NEUBERGER BERMAN
EQUITY FUNDS
SUPPLEMENT TO THE PROSPECTUS DATED DECEMBER 30, 1998
I. NEUBERGER BERMAN INTERNATIONAL FUND: THE FOLLOWING PARAGRAPH IS ADDED
TO THE "MANAGEMENT" SIDEBAR ON PAGE 24:
Benjamin E. Segal is an Assistant Vice President of Neuberger Berman
Management Inc. and has been an Associate Manager of the fund since January
1999. He was an assistant portfolio manager at another firm from 1997 to
1998. Prior to 1997, he held positions in international finance and
consulting.
II. NEUBERGER BERMAN GENESIS FUND: AS OF JUNE 1, 1999, THE FUND IS OPEN TO NEW
INVESTORS.
III. NEUBERGER BERMAN SOCIALLY RESPONSIVE FUND: THE LAST SENTENCE OF
THE THIRD PARAGRAPH UNDER THE HEADING "GOAL & STRATEGY" ON PAGE 43 OF THE
PROSPECTUS IS REVISED TO READ AS FOLLOWS:
While these judgments are inevitably subjective, the fund has a strict policy of
avoiding companies that receive more than 5% of their total revenue from
alcohol, tobacco, gambling, or weapons, or that are involved in nuclear power.
The fund also does not invest in any company that derives its total revenue
primarily from non-consumer sales to the military.
IV. NEUBERGER BERMAN GENESIS, MANHATTAN, MILLENNIUM, PARTNERS AND SOCIALLY
RESPONSIVE FUNDS: THE FOLLOWING DISCLOSURE IS ADDED TO THE SIDEBARS ENTITLED
"OTHER RISKS" ON PAGES 10, 28, 34, 38 AND 44 OF THE PROSPECTUS:
In using certain derivatives to gain stock market exposure for excess cash
holdings, the fund increases its risk of loss.
This Supplement is dated May 26, 1999, and replaces the Supplement dated
February 3, 1999.
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NEUBERGER BERMAN
EQUITY FUNDS
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 30, 1998
I. THE FINAL PARAGRAPH IN THE SECTION "INVESTMENT INFORMATION - INVESTMENT
POLICIES AND LIMITATIONS" IS REVISED TO READ AS FOLLOWS:
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.
II. THE FOLLOWING ADDITIONAL CHANGES APPLY TO THE STATEMENT OF ADDITIONAL
INFORMATION:
Effective April 28, 1999, each Portfolio may purchase and sell stock index
futures contracts, and purchase and sell put and call options thereon, for
purposes of managing cash flow. The managers may use such futures and options to
increase each Portfolio's exposure to the performance of a recognized securities
index, such as the S&P 500 Index. Therefore, the disclosure regarding such
futures and options in the sections "Futures Contracts and Options Thereon,"
"Put and Call Options on Securities Indices," "General Information about
Securities Options" and "Regulatory Limitations on Using Financial Instruments"
under the heading "Futures, Options on Futures, Options on Securities and
Indices, Forward Contracts, and Options on Foreign Currencies (collectively,
`Financial Instruments')" applies to all of the Portfolios.
As in the past, Neuberger Berman INTERNATIONAL, MILLENNIUM and SOCIALLY
RESPONSIVE Portfolios also have broader authority with respect to the use of
derivatives, although MILLENNIUM and SOCIALLY RESPONSIVE Portfolios have no
current intention of using such authority.
In addition, each Portfolio now may invest, at times, in instruments
structured as investment companies to gain exposure to the performance of a
recognized securities, index, such as the S&P 500 Index, or another appropriate
index. Therefore, the disclosure regarding such investments in the section
"Other Investment Companies" applies to all the Portfolios.
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III. THE FOLLOWING DISCUSSION IS ADDED TO THE STATEMENT OF ADDITIONAL
INFORMATION:
AS THE FOLLOWING CHART SHOWS, MARKETS HAVE TENDED TO MOVE IN CYCLES AND
EXTREMES, WHETHER IT'S BETWEEN ASSET CLASSES, CAPITALIZATION RANGES OR EQUITY
STYLES. RECENT EVIDENCE SUGGESTS THAT VALUE STOCKS, PARTICULARLY IN THE MID- AND
SMALL-CAP SECTORS, ARE ATTRACTIVELY PRICED. WHILE IT'S IMPOSSIBLE TO PREDICT
WHEN MARKET CYCLES WILL CHANGE, IN NEUBERGER BERMAN'S OPINION, THESE SECURITIES
NOW PRESENT GOOD BUYING OPPORTUNITIES.
