As filed with the Securities and Exchange Commission on December 12, 1997
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. 77 [ X ]
and/or ---- ---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
---
Amendment No. 32 [ 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 15, 1997 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 1997 fiscal year on November 25, 1997.
Neuberger & Berman Equity Funds is a "master/feeder fund." This
Post-Effective Amendment No. 77 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. 77 ON FORM N-1A
This post-effective amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 77 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. 77 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
FORM N-1A ITEM NO. CAPTION IN PART A PROSPECTUS
------------------ ----------------------------
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Financial Highlights; Performance
Information Information
Item 4. General Description of Investment Programs; Description of
Registrant Investments; 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 Front Cover Page; Dividends, Other
Securities Distributions, and Taxes; Information
Regarding Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities How to Buy Shares; Additional
Being Offered Information on Telephone Transactions;
Shareholder Services; Share Prices and
Net Asset Value; Management and
Administration
Item 8. Redemption or Repurchase How to Sell Shares; Additional
Information on Telephone Transactions;
Shareholder Services; Share Prices and
Net Asset Value
Item 9. Pending Legal Proceedings Not Applicable
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 Organization
History
Item 13. Investment Objectives Investment Information; Certain Risk
and Policies Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Control Persons and Principal Holders
Principal Holders of of Securities
Securities
<PAGE>
Item 16. Investment Advisory and Investment Management and
Other Services Administration Services; Trustees and
Officers; Distribution Arrangements;
Reports to Shareholders; Custodian and
Transfer Agent; Independent
Auditors/Accountants
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Investment Information; Additional
Securities Redemption Information; Dividends and
Other Distributions
Item 19. Purchase 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 Information
Performance Data
Item 23. Financial Statements Financial Statements
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.
77.
<PAGE>
<PAGE>
PROSPECTUS
- ------------------------------------------------------------------------
December 15, 1997
NEUBERGER&BERMAN
EQUITY FUNDS -Registered Trademark-
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>
Neuberger&Berman
EQUITY FUNDS
No-Load Equity Funds
- ----------------------------------------------------------------------
Neuberger&Berman FOCUS Neuberger&Berman MANHATTAN
FUND-REGISTERED TRADEMARK- FUND-REGISTERED TRADEMARK-
Neuberger&Berman GENESIS Neuberger&Berman PARTNERS
FUND-REGISTERED TRADEMARK- FUND-REGISTERED TRADEMARK-
Neuberger&Berman GUARDIAN FUND-SM- Neuberger&Berman SOCIALLY
Neuberger&Berman INTERNATIONAL RESPONSIVE
FUND-REGISTERED TRADEMARK- FUND-REGISTERED TRADEMARK-
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
structure that you should consider, see "Summary" on page 3, and "Information
Regarding Organization, Capitalization, and Other Matters" on page 52.
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 15, 1997, 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 15, 1997
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, NOR HAS THE SECURITIES AND EXCHANGE 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 8
FINANCIAL HIGHLIGHTS 9
Selected Per Share Data and Ratios 9
Focus Fund 10
Genesis Fund 11
Guardian Fund 12
International Fund 13
Manhattan Fund 14
Partners Fund 15
Socially Responsive Fund 16
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
Special Considerations of Small-and Mid-Cap
Company Stocks 27
Short-Term Trading;
Portfolio Turnover 28
Borrowings 28
Other Investments 29
PERFORMANCE INFORMATION 30
Total Return Information 32
HOW TO BUY SHARES 33
By Mail 33
By Wire 33
By Telephone 34
By Exchanging Shares 34
Other Information 34
HOW TO SELL SHARES 36
By Mail or Facsimile Transmission (Fax) 36
By Telephone 37
Other Information 38
ADDITIONAL INFORMATION ON TELEPHONE
TRANSACTIONS 39
SHAREHOLDER SERVICES 40
Automatic Investing and Dollar Cost Averaging 40
Exchange Privilege 40
Systematic Withdrawal Plans 41
Retirement Plans 41
Electronic Bank Transfers 42
Internet Access 42
SHARE PRICES AND
NET ASSET VALUE 43
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES 44
Distribution Options 44
Taxes 44
MANAGEMENT AND ADMINISTRATION 47
Trustees and Officers 47
Investment Manager, Administrator,
Distributor, and Sub-Adviser 47
Expenses 49
Transfer and Shareholder Servicing Arrangements 51
INFORMATION REGARDING
ORGANIZATION, CAPITALIZATION,
AND OTHER MATTERS 52
The Funds 52
The Portfolios 52
DESCRIPTION OF INVESTMENTS 55
USE OF JOINT PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION 63
DIRECTORY 64
FUNDS ELIGIBLE FOR EXCHANGE 65
<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
--------------------------
Buy Shares In
--------------------------
FUNDS
--------------------------
Invest In
--------------------------
PORTFOLIOS
--------------------------
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 "Information
Regarding Organization, Capitalization, and Other Matters" on page 52. 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 55.
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.
3
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY FUNDS STYLE CHARACTERISTICS
- ------------------------------------------------------------------------------------
<S> <C> <C>
GUARDIAN FUND Broadly diversified, A growth and income fund that invests
large-cap value fund. primarily in 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, Invests principally in common stocks
more concentrated selected from 13 multi-industry sectors
portfolio than of the economy. To maximize potential
Guardian. 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
small-cap value fund. with small market capitalizations (up to
$1.5 billion at the time of the
Portfolio's investment). Portfolio
managers seek 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, Seeks long-term capital appreciation by
medium- to large-cap investing primarily in foreign stocks,
international equity both in developed economies and in
fund. Capitalization emerging markets. Portfolio manager
is determined in seeks undervalued companies in countries
relation to the with strong potential for growth.
principal market in
which securities are
traded.
MANHATTAN FUND Broadly diversified, Invests in securities believed to have
small-, medium- and the maximum potential for long-term
large-cap growth fund. capital appreciation. Portfolio managers
seek stocks of companies that are
projected to grow at above-average rates
and that may appear poised for a period
of accelerated earnings.
PARTNERS FUND Broadly diversified, Seeks capital growth through an approach
medium- to large-cap that is intended to increase capital
value fund. 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
RESPONSIVE FUND large-cap value fund. investing in 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-Registered Trademark-, see "How
to Buy Shares" on page 33, "How to Sell Shares" on page 36, and "Shareholder
Services -- Exchange Privilege" on page 40.
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 a price
that is lower than what the manager believes they are worth. 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). A value-oriented manager 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 N&B Management believes they have reached their
potential.
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 N&B Management projects will grow at above-average rates and
faster than others expect. While a growth portfolio manager may be willing to
pay a higher multiple of earnings per share than a value manager, the multiple
tends to be reasonable relative to the manager's expectation of the company's
earnings growth rate.
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 adheres to a growth-oriented investment
approach. Neuberger&Berman MANHATTAN Portfolio is therefore willing
5
<PAGE>
to invest in securities with prices that are higher multiples of earnings than
securities likely to be purchased by the other Portfolios, but generally buys
companies that are projected by N&B Management to have higher earnings growth
rates.
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.
<TABLE>
<S> <C>
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
</TABLE>
If you want to redeem shares by wire transfer, the 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 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 ("Total Operating
Expenses"). "Total Operating Expenses" exclude interest, taxes, brokerage
commissions, and extraordinary expenses.
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. "Management and
Administration Fees" in the following table (except with respect to
Neuberger&Berman GENESIS Fund) are based upon administration fees incurred by
each Fund and management fees incurred by its corresponding Portfolio during the
past fiscal year. Management and Administration Fees for Neuberger&Berman
GENESIS Fund have been restated based on current fee rates. For more
information, see "Management and Administration" and the SAI.
The Funds and Portfolios incur other expenses for things such as accounting
and legal fees, transfer agency fees, custodial fees, printing and furnishing
shareholder statements and Fund reports and compensating trustees who are not
affiliated with N&B Management ("Other Expenses"). Other Expenses in the
following table (except with respect to Neuberger&Berman SOCIALLY RESPONSIVE
Fund) are based on
7
<PAGE>
each Fund's and Portfolio's expenses for the past fiscal year. Other Expenses
for Neuberger&Berman SOCIALLY RESPONSIVE Fund have been restated based on
current expense levels. All expenses are factored into the Funds' share prices
and dividends and are not charged directly to Fund shareholders.
<TABLE>
<CAPTION>
NEUBERGER&BERMAN MANAGEMENT AND 12b-1 OTHER TOTAL OPERATING
EQUITY FUNDS ADMINISTRATION FEES FEES EXPENSES EXPENSES
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS FUND 0.76% None 0.10% 0.86%
GENESIS FUND 1.07% None 0.19% 1.26%
GUARDIAN FUND 0.70% None 0.10% 0.80%
INTERNATIONAL FUND 1.11% None 0.59% 1.70%
MANHATTAN FUND 0.79% None 0.19% 0.98%
PARTNERS FUND 0.72% None 0.09% 0.81%
SOCIALLY RESPONSIVE FUND 0.81% None 0.39% 1.20%
</TABLE>
For more information, see "Expenses" on page 49.
Example
- ----------------------------------------------------------------------
To illustrate the effect of Total 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:
<TABLE>
<CAPTION>
NEUBERGER&BERMAN
EQUITY FUNDS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS FUND $ 9 $27 $48 $106
GENESIS FUND $13 $40 $69 $152
GUARDIAN FUND $ 8 $26 $44 $ 99
INTERNATIONAL FUND $17 $54 $92 $201
MANHATTAN FUND $10 $31 $54 $120
PARTNERS FUND $ 8 $26 $45 $100
SOCIALLY RESPONSIVE FUND $12 $38 $66 $145
</TABLE>
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.
8
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
- ----------------------------------------------------------------------
The financial information in the following tables is for each Fund as of
August 31, 1997 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."
9
<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 August 31, to August 31, Year Ended September 30,
1997(2) 1996(2) 1995(2) 1994(2) 1993(2) 1992 1991 1990 1989 1988
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year $ 28.46 $ 28.88 $24.42 $24.00 $19.31 $18.91 $16.66 $19.01 $16.60 $20.10
------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income .08 .19 .17 .21 .23 .29 .38 .44 .46 .46
Net Gains or Losses on
Securities
(both realized and
unrealized) 12.00 .85 5.97 2.16 4.65 2.62 2.96 (1.84) 4.83 (2.98)
------------------------------------------------------------------------------------------------
Total From Investment
Operations 12.08 1.04 6.14 2.37 4.88 2.91 3.34 (1.40) 5.29 (2.52)
------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.22) (.11) (.20) (.25) (.04) (.31) (.37) (.39) (.49) (.47)
Distributions (from net
capital gains) (1.43) (1.35) (1.48) (1.70) (.15) (2.20) (.72) (.56) (2.39) (.51)
------------------------------------------------------------------------------------------------
Total Distributions (1.65) (1.46) (1.68) (1.95) (.19) (2.51) (1.09) (.95) (2.88) (.98)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 38.89 $ 28.46 $28.88 $24.42 $24.00 $19.31 $18.91 $16.66 $19.01 $16.60
------------------------------------------------------------------------------------------------
Total Return(3) +43.92% +3.70% +27.47% +10.35% +25.39%(4) +15.51% +20.20% -7.54% +32.23% -12.44%
------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $1,411.9 $1,071.4 $956.0 $643.9 $573.9 $439.2 $399.2 $368.6 $441.3 $375.2
------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to
Average
Net Assets(5) .86% .89% -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------
Ratio of Net Expenses to
Average
Net Assets .86% .89% .87% .85% .92%(6) .91% .93% .92% .99% 1.01%
------------------------------------------------------------------------------------------------
Ratio of Net Investment
Income to Average Net
Assets .21% .69% .75% .89% 1.18%(6) 1.46% 2.01% 2.34% 2.39% 2.64%
------------------------------------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- 52% 77% 60% 66% 60% 66%
------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
10
<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 August 31, to August 31,
1997(2) 1996(2) 1995(2) 1994(2) 1993(2)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $10.91 $ 9.52 $ 8.27 $ 8.62 $ 8.30
------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.01) (.01) -- (.01) --
Net Gains or Losses on
Securities (both realized and
unrealized) 4.80 1.95 1.56 .42 .32
------------------------------------------------------------------
Total From Investment
Operations 4.79 1.94 1.56 .41 .32
------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- -- -- (.01) --
Distributions (from net capital
gains) (.15) (.55) (.31) (.75) --
------------------------------------------------------------------
Total Distributions (.15) (.55) (.31) (.76) --
------------------------------------------------------------------
Net Asset Value, End of Year $15.55 $10.91 $ 9.52 $ 8.27 $ 8.62
------------------------------------------------------------------
Total Return(3) +44.32% +21.32% +19.69% +4.77% +3.86%(4)
------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $718.1 $195.4 $111.5 $135.6 $ 118.5
------------------------------------------------------------------
Ratio of Gross Expenses to
Average
Net Assets(5) 1.17% 1.28% -- -- --
------------------------------------------------------------------
Ratio of Net Expenses to
Average
Net Assets 1.16%(8) 1.28%(8) 1.35%(8) 1.36% 1.51%(6)
------------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.08%)(8) (.18%)(8) (.16%)(8) (.20%) (.08%)(6)
------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- --
------------------------------------------------------------------
<CAPTION>
Period From
September
27,
1988(10) to
Year Ended July 31, July 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 7.10 $ 6.41 $ 5.78 $6.25 $ 5.00
Income From Investment Operations
Net Investment Income (Loss) .01 (.01) .03 .02 .02
Net Gains or Losses on
Securities (both realized and
unrealized) 1.19 .80 .64 (.35) 1.24
Total From Investment
Operations 1.20 .79 .67 (.33) 1.26
Less Distributions
Dividends (from net investment
income) -- (.01) (.04) (.02) (.01)
Distributions (from net capital
gains) -- (.09) -- (.12) --
Total Distributions -- (.10) (.04) (.14) (.01)
Net Asset Value, End of Year $ 8.30 $ 7.10 $ 6.41 $5.78 $ 6.25
Total Return(3) +16.90% +12.38% +11.80% -5.33% +25.24%(4)
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $113.5 $ 72.2 $ 27.8 $20.8 $ 18.1
Ratio of Gross Expenses to
Average
Net Assets(5) -- -- -- -- --
Ratio of Net Expenses to
Average
Net Assets 1.65% 2.00%(8) 2.00%(8) 2.00%(8) 2.00%(6)(8)
Ratio of Net Investment Income
(Loss) to Average Net Assets .15% (.14%)(8) .60%(8) .41%(8) .51%(6)(8)
Portfolio Turnover Rate(7) 54% 23% 46% 37% 10%
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
11
<PAGE>
FINANCIAL HIGHLIGHTS(9)
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. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
November 1, 1989 Year Ended
Year Ended August 31, to August 31, October 31,
1997(2) 1996(2) 1995(2) 1994(2) 1993(2) 1992 1991 1990 1989 1988
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year $ 23.78 $ 23.61 $ 19.52 $ 18.57 $ 15.73 $14.90 $11.90 $13.20 $12.31 $11.08
---------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income .15 .31 .27 .24 .30 .29 .32 .31 .35 .35
Net Gains or Losses on
Securities (both realized
and unrealized) 8.96 .90 4.30 1.41 3.45 1.71 3.20 (1.36) 2.08 2.55
---------------------------------------------------------------------------------------------------
Total From Investment
Operations 9.11 1.21 4.57 1.65 3.75 2.00 3.52 (1.05) 2.43 2.90
---------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.24 ) (.28 ) (.25 ) (.30 ) (.25 ) (.26) (.35) (.25) (.36) (.36)
Distributions (from net
capital gains) (1.24 ) (.76 ) (.23 ) (.40 ) (.66 ) (.91) (.17) -- (1.18) (1.31)
---------------------------------------------------------------------------------------------------
Total Distributions (1.48 ) (1.04 ) (.48 ) (.70 ) (.91 ) (1.17) (.52) (.25) (1.54) (1.67)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 31.41 $ 23.78 $ 23.61 $ 19.52 $ 18.57 $15.73 $14.90 $11.90 $13.20 $12.31
---------------------------------------------------------------------------------------------------
Total Return(3) +39.69% +5.27% +24.06% +9.12% +24.43% +13.88% +30.48% -8.08%(4) +19.91% +26.79%
---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $6,475.1 $4,905.2 $3,947.5 $2,416.5 $1,787.0 $802.9 $628.6 $496.3 $569.3 $539.1
---------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to
Average Net Assets(5) .80% .82% -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------
Ratio of Net Expenses to
Average Net Assets .80% .82% .80% .80% .81% .82% .84% .86%(6) .84% .84%
---------------------------------------------------------------------------------------------------
Ratio of Net Investment
Income to Average Net
Assets .55% 1.37% 1.40% 1.36% 2.01% 1.90% 2.46% 2.89%(6) 2.59% 2.80%
---------------------------------------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- 27% 41% 59% 58% 52% 73%
---------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
12
<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
June 15, 1994(10)
Year Ended August 31, to August 31,
1997 1996 1995 1994
-----------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $11.91 $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) 2.94 1.24 .21 .45
-----------------------------------------------
Total From Investment Operations 2.94 1.25 .27 .46
-----------------------------------------------
Less Distributions
Dividends (from net investment income) (.02) (.04) (.03) --
-----------------------------------------------
Net Asset Value, End of Year $14.83 $11.91 $10.70 $10.46
-----------------------------------------------
Total Return(3) +24.71% +11.73% +2.60% +4.60%(4)
-----------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $115.4 $ 57.0 $ 26.4 $ 6.2
-----------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) 1.70% 1.70% -- --
-----------------------------------------------
Ratio of Net Expenses to Average Net Assets(8) 1.70% 1.70% 1.70% 1.70%(6)
-----------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets(8) (.02%) .24% .73% .57%(6)
-----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
13
<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
Year Ended August 31, December 31,
1997(2) 1996(2) 1995(2) 1994(2) 1993(2) 1992 1991 1990(11) 1989 1988
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $11.94 $13.27 $11.28 $12.94 $11.59 $11.55 $ 9.46 $10.44 $ 9.04 $ 7.81
----------------------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.03) (.04) -- .02 .02 .06 .13 .10 .18 .17
Net Gains or Losses on
Securities
(both realized and unrealized) 4.26 (.33) 2.70 .40 3.06 .49 2.27 (1.08) 2.45 1.26
----------------------------------------------------------------------------------------------
Total From Investment
Operations 4.23 (.37) 2.70 .42 3.08 .55 2.40 (.98) 2.63 1.43
----------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- -- (.01) (.02) (.05) (.11) (.16) -- (.18) (.16)
Distributions (from net capital
gains) (1.66) (.96) (.70) (2.06) (1.68) (.40) (.15) -- (1.05) (.04)
----------------------------------------------------------------------------------------------
Total Distributions (1.66) (.96) (.71) (2.08) (1.73) (.51) (.31) -- (1.23) (.20)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $14.51 $11.94 $13.27 $11.28 $12.94 $11.59 $11.55 $ 9.46 $10.44 $ 9.04
----------------------------------------------------------------------------------------------
Total Return(3) +38.75% -2.91% +26.00% +3.49% +27.76% +4.74% +26.17% -9.39%(4) +29.09% +18.31%
----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $570.4 $516.2 $612.0 $510.3 $537.6 $400.7 $429.0 $355.6 $404.7 $341.7
----------------------------------------------------------------------------------------------
Ratio of Gross Expenses to
Average
Net Assets(5) .99% .98% -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------
Ratio of Net Expenses to
Average
Net Assets .98% .98% .98% .96% 1.04% 1.07% 1.09% 1.14%(6) 1.12% 1.18%
----------------------------------------------------------------------------------------------
Ratio of Net Investment Income
(Loss)
to Average Net Assets (.20%) (.27%) .03% .16% .20% .57% 1.28% 1.44%(6) 1.60% 1.55%
----------------------------------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- 76%(6) 83% 78% 91%(6) 77% 70%
----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
14
<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
July 1, 1993
Year Ended August 31, to August 31, Year Ended June 30,
1997(2) 1996(2) 1995(2) 1994(2) 1993(2) 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 23.88 $ 23.72 $ 21.32 $ 22.46 $ 20.98 $ 18.96 $17.80 $18.11 $19.04 $16.84 $20.83
--------------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income .19 .22 .17 .10 .02 .16 .23 .50 .83 .71 .55
Net Gains or Losses
on Securities (both
realized and
unrealized) 10.36 2.84 3.94 1.07 1.46 3.84 2.05 .27 .68 2.14 (1.05)
--------------------------------------------------------------------------------------------------------
Total From
Investment
Operations 10.55 3.06 4.11 1.17 1.48 4.00 2.28 .77 1.51 2.85 (.50)
--------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.22) (.20) (.11) (.11) -- (.19) (.34) (.74) (.76) (.65) (.70)
Distributions (from
net capital gains) (2.61) (2.70) (1.60) (2.20) -- (1.79) (.78) (.34) (1.68) -- (2.79)
--------------------------------------------------------------------------------------------------------
Total Distributions (2.83) (2.90) (1.71) (2.31) -- (1.98) (1.12) (1.08) (2.44) (.65) (3.49)
--------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Year $ 31.60 $ 23.88 $ 23.72 $ 21.32 $ 22.46 $ 20.98 $18.96 $17.80 $18.11 $19.04 $16.84
--------------------------------------------------------------------------------------------------------
Total Return(3) +47.11% +13.86% +21.53% +5.56% +7.05%(4) +21.78% +13.23% +5.14% +8.11% +17.59% -2.73%
--------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Year
(in millions) $3,103.7 $1,871.9 $1,564.0 $1,335.9 $1,185.1 $1,085.6 $852.9 $823.5 $793.8 $743.0 $718.8
--------------------------------------------------------------------------------------------------------
Ratio of Gross
Expenses to
Average Net
Assets(5) .81% .84% -- -- -- -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------
Ratio of Net Expenses
to
Average Net Assets .81% .84% .83% .81% .84%(6) .86% .86% .88% .91% .97% .95%
--------------------------------------------------------------------------------------------------------
Ratio of Net
Investment Income
to Average Net
Assets .72% .93% .83% .48% .59%(6) .83% 1.23% 2.84% 4.53% 3.96% 3.28%
--------------------------------------------------------------------------------------------------------
Portfolio Turnover
Rate(7) -- -- -- -- 6% 82% 97% 161% 136% 157% 210%
--------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
15
<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, 1994(10)
Year Ended August 31, to August 31,
1997 1996 1995 1994
------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.88 $11.84 $10.07 $10.00
------------------------------------------------
Income From Investment Operations
Net Investment Income .03 .02 .03 .01
Net Gains or Losses on Securities (both realized and unrealized) 4.33 2.35 1.76 .06
------------------------------------------------
Total From Investment Operations 4.36 2.37 1.79 .07
------------------------------------------------
Less Distributions
Dividends (from net investment income) (.03) (.02) (.02) --
Distributions (from net capital gains) (.42) (.31) -- --
------------------------------------------------
Total Distributions (.45) (.33) (.02) --
------------------------------------------------
Net Asset Value, End of Year $17.79 $13.88 $11.84 $10.07
------------------------------------------------
Total Return(3) +31.96% +20.19% +17.82% +0.70%(4)
------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 59.7 $ 32.9 $ 8.2 $ 2.3
------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) 1.49% 1.50% -- --
------------------------------------------------
Ratio of Net Expenses to Average Net Assets(8) 1.48% 1.50% 1.51% 1.50%(6)
------------------------------------------------
Ratio of Net Investment Income to Average Net Assets(8) .23% .19% .36% .50%(6)
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
16
<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) 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 and Neuberger&Berman SOCIALLY RESPONSIVE Fund, total
return would have been lower if N&B Management had not reimbursed certain
expenses. For Neuberger&Berman GENESIS Fund, total return would have been
lower if N&B Management had not waived a portion of the management fee.
4) Not annualized.
5) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements. For Neuberger&Berman
GENESIS Fund, Neuberger&Berman INTERNATIONAL Fund, and Neuberger&Berman
SOCIALLY RESPONSIVE Fund, these ratios reflect the reimbursement of certain
expenses or the waiver of a portion of the management fee.
6) Annualized.
7) 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>
Period from
August 2, 1993
Year Ended August 31, to August 31,
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Neuberger&Berman FOCUS Portfolio 63% 39% 36% 52% 4%
Neuberger&Berman GENESIS Portfolio 18% 21% 37% 63% 3%
Neuberger&Berman GUARDIAN Portfolio 50% 37% 26% 24% 3%
Neuberger&Berman MANHATTAN Portfolio 89% 53% 44% 50% 3%
Neuberger&Berman PARTNERS Portfolio 77% 96% 98% 75% 8%
</TABLE>
17
<PAGE>
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, 1996, and 1997 were 5%, 41%, 45%, and
37%, respectively. The portfolio turnover rates for Neuberger&Berman SOCIALLY
RESPONSIVE Portfolio for the period March 14, 1994 (commencement of
operations) to August 31, 1994 and the years ended August 31, 1995, 1996, and
1997 were 14%, 58%, 53%, and 51%, respectively.
