As filed with the Securities and Exchange Commission on February 12, 1999
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. 83 [ X ]
-----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 38 [ 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)
___ on _________________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)
X on April 30, 1999 pursuant to paragraph (a)(2)
Neuberger Berman Equity Funds is a "master/feeder fund." This
Post-Effective Amendment No. 83 includes a signature page for the master fund,
Equity Managers Trust, and appropriate officers and trustees thereof.
<PAGE>
NEUBERGER BERMAN EQUITY FUNDS
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 83 ON FORM N-1A
This post-effective amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 83 on Form N-1A
NEUBERGER BERMAN REGENCY FUND
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
<PAGE>
[PHOTO] NEUBERGER BERMAN
NEUBERGER BERMAN
REGENCY FUND-SM-
- --------------------------------------------------------------------------------
PROSPECTUS APRIL 30, 1999
The Securities and Exchange Commission does not say
whether any mutual fund is a good or bad investment or
whether the information in any prospectus is accurate or
complete. It is unlawful for anyone to indicate
otherwise.
<PAGE>
CONTENTS
- -----------------
<TABLE>
<C> <S>
NEUBERGER BERMAN EQUITY FUNDS
PAGE 2 ...... Regency Fund
YOUR INVESTMENT
6 ...... Share Prices
7 ...... Privileges and Services
8 ...... Distributions and Taxes
10 ...... Maintaining Your Account
14 ...... Buying and Selling Shares
</TABLE>
The "Neuberger Berman" name and logo are service
marks of Neuberger Berman, LLC. "Neuberger Berman
Management Inc." and the individual fund name in
this prospectus are either service marks or
registered trademarks of Neuberger Berman
Management Inc. -C-1999 Neuberger Berman Management
Inc.
<PAGE>
- ------------------------------------------------------------
FUND MANAGEMENT
The fund is managed by Neuberger Berman Management Inc., in conjunction with
Neuberger Berman, LLC, as sub-adviser. Together, the firms manage more than
$55.4 billion in total assets (as of December 31, 1998) and continue an asset
management history that began in 1939.
RISK INFORMATION
This prospectus discusses principal risks of investment in fund shares. These
and other risks are discussed in detail in the Statement of Additional
Information (see back cover).
THIS FUND:
- - IS DESIGNED FOR INVESTORS WITH LONG-TERM GOALS IN MIND
- - OFFERS YOU THE OPPORTUNITY TO PARTICIPATE IN FINANCIAL MARKETS THROUGH A
PROFESSIONALLY MANAGED STOCK PORTFOLIO
- - ALSO OFFERS THE OPPORTUNITY TO DIVERSIFY YOUR PORTFOLIO WITH A FUND THAT
INVESTS USING A VALUE APPROACH
- - USES A MASTER/FEEDER STRUCTURE IN ITS PORTFOLIO; SEE PAGE 12 FOR INFORMATION
ON HOW IT WORKS
- - CARRIES CERTAIN RISKS, INCLUDING THE RISK THAT YOU COULD LOSE MONEY IF FUND
SHARES ARE WORTH LESS THAN WHAT YOU PAID
- - IS A MUTUAL FUND, NOT A BANK DEPOSIT, AND IS NOT GUARANTEED OR INSURED
1
<PAGE>
[PHOTO]
NEUBERGER BERMAN
REGENCY FUND
- --------------------------------------------------------------------------------
ABOVE: PORTFOLIO MANAGERS ROBERT I.
GENDELMAN, MICHAEL M. KASSEN AND S. BASU
MULLICK
"WE FOCUS ON THE MID-CAP SECTOR OF THE MARKET BECAUSE WE BELIEVE THERE ARE
NUMEROUS OPPORTUNITIES THERE TO FIND LESS
WELL-KNOWN VALUES. WE LOOK FOR LEADERSHIP COMPANIES WITH STRONG
FUNDAMENTALS WHOSE UNDERLYING VALUE IS NOT YET REFLECTED IN THEIR STOCK PRICES."
2
<PAGE>
GOAL & STRATEGY
- ------------------------------------------------------------
MID-CAP STOCKS
Mid-cap stocks have historically shown risk/return characteristics that are in
between those of small- and large-cap stocks. Their prices can rise and fall
substantially, although they have the potential to offer comparatively
attractive long-term returns.
Mid-caps are less widely followed on Wall Street than
large-caps, which can
make it comparatively easier to find attractive stocks that
are not overpriced.
VALUE INVESTING
At any given time, there are companies whose stock prices are below the market
average, based on earnings, book value, or other financial measures. The value
investor examines these companies, searching for those that may rise in price
before other investors realize their worth.
[ICON]
THE FUND SEEKS GROWTH OF CAPITAL.
To pursue this goal, the fund invests mainly in common stocks of
mid-capitalization companies. The fund seeks to reduce risk by diversifying
among many companies and industries.
The managers look for well-managed companies whose stock prices are undervalued.
Factors in identifying these firms may include:
- - strong fundamentals
- - consistent cash flow
- - a sound track record through all phases of the market cycle
The managers may also look for other characteristics in a company, such as a
strong position relative to competitors, a high level of stock ownership among
management, and a recent sharp decline in stock price that appears to be the
result of a short-term market overreaction to negative news.
The fund generally considers selling a stock when it reaches the managers'
target price, when it fails to perform as expected, or when other opportunities
appear more attractive.
The fund has the ability to change its goal without shareholder approval,
although it does not currently intend to do so.
Regency Fund 3
<PAGE>
MAIN RISKS
- ------------------------------------------------------------
OTHER RISKS
The fund may use certain practices and securities involving additional risks.
Borrowing, securities lending, and derivatives could create leverage, meaning
that certain gains or losses could be amplified, increasing share price
movements.
Although they may add diversification, foreign securities can be riskier,
because foreign markets tend to be more volatile and currency exchange rates
fluctuate.
When the fund anticipates unusual market or other conditions, it may temporarily
depart from its goal and invest substantially in high-quality short-term fixed-
income investments. This could help the fund avoid losses but may mean lost
opportunities.
[ICON] Most of the fund's performance depends
on what happens in the stock market. The market's behavior is
unpredictable, particularly in the short term. Because of this, the
value of your investment will rise and fall, and you could lose money.
By focusing on mid-cap stocks, the fund is subject to their risks, including the
risk its holdings may:
- - fluctuate more widely in price than the market as
a whole
- - underperform stocks with larger or smaller
capitalizations during a particular time interval
- - fall in price or be difficult to sell during market downturns
With a value approach, there is also the risk that stocks may remain undervalued
during a given period. This may happen because value stocks as a category lose
favor with investors compared to growth stocks or because the managers failed to
anticipate which stocks or industries would benefit from changing market or
economic conditions. To the extent that the managers sell stocks before they
reach their market peak, the fund may miss out on opportunities for higher
performance.
Through active trading, the fund may have a high portfolio turnover rate, which
can mean higher taxable distributions and lower performance due to increased
brokerage costs.
4 Neuberger Berman
<PAGE>
INVESTOR EXPENSES
- -------------------------------------------------------------
MANAGEMENT
MICHAEL M. KASSEN, ROBERT I. GENDELMAN AND S. BASU MULLICK are Vice
Presidents of Neuberger Berman Management. They have co-managed the fund since
its inception in 1999. Kassen and Gendelman are principals of Neuberger Berman,
LLC. Kassen has been a portfolio manager at the firm since 1990. Gendelman was a
portfolio manager at another firm from 1992 to 1993, as was Mullick from 1993 to
1998.
NEUBERGER BERMAN MANAGEMENT is the fund's investment manager, administrator, and
distributor. It engages Neuberger Berman, LLC as sub-adviser to provide
management and related services. For investment management services, the fund
will pay Neuberger Berman Management a fee at the annual rate of 0.55% of the
first $250 million of average net assets, 0.525% of the next $250 million, 0.50%
of the next $250 million, 0.475% of the next $250 million, 0.45% of the next
$500 million, and 0.425% of average net assets in excess of $1.5 billion.
[ICON] The fund does not charge you any fees for
buying, selling, or exchanging shares, or for maintaining your
account. Your only fund cost is your share of annual operating
expenses. The expense example can help you compare costs among funds.
FEE TABLE
SHAREHOLDER FEES None
- -------------------------------------------------------
ANNUAL OPERATING EXPENSES (% of average net assets)*
These are deducted from fund assets, so you pay them indirectly.
<TABLE>
<S> <C> <C>
Management fees 0.81
PLUS: Distribution (12b-1) fees None
Other expenses** 0.99
....
EQUALS: Total annual operating expenses 1.80
MINUS: Expense reimbursement 0.30
....
EQUALS: Net expenses 1.50
</TABLE>
* NEUBERGER BERMAN MANAGEMENT HAS AGREED TO REIMBURSE CERTAIN EXPENSES OF THE
FUND THROUGH 12/31/02, SO THAT THE TOTAL ANNUAL OPERATING EXPENSES OF THE
FUND ARE LIMITED TO 1.50% OF AVERAGE NET ASSETS. THIS ARRANGEMENT DOES NOT
COVER INTEREST, TAXES, BROKERAGE COMMISSIONS, AND EXTRAORDINARY EXPENSES. THE
FUND HAS AGREED TO REPAY NEUBERGER BERMAN MANAGEMENT FOR EXPENSES REIMBURSED
TO THE FUND PROVIDED THAT REPAYMENT DOES NOT CAUSE THE FUND'S ANNUAL
OPERATING EXPENSES TO EXCEED 1.50% OF ITS AVERAGE NET ASSETS AND THE
REPAYMENT IS MADE WITHIN THREE YEARS AFTER THE YEAR IN WHICH NEUBERGER BERMAN
MANAGEMENT INCURRED THE EXPENSE. THE TABLE INCLUDES COSTS PAID BY THE FUND
AND ITS SHARE OF MASTER PORTFOLIO COSTS. FOR MORE INFORMATION ON
MASTER/FEEDER FUNDS, SEE "FUND STRUCTURE" ON PAGE 12.
** OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.
EXPENSE EXAMPLE
The example assumes that you invested $10,000 for the periods shown, that you
earned a hypothetical 5% total return each year, and that the fund's expenses
were those in the table above. Your costs would be the same whether you sold
your shares or continued to hold them at the end of each period. Actual
performance and expenses may be higher or lower.
<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
- --------------------------------------
Expenses $153 $474
</TABLE>
Because the fund is new it does not have performance or financial highlights to
report.
Regency Fund 5
<PAGE>
YOUR INVESTMENT
SHARE PRICES
- ------------------------------------------------------------
SHARE PRICE CALCULATIONS
The fund's share price is the total value of its assets minus its liabilities,
divided by the total number of shares. Because the value of the fund's
securities changes every business day, the share price usually changes as well.
When valuing portfolio securities, the fund uses market prices. However, in rare
cases, events that occur after certain markets have closed may render these
prices unreliable.
When the fund believes a market price does not reflect a security's true value,
the fund may substitute for the market price a fair-value estimate made
according to methods approved by its trustees. The fund may also use these
methods to value certain types of illiquid securities.
Because the fund does not have a sales charge, the price you pay for each share
of the fund is the fund's net asset value per share. Similarly, because there
are no fees for selling shares, the fund pays you the full share price when you
sell shares.
The fund is open for business every day the New York Stock Exchange is open. In
general, every buy or sell order you place will go through at the next share
price to be calculated after your order has been accepted. The fund calculates
its share price as of the end of regular trading on the Exchange on business
days, usually 4:00 p.m. eastern time.
Because foreign markets may be open on days when U.S. markets are closed, the
value of foreign securities owned by the fund could change on days when you
can't buy or sell fund shares. The fund's share price, however, will not change
until the next time it is calculated.
6 Neuberger Berman
<PAGE>
PRIVILEGES
AND SERVICES
- ------------------------------------------------------------
DOLLAR-COST AVERAGING
Systematic investing allows you to take advantage of the principle of
dollar-cost averaging. When you make regular investments of a given amount --
say, $100 a month -- you will end up investing at different share prices over
time. When the share price is high, your $100 buys fewer shares; when the share
price is low, your $100 buys more shares. Over time, this can help lower the
average price you pay per share.
Dollar-cost averaging cannot guarantee you a profit or protect you from losses
in a declining market. But it can be beneficial over the long term.
As a Neuberger Berman funds shareholder, you have access to a range of services
to make investing easier:
SYSTEMATIC INVESTMENTS -- This plan lets you take advantage of dollar-cost
averaging by establishing periodic investments of $100 a month or more. You
choose the schedule and amount. Your investment money may come from a Neuberger
Berman money market fund or your bank account.
SYSTEMATIC WITHDRAWALS -- This plan lets you arrange withdrawals of at least
$100 from a Neuberger Berman fund on a periodic schedule. You can also set up
payments to distribute the full value of an account over a given time. While
this service can be helpful to many investors, be aware that it could generate
capital gains or losses.
ELECTRONIC BANK TRANSFERS -- When you sell fund shares, you can have the money
sent to your bank account electronically rather than mailed to you as a check.
Please note that your bank must be a member of the Automated Clearing House, or
ACH, system. This service is not available for retirement accounts.
INTERNET ACCESS -- At www.nbfunds.com, you can make transactions, check your
account, and access a wealth of information.
FUNDFONE-REGISTERED TRADEMARK- -- Get up-to-date performance and account
information through our 24-hour automated service by calling 800-335-9366. If
you already have an account with us, you can place orders to buy, sell, or
exchange fund shares.
Your Investment 7
<PAGE>
DISTRIBUTIONS
AND TAXES
- ------------------------------------------------------------
BUYING SHARES BEFORE
A DISTRIBUTION
The money the fund earns, either as income or as capital gains, is reflected in
its share price until the fund makes a distribution. At that time, the amount of
the distribution is deducted from the share price. The amount of the
distribution is either reinvested in additional fund shares or paid to
shareholders in cash.
Because of this, if you buy shares just before the fund makes a distribution,
you'll end up getting some of your investment back as a taxable distribution.
You can avoid this situation by waiting to invest until after the distribution
has been made.
If you're investing in a tax-advantaged account, you don't need to worry;
generally, there are no tax consequences to you in this case.
DISTRIBUTIONS -- The fund pays out to shareholders any net income and net
capital gains. Ordinarily, the fund makes these distributions once a year in
December.
Unless you tell us otherwise, your income and capital gain distributions from
the fund will be reinvested in the fund. However, if you prefer you may:
- - receive all distributions in cash
- - reinvest capital gain distributions, but receive income distributions in cash
To take advantage of one of these options, please indicate your choice on your
application.
HOW DISTRIBUTIONS ARE TAXED -- Except for tax-advantaged retirement accounts,
all fund distributions you receive are generally taxable to you, regardless of
whether you take them in cash or reinvest them.
Distributions are taxable in the year you receive them. In some cases,
distributions you receive in January are taxable as if they had been paid the
previous year. Your tax statement (see sidebar on facing page) will help clarify
this for you.