HISTORICAL PERFORMANCE CYCLES CHART A:
Russell Mid-Cap Value Index vs. S&P 500 Index 1986-1998
x-axis: Year
y-axis: Performance Spread
RUSSELL MIDCAP S&P 500 DIFFERENCE
VALUE ------- ----------
-----
1986 17.87 18.21 -0.34
1987 -2.19 5.17 -7.36
1988 24.61 16.50 8.11
1989 22.70 31.43 -8.73
1990 -16.08 -3.19 -12.89
1991 37.92 30.55 7.37
1992 21.68 7.68 14.00
1993 15.62 10.00 5.62
1994 -2.12 1.33 -3.45
1995 34.93 37.50 -2.57
1996 20.26 23.25 -2.99
1997 34.41 33.38 1.03
1998 5.08 28.76 -23.68
Cumulative Returns
S&P 500 RUSSMCV
------- -------
3 years ending 1988 45.64 43.66
2 years ending 1990 27.60 2.97
3 years ending 1993 54.56 94.03
5 years ending 1998 193.92 124.32
Source: Frank Russell, Investment Technologies, Callan Assoc., Neuberger Berman,
LLC Dec. 31, 1985 is the inception date of the Russell Mid-Cap Value Index
<PAGE>
Footnotes:
*The Russell Midcap(TRADEMARK) Value Index measures the performance of those
Russell Midcap(TRADEMARK) Index companies with lower price-to-book ratios and
lower forecasted growth values. The Russell Midcap Index measures the
performance of the 800 smallest companies in the Russell 1000(REGISTERED) 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). The S&P 500 Index is an unmanaged
index generally considered representative of stock market activity. Please note
that indices do not take into account any fees and expenses of investing in the
individual securities that they track and that individuals cannot invest
directly in any index. Data about the performance of these indices are prepared
or obtained by Neuberger Berman Management Inc. and include reinvestment of all
dividends and capital gain distributions.
Performance data quoted represents past performance, which is no guarantee of
future results.
HISTORICAL PERFORMANCE CYCLES CHART B:
Russell 2000 Index vs. S&P 500 Index 1979-1998
x-axis: Year
y-axis: Performance Spread
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RUSSELL 2000 S&P DIFFERENCE
------------ 500 ----------
---
1979 43.09 18.44 24.65
1980 38.58 32.42 6.16
1981 2.03 -4.91 6.94
1982 24.95 21.58 3.36
1983 29.13 22.43 6.71
1984 -7.30 6.10 -13.41
1985 31.05 31.57 -0.52
1986 5.68 18.21 -12.53
1987 -8.77 5.17 -13.94
1988 24.89 16.50 8.39
1989 16.24 31.43 -15.19
1990 -19.51 -3.19 -16.31
1991 46.05 30.55 15.50
1992 18.41 7.68 10.73
1993 18.91 10.00 8.91
1994 -1.82 1.33 -3.15
1995 28.44 37.50 -9.06
1996 16.49 23.25 -6.75
1997 22.36 33.38 -11.01
1998 -2.55 28.76 -31.30
Cumulative
Returns
S&P R2000
500 -----
---
5 years ending 122.58 226.44
1983
7 years ending 160.15 36.88
1990
3 years ending 54.56 105.63
1993
5 years ending 193.92 75.23
1998
Source: Frank Russell, Investment Technologies, Callan Assoc., Neuberger Berman,
LLC Dec. 31, 1978 is the inception date of the Russell 2000 Index
Footnotes:
*The Russell 2000(REGISTERED) Index is an unmanaged index consisting of the
securities of the 2,000 issuers having the smallest capitalization in the
Russell 3000(REGISTERED) Index, representing approximately 11% of the Russell
<PAGE>
3000 total market capitalization. The smallest company's market capitalization
is roughly $222 million. The Russell 3000(REGISTERED) Index measures the
performance of the 3,000 largest U.S. companies based on total market
capitalization. The S&P 500 Index is an unmanaged index generally considered
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track and that individuals cannot invest directly in any index. Data
about the performance of these indices are prepared or obtained by Neuberger
Berman Management Inc. and include reinvestment of all dividends and capital
gain distributions.
Performance data quoted represents past performance, which is no guarantee of
future results.
This Supplement is dated May 26, 1999.