The average commission rates paid by each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended August 31,
1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
Neuberger&Berman FOCUS Portfolio $ 0.0555 $ 0.0578
Neuberger&Berman GENESIS Portfolio $ 0.0565 $ 0.0576
Neuberger&Berman GUARDIAN Portfolio $ 0.0538 $ 0.0580
Neuberger&Berman INTERNATIONAL Portfolio $ 0.0161 $ 0.0150
Neuberger&Berman MANHATTAN Portfolio $ 0.0573 $ 0.0373
Neuberger&Berman PARTNERS Portfolio $ 0.0522 $ 0.0494
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio $ 0.0568 $ 0.0587
</TABLE>
8) After reimbursement of expenses by N&B Management. Had N&B Management not
undertaken such action the annualized ratios of net expenses and net
investment income (loss) to average daily net assets would have been:
<TABLE>
<CAPTION>
Period from
Year Ended September 27, 1988
July 31, to July 31,
NEUBERGER&BERMAN GENESIS FUND 1991 1990 1989
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 2.16% 2.40% 3.79%
-------------------------------------------
Net Investment Income (Loss) .44% .01% (1.28%)
-------------------------------------------
</TABLE>
Had Neuberger&Berman GENESIS Fund not reimbursed N&B Management, the
annualized ratios of net expenses and net investment income to average daily
net assets would have been:
<TABLE>
<CAPTION>
Year Ended
July 31,
1992
- ------------------------------------------------------------
<S> <C>
Net Expenses 1.65%
-----
Net Investment Income .21%
-----
</TABLE>
18
<PAGE>
Had N&B Management not waived a portion of the management fee borne
directly by Neuberger&Berman GENESIS Portfolio, the annualized ratios of net
expenses and net investment income (loss) to average daily net assets would
have been:
<TABLE>
<CAPTION>
Year Ended
August 31,
1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.26% 1.38% 1.38%
----------------------------
Net Investment Loss (.18%) (.28%) (.19%)
----------------------------
</TABLE>
After reimbursement of expenses by N&B Management. Had N&B Management not
undertaken such action, the annualized ratios of net expenses and net
investment income (loss) to average daily net assets would have been:
<TABLE>
<CAPTION>
Period from
Year Ended June 15, 1994
August 31, to August 31,
NEUBERGER&BERMAN INTERNATIONAL FUND 1996 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 2.28% 2.31% 2.50%
------------------------------------
Net Investment Income (Loss) (.34%) .12% (.23%)
------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
Year Ended March 16, 1994
August 31, to August 31,
NEUBERGER&BERMAN SOCIALLY RESPONSIVE FUND 1996 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.69% 2.50% 2.50%
------------------------------------
Net Investment Income (Loss) .00% (.63%) (.50%)
------------------------------------
</TABLE>
Had Neuberger&Berman INTERNATIONAL Fund not repaid N&B Management for
certain expenses previously reimbursed by N&B Management, the annualized
ratios of net expenses and net investment income (loss) to average daily net
assets would have been:
<TABLE>
<CAPTION>
Year Ended
August 31,
1997
- ------------------------------------------------------------
<S> <C>
Net Expenses 1.69%
-----
Net Investment Loss (.01%)
-----
</TABLE>
19
<PAGE>
Had Neuberger&Berman SOCIALLY RESPONSIVE Fund not repaid N&B Management
for certain expenses previously reimbursed by N&B Management, the annualized
ratios of net expenses and net investment income to average daily net assets
would have been:
<TABLE>
<CAPTION>
Year Ended
August 31,
1997
- ------------------------------------------------------------
<S> <C>
Net Expenses 1.20%
-----
Net Investment Income .51%
-----
</TABLE>
9) Adjusted for a 200% stock dividend effective January 20, 1993.
10) The date investment operations commenced.
11) For the eight-month period ended August 31, 1990.
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 55.
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
21
<PAGE>
the end of the Fund's most recent 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, or (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).
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, are out-of-sync 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.
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. 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
22
<PAGE>
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.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 27.
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 has paid its shareholders an income dividend every quarter and a
capital gain distribution every year since its 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 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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<PAGE>
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"), swaps, 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, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 27 and "Description of Investments" on page 55.
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 can invest in securities of small-,
medium-, and large-capitalization companies believed by N&B Management to have
the maximum potential for long-term capital appreciation. The portfolio managers
currently intend to focus primarily on the securities of medium-capitalization
companies ("mid-cap companies"). The portfolio managers do not seek to invest in
securities that pay dividends or interest, and any such income is incidental.
The Portfolio uses a growth-oriented 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 securities likely to be purchased by other Portfolios. In
selecting stocks, N&B Management considers, among other factors, a company's
financial strength, competitive position, projected future earnings, management
strength and experience, reasonable valuation and other investment criteria. The
Portfolio also diversifies its investments among companies and industries.
24
<PAGE>
The Portfolio's growth investment program involves greater risks and share
price volatility than programs that invest in more undervalued securities.
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.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 27.
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.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 27.
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
25
<PAGE>
accordance with the Social Policy, and at least 65% of its total assets are
invested in equity securities. The Portfolio expects that substantially all of
its equity securities will be selected in accordance with the Social Policy.
The Portfolio may also engage in portfolio management techniques that are not
subject to the Social Policy, such as 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.
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
26
<PAGE>
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 5% of its total annual revenue from (i)
manufacturing and selling alcohol and/or tobacco, (ii) sales in or services
related to gambling, or (iii) 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 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.
Special Considerations of Small-
and Mid-Cap Company Stocks
- ----------------------------------------------------------------------
Investments in small- and mid-cap company stocks may present greater
opportunities for capital appreciation than investments in stocks of
large-capitalization companies ("large-cap companies"). However, small- and
mid-cap company stocks may have higher risk and volatility. These stocks
generally are not as broadly traded as large-cap company stocks and their prices
thus may fluctuate more widely and abruptly. Any such movements in stocks held
by a Portfolio would be reflected in the corresponding Fund's net asset value.
Small- and mid-cap company stocks also are less researched than large-cap
company stocks and are often overlooked in the market.
27
<PAGE>
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. See "Notes to
Financial Highlights" for more information about the portfolio turnover rate of
each Portfolio. 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 indirectly by the corresponding Fund) and a possible increase in realized
short-term capital gains or losses. See "Dividends, Other Distributions, and
Taxes" on page 44 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).
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 amplify 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.
28
<PAGE>
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.
29
<PAGE>
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 evens 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 for
the 1-year, 5-year, 10-year and since inception periods ended August 31, 1997.
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-Registered Trademark- Index, Neuberger&Berman INTERNATIONAL Fund, which is
compared with the EAFE-Registered Trademark- Index and Neuberger&Berman
MANHATTAN Fund, which is compared with the Russell Midcap Growth 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-Registered Trademark- Index, representing about 10% of the Russell 3000's
total market capitalization. The EAFE-Registered Trademark- Index is the Morgan
Stanley Capital International Europe, Australasia, Far East Index, an unmanaged
index of non-U.S. equity market performance. The Russell Midcap Growth-TM- Index
measures the performance of those Russell Midcap Index companies with higher
price-to-book ratios and higher forecasted growth values. The Russell Midcap-TM-
Index measures the performance of the 800 smallest companies in the Russell
1000-Registered Trademark- Index, which represents approximately 35% of the
total market capitalization of the Russell 1000 Index (which in turn consists of
the 1,000 largest U.S. companies based on market capitalization). 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.
30
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED AUGUST 31, 1997
<TABLE>
<CAPTION>
NEUBERGER&BERMAN 10 SINCE INCEPTION
EQUITY FUNDS 1 YEAR 5 YEARS YEARS INCEPTION DATE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOCUS FUND +43.92% +21.91% +14.38% +12.43% 10/19/55
GUARDIAN FUND +39.69 +19.89 +14.44 +13.43 6/1/50
PARTNERS FUND +47.11 +22.46 +14.33 +18.67 1/20/75*
SOCIALLY RESPONSIVE FUND +31.96 N/A N/A +20.03 3/16/94
S&P "500" INDEX +40.73 +19.78 +13.85 N/A N/A
MANHATTAN FUND +38.75 +17.55 +11.48 +17.50 3/1/79*
RUSSELL MIDCAP GROWTH INDEX +31.23 +18.56 +13.18 N/A N/A
GENESIS FUND +44.32 +22.22 N/A +16.69 9/27/88
RUSSELL 2000 INDEX +28.96 +19.36 N/A +14.57** N/A
INTERNATIONAL FUND +24.71 N/A N/A +13.33 6/15/94
EAFE-REGISTERED TRADEMARK- INDEX +9.36 N/A N/A +6.82** N/A
</TABLE>
*THE DATES WHEN N&B MANAGEMENT BECAME INVESTMENT ADVISER TO THESE FUNDS.
**FROM INCEPTION DATE OF THE FUND LISTED IMMEDIATELY ABOVE.
Prior to November 1991, the investment policies 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. Neuberger&Berman
MANHATTAN Portfolio has the ability to invest in the stocks of small-, medium-
and large-capitalization companies. Prior to July 1997, Neuberger&Berman
MANHATTAN Portfolio invested in the stocks of companies from each of these
capitalization levels. In July 1997, Neuberger&Berman MANHATTAN Portfolio
changed its focus to the stocks of medium-capitalization companies. Therefore,
performance results for Neuberger&Berman MANHATTAN Fund prior to July 1997 may
be more appropriately compared to the S&P "500" Index. 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) performed year by year, in terms of an annual per share total return for
each of the last ten calendar years (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, 1997).
31
<PAGE>
TOTAL RETURNS FOR CALENDAR YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
NEUBERGER&BERMAN
EQUITY FUNDS 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOCUS FUND +0.6 % +16.5 % +29.8 % -5.9 % +24.7 % +21.1 % +16.3 % +0.9 % +36.2 % +16.2 %
GUARDIAN FUND -1.0 +28.0 +21.5 -4.7 +34.3 +19.0 +14.5 +0.6 +32.1 +17.9
MANHATTAN FUND +0.4 +18.3 +29.1 -8.1 +30.9 +17.8 +10.0 -3.6 +31.0 +9.9
PARTNERS FUND +4.3 +15.5 +22.8 -5.1 +22.4 +17.5 +16.5 -1.9 +35.2 +26.5
SOCIALLY RESPONSIVE FUND N/A N/A N/A N/A N/A N/A N/A N/A +38.9 +18.5
S&P "500" INDEX +5.2 +16.5 +31.6 -3.1 +30.3 +7.6 +10.0 +1.4 +37.5 +22.9
GENESIS FUND N/A N/A +17.3 -16.2 +41.6 +15.6 +13.9 -1.8 +27.3 +29.9
RUSSELL 2000 INDEX N/A N/A +16.3 -19.5 +46.0 +18.4 +18.9 -1.8 +28.5 +16.5
INTERNATIONAL FUND N/A N/A N/A N/A N/A N/A N/A N/A +7.9 +23.7
EAFE-REGISTERED TRADEMARK-
INDEX N/A N/A N/A N/A N/A N/A N/A N/A +11.6 +6.4
</TABLE>
TOTAL RETURN INFORMATION. You can obtain current performance information
about each Fund by calling N&B Management at 800-877-9700.
32
<PAGE>
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 calculated as of the
close of regular trading on the NYSE, usually 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 accept or reject purchase orders or
waive the minimum investment requirements.
By Mail
- ----------------------------------------------------------------------
Send your check 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 for a minimum
of $1,000. For each ADDITIONAL PURCHASE, please send at least $100 for shares of
any Fund. YOUR CHECK TO OPEN A NEW ACCOUNT MUST BE MADE PAYABLE ON ITS FACE TO
"NEUBERGER& BERMAN FUNDS." GENERALLY, CHECKS ARE NOT ACCEPTED UNLESS MADE
PAYABLE TO "NEUBERGER&BERMAN FUNDS." N&B MANAGEMENT RESERVES THE RIGHT TO ACCEPT
CERTAIN CHECKS FOR SUBSEQUENT INVESTMENTS MADE PAYABLE TO THE REGISTERED
OWNER(S) OF THOSE ACCOUNTS.
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
33
<PAGE>
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.
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
- ----------------------------------------------------------------------
/ / You must pay for your shares in U.S. dollars by check (drawn on a U.S.
bank), by bank or federal funds wire transfer, or by electronic bank
transfer; cash cannot be accepted.
/ / 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."
/ / 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.
/ / 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
34
<PAGE>
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.
/ / 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. These institutions may have additional requirements to
buy shares. Some of these institutions (or their designees) may be
authorized to accept purchase orders on behalf of the Funds. A Fund will
be deemed to have received your purchase order when an authorized
institution (or its designee) accepts the order. Your order will receive
the next price calculated after the order has been accepted by the
authorized institution (or its designee). You should consult your
institution to determine the time by which it must receive your order for
you to purchase Fund shares at that day's price.
/ / 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.
35
<PAGE>
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
calculated as of the close of regular trading on the NYSE, usually 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. These institutions may have
additional requirements to sell shares. Some of these institutions (or their
designees) may be authorized to accept redemption orders on behalf of the Funds.
A Fund will be deemed to have received your redemption order when an authorized
institution (or its designee) accepts the order. Your order will receive the
next price calculated after the order has been accepted by the authorized
institution (or its designee). You should consult your institution to determine
the time by which it must receive your order for you to sell Fund shares at that
day's price.
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
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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 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 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 N&B Management or 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."
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Other Information
- ----------------------------------------------------------------------
/ / Usually, redemption proceeds will be mailed on the next business day
following the receipt of a proper redemption request, but in any case
within three business days of such receipt (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.
/ / Each Fund may delay paying for any redemption until it is reasonably
satisfied that the check used to buy shares has cleared, which may take
up to 15 days after the purchase date. So if you plan to sell shares
shortly after buying them, you may want to pay for the purchase with a
certified check or by wire transfer.
/ / Each Fund may suspend redemptions or postpone payments on days when the
NYSE is closed, when trading on the NYSE is restricted, or as permitted
by the SEC.
/ / 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.
/ / No interest will accrue on amounts represented by uncashed redemption
checks.
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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, 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.
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<PAGE>
Please note the following about the exchange privilege:
/ / You can exchange shares ONLY between accounts registered in the same
name, address, and taxpayer ID number.
/ / An exchange order cannot be modified or canceled.
/ / You can exchange only into a fund whose shares are eligible for sale in
your state under applicable state securities laws.
/ / An exchange may have tax consequences for you.
/ / Because excessive trading (including short-term "market timing" trading)
can hurt 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.
/ / 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, although
distributions from these plans generally are taxable. In the case of so-called
"Roth IRAs," available to certain taxpayers beginning in 1998, contributions are
not tax deductible but distributions from the plan may be tax-free. 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-
41
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sharing and money purchase pension plans, section 401(k) plans, section
403(b)(7) accounts, and 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.
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. You can access fund prices, informative articles and
interactive worksheets to assist you in financial planning, and the prospectuses
of certain other Neuberger&Berman Funds.
42
<PAGE>
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 on that day. 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 on that day. 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.
If N&B Management believes that the price of a security obtained under a
Portfolio's valuation procedures (as described above) does not represent the
amount that the Portfolio reasonably expects to receive on a current sale of the
security, the Portfolio will value the security based on a method that the
trustees of the corresponding Managers Trust believe accurately reflects fair
value.
43
<PAGE>
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), any net capital gains
from investment transactions, and any net 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 other 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 Fund application.
ALL DISTRIBUTIONS IN CASH. You may elect to receive all dividends and other
distributions in cash, by checking that election box on your Fund 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. No interest will accrue on amounts
represented by uncashed dividend or other distribution checks. 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
- ----------------------------------------------------------------------
Your investment has certain tax consequences, depending on the type of your
account. If you have a qualified RETIREMENT ACCOUNT, taxes are deferred.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax and
generally also are 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
44
<PAGE>
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 any other 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. Under the Taxpayer Relief Act of 1997, different maximum tax rates apply
to a Fund's distributions of net capital gain depending on its corresponding
Portfolio's holding period.
Every January, your Fund will send you a statement showing the amount of
distributions paid in cash or reinvested in Fund shares for the previous year.
You will also receive information showing (1) the portion, if any, of those
distributions that generally is not subject to state and local income taxes in
certain states and (2) capital gain distributions broken down in a manner that
will enable you or your tax adviser to determine the appropriate rate of capital
gains tax on such distributions.
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 generally 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. Capital gain on shares held for more than one year
will be long-term capital gain, in which event it will be subject to federal
income tax at the capital gains rates applicable to your holding period and tax
bracket.
When you sell Fund shares, you will receive a confirmation statement showing
the number of shares you sold and the price.
OTHER. Every January, you will receive a consolidated transaction statement
for the previous year. Be sure to keep your statements; they will be useful to
you and your tax preparer in determining the capital gains and losses from your
redemptions.
Each Fund intends to continue to qualify for treatment as a regulated
investment company for federal income tax purposes so that it will not have to
pay federal income tax on that part of its taxable income and realized gains
that it distributes to its shareholders.
45
<PAGE>
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.
46
<PAGE>
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.
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 Portfolios, N&B
Management currently serves as investment manager of other mutual funds.
Neuberger&Berman acts as sub-adviser for the Portfolios and other mutual funds
managed by N&B Management. The mutual funds managed by N&B Management and
Neuberger&Berman had aggregate net assets of approximately $21.2 billion as of
September 30, 1997.
As sub-adviser, Neuberger&Berman furnishes N&B Management with investment
recommendations and research without added cost to the Portfolios. N&B
Management compensates Neuberger&Berman for its costs in connection with those
services. 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 $54.1 billion of assets as of
September 30, 1997. 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.
Unless otherwise indicated, the following is five-year 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 and Kevin L. Risen are co-managers of the
Portfolios. Mr.
47
<PAGE>
Simons and Mr. Risen 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 since 1988, and for Neuberger&Berman
GUARDIAN Portfolio and Neuberger&Berman GUARDIAN Fund since 1981. Mr. Risen has
had those responsibilities since 1996, and during the year prior thereto, he was
a portfolio manager for Neuberger&Berman. He was a research analyst at
Neuberger&Berman from 1992 to 1995.
Neuberger&Berman GENESIS Portfolio -- Judith M. Vale and Robert W. D'Alelio
are co-managers of the Portfolio. Ms. Vale and Mr. D'Alelio have been senior
members of Neuberger&Berman's Small Cap Group since 1992 and 1996, respectively,
and are both Vice Presidents of N&B Management. Ms. Vale is a principal of
Neuberger&Berman. Ms. Vale and Mr. D'Alelio have been primarily responsible for
the day-to-day management of Neuberger&Berman GENESIS Portfolio since February
1994 and July 1997, respectively. Mr. D'Alelio was a senior portfolio manager
for another investment management group from 1992 to 1996.
Neuberger&Berman INTERNATIONAL Portfolio -- Valerie Chang is manager of the
Portfolio. Ms. Chang, an Assistant Vice President of N&B Management and an
assistant portfolio manager for Neuberger&Berman INTERNATIONAL Portfolio from
December 1996 until June 1997, has been responsible for the management of
Neuberger&Berman INTERNATIONAL Portfolio since June 1997. She served in the
investment banking division of Salomon Brothers and Morgan Stanley & Co., Inc.
from 1993 until 1995 and as a senior securities analyst for TIAA/CREF from 1995
until December 1996.
Neuberger&Berman MANHATTAN Portfolio -- Jennifer K. Silver and Brooke A. Cobb
are co-managers of the Portfolio. Ms. Silver is Director of the Neuberger&
Berman Growth Equity Group, and both she and Mr. Cobb are Vice Presidents of N&B
Management. Ms. Silver is a principal of Neuberger&Berman. Ms. Silver and Mr.
Cobb have had responsibility for Neuberger&Berman MANHATTAN Portfolio since July
1997. Previously, Ms. Silver was a portfolio manager for several large mutual
funds managed by a prominent investment adviser. Mr. Cobb was the chief
investment officer for an investment advisory firm managing individual accounts
from 1995 to 1997 and, from 1992 to 1995, a portfolio manager of a large mutual
fund managed by a prominent investment adviser.
Neuberger&Berman PARTNERS Portfolio -- Michael M. Kassen and Robert I.
Gendelman are co-managers of the Portfolio. Mr. Kassen and Mr. Gendelman are
Vice Presidents of N&B Management and principals of Neuberger&Berman. Mr. Kassen
and Mr. Gendelman have had responsibility for Neuberger&Berman PARTNERS
Portfolio and Neuberger&Berman PARTNERS Fund since June 1990 and October
48
<PAGE>
1994, respectively. Mr. Kassen has been an employee of N&B Management since
1990. Mr. Gendelman was a portfolio manager for another mutual fund manager from
1992 to 1993.
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio -- Janet Prindle is manager of
the Portfolio and Robert Ladd and Ingrid Saukaitis are associate managers of the
Portfolio. Ms. Prindle, a Vice President of N&B Management since November 1993,
has been a principal of Neuberger&Berman since 1983. Ms. Prindle has been
responsible for Neuberger&Berman SOCIALLY RESPONSIVE Portfolio since its
inception in March 1994. 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. Mr. Ladd and Ms.
Saukaitis have had responsibility for Neuberger&Berman SOCIALLY RESPONSIVE
Portfolio since December 1997. During the five years prior thereto, Mr. Ladd was
a portfolio manager for Neuberger& Berman. Ms. Saukaitis has been Director of
Social Research for Neuberger&Berman since February 1997. From 1995 to January
1997 she was a project director for a non-profit group that provided social
research on companies to the investment industry. Both Mr. Ladd and Ms.
Saukaitis are Assistant Vice Presidents of N&B Management.
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. 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
49
<PAGE>
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.
N&B Management provides administrative services to each Fund that include
furnishing facilities and personnel for the Fund and performing certain
shareholder, shareholder-related, and other services. For such administrative
services, each Fund pays N&B Management a fee at the annual rate of 0.26% 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.
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 the
"Other Expenses" described on page 7.
See "Expense Information -- Annual Fund Operating Expenses" for information
about how these fees and expenses may affect the value of your investment.
During its 1997 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:
<TABLE>
<S> <C>
Neuberger&Berman FOCUS Fund 0.76%
Neuberger&Berman GENESIS Fund 1.07%
Neuberger&Berman GUARDIAN Fund 0.70%
Neuberger&Berman INTERNATIONAL Fund 1.11%
Neuberger&Berman MANHATTAN Fund 0.79%
Neuberger&Berman PARTNERS Fund 0.72%
Neuberger&Berman SOCIALLY RESPONSIVE Fund 0.81%
</TABLE>
N&B Management has voluntarily undertaken to reimburse Neuberger&Berman
INTERNATIONAL Fund for its Total Operating Expenses which exceed 1.70% per annum
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<PAGE>
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 Total Operating Expenses
that N&B Management reimbursed to the Fund through December 31, 1996, so long as
the Fund's Total Operating Expenses during that period do not exceed the above
expense limitation. N&B Management may terminate its undertaking by giving at
least sixty days' prior written notice to the Fund. The effect of reimbursement
by N&B Management is to reduce a Fund's expenses and thereby increase its total
return.
During its 1997 fiscal year, each Fund bore aggregate expenses as a
percentage of its average daily net assets as follows:
<TABLE>
<S> <C>
Neuberger&Berman FOCUS Fund 0.86%
Neuberger&Berman GENESIS Fund 1.16%*
Neuberger&Berman GUARDIAN Fund 0.80%
Neuberger&Berman INTERNATIONAL Fund 1.70%**
Neuberger&Berman MANHATTAN Fund 0.98%
Neuberger&Berman PARTNERS Fund 0.81%
Neuberger&Berman SOCIALLY RESPONSIVE Fund 1.48%**
</TABLE>
*REFLECTS THE THEN CURRENT FEE WAIVER.
**REFLECTS RECOUPMENT OF REIMBURSED FEES AS DESCRIBED ABOVE OR IN THE SAI.
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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<PAGE>
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 operating 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
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<PAGE>
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 diversified, open-end management investment companies. Equity
Managers Trust has six separate Portfolios. Global Managers Trust currently has
one operating 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; the Fund thus acquires an indirect interest in those
securities.
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. Series of two other investment
companies, Neuberger& Berman Equity Trust ("N&B Equity Trust") and
Neuberger&Berman Equity Assets ("N&B Equity Assets"), invest all of their
respective net assets in corresponding Portfolios of Equity Managers Trust. N&B
Equity Trust and N&B Equity Assets do not sell their shares directly to members
of the general public.
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. 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 invests in a
Portfolio is 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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<PAGE>
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, RESTRICTED AND RULE 144A SECURITIES. Each Portfolio may invest up
to 15% of its net assets in illiquid securities, which are securities that
cannot be expected to be sold within seven days at approximately the price at
which they are valued. These may include unregistered or other restricted
securities and repurchase agreements maturing in greater than seven days.
Illiquid securities may also include commercial paper under section 4(2) of the
Securities Act of 1933, as amended, and Rule 144A securities (restricted
securities that may be traded freely among qualified institutional buyers
pursuant to an exemption from the registration requirements of the securities
laws); these securities are considered illiquid unless N&B Management, acting
pursuant to guidelines established by the trustees of the Managers Trusts,
determines they are liquid. Generally, foreign securities freely tradable in
their principal market are not considered restricted or illiquid. Illiquid
securities may be difficult for a Portfolio to value or dispose of due to the
absence of an active trading market. The sale of some illiquid securities by the
Portfolios may be subject to legal restrictions which could be costly to the
Portfolios.
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 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.