8 Neuberger Berman
<PAGE>
- ------------------------------------------------------------
TAXES AND YOU
The taxes you actually owe on distributions and transactions can vary with many
factors, such as your tax bracket, how long you held your shares, and whether
you owe alternative minimum tax.
How can you figure out your tax liability on fund distributions and
transactions? One helpful tool is the tax statement that we send you every
January. It details the distributions you received during the past year and
shows their tax status. A separate statement covers your transactions.
Most importantly, consult your tax professional. Everyone's tax situation is
different, and your professional should be able to help you answer any questions
you may have.
Income distributions and short-term capital gain
distributions are generally taxed as ordinary income. Distributions of other
capital gains are generally taxed as long-term capital gains. The tax treatment
of capital gain distributions depends on how long the fund held the securities
it sold, not when you bought your shares of the fund, or whether you reinvested
your distributions.
HOW TRANSACTIONS ARE TAXED -- When you sell fund shares, you generally realize a
gain or loss. These transactions, which include exchanges between funds, usually
have tax consequences. The exception, once again, is tax-advantaged retirement
accounts.
Your Investment 9
<PAGE>
MAINTAINING YOUR
ACCOUNT
- ------------------------------------------------------------
BACKUP WITHHOLDING
When sending in your application, it's important to provide your Social Security
or other taxpayer ID number. If we don't have this number, or if the IRS tells
us that you are subject to backup withholding, the IRS requires the fund to
withhold 31% of all money you receive from the fund, whether from selling shares
or from distributions.
If the appropriate ID number has been applied for but is not available (such as
in the case of a custodial account for a newborn), you may open the account
without a number. However, we must receive the number within 60 days in order to
avoid backup withholding. For information on custodial accounts, call
800-877-9700.
WHEN YOU BUY SHARES -- Instructions for buying shares are on pages 14 and 15.
Whenever you make an initial investment in the fund or add to an existing
account (except with an automatic investment), you will be sent a statement
confirming your transaction. All investments must be made in U.S. dollars, and
investment checks must be drawn on a U.S. bank.
The fund does not generally issue certificates for shares, although you can
request them. Please note, however, that the only way to sell those shares is by
sending in the certificates. Also, if you lose a certificate, you will be
charged a fee to replace it.
WHEN YOU SELL SHARES -- Instructions for selling shares are on pages 16 and 17.
You can place an order to sell some or all of your shares at any time. The
proceeds from the shares you sold are generally sent out the next business day
after your order is executed, and nearly always within three business days.
There are two cases in which proceeds may be delayed beyond this time:
- - in unusual circumstances where the law allows additional time if needed
- - if a check you wrote to buy shares hasn't cleared by
the time you sell those shares
If you think you may need to sell shares soon after buying them, you can avoid
the check clearing time (which may be up to 15 days) by investing by wire or
certified check.
10 Neuberger Berman
<PAGE>
- ------------------------------------------------------------
SIGNATURE GUARANTEES
A signature guarantee is a guarantee that your signature is authentic.
Most banks, brokers, and other financial institutions can provide you with one.
Some may charge a fee; others may not, particularly if you are a customer of
theirs.
A notarized signature from a notary public is not a signature guarantee.
In some cases, you will have to place your order to sell shares in writing, and
you will need a signature guarantee (see sidebar). These cases include:
- - when selling more than $50,000 worth of shares
- - when you want the check for the proceeds to be made out to someone other than
an owner of record, or sent somewhere other than the address of record
- - when you want the proceeds sent by wire or
electronic transfer to a bank account you have not designated in advance
When selling shares in an account that you do not intend to close, be sure to
leave at least $1,000 worth of shares in the account. Otherwise, the fund has
the right to request that you bring the balance back up to the minimum level. If
you have not done so within 60 days, we may close your account and send you the
proceeds by mail.
UNCASHED CHECKS -- We do not pay interest on uncashed checks from fund
distributions or the sale of fund shares. We are not responsible for checks
after they are sent to you. After allowing a reasonable time for delivery,
please call us if you have not received an expected check. While we cannot track
a check, we may make arrangements for a replacement.
STATEMENTS AND CONFIRMATIONS -- Please review your account statements and
confirmations carefully as soon as you receive them. You must contact us within
30 days if you have any questions or notice any discrepancies. Otherwise, you
may adversely affect your right to make a claim about the transaction(s).
Your Investment 11
<PAGE>
MAINTAINING YOUR
ACCOUNT CONTINUED
- -------------------------------------------------------------------
FUND STRUCTURE
The fund uses a "master/feeder" structure.
Rather than investing directly in securities, the fund is a "feeder fund,"
meaning that it invests in a corresponding "master portfolio." The master
portfolio in turn invests in securities, using the strategies described in this
prospectus. One potential benefit of this structure is lower costs, since the
expenses of the master portfolio can be shared with any other feeder funds. In
this prospectus, we have used the word "fund" to mean the feeder fund and its
master portfolio.
For reasons relating to costs or a change in investment goal, among others, the
feeder fund could switch to another master portfolio or decide to manage its
assets itself. The fund is not currently contemplating such a move.
WHEN YOU EXCHANGE SHARES -- You can move money from one Neuberger Berman fund to
another through an exchange of shares. There are three things to remember when
making an exchange:
- - both accounts must have the same registration
- - you will need to observe the minimum investment and minimum account balance
requirements for the fund accounts involved
- - because an exchange is a sale for tax purposes, consider any tax consequences
before placing your order
The exchange program is available to all shareholders in the funds, but can be
withdrawn from any investor that we believe is trying to "time the market" or is
otherwise making exchanges that we judge to be excessive. Frequent exchanges can
interfere with fund management and affect costs and performance for other
shareholders.
PLACING ORDERS BY TELEPHONE -- Neuberger Berman fund investors have the option
of placing telephone orders to buy, sell, or exchange shares. On non-retirement
accounts, this option is available to you unless you indicate on your account
application (or in a subsequent letter to us or to State Street Bank and Trust
Company) that you don't want it.
Whenever we receive a telephone order, we take steps to make sure the order is
legitimate. These may include asking for identifying information and recording
the call. As long as the fund and its representatives
12 Neuberger Berman
<PAGE>
- ------------------------------------------------------------
EURO AND YEAR 2000
ISSUES
Like other mutual funds, the fund could be affected by problems relating to the
conversion of European currencies into the Euro beginning 1/1/99 and the ability
of computer systems to recognize the Year 2000.
At Neuberger Berman, we are taking steps to ensure that our own computer systems
are compliant with Euro and Year 2000 issues and to determine that the systems
used by our major service providers are also compliant. We are also making
efforts to determine whether companies in the fund's portfolio will be
affected by either issue.
At the same time, it is impossible to know whether these problems, which could
disrupt fund operations and investments if uncorrected, have been adequately
addressed until the dates in question arrive.
take reasonable measures to verify the authenticity of calls, investors may be
responsible for any losses caused by unauthorized telephone orders.
In unusual circumstances, it may be difficult to place an order by phone. In
these cases, consider sending your order by fax or express delivery.
OTHER POLICIES -- Under certain circumstances, the fund reserves the right to:
- - suspend the offering of shares
- - reject any exchange or investment order
- - change, suspend, or revoke the exchange privilege
- - suspend the telephone order privilege
- - satisfy an order to sell fund shares with securities rather than cash, for
certain very large orders
- - suspend or postpone your right to sell fund shares on days when trading on the
New York Stock Exchange is restricted, or as otherwise permitted by the SEC
- - change its investment minimums or other requirements for buying and selling,
or waive any minimums or requirements for certain investors
Your Investment 13
<PAGE>
BUYING SHARES
Method Things to know
- -----------------------------------------------------------------------------
SENDING US A CHECK
Your first investment must be at least $1,000
Additional investments can be as little as $100
We cannot accept cash, money orders, starter checks, or travelers checks
You will be responsible for any losses or fees resulting from a bad check; if
necessary, we may sell other shares belonging to you in order to cover these
losses
All checks must be made out to "Neuberger Berman Funds;" we cannot accept checks
made out to you or other parties and signed over to us
- -----------------------------------------------------------------------------
WIRING MONEY
All wires must be for at least $1,000
- -----------------------------------------------------------------------------
EXCHANGING FROM
ANOTHER FUND
All exchanges must be for at least $1,000
Both accounts involved must be registered in the same name, address and tax ID
number
An exchange order cannot be cancelled or changed once it has been placed
- -----------------------------------------------------------------------------
CALLING IN YOUR ORDER
(with follow-up payment)
All phone investment orders must be for at least $1,000
The money for your shares must be received within three days after you place
your order, or your order may be cancelled
You will be responsible for any losses or fees resulting from a cancelled order;
if necessary, we may sell other shares belonging to you in order to cover these
losses
Not available on retirement accounts
- -----------------------------------------------------------------------------
SETTING UP SYSTEMATIC
INVESTMENTS
All investments must be at least $100
14 Neuberger Berman
<PAGE>
RETIREMENT PLANS
We offer investors a number of tax-advantaged plans for retirement saving:
TRADITIONAL IRAS allow money to grow tax-deferred until you take it out at
retirement. Contributions are deductible for some investors, but even when
they're not, an IRA can be beneficial.
ROTH IRAS offer tax-free growth like a traditional IRA, but instead of
tax-deductible contributions, the withdrawals are tax-free for investors who
meet certain requirements.
Also available: SEP-IRA, SIMPLE, Keogh, and other types of plans. Consult your
tax professional to find out which types of plans may be beneficial for you,
then call 800-877-9700 for information on any Neuberger Berman retirement plan.
Instructions
- ----------------------------------------------------
Fill out the application and enclose your check
If regular first-class mail, address to:
NEUBERGER BERMAN FUNDS
BOSTON SERVICE CENTER
P.O. BOX 8403
BOSTON, MA 02266-8403
If express delivery, registered mail, or certified mail, send to:
NEUBERGER BERMAN FUNDS
C/O STATE STREET BANK AND TRUST COMPANY
66 BROOKS DRIVE
BRAINTREE, MA 02184-3839
- ----------------------------------------------------
Before wiring any money, call 800-877-9700 for an order confirmation
Have your financial institution send your wire to State Street Bank and Trust
Company
Include your name, the fund name, your account number and other information as
requested
- ----------------------------------------------------
Call 800-877-9700 to place your order
To place an order using FUNDFONE-Registered Trademark-, call 800-335-9366
- ----------------------------------------------------
Call 800-877-9700 to place your order
Follow up with a wire, electronic transfer, or check
(via express delivery)
To add shares to an existing account using FUNDFONE-Registered Trademark-, call
800-335-9366
- ----------------------------------------------------
Call 800-877-9700 for instructions
Your Investment 15
<PAGE>
SELLING SHARES
Method Things to know
- -----------------------------------------------------------------------------
SENDING US A LETTER
Unless you tell us otherwise, we will mail your proceeds by check to the address
of record, payable to the registered owner(s)
If you have designated a bank account on your application, you can request that
we wire the proceeds to this account; if the total balance in all of your
Neuberger Berman fund accounts is less than $200,000, you will be charged an
$8.00 fee
You can also request that we send the proceeds to your designated bank account
by electronic transfer without fee
You may need a signature guarantee (see page 11)
- -----------------------------------------------------------------------------
SENDING US A FAX
For amounts of up to $50,000
Not available if you have changed the address on the account by phone, fax, or
postal address change in the past 15 days
- -----------------------------------------------------------------------------
CALLING IN YOUR ORDER
All phone orders to sell shares must be for at least $1,000, unless you are
closing out an account
Not available if you have declined the phone option or are selling shares in a
retirement account
Not available if you have changed the address on the account by phone, fax, or
postal address change in the past 15 days
- -----------------------------------------------------------------------------
EXCHANGING INTO
ANOTHER FUND
All exchanges must be for at least $1,000
Both accounts involved must be registered in the same name, address and tax ID
number
An exchange order cannot be cancelled or changed once it has been placed
- -----------------------------------------------------------------------------
SETTING UP SYSTEMATIC
WITHDRAWALS
For accounts with at least $5,000 worth of shares in them
Withdrawals must be at least $100
16 Neuberger Berman
<PAGE>
INTERNET CONNECTION
Investors with Internet access can enjoy many valuable and time-saving features
by visiting us on the World Wide Web at www.nbfunds.com.
The site offers complete information on our funds, current performance data, and
an Investment Education Center with interactive worksheets for college and
retirement planning. Also available are relevant news items, tax information,
portfolio manager interviews, and related articles.
As a Neuberger Berman funds shareholder, you can use the web site to access
account information and even make secure transactions -- 24 hours a day.
Instructions
- ----------------------------------------------------
Send us a letter requesting us to sell shares signed by all registered owners;
include your name, account number, the fund name, the dollar amount or number of
shares you want to sell, and any other instructions
If regular first-class mail, send to:
NEUBERGER BERMAN FUNDS
BOSTON SERVICE CENTER
P.O. BOX 8403
BOSTON, MA 02266-8403
If express delivery, registered mail, or certified mail, send to:
NEUBERGER BERMAN FUNDS
C/O STATE STREET BANK AND TRUST COMPANY
66 BROOKS DRIVE
BRAINTREE, MA 02184-3839
- ----------------------------------------------------
Draw up a request to sell shares as described above
Fax it to 212-476-8848
Call 800-877-9700 to make sure your fax arrived and is in order
- ----------------------------------------------------
Call 800-877-9700 to place your order
Give your name, account number, the fund name, the dollar amount or number of
shares you want to sell, and any other instructions
To place an order using FUNDFONE-Registered Trademark-, call 800-335-9366
- ----------------------------------------------------
Call 800-877-9700 to place your order
To place an order using FUNDFONE-Registered Trademark-, call 800-335-9366
- ----------------------------------------------------
Call 800-877-9700 for instructions
Your Investment 17
<PAGE>
[SOLID BAR]
OBTAINING INFORMATION
You can obtain a shareholder report, SAI, and other information from:
NEUBERGER BERMAN
MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
212-476-8800
Web site:
www.nbfunds.com
Email:
[email protected]
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549-6009
800-SEC-0330 (Public
Reference Section)
Web site:
www.sec.gov
You can request copies of documents from the SEC for the cost of a duplicating
fee, or view documents at the SEC's Public Reference Room in Washington.
NEUBERGER BERMAN REGENCY FUND
- - No load
- - No sales charges
- - No 12b-1 fees
If you'd like further details on the fund, you can request a free copy of the
following documents:
SHAREHOLDER REPORTS -- Published twice a year, the shareholder reports offer
information about the fund's recent performance, including:
- - a discussion by the portfolio managers about strategies and market conditions
- - fund performance data and financial statements
- - complete portfolio holdings
STATEMENT OF ADDITIONAL INFORMATION -- The SAI contains more comprehensive
information on the fund, including:
- - various types of securities and practices, and their risks
- - investment limitations and additional policies
- - information about the fund's management and business structure
The SAI is incorporated by reference into this prospectus, making it legally
part of the prospectus.
Investment manager:
NEUBERGER BERMAN MANAGEMENT INC.
