As filed with the Securities and Exchange Commission on April 14, 2000
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. [ 90] [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. [ 45] [ 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
Michael M. Kassen, President
Neuberger Berman Equity Funds
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W., 2nd Floor
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] on April 17, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on ________________pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on _______________pursuant to paragraph (a)(2)
Neuberger Berman Equity Funds is a "master/feeder fund." This
Post-Effective Amendment No. 90 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. 90 ON FORM N-1A
This post-effective amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 90 on Form N-1A
Neuberger Berman Technology Fund
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibit Index
No change is intended to be made by this Post-Effective Amendment No.
90 to the prospectus or statement of additional information of any other series
of Neuberger Berman Equity Funds.
<PAGE>
<PAGE>
NEUBERGER BERMAN
NEUBERGER BERMAN TECHNOLOGY FUND
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PROSPECTUS APRIL 17, 2000
These securities, like the securities of all mutual
funds, have not been approved or disapproved by the
Securities and Exchange Commission, and the Securities
and Exchange Commission has not determined if this
prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
<PAGE>
CONTENTS
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<TABLE>
<C> <S>
NEUBERGER BERMAN EQUITY FUNDS
PAGE 2 ...... Technology Fund
YOUR INVESTMENT
6 ...... Share Prices
7 ...... Privileges and Services
8 ...... Distributions and Taxes
10 ...... Maintaining Your Account
16 ...... Buying Shares
18 ...... 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-2000 Neuberger Berman Management
Inc.
<PAGE>
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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
$54.4 billion in total assets (as of December 31, 1999) 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 SEEKING LONG-TERM GROWTH OF CAPITAL
- - OFFERS YOU THE OPPORTUNITY TO PARTICIPATE IN FINANCIAL MARKETS THROUGH A
PROFESSIONALLY MANAGED STOCK PORTFOLIO
- - USES A MASTER/FEEDER STRUCTURE IN ITS PORTFOLIO; SEE PAGE 20 FOR INFORMATION
ON HOW IT WORKS
- - IS A MUTUAL FUND, NOT A BANK DEPOSIT, AND IS NOT GUARANTEED OR INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY
1
<PAGE>
NEUBERGER BERMAN TECHNOLOGY FUND
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"WE CONSTANTLY CHALLENGE WHAT WE THOUGHT YESTERDAY," SAYS
MANAGEMENT TEAM MEMBER RUDY TORRIJOS, "AND WE REVISE IT FOR
WHAT WE BELIEVE IS RIGHT FOR TODAY. RAPID CHANGE AND EVOLUTION
ARE PART OF THE OPPORTUNITY IN THE TECHNOLOGY SECTOR. OUR JOB
IS NOT TO FIGHT CHANGE, IT'S TO TRY TO TAKE ADVANTAGE OF THAT
CHANGE."
2
<PAGE>
GOAL AND STRATEGY
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TECHNOLOGY STOCKS
Technology companies are those whose processes, products or services may be
expected to significantly benefit from technological developments and the
application of technological advances. Therefore, these companies may be found
in virtually any industry. Because the managers seek companies that benefit from
innovations, there may be times when a significant portion of the portfolio
consists of small- and mid-cap companies.
GROWTH INVESTING
For growth investors, the aim is to invest in companies that are already
successful but could be even more so. In certain rapidly-emerging industries,
such as the Internet, success may be measured in market share rather than
profits. Often, growth stocks are in emerging or rapidly growing industries and
may not yet have reached their full potential. The growth investor looks for
indications of continued success.
[ICON]
THE FUND SEEKS LONG TERM GROWTH OF CAPITAL.
To pursue this goal, the fund invests at least 65% of its assets in common
stocks of companies substantially engaged in offering, using or developing
products, processes or services that provide or that benefit significantly from
technological advances, or are expected to do so. The fund may invest in
companies of any capitalization size, and may invest up to 20% of its assets in
foreign companies.
Some of the businesses that are, from time to time, likely to make up a
significant portion of the portfolio, either individually or in the aggregate
are:
- - computer products, software and electronic components
- - computer services
- - telecommunications
- - networking
- - Internet
- - biotechnology, pharmaceuticals or medical technology
The managers take a growth approach to selecting stocks, looking for new
companies that are in the developmental stage as well as older companies that
appear poised to grow because of new products, technology or management. Factors
in identifying these firms may include surprises in the company's fundamentals
relative to the market's expectations, financial strength, a strong position
relative to competitors and a stock price that is reasonable relative to its
growth rate.
The managers follow a disciplined selling strategy and may sell a portfolio
stock when it is not likely to exceed the market's expectations, fails to
perform as expected, or appears less desirable than another stock.
The fund may trade actively at certain times to take advantage of industries
that are benefiting from recent innovations or attractive changes in stock
prices.
The fund has the ability to change its goal without shareholder approval,
although it does not currently intend to do so.
Technology Fund 3
<PAGE>
FOREIGN SECURITIES
Although they may add diversification, foreign securities can be riskier,
because foreign markets tend to be more volatile and currency exchange rates
fluctuate.
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. In using certain derivatives to gain stock market exposure for excess
cash holdings, the fund increases its risk of loss.
When the fund anticipates adverse market, economic, political or other
conditions, it may temporarily depart from its goal and invest substantially in
high-quality short-term investments. This could help the fund avoid losses but
may mean lost opportunities.
MAIN RISKS
- --------------------------------------------------------------------------------
[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 behavior, the value of your investment
will rise and fall, and you could lose money.
By focusing on technology stocks, the fund is subject to their risks, including
the risk its holdings may:
- - fluctuate more widely and rapidly in price than the market as a whole
- - underperform other types of stocks or be difficult to sell when the economy is
not robust, during market downturns, or when they are out of favor.
- - be subject to the risk that a particular group of stocks of companies in
inter-related industries will decline in price due to sector-specific
developments.
- - be affected by obsolete technology, expired patents, short product cycles,
price competition, market saturation and new market entrants.
To the extent that the fund invests in a type of stock, it takes on the risks
associated with that type. For instance, mid-cap and small- cap stocks tend
to be less liquid and more volatile than large-cap stocks. Smaller companies
tend to be unseasoned issuers with new products and less experienced
management. Also, because the prices of most growth stocks are based on
future expectations, these stocks tend to be more sensitive than value stocks
to bad economic news and negative earnings surprises. Growth stocks in
particular may underperform during periods when the market favors value
stocks. The fund's performance may also suffer if certain stocks do not
perform as the portfolio management team expected. 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.
PERFORMANCE -- Because the fund is new it does not have performance to report.
4 Neuberger Berman
<PAGE>
MANAGEMENT
The fund is managed by a team of investment professionals led by Jennifer
Silver, Vice President of Neuberger Berman Management and Managing Director of
Neuberger Berman, LLC. This team is part of the Growth Equity Group at Neuberger
Berman, and has managed the fund's assets since May 2000.
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 management/administration services, the
fund will pay Neuberger Berman Management a fee at the annual rate of 1.11% of
average net assets.
INVESTOR EXPENSES
- --------------------------------------------------------------------------------
[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 1.11
PLUS: Distribution (12b-1) fees None
Other Expenses*** 0.91
....
EQUALS: Total Annual Operating Expenses 2.02
MINUS: Expense Reimbursement 0.02
....
EQUALS: Net Expenses 2.00
</TABLE>
** NEUBERGER BERMAN MANAGEMENT HAS CONTRACTUALLY AGREED TO REIMBURSE CERTAIN
EXPENSES OF THE FUND THROUGH 12/31/03, SO THAT THE TOTAL ANNUAL OPERATING
EXPENSES OF THE FUND ARE LIMITED TO 2.00% OF AVERAGE NET ASSETS. IN
ADDITION, THE 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 THE REPAYMENT DOES NOT CAUSE THE FUND'S ANNUAL OPERATING EXPENSES TO
EXCEED 2.00% OF ITS AVERAGE NET ASSETS. ANY SUCH REPAYMENT MUST BE 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 20.
*** 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
you shares or continued to hole them at the end of each period. Actual
performance and expenses may be lower or higher.
<TABLE>
<CAPTION>
1 Year 3 Years
- -------------------------------------
<S> <C> <C>
Expenses $203 $627
</TABLE>
FINANCIAL HIGHLIGHTS -- Because the fund is new it does not have financial
highlights to report.
Technology 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 sales charges, 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 will pay you the full share
price when you sell shares. If you use an investment provider, that provider
may charge fees which are in addition to those described in this prospectus.
The fund is open for business every day the New York Stock Exchange is open. The
Exchange is closed on all national holidays and Good Friday; fund shares will
not be priced on those days. 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. If you use an
investment provider, depending on when it accepts orders, it's possible that the
fund's share price could change on days when you are unable to buy or sell
shares.
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. Remember, though, any purchase or sale takes
place at the next share price calculated after your order is received.
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.
If you purchase fund shares directly from Neuberger Berman Management, you have
access to the services listed below to make investing easier. If you are
purchasing shares through an investment provider, consult that provider for
information about investment services.
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 from a
Neuberger Berman fund of at least $100 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 of the fund 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.
Generally, if you're investing in a tax-advantaged account, there are no tax
consequences to you.
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 designate 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.
If you use an investment provider, you must consult their representative about
whether your income and capital gains distributions from a fund will be
reinvested in that fund or paid to you in cash.
HOW DISTRIBUTIONS ARE TAXED -- Except for tax-advantaged retirement accounts and
other tax-exempt investors, all fund distributions you receive are generally
taxable to you, regardless of whether you take them in cash or reinvest them.
Fund distributions to Roth IRAs, other individual retirement accounts and
qualified retirement plans generally are tax-free. Eventual withdrawals from a
Roth IRA may also be tax-free, while withdrawals from other retirement accounts
and plans generally are subject to tax.
Distributions are taxable in the year you receive them. In some cases,
distributions you receive in January are
8 Neuberger Berman
<PAGE>
- --------------------------------------------------------------------------------
taxable as if they had been paid the previous year. Your tax statement (see
sidebar on facing page) will help clarify this for you.
Income distributions and net 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 or exchange fund shares, you
generally realize a taxable gain or loss. The exception, once again, is
tax-advantaged retirement accounts.
UNCASHED CHECKS -- When you receive a check, you may want to deposit or cash it
right away, because you will not receive interest on uncashed checks.
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 or your investment
provider send you every January. It details the distributions you received
during the past year and shows their tax status. A separate statement covers
your share 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.
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, the IRS requires the
fund to withhold 31% of all money you receive from the fund, whether from
selling shares or from distributions. We are also required to withhold 31% of
all money you receive from distributions if the IRS tells us that you are
subject to backup withholding.
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 from Neuberger Berman
Management are on pages 16 and 17. See the sidebars on pages 13 and 14 if you
are buying shares through an investment provider. 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.
WHEN YOU SELL SHARES -- If you bought your shares from Neuberger Berman
Management, instructions for selling shares are on pages 18 and 19. See the
sidebars on pages 13 and 14 if you want to sell shares you purchased through an
investment provider. 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
The fund does not issue certificates for shares. If you have share certificates
from prior purchases, please note that the only way to redeem share certificates
is by sending in those certificates. Also, if you lose a certificate, you will
be charged a fee to replace it.
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.
Your Investment 11
<PAGE>
MAINTAINING YOUR ACCOUNT CONTINUED
- --------------------------------------------------------------------------------
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).
12 Neuberger Berman
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PROVIDERS
The fund shares available in this prospectus may also be purchased through
certain investment providers such as banks, brokerage firms, workplace
retirement programs, and financial advisers.
The fees and policies outlined in this prospectus are set by the funds and by
Neuberger Berman Management. However, if you use an investment provider, most of
the information you'll need for managing your investment will come from that
provider. This includes information on how to buy and sell shares, investor
services, and additional policies.
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 privilege 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
Your Investment 13
<PAGE>
MAINTAINING YOUR ACCOUNT CONTINUED
- --------------------------------------------------------------------------------
call. As long as a fund and its representatives 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
- - 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
INVESTMENT PROVIDERS
(CONTINUED)
If you use an investment provider, you must contact that provider to buy or sell
shares of the fund.
Most investment providers allow you to take advantage of the Neuberger Berman
fund exchange program, which is designed for moving money from one Neuberger
Berman fund to another through an exchange of shares. See page 13 for more
information.
14 Neuberger Berman
<PAGE>
(This page has been left blank intentionally.)
Your Investment 15
<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
A wire for a first investment must be for at least $1,000
- --------------------------------------------------------------------------------
EXCHANGING FROM ANOTHER FUND
An exchange for a first investment 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 canceled 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 canceled
You will be responsible for any losses or fees resulting from a canceled 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
16 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 17
<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
- -----------------------------------------------------------------------------
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 canceled 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
18 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
- ----------------------------------------------------
Write 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 19
<PAGE>
FUND STRUCTURE
- ------------------------------------------------------------
CONVERSION TO THE EURO
Like other mutual funds, the fund could be affected by problems relating to the
conversion of European currencies into the Euro, which extends from 1/1/99 to
7/1/02.
At Neuberger Berman, we are taking steps to ensure that our own computer systems
are compliant with Euro 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 this
issue.
At the same time, it is impossible to know whether the ongoing conversion, which
could disrupt fund operations and investments if problems arise, has been
adequately addressed until the conversion is completed.
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.
20 Your Investment
<PAGE>
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]
You can also request copies of this information from the SEC for the cost of a
duplicating fee by sending an e-mail request to [email protected], or by
writing to the SEC's Public Reference Section, Washington DC 20549-0102. They
are also available from the EDGAR Database on the SEC's website at www.sec.gov.
You may also view and copy the document at the SEC's Public Reference Room in
Washington. Call 202-942-8090 for
information about the
operation of the Public
Reference Room.
NEUBERGER BERMAN TECHNOLOGY FUND
- - No load
- - No sales charges
- - No 12b-1 fees
If you'd like further details about this 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 manager(s) 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 2nd Floor
New York, NY 10158-0180
[RECYCLE LOGO] A0576F05/00 SEC file number: 811-582
<PAGE>
- --------------------------------------------------------------------------------
NEUBERGER BERMAN TECHNOLOGY FUND AND PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 17, 2000
NO-LOAD MUTUAL FUND
605 THIRD AVENUE, 2ND FLOOR, NEW YORK, NY 10158-0180
TOLL-FREE 800-877-9700
- --------------------------------------------------------------------------------
Neuberger Berman Technology Fund ("Fund"), a series of Neuberger
Berman Equity Funds ("Trust"), is a no-load mutual fund that offers shares
pursuant to a Prospectus dated April 17, 2000. The Fund invests all of its net
investable assets in Neuberger Berman Technology Portfolio ("Portfolio").
The Fund's Prospectus provides basic information that an investor
should know before investing. You may obtain a free copy of the Prospectus 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. (C)2000 Neuberger Berman Management Inc.