55
<PAGE>
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 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
56
<PAGE>
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 and may purchase call options in
related closing transactions. When a Portfolio writes a covered call option
against a security, the Portfolio is obligated to sell that security to the
purchaser of the option at a fixed price at any time during a specified period
if the purchaser decides to exercise the option. 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
57
<PAGE>
a different currency if N&B Management believes that there is a pattern of
correlation between the two currencies. 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 purchase and
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 use 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. When the
Portfolio purchases or sells a futures contract it generally becomes obligated
to accept or make delivery of the currencies or securities underlying the
contract at a specified price at a specified future time. The obligations of the
parties under a futures contract are often closed out before the delivery date.
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
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<PAGE>
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 "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. Losses that may arise from certain futures
transactions are potentially unlimited.
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.
Neuberger&Berman INTERNATIONAL Portfolio also 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.
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
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<PAGE>
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 Fund's NAV.
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 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 Fund's NAV 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
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guaranteed by U.S. Government agencies or by instrumentalities of the U.S.
Government, such as the Government National Mortgage Association, Fannie Mae
(formerly, Federal National Mortgage Association), Freddie Mac (formerly,
Federal Home Loan Mortgage Corporation), Student Loan Marketing Association
(commonly known as "Sallie Mae"), 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 Agency mortgage-backed securities. The market prices of U.S.
Government and Agency 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 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 in domestic and foreign
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
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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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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
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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 Limited Maturity Bond Fund
Neuberger&Berman High Yield Bond Fund
(available March 1, 1998)
MUNICIPAL FUNDS
Neuberger&Berman Municipal Money Fund
Neuberger&Berman Municipal Securities Trust
Neuberger&Berman, Neuberger&Berman Management Inc., and the above-named Funds
are registered trademarks or service marks of Neuberger&Berman, LLC or
Neuberger&Berman Management Inc.
- -C- 1997 Neuberger&Berman Management Incorporated.
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Neuberger&Berman Management Inc.-Registered Trademark-
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.
[LOGO] PRINTED ON RECYCLED PAPER
NBEP00031297
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS AND PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 15, 1997
Neuberger & Berman Manhattan Neuberger & Berman Genesis Fund
Fund (and Neuberger & Berman (and Neuberger & Berman
Manhattan Portfolio) Genesis Portfolio)
Neuberger & Berman Focus Neuberger & Berman Guardian Fund
Fund (and Neuberger & Berman (and Neuberger & Berman
Focus Portfolio) Guardian Portfolio)
Neuberger & Berman Partners Neuberger & Berman Socially
Fund (and Neuberger & Responsive Fund (and Neuberger &
Berman Partners Portfolio) Berman 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 15, 1997. 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.
<PAGE>
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
Investment Insight....................................................6
Neuberger & Berman MANHATTAN Portfolio.......................6
Neuberger & Berman GENESIS Portfolio.........................7
Neuberger & Berman FOCUS and Neuberger & Berman
GUARDIAN Portfolios..................................10
Neuberger & Berman PARTNERS Portfolio.......................11
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio............12
Neuberger & Berman INTERNATIONAL Portfolio..................15
Additional Investment Information....................................20
Neuberger & Berman FOCUS Portfolio - Description of
Economic Sectors..........................................43
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio -
Description of Social Policy..............................46
PERFORMANCE INFORMATION.......................................................49
Total Return Computations............................................50
Comparative Information..............................................51
Other Performance Information........................................52
CERTAIN RISK CONSIDERATIONS...................................................53
TRUSTEES AND OFFICERS.........................................................54
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES.............................62
Investment Manager and Administrator.................................62
Sub-Adviser..........................................................67
Investment Companies Managed.........................................68
Management and Control of N&B Management.............................70
DISTRIBUTION ARRANGEMENTS.....................................................71
ADDITIONAL PURCHASE INFORMATION...............................................72
Automatic Investing and Dollar Cost Averaging........................72
ADDITIONAL EXCHANGE INFORMATION...............................................72
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ADDITIONAL REDEMPTION INFORMATION.............................................74
Suspension of Redemptions............................................74
Redemptions in Kind..................................................75
DIVIDENDS AND OTHER DISTRIBUTIONS.............................................75
ADDITIONAL TAX INFORMATION....................................................76
Taxation of the Funds................................................76
Taxation of the Portfolios...........................................77
Taxation of the Funds' Shareholders..................................81
PORTFOLIO TRANSACTIONS........................................................82
Portfolio Turnover...................................................91
REPORTS TO SHAREHOLDERS.......................................................91
ORGANIZATION..................................................................91
CUSTODIAN AND TRANSFER AGENT..................................................92
INDEPENDENT AUDITORS/ACCOUNTANTS..............................................92
LEGAL COUNSEL.................................................................92
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........................92
REGISTRATION STATEMENT........................................................94
FINANCIAL STATEMENTS..........................................................94
Appendix A....................................................................96
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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 objective, 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
<PAGE>
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:
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, 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 investment policies and limitations are
fundamental and apply to all Portfolios unless otherwise indicated:
1. BORROWING (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). 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.
BORROWING (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). The
Portfolio may not borrow money, except that the Portfolio may (i) borrow money
from banks for temporary or emergency purposes and for leveraging or investment
and (ii) enter into reverse repurchase agreements for any purpose; provided that
(i) and (ii) in combination do not exceed 33-1/3% of the value of its total
assets (including the amount borrowed) less liabilities (other than borrowings).
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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 (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). 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.
COMMODITIES (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). 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. 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
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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 (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). None of these Portfolios 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.
REAL ESTATE (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). This
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. 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").
For purposes of the limitations on commodities, the Portfolios
do not consider foreign currencies or forward contracts to be physical
commodities.
The following investment policies and limitations are
non-fundamental and apply to all Portfolios unless otherwise indicated:
1. BORROWING (ALL PORTFOLIOS EXCEPT NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). None of these Portfolios may purchase securities if
outstanding borrowings, including any reverse repurchase agreements, exceed 5%
of its total assets.
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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. 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.
4. FOREIGN SECURITIES (ALL PORTFOLIOS EXCEPT NEUBERGER &
BERMAN INTERNATIONAL Portfolio). None of these Portfolios 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").
5. ILLIQUID SECURITIES. No Portfolio may purchase any security
if, as a result, more than 15% 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.
6. PLEDGING (NEUBERGER & BERMAN GENESIS AND NEUBERGER & BERMAN
GUARDIAN PORTFOLIOS). Neither of these Portfolios may pledge or hypothecate any
of its assets, except that (i) Neuberger & Berman GENESIS 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 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 are
not subject to any restrictions on their ability to pledge or hypothecate assets
and may do so in connection with permitted borrowings.
7. SECTOR CONCENTRATION (NEUBERGER & BERMAN FOCUS PORTFOLIO).
This Portfolio may not invest more than 50% of its total assets in any one
economic sector.
8. INVESTMENTS IN ANY ONE ISSUER (NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). At the close of each quarter of this Portfolio's
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taxable 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 its 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, or securities of another regulated investment company
("RIC").
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. In addition, although the Portfolios do not have policies limiting their
investment in warrants, no Portfolio currently intends to invest in warrants
unless acquired in units or attached to securities.
INVESTMENT INSIGHT
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NEUBERGER & BERMAN MANHATTAN PORTFOLIO
--------------------------------------
The portfolio co-managers of Neuberger & Berman MANHATTAN
Portfolio love surprises - positive earnings surprises that is. Their extensive
research has revealed that historically the stocks of companies that
consistently exceeded consensus earnings estimates tended to be terrific
performers. They screen the mid-cap growth stock universe to isolate stocks
whose most recent earnings have beat the Street's expectations. They then roll
up their sleeves and, through diligent fundamental research, strive to identify
those companies most likely to record a string of positive earnings surprises.
Their goal is to invest today in the fast growing mid-sized companies that will
comprise tomorrow's Fortune 500.
The co-managers explain, "Let us begin by saying we are growth
stock investors in the purest sense of the term. We want to own the stocks of
companies that are growing earnings faster than the average American business
and ideally, faster than the competitors in their respective industries." The
co-managers explain that they are particularly biased towards companies that
have consistently beaten consensus earnings estimates. Their extensive research
has revealed that stocks whose earnings consistently exceeded expectations
offered greater potential for long-term capital appreciation.
The co-managers focus their research efforts on mid-cap stocks
in new and/or rapidly evolving industries. The mid-cap growth sector is less
widely followed by Wall Street analysts and therefore, less efficient than the
large-cap stock market. By focusing on stocks with market capitalizations
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between $500 million and $8 billion, the co-managers believe they are likely to
identify more of their brand of growth stock opportunities. Considering the
currently high valuations of large-cap growth stocks relative to mid-cap growth
stocks with what the co-managers think is comparable or, in many cases, better
earnings growth potential, they believe the Portfolio is particularly well
positioned in today's market. The Portfolio now uses the Russell
Midcap[TRADEMARK] Growth Index as its benchmark. Consistent with the Portfolio's
capitalization parameters and growth style, the co-managers believe this is a
more appropriate benchmark than the S&P "500."
They reiterate, "Let us once again emphasize we are growth
stock investors. But, there is a value component to our discipline as well. We
just define value differently." The kind of fast growth companies the
co-managers favor generally do not trade at below market average price/earnings
ratios. However, they often trade at very reasonable multiples relative to
annual earnings growth rates. Given the choice between two good companies with
comparable earnings growth rates, the co-managers will select the one trading at
the lower multiple to earnings growth.
"We are dispassionate sellers," say the co-managers. "If a
stock does not live up to our earnings expectations or if we believe its
valuation has become excessive, we will sell and direct the assets to another
opportunity we find more attractive. We will maintain a broadly diversified
portfolio rather than heavily concentrating our holdings in just a few of the
fastest growing industry groups."
NEUBERGER & BERMAN GENESIS PORTFOLIO
------------------------------------
Neuberger & Berman GENESIS Fund was established in 1988. A
fund dedicated primarily 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 most of the other equity funds managed by N&B Management.
The Portfolio is comprised of small-cap stocks with solid earnings today, not
just promises for tomorrow.
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 other Portfolios look for in stocks of larger
companies. The portfolio co-managers stick to the areas they understand. They
look for the most persistent earnings growth at the lowest multiple, as well as
for well-established companies with entrepreneurial management and sound
finances. Also considered are catalysts to exposing value, such as management
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changes and new product lines. Often, these are firms that have suffered
temporary setbacks or undergone a restructuring.
Neuberger & Berman GENESIS Portfolio's motto is "boring is
beautiful." Instead of investing in trendy, high-priced stocks that tend to hurt
shareholders on the downside, the Portfolio looks for little-known, solid,
growing companies whose stocks the managers believe are wonderful bargains.
AN INTERVIEW WITH THE PORTFOLIO CO-MANAGER
- ------------------------------------------
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.
Of course, we're not advocating that an investor's portfolio
consist only of small-cap stock funds. It pays to diversify. Let's look back
about 25 years. While past performance cannot indicate future performance,
small-cap stocks outperformed larger-cap stocks 16 of the years from 1971 to
1996, which means larger-cap stocks did better the rest of the time.1/
- -----------------
1/ Results are on a total return basis and include reinvestment of all dividends
and other 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 1996.
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, BILLS AND INFLATION 1997 YEARBOOK[TRADEMARK], Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved.
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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: We 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, we're 100% behind finding GROWING
small-cap companies -- what we believe are highly profitable companies with
solid records and promising futures. So where do we 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. We believe 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, we're "value" managers. Yet we'd like to make
this point clear: Low price-to-earnings multiples, in and of themselves, cannot
justify a "buy" decision. When we search for growing, high-quality small-cap
companies selling at what we feel are bargain prices, we ask ourselves: 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 are used to decide
which small-cap companies make the cut -- and which ones don't?
A: Over the years, we've seen hundreds of small-cap companies
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.
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No small-cap company can grow without having the right people
on board. That's why we spend so much time meeting the CEOs and CFOs of
small-cap companies. While we question the managers about future plans and
strategies, we 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.
NEUBERGER & BERMAN FOCUS AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS
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. The portfolio co-managers begin by
looking for stocks that are selling for less than the managers think they're
worth, a "bottom-up approach." More often than not, such stocks are in a few
economic sectors that are out of favor and are undervalued as a group. The
portfolio co-managers think most cheap stocks deserve to be cheap and their job
is to find the few that don't.
The portfolio co-managers don't pick sectors for Neuberger &
Berman FOCUS Portfolio based on their perception of what the economy is going to
do. They look for stocks with low valuations; often, these stocks will be found
in a particular sector. 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 may 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 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 has served
shareholders well and has 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.
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The portfolio co-managers 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. The managers would rather buy an undervalued stock because
they expect it to become fairly valued than buy one fairly valued and hope it
becomes overvalued. The managers tend to buy stocks that are out of favor,
believing that an investor is not going to get great companies at great
valuations when the market perception is great.
Investors who switch around a lot are not going to benefit
from Neuberger & Berman GUARDIAN Portfolio's approach. They're following the
market -- this Portfolio is looking at fundamentals.
NEUBERGER & BERMAN PARTNERS PORTFOLIO
-------------------------------------
Neuberger & Berman PARTNERS Portfolio's objective is capital
growth. It seeks to make money in good markets and not give up those gains
during rough times.
Investors in Neuberger & Berman PARTNERS Fund typically 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.
The portfolio co-managers 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 their projection of the growth of the company's future
earnings. If the market goes down, those stocks the Portfolio elects to hold,
historically, have gone down less.
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 the portfolio co-managers' eyes? Companies
whose managements 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.
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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 SOCIALLY RESPONSIVE PORTFOLIO
Securities for this Portfolio are selected through a two-phase
process. The first is financial. The portfolio manager analyzes a universe of
companies according to N&B Management's value-oriented philosophy and looks for
stocks which are undervalued for any number of reasons. The manager focuses on
financial fundamentals, including balance sheet ratios and cash flow analysis,
and meets 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. N&B
Management's social research is based on the same kind of philosophy that
governs its financial approach: N&B Management believes that first-hand
knowledge and experience are its most important tools. Utilizing a database, the
portfolio manager does careful, in-depth tracking and analyzes a large number of
companies on some eighty issues in six broad social categories. The manager uses
a wide variety of sources to determine company practices and policies in these
areas. Performance is analyzed in light of knowledge of the issues and of the
best practices in each industry.
The portfolio manager understands that, for many issues and in
many industries, absolute standards are elusive and often counterproductive.
Thus, in addition to quantitative measurements, the manager places value on such
indicators as management commitment, progress, direction, and industry
leadership.
AN INTERVIEW WITH THE PORTFOLIO MANAGER
Q: First things first. How do you begin your stock selection
process?
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
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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 we're 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 we're face to face with a CEO, we're 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?" We've analyzed
companies for over three decades, and we 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 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
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opportunities available. This is a crucial point, and an analogy can be used 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
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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.
NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO
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 30% of that total at the end
of 1996 -- or less than a third 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
- -------------------
2/ Source: Morgan Stanley Capital International.
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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.
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."
The portfolio manager searches the world for investment
opportunities wherever and whenever they arise -- in both developed and emerging
markets. First, the portfolio manager looks for countries with strong potential
for growth. N&B Management believes that the majority of the total return in a
global equity portfolio can be attributed to country allocation. The Portfolio's
stock selection process leads to diversification across more than 20 countries
that the manager believes offer the best value.
Then, the portfolio manager focuses on individual companies.
The portfolio manager looks at the fundamentals. Does the company lead its
market niche? How strong is its management? If the company is small, has it
shown sustained growth? In general, the Portfolio's selection process leads to
investments in mid-sized companies in developed countries and larger, more
established firms in emerging markets such as Hungary and Singapore.
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
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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.
For much of the past two decades, international stocks, on
average, have outperformed U.S. stocks. If you had invested $10,000 in the
international stocks that comprise the EAFE(REGISTERED) Index and the U.S.
stocks that make up the S&P "500" Index twenty years ago, here's what your
investments would have been worth as of December 31, 1996 and August 31, 1997:
<TABLE>
Avg. annual total
Value of investment return3/
<S> <C> <C>
12/31/96 8/31/97 12/31/96 8/31/97
-------- ------- -------- -------
International stocks (EAFE(REGISTERED)) $171,996 $163,875 15.29% 15.01%
Domestic stocks (S&P "500") $150,282 $200,011 14.51% 16.16%
</TABLE>
Of course, these historical results may not continue in the
future. Investors should keep in mind the greater risks inherent in foreign
markets, such as currency exchange fluctuations, interest rates, and potentially
adverse economic and political conditions.
- -------------------
2/ Total return includes reinvestment of all dividends and other distributions.
The EAFE(REGISTERED) Index, also known as the Morgan Stanley Capital
International Europe, Australasia, Far East Index, is an unmanaged index of over
1,000 foreign stock prices and is translated into U.S. dollars. The S&P "500"
Index is an unmanaged index generally considered to be representative of U.S.
stock market activity. Indices do not take into account brokerage commissions or
other fees and expenses of investing in the individual securities that they
track. Data about the performance of these indices are prepared or obtained by
N&B Management.
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AN INTERVIEW WITH THE PORTFOLIO MANAGER
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-third 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.
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
professional managers.
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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.
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
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markets where equity investments have traditionally commanded less attention
than fixed income securities.
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, in our opinion, 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.
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 to have good
knowledge about BOTH the United States and the areas outside the United States
where these companies dominate.
* * * * *
Each Portfolio invests in a wide array of stocks, and no
single stock makes up more than a small fraction of any Portfolio's total
assets. Of course, each Portfolio's holdings are subject to change.
ADDITIONAL INVESTMENT INFORMATION
Some or all of the Portfolios, as indicated below, may make
the following investments, among others, although they may not buy all of the
types of securities or use all of the investment techniques that are described.
REPURCHASE AGREEMENTS (ALL PORTFOLIOS). In a repurchase
agreement, a Portfolio purchases securities from a bank that is a member of the
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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 a repurchase agreement with
a maturity of more than seven days if, as a result, more than 15% 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
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
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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 tradable
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 15% 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, 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.
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<PAGE>
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 amplify 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 the Fund's shareholders 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, nationalization, expropriation, or confiscatory taxation) 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
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<PAGE>
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(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, and (2)
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
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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 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
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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.
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 AND INDICES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "FINANCIAL INSTRUMENTS")
FUTURES CONTRACTS AND OPTIONS THEREON (NEUBERGER & BERMAN
SOCIALLY RESPONSIVE AND INTERNATIONAL PORTFOLIOS). Neuberger & Berman SOCIALLY
RESPONSIVE 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.
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio does not engage in transactions
in futures or options on futures for speculation. This 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
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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.
Neuberger & Berman INTERNATIONAL Portfolio may enter into
futures contracts on currencies, debt securities, interest rates, and securities
indices that are traded on exchanges regulated by the Commodity Futures Trading
Commission ("CFTC") or on foreign exchanges. Trading on foreign exchanges is
subject to the legal requirements of the jurisdiction in which the exchange is
located and 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. The Portfolio
may also purchase and write put and call options on such futures contracts for
BONA FIDE hedging and non-hedging purposes.
Neuberger & Berman INTERNATIONAL Portfolio may sell 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 may purchase
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. To compensate for
differences in historical volatility between positions Neuberger & Berman
INTERNATIONAL 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.
With respect to currency futures, Neuberger & Berman INTERNATIONAL
Portfolio may sell a futures contract or a call option, or it may purchase a put
option on such futures contract, if N&B Management anticipates that exchange
rates for a particular currency will fall. Such a transaction will be used as a
hedge (or, in the case of a sale of a call option, a partial hedge) against a
decrease in the value of portfolio securities denominated in that currency. If
N&B Management anticipates that a particular currency will rise, Neuberger &
Berman INTERNATIONAL 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
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currency will appreciate in value, but securities denominated in that currency
do not present an attractive investment and are not included in 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 CFTC;
futures transactions must be executed through a futures commission merchant that
is a member of the relevant contract market. In both U.S. and foreign markets,
an 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. 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. This may result in a profit or
loss. While futures contracts entered into by Neuberger & Berman INTERNATIONAL
Portfolio will usually be liquidated in this manner, the Portfolio may instead
make or take delivery of underlying securities whenever it appears economically
advantageous for it to do so.
"Margin" with respect to a futures contract is the amount of
assets that must be deposited by Neuberger & Berman SOCIALLY RESPONSIVE or
INTERNATIONAL 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
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contract cause the margin deposit to exceed the required margin, the excess will
be paid to the Portfolio. In computing their NAVs, Neuberger & Berman SOCIALLY
RESPONSIVE and INTERNATIONAL Portfolios mark to market the value of their open
futures positions. Each Portfolio also must make margin deposits with respect to
options on futures that it has written (but not with respect to options on
futures that it has purchased). 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. Options on futures have characteristics
and risks similar to those of securities options, as discussed herein.
Although each of Neuberger & Berman SOCIALLY RESPONSIVE and
INTERNATIONAL Portfolios believes that the use of futures contracts will benefit
it, if N&B Management's judgment about the general direction of the markets or
about interest rate or currency exchange rate trends 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 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 securities
being hedged can be only approximate due to differences between the futures and
securities markets or differences between the securities or currencies
underlying a Portfolio's futures position and the securities held by or to be
purchased for the Portfolio. 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.
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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 Neuberger & Berman SOCIALLY RESPONSIVE or INTERNATIONAL
Portfolio, it could (depending on the size of the position) have an adverse
impact on the NAV of the Portfolio.
CALL OPTIONS ON SECURITIES (ALL PORTFOLIOS). Neuberger &
Berman SOCIALLY RESPONSIVE and INTERNATIONAL Portfolios may write covered call
options and may purchase call options on securities. Each of the other
Portfolios may write covered call options and may purchase call options in
related closing transactions. The purpose of writing call options is 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) or 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.
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
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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
securities it intends to purchase. Neuberger & Berman INTERNATIONAL Portfolio
may purchase call options for hedging or non-hedging purposes.
PUT OPTIONS ON SECURITIES (NEUBERGER & BERMAN SOCIALLY
RESPONSIVE AND INTERNATIONAL Portfolios). Each of these Portfolios may write and
purchase put options on securities. Generally, the purpose of writing and
purchasing these options is 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). However, Neuberger & Berman
INTERNATIONAL Portfolio also may use put options for non-hedging purposes.
Neuberger & Berman SOCIALLY RESPONSIVE or INTERNATIONAL
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 decides to exercise the option. The Portfolio may be
obligated to purchase the underlying security at more than its current value.
When Neuberger & Berman SOCIALLY RESPONSIVE or INTERNATIONAL
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. A Portfolio might 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 Neuberger & Berman SOCIALLY RESPONSIVE or INTERNATIONAL Portfolio
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are purchased solely on the basis of investment considerations consistent with
the Portfolio's investment objective. When writing a put option, a 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.
GENERAL INFORMATION ABOUT SECURITIES OPTIONS. 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.
American-style options are exercisable at any time prior to their expiration
date. Neuberger & Berman INTERNATIONAL Portfolio also may purchase
European-style options, which are exercisable only immediately prior to their
expiration date. The obligation under any option written by a Portfolio
terminates upon expiration of the option or, at an earlier time, when the
Portfolio 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 or closed out, the Portfolio will lose the
entire amount of the premium paid.
Options are traded both on U.S. national securities exchanges
and in the over-the-counter ("OTC") market. Neuberger & Berman INTERNATIONAL
Portfolio also may purchase and sell options that are traded on foreign
exchanges. 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 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.
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The assets used as cover (or held in a segregated account) 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 market. 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 on the Portfolio's
statement of assets and liabilities. This liability is adjusted daily to the
option's current market value.
Closing transactions are effected in order to realize a profit
(or minimize a loss) 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 or INTERNATIONAL Portfolio to write another call option on the
underlying security with a different exercise price or expiration date or both.
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 or spreads in
connection with purchasing or writing options, including those used to close out
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existing positions. From time to time, Neuberger & Berman SOCIALLY RESPONSIVE or
INTERNATIONAL Portfolio may purchase an underlying security for delivery in
accordance with an exercise notice of a call option assigned to it, rather than
delivering the security from its portfolio. In those cases, additional brokerage
commissions are incurred.
The 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.
PUT AND CALL OPTIONS ON SECURITIES INDICES (NEUBERGER & BERMAN
INTERNATIONAL PORTFOLIO). The Portfolio may 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. The Portfolio may write securities
index options to close out positions in such options that it has purchased. 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
New York Stock Exchange ("NYSE"), the American Stock Exchange, and other U.S.
and foreign exchanges. All securities index options purchased by the Portfolio
will be listed and traded on an exchange.
The effectiveness of hedging through the purchase of
securities index options will depend upon the extent to which price movements in
the 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.
Securities index options have characteristics and risks
similar to those of securities options, as discussed herein.
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FOREIGN CURRENCY TRANSACTIONS (ALL PORTFOLIOS). Each Portfolio
may enter into contracts for the purchase or sale of a specific currency at a
future date (usually less than one year from the date of the contract) at a
fixed price ("forward contracts"). Neuberger & Berman INTERNATIONAL Portfolio
also may engage in foreign currency exchange transactions on a spot (I.E., cash)
basis at the spot rate prevailing in the foreign currency exchange market.
The Portfolios (other than Neuberger & Berman INTERNATIONAL
Portfolio) 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. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by a Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
Neuberger & Berman INTERNATIONAL Portfolio may enter into
forward contracts for hedging or non-hedging purposes. 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 its portfolio
securities or other assets denominated in that currency. Neuberger & Berman
INTERNATIONAL 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.
Forward contracts are traded in the interbank market directly
between dealers (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.
At the consummation of a forward contract to sell currency, a
Portfolio may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract. If the
Portfolio chooses to make delivery of the foreign currency, it may be required
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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 dealer who is a party to the original forward
contract.