Sub-adviser:
NEUBERGER BERMAN, LLC
[LOGO]
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue
New York, NY 10158-0180
[RECYCLE LOGO] NMLRR2370499 SEC file number: 811-582
<PAGE>
________________________________________________________________________________
NEUBERGER BERMAN REGENCY FUND AND PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 30, 1999
No-Load Mutual Fund
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
________________________________________________________________________________
Neuberger Berman REGENCY Fund ("Fund"), a series of Neuberger Berman
Equity Fund ("Trust"), is a no-load mutual fund that offers shares pursuant to a
Prospectus dated April 30, 1999. The Fund invests all of its net investable
assets in Neuberger Berman REGENCY Portfolio ("Portfolio").
The Fund's 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 Inc. ("NB 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.
No person has been authorized to give any information or to make any
representations not contained in the Prospectus or in this SAI in connection
with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Fund or its distributor. The Prospectus and this SAI do not constitute an
offering by the Fund or its distributor in any jurisdiction in which such
offering may not lawfully be made.
The "Neuberger Berman" name and logo are service marks of Neuberger
Berman, LLC. "Neuberger Berman Management Inc." and the fund and portfolio names
in this SAI are either service marks or registered trademarks of Neuberger
Berman Management Inc. (Copyright)1999 Neuberger Berman Management Inc.
<PAGE>
TABLE OF CONTENTS
Page
----
INVESTMENT INFORMATION.........................................................1
Investment Policies and Limitations......................................1
Investment Insight.......................................................3
Additional Investment Information........................................4
PERFORMANCE INFORMATION.......................................................15
Total Return Computations...............................................15
Comparative Information.................................................16
Other Performance Information...........................................17
CERTAIN RISK CONSIDERATIONS...................................................17
TRUSTEES AND OFFICERS.........................................................17
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES.............................23
Investment Manager and Administrator....................................23
Management and Administration Fees......................................24
Sub-Adviser.............................................................25
Investment Companies Managed............................................25
Management and Control of NB Management.................................28
DISTRIBUTION ARRANGEMENTS.....................................................29
ADDITIONAL PURCHASE INFORMATION...............................................29
Share Prices and Net Asset Value........................................29
Automatic Investing and Dollar Cost Averaging...........................30
ADDITIONAL EXCHANGE INFORMATION...............................................30
ADDITIONAL REDEMPTION INFORMATION.............................................34
Suspension of Redemptions...............................................34
Redemptions in Kind.....................................................34
DIVIDENDS AND OTHER DISTRIBUTIONS.............................................34
ADDITIONAL TAX INFORMATION....................................................35
Taxation of the Fund....................................................35
Taxation of the Portfolio...............................................36
Taxation of the Fund's Shareholders.....................................38
i
<PAGE>
PORTFOLIO TRANSACTIONS........................................................39
Portfolio Turnover......................................................41
REPORTS TO SHAREHOLDERS.......................................................42
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS................................42
CUSTODIAN AND TRANSFER AGENT..................................................44
INDEPENDENT AUDITORS..........................................................44
LEGAL COUNSEL.................................................................44
APPENDIX A...................................................................A-1
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER........................A-1
ii
<PAGE>
INVESTMENT INFORMATION
The Fund is a separate operating series of the Trust, a Delaware
business trust that is registered with the Securities and Exchange Commission
("SEC") as a diversified open-end management investment company. The Fund seeks
its investment objective by investing all of its net investable assets in the
Portfolio, a series of Equity Managers Trust ("Managers Trust") that has an
investment objective identical to that of the Fund. The Portfolio, in turn,
invests in securities in accordance with an investment objective, policies, and
limitations identical to those of the Fund. (The Trust and Managers Trust, which
is an open-end management investment company managed by NB Management, are
together referred to below as the "Trusts.")
The following information supplements the discussion in the
Prospectus of the investment objective, policies, and limitations of the Fund
and Portfolio. The investment objective and, unless otherwise specified, the
investment policies and limitations of the 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
Managers Trust ("Portfolio Trustees") without shareholder approval. The
fundamental investment policies and limitations of the Fund or the Portfolio may
not be changed without the approval of the lesser of:
(1) 67% of the total units of beneficial interest ("shares") of the
Fund or Portfolio represented at a meeting at which more than 50% of the
outstanding Fund or Portfolio shares are represented or
(2) a majority of the outstanding shares of the Fund or Portfolio.
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 the Fund is called upon to vote on a change in a fundamental investment
policy or limitation of the Portfolio, the Fund casts its votes in proportion to
the votes of its shareholders at a meeting thereof called for that purpose.
Investment Policies and Limitations
- -----------------------------------
The Fund has the following fundamental investment policy, to enable
it to invest in the Portfolio:
Notwithstanding any other investment policy of the Fund, the
Fund may invest all of its 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.
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of the Fund are identical to
those of the Portfolio. Therefore, although the following discusses the
investment policies and limitations of the Portfolio, it applies equally to the
Fund.
1
<PAGE>
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 the Portfolio.
The Portfolio's fundamental investment policies and limitations are
as follows:
1. BORROWING. The Portfolio may not borrow money, except that the
Portfolio may (i) borrow money from banks for temporary or emergency purposes
and 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 the Portfolio's total assets, the Portfolio will reduce
its borrowings within three days (excluding Sundays and holidays) to the extent
necessary to comply with the 33-1/3% limitation.
2. COMMODITIES. The Portfolio may not purchase physical commodities
or contracts thereon, unless acquired as a result of the ownership of securities
or instruments, but this restriction shall not prohibit the Portfolio from
purchasing futures contracts or options (including options on futures contracts,
but excluding options or futures contracts on physical commodities) or from
investing in securities of any kind.
3. DIVERSIFICATION. The Portfolio may not, with respect to 75% of
the value of its total assets, purchase the securities of any issuer (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. The Portfolio may not purchase any
security if, as a result, 25% or more of its total assets (taken at current
value) would be invested in the securities of issuers having their principal
business activities in the same industry. This limitation does not apply to
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
5. LENDING. The Portfolio may not lend any security or make any
other loan if, as a result, more than 33-1/3% of its total assets (taken at
current value) would be lent to other parties, except, in accordance with its
investment objective, policies, and limitations, (i) through the purchase of a
portion of an issue of debt securities or (ii) by engaging in repurchase
agreements.
6. REAL ESTATE. The Portfolio may not purchase real estate unless
acquired as a result of the ownership of securities or instruments, but this
restriction shall not prohibit the Portfolio from purchasing securities issued
by entities or investment vehicles that own or deal in real estate or interests
therein or instruments secured by real estate or interests therein.
7. SENIOR SECURITIES. The Portfolio may not issue senior securities,
except as permitted under the 1940 Act.
8. UNDERWRITING. The Portfolio may not underwrite securities of
other issuers, except to the extent that the Portfolio, in disposing of
portfolio securities, may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 ("1933 Act").
2
<PAGE>
For purposes of the limitation on commodities, the Portfolio does
not consider foreign currencies or forward contracts to be physical commodities.
The Portfolio's non-fundamental investment policies and limitations
are as follows:
1. BORROWING. The Portfolio may not purchase securities if
outstanding borrowings, including any reverse repurchase agreements, exceed 5%
of its total assets.
2. LENDING. Except for the purchase of debt securities and engaging
in repurchase agreements, the Portfolio may not make any loans other than
securities loans.
3. MARGIN TRANSACTIONS. The Portfolio may not purchase securities on
margin from brokers or other lenders, except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions. Margin payments in connection with transactions in futures
contracts and options on futures contracts shall not constitute the purchase of
securities on margin and shall not be deemed to violate the foregoing
limitation.
4. FOREIGN SECURITIES. The Portfolio may not invest more than 10% of
the value of its total assets in securities of foreign issuers, provided that
this limitation shall not apply to foreign securities denominated in U.S.
dollars, including American Depositary Receipts ("ADRs").
5. ILLIQUID SECURITIES. The Portfolio may not 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.
The Portfolio does not intend to invest in futures contracts and
options thereon during the coming year. In addition, although the Portfolio does
not have policies limiting its investment in warrants, the Portfolio does not
currently intend to invest in warrants unless acquired in units or attached to
securities.
TEMPORARY DEFENSIVE POSITION. For temporary defensive purposes, the
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.
Investment Insight
- ------------------
Neuberger Berman's commitment to its asset management approach is
reflected in the more than $125 million the organization's principals, employees
and their families invested in the Neuberger Berman mutual funds.
Neuberger Berman REGENCY Fund seeks long-term growth of capital by
primarily investing in common stocks of mid-capitalization companies with solid
fundamentals. The characteristics the portfolio co-managers look for in
companies include consistent cash flows, low price-to-earnings ratios, and sound
track records through all phases of the market cycle. They are looking for
3
<PAGE>
quality medium-sized companies whose stock prices are undervalued compared to
what they believe is the stocks' intrinsic value in the marketplace.
Their ultimate goal is to find undervalued companies that have not
yet been discovered by the majority of investors, or better yet to buy "great
companies at a great price." They attempt to do this by focusing on the mid-cap
segment of the market because it generally tends to be less followed than the
large-cap segment by Wall Street analysts. They strongly believe that more often
than not, if you are patient and you do your homework on a company, you can get
a good business at a great or at least a good price.
A particular characteristic the portfolio co-managers like to focus
on is the "owner-operator" aspect of many of the companies in the portfolio.
"Owner-operator" companies are those that continue to be run by the company's
original founder(s) and who still own a lot of stock. Many of these kinds of
companies are found in the mid-cap sector and are considered to be "leadership"
businesses, despite their medium size.
The Fund's value approach in the mid-cap sector complements the
mid-cap growth style of investing utilized by Neuberger Berman's Manhattan Fund.
Investors seeking a balance between growth and value investing styles and
various market capitalizations may want to consider this fund.
REGENCY Portfolio uses the Russell MidcapTM Value Index as its
benchmark. Consistent with the Portfolio's capitalization parameters and value
style, the co-managers believe this is a more appropriate benchmark than the S&P
"500." The Portfolio regards mid-cap companies to be those companies with market
capitalizations that, at the time of investment, fall within the capitalization
range of the Russell MidcapTM Value Index as last announced by the Frank Russell
Company before the date of this SAI. For purposes of this SAI, that range was
approximately $1.4 billion to $10.3 billion. Companies whose market
capitalizations move out of this mid-cap range after purchase continue to be
considered mid-cap companies for purposes of the Portfolio's investment program.
The Portfolio does not follow a policy of active trading for short-term profits.
Additional Investment Information
- ---------------------------------
The Portfolio may make the following investments, among others,
although it may not buy all of the types of securities or use all of the
investment techniques that are described.
ILLIQUID SECURITIES. Illiquid securities 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 1933 Act,
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 NB Management, acting pursuant to guidelines
established by the trustees of Managers Trust, 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 the
Portfolio to value or dispose of due to the absence of an active trading market.
The sale of some illiquid securities by the Portfolio may be subject to legal
4
<PAGE>
restrictions which could be costly to the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio may invest up to 15% of its
net assets in illiquid securities.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio
purchases securities from a bank that is a member of the Federal Reserve System
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. Costs,
delays, or losses could result if the selling party to a repurchase agreement
becomes bankrupt or otherwise defaults. NB Management monitors the
creditworthiness of sellers.
POLICIES AND LIMITATIONS. Repurchase agreements with a maturity of
more than seven days are considered to be illiquid securities. The Portfolio may
not 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. The
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.
SECURITIES LOANS. The Portfolio may lend securities to banks,
brokerage firms, and other institutional investors judged creditworthy by NB
Management, provided that cash or equivalent collateral, equal to at least 100%
of the market value of the loaned securities, is continuously maintained by the
borrower with the Portfolio. The Portfolio may invest the cash collateral and
earn income, or it may receive an agreed upon amount of interest income from a
borrower who has delivered equivalent collateral. During the time securities are
on loan, the borrower will pay the Portfolio an amount equivalent to any
dividends or interest paid on such securities. These loans are subject to
termination at the option of the Portfolio or the borrower. The Portfolio may
pay reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker. The Portfolio does not have the
right to vote securities on loan, but would terminate the loan and regain the
right to vote if that were considered important with respect to the investment.
NB 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.
POLICIES AND LIMITATIONS. The 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 NB
Management. Borrowers are required continuously to secure their obligations to
return securities on loan from the 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
5
<PAGE>
value of the loaned securities, which will also be marked to market daily.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. The Portfolio may
invest in restricted securities, which are securities that may not be sold to
the public without an effective registration statement under the 1933 Act.
Before they are registered, such securities may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed to facilitate efficient trading among institutional investors
by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by the
Portfolio qualify under Rule 144A and an institutional market develops for those
securities, the Portfolio likely will be able to dispose of the securities
without 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 the Portfolio's
illiquidity. NB Management, acting under guidelines established by the Portfolio
Trustees, may determine that certain securities qualified for trading under Rule
144A are liquid. 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, the Portfolio may be obligated to
pay all or part of the registration expenses, and a considerable period may
elapse between the decision to sell and the time the Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Portfolio might obtain a
less favorable price than prevailed when it decided to sell. Restricted
securities for which no market exists are priced by a method that the Portfolio
Trustees believe accurately reflects fair value.
POLICIES AND LIMITATIONS. To the extent restricted securities,
including Rule 144A securities, are illiquid, purchases thereof will be subject
to the Portfolio's 15% limit on investments in illiquid securities.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement,
the 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. 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.
POLICIES AND LIMITATIONS. Reverse repurchase agreements are
considered borrowings for purposes of the Portfolio's investment policies and
limitations concerning borrowings. While a reverse repurchase agreement is
outstanding, the 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.
FOREIGN SECURITIES. The 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. While investments in foreign securities are intended to reduce
risk by providing further diversification, such investments involve sovereign
6
<PAGE>
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.
The Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(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 (and gains realized on
disposition thereof) may be subject to foreign taxes, including taxes withheld
from those payments. Commissions on foreign securities exchanges are often at
fixed rates and are generally higher than negotiated commissions on U.S.
exchanges, although the Portfolio endeavors to achieve the most favorable net
results on portfolio transactions.
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 the Portfolio are uninvested
and no return is earned thereon. The inability of the Portfolio to make intended
security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to the Portfolio
due to subsequent declines in value of the securities or, if the Portfolio has
entered into a contract to sell the securities, could result in possible
liability to the purchaser.
Interest rates prevailing in other countries may affect the prices
of foreign securities and exchange rates for foreign currencies. Local factors,
including the strength of the local economy, the demand for borrowing, the
government's fiscal and monetary policies, and the international balance of
payments, often affect interest rates in other countries. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
7
<PAGE>
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.
POLICIES AND LIMITATIONS. In order to limit the risks inherent in
investing in foreign currency denominated securities, the 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, the Portfolio is not restricted in
the amount it may invest in securities denominated in any one foreign currency.
Investments in securities of foreign issuers are subject to the
Portfolio's quality standards. The Portfolio may invest only in securities of
issuers in countries whose governments are considered stable by NB Management.