<PAGE>
TABLE OF CONTENTS
INVESTMENT INFORMATION.......................................................1
Investment Policies and Limitations....................................1
Investment Insight.....................................................3
Additional Investment Information......................................5
PERFORMANCE INFORMATION.....................................................21
Total Return Computations.............................................21
Comparative Information...............................................21
Other Performance Information.........................................22
CERTAIN RISK CONSIDERATIONS.................................................23
TRUSTEES AND OFFICERS.......................................................23
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES...........................28
Investment Manager and Administrator..................................28
Management and Administration Fees....................................29
Sub-Adviser...........................................................30
Investment Companies Managed..........................................31
Management and Control of NB Management...............................33
DISTRIBUTION ARRANGEMENTS...................................................34
ADDITIONAL PURCHASE INFORMATION.............................................34
Share Prices and Net Asset Value......................................34
Automatic Investing and Dollar Cost Averaging.........................35
ADDITIONAL EXCHANGE INFORMATION.............................................35
ADDITIONAL REDEMPTION INFORMATION...........................................38
Suspension of Redemptions.............................................38
Redemptions in Kind...................................................39
DIVIDENDS AND OTHER DISTRIBUTIONS...........................................39
ADDITIONAL TAX INFORMATION..................................................40
i
<PAGE>
Taxation of the Fund..................................................40
Taxation of the Portfolio.............................................40
Taxation of the Fund's Shareholders...................................43
PORTFOLIO TRANSACTIONS......................................................44
Portfolio Turnover....................................................46
REPORTS TO SHAREHOLDERS.....................................................46
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS..............................47
CUSTODIAN AND TRANSFER AGENT................................................49
INDEPENDENT ACCOUNTANTS.....................................................49
LEGAL COUNSEL...............................................................49
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 20% 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.
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 employees and their
families invested in the Neuberger Berman mutual funds.
No one knows what the future will look like, but we do know that
technological change permeates life in today's world and seems likely to play a
huge role in shaping the future.
o Computers can read an imprint of your palm or the iris of your eye as
security "passwords." Telephone services can recognize your voice and soon,
voice operation of computers may be as commonplace as keyboards and mice.
3
<PAGE>
o New appliances for the "smart house" - such as robotic vacuum cleaners and
interactive kitchen appliances- are reportedly on the way.
o Biologists have cloned animals, and they are nearing completion of the human
genetic "map." Many scientists and doctors believe that the mapping of the
human genome - the entire sequence of 3 billion chemical pairs that
constitute human DNA - will reveal to them why certain people are predisposed
to certain diseases. Before too long, an individual's genetic sequence may
dictate personally tailored remedies for illness and disease, with the
potential to greatly extend human life. This knowledge and the potential
treatment innovations may introduce a new era of medicine and entire new
industries.
The current stage of technology's evolution is especially exciting
because everything is converging toward a unified system: the INTERNET. Not
since Gutenberg invented the printing press in 1450 has there been an innovation
with such potential for reshaping so many aspects of our lives. The reach of the
Internet is global, and the opportunities, with commensurate risks, are
virtually unlimited.1
Yesterday's science fiction is rapidly becoming more science and
less fiction. As Jennifer Silver, head of Neuberger Berman's Boston-based Growth
Equity Group, says, "Technology has experienced constant change for many
decades. But the more you see of the innovations today, the more excited you
become."
At Neuberger Berman, we believe growth opportunities exist for a
wide range of companies - from the smallest start-ups to some of the largest
blue chips. Among the perceived trends driving the continuing technology boom
are:
o Increasing business-to-business e-commerce
o Rapid spread of the Internet among consumers
o Advances in wireless broadband telecommunications
o Proliferation of web-enabled appliances for the home and office
o Innovations in medical diagnostic and surgical procedures
o Improving biochemical and drug research techniques
Neuberger Berman Technology Fund seeks long-term capital growth by
investing in the stocks of compelling technology-related companies of all sizes.
This all-cap technology fund will invest in companies such as computer products;
software; electronic components; computer services; telecommunications;
networking; Internet; biotechnology, pharmaceutical and medical technology.
- -------------------
1 The Fund may or may not invest in companies involved with any aspect of the
examples of technological change mentioned herein.
4
<PAGE>
The Fund may also include companies that are indirectly related to
the technology sector, such as service providers to technology companies.
Although there are no guarantees, the Fund will endeavor to select only those
tech and tech-related stocks which its management team believes have the most
merit and potential for growth.
The Technology Fund employs quantitative and qualitative research
screens to select approximately 60-75 stocks (based on portfolio assets of
$25-$50 million) with the most merit. The management team looks for new
companies that are in the development stage as well as older companies that
appear poised to grow because of new products, technology or management.
Factors in identifying these firms may include:
o positive fundamental surprises (revenue/earnings surprises, new
customer wins, subscribers, etc.)
o strong position relative to competitors
o new business alliances
o multi-industry exposure or applications for products
o development or use of technology innovations
o financial strength
o reasonable relative valuations
The fast-paced technology sector compels investors to be open-minded
and ready to scrutinize which companies are best - practically on a daily basis.
That willingness and objectivity is an important part of the team's management
style. "We constantly challenge what we thought yesterday," says management team
member Rudy Torrijos, "and we revise it for what we think is right today. Rapid
change and evolution are part of the opportunity in the technology sector. Our
job is not to fight the change, it's to try to take advantage of that change."
An investment concentrated in one area inevitably carries greater
risk. With technology companies, any remarkable potential for growth is
naturally accompanied by heightened volatility. Neuberger Berman has a
time-honored tradition of taking risk seriously. The Technology Fund's
management team uses a systematic investment discipline to help identify and
control risk. If we think a company or its stock indicates any fundamental
weakening, the team will sell it swiftly. Neuberger Berman also believes in
staying faithful to its investment style, seeking strong growth companies at
reasonable prices.
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.
TECHNOLOGY SECURITIES. These include the securities of companies
substantially engaged in offering, using or developing products, processes or
services that provide, or that benefit significantly from, technological
advances or that are expected to do so. Technology-related businesses include,
among others: computer products, software and electronic components; computer
5
<PAGE>
services; telecommunications; networking; internet; and biotechnology,
pharmaceuticals or medical technology. Although the Portfolio will not invest
25% or more of its total assets in the securities of issuers having their
principal business activities in the same industry, the Portfolio may invest in
companies in inter-related industries that may react similarly to economic or
competitive pressures. The products or services offered by issuers of technology
securities quickly may become obsolete in the face of technological
developments. The economic outlook of such companies may fluctuate dramatically
due to changes in regulatory or competitive environments. In addition,
technology companies often progress at an accelerated rate, and these companies
may be subject to short product cycles and aggressive pricing which may increase
their volatility. Competitive pressures in the technology-related industries
also may have a significant effect on the performance of technology securities.
The issuers of technology securities also may be smaller or newer
companies, which may lack depth of management, be unable to generate funds
necessary for growth or potential development, or be developing or marketing new
products or services for which markets are not yet established and may never
become established. In addition, such companies may be subject to intense
competition from larger or more established companies.
POLICIES AND LIMITATIONS. The Portfolio normally invests at least
65% of its total assets in technology securities. The Portfolio may not invest
25% or more of its total assets in the securities of issuers having their
principal business activities in the same industry.
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
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
6
<PAGE>
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
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
7
<PAGE>
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
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)
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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.
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 20% 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.
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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.
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES AND INDICES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "HEDGING INSTRUMENTS")
FUTURES CONTRACTS AND OPTIONS THEREON. The Portfolio may purchase
and sell interest rate futures contracts, stock and bond index futures
contracts, and foreign currency futures contracts and may purchase and sell
options thereon in an attempt to hedge against changes in the prices of
securities or, in the case of foreign currency futures and options thereon, to
hedge against changes in prevailing currency exchange rates. Because the futures
markets may be more liquid than the cash markets, the use of futures contracts
permits the Portfolio to enhance portfolio liquidity and maintain a defensive
position without having to sell portfolio securities. The Portfolio views
investment in (i) interest rate and securities index futures and options thereon
as a device to reduce risk or preserve total return in an adverse environment
for the hedged securities, and (ii) foreign currency futures and options thereon
as a means of establishing more definitely the effective return on, or the
purchase price of, securities denominated in foreign currencies that are held or
intended to be acquired by the Portfolio.
The Portfolio may purchase and sell stock index futures contracts,
and may purchase and sell options thereon. For purposes of managing cash flow,
the managers may use such futures and options to increase the Portfolio's
exposure to the performance of a recognized securities index, such as the S&P
"500" Index.
A "sale" of a futures contract (or a "short" futures position)
entails the assumption of a contractual obligation to deliver the securities or
currency underlying the contract at a specified price at a specified future
time. A "purchase" of a futures contract (or a "long" futures position) entails
the assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are traded
on exchanges that have been designated as "contract markets" by the CFTC;
futures transactions must be executed through a futures commission merchant that
is a member of the relevant contract market. In both U.S. and foreign markets,
an exchange's affiliated clearing organization guarantees performance of the
contracts between the clearing members of the exchange.
Although futures contracts by their terms may require the actual
delivery or acquisition of the underlying securities or currency, in most cases
the contractual obligation is extinguished by being offset before the expiration
of the contract. A futures position is offset by buying (to offset an earlier
sale) or selling (to offset an earlier purchase) an identical futures contract
calling for delivery in the same month. This may result in a profit or loss.
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"Margin" with respect to a futures contract is the amount of assets
that must be deposited by the Portfolio with, or for the benefit of, a futures
commission merchant in order to initiate and maintain the Portfolio's futures
positions. The margin deposit made by the Portfolio when it enters into a
futures contract ("initial margin") is intended to assure its performance of the
contract. If the price of the futures contract changes -- increases in the case
of a short (sale) position or decreases in the case of a long (purchase)
position -- so that the unrealized loss on the contract causes the margin
deposit not to satisfy margin requirements, the Portfolio will be required to
make an additional margin deposit ("variation margin"). However, if favorable
price changes in the futures contract cause the margin deposit to exceed the
required margin, the excess will be paid to the Portfolio. In computing its NAV,
the Portfolio marks to market the value of its open futures positions. The
Portfolio also must make margin deposits with respect to options on futures that
it has written (but not with respect to options on futures that it has
purchased). If the futures commission merchant holding the margin deposit goes
bankrupt, the Portfolio could suffer a delay in recovering its funds and could
ultimately suffer a loss.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume a short futures
position (if the option is a call) or a long futures position (if the option is
a put). Upon exercise of the option, the accumulated cash balance in the
writer's futures margin account is delivered to the holder of the option. That
balance represents the amount by which the market price of the futures contract
at exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option. Options on futures have characteristics
and risks similar to those of securities options, as discussed herein.
Although the Portfolio believes that the use of futures contracts
will benefit it, if NB Management's judgment about the general direction of the
markets or about interest rate or currency exchange rate trends is incorrect,
the Portfolio's overall return would be lower than if it had not entered into
any such contracts. The prices of futures contracts are volatile and are
influenced by, among other things, actual and anticipated changes in interest or
currency exchange rates, which in turn are affected by fiscal and monetary
policies and by national and international political and economic events. At
best, the correlation between changes in prices of futures contracts and of
securities being hedged can be only approximate due to differences between the
futures and securities markets or differences between the securities or
currencies underlying the Portfolio's futures position and the securities held
by or to be purchased for the Portfolio. The currency futures market may be
dominated by short-term traders seeking to profit from changes in exchange
rates. This would reduce the value of such contracts used for hedging purposes
over a short-term period. Such distortions are generally minor and would
diminish as the contract approaches maturity.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage; as a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss, or gain, to the investor. Losses that may arise from certain futures
transactions are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation in the
price of a futures contract or option thereon during a single trading day; once
the daily limit has been reached, no trades may be made on that day at a price
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beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio may purchase and sell stock
index futures contracts, and may purchase and sell options thereon. For purposes
of managing cash flow, the managers may use such futures and options to increase
the Portfolio's exposure to the performance of a recognized securities index,
such as the S&P "500" Index.
The Portfolio may also purchase and sell futures contracts and may
purchase and sell options thereon in an attempt to hedge against changes in the
prices of securities or, in the case of foreign currency futures and options
thereon, to hedge against prevailing currency exchange rates. The Portfolio does
not engage in transactions in futures and options on futures for speculation.
CALL OPTIONS ON SECURITIES. The Portfolio may write covered call
options and may purchase call options on securities. It may also 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
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.
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POLICIES AND LIMITATIONS. The Portfolio may write covered call
options and may purchase call options on securities. It may also 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 or to protect against an increase in the price of the
securities it intends to purchase.
PUT OPTIONS ON SECURITIES. The Portfolio may write and purchase put
options on securities. The Portfolio will receive a premium for writing a put
option, which obligates the Portfolio to acquire a security at a certain price
at any time until a certain date if the purchaser decides to exercise the
option. The Portfolio may be obligated to purchase the underlying security at
more than its current value.
When the Portfolio purchases a put option, it pays a premium to the
writer for the right to sell a security to the writer for a specified amount at
any time until a certain date. The Portfolio would purchase a put option in
order to protect itself against a decline in the market value of a security it
owns.
Portfolio securities on which put options may be written and
purchased by the Portfolio are purchased solely on the basis of investment
considerations consistent with the Portfolio's investment objective. When
writing a put option, the Portfolio, in return for the premium, takes the risk
that it must purchase the underlying security at a price that may be higher than
the current market price of the security. If a put option that the Portfolio has
written expires unexercised, the Portfolio will realize a gain in the amount of
the premium.
POLICIES AND LIMITATIONS. The Portfolio generally writes and
purchases put options on securities for hedging purposes (i.e., to reduce, at
least in part, the effect of price fluctuations of securities held by the
Portfolio on the Portfolio's and its corresponding Fund's NAVs).
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
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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.
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.
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PUT AND CALL OPTIONS ON SECURITIES INDICES. For purposes of managing
cash flow, the Portfolio may purchase put and call options on securities indices
to increase the Portfolio's exposure to the performance of a recognized
securities index, such as the S&P "500" Index. Unlike a securities option, which
gives the holder the right to purchase or sell a specified security at a
specified price, an option on a securities index gives the holder the right to
receive a cash "exercise settlement amount" equal to (1) the difference between
the exercise price of the option and the value of the underlying securities
index on the exercise date (2) multiplied by a fixed "index multiplier." A
securities index fluctuates with changes in the market values of the securities
included in the index. Options on stock indices are currently traded on the
Chicago Board Options Exchange, the New York Stock Exchange ("NYSE"), the
American Stock Exchange, and other U.S. and foreign exchanges.
The effectiveness of hedging through the purchase of securities
index options will depend upon the extent to which price movements in the
securities being hedged correlate with price movements in the selected
securities index. Perfect correlation is not possible because the securities
held or to be acquired by the Portfolio will not exactly match the composition
of the securities indices on which options are available.
Securities index options have characteristics and risks similar to
those of securities options, as discussed herein.
POLICIES AND LIMITATIONS. For purposes of managing cash flow, the
Portfolio may purchase put and call options on securities indices to increase
the Portfolio's exposure to the performance of a recognized securities index,
such as the S&P "500" Index. All securities index options purchased by the
Portfolio will be listed and traded on an exchange.
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
difference (the spread) between the prices at which they are buying and selling
various currencies.
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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.
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
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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.
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 to promptly 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.
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.
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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
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.
18
<PAGE>
POLICIES AND LIMITATIONS. The Portfolio normally may invest up to
35% of its total assets in debt securities (including convertible 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.
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
19
<PAGE>
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.
