As filed with the Securities and Exchange Commission on November __, 2000
Registration Nos.: 1933 Act Registration No. 2-11357
1940 Act Registration No. 811-582
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------
FORM N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. |_| Post-Effective Amendment No. |_|
(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.
Washington, D.C. 20036-1800
(Names and Addresses of Agents for Service of Process)
For the new shares of Neuberger Equity Funds, the approximate date of the
proposed public offering is: as soon as practicable after this Registration
Statement becomes effective under the Securities Act of 1933. The public
offering of shares of Registrant's series is on-going. The title of securities
being registered is shares of beneficial interest.
It is proposed that this filing will become effective on December __,
2000, pursuant to Rule 488.
<PAGE>
NEUBERGER BERMAN EQUITY FUNDS
FORM N-14
CONTENTS OF REGISTRATION STATEMENT ON FORM N-14
This Registration Statement consists of the following papers and
documents:
Cover Sheet
Contents of Registration Statement on Form N-14
NEUBERGER BERMAN EQUITY FUNDS
-----------------------------
Part A - Prospectus and Information Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
FASCIANO FUND, INC.
190 S. LaSalle Street
Suite 2800
Chicago, Illinois 60603
_____________, 2001
Dear Shareholder:
I am pleased to announce that the Fasciano Company and our Fasciano Fund have
joined forces with Neuberger Berman, a leading mutual fund and investment
management company headquartered in New York. Joining Neuberger Berman is a
strategic business decision. In today's competitive environment, I am confident
that this alliance will benefit our mutual fund, which will be reorganized into
the Neuberger Berman Fasciano Fund. The Neuberger Berman Fasciano Fund would
have identical investment objectives and principal investment strategies to
those of the Fasciano Fund.
The decision to join Neuberger Berman was based on its reputation as a premier
investment management firm with more than $56 million under management in
equity, fixed income, international, global and socially responsive portfolios.
In fact, Neuberger Berman has provided clients with a broad range of investment
products, services and strategies for more than 60 years, and was an early
pioneer in the field of no-load mutual funds almost 50 years ago. Neuberger
Berman is also known for its in-house research capabilities - a great advantage
in a time when purely independent resources are becoming scarce.
Neuberger Berman's shareholder services will also prove to be a great advantage.
Your account will be handled by a professional staff dedicated only to Neuberger
Berman's mutual fund clients.
All in all, I am confident that our alignment with Neuberger Berman will greatly
enhance our capabilities to serve your investment interests best. Our fund has
grown rapidly in the past few years, and being part of Neuberger Berman will
allow me to spend more time doing what I do best - managing money.
After carefully studying the merits of the proposal, the Board of Directors of
the Fasciano Fund determined that the conversion to the Neuberger Berman
Fasciano Fund is in the best interests of shareholders. Since the Board has
approved the Transaction, you and your fellow shareholders are being asked to
approve the proposal at a Special Meeting of Shareholders to be held at
_______________________________________________________________ on ________,
2001. A proxy card is enclosed for use in the Special Meeting. This card
represents shares you held as of the record date, January 15, 2001. IT IS
IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE
PROVIDED AS SOON AS POSSIBLE, OR HELP US SAVE TIME AND POSTAGE COSTS BY VOTING
ON THE INTERNET OR BY TELEPHONE - INSTRUCTIONS CAN BE FOUND ON YOUR PROXY CARD.
PLEASE READ THE ENCLOSED PROXY MATERIALS CAREFULLY BEFORE YOU VOTE. IT CONTAINS
INFORMATION IMPORTANT FOR YOUR DECISION-MAKING PROCESS.
<PAGE>
I welcome any questions you may have regarding Neuberger Berman and the range of
products and services it offers its clients.
Sincerely,
Michael Fasciano
(312) 444-6044
<PAGE>
Q. WHAT IS THIS DOCUMENT AND WHY ARE WE SENDING IT TO YOU?
A. This document is a combined proxy statement for the Fasciano Fund, Inc. (the
"Fasciano Fund"), and a prospectus for the Neuberger Berman Fasciano Fund
("Neuberger Berman Fund" or the "New Fund"). This Prospectus/Proxy Statement
contains information Fasciano Fund shareholders should know before voting on the
proposed transaction. It should be retained for future reference.
Q. WHAT IS THE PROPOSED TRANSACTION?
A. The Fasciano Fund has entered into an Agreement and Plan of Reorganization
with Neuberger Berman Equity Funds. Under the agreement, the Fasciano Fund will
be converted to the Neuberger Berman Fund, a mutual fund that will be managed by
Neuberger Berman Management Inc. ("NBMI") with investment objectives and
principal investment strategies identical to those of the Fasciano Fund. The
Board of Directors of the Fasciano Fund has approved the proposed Transaction.
You, as a shareholder of the Fasciano Fund, are now being asked to approve the
Transaction. If approved, and if certain other conditions are met, your Fasciano
Fund shares will be exchanged for shares of the New Fund.
Q. WHY IS THE TRANSACTION BEING PROPOSED?
A. Michael Fasciano, who is currently president of Fasciano Company, Inc., the
investment adviser to the Fasciano Fund, and president and portfolio manager of
the Fasciano Fund, has entered into an agreement with Neuberger Berman, Inc.
("Neuberger Berman") under which he will become a shareholder of Neuberger
Berman, a Managing Director of Neuberger Berman, LLC and portfolio manager of
the Neuberger Berman Fund. The transaction between Mr. Fasciano and Neuberger
Berman is subject to shareholder approval of the Transaction and other
conditions being satisfied. The Board of the Fasciano Fund believes that the
Transaction is in the best interests of the Fasciano Fund and its shareholders.
Shareholders of the Fasciano Fund will become part of the Neuberger Berman
mutual fund family. As a result, Neuberger Berman's portfolio management and
fund administration resources will become available to the Fasciano Fund and
Neuberger Berman's shareholder servicing resources will become available to you.
The Neuberger Berman Fund is a new series of Neuberger Berman Equity Funds,
created solely for the purpose of the proposed Transaction.
Q. HOW WILL THIS AFFECT ME AS A FUND SHAREHOLDER?
A. You will become a shareholder of the Neuberger Berman Fund. There will be no
sales charges or redemption fees applied in connection with this transaction.
THE SHARES OF THE NEUBERGER BERMAN FUND THAT YOU RECEIVE WILL HAVE A TOTAL NET
ASSET VALUE EQUAL TO THE TOTAL NET ASSET VALUE OF THE FASCIANO FUND SHARES YOU
HELD AS OF THE CLOSING DATE OF THE TRANSACTION.
<PAGE>
Q. WILL THE TRANSACTION RESULT IN ANY TAXES?
A. Neither the Fasciano Fund nor its shareholders will recognize any gain or
loss for federal income tax purposes as a direct result of the Transaction.
Q. HOW DOES THE BOARD OF THE FASCIANO FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of the Fasciano Fund unanimously
recommends that you vote "FOR" the proposed Transaction.
Q. WHO IS PAYING FOR THE COSTS OF TRANSACTION?
A. Neuerger Berman and Fasciano Company, Inc. have agreed to pay for all the
costs associated with the Special Shareholder Meeting. The Fasciano Fund will
not bear any of the costs of the Transaction.
Q. HOW DO I CONTACT YOU?
A. If you have any questions, call the Fasciano Fund toll free at
1-800-848-6050. To learn more about NBMI and the Neuberger Berman Fund, call
1-800-877-9700.
PLEASE VOTE.
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN.
<PAGE>
FASCIANO FUND, INC.
190 S. LaSalle Street
Suite 2800
Chicago, Illinois 60603
NOTICE OF A SPECIAL MEETING
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of
Fasciano Fund, Inc. (the "Fasciano Fund") will be held at
___________________________ on ________, 2001, at ____ _.m. Eastern Time, for
the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Plan of Reorganization"),
between the Fasciano Fund and Neuberger Berman Equity Funds, and
the transactions contemplated thereby, including: (a) the
transfer of all the assets of the Fasciano Fund to, and the
assumption of all the liabilities of the Fasciano Fund by, the
Neuberger Berman Fasciano Fund (the "Neuberger Berman Fund"), in
exchange for shares of the Neuberger Berman Fund; (b) the
distribution of the Neuberger Berman Fund shares so received by
the Fasciano Fund PRO RATA to shareholders of the Fasciano Fund;
and (c) the dissolution of the Fasciano Fund; and
ITEM 2. To transact such other business as may properly come before
the meeting and any adjournment thereof.
The proposed Transaction and related matters are described in the attached
Prospectus/Proxy Statement. A form of the Plan of Reorganization is attached to
the Prospectus/Proxy Statement as Appendix A.
Only shareholders of record on January 15, 2001 of the Fasciano Fund are
entitled to notice of and to vote at the Special Meeting and any adjournment
thereof. There are no appraisal rights for those shareholders that vote against
the proposal. Because the Fasciano Fund is a registered investment company whose
shareholders can redeem their shares at any time for their net asset value,
there are no appraisal rights for those shareholders that vote against the
proposal.
<PAGE>
Shareholders are requested to vote their shares by executing and returning
promptly in the enclosed envelope the accompanying proxy card(s), OR TO VOTE BY
TELEPHONE BY CALLING [PHONE #] OR VIA THE INTERNET AT WWW.PROXYVOTE.COM. This is
important to ensure a quorum at the meeting. Unless proxy cards submitted by
corporations and partnerships are signed by the appropriate persons as indicated
in the voting instructions on the proxy cards, they will not be voted. Proxies
may be revoked at any time before they are exercised by submitting a written
notice of revocation or a subsequently executed proxy or by attending the
meeting and voting in person.
Sincerely,
--------------------
Douglas G. Hess
Assistant Secretary
_________________, 2001
<PAGE>
PROSPECTUS/PROXY STATEMENT
Dated ________________, 2001
FASCIANO FUND, INC.
190 S. LaSalle Street
Suite 2800
Chicago, Illinois 60603
1-800-848-6050
To convert into:
NEUBERGER BERMAN FASCIANO FUND
(A SERIES OF NEUBERGER BERMAN EQUITY FUNDS)
605 Third Avenue
New York, New York 10158
Telephone 1-800-877-9700
This Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Fasciano Fund, Inc. (the
"Fund" or the "Fasciano Fund") in connection with the Special Meeting of
Shareholders (the "Meeting") to be held at ________________ on _______, 2001 at
____ _.m. Eastern Time, at which shareholders will be asked to consider and
approve the proposed Agreement and Plan of Reorganization (the "Plan of
Reorganization"), between the Fasciano Fund and Neuberger Berman Equity Funds,
and the transactions contemplated thereby (the "Transaction"), including: (a)
the transfer of all assets of the Fasciano Fund to, and the assumption of all
liabilities of the Fasciano Fund by Neuberger Berman Fasciano Fund (the
"Neuberger Berman Fund" or "New Fund"), in exchange for shares of the Neuberger
Berman Fund; (b) the distribution of the Neuberger Berman Fund shares so
received by the Fasciano Fund PRO RATA to shareholders of the Fasciano Fund; and
(c) the dissolution of the Fasciano Fund. A form of the Plan of Reorganization
is attached as Appendix A.
The Neuberger Berman Fund and the Fasciano Fund are open-end management
investment companies. In approving the Transaction, the Fasciano Fund's Board of
Directors considered, among other things, (1) that the Neuberger Berman fund
complex can provide the Fasciano Fund with the benefit of broader administration
and portfolio management services and can provide Fasciano Fund shareholders
with the benefit of broader shareholder services; (2) that the Neuberger Berman
Fund is a newly created series with investment objectives and principal
investment strategies identical to those of the Fasciano Fund; (3) that Michael
Fasciano, the portfolio manager of the Fasciano Fund, would be the portfolio
manager of the New Fund; (4) that the interests of shareholders of the Fasciano
Fund would not be diluted as a result of the Transaction; and (5) that the
Transaction would be a tax-free transaction.
<PAGE>
This Prospectus/Proxy Statement constitutes the proxy statement of the
Fasciano Fund for the Meeting and the prospectus for the shares of the Neuberger
Berman Fund that are currently being registered with the Securities and Exchange
Commission ("SEC") and are to be issued by the Neuberger Berman Fund in
connection with the Transaction.
If approved by shareholders, the Transaction will be effected by the
transfer of all the assets of the Fasciano Fund in exchange for Investor Class
shares of the Neuberger Berman Fund and the Neuberger Berman Fund's assumption
of liabilities of the Fasciano Fund. On the day of the Transaction, each
Fasciano Fund shareholder will receive shares of the Neuberger Berman Fund with
the same total net asset value as their Fasciano Fund shares. After the
Transaction, the Fasciano Fund will be dissolved.
This Prospectus/Proxy Statement sets forth certain information that a
Fasciano Fund shareholder should know before voting on the Transaction and
should be retained for future reference. A Statement of Additional Information
relating to this Prospectus/Proxy Statement, dated _______, 2001 ("SAI") has
been filed with the SEC and is incorporated herein by this reference. A copy of
the SAI may be obtained without charge by writing or calling the Neuberger
Berman Fasciano Fund at the address and telephone number shown above.
This Prospectus/Proxy Statement was first mailed to shareholders on or
about ____________, 2001.
SHARES OF THE NEUBERGER BERMAN FUND AND THE FASCIANO FUND ARE NOT DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY NEUBERGER BERMAN EQUITY FUNDS OR THE
FASCIANO FUND.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY........................................................................1
BOARD CONSIDERATIONS........................................................2
REASONS FOR THE TRANSACTION.................................................2
FEDERAL INCOME TAX CONSEQUENCES.............................................2
OVERVIEW OF THE NEUBERGER BERMAN FUND AND THE FASCIANO FUND.................2
MANAGEMENT AND ARRANGEMENTS WITH SERVICE PROVIDERS.......................5
COMPARATIVE FEE TABLES...................................................5
PURCHASES................................................................6
EXCHANGES................................................................7
DIVIDENDS AND OTHER DISTRIBUTIONS........................................7
REDEMPTION PROCEDURES....................................................7
SHAREHOLDER RIGHTS.......................................................8
VOTING INFORMATION..........................................................9
FINANCIAL HIGHLIGHTS...........................................................9
INFORMATION RELATING TO THE PROPOSED TRANSACTION..............................10
DESCRIPTION OF THE PLAN OF REORGANIZATION..................................10
BOARD CONSIDERATIONS.......................................................12
CAPITALIZATION.............................................................12
FEDERAL INCOME TAX CONSEQUENCES............................................13
INFORMATION RELATING TO VOTING MATTERS........................................13
GENERAL INFORMATION........................................................13
SHAREHOLDER APPROVAL.......................................................14
QUORUM; ADJOURNMENT........................................................15
ANNUAL MEETINGS............................................................15
ADDITIONAL INFORMATION ABOUT THE NEUBERGER BERMAN FUND
AND THE FASCIANO FUND......................................................15
LEGAL MATTERS.................................................................16
EXPERTS.......................................................................16
OTHER BUSINESS................................................................16
SHAREHOLDER INQUIRIES.........................................................16
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION.............................A-1
APPENDIX B INFORMATION RELATING TO BUYING AND SELLING SHARES
OF THE NEUBERGER BERMAN FUND'S INVESTOR CLASS SHARES......................B-1
APPENDIX C ARRANGEMENTS WITH SERVICE PROVIDERS..............................C-1
<PAGE>
SUMMARY
The following is a summary of certain information relating to the proposed
Transaction, and is qualified in its entirety by reference to the more complete
information contained elsewhere in this Prospectus/Proxy Statement and the
Appendices attached.
ABOUT THE PROPOSED TRANSACTION
The Board of Directors of the Fasciano Fund and the Board of Trustees of
Neuberger Berman Equity Funds, including in each case all the directors/trustees
who are not "interested persons" of Neuberger Berman Equity Funds or Fasciano
Fund within the meaning of Section 2(a)(19) of the Investment Company Act of
1940, as amended (the "1940 Act") (the "Boards"), propose that the Fasciano Fund
convert into the Neuberger Berman Fund, and that each Fasciano Fund shareholder
become a shareholder of the Neuberger Berman Fund.
The Transaction will have three steps:
o First, if the shareholders of the Fasciano Fund approve the
Transaction, the Fasciano Fund will transfer all of its assets to
the Neuberger Berman Fund. In exchange, the Fasciano Fund will
receive shares of the Neuberger Berman Fund with a total net asset
value equal to the value of the assets it is transferring (net of
the Fasciano Fund's liabilities) calculated as of the close of
business on the date of the Transaction and the Neuberger Berman
Fund will assume all of those liabilities.
o Second, the Neuberger Berman Fund, through its transfer agent, will
open an account for each shareholder of the Fasciano Fund, and will
credit each such account with shares of the Neuberger Berman Fund
having the same value as the Fasciano Fund shares that the
shareholder owned on the date of the Transaction.
o The Fasciano Fund will subsequently dissolve.
Approval of the Transaction will constitute approval of the transfer of
assets, the assumption of liabilities, the distribution of shares and the
dissolution of the Fasciano Fund.
No sales charge or fee of any kind will be charged to Fasciano Fund
shareholders in connection with the Transaction. Consummation of the Transaction
is subject to a number of conditions, including completion of the Agreement
among Neuberger Berman, Inc., Michael Fasciano and Fasciano Company, Inc. dated
October 13, 2000. In addition, the Board of the Fasciano Fund may cause the Plan
of Reorganization not to proceed if the Board believes that proceeding with the
Plan of Reorganization is not in the best interests of the Fasciano Fund and its
shareholders.
<PAGE>
BOARD CONSIDERATIONS
Based upon their evaluation of the relevant information presented to them,
and in light of their fiduciary duties under federal and state law, the Boards
have determined that the Transaction is in the best interests of shareholders of
the Fasciano Fund and Neuberger Berman Equity Funds, respectively, and that the
interests of existing shareholders of the Fasciano Fund will not be diluted as a
result of the Transaction. See "Information Relating to the Proposed Transaction
- Board Considerations."
REASONS FOR THE TRANSACTION
The primary reason for the proposed Transaction is that the Fasciano Fund
will have access to additional resources related to portfolio management and
fund administration and Fasciano Fund shareholders will have access to
additional shareholder servicing resources. In approving the Transaction, the
Board of the Fasciano Fund considered, among other things, (a) the fact that the
newly organized Neuberger Berman Fund would have investment objectives and
principal investment strategies identical to those of the Fasciano Fund; (b) the
fact that Michael Fasciano, the portfolio manager to the Fasciano Fund, would be
the portfolio manager to the New Fund; (c) the fact that shareholder interests
would not be diluted in the proposed Transaction; and (d) the status of the
Transaction as a tax-free transaction.
FEDERAL INCOME TAX CONSEQUENCES
The Fasciano Fund and its shareholders will not recognize any gain or loss
for federal income tax purposes as a result of the Transaction, and the
Neuberger Berman Fund will not recognize gain or loss for federal tax purposes
on its issuance of shares in the Transaction. See "Information Relating to the
Proposed Transaction - Federal Income Tax Consequences."
OVERVIEW OF THE NEUBERGER BERMAN FUND AND THE FASCIANO FUND
INVESTMENT OBJECTIVES, STRATEGIES, POLICIES AND PRINCIPAL RISKS OF
THE NEUBERGER BERMAN FUND AND THE FASCIANO FUND
Since the Neuberger Berman Fund has been created as a shell series of
Neuberger Berman Equity Funds solely for the purpose of the Transaction, it has
investment objectives and policies and principal investment strategies that are
identical to those of the Fasciano Fund. The description below describes how the
New Fund will be managed, which is substantially identical to how the Fasciano
Fund is currently managed.
GOAL AND STRATEGY
The primary investment objective of the New Fund will be long-term capital
growth. The portfolio manager also may consider a company's potential for
current income prior to selecting it for the New Fund.
2
<PAGE>
To pursue this goal, the New Fund will invest primarily in the common
stocks of smaller companies with market capitalizations of less than $1.5
billion at the time the fund first invests in them. These include securities
having common stock characteristics, such as securities convertible into common
stocks, and rights and warrants to purchase common stocks. The New Fund may
continue to hold or add to a position in a stock after it has grown beyond $1.5
billion. The manager will look for companies with:
o strong business franchises that are likely to sustain long-term
rates of earnings growth for a three to five year time horizon, and
o stock prices that the market has under-valued relative to the value
of similar companies and that offer excellent potential to
appreciate over a three to five year time horizon.
In choosing companies that the manager believes are likely to achieve the
New Fund's objective, the manager will consider the company's ability to sustain
long-term rates of earnings growth, as well as overall business qualities. These
qualities include the company's profitability and cash flow, financial
condition, insider ownership, and stock valuation. In selecting companies that
the manager believes may have greater potential to appreciate in price, the
manager will invest the New Fund in smaller companies that are under-followed by
major Wall Street brokerage houses and large asset management firms. However,
the New Fund may hold the stocks of small companies that grow into medium-size
companies.
The New Fund will invest in companies on a long-term basis and emphasize
long-term investment performance. Prospective investors should invest in the New
Fund with a time horizon of three years or longer to be consistent with the
manager. The New Fund may not be suitable for you if you have a short-term
investment horizon or are unwilling to accept fluctuations in share price,
including significant declines over a given period.
Although the New Fund primarily will invest in companies on a long-term
basis, from time to time, the New Fund may invest on a short-term basis or may
sell within a few months securities that it originally had intended to be a
long-term investment if the security no longer meets the quality or valuation
requirements of the New Fund.
The manager generally will not attempt to invest the New Fund based on a
market timing strategy. Rather, the manager will invest in a company when the
manager believes the company meets the New Fund's requirements for long-term
earnings growth prospects and price appreciation potential.
The New Fund generally will seek to be fully invested in common stocks.
However, at times, the manager may invest a large portion of the New Fund's
assets in cash if the manager is unable to locate and invest in a sufficient
number of companies that meet the New Fund's quality and valuation requirements.
When a stock no longer meets the New Fund's investment criteria, the
manager will consider selling it.
3
<PAGE>
At times, the manager may emphasize certain sectors that he believes will
benefit from market or economic trends.
Unlike the Fasciano Fund, the New Fund will have the ability to change its
goal without shareholder approval, although it does not currently intend to do
so.
MAIN RISKS
Most of the New Fund's performance depends on what happens in the stock
market. The market's behavior is unpredictable, particularly in the short term.
Because of this, the value of your investment will rise and fall, and you could
lose money.
In addition, the smaller companies that the New Fund will tend to invest
in are often more volatile and less liquid than the stocks of larger companies
and
o may have a shorter history of operations than large companies;
o may not have as great an ability to raise additional capital;
o may have a less diversified product line, making them more
susceptible to market pressure; and
o may have a smaller public market for their shares.
Small-cap stocks may also:
o underperform other types of stocks or be difficult to sell when the
economy is not robust, during market downturns, or when small-cap
stocks are out of favor;
o be more affected than other types of stocks by the underperformance
of a sector that the manager decided to emphasize.
The New Fund will combine value and growth styles of investing. Value
investors seek stocks trading at below market average prices based on earnings,
book value, or other financial measures before other investors discover their
worth. Growth investors seek companies that are already successful but may not
have reached their full potential. Growth stocks may suffer more than value
stocks during market downturns, while value stocks may remain undervalued if
other investors do not recognize their worth.
OTHER RISKS
The New 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
4
<PAGE>
movements. In using certain derivatives to gain stock market exposure for excess
cash holdings, the New Fund will increase its risk of loss.