OPTIONS ON SECURITIES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "HEDGING INSTRUMENTS")
CALL OPTIONS ON SECURITIES. The Portfolio 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 the Fund's net asset values ("NAVs")) or to earn premium income.
Portfolio securities on which call options may be written and purchased by the
Portfolio are purchased solely on the basis of investment considerations
consistent with the Portfolio's investment objective.
When the Portfolio writes a call option, it is obligated to sell a
security to a purchaser at a specified price at any time until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the call option. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it to
deliver the underlying security against payment of the exercise price. The
Portfolio may be obligated to deliver securities underlying an option at less
than the market price.
The writing of covered call options is a conservative investment
technique that is believed to involve relatively little risk but is capable of
enhancing the Portfolio's total return. When writing a covered call option, the
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security above the exercise price, but
conversely retains the risk of loss should the price of the security decline.
If a call option that the 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
8
<PAGE>
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 the Portfolio purchases a call option, it pays a premium for
the right to purchase a security from the writer at a specified price until a
specified date.
POLICIES AND LIMITATIONS. The Portfolio may write covered call
options and may purchase call options in related closing transactions. The
Portfolio writes only "covered" call options on securities it owns (in contrast
to the writing of "naked" or uncovered call options, which the Portfolio will
not do). The Portfolio would purchase a call option to offset a previously
written call option.
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. The
obligation under any option written by the 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 the 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. Exchange-traded options in the United
States are issued by a clearing organization affiliated with the exchange on
which the option is listed; the clearing organization in effect guarantees
completion of every exchange-traded option. In contrast, OTC options are
contracts between the Portfolio and a counter-party, with no clearing
organization guarantee. Thus, when the Portfolio writes an OTC option, it
generally will be able to "close out" the option prior to its expiration only by
entering into a closing purchase transaction with the dealer to whom the
Portfolio originally sold the option. There can be no assurance that the
Portfolio would be able to liquidate an OTC option at any time prior to
expiration. Unless the Portfolio is able to effect a closing purchase
transaction in a covered OTC call option it has written, it will not be able to
liquidate securities used as cover until the option expires or is exercised or
until different cover is substituted. In the event of the counter-party's
insolvency, the Portfolio may be unable to liquidate its options position and
the associated cover. NB Management monitors the creditworthiness of dealers
with which the Portfolio may engage in OTC options transactions.
The premium received (or paid) by the Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable 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 the Portfolio for
writing an option is recorded as a liability on the Portfolio's statement of
assets and liabilities. This liability is adjusted daily to the option's current
market value.
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.
9
<PAGE>
There is, of course, no assurance that the Portfolio will be able to effect
closing transactions at favorable prices. If the Portfolio cannot enter into
such a transaction, it may be required to hold a security that it might
otherwise have sold, in which case it would continue to be at market risk on the
security.
The Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from writing the call 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.
The Portfolio pays brokerage commissions or spreads in connection
with purchasing or writing options, including those used to close out existing
positions.
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.
POLICIES AND LIMITATIONS. The Portfolio may use American-style
options. The assets used as cover (or held in a segregated account) for OTC
options written by the Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC call option
written subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic value
of the option.
FOREIGN CURRENCY TRANSACTIONS. The 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"). The 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 Portfolio enters into forward contracts in an attempt to hedge
against changes in prevailing currency exchange rates. The Portfolio does not
engage in transactions in forward contracts for speculation; it views
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 the Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
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
10
<PAGE>
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, the
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
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.
NB 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 NB Management is incorrect in its judgment of future
exchange rate relationships, the Portfolio could be in a less advantageous
position than if such a hedge had not been established. If the 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 the Portfolio's securities against a decline in the value of a currency
does not eliminate fluctuations in the prices of underlying securities. Because
forward contracts are not traded on an exchange, the assets used to cover such
contracts may be illiquid. The Portfolio may experience delays in the settlement
of its foreign currency transactions.
POLICIES AND LIMITATIONS. The Portfolio may enter into forward
contracts for the purpose of hedging and not for speculation.
OPTIONS ON FOREIGN CURRENCIES. The Portfolio may write and purchase
covered call and put options on foreign currencies. 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.
POLICIES AND LIMITATIONS. The Portfolio would use options on foreign
currencies 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.
11
<PAGE>
REGULATORY LIMITATIONS ON USING HEDGING INSTRUMENTS. To the extent
the 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 Portfolio does not intend to invest in futures contracts and options
thereon during the coming year.
COVER FOR HEDGING INSTRUMENTS. 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 the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet current
obligations. The Portfolio may be unable promptly to dispose of assets which
cover, or are segregated with respect to, an illiquid futures, options or
forward position; this inability may result in a loss to the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio will comply with SEC
guidelines regarding "cover" for Hedging 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.
GENERAL RISKS OF HEDGING INSTRUMENTS. The primary risks in using
Hedging Instruments are (1) imperfect correlation or no correlation between
changes in market value of the securities or currencies held or to be acquired
by the Portfolio and the prices of Hedging Instruments; (2) possible lack of a
liquid secondary market for Hedging Instruments and the resulting inability to
close out Hedging Instruments when desired; (3) the fact that the skills needed
to use Hedging Instruments are different from those needed to select the
Portfolio's securities; (4) the fact that, although use of Hedging Instruments
for hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in hedged investments; and (5) the possible inability of the Portfolio
to purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for the 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 Hedging Instruments.
There can be no assurance that the Portfolio's use of Hedging Instruments will
be successful.
The Portfolio's use of Hedging Instruments may be limited by the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
it must comply if the Fund is to continue to qualify as a regulated investment
company ("RIC"). See "Additional Tax Information." Hedging Instruments may not
be available with respect to some currencies, especially those of so-called
emerging market countries.
POLICIES AND LIMITATIONS. NB Management intends to reduce the risk
of imperfect correlation by investing only in Hedging Instruments whose behavior
is expected to resemble or offset that of the Portfolio's underlying securities
or currency. NB Management intends to reduce the risk that the Portfolio will be
unable to close out Hedging Instruments by entering into such transactions only
if NB Management believes there will be an active and liquid secondary market.
12
<PAGE>
FIXED INCOME SECURITIES. While the emphasis of the Portfolio's
investment program is on common stocks and other equity securities, it may also
invest in money market instruments, U.S. Government and Agency Securities, and
other fixed income securities. The Portfolio may invest in investment grade
corporate bonds and debentures and in corporate debt securities rated below
investment grade.
U.S. Government Securities are obligations of the U.S. Treasury
backed by the full faith and credit of the United States. U.S. Government Agency
Securities are issued or guaranteed by U.S. Government agencies or by
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, Fannie Mae (also known as Federal National Mortgage
Association), Freddie Mac (also known as Federal Home Loan Mortgage
Corporation), Student Loan Marketing Association (commonly known as "Sallie
Mae"), and the Tennessee Valley Authority. Some U.S. Government Agency
Securities are supported by the full faith and credit of the United States,
while others may by 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.
Investment grade debt securities are those receiving one of the four
highest ratings from Standard & Poor's ("S&P"), Moody's Investors Service, Inc.
("Moody's"), or another nationally recognized statistical rating organization
("NRSRO") or, if unrated by any NRSRO, deemed by NB Management to be comparable
to such rated securities ("Comparable Unrated Securities"). Securities rated by
Moody's in its fourth highest rating category (Baa) or Comparable Unrated
Securities may be deemed to have speculative characteristics.
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 Portfolio may rely on the ratings of any NRSRO,
the Portfolio primarily refers to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). The value of the fixed income securities in which the
Portfolio may invest is likely to decline in times of rising market interest
rates. Conversely, when rates fall, the value of the Portfolio's fixed income
investments is likely to rise. Foreign debt securities are subject to risks
similar to those of other foreign securities.
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
13
<PAGE>
higher-rated securities. Pricing of thinly traded securities requires greater
judgment than pricing of securities for which market transactions are regularly
reported. NB Management will invest in lower-rated securities only when it
concludes that the anticipated return on such an investment to the Portfolio
warrants exposure to the additional level of risk.
POLICIES AND LIMITATIONS. The Portfolio normally may invest up to
35% of its total assets in debt securities. The Portfolio may invest up to 15%
of its net assets in corporate debt securities rated below investment grade or
Comparable Unrated Securities. Subsequent to its purchase by the 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 the Portfolio.
In such a case, the 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 15% of its net assets.
COMMERCIAL PAPER. Commercial paper is a short-term debt security
issued by a corporation or bank, usually for purposes such as financing current
operations. The 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, NB Management may
in certain cases determine that such paper is liquid, pursuant to guidelines
established by the Portfolio Trustees.
POLICIES AND LIMITATIONS. The Portfolio may invest in commercial
paper only if it has received the highest rating from S&P (A-1) or Moody's (P-1)
or deemed by NB Management to be of comparable quality.
ZERO COUPON SECURITIES. The Portfolio 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 the Portfolio prior to the receipt of any
actual payments. Because the 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, the Portfolio
may have to dispose of portfolio securities under disadvantageous circumstances
to generate cash, or may be required to borrow, to satisfy the 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.
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<PAGE>
CONVERTIBLE SECURITIES. The Portfolio may invest in convertible
securities. A convertible security is a bond, debenture, note, preferred stock,
or other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. Convertible securities generally
have features of both common stocks and debt 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.
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 the Portfolio is called
for redemption, the Portfolio will be required to convert it into the underlying
common stock, sell it to a third party or permit the issuer to redeem the
security. Any of these actions could have an adverse effect on the Portfolio's
and the Fund's ability to achieve their investment objectives.
POLICIES AND LIMITATIONS. Convertible debt securities are subject to
the Portfolio's investment policies and limitations concerning fixed income
securities.
PREFERRED STOCK. The 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.
PERFORMANCE INFORMATION
The Fund's performance figures are based on historical results and
are not intended to indicate future performance. The share price and total
return of the Fund will vary, and an investment in the Fund, when redeemed, may
be worth more or less than an investor's original cost. As of the date of this
SAI, the Fund was new and had no performance history.
Total Return Computations
- -------------------------
The Fund may advertise certain total return information. An average
annual compounded rate of return ("T") may be computed by using the redeemable
value at the end of a specified period ("ERV") of a hypothetical initial
15
<PAGE>
investment of $1,000 ("P") over a period of time ("n") according to the formula:
P(1+T)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.
Comparative Information
- -----------------------
From time to time the Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings)
published by independent services or publications (including
newspapers, newsletters, and financial periodicals) that monitor the
performance of mutual funds, such as Lipper Analytical Services,
Inc., 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 Value 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 and various other domestic, international, and global indices.
The S&P 500 Index is a broad index of common stock prices, while the
DJIA represents a narrower segment of industrial companies. The S&P
600 Index includes stocks that range in market value from $35 million
to $6.1 billion, with an average of $572 million. The S&P 400 Index
measures mid-sized companies that have an average market
capitalization of $2.1 billion. Each assumes reinvestment of
distributions and is calculated without regard to tax consequences or
the costs of investing. The Portfolio may invest in different types
of securities from those included in some of the above indices.
Evaluations of the Fund's performance, its total returns, and
comparisons may be used in advertisements and in information furnished to
current and prospective shareholders (collectively, "Advertisements"). The Fund
may also be compared to individual asset classes such as common stocks,
small-cap stocks, or Treasury bonds, based on information supplied by Ibbotson
and Sinquefield.
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<PAGE>
Other Performance Information
- -----------------------------
From time to time, information about the Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for the Fund. This information may include the Portfolio's
portfolio diversification by asset type. Information used in Advertisements may
include statements or illustrations relating to the appropriateness of types of
securities and/or mutual funds that may be employed to meet specific financial
goals, such as (1) funding retirement, (2) paying for children's education, and
(3) financially supporting aging parents.
NB 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 the 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 at market
highs and/or lows, and investing early versus late for retirement plans also may
be included in Advertisements, if appropriate.
CERTAIN RISK CONSIDERATIONS
Although the Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
risk. There can, of course, be no assurance the Portfolio will achieve its
investment objective.
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 NB Management and Neuberger
Berman, LLC ("Neuberger Berman").
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<TABLE>
<CAPTION>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
--------- --------------- --------------------------
<S> <C> <C>
Faith Colish (63) Trustee of each Trust Attorney at Law, Faith Colish,
63 Wall Street A Professional Corporation.
24th Floor
New York, NY 10005
Stanley Egener* (64) Chairman of the Principal of Neuberger Berman;
Board, Chief President and Director of NB
Executive Officer, Management; Chairman of the
and Trustee of each Board, Chief Executive Officer
Trust and Trustee of nine other
mutual funds for which NB
Management acts as investment
manager or administrator.
Howard A. Mileaf (61) Trustee of each Trust Vice President and Special
WHX Corporation Counsel to WHX Corporation
110 East 59th Street (holding company) since 1992;
30th Floor Director of Kevlin Corporation
New York, NY 10022 (manufacturer of microwave and
other products).
Edward I. O'Brien* (70) Trustee of each Trust Until 1993, President of the
12 Woods Lane Securities Industry Association
Scarsdale, NY 10583 ("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. (70) Trustee of each Trust Retired. Formerly, President
7082 Siena Court of SOBRO (South Bronx Overall
Boca Raton, FL 33433 Economic Development
Corporation).
John P. Rosenthal (66) Trustee of each Trust Senior Vice President of
Burnham Securities Inc. Burnham Securities Inc. (a
Burnham Asset Management registered broker-dealer) since
Corp. 1991; Director, Cancer
1325 Avenue of the Americas Treatment Holdings, Inc.
17th Floor
New York, NY 10019
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Cornelius T. Ryan (67) Trustee of each Trust General Partner of Oxford
Oxford Bioscience Partners Partners and Oxford Bioscience
315 Post Road West Partners (venture capital
Westport, CT 06880 partnerships) and President of
Oxford Venture Corporation;
Director of Capital Cash
Management Trust (money market
fund) and Prime Cash Fund.
Gustave H. Shubert (69) Trustee of each Trust Senior Fellow/Corporate Advisor
13838 Sunset Boulevard and Advisory Trustee of Rand (a
Pacific Palisades, CA 90272 non-profit public interest
research institution) since
1989; Honorary Member of the
Board of Overseers of the
Institute for Civil Justice, the
Policy Advisory Committee of the
Clinical Scholars Program at the
University of California, the
American Association for the
Advancement of Science, the
Counsel on Foreign Relations,
and the Institute for Strategic
Studies (London); advisor to the
Program Evaluation and
Methodology Division of the U.S.
General Accounting Office;
formerly Senior Vice President
and Trustee of Rand.
Lawrence Zicklin* (62) President and Trustee Principal of Neuberger Berman;
of each Trust Director of NB Management;
President and/or Trustee of six
other mutual funds for which NB
Management acts as investment
manager or administrator.
Daniel J. Sullivan (59) Vice President of Senior Vice President of NB
each Trust Management since 1992; Vice
President of nine other mutual
funds for which NB Management
acts as investment manager or
administrator.