SWAP AGREEMENTS The portfolio may enter into swap agreements to
manage or gain exposure to particular types of investments (including equity
securities or indices of equity securities in which the Portfolio otherwise
could not invest efficiently). In a swap agreement, one party agrees to make
regular payments equal to a floating rate on a specified amount in exchange for
payments equal to a fixed rate, or a different floating rate, on the same amount
for a specific period.
Swap agreements may involve leverage and may be highly volatile;
depending on how they are used, they may have a considerable impact on the
Portfolio's performance. The risks of swap agreements depend upon the other
party's creditworthiness and ability to perform, as well as the Portfolio's
ability to terminate its swap agreements or reduce its exposure through
offsetting transactions. Swap agreements may be illiquid. The swap market is
relatively new and largely unregulated.
POLICIES AND LIMITATIONS. In accordance with SEC staff requirements,
the Portfolio will segregate cash or appropriate liquid securities in an amount
equal to its obligations under swap agreements; when an agreement provides for
netting of the payments by the two parties, the Portfolio will segregate only
the amount of its net obligation, if any.
OTHER INVESTMENT COMPANIES. The Portfolio at times may invest in
instruments structured as investment companies to gain exposure to the
performance of a recognized securities index, such as the S&P "500" Index. As a
20
<PAGE>
shareholder in an investment company, the Portfolio would bear its pro rata
share of that investment company's expenses. Investment in other funds may
involve the payment of substantial premiums above the value of such issuer's
portfolio securities. The Portfolio does not intend to invest in such funds
unless, in the judgment of NB Management, the potential benefits of such
investment justify the payment of any applicable premium or sales charge.
POLICIES AND LIMITATIONS. Except as otherwise permitted pursuant to
an exemptive order obtained by the Trust, the Portfolio's investment in such
securities is limited to (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Portfolio's total assets with respect to any one
investment company and (iii) 10% of the Portfolio's total assets in the
aggregate.
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
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
21
<PAGE>
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.
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.
22
<PAGE>
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").
<TABLE>
<CAPTION>
Positions Held With
Name, Age, and Address(1) The Trusts Principal Occupation(s)(2)
- ------------------------- ---------- --------------------------
<S> <C> <C>
Claudia A. Brandon (43) Secretary of each Trust Employee of Neuberger Berman since
1999; Vice President of NB
Management from 1986 to 1999;
Secretary of nine other mutual
funds for which NB Management acts
as investment manager or
administrator.
Faith Colish (64) Trustee of each Trust Attorney at Law, Faith Colish, A
63 Wall Street Professional Corporation.
24th Floor
New York, NY 10005
Stacy Cooper-Shugrue (36) Assistant Secretary of Employee of Neuberger Berman since
each Trust 1999; Assistant Vice President of
NB Management from 1993 to 1999;
Assistant Secretary of nine other
mutual funds for which NB
Management acts as investment
manager or administrator.
23
<PAGE>
Positions Held With
Name, Age, and Address(1) The Trusts Principal Occupation(s)(2)
- ------------------------- ---------- --------------------------
Barbara DiGiorgio (41) Assistant Treasurer of Employee of NB Management;
each Trust Assistant Vice President of NB
Management from 1993 to 1999;
Assistant Treasurer since 1996 of
nine other mutual funds for which
NB Management acts as investment
manager or administrator.
Michael M. Kassen* (46) President and Trustee of Executive Vice President, Chief
each Trust Investment Officer and Director of
Neuberger Berman, Inc. (holding
company); Executive Vice President,
Chief Investment Officer and
Director of NB Management;
President and Trustee of six other
mutual funds for which NB
Management acts as investment
manager or administrator.
Howard A. Mileaf (62) Trustee of each Trust Vice President and Special Counsel
WHX Corporation to WHX Corporation (holding
110 East 59th Street company) since 1992; Director of
30th Floor Kevlin Corporation (manufacturer of
New York, NY 10022 microwave and other products).
Edward I. O'Brien* (71) 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. (71) Trustee of each Trust Retired. Formerly, President of
7082 Siena Court SOBRO (South Bronx Overall Economic
Boca Raton, FL 33433 Development Corporation).
24
<PAGE>
Positions Held With
Name, Age, and Address(1) The Trusts Principal Occupation(s)(2)
- ------------------------- ---------- --------------------------
John P. Rosenthal (66) Trustee of each Trust Senior Vice President of Burnham
Burnham Securities Inc. Securities Inc. (a registered
Burnham Asset Management Corp. broker-dealer) since 1991;
1325 Avenue of the Americas Director, Cancer Treatment
17th Floor Holdings, Inc.
New York, NY 10019
Richard Russell (53) Treasurer and Principal Employee of NB Management since
Accounting Officer of 1993; Treasurer and Principal
each Trust Accounting Officer of nine other
mutual funds for which NB
Management acts as investment
manager or administrator.
Cornelius T. Ryan (68) Trustee of each Trust General Partner of Oxford Partners
Oxford Bioscience Partners and Oxford Bioscience Partners
315 Post Road West (venture capital partnerships) and
Westport, CT 06880 President of Oxford Venture
Corporation; Director of Capital
Cash Management Trust (money market
fund) and Prime Cash Fund.
Gustave H. Shubert (70) Trustee of each Trust Senior Fellow/Corporate Advisor and
13838 Sunset Boulevard 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.
25
<PAGE>
Positions Held With
Name, Age, and Address(1) The Trusts Principal Occupation(s)(2)
- ------------------------- ---------- --------------------------
Daniel J. Sullivan (60) Vice President of each Senior Vice President of NB
Trust Management since 1992; Vice
President of nine other mutual
funds for which NB Management acts
as investment manager or
administrator.
Peter E. Sundman* (40) Chairman of the Board, Executive Vice President and
Chief Executive Officer Director of Neuberger Berman, Inc.
and Trustee of each Trust (holding company); President and
Director of NB Management;
Principal of Neuberger Berman from
1997 to 1999; Chairman of the
Board, President, Chief Executive
Officer and/or Trustee of nine
other mutual funds for which NB
Management acts as investment
manager or administrator.
Michael J. Weiner (52) Vice President and Principal of Neuberger Berman from
Principal Financial 1998-99; Senior Vice President of
Officer of each Trust NB Management since 1992; 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.
Celeste Wischerth (38) Assistant Treasurer of Employee of NB Management;
each Trust 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" within the meaning of the
1940 Act. Mr. Sundman and Mr. Kassen are interested persons of each Trust by
virtue of the fact that they are officers and/or directors of NB Management and
26
<PAGE>
Managing Directors of Neuberger Berman. Mr. O'Brien is an interested person of
the Trust and Managers Trust by virtue of the fact that he is a director of Legg
Mason, Inc., a wholly owned subsidiary of which, from time to time, serves as a
broker or dealer to the 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.
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>
<CAPTION>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/99
Aggregate Total Compensation from Investment
Compensation Companies in the Neuberger Berman
Name and Position With the Trust From the Trust Fund Complex Paid to Trustees
- -------------------------------- -------------- -----------------------------
<S> <C> <C>
Faith Colish $21,602 $96,500
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 $22,433 $64,250
Trustee (4 other investment
companies)
Edward I. O'Brien $23,069 $61,750
Trustee (3 other investment
companies)
John T. Patterson, Jr. $23,341 $66,500
Trustee (4 other investment
companies)
27
<PAGE>
Aggregate Total Compensation from Investment
Compensation Companies in the Neuberger Berman
Name and Position With the Trust From the Trust Fund Complex Paid to Trustees
- -------------------------------- -------------- -----------------------------
John P. Rosenthal $22,429 $64,250
Trustee (4 other investment
companies)
Cornelius T. Ryan $19,771 $52,750
Trustee (3 other investment
companies)
Gustave H. Shubert $22,251 $59,500
Trustee (3 other investment
companies)
Lawrence Zicklin* $ 0 $ 0
President and Trustee (5 other investment
companies)
</TABLE>
* Retired, October 27, 1999.
At March 31, 2000, 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.
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
Portfolio was authorized by the Board of Trustees to become subject to the
Management Agreement on January 27, 2000 and became subject to it on April 17,
2000. The Management Agreement was approved by the holders of the interests in
the Portfolio on April 17, 2000.
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
28
<PAGE>
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 (one of whom is an officer of Neuberger Berman and 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"). 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
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 0.85% of the Portfolio's average daily net assets.
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 plus certain out-of-pocket expenses for technology used
for shareholder servicing and shareholder communications subject to the prior
approval of an annual budget by the Trust's Board of Trustees, including a
majority of those Trustees who are not interested persons of the Trust or of NB
Management, and periodic reports to the Board of Trustees on actual expenses.
With the Fund's consent NB Management may subcontract to third parties some of
its responsibilities to the Fund under the Administration Agreement. In
addition, the Fund may compensate third parties for accounting and other
services.
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, 2.00% per annum of
the Fund's average daily net assets. This undertaking lasts until December 31,
29
<PAGE>
2003. The Fund has contractually undertaken to reimburse NB Management, until
December 31, 2006, 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 2.00% 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, 2000. 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, 2000. 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.
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 by the Board of Trustees to become subject to the
Sub-Advisory Agreement on January 27, 2000 and became subject to it on April 17,
2000. The Sub-Advisory Agreement was approved by the holders of the interests in
the Portfolio on April 17, 2000.
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 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.
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The Sub-Advisory Agreement continues until August 2, 2000 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 December 31, 1999, the investment companies managed by NB
Management had aggregate net assets of approximately $18.7 billion. NB
Management currently serves as investment manager of the following investment
companies:
<TABLE>
<CAPTION>
Approximate Net Assets at
Name December 31, 1999
---- -----------------
<S> <C>
Neuberger Berman Cash Reserves Portfolio.......................................$ 1,067,386,621
(investment portfolio for Neuberger Berman Cash Reserves)
Neuberger Berman Government Money Portfolio......................................$ 496,244,470
(investment portfolio for Neuberger Berman Government Money Fund)
Neuberger Berman High Yield Bond Portfolio........................................$ 17,717,320
(investment portfolio for Neuberger Berman High Yield Bond Fund)
Neuberger Berman Limited Maturity Bond Portfolio.................................$ 264,519,644
(investment portfolio for Neuberger Berman Limited Maturity Bond Fund and Neuberger
Berman Limited Maturity Bond Trust)
Neuberger Berman Municipal Money Portfolio.......................................$ 301,713,416
(investment portfolio for Neuberger Berman Municipal Money Fund)
Neuberger Berman Municipal Securities Portfolio...................................$ 32,652,269
(investment portfolio for Neuberger Berman Municipal Securities Trust)
Neuberger Berman Century Portfolio................................................$ 12,994,259
(investment portfolio for Neuberger Berman Century Fund and Neuberger Berman Century
Trust)
Neuberger Berman Focus Portfolio...............................................$ 1,772,136,921
(investment portfolio for Neuberger Berman Focus Fund, Neuberger Berman Focus Trust, and
Neuberger Berman Focus Assets)
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<PAGE>
Neuberger Berman Genesis Portfolio.............................................$ 1,619,248,797
(investment portfolio for Neuberger Berman Genesis Fund, Neuberger Berman Genesis Trust,
Neuberger Berman Genesis Assets and Neuberger Berman Genesis Institutional)
Neuberger Berman Guardian Portfolio.......................................... $ 4,406,419,837
(investment portfolio for Neuberger Berman Guardian Fund, Neuberger Berman Guardian
Trust, and Neuberger Berman Guardian Assets)
Neuberger Berman International Portfolio.........................................$ 195,064,579
(investment portfolio for Neuberger Berman International Fund and Neuberger Berman
International Trust)
Neuberger Berman Manhattan Portfolio.............................................$ 901,991,808
(investment portfolio for Neuberger Berman Manhattan Fund, Neuberger Berman Manhattan
Trust, and Neuberger Berman Manhattan Assets)
Neuberger Berman Millennium Portfolio............................................$ 214,859,495
(investment portfolio for Neuberger Berman Millennium Fund, Neuberger Berman Millennium
Trust and Neuberger Berman Millennium Assets)
Neuberger Berman Partners Portfolio............................................$ 3,489,710,309
(investment portfolio for Neuberger Berman Partners Fund, Neuberger Berman Partners
Trust, and Neuberger Berman Partners Assets)
Neuberger Berman Regency Portfolio................................................$ 33,586,640
(investment portfolio for Neuberger Berman Regency Fund and Neuberger Berman Regency
Trust)
Neuberger Berman Socially Responsive Portfolio...................................$ 146,960,016
(investment portfolio for Neuberger Berman Socially Responsive Fund, Neuberger Berman
Socially Responsive Trust, and Neuberger Berman Socially Responsive Assets)
Advisers Managers Trust (seven series).........................................$ 2,442,187,166
</TABLE>
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
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
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<PAGE>
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, who are deemed "control
persons," all of whom have offices at the same address as NB Management, are
Richard A. Cantor, Director and Chairman; Robert Matza, Director; Theodore P.
Giuliano, Director and Vice President; Michael M. Kassen, Director, Executive
Vice President and Chief Investment Officer; Barbara Katersky, Senior Vice
President; Irwin Lainoff, Director; Daniel J. Sullivan, Senior Vice President;
Philip Ambrosio, Senior Vice President and Chief Financial Officer; Peter E.
Sundman, Director and President; Michael J. Weiner, Senior Vice President; and
Lawrence Zicklin, Director.
The directors and officers of Neuberger Berman, who are deemed
"control persons," all of whom have offices at the same address as Neuberger
Berman, are Jeffrey B. Lane, President and Chief Executive Officer; Robert
Matza, Executive Vice President and Chief Administrative Officer; Michael M.
Kassen, Executive Vice President and Chief Investment Officer; Heidi L.
Schneider, Executive Vice President; Peter E. Sundman, Executive Vice President;
Philip Ambrosio, Senior Vice President and Chief Financial Officer; Kevin
Handwerker, Senior Vice President, General Counsel and Secretary; Robert Akeson,
Senior Vice President; Salvatore A. Buonocore, Senior Vice President; Seth J.
Finkel, Senior Vice President; Robert Firth, Senior Vice President; Brian
Gaffney, Senior Vice President; Brian E. Hahn, Senior Vice President; Lawrence
J. Cohn, Senior Vice President; Joseph K. Herlihy, Senior Vice President and
Treasurer; Barbara R. Katersky, Senior Vice President; Diane E. Lederman, Senior
Vice President; Peter B. Phelan, Senior Vice President; Robert H. Splan, Senior
Vice President; Andrea Trachtenberg, Senior Vice President; Michael J. Weiner,
Senior Vice President; Marvin C. Schwartz, Managing Director.
Messrs. Giuliano, Sundman, Sullivan, and Weiner are officers of
each Trust.
Neuberger Berman and NB Management are wholly owned subsidiaries of
Neuberger Berman Inc., a publicly owned holding company owned primarily by the
employees of Neuberger Berman.
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
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<PAGE>
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, 2000. 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
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.
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<PAGE>
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.
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<PAGE>
EQUITY FUNDS
Neuberger Berman Century Fund Invests mainly in common stocks of
large-capitalization companies. The manager
seeks to buy companies with strong earnings
growth and the potential for higher earnings,
priced at attractive levels relative to their
growth rates.
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 market capitalizations (up to $1.5
billion at the time of the Portfolio's
investment). Portfolio managers seek to buy
the stocks of strong companies with a history
of solid performance and a proven management
team, which are selling at attractive prices.