When the New 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 New Fund avoid losses
but may mean lost opportunities.
MANAGEMENT AND ARRANGEMENTS WITH SERVICE PROVIDERS
Responsibility to oversee management of the Fasciano Fund rests with the
Fund's Board of Directors. The investment adviser to the Fasciano Fund is
Fasciano Company, Inc. ("Fasciano Company"), 190 S. LaSalle Street, Suite 2800,
Chicago, Illinois 60603. Firstar Mutual Fund Services, LLC provides
administrative services to the Fasciano Fund and acts as the Fund's custodian
and transfer agent. The Fasciano Fund is self-distributed (in other words, the
Fund's shares are distributed directly by the Fund, and there is no principal
underwriter or distributor). The Fasciano Company may directly or indirectly pay
qualifying broker-dealers, financial institutions and other entities for
providing distribution services to the Fasciano Fund.
Responsibility to oversee management of the Neuberger Berman Fund rests
with Neuberger Berman Equity Funds' Board of Trustees. The investment manager to
the Neuberger Berman Fund will be Neuberger Berman Management Inc. ("NBMI"), a
wholly-owned subsidiary of Neuberger Berman, Inc., located at 605 Third Avenue,
2nd Floor, New York NY 10158-0180. Another wholly-owned subsidiary of Neuberger
Berman Inc. and an affiliate of NBMI, Neuberger Berman, LLC, will be sub-adviser
to the Neuberger Berman Fund and is located at 605 Third Avenue, New York NY
10158-3698. NBMI also will serve as the administrator of the Neuberger Berman
Fund and distributor of its shares. State Street Bank and Trust Company will
serve as the New Fund's custodian and transfer agent.
If the Transaction is approved by shareholders, Michael F. Fasciano will
become the portfolio manager of the Neuberger Berman Fund, a Managing Director
of Neuberger Berman, LLC, and a Vice President of NBMI. Mr. Fasciano has served
as the Fasciano Fund's portfolio manager since the Fund's inception in 1986 and
is president of the Fasciano Company.
See Appendix C for more information regarding arrangements with service
providers of the Fasciano Fund and the Neuberger Berman Fund.
COMPARATIVE FEE TABLES
The table set forth below shows (a) shareholder fees and annual operating
expenses for the Fasciano Fund for the fiscal year ended June 30, 2000; and (b)
the estimated expenses the Neuberger Berman Fund expects to incur during the
fiscal year ended August 31, 2001. Neither the Neuberger Berman Fund nor the
Fasciano Fund charges 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.
5
<PAGE>
NEUBERGER
FASCIANO BERMAN FUND
FUND (INVESTOR CLASS)
---- ----------------
SHAREHOLDER FEES None None
ANNUAL OPERATING EXPENSES
(% of average net assets)
These are deducted from fund
assets, so you pay them indirectly.
Management fees 1.00% 0.85%
Distribution (12b-1) fees None None
Other expenses 0.20% %*
Total Annual Operating Expenses 1.20% %
*Other expenses are based on estimated amounts for the current fiscal year.
EXPENSE EXAMPLE
The expense example can help you compare costs between the Fasciano Fund
and the Neuberger Berman Fund if the Transaction is approved. 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 Funds' expenses were those
in the table above. Your costs would be the same whether you sold your shares or
continued to hold them at the end of each period. Actual performance and
expenses may be higher or lower.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Neuberger $ $ $ $
Berman Fund
Fasciano Fund $122 $381 $660 $1,455
PURCHASES
Shares of the Fasciano Fund and the Neuberger Berman Fund are sold on a
continuous basis at net asset value with no sales charges. The net asset value
of each Fund is calculated as of the close of regular trading on the New York
Stock Exchange (normally 3:00 p.m. Central Time, which is 4:00 p.m. Eastern
Time). Purchases of each Fund's shares may be made by check, by wire, by phone
or by setting up a systematic investment program. Shareholders of each Fund may
reinvest their dividends in Fund shares. Neuberger Berman Fund shareholders may
purchase shares by phone only if the investment order is for at least $1,000 and
the money for the shares is received within three days after the order is
purchased. Fasciano Fund shareholders may not make an initial purchase by
telephone, but subsequent investments of at least $100 may be made by phone.
6
<PAGE>
Purchases of Neuberger Berman Fund shares through systematic investing must be
at least $100. Purchases of Fasciano Fund shares through the Fund's Automatic
Investment Plan must be at least $50 and not more than $50,000. Neuberger Berman
Fund shareholders may also purchase shares via the Internet.
EXCHANGES
Shares of the Neuberger Berman Fund may be exchanged on any business day
at their net asset value for shares of the Investor Class of one or more of the
17 other Neuberger Berman funds. Fasciano Fund shareholders do not have any
funds also managed by the Fasciano Company into which they may exchange their
shares as compared to the number of mutual funds available to Neuberger Berman
Fund shareholders.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fasciano Fund ordinarily declares and pays, and the Neuberger Berman
Fund ordinarily will declare and pay, dividends from net investment income and
net realized capital gains, if any, annually. Dividends and capital gain
distributions are automatically reinvested in Fund shares, unless otherwise
indicated in the purchase application or in writing. The Neuberger Berman Fund
also will provide the following options: shareholders may (1) receive all
distributions in cash or (2) reinvest capital gain distributions, but receive
income distributions in cash.
REDEMPTION PROCEDURES
Shares of the Fasciano Fund and the Neuberger Berman Fund are redeemable
on any business day at a price equal to the net asset value of the shares the
next time it is calculated after receipt of a redemption request in good order.
Shares of each Fund may be redeemed in writing by sending a letter, by
telephone, or under a Systematic Withdrawal Plan. Shares of the Neuberger Berman
Fund also may be redeemed via the Internet, and shares valued up to $50,000 also
may be redeemed by sending a written request by fax. All phone orders to sell
shares of the Neuberger Berman Fund must be for at least $1,000, unless you are
closing out an account. There is no such minimum for redeeming shares of the
Fasciano Fund by phone. The Fasciano Fund's Systematic Withdrawal Plan requires
a $10,000 minimum account balance, while the Neuberger Berman Fund requires a
$5,000 balance and withdrawals must be at least $100.
Each Fund gives shareholders the option of having their redemption
proceeds wired to a designated bank account. For this service, the Neuberger
Berman Fund charges an $8 fee if the total balance in all Neuberger Berman fund
accounts is less than $200,000. The Fasciano Fund charges $12 for this service.
The Neuberger Berman Fund requires a signature guarantee when selling more
than $50,000 worth of shares and when proceeds are to be sent by wire or
electronic transfer to a bank account not designated in advance. In contrast,
the Fasciano Fund requires a signature guarantee if the shares to be redeemed
have a value of more than $20,000. Both Funds require a signature guarantee when
7
<PAGE>
a shareholder requests that the proceeds be sent to an address different from
the address of record.
If the shares of the Fasciano Fund to be redeemed are represented by
certificates and you are redeeming your shares in writing, your redemption
request must be accompanied by properly endorsed certificates. The Neuberger
Berman Fund does not issue stock certificates.
FOR MORE INFORMATION RELATING TO PURCHASING AND SELLING SHARES OF THE
FASCIANO FUND, SEE THE PROSPECTUS, DATED NOVEMBER 1, 2000, AND FOR MORE
INFORMATION RELATING TO PURCHASING AND SELLING SHARES OF THE NEUBERGER BERMAN
FUND, SEE APPENDIX B.
SHAREHOLDER RIGHTS
The chart below describes some of the differences between your rights as a
shareholder of the Fasciano Fund and your rights as a shareholder of the
Neuberger Berman Fund. The Fasciano Fund is organized as Maryland corporation,
and the Neuberger Berman Fund is a series of Neuberger Berman Equity Funds, a
Delaware business trust.
--------------------------------------------------------------------------------
CATEGORY FASCIANO FUND NEUBERGER BERMAN FUND
--------------------------------------------------------------------------------
1. Par Value Each share has a par Each share has a par
value of $.01 value of $.001
--------------------------------------------------------------------------------
2. Preemptive Rights None None
--------------------------------------------------------------------------------
3. Preference None None
--------------------------------------------------------------------------------
4. Appraisal Rights None None
--------------------------------------------------------------------------------
5. Transaction Rights None None
--------------------------------------------------------------------------------
6. Exchange Rights (not None None
including the right
to exchange among
Funds)
--------------------------------------------------------------------------------
7. Shareholder Rights No right to call for No right to call for
any partition or any partition or
division of division of
property, profits, property, profits,
rights or interests rights or interest
of the Corporation of the Trust
--------------------------------------------------------------------------------
8. Personal Liability of None None
Shareholders
--------------------------------------------------------------------------------
9. Annual meetings No annual meetings No annual meetings
required, unless required, unless
required under the required under the
1940 Act 1940 Act
--------------------------------------------------------------------------------
8
<PAGE>
--------------------------------------------------------------------------------
CATEGORY FASCIANO FUND NEUBERGER BERMAN FUND
--------------------------------------------------------------------------------
10. Right to call meeting of Shall be called upon Shall be called upon
shareholders written request of request of
shareholders holding shareholders owning
at least 10% of the at least 10% of the
outstanding shares outstanding shares
--------------------------------------------------------------------------------
11. Notice of meetings Mailed to each Mailed to each
shareholder entitled shareholders
to vote at least 10 entitled to vote at
days, not more than least 15 days prior
90 days, before the to the meeting
meeting
--------------------------------------------------------------------------------
12. Record date for meetings Directors may close Trustees may fix in
transfer book not advance a date up to
exceeding 90 days 90 days before the
and not less than 10 meeting
days prior to the
date of such meeting
--------------------------------------------------------------------------------
13. Election of Directors or Majority of those A plurality
Trustees stockholders voting
on the matter
--------------------------------------------------------------------------------
14. Adjournment of meetings Majority of shares A majority of shares
represented at present in person or
meeting in person or by proxy and
by proxy entitled to vote.
--------------------------------------------------------------------------------
15. Removal of Directors or May be removed from May be removed at a
Trustees by Shareholders office by a vote of shareholder meeting
the shareholders by a vote of
holding a majority shareholders owning
of the shares at least 2/3 of the
entitled to vote outstanding shares
of the Trust
--------------------------------------------------------------------------------
VOTING INFORMATION
This Prospectus/Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of the Fasciano Fund in
connection with the Meeting. Only shareholders of record at the close of
business on January 15, 2001 will be entitled to notice of and to vote at the
Meeting. Each share or fraction thereof is entitled to one vote or fraction
thereof. Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or if no instruction is given, the
persons named as proxies will vote in favor of the proposed Transaction. Proxies
may be revoked at any time before they are exercised by submitting a written
notice of revocation or a subsequently executed proxy, or by attending the
Meeting and voting in person. For additional information, including a
description of the shareholder vote required for approval of the Transaction,
see "Information Relating to Voting Matters."
FINANCIAL HIGHLIGHTS
The Financial Highlights information for the Fasciano Fund is incorporated
by reference to the Fasciano Fund Prospectus, dated, November 1, 2000 and the
Annual Report for the fiscal year ended June 30, 2000. Additional copies of the
Prospectus and Annual Report of the Fasciano Fund are available upon request,
without charge, by calling 1-800-848-6050. The Neuberger Berman Fund currently
has no Financial Highlights information since its registration is currently
pending with the SEC and it has not yet commenced operations. If the Transaction
9
<PAGE>
is approved by the Fasciano Fund shareholders, the Neuberger Berman Fund will
assume the Fasciano Fund's Financial Highlights information after the
Transaction takes place.
INFORMATION RELATING TO THE PROPOSED TRANSACTION
Neuberger Berman Inc., a Delaware corporation ("Neuberger Berman"),
Fasciano Company, Inc.("Fasciano Company") an Illinois corporation, and Michael
Fasciano, the sole shareholder of Fasciano Company, Inc., entered into an Asset
Purchase Agreement dated October 13, 2000. Subject to certain conditions,
Fasciano Company will sell all of its assets, rights, properties, and goodwill
necessary to carry on its advisory business and operations to Neuberger Berman
Inc. (the "Asset Transaction"). Consummation of the Asset Purchase Agreement
among the parties is conditioned upon, among other things, shareholders of the
Fasciano Fund approving the Reorganization.
Upon the closing of the Asset Transaction, Neuberger Berman Inc. will pay
Fasciano Company cash and restricted Neuberger Berman Inc. common stock then
worth, in total, $5,110,000. In addition, over the five years subsequent to the
closing of the Asset Transaction, Fasciano Company can earn up to $5,000,000, as
additional purchase price in the event average daily net assets of the Neuberger
Berman Fund and any funds that may be cloned from the Neuberger Berman Fund meet
certain benchmarks, the first of which is approximately $100,000,000 above the
expected net assets of the Fund at the time of the closing. Michael Fasciano
will enter into an employment agreement with Neuberger Berman[, LLC], and will
be the portfolio manager of the Neuberger Berman Fund, compensated at a level
consistent with the amount Neuberger Berman[, LLC] pays to portfolio managers of
comparable experience.
After a significant and rapid growth of assets in the Fasciano Fund in
1999, Fasciano Company examined the strategic alternatives available to it for
the Fund to stay competitive. Fasciano Company determined that Neuberger Berman
Inc. and its subsidiaries would be able to provide the high quality
administrative, operational, and research support necessary to pursue this goal
and benefit the Fasciano Fund's shareholders. The Reorganization described in
this Prospectus/Proxy statement is being proposed in conjunction with the sale
by Fasciano Company of the assets described above.
DESCRIPTION OF THE PLAN OF REORGANIZATION
Neuberger Berman Equity Funds, on behalf of the Neuberger Berman Fund, and
the Fasciano Fund have entered into the Plan of Reorganization, which provides
that the Neuberger Berman Fund is to acquire the assets and assume the
liabilities of the Fasciano Fund. The Plan of Reorganization sets forth the
terms and conditions that will apply to the Transaction. The following
description of the Plan of Reorganization is qualified in its entirety by
reference to the actual Plan, a form of which is set forth as Appendix A.
The Plan of Reorganization provides the details of the Transaction. In
essence, the Transaction will have three steps:
10
<PAGE>
o First, if the shareholders of the Fasciano Fund approve the
Transaction, the Fasciano Fund will transfer all of its assets to
the Neuberger Berman Fund. In exchange, the Fasciano Fund will
receive shares of the Neuberger Berman Fund with a total net asset
value equal to the value of the assets it is transferring (net of
the Fasciano Fund's liabilities) calculated on the close of business
on the date of the Transaction and the Neuberger Berman Fund will
assume all of those liabilities.
o Second, the Neuberger Berman Fund, through its transfer agent, will
open an account for each shareholder of the Fasciano Fund, and will
credit each such account with shares of the Neuberger Berman Fund
having the same total value as the Fasciano Fund shares that the
shareholder owned on the date of the Transaction.
o Third, the Fasciano Fund will subsequently dissolve.
On the day of the Transaction, Fasciano Fund shareholders will receive
shares of the Neuberger Berman Fund, with the same total value as their shares
of the Fasciano Fund. Because the Fasciano Fund is a registered investment
company whose shareholders can redeem their shares at any time for their net
asset value, there are no appraisal rights for those shareholders that vote
against the proposal.
Transaction expenses will be paid by _____________. The consummation of
the Transaction is subject to certain conditions relating to the Plan of
Reorganization, set forth below:*
o Approval of the Plan of Reorganization by the shareholders of the
Fasciano Fund;
o Receipt of certain legal opinions described in the Plan of
Reorganization;
o Continuing accuracy of the representations and warranties in the
Plan of Reorganization;
o Performance in all material respects of the Plan of Reorganization.
Neuberger Berman Equity Funds, on behalf of the Neuberger Berman Fund, and
Fasciano Fund may mutually agree to terminate the Plan of Reorganization at or
prior to the Transaction date. Alternatively, either Fund may decide
unilaterally with written notice to terminate the Plan of Reorganization under
certain circumstances. In addition, either Fund may waive the other party's
breach of a provision or failure to satisfy a condition of the Plan of
Reorganization.
------------------
* Consummation of the Transaction also is subject to certain standard conditions
enumerated in the Agreement among Michael Fasciano, Fasciano Company, Inc. and
Neuberger Berman Inc.
11
<PAGE>
BOARD CONSIDERATIONS
The Board of Directors of the Fasciano Fund has determined that the
Transaction is in the best interests of the Fasciano Fund and its shareholders
and has approved the Plan of Reorganization. In approving the Transaction, the
Board considered the following factors, among others:
o Because the Neuberger Berman Funds have a large investment
management business, the Board believes the Transaction can provide
the Fasciano Fund with the benefit of broader administration and
portfolio management services and can provide you with the benefit
of broader shareholder services. This includes the opportunity to
exchange shares of the New Fund with shares of other mutual funds in
the Neuberger Berman family of funds;
o the fact that that Michael Fasciano will be the portfolio manager to
the New Fund;
o the fact that shareholder interests would not be diluted in the
proposed Transaction; and
o the status of the Transaction as a tax-free reorganization.
The Fasciano Fund Board carefully reviewed certain "due diligence"
materials related to Neuberger Berman and its subsidiaries. The Board also met
with independent trustees of the Neuberger Berman funds. The Board was aware
that Michael Fasciano and NBMI derive certain benefits from the Transaction and
from the potential growth of the Fasciano Fund. After consideration of the
factors and other relevant information, the Board unanimously approved the Plan
of Reorganization and directed that it be submitted to shareholders for
approval. THE FASCIANO FUND BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PLAN OF REORGANIZATION AND THE TRANSACTIONS CONTEMPLATED
THEREBY.
At a meeting held on November 13, 2000, the Board of Trustees of Neuberger
Berman Equity Funds approved the Plan of Reorganization, finding that the
Transaction is in the best interests of Neuberger Berman Equity Funds and its
shareholders.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the
Neuberger Berman Fund's Investor Class shares, the Fasciano Fund and the
unaudited capitalization of the Funds on a PRO FORMA combined basis as of [June
30, 2000]:
NEUBERGER NEUBERGER
BERMAN BERMAN
FUND FUND
(INVESTOR FASCIANO PRO FORMA
CLASS) FUND COMBINED
------------ ------------- ------------
Net Assets......................... [271,869,321]
Net Asset Value Per Share.......... 32.55
12
<PAGE>
Shares Outstanding................. 8,199,185
If the Transaction is consummated, the capitalization of the Fasciano Fund
is likely to be different at the Transaction date as a result of daily share
purchase and redemption activity.
FEDERAL INCOME TAX CONSEQUENCES
The Transaction will constitute a "reorganization" within the meaning of
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended ("Code"). The
Transaction is not expected to have material federal income tax consequences to
the Fasciano Fund or its shareholders or the Neuberger Berman Fund. Following
the Transaction, the Neuberger Berman Fund will have the same federal tax basis
in the assets of the Fasciano Fund that the Fasciano Fund had in those assets
immediately prior to the Transaction. In addition, each shareholder of the
Fasciano Fund will have the same federal tax basis in the shares of the
Neuberger Berman Fund received in the Transaction that the shareholder had in
his or her shares of the Fasciano Fund immediately prior to the Transaction, and
the shareholder's holding period for those Neuberger Berman Fund shares will
include his or her holding period for those Fasciano Fund shares. It is not
expected that Fasciano Fund shareholders will incur any state or local tax
liabilities as a result of the Transaction, but the Fund's shareholders should
consult their tax advisors to make sure.
Neuberger Berman Equity Funds and the Fasciano Fund have not sought a tax
ruling from the Internal Revenue Service (the "IRS") regarding the foregoing,
but are acting in reliance on an opinion of counsel. The opinion of counsel is
not binding on the IRS and does not preclude the IRS from adopting a contrary
position.
The Neuberger Berman Fund's utilization after the Reorganization of any
pre-Reorganization capital losses realized by the Fasciano Fund could be subject
to limitations in future years under the Code.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
The Board of Directors of the Fasciano Fund is providing this
Prospectus/Proxy Statement in connection with the solicitation of proxies for
use at the Meeting. Solicitation of proxies will occur principally by mail, but
officers and service contractors of the Fund may also solicit proxies by
telephone, telegraph, or personal interview. [NAME OF PROXY SOLICITOR] has been
hired to assist in the proxy solicitation. For soliciting services, estimated
proxy expenses total $__________. [NBMI and the Fasciano Company will bear all
costs of solicitation.] If votes are recorded by telephone, [NAME OF PROXY
SOLICITOR] will use procedures designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their shares in
accordance with their instructions, and to confirm that a shareholder's
instructions have been properly recorded. Any shareholder giving a proxy may
revoke it at any time before it is exercised by submitting to the Fasciano Fund
13
<PAGE>
a written notice of revocation or a subsequently executed proxy, or by attending
the Meeting and voting in person.
Only shareholders of the Fasciano Fund of record at the close of business
on January 15, 2001 will be entitled to vote at the Meeting. On that date, there
were outstanding and entitled to be voted __________ shares of the Fasciano
Fund. Each share or fractional share is entitled to one vote or fraction
thereof.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting or any adjournment
thereof. If you sign and date your proxy card but do not mark it "For,"
"Against" or "Abstain," the persons named as proxies will vote it FOR the
Transaction. For information on adjournments of the Meeting, see "Quorum" below.
SHAREHOLDER APPROVAL
The Plan of Reorganization and the transactions contemplated by it are
being submitted for approval at the Meeting in accordance with the provisions of
the charter and bylaws of the Fasciano Fund. Under the charter and bylaws, the
Transaction must be approved by a majority of the outstanding shares of common
stock. Shareholders who do not vote for the Transaction do not have appraisal
rights.
In tallying shareholder votes, abstentions and broker non-votes (I.E.,
proxies sent in by brokers and other nominees that cannot be voted on a proposal
because instructions have not been received from the beneficial owners) will be
counted in determining whether a quorum is present for purposes of convening the
Meeting. With respect to voting on the Transaction, abstentions and broker
non-votes will have the same effect as votes cast against the proposal.
As of September 30, 2000, the following persons owned of record 5% or more
of the shares of the Fasciano Fund:
Charles Schwab & Co. 46%
101 Montgomery Street
San Francisco, CA 94104
National Financial 18%
Services Co.
200 Liberty Street
New York, NY 10281-1003
As of September 30, 2000, the directors and officers of the Fasciano Fund,
as a group, owned [1%] of the outstanding shares of the Fund.
14
<PAGE>
QUORUM; ADJOURNMENT
A quorum is constituted by a majority of the shares of stock entitled to
vote at the Meeting, present in person or represented by proxy. In the event
that a quorum is not present at the Meeting, or in the event that a quorum is
present at the Meeting but sufficient votes to approve the Transaction are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy and voting on the question of adjournment. The
persons named as proxies will vote in favor of such adjournments if they
determine that adjournment and additional solicitation is reasonable and in the
best interest of shareholders of the Fasciano Fund. Abstentions and broker
non-votes have no effect on the outcome of a vote on adjournment.
ANNUAL MEETINGS
The Fasciano Fund does not intend to hold annual meetings of shareholders
for the election of directors and other business unless and until such time as
less than a majority of the directors holding office have been elected by
shareholders, at which time the directors then in office will call a
shareholders' meeting for the purpose of electing directors. Shareholders have
the right to call a meeting of shareholders to consider the removal of one or
more directors or to act on other matters, and such meetings will be called when
requested in writing by the holders of record of 10% or more of the Fasciano
Fund's outstanding shares. To the extent required by law, the Fasciano Fund will
assist in shareholder communications on such matters.