19
<PAGE>
Michael J. Weiner (51) Vice President and Senior Vice President of NB
Principal Financial Management since 1992;
Officer of each Trust Principal of Neuberger Berman
since 1998; Treasurer of NB
Management from 1992 to 1996;
Vice President and Principal
Financial Officer of nine other
mutual funds for which NB
Management acts as investment
manager or administrator.
Claudia A. Brandon (42) Secretary of each Trust Vice President of NB
Management; Secretary of nine
other mutual funds for which NB
Management acts as investment
manager or administrator.
Richard Russell (52) Treasurer and Vice President of NB Management
Principal Accounting since 1993; Treasurer and
Officer of each Trust Principal Accounting Officer of
nine other mutual funds for
which NB Management acts as
investment manager or
administrator.
Stacy Cooper-Shugrue (35) Assistant Secretary Assistant Vice President of NB
of each Trust Management since 1993;
Assistant Secretary of nine
other mutual funds for which NB
Management acts as investment
manager or administrator.
C. Carl Randolph (61) Assistant Secretary Principal of Neuberger Berman
of each Trust since 1992; Assistant Secretary
of nine other mutual funds for
which NB Management acts as
investment manager or
administrator.
20
<PAGE>
Barbara DiGiorgio (40) Assistant Treasurer Assistant Vice President of NB
of each Trust Management since 1993;
Assistant Treasurer since 1996
of nine other mutual funds for
which NB Management acts as
investment manager or
administrator.
Celeste Wischerth (37) Assistant Treasurer Assistant Vice President of NB
of each Trust Management since 1994; prior
thereto, employee of NB
Management; Assistant Treasurer
since 1996 of nine other mutual
funds for which NB Management
acts as investment manager or
administrator.
</TABLE>
___________________
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of the Trust within the
meaning of the 1940 Act. Messrs. Egener and Zicklin are interested persons by
virtue of the fact that they are officers and/or directors of NB Management and
principals of Neuberger Berman. Mr. O'Brien is an interested person by virtue of
the fact that he is a director of Legg Mason, Inc., a wholly owned subsidiary of
which, from time to time, serves as a broker or dealer to the Portfolio and
other funds for which NB Management serves as investment manager.
The Trust's Trust Instrument and Managers Trust's Declaration of
Trust provide that each such Trust will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties involved in
the conduct of their offices, or (b) did not act in good faith in the reasonable
belief that their action was in the best interest of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined (by a court or other body approving the settlement or other
disposition, by a majority of disinterested trustees based upon a review of
readily available facts, or in a written opinion of independent counsel) that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.
21
<PAGE>
The following table sets forth information concerning the
compensation of the trustees of the Trust. None of the Neuberger Berman Funds
has any retirement plan for its trustees.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/98
-----------------------------
Total Compensation from
Aggregate Investment Companies in the
Compensation Neuberger Berman Fund Complex
Name and Position with the Trust from the Trust Paid to Trustees
- -------------------------------- -------------- -----------------------------
Faith Colish $ 18,281 $ 84,500
Trustee (5 other investment
companies)
Stanley Egener $ 0 $ 0
Chairman of the Board, Chief (9 other investment
Executive Officer, and Trustee companies)
Howard A. Mileaf $ 18,474 $ 52,000
Trustee (4 other investment
companies)
Edward I. O'Brien $ 19,799 $ 51,750
Trustee (3 other investment
companies)
John T. Patterson, Jr. $ 19,993 $ 55,750
Trustee (4 other investment
companies)
John P. Rosenthal $ 17,056 $ 47,750
Trustee (4 other investment
companies)
Cornelius T. Ryan $ 18,667 $ 48,750
Trustee (3 other investment
companies)
Gustave H. Shubert $ 18,474 $ 48,250
Trustee (3 other investment
companies)
Lawrence Zicklin $ 0 $ 0
President and Trustee (5 other investment
companies)
At March 31, 1999, the trustees and officers of the Trusts, as a group, owned
beneficially or of record less than 1% of the outstanding shares of the Fund.
22
<PAGE>
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
Investment Manager and Administrator
- ------------------------------------
Because all of the Fund's net investable assets are invested in the
Portfolio, the Fund does not need an investment manager. NB Management serves as
the Portfolio's investment manager pursuant to a management agreement with
Managers Trust, dated as of August 2, 1993 ("Management Agreement"). The
Management Agreement was approved by the holders of the interests in the
Portfolio on _____________, 1999.
The Management Agreement provides, in substance, that NB Management
will make and implement investment decisions for the Portfolio in its discretion
and will continuously develop an investment program for the Portfolio's assets.
The Management Agreement permits NB Management to effect securities transactions
on behalf of the Portfolio through associated persons of NB Management. The
Management Agreement also specifically permits NB Management to compensate,
through higher commissions, brokers and dealers who provide investment research
and analysis to the Portfolio, although NB Management has no current plans to
pay a material amount of such compensation.
NB Management provides to the Portfolio, without separate cost,
office space, equipment, and facilities and the personnel necessary to perform
executive, administrative, and clerical functions. NB Management pays all
salaries, expenses, and fees of the officers, trustees, and employees of
Managers Trust who are officers, directors, or employees of NB Management. Two
directors of NB Management (who also are principals of Neuberger Berman), one of
whom also serves as an officer of NB Management, presently serve as trustees and
officers of the Trusts. See "Trustees and Officers." The Portfolio pays NB
Management a management fee based on the Portfolio's average daily net assets,
as described below.
NB Management provides facilities, services, and personnel to the
Fund pursuant to an administration agreement with the Trust, dated August 3,
1993, as amended on August 2, 1996. ("Administration Agreement"). The Fund was
authorized to become subject to the Administration Agreement by vote of the Fund
Trustees on April 28, 1999, and became subject to it on April 30, 1999. For such
administrative services, the Fund pays NB Management a fee based on the Fund's
average daily net assets, as described below.
Under the Administration Agreement, NB Management also provides to
the Fund and its shareholders certain shareholder, shareholder-related, and
other services that are not furnished by the Fund's shareholder servicing agent.
NB Management provides the direct shareholder services specified in the
Administration Agreement, assists the shareholder servicing agent in the
development and implementation of specified programs and systems to enhance
overall shareholder servicing capabilities, solicits and gathers shareholder
proxies, performs services connected with the qualification of the 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, NB Management or the Fund may enter into
arrangements with registered broker-dealers or other third parties pursuant to
23
<PAGE>
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.
Management and Administration Fees
- ----------------------------------
For investment management services, the Portfolio pays NB Management
a fee at the annual rate of 0.55% of the first $250 million of that Portfolio's
average daily net assets, 0.525% of the next $250 million, 0.50% of the next
$250 million, 0.475% of the next $250 million, 0.45% of the next $500 million,
and 0.425% of average daily net assets in excess of $1.5 billion.
NB Management provides administrative services to the Fund that
includes furnishing facilities and personnel for the Fund and performing
accounting, recordkeeping, and other services. For such administrative services,
the Fund pays NB Management a fee at the annual rate of 0.26% of the Fund's
average daily net assets.
NB Management has contractually undertaken to reimburse the Fund for
its total operating expenses (excluding interest, taxes, brokerage commissions
and extraordinary expenses) which exceed, in the aggregate, 1.50% per annum of
the Fund's average daily net assets. This undertaking lasts until December 31,
2002. The Fund has contractually undertaken to reimburse NB Management, until
December 31, 2005, for the excess expenses paid by NB Management, provided the
reimbursements do not cause the Fund's total operating expenses (exclusive of
taxes, interest, brokerage commissions, and extraordinary expenses) to exceed an
annual rate of 1.50% of average net assets and the reimbursements are made
within three years after the year in which NB Management incurred the expense.
The Management Agreement continues until August 2, 1999. The
Management Agreement is renewable thereafter from year to year with respect to
the Portfolio, so long as its continuance is approved at least annually (1) by
the vote of a majority of the Portfolio Trustees who are not "interested
persons" of NB Management or Managers Trust ("Independent Portfolio Trustees"),
cast in person at a meeting called for the purpose of voting on such approval,
and (2) by the vote of a majority of the Portfolio Trustees or by a 1940 Act
majority vote of the outstanding interests in the Portfolio. The Administration
Agreement continues until August 2, 1999. The Administration Agreement is
renewable from year to year with respect to the 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 NB 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 the Fund.
The Management Agreement is terminable, without penalty, with
respect to the Portfolio on 60 days' written notice either by Managers Trust or
by NB Management. The Administration Agreement is terminable, without penalty,
with respect to the Fund on 60 days' written notice either by NB Management or
by the Trust. Each Agreement terminates automatically if it is assigned.
24
<PAGE>
Sub-Adviser
- -----------
NB Management retains Neuberger Berman, 605 Third Avenue, New York,
NY 10158-3698, as sub-adviser with respect to the Portfolio pursuant to a
sub-advisory agreement dated August 2, 1993 ("Sub-Advisory Agreement"). The
Portfolio was authorized to become subject to the Sub-Advisory Agreement on
April 28, 1999 and became subject to it on April 30, 1999. The Sub-Advisory
Agreement was approved by the holders of the interests in the Portfolio on
________, 1999.
The Sub-Advisory Agreement provides in substance that Neuberger
Berman will furnish to NB 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, NB 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 NB Management. The Sub-Advisory Agreement provides that NB 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
NB Management.
The Sub-Advisory Agreement continues until August 2, 1999 and is
renewable from year to year, subject to approval of its continuance in the same
manner as the Management Agreement. The Sub-Advisory Agreement is subject to
termination, without penalty, with respect to the Portfolio by the Portfolio
Trustees or a 1940 Act majority vote of the outstanding interests in the
Portfolio, by NB Management, or by Neuberger Berman on not less than 30 nor more
than 60 days' written notice. The Sub-Advisory Agreement also terminates
automatically with respect to the Portfolio if it is assigned or if the
Management Agreement terminates with respect to the Portfolio.
Most money managers that come to the Neuberger Berman organization
have at least fifteen years experience. Neuberger Berman and NB Management
employ experienced professionals that work in a competitive environment.
Investment Companies Managed
- ----------------------------
As of March 31, 1999, the investment companies managed by NB
Management had aggregate net assets of approximately $____ billion. NB
Management currently serves as investment manager of the following investment
companies:
25
<PAGE>
Approximate Net
Assets at
Name March 31, 1999
---- ----------------
Neuberger Berman Cash Reserves $______________
Portfolio
(investment portfolio for
Neuberger Berman Cash Reserves)
Neuberger Berman Government Money $______________
Portfolio
(investment portfolio for
Neuberger Berman Government
Money Fund)
Neuberger Berman High Yield Bond $______________
Portfolio
(investment portfolio for
Neuberger Berman High Yield Bond
Fund)
Neuberger Berman Limited Maturity Bond $______________
Portfolio
(investment portfolio for
Neuberger Berman Limited
Maturity Bond Fund and Neuberger
Berman Limited Maturity Bond
Trust)
Neuberger Berman Municipal Securities $______________
Portfolio
(investment portfolio for
Neuberger Berman Municipal
Securities Trust)
Neuberger Berman Municipal Money $______________
Portfolio
(investment portfolio for
Neuberger Berman Municipal Money
Fund)
Neuberger Berman Focus Portfolio $______________
(investment portfolio for Neuberger
Berman Focus Fund, Neuberger Berman
Focus Trust, and Neuberger Berman
Focus Assets)
Neuberger Berman Genesis Portfolio $______________
(investment portfolio for
Neuberger Berman Genesis Fund,
Neuberger Berman Genesis Trust
and Neuberger Berman Genesis
Assets)
Neuberger Berman Guardian Portfolio $______________
(investment portfolio for
Neuberger Berman Guardian Fund,
Neuberger Berman Guardian Trust
and Neuberger Berman Guardian
Assets)
26
<PAGE>
Approximate Net
Assets at
Name March 31, 1999
---- ----------------
Neuberger Berman International $______________
Portfolio
(investment portfolio for
Neuberger Berman International
Fund and Neuberger Berman
International Trust)
Neuberger Berman Manhattan Portfolio $______________
(investment portfolio for
Neuberger Berman Manhattan Fund,
Neuberger Berman Manhattan Trust
and Neuberger Berman Manhattan
Assets)
Neuberger Berman Millennium Portfolio $______________
(investment portfolio for
Neuberger Berman Millennium Fund
and Neuberger Berman Millennium
Trust)
Neuberger Berman Partners Portfolio $______________
(investment portfolio for
Neuberger Berman Partners Fund,
Neuberger Berman Partners Trust
and Neuberger Berman Partners
Assets)
Neuberger Berman Socially Responsive $______________
Portfolio
(investment portfolio for
Neuberger Berman Socially
Responsive Fund, Neuberger
Berman Socially Responsive Trust
and Neuberger Berman NYCDC
Socially Responsive Trust)
Advisers Managers Trust $______________
(seven series)
The investment decisions concerning the Portfolio and the other
mutual funds managed by NB Management (collectively, "Other NB Funds") have been
and will continue to be made independently of one another. In terms of their
investment objectives, most of the Other NB Funds differ from the Portfolio.
Even where the investment objectives are similar, however, the methods used by
the Other NB Funds and the Portfolio to achieve their objectives may differ. The
investment results achieved by all of the mutual funds managed by NB Management
have varied from one another in the past and are likely to vary in the future.
There may be occasions when the Portfolio and one or more of the
Other NB Funds or other accounts managed by Neuberger Berman are
contemporaneously engaged in purchasing or selling the same securities from or
27
<PAGE>
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
have a detrimental effect on the price or volume of the securities as to the
Portfolio, in other cases it is believed that the Portfolio's ability to
participate in volume transactions may produce better executions for it. In any
case, it is the judgment of the Portfolio Trustees that the desirability of the
Portfolio's having its advisory arrangements with NB Management outweighs any
disadvantages that may result from contemporaneous transactions.
The Portfolio is subject to certain limitations imposed on all
advisory clients of Neuberger Berman (including the Portfolio, the Other NB
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 NB Management
- ---------------------------------------
The directors and officers of NB Management, all of whom have
offices at the same address as NB 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; Andrea
Trachtenberg, Senior Vice President; Michael J. Weiner, Senior Vice President;
Patrick T. Byrne, Vice President; Valerie Chang, Vice President; Brooke A. Cobb,
Vice President; Robert W. D'Alelio, 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;
Michael F. Malouf, Vice President; S. Basu Mullick, 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; Susan Stang, Vice President; Judith M. Vale,
Vice President; Susan Walsh, Vice President; Catherine Waterworth, Vice
President; Allan R. White III, Vice President; Miriam Zussman, Vice President;
Robert Conti, Treasurer; Ramesh Babu, Assistant Vice President; Barbara
DiGiorgio, 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; Benjamin Segal, Assistant
Vice President; Josephine Velez, Assistant Vice President; Celeste Wischerth,
Assistant Vice President; and Ellen Metzger, Secretary. Messrs. Cantor,
D'Alelio, Egener, Gendelman, Giuliano, Kassen, Lainoff, Risen, Simons, Sundman,
Weiner, White and Zicklin and Mmes. Prindle, Silver and Vale are principals of
Neuberger Berman.