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 Seeks long-term capital appreciation by
International Fund 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 Invests in securities believed to have the
Fund 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 Millennium Seeks long-term growth of capital by investing
Fund 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.
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<PAGE>
Neuberger Berman Seeks capital growth through an approach that
Partners Fund is 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 growth of capital by investing
Regency Fund primarily in common stocks of
mid-capitalization companies which the manager
believes have solid fundamentals.
Neuberger Berman Seeks long-term capital appreciation by
Socially Responsive Fund investing in common stocks of companies that
meet both financial and social criteria.
INCOME FUNDS
Neuberger Berman A U.S. Government money market fund seeking
Government Money Fund maximum safety and liquidity and the highest
available current income. The corresponding
portfolio invests only in U.S. Treasury
obligations and other money market
instruments 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 Cash Reserves A money market fund seeking the highest
current income consistent with safety and
liquidity. The corresponding portfolio
invests in high-quality money market
instruments. It seeks to maintain a constant
purchase and redemption price of $1.00.
Neuberger Berman Seeks the highest current income consistent
Limited Maturity Bond Fund with low risk to principal and liquidity
and, secondarily, total return. The
corresponding portfolio invests in debt
securities, primarily investment grade;
maximum 10% below investment grade, but no
lower than B.*/ Maximum average duration of
four years.
Neuberger Berman Seeks high current income and, secondarily,
High Yield Bond Fund capital growth, by investing primarily in
lower-rated debt securities; also invests in
investment grade income-producing and
non-income-producing debt and equity
securities.
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<PAGE>
MUNICIPAL FUNDS
Neuberger Berman A money market fund seeking the maximum
Municipal Money current 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
Securities Trust low risk to principal, limited price
fluctuation, and liquidity and, secondarily,
total return. The corresponding portfolio
invests in investment grade municipal
securities. Maximum average duration of 10
years.
- ------------------------
*/ 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.
The Fund described herein, and any of the Neuberger Berman Funds
described above, may terminate or modify its exchange privilege in the future.
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.
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.
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<PAGE>
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) 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 and 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
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.
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<PAGE>
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.
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
Certain investment portfolios managed by NB Management have received
rulings from the Service to the effect that, among other things, each portfolio
will be treated as a separate partnership for federal income tax purposes and
will not be a "publicly traded partnership." Although these rulings may not be
relied on as precedent by the Portfolio, NB Management believes the reasoning
40
<PAGE>
thereof and hence, their conclusion apply to the Portfolio as well. As a result,
the Portfolio is not subject to federal income tax; instead, each investor in
the Portfolio, such as the Fund, is required to take into account in determining
its federal income tax liability its share of the Portfolio's income, gains,
losses, deductions, and credits, without regard to whether it has received any
cash distributions from the Portfolio. The Portfolio also is not subject to
Delaware or New York income or franchise tax.
Because the Fund is deemed to own a proportionate share of the
Portfolio's assets and income for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to
continue to conduct its operations so that the Fund will be able to continue to
satisfy all those requirements.
Distributions to the Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The Fund's basis for its interest in the Portfolio
generally 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
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.
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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
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
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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.
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
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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 may, from time to time, be 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
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).
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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.
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 employees 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
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<PAGE>
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.
An investment team is 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. The team is made up from members of the
Neuberger Berman Growth Group, headed by Jennifer Silver, Vice President of
Neuberger Berman Management, and Managing Director 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
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
accountants 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.
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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
eleven 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.
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 eleven 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,
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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. A series of another investment
company, Neuberger Berman Equity Trust ("Equity Trust") invests all of its net
assets in the Portfolio. Equity Trust does 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) 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) 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 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
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
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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 ACCOUNTANTS
The Fund and Portfolio have selected PricewaterhouseCoopers LLP as
the independent accountants 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.
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.
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Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P CORPORATE BOND RATINGS:
AAA - BONDS rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA - BONDS rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A - Bonds RATED A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - BONDS rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB, B, CCC, CC, C - Bonds RATED BB, B, CCC, CC, and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
CI - The rating CI is RESERVED for income bonds on which no interest is
being paid.
D - Bonds rated D are In default, and payment of interest and/or
repayment of principal is in arrears.
PLUS (+) OR MINUS (-) - The ratings ABOVE may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S CORPORATE BOND RATINGS:
Aaa - Bonds rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or an exceptionally stable
margin, and principal is secure. Although the various protective elements are
likely to change, the changes that can be visualized are most unlikely to impair
the fundamentally strong position of the issuer.
A-1
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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 (+).
Moody's COMMERCIAL paper ratings
A-2
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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
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NEUBERGER BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 90 ON FORM N-1A
PART C
OTHER INFORMATION
Item 23. 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 (Filed August 30, 1995).
(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 (Filed December 21, 1998).
(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 (Filed
August 30, 1995).
(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 (Filed
August 30, 1995).
(c) (1) Trust Instrument of Neuberger Berman Equity Funds,
Articles IV, V, and VI. Incorporated by Reference
to Post-Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582 (Filed August 30, 1995).
(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 (Filed August 30, 1995).
(d) (1) (i) Management Agreement Between Equity
Managers Trust and Neuberger Berman
Management Inc. Incorporated by Reference
to Post-Effective Amendment No. 87 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582 (Filed October 22,
1999).
(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. Incorporated by
Reference to Post-Effective Amendment No.
87 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582 (Filed
October 22, 1999).
<PAGE>
(2) (i) Sub-Advisory Agreement Between Neuberger
Berman Management Inc. 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 (Filed August 30,
1995).
(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 Inc.. Incorporated by Reference
to Post-Effective Amendment No. 74 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582 (Filed December
15, 1995).
(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 (Filed December
15, 1995).
(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 (Filed
December 15, 1995).
(4) (i) Sub-Advisory Agreement Between Neuberger
Berman Management Inc. 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 (Filed December
15, 1995).
(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 (Filed December
15, 1995).
(e) (1) Distribution Agreement Between Neuberger Berman
Equity Funds and Neuberger Berman Management Inc.
Incorporated by Reference to Post-Effective
Amendment No. 87 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582 (Filed
October 22, 1999).
(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 (Filed
December 15, 1995).
<PAGE>
(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 (Filed December 5, 1996).
(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 (Filed August 30, 1995).
(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 (Filed August 30,
1995).
(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 (Filed December
12, 1997).
(iv) 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
(Filed December 5, 1996).
(2) (i) Administration Agreement Between Neuberger
Berman Equity Funds and Neuberger Berman
Management Inc. Incorporated by Reference
to Post-Effective Amendment No. 87 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582 (Filed October 22,
1999).
(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. 87 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582
(Filed October 22, 1999).
(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 (Filed December 12, 1997).
(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 (Filed December 12, 1997).
<PAGE>
(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 (Filed December 12, 1997).
(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 (Filed October 19, 1998).
(5) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with Respect to Neuberger
Berman Regency Fund. Incorporated by Reference to
Post-Effective Amendment No. 83 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582 (Filed February 12, 1999).
(6) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with Respect to Neuberger
Berman Century Fund. Incorporated by Reference to
Post-Effective Amendment No. 87 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582 (Filed October 22, 1999).
(7) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with Respect to Neuberger
Berman Technology 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. Not Applicable.
(o) Plan Pursuant to Rule 18f-3. None.
(p) (1) Code of Ethics for Registrant and Neuberger Berman
Management Inc. Filed Herewith.
(2) Code of Ethics for Equity Managers Trust,
Neuberger Berman Management Inc. and Neuberger
Berman, LLC. Filed Herewith.
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.)
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
<PAGE>
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 Inc. ("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 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
<PAGE>
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 or 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
- ---- ------------------------------
Philip Ambrosio Senior Vice President and Chief Financial
Senior Vice President and Chief Officer, Neuberger Berman Inc.
Financial Officer, Neuberger
Berman
Thomas J. Brophy Vice President and Portfolio Manager,
Vice President, Columbus Circle Investors.(1)
NB Management
- --------------------
(1) Until 1998.
<PAGE>
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
<S> <C>
Barbara DiGiorgio Assistant Treasurer, Neuberger Berman Advisers
Assistant Vice President, Management Trust; Assistant Treasurer, Advisers
NB Management Managers Trust; Assistant Treasurer, Neuberger
Berman Income Funds; Assistant Treasurer,
Neuberger Berman Income Trust; Assistant
Treasurer, Neuberger Berman Equity Funds;
Assistant Treasurer, Neuberger Berman Equity
Trust; Assistant Treasurer, Income Managers
Trust; Assistant Treasurer, Equity Managers
Trust; Assistant Treasurer, Global Managers
Trust; Assistant Treasurer, Neuberger Berman
Equity Assets; Assistant Treasurer, Neuberger
Berman Equity Series.
Robert S. Franklin Vice President, High Yield Fixed Income
Vice President, Analyst, Prudential Insurance Company.(2)
NB Management
Theodore P. Giuliano President and Trustee, Neuberger Berman Income
Vice President and Director, NB Funds; President and Trustee, Neuberger Berman
Management; Managing Income Trust; President and Trustee, Income
Director,Neuberger Berman Managers Trust.
Michael M. Kassen Executive Vice President, Chief Investment
Executive Vice President, Officer and Director, Neuberger Berman Inc.
Neuberger Berman
Kelly M. Landron Assistant Portfolio Manager/Analyst, Neuberger
Vice President, Berman.(3)
NB Management
Jeffrey B. Lane President, Chief Executive Officer and
President and Chief Executive Director of Neuberger Berman, Inc.
Officer, Neuberger Berman
Michael F. Malouf Portfolio Manager, Dresdner RCM Global
Vice President, Investors.(4)
NB Management
Robert Matza Executive Vice President, Chief Administrative
Executive Vice President and Chief Officer and Director, Neuberger Berman, Inc.
Administrative Officer,
Neuberger Berman; Director, NB
Management
S. Basu Mullick Portfolio Manager, Ark Asset Management.(5)
Vice President,
NB Management
- --------------------
(2) Until 1998.
(3) Until 1998.
(4) Until 1998.
(5) Until 1998.
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Kevin Handwerker Senior Vice President, Secretary and General
Senior Vice President, General Counsel, Neuberger Berman, Inc.
Counsel and Secretary,
Neuberger Berman
Richard Russell Treasurer, Neuberger Berman Advisers Management
Vice President, Trust; Treasurer, Advisers Managers Trust;
NB Management Treasurer, Neuberger Berman Income Funds;
Treasurer, Neuberger Berman Income Trust;
Treasurer, Neuberger Berman Equity Funds;
Treasurer, Neuberger Berman Equity Trust;
Treasurer, Income Managers Trust; Treasurer,
Equity Managers Trust; Treasurer, Global
Managers Trust; Treasurer, Neuberger Berman
Equity Assets; Treasurer, Neuberger Berman
Equity Series.
Heidi L. Schneider Executive Vice President and Director, Neuberger
Executive Vice President, Neuberger Berman, Inc.
Berman
Benjamin E. Segal Assistant Portfolio Manager, GT Global
Vice President, NB Management, Investment Management(6).
Managing Director, Neuberger Berman
Daniel J. Sullivan Vice President, Neuberger Berman Advisers
Senior Vice President, Management Trust; Vice President, Advisers
NB Management Managers Trust; 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.
- --------------------
(6) Until 1998.
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Peter E. Sundman Executive Vice President and Director, Neuberger
President, NB Management; Executive Berman Inc.; President and Chief Executive
Vice President, Neuberger Berman Officer, Income Managers Trust; President and
Chief Executive Officer, Neuberger Berman
Income Funds; President and Chief
Executive Officer, Neuberger Berman Income
Trust.
Catherine Waterworth Managing Director, TCW Group Inc.(7)
Vice President,
NB Management
Michael J. Weiner Vice President, Neuberger Berman Advisers
Senior Vice President, Management Trust; Vice President, Advisers
NB Management; Senior Vice Managers Trust; Vice President, Neuberger Berman
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.
Allan R. White, III Portfolio Manager, Salomon Asset Management.(8)
Vice President, NB
Management; Managing Director,
Neuberger Berman
Celeste Wischerth, Assistant Treasurer, Neuberger Berman Advisers
NB Management Management Trust; Assistant Treasurer, Advisers
Managers Trust; Assistant Treasurer, Neuberger
Berman Income Funds; Assistant Treasurer,
Neuberger Berman Income Trust; Assistant
Treasurer, Neuberger Berman Equity Funds;
Assistant Treasurer, Neuberger Berman Equity
Trust; Assistant Treasurer, Income Managers
Trust; Assistant Treasurer, Equity Managers
Trust; Assistant Treasurer, Global Managers
Trust; Assistant Treasurer, Neuberger Berman
Equity Assets; Assistant Treasurer, Neuberger
Berman Equity Series.
- --------------------
(7) Until 1998.
(8) Until 1998.
</TABLE>
<PAGE>
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.
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 Assets
Neuberger Berman Equity Series
Neuberger Berman Equity Trust
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.
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES POSITIONS AND
---- --------------------- -------------
WITH UNDERWRITER OFFICES
---------------- -------
WITH REGISTRANT
---------------
<S> <C> <C>
Ramesh Babu 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
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Robert S. Franklin Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and Director None
Michael M. Kassen Vice President and Director President
Robert L. Ladd Vice President None
Josephine Mahaney Vice President None
Michael F. Malouf Vice President None
Robert Matza Director None
Ellen Metzger Secretary None
Basu Mullick Vice President None
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND
---- --------------------- -------------
WITH UNDERWRITER OFFICES
---------------- -------
WITH REGISTRANT
---------------
Janet W. Prindle Vice President None
Kevin L. Risen Vice President None
Ingrid Saukaitis Vice President None
Benjamin Segal Vice President None
Jennifer K. Silver Vice President None
Kent C. Simons Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman President Trustee and
Chairman of the Board
Judith M. Vale Vice President None
Josephine Velez 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
</TABLE>
(c) No commissions or other compensation were received directly or
indirectly from the Registrant by any principal underwriter who was not an
affiliated person of the Registrant.
Item 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
<PAGE>
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, EQUITY MANAGERS TRUST certifies that it meets
all of the requirements for effectiveness of Post-Effective Amendment No. 90 to
the Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City and State of New York on the 13th day of April, 2000.
EQUITY MANAGERS TRUST
By: /s/Michael M. Kassen
---------------------------
Michael M. Kassen
President
Pursuant to the requirements of the Securities Act of 1933, the
Post-Effective Amendment No. 90 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/Peter E. Sundman Chairman of the Board April 13, 2000
- -------------------------- and Trustee (Chief
Peter E. Sundman Executive Officer)
/s/Michael M. Kassen President and Trustee April 13, 2000
- --------------------------
Michael M. Kassen
/s/Michael J. Weiner Vice President April 13, 2000
- -------------------------- (Principal Financial
Michael J. Weiner Officer)
/s/Richard Russell Treasurer (Principal April 13, 2000
- -------------------------- Accounting Officer)
Richard Russell
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/Faith Colish Trustee April 13, 2000
- --------------------------
Faith Colish
/s/Howard A. Mileaf Trustee April 13, 2000
- --------------------------
Howard A. Mileaf
/s/Edward I. O'Brien Trustee April 13, 2000
- --------------------------
Edward I. O'Brien
Trustee
- --------------------------
John T. Patterson, Jr.