ADDITIONAL INFORMATION ABOUT THE NEUBERGER BERMAN FUND
AND THE FASCIANO FUND
Additional information about the Fasciano Fund is included in the
Prospectus, dated November 1, 2000, which is incorporated by reference herein.
Additional information about the Fasciano Fund may also be obtained from its
Statement of Additional Information, dated November 1, 2000 and its Annual
Report for the fiscal year ended June 30, 2000, which have been filed with the
SEC. Copies of the Prospectus, Statement of Additional Information, and Annual
Report for the Fund may be obtained without charge by calling the Fund at
1-800-848-6050. The Fasciano Fund is subject to certain informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act, as
applicable, and in accordance with such requirements file reports, proxy
statements, and other information with the SEC. These materials may be inspected
and copied:
o At the Public Reference Facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549;
o At the SEC's Regional Offices at 7 World Trade Center, 13th
Floor, New York, New York 10048 and at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois
60661-2511;
15
<PAGE>
o By writing to the SEC's Public Reference Branch, Office of
Consumer Affairs and Information, 450 Fifth Street, N.W.,
Washington, D.C. at rates prescribed by the SEC;
o By e-mail request to [email protected] (for a duplicating
fee); and
o On the SEC's EDGAR database on the SEC's Internet Web
site at http://www.sec.gov.
The Neuberger Berman Fund is in the process of filing its first
registration statement with the SEC and does not yet have an effective
prospectus or statement of additional information. The registration of the
Neuberger Berman Fund as an open-end investment company will be effective prior
to the Transaction date. The Neuberger Berman Fund's Investor Class will assume
the performance history and financial highlights of the Fasciano Fund if
shareholders approve the Transaction.
LEGAL MATTERS
Opinions concerning certain legal matters pertaining to the Transaction
will be provided by legal counsel to Neuberger Berman Equity Funds, Kirkpatrick
& Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036-1800,
and legal counsel to the Fasciano Fund, Bell, Boyd & Lloyd LLC, 70 West Madison
Street, Suite 3300 Chicago, Illinois 60602.
EXPERTS
The audited financial statements of the Fasciano Fund incorporated by
reference herein and included in the Fund's Annual Report to Shareholders for
the fiscal year ended June 30, 2000 have been audited by Arthur Andersen LLP,
independent accountants. The independent accountants' report is included in the
Fasciano Fund's Annual Report to Shareholders. These financial statements have
been incorporated herein by reference in reliance on Arthur Andersen LLP's
report given on their authority as experts in auditing and accounting.
OTHER BUSINESS
The Board of Directors of the Fasciano Fund knows of no other business to
be brought before the Meeting. However, if any other matters come before the
Meeting, it is the intention that proxies that do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Fasciano Fund in writing at
the address on the cover page of this Prospectus/Proxy Statement or by
telephoning 1-800-848-6050.
* * *
16
<PAGE>
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, OR TO
VOTE VIA TELEPHONE BY CALLING [PHONE #] OR VIA THE INTERNET AT
WWW.PROXYVOTE.COM.
17
<PAGE>
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made as of
___________, 2000, between Neuberger Berman Equity Funds, a Delaware business
trust ("Equity Funds"), on behalf of Neuberger Berman Fasciano Fund, a
segregated portfolio of assets ("series") thereof ("Acquiring Fund"), and
Fasciano Fund, Inc., a Maryland corporation ("Acquired Fund"). (Acquiring Fund
and Acquired Fund are sometimes referred to herein individually as a "Fund" and
collectively as the "Funds.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by Acquiring Fund
are made and shall be taken or undertaken by Equity Funds.
Acquired Fund intends to change its identity, form, and place of
organization -- by converting to a series of Equity Funds -- through a
reorganization within the meaning of section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended ("Code"); and the parties intend this Agreement
to be, and adopt it as, a "plan of reorganization" within the meaning of the
regulations under section 368 of the Code ("Regulations"). Acquired Fund desires
to accomplish such conversion by transferring all of its assets to Acquiring
Fund in exchange solely for voting shares of beneficial interest in Acquiring
Fund and Acquiring Fund's assumption of all of Acquired Fund's liabilities,
followed by the distribution of those shares pro rata to the stockholders of
Acquired Fund in exchange therefor, all on the terms and conditions set forth
herein. (All such transactions are referred to herein as the "Reorganization.")
Acquired Fund has a single class of shares ("Acquired Fund Shares").
Acquiring Fund's shares will be divided into multiple classes, including
Investor Class shares. Only Acquiring Fund's Investor Class shares ("Acquiring
Fund Shares"), which are substantially similar to the Acquired Fund Shares, are
involved in the Reorganization.
In consideration of the mutual promises contained herein, the parties agree
as follows:
1. PLAN OF REORGANIZATION
1.1. Acquired Fund agrees to assign, sell, convey, transfer, and deliver all
of its assets described in paragraph 1.2 ("Assets") to Acquiring Fund. Acquiring
Fund agrees in exchange therefor:
(a) to issue and deliver to Acquired Fund the number of full and
fractional (rounded to the third decimal place) Acquiring Fund Shares equal to
the number of full and fractional Acquired Fund Shares then outstanding and
(b) to assume all of Acquired Fund's liabilities described in
paragraph 1.3 ("Liabilities").
These transactions shall take place at the Closing (as defined in paragraph
3.1).
<PAGE>
1.2. The Assets shall include all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), claims and rights of
action, rights to register shares under applicable securities laws, books and
records, deferred and prepaid expenses shown as assets on Acquired Fund's books,
and other property owned by Acquired Fund at the Effective Time (as defined in
paragraph 3.1).
1.3. The Liabilities shall include all of Acquired Fund's liabilities,
debts, obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the ordinary course
of business, whether or not determinable at the Effective Time, and whether or
not specifically referred to in this Agreement. Notwithstanding the foregoing,
Acquired Fund agrees to use its reasonable best efforts to discharge all its
known Liabilities before the Effective Time.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the Initial Acquiring Fund Share (as defined in paragraph 6.7)
shall be redeemed by Acquiring Fund at the subscription price paid therefor and
(b) Acquired Fund shall distribute the Acquiring Fund Shares it receives
pursuant to paragraph 1.1 to its stockholders of record, determined as of the
Effective Time (each a "Stockholder" and collectively "Stockholders"), in
constructive exchange for their Acquired Fund Shares. That distribution shall be
accomplished by Equity Funds' transfer agent opening accounts on Acquiring
Fund's share transfer books in the Stockholders' names and transferring those
Acquiring Fund Shares thereto. Each Stockholder's account shall be credited with
the respective pro rata number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares due to that Stockholder. Each Stockholder
also shall have the right to receive any unpaid dividends or other distributions
that Acquired Fund declared prior to the Effective Date with respect to the
Stockholder's Acquired Fund Shares. Acquiring Fund shall not issue certificates
representing the Acquiring Fund Shares issued in connection with the
Reorganization.
1.5. When the Acquiring Fund Shares are distributed pursuant to paragraph
1.4, all outstanding Acquired Fund Shares, including any represented by
certificates, shall be canceled on Acquired Fund's share transfer books.
1.6. As soon as reasonably practicable after distribution of the Acquiring
Fund Shares pursuant to paragraph 1.4, but in all events within [six months]
after the Effective Time, Acquired Fund shall be de-registered as an investment
company under the Investment Company Act of 1940, as amended ("1940 Act"), and
dissolved and any further actions shall be taken in connection therewith as
required by applicable law.
1.7. Any reporting responsibility of Acquired Fund to a public authority is
and shall remain its responsibility up to and including the date on which it is
dissolved and de-registered.
1.8. Any transfer taxes payable on issuance of Acquiring Fund Shares in a
name other than that of the registered holder on Acquired Fund's books of the
Acquired Fund Shares constructively exchanged therefor shall be paid by the
person to whom those Acquiring Fund Shares are to be issued, as a condition of
that transfer.
2. [Intentionally omitted]
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3. CLOSING AND EFFECTIVE TIME
3.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at Equity Funds' principal office on or about
_________ , 2001, or at such other place and/or on such other date as to which
the parties may agree. All acts taking place at the Closing shall be deemed to
take place simultaneously as of the close of business on the date thereof or at
such other time as to which the parties may agree ("Effective Time"). Articles
of Transfer shall be filed by Acquired Fund with the Maryland State Department
of Assessments and Taxation.
3.2. Acquired Fund shall deliver to Equity Funds at the Closing a schedule
of the Assets as of the Effective Time, which shall set forth the adjusted basis
and holding period for federal income tax purposes, by lot, of all Assets,
including all portfolio securities, transferred by Acquired Fund to Acquiring
Fund. Acquiring Fund's [accounting and pricing agent] shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period for federal income tax purposes, by
lot) concerning the Assets, including all portfolio securities, transferred by
Acquired Fund to Acquiring Fund, as reflected on Acquiring Fund's books
immediately after the Closing, does or will conform to that information on
Acquired Fund's books immediately before the Closing. Acquired Fund's custodian
shall deliver at the Closing a certificate of an authorized officer stating that
(a) the Assets it holds will be transferred to Acquiring Fund's custodian at the
Effective Time and (b) all necessary taxes in conjunction with the delivery of
the Assets, including all applicable federal and state stock transfer stamps, if
any, have been paid or provision for payment has been made.
3.3. Acquired Fund's transfer agent shall deliver to Equity Funds transfer
agent at the Closing a list of the names and addresses of the Stockholders and
the number of outstanding Acquired Fund Shares owned by each Stockholder, all as
of the Effective Time, certified by Acquired Fund's Secretary or an Assistant
Secretary thereof. Equity Funds' transfer agent shall deliver at the Closing (or
as soon as is reasonably practicable thereafter) a certificate as to the opening
on Acquiring Fund's share transfer books of accounts in the Stockholders' names.
Equity Funds or its transfer agent shall issue and deliver a confirmation to
Acquired Fund evidencing the Acquiring Fund Shares to be credited to Acquired
Fund at the Effective Time or provide evidence satisfactory to Acquired Fund
that those Acquiring Fund Shares have been credited to Acquired Fund's account
on Acquiring Fund's books.
3.4. Each party shall deliver to the other at the Closing (a) a certificate
executed in its name by its President or a Vice President in form and substance
satisfactory to the recipient and dated as of the Effective Time, to the effect
that the representations and warranties it made in this Agreement are true and
correct at the Effective Time, except as they may be affected by the
transactions contemplated by this Agreement, and (b) bills of sale, checks,
assignments, stock certificates, receipts, and other documents the other party
or its counsel reasonably requests.
4. REPRESENTATIONS AND WARRANTIES
4.1. Acquired Fund represents and warrants as follows:
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4.1.1. Acquired Fund is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Maryland; it has the power to
carry on its business as it is now being conducted and to carry out this
Agreement; and its Articles of Incorporation, as amended ("Charter"), have been
duly filed in the office of the Department of Assessments and Taxation thereof;
4.1.2. Acquired Fund is duly registered as an open-end management investment
company under the 1940 Act, and that registration is in full force and effect;
and all Acquired Fund Shares outstanding at the Effective Time will have been
duly authorized and duly and validly issued and outstanding shares of Acquired
Fund, fully paid and non-assessable by it;
4.1.3. At the Closing, Acquired Fund will have good and marketable title to
the Assets and full right, power, and authority to sell, assign, transfer, and
deliver the Assets free of any liens or other encumbrances; and on delivery and
payment for the Assets, Acquiring Fund will acquire good and marketable title
thereto;
4.1.4. Acquired Fund's current prospectus and statement of additional
information conform in all material respects to the applicable requirements of
the Securities Act of 1933, as amended ("1933 Act"), and the 1940 Act and the
rules and regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
4.1.5. Acquired Fund is not in violation of, and the execution and delivery
of this Agreement and consummation of the transactions contemplated hereby will
not conflict with or violate, Maryland law or any provision of its Charter or
By-Laws or of any provision of any agreement, instrument, lease, or other
undertaking to which Acquired Fund is a party or by which it is bound or result
in the acceleration of any obligation, or the imposition of any penalty, under
any agreement, judgment, or decree to which it is a party or by which it is
bound, except as otherwise disclosed in writing to and accepted by Equity Funds;
4.1.6. Except as otherwise disclosed in writing to and accepted by Equity
Funds, all material contracts and other commitments of or applicable to Acquired
Fund (other than this Agreement and investment contracts, including options,
futures, and forward contracts) will be terminated, or provision for discharge
of any liabilities of Acquired Fund thereunder will be made, at or prior to the
Effective Time, without either Fund's incurring any liability or penalty with
respect thereto and without diminishing or releasing any rights Acquired Fund
may have had with respect to actions taken or omitted or to be taken by any
other party thereto prior to the Closing;
4.1.7. Except as otherwise disclosed in writing to and accepted by Equity
Funds, no litigation, administrative proceeding, or (to Acquired Fund's
knowledge) investigation of or before any court or governmental body is
presently pending or (to Acquired Fund's knowledge) threatened against Acquired
Fund or any of its properties or assets that, if adversely determined, would
materially and adversely affect Acquired Fund's financial condition or the
conduct of its business; and Acquired Fund knows of no facts that might form the
basis for the institution of any such litigation, proceeding, or investigation
and is not a party to or subject to the provisions of any order, decree, or
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judgment of any court or governmental body that materially or adversely affects
its business or its ability to consummate the transactions contemplated hereby;
for purposes of this provision, investment underperformance or negative
investment performance, by themselves, shall not be deemed to constitute such
facts, provided all required performance disclosures have been made;
4.1.8. The execution, delivery, and performance of this Agreement have been
duly authorized as of the date hereof by all necessary action on the part of
Acquired Fund's board of directors, which has made the determinations required
by Maryland law and the 1940 Act; and, subject to approval by Acquired Fund's
stockholders, this Agreement constitutes a valid and legally binding obligation
of Acquired Fund, enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting creditors' rights and by
general principles of equity;
4.1.9. At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by Acquired Fund's
stockholders;
4.1.10. No governmental consents, approvals, authorizations, or filings are
required under the 1933 Act, the Securities Exchange Act of 1934, as amended
("1934 Act"), or the 1940 Act for the execution or performance of this Agreement
by Acquired Fund, except for (a) the filing with the Securities and Exchange
Commission ("SEC") of a registration statement by Equity Funds on Form N-14
relating to the Acquiring Fund Shares issuable hereunder, and any supplement or
amendment thereto ("N-14 Registration Statement"), including therein a
prospectus/proxy statement ("Proxy Statement"), and (b) such consents,
approvals, authorizations, and filings as have been made or received or as may
be required subsequent to the Effective Time;
4.1.11. On the effective date of the N-14 Registration Statement, at the
time of the Stockholders' Meeting (as defined in paragraph 5.2), and at the
Effective Time, the Proxy Statement will (a) comply in all material respects
with the applicable provisions of the 1933 Act, the 1934 Act, and the 1940 Act
and the rules and regulations thereunder and (b) not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that the
foregoing shall apply only to matters that are known or, in the exercise of due
diligence should be known, to Acquired Fund or its officers or directors, and
shall not apply to statements in or omissions from the Proxy Statement made in
reliance on and in conformity with information furnished by Equity Funds for use
therein;
4.1.12. The liabilities were incurred by Acquired Fund in the ordinary
course of its business and are associated with the assets; and there are no
liabilities other than liabilities disclosed or provided for in Acquired Fund's
financial statements referred to in paragraph 4.1.18 and liabilities incurred by
Acquired Fund in the ordinary course of its business subsequent to June 30,
2000, or otherwise disclosed in writing to Equity Funds, none of which has been
materially adverse to the business, assets, or results of Acquired Fund's
operations;
4.1.13. Acquired Fund qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past taxable year since
it commenced operations and will continue to meet all the requirements for that
5
<PAGE>
qualification for its current taxable year; the Assets will be invested at all
times through the Effective Time in a manner that ensures compliance with the
foregoing; and Acquired Fund has no earnings and profits accumulated in any
taxable year in which the provisions of Subchapter M did not apply to it;
4.1.14. Acquired Fund is not under the jurisdiction of a court in a
"title 11 or similar case" (within the meaning of section 368(a)(3)(A) of the
Code);
4.1.15. During the five-year period ending at the Effective Time, neither
Acquired Fund nor any person "related" (as defined in section 1.368-1(e)(3) of
the Regulations without regard to section 1.368-1(e)(3)(i)(A) thereof) to
Acquired Fund will have directly or through any transaction, agreement, or
arrangement with any other person, (a) acquired Acquired Fund Shares with
consideration other than Acquired Fund Shares, except for shares redeemed in the
ordinary course of Acquired Fund's business as an open-end investment company as
required by the 1940 Act, or (b) made distributions with respect to Acquired
Fund Shares, except for (i) dividends qualifying for the deduction for dividends
paid (as defined in section 561 of the Code) referred to in sections 852(a)(1)
and 4982(c)(1)(A) of the Code and (ii) additional distributions, to the extent
they do not exceed 50% of the value (without giving effect to those
distributions) of the proprietary interest in Acquired Fund at the Effective
Time;
4.1.16. Not more than 25% of the value of Acquired Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested in the
stock and securities of any one issuer, and not more than 50% of the value of
such assets is invested in the stock and securities of five or fewer issuers;
4.1.17. Acquired Fund's federal income and excise tax returns, and all
applicable state and local tax returns, for all taxable years through and
including the taxable year ended June 30, 2000, have been timely filed and all
taxes payable pursuant to those returns have been timely paid;
4.1.18. Acquired Fund's audited financial statements for the year ended June
30, 2000 and unaudited financial statements for the six months ended December
31, 2000, to be delivered to Equity Funds, fairly represent, in all material
respects, Acquired Fund's financial position as of such respective dates and the
results of its operations and changes in its net assets for the respective
periods then ended; and
4.1.19. As of the Effective Time, Acquired Fund will not have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire Acquired Fund Shares.
4.1.20. As of the Effective Time, Acquired Fund shall be in material
compliance with the laws requiring notice or registration for the sale of
securities in each state or other jurisdiction in which its shares have been
sold.
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4.2. Equity Funds represents and warrants as follows:
4.2.1. Equity Funds is a business trust duly organized, validly existing and
in good standing under the laws of the State of Delaware; it has the power to
carry on its business as it is now being conducted and to carry out this
Agreement on behalf of Acquiring Fund; and its Certificate of Trust has been
duly filed in the office of the Secretary of State of Delaware;
4.2.2. Equity Funds is duly registered as an open-end management investment
company under the 1940 Act, and that registration is in full force and effect;
4.2.3. Before the Effective Time, Acquiring Fund will be a duly established
and designated series of Equity Funds; Acquiring Fund has not commenced
operations and will not do so until after the Closing; and before the Effective
Time there will be no issued and outstanding shares in Acquiring Fund or any
other securities issued by it, except the Initial Acquiring Fund Share;
4.2.4. No consideration other than Acquiring Fund Shares (and Acquiring
Fund's assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
4.2.5. The Acquiring Fund Shares to be issued and delivered to Acquired Fund
hereunder, at the Effective Time, will have been registered under the Securities
Act of 1933, will have been duly authorized and, when issued and delivered as
provided herein, will be duly and validly issued and outstanding shares of
Acquiring Fund, fully paid and non-assessable by Equity Funds;
4.2.6. Acquiring Fund is not in violation of, and the execution and delivery
of this Agreement and consummation of the transactions contemplated hereby will
not conflict with or violate, Delaware law or any provision of the Trust
Instrument or By-Laws of Equity Funds or of any provision of any agreement,
instrument, lease, or other undertaking to which Acquiring Fund is a party or by
which it is bound or result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, judgment, or decree to which
Acquiring Fund is a party or by which it is bound, except as otherwise disclosed
in writing to and accepted by Acquired Fund;
4.2.7. Except as otherwise disclosed in writing to and accepted by Acquired
Fund, no litigation, administrative proceeding, or (to Equity Funds' knowledge)
investigation of or before any court or governmental body is presently pending
or (to Equity Funds' knowledge) threatened against Equity Funds with respect to
Acquiring Fund or any of its properties or assets that, if adversely determined,
would materially and adversely affect Acquiring Fund's financial condition or
the conduct of its business; and Equity Funds knows of no facts that might form
the basis for the institution of any such litigation, proceeding, or
investigation and is not a party to or subject to the provisions of any order,
decree, or judgment of any court or governmental body that materially or
adversely affects its business or its ability to consummate the transactions
contemplated hereby.
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<PAGE>
4.2.8. The execution, delivery, and performance of this Agreement have been
duly authorized as of the date hereof by all necessary action on the part of
Equity Funds' board of trustees (together with Acquired Fund's board of
directors, the "Boards"), which has made the determinations required by Delaware
law and the 1940 Act; and this Agreement constitutes a valid and legally binding
obligation of Acquiring Fund, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting creditors'
rights and by general principles of equity;
4.2.9. No governmental consents, approvals, authorizations, or filings are
required under the 1933 Act, the 1934 Act, or the 1940 Act for the execution or
performance of this Agreement by Equity Funds, except for (a) the filing with
the SEC of the N-14 Registration Statement, (b) the filing with the SEC of a
registration statement on Form N-1A relating to Acquiring Fund ("N-1A
Registration Statement"), and (c) such consents, approvals, authorizations, and
filings as have been made or received or as may be required subsequent to the
Effective Time;
4.2.10. On the effective date of the N-14 Registration Statement, at the
time of the Stockholders' Meeting, and at the Effective Time, the Proxy
Statement will (a) comply in all material respects with the applicable
provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules and
regulations thereunder and (b) not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided that the foregoing shall not apply to
statements in or omissions from the Proxy Statement made in reliance on and in
conformity with information furnished by Acquired Fund for use therein;
4.2.11. Acquiring Fund will be a "fund" as defined in section 851(g)(2) of
the Code, will meet all the requirements to qualify for treatment as a RIC for
its taxable year in which the Reorganization occurs, and presently intends to so
qualify for each succeeding taxable year in which Acquiring Fund is a series of
a registered investment company subject to Subchapter M of the Code;
4.2.12. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares issued in
the ordinary course of its business as a series of an open-end investment
company; nor does Acquiring Fund, or any person "related" (within the meaning of
section 1.368-1(e)(3) of the Regulations) to Acquiring Fund, have any plan or
intention to redeem or otherwise reacquire any Acquiring Fund Shares issued to
the Stockholders pursuant to the Reorganization, except to the extent it is
required by the 1940 Act to redeem any of its shares presented for redemption at
net asset value in the ordinary course of that business;
4.2.13. Following the Reorganization, Acquiring Fund (a) will continue
Acquired Fund's "historic business" (within the meaning of section 1.368-1(d)(2)
of the Regulations) and (b) will use a significant portion of Acquired Fund's
"historic business assets" (within the meaning of section 1.368-1(d)(3) of the
Regulations) in a business; in addition, Acquiring Fund has no plan or intention
8
<PAGE>
to sell or otherwise dispose of any of the Assets, except for dispositions made
in the ordinary course of that business and dispositions necessary to maintain
its status as a RIC;
4.2.14. There is no plan or intention for Acquiring Fund to be dissolved or
merged into another business trust or a corporation or any "fund" thereof
(within the meaning of section 851(g)(2) of the Code) following the
Reorganization;
4.2.15. Immediately after the Reorganization, (a) not more than 25% of the
value of Acquiring Fund's total assets (excluding cash, cash items, and U.S.
government securities) will be invested in the stock and securities of any one
issuer and (b) not more than 50% of the value of such assets will be invested in
the stock and securities of five or fewer issuers; and
4.2.16. Except as contemplated by this Agreement, the Acquiring Fund does
not have outstanding any options, warrants or other rights to subscribe for or
purchase any Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares.