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 but 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. Using forward contracts to protect the
value of a Portfolio's securities against a decline in the value of a currency
does not eliminate fluctuations in the prices of the underlying securities.
Because forward contracts are not traded on an exchange, the assets used to
cover such contracts may be illiquid. A Portfolio may experience delays in the
settlement of its foreign currency transactions.
Neuberger & Berman INTERNATIONAL Portfolio may purchase
securities of an issuer domiciled in a country other than the country in whose
currency the instrument is denominated. The Portfolio may invest in 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
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the European currency markets, limiting the Portfolio's ability to prevent
potential losses. In addition, Neuberger & Berman International Portfolio may
invest in securities denominated in other currency baskets.
OPTIONS ON FOREIGN CURRENCIES (ALL PORTFOLIOS). Each Portfolio
may write and purchase covered call and put options on foreign currencies. 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. In addition,
Neuberger & Berman INTERNATIONAL Portfolio may purchase put and call options on
foreign currencies for non-hedging purposes when N&B Management anticipates that
a currency will appreciate or depreciate 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.
Currency options have characteristics and risks similar to
those of securities 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. 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. The Portfolios (except Neuberger & Berman SOCIALLY
RESPONSIVE and INTERNATIONAL Portfolios) do not intend to invest in futures
contracts and options thereon during the coming year.
COVER FOR FINANCIAL INSTRUMENTS. 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
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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. 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. 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 RIC. See "Additional Tax Information." Hedging instruments may not be
available with respect to some currencies, especially those of so-called
emerging market countries.
SHORT SALES (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO). The
Portfolio may enter into short sales of securities. 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
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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 amplify 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.
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 ("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 in
domestic and foreign 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
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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 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
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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 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") must be taken into income 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
accrued 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 a 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. 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.
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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
objectives.
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.
SWAP AGREEMENTS (NEUBERGER & BERMAN INTERNATIONAL PORTFOLIO).
The Portfolio may enter into swap agreements to manage or gain exposure to
particular types of investments (including equity securities or indices of
equity securities in which the Portfolio otherwise could not invest
efficiently). In a swap agreement, one party agrees to make regular payments
equal to a floating rate on a specified amount in exchange for payments equal to
a fixed rate, or a different floating rate, on the same amount for a specified
period.
Swap agreements may involve leverage and may be highly
volatile; depending on how they are used, they may have a considerable impact on
the Portfolio's performance. The risks of swap agreements depend upon the other
party's creditworthiness and ability to perform, as well as the Portfolio's
ability to terminate its swap agreements or reduce its exposure through
offsetting transactions. In accordance with SEC staff requirements, the
Portfolio will segregate cash or appropriate liquid securities in an amount
equal to its obligations under swap agreements; when an agreement provides for
netting of the payments by the two parties, the Portfolio will segregate only
the amount of its net obligation, if any. Swap agreements may be illiquid. The
swap market is relatively new and is largely unregulated.
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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.
(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
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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.
(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
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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
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
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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.
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
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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
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demonstrated in terms of 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.
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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 manager 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.
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.
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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 smoothes 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 for the one-, five-, and ten-year periods ended August 31, 1997,
were +38.75%, +17.55%, and +11.48%, respectively.
The average annual total returns for Neuberger & Berman
GENESIS Fund for the one- and five-year periods ended August 31, 1997, and for
the period from September 27, 1988 (commencement of operations) through August
31, 1997, were +44.32%, +22.22%, and +16.69%, respectively.
The average annual total returns for Neuberger & Berman FOCUS
Fund for the one-, five-, and ten-year periods ended August 31, 1997, were
+43.92%, +21.91%, and +14.38%, respectively.
The average annual total returns for Neuberger & Berman
GUARDIAN Fund for the one-, five-, and ten-year periods ended August 31, 1997,
were +39.69%, +19.89%, and +14.44%, respectively.
The average annual total returns for Neuberger & Berman
PARTNERS Fund for the one-, five-, and ten-year periods ended August 31, 1997,
were +47.11%, +22.46%, and +14.33%, respectively.
The average annual total returns for Neuberger & Berman
SOCIALLY RESPONSIVE Fund for the one-year period ended August 31, 1997, and for
the period from March 16, 1994 (commencement of operations) through August 31,
1997, were +31.96% and +20.03%, respectively.
The average annual total returns for Neuberger & Berman
INTERNATIONAL Fund for the one-year period ended August 31, 1997, and for the
period from June 15, 1994 (commencement of operations) through August 31, 1997,
were +24.71% and +13.33%, respectively.
Prior to January 5, 1989, the investment policies 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
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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 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
necessarily reflect the level of performance and expenses that would have been
experienced had the Fund's current investment policies been in effect.
N&B Management may from time to time waive a portion of its
fees due from any Fund or Portfolio or reimburse a Fund or Portfolio for a
portion of its expenses. Such action has the effect of increasing total return.
Actual reimbursements and waivers are described in the Prospectus and in
"Investment Management and Administration Services" below.
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, Russell Midcap Growth Index, Dow Jones Industrial
Average ("DJIA"), Wilshire 1750 Index, Nasdaq Composite Index,
Montgomery Securities Growth Stock 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(REGISTERED) Index, the Financial Times World XUS Index, and
51
<PAGE>
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(REGISTERED) Index is an unmanaged index of
common stock prices of more than 1,000 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.
52
<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.
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 that any Portfolio will achieve its
investment objective.
53
<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:
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 (62) Trustee of each Attorney at Law, Faith
63 Wall Street Trust Colish, A Professional
24th Floor Corporation.
New York, NY 10005
Donald M. Cox (75) Trustee of each Trust Retired. Formerly Senior
435 East 52nd Street Vice President and Direc
New York, NY 10022 tor of Exxon Corporation;
Director of Emigrant
Savings Bank.
Stanley Egener* (63) Chairman of the Principal of Neuberger &
Board, Chief Berman; President and
Executive Offi Director of N&B
cer, and Trustee Management; Chairman of
of each Trust the Board, Chief Executive
Officer and Trustee of
eight other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
Howard A. Mileaf (60) Trustee of each Vice President and Special
WHX Corporation Trust Counsel to WHX Corporation
110 East 59th Street (holding company) since
30th Floor 1992; Director of Kevlin
New York, NY 10022 Corporation (manufacturer
of microwave and other
products).
54
<PAGE>
Positions Held
With the Trust
Name, Age, and and Equity
Address(1) Managers Trust Principal Occupation(s)(2)
- ---------- -------------- --------------------------
Edward I. O'Brien* (69) Trustee of each Until 1993, President of
12 Woods Lane Trust the Securities Industry
Scarsdale, NY 10583 Association ("SIA")
(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. (69) Trustee of each Retired. Formerly,
183 Ledge Drive Trust President of SOBRO (South
Torrington, CT 06790 Bronx Overall Economic
Development Corporation).
John P. Rosenthal (64) Trustee of each Senior Vice President of
Burnham Securities Inc. Trust Burnham Securities Inc.
Burnham Asset Management Corp. (a registered broker-
1325 Avenue of the Americas dealer) since 1991;
17th Floor Director, Cancer
New York, NY 10019 Treatment Holdings, Inc.
Cornelius T. Ryan (66) Trustee of each General Partner of Oxford
Oxford Bioscience Partners Trust Partners and Oxford
315 Post Road West Bioscience Partners (venture
Westport, CT 06880 capital partnerships) and
President of Oxford Venture
Corporation; Director of
Capital Cash Management
Trust (money market fund)
and Prime Cash Fund.
55
<PAGE>
Positions Held
With the Trust
Name, Age, and and Equity
Address(1) Managers Trust Principal Occupation(s)(2)
- ---------- -------------- --------------------------
Gustave H. Shubert (68) Trustee of each Senior Fellow/Corporate
13838 Sunset Boulevard Trust Advisor and Advisory Trustee
Pacific Palisades, CA of Rand (a non- profit
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 Ameri can 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* (61) President and Principal of Neuberger &
Trustee of each Berman; Director of N&B
Trust Management; President and/or
Trustee of five other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
Daniel J. Sullivan (57) Vice President of Senior Vice President of
each Trust N&B Management since
1992; Vice President
of eight other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
56
<PAGE>
Positions Held
With the Trust
Name, Age, and and Equity
Address(1) Managers Trust Principal Occupation(s)(2)
- ---------- -------------- --------------------------
Michael J. Weiner (50) Vice President Senior Vice President of
and Principal N&B Management since
Financial 1992; Treasurer of N&B
Officer of each Management from 1992 to
Trust 1996; 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 (41) Secretary of each Vice President of N&B
Trust Management; Secretary
of eight other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
Richard Russell (50) Treasurer and Vice President of N&B
Principal Ac Management since 1993; prior
counting Officer thereto, Assistant Vice
of each Trust President of N&B Management;
Treasurer and Principal Ac
counting Officer of eight
other mutual funds for which
N&B Management acts as
investment manager or
administrator.
Stacy Cooper-Shugrue (34) Assistant Secre Assistant Vice President of
tary of each N&B Management since 1993;
Trust prior thereto, employee of
N&B Man agement; Assistant
Secretary of eight other
mutual funds for which N&B
Management acts as
investment manager or
administrator.
57
<PAGE>
Positions Held
With the Trust
Name, Age, and and Equity
Address(1) Managers Trust Principal Occupation(s)(2)
- ---------- -------------- --------------------------
C. Carl Randolph (60) Assistant Secretary Principal of Neuberger &
of each Trust Berman since 1992; Assistant
Secretary of eight other
mutual funds for which N&B
Management acts as
investment manager or
administrator.
Barbara DiGiorgio (38) Assistant Treasurer Assistant Vice President of
of each Trust N&B Management since 1993;
prior thereto, employee of
N&B Management; Assistant
Treasurer since 1996 of
eight other mutual funds for
which N&B Management acts as
investment manager or
administrator.
Celeste Wischerth (36) Assistant Assistant Vice President of
Treasurer of each N&B Management since 1994;
Trust prior thereto, employee of
N&B Management; Assistant
Treasurer since 1996 of
eight other mutual funds for
which N&B Management acts as
investment manager or
administrator.
</TABLE>
GLOBAL MANAGERS TRUST:
- ---------------------
Positions Held
Name, Age, and with Global Principal
Address(1) Managers Trust Occupation(s)(2)
- ---------- -------------- ----------------
Stanley Egener* (63) Chairman of the (See above)
Board, Chief
Executive Officer
and Trustee
58
<PAGE>
Positions Held
Name, Age, and with Global Principal
Address(1) Managers Trust Occupation(s)(2)
- ---------- -------------- ----------------
Howard A. Mileaf (60) Trustee (See above)
WHX Corporation
110 East 59th Street
30th Floor
New York, NY 10022
John T. Patterson, Jr. 69) Trustee (See above)
183 Ledge Drive
Torrington, CT 06790
John P. Rosenthal (64) Trustee (See above)
Burnham Securities Inc.
Burnham Asset
Management Corp.
1325 Avenue of the Americas
17th Floor
New York, NY 10019
Lawrence Zicklin (61) President (See above)
Daniel J. Sullivan (57) Vice President (See above)
Michael J. Weiner (50) Vice President and (See above)
Principal Financial
Officer
Richard Russell (50) Treasurer and (See above)
Principal Accounting
Officer
Claudia A. Brandon (41) Secretary (See above)
Stacy Cooper-Shugrue (34) Assistant Secretary (See above)
C. Carl Randolph (60) Assistant Secretary (See above)
Barbara DiGiorgio (38) Assistant Treasurer (See above)
Celeste Wischerth (36) Assistant Treasurer (See above)
59
<PAGE>
Positions Held
Name, Age, and with Global Principal
Address(1) Managers Trust Occupation(s)(2)
- ---------- -------------- ----------------
Jacqueline Henning (55) 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 (36) Assistant Secretary Operations
Supervisor, State
Street Cayman Trust
Co., Ltd.; Project
Manager, State
Street Canada,
Inc., 1992-94.
- --------------------
(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
60
<PAGE>
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.
The following table sets forth information concerning the
compensation of the trustees of the Trust. None of the Neuberger & Berman
Funds(REGISTERED) has any retirement plan for its trustees.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/97
Total Compensation
from Investment
Aggregate Companies in the
Name and Position with Compensation Neuberger & Berman Fund
the Trust from the Trust Complex Paid to Trustees
---------------------- -------------- ------------------------
Faith Colish $ 12,331 $ 64,000
Trustee (5 other investment
companies)
Donald M. Cox $ 12,331 $ 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, $ 8,295 $ 20,000
Trustee, and
The Estate of (3 other investment
Alan R. Gruber companies)
Howard A. Mileaf $ 12,538 $ 33,500
Trustee (4 other investment
companies)
Edward I. O'Brien $ 13,962 $ 34,000
Trustee (3 other investment
companies)
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<PAGE>
Total Compensation
from Investment
Aggregate Companies in the
Name and Position with Compensation Neuberger & Berman Fund
the Trust from the Trust Complex Paid to Trustees
---------------------- -------------- ------------------------
John T. Patterson, Jr. $ 13,962 $ 37,500
Trustee (4 other investment
companies)
John P. Rosenthal $ 12,331 $ 32,500
Trustee (4 other investment
companies)
Cornelius T. Ryan $ 12,538 $ 30,500
Trustee (3 other investment
companies)
Gustave H. Shubert $ 12,538 $ 30,500
Trustee (3 other investment
companies)
Lawrence Zicklin $ 0 $ 0
President and Trustee (5 other investment
companies)
At November 28, 1997, 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 2.84% 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
62
<PAGE>
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 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 facilities, services, and personnel to
each Fund pursuant to an administration agreement with the Trust, dated May 1,
1995, as amended on August 2, 1997 ("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
63
<PAGE>
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 &
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 Asset Management, L.P. ("BNP-N&B
Global"), a joint venture of Banque Nationale de Paris ("BNP") and Neuberger &
Berman, 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, 1997, 1996 and 1995,
Neuberger & Berman MANHATTAN Fund accrued management and administration fees of
64
<PAGE>
$4,249,498, $4,716,468 and $3,685,282, respectively. During the fiscal years
ended August 31, 1997, 1996 and 1995, Neuberger & Berman GENESIS Fund accrued
management and administration fees of $4,174,636, $1,535,678 and $1,155,623,
respectively. From May 1, 1995 to December 15, 1997, N&B Management voluntarily
waived a portion of the management fee borne by Neuberger & Berman GENESIS
Portfolio to reduce the fee by 0.10% per annum of the average daily net assets
of that Portfolio. During the fiscal years ended August 31, 1997 and 1996 and
the period from May 1, 1995 to August 31, 1995, N&B Management waived $385,721,
$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, 1997, 1996 and 1995, Neuberger & Berman FOCUS Fund
accrued management and administration fees of $9,279,747, $8,144,099 and
$5,114,879, respectively. During the fiscal years ended August 31, 1997, 1996
and 1995, Neuberger & Berman GUARDIAN Fund accrued management and administration
fees of $40,024,744, $32,628,373 and $18,549,364, respectively. During the
fiscal years ended August 31, 1997, 1996 and 1995, Neuberger & Berman PARTNERS
Fund accrued management and administration fees of $17,596,503, $13,049,313 and
$9,233,615, respectively.
During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman SOCIALLY RESPONSIVE Fund accrued management and
administration fees of $383,500, $145,742 and $37,197, respectively. Until
December 31, 1997, N&B Management has voluntarily undertaken to reimburse
Neuberger & Berman SOCIALLY RESPONSIVE Fund for its Total Operating Expenses (as
defined in the Prospectus) which exceed 1.50% per annum of the Fund's average
daily net assets. For the fiscal years ended August 31, 1997, 1996, and 1995,
N&B Management reimbursed that Fund for $0, $34,074 and $78,940, respectively,
of expenses. Neuberger & Berman SOCIALLY RESPONSIVE Fund has in turn agreed to
repay N&B Management through March 14, 1998, for the excess Total Operating
Expenses that N&B Management reimbursed to the Fund through March 14, 1996, so
long as the Fund's Total Operating Expenses during that period do not exceed the
above expense limitation. During the fiscal year ended August 31, 1997,
Neuberger & Berman SOCIALLY RESPONSIVE Fund repaid N&B Management $131,041 of
expenses that N&B Management reimbursed to the Fund through March 14, 1996. As
of August 31, 1997, Neuberger & Berman SOCIALLY RESPONSIVE Fund has repaid N&B
Management for all such expenses. During the fiscal years ended August 31, 1997,
1996 and 1995, Neuberger & Berman INTERNATIONAL Fund accrued advisory or
management and administration fees of $998,616, $469,310 and $317,147,
respectively. For those same periods, N&B Management (and, for periods prior to
November 1, 1995, BNP-N&B Global) reimbursed that Fund for $0, $282,021 and
65
<PAGE>
$407,108, respectively, in expenses. During the fiscal year ended August 31,
1997, Neuberger & Berman INTERNATIONAL Fund repaid N&B Management $13,955 of
expenses that N&B Management reimbursed to the Fund through December 31, 1996.
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. During the period from September 1, 1994 to April 30, 1995,
the Funds paid and accrued the following amounts for these services: Neuberger &
Berman MANHATTAN Fund - $127,079, Neuberger & Berman GENESIS Fund - $29,930,
Neuberger & Berman FOCUS Fund - $169,437, Neuberger & Berman GUARDIAN Fund -
$670,627, Neuberger & Berman Partners Fund - $340,751, Neuberger & Berman
SOCIALLY RESPONSIVE Fund - $1,085, and Neuberger & Berman INTERNATIONAL Fund -
$4,178.
The Management Agreements continue until August 2, 1998. 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 until August 2, 1998. 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 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.
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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 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 numerous 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 until August 2, 1998 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' prior written notice. The Sub-Advisory Agreements also
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terminate automatically with respect to each Portfolio if they are assigned or
if the Management Agreement terminates with respect to that Portfolio.
Most money managers that come to the Neuberger & Berman
organization have at least fifteen years experience. Neuberger & Berman and N&B
Management employ experienced professionals that work in a competitive
environment.
INVESTMENT COMPANIES MANAGED
- ----------------------------
As of September 30, 1997, the investment companies managed by
N&B Management had aggregate net assets of approximately $21.2 billion. N&B
Management currently serves as investment manager of the following investment
companies:
Approximate
Net Assets at
Name September 30, 1997
- ---- ------------------
Neuberger & Berman Cash Reserves Portfolio.........................$667,531,894
(investment portfolio for Neuberger & Berman Cash Reserves)
Neuberger & Berman Government Money Portfolio.......................$248,190,672
(investment portfolio for Neuberger & Berman Government Money Fund)
Neuberger & Berman Limited Maturity Bond Portfolio..................$295,393,823
(investment portfolio for Neuberger & Berman Limited Maturity
Bond Fund and Neuberger & Berman Limited Maturity Bond Trust)
Neuberger & Berman Municipal Money Portfolio........................$146,706,408
(investment portfolio for Neuberger & Berman Municipal Money Fund)
Neuberger & Berman Municipal Securities Portfolio....................$31,573,660
(investment portfolio for Neuberger & Berman Municipal Securities Trust)
Neuberger & Berman Ultra Short Bond Portfolio........................$62,627,463
(investment portfolio for Neuberger & Berman Ultra Short Bond Fund and
Neuberger & Berman Ultra Short Bond Trust)
Neuberger & Berman Focus Portfolio................................$1,661,565,204
(investment portfolio for Neuberger & Berman Focus Fund, Neuberger
& Berman Focus Trust and Neuberger & Berman Focus Assets)
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Neuberger & Berman Genesis Portfolio..............................$1,491,048,221
(investment portfolio for Neuberger & Berman Genesis Fund, Neuberger
& Berman Genesis Trust and Neuberger & Berman Genesis Assets)
Neuberger & Berman Guardian Portfolio........................... $9,123,101,599
(investment portfolio for Neuberger & Berman Guardian Fund, Neuberger
& Berman Guardian Trust and Neuberger & Berman Guardian Assets)
Neuberger & Berman International Portfolio..........................$127,016,071
(investment portfolio for Neuberger & Berman International Fund
and Neuberger & Berman International Trust)
Neuberger & Berman Manhattan Portfolio..............................$655,156,471
(investment portfolio for Neuberger & Berman Manhattan Fund,
Neuberger & Berman Manhattan Trust and Neuberger & Berman Manhattan
Assets)
Neuberger & Berman Partners Portfolio.............................$3,783,754,657
(investment portfolio for Neuberger & Berman Partners Fund,
Neuberger & Berman Partners Trust and Neuberger & Berman Partners Assets)
Neuberger & Berman Socially Responsive..............................$274,230,723
Portfolio (investment portfolio for Neuberger & Berman Socially
Responsive Fund, Neuberger & Berman Socially Responsive Trust
and Neuberger & Berman NYCDC Socially Responsive Trust)
Advisers Managers Trust............................$2,651,503,613 (seven series)
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 funds involved. Although in some cases this arrangement may
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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; Brooke A. Cobb, Vice President; Robert W.
D'Alelio, Vice President; Roberta D'Orio, Vice President; Clara Del Villar, Vice
President; Brian J. Gaffney, Vice President; Joseph G. Galli, Vice President;
Robert I. Gendelman, Vice President; Josephine P. Mahaney, Vice President; Ellen
Metzger, Vice President and Secretary; Paul Metzger, Vice President; Janet W.
Prindle, Vice President; Kevin L. Risen, Vice President; Richard Russell, Vice
President; Jennifer K. Silver, Vice President; Kent C. Simons, Vice President;
Frederic 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; Valerie Chang, Assistant Vice
President; Stacy Cooper-Shugrue, Assistant Vice President; Barbara DiGiorgio,
Assistant Vice President; Michael J. Hanratty, Assistant Vice President; Leslie
Holliday-Soto, Assistant Vice President; Jody L. Irwin, Assistant Vice
President; Robert L. Ladd, Assistant Vice President; Carmen G. Martinez,
Assistant Vice President; Joseph S. Quirk, Assistant Vice President; Ingrid
Saukaitis, Assistant Vice President; Josephine Velez, Assistant Vice President;
Celeste Wischerth, Assistant Vice President; and Loraine Olavarria, Assistant
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Secretary. Messrs. Cantor, Egener, Gendelman, Giuliano, Kassen, Lainoff, Risen,
Simons, Sundman and Zicklin and Mmes. Prindle, Silver 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. Russell, Sullivan,
and Weiner, 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, 1998. 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
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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.
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 seeking
Government Money Fund 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
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INCOME FUNDS
- ------------
backed by the full faith and credit of the
United States. It seeks to maintain a constant
purchase and redemption price of $1.00.
Neuberger & Berman A money market fund seeking the highest
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 the highest current income consistent
Limited Maturity Bond Fund 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
- ---------------
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 with low
Municipal Securities risk to principal, limited price fluctuation,
Trust and liquidity and, secondarily, total return.
The corresponding portfolio invests in
investment grade municipal securities. Maximum
average duration of 10 years.
- ------------------------
*/ 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.
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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 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, (2) when
trading on the NYSE is restricted, (3) when an 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.
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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 substantially all of
its share of any net investment income (after deducting expenses incurred
directly by the Fund), any net realized capital gains, and any net realized
gains from foreign currency transactions earned or realized by its corresponding
Portfolio. 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. 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).
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 (after deducting expenses incurred directly by Neuberger &
Berman GUARDIAN Fund), if any, near the end of each other 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
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
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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 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
to request that the cash election be reinstated.
Dividend or other distribution checks that are not cashed or deposited
within 180 days from being issued will be reinvested in additional shares of the
distributing Fund at the Fund's price on the day the check is reinvested. No
interest will accrue on amounts represented by uncashed dividend or distribution
checks.
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"); and (2) 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 satisfies the requirements to qualify as a RIC, each Portfolio
intends to continue to conduct its operations so that its corresponding Fund
will be able to continue to satisfy all those requirements.
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Distributions to a Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise) will not
result in the Fund's recognition of any gain or loss for federal income tax
purposes, except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio, (3)
loss will be recognized if a liquidation distribution consists solely of cash
and/or unrealized receivables, and (4) gain 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, and gains
realized 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 and/or total return on its securities. Tax treaties between
certain countries and the United States may reduce or eliminate 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 the
shareholder, 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
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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. Pursuant to the Taxpayer Relief Act of 1997 ("Tax
Act"), beginning in 1998 individual shareholders of the Fund who have no more
than $300 ($600 for married persons filing jointly) of creditable foreign taxes
included on Forms 1099 and all of whose foreign source income is "qualified
passive income" may elect each year to be exempt from the extremely complicated
foreign tax credit limitation and will be able to claim a foreign tax credit
without having to file the detailed Form 1116 that otherwise is required.
A Portfolio may invest in the stock of "passive foreign
investment companies" ("PFICs"). A PFIC is a foreign corporation -- other than a
"controlled foreign corporation" (I.E., a foreign corporation in which, on any
day during its taxable year, more than 50% of the total voting power of all
voting stock therein or the total value of all stock therein is owned, directly,
indirectly, or constructively, by "U.S. shareholders," defined as U.S. persons
that individually own, directly, indirectly, or constructively, at least 10% of
that voting power) as to which a Portfolio is a U.S. shareholder (effective for
the taxable year beginning September 1, 1998) -- 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 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" ("QEF"), 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 QEF'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
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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 from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Effective for taxable years beginning after 1997, a holder of
stock in any PFIC may elect to include in ordinary income each taxable year the
excess, if any, of the fair market value of the stock over the adjusted basis
therein as of the end of that year. Pursuant to the election, a deduction (as an
ordinary, not capital, loss) also would be allowed for the excess, if any, of
the holder's adjusted basis in PFIC stock over the fair market value thereof as
of the taxable year-end, but only to the extent of any net mark-to-market gains
with respect to that stock included in income for prior taxable years. The
adjusted basis in each PFIC's stock subject to the election would be adjusted to
reflect the amounts of income included and deductions taken thereunder. Proposed
regulations would provide a similar election with respect to the stock of
certain PFICs.