/s/John P. Rosenthal Trustee April 13, 2000
- --------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee April 13, 2000
- --------------------------
Cornelius T. Ryan
Trustee
- ----------------------
Gustave H. Shubert
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER BERMAN EQUITY FUNDS
certifies that it meets all of the requirements for effectiveness of
Post-Effective Amendment No. 90 to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City and State of New York on the
13th day of April, 2000.
NEUBERGER BERMAN EQUITY FUNDS
By: /s/Michael M. Kassen
--------------------------------
Michael M. Kassen
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 90 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/Peter E. Sundman Chairman of the Board April 13, 2000
- -------------------------- and Trustee (Chief
Peter E. Sundman Executive Officer)
/s/Michael M. Kassen President and Trustee April 13, 2000
- --------------------------
Michael M. Kassen
/s/Michael J. Weiner Vice President April 13, 2000
- -------------------------- (Principal Financial
Michael J. Weiner Officer)
/s/Richard Russell Treasurer (Principal April 13, 2000
- -------------------------- Accounting Officer)
Richard Russell
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/Faith Colish Trustee April 13, 2000
- --------------------------
Faith Colish
/s/Howard A. Mileaf Trustee April 13, 2000
- --------------------------
Howard A. Mileaf
/s/Edward I. O'Brien Trustee April 13, 2000
- --------------------------
Edward I. O'Brien
Trustee
- --------------------------
John T. Patterson, Jr.
/s/John P. Rosenthal Trustee April 13, 2000
- --------------------------
John P. Rosenthal
/s/Cornelius T. Ryan Trustee April 13, 2000
- --------------------------
Cornelius T. Ryan
Trustee
- --------------------------
Gustave H. Shubert
<PAGE>
NEUBERGER BERMAN EQUITY FUNDS
POST-EFFECTIVE AMENDMENT NO. 90 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 (Filed August 30, 1995).
(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 (Filed December 21, 1998).
(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 (Filed
August 30, 1995).
(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 (Filed
August 30, 1995).
(c) (1) Trust Instrument of Neuberger Berman Equity Funds,
Articles IV, V, and VI. Incorporated by Reference
to Post-Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582 (Filed August 30, 1995).
(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 (Filed August 30, 1995).
<PAGE>
Exhibit Description
Number -----------
------
(d) (1) (i) Management Agreement Between Equity
Managers Trust and Neuberger Berman
Management Inc. Incorporated by Reference
to Post-Effective Amendment No. 87 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582 (Filed October 22,
1999).
(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. Incorporated by
Reference to Post-Effective Amendment No.
87 to Registrant's Registration Statement,
File Nos. 2-11357 and 811-582 (Filed
October 22, 1999).
(2) (i) Sub-Advisory Agreement Between Neuberger
Berman Management Inc. 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 (Filed August 30,
1995).
<PAGE>
Exhibit Description
Number -----------
------
(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 Inc.. Incorporated by Reference
to Post-Effective Amendment No. 74 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582 (Filed December
15, 1995).
(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 (Filed December
15, 1995).
(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 (Filed
December 15, 1995).
(4) (i) Sub-Advisory Agreement Between Neuberger
Berman Management Inc. 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 (Filed December
15, 1995).
(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 (Filed December
15, 1995).
(e) (1) Distribution Agreement Between Neuberger Berman
Equity Funds and Neuberger Berman Management Inc.
Incorporated by Reference to Post-Effective
Amendment No. 87 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582 (Filed
October 22, 1999).
(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 (Filed
December 15, 1995).
(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 (Filed December 5, 1996).
<PAGE>
Exhibit Description
Number -----------
------
(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 (Filed August 30, 1995).
(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 (Filed August 30,
1995).
(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 (Filed December
12, 1997).
(iv) 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
(Filed December 5, 1996).
(2) (i) Administration Agreement Between Neuberger
Berman Equity Funds and Neuberger Berman
Management Inc. Incorporated by Reference
to Post-Effective Amendment No. 87 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582 (Filed October 22,
1999).
(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. 87 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582
(Filed October 22, 1999).
(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 (Filed December 12, 1997).
(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 (Filed December 12, 1997).
<PAGE>
Exhibit Description
Number -----------
------
(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 (Filed December 12, 1997).
(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 (Filed October 19, 1998).
(5) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with Respect to Neuberger
Berman Regency Fund. Incorporated by Reference to
Post-Effective Amendment No. 83 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582 (Filed February 12, 1999).
(6) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with Respect to Neuberger
Berman Century Fund. Incorporated by Reference to
Post-Effective Amendment No. 87 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582 (Filed October 22, 1999).
(7) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with Respect to Neuberger
Berman Technology 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. Not Applicable.
(o) Plan Pursuant to Rule 18f-3. None.
(p) (1) Code of Ethics for Registrant and Neuberger Berman
Management Inc. Filed Herewith.
(2) Code of Ethics for Equity Managers Trust,
Neuberger Berman Management Inc. and Neuberger
Berman, LLC. Filed Herewith.
NEUBERGER BERMAN EQUITY FUNDS
DECLARATION OF TRUST
SCHEDULE A
Neuberger Berman Century Fund
Neuberger Berman Focus Fund
Neuberger Berman Genesis Fund
Neuberger Berman Guardian Fund
Neuberger Berman International Fund
Neuberger Berman Manhattan Fund
Neuberger Berman Millennium Fund
Neuberger Berman Partners Fund
Neuberger Berman Regency Fund
Neuberger Berman Socially Responsive Fund
Neuberger Berman Technology Fund
DATED: April 17, 2000
EQUITY MANAGERS TRUST
MANAGEMENT AGREEMENT
SCHEDULE A
The Series of Equity Managers Trust currently subject to this Agreement
are as follows:
Neuberger Berman Century Portfolio
Neuberger Berman Focus Portfolio
Neuberger Berman Genesis Portfolio
Neuberger Berman Guardian Portfolio
Neuberger Berman Manhattan Portfolio
Neuberger Berman Millennium Portfolio
Neuberger Berman Partners Portfolio
Neuberger Berman Regency Portfolio
Neuberger Berman Socially Responsive Portfolio
Neuberger Berman Technology Portfolio
Dated: April 17, 2000
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 Century Portfolio
Neuberger Berman Focus Portfolio
Neuberger Berman Genesis Portfolio
Neuberger Berman Guardian Portfolio
Neuberger Berman Millennium Portfolio
Neuberger Berman Manhattan Portfolio
Neuberger Berman Partners Portfolio
Neuberger Berman Regency Portfolio
Neuberger Berman Socially Responsive Portfolio
Neuberger Berman Technology Portfolio
Dated: April 17, 2000
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 Century Fund October 25, 1999
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 Millennium Fund October 19, 1998
Neuberger Berman Partners Fund August 2, 1993
Neuberger Berman Regency Fund April 30, 1999
Neuberger Berman Socially Responsive Fund March 16, 1994
Neuberger Berman Technology Fund April 17, 2000
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 Century Fund October 25, 1999
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 Millennium Fund October 19, 1998
Neuberger Berman Partners Fund August 2, 1993
Neuberger Berman Regency Fund April 30, 1999
Neuberger Berman Socially Responsive Fund March 16, 1994
Neuberger Berman Technology Fund April 17, 2000
KIRKPATRICK & LOCKHART LLP 1800 MASSACHUSETTS AVENUE, N.W.
SECOND FLOOR
WASHINGTON, D.C. 20036-1800
202-778-9000
www.kl.com
April 14, 2000
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
December 23, 1992. You have requested our opinion regarding certain matters in
connection with the Trust's issuance of shares of beneficial interest, par value
$0.001 per share ("Shares"), in its new series, Neuberger Berman Technology 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, when
issued in accordance with the Trust's Trust Instrument, By-laws, and prospectus,
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 simply as a result of being a
shareholder 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.
<PAGE>
Neuberger Berman Equity Funds
April 14, 2000
Page 2
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. 90 to the Trust's Registration Statement on Form
N-1A (File Nos. 002-11357 and 811-00582) to be filed with the Securities and
Exchange Commission. We also consent to the reference to our firm in Statement
of Additional Information filed as part of the Registration Statement.
Sincerely,
KIRKPATRICK & LOCKHART LLP
By: /s/ Arthur C. Delibert
----------------------
Arthur C. Delibert
CODE OF ETHICS - AMENDED AND RESTATED
This Code of Ethics ("Code") is adopted by:
NEUBERGER BERMAN EQUITY FUNDS, a registered investment company
("Trust") on behalf of its series (each series of which is referred to
as a "Fund")
Neuberger Berman Management Inc., the administrator and distributor of
Fund shares ("NB Management")
pursuant to Rule 17j-1 promulgated by the Securities and Exchange Commission
(the "Rule") under the Investment Company Act of 1940.
STATEMENT OF GENERAL PRINCIPLES
This Code of Ethics is adopted in recognition of the general fiduciary
principles that govern personal investment activities of all individuals
associated with the Trust, Fund, NB Management, and NB.
It is the duty at all times to place the interests of Fund shareholders
first. Priority must be given to Fund trades over personal securities
trades.
All personal securities transactions must be conducted consistent with
this Code of Ethics and in such a manner as to avoid any actual or
potential conflict of interest or any abuse of an individual's position
of trust and responsibility.
Individuals should not take advantage of their positions.
Amended and Restated 1/27/00
<PAGE>
TABLE OF CONTENTS
1. General Prohibitions ............................................ 4
2. Definitions ..................................................... 5
Access Person ................................................... 5
Advisory Person ................................................. 5
Beneficial Interest ............................................. 5
Blind Trust ..................................................... 6
Day ............................................................. 6
Immediate Family ................................................ 6
Investment Company ............................................. 6
Investment Personnel ............................................ 6
Legal and Compliance Department ................................. 6
Portfolio Manager ............................................... 7
Related Issuer .................................................. 7
Security ........................................................ 7
Trading Desk .................................................... 7
3. Required Compliance Procedures ...................................... 8
3.1 All Securities Transactions through Neuberger Berman ............ 8
3.2 Preclearance of Securities Transactions by Access Persons ...... 8
3.3 Post-Trade Monitoring of Precleared Transactions ............... 9
3.4 Disclosure of Personal Holdings ..............................10
3.5 Certification of Compliance with Code of Ethics .................10
4. Restrictions and Disclosure Requirements ...........................11
4.1 Initial Public Offerings .......................................11
4.2 Private Placements ..........................................11
4.3 Related Issuers .............................................11
4.4 Blackout Periods ............................................12
4.5 Same Day Price Switch .......................................13
4.6 Short-Term Trading Profits ..................................15
4.7 Gifts .......................................................16
4.8 Service as Director of Publicly Traded Companies .. 16
5. Procedures with Regard to Dissemination of Information 17
Amended and Restated 1/27/00
<PAGE>
6. Reporting by Access Persons .........................................18
6.1 General Requirement ............................................18
6.2 Disinterested Trustees .........................................18
6.3 Contents ........................................................18
7. Code of Ethics Board ...............................................20
8. Annual Report to Board of Trustees ..................................21
9. Implementation .....................................................22
9.1 Forms ..........................................................22
9.2 Exceptions .....................................................22
Amended and Restated 1/27/00
<PAGE>
1. General Prohibitions
- -----------------------
No individual associated with the Trust, Fund, NB Management, or NB, in
connection with the purchase or sale, directly or indirectly, by such person of
a security held or to be acquired by such Trust or Fund, shall:
Employ any device, scheme or artifice to defraud such Trust or Fund;
Make to such Trust or Fund any untrue statement of a material fact or
omit to state to such Trust or Fund a material fact necessary in order
to make the statements made, in light of the circumstances under which
they are made, not misleading;
Engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon any such Trust or Fund;
Engage in any manipulative practice with respect to such Trust or Fund;
Engage in any transaction in a security while in possession of material
nonpublic information regarding the security or the issuer of the
security; or
Engage in any transaction intended to raise, lower, or maintain the
price of any security or to create a false appearance of active
trading.
-4-
<PAGE>
2. Definitions
- --------------
The following words have the following meanings, regardless of whether such
terms are capitalized or not in this Code:
ACCESS PERSON - any principal or employee of NB who is an Advisory
Person and all Trustees, directors, officers, or Advisory Persons of the Trust
or NB Management. The determination as to whether an individual is an Access
Person shall be made by the Legal and Compliance Department.
ADVISORY PERSON - any employee of the Fund or NB Management (or of any
company in a control relationship to NB, the Fund, or NB Management) or any
employee or principal of NB who, in connection with his or her regular functions
or duties, makes, participates in, or obtains information regarding the purchase
or sale of a security by the Fund, or whose functions relate to the making of
any recommendations with respect to such purchases or sales.
BENEFICIAL INTEREST - a person has a Beneficial Interest in an account
in which he or she may profit or share in the profit from transactions. Without
limiting the foregoing, a person has a Beneficial Interest when the securities
in the account are held:
(i) in his or her name;
(ii) in the name of any of his or her Immediate Family;
(iii) in his or her name as trustee for himself or herself or for
his or her Immediate Family;
(iv) in a trust in which he or she has a Beneficial Interest or is
the settlor with a power to revoke;
(v) by another person and he or she has a contract or an
understanding with such person that the securities held in
that person's name are for his or her benefit;
(vi) in the form of a right to acquisition of such security through
the exercise of warrants, options, rights, or conversion
rights;
(vii) by a partnership of which he or she is a member;
(viii) by a corporation which he or she uses as a personal trading
medium;
(ix) by a holding company which he or she controls; or
(x) any other relationship in which a person would have beneficial
ownership under Section 16 of the Securities Exchange Act of
1934 and the rules and regulations thereunder, except that the
determination of direct or indirect Beneficial Interest shall
-5-
<PAGE>
apply to all securities which an Access Person has or
acquires.
Any person who wishes to disclaim a Beneficial Interest in any securities must
submit a written request to the Legal and Compliance Department explaining the
reasons therefor. Any disclaimers granted by the Legal and Compliance Department
must be made in writing. Without limiting the foregoing, if a disclaimer is
granted to any person with respect to shares held by a member or members of his
or her Immediate Family, the provisions of this Code of Ethics applicable to
such person shall not apply to any member or members of his or her Immediate
Family for which such disclaimer was granted, except with respect to
requirements specifically applicable to members of a person's Immediate Family.
BLIND TRUST - a trust in which an Access Person or employee has
Beneficial Interest or is the settlor with a power to revoke, with respect to
which the Legal and Compliance Department has determined that such Access Person
or employee has no direct or indirect influence or control over the selection or
disposition of securities and no knowledge of transactions therein, provided,
however, that direct or indirect influence or control of such trust is held by a
person or entity not associated with Neuberger Berman or any affiliate of
Neuberger Berman and not a relative of such Access Person or employee
DAY - a calendar day
IMMEDIATE FAMILY - any of the following relatives sharing the same
household with an individual: child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law, including adoptive relationships
INVESTMENT COMPANY - each registered investment company and series
thereof for which NB Management is the investment manager, investment adviser,
sub-adviser, administrator or distributor, or for which NB is the investment
adviser or sub-adviser.
INVESTMENT PERSONNEL - Portfolio Managers, and Access Persons who, in
connection with their regular functions or duties, provide information and
advice to a Portfolio Manager or who help execute a Portfolio Manager's
decisions. Each member of this category is individually referred to as an
Investment Person. The determination as to whether an individual is an
Investment Person shall be made by the Legal and Compliance Department.