4.3. Each party represents and warrants as follows:
4.3.1. The fair market value of the Acquiring Fund Shares received by each
Stockholder will be approximately equal to the fair market value of its Acquired
Fund Shares constructively surrendered in exchange therefor;
4.3.2. Its management (a) is unaware of any plan or intention of
Stockholders to redeem, sell, or otherwise dispose of (i) any portion of their
Acquired Fund Shares before the Reorganization to any person "related" (within
the meaning of section 1.368-1(e)(3) of the Regulations) to either Fund or (ii)
any portion of the Acquiring Fund Shares to be received by them in the
Reorganization to any person "related" (within such meaning) to Acquiring Fund,
(b) does not anticipate dispositions of those Acquiring Fund Shares at the time
of or soon after the Reorganization to exceed the usual rate and frequency of
dispositions of shares of Acquired Fund as an open-end investment company, (c)
expects that the percentage of Stockholder interests, if any, that will be
disposed of as a result of or at the time of the Reorganization will be de
minimis, and (d) does not anticipate that there will be extraordinary
redemptions of Acquiring Fund Shares immediately following the Reorganization;
4.3.3. The Stockholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
4.3.4. Immediately following consummation of the Reorganization, the
Stockholders will own all the Acquiring Fund Shares and will own such shares
solely by reason of their ownership of Acquired Fund Shares immediately before
the Reorganization;
4.3.5. Immediately following consummation of the Reorganization, Acquiring
Fund will hold the same assets -- except for assets distributed to stockholders
who receive cash or other property and assets used to pay Reorganization
expenses -- and be subject to the same liabilities that Acquired Fund held or
was subject to immediately prior to the Reorganization, plus any liabilities for
expenses of the parties incurred in connection with the Reorganization. Such
excepted assets, together with the amount of all redemptions and distributions
9
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(other than regular, normal income and capital gain dividends) made by Acquired
Fund immediately preceding the Reorganization, will, in the aggregate,
constitute less than 1% of its net assets;
4.3.6. None of the compensation received by any Stockholder who is an
employee of or service provider to Acquired Fund will be separate consideration
for, or allocable to, any of the Acquired Fund Shares held by that Stockholder;
none of the Acquiring Fund Shares received by any such Stockholder will be
separate consideration for, or allocable to, any employment agreement,
investment advisory agreement, or other service agreement; and the consideration
paid to any such Stockholder will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's-length for
substantially similar services; and
4.3.7. Neither Fund will be reimbursed for any expenses incurred by it
or on its behalf in connection with the Reorganization unless those expenses
are solely and directly related to the Reorganization (determined in
accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187).
5. COVENANTS
5.1. Acquired Fund covenants to operate its business in the ordinary course
between the date hereof and the Closing, it being understood that (a) such
ordinary course will include declaring and paying customary dividends and other
distributions and changes in operations contemplated by Acquired Fund's normal
business activities and (b) Acquired Fund will retain exclusive control of its
investments until the Closing, provided that it shall not dispose of more than
an insignificant portion of its historic business assets (as defined above)
during that period without Equity Funds' prior consent. With respect to aspects
of its business other than Acquiring Fund, Equity Funds shall promptly inform
Acquired Fund of any material developments outside the ordinary course of
business, provided that Acquired Fund and its officers, directors, agents and
representatives, in recognition that Neuberger Berman Inc. is a publicly held
company, shall have first agreed in writing not to disclose said information to
any other party, or to purchase or sell any securities of Neuberger Berman Inc.
(or any related securities), until the fact of such development shall have been
disseminated to the securities markets. Equity Funds shall promptly notify
Acquired Fund of the pendency of any actions or investigations relating to
aspects of its business other than Acquiring Fund, provided that Acquired Fund
and its officers, directors, agents and representatives, in recognition that
Neuberger Berman Inc. is a publicly held company, shall have first agreed in
writing not to disclose said information to any other party, or to purchase or
sell any securities of Neuberger Berman Inc. (or any related securities), until
the fact of such action or investigation shall have been disseminated to the
securities markets.
5.2. Acquired Fund covenants to call a stockholders' meeting to consider and
act on this Agreement and to take all other action necessary to obtain approval
of the transactions contemplated hereby ("Stockholders' Meeting").
5.3. Acquired Fund covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
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5.4. Acquired Fund covenants that it will assist Equity Funds in obtaining
information Equity Funds reasonably requests concerning the beneficial ownership
of Acquired Fund Shares.
5.5. Acquired Fund covenants that its books and records (including all
books and records required to be maintained under the 1940 Act and the rules and
regulations thereunder) will be turned over to Equity Funds at the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy Statement in
compliance with applicable federal and state securities laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be executed and
delivered all assignments and other instruments, and will take or cause to be
taken all further action, the other Fund may deem necessary or desirable to vest
in, and confirm to, (a) Acquiring Fund, title to and possession of all the
Assets, and (b) Acquired Fund, title to and possession of the Acquiring Fund
Shares to be delivered hereunder, and otherwise to carry out the intent and
purpose hereof.
5.8. Subject to this Agreement, each Fund covenants to take or cause to be
taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
5.9 Equity Funds shall promptly prepare and file with the SEC a
Registration Statement on Form N-14 in connection with the Reorganization.
Equity Funds shall also make any other filings reasonably required in connection
with the offer and distribution of its shares in connection with the
Reorganization, including, without limitation, filings with state regulatory
authorities. Acquired Fund shall assist Equity Funds in preparing the N-14
Registration Statement.
5.10. Equity Funds will prepare and file with the SEC an amendment to its
registration statement on Form N-1A relating to the continued issuance by
Acquiring Fund of its shares following the Closing, which registration statement
shall comply in all material respects with the requirements of the 1933 Act, the
1940 Act, and the rules and regulations thereunder.
5.11. Except to the extent permitted to do otherwise pursuant to an
exemptive order of the SEC or a no-action letter from the SEC staff, Equity
Funds covenants that, for a period of three years from the Closing, at least 75%
of the members of its Board of Trustees shall not be interested persons of an
investment adviser to Equity Funds or investment adviser to Acquired Fund, and
that, for a period of two years from the Closing, Equity Funds will not enter
into, participate in, or allow to continue any arrangement that would constitute
an "unfair burden" on the Acquiring Fund or its shareholders within the meaning
of Section 15(f) of the 1940 Act.
5.12. As of the Effective Time, Acquiring Fund shall be in material
compliance with the laws requiring notice or registration for the sale of
securities in each state and in any other jurisdiction in which it has been
informed by Acquired Fund that its shareholders reside.
6. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) the other Fund's
performance of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
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hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made at
and as of the Effective Time, and (c) the following further conditions that, at
or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Board and shall have been approved by
Acquired Fund's stockholders in accordance with Acquired Fund's Charter and
By-Laws and applicable law.
6.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The N-14 Registration Statement shall have
become effective under the 1933 Act, the N-1A Registration Statement shall have
become effective under the 1933 Act and the 1940 Act, no stop orders suspending
the effectiveness thereof shall have been issued, and the SEC shall not have
issued an unfavorable report with respect to the Reorganization under section
25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin
consummation of the transactions contemplated hereby under section 25(c) of the
1940 Act. All consents, orders, and permits of federal, state, and local
regulatory authorities (including the SEC and state securities authorities)
deemed necessary by either party to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on either Fund's assets or properties, provided that either party
may for itself waive any of such conditions.
6.3. At the Effective Time, no action, suit, or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or to obtain damages or other relief in connection with,
the transactions contemplated hereby.
6.4. Acquired Fund shall have received an opinion of Kirkpatrick & Lockhart
LLP ("Equity Funds' Counsel") substantially to the effect that:
6.4.1. Acquiring Fund is a duly established series of Equity Funds, a
business trust duly organized, validly existing, and in good standing under the
laws of the State of Delaware with power under its Trust Instrument to own all
its properties and assets and, to the knowledge of Equity Funds' Counsel, to
carry on its business as presently conducted;
6.4.2. This Agreement (a) has been duly authorized, executed, and delivered
by Equity Funds on behalf of Acquiring Fund and (b) assuming due authorization,
execution, and delivery of this Agreement by Acquired Fund, is a valid and
legally binding obligation of Equity Funds with respect to Acquiring Fund,
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws relating to or affecting creditors' rights and by general
principles of equity;
6.4.3. The Acquiring Fund Shares to be issued and distributed to the
Stockholders under this Agreement, assuming their due delivery as contemplated
by this Agreement, when issued, will be duly authorized, validly issued and
outstanding, and fully paid and non-assessable by Equity Funds and free of
preemptive rights;
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6.4.4. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, materially
violate Equity Funds' Trust Instrument or By-Laws or any provision of any
agreement (known to Equity Funds' Counsel, without any independent inquiry or
investigation) to which Equity Funds (with respect to Acquiring Fund) is a party
or by which it is bound or (to the knowledge of Equity Funds' Counsel, without
any independent inquiry or investigation) result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement, judgment, or
decree to which Equity Funds is a party or by which it is bound, except as set
forth in that opinion or as otherwise disclosed in writing to and accepted by
Acquired Fund;
6.4.5. To the knowledge of Equity Funds' Counsel (without any independent
inquiry or investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by Equity Funds
(on behalf of Acquiring Fund) of the transactions contemplated herein, except
those obtained under the 1933 Act, the 1934 Act, and the 1940 Act and those that
may be required under state securities laws;
6.4.6. Equity Funds is registered with the SEC as an investment company,
such registration is in full force and effect, and to the knowledge of Equity
Funds' Counsel no order has been issued or proceeding instituted to suspend that
registration; and
6.4.7. To the knowledge of Equity Funds' Counsel (without any independent
inquiry or investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending or
threatened as to Equity Funds (with respect to Acquiring Fund) or any of its
properties or assets attributable or allocable to Acquiring Fund and (b) Equity
Funds (with respect to Acquiring Fund) is not a party to or subject to the
provisions of any order, decree, or judgment of any court or governmental body
that materially and adversely affects Acquiring Fund's business, except as set
forth in that opinion or as otherwise disclosed in writing to and accepted by
Acquired Fund.
In rendering the foregoing opinion, Equity Funds' Counsel may (1) rely, as to
matters governed by the laws of the State of Delaware, on an opinion of
competent Delaware counsel reasonably acceptable to Acquired Fund, (2) make
assumptions regarding the authenticity, genuineness, and/or conformity of
documents and copies thereof without independent verification thereof, (3) limit
that opinion to applicable federal and state law, (4) define the word
"knowledge" and related terms to mean the knowledge of attorneys then with
Equity Funds' Counsel who have devoted substantive attention to matters directly
related to this Agreement and the Reorganization, and (5) rely on certificates
of officers of Equity Funds as to matters of fact.
6.5. Equity Funds shall have received an opinion of Bell, Boyd & Lloyd LLC
("Acquired Fund Counsel") substantially to the effect that:
6.5.1. Acquired Fund is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Maryland with power under its
Charter to own all its properties and assets and, to the knowledge of Acquired
Fund Counsel, to carry on its business as it is now being conducted;
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6.5.2. This Agreement (a) has been duly authorized, executed, and delivered
by Acquired Fund and (b) assuming due authorization, execution, and delivery of
this Agreement by Equity Funds on behalf of Acquiring Fund, is a valid and
legally binding obligation of Acquired Fund, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
6.5.3. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, materially
violate Acquired Fund's Charter or By-Laws or any provision of any agreement
(known to Acquired Fund Counsel, without any independent inquiry or
investigation) to which Acquired Fund is a party or by which it is bound or (to
the knowledge of Acquired Fund Counsel, without any independent inquiry or
investigation) result in the acceleration of any obligation, or the imposition
of any penalty, under any agreement, judgment, or decree to which Acquired Fund
is a party or by which it is bound, except as set forth in that opinion or as
otherwise disclosed in writing to and accepted by Equity Funds;
6.5.4. To the knowledge of Acquired Fund Counsel (without any independent
inquiry or investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by Acquired
Fund of the transactions contemplated herein, except those obtained under the
1933 Act, the 1934 Act, and the 1940 Act and those that may be required under
state securities laws;
6.5.5. Acquired Fund is registered with the SEC as an investment company,
such registration is in full force and effect, and to the knowledge of Acquired
Fund Counsel no order has been issued or proceeding instituted to suspend that
registration; and
6.5.6. To the knowledge of Acquired Fund Counsel (without any independent
inquiry or investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending or
threatened as to Acquired Fund or any of its properties or assets and (b)
Acquired Fund is not a party to or subject to the provisions of any order,
decree, or judgment of any court or governmental body that materially and
adversely affects Acquired Fund's business, except as set forth in that opinion
or as otherwise disclosed in writing to and accepted by Equity Funds.
In rendering the foregoing opinion, Acquired Fund Counsel may (1) rely, as to
matters governed by the laws of the State of Maryland, on an opinion of
competent Maryland counsel reasonably acceptable to Acquiring Fund, (2) make
assumptions regarding the authenticity, genuineness, and/or conformity of
documents and copies thereof without independent verification thereof, (3) limit
such opinion to applicable federal and state law, (4) define the word
"knowledge" and related terms to mean the knowledge of attorneys then with
Acquired Fund Counsel who have devoted substantive attention to matters directly
related to this Agreement and the Reorganization, and (5) rely on certificates
of officers of the Acquired Fund as to matters of fact.
6.6. Each party shall have received an opinion of Equity Funds' Counsel,
addressed to and in form and substance reasonably satisfactory to it, as to the
federal income tax consequences mentioned below ("Tax Opinion"). In rendering
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the Tax Opinion, Equity Funds' Counsel may rely as to factual matters,
exclusively and without independent verification, on the representations made in
this Agreement, which Equity Funds' Counsel may treat as representations made to
it, or in separate letters addressed to Equity Funds' Counsel and the
certificates delivered pursuant to paragraph 3.4. The Tax Opinion shall be
substantially to the effect that, based on the facts and assumptions stated
therein and conditioned on consummation of the Reorganization in accordance with
this Agreement, for federal income tax purposes:
6.6.1. Acquiring Fund's acquisition of the Assets in exchange solely for
Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities,
followed by Acquired Fund's distribution of those shares pro rata to the
Stockholders constructively in exchange for their Acquired Fund Shares, will
qualify as a reorganization within the meaning of section 368(a)(1)(F) of the
Code, and each Fund will be "a party to a reorganization" within the meaning of
section 368(b) of the Code;
6.6.2. Acquired Fund will recognize no gain or loss on the transfer of the
Assets to Acquiring Fund in exchange solely for Acquiring Fund Shares and
Acquiring Fund's assumption of the Liabilities or on the subsequent distribution
of those shares to the Stockholders in constructive exchange for their Acquired
Fund Shares;
6.6.3. Acquiring Fund will recognize no gain or loss on its receipt of
the Assets in exchange solely for Acquiring Fund Shares and its assumption of
the Liabilities;
6.6.4. Acquiring Fund's basis in the Assets will be the same as Acquired
Fund's basis therein immediately before the Reorganization, and Acquiring Fund's
holding period for the Assets will include Acquired Fund's holding period
therefor;
6.6.5. A Stockholder will recognize no gain or loss on the constructive
exchange of all its Acquired Fund Shares solely for Acquiring Fund Shares
pursuant to the Reorganization;
6.6.6. A Stockholder's aggregate basis in the Acquiring Fund Shares to be
received by it in the Reorganization will be the same as the aggregate basis in
its Acquired Fund Shares to be constructively surrendered in exchange for those
Acquiring Fund Shares, and its holding period for those Acquiring Fund Shares
will include its holding period for those Acquired Fund Shares, provided the
Stockholder held the latter as capital assets at the Effective Time; and
6.6.7. For purposes of section 381 of the Code, Acquired Fund and Acquiring
Fund will be treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Acquired Fund's taxable
year, Acquired Fund's tax attributes enumerated in section 381(c) of the Code
will be taken into account by Acquiring Fund as if there had been no
Reorganization, and the part of Acquired Fund's taxable year before the
Reorganization will be included in Acquiring Fund's taxable year after the
Reorganization.
Notwithstanding subparagraphs 6.6.2 and 6.6.4, the Tax Opinion may state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
Stockholder with respect to any asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes on the transfer
thereof under a mark-to-market system of accounting.
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6.7. Prior to the Closing, Equity Funds' trustees shall have authorized the
issuance of, and Acquiring Fund shall have issued, one Acquiring Fund Share to
Neuberger Berman Management Inc. ("NBMI") or an affiliate thereof ("Initial
Acquiring Fund Share") to vote on the matters referred to in paragraph 6.8.
6.8. Equity Funds (on behalf of and with respect to Acquiring Fund) shall
have entered into an investment advisory contract, a sub-advisory agreement, and
other agreements necessary for Acquiring Fund's operation as a series of Equity
Funds. Each such contract and agreement shall have been approved by Equity
Funds' trustees and, to the extent required by law, by (a) such of those
trustees who are not "interested persons" thereof (as defined in the 1940 Act)
and (b) NBMI or its affiliate, as the case may be, as Acquiring Fund's sole
initial shareholder.
At any time before the Closing, either party may waive (i) any of the foregoing
conditions (except that set forth in paragraph 6.1) or (ii) the effect of any
inaccuracies in the representations and warranties made to it pursuant to this
Agreement, if, in the judgment of its Board, that waiver will not have a
material adverse effect on the interests of its Fund's shareholders or
stockholders, as the case may be.
7. BROKERAGE FEES
7.1. Each party represents and warrants to the other that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
8. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not set forth
herein, and this Agreement constitutes the entire agreement between the parties.
The representations, warranties, and covenants contained herein or in any
document delivered pursuant hereto or in connection herewith shall not survive
the Closing.
9. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Acquired Fund's stockholders:
9.1. By either Fund upon written notice to the other Fund (a) in the event
of the other Fund's material breach of any representation, warranty, or covenant
contained herein to be performed at or prior to the Effective Time, (b) if a
condition to its obligations has not been met and it reasonably appears that
such condition will not or cannot be met, (c) if the Board of the Acquired Fund
determines in good faith that consummation of the Reorganization is not in the
best interests of the Acquired Fund's shareholders; or (d) if the Closing has
not occurred on or before [April 30], 2001;
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9.2. By the parties' mutual agreement; or
9.3 By either party if the Asset Purchase Agreement among Neuberger Berman
Inc., Michael Fasciano, and Fasciano Company, Inc. dated as of October 13, 2000
shall not have been consummated and closed at Closing.
In the event of termination under paragraphs 9.2 or 9.3, there shall be no
liability for damages on the part of either Fund, or the trustees, directors or
officers of either Fund, to the other Fund. There shall be no liability for
damages on the part of the Acquired Fund or the directors or officers of the
Acquired Fund, to the Acquired Fund, if a termination pursuant to paragraph
9.1(c) is a direct result of an occurrence, subsequent to the date hereof, of an
event relating to Neuberger Berman Inc., Neuberger Berman, LLC or Neuberger
Berman Management Inc. such that the Board of the Acquired Fund acting in good
faith reasonably determines that Neuberger Berman Management Inc. succeeding as
the investment adviser of the Acquired Fund is not in the best interests of the
Fund or its shareholders.
10. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Acquired Fund's stockholders, in any manner
mutually agreed on in writing by the parties; provided that following that
approval no such amendment shall have a material adverse effect on the
Stockholders' interests.
11. MISCELLANEOUS
11.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the case of any
conflict between those laws and the federal securities laws, the latter shall
govern.
11.2. Nothing expressed or implied herein is intended or shall be construed
to confer on or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
11.3. Acquired Fund acknowledges that Equity Funds is a business trust
organized in series form. This Agreement is executed by Equity Funds on behalf
of Acquiring Fund and by its trustees and/or officers in their capacities as
such, and not individually. Equity Funds' obligations under this Agreement are
not binding on or enforceable against any of its trustees, officers, or
shareholders but are only binding on and enforceable against the assets and
property of Acquiring Fund and no other series of Equity Funds. A trustee of
Equity Funds shall not be personally liable hereunder to Acquired Fund or its
directors or stockholders for any act, omission, or obligation of Equity Funds
or Acquiring Fund. Acquired Fund agrees that, in asserting any rights or claims
under this Agreement, it shall look only to Acquiring Fund's assets and property
in settlement of those rights and claims and not to those trustees, officers, or
shareholders.
11.4. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by each party and delivered to
the other party. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
11.5 All notices or other communications required or permitted under this
Agreement shall be in writing and shall be sent by personal delivery, registered
or certified mail, postage prepaid, telecopier or facsimile transmission, or
recognized overnight courier as follows:
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(a) If to Equity Funds:
Neuberger Berman Equity Funds
605 Third Avenue - 2nd Floor
New York, NY 10158-0180
Attention: Peter Sundman, President
cc: Ellen Metzger, Esq.
telecopier: (212) 476-5781
(b) If to Acquired Fund:
Fasciano Fund, Inc.
190 S. LaSalle Street - Suite 2800
Chicago, Illinois 60603
Attention: Michael Fasciano
(312) 444-6044
telecopier: (312) 444-6011
with a copy to:
Alan Goldberg, Esq.
Bell, Boyd & Lloyd LLC
70 West Madison Street, Suite 3300
Chicago, IL 60602
Either party may change its address from time to time by providing written
notice in the manner set forth above. All notices shall be effective upon
delivery, when deposited in the mail addressed as set forth above, or on receipt
of confirmation of delivery by telecopier or facsimile transmission.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officer as of the day and year first written
above.
NEUBERGER BERMAN EQUITY FUNDS, on
behalf of its series, Neuberger Berman Fasciano Fund
By: ______________________
President
FASCIANO FUND, INC.
By: ______________________
President
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APPENDIX B
INFORMATION RELATING TO BUYING AND SELLING SHARES
OF THE NEUBERGER BERMAN FUND'S INVESTOR CLASS SHARES
SHARE PRICES
Because Investor Class Shares of the Neuberger Berman Fund do not have sales
charges, the price you pay for each share is the Neuberger Berman Fund's net
asset value per share. The Neuberger Berman Fund pays 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 Neuberger Berman 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; Neuberger Berman 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 Neuberger Berman
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 Neuberger
Berman 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 Neuberger Berman Fund could change on
days when you can't buy or sell shares. Remember, though, any purchase or sale
takes place at the next share price calculated after your order is accepted.
Share Price Calculations
------------------------
The price of Investor Class Shares of the Neuberger Berman Fund is the total
value of the assets attributable to Investor Class minus the liabilities
attributable to that class, divided by the total number of Investor Class
shares. Because the value of the Neuberger Berman Fund's securities changes
every business day, the share price usually changes as well.
When valuing portfolio securities, the Neuberger Berman Fund uses market prices.
However, in rare cases, events that occur after certain markets have closed may
render these prices unreliable.
