETS> 8
<TOTAL-ASSETS> 158,592
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107
<TOTAL-LIABILITIES> 107
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 120,157
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,637
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,448
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,243
<NET-ASSETS> 158,485
<DIVIDEND-INCOME> 1,814
<INTEREST-INCOME> 325
<OTHER-INCOME> 0
<EXPENSES-NET> (832)
<NET-INVESTMENT-INCOME> 1,307
<REALIZED-GAINS-CURRENT> 11,385
<APPREC-INCREASE-CURRENT> 9,035
<NET-CHANGE-FROM-OPS> 21,727
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 61,738
<ACCUMULATED-NII-PRIOR> 1,330
<ACCUMULATED-GAINS-PRIOR> 1,063
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 704
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 832
<AVERAGE-NET-ASSETS> 128,052
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman International Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000922246
<NAME> GLOBAL MANAGERS TRUST
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN INTERNATIONAL PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 50,943
<INVESTMENTS-AT-VALUE> 57,765
<RECEIVABLES> 79
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 19
<TOTAL-ASSETS> 57,896
<PAYABLE-FOR-SECURITIES> 712
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 201
<TOTAL-LIABILITIES> 913
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,399
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 575
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (635)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,644
<NET-ASSETS> 56,983
<DIVIDEND-INCOME> 605
<INTEREST-INCOME> 183
<OTHER-INCOME> 0
<EXPENSES-NET> 555
<NET-INVESTMENT-INCOME> 233
<REALIZED-GAINS-CURRENT> 609
<APPREC-INCREASE-CURRENT> 3,964
<NET-CHANGE-FROM-OPS> 4,806
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 342
<ACCUMULATED-GAINS-PRIOR> (1,244)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 603
<AVERAGE-NET-ASSETS> 40,479
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 1.37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Genesis Portfolio Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<CIK> 0000910055
<NAME> EQUITYI MANAGERS TRUST
<SERIES>
<NUMBER> 03
<NAME> NEUBERGER&BERMAN GENESIS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 199,197
<INVESTMENTS-AT-VALUE> 260,418
<RECEIVABLES> 904
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 50
<TOTAL-ASSETS> 261,385
<PAYABLE-FOR-SECURITIES> 1,319
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202
<TOTAL-LIABILITIES> 1,521
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 179,304
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,072
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,267
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,221
<NET-ASSETS> 259,864
<DIVIDEND-INCOME> 1,711
<INTEREST-INCOME> 263
<OTHER-INCOME> 0
<EXPENSES-NET> (1,503)
<NET-INVESTMENT-INCOME> 471
<REALIZED-GAINS-CURRENT> 5,660
<APPREC-INCREASE-CURRENT> 27,635
<NET-CHANGE-FROM-OPS> 33,766
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 117,704
<ACCUMULATED-NII-PRIOR> 601
<ACCUMULATED-GAINS-PRIOR> 12,607
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,506
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,680
<AVERAGE-NET-ASSETS> 177,201
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