LEGAL AND COMPLIANCE DEPARTMENT - NB Legal and Compliance Department
PORTFOLIO MANAGER - an Access Person who has or shares principal
day-to-day responsibility for managing the portfolio of any Fund. The
determination as to whether an individual is a Portfolio Manager shall be made
by the Legal and Compliance Department.
RELATED ISSUER - an issuer with respect to which an Investment Person or
his or her Immediate Family: (i) has a business relationship with such issuer or
any promoter, underwriter, officer, director, or employee of such issuer; or
(ii) is related to any officer, director or employee of such issuer.
-6-
<PAGE>
SECURITY - any option, stock or option thereon, instrument, bond,
debenture, pre-organization certificate, investment contract, any other interest
commonly known as a security, and any security or instrument related to, but not
necessarily the same as, those held or to be acquired by a Fund; provided,
however, that the following shall not be considered a "security": securities
issued by the United States Government, bankers' acceptances, bank certificates
of deposit, commercial paper, shares of registered open-end investment
companies, commodities, futures, and options on futures.
TRADING DESK - NB Trading Desk
-7-
<PAGE>
3. Required Compliance Procedures
- ---------------------------------
3.1 All Securities Transactions through Neuberger Berman.
---------------------------------------------------------
(a) Every Access Person, and every employee of the Fund, NB Management,
or NB and principal of NB is required to execute through Neuberger Berman ("NB")
all transactions in securities held in his or her own name or in which he or she
has a Beneficial Interest; provided, however, that this requirement shall not
apply to any Access Person who is a disinterested Trustee of the Trust. Every
Portfolio Manager is also required to provide the Legal and Compliance
Department with duplicate copies of confirmations of all transactions in
securities held in the name of members of his or her Immediate Family or in
which such members have a Beneficial Interest.
(b) Exceptions will only be granted upon a showing of extenuating
circumstances. Any individual seeking an exception to this policy must submit a
written request to the Legal and Compliance Department explaining the reasons
therefor. Any exceptions granted must be made in writing.
(c) Any individual granted an exception is required to direct his or her
broker, adviser or trustee, as the case may be, to supply to the Legal and
Compliance Department, on a timely basis, duplicate copies of confirmations of
all personal securities transactions and copies of periodic statements for all
securities accounts in his or her own name or in which he or she has a
Beneficial Interest.
(d) Individuals are not required to execute through NB transactions in
which they are establishing a dividend reinvestment plan directly through an
issuer. However, individuals must obtain written approval from the Legal and
Compliance Department prior to establishing any such plan and supply to the
Legal and Compliance Department, on a timely basis, duplicate copies of all
confirmations relating to the plan.
3.2 Preclearance of Securities Transactions by Access Persons.
--------------------------------------------------------------
(a) Every Access Person must obtain prior approval from the Trading Desk
before executing any transaction in securities held in his or her own name or in
which he or she has a Beneficial Interest. Before executing any such
transaction, the Trading Desk shall determine that:
(i) No Investment Company has a pending "buy" or "sell" order in that
security;
(ii) The security does not appear on any "restricted" list of NB; and
(iii) Such transaction is not short selling or option trading that is
economically opposite any pending transaction for any Investment
Company.
(b) The following securities are exempt from preclearance
requirements:
(i) Securities transactions effected in blind trusts
-8-
<PAGE>
(ii) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(iii) The acquisition of securities through the exercise of rights
issued by an issuer pro rata to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(iv) Repurchase agreements
(v) Options on the Standard & Poor's "500" Composite Stock Price
Index
(vi) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
(c) A disinterested Trustee of the Trust must obtain prior written
approval from the Legal and Compliance Department regarding a transaction in a
security held in his or her own name or in which he or she has a Beneficial
Interest only if such Trustee, at the time of that transaction, knew or, in the
ordinary course of fulfilling his or her official duties as a Trustee of the
Trust, should have known about any security that, during the 15-day period
immediately before or after the date of the transaction by that Trustee, was
purchased or sold by a Fund or was being considered by NB Management for
purchase or sale by a Fund.
(d) Obtaining preclearance approval does not constitute a waiver of any
prohibitions, restrictions, or disclosure requirements in this Code of Ethics.
3.3 Post-Trade Monitoring of Precleared Transactions.
-----------------------------------------------------
After the Trading Desk has granted preclearance to an Access Person with
respect to any personal securities transaction, the investment activity of such
Access Person shall be monitored by the Legal and Compliance Department to
ascertain that such activity conforms to the preclearance so granted and the
provisions of this Code.
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<PAGE>
3.4 Disclosure of Personal Holdings.
------------------------------------
All Access Persons (except disinterested Trustees of the Trust) are
required to disclose all holdings in securities held in their own names or in
which they have a Beneficial Interest to the Legal and Compliance Department
upon commencement of employment and thereafter on an annual basis.
3.5 Certification of Compliance With Code of Ethics.
----------------------------------------------------
All Access Persons are required to certify annually in writing that they
have:
(a) read and understand the Code of Ethics and recognize that they are
subject thereto;
(b) complied with the requirements of the Code of Ethics;
(c) disclosed or reported all personal securities transactions required
to be disclosed or reported pursuant to the requirements of the Code; and
(d) with respect to any blind trusts in which such person has a
Beneficial Interest, that such person has no direct or indirect influence or
control and no knowledge of any transactions therein.
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<PAGE>
4. Restrictions and Disclosure Requirements
- -------------------------------------------
4.1 Initial Public Offerings.
-----------------------------
All Investment Personnel are prohibited from acquiring a Beneficial
Interest in any securities in an initial public offering, in order to preclude
any possibility of their profiting improperly from their positions on behalf of
a Fund. No member of an Immediate Family of an Investment Person may acquire a
Beneficial Interest in an initial public offering without the prior written
consent of the Legal and Compliance Department.
4.2 Private Placements.
-----------------------
(a) No Investment Person or member of his or her Immediate Family may
acquire a Beneficial Interest in any securities in private placements without
prior written approval by the Legal and Compliance Department.
(b) Prior approval shall take into account, among other factors, whether
the investment opportunity should be reserved for a Trust or Fund and its
shareholders and whether the opportunity is being offered to an individual by
virtue of his or her position or relationship to the Trust or Fund.
(c) An Investment Person who has (or a member of whose Immediate Family
has) acquired a Beneficial Interest in securities in a private placement is
required to disclose that investment to the Portfolio Manager when such
Investment Person plays a part in any subsequent consideration of an investment
in the issuer for any Trust or Fund; provided, however, that if any such
Investment Person is the Portfolio Manager, such Investment Person shall make
such disclosure to the Legal and Compliance Department. In any such
circumstances, the decision to purchase securities of the issuer for a Trust or
Fund is subject to an independent review by Investment Personnel with no
personal interest in the issuer. Such independent review shall be made in
writing and furnished to the Legal and Compliance Department.
4.3 Related Issuers.
--------------------
Investment Personnel are required to disclose to the Portfolio Manager
when they play a part in any consideration of an investment by a Trust or Fund
in a Related Issuer; provided, however, that if any such Investment Person is
the Portfolio Manager, such Investment Person shall make such disclosure to the
Legal and Compliance Department. In any such circumstances, the decision to
purchase securities of the Related Issuer for a Trust or Fund is subject to an
independent review by Investment Personnel with no personal interest in the
Related Issuer. Such independent review shall be made in writing and furnished
to the Legal and Compliance Department.
4.4 Blackout Periods.
---------------------
(a) No Access Person may execute a securities transaction in securities
held in his or her own name or in which he or she has a Beneficial Interest on a
day during which any Investment Company has a pending "buy" or "sell" order in
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<PAGE>
that same security until that order is executed or withdrawn; provided, however,
that this prohibition shall apply to a disinterested Trustee only if such
Trustee, at the time of that transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a Trustee of the Trust, should have
known about any security that, during the 15-day period immediately preceding
the date of the transaction by that Trustee, was purchased or sold by a Fund or
was being considered by NB Management for purchase or sale by a Fund.
(b) No Portfolio Manager or member of his or her Immediate Family may
buy or sell a security held in his or her own name or in which he or she has a
Beneficial Interest within seven (7) Days before or after a Fund that such
Portfolio Manager manages trades in that security, provided, however, that this
prohibition shall not apply to:
(i) Securities transactions effected in blind trusts
(ii) Securities transactions that are non-volitional on the part of
either the Access Person or the Fund
(iii) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(iv) The acquisition of securities through the exercise of rights
issued by an issuer pro rata to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(v) Repurchase agreements
(vi) Options on the Standard & Poor's "500" Composite Stock Price
Index
(vii) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
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<PAGE>
(c) Any securities position established in violation of Section 4.4(b)
shall be closed out as soon as possible consistent with applicable law. Any
profits on trades within the proscribed periods shall be disgorged to the Fund.
(d) The foregoing blackout periods should not operate to the detriment
of any Investment Company. Without limiting the scope or meaning of this
statement, the following procedure is to be implemented under extraordinary
situations:
(i) If a Portfolio Manager of a Fund or member of his or her
Immediate Family has executed a transaction in a security and
within seven (7) Days thereafter such security is considered for
purchase or sale by such Fund, such Portfolio Manager shall
submit a written memorandum to the Legal and Compliance
Department prior to the entering of the purchase or sale order
for the Fund. Such memorandum shall describe the circumstances
underlying the consideration of such transaction for the Fund.
(ii) Based on such memorandum and other factors it deems relevant
under the specific circumstances, the Legal and Compliance
Department shall have authority to determine that the prior
transaction by the Portfolio Manager or member of his or her
Immediate Family shall not be considered a violation of the
provisions of paragraph (b) of this section.
(iii) The Legal and Compliance Department shall make a written record
of any determination made under paragraph (d)(ii) of this
section, including the reasons therefor. The Legal and Compliance
Department shall maintain records of any such memoranda and
determinations and provide copies thereof as part of its monthly
reports to the Board of Trustees of the Trust.
4.5 Same Day Price Switch.
--------------------------
(a) If any employee of a Fund, NB Management, or any employee or
principal of NB purchases a security (other than a fixed income security) held,
or by reason of such transaction held, in his or her own name or in which he or
she has a Beneficial Interest and subsequent thereto a Fund purchases the same
security during the same day, then, to the extent that the price paid per share
by the Fund for such purchase is less favorable than the price paid per share by
such principal or employee, the Fund shall have the benefit of the more
favorable price per share.
(b) If any such principal or employee sells a security (other than a
fixed income security) held in his or her own name or in which he or she has a
Beneficial Interest and subsequent thereto a Fund sells the same security during
the same day, then, to the extent that the price per share received by the Fund
for such sale is less favorable than the price per share received by the
principal or employee, the Fund shall have the benefit of the more favorable
price per share.
(c) An amount of money necessary to effectuate the price adjustment
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<PAGE>
shall be transferred from the account of the principal or employee subject to
the price adjustment policies, to the Fund's account. The price adjustment shall
be limited to the number of shares purchased or sold by the principal or
employee or the number of shares purchased or sold by the Fund, whichever is
smaller.
(d) Notwithstanding the foregoing, price switching shall not apply to:
(i) Securities transactions effected in blind trusts
(ii) Securities transactions that are non-volitional on the part of
either the Access Person or the Fund
(iii) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(iv) The acquisition of securities through the exercise of rights
issued by an issuer pro rata to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(v) Repurchase agreements
(vi) Options on the Standard & Poor's "500" Composite Stock Price
Index
(vii) Transactions in which the adjustment resulting from the price
switch is less than Five Hundred Dollars ($ 500.00)
(viii) Transactions arising through arbitrage, market making activities
or hedged options trading
(ix) Transactions in the NB ERISA Profit Sharing and Retirement Plan
(x) Transactions involving odd lots
(xi) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
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<PAGE>
4.6 Short-Term Trading Profits.
-------------------------------
(a) No Investment Person may profit in the purchase and sale, or sale
and purchase, of the same (or equivalent) securities held in his or her own name
or in which he or she has a Beneficial Interest within sixty (60) Days,
provided, however, that this prohibition shall not apply to:
(i) Any security that was neither held, purchased, nor sold by any
Investment Company during such sixty (60) Day period
(ii) Securities transactions effected in blind trusts
(iii) Securities transactions that are non-volitional on the part of
either the Access Person or the Fund
(iv) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(v) The acquisition of securities through the exercise of rights
issued by an issuer pro rata to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(vi) Repurchase agreements
(vii) Options on the Standard & Poor's "500" Composite Stock Price
Index
(viii) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
(b) Any profits on trades within the proscribed periods shall be
disgorged to a charity to be determined by the Legal and Compliance Department.
(c) In determining the applicability of this section, determinations
shall be made based upon a last-in, first-out ("LIFO") calculation; provided,
however, that such determinations shall be solely for purposes of this Code of
Ethics and shall not have any applicability for tax or other purposes.
-15-
<PAGE>
4.7 Gifts.
----------
All Access Persons and employees are prohibited from giving or receiving
any gift or other thing of more than One Hundred Dollars ($ 100) in value to or
from any person or entity that does business with or on behalf of the Fund in
any one year.
4.8 Service as Director of Publicly Traded Companies.
-----------------------------------------------------
Investment Personnel are prohibited from serving on the Boards of
Directors of publicly traded companies.
-16-
<PAGE>
5. Procedures with Regard to Dissemination of Information
- ---------------------------------------------------------
(a) NB, NB Management, and the Trust, and their officers, principals and
employees, shall not disclose to any disinterested Trustee of the Trust
information regarding the consideration or decision to purchase or sell a
particular security when it is contemplated that such action will be taken
within the next 15 days, unless it is
(i) requested in writing by a disinterested Trustee of the Trust or
requested through a formal action of the Board of the Trust or any committee
thereof;
(ii) given because it is determined that the disinterested Trustee
should have the information so that he or she may effectively carry out his or
her duties; or
(iii) given so that NB or NB Management may carry out its duties as
administrator or sub-adviser of a Fund.
(b) If any information regarding transactions contemplated by the Fund
is given to a disinterested Trustee, such disinterested Trustee shall be advised
at that time that he or she and any other Fund Trustee receiving such
information will be considered a Portfolio Manager with respect to any security
held or to be acquired by the Fund, as indicated in the information which has
been disclosed, for the next succeeding 22 days, and NB Management shall so
notify the Legal and Compliance Department. At such time, the Trustee shall be
reminded by NB Management of the provisions of Sections 3.2, 4.4, and 6.2 of
this Code.
(c) Subject to Sections 5(a) and 5(b), Access Persons and principals and
employees of NB Management, NB, or the Trust are prohibited from revealing
information relating to current or anticipated investment intentions, portfolio
transactions or activities of Funds except to persons whose responsibilities
require knowledge of the information.