When the Neuberger Berman Fund believes a market price does not reflect a
security's true value, the Neuberger Berman Fund may substitute for the market
price a fair-value estimate made according to methods approved by its trustees.
The Neuberger Berman Fund may also use these methods to value certain types of
illiquid securities.
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PRIVILEGES AND SERVICES
If you purchase Investor Class shares directly from Neuberger Berman Management,
you have access to the services listed below. 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 of at least $100
from the Neuberger Berman Fund on a periodic schedule. You can also set up
payments to distribute the full value of an account over a given time. While
this service can be helpful to many investors, be aware that it could generate
capital gains or losses.
ELECTRONIC BANK TRANSFERS - When you sell Neuberger Berman 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.NB.COM, you can make transactions, check your account,
and access a wealth of information.
FUNDFONE(R) - 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 Neuberger Berman
Fund shares.
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.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS - The Neuberger Berman Fund pays out to shareholders any net
income and net capital gains. The Neuberger Berman Fund makes these
distributions once a year (in December).
Unless you designate otherwise, your income and capital gain distributions from
the Neuberger Berman Fund will be reinvested in the Neuberger Berman Fund.
However, if you prefer you may:
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o receive all distributions in cash
o reinvest capital gain distributions, but receive income distributions
in cash
Distributions taken in cash can be sent to you by check, by electronic transfer
to a designated bank account or invested in Investor Class shares of another NB
fund of the same account registration. To take advantage of one of these
options, please indicate your choice on your application. If you use an
investment provider, you must consult its representative about whether your
income and capital gain distributions from the Neuberger Berman Fund will be
reinvested in the Neuberger Berman Fund or paid to you in cash.
HOW DISTRIBUTIONS ARE TAXED - Except for tax-advantaged retirement accounts and
other tax-exempt investors, all Neuberger Berman Fund distributions you receive
are generally taxable to you, regardless of whether you take them in cash or
reinvest them. Neuberger Berman Fund distributions to Roth IRAs, other
individual retirement accounts and qualified retirement plans generally are tax
free. Eventual withdrawals from a Roth IRA also may 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 taxable as if they had been paid the
previous year. Your tax statement 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 Neuberger Berman Fund held the securities
it sold, not when you bought your shares of the Neuberger Berman Fund, or
whether you reinvested your distributions.
HOW SHARE TRANSACTIONS ARE TAXED - When you sell or exchange Neuberger Berman
Fund shares, you generally realize a taxable gain or loss. The exception, once
again, is tax-advantaged retirement accounts.
Buying Shares Before a Distribution
-----------------------------------
The money the Neuberger Berman Fund earns, either as income or as capital gains,
is reflected in its share price until it distributes the money. At that time,
the amount of the distribution is deducted from the share price. The amount of
the distribution is either reinvested in additional Neuberger Berman Fund shares
or paid to shareholders in cash.
Because of this, if you buy shares just before the Neuberger Berman 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 from a distribution.
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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 Neuberger Berman Fund distributions
and share 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.
MAINTAINING YOUR ACCOUNT
WHEN YOU BUY SHARES - Instructions for buying shares from Neuberger Berman
Management are on pages B-7 and B-8. See the section entitled INVESTMENT
PROVIDERS on page B-7 if you are buying shares through an investment provider.
Whenever you make an initial investment in the Neuberger Berman 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 B-9 and B-10. See the
section entitled INVESTMENT PROVIDERS on pages B-6 and B-7 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:
o in unusual circumstances where the law allows additional time if
needed
o if a check you wrote to buy shares hasn't cleared by the time you
sell those shares
The Neuberger Berman 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.
In some cases, you will have to place your order to sell shares in writing, and
you will need a signature guarantee. These cases include:
o when selling more than $50,000 worth of shares
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<PAGE>
o 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
o 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 Neuberger
Berman 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 any proceeds by mail.
UNCASHED CHECKS - We do not pay interest on uncashed checks from Neuberger
Berman Fund distributions or the sale of Neuberger Berman 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
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).
WHEN YOU EXCHANGE SHARES - You can move money from the Neuberger Berman Fund to
another NB fund through an exchange of shares, or by electing to use your cash
distributions from the Neuberger Berman Fund to purchase Investor Class shares
of another NB fund. There are three things to remember when making an exchange:
o both accounts must have the same registration
o you will need to observe the minimum investment and minimum account
balance requirements for the fund accounts involved
o 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, subject to certain restrictions. On non-retirement
accounts, this option is available to you unless you indicate on your account
application (or in a subsequent letter to us or to State Street Bank and Trust
Company) that you don't want it.
Whenever we receive a telephone order, we take steps to make sure the order is
legitimate. These may include asking for identifying information and recording
the call. As long as the Neuberger Berman Fund and its representatives take
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<PAGE>
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 Neuberger Berman Fund reserves
the right to:
o suspend the offering of shares
o reject any exchange or investment order
o change, suspend, or revoke the exchange privilege
o suspend the telephone order privilege
o satisfy an order to sell fund shares with securities rather than
cash, for certain very large orders
o 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
o change its investment minimums or other requirements for buying and
selling, or waive any minimums or requirements for certain investor
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
Neuberger Berman Fund to withhold 31% of all money you receive from the
Neuberger Berman 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.
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.
B-6
<PAGE>
Investment Providers
--------------------
The Investment Class 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 Neuberger
Berman Fund 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.
If you use an investment provider, you must contact that provider to buy or sell
shares of the Neuberger Berman Fund described in this prospectus.
Most investment providers allow you to take advantage of the NB fund exchange
program, which is designed for moving money from one NB fund to another through
an exchange of shares. See page B-5 for more information.
BUYING SHARES
Method Things to know
--------------------------------------------------------------------------------
Sending us a check Your first investment must be at least $1,000
Additional investments can be as little as $100
We cannot accept cash, money orders, starter
checks, or travelers checks
You will be responsible for any losses or fees
resulting from a bad check; if necessary, we may
sell other shares belonging to you in order to
cover these losses
All checks must be made out to "Neuberger Berman
Funds;" we cannot accept checks made out to you or
other parties and signed over to us
--------------------------------------------------------------------------------
Wiring money All wires must be for at least $1,000
--------------------------------------------------------------------------------
Exchanging from All exchanges must be for at least $1,000
another fund
Both accounts involved must be registered in the
same name, address and tax ID number
An exchange order cannot be cancelled or changed
once it has been placed
--------------------------------------------------------------------------------
By telephone We do not accept phone orders for a first
investment
Additional investments must be for at least $1,000
--------------------------------------------------------------------------------
B-7
<PAGE>
Shares will be purchase at the time we receive your
money
Not available on retirement accounts
--------------------------------------------------------------------------------
Setting up systematic All investments must be at least $100
investments
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(R), call 800-335-9366
--------------------------------------------------------------------------------
Call 800-877-9700 to notify us of your purchase
Immediately follow up with a wire or electronic transfer
To add shares to an existing account using FUNDFONE(R), call 800-335-9366
--------------------------------------------------------------------------------
Call 800-877-9700 for instructions
Retirement Plans
----------------
We offer investors a number of tax-advantaged plans for retirement saving:
B-8
<PAGE>
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.
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
--------------------------------------------------------------------------------
B-9
<PAGE>
Method Things to know
--------------------------------------------------------------------------------
Exchanging into another All exchanges must be for at least $1,000
fund
Both accounts involved must be registered in the
same name, address and tax ID number
An exchange order cannot be cancelled or changed
once it has been placed
--------------------------------------------------------------------------------
Setting up systematic For accounts with at least $5,000 worth of shares
withdrawals in them
Withdrawals must be at least $100
--------------------------------------------------------------------------------
Redemption fee There is no redemption fee for Neuberger Berman
Fund shares.
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, 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
--------------------------------------------------------------------------------
Write a request to sell shares as described above
Call 800-877-9700 to obtain the correct fax number
--------------------------------------------------------------------------------
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(R), call 800-335-9366
--------------------------------------------------------------------------------
Call 800-877-9700 to place your order
--------------------------------------------------------------------------------
B-10
<PAGE>
--------------------------------------------------------------------------------
To place an order using FUNDFONE(R), call 800-335-9366
--------------------------------------------------------------------------------
See page 78 or call 800-877-9700 for more information
Investors with Internet access can enjoy many valuable and time-saving features
by visiting us on the World Wide Web at WWW.NB.COM.
The site offers complete information on all NB 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 Fund shareholder, you can use the web site to access
account information and even make secure transactions - 24 hours a day.
REDEMPTION FEE
There is no redemption fee for Neuberger Berman Fund shares. If, however, you
buy and then sell shares of Neuberger Berman International and Neuberger Berman
Technology Funds or exchange them for shares of another fund in 180 days or less
of purchase, you will be charged a 2.00% fee on the current net asset value of
the shares sold or exchanged. For International Fund, this fee will be applied
only to those shares purchased on or after September 11, 2000. The fee is paid
to the NB funds to offset costs associated with short-term trading, such as
portfolio transaction and administrative costs.
Neuberger Berman Management uses a "first-in, first-out" method to determine how
long you have held your NB fund shares. This means that if you bought shares on
different days, the shares purchased first will be considered redeemed first for
purposes of determining whether the redemption fee will be charged.
We will not impose the redemption fee on a redemption or an exchange of:
o shares acquired by reinvestment of dividends or other distribution of
the funds;
o shares held in an account of certain qualified retirement plans; or
o shares purchased through other investment providers, IF the provider
imposes a similar type of fee or otherwise has a policy in place to
deter short-term trading.
Shareholders purchasing through an investment provider should contact that
provider to determine whether it imposes a redemption fee or has such a policy
in place.
B-11
<PAGE>
FUND STRUCTURE
The Neuberger Berman Fund uses a "multiple class" structure. The Neuberger
Berman Fund offers one class of shares. This prospectus/proxy statement relates
solely to the Neuberger Berman Fund Investor Class shares.
Conversion to the Euro
----------------------
Like other mutual funds, the NB funds 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 NB funds' portfolios 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.
B-12
<PAGE>
APPENDIX C
ARRANGEMENTS WITH SERVICE PROVIDERS
FASCIANO FUND
The investment adviser to the Fasciano Fund is Fasciano Company, Inc.,
190 S. LaSalle Street, Suite 2800 Chicago, Il 60603 ("Fasciano Company").
Pursuant to an investment advisory agreement with the Fasciano Fund, the
Fasciano Company furnishes continuing investment supervision and is responsible
for overall management of the Fasciano Fund's business affairs. The Fasciano
Company also furnishes office space, equipment, and personnel to the Fasciano
Fund and assumes the expenses of printing and distributing the Fasciano Fund's
prospectus and reports to prospective investors. The Fasciano Fund pays all of
its own expenses (except those the Fasciano Company specifically assumes)
including but not limited to printing and postage charges; securities
registration, custodian and transfer agency fees; accounting service fees and
audit and legal fees.
For its services, the Fasciano Company receives a monthly fee at an
annual rate of 1.0% of the average daily net asset value of the Fasciano Fund.
The advisory agreement provides that the Fasciano Company will reimburse the
Fasciano Fund to the extent that its total annual operating expenses exceed
2.0%, exclusive of (i) taxes, (ii) interest charges, (iii) litigation and other
extraordinary expenses, and (iv) brokers' commissions and other charges relating
to the purchase and sale of the Fasciano Fund's portfolio securities.
Firstar Mutual Fund Services, LLC, 615 East Michigan Street, Milwaukee,
WI 53201 ("Firstar") provides administrative services to the Fasciano Fund.
Under the administration servicing agreement, Firstar has contracted to provide
the following services: (1) compile data for and prepare timely notices to the
SEC required pursuant to Rule 24f-2 under the 1940 Act and semi-annual reports
to the SEC and current shareholders; (2) coordinate execution and filing of all
federal and state tax returns and required tax filings other than those required
to be made by the Fasciano Fund's custodian and transfer agent; (3) prepare
compliance filings and Blue Sky registrations pursuant to state securities laws
with the advice of the Fasciano Fund's counsel; (4) assist with preparation of
annual and semi-annual reports and registration statements for the Fasciano
Fund; (5) monitor the Fasciano Fund's expense accruals and cause all appropriate
expenses to be paid on proper authorization from the Fasciano Fund; (6) monitor
the Fasciano Fund's status as a regulated investment company under Subchapter M;
(7) maintain the Fasciano Fund's fidelity bond as required by the Investment
Company Act of 1940 ("1940 Act"); and (8) monitor compliance with the policies
and limitations of the Fasciano Fund as set forth in the Fasciano Fund's
prospectus, SAI, by-laws and articles of incorporation.
The Fasciano Fund pays Firstar a monthly fee at the annual rate of
0.06% of the Fasciano Fund's average daily net assets up to $200 million, 0.05%
of the next $500 million of average daily net assets, and 0.03% of average daily
net assets in excess of $700 million, subject to the minimum annual fees
described herein.
<PAGE>
Firstar Bank-Milwaukee, P.O. Box 701, Milwaukee, Wisconsin 53201, acts
as custodian of the securities and other assets of the Fasciano Fund. As
custodian, it is responsible for, among other things, safeguarding and
controlling the Fasciano Fund's cash and securities, handling the receipt and
delivery of securities, and collecting interest and dividends on the Fasciano
Fund's investments.
Firstar also serves as transfer agent and dividend disbursing agent for
the Fasciano Fund under a shareholder servicing agent agreement. As transfer and
dividend disbursing agent, Firstar has agreed to: (1) issue and redeem shares of
the Fasciano Fund; (2) make dividend and other distributions to shareholders of
the Fasciano Fund; (3) respond to correspondence from Fasciano Fund shareholders
and others relating to its duties; (4) maintain shareholder accounts; and (5)
make periodic reports to the Fasciano Fund.
The Fasciano Fund has no principal underwriter or distributor. Shares
are self-distributed, i.e., distributed directly by the Fasciano Fund.
NEUBERGER BERMAN FUND
The investment manager to the Neuberger Berman Fund will be Neuberger
Berman Management Inc., 605 Third Avenue, 2nd Floor, New York NY 10158-0180
("NBMI"), a wholly-owned subsidiary of Neuberger Berman, Inc., pursuant to a
management agreement with the Trust on behalf of the Neuberger Berman Fund
("Management Agreement"). The Management Agreement will provide, in substance,
that NBMI will make and implement investment decisions for the Neuberger Berman
Fund in its discretion and will continuously develop an investment program for
the Neuberger Berman Fund's assets. NBMI will be permitted to effect securities
transactions on behalf of the Neuberger Berman Fund through associated persons
of NBMI. Pursuant to the Management Agreement, NBMI also will provide office
space, equipment, and facilities and the personnel necessary to perform
executive, administrative, and clerical functions. NBMI will pay all salaries,
expenses, and fees of the officers, trustees, and employees of the Trust who are
officers, directors, or employees of NBMI. The Neuberger Berman Fund will pay
NBMI a management fee of 0.85% of the Neuberger Berman Fund's average daily net
assets.
Another wholly-owned subsidiary of Neuberger Berman Inc. and an
affiliate of NBMI, Neuberger Berman, LLC, 605 Third Avenue, New York NY
10158-3698, will be sub-adviser to the Neuberger Berman Fund pursuant to a
sub-advisory agreement ("Sub-Advisory Agreement").
The Sub-Advisory Agreement will provide in substance that Neuberger
Berman will furnish to NBMI, upon reasonable request, the same type of
investment recommendations and research that Neuberger Berman, from time to
time, provides to its principals and employees for use in managing client
accounts. In this manner, NBMI 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 NBMI. The
Sub-Advisory Agreement provides that NBMI will pay for the services rendered by
Neuberger Berman based on the direct and indirect costs to Neuberger Berman in
connection with those services.
2
<PAGE>
NBMI will provide facilities, services, and personnel to the Neuberger
Berman Fund pursuant to an administration agreement with the Trust
("Administration Agreement"). For such administrative services, the Neuberger
Berman Fund will pay NBMI a fee of 0.15% of the Neuberger Berman Fund's average
daily net assets.
Under the Administration Agreement, NBMI will also provide to the
Neuberger Berman Fund and its shareholders certain shareholder,
shareholder-related, and other services that are not furnished by the Neuberger
Berman Fund's shareholder servicing agent. NBMI will provide the following
direct shareholder services: (1) process Neuberger Berman Fund share purchase
and redemption requests; (2) coordinate and implement bank-to-wire transfers in
connection with Neuberger Berman Fund share purchases and redemptions; (3)
execute exchange orders; (4) respond to telephone and in-person inquiries from
existing shareholders; (5) deal with shareholder complaints and correspondence;
(6) assist the shareholder servicing agent in the development and implementation
of specified programs and systems to enhance overall shareholder servicing
capabilities; (7) solicit and gather shareholder proxies, perform services
connected with the qualification of the Neuberger Berman Fund's shares for sale
in various states; and (8) furnish other services the parties agree from time to
time should be provided under the Administration Agreement.
From time to time, NBMI or the Neuberger Berman 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 Neuberger Berman 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.
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110, ("State Street") will serve as the Neuberger Berman Fund's custodian,
transfer agent and shareholder servicing agent. As such, State Street will,
among other things, safeguard the Neuberger Berman Fund's assets, receive
purchase orders and redemption requests, maintain shareholder accounts, execute
transactions with broker-dealers authorized by the Neuberger Berman Fund,
prepare and transmit payments for dividends and record the issuance of shares of
the Neuberger Berman Fund.
NBMI will serve as the distributor ("Distributor") in connection with
the offering of the Neuberger Berman Fund shares. Neuberger Berman Investor
Class shares will be offered on a no-load basis. The Distributor is the
Neuberger Berman Fund's "principal underwriter" within the meaning of the 1940
Act and, as such, will act as agent in arranging for the sale of the Neuberger
Berman Fund's Investor Class shares without sales commission or other
compensation and will bear all advertising and promotion expenses incurred in
the sale of those shares. The Distributor will agree: (1) to sell shares of the
Neuberger Berman Fund only at net asset value ("NAV"); (2) that the Neuberger
Berman Fund shall receive 100% of such NAV; and (3) to enter into agreements
with dealers selected by the Distributor, providing for the sale to such dealers
and resale by such dealers of Neuberger Berman Fund shares at their NAV.
3
<PAGE>
--------------------------------------------------------------------------------
NEUBERGER BERMAN FASCIANO FUND
605 Third Avenue
New York, NY 10158
To acquire substantially all of the assets and liabilities of
FASCIANO FUND, INC.
190 S. LaSalle Street
Suite 2800
Chicago, Illinois 60603
STATEMENT OF ADDITIONAL INFORMATION
(Special Meeting of Stockholders of Fasciano Fund, Inc.)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Prospectus/Proxy Statement dated ___________,
2000 for the Special Meeting of Stockholders of Fasciano Fund, Inc. (the
"Fasciano Fund") to be held on ________, 200_. Copies of the Prospectus/Proxy
Statement may be obtained without charge by calling the Fund at
1-800-____________. Unless otherwise indicated, capitalized terms used herein
and not otherwise defined have the same meanings as are given to them in the
Prospectus/Proxy Statement.
Further information about the Fasciano Fund is contained in the
Fasciano Fund's Statement of Additional Information ("SAI") dated November 1,
2000, which is incorporated herein by reference (so it is legally considered a
part of this SAI). The audited financial statements and related independent
public accountant's report for the Fasciano Fund contained in the Annual Report
for the fiscal year ended June 30, 2000 are also incorporated herein by
reference. No other parts of the Annual Report are incorporated by reference
herein.
The date of this Statement of Additional Information is _________ __,
2000.
<PAGE>
TABLE OF CONTENTS
PAGE
----
INVESTMENT INFORMATION.........................................................2
Investment Policies and Limitations.......................................2
Investment Insight........................................................4
Investment Program........................................................5
Additional Investment Information.........................................6
PERFORMANCE INFORMATION.......................................................20
CERTAIN RISK CONSIDERATIONS...................................................20
TRUSTEES AND OFFICERS.........................................................20
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES.............................28
Investment Manager and Administrator.....................................28
Management and Administration Fees.......................................29
Sub-Adviser..............................................................30
Investment Companies Managed.............................................30
Codes of Ethics..........................................................32
Management and Control of NB Management and Neuberger Berman.............32
DISTRIBUTION ARRANGEMENTS.....................................................33
ADDITIONAL PURCHASE INFORMATION...............................................33
Share Prices and Net Asset Value.........................................34
ADDITIONAL REDEMPTION INFORMATION.............................................38
Suspension of Redemptions................................................38
Redemptions in Kind......................................................38
DIVIDENDS AND OTHER DISTRIBUTIONS.............................................38
ADDITIONAL TAX INFORMATION....................................................38
Taxation of the Fund.....................................................39
Taxation of the Fund's Shareholders......................................42
PORTFOLIO TRANSACTIONS........................................................42
Portfolio Turnover.......................................................45
REPORTS TO SHAREHOLDERS.......................................................46
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS................................46
CUSTODIAN AND TRANSFER AGENT..................................................47
INDEPENDENT AUDITORS..........................................................47
LEGAL COUNSEL.................................................................47
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........................47
FINANCIAL STATEMENTS..........................................................48
APPENDIX A: RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER..................A-1
<PAGE>
GENERAL INFORMATION
The stockholders of the Fasciano Fund, are being asked to approve or
disapprove the Agreement and Plan of Reorganization dated as of _______, 2000
(the "Plan of Reorganization"), between Neuberger Berman Equity Funds ("Trust")
and the Fasciano Fund and the transactions contemplated thereby. The Plan of
Reorganization contemplates the transfer of the Fasciano Fund's assets to, and
the assumption of the Fasciano Fund's liabilities by, the Neuberger Berman
Fasciano Fund ("Neuberger Berman Fund"), a newly created series of Neuberger
Berman Equity Funds, in exchange for full and fractional shares of the Neuberger
Berman Fund (the "Conversion"). The Neuberger Berman Fund shares received by the
Fasciano Fund will have an aggregate net asset value equal to the aggregate net
asset value of the shares of the Fasciano Fund that are outstanding at the
Closing Date (as defined in the Plan of Reorganization).
Following the exchange, the Fasciano Fund will make a liquidating
distribution of the Neuberger Berman Fund shares to its stockholders. Each
stockholder owning shares of the Fasciano Fund at the Closing Date will receive
shares of the Neuberger Berman Fund of equal value, plus the right to receive
any unpaid dividends and distributions that were declared before the Closing
Date on shares in the Fasciano Fund. The Fasciano Fund will then dissolve.
The Special Meeting of Stockholders of the Fasciano Fund to consider
the Plan of Reorganization and the related transactions will be held at ____
_.m., Eastern Time, on ________, 200_, at ________________. For further
information about the transaction, see the Prospectus/Proxy Statement.
<PAGE>
INVESTMENT INFORMATION
The Neuberger Berman 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 following information supplements the discussion in the Prospectus
of the investment objective, policies, and limitations of the Neuberger Berman
Fund. The investment objective and, unless otherwise specified, the investment
policies and limitations of the Neuberger Berman Fund are not fundamental. Any
investment objective, policy or limitation that is not fundamental may be
changed by the trustees of the Trust ("Trustees") without shareholder approval.
The fundamental investment policies and limitations of the Neuberger Berman Fund
may not be changed without the approval of the lesser of:
(1) 67% of the total units of beneficial interest ("shares") of
the Neuberger Berman Fund represented at a meeting at which more than 50% of the
outstanding Neuberger Berman Fund shares are represented or
(2) a majority of the outstanding shares of the Neuberger Berman
Fund.