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 amount, 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 a 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.
Exchange-traded futures contracts, certain forward 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) for federal
income tax purposes at the end of a Portfolio's taxable year. Sixty percent of
any net 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. As of the date of this SAI, it is not entirely
clear whether that 60% portion will qualify for the reduced maximum tax rates on
net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
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not more than 18 months. However, proposed technical corrections legislation
would clarify that the 20% rate applies.
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 income 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.
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.
Each Fund is required to withhold 31% of all dividends,
capital gain distributions, and redemption proceeds payable to any individuals
and certain other non-corporate shareholders who do not provide the Fund with a
correct taxpayer identification number. Withholding at that rate also is
required from 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 (including, after 1997, a Roth IRA) or a qualified
retirement plan (including a simplified employee pension plan, savings incentive
match plan for employees, Keogh plan, corporate profit-sharing and money
purchase pension plan, Code section 401(k) plan, and Code section 403(b)(7)
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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 certain securities traded on the OTC
market) and in connection with the purchase and sale of options on its
securities. Neuberger & Berman may act as broker for Neuberger & Berman
INTERNATIONAL Portfolio. A substantial portion of the portfolio transactions of
Neuberger & Berman GENESIS Portfolio 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.
During the fiscal year ended August 31, 1995, Neuberger &
Berman MANHATTAN 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.
During the fiscal year ended August 31, 1997, Neuberger &
Berman MANHATTAN Portfolio paid brokerage commissions of $971,026, of which
$458,679 was paid to Neuberger & Berman. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 59.11% of the aggregate dollar
amount of transactions involving the payment of commissions, and 47.24% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1997. 92.43% of the $512,347 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $299,598,328) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1997,
that Portfolio acquired securities of the following of its "regular brokers or
dealers" (as defined in the 1940 Act) ("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: General Electric Capital Corp.,
$18,100,000 and State Street Bank & Trust Company, N.A., $6,987,488.
During the fiscal year ended August 31, 1995, Neuberger &
Berman GENESIS Portfolio paid brokerage commissions of $199,718, of which
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$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.
During the fiscal year ended August 31, 1997, Neuberger &
Berman GENESIS Portfolio paid brokerage commissions of $860,097, of which
$516,040 was paid to Neuberger & Berman. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 62.57% of the aggregate dollar
amount of transactions involving the payment of commissions, and 60.00% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1997. 89.06% of the $344,057 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $128,731,955) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1997,
that Portfolio acquired securities of the following of its Regular B/Ds: Chevron
Oil Finance Company, 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.,
$40,000,000.
During the fiscal year ended August 31, 1995, Neuberger &
Berman FOCUS 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.
During the fiscal year ended August 31, 1997, Neuberger &
Berman FOCUS Portfolio paid brokerage commissions of $1,825,493, of which
$920,202 was paid to Neuberger & Berman. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 55.85% of the aggregate dollar
amount of transactions involving the payment of commissions, and 50.41% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1997. 80.39% of the $905,291 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $398,888,691) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1997,
that Portfolio acquired securities of the following of its Regular B/Ds: General
Electric Capital Corp., Merrill, Lynch, Pierce, Fenner & Smith Inc., Morgan
Stanley, Dean Witter, Discover & Co., 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., $46,120,000;
Merrill, Lynch, Pierce, Fenner & Smith Inc., $35,055,000; and Morgan Stanley,
Dean Witter, Discover & Co., $27,397,563.
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During the fiscal year ended August 31, 1995, Neuberger &
Berman GUARDIAN 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.
During the fiscal year ended August 31, 1997, Neuberger &
Berman GUARDIAN Portfolio paid brokerage commissions of $8,540,335, of which
$4,806,913 was paid to Neuberger & Berman. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 60.45% of the aggregate dollar
amount of transactions involving the payment of commissions, and 56.28% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1997. 87.31% of the $3,733,422 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $1,958,958,289); was directed to those brokers because
of research services they provided. During the fiscal year ended August 31,
1997, that Portfolio acquired securities of the following of its Regular B/Ds:
Chevron Oil Finance Company, General Electric Capital Corp., Merrill, Lynch,
Pierce, Fenner & Smith Inc., Morgan Stanley, Dean Witter, Discover & Co., 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., $36,480,000; Merrill, Lynch, Pierce, Fenner & Smith
Inc., $201,720,000; and Morgan Stanley, Dean Witter, Discover & Co.,
$178,784,375.
During the fiscal year ended August 31, 1995, Neuberger &
Berman PARTNERS 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.
During the fiscal year ended August 31, 1997, Neuberger &
Berman PARTNERS Portfolio paid brokerage commissions of $5,413,453, of which
$3,508,790 was paid to Neuberger & Berman. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 66.94% of the aggregate dollar
amount of transactions involving the payment of commissions, and 64.82% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1997. 89.93% of the $1,904,663 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $1,164,076,407) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1997,
that Portfolio acquired securities of the following of its Regular B/Ds: Chevron
Oil Finance Company, General Electric Capital Corp., and State Street Bank and
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Trust Company, N.A.; at that date, that Portfolio held securities of its Regular
B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$43,550,000.
During the fiscal year ended August 31, 1995, Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio paid brokerage commissions of $138,378, of
which $95,964 was paid to Neuberger & Berman. During the fiscal year ended
August 31, 1996, Neuberger & Berman SOCIALLY RESPONSIVE Portfolio paid brokerage
commissions of $208,834, of which $124,879 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio paid brokerage commissions of $305,640, of
which $232,238 was paid to Neuberger & Berman. Transactions in which that
Portfolio used Neuberger & Berman as broker comprised 80.59% of the aggregate
dollar amount of transactions involving the payment of commissions, and 75.98%
of the aggregate brokerage commissions paid by the Portfolio, during the fiscal
year ended August 31, 1997. 78.58% of the $73,402 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $30,816,054) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1997,
that Portfolio acquired securities of the following of its Regular B/Ds: State
Street Bank and Trust Company, N.A.; at that date, that Portfolio held none of
the securities of its Regular B/Ds.
During the fiscal year ended August 31, 1995, Neuberger &
Berman INTERNATIONAL Portfolio paid brokerage commissions of $128,324, of which
$4,110 was paid to Neuberger & Berman and $0 was paid to BNP-International
Financial Services Corporation (a wholly owned subsidiary of BNP that previously
was an affiliate of an affiliate of Neuberger & Berman). During the fiscal year
ended August 31, 1996, Neuberger & Berman INTERNATIONAL Portfolio paid brokerage
commissions of $183,335, of which $5,485 was paid to Neuberger & Berman and $0
was paid to BNP-International Financial Services Corporation.
During the fiscal year ended August 31, 1997, Neuberger &
Berman INTERNATIONAL Portfolio paid brokerage commissions of $297,431, of which
$5,910 was paid to Neuberger & Berman. Transactions in which the Portfolio used
Neuberger & Berman as broker comprised 5.69% of the aggregate dollar amount of
transactions involving the payment of commissions, and 1.99% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. Of the $291,521 paid to other brokers by that Portfolio during that
fiscal year, 95.22% (representing commissions on transactions involving
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approximately $72,894,607) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
Portfolio acquired securities of the following of its Regular B/Ds: HSBC
Securities, Inc., Societe Generale Securities Corporation, 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: HSBC Securities, Inc., $913,607
and Societe General Securities Corporation, $719,951.
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. In accordance with the order, securities loans made by a
Portfolio to Neuberger & Berman are fully secured by cash collateral. The
portion of the income on the cash collateral which may be shared with Neuberger
& Berman is to be determined by reference to concurrent arrangements between
Neuberger & 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 may be required
to pay that Portfolio, on a quarterly basis, certain of the 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, in any
month, 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, 1997, 1996 and 1995,
Neuberger & Berman MANHATTAN Portfolio earned interest income of $988,931,
$301,788, and $507,239, respectively, from the collateralization of securities
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loans, from which Neuberger & Berman was paid $326,403, $186,163 and $270,594,
respectively.
During the fiscal year ended August 31, 1997, Neuberger &
Berman GENESIS Portfolio earned interest income of $168,552, from the
collateralization of securities loans, from which Neuberger & Berman was paid
$69,948. During the fiscal years ended August 31, 1996 and 1995, Neuberger &
Berman GENESIS Portfolio earned no interest income from the collateralization of
securities loans.
During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman GUARDIAN Portfolio earned interest income of $4,005,765,
$2,427,096 and $1,430,672, respectively, from the collateralization of
securities loans, from which Neuberger & Berman was paid $3,523,486, $2,129,341
and $1,252,190, respectively.
During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman FOCUS Portfolio earned interest income of $1,053,272,
$368,663 and $327,447, respectively, from the collateralization of securities
loans, from which Neuberger & Berman was paid $898,127, $330,001 and $291,207,
respectively.
During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman PARTNERS Portfolio earned interest income of $797,133,
$173,908 and $52,410, respectively, from the collateralization of securities
loans, from which Neuberger & Berman was paid $688,624, $118,041 and $48,736,
respectively.
During the fiscal year ended August 31, 1997, Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio earned interest income of $80,484, from the
collateralization of securities loans, from which Neuberger & Berman was paid
$51,639. During the fiscal years ended August 31, 1996 and 1995, Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio earned no interest income from the
collateralization of securities loans.
During the fiscal years ended August 31, 1997, 1996 and 1995,
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
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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 as its broker where, in
the judgment of N&B Management, 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 Managers Trusts and N&B Management have
expressly authorized Neuberger & Berman to retain such compensation, and
Neuberger & Berman has agreed to comply 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
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
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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 contemporaneously 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 managed accounts ("Managed Accounts") evaluates semi-annually the
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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.
Kent C. Simons and Kevin L. Risen; Judith M. Vale and Robert W.
D'Alelio; Valerie Chang; Jennifer K. Silver and Brooke A. Cobb; Michael M.
Kassen and Robert I. Gendelman; and Janet W. Prindle, each of whom is a Vice
President of N&B Management (except for Ms. Chang, who is an Assistant Vice
President) and a principal of Neuberger & Berman (except for Mr. D'Alelio, Mr.
Cobb, and Ms. Chang), are the persons primarily responsible for making decisions
as to specific action to be taken with respect to the investment portfolios of
Neuberger & Berman FOCUS and Neuberger & Berman GUARDIAN, Neuberger & Berman
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GENESIS, Neuberger & Berman INTERNATIONAL, Neuberger & Berman MANHATTAN,
Neuberger & Berman PARTNERS, and Neuberger & Berman SOCIALLY RESPONSIVE
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 Ms. Prindle is
unavailable to perform her responsibilities, Robert Ladd and/or Ingrid
Saukaitis, each of whom is an Assistant Vice President of N&B Management, will
assume responsibility for the portfolio of Neuberger & Berman SOCIALLY
RESPONSIVE 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 name of Neuberger & Berman FOCUS Fund was "Neuberger &
Berman Selected Sectors Fund, Inc." before August 2, 1993; and "Neuberger &
Berman Selected Sectors Fund" before 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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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
December 1, 1997:
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<PAGE>
Percentage of
Ownership at
Name And Address December 1, 1997
---------------- ----------------
Neuberger & Berman Charles Schwab & Co., Inc.* 7.23%
MANHATTAN Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Charles Schwab & Co., Inc.* 38.04%
GENESIS Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Charles Schwab & Co., Inc.* 26.43%
GUARDIAN Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Charles Schwab & Co., Inc.* 17.25%
PARTNERS Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Nationwide Life Insurance Co. 6.51%
QPVA
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
Neuberger & Berman Charles Schwab & Co., Inc.* 34.00%
SOCIALLY Attn: Mutual Funds Dept.
RESPONSIVE Fund 101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Charles Schwab & Co., Inc.* 14.07%
FOCUS Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman Charles Schwab & Co., Inc.* 10.71%
INTERNATIONAL Fund Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Neuberger & Berman* 9.45%
11 Broadway, 12th Floor
New York, NY 10004-1303
Operations Control
93
<PAGE>
Percentage of
Ownership at
Name And Address December 1, 1997
---------------- ----------------
Town of Cheshire 5.40%
Retirement Plan
Director of Finance
Town of Cheshire
84 South Main St.
Cheshire, CT 06410-3108
- ---------------------------
* 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.
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, 1997:
The audited financial statements of the Funds and Portfolios
and notes thereto for the fiscal year ended August 31, 1997,
and the reports of Ernst & Young LLP, independent auditors,
with respect to such audited financial statements of Neuberger
94
<PAGE>
& 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.
95
<PAGE>
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
96
<PAGE>
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.
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.
- 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.
97
<PAGE>
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.
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.
98
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 77 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,
1997, 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:
Exhibit
NUMBER DESCRIPTION
------ -----------
(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.
(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.
C-2
<PAGE>
Exhibit
NUMBER DESCRIPTION
------ -----------
(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) (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. Filed herewith.
(b) Schedule A - Series of Neuberger & Berman Equity
Funds Currently Subject to the Distribution
Agreement. Filed herewith.
(7) Bonus, Profit Sharing or Pension Plans. None.
(8) (a) Custodian Contract Between Neuberger & Berman Equity
Funds and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective Amendment
No. 74 to Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000426.
C-3
<PAGE>
Exhibit
NUMBER DESCRIPTION
------ -----------
(b) Schedule of Compensation under the Custodian
Contract. Incorporated by Reference to Post-Effective
Amendment No. 76 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-96-000525.
(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.
(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) Second Amendment to Transfer Agency and Service
Agreement between Neuberger & Berman Equity
Funds and State Street Bank and Trust Company.
Filed Herewith.
(v) Schedule of Compensation under the Transfer
Agency and Service Agreement. Incorporated by
Reference to Post-Effective Amendment No. 76 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, Edgar Accession No.
0000898432-96-000525.
(b) (i) Administration Agreement Between Neuberger &
Berman Equity Funds and Neuberger & Berman
Management Incorporated. Filed Herewith.
(ii) Schedule A - Series of Neuberger & Berman
Equity Funds Currently Subject to the
Administration Agreement. Filed Herewith.
(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-4
<PAGE>
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters with Respect to Neuberger & Berman
Equity Funds. Filed Herewith.
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP with
Respect to Neuberger & Berman Socially Responsive
Fund. Filed Herewith.
(c) Opinion and Consent of Kirkpatrick & Lockhart LLP with
Respect to Neuberger & Berman International Fund.
Filed Herewith.
(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.
None.
(17) Financial Data Schedule. Filed Herewith.
(18) Plan Pursuant to Rule 18f-3. None.
Item 25. Persons Controlled By or Under Common Control with Registrant.
- ------- -------------------------------------------------------------
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.)
Item 26. Number of Holders of Securities.
- ------- -------------------------------
The following information is given as of October 31, 1997.
Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial interest,
$0.001 par value, of:
Neuberger & Berman Focus Fund 42,368
Neuberger & Berman Genesis Fund 39,463
Neuberger & Berman Guardian Fund 133,983
Neuberger & Berman International Fund 6,894
Neuberger & Berman Manhattan Fund 39,232
Neuberger & Berman Partners Fund 79,315
Neuberger & Berman Socially 4,021
Responsive Fund
=====================================================
C-5
<PAGE>
Item 27. Indemnification.
- ------- ---------------
A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article IX, Section 2 of the Trust Instrument provides
that the Registrant shall indemnify any present or former trustee, officer,
employee or agent of the Registrant ("Covered Person") to the fullest extent
permitted by law against liability and all expenses reasonably incurred or paid
by him or her in connection with any claim, action, suit or proceeding
("Action") in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been a Covered Person and against amounts paid or
incurred by him or her in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other body to be liable to the
Registrant or its shareholders by reason of "willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office" ("Disabling Conduct"), or not to have acted in good faith in the
reasonable belief that his or her action was in the best interest of the
Registrant. In the event of a settlement, no indemnification may be provided
unless there has been a determination that the officer or trustee did not engage
in Disabling Conduct (i) by the court or other body approving the settlement;
(ii) by at least a majority of those trustees who are neither interested
persons, as that term is defined in the Investment Company Act of 1940 ("1940
Act"), of the Registrant ("Independent Trustees"), nor parties to the matter
based upon a review of readily available facts; or (iii) by written opinion of
independent legal counsel based upon a review of readily available facts.
Pursuant to Article IX, Section 3 of the Trust Instrument, if any
present or former shareholder of any series ("Series") of the Registrant shall
be held personally liable solely by reason of his or her being or having been a
shareholder and not because of his or her acts or omissions or for some other
reason, the present or former shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of any entity, its
general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Registrant, on behalf of the affected
Series, shall, upon request by such shareholder, assume the defense of any claim
made against such shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
Section 9 of the Management 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.
C-6
<PAGE>
Section 12 of the Administration Agreement between the Registrant and
N&B Management provides that N&B Management will not be liable to the Registrant
for any action taken or omitted to be taken by N&B Management or its employees,
agents or contractors in carrying out the provisions of the Agreement if such
action was taken or omitted in good faith and without negligence or misconduct
on the part of N&B Management, or its employees, agents or contractors. Section
13 of the Administration Agreement provides that the Registrant shall indemnify
N&B Management and hold it harmless from and against any and all losses, damages
and expenses, including reasonable attorneys' fees and expenses, incurred by N&B
Management that result from: (i) any claim, action, suit or proceeding in
connection with N&B Management's entry into or performance of the Agreement; or
(ii) any action taken or omission to act committed by N&B Management in the
performance of its obligations under the Agreement; or (iii) any action of N&B
Management upon instructions believed in good faith by it to have been executed
by a duly authorized officer or representative of a Series; provided, that N&B
Management will not be entitled to such indemnification in respect of actions or
omissions constituting negligence or misconduct on the part of N&B Management,
or its employees, agents or contractors. Amounts payable by the Registrant under
this provision shall be payable solely out of assets belonging to that Series,
and not from assets belonging to any other Series of the Registrant. Section 14
of the Administration Agreement provides that N&B Management will indemnify the
Registrant and hold it harmless from and against any and all losses, damages and
expenses, including reasonable attorneys' fees and expenses, incurred by the
Registrant that result from: (i) N&B Management's failure to comply with the
terms of the Agreement; or (ii) N&B Management's lack of good faith in
performing its obligations under the Agreement; or (iii) the negligence or
misconduct of N&B Management, or its employees, agents or contractors in
connection with the Agreement. The Registrant shall not be entitled to such
indemnification in respect of actions or omissions constituting negligence or
misconduct on the part of the Registrant or its employees, agents or contractors
other than N&B Management, unless such negligence or misconduct results from or
is accompanied by negligence or misconduct on the part of N&B Management, any
affiliated person of N&B Management, or any affiliated person of an affiliated
person of N&B Management.
Section 11 of the Distribution Agreement between the Registrant and
N&B Management provides that N&B Management shall look only to the assets of a
Series for the Registrant's performance of the Agreement by the Registrant on
behalf of such Series, and neither the Trustees nor any of the Registrant's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF ADVISER AND SUB-ADVISER.
- ------- ---------------------------------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each 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.
C-7
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management Trust;
Vice President, N&B Secretary, Advisers Managers Trust; Secretary, Neuberger
Management & 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.
Brooke A. Cobb Chief Investment Officer, Bainco International
Vice President, N&B Investors.1 Senior Vice President and Senior Portfolio
Management Manager, Putnam Investments.2
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman Advisers
Assistant Vice Management Trust; Assistant Secretary, Advisers Managers
President, Trust; Assistant Secretary, Neuberger & Berman Income
N&B Management Funds; Assistant Secretary, Neuberger & Berman Income
Trust; Assistant Secretary, Neuberger & Berman Equity
Funds; Assistant Secretary, Neuberger & Berman Equity
Trust; Assistant Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers Trust; Assistant
Secretary, Global Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Robert W. D'Alelio Senior Portfolio Manager, Putnam Investments.3
Vice President, N&B
Management
Barbara DiGiorgio, Assistant Treasurer, Neuberger & Berman Advisers
Assistant Vice Management Trust; Assistant Treasurer, Advisers Managers
President, Trust; Assistant Treasurer, Neuberger & Berman Income
N&B Management 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 & Berman
President and Director, Advisers Management Trust; Chairman of the Board and
N&B Management; Trustee, Advisers Managers Trust; Chairman of the Board
Principal, Neuberger & and Trustee, Neuberger & Berman Income Funds; Chairman
Berman 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 Funds;
Vice President and President and Trustee, Neuberger & Berman Income Trust;
Director, N&B President and Trustee, Income Managers Trust.
Management;
Principal, Neuberger &
Berman
- ----------
1 Until 1997.
2 Until 1995.
3 Until 1996.
C-8
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers
Principal, Neuberger & Management Trust; Assistant Secretary, Advisers Managers
Berman Trust; Assistant Secretary, Neuberger & Berman Income
Funds; Assistant Secretary, Neuberger & Berman Income
Trust; Assistant Secretary, Neuberger & Berman Equity
Funds; Assistant Secretary, Neuberger & Berman Equity
Trust; Assistant Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers Trust; Assistant
Secretary, Global Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Richard Russell Treasurer, Neuberger & Berman Advisers Management Trust;
Vice President, Treasurer, Advisers Managers Trust; Treasurer, Neuberger
N&B Management & 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.
Ingrid Saukaitis Project Director, Council on Economic Priorities.4
Assistant Vice
President,
N&B Management
Jennifer K. Silver Portfolio Manager and Director, Putnam Investments.5
Vice President,
N&B Management;
Principal,
Neuberger & Berman
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers Management
Senior Vice President, Trust; Vice President, Advisers Managers Trust; Vice
N&B Management President, Neuberger & Berman Income Funds; Vice
President, Neuberger & Berman Income Trust; Vice
President, Neuberger & Berman Equity Funds; Vice
President, Neuberger & Berman Equity Trust; Vice
President, Income Managers Trust; Vice President, Equity
Managers Trust; Vice President, Global Managers Trust;
Vice President, Neuberger & Berman Equity Assets.
Michael J. Weiner Vice President, Neuberger & Berman Advisers Management
Senior Vice President, Trust; Vice President, Advisers Managers Trust; Vice
N&B Management 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.
- ----------
4 Until 1997.
5 Until 1997.
C-9
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Celeste Wischerth, Assistant Treasurer, Neuberger & Berman Advisers
Assistant Vice Management Trust; Assistant Treasurer, Advisers Managers
President, Trust; Assistant Treasurer, Neuberger & Berman Income
N&B Management 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 Advisers
Director, N&B Management Trust; President and Trustee, Advisers
Management; Managers Trust; President and Trustee, Neuberger &
Principal, Neuberger & Berman Equity Funds; President and Trustee, Neuberger &
Berman & Berman Equity Trust; President and Trustee, Equity
Managers Trust; President, Global Managers Trust;
President and Trustee, Neuberger & Berman Equity Assets.
The principal address of N&B Management, Neuberger & Berman, and of each of
the investment companies named above, is 605 Third Avenue, New York, New York
10158.
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 Trust
Neuberger & Berman Equity Assets
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.
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Assistant Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Vice President Assistant Treasurer
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board,
Chief Executive
Officer, and Trustee
C-10
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
Brian J. Gaffney Vice President None
Joseph G. Galli Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and Director None
Michael J. Hanratty Assistant 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
Robert L. Ladd Assistant Vice President None
Irwin Lainoff Director None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Vice President None
Loraine Olavarria Assistant Secretary None
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Vice President None
Richard Russell Vice President Treasurer and
Principal Accounting
Officer
Ingrid Saukaitis Assistant Vice President None
Jennifer K. Silver Vice President None
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
Andrea Trachtenberg Vice President of None
Marketing
Judith M. Vale Vice President None
Josephine Velez Assistant Vice President None
Susan Walsh Vice President None
Michael J. Weiner Senior Vice President Vice President and
Principal Financial
Officer
C-11
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
Celeste Wischerth Assistant Vice President Assistant Treasurer
Thomas Wolfe Vice President None
Lawrence Zicklin Director Trustee and President
(c) No commissions or other compensation were received directly or
indirectly from the Registrant by any principal underwriter who was not an
affiliated person of the Registrant.
Item 30. Location of Accounts and Records.
- ------- --------------------------------
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, as amended, and the rules promulgated thereunder
with respect to the Registrant are maintained at the offices of State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, except
for the Registrant's Trust Instrument and By-laws, minutes of meetings of the
Registrant's Trustees and shareholders and the Registrant's policies and
contracts, which are maintained at the offices of the Registrant, 605 Third
Avenue, New York, New York 10158.
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-12
<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. 77 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
10th day of December, 1997.
NEUBERGER & BERMAN EQUITY FUNDS
By:/s/Lawrence Zicklin
---------------------------
Lawrence Zicklin*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 77 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee December 10, 1997
- -------------------------
Faith Colish*
/s/ Donald M. Cox Trustee December 10, 1997
- -------------------------
Donald M. Cox*
/s/ Stanley Egener Chairman of the Board December 10, 1997
- ------------------------- and Trustee (Chief
Stanley Egener* Executive Officer)
/s/ Howard A. Mileaf Trustee December 10, 1997
- -------------------------
Howard A. Mileaf*
/s/ Edward I. O'Brien Trustee December 10, 1997
- -------------------------
Edward I. O'Brien*
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee December 10, 1997
- --------------------------
John T. Patterson, Jr.*
/s/ John P. Rosenthal Trustee December 10, 1997
- --------------------------
John P. Rosenthal*
/s/ Cornelius T. Ryan Trustee Decmeber 10, 1997
- --------------------------
Cornelius T. Ryan*
/s/ Gustave H. Shubert Trustee December 10, 1997
- --------------------------
Gustave H. Shubert*
/s/ Lawrence Zicklin President and Trustee December 10, 1997
- --------------------------
Lawrence Zicklin*
/s/ Michael J. Weiner Vice President December 10, 1997
- -------------------------- (Principal Financial
Michael J. Weiner* Officer)
/s/ Richard Russell Treasurer (Principal December 10, 1997
- -------------------------- Accounting Officer)
Richard Russell*
* Signatures affixed by Beth A. Stekler pursuant to a Power of Attorney
dated October 24, 1996, and filed herewith.
<PAGE>
POWER OF ATTORNEY
-----------------
NEUBERGER & BERMAN EQUITY FUNDS, a Delaware business trust ("Trust"),
and each of its undersigned officers and trustees hereby nominates, constitutes
and appoints Lawrence Zicklin, Michael J. Weiner, Richard M. Phillips, Arthur C.
Delibert, Dana L. Platt, Susan M. Casey and Beth A. Stekler (with full power to
each of them to act alone) its/his/her true and lawful attorney-in-fact and
agent, for it/him/her and on its/his/her behalf and in its/his/her name, place
and stead in any and all capacities, to make, execute and sign the Trust's
Registration Statement on Form N-1A under the Securities Act of 1933 and/or the
Investment Company Act of 1940, any registration statements on Form N-14, and
any and all amendments to such registration statements on Form N-1A or Form
N-14, and to file with the Securities and Exchange Commission, and any other
regulatory authority having jurisdiction over the offer and sale of shares of
the Beneficial Interest of the Trust, any such registration statement or
amendment, and any and all supplements thereto or to any prospectus or statement
of additional information forming a part thereof, and any and all exhibits and
other documents requisite in connection therewith, granting unto said attorneys,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises as fully
to all intents and purposes as the Trust and the undersigned officers and
trustees itself/themselves might or could do.
IN WITNESS WHEREOF, NEUBERGER & BERMAN EQUITY FUNDS has caused this
power of attorney to be executed in its name by its President, and attested by
its Secretary, and the undersigned officers and trustees have hereunto set their
hands and seals this 24th day of October, 1996.
NEUBERGER & BERMAN EQUITY FUNDS
By: /s/ Lawrence Zicklin
--------------------------------
Lawrence Zicklin, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
- ------------------------------
Claudia A. Brandon,
Secretary
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener Chairman of the Board, Chief
- ------------------------------------ Executive Officer, and Trustee
Stanley Egener
/s/ Lawrence Zicklin
- ------------------------------------ President and Trustee
Lawrence Zicklin
/s/ Michael J. Weiner
- ------------------------------------ Vice President and Principal
Michael J. Weiner Financial Officer
/s/ Richard Russell
- ------------------------------------ Treasurer and Principal
Richard Russell Accounting Officer
/s/ Faith Colish
- ------------------------------------ Trustee
Faith Colish
/s/ Donald M. Cox
- ------------------------------------ Trustee
Donald M. Cox
/s/ Alan R. Gruber
- ------------------------------------ Trustee
Alan R. Gruber
/s/ Howard A. Mileaf
- ------------------------------------ Trustee
Howard A. Mileaf
/s/ Edward I. O'Brien
- ------------------------------------ Trustee
Edward I. O'Brien
[signatures continued on next page]
-2-
<PAGE>
Signature Title
--------- -----
/s/ John T. Patterson, Jr.
- ----------------------------------- Trustee
John T. Patterson, Jr.
/s/ John P. Rosenthal
- ----------------------------------- Trustee
John P. Rosenthal
/s/ Cornelius T. Ryan
- ----------------------------------- Trustee
Cornelius T. Ryan
/s/ Gustave H. Shubert
- ----------------------------------- Trustee
Gustave H. Shubert
- 3 -
<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. 77
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 10th day of December 1997.
EQUITY MANAGERS TRUST
By:/s/ Lawrence Zicklin
--------------------------------
Lawrence Zicklin*
President
Pursuant to the requirements of the Securities Act of 1933, the
Post-Effective Amendment No. 77 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee December 10, 1997
- -------------------------
Faith Colish*
/s/ Donald M. Cox Trustee December 10, 1997
- -------------------------
Donald M. Cox*
/s/ Stanley Egener Chairman of the Board December 10, 1997
- ------------------------- and Trustee (Chief
Stanley Egener* Executive Officer)
/s/ Howard A. Mileaf Trustee December 10, 1997
- -------------------------
Howard A. Mileaf*
/s/ Edward I. O'Brien Trustee December 10, 1997
- -------------------------
Edward I. O'Brien*
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee December 10, 1997
- --------------------------
John T. Patterson, Jr.*
/s/ John P. Rosenthal Trustee December 10, 1997
- --------------------------
John P. Rosenthal*
/s/ Cornelius T. Ryan Trustee Decmeber 10, 1997
- --------------------------
Cornelius T. Ryan*
/s/ Gustave H. Shubert Trustee December 10, 1997
- --------------------------
Gustave H. Shubert*
/s/ Lawrence Zicklin President and Trustee December 10, 1997
- --------------------------
Lawrence Zicklin*
/s/ Michael J. Weiner Vice President December 10, 1997
- -------------------------- (Principal Financial
Michael J. Weiner* Officer)
/s/ Richard Russell Treasurer (Principal December 10, 1997
- -------------------------- Accounting Officer)
Richard Russell*
* Signatures affixed by Beth A. Stekler pursuant to a Power of Attorney
dated October 24, 1996, and filed herewith.
<PAGE>
POWER OF ATTORNEY
EQUITY MANAGERS TRUST, a New York trust (the "Trust"), and each of its
undersigned officers and trustees hereby nominates, constitutes and appoints
Lawrence Zicklin, Michael J. Weiner, Richard M. Phillips, Arthur C. Delibert,
Susan M. Casey, Dana L. Platt and Beth A. Stekler (with full power to each of
them to act alone) its/his/her true and lawful attorney-in-fact and agent, for
it/him/her and on its/his/her behalf and in its/his/her name, place and stead in
any and all capacities, to make, execute and sign any feeder fund Registration
Statements on Form N-1A under the Securities Act of 1933 and/or the Investment
Company Act of 1940 and any amendments thereto, any amendments to the Trust's
Registration Statement on Form N-1A under the Investment Company Act of 1940,
any registration statements on Form N-14 and any amendments thereto, and to file
with the Securities and Exchange Commission, and any other regulatory authority
having jurisdiction over the offer and sale of shares of such feeder fund, any
such registration statement or amendments, and any and all supplements thereto
or to any prospectus or statement of additional information forming a part
thereof, and any and all exhibits and other documents requisite in connection
therewith, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises as fully to all intents and purposes as the
Trust and the undersigned officers and trustees itself/themselves might or could
do.
IN WITNESS WHEREOF, EQUITY MANAGERS TRUST has caused this power of
attorney to be executed in its name by its President, and attested by its
Secretary, and the undersigned officers and trustees have hereunto set their
hands this 24th day of October, 1996.
EQUITY MANAGERS TRUST
By: /s/ Lawrence Zicklin
------------------------------
Lawrence Zicklin, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
- ------------------------------
Claudia A. Brandon,
Secretary
[Signatures Continued on Next Page]
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener
- ---------------------------------- Chairman of the Board, Chief
Stanley Egener Executive Officer, and Trustee
/s/ Lawrence Zicklin
- ---------------------------------- President and Trustee
Lawrence Zicklin
/s/ Michael J. Weiner
- ---------------------------------- Vice President and Principal
Michael J. Weiner Financial Officer
/s/ Richard Russell
- ---------------------------------- Treasurer and Principal
Richard Russell Accounting Officer
/s/ Faith Colish
- ---------------------------------- Trustee
Faith Colish
/s/ Donald M. Cox
- ---------------------------------- Trustee
Donald M. Cox
/s/ Alan R. Gruber
- ---------------------------------- Trustee
Alan R. Gruber
/s/ Howard A. Mileaf
- ---------------------------------- Trustee
Howard A. Mileaf
/s/ Edward I. O'Brien
- ---------------------------------- Trustee
Edward I. O'Brien
[signatures continued on next page]
- 2 -
<PAGE>
Signature Title
--------- -----
/s/ John T. Patterson, Jr.
- ---------------------------------- Trustee
John T. Patterson, Jr.
/s/ John P. Rosenthal
- ---------------------------------- Trustee
John P. Rosenthal
/s/ Cornelius T. Ryan
- ---------------------------------- Trustee
Cornelius T. Ryan
/s/ Gustave H. Shubert
- ---------------------------------- Trustee
Gustave H. Shubert
- 3 -
<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. 77 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 Nassau, the Bahamas on the 21st day of November, 1997.
GLOBAL MANAGERS TRUST
By:/s/Stanley Egener
Stanley Egener, Chairman of the Board
(Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933,
Post-Effective Amendment No. 77 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/Stanley Egener Chairman of the Board November 21, 1997
- ------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/Howard A. Mileaf Trustee November 21, 1997
- -------------------------
Howard A. Mileaf
/s/John T. Patterson, Jr. Trustee November 21, 1997
- -------------------------
John T. Patterson, Jr.
/s/John P. Rosenthal Trustee November 21, 1997
- -------------------------
John P. Rosenthal
/s/Michael J. Weiner Vice President(Principal November 21, 1997
- ------------------------- Financial Officer)
Michael J. Weiner
/s/Richard Russell Treasurer (Principal November 21, 1997
- ------------------------- Accounting Officer)
Richard Russell*
</TABLE>
*Signed at Nassau, the Bahamas, by Arthur C. Delibert, pursuant to a Power of
Attorney executed in Paget, Bermuda, on May 5, 1995, and filed herewith.
<PAGE>
POWER OF ATTORNEY
GLOBAL MANAGERS TRUST, a New York trust (the "Trust"), and each of its
undersigned officers and trustees hereby nominates, constitutes and appoints
Stanley Egener, Michael J. Weiner, Alan R. Dynner, Richard M. Phillips, Arthur
C. Delibert, Susan M. Casey, Beth A. Stekler, Jacqueline Henning and Lenore Joan
McCabe (with full power to each of them to act atone) its/his/her true and
lawful attorney-in-fact and agent, for it/him/her and on its/his/her behalf and
in its/his/her name, place and stead in any and all capacities, to make, execute
and sign any and all amendments to the Trust's Registration Statement on Form
N-1A under the Securities Act of 1933 and the Investment Company Act of 1940,
any registration statement of any feeder fund investing in the Trust, and any
registration statements on Form N-14, and to file with the Securities and
Exchange Commission, and any other regulatory authority having jurisdiction over
the offer and sale of shares of the Beneficial Interest of the Trust, any such
amendment, and any and all supplements thereto or to any prospectus or statement
of additional information forming a part thereof, and any and all exhibits and
other documents requisite in connection therewith, granting unto said attorneys,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises as fully
to all intents and purposes as the Trust and the undersigned officers and
trustees itself/themselves might or could do.
IN WITNESS WHEREOF, GLOBAL MANAGERS TRUST has caused this power of attorney to
be executed in its name by its Chairman, and attested by its Secretary, and the
undersigned officers and trustees have hereunto set their hands and seals at
Paget, Bermuda, this 5th day of May, 1945.
GLOBAL MANAGERS TRUST
By: /s/ Stanley Egener
-------------------------------
Stanley Egener, Chairman of the
Board
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
- -----------------------------
Claudia A. Brandon, Secretary
[Signatures Continued on Next Page]
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------- -----
<S> <C>
/s/ Stanley Egener Chairman of the Board and Trustee
- ------------------------- (Chief Executive Officer)
Stanley Egener
/s/ Howard A. Mileaf Trustee
- -------------------------
Howard A. Mileaf
/s/ John T. Patterson, Jr. Trustee
- -------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee
- -------------------------
John P. Rosenthal
Michael J. Weiner Vice President
- -------------------------
Michael J. Weiner
/s/ Richard Russell Treasurer
- -------------------------
Richard Russell
/s/ Claudia A. Brandon Secretary
- -------------------------
Claudia A. Brandon
</TABLE>
<PAGE>
NEUBERGER & BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 77 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- ------------
(1) (a) Certificate of Trust. Incorporated by N.A.
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 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. N.A.
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. 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.
(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.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- ------------
(b) (i) Sub-Advisory Agreement Between Neuberger N.A.
& 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 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 Under N.A.
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 & N.A.
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 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 & ____
Berman Equity Funds and Neuberger & Berman
Management Incorporated. Filed Herewith.
(b) Schedule A - Series of Neuberger & Berman ____
Equity Funds Currently Subject to the
Distribution Agreement. Filed Herewith.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- ------------
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & N.A.
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 of Compensation under the Custodian N.A.
Contract. Incorporated by Reference to
Post-Effective Amendment No. 76 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, Edgar Accession No.
0000898432-96-000525.
(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) Second Amendment to Transfer Agency and ____
Service Agreement between Neuberger &
Berman Equity Funds and State Street Bank
and Trust Company. Filed Herewith.
(v) Schedule of Compensation under the N.A.
Transfer Agency and Service Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 76 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-96-000525.
(b) (i) Administration Agreement Between Neuberger ____
& Berman Equity Funds and Neuberger &
Berman Management Incorporated. Filed
herewith.
(ii) Schedule A - Series of Neuberger & Berman ____
Equity Funds Currently Subject to the
Administration Agreement. Filed herewith.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- ------------
(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 LLP ____
on Securities Matters with Respect to Neuberger &
Berman Equity Funds. Filed Herewith.
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP ____
with Respect to Neuberger & Berman Socially
Responsive Fund. Filed Herewith.
(c) Opinion and Consent of Kirkpatrick & Lockhart LLP ____
with Respect to Neuberger & Berman International
Fund. Filed Herewith.
(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.
None.
(17) Financial Data Schedule. Filed herewith. ____
(18) Plan Pursuant to Rule 18f-3. None. N.A.
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 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-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 705,004
<RECEIVABLES> 13,602
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 718,606
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 498
<TOTAL-LIABILITIES> 498
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 506,822
<SHARES-COMMON-STOCK> 46,180
<SHARES-COMMON-PRIOR> 17,908
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,525
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 197,761
<NET-ASSETS> 718,108
<DIVIDEND-INCOME> 2,959
<INTEREST-INCOME> 1,240
<OTHER-INCOME> 0
<EXPENSES-NET> (4,519)
<NET-INVESTMENT-INCOME> (320)
<REALIZED-GAINS-CURRENT> 14,252
<APPREC-INCREASE-CURRENT> 148,087
<NET-CHANGE-FROM-OPS> 162,019
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (3,645)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 37,602
<NUMBER-OF-SHARES-REDEEMED> (9,618)
<SHARES-REINVESTED> 288
<NET-CHANGE-IN-ASSETS> 522,729
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,230
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,519
<AVERAGE-NET-ASSETS> 388,951
<PER-SHARE-NAV-BEGIN> 10.91
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 4.80
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.15)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.55
<EXPENSE-RATIO> 1.16
<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 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-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 59,757
<RECEIVABLES> 238
<ASSETS-OTHER> 24
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60,019
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 279
<TOTAL-LIABILITIES> 279
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,047
<SHARES-COMMON-STOCK> 3,358
<SHARES-COMMON-PRIOR> 2,372
<ACCUMULATED-NII-CURRENT> 53
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,408
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,232
<NET-ASSETS> 59,740
<DIVIDEND-INCOME> 666
<INTEREST-INCOME> 142
<OTHER-INCOME> 0
<EXPENSES-NET> (701)
<NET-INVESTMENT-INCOME> 107
<REALIZED-GAINS-CURRENT> 1,586
<APPREC-INCREASE-CURRENT> 11,253
<NET-CHANGE-FROM-OPS> 12,946
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (82)
<DISTRIBUTIONS-OF-GAINS> (1,152)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,925
<NUMBER-OF-SHARES-REDEEMED> (1,013)
<SHARES-REINVESTED> 74
<NET-CHANGE-IN-ASSETS> 26,816
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> 951
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 701
<AVERAGE-NET-ASSETS> 47,358
<PER-SHARE-NAV-BEGIN> 13.88
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 4.33
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> (.42)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.79
<EXPENSE-RATIO> 1.48
<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-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 115,264
<RECEIVABLES> 271
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115,571
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 195
<TOTAL-LIABILITIES> 195
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 90,855
<SHARES-COMMON-STOCK> 7,780
<SHARES-COMMON-PRIOR> 4,784
<ACCUMULATED-NII-CURRENT> (153)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,816
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,858
<NET-ASSETS> 115,376
<DIVIDEND-INCOME> 1,130
<INTEREST-INCOME> 382
<OTHER-INCOME> 0
<EXPENSES-NET> (1,533)
<NET-INVESTMENT-INCOME> (21)
<REALIZED-GAINS-CURRENT> 2,368
<APPREC-INCREASE-CURRENT> 16,214
<NET-CHANGE-FROM-OPS> 18,561
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (111)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,581
<NUMBER-OF-SHARES-REDEEMED> (3,592)
<SHARES-REINVESTED> 7
<NET-CHANGE-IN-ASSETS> 58,388
<ACCUMULATED-NII-PRIOR> 23
<ACCUMULATED-GAINS-PRIOR> (599)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,533
<AVERAGE-NET-ASSETS> 90,112
<PER-SHARE-NAV-BEGIN> 11.91
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 2.94
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.83
<EXPENSE-RATIO> 1.70
<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 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-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 6,475,571
<RECEIVABLES> 8,616
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,484,187
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,051
<TOTAL-LIABILITIES> 9,051
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,679,088
<SHARES-COMMON-STOCK> 206,153
<SHARES-COMMON-PRIOR> 206,284
<ACCUMULATED-NII-CURRENT> 6,443
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 723,639
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,065,966
<NET-ASSETS> 6,475,136
<DIVIDEND-INCOME> 61,755
<INTEREST-INCOME> 15,493
<OTHER-INCOME> 0
<EXPENSES-NET> (45,637)
<NET-INVESTMENT-INCOME> 31,611
<REALIZED-GAINS-CURRENT> 728,099
<APPREC-INCREASE-CURRENT> 1,139,234
<NET-CHANGE-FROM-OPS> 1,898,944
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (49,597)
<DISTRIBUTIONS-OF-GAINS> (252,628)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36,707
<NUMBER-OF-SHARES-REDEEMED> (47,659)
<SHARES-REINVESTED> 10,821
<NET-CHANGE-IN-ASSETS> 1,569,967
<ACCUMULATED-NII-PRIOR> 24,429
<ACCUMULATED-GAINS-PRIOR> 249,689
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 45,637
<AVERAGE-NET-ASSETS> 5,734,823
<PER-SHARE-NAV-BEGIN> 23.78
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> 8.96
<PER-SHARE-DIVIDEND> (.24)
<PER-SHARE-DISTRIBUTIONS> (1.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 31.41
<EXPENSE-RATIO> .80
<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 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-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 570,594
<RECEIVABLES> 231
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 570,825
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 376
<TOTAL-LIABILITIES> 376
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 338,411
<SHARES-COMMON-STOCK> 39,315
<SHARES-COMMON-PRIOR> 43,230
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 146,083
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 85,955
<NET-ASSETS> 570,449
<DIVIDEND-INCOME> 3,359
<INTEREST-INCOME> 861
<OTHER-INCOME> 0
<EXPENSES-NET> (5,272)
<NET-INVESTMENT-INCOME> (1,052)
<REALIZED-GAINS-CURRENT> 170,508
<APPREC-INCREASE-CURRENT> 5,870
<NET-CHANGE-FROM-OPS> 175,326
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (67,073)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,177
<NUMBER-OF-SHARES-REDEEMED> (16,326)
<SHARES-REINVESTED> 5,234
<NET-CHANGE-IN-ASSETS> 54,210
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 49,542
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,272
<AVERAGE-NET-ASSETS> 536,346
<PER-SHARE-NAV-BEGIN> 11.94
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> 4.26
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.66)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.51
<EXPENSE-RATIO> .98
<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 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-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 3,099,619
<RECEIVABLES> 6,591
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,106,210
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,482
<TOTAL-LIABILITIES> 2,482
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,991,163
<SHARES-COMMON-STOCK> 98,204
<SHARES-COMMON-PRIOR> 78,380
<ACCUMULATED-NII-CURRENT> 11,889
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 463,047
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 637,629
<NET-ASSETS> 3,103,728
<DIVIDEND-INCOME> 31,495
<INTEREST-INCOME> 5,757
<OTHER-INCOME> 0
<EXPENSES-NET> (19,746)
<NET-INVESTMENT-INCOME> 17,506
<REALIZED-GAINS-CURRENT> 490,163
<APPREC-INCREASE-CURRENT> 417,398
<NET-CHANGE-FROM-OPS> 925,067
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17,551)
<DISTRIBUTIONS-OF-GAINS> (208,212)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29,056
<NUMBER-OF-SHARES-REDEEMED> (17,682)
<SHARES-REINVESTED> 8,450
<NET-CHANGE-IN-ASSETS> 1,231,784
<ACCUMULATED-NII-PRIOR> 11,934
<ACCUMULATED-GAINS-PRIOR> 181,185
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,746
<AVERAGE-NET-ASSETS> 2,440,023
<PER-SHARE-NAV-BEGIN> 23.88
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> 10.36
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (2.61)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 31.60
<EXPENSE-RATIO> .81
<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 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-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 1,410,709
<RECEIVABLES> 2,226
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,412,935
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,025
<TOTAL-LIABILITIES> 1,025
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 688,845
<SHARES-COMMON-STOCK> 36,307
<SHARES-COMMON-PRIOR> 37,641
<ACCUMULATED-NII-CURRENT> 1,666
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 172,000
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 549,399
<NET-ASSETS> 1,411,910
<DIVIDEND-INCOME> 11,924
<INTEREST-INCOME> 1,094
<OTHER-INCOME> 0
<EXPENSES-NET> (10,497)
<NET-INVESTMENT-INCOME> 2,521
<REALIZED-GAINS-CURRENT> 172,820
<APPREC-INCREASE-CURRENT> 265,410
<NET-CHANGE-FROM-OPS> 440,751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,010)
<DISTRIBUTIONS-OF-GAINS> (52,068)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,453
<NUMBER-OF-SHARES-REDEEMED> (9,505)
<SHARES-REINVESTED> 1,718
<NET-CHANGE-IN-ASSETS> 340,530
<ACCUMULATED-NII-PRIOR> 7,155
<ACCUMULATED-GAINS-PRIOR> 51,474
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,497
<AVERAGE-NET-ASSETS> 1,226,569
<PER-SHARE-NAV-BEGIN> 28.46
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> 12.00
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (1.43)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 38.89
<EXPENSE-RATIO> .86
<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 Focus Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN FOCUS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 1,001,253
<INVESTMENTS-AT-VALUE> 1,588,776
<RECEIVABLES> 14,751
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 8
<TOTAL-ASSETS> 1,603,576
<PAYABLE-FOR-SECURITIES> 20,629
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,506
<TOTAL-LIABILITIES> 30,135
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 639,085
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 33,648
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 316,481
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 584,227
<NET-ASSETS> 1,573,441
<DIVIDEND-INCOME> 12,943
<INTEREST-INCOME> 1,187
<OTHER-INCOME> 0
<EXPENSES-NET> (7,011)
<NET-INVESTMENT-INCOME> 7,119
<REALIZED-GAINS-CURRENT> 176,471
<APPREC-INCREASE-CURRENT> 298,137
<NET-CHANGE-FROM-OPS> 481,727
<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> 451,070
<ACCUMULATED-NII-PRIOR> 26,529
<ACCUMULATED-GAINS-PRIOR> 140,010
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,610
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,011
<AVERAGE-NET-ASSETS> 1,330,064
<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> .53
<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>
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN GUARDIAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 6,199,099
<INVESTMENTS-AT-VALUE> 8,801,318
<RECEIVABLES> 23,202
<ASSETS-OTHER> 198
<OTHER-ITEMS-ASSETS> 13
<TOTAL-ASSETS> 8,824,731
<PAYABLE-FOR-SECURITIES> 49,050
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,474
<TOTAL-LIABILITIES> 66,524
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,580,149
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 256,517
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,326,183
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,595,358
<NET-ASSETS> 8,758,207
<DIVIDEND-INCOME> 80,759
<INTEREST-INCOME> 20,405
<OTHER-INCOME> 0
<EXPENSES-NET> (34,306)
<NET-INVESTMENT-INCOME> 66,858
<REALIZED-GAINS-CURRENT> 871,150
<APPREC-INCREASE-CURRENT> 1,570,338
<NET-CHANGE-FROM-OPS> 2,508,346
<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> 2,525,665
<ACCUMULATED-NII-PRIOR> 189,659
<ACCUMULATED-GAINS-PRIOR> 455,033
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,887
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 34,306
<AVERAGE-NET-ASSETS> 7,502,735
<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>
<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>
<SERIES>
<NUMBER> 02
<NAME> NEUBERGER&BERMAN MANHATTAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 522,622
<INVESTMENTS-AT-VALUE> 615,904
<RECEIVABLES> 20,770
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 12
<TOTAL-ASSETS> 636,713
<PAYABLE-FOR-SECURITIES> 14,593
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 377
<TOTAL-LIABILITIES> 14,970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 204,678
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 7,173
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 316,610
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 93,282
<NET-ASSETS> 621,743
<DIVIDEND-INCOME> 3,638
<INTEREST-INCOME> 934
<OTHER-INCOME> 0
<EXPENSES-NET> (3,418)
<NET-INVESTMENT-INCOME> 1,154
<REALIZED-GAINS-CURRENT> 180,525
<APPREC-INCREASE-CURRENT> 10,646
<NET-CHANGE-FROM-OPS> 192,325
<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> 54,317
<ACCUMULATED-NII-PRIOR> 6,019
<ACCUMULATED-GAINS-PRIOR> 136,085
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,093
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,418
<AVERAGE-NET-ASSETS> 581,060
<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> .59
<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 Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN PARTNERS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 2,882,508
<INVESTMENTS-AT-VALUE> 3,584,061
<RECEIVABLES> 30,758
<ASSETS-OTHER> 94
<OTHER-ITEMS-ASSETS> 19
<TOTAL-ASSETS> 3,614,932
<PAYABLE-FOR-SECURITIES> 32,033
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,326
<TOTAL-LIABILITIES> 39,359
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,754,354
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 77,754
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,041,912
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 701,553
<NET-ASSETS> 3,575,573
<DIVIDEND-INCOME> 35,022
<INTEREST-INCOME> 6,410
<OTHER-INCOME> 0
<EXPENSES-NET> (13,116)
<NET-INVESTMENT-INCOME> 28,316
<REALIZED-GAINS-CURRENT> 531,668
<APPREC-INCREASE-CURRENT> 473,597
<NET-CHANGE-FROM-OPS> 1,033,581
<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> 1,575,970
<ACCUMULATED-NII-PRIOR> 49,438
<ACCUMULATED-GAINS-PRIOR> 510,244
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,498
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,116
<AVERAGE-NET-ASSETS> 2,705,496
<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> .48
<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 Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> NEUBERGER&BERMAN GENESIS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 858,349
<INVESTMENTS-AT-VALUE> 1,130,629
<RECEIVABLES> 551
<ASSETS-OTHER> 19
<OTHER-ITEMS-ASSETS> 26
<TOTAL-ASSETS> 1,131,225
<PAYABLE-FOR-SECURITIES> 31,635
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,939
<TOTAL-LIABILITIES> 47,574
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 771,893
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,800
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 36,678
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 272,280
<NET-ASSETS> 1,083,651
<DIVIDEND-INCOME> 4,129
<INTEREST-INCOME> 1,749
<OTHER-INCOME> 0
<EXPENSES-NET> (4,150)
<NET-INVESTMENT-INCOME> 1,728
<REALIZED-GAINS-CURRENT> 18,411
<APPREC-INCREASE-CURRENT> 211,059
<NET-CHANGE-FROM-OPS> 231,198
<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> 823,787
<ACCUMULATED-NII-PRIOR> 1,072
<ACCUMULATED-GAINS-PRIOR> 18,267
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,881
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,150
<AVERAGE-NET-ASSETS> 539,327
<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> .77
<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 Portfolio Annual Report
and is qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN SOCIALLY RESPONSIVE PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 188,564
<INVESTMENTS-AT-VALUE> 255,850
<RECEIVABLES> 3,248
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 259,113
<PAYABLE-FOR-SECURITIES> 2,668
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 164
<TOTAL-LIABILITIES> 2,832
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 160,218
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4,851
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,926
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 67,286
<NET-ASSETS> 256,281
<DIVIDEND-INCOME> 2,881
<INTEREST-INCOME> 612
<OTHER-INCOME> 0
<EXPENSES-NET> (1,279)
<NET-INVESTMENT-INCOME> 2,214
<REALIZED-GAINS-CURRENT> 11,478
<APPREC-INCREASE-CURRENT> 44,043
<NET-CHANGE-FROM-OPS> 57,735
<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> 97,796
<ACCUMULATED-NII-PRIOR> 2,637
<ACCUMULATED-GAINS-PRIOR> 12,448
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,279
<AVERAGE-NET-ASSETS> 204,186
<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> .63
<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 Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN INTERNATIONAL PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 91,445
<INVESTMENTS-AT-VALUE> 115,099
<RECEIVABLES> 272
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</TABLE>
DISTRIBUTION AGREEMENT
This Agreement is made as of August 2, 1993, between Neuberger &
Berman Equity Funds, a Delaware business trust ("Trust"), and Neuberger & Berman
Management Incorporated, a New York corporation (the "Distributor"), and is
amended as of May 1, 1995 and August 2, 1997.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end, diversified management investment
company and has established several separate series of shares ("Series"), with
each Series having its own assets and investment policies; and
WHEREAS, the Trust desires to retain the Distributor to furnish
distribution services to each Series listed in Schedule A attached hereto, and
to such other Series of the Trust hereinafter established as agreed to from time
to time by the parties, evidenced by an addendum to Schedule A (hereinafter
"Series" shall refer to each Series which is subject to this Agreement and all
agreements and actions described herein to be made or taken by a Series shall be
made or taken by the Trust on behalf of the Series), and the Distributor is
willing to furnish such services,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. The Trust hereby appoints the Distributor as agent to sell the
shares of beneficial interest of each Series (the "Shares") and the Distributor
hereby accepts such appointment. All sales by the Distributor shall be expressly
subject to acceptance by the Trust, acting on behalf of the Series. The Trust
may suspend sales of the Shares of any one or more Series at any time, and may
resume sales at any later time.