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<PAGE>
6. Reporting by Access Persons
- ------------------------------
6.1 General Requirement.
------------------------
Every Access Person shall report, or cause to be reported, to the Trust
and Legal and Compliance Department the information described in Section 6.3
with respect to transactions in any security in which such Access Person has, or
by reason of such transaction acquires, any direct or indirect Beneficial
Interest; provided, however, that no report is required with respect to
transactions where such report would duplicate information recorded by NB or NB
Management pursuant to Rules 204-2(a)(12) or 204-2(a)(13) under the Investment
Advisers Act of 1940. For purposes of the foregoing (b), the Legal and
Compliance Department maintains (i) electronic records of all securities
transactions effected through NB, and (ii) copies of any duplicate confirmations
that have been provided to the Legal and Compliance Department under this Code
of Ethics with respect to securities transactions that, pursuant to exceptions
granted by the Legal and Compliance Department, have not been effected through
NB; accordingly, no report is required with respect to such transactions.
6.2 Disinterested Trustees.
---------------------------
(a) A disinterested Trustee of the Trust need only report a transaction
in a security if such Trustee, at the time of that transaction, knew or, in the
ordinary course of fulfilling his or her official duties as a Trustee, should
have known that, during the 15-day period immediately preceding the date of the
transaction by that Trustee, such security was purchased or sold by a Fund or
was being considered for purchase or sale by NB Management.
(b) Notwithstanding the foregoing, disinterested Trustees are required
to report to the Legal and Compliance Department in writing whenever they own
individually more than 1/2 of 1% of the outstanding shares of any issuer,
together with the number of shares so owned.
6.3 Contents.
-------------
Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates was
effected, and shall contain the following information:
(i) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(iii) The price at which the transaction was effected; and
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected.
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<PAGE>
Unless otherwise stated, no report shall be construed as an admission by the
person making such report that he or she has any direct or indirect Beneficial
Interest in the security to which the report relates.
-19-
<PAGE>
7. Code of Ethics Board.
- ------------------------
A Code of Ethics Board shall be created by NB Management and the Trust,
composed of three members, two of whom shall be disinterested Trustees selected
by the Board of Trustees of the Trust and one of whom shall be selected by NB
Management.
Any person who has knowledge of any violation of this Code shall report
said violation to the Code of Ethics Board.
The Code of Ethics Board shall consult regularly and meet no less
frequently than annually with the Legal and Compliance Department regarding the
implementation of this Code. The Legal and Compliance Department shall provide
the Code of Ethics Board with such reports as are required herein or as are
requested by the Code of Ethics Board.
A monthly report shall be provided to the Trustees of the Trust
certifying that except as specifically disclosed to the Code of Ethics Board,
the Legal and Compliance Department knows of no violation of this Code. A
representative of the Legal and Compliance Department shall attend all regular
meetings of the Trustees to report on the implementation of this Code.
NB Management, NB, and the Trustees of the Trust shall have authority to
impose sanctions for violations of this Code. The Code of Ethics Board shall
make recommendations regarding sanctions to be imposed on Access Persons who
violate this Code. Such recommendations may include a letter of censure,
suspension or termination of the employment of the violator, forfeiture of
profits, forfeiture of personal trading privileges, forfeiture of gifts, or any
other penalty the Code of Ethics Board deems to be appropriate. All such
recommendations shall be submitted to NB Management and the Board of Trustees of
the Trust.
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<PAGE>
8. Annual Report to Board of Trustees.
- --------------------------------------
NB Management shall prepare an annual report to the Board of Trustees of the
Trust that:
(i) summarizes existing procedures concerning personal investing and
any changes in the procedures made during the past year;
(ii) identifies any violations requiring significant remedial action
during the past year; and
(iii) identifies any recommended changes in existing restrictions or
procedures based upon the Fund's experience under the Code of
Ethics, evolving industry practices, or developments in
applicable laws or regulations.
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<PAGE>
9. Implementation.
- ------------------
9.1 Forms.
----------
The Legal and Compliance Department is authorized, with the advice of
counsel, to prepare written forms for use in implementing this Code. Such forms
shall be attached as an Appendix to this Code and shall be disseminated to all
individuals subject to the Code.
9.2 Exceptions.
---------------
Exceptions to the requirements of this Code shall rarely, if ever, be
granted. However, the Legal and Compliance Department shall have authority to
grant exceptions on a case-by-case basis. Any exceptions granted must be in
writing and reported to the Code of Ethics Board.
-22-
CODE OF ETHICS - AMENDED AND RESTATED
This Code of Ethics ("Code") is adopted by:
EQUITY MANAGERS TRUST, a registered investment company ("Trust") on behalf
of its series (each series of which is referred to as a "Fund")
Neuberger Berman Management Inc., the investment manager of the Fund ("NB
Management") and Neuberger Berman, LLC, the sub-adviser of the Fund ("NB")
pursuant to Rule 17j-1 promulgated by the Securities and Exchange Commission
(the "Rule") under the Investment Company Act of 1940.
STATEMENT OF GENERAL PRINCIPLES
This Code of Ethics is adopted in recognition of the general fiduciary
principles that govern personal investment activities of all individuals
associated with the Trust, Fund, NB Management, and NB.
It is the duty at all times to place the interests of Fund shareholders
first. Priority must be given to Fund trades over personal securities
trades.
All personal securities transactions must be conducted consistent with
this Code of Ethics and in such a manner as to avoid any actual or
potential conflict of interest or any abuse of an individual's position of
trust and responsibility.
Individuals should not take advantage of their positions.
AMENDED AND RESTATED 1/27/00
<PAGE>
TABLE OF CONTENTS
PAGE
1. General Prohibitions......................................................1
2. Definitions...............................................................2
Access Person.............................................................2
Advisory Person...........................................................2
Beneficial Interest.......................................................2
Blind Trust...............................................................3
Day.......................................................................3
Immediate Family..........................................................3
Investment Company........................................................3
Investment Personnel......................................................4
Legal and Compliance Department...........................................4
Portfolio Manager.........................................................4
Related Issuer............................................................4
Security..................................................................4
Trading Desk..............................................................4
3. Required Compliance Procedures............................................5
3.1 All Securities Transactions through Neuberger Berman..................5
3.2 Preclearance of Securities Transactions by Access Persons.............5
3.3 Post-Trade Monitoring of Precleared Transactions......................6
3.4 Disclosure of Personal Holdings.......................................7
3.5 Certification of Compliance With Code of Ethics.......................7
4. Restrictions and Disclosure Requirements..................................8
4.1 Initial Public Offerings..............................................8
4.2 Private Placements....................................................8
4.3 Related Issuers.......................................................8
4.4 Blackout Periods......................................................8
4.5 Same Day Price Switch................................................10
4.6 Short-Term Trading Profits...........................................12
4.7 Gifts................................................................13
4.8 Service as Director of Publicly Traded Companies.....................13
5. Procedures with Regard to Dissemination of Information...................14
AMENDED AND RESTATED 1/27/00
<PAGE>
6. Reporting by Access Persons..............................................15
6.1 General Requirement..................................................15
6.2 Disinterested Trustees...............................................15
6.3 Contents.............................................................15
7. Code of Ethics Board.....................................................17
8. Annual Report to Board of Trustees.......................................18
9. Implementation...........................................................19
9.1 Forms................................................................19
9.2 Exceptions...........................................................19
AMENDED AND RESTATED 1/27/00
<PAGE>
1. GENERAL PROHIBITIONS
No individual associated with the Trust, Fund, NB Management, or NB, in
connection with the purchase or sale, directly or indirectly, by such person of
a security held or to be acquired by such Trust or Fund, shall:
Employ any device, scheme or artifice to defraud such Trust or Fund;
Make to such Trust or Fund any untrue statement of a material fact or omit
to state to such Trust or Fund a material fact necessary in order to make
the statements made, in light of the circumstances under which they are
made, not misleading;
Engage in any act, practice, or course of business which operates or would
operate as a fraud or deceit upon any such Trust or Fund;
Engage in any manipulative practice with respect to such Trust or Fund;
Engage in any transaction in a security while in possession of material
nonpublic information regarding the security or the issuer of the
security; or
Engage in any transaction intended to raise, lower, or maintain the price
of any security or to create a false appearance of active trading.
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<PAGE>
2. DEFINITIONS
The following words have the following meanings, regardless of whether such
terms are capitalized or not in this Code:
ACCESS PERSON - any principal or employee of NB who is an Advisory Person
and all Trustees, directors, officers, or Advisory Persons of the Trust or NB
Management. The determination as to whether an individual is an Access Person
shall be made by the Legal and Compliance Department.
ADVISORY PERSON - any employee of the Fund or NB Management (or of any
company in a control relationship to NB, the Fund, or NB Management) or any
employee or principal of NB who, in connection with his or her regular functions
or duties, makes, participates in, or obtains information regarding the purchase
or sale of a security by the Fund, or whose functions relate to the making of
any recommendations with respect to such purchases or sales.
BENEFICIAL INTEREST - a person has a Beneficial Interest in an account in
which he or she may profit or share in the profit from transactions. Without
limiting the foregoing, a person has a Beneficial Interest when the securities
in the account are held:
(i) in his or her name;
(ii) in the name of any of his or her Immediate Family;
(iii) in his or her name as trustee for himself or herself or for his or
her Immediate Family;
(iv) in a trust in which he or she has a Beneficial Interest or is the
settlor with a power to revoke;
(v) by another person and he or she has a contract or an understanding
with such person that the securities held in that person's name
are for his or her benefit;
(vi) in the form of a right to acquisition of such security through the
exercise of warrants, options, rights, or conversion rights;
(vii) by a partnership of which he or she is a member;
(viii) by a corporation which he or she uses as a personal trading
medium;
(ix) by a holding company which he or she controls; or
(x) any other relationship in which a person would have beneficial
ownership under Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, except that the
- --------------------------------------------------------------------------------
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<PAGE>
determination of direct or indirect Beneficial Interest shall apply
to all securities which an Access Person has or acquires.
Any person who wishes to disclaim a Beneficial Interest in any securities must
submit a written request to the Legal and Compliance Department explaining the
reasons therefor. Any disclaimers granted by the Legal and Compliance Department
must be made in writing. Without limiting the foregoing, if a disclaimer is
granted to any person with respect to shares held by a member or members of his
or her Immediate Family, the provisions of this Code of Ethics applicable to
such person shall not apply to any member or members of his or her Immediate
Family for which such disclaimer was granted, except with respect to
requirements specifically applicable to members of a person's Immediate Family.
BLIND TRUST - a trust in which an Access Person or employee has Beneficial
Interest or is the settlor with a power to revoke, with respect to which the
Legal and Compliance Department has determined that such Access Person or
employee has no direct or indirect influence or control over the selection or
disposition of securities and no knowledge of transactions therein, PROVIDED,
HOWEVER, that direct or indirect influence or control of such trust is held by a
person or entity not associated with Neuberger Berman or any affiliate of
Neuberger Berman and not a relative of such Access Person or employee
DAY - a calendar day
IMMEDIATE FAMILY - any of the following relatives sharing the same
household with an individual: child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law, including adoptive relationships
INVESTMENT COMPANY - each registered investment company and series thereof
for which NB Management is the investment manager, investment adviser,
sub-adviser, administrator or distributor, or for which NB is the investment
adviser or sub-adviser.
INVESTMENT PERSONNEL - Portfolio Managers, and Access Persons who, in
connection with their regular functions or duties, provide information and
advice to a Portfolio Manager or who help execute a Portfolio Manager's
decisions. Each member of this category is individually referred to as an
INVESTMENT PERSON. The determination as to whether an individual is an
Investment Person shall be made by the Legal and Compliance Department.
LEGAL AND COMPLIANCE DEPARTMENT - NB Legal and Compliance Department
PORTFOLIO MANAGER - an Access Person who has or shares principal day-to-day
responsibility for managing the portfolio of any Fund. The determination as to
whether an individual is a Portfolio Manager shall be made by the Legal and
Compliance Department.
RELATED ISSUER - an issuer with respect to which an Investment Person or
his or her Immediate Family: (i) has a business relationship with such issuer or
any promoter, underwriter, officer, director, or employee of such issuer; or
(ii) is related to any officer, director or employee of such issuer.
- --------------------------------------------------------------------------------
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<PAGE>
SECURITY - any option, stock or option thereon, instrument, bond,
debenture, pre-organization certificate, investment contract, any other interest
commonly known as a security, and any security or instrument related to, but not
necessarily the same as, those held or to be acquired by a Fund; PROVIDED,
HOWEVER, that the following shall not be considered a "security": securities
issued by the United States Government, bankers' acceptances, bank certificates
of deposit, commercial paper, shares of registered open-end investment
companies, commodities, futures, and options on futures.
TRADING DESK - NB Trading Desk
- --------------------------------------------------------------------------------
- 7 -
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<PAGE>
3. REQUIRED COMPLIANCE PROCEDURES
3.1 ALL SECURITIES TRANSACTIONS THROUGH NEUBERGER BERMAN.
(a) Every Access Person, and every employee of the Fund, NB Management, or
NB and principal of NB is required to execute through Neuberger Berman ("NB")
all transactions in securities held in his or her own name or in which he or she
has a Beneficial Interest; PROVIDED, HOWEVER, that this requirement shall not
apply to any Access Person who is a disinterested Trustee of the Trust. Every
Portfolio Manager is also required to provide the Legal and Compliance
Department with duplicate copies of confirmations of all transactions in
securities held in the name of members of his or her Immediate Family or in
which such members have a Beneficial Interest.
(b) Exceptions will only be granted upon a showing of extenuating
circumstances. Any individual seeking an exception to this policy must submit a
written request to the Legal and Compliance Department explaining the reasons
therefor. Any exceptions granted must be made in writing.
(c) Any individual granted an exception is required to direct his or her
broker, adviser or trustee, as the case may be, to supply to the Legal and
Compliance Department, on a timely basis, duplicate copies of confirmations of
all personal securities transactions and copies of periodic statements for all
securities accounts in his or her own name or in which he or she has a
Beneficial Interest.
(d) Individuals are not required to execute through NB transactions in
which they are establishing a dividend reinvestment plan directly through an
issuer. However, individuals must obtain written approval from the Legal and
Compliance Department prior to establishing any such plan and supply to the
Legal and Compliance Department, on a timely basis, duplicate copies of all
confirmations relating to the plan.
3.2 PRECLEARANCE OF SECURITIES TRANSACTIONS BY ACCESS PERSONS.
(a) Every Access Person must obtain prior approval from the Trading Desk
before executing any transaction in securities held in his or her own name or in
which he or she has a Beneficial Interest. Before executing any such
transaction, the Trading Desk shall determine that:
(i) No Investment Company has a pending "buy" or "sell" order in that
security;
(ii) The security does not appear on any "restricted" list of NB; and
(iii) Such transaction is not short selling or option trading that is
economically opposite any pending transaction for any Investment
Company.
(b) The following securities are exempt from preclearance requirements:
(i) Securities transactions effected in blind trusts
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(ii) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(iii) The acquisition of securities through the exercise of rights
issued by an issuer PRO RATA to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(iv) Repurchase agreements
(v) Options on the Standard & Poor's "500" Composite Stock Price Index
(vi) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
(c) A disinterested Trustee of the Trust must obtain prior written approval
from the Legal and Compliance Department regarding a transaction in a security
held in his or her own name or in which he or she has a Beneficial Interest only
if such Trustee, at the time of that transaction, knew or, in the ordinary
course of fulfilling his or her official duties as a Trustee of the Trust,
should have known about any security that, during the 15-day period immediately
before or after the date of the transaction by that Trustee, was purchased or
sold by a Fund or was being considered by NB Management for purchase or sale by
a Fund.