Messrs. Egener and Zicklin are trustees and officers and Messrs.
Russell, Sullivan and Weiner and Mmes. DiGiorgio and Wischerth are officers of
the Trust.
All of the outstanding voting stock in NB Management is owned by
persons who are also principals of Neuberger Berman.
28
<PAGE>
DISTRIBUTION ARRANGEMENTS
NB Management serves as the distributor ("Distributor") in
connection with the offering of the Fund's shares on a no-load basis. In
connection with the sale of its shares, the Fund has authorized the Distributor
to give only the information, and to make only the statements and
representations, contained in the Prospectus and this SAI or that properly may
be included in sales literature and advertisements in accordance with the 1933
Act, the 1940 Act, and applicable rules of self-regulatory organizations. Sales
may be made only by the Prospectus, which may be delivered personally, through
the mails, or by electronic means. The Distributor is the Fund's "principal
underwriter" within the meaning of the 1940 Act and, as such, acts as agent in
arranging for the sale of the Fund's shares without sales commission or other
compensation and bears all advertising and promotion expenses incurred in the
sale of the Fund's shares.
The Distributor or one of its affiliates may, from time to time,
deem it desirable to offer to shareholders of the Fund, 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 Fund's
shareholder lists, however, will be made subject to terms and conditions, if
any, approved by a majority of the Independent Fund Trustees. These lists will
not be used to offer the Fund's shareholders any investment products or services
other than those managed or distributed by NB Management or Neuberger Berman.
The Trust, on behalf of the Fund, and the Distributor are parties to
a Distribution Agreement that continues until August 2, 1999. The Distribution
Agreement may be renewed annually if specifically approved by (1) the vote of a
majority of the Fund Trustees or a 1940 Act majority vote of the Fund's
outstanding shares and (2) the vote of a majority of the Independent Fund
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated by either party and will
terminate automatically on its assignment, in the same manner as the Management
Agreements.
ADDITIONAL PURCHASE INFORMATION
Share Prices and Net Asset Value
- --------------------------------
The Fund's shares are bought or sold at a price that is the Fund's
NAV per share. The NAVs for the Fund and the Portfolio are calculated by
subtracting total liabilities from total assets (in the case of the Portfolio,
the market value of the securities the Portfolio holds plus cash and other
assets; in the case of the Fund, its percentage interest in the Portfolio,
multiplied by the Portfolio's NAV, plus any other assets). The Fund's per share
NAV is calculated by dividing its NAV by the number of Fund shares outstanding
and rounding the result to the nearest full cent. The Fund and the Portfolio
calculate their NAVs as of the close of regular trading on the NYSE, usually 4
p.m. Eastern time, on each day the NYSE is open.
The Portfolio values securities (including options) listed on the
NYSE, the American Stock Exchange or other national securities exchanges or
quoted on The Nasdaq Stock Market, and other securities for which market
quotations are readily available, at the last reported sale price on the day the
29
<PAGE>
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. The Portfolio values all other securities and assets,
including restricted securities, by a method that the trustees of the Trust
believe accurately reflects fair value.
If NB Management believes that the price of a security obtained
under the 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 Managers Trust believe accurately reflects fair
value.
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 NB 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
"Maintaining Your Account," 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
series of the Trust or the Income and Municipal Funds that are briefly described
below, provided that the minimum investment requirements of the other fund(s)
are met.
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EQUITY FUNDS
Neuberger Berman Focus Fund Invests principally in common stocks
selected from 13 multi-industry sectors of the
economy. To maximize potential return, the Portfolio
normally makes at least 90% of its investments in not
more than six sectors of the economy believed by the
portfolio managers to be undervalued.
Neuberger Berman Genesis Fund Invests primarily in stocks of companies with small
(Closed to most new investors. For market capitalizations (up to $1.5 billion at the
more information, see Genesis Fund's time of the Portfolio's investment). Portfolio
Prospectus) 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.
Neuberger Berman Guardian Fund A growth and income fund that invests primarily in stocks
of established, high-quality companies that are not
well followed on Wall Street or are temporarily out
of favor.
Neuberger Berman International Fund Seeks long-term capital appreciation by investing
primarily in foreign stocks of any capitalization,
both in developed economies and in emerging markets.
Portfolio manager seeks undervalued companies in
countries with strong potential for growth.
Neuberger Berman Manhattan Fund Invests in securities believed to have the maximum
potential for long-term capital appreciation.
Portfolio managers seek stocks of companies that are
projected to grow at above-average rates and that
appear to the managers poised for a period of
accelerated earnings.
Neuberger Berman Regency Fund Seeks long-term growth of capital by investing primarily
in common stocks of mid-capitalization companies. The
portfolio co-managers look for financially sound
companies that are trading at discounts to what they
believe is their underlying value in the marketplace.
The portfolio co-managers' bottom-up approach seeks
companies with strong fundamentals, including
consistent cash flows and sound track records through
all phases of the market cycle. They also look for
other characteristics in companies they follow, such
as strong positions relative to competitors and high
levels of stock ownership among management.
<PAGE>
Neuberger Berman Millennium Fund Seeks long-term growth of capital by investing
primarily in common stocks of small-capitalization
companies, which it defines as those with a total
market value of no more than $1.5 billion at the time
of initial investment. The portfolio co-managers take
a growth approach to stock selection, looking for new
companies that are in the developmental stage as well
as older companies that appear poised to grow because
of new products, markets or management. Factors in
identifying these firms may include financial
strength, a strong position relative to competitors
and a stock price that is reasonable relative to its
growth rate.
Neuberger Berman Seeks capital growth through an approach that is
Partners Fund intended to increase capital with reasonable risk.
Portfolio managers look at fundamentals, focusing
particularly on cash flow, return on capital, and
asset values.
Neuberger Berman Seeks long-term capital appreciation by investing
Socially Responsive Fund in common stocks of companies that meet both financial
and social criteria.
INCOME FUNDS
- ------------
Neuberger Berman A U.S. Government money market fund seeking maximum
Government Money Fund safety and liquidity and the highest available current
income. The corresponding portfolio invests only in
U.S. Treasury obligations and other money market
instruments backed by the full faith and credit of
the United States. It seeks to maintain a constant
purchase and redemption price of $1.00.
Neuberger Berman A money market fund seeking the highest current
Cash Reserves 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 with
Limited Maturity Bond Fund 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.
<PAGE>
Neuberger Berman In seeking its objective of high current income
High Yield Bond Fund and, secondarily, capital growth, the fund
invests primarily in lower-rated debt securities, and
in investment grade income-producing and
non-income-producing debt and equity securities.
MUNICIPAL FUNDS
- ---------------
Neuberger Berman A money market fund seeking the maximum current
Municipal Money Fund 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 Municipal Seeks high current tax-exempt income with low
Securities Trust risk to principal, limited price fluctuation,
and liquidity and, secondarily, total return. The
corresponding portfolio invests in investment grade
municipal securities. Maximum average duration of 10
years.
</TABLE>
*/ As rated by Moody's or S&P or, if unrated by either of those entities,
determined by NB Management to be of comparable quality.
Any Neuberger Berman Fund described herein, and any of the Neuberger
Berman 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 Neuberger Berman 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 Neuberger Berman 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.
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ADDITIONAL REDEMPTION INFORMATION
Suspension of Redemptions
- -------------------------
The right to redeem the Fund's shares may be suspended or payment of
the redemption price postponed (1) when the NYSE is closed, (2) when trading on
the NYSE is restricted, (3) when an emergency exists as a result of which it is
not reasonably practicable for the Portfolio to dispose of securities it owns or
fairly to determine the value of its net assets, or (4) for such other period as
the SEC may by order permit for the protection of the Fund's shareholders.
Applicable SEC rules and regulations shall govern whether the conditions
prescribed in (2) or (3) exist. If the right of redemption is suspended,
shareholders may withdraw their offers of redemption, or they will receive
payment at the NAV per share in effect at the close of business on the first day
the NYSE is open ("Business Day") after termination of the suspension.
Redemptions in Kind
- -------------------
The Fund reserves the right, under certain conditions, to honor any
request for redemption (or a combination of requests from the same shareholder
in any 90-day period) exceeding $250,000 or 1% of the net assets, whichever is
less, by making payment in whole or in part in securities valued as described in
"Share Prices and Net Asset Value" above. 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 Fund does not
redeem in kind under normal circumstances, but would do so when the Fund
Trustees determined that it was in the best interests of the Fund's shareholders
as a whole.
DIVIDENDS AND OTHER DISTRIBUTIONS
The 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 the Portfolio. The
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 the Portfolio's NAV (and, hence, the Fund's NAV) until they are
distributed. The Fund calculates its net investment income and NAV per share as
of the close of regular trading on the NYSE on each Business Day (usually 4:00
p.m. Eastern time).
Dividends from net investment income distributions of net realized
capital and foreign currency gains, if any, normally are paid once annually, in
December.
Dividends and other distributions are automatically reinvested in
additional shares of the 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 to federal, state, or
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local income taxation, they are taxable to the shareholders whether received in
cash or reinvested in Fund shares.
A cash election with respect to the 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 Fund at its NAV per share on the day the check is reinvested. No
interest will accrue on amounts represented by uncashed dividend or other
distribution checks.
ADDITIONAL TAX INFORMATION
Taxation of the Fund
- --------------------
To qualify for treatment as a RIC under the Code, the Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. 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 Hedging 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. If the Fund failed to
qualify as a RIC for any taxable year, it would be taxed on the full amount of
its taxable income for that year without being able to deduct the distributions
it makes to its shareholders and the shareholders would treat all those
distributions, including distributions of net capital gain (the excess of net
long-term capital gain over net short-term capital loss), as dividends (that is,
ordinary income) to the extent of the Fund's earnings and profits.
Certain funds that invest in portfolios managed by NB Management
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
the Fund, NB Management believes that the reasoning thereof and, hence, their
conclusion apply to the Fund as well.
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The Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and 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
Fund of distributions to it from the Portfolio, investments by the Portfolio in
certain securities, and hedging transactions engaged in by the Portfolio.
Taxation of the Portfolio
- -------------------------
The Portfolio has received a ruling from the Service to the effect
that, among other things, the Portfolio will be treated as a separate
partnership for federal income tax purposes and will not be a "publicly traded
partnership." As a result, the Portfolio is not subject to federal income tax;
instead, each investor in the Portfolio, such as the Fund, is required to take
into account in determining its federal income tax liability its share of the
Portfolio's income, gains, losses, deductions, and credits, without regard to
whether it has received any cash distributions from the Portfolio. The Portfolio
also is not subject to Delaware or New York income or franchise tax.
Because the Fund is deemed to own a proportionate share of the
Portfolio's assets and income for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to
continue to conduct its operations so that the Fund will be able to continue to
satisfy all those requirements.
Distributions to the Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The Fund's basis for its interest in the Portfolio
generally equals the amount of cash 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 the Portfolio, and gains realized
by the 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 these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors.
The 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
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<PAGE>
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 the Portfolio is a U.S. shareholder -- that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, if
the Portfolio holds stock of a PFIC, the Fund (indirectly through its interest
in the Portfolio) will be subject to federal income tax on 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 the Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the Fund's incurring the
foregoing tax and interest obligation, the Fund would be required to include in
income each year its 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 the Fund most likely would have to
distribute to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax -- even if the Portfolio did not receive those earnings and gain from
the QEF. In most instances it will be very difficult, if not impossible, to make
this election because of certain requirements thereof.
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 (and under regulations proposed in 1992 that
provided a similar election with respect to the stock of certain PFICs).
The Portfolio's use of hedging strategies, such as writing (selling)
and purchasing options 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 Portfolio realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
Hedging Instruments derived by the Portfolio with respect to its business of
investing in securities or foreign currencies, will qualify as permissible
income for the Fund under the Income Requirement.
Exchange-traded futures contracts, certain forward contracts and
listed options thereon subject to Section 1256 of the Code ("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 the
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
37
<PAGE>
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.
Section 1256 contracts also may be marked-to-market for purposes of the Excise
Tax. These rules may operate to increase the amount that a Fund must distribute
to satisfy the Distribution Requirement, which will be taxable to the
shareholders as ordinary income, and to increase the net capital gain recognized
by the Fund, without in either case increasing the cash available to the Fund. A
Fund may elect to exclude certain transactions from the operation of section
1256, although doing so may have the effect of increasing the relative
proportion of net short-term capital gain (taxable as ordinary income) and/or
increasing the amount of dividends that must be distributed to meet the
Distribution Requirement and avoid imposition of the Excise Tax.
If the Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward contract,
or short sale) with respect to any stock, debt instrument (other than "straight
debt"), or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract, or a futures or forward contract entered into by the Fund or
a related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale. The foregoing will not apply,
however, to any transaction during any taxable year that otherwise would be
treated as a constructive sale if the transaction is closed within 30 days after
the end of that year and the Fund holds the appreciated financial position
unhedged for 60 days after that closing (i.e., at no time during that 60-day
period is the Fund's risk of loss regarding that position reduced by reason of
certain specified transactions with respect to substantially similar or related
property, such as having an option to sell, being contractually obligated to
sell, making a short sale, or granting an option to buy substantially identical
stock or securities).
The Portfolio may acquire zero coupon securities or other securities
issued with original issue discount ("OID"). As a holder of those securities,
the Portfolio (and, through it, the Fund) must take into income the OID that
accrues on the securities during the taxable year, even if it receives no
corresponding payment on them during the year. Because the Fund annually must
distribute substantially all of its investment company taxable income (including
its share of the 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 the Portfolio actually receives. Those
distributions will be made from the Fund's (or its share of the Portfolio's)
cash assets or, if necessary, from the proceeds of sales of the Portfolio's
securities. The Portfolio may realize capital gains or losses from those sales,
which would increase or decrease the Fund's investment company taxable income
and/or net capital gain.
Taxation of the Fund's Shareholders
- -----------------------------------
If Fund shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
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The 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 in "Maintaining Your Account" in the Prospectus, the
Fund may close a shareholder's account 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 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) 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 the Portfolio in the
purchase and sale of its portfolio securities (other than certain securities
traded on the OTC market) and in connection with the writing of covered call
options on its securities.
Portfolio securities are, from time to time, loaned by the Portfolio
to Neuberger Berman in accordance with the terms and conditions of an order
issued by the 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 the 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 the Portfolio in order
to re-lend them to other Neuberger Berman Portfolios, Neuberger Berman may be
required to pay the 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 the
Portfolio has indicated a willingness to lend, Neuberger Berman must borrow such
security from the 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 the Portfolio. If, in any month, the Portfolio's
expenses exceed its income in any securities loan transaction with Neuberger
Berman, Neuberger Berman must reimburse the Portfolio for such loss.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to securities loans by the
Portfolio.
In effecting securities transactions, the 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. The
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Portfolio plans to continue to use Neuberger Berman as its principal broker
where, in the judgment of NB Management, that firm is able to obtain a price and
execution at least as favorable as other qualified brokers. To the Portfolio's
knowledge, no affiliate of the Portfolio receives give-ups or reciprocal
business in connection with its securities transactions.
The use of Neuberger Berman as a broker for the 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. Managers Trust and NB 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 the 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 the Portfolio's policy that the commissions paid to Neuberger
Berman must, in NB Management's judgment, be (1) at least as favorable as those
charged by other brokers having comparable execution capability and (2) at least
as favorable as commissions contemporaneously charged by Neuberger Berman on
comparable transactions for its most favored unaffiliated customers, except for
accounts for which Neuberger Berman acts as a clearing broker for another
brokerage firm and customers of Neuberger Berman considered by a majority of the
Independent Portfolio Trustees not to be comparable to the Portfolio. The
Portfolio does not deem it practicable and in its 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, the 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 Portfolio and to its other customers and information
concerning the prevailing level of commissions charged by other brokers having
comparable execution capability. In addition, the procedures pursuant to which
Neuberger Berman effects brokerage transactions for the Portfolio must be
reviewed and approved no less often than annually by a majority of the
Independent Portfolio Trustees.
To ensure that accounts of all investment clients, including the
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.
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The Portfolio expects that it will execute a portion of its
transactions through brokers other than Neuberger Berman. In selecting those
brokers, NB 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 NB Management and principals of
Neuberger Berman who are portfolio managers of the Portfolio and Other NB Funds
(collectively, "NB Funds") and some of Neuberger Berman's managed accounts
("Managed Accounts") evaluates semi-annually the nature and quality of the
brokerage and research services provided by other brokers. Based on this
evaluation, the committee establishes a list and projected 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 NB 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 NB Funds and/or the Managed Accounts; and (3) the
aggregate amount of brokerage commissions generated by transactions for the NB
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 NB 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. NB
Management believes that those research services benefit the Portfolio by
supplementing the information otherwise available to NB Management. That
research may be used by NB Management in servicing Other NB Funds and, in some
cases, by Neuberger Berman in servicing the Managed Accounts. On the other hand,
research received by NB Management from brokers effecting portfolio transactions
on behalf of the Other NB Funds and by Neuberger Berman from brokers effecting
portfolio transactions on behalf of the Managed Accounts may be used for the
Portfolio's benefit.
Michael M. Kassen, Robert I. Gendelman and S. Basu Mullick, each of
whom is a Vice President of NB Management, are the persons primarily responsible
for making decisions as to specific action to be taken with respect to the
investment portfolio of the Portfolio. Each of them has full authority to take
action with respect to portfolio transactions and may or may not consult with
other personnel of NB Management prior to taking such action. Mr. Kassen and Mr.
Gendelman are principals of Neuberger Berman, LLC.
Portfolio Turnover
- ------------------
The Portfolio's portfolio turnover rate is calculated by dividing
(1) the lesser of the cost of the securities purchased or the proceeds from the
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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 the Fund receive unaudited semi-annual financial
statements, as well as year-end financial statements audited by the independent
auditors for the Fund and Portfolio. The Fund's statements show the investments
owned by the Portfolio and the market values thereof and provide other
information about the Fund and its operations, including the Fund's beneficial
interest in the Portfolio.
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS
The Fund
- --------
The 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 1940 Act as a diversified, open-end
management investment company, commonly known as a mutual fund. The Trust has
nine separate operating series. Each series of the Trust 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.
Prior to November 9, 1998, the name of the Trust was "Neuberger
Berman Equity Funds."
DESCRIPTION OF SHARES. The Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share). Shares of
the Fund represent equal proportionate interests in the assets of the Fund only
and have identical voting, dividend, redemption, liquidation, and other rights.
All shares issued are fully paid and non-assessable, and shareholders have no
preemptive or other 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 Fund. The trustees will call special
meetings of shareholders of the Fund only if required under the 1940 Act or in
their discretion or upon the written request of holders of 10% or more of the
outstanding shares of the Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of the Fund will not be personally liable for the obligations of
the Fund; a shareholder is entitled to the same limitation of personal liability
extended to shareholders of 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 the Fund contain a statement that
such obligation may be enforced only against the assets of the Trust or Fund and
provides for indemnification out of Trust or Fund property of any shareholder
nevertheless held personally liable for Trust or Fund obligations, respectively.
<PAGE>
The Portfolio
- -------------
The Portfolio is a separate operating series of Managers Trust, a
New York common law trust organized as of December 1, 1992. Managers Trust is
registered under the 1940 Act as a diversified, open-end management investment
company. Managers Trust has eight separate Portfolios. 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.
FUND'S INVESTMENTS IN THE PORTFOLIO. The Fund is a "feeder fund"
that seeks to achieve its investment objective by investing all of its net
investable assets in the 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.
The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. Members of the general public may not
purchase a direct interest in the Portfolio. Series of three other investment
companies, Neuberger Berman Equity Trust ("Equity Trust"), Neuberger Berman
Equity Assets ("Equity Assets") and Neuberger Berman Equity Series ("Equity
Series"), invest all of their respective net assets in corresponding Portfolios
of Managers Trust. Equity Trust, Equity Assets and Equity Series do not sell
their shares directly to members of the general public.
The Portfolio may also permit other investment companies and/or
other institutional investors to invest in the Portfolio. All investors will
invest in the Portfolio on the same terms and conditions as the Fund and will
pay a proportionate share of the Portfolio's expenses. Other investors in the
Portfolio (including the series of Equity Trust and Equity Assets) are not
required to sell their shares at the same public offering price as the Fund,
could have a different administration fee and expenses than the Fund, and
(except Equity Trust and 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.
Information regarding any fund that invests in the Portfolio is available from
NB Management by calling 800-877-9700.
The trustees of the Trust believe that investment in the Portfolio
by a series of Equity Trust or Equity Assets or by other potential investors in
addition to the Fund may enable the Portfolio to realize economies of scale that
could reduce its operating expenses, thereby producing higher returns and
benefiting all shareholders. However, the Fund's investment in the Portfolio may
be affected by the actions of other large investors in the Portfolio, if any.
For example, if a large investor in the Portfolio (other than the Fund) redeemed
its interest in the Portfolio, the Portfolio's remaining investors (including
the Fund) might, as a result, experience higher pro rata operating expenses,
thereby producing lower returns.
The Fund may withdraw its entire investment from the Portfolio at
any time, if the trustees of the Trust determine that it is in the best
interests of the Fund and its shareholders to do so. The Fund might withdraw,
for example, if there were other investors in the Portfolio with power to, and
who did by a vote of all investors (including the Fund), change the investment
objective, policies, or limitations of the Portfolio in a manner not acceptable
to the trustees of the Trust. A withdrawal could result in a distribution in
43
<PAGE>
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 the Fund withdrew its investment from the 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. The Portfolio normally will not hold
meetings of investors except as required by the 1940 Act. Each investor in the
Portfolio will be entitled to vote in proportion to its relative beneficial
interest in the Portfolio. On most issues subjected to a vote of investors, the
Fund will solicit proxies from its shareholders and will vote its interest in
the Portfolio in proportion to the votes cast by the Fund's shareholders. If
there are other investors in the Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all Portfolio investors; indeed, if other
investors hold a majority interest in the Portfolio, they could have voting
control of the Portfolio.
CERTAIN PROVISIONS. Each investor in the Portfolio, including the
Fund, will be liable for all obligations of the Portfolio. However, the risk of
an investor in the Portfolio incurring financial loss 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 the Portfolio, investors
would be entitled to share pro rata in the net assets of the Portfolio available
for distribution to investors.
CUSTODIAN AND TRANSFER AGENT
The Fund and Portfolio have selected State Street Bank and Trust
Company, 225 Franklin Street, Boston, MA 02110, as custodian for their
securities and cash. State Street also serves as the 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 the Portfolio.
INDEPENDENT AUDITORS
The Fund and Portfolio have selected
____________________________________, as the independent auditors who will audit
their financial statements.
LEGAL COUNSEL
The Fund and Portfolio have selected Kirkpatrick & Lockhart LLP,
1800 Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036-1800, as
their legal counsel.
44
<PAGE>
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information
included in the Trust's registration statement filed with the SEC under the 1933
Act with respect to the securities offered by the Prospectus. The registration
statement, including the exhibits filed therewith, may be examined at the SEC's
offices in Washington, D.C. The SEC maintains a Website (http://www.sec.gov)
that contains this SAI, material incorporated by reference, and other
information regarding the Fund and Portfolio.
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.
45
<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 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.
A-1
<PAGE>
Aa - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as "high-grade bonds." They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa-rated securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa-rated
securities.
A - Bonds rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
MODIFIERS--Moody's may apply numerical modifiers 1, 2, and 3 in each generic
rating classification described above. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks in the lower end of its generic rating.
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 (+).
A-2
<PAGE>
Moody's commercial paper ratings
Issuers rated Prime-1 (or related supporting institutions), also
known as P-1, have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
A-3
<PAGE>
NEUBERGER BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 83 ON FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements: None.
(b) Exhibits:
Exhibit Description
Number -----------
-------
(a) (1) 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.
(2) Restated Certificate of Trust. Incorporated by
reference to Post-Effective Amendment No. 82 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, EDGAR Accession No.
00008988432-98-000840.
(3) 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.
(4) Schedule A - Current Series of Neuberger Berman
Equity Funds. Filed Herewith.
(b) 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.
(c) (1) 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.
(2) 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.
<PAGE>
Exhibit Description
Number -----------
-------
(d) (1) (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.
Filed Herewith.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Filed Herewith.
(2) (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. Filed Herewith.
(3) (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.
(4) (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.
<PAGE>
Exhibit Description
Number -----------
-------
(e) (1) Distribution Agreement Between Neuberger Berman
Equity Funds and Neuberger Berman Management
Incorporated. Incorporated by Reference to
Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582,
EDGAR Accession No. 0000898432-97-000516.
(2) Schedule A - Series of Neuberger Berman Equity Funds
Currently Subject to the Distribution Agreement.
Filed Herewith.
(f) Bonus, Profit Sharing or Pension Plans. None.
(g) (1) 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.
(2) 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.
(h) (1) (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) 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.
(iii) Second 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. 77 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-97-000516.
(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.
(2) (i) Administration Agreement Between Neuberger
Berman Equity Funds and Neuberger Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 77 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-97-000516.
<PAGE>
Exhibit Description
Number -----------
-------
(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. 81 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, EDGAR Accession No.
0000898432-98-000686.
(i) (1) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
Equity Funds. Incorporated by Reference to
Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, EDGAR Accession No. 0000898432-97-000516.
(2) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
Socially Responsive Fund. Incorporated by Reference
to Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, EDGAR Accession No. 0000898432-97-000516.
(3) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
International Fund. Incorporated by Reference to
Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582,
EDGAR Accession No. 0000898432-97-000516.
(4) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
Millennium Fund. Incorporated by Reference to
Post-Effective Amendment No. 81 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582,
EDGAR Accession No. 0000898432-98-000686.
(5) Opinion and Consent of Kirkpatrick & Lockhart LLP
with Respect to Neuberger Berman Regency Fund. Filed
Herewith.
(j) Consent of Independent Auditors. None.
(k) Financial Statements Omitted from Prospectus. None.
(l) Letter of Investment Intent. None.
(m) Plan Pursuant to Rule 12b-1. None.
(n) Financial Data Schedule. None.
(o) Plan Pursuant to Rule 18f-3. None.
ITEM 24. 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.)
<PAGE>
ITEM 25. 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 ("NB 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 NB Management nor any
director, officer or employee of NB Management performing services for the
series of the Managers Trusts at the direction or request of NB Management in
connection with NB 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 NB Management against any liability to the Managers Trusts or any
series thereof or their interest holders to which NB 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 NB Management's reckless
disregard of its obligations and duties under the Agreements, or (ii) to protect
any director, officer or employee of NB 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 NB Management and
Neuberger Berman, LLC ("Neuberger Berman") with respect to the Managers Trusts
provides that, in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties or of reckless disregard of its
duties and obligations under the Agreement, Neuberger Berman will not be subject
to any liability for any act or omission or any loss suffered by any series of
the Managers Trusts or their interest holders in connection with the matters to
which the Agreements relate.
Section 12 of the Administration Agreement between the Registrant and NB
Management provides that NB Management will not be liable to the Registrant for
<PAGE>
any action taken or omitted to be taken by NB 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 NB Management, or its employees, agents or contractors. Section
13 of the Administration Agreement provides that the Registrant shall indemnify
NB Management and hold it harmless from and against any and all losses, damages
and expenses, including reasonable attorneys' fees and expenses, incurred by NB
Management that result from: (i) any claim, action, suit or proceeding in
connection with NB Management's entry into or performance of the Agreement; or
(ii) any action taken or omission to act committed by NB Management in the
performance of its obligations under the Agreement; or (iii) any action of NB
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 NB
Management will not be entitled to such indemnification in respect of actions or
omissions constituting negligence or misconduct on the part of NB 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 NB 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) NB Management's failure to comply with the
terms of the Agreement; or (ii) NB Management's lack of good faith in performing
its obligations under the Agreement; or (iii) the negligence or misconduct of NB
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 NB
Management, unless such negligence or misconduct results from or is accompanied
by negligence or misconduct on the part of NB Management, any affiliated person
of NB Management, or any affiliated person of an affiliated person of NB
Management.
Section 11 of the Distribution Agreement between the Registrant and NB
Management provides that NB 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 26. 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 NB 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.
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Claudia A. Brandon Secretary, Neuberger Berman Advisers Management Trust;
Vice President, NB Secretary, Advisers Managers Trust; Secretary,
Management Neuberger Berman Income Funds; Secretary, Neuberger
<PAGE>
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; Secretary,
Neuberger Berman Equity Series.
Valerie Chang
Vice President, Senior Securities Analyst, TIAA/CREF.(1)
NB Management
Brooke A. Cobb Chief Investment Officer, Bainco International
Vice President, Investors. Senior Vice President and Senior Portfolio
NB Management Manager, Putnam Investments.(2)
Stacy Cooper-Shugrue Assistant Secretary, Neuberger Berman Advisers
Assistant Vice Management Trust; Assistant Secretary, Advisers
President, Managers Trust; Assistant Secretary, Neuberger Berman
NB Management 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; Assistant
Secretary, Neuberger Berman Equity Series.
Robert W. D'Alelio Senior Portfolio Manager, Putnam Investments.(3)
Vice President, NB
Management;
Principal, Neuberger
Berman
Barbara DiGiorgio, Assistant Treasurer, Neuberger Berman Advisers
Assistant Vice Management Trust; Assistant Treasurer, Advisers
President, Managers Trust; Assistant Treasurer, Neuberger Berman
NB Management Income Funds; Assistant Treasurer, Neuberger Berman
Income Trust; Assistant Treasurer, Neuberger Berman
Equity Funds; Assistant Treasurer, Neuberger Berman
Equity Trust; Assistant Treasurer, Income Managers
Trust; Assistant Treasurer, Equity Managers Trust;
Assistant Treasurer, Global Managers Trust; Assistant
Treasurer, Neuberger Berman Equity Assets; Assistant
Treasurer, Neuberger Berman Equity Series.
- ---------------
1 Until 1996.
2 Until 1997.
3 Until 1996.
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Stanley Egener Chairman of the Board and Trustee, Neuberger Berman
President and Director, Advisers Management Trust; Chairman of the Board and
NB Management; Trustee, Advisers Managers Trust; Chairman of the Board
Principal, Neuberger and Trustee, Neuberger Berman Income Funds; Chairman of
Berman 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; Chairman of the Board and Trustee, Neuberger
Berman Equity Series.
Theodore P. Giuliano President and Trustee, Neuberger Berman Income Funds;
Vice President and President and Trustee, Neuberger Berman Income Trust;
Director, NB Management; President and Trustee, Income Managers Trust.
Principal, Neuberger
Berman
Michael F. Malouf Portfolio Manager, Dresdner RCM Global Investors.(4)
Vice President, NB
Management
S. Basu Mullick Portfolio Manager, Ark Asset Management.(5)
Vice President NB
Management
C. Carl Randolph Assistant Secretary, Neuberger Berman Advisers
Principal, Neuberger Management Trust; Assistant Secretary, Advisers
Berman Managers 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; Assistant
Secretary, Neuberger Berman Equity Series.
- ---------------
4 Until 1998.
5 Until 1998.
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Ingrid Sauakaitis Project Director, Council on Economic Priorities.(6)
Assistant Vice
President, NB Management
Richard Russell Treasurer, Neuberger Berman Advisers Management Trust;
Vice President, Treasurer, Advisers Managers Trust; Treasurer,
NB Management Neuberger Berman Income Funds; Treasurer, Neuberger
Berman Income Trust; Treasurer, Neuberger Berman Equity
Funds; Treasurer, Neuberger Berman Equity Trust;
Treasurer, Income Managers Trust; Treasurer, Equity
Managers Trust; Treasurer, Global Managers Trust;
Treasurer, Neuberger Berman Equity Assets; Treasurer,
Neuberger Berman Equity Series.
Jennifer K. Silver Portfolio Manager and Director, Putnum Investments.(7)
Vice President, NB
Management, Principal
Neuberger Berman
Daniel J. Sullivan Vice President, Neuberger Berman Advisers Management
Senior Vice President, Trust; Vice President, Advisers Managers Trust;
NB Management Vice President, Neuberger Berman Income Funds; Vice
President, Neuberger Berman Income Trust; Vice
President, Neuberger Berman Equity Funds; Vice
President, Neuberger Berman Equity Trust; Vice
President, Income Managers Trust; Vice President,
Equity Managers Trust; Vice President, Global Managers
Trust; Vice President, Neuberger Berman Equity Assets;
Vice President, Neuberger Berman Equity Series.
Michael J. Weiner Vice President, Neuberger Berman Advisers Management
Senior Vice President, Trust; Vice President, Advisers Managers Trust; Vice
NB Management; President, Neuberger Berman Income Funds; Vice
Principal, Neuberger President, Neuberger Berman Income Trust; Vice
Berman 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;
Vice President, Neuberger Berman Equity Series.
- -------------
6 Until 1997.
7 Until 1997.
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Allan R. White III Portfolio Manager, Salomon Asset Management.(8)
Vice President, NB
Management;
Principal, Neuberger
Berman
Celeste Wischerth, Assistant Treasurer, Neuberger Berman Advisers
Assistant Vice Management Trust; Assistant Treasurer, Advisers
President, Managers Trust; Assistant Treasurer, Neuberger Berman
NB Management Income Funds; Assistant Treasurer, Neuberger Berman
Income Trust; Assistant Treasurer, Neuberger Berman
Equity Funds; Assistant Treasurer, Neuberger Berman
Equity Trust; Assistant Treasurer, Income Managers
Trust; Assistant Treasurer, Equity Managers Trust;
Assistant Treasurer, Global Managers Trust; Assistant
Treasurer, Neuberger Berman Equity Assets; Assistant
Treasurer, Neuberger Berman Equity Series.
Lawrence Zicklin President and Trustee, Neuberger Berman Advisers
Director, NB Management; Management Trust; President and Trustee, Advisers
Principal, Neuberger Managers Trust; President and Trustee, Neuberger Berman
Berman Equity Funds; President and Trustee, Neuberger Berman
Equity Trust; President and Trustee, Equity Managers
Trust; President, Global Managers Trust; President and
Trustee, Neuberger Berman Equity Assets; President and
Trustee, Neuberger Berman Equity Series.
The principal address of NB Management, Neuberger Berman, and of each of
the investment companies named above, is 605 Third Avenue, New York, New York
10158.
- --------------
8 Until 1998.
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) NB 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 Equity Series
Neuberger Berman Income Funds
Neuberger Berman Income Trust
NB 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
--------------------- ---------------------
Ramesh Babu Assistant Vice President None
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang 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 Assistant Vice President Assistant Treasurer
Stanley Egener President and Director Chairman of the
Board, Chief
Executive Officer,
and Trustee
Brian J. Gaffney Vice President None
Joseph G. Galli Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and None
Director
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
Michael M. Kassen Vice President and None
Director
Robert L. Ladd Assistant Vice President None
Irwin Lainoff Director None
Josephine Mahaney Vice President None
Michael F. Malouf Vice President None
Carmen G. Martinez Assistant Vice President None
Ellen Metzger Vice President and None
Secretary
Paul Metzger Vice President None
S. Basu Mullick 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
Benjamin Segal Assistant Vice President None
Jennifer K. Silver Vice President None
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Susan Stang Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Andrea Trachtenberg Senior Vice President None
Judith M. Vale Vice President None
Josephine Velez Assistant Vice President None
Susan Walsh Vice President None
Catherine Waterworth Vice President None
Michael J. Weiner Senior Vice President Vice President and
Principal Financial
Officer
Allan R. White, III Vice President None
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
--------------------- ---------------------
Celeste Wischerth Assistant Vice President Assistant Treasurer
Lawrence Zicklin Director Trustee and President
Miriam Zussman Vice President None
(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 28. 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 29. 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 30. UNDERTAKINGS
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER BERMAN EQUITY FUNDS
has duly caused this Post-Effective Amendment No. 83 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 February, 1999.
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. 83 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee February 10, 1999
- -----------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board February 10, 1999
- ----------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee February 10, 1999
- -----------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee February 10, 1999
- -----------------------
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee February 10, 1999
- --------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee February 10, 1999
- ---------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee February 10, 1999
- ---------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee February 10, 1999
- ---------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee February 10, 1999
- ---------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President February 10, 1999
- ---------------------------- (Principal
Michael J. Weiner Financial Officer)
/s/ Richard Russell Treasurer (Principal February 10, 1999
- ---------------------------- Accounting Officer)
Richard Russell
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, EQUITY MANAGERS TRUST has duly caused this
Post-Effective Amendment No. 83 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 February 1999.
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. 83 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee February 10, 1999
- -----------------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board February 10, 1999
- ----------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee February 10, 1999
- -----------------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee February 10, 1999
- -----------------------------
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee February 10, 1999
- -----------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee February 10, 1999
- -----------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee February 10, 1999
- -----------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee February 10, 1999
- -----------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee February 10, 1999
- -----------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President February 10, 1999
- ----------------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell Treasurer (Principal February 10, 1999
- ----------------------------- Accounting Officer)
Richard Russell
<PAGE>
NEUBERGER BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 83 ON FORM N-1A
INDEX TO EXHIBITS
Exhibit Description
Number -----------
------
(a) (1) 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.
(2) Restated Certificate of Trust. Incorporated by
reference to Post-Effective Amendment No. 82 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, EDGAR Accession No.
00008988432-98-000840.
(3) 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.
(4) Schedule A - Current Series of Neuberger Berman
Equity Funds. Filed Herewith.
(b) 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.
(c) (1) 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.
(2) 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.
(d) (1) (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.
Filed Herewith.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Filed Herewith.
<PAGE>
Exhibit Description
Number -----------
------
(2) (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. Filed Herewith.
(3) (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.
(4) (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.
(e) (1) Distribution Agreement Between Neuberger Berman
Equity Funds and Neuberger Berman Management
Incorporated. Incorporated by Reference to
Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582,
EDGAR Accession No. 0000898432-97-000516.
(2) Schedule A - Series of Neuberger Berman Equity Funds
Currently Subject to the Distribution Agreement.
Filed Herewith.
<PAGE>
Exhibit Description
Number -----------
------
(f) Bonus, Profit Sharing or Pension Plans. None.
(g) (1) 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.
(2) 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.
(h) (1) (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) 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.
(iii) Second 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. 77 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-97-000516.
(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.
(2) (i) Administration Agreement Between Neuberger
Berman Equity Funds and Neuberger Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 77 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-97-000516.
(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. 81 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582, EDGAR Accession No.
0000898432-98-000686.
<PAGE>
Exhibit Description
Number -----------
------
(i) (1) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
Equity Funds. Incorporated by Reference to
Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, EDGAR Accession No. 0000898432-97-000516.
(2) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
Socially Responsive Fund. Incorporated by Reference
to Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582, EDGAR Accession No. 0000898432-97-000516.
(3) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
International Fund. Incorporated by Reference to
Post-Effective Amendment No. 77 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582,
EDGAR Accession No. 0000898432-97-000516.
(4) Opinion and Consent of Kirkpatrick & Lockhart, LLP on
Securities Matters with Respect to Neuberger Berman
Millennium Fund. Incorporated by Reference to
Post-Effective Amendment No. 81 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582,
EDGAR Accession No. 0000898432-98-000686.
(5) Opinion and Consent of Kirkpatrick & Lockhart, LLP
with Respect to Neuberger Berman Regency Fund. Filed
Herewith.
(j) Consent of Independent Auditors. None.
(k) Financial Statements Omitted from Prospectus. None.
(l) Letter of Investment Intent. None.
(m) Plan Pursuant to Rule 12b-1. None.
(n) Financial Data Schedule. None.
(o) Plan Pursuant to Rule 18f-3. None.
NEUBERGER BERMAN EQUITY FUNDS
DECLARATION OF TRUST
SCHEDULE A
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
Neuberger Berman Millennium Fund
Neuberger Berman Regency Fund
DATED: April 30, 1999
--------------
EQUITY MANAGERS TRUST
MANAGEMENT AGREEMENT
SCHEDULE A
The Series of Equity Managers Trust currently subject to this Agreement
are as follows:
Neuberger Berman Focus Portfolio
Neuberger Berman Genesis Portfolio
Neuberger Berman Guardian Portfolio
Neuberger Berman Manhattan Portfolio
Neuberger Berman Partners Portfolio
Neuberger Berman Socially Responsive Portfolio
Neuberger Berman Millennium Portfolio
Neuberger Berman Regent Portfolio
EQUITY MANAGERS TRUST
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Paragraph 3 of the Equity Managers Trust Management
Agreement shall be calculated in accordance with the following schedules:
NEUBERGER BERMAN GUARDIAN PORTFOLIO
NEUBERGER BERMAN MANHATTAN PORTFOLIO
NEUBERGER BERMAN PARTNERS PORTFOLIO
NEUBERGER BERMAN FOCUS PORTFOLIO
NEUBERGER BERMAN SOCIALLY RESPONSIVE PORTFOLIO
NEUBERGER BERMAN REGENT PORTFOLIO
0.55 % on the first $250 million of average daily net assets 0.525 % on the next
$250 million of average daily net assets 0.50 % on the next $250 million of
average daily net assets 0.475 % on the next $250 million of average daily net
assets 0.45 % on the next $250 million of average daily net assets 0.425 % on
average daily net assets in excess of $1.5 billion
NEUBERGER BERMAN GENESIS PORTFOLIO
NEUBERGER BERMAN MILLENNIUM PORTFOLIO
0.85 % on the first $250 million of average daily net assets 0.80 % on the next
$250 million of average daily net assets 0.75 % on the next $250 million of
average daily net assets 0.70 % on the next $250 million of average daily net
assets 0.65 % on average daily net assets in excess of $1 billion
April 30, 1999
NEUBERGER BERMAN MANAGEMENT INC.
SUB-ADVISORY AGREEMENT
SCHEDULE A
The Series of Equity Managers Trust currently subject to this Agreement
are as follows:
Neuberger Berman Focus Portfolio
Neuberger Berman Genesis Portfolio
Neuberger Berman Guardian Portfolio
Neuberger Berman Manhattan Portfolio
Neuberger Berman Partners Portfolio
Neuberger Berman Socially Responsive
Portfolio
Neuberger Berman Millennium Portfolio
Neuberger Berman Regent Portfolio
NEUBERGER BERMAN EQUITY FUNDS
DISTRIBUTION AGREEMENT
SCHEDULE A
The Series of Neuberger 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
Neuberger Berman Millennium Fund October 19, 1998
Neuberger Berman Regency Fund April 30, 1999
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
Neuberger Berman Millennium Fund October 19, 1998
Neuberger Berman Regency Fund April 30, 1999
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone (202) 778-9000
Facsimile (202) 778-9100
www.kl.com
February 11, 1999
Neuberger Berman Equity Funds
605 Third Avenue, Second Floor
New York, New York 10158-0180
Ladies and Gentlemen:
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
May 6, 1993. 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 Regency Fund
("Fund").
We have, as counsel, participated in various business and other
proceedings relating to the Trust. We have examined copies, either certified or
otherwise proved to be genuine, of the Trust Instrument and the By-laws of the
Trust, the minutes of meetings of its board of trustees and other documents
relating to its organization and operation, and we are generally familiar with
its business affairs. Based upon the foregoing, it is our opinion that the
Shares of the Fund may be legally and validly issued in accordance with the
Trust's Trust Instrument and By-laws 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, the Shares
will be legally issued, fully paid and non-assessable by the Trust.
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 becomes 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.
To guard against this risk, the Trust Instrument: (i) requires that every
written obligation of the Trust contain a statement that such obligation may be
enforced only 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, solely by reason of being a shareholder, 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 is in effect; and (iii) the Trust
itself is unable to meet its obligations.
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Neuberger Berman Equity Trust
February 11, 1999
Page 3
We express no opinion as to compliance with the Securities Act of 1933,
the Investment Company Act of 1940, or applicable state securities laws in
connection with the sale of Shares.
We hereby consent to the filing of this opinion in connection with
Post-Effective Amendment No. 19 to the Trust's Registration Statement on Form
N-1A (File Nos. 33-64368 and 811-07784) to be filed with the Securities and
Exchange Commission. We also consent to the reference to our firm in the
Statement of Additional Information filed as part of the Registration Statement.
Sincerely,
KIRKPATRICK & LOCKHART LLP
By: /s/ Arthur C. Delibert
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Arthur C. Delibert