<PAGE>
2. (a) The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value ("NAV") thereof as described in
Section 3 hereof, and (ii) the Series shall receive 100% of such NAV.
(b) The Distributor may enter into agreements, in form and
substance satisfactory to the Trust, with dealers selected by the Distributor,
providing for the sale to such dealers and resale by such dealers of Shares at
their NAV.
3. The Trust agrees to supply to the Distributor, promptly after
the time or times at which NAV is determined, on each day on which the New York
Stock Exchange is open for unrestricted trading and on such other days as the
Board of Trustees of the Trust ("Trustees") may from time to time determine
(each such day being hereinafter called a "business day"), a statement of the
NAV of each Series having been determined in the manner set forth in the
then-current Prospectus and Statement of Additional Information ("SAI") of each
Series. Each determination of NAV shall take effect as of such time or times on
each business day as set forth in the then-current Prospectus of each Series.
4. Upon receipt by the Trust at its principal place of business
of a written order from the Distributor, together with delivery instructions,
the Trust shall, if it elects to accept such order, as promptly as practicable,
cause the Shares purchased by such order to be delivered in such amounts and in
such names as the Distributor shall specify, against payment therefor in such
manner as may be acceptable to the Trust. The Trust may, in its discretion,
refuse to accept any order for the purchase of Shares that the Distributor may
tender to it.
5. (a) All sales literature and advertisements used by the
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<PAGE>
Distributor in connection with sales of Shares shall be subject to approval by
the Trust. The Trust authorizes the Distributor, in connection with the sale or
arranging for the sale of Shares of any Series, to provide only such information
and to make only such statements or representations as are contained in the
Series' then-current Prospectus and SAI or in such financial and other
statements furnished to the Distributor pursuant to the next paragraph or as may
properly be included in sales literature or advertisements in accordance with
the provisions of the Securities Act of 1933 (the "1933 Act"), the 1940 Act and
applicable rules of self-regulatory organizations. Neither the Trust nor any
Series shall be responsible in any way for any information provided or
statements or representations made by the Distributor or its representatives or
agents other than the information, statements and representations described in
the preceding sentence.
(b) Each Series shall keep the Distributor fully informed with
regard to its affairs, shall furnish the Distributor with a certified copy of
all of its financial statements and a signed copy of each report prepared for it
by its independent auditors, and shall cooperate fully in the efforts of the
Distributor to negotiate and sell Shares of such Series and in the Distributor's
performance of all its duties under this Agreement.
6. The Distributor, as agent of each Series and for the account
and risk of each Series, is authorized, subject to the direction of the Trust,
to redeem outstanding Shares of such Series when properly tendered by
shareholders pursuant to the redemption right granted to such Series'
shareholders by the Trust Instrument of the Trust, as from time to time in
effect, at a redemption price equal to the NAV per Share of such Series next
determined after proper tender and acceptance. The Trust has delivered to the
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<PAGE>
Distributor a copy of the Trust's Trust Instrument as currently in effect and
agrees to deliver to the Distributor any amendments thereto promptly upon filing
thereof with the Office of the Secretary of State of the State of Delaware.
7. The Distributor shall assume and pay or reimburse each Series
for the following expenses of such Series: (i) costs of printing and
distributing reports, prospectuses and SAIs for other than existing shareholders
used in connection with the sale or offering of the Series' Shares; (ii) costs
of preparing, printing and distributing all advertising and sales literature
relating to such Series printed at the instruction of the Distributor; and (iii)
counsel fees and expenses in connection with the foregoing. The Distributor
shall pay all its own costs and expenses connected with the sale of Shares.
8. Each Series shall maintain a currently effective Registration
Statement on Form N-1A with respect to such Series and shall file with the
Securities and Exchange Commission (the "SEC") such reports and other documents
as may be required under the 1933 Act and the 1940 Act or by the rules and
regulations of the SEC thereunder.
Each Series represents and warrants that the Registration
Statement, post-effective amendments, Prospectus and SAI (excluding statements
relating to the Distributor and the services it provides that are based upon
written information furnished by the Distributor expressly for inclusion
therein) of such Series shall not contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and that all statements or
information furnished to the Distributor, pursuant to Section 5(b) hereof, shall
be true and correct in all material respects.
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<PAGE>
9. (a) This Agreement, as amended, shall become effective on
August 2, 1997 and shall remain in full force and effect until August 2, 1998
and may be continued from year to year thereafter; PROVIDED, that such
continuance shall be specifically approved each year by the Trustees or by a
majority of the outstanding voting securities of the Series, and in either case,
also by a majority of the Trustees who are not interested persons of the Trust
or the Distributor ("Disinterested Trustees"). This Agreement may be amended as
to any Series with the approval of the Trustees or of a majority of the
outstanding voting securities of such Series; PROVIDED, that in either case,
such amendment also shall be approved by a majority of the Disinterested
Trustees.
(b) Either party may terminate this Agreement without the payment
of any penalty, upon not more than sixty days' nor less than thirty days'
written notice delivered personally or mailed by registered mail, postage
prepaid, to the other party; PROVIDED, that in the case of termination by any
Series, such action shall have been authorized (i) by resolution of the
Trustees, or (ii) by vote of a majority of the outstanding voting securities of
such Series, or (iii) by written consent of a majority of the Disinterested
Trustees.
(c) This Agreement shall automatically terminate if it is
assigned by the Distributor.
(d) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC validly issued pursuant to the 1940
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<PAGE>
Act. Specifically, the terms "interested persons," "assignment" and "vote of a
majority of the outstanding voting securities," as used in this Agreement, shall
have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition,
when the effect of a requirement of the 1940 Act reflected in any provision of
this Agreement is modified, interpreted or relaxed by a rule, regulation or
order of the SEC, whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order. The
Trust and the Distributor may from time to time agree on such provisions
interpreting or clarifying the provisions of this Agreement as, in their joint
opinion, are consistent with the general tenor of this Agreement and with the
specific provisions of this Section 9(d). Any such interpretations or
clarifications shall be in writing signed by the parties and annexed hereto, but
no such interpretation or clarification shall be effective if in contravention
of any applicable federal or state law or regulations, and no such
interpretation or clarification shall be deemed to be an amendment of this
Agreement.
No term or provision of this Agreement shall be construed to
require the Distributor to provide distribution services to any series of the
Trust other than the Series, or to require any Series to pay any compensation or
expenses that are properly allocable, in a manner approved by the Trustees, to a
series of the Trust other than such Series.
(e) This Agreement is made and to be principally performed in the
State of New York, and except insofar as the 1940 Act or other federal laws and
regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York.
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<PAGE>
(f) This Agreement is made by the Trust solely with respect to
the Series, and the obligations created hereby with respect to one Series bind
only assets belonging to that Series and are not binding on any other series of
the Trust.
10. The Distributor or one of its affiliates may from time to
time deem it desirable to offer to the list of shareholders of each Series the
shares of other mutual funds for which it acts as Distributor, including other
series of the Trust or other products or services; however, any such use of the
list of shareholders of any Series shall be made subject to such terms and
conditions, if any, as shall be approved by a majority of the Disinterested
Trustees.
11. The Distributor shall look only to the assets of a Series for
the performance of this Agreement by the Trust on behalf of such Series, and
neither the shareholders, the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed by their duly authorized officers and under their
respective seals.
NEUBERGER & BERMAN
EQUITY FUNDS
By: /s/ Michael J. Weiner
-----------------------
Title: Vice President
--------------------
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<PAGE>
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
By: /s/ Stanley Egener
-----------------------
Title: President
--------------------
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NEUBERGER & BERMAN EQUITY FUNDS
DISTRIBUTION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Funds currently subject to this
Agreement are as follows:
DATE MADE A PARTY
SERIES TO AGREEMENT
------ -----------------
Neuberger & Berman Focus Fund August 2, 1993
Neuberger & Berman Genesis Fund August 2, 1993
Neuberger & Berman Guardian Fund August 2, 1993
Neuberger & Berman International Fund November 1, 1995
Neuberger & Berman Manhattan Fund August 2, 1993
Neuberger & Berman Partners Fund August 2, 1993
Neuberger & Berman Socially Responsive Fund March 16, 1994
AMENDMENT TO THE
TRANSFER AGENCY AND SERVICE AGREEMENT
This Amendment dated as of January 23, 1997 between Neuberger
& Berman Equity Funds, a Delaware business trust, having its principal office
and place of business at 605 Third Avenue, 2nd Floor, New York, NY 10158-0180
(the "Fund") and State Street Bank and Trust Company, a Massachusetts trust
company having its principal office and place of business at 225 Franklin
Street, Boston, MA 02110 (the "Bank") is made to the Transfer Agency and Service
Agreement dated as of August 2, 1993 between the Fund and the Bank, as amended
(the "Transfer Agency Agreement").
WHEREAS, Neuberger & Berman Management, Inc. ("NBMI"), acting
in its own name on its own behalf and on behalf of the Fund and its Portfolios,
to which it serves as distributor and investment manager, has contracted with
National Securities Clearing Corporation (the "NSCC") for the use of certain
mutual fund processing systems called Fund/SERV and Networking;
WHEREAS, Fund/SERV is an automated trading and settlement
system and Networking is an automated electronic recordkeeping and dividend
settlement system through which customer-level accounts ("Networking Accounts")
are established with the Fund by institutions such as recordkeepers or
broker-dealers ("Institutions");
WHEREAS, the NSCC will transmit orders for Fund shares placed
by Institutions via Fund/SERV to the Bank's agent, Boston Financial Data
Services, Inc. ("BFDS") on DST,
WHEREAS, NBMI has appointed the Bank as its settling bank for
purposes of performing same day funds settlement under an agreement dated
January 26, 1996;
WHEREAS, NBMI will enter into agreements with Institutions
which will set forth details about Networking or Fund/SERV, including
establishing subaccounts in lieu of omnibus accounts, the transmission of orders
for Fund shares via Fund/SERV, and each parties responsibilities under
Networking matrix levels;
WHEREAS, the matrix levels chosen by NBMI and the Institutions
will determine which services to the Networked Accounts will be performed by the
Institutions and which will be performed by the Fund or the Bank;
WHEREAS, in instances where the Institutions will be providing
services, in lieu of the Fund or Bank, the fees charged per account by the Bank
or BFDS under the Transfer Agency Agreement will be reduced;
WHEREAS, in lieu of having the Bank or BFDS be a party to
NBMI's agreements with the NSCC and with each Institution, the Bank and the Fund
desire to amend the Transfer Agency Agreement to provide for changes related to
the use of Fund/SERV and or Networking by the Fund and the reduction in fees
based on Networked Accounts;
<PAGE>
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the parties agree as follows:
Article 1. Fund/SERV and Networking
(a) The parties hereto agree that with respect to all
Networked Accounts, Networking and Fund/SERV transactions, the parties and/or
their agents shall be bound by the By-Laws and the Rules and Procedures of the
NSCC.
(b) The Bank or BFDS may only take instructions from NBMI or
the Fund regarding the conversion to, implementation of or day-to-day operations
of Fund/SERV and Networking with respect to Networked Accounts with the Fund.
(c) Schedule A to the Transfer Agency Agreement shall be
updated to include NSCC (on behalf of Institutions) as a Designated Party to
transrnit orders to the Bank on DST.
Article 2. Fees and Expenses; Fee Schedule
The Bank agrees to reduce the fees charged by the Bank or BFDS
to the Funds for Level 3 Networked Accounts. The fee schedule to the Transfer
Agency Agreement shall be amended to include that Funds on behalf of the
Portfolios shall be charged $5.25 for all Level 3 Networked Accounts maintained
at the Bank or with BFDS.
Article 3. Miscellaneous
(a) All other terms and conditions of the Transfer Agency
Agreement remain in full force and effect.
(b) Terms used herein but not defined herein shall have the
meanings set forth in the Transfer Agency Agreement.
(c) This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Amendment.
NEUBERGER & BERMAN EQUITY STATE STREET BANK AND TRUST
FUNDS COMPANY
By: /s/ Daniel J. Sullivan By: /s/ Ronald E. Logue
-------------------------- -----------------------------
Daniel J. Sullivan Executive Vice President
Vice President Ronald E. Logue
ADMINISTRATION AGREEMENT
This Agreement is made as of August 2, 1993, between Neuberger &
Berman Equity Funds, a Delaware business trust ("Trust"), and Neuberger & Berman
Management Incorporated, a New York corporation ("Administrator"), and is
amended as of May 1, 1995 and August 2, 1997.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end, diversified management investment
company and has established several separate series of shares ("Series"), with
each Series having its own assets and investment policies; and
WHEREAS, the Trust desires to retain the Administrator to furnish
administrative services and certain shareholder and shareholder-related services
not generally available from banks and other institutions that act as servicing
agents for investment companies ("institutional servicing agents") to each
Series listed in Schedule A attached hereto, and to such other Series of the
Trust hereinafter established as agreed to from time to time by the parties,
evidenced by an addendum to Schedule A (hereinafter "Series" shall refer to each
Series which is subject to this Agreement and all agreements and actions
described herein to be made or taken by a Series shall be made or taken by the
<PAGE>
Trust on behalf of the Series), and the Administrator is willing to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. SERVICES OF THE ADMINISTRATOR.
1.1 ADMINISTRATIVE SERVICES. The Administrator shall supervise
each Series's business and affairs and shall provide such services required for
effective administration of such Series as are not provided by employees or
other agents engaged by such Series; PROVIDED, that the Administrator shall not
have any obligation to provide under this Agreement any direct or indirect
services to a Series's shareholders except those described in this Agreement,
any services related to the distribution of a Series's shares, or any other
services that are the subject of a separate agreement or arrangement between a
Series and the Administrator. Subject to the foregoing, in providing
administrative services hereunder, the Administrator shall:
1.1.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish
without cost to each Series, or pay the cost of, such office space, office
equipment and office facilities as are adequate for the Series's needs.
1.1.2 PERSONNEL. Provide, without remuneration from or
other cost to each Series, the services of individuals competent to perform all
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<PAGE>
of the Series's executive, administrative and clerical functions that are not
performed by employees or other agents engaged by the Series or by the
Administrator acting in some other capacity pursuant to a separate agreement or
arrangement with the Series.
1.1.3 AGENTS. Assist each Series in selecting and
coordinating the activities of the other agents engaged by the Series, including
the Series's shareholder servicing agent, custodian, independent auditors and
legal counsel.
1.1.4 TRUSTEES AND OFFICERS. Authorize and permit the
Administrator's directors, officers or employees who may be elected or appointed
as trustees or officers of the Trust to serve in such capacities, without
remuneration from or other cost to the Trust or any Series.
1.1.5 BOOKS AND RECORDS. Assure that all financial,
accounting and other records required to be maintained and preserved by each
Series are maintained and preserved by it or on its behalf in accordance with
applicable laws and regulations.
1.1.6 REPORTS AND FILINGS. Assist in the preparation of
(but not pay for) all periodic reports by each Series to shareholders of such
Series and all reports and filings required to maintain the registration and
qualification of the Series and the Series's shares, or to meet other regulatory
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<PAGE>
or tax requirements applicable to the Series, under federal and state securities
and tax laws.
1.2 SHAREHOLDER AND RELATED SERVICES. The Administrator shall provide
such of the following services as are required by any Series or its
shareholders:
1.2.1 Direct shareholder services, consisting of:
(a) Processing Series share purchase and redemption
requests transmitted or delivered to the office of the Administrator;
(b) Coordinating and implementing bank-to-bank wire
transfers in connection with Series share purchases and redemptions;
(c) Executing exchange orders involving concurrent
purchases and redemptions of shares of a Series and shares of other Series or of
other investment companies or series thereof;
(d) Responding to telephonic and in-person inquiries from
existing shareholders or their representatives requesting information regarding
matters such as shareholder account or transaction status, net asset value
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<PAGE>
("NAV") of Series shares, and Series performance, Series services, plans and
options, Series investment policies, Series portfolio holdings, and Series
distributions and classification thereof for tax purposes;
(e) Dealing with shareholder complaints and correspondence
directed to or brought to the attention of the Administrator; and
(f) Generating or developing and distributing special data,
notices, reports, programs and literature required by large shareholders, by
shareholders with specialized informational needs, or by shareholders generally
in light of developments, such as changes in tax laws.
1.2.2 Assisting any institutional servicing agent engaged by the
Series in the development, implementation and maintenance of the following
special programs and systems to enhance overall Series shareholder servicing
capability, consisting of:
(a) Training programs for personnel of such institutional
servicing agent;
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<PAGE>
(b) Joint programs with such institutional servicing agent
for the development of systems software, shareholder information reports, and
other special reports;
(c) Automatic data exchange facilities with shareholders
and such institutional servicing agent;
(d) Automated clearinghouse transfer procedures between
shareholders and such institutional servicing agent; and
(e) Touch-tone telephone information and transaction
systems for shareholders.
1.2.3 Soliciting and gathering shareholder proxies.
1.2.4 Such other shareholder and shareholder-related services,
whether similar to or different from those described in Subparagraphs 1.2.1,
1.2.2 and 1.2.3 of this Paragraph 1.2, as the parties may from time to time
agree in writing.
1.3 BLUE SKY SERVICES. The Administrator shall maintain under this Agreement the
registration or qualification of a Series and its shares under state Blue Sky or
securities laws and regulations, as necessary; PROVIDED that such Series shall
pay all related filing fees and registration or qualification fees.
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<PAGE>
1.4 OTHER SERVICES. The Administrator shall provide such other
services required by a Series as the parties may from time to time agree in
writing are appropriate to be provided under this Agreement.
2. EXPENSES OF EACH SERIES.
2.1 EXPENSES TO BE PAID BY THE ADMINISTRATOR. The Administrator
shall pay all salaries, expenses and fees of the officers, trustees, or
employees of the Trust who are officers, directors or employees of the
Administrator. In the event that the Administrator pays or assumes any expenses
of the Trust or a Series not required to be paid or assumed by the Administrator
under this Agreement, the Administrator shall not be obligated hereby to pay or
assume the same or any similar expense in the future; PROVIDED, that nothing
herein contained shall be deemed to relieve the Administrator of any obligation
to the Trust or to a Series under any separate agreement or arrangement between
the parties.
2.2 EXPENSES TO BE PAID BY THE SERIES. Each Series shall bear all
expenses of its operation, except those specifically allocated to the
Administrator under this Agreement or under any separate agreement between such
Series and the Administrator. Expenses to be borne by such Series shall include
both expenses directly attributable to the operation of that Series and the
offering of its shares, as well as the portion of any expense of the Trust that
is properly allocable to such Series in a manner approved by the trustees of the
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<PAGE>
Trust ("Trustees"). Subject to any separate agreement or arrangement between the
Trust or a Series and the Administrator, the expenses hereby allocated to each
Series, and not to the Administrator, include, but are not limited to:
2.2.1 CUSTODY. All charges of depositories, custodians, and
other agents for the transfer, receipt, safekeeping, and servicing of its cash,
securities, and other property.
2.2.2 SHAREHOLDER SERVICING. All expenses of maintaining
and servicing shareholder accounts, including but not limited to the charges of
any shareholder servicing agent, dividend disbursing agent or other agent
engaged by a Series to service shareholder accounts; EXCEPT those expenses
specifically allocated to the Administrator in Subparagraph 1.2 hereof, and
those which may in the future be specifically allocated to the Administrator
under subparagraph 1.4 hereof.
2.2.3 SHAREHOLDER REPORTS. All expenses of preparing,
setting in type, printing and distributing reports and other communications to
shareholders of a Series.
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<PAGE>
2.2.4 PROSPECTUSES. All expenses of preparing, setting in
type, printing and mailing annual or more frequent revisions of a Series's
Prospectus and Statement of Additional Information ("SAI") and any supplements
thereto and of supplying them to shareholders of the Series.
2.2.5 PRICING AND PORTFOLIO VALUATION. All expenses of
computing a Series's net asset value ("NAV") per share, including any equipment
or services obtained for the purpose of pricing shares or valuing the Series's
investment portfolio.
2.2.6 COMMUNICATIONS. All charges for equipment or services
used for communications between the Administrator or the Series and any
custodian, shareholder servicing agent, portfolio accounting services agent, or
other agent engaged by a Series.
2.2.7 LEGAL AND ACCOUNTING FEES. All charges for services
and expenses of a Series's legal counsel and independent auditors.
2.2.8 TRUSTEES' FEES AND EXPENSES. All compensation of
Trustees other than those affiliated with the Administrator, all expenses
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<PAGE>
incurred in connection with such unaffiliated Trustees' services as Trustees,
and all other expenses of meetings of the Trustees or committees thereof.
2.2.9 SHAREHOLDER MEETINGS. All expenses incidental to
holding meetings of shareholders, including the printing of notices and proxy
materials, and proxy solicitation therefor.
2.2.10 FEDERAL REGISTRATION FEES. All fees and expenses of
registering and maintaining the registration of the Trust and each Series under
the 1940 Act and the registration of each Series's shares under the Securities
Act of 1933 (the "1933 Act"), including all fees and expenses incurred in
connection with the preparation, setting in type, printing, and filing of any
Registration Statement, Prospectus and SAI under the 1933 Act or the 1940 Act,
and any amendments or supplements that may be made from time to time.
2.2.11 STATE REGISTRATION FEES. All fees and expenses of
qualifying and maintaining the qualification of the Trust and each Series and of
each Series's shares for sale under securities laws of various states or
jurisdictions, and of registration and qualification of each Series under all
other laws applicable to a Series or its business activities (including
registering the Series as a broker-dealer, or any officer of the Series or any
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<PAGE>
person as agent or salesman of the Series in any state).
2.2.12 SHARE CERTIFICATES. All expenses of preparing and
transmitting a Series's share certificates, if any.
2.2.13 CONFIRMATIONS. All expenses incurred in connection
with the issue and transfer of a Series's shares, including the expenses of
confirming all share transactions.
2.2.14 BONDING AND INSURANCE. All expenses of bond,
liability, and other insurance coverage required by law or regulation or deemed
advisable by the Trustees, including, without limitation, such bond, liability
and other insurance expense that may from time to time be allocated to the
Series in a manner approved by the Trustees.
2.2.15 BROKERAGE COMMISSIONS. All brokers' commissions and
other charges incident to the purchase, sale or lending of a Series's portfolio
securities.
2.2.16 TAXES. All taxes or governmental fees payable by or
with respect to a Series to federal, state or other governmental agencies,
domestic or foreign, including stamp or other transfer taxes.
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<PAGE>
2.2.17 TRADE ASSOCIATION FEES. All fees, dues and other
expenses incurred in connection with a Series's membership in any trade
association or other investment organization.
2.2.18 NONRECURRING AND EXTRAORDINARY EXPENSES. Such
nonrecurring and extraordinary expenses as may arise, including the costs of
actions, suits, or proceedings to which the Series is a party and the expenses a
Series may incur as a result of its legal obligation to provide indemnification
to the Trust's officers, Trustees and agents.
2.2.19 ORGANIZATIONAL EXPENSES. All organizational expenses
of each Series paid or assessed by the Administrator, which such Series shall
reimburse to the Administrator at such time or times and subject to such
condition or conditions as shall be specified in the Prospectus and SAI pursuant
to which such Series makes the initial public offering of its shares.
2.2.20 INVESTMENT ADVISORY SERVICES. Any fees and expenses
for investment advisory services that may be incurred or contracted for by a
Series.
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<PAGE>
3. ADMINISTRATION FEE.
3.1 FEE. As compensation for all services rendered, facilities
provided and expenses paid or assumed by the Administrator to or for each Series
under this Agreement, such Series shall pay the Administrator an annual fee as
set out in Schedule B to this Agreement.
3.2 COMPUTATION AND PAYMENT OF FEE. The administration fee shall
accrue on each calendar day, and shall be payable monthly on the first business
day of the next succeeding calendar month. The daily fee accruals for each
Series shall be computed by multiplying the fraction of one divided by the
number of days in the calendar year by the applicable annual administration fee
rate (as set forth in Schedule B hereto), and multiplying this product by the
NAV of such Series, determined in the manner set forth in such Series's
then-current Prospectus, as of the close of business on the last preceding
business day on which such Series's NAV was determined.
3.3 STATE EXPENSE LIMITATION. If in any fiscal year a Series's
operating expenses plus such Series's pro rata portion of the operating expenses
of any portfolio of Equity Managers Trust in which such Series invests all or
substantially all of its assets ("Aggregate Operating Expenses"), which includes
any fees or expense reimbursements payable to the Administrator pursuant to this
Agreement and any compensation payable to the Administrator pursuant to (i) the
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<PAGE>
Management Agreement between such portfolio and the Administrator, or (ii) any
other agreement or arrangement with respect to such Series, but excluding
interest, taxes, brokerage commissions, litigation and indemnification expenses,
and other extraordinary expenses not incurred in the ordinary course of such
Series's business) exceed the lowest applicable percentage expense limitation
imposed under the securities law and regulations of any state in which such
Series's shares are qualified for sale (the "State Expense Limitation"), then
the administration fee payable to the Administrator under this Agreement by such
Series shall be reduced by the amount of such excess; PROVIDED, that the
Administrator shall have no obligation hereunder to reimburse the Series for any
such expenses which exceed such administration fee.
Any reduction in the administration fee shall be made monthly, by
annualizing the Aggregate Operating Expenses of such Series for each month as of
the last day of such month. An adjustment shall be made on or before the last
day of the first month of the next succeeding fiscal year if Aggregate Operating
Expenses for such Series's fiscal year do not exceed the State Expense
Limitation or if for such fiscal year there is no applicable State Expense
Limitation.
4. OWNERSHIP OF RECORDS. All records required to be maintained and
preserved by each Series pursuant to the provisions of rules or regulations of
the Securities and Exchange Commission ("SEC") under Section 31(a) of the 1940
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<PAGE>
Act and maintained and preserved by the Administrator on behalf of such Series,
including any such records maintained by the Administrator in connection with
the performance of its obligations hereunder, are the property of such Series
and shall be surrendered by the Administrator promptly on request by the Series;
PROVIDED, that the Administrator may at its own expense make and retain copies
of any such records.
5. REPORTS TO ADMINISTRATOR. Each Series shall furnish or otherwise make
available to the Administrator such copies of that Series's Prospectus, SAI,
financial statements, proxy statements, reports, and other information relating
to its business and affairs as the Administrator may, at any time or from time
to time, reasonably require in order to discharge its obligations under this
Agreement.
6. REPORTS TO EACH SERIES. The Administrator shall prepare and furnish
to each Series such reports, statistical data and other information in such form
and at such intervals as such Series may reasonably request.
7. ADMINISTRATOR'S OWNERSHIP OF SOFTWARE AND RELATED MATERIALS. All
computer programs, written procedures and similar items developed or acquired
and used by the Administrator in performing its obligations under this Agreement
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<PAGE>
shall be the property of the Administrator, and no Series will acquire any
ownership interest therein or property rights with respect thereto.
8. CONFIDENTIALITY. The Administrator agrees, on its own behalf and on
behalf of its employees, agents and contractors, to keep confidential any and
all records maintained and other information obtained hereunder which relates to
any Series or to any of a Series's former, current or prospective shareholders,
EXCEPT that the Administrator may deliver records or divulge information (a)
when requested to do so by duly constituted authorities after prior notification
to and approval in writing by such Series (which approval will not be
unreasonably withheld and may not be withheld by such Series where the
Administrator advises such Series that the Administrator may be exposed to civil
or criminal contempt proceedings or other penalties for failure to comply with
such request) or (b) whenever requested in writing to do so by such Series.
9. SERVICES TO OTHER CLIENTS. Nothing herein shall limit the freedom of
the Administrator or any affiliated person of the Administrator to render
services of the types contemplated hereby to other persons, firms or
corporations, including but not limited to other investment companies, or to
engage in other business activities.
10. LIMITATION OF LIABILITY REGARDING THE TRUST. The Administrator shall
look only to the assets of each Series for performance of this Agreement by the
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<PAGE>
Trust on behalf of such Series, and neither the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor, nor shall any other Series by liable therefor.
11. ADMINISTRATOR'S ACTIONS IN RELIANCE ON SERIES'S INSTRUCTIONS, LEGAL
OPINIONS, ETC.; SERIES'S COMPLIANCE WITH LAWS.
11.1 The Administrator may at any time apply to an officer of the
Trust for instructions, and may consult with legal counsel for a Series or with
the Administrator's own legal counsel, in respect of any matter arising in
connection with this Agreement; and the Administrator shall not be liable for
any action taken or omitted to be taken in good faith and with due care in
accordance with such instructions or with the advice or opinion of such legal
counsel. The Administrator shall be protected in acting upon any such
instructions, advice or opinion and upon any other paper or document delivered
by a Series or such legal counsel which the Administrator believes to be genuine
and to have been signed by the proper person or persons.
11.2 Except as otherwise provided in this Agreement or in any
separate agreement between the parties and except for the accuracy of
information furnished to each Series by the Administrator, each Series assumes
full responsibility for the preparation, contents, filing and distribution of
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<PAGE>
its Prospectus and SAI, and full responsibility for other documents or actions
required for compliance with all applicable requirements of the 1940 Act, the
Securities Exchange Act of 1934, the 1933 Act, and any other applicable laws,
rules and regulations of governmental authorities having jurisdiction over such
Series.
12. LIABILITY OF ADMINISTRATOR. The Administrator shall not be liable to
any Series for any action taken or omitted to be taken by the Administrator or
its employees, agents or contractors in carrying out the provisions of this
Agreement if such action was taken or omitted in good faith and without
negligence or misconduct on the part of the Administrator, or its employees,
agents or contractors.
13. INDEMNIFICATION BY SERIES. Each Series shall indemnify the
Administrator and hold it harmless from and against any and all losses, damages
and expenses, including reasonable attorneys' fees and expenses, incurred by the
Administrator that result from: (i) any claim, action, suit or proceeding in
connection with the Administrator's entry into or performance of this Agreement
with respect to such Series; or (ii) any action taken or omission to act
committed by the Administrator in the performance of its obligations hereunder
with respect to such Series; or (iii) any action of the Administrator upon
instructions believed in good faith by it to have been executed by a duly
authorized officer or representative of the Trust with respect to such Series;
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<PAGE>
PROVIDED, that the Administrator shall not be entitled to such indemnification
in respect of actions or omissions constituting negligence or misconduct on the
part of the Administrator or its employees, agents or contractors. Before
confessing any claim against it which may be subject to indemnification by a
Series hereunder, the Administrator shall give such Series reasonable
opportunity to defend against such claim in its own name or in the name of the
Administrator.
14. INDEMNIFICATION BY THE ADMINISTRATOR. The Administrator shall
indemnify each Series and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by such Series which result from: (i) the Administrator's failure to
comply with the terms of this Agreement with respect to such Series; or (ii) the
Administrator's lack of good faith in performing its obligations hereunder with
respect to such Series; or (iii) the negligence or misconduct of the
Administrator or its employees, agents or contractors in connection herewith
with respect to such Series. A Series shall not be entitled to such
indemnification in respect of actions or omissions constituting negligence or
misconduct on the part of that Series or its employees, agents or contractors
other than the Administrator unless such negligence or misconduct results from
or is accompanied by negligence or misconduct on the part of the Administrator,
any affiliated person of the Administrator, or any affiliated person of an
affiliated person of the Administrator. Before confessing any claim against it
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<PAGE>
which may be subject to indemnification hereunder, a Series shall give the
Administrator reasonable opportunity to defend against such claim in its own
name or in the name of the Trust on behalf of such Series.
15. EFFECT OF AGREEMENT. Nothing herein contained shall be deemed to
require the Trust or any Series to take any action contrary to the Trust
Instrument or Bylaws of the Trust or any applicable law, regulation or order to
which it is subject or by which it is bound, or to relieve or deprive the
Trustees of their responsibility for and control of the conduct of the business
and affairs of the Series or the Trust.
16. TERM OF AGREEMENT. The term of this Agreement, as amended, shall
begin on August 2, 1997 with respect to each Series and, unless sooner
terminated as hereinafter provided, this Agreement shall remain in effect
through August 2, 1998. Thereafter, this Agreement shall continue in effect with
respect to each Series from year to year, subject to the termination provisions
and all other terms and conditions hereof; PROVIDED, such continuance with
respect to a Series is approved at least annually by vote or written consent of
the Trustees, including a majority of the Trustees who are not interested
persons of either party hereto ("Disinterested Trustees"); and PROVIDED FURTHER,
that the Administrator shall not have notified a Series in writing at least
sixty days prior to the first expiration date hereof or at least sixty days
-20-
<PAGE>
prior to any expiration date in any year thereafter that it does not desire such
continuation. The Administrator shall furnish any Series, promptly upon its
request, such information (including the Administrator's costs of delivering the
services provided to such Series hereunder) as may reasonably be necessary to
evaluate the terms of this Agreement or any extension, renewal or amendment
thereof. The Administrator shall permit the Trust and/or the Series and their
accountants, counsel or other representatives to review its books and records
relating to the services provided hereunder at reasonable intervals during
normal business hours upon reasonable notice requesting such review.
17. AMENDMENT OR ASSIGNMENT OF AGREEMENT. Any amendment to this
Agreement shall be in writing signed by the parties hereto. The Administrator
may not assign this Agreement or any interest hereunder voluntarily, by
operation of law, or otherwise, without the prior written consent of any Series
affected thereby. Any amendment hereof or assignment or transfer of any interest
hereunder by the Administrator shall not be effective with respect to a Series
unless and until authorized (i) by resolution of the Trustees, including the
vote or written consent of a majority of the Disinterested Trustees or (ii) by
vote of a majority of the outstanding voting securities of such Series.
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<PAGE>
18. TERMINATION OF AGREEMENT. This Agreement may be terminated at any
time by either party hereto, without the payment of any penalty, upon sixty
days' prior written notice to the other party; PROVIDED, that in the case of
termination by any Series, such action shall have been authorized (i) by
resolution of the Trustees, including the vote or written consent of the
Disinterested Trustees, or (ii) by vote of a majority of the outstanding voting
securities of such Series. This agreement shall automatically and immediately
terminate as to any Series in the event of its assignment by the Administrator,
or the Administrator's assignment or transfer of any interest hereunder, without
prior written consent of the affected Series as provided in Paragraph 17 hereof;
PROVIDED that with the consent of a Series, the Administrator may subcontract to
another person any of its responsibilities under this Agreement with respect to
any such Series.
19. NAME OF A SERIES. Each Series hereby agrees that if the
Administrator shall at any time for any reason cease to serve as administrator
to a Series, such Series shall, if and when requested by the Administrator,
eliminate from such Series's name the name "Neuberger & Berman" and thereafter
refrain from using the name "Neuberger & Berman" or the initials "N&B" in
connection with its business or activities, and the foregoing agreement of each
Series shall survive any termination of this Agreement and any extension or
renewal thereof.
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<PAGE>
20. INTERPRETATION AND DEFINITION OF TERMS. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms
"vote of a majority of the outstanding voting securities," "interested person,"
"assignment" and "affiliated person" as used in this Agreement shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In addition, when the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is modified, interpreted or relaxed by a rule, regulation or order of
the SEC, whether of special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. The Trust
and the Administrator may from time to time agree on such provisions
interpreting or clarifying the provisions of this Agreement as, in their joint
opinion, are consistent with the general tenor of this Agreement and with the
specific provisions of this Paragraph 20. Any such interpretations or
clarifications shall be in writing signed by the parties and annexed hereto, but
no such interpretation or clarification shall be effective if in contravention
of any applicable federal or state law or regulations, and no such
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<PAGE>
interpretation or clarification shall be deemed to be an amendment to this
Agreement.
21. CHOICE OF LAW. This Agreement is made and to be principally
performed in the State of New York, and except insofar as the 1940 Act or other
federal laws and regulations may be controlling, this Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws of
the State of New York.
22. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
23. EXECUTION IN COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized and their
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<PAGE>
respective seals to be hereunto affixed, as of the day and year first above
written.
NEUBERGER & BERMAN EQUITY FUNDS
By /s/ Michael J. Weiner
--------------------------
Vice President
--------------------------
Title
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
By /s/ Stanley Egener
--------------------------
President
--------------------------
Title
-25-
NEUBERGER & BERMAN EQUITY FUNDS
ADMINISTRATION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Funds currently subject to this
Agreement are as follows:
DATE MADE A PARTY
SERIES TO AGREEMENT
------ -----------------
Neuberger & Berman Focus Fund August 2, 1993
Neuberger & Berman Genesis Fund August 2, 1993
Neuberger & Berman Guardian Fund August 2, 1993
Neuberger & Berman International Fund November 1, 1995
Neuberger & Berman Manhattan Fund August 2, 1993
Neuberger & Berman Partners Fund August 2, 1993
Neuberger & Berman Socially Responsive Fund March 16, 1994
-26-
Exhibit 10(A)
KIRKPATRICK & LOCKHART
South Lobby - 9th Floor
1800 M Street, N.W.
Washington, D.C. 20036-5891
June 1, 1993
Neuberger & Berman Equity Funds
605 Third Avenue
New York, New York 10158
Dear Sir or Madam:
You have requested our opinion regarding certain matters in connection with
the issuance of shares of beneficial interest ("Shares") of Neuberger & Berman
Equity Funds ("Trust") in the following designated Series: Neuberger & Berman
Genesis Fund; Neuberger & Berman Guardian Fund; Neuberger & Berman Manhattan
Fund; Neuberger & Berman Partners Fund; and Neuberger & Berman Selected Sectors
Fund (each, a "Series").
We have, as counsel, participated in the preparation of the Trust's
organizational documents and in various other matters concerning the Trust. We
have examined copies, either certified or otherwise proved to be genuine, of the
Trust Instrument dated December 23, 1992 ("Trust Instrument") and By-Laws of the
Trust, the minutes of meetings of the trustees, and other documents relating to
the organization and operation of the Trust and the Series, and we generally are
familiar with its business. Based on the foregoing, it is our opinion that the
unlimited number of unissued Shares of each Series, which are currently being
registered, may be legally and validly issued from time to time in accordance
with the Trust Instrument and By-Laws of the Trust and subject to compliance
with the Securities Act of 1933, the Investment Company Act of 1940, and
applicable state laws regulating the offer and sale of securities; and when so
issued, such Shares will be legally issued, fully paid, and nonassessable by the
Trust or any Series.
The Trust is a business trust established pursuant to the Delaware Business
Trust Act ("Delaware Act"). The Delaware Act provides that a shareholder of the
Trust is entitled to the same limitation of personal liability extended to
shareholders of for-profit corporations. To the extent that the Trust or any of
its shareholders become subject to the jurisdiction of courts in states which do
not have statutory or other authority limiting the liability of business trust
shareholders, such courts might not apply the Delaware Act and could subject
Trust shareholders to liability.
<PAGE>
Neuberger & Berman Equity Funds
June 1, 1993
Page 2
To guard against this risk, the Trust Instrument: (i) requires that every
written obligation of the Trust contain a statement that such obligation may
only be enforced against the assets of the Trust; however, the omission of such
a disclaimer will not operate to create personal liability for any shareholder;
and (ii) provides for indemnification out of Trust property of any shareholder
held personally liable for the obligations of the Trust. Thus, the risk of a
Trust shareholder incurring financial loss beyond his or her investment because
of shareholder liability is limited to circumstances in which: (i) a court
refuses to apply Delaware law; (ii) no contractual limitation of liability was
in effect; and (iii) the Trust itself would be unable to meet its obligations.
We hereby consent to the filing of this opinion in connection with
Post-Effective Amendment No. 60 to the Trust's Registration Statement on Form
N-1A (File Nos. 2-11357 and 811-582) to be filed with the Securities and
Exchange Commission and to the reference to our firm under the caption "Legal
Counsel" in the Statements of Additional Information incorporated by reference
into the Series' Prospectuses.
Sincerely yours,
KIRKPATRICK & LOCKHART
By: /s/ Alan Roy Dynner
---------------------------
Alan Roy Dynner
KIRKPATRICK & LOCKHART
South Lobby - 9th Floor
1800 M Street, N.W.
Washington, D.C. 20036-5891
March 9, 1994
Neuberger & Berman Equity Funds
605 Third Avenue, Second Floor
New York, New York 10158-0006
Dear Sir or Madam:
Neuberger & Berman Equity Funds ("Trust") is a business trust organized
under the laws of the State of Delaware and governed by a Trust Instrument dated
December 23, 1992. You have requested our opinion regarding certain matters in
connection with the Trust's issuance of shares of beneficial interest, par value
$0.001 per share ("Shares") in its new series, Neuberger & Berman Socially
Responsive Fund.
We have, as counsel, participated in various corporate and other matters
relating to the Trust. We have examined copies of the Trust Instrument and
By-Laws, the minutes of meetings of the trustees and other documents relating to
the organization and operation of the Trust, and we are generally familiar with
its business affairs. Based upon the foregoing, it is our opinion that the
unissued Shares designated as the Neuberger & Berman Socially Responsive Fund,
which are currently being registered, may be legally and validly issued from
time to time in accordance with the Trust's Trust Instrument and By-Laws; and
when so issued, will be legally issued, fully paid and nonassessable by the
Trust.
<PAGE>
Neuberger & Berman Equity Funds
March 9, 1994
Page 2
We hereby consent to the filing of this opinion in connection with a
Post-Effective Amendment to the Trust's Registration Statement on Form N-1A. We
also consent to the reference to our firm under the caption "Legal Counsel" in
the Statement of Additional Information filed as part of the Registration
Statement.
Sincerely,
KIRKPATRICK & LOCKHART
/s/ Arthur C. Delibert
--------------------------
Arthur C. Delibert
EXHIBIT 10(C)
KIRKPATRICK & LOCKHART
South Lobby - 9th Floor
1800 M Street, N.W.
Washington, D.C. 20036-5891
June 1, 1994
Neuberger & Berman Equity Funds
605 Third Avenue, Second Floor
New York, New York 10158-0006
Dear Sir or Madam:
Neuberger & Berman Equity Funds ("Trust") is a business trust organized
under the laws of the State of Delaware and governed by a Trust Instrument dated
December 23, 1992. You have requested our opinion regarding certain matters in
connection with the Trust's issuance of shares of beneficial interest, par value
$0.001 per share ("Shares") in its new series, Neuberger & Berman International
Fund.
We have, as counsel, participated in various corporate and other matters
relating to the Trust. We have examined copies of the Trust Instrument and
By-Laws, the minutes of meetings of the trustees and other documents relating to
the organization and operation of the Trust, and we are generally familiar with
its business affairs. Based upon the foregoing, it is our opinion that the
unissued Shares designated as the Neuberger & Berman International Fund, which
are currently being registered, may be legally and validly issued from time to
time in accordance with the Trust's Trust Instrument and By-Laws; and when so
issued, will be legally issued, fully paid and nonassessable by the Trust.
We hereby consent to the filing of this opinion in connection with a
Post-Effective Amendment to the Trust's Registration Statement on Form N-1A. We
also consent to the reference to our firm under the caption "Legal Counsel" in
the Statement of Additional Information filed as part of the Registration
Statement.
Sincerely,
KIRKPATRICK & LOCKHART
/s/ Arthur C. Delibert
----------------------
Arthur C. Delibert
EXHIBIT 11(a)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references 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 77 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, 1997 on Neuberger &
Berman Focus Fund, Neuberger & Berman Genesis Fund, Neuberger & Berman Guardian
Fund, Neuberger & Berman International Fund, and Neuberger & Berman Partners
Fund, five of the series comprising Neuberger & Berman Equity Funds, and on
Neuberger & Berman Focus Portfolio, Neuberger & Berman Genesis Portfolio,
Neuberger & Berman Guardian Portfolio, and Neuberger & Berman Partners
Portfolio, four of the series comprising Equity Managers Trust, included in the
1997 Annual Report to Shareholders of Neuberger & Berman Equity Funds.
/s/ Ernst & Young LLP
------------------------------
ERNST & YOUNG LLP
Boston, Massachusetts
December 8, 1997
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the references 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 77 to the Registration Statement
(Form N-1A No. 2-11357) of Neuberger & Berman Equity Funds, and to the
incorporation by reference of our report dated October 3, 1997 on Neuberger &
Berman International Portfolio (a separate series of Global Managers Trust),
included in the 1997 Annual Report to Shareholders of Neuberger & Berman Equity
Funds.
By: /s/ Ernst & Young
--------------------------------
ERNST & YOUNG
Grand Cayman
Cayman Islands
December 8, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board 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. 77 to the Registration
Statement on Form N-1A of Neuberger & Berman Equity Funds of our reports dated
October 3, 1997 on our audits of the financial statements and financial
highlights of Neuberger & Berman Manhattan Fund and Portfolio and Neuberger &
Berman Socially Responsive Fund and Portfolio, which reports are included in the
Annual Report to Shareholders of Neuberger & Berman Equity Funds for the fiscal
year ended August 31, 1997.
We also consent to the reference to our Firm with respect to 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.
By: /s/ Coopers & Lybrand L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 8, 1997