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."
INVESTMENT POLICIES AND LIMITATIONS
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 Neuberger Berman Fund.
The Neuberger Berman Fund's fundamental investment policies and
limitations are as follows:
1. BORROWING. The Neuberger Berman Fund may not borrow money,
except that it 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 Neuberger Berman Fund's total assets, it 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 Neuberger Berman Fund 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 Neuberger Berman Fund 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.
2
<PAGE>
3. DIVERSIFICATION. The Neuberger Berman Fund 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 or securities issued by other registered
investment companies) if, as a result, (i) more than 5% of the value of the
Neuberger Berman Fund's total assets would be invested in the securities of that
issuer or (ii) the Neuberger Berman Fund would hold more than 10% of the
outstanding voting securities of that issuer.
4. INDUSTRY CONCENTRATION. The Neuberger Berman Fund 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 Neuberger Berman Fund 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 an issue of debt securities or (ii) by engaging in repurchase
agreements.
6. REAL ESTATE. The Neuberger Berman Fund may not purchase real
estate unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit the Neuberger Berman Fund
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 Neuberger Berman Fund may not issue
senior securities, except as permitted under the 1940 Act.
8. UNDERWRITING. The Neuberger Berman Fund may not underwrite
securities of other issuers, except to the extent that the Neuberger Berman
Fund, in disposing of its own securities, may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 ("1933 Act").
For purposes of the limitation on commodities, the Neuberger Berman
Fund does not consider foreign currencies or forward contracts to be physical
commodities.
The Neuberger Berman Fund has the following fundamental investment
policy:
Notwithstanding any other investment policy of the Neuberger
Berman Fund, the Neuberger Berman Fund may invest all of its
net investable assets (cash, securities, and receivables
relating to securities) in an open-end management investment
company having substantially the same investment objective,
policies, and limitations as the Neuberger Berman Fund.
The following investment policies and limitations are non-fundamental:
1. BORROWING. The Neuberger Berman Fund ay not purchase
securities if outstanding borrowings, including any reverse repurchase
agreements, exceed 5% of its total assets.
3
<PAGE>
2. LENDING. Except for the purchase of debt securities and
engaging in repurchase agreements, the Neuberger Berman Fund may not make any
loans other than securities loans.
3. MARGIN TRANSACTIONS. The Neuberger Berman Fund may not
purchase securities on margin from brokers or other lenders, except that the
Neuberger Berman Fund 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 Neuberger Berman Fund may not invest
more than 10% of the value of its total assets in securities of foreign issuers,
provided that this limitation shall not apply to foreign securities denominated
in U.S. dollars, including American Depositary Receipts ("ADRs").
5. ILLIQUID SECURITIES. The Neuberger Berman Fund 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 Neuberger Berman Fund has valued the
securities, such as repurchase agreements maturing in more than seven days.
Although the Neuberger Berman Fund does not have policies limiting its
investment in warrants, the Neuberger Berman Fund does not currently intend to
invest in warrants unless acquired in units or attached to securities.
CASH MANAGEMENT AND TEMPORARY DEFENSIVE POSITIONS. For temporary
defensive purposes, or to manage cash pending investment or payout, the
Neuberger Berman Fund 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.
Pursuant to an exemptive order received from the U.S. Securities and
Exchange Commission, the Neuberger Berman Fund also may invest up to 25% of its
total assets in shares of a money market fund managed by Neuberger Berman
Management Inc. ("NB Management"), to manage uninvested cash and cash collateral
received in connection with securities lending.
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.
In advertisements, the Neuberger Berman Fund's allocation to a
particular market sector(s) may be discussed as a way to demonstrate how the
Neuberger Berman Fund manager uncovers stocks that he perceives to fit the
Neuberger Berman Fund's investment parameters. These discussions may include
references to current or former holdings of the Neuberger Berman Fund.
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INVESTMENT PROGRAM
The primary investment objective of the Neuberger Berman Fund is
long-term capital growth. The manager also may consider a company's potential
for current income prior to selecting it for the Neuberger Berman Fund.
To pursue this goal, the Neuberger Berman Fund invests primarily in the
common stocks of smaller companies with market capitalizations of less than $1.5
billion (at the time the Neuberger Berman Fund first invests in them). These
include securities having common stock characteristics, such as securities
convertible into common stocks, and rights and warrants to purchase common
stocks. (The Neuberger Berman Fund may continue to hold or add to a position in
a stock after it has grown beyond $1.5 billion.) The manager looks for companies
with:
o strong business franchises that are likely to sustain long-term rates of
earnings growth for a three to five year time horizon, and
o stock prices that the market has under-valued relative to the value of
similar companies and that offer excellent potential to appreciate over a
three to five year time horizon.
In choosing companies that the manager believes are likely to achieve
the Neuberger Berman Fund's objective, the manager considers the company's
ability to sustain long-term rates of earnings growth, as well as overall
business qualities. These qualities include the company's profitability and cash
flow, financial condition, insider ownership, and stock valuation. In selecting
companies that the manager believes may have greater potential to appreciate in
price, the manager will invest the Neuberger Berman Fund in smaller companies
that are under-followed. However, the Neuberger Berman Fund may hold the stocks
of small companies that grow into medium-size companies and may invest in larger
companies that the manager believes present attractive opportunities for
long-term growth.
The Neuberger Berman Fund invests in companies on a long-term basis and
emphasizes long-term investment performance. From time to time, however, the
Neuberger Berman Fund may invest on a short-term basis or may sell within a few
months securities that it originally had intended to be a long-term investment
if the security no longer meets the quality or valuation requirements of the
Neuberger Berman Fund.
The manager generally does not attempt to invest the Neuberger Berman
Fund based on a market timing strategy. Rather, the manager will invest in a
company when the manager believes the company meets the Neuberger Berman Fund's
requirements for long-term earnings growth prospects and price appreciation
potential.
The Neuberger Berman Fund generally seeks to be fully invested in
common stocks. However, at times, the manager may invest a large portion of the
Neuberger Berman Fund's assets in cash if the manager is unable to locate and
invest in a sufficient number of companies that meet the Neuberger Berman Fund's
quality and valuation requirements.
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ADDITIONAL INVESTMENT INFORMATION
The Neuberger Berman Fund may make the following investments, among
others, some of which are part of the Neuberger Berman Fund's principal
investment strategies and some of which are not. The principal risks of the
Neuberger Berman Fund's principal strategies are disclosed in the Prospectus. It
may not buy all of the types of securities or use all of the investment
techniques that are described.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot be
expected to be sold within seven days at approximately the price at which they
are valued. These may include unregistered or other restricted securities and
repurchase agreements maturing in greater than seven days. Illiquid securities
may also include commercial paper under section 4(2) of the 1933 Act, as
amended, and Rule 144A securities (restricted securities that may be traded
freely among qualified institutional buyers pursuant to an exemption from the
registration requirements of the securities laws); these securities are
considered illiquid unless NB Management, acting pursuant to guidelines
established by the Trustees, 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 Neuberger
Berman Fund to value or dispose of due to the absence of an active trading
market. The sale of some illiquid securities by the Neuberger Berman Fund may be
subject to legal restrictions which could be costly to it. [THE NEUBERGER BERMAN
FUND DOES NOT EXPECT TO INVEST IN ILLIQUID SECURITIES DURING THE NEXT FISCAL
YEAR.]
POLICIES AND LIMITATIONS. The Neuberger Berman Fund may invest up to
[15%] of its net assets in illiquid securities.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Neuberger Berman
Fund 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 Neuberger Berman Fund 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 Neuberger Berman
Fund may not enter into a repurchase agreement with a maturity of more than
seven days if, as a result, more than 15% of the value of its net assets would
then be invested in such repurchase agreements and other illiquid securities.
The Neuberger Berman Fund may enter into a repurchase agreement only if (1) the
underlying securities are of a type that the Neuberger Berman Fund'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 Neuberger Berman Fund's account by its custodian or a bank acting
as the Neuberger Berman Fund's agent.
SECURITIES LOANS. The Neuberger Berman Fund 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
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100% of the market value of the loaned securities, is continuously maintained by
the borrower with the Neuberger Berman Fund. The Neuberger Berman Fund 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
Neuberger Berman Fund an amount equivalent to any dividends or interest paid on
such securities. These loans are subject to termination at the option of the
Neuberger Berman Fund or the borrower. The Neuberger Berman Fund 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 Neuberger Berman Fund 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 Neuberger Berman Fund securities involve some risk of loss of
rights in the collateral should the borrower fail financially.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund may lend its
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 Neuberger Berman Fund by depositing
collateral in a form determined to be satisfactory by the 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 Neuberger Berman
Fund 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
Neuberger Berman Fund qualify under Rule 144A and an institutional market
develops for those securities, the Neuberger Berman Fund 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 Neuberger Berman Fund's illiquidity. NB Management, acting under guidelines
established by the Trustees, may determine that certain securities qualified for
trading under Rule 144A are liquid. Regulation S under the 1933 Act permits the
sale abroad of securities that are not registered for sale in the United States.
Where registration is required, the Neuberger Berman Fund 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 Neuberger Berman
Fund may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
the Neuberger Berman Fund might obtain a less favorable price than prevailed
when it decided to sell. Restricted securities for which no market exists are
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priced by a method that the 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 Neuberger Berman Fund's 15% limit on investments in illiquid securities.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the
Neuberger Berman Fund 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 Neuberger Berman Fund.
POLICIES AND LIMITATIONS. Reverse repurchase agreements are considered
borrowings for purposes of the Neuberger Berman Fund's investment policies and
limitations concerning borrowings. While a reverse repurchase agreement is
outstanding, the Neuberger Berman Fund 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 Neuberger Berman Fund's obligations under the
agreement.
FOREIGN SECURITIES. The Neuberger Berman Fund may invest in U.S.
dollar-denominated securities of foreign issuers and foreign branches of U.S.
banks, including negotiable certificates of deposit ("CDs"), bankers'
acceptances and commercial paper. Foreign issuers are issuers organized and
doing business principally outside the U.S. and include banks, non-U.S.
governments, and quasi-governmental organizations. 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 Neuberger Berman Fund also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(3) obligations of other corporations, and (4) obligations of foreign
governments and their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities involves the special risks associated with
investing in non-U.S. issuers, as described in the preceding paragraph, and the
additional risks of (1) adverse changes in foreign exchange rates, and (2)
adverse changes in investment or exchange control regulations (which could
prevent cash from being brought back to the United States). Additionally,
dividends and interest payable on foreign securities (and gains realized on
disposition thereof) may be subject to foreign taxes, including taxes withheld
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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 Neuberger Berman Fund endeavors to achieve the most
favorable net results on its 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 Neuberger Berman Fund are
uninvested and no return is earned thereon. The inability of the Neuberger
Berman Fund to make intended security purchases due to settlement problems could
cause it to miss attractive investment opportunities. Inability to dispose of
Neuberger Berman Fund securities due to settlement problems could result in
losses to the Neuberger Berman Fund due to subsequent declines in value of the
securities or, if the Neuberger Berman Fund 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 Neuberger Berman Fund may invest in American Depositary Receipts
(ADRs), European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs),
and International Depositary Receipts (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 Neuberger Berman Fund
may not purchase foreign currency denominated securities if, as a result, more
than 20% of its total assets (taken at market value) would be invested in such
securities. Within those limitations, however, the Neuberger Berman Fund 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
Neuberger Berman Fund's quality standards. The Neuberger Berman Fund 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, "FINANCIAL INSTRUMENTS")
FUTURES CONTRACTS AND OPTIONS THEREON. The Neuberger Berman Fund 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 Neuberger Berman Fund to enhance portfolio liquidity and maintain a
defensive position without having to sell portfolio securities. The Neuberger
Berman Fund views investment in (i) interest rate and securities index futures
and options thereon as a maturity management device and/or a device to reduce
risk or preserve total return in an adverse environment for the hedged
securities, and (ii) foreign currency futures and options thereon as a means of
establishing more definitely the effective return on, or the purchase price of,
securities denominated in foreign currencies that are held or intended to be
acquired by the portfolio.
For purposes of managing cash flow, the Neuberger Berman Fund may
purchase and sell stock index futures contracts, and may purchase and sell
options thereon, to increase its 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.
While futures contracts entered into by the Neuberger Berman Fund will usually
be liquidated in this manner, the Neuberger Berman Fund may instead make or take
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delivery of underlying securities whenever it appears economically advantageous
for it to do so.
"Margin" with respect to a futures contract is the amount of assets
that must be deposited by the Neuberger Berman Fund with, or for the benefit of,
a futures commission merchant in order to initiate and maintain the Neuberger
Berman Fund's futures positions. The margin deposit made by the Neuberger Berman
Fund 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
Neuberger Berman Fund 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 Neuberger Berman Fund. In computing its NAV, the Neuberger Berman
Fund marks to market the value of its open futures positions. The Neuberger
Berman Fund 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 Neuberger Berman Fund 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 Neuberger Berman Fund 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 Neuberger Berman Fund'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 Neuberger Berman Fund's futures
position and the securities held by or to be purchased for the Neuberger Berman
Fund. 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
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gain, to the investor. Losses that may arise from certain futures transactions
are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation in the
price of a futures contract or option thereon during a single trading day; once
the daily limit has been reached, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by a Fund, it could (depending on the size of the position) have
an adverse impact on the NAV of the Fund.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund may 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 Neuberger Berman Fund does not engage in transactions in
futures and options on futures for speculation.
The Neuberger Berman Fund 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 funds'
exposure to the performance of a recognized securities index, such as the S&P
500 Index.
CALL OPTIONS ON SECURITIES. The Neuberger Berman Fund may write covered
call options and may purchase call options on securities. 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 Neuberger Berman Fund on its NAV) or to
earn premium income. Portfolio securities on which call options may be written
and purchased by the Neuberger Berman Fund are purchased solely on the basis of
investment considerations consistent with the Neuberger Berman Fund's investment
objective.
When the Neuberger Berman Fund 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 Neuberger Berman Fund
receives a premium for writing the call option. So long as the obligation of the
call option continues, the Neuberger Berman Fund may be assigned an exercise
notice, requiring it to deliver the underlying security against payment of the
exercise price. The Neuberger Berman Fund 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 Neuberger Berman Fund's total return. When writing a covered call
option, the Neuberger Berman Fund, 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 Neuberger Berman Fund has written expires
unexercised, the Neuberger Berman Fund will realize a gain in the amount of the
premium; however, that gain may be offset by a decline in the market value of
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the underlying security during the option period. If the call option is
exercised, the Neuberger Berman Fund will realize a gain or loss from the sale
of the underlying security.
When the Neuberger Berman Fund purchases a call option, it pays a
premium for the right to purchase a security from the writer at a specified
price until a specified date.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund may write covered
call options and may purchase call options on securities. The Neuberger Berman
Fund may also write covered call options and may purchase call options in
related closing transactions. The Neuberger Berman Fund writes only "covered"
call options on securities it owns (in contrast to the writing of "naked" or
uncovered call options, which the Neuberger Berman Fund will not do).
The Neuberger Berman Fund would purchase a call option to offset a
previously written call option. The Neuberger Berman Fund also may purchase a
call option to protect against an increase in the price of the securities it
intends to purchase.
PUT OPTIONS ON SECURITIES. The Neuberger Berman Fund may write and
purchase put options on securities. The Neuberger Berman Fund will receive a
premium for writing a put option, which obligates the Neuberger Berman Fund to
acquire a security at a certain price at any time until a certain date if the
purchaser decides to exercise the option. The Neuberger Berman Fund may be
obligated to purchase the underlying security at more than its current value.
When the Neuberger Berman Fund 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 Neuberger Berman Fund
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 Neuberger Berman Fund are purchased solely on the basis of investment
considerations consistent with the Neuberger Berman Fund's investment objective.
When writing a put option, the Neuberger Berman Fund, 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 Neuberger Berman Fund has written expires unexercised, the Fund will realize
a gain in the amount of the premium.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund 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
Neuberger Berman Fund on its NAV).
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 Neuberger Berman Fund terminates upon
expiration of the option or, at an earlier time, when the Neuberger Berman Fund
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 Neuberger Berman
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Fund and is never exercised or closed out, the Neuberger Berman Fund 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 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
Neuberger Berman Fund and a counter-party, with no clearing organization
guarantee. Thus, when the Neuberger Berman Fund sells (or purchases) an OTC
option, it generally will be able to "close out" the option prior to its
expiration only by entering into a closing transaction with the dealer to whom
(or from whom) the Neuberger Berman Fund originally sold (or purchased) the
option. There can be no assurance that the Neuberger Berman Fund would be able
to liquidate an OTC option at any time prior to expiration. Unless the Neuberger
Berman Fund 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 Neuberger
Berman Fund may be unable to liquidate its options position and the associated
cover. NB Management monitors the creditworthiness of dealers with which the
Neuberger Berman Fund may engage in OTC options transactions.
The premium received (or paid) by the Neuberger Berman Fund 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 Neuberger Berman Fund for writing an option is recorded as a liability on
the Neuberger Berman Fund's statement of assets and liabilities. This liability
is adjusted daily to the option's current market value.
Closing transactions are effected in order to realize a profit (or
minimize a loss) on an outstanding option, to prevent an underlying security
from being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits the Neuberger Berman Fund
to write another call option on the underlying security with a different
exercise price or expiration date or both. There is, of course, no assurance
that the Neuberger Berman Fund will be able to effect closing transactions at
favorable prices. If the Neuberger Berman Fund cannot enter into such a
transaction, it may be required to hold a security that it might otherwise have
sold (or purchase a security that it would not have otherwise bought), in which
case it would continue to be at market risk on the security.
The Neuberger Berman Fund will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than the
premium received from writing the call or put option. Because increases in the
market price of a call option generally reflect increases in the market price of
the underlying security, any loss resulting from the repurchase of a call option
is likely to be offset, in whole or in part, by appreciation of the underlying
security owned by the Neuberger Berman Fund; however, the Neuberger Berman Fund
could be in a less advantageous position than if it had not written the call
option.
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<PAGE>
The Neuberger Berman Fund pays brokerage commissions or spreads in
connection with purchasing or writing options, including those used to close out
existing positions. From time to time, the Neuberger Berman Fund may purchase an
underlying security for delivery in accordance with an exercise notice of a call
option assigned to it, rather than delivering the security from its portfolio.
In those cases, additional brokerage commissions are incurred.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot be
reflected in the options markets.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund may use
American-style options. The assets used as cover (or held in a segregated
account) for OTC options written by the Neuberger Berman Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Neuberger Berman Fund 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.
PUT AND CALL OPTIONS ON SECURITIES INDICES. For purposes of managing
cash flow, the Neuberger Berman Fund may purchase put and call options on
securities indices to increase its 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 Neuberger Berman Fund 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
Neuberger Berman Fund may purchase put and call options on securities indices to
increase the Neuberger Berman Fund's exposure to the performance of a recognized
securities index, such as the S&P 500 Index. All securities index options
purchased by the Neuberger Berman Fund will be listed and traded on an exchange.
15
<PAGE>
FOREIGN CURRENCY TRANSACTIONS. The Neuberger Berman Fund 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 Neuberger Berman Fund 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 Neuberger Berman Fund enters into forward contracts in an attempt
to hedge against changes in prevailing currency exchange rates. The Neuberger
Berman Fund 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
Neuberger Berman Fund 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.
At the consummation of a forward contract to sell currency, the
Neuberger Berman Fund may either make delivery of the foreign currency or
terminate its contractual obligation to deliver by purchasing an offsetting
contract. If the Neuberger Berman Fund chooses to make delivery of the foreign
currency, it may be required to obtain such currency through the sale of
Neuberger Berman Fund securities denominated in such currency or through
conversion of other assets of the Neuberger Berman Fund into such currency. If
the Neuberger Berman Fund 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 Neuberger Berman Fund could be in a less
advantageous position than if such a hedge had not been established. If the
Neuberger Berman Fund 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 Neuberger Berman Fund's securities against
16
<PAGE>
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 Neuberger
Berman Fund may experience delays in the settlement of its foreign currency
transactions.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund may enter into
forward contracts for the purpose of hedging and not for speculation.
COVER FOR HEDGING INSTRUMENTS. Securities held in a segregated account
cannot be sold while the 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 Neuberger Berman Fund's assets could
impede fund management or the Neuberger Berman Fund's ability to meet current
obligations. The Neuberger Berman Fund may be unable promptly to dispose of
assets which cover, or are segregated with respect to, an illiquid forward
position; this inability may result in a loss to the Neuberger Berman Fund.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund 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 Neuberger Berman Fund 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 Neuberger Berman Fund'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 Neuberger Berman Fund 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 Neuberger Berman Fund 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 Neuberger Berman Fund's use of hedging instruments will be
successful.
The Neuberger Berman Fund'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 Neuberger Berman 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 Neuberger Berman Fund's underlying
securities or currency. NB Management intends to reduce the risk that the
Neuberger Berman Fund 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.
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<PAGE>
FIXED INCOME SECURITIES. While the emphasis of the Neuberger Berman
Fund'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 Neuberger Berman Fund may
invest in investment grade corporate bonds and debentures. The Neuberger Berman
Fund may also invest in corporate debt securities rated below investment grade.
U.S. Government Securities are obligations of the U.S. Treasury backed
by the full faith and credit of the United States. U.S. Government Agency
Securities are issued or guaranteed by U.S. Government agencies or by
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, Fannie Mae (also known as Federal National Mortgage
Association), Freddie Mac (also known as Federal Home Loan Mortgage
Corporation), Student Loan Marketing Association (commonly known as "Sallie
Mae"), and the Tennessee Valley Authority. Some U.S. Government Agency
Securities are supported by the full faith and credit of the United States,
while others may by supported by the issuer's ability to borrow from the U.S.
Treasury, subject to the Treasury's discretion in certain cases, or only by the
credit of the issuer. U.S. Government Agency Securities include U.S. Government
Agency mortgage-backed securities. The market prices of U.S. Government and
Agency Securities are not guaranteed by the Government.
"Investment grade" debt securities are those receiving one of the four
highest ratings from Standard & Poor's ("S&P"), Moody's Investors Service, Inc.
("Moody's"), or another nationally recognized statistical rating organization
("NRSRO") or, if unrated by any NRSRO, deemed by NB Management to be comparable
to such rated securities ("Comparable Unrated Securities"). Securities rated by
Moody's in its fourth highest rating category (Baa) or Comparable Unrated
Securities may be deemed to have speculative characteristics.
The ratings of an NRSRO represent its opinion as to the quality of
securities it undertakes to rate. Ratings are not absolute standards of quality;
consequently, securities with the same maturity, coupon, and rating may have
different yields. Although the Neuberger Berman Fund may rely on the ratings of
any NRSRO, the Neuberger Berman Fund 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
Neuberger Berman Fund may invest is likely to decline in times of rising market
interest rates. Conversely, when rates fall, the value of the Neuberger Berman
Fund'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.
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<PAGE>
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 Neuberger
Berman Fund warrants exposure to the additional level of risk.
POLICIES AND LIMITATIONS. There are no restrictions as to the ratings
of debt securities the Neuberger Berman Fund may acquire or the portion of the
Neuberger Berman Fund's assets that the Neuberger Berman Fund may invest in debt
securities in a particular ratings category. Although the Neuberger Berman Fund
does not presently intend to invest in debt securities, it may invest in
convertible bonds that present a good value because they are convertible into
equity securities and have an attractive yield.
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 Neuberger Berman Fund 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 Trustees.
POLICIES AND LIMITATIONS. The Neuberger Berman Fund may invest in
commercial paper only if it has received the highest rating from S&P (A-1) or
Moody's (P-1) or is deemed by NB Management to be of comparable quality.
CONVERTIBLE SECURITIES. The Neuberger Berman Fund may invest in
convertible securities. A convertible security is a bond, debenture, note,
preferred stock, or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. Convertible
securities generally have features of both common stocks and debt securities. A
convertible security entitles the holder to receive the interest paid or accrued
on debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, such
securities ordinarily provide a stream of income with generally higher yields
than common stocks of the same or similar issuers, but lower than the yield on
non-convertible debt. Convertible securities are usually subordinated to
comparable-tier non-convertible securities but rank senior to common stock in a
corporation's capital structure. The value of a convertible security is a
function of (1) its yield in comparison to the yields of other securities of
comparable maturity and quality that do not have a conversion privilege and (2)
its worth if converted into the underlying common stock.
The price of a convertible security often reflects variations in the
price of the underlying common stock in a way that non-convertible debt may not.
Convertible securities are typically issued by smaller capitalization companies
whose stock prices may be volatile. A convertible security may be subject to
redemption at the option of the issuer at a price established in the security's
governing instrument. If a convertible security held by the Neuberger Berman
Fund is called for redemption, the Neuberger Berman Fund 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 Neuberger Berman Fund and its ability to achieve its investment
objectives.
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<PAGE>
POLICIES AND LIMITATIONS. Convertible debt securities are subject to
the Neuberger Berman Fund's investment policies and limitations concerning fixed
income securities.
PREFERRED STOCK. The Neuberger Berman Fund 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.
OTHER INVESTMENT COMPANIES. The Neuberger Berman Fund 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
shareholder in an investment company, the Neuberger Berman Fund 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
fund securities. The Neuberger Berman Fund 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 for investments in a money market fund
managed by NB Management for cash management purposes, the Neuberger Berman
Fund's investment in securities of other investment companies is limited to (i)
3% of the total voting stock of any one investment company, (iii) 5% of the
Neuberger Berman Fund's total assets with respect to any one investment company
and (iv) 10% of the Neuberger Berman Fund's total assets in the aggregate.
PERFORMANCE INFORMATION
At the date of this SAI the Neuberger Berman Fund is new and has no
performance history.
CERTAIN RISK CONSIDERATIONS
Although the Neuberger Berman Fund 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 Neuberger Berman Fund will
achieve its investment objective.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees and
officers of the Trust, 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 administered or
managed by NB Management and Neuberger Berman.
THE TRUST
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<PAGE>
Positions Held
Name, Age, and Address (1) With the Trust Principal Occupation(s)(2)
----------------------------- -------------- --------------------------
Claudia A. Brandon (43) Secretary Employee of Neuberger
Berman since 1999; Vice
President of NB
Management from 1986 to
1999; Secretary of two
other mutual funds for
which NB Management acts
as investment manager or
administrator.
John Cannon (70) Trustee Retired. Formerly,
531 Willow Avenue Chairman and Chief
Ambler, PA 19002 Investment Officer of CDC
Capital Management
(registered investment
adviser) (1993-Jan. 1999).
Faith Colish (64) Trustee Attorney at Law, Faith
63 Wall Street Colish, A Professional
24th Floor Corporation.
New York, NY 10005
Stacy Cooper-Shugrue (37) Assistant Employee of Neuberger
Secretary Berman since 1999;
Assistant Vice President
of NB Management from
1993 to 1999; Assistant
Secretary of two other
mutual funds for which NB
Management acts as
investment manager or
administrator.
Barbara DiGiorgio (41) Assistant Employee of NB
Treasurer Management; Assistant
Vice President of NB
Management from 1993 to
1999; Assistant Treasurer
of two other mutual funds
for which NB Management
acts as investment
manager or administrator.
Walter G. Ehlers (67) Trustee Consultant, Director of
6806 Suffolk Place the Turner Corporation,
Harvey Cedars, NJ 08008 A.B. Chance Company and
Crescent Jewlry, Inc.
21
<PAGE>
Positions Held
Name, Age, and Address (1) With the Trust Principal Occupation(s)(2)
----------------------------- -------------- --------------------------
C. Anne Harvey (62) Trustee Director of American
2555 Pennsylvania Avenue, N.W. Association of Retired
Washington, DC 20037 Persons ("AARP") Program
Services and
Administrator of AARP
Foundation; The National
Rehabilitation Hospital's
Board of Advisors;
Individual Investors
Advisory Committee to the
New York Stock Exchange
Board of Directors;
Steering Committee for
the U.S. Securities and
Exchange Commission Facts
on Saving and Investing
Campaign; and American
Savings Education
Council's Policy Board
(ASEC).
Barry Hirsch (67) Trustee Senior Vice President,
Loews Corporation Secretary, and General
667 Madison Avenue Council of Loews
7th Floor Corporation (diversified
New York, NY 10021 financial corporation).
Michael M. Kassen* (47) Trustee Executive Vice President,
Chief Investment Officer
and Director of Neuberger
Berman, Inc. (holding
company); Executive Vice
President, Chief
Investment Officer and
Director of NB
Management ; President
and/or Trustee of two
other mutual funds for
which NB Management acts
as investment manager or
administrator.
Robert A. Kavesh (72) Trustee Professor of Finance and
110 Bleecker Street Economics at Stern School
Apt. 24B of Business, New York
New York, NY 10012 University.
Howard A. Mileaf (63) Trustee Vice President and Special
WHX Corporation Counsel to WHX Corporation
110 East 59th Street (holding company) since
30th Floor 1992; Director of Kevlin
New York, NY 10022 Corporation (manufacturer
of microwave and other
products).
22
<PAGE>
Positions Held
Name, Age, and Address (1) With the Trust Principal Occupation(s)(2)
----------------------------- -------------- --------------------------
Edward I. O'Brien* (71) Trustee Private Investment
12 Woods Lane Management; President of
Scarsdale, NY 10583 the Securities Industry
Association ("SIA")
(securities industry's
representative in
government relations and
regulatory matters at the
federal and state levels)
from 1974 to 1992; Adviser
to SIA from November 1992
to November 1993; Director
of Legg Mason, Inc.
John P. Rosenthal (67) Trustee Senior Vice President of
Burnham Securities Inc. Burnham Securities Inc. (a
Burnham Asset Management Corp. registered broker-dealer)
1325 Avenue of the Americas since 1991; Director,
17th Floor Cancer Treatment Holdings,
New York, NY 10019 Inc.
William E. Rulon (67) Trustee Retired. Senior Vice
2980 Bayside Walk President of Foodmaker
San Diego, CA 92109 Inc. (operator and
Franchiser of Restaurants)
until January 1997;
Secretary of Foodmaker,
Inc. until July 1996.
Richard Russell (54) Treasurer and Employee of NB Management
Principal since 1993; Treasurer and
Financial and Principal Financial and
Accounting Accounting Officer of two
Officer other mutual funds for
which NB Management acts
as investment manager or
administrator.
Cornelius T. Ryan (68) Trustee General Partner of Oxford
Oxford Bioscience Partners Partners and Oxford
315 Post Road West Bioscience Partners
Westport, CT 06880 (venture capital
partnerships) and
President of Oxford
Venture Corporation;
Director of Capital Cash
Management Trust (money
market fund) and Prime
Cash Fund
23
<PAGE>
Positions Held
Name, Age, and Address (1) With the Trust Principal Occupation(s)(2)
----------------------------- -------------- --------------------------
Tom Decker Seip (50) Nominee General Partner of Seip
30 Ridge Lane Investments LP (a private
Orinda, CA 94563 investment partnership);
Member of the Board of
Directors of Offroad
Capital Inc. and E-Finance
Corporation (pre-public
internet commerce
companies); Trustee of
Hambrecht and Quist Funds
Trust; Member of the Board
of Directors of
AmericaOne; Senior
Executive at the Charles
Schwab Corporation from
1983 to 1999; including
Chief Executive Officer of
Charles Schwab Investment
Management, Inc. and
Trustee of Schwab Family
of Funds and Schwab
investments from 1997 to
1998; Executive Vice
President-Retail Brokerage
for Charles Schwab
Investment Management from
1994 to 1997.
Gustave H. Shubert (71) Trustee Senior Fellow/Corporate
13838 Sunset Boulevard Advisor and Advisory
Pacific Palisades, CA 90272 Trustee of Rand (a
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.
24
<PAGE>
Positions Held
Name, Age, and Address (1) With the Trust Principal Occupation(s)(2)
----------------------------- -------------- --------------------------
Candace L. Straight (52) Trustee Private investor and
518 Passaic Avenue consultant specializing in
Bloomfield, NJ 07003 the insurance industry;
Advisory Director of
Securities Capital LLC (a
global private equity
investment firm dedicated
to making investments in
the insurance sector);
Principal of Head &
Company, LLC (limited
liability company
providing investment
banking and consulting
services to the insurance
industry) until March
1996; Director of Drake
Holdings (U.K. motor
insurer) until June 1996.
Daniel J. Sullivan (60) Vice President Senior Vice President of
NB Management since 1992;
Vice President of two
other mutual funds for
which NB Management acts
as investment manager or
administrator.
Peter E. Sundman* (40) Chairman of the Chairman of the Board,
Board, Chief Chief Executive Officer,
Executive and Trustee of the Trust,
Officer and Neuberger Berman Income
Trustee Funds and Advisers
Managers Trust (since
2000). Executive Vice
President and Principal of
Neuberger Berman, LLC from
1997 to 1999; President
and Director of NB
Management; Executive Vice
President and Director of
Neuberger Berman Inc.
Peter P. Trapp (55) Trustee Regional Manager for
Ford Motor Credit Company Atlanta Region, Ford Motor
1455 Lincoln Parkway Credit Company since
Atlanta, GA 30346-2209 August, 1997; prior
thereto, President, Ford
Life Insurance Company,
April 1995 until August
1997.
Celeste Wischerth (39) Assistant Employee of NB Management;
Treasurer Assistant Treasurer since
1996 of two other mutual
funds for which NB
Management acts as
investment manager or
administrator.
--------------------
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<PAGE>
(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 the Trust
by virtue of the fact that they are officers and/or directors of NB Management
and Managing Directors of Neuberger Berman. Mr. O'Brien is an interested person
of the 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 Neuberger Berman Fund and other funds for which NB Management
serves as investment manager.
The Trust's Trust Instrument and Declaration of Trust provide that the
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. Neuberger Berman Equity Funds does not have any
retirement plan for its trustees.
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TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/00
TOTAL COMPENSATION
FROM INVESTMENT
IN THE COMPANIES
AGGREGATE NEUBERGER BERMAN
COMPENSATION FUND COMPLEX
NAME AND POSITION WITH THE TRUST FROM THE TRUST PAID TO TRUSTEES
John Cannon $0 $44,000
Trustee
Faith Colish $47,950 $76,500
Trustee (5 other investment
companies)
Stanley Egener* $0 $0
Chairman of the Board, Chief (9 other investment
Executive Officer, and Trustee companies)
Walter G. Ehlers $0 $28,000
Trustee
C. Anne Harvey $0 $28,000
Trustee
Barry Hirsch $0 $44,750
Trustee
Michael M. Kassen $0 $0
Trustee
Robert A. Kavesh $0 $44,000
Trustee
Howard A. Mileaf $50,750 $67,417
Trustee (4 other investment
companies)
Edward I. O'Brien $47,000 $47,000
Trustee (3 other investment
companies)
John T. Patterson, Jr.** $50,200 $50,200
Trustee (4 other investment
companies)
John P. Rosenthal $50,700 $50,700
Trustee (4 other investment
companies)
William E. Rulon $0 $44,000
Trustee
Cornelius T. Ryan $48,500 $48,500
Trustee (3 other investment
companies)
Tom Decker Seip $0 $0
Trustee
Gustave H. Shubert $44,000 $44,000
Trustee (3 other investment
companies)
Candace L. Straight $0 $62,667
Trustee
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TOTAL COMPENSATION
FROM INVESTMENT
IN THE COMPANIES
AGGREGATE NEUBERGER BERMAN
COMPENSATION FUND COMPLEX
NAME AND POSITION WITH THE TRUST FROM THE TRUST PAID TO TRUSTEES
Peter E. Sundman $0 $0
Trustee
Peter P. Trapp $0 $25,500
Trustee
Lawrence Zicklin* $0 $0
President and Trustee (5 other investment
companies)
*Retired, October 27, 1999
**Deceased, September 26, 2000
At November 30, 2000, the trustees and officers of the Trust,
as a group, owned beneficially or of record less than 1% of the outstanding
shares of the Neuberger Berman Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
INVESTMENT MANAGER AND ADMINISTRATOR
NB Management serves as the Neuberger Berman Fund's investment manager
pursuant to a management agreement with the Trust, dated as of _____________,
2001 ("Management Agreement").
The Management Agreement provides, in substance, that NB Management
will make and implement investment decisions for the Neuberger Berman Fund in
its discretion and will continuously develop an investment program for the
Neuberger Berman Fund's assets. The Management Agreement permits NB Management
to effect securities transactions on behalf of the Neuberger Berman Fund 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 Neuberger Berman
Fund, although NB Management has no current plans to pay a material amount of
such compensation.
NB Management provides to the Neuberger Berman Fund, without separate
cost, office space, equipment, and facilities and the personnel necessary to
perform executive, administrative, and clerical functions. NB Management pays
all salaries, expenses, and fees of the officers, trustees, and employees of the
Trust who are officers, directors, or employees of NB Management. One director
of NB Management (who is also an officer of Neuberger Berman), who also serves
as an officer of NB Management, presently serves as a trustee and/or officer of
the Trust. See "Trustees and Officers." The Neuberger Berman Fund pays NB
Management a management fee based on the Neuberger Berman Fund's average daily
net assets, as described below.
NB Management provides facilities, services and personnel, as well as
accounting, recordkeeping, and other services, to the Neuberger Berman Fund
pursuant to an administration agreement with the Trust, dated December 15, 2000.
("Administration Agreement"). For such administrative services, the Neuberger
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Berman Fund pays NB Management a fee based on the Neuberger Berman Fund's
average daily net assets, as described below.
Under the Administration Agreement, NB Management also provides to the
Neuberger Berman Fund and its shareholders certain shareholder, shareholder
related, and other services that are not furnished by the Neuberger Berman
Fund's shareholder servicing agent. NB Management provides the direct
shareholder services provided 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
qualification of the Neuberger Berman Fund's shares for sale in various states,
and furnishes other services the parties agree to from time to time should be
provided under the Administration Agreement.
From time to time, NB Management or the Neuberger Berman Fund may enter
into arrangements with registered broker-dealers or other third parties pursuant
to which it pays the broker-dealers or other third party a per account fee or a
fee based on a percentage of the aggregate net asset value of Neuberger Berman
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 Neuberger Berman Fund pays NB
Management a fee at the annual rate of 0.85% of the Neuberger Berman Fund's
average daily net assets.
NB Management provides administrative services to the Neuberger Berman
Fund that include furnishing facilities and personnel for the Neuberger Berman
Fund and performing accounting, recordkeeping, and other services. For such
administrative services, the Neuberger Berman Fund pays NB Management a fee at
the annual rate of 0.15% of the Neuberger Berman 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
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 Neuberger Berman
Fund's consent NB Management may subcontract some of its responsibilities to the
Neuberger Berman Fund under the Administration Agreement and may compensate
broker-dealers, banks, third-party administrators and other institutions that
provides such services.
The Management Agreement continues until August 2, 2001. The Management
Agreement is renewable thereafter from year to year with respect to the
Neuberger Berman Fund, so long as its continuance is approved at least annually
(1) by the vote of a majority of the Trustees who are not "interested persons"
of NB Management or the Trust ("Independent 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 Trustees or by a 1940 Act majority vote of the outstanding
interests in the Neuberger Berman Fund. The Administration Agreement continues
until August 2, 2001. The Administration Agreement is renewable from year to
year with respect to the Neuberger Berman Fund, so long as its continuance is
approved at least annually (1) by the vote of a majority of the
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Independent 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 Trustees or by
a 1940 Act majority vote of the outstanding shares in the Neuberger Berman Fund.
The Management and Administration Agreements are terminable, without
penalty, with respect to the Neuberger Berman Fund on 60 days' written notice
either by the Trust or by NB Management. 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 Neuberger Berman Fund pursuant to
a sub-advisory agreement dated December 15, 2000 ("Sub-Advisory Agreement").
The Sub-Advisory Agreement provides in substance that Neuberger Berman
will furnish to NB Management, upon reasonable request, the same type of
investment recommendations and research that Neuberger Berman, from time to
time, provides to its principals and employees for use in managing client
accounts. In this manner, NB Management expects to have available to it, in
addition to research from other professional sources, the capability of the
research staff of Neuberger Berman. This staff consists of numerous investment
analysts, each of whom specializes in studying one or more industries, under the
supervision of the Director of Research, who is also available for consultation
with NB Management. The Sub-Advisory Agreement provides that NB Management will
pay for the services rendered by Neuberger Berman based on the direct and
indirect costs to Neuberger Berman in connection with those services. Neuberger
Berman also serves as sub-adviser for all of the other mutual funds managed by
NB Management.
The Sub-Advisory Agreement continues until August 2, 2001 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 Neuberger Berman Fund by the
Trustees or a 1940 Act majority vote of the outstanding interests in the
Neuberger Berman Fund, 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 Neuberger Berman Fund if it is
assigned or if the Management Agreement terminates with respect to the Neuberger
Berman Fund.
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 September 30, 2000, the investment companies managed by NB
Management had aggregate net assets of approximately $20.7 billion. NB
Management currently serves as investment manager of the following investment
companies:
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APPROXIMATE
NET ASSETS AT
NAME SEPTEMBER 30, 2000
Neuberger Berman Cash Reserves Fund...............................$1,032,588,729
Neuberger Berman Government Money Fund..............................$298,740,903
Neuberger Berman High Yield Bond Fund................................$13,069,861
Neuberger Berman Institutional Cash Fund ...........................$614,137,910
Neuberger Berman Limited Maturity Bond Fund.........................$209,756,532
Neuberger Berman Municipal Money Fund...............................$249,825,527
Neuberger Berman Municipal Securities Fund...........................$28,921,420
Neuberger Berman Century Fund........................................$40,811,096
Neuberger Berman Focus Fund.......................................$2,281,128,330
Neuberger Berman Genesis Fund.....................................$1,864,536,230
Neuberger Berman Guardian Fund....................................$3,600,872,105
Neuberger Berman International Fund.................................$162,589,812
Neuberger Berman Manhattan Fund...................................$1,297,716,998
Neuberger Berman Millennium Fund....................................$291,746,557
Neuberger Berman Partners Fund....................................$2,720,153,662
Neuberger Berman Regency Fund........................................$36,891,774
Neuberger Berman Socially Responsive Fund...........................$128,352,668
Neuberger Berman Technology Fund.....................................$26,696,757
Advisers Management Trust.........................................$3,027,632,991
The investment decisions concerning the Neuberger Berman Fund 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
Neuberger Berman Fund. Even where the investment objectives are similar,
however, the methods used by the Other NB Funds and the Neuberger Berman Fund to
achieve their objectives may differ. The investment results achieved by all of
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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 Neuberger Berman Fund 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
Neuberger Berman Fund, in other cases it is believed that the Neuberger Berman
Fund's ability to participate in volume transactions may produce better
executions for it. In any case, it is the judgment of the Trustees that the
desirability of the Neuberger Berman Fund's having its advisory arrangements
with NB Management outweighs any disadvantages that may result from
contemporaneous transactions.
The Neuberger Berman Fund is subject to certain limitations imposed on
all advisory clients of Neuberger Berman (including the Neuberger Berman Fund,
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.
CODES OF ETHICS
The Trust, NB Management and Neuberger Berman have personal securities
trading policies that restrict the personal securities transactions of
employees, officers, and trustees. Their primary purpose is to ensure that
personal trading by these individuals does not disadvantage any fund managed by
NB Management. The Fund manager and other investment personnel who comply with
the policies' preclearance and disclosure procedures may be permitted to
purchase, sell or hold certain types of securities which also may be or are held
in the funds they advise, but are restricted from trading in close conjunction
with the Neuberger Berman Fund or taking personal advantage of investment
opportunities that may belong to the Neuberger Berman Fund.
MANAGEMENT AND CONTROL OF NB MANAGEMENT AND NEUBERGER BERMAN LLC ("NEUBERGER
----------------------------------------------------------------------------
BERMAN")
--------
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; Robert Matza, Director; Theodore P. Giuliano,
Director and Vice President; Michael M. Kassen, Director and Chairman; Barbara
Katersky, Senior Vice President; Daniel J. Sullivan, Senior Vice President;
Matthew S. Stadler, Senior Vice President and Chief Financial Officer; Peter E.
Sundman, Director and President; and Lawrence Zicklin, Director.
The officers and employees 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
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<PAGE>
President; Peter E. Sundman, Executive Vice President; Matthew S. Stadler,
Senior Vice President and Chief Financial Officer; Kevin Handwerker, Senior Vice
President and Secretary; Joseph K. Herlihy, Senior Vice President and Treasurer;
Robert Akeson, Senior Vice President; Steven April, Senior Vice President;
Salvatore A. Buonocore, Senior Vice President; Philip Callahan, Senior Vice
President; Lawrence J. Cohn, Senior Vice President; Joseph F. Collins III,
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; Barbara R. Katersky, Senior Vice President; Diane E.
Lederman, Senior Vice President; Peter B. Phelan, Senior Vice President; David
Root, Senior Vice President; Mark Shone, Senior Vice President; Robert H. Splan,
Senior Vice President; Andrea Trachtenberg, Senior Vice President; and Marvin C.
Schwartz, Managing Director.
Mr. Sundman and Mr. Kassen are trustees and officers of the Trust. Mr.
Sullivan is an officer of the 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. The directors and officers of Neuberger Berman,
Inc. are: Jeffrey B. Lane, Director, Chief Executive Officer and President;
Peter E. Sundman, Director and Executive Vice President; Heidi L. Schneider,
Director and Executive Vice President; Michael M. Kassen, Director, Chief
Investment Officer and Executive Vice President; Robert Matza, Director, Chief
Administrative Officer and Executive Vice President; Marvin C. Schwartz,
Director and Vice Chairman; Matthew S. Stadler, Senior Vice President and Chief
Financial Officer; Kevin Handwerker, Senior Vice President and Secretary; Joseph
K. Herlihy, Treasurer; and Ellen Metzger, Assistant Secretary.
DISTRIBUTION ARRANGEMENTS
The Neuberger Berman Fund offers one class of shares, known as Investor
Class shares.
DISTRIBUTOR
NB Management serves as the distributor ("Distributor") in connection
with the offering of the Neuberger Berman Fund's shares. Investor Class shares
are offered on a no-load basis.
In connection with the sale of its shares, the Neuberger Berman Fund
has authorized the Distributor to give only the information, and to make only
the statements and representations, contained in a Prospectus or 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 a Prospectus, which may be delivered
personally, through the mails, or by electronic means. The Distributor is the
Neuberger Berman Funds' "principal underwriter" within the meaning of the 1940
Act and, as such, acts as agent in arranging for the sale of the Neuberger
Berman Fund's Investor Class shares without sales commission or other
compensation and bears all advertising and promotion expenses incurred in the
sale of those shares.
For the Neuberger Berman Fund's Investor Class, the Distributor or one
of its affiliates may, from time to time, deem it desirable to offer to
shareholders of the Neuberger Berman Fund, through use of their shareholder
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lists, the shares of other mutual funds for which the Distributor acts as
distributor or other products or services. Any such use of the Neuberger Berman
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 Neuberger Berman 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 Neuberger Berman Fund, and the Distributor
are parties to a Distribution Agreement ("Distribution Agreement"). The
Distribution Agreement continues until August 2, 2001. The Distribution
Agreement may be renewed annually if specifically approved by (1) the vote of a
majority of the Trustees or a 1940 Act majority vote of the Neuberger Berman
Fund's outstanding shares and (2) the vote of a majority of the Independent
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
Agreement.
ADDITIONAL PURCHASE INFORMATION
SHARE PRICES AND NET ASSET VALUE
The Neuberger Berman Fund's shares are bought or sold at a price that
is the Neuberger Berman Fund's NAV per share. The NAV for the Neuberger Berman
Fund is calculated by subtracting total liabilities from total assets (the
market value of the securities the Neuberger Berman Fund holds plus cash and
other assets). The Neuberger Berman Fund's per share NAV is calculated by
dividing its NAV by the number of Neuberger Berman Fund shares outstanding and
rounding the result to the nearest full cent. The Neuberger Berman Fund
calculates its NAV as of the close of regular trading on the NYSE, usually 4
p.m. Eastern time, on each day the NYSE is open.
The Neuberger Berman Fund 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 Neuberger Berman Fund 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 Neuberger Berman Fund's valuation procedures (as described above) does not
represent the amount that the Neuberger Berman Fund reasonably expects to
receive on a current sale of the security, the Neuberger Berman Fund will value
the security based on a method that the trustees of the Trust believe accurately
reflects fair value.
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AUTOMATIC INVESTING AND DOLLAR COST AVERAGING
The Neuberger Berman Fund's shareholders may arrange to have a fixed
amount automatically invested in Neuberger Berman Fund shares each month. To do
so, the Neuberger Berman Fund 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 Funds,
Boston Service Center, P.O. Box 8403, Boston, MA 02266-8403.
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," the Neuberger Berman Fund's shareholders may redeem
at least $1,000 worth of a Neuberger Berman Fund's shares and invest the
proceeds in Investor Class shares of one or more of the other funds managed by
NB Management (Other NB Funds) that are briefly described below, provided that
the minimum investment requirements of the other fund(s) are met.
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 Fund normally makes at least 90% of its
investments in not more than six sectors of
the economy believed by the Fund 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 Fund's
investment). Fund 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.
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Neuberger Berman International Seeks long-term capital appreciation by
Fund investing primarily in foreign stocks of any
capitalization, both in developed economies
and in emerging markets. Fund manager seeks
undervalued companies in countries with
strong potential for growth.
Neuberger Berman Manhattan Fund Invests in securities believed to have the
maximum potential for long-term capital
appreciation. Fund 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
Fund investing primarily in common stocks of
small-capitalization companies, which it
defines as those with a total market value
of no more than $1.5 billion at the time of
initial investment. The Fund co-managers
take a growth approach to stock selection,
looking for new companies that are in the
developmental stage as well as older
companies that appear poised to grow because
of new products, markets or management.
Factors in identifying these firms may
include financial strength, a strong
position relative to competitors and a stock
price that is reasonable relative to its
growth rate.
Neuberger Berman Partners Fund Seeks capital growth through an approach
that is intended to increase capital with
reasonable risk. Fund managers look at
fundamentals, focusing particularly on cash
flow, return on capital, and asset values.
Neuberger Berman Seeks long-term growth of capital by
Regency Fund investing 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.
Neuberger Berman Seeks long-term capital growth by investing
Technology Fund in the stocks of dynamic technology and
tech-related companies of all sizes.
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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 Fund invests
only in U.S. Treasury obligations and other
money market instruments issued or
guaranteed as to principal or interest by
the U.S. Government, its agencies or
instrumentalities. It seeks to maintain a
constant purchase and redemption price of
$1.00.
Neuberger Berman A money market fund seeking the highest
Cash Reserves current income consistent with safety and
liquidity. The Fund 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 Fund
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 In seeking its objective of high current
High Yield Bond Fund income and, secondarily, capital growth, the
fund invests primarily in lower-rated debt
securities, and in investment grade
income-producing and non-income producing
debt and equity securities.
MUNICIPAL FUNDS
Neuberger Berman A money market fund seeking the maximum
Municipal Money Fund current income exempt from federal income
tax, consistent with safety and liquidity.
The Fund 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 Fund invests in investment
grade municipal securities with a 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.
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Before effecting an exchange, Neuberger Berman Fund shareholders must
obtain and should review a currently effective prospectus of the fund into which
the exchange is to be made. 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. Each fund may terminate or modify its exchange privilege in the
future.
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 Neuberger Berman 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 Neuberger Berman Fund 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 Neuberger Berman Fund's shareholders. Applicable SEC rules and
regulations shall govern whether the conditions prescribed in (2) or (3) exist.
If the right of redemption is suspended, shareholders may withdraw their offers
of redemption, or they will receive payment at the NAV per share in effect at
the close of business on the first day the NYSE is open ("Business Day") after
termination of the suspension.
REDEMPTIONS IN KIND
The Neuberger Berman Fund reserves the right, under certain conditions,
to honor any request for redemption 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 Neuberger Berman Fund does not redeem in kind under normal
circumstances, but would do so when the Trustees determined that it was in the
best interests of the Neuberger Berman Fund's shareholders as a whole.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Neuberger Berman Fund distributes to its shareholders substantially
all of its share of any net investment income (after deducting expenses
attributable to the class), any net realized capital gains, and any net realized
gains from foreign currency transactions earned or realized by the Neuberger
Berman Fund. The Neuberger Berman Fund's net investment income consists of all
income accrued on Neuberger Berman Fund assets less accrued expenses, but does
not include capital and foreign currency gains and losses. Net investment income
and realized gains and losses are reflected in a Fund's NAV until they are
distributed. The Neuberger Berman Fund calculates its net investment income and
NAV per share as of the close of regular trading on the NYSE on each Business
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Day (usually 4:00 p.m. Eastern time).
The Neuberger Berman Fund generally distributes substantially all of
its share of the Neuberger Berman Fund's net investment income (after deducting
expenses incurred directly by the Neuberger Berman Fund), if any, near the end
of each calendar quarter. Distributions of net realized capital and foreign
currency gains, if any, normally are paid once each year, in December.
Dividends and other distributions are automatically reinvested in
additional shares of the Neuberger Berman Fund, unless the shareholder elects to
receive them in cash ("cash election"). Neuberger Berman Fund 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 by check, through an electronic transfer to a bank account or used to
purchase shares of an Other NB Fund, 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 Neuberger Berman Fund
shares.
A cash election with respect to the Neuberger Berman 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 Neuberger Berman Fund mailings to the shareholder for 180 days,
the Neuberger Berman Fund will terminate the shareholder's cash election.
Thereafter, the shareholder's dividends and other distributions will
automatically be reinvested in additional Neuberger Berman Fund shares until the
shareholder notifies State Street or the Neuberger Berman Fund in writing to
request that the cash election be reinstated.
Dividend or other distribution checks that are not cashed or deposited
within 180 days from being issued will be reinvested in additional shares of the
distributing Neuberger Berman Fund at its NAV per share on the day the check is
reinvested. No interest will accrue on amounts represented by uncashed dividend
or other distribution checks.
ADDITIONAL TAX INFORMATION
TAXATION OF THE NEUBERGER BERMAN FUND
To continue to qualify for treatment as a RIC under the Code, the
Neuberger Berman 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 Neuberger Berman 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 Neuberger
Berman 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
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issuer, to an amount that does not exceed 5% of the value of the Neuberger
Berman 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 Neuberger
Berman Fund failed to qualify for treatment 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
Neuberger Berman Fund's earnings and profits.
The Neuberger Berman 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.
Distributions to the Neuberger Berman Fund (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the Neuberger
Berman 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 Neuberger Berman Fund's basis for its interest in the
Neuberger Berman Fund before the distribution, (2) income or gain will be
recognized if the distribution is in liquidation of the Neuberger Berman Fund's
entire interest in the Neuberger Berman Fund and includes a disproportionate
share of any unrealized receivables held by the Neuberger Berman Fund, and (3)
loss will be recognized if a liquidation distribution consists solely of cash
and/or unrealized receivables, and (4) gain or loss may be recognized on a
distribution to a fund that contributed property to a fund.
Dividends and interest received by the Neuberger Berman Fund, and gains
realized by the Neuberger Berman Fund, may be subject to income, withholding, or
other taxes imposed by foreign countries and U.S. possessions ("foreign taxes")
that would reduce the 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 Neuberger Berman Fund may invest in the stock of "passive foreign
investment companies" ("PFICs"). A PFIC is any foreign corporation (with certain
exceptions) 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 Neuberger Berman Fund holds stock of a PFIC, the Neuberger
Berman Fund (indirectly through its interest in the Neuberger Berman Fund) will
be subject to federal income tax on its share of a portion of any "excess
distribution" received by the Fund on the stock or of any gain on the Neuberger
Berman Fund's disposition of the stock (collectively, "PFIC income"), plus
interest thereon, even if the Neuberger Berman Fund distributes its share of the
PFIC income as a taxable dividend to its shareholders. The balance of the
Neuberger Berman 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 it distributes that income to its shareholders.
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If the Neuberger Berman Fund invests in a PFIC and elects to treat the
PFIC as a "qualified electing fund" ("QEF"), then in lieu of the Neuberger
Berman Fund's incurring the foregoing tax and interest obligation, the Neuberger
Berman Fund would be required to include in income each year its share of the
Neuberger Berman Fund's pro rata share of the QEF's annual ordinary earnings and
net capital gain -- which the Neuberger Berman Fund most likely would have to
distribute to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax -- even if the Neuberger Berman Fund 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
for 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 under the election (and under regulations proposed in 1992
that provided a similar election with respect to the stock of certain PFICs).
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.
The Neuberger Berman Fund'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 Neuberger Berman Fund
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 Neuberger Berman Fund with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income for the Neuberger Berman Fund under the Income
Requirement.
Exchange-traded futures contracts and certain forward contracts 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 Neuberger Berman Fund'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 Neuberger Berman
Fund, without in either case increasing the cash available to the Neuberger
Berman 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 to its shareholders
as ordinary income when distributed to them) and/or increasing the amount of
dividends that Fund must distribute to meet the Distribution Requirement and
avoid imposition of the Excise Tax.
If the Neuberger Berman 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
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(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
position, the Neuberger Berman Fund will be treated as having made an actual
sale thereof, with the result that gain will be recognized at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract, or a futures or forward contract entered into by the
Neuberger Berman Fund or a related person with respect to the same or
substantially identical property. In addition, if the appreciated financial
position is itself a short sale or such a contract, acquisition of the
underlying property or substantially identical 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
Neuberger Berman 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
Neuberger Berman Fund's risk of loss regarding that position reduced by reason
of certain specified transactions with respect to substantially identical 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).
TAXATION OF THE NEUBERGER BERMAN FUND'S SHAREHOLDERS
If Neuberger Berman 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 Neuberger Berman 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 Neuberger
Berman 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
Neuberger Berman Fund may close a shareholder's account with the Neuberger
Berman Fund and redeem the remaining shares if the account balance falls below
the specified minimum and the shareholder fails to re-establish 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 Neuberger Berman Fund's payment of the redemption
proceeds may result in adverse tax consequences for the accountholder. The
accountholder should consult his or her tax adviser regarding any such
consequences.
PORTFOLIO TRANSACTIONS
Neuberger Berman acts as principal broker for the Neuberger Berman Fund
in the purchase and sale of its portfolio securities (other than certain
securities traded on the OTC market).
Portfolio securities may, from time to time, be loaned by the Neuberger
Berman Fund to Neuberger Berman in accordance with the terms and conditions of
an order issued by the SEC. The order exempts such transactions from provisions
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of the 1940 Act that would otherwise prohibit such transactions, subject to
certain conditions. In accordance with the order, securities loans made by the
Neuberger Berman Fund 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 Neuberger Berman Fund in order to re-lend them to Other NB Funds,
Neuberger Berman may be required to pay the Neuberger Berman Fund, 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 Neuberger Berman Fund has indicated a
willingness to lend, Neuberger Berman must borrow such security from the
Neuberger Berman Fund, 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 Neuberger Berman Fund. If, in any month, the
Fund's expenses exceed its income in any securities loan transaction with
Neuberger Berman, Neuberger Berman must reimburse the Neuberger Berman Fund for
such loss.
A committee of Independent Trustees from time to time reviews, among
other things, information relating to securities loans by the Neuberger Berman
Fund. The Neuberger Berman Fund does not presently intend to lend portfolio
securities to Neuberger Berman.
In effecting securities transactions, the Neuberger Berman Fund
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 Independent Trustees of the Trust have approved the use of
Neuberger Berman as the principal broker for the other series of the Trust.
Although the Trustees have not yet considered this matter with respect to the
Neuberger Berman Fund, the following paragraphs describe the policies with
respect to the Trust's use of Neuberger Berman for brokerage. Series of the
Trust may use Neuberger Berman as broker where, in the judgment of NB
Management, Neuberger Berman is able to obtain a price and execution at least as
favorable as other qualified brokers. To the Trust's knowledge, no affiliate of
the Trust receives give-ups or reciprocal business in connection with its
securities transactions.
The use of Neuberger Berman as a broker for the Trust is subject to the
requirements of Section 11(a) of the Securities Exchange Act of 1934. Section
11(a) prohibits members of national securities exchanges from retaining
compensation for executing exchange transactions for accounts which they or
their affiliates manage, except where they have the authorization of the persons
authorized to transact business for the account and comply with certain annual
reporting requirements. The Trust and NB Management have expressly authorized
Neuberger Berman to retain such compensation, and Neuberger Berman has agreed to
comply with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by the Trust 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
Trust'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
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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
Trustees not to be comparable to the Trust. The Trust 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 Trust unless an appropriate exemption is
available.
A committee of Independent Trustees from time to time reviews, among
other things, information relating to the commissions charged by Neuberger
Berman to the Trust 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 Trust must be reviewed and
approved no less often than annually by a majority of the Independent Trustees.
To ensure that accounts of all investment clients, including the Trust,
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.
Under policies adopted by the Board of Trustees, Neuberger Berman may
enter into agency cross-trades on behalf of the Trust. An agency cross-trade is
a securities transaction in which the same broker acts as agent on both sides of
the trade and the broker or an affiliate has discretion over one of the
participating accounts. In this situation, Neuberger Berman would receive
brokerage commissions from other participants in the trade. The other account
participating in an agency cross-trade with the Trust cannot be an account over
which Neuberger Berman exercises investment discretion. A member of the Board of
Trustees who is not affiliated with Neuberger Berman reviews confirmation of
each agency cross-trade that the Trust participates in.
The Neuberger Berman Fund expects that it will execute a portion of its
transactions through brokers other than Neuberger Berman. In selecting those
brokers, NB Management will consider 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 Neuberger Berman Fund shares effected through, those
brokers.
In certain instances Neuberger Berman specifically allocates brokerage
for research services (including research reports on issuers, industries as well
as economic and financial data) which may otherwise be purchased for cash. While
the receipt of such services has not reduced Neuberger Berman's normal internal
research activities, Neuberger Berman's expenses could be materially increased
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if it were to generate such additional information internally. To the extent
such research services are provided by others, Neuberger Berman is relieved of
expenses it may otherwise incur. In some cases research services are generated
by third parties but provided to Neuberger Berman by or through broker dealers.
Research obtained in this manner may be used in servicing any or all clients of
Neuberger Berman and may be used in connection with clients other than those
client's whose brokerage commissions are used to acquire the research services
described herein. With regard to allocation of brokerage to acquire research
services described above, Neuberger Berman always considers its best execution
obligation when deciding which broker to utilize.
A committee comprised of officers of NB Management and employees of
Neuberger Berman who are portfolio managers of several Neuberger Berman mutual
funds (collectively, "NB Funds") and some of Neuberger Berman's managed accounts
("Managed Accounts") evaluates semi-annually the nature and quality of the
brokerage and research services provided by other brokers. Based on this
evaluation, the committee establishes a list and projected rankings of preferred
brokers for use in determining the relative amounts of commissions to be
allocated to those brokers. Ordinarily, the brokers on the list effect a large
portion of the brokerage transactions for the NB Funds and the Managed Accounts
that are not effected by Neuberger Berman. However, in any semi-annual period,
brokers not on the list may be used, and the relative amounts of brokerage
commissions paid to the brokers on the list may vary substantially from the
projected rankings. These variations reflect the following factors, among
others: (1) brokers not on the list or ranking below other brokers on the list
may be selected for particular transactions because they provide better price
and/or execution, which is the primary consideration in allocating brokerage;
(2) adjustments may be required because of periodic changes in the execution
capabilities of or research provided by particular brokers or in the execution
or research needs of the NB Funds and/or the Managed Accounts; and (3) the
aggregate amount of brokerage commissions generated by transactions for the NB
Funds and the Managed Accounts may change substantially from one semi-annual
period to the next.
The commissions paid to a broker other than Neuberger Berman may be
higher than the amount another firm might charge if NB Management determines in
good faith that the amount of those commissions is reasonable in relation to the
value of the brokerage and research services provided by the broker. NB
Management believes that those research services benefit the Neuberger Berman
Fund 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 fund transactions on
behalf of the Other NB Funds and by Neuberger Berman from brokers effecting fund
transactions on behalf of the Managed Accounts may be used for the Neuberger
Berman Fund's benefit.
Michael F. Fasciano, who is a Vice President of NB Management and a
Managing Director of Neuberger Berman, is the person primarily responsible for
making decisions as to specific action to be taken with respect to the
investments of the Neuberger Berman Fund. He has full authority to take action
with respect to Neuberger Berman Fund transactions and may or may not consult
with other personnel of NB Management prior to taking such action.
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PORTFOLIO TURNOVER
The Neuberger Berman Fund's 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 Neuberger Berman Fund 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 Neuberger Berman Fund during the fiscal year.
REPORTS TO SHAREHOLDERS
Shareholders of the Neuberger Berman Fund will receive unaudited
semi-annual financial statements, as well as year-end financial statements
audited by the independent auditors for the Neuberger Berman Fund. The Neuberger
Berman Fund's statements show the investments owned by it and the market values
thereof and provide other information about the Neuberger Berman Fund.
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS
THE FUND
The Neuberger Berman Fund is a separate ongoing 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 twelve separate operating series. 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.
The Trustees have created four classes of shares of the Neuberger
Berman Fund, designated Investor Class, Advisor Class, Trust Class, and
Institutional Class. This SAI and the accompanying Prospectus/Proxy Statement
describe Investor Class shares. The other classes of shares are not being
offered at this time.
Prior to November 9, 1998, the name of the Trust was "Neuberger &
Berman Equity Fund".
DESCRIPTION OF SHARES. The Neuberger Berman Fund is authorized to issue
an unlimited number of shares of beneficial interest (par value $0.001 per
share). Shares of the Neuberger Berman Fund represent equal proportionate
interests in the assets of the Neuberger Berman Fund only and have identical
voting, dividend, redemption, liquidation, and other rights except that expenses
allocated to a Class may be borne solely by such Class as determined by the
Trustees, and a Class may have exclusive voting rights with respect to matters
affecting only that Class. 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 do not intend to hold annual
meetings of shareholders of the Neuberger Berman Fund. The Trustees will call
special meetings of shareholders of the Neuberger Berman Fund or Class only if
required under the 1940 Act or in their discretion or upon the written request
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of holders of 10% or more of the outstanding shares of the Neuberger Berman Fund
entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of the Neuberger Berman Fund will not be personally liable for the
obligations of the Neuberger Berman 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
Neuberger Berman Fund contain a statement that such obligation may be enforced
only against the assets of the Trust or Neuberger Berman Fund and provides for
indemnification out of Trust or Neuberger Berman Fund property of any
shareholder nevertheless held personally liable for Trust or Neuberger Berman
Fund obligations, respectively.
CUSTODIAN AND TRANSFER AGENT
The Neuberger Berman Fund has selected State Street Bank and Trust
Company ("State Street"), 225 Franklin Street, Boston, MA 02110, as custodian
for its respective securities and cash. State Street also serves as the
Neuberger Berman Fund's transfer and shareholder servicing agent, administering
purchases, redemptions, and transfers of Neuberger Berman Fund shares and the
payment of dividends and other distributions through its Boston Service Center.
All Neuberger Berman Fund correspondence should be mailed to Neuberger Berman
Funds, c/o Boston Service Center, P.O. Box 8403, Boston, MA 02266-8403.
INDEPENDENT AUDITORS
The Neuberger Berman Fund has selected Ernst & Young LLP, 200 Clarendon
Street, Boston, MA 02116, as the independent auditors who will audit its
financial statements.
LEGAL COUNSEL
The Neuberger Berman Fund has selected Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036-1800, as its legal
counsel.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of September 30, 2000, the following are all of the beneficial and
record owners of more than five percent of the Fasciano Fund. The owners listed
are record owners. These entities hold these shares of record for the accounts
of certain of their clients and have informed the Fasciano Fund of their policy
to maintain the confidentiality of holdings in their client accounts, unless
disclosure is expressly required by law.
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PERCENTAGE OF OWNERSHIP AT
NAME AND ADDRESS SEPTEMBER 30, 2000
---------------- ------------------
Neuberger Berman Charles Schwab & Co., Inc.
FASCIANO Fund 101 Montgomery Street
San Francisco, CA 94104-4122 45.7%
National Financial Services
Corporation
200 Liberty Street
New York, NY 10281-1003 17.9%
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 Neuberger Berman Fund.
Statements contained in this SAI and in the Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete. In each instance where reference is made to the copy of any contract
or other document filed as an exhibit to the registration statement, each such
statement is qualified in all respects by such reference.
FINANCIAL STATEMENTS
The following financial statements and related documents are
incorporated by reference herein and are included in the Fasciano Fund's Annual
Report to shareholders for the fiscal year ended June 30, 2000:
The audited financial statements of the Fasciano Fund and notes
thereto for the fiscal year ended June 30, 2000, and the reports of Arthur
Anderson LLP, independent accountants, with respect to such audited
financial statements.
The Neuberger Berman Fund has not yet commenced operations and thus has
no financial information of its own. If the conversion is approved by
shareholders of the Fasciano Fund, the Neuberger Berman Fund will adopt the
Fasciano Fund's historical financial information.
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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.
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
<PAGE>
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
<PAGE>
Issuers rated PRIME-1 (or related supporting institutions), also known
as P-1, have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
A-3
<PAGE>
NEUBERGER BERMAN EQUITY FUNDS
FORM N-14
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION.
------- ---------------
A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article IX, Section 2 of the Trust Instrument provides
that the Registrant shall indemnify any present or former trustee, officer,
employee or agent of the Registrant ("Covered Person") to the fullest