(d) Obtaining preclearance approval does not constitute a waiver of any
prohibitions, restrictions, or disclosure requirements in this Code of Ethics.
3.3 POST-TRADE MONITORING OF PRECLEARED TRANSACTIONS.
After the Trading Desk has granted preclearance to an Access Person with
respect to any personal securities transaction, the investment activity of such
Access Person shall be monitored by the Legal and Compliance Department to
ascertain that such activity conforms to the preclearance so granted and the
provisions of this Code.
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3.4 DISCLOSURE OF PERSONAL HOLDINGS.
All Access Persons (except disinterested Trustees of the Trust) are
required to disclose all holdings in securities held in their own names or in
which they have a Beneficial Interest to the Legal and Compliance Department
upon commencement of employment and thereafter on an annual basis.
3.5 CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS.
All Access Persons are required to certify annually in writing that they
have:
(a) read and understand the Code of Ethics and recognize that they are
subject thereto;
(b) complied with the requirements of the Code of Ethics;
(c) disclosed or reported all personal securities transactions required to
be disclosed or reported pursuant to the requirements of the Code; and
(d) with respect to any blind trusts in which such person has a Beneficial
Interest, that such person has no direct or indirect influence or control and no
knowledge of any transactions therein.
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4. RESTRICTIONS AND DISCLOSURE REQUIREMENTS
4.1 INITIAL PUBLIC OFFERINGS.
All Investment Personnel are prohibited from acquiring a Beneficial
Interest in any securities in an initial public offering, in order to preclude
any possibility of their profiting improperly from their positions on behalf of
a Fund. No member of an Immediate Family of an Investment Person may acquire a
Beneficial Interest in an initial public offering without the prior written
consent of the Legal and Compliance Department.
4.2 PRIVATE PLACEMENTS.
(a) No Investment Person or member of his or her Immediate Family may
acquire a Beneficial Interest in any securities in private placements without
prior written approval by the Legal and Compliance Department.
(b) Prior approval shall take into account, among other factors, whether
the investment opportunity should be reserved for a Trust or Fund and its
shareholders and whether the opportunity is being offered to an individual by
virtue of his or her position or relationship to the Trust or Fund.
(c) An Investment Person who has (or a member of whose Immediate Family
has) acquired a Beneficial Interest in securities in a private placement is
required to disclose that investment to the Portfolio Manager when such
Investment Person plays a part in any subsequent consideration of an investment
in the issuer for any Trust or Fund; PROVIDED, HOWEVER, that if any such
Investment Person is the Portfolio Manager, such Investment Person shall make
such disclosure to the Legal and Compliance Department. In any such
circumstances, the decision to purchase securities of the issuer for a Trust or
Fund is subject to an independent review by Investment Personnel with no
personal interest in the issuer. Such independent review shall be made in
writing and furnished to the Legal and Compliance Department.
4.3 RELATED ISSUERS.
Investment Personnel are required to disclose to the Portfolio Manager when
they play a part in any consideration of an investment by a Trust or Fund in a
Related Issuer; PROVIDED, HOWEVER, that if any such Investment Person is the
Portfolio Manager, such Investment Person shall make such disclosure to the
Legal and Compliance Department. In any such circumstances, the decision to
purchase securities of the Related Issuer for a Trust or Fund is subject to an
independent review by Investment Personnel with no personal interest in the
Related Issuer. Such independent review shall be made in writing and furnished
to the Legal and Compliance Department.
4.4 BLACKOUT PERIODS.
(a) No Access Person may execute a securities transaction in securities
held in his or her own name or in which he or she has a Beneficial Interest on a
day during which any Investment Company has a pending "buy" or "sell" order in
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that same security until that order is executed or withdrawn; PROVIDED, HOWEVER,
that this prohibition shall apply to a disinterested Trustee only if such
Trustee, at the time of that transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a Trustee of the Trust, should have
known about any security that, during the 15-day period immediately preceding
the date of the transaction by that Trustee, was purchased or sold by a Fund or
was being considered by NB Management for purchase or sale by a Fund.
(b) No Portfolio Manager or member of his or her Immediate Family may buy
or sell a security held in his or her own name or in which he or she has a
Beneficial Interest within seven (7) Days before or after a Fund that such
Portfolio Manager manages trades in that security, PROVIDED, HOWEVER, that this
prohibition shall not apply to:
(i) Securities transactions effected in blind trusts
(ii) Securities transactions that are non-volitional on the part of
either the Access Person or the Fund
(iii) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(iv) The acquisition of securities through the exercise of rights
issued by an issuer PRO RATA to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(v) Repurchase agreements
(vi) Options on the Standard & Poor's "500" Composite Stock Price Index
(vii) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
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(c) Any securities position established in violation of Section 4.4(b)
shall be closed out as soon as possible consistent with applicable law. Any
profits on trades within the proscribed periods shall be disgorged to the Fund.
(d) The foregoing blackout periods should not operate to the detriment of
any Investment Company. Without limiting the scope or meaning of this statement,
the following procedure is to be implemented under extraordinary situations:
(i) If a Portfolio Manager of a Fund or member of his or her Immediate
Family has executed a transaction in a security and within seven
(7) Days thereafter such security is considered for purchase or
sale by such Fund, such Portfolio Manager shall submit a written
memorandum to the Legal and Compliance Department prior to the
entering of the purchase or sale order for the Fund. Such
memorandum shall describe the circumstances underlying the
consideration of such transaction for the Fund.
(ii) Based on such memorandum and other factors it deems relevant under
the specific circumstances, the Legal and Compliance Department
shall have authority to determine that the prior transaction by
the Portfolio Manager or member of his or her Immediate Family
shall not be considered a violation of the provisions of paragraph
(b) of this section.
(iii) The Legal and Compliance Department shall make a written record of
any determination made under paragraph (d)(ii) of this section,
including the reasons therefor. The Legal and Compliance
Department shall maintain records of any such memoranda and
determinations and provide copies thereof as part of its monthly
reports to the Board of Trustees of the Trust.
4.5 SAME DAY PRICE SWITCH.
(a) If any employee of a Fund, NB Management, or any employee or principal
of NB purchases a security (other than a fixed income security) held, or by
reason of such transaction held, in his or her own name or in which he or she
has a Beneficial Interest and subsequent thereto a Fund purchases the same
security during the same day, then, to the extent that the price paid per share
by the Fund for such purchase is less favorable than the price paid per share by
such principal or employee, the Fund shall have the benefit of the more
favorable price per share.
(b) If any such principal or employee sells a security (other than a fixed
income security) held in his or her own name or in which he or she has a
Beneficial Interest and subsequent thereto a Fund sells the same security during
the same day, then, to the extent that the price per share received by the Fund
for such sale is less favorable than the price per share received by the
principal or employee, the Fund shall have the benefit of the more favorable
price per share.
(c) An amount of money necessary to effectuate the price adjustment shall
be transferred from the account of the principal or employee subject to the
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price adjustment policies, to the Fund's account. The price adjustment shall be
limited to the number of shares purchased or sold by the principal or employee
or the number of shares purchased or sold by the Fund, whichever is smaller.
(d) Notwithstanding the foregoing, price switching shall not apply to:
(i) Securities transactions effected in blind trusts
(ii) Securities transactions that are non-volitional on the part of
either the Access Person or the Fund
(iii) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(iv) The acquisition of securities through the exercise of rights
issued by an issuer PRO RATA to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(v) Repurchase agreements
(vi) Options on the Standard & Poor's "500" Composite Stock Price Index
(vii) Transactions in which the adjustment resulting from the price
switch is less than Five Hundred Dollars ($ 500.00)
(viii) Transactions arising through arbitrage, market making activities
or hedged options trading
(ix) Transactions in the NB ERISA Profit Sharing and Retirement Plan
(x) Transactions involving odd lots
(xi) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
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4.6 SHORT-TERM TRADING PROFITS.
(a) No Investment Person may profit in the purchase and sale, or sale and
purchase, of the same (or equivalent) securities held in his or her own name or
in which he or she has a Beneficial Interest within sixty (60) Days, PROVIDED,
HOWEVER, that this prohibition shall not apply to:
(i) Any security that was neither held, purchased, nor sold by any
Investment Company during such sixty (60) Day period
(ii) Securities transactions effected in blind trusts
(iii) Securities transactions that are non-volitional on the part of
either the Access Person or the Fund
(iv) The acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers,
consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all
holders of the same class of securities
(v) The acquisition of securities through the exercise of rights
issued by an issuer PRO RATA to all holders of a class of
securities, to the extent the rights were acquired in the issue,
and sales of such rights so acquired
(vi) Repurchase agreements
(vii) Options on the Standard & Poor's "500" Composite Stock Price Index
(viii) Other securities that may from time to time be so designated in
writing by the Code of Ethics Board
(b) Any profits on trades within the proscribed periods shall be disgorged
to a charity to be determined by the Legal and Compliance Department.
(c) In determining the applicability of this section, determinations shall
be made based upon a last-in, first-out ("LIFO") calculation; provided, however,
that such determinations shall be solely for purposes of this Code of Ethics and
shall not have any applicability for tax or other purposes.
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4.7 GIFTS.
All Access Persons and employees are prohibited from giving or receiving
any gift or other thing of more than One Hundred Dollars ($ 100) in value to or
from any person or entity that does business with or on behalf of the Fund in
any one year.
4.8 SERVICE AS DIRECTOR OF PUBLICLY TRADED COMPANIES.
Investment Personnel are prohibited from serving on the Boards of Directors
of publicly traded companies.
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5. PROCEDURES WITH REGARD TO DISSEMINATION OF INFORMATION
(a) NB, NB Management, and the Trust, and their officers, principals and
employees, shall not disclose to any disinterested Trustee of the Trust
information regarding the consideration or decision to purchase or sell a
particular security when it is contemplated that such action will be taken
within the next 15 days, unless it is
(i) requested in writing by a disinterested Trustee of the Trust or
requested through a formal action of the Board of the Trust or any committee
thereof;
(ii) given because it is determined that the disinterested Trustee
should have the information so that he or she may effectively carry out his or
her duties; or
(iii) given so that NB or NB Management may carry out its duties as
administrator or sub-adviser of a Fund.
(b) If any information regarding transactions contemplated by the Fund is
given to a disinterested Trustee, such disinterested Trustee shall be advised at
that time that he or she and any other Fund Trustee receiving such information
will be considered a Portfolio Manager with respect to any security held or to
be acquired by the Fund, as indicated in the information which has been
disclosed, for the next succeeding 22 days, and NB Management shall so notify
the Legal and Compliance Department. At such time, the Trustee shall be reminded
by NB Management of the provisions of Sections 3.2, 4.4, and 6.2 of this Code.
(c) Subject to Sections 5(a) and 5(b), Access Persons and principals and
employees of NB Management, NB, or the Trust are prohibited from revealing
information relating to current or anticipated investment intentions, portfolio
transactions or activities of Funds except to persons whose responsibilities
require knowledge of the information.
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6. REPORTING BY ACCESS PERSONS
6.1 GENERAL REQUIREMENT.
Every Access Person shall report, or cause to be reported, to the Trust and
Legal and Compliance Department the information described in Section 6.3 with
respect to transactions in any security in which such Access Person has, or by
reason of such transaction acquires, any direct or indirect Beneficial Interest;
PROVIDED, HOWEVER, that no report is required with respect to transactions where
such report would duplicate information recorded by NB or NB Management pursuant
to Rules 204-2(a)(12) or 204-2(a)(13) under the Investment Advisers Act of 1940.
For purposes of the foregoing (b), the Legal and Compliance Department maintains
(i) electronic records of all securities transactions effected through NB, and
(ii) copies of any duplicate confirmations that have been provided to the Legal
and Compliance Department under this Code of Ethics with respect to securities
transactions that, pursuant to exceptions granted by the Legal and Compliance
Department, have not been effected through NB; accordingly, no report is
required with respect to such transactions.
6.2 DISINTERESTED TRUSTEES.
(a) A disinterested Trustee of the Trust need only report a transaction in
a security if such Trustee, at the time of that transaction, knew or, in the
ordinary course of fulfilling his or her official duties as a Trustee, should
have known that, during the 15-day period immediately preceding the date of the
transaction by that Trustee, such security was purchased or sold by a Fund or
was being considered for purchase or sale by NB Management.
(b) Notwithstanding the foregoing, disinterested Trustees are required to
report to the Legal and Compliance Department in writing whenever they own
individually more than 1/2 of 1% of the outstanding shares of any issuer,
together with the number of shares so owned.
6.3 CONTENTS.
Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates was
effected, and shall contain the following information:
(i) The date of the transaction, the title and the number of shares,
and the principal amount of each security involved;
(ii) The nature of the transaction (I.E., purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected; and
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected.
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Unless otherwise stated, no report shall be construed as an admission by the
person making such report that he or she has any direct or indirect Beneficial
Interest in the security to which the report relates.
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7. CODE OF ETHICS BOARD.
A Code of Ethics Board shall be created by NB Management and the Trust,
composed of three members, two of whom shall be disinterested Trustees selected
by the Board of Trustees of the Trust and one of whom shall be selected by NB
Management.
Any person who has knowledge of any violation of this Code shall report
said violation to the Code of Ethics Board.
The Code of Ethics Board shall consult regularly and meet no less
frequently than annually with the Legal and Compliance Department regarding the
implementation of this Code. The Legal and Compliance Department shall provide
the Code of Ethics Board with such reports as are required herein or as are
requested by the Code of Ethics Board.
A monthly report shall be provided to the Trustees of the Trust certifying
that except as specifically disclosed to the Code of Ethics Board, the Legal and
Compliance Department knows of no violation of this Code. A representative of
the Legal and Compliance Department shall attend all regular meetings of the
Trustees to report on the implementation of this Code.
NB Management, NB, and the Trustees of the Trust shall have authority to
impose sanctions for violations of this Code. The Code of Ethics Board shall
make recommendations regarding sanctions to be imposed on Access Persons who
violate this Code. Such recommendations may include a letter of censure,
suspension or termination of the employment of the violator, forfeiture of
profits, forfeiture of personal trading privileges, forfeiture of gifts, or any
other penalty the Code of Ethics Board deems to be appropriate. All such
recommendations shall be submitted to NB Management and the Board of Trustees of
the Trust.
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8. ANNUAL REPORT TO BOARD OF TRUSTEES.
NB Management shall prepare an annual report to the Board of Trustees of the
Trust that:
(i) summarizes existing procedures concerning personal investing and
any changes in the procedures made during the past year;
(ii) identifies any violations requiring significant remedial action
during the past year; and
(iii) identifies any recommended changes in existing restrictions or
procedures based upon the Fund's experience under the Code of
Ethics, evolving industry practices, or developments in applicable
laws or regulations.
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9. IMPLEMENTATION.
9.1 FORMS.
The Legal and Compliance Department is authorized, with the advice of
counsel, to prepare written forms for use in implementing this Code. Such forms
shall be attached as an Appendix to this Code and shall be disseminated to all
individuals subject to the Code.
9.2 EXCEPTIONS.
Exceptions to the requirements of this Code shall rarely, if ever, be
granted. However, the Legal and Compliance Department shall have authority to
grant exceptions on a case-by-case basis. Any exceptions granted must be in
writing and reported to the Code of Ethics Board.
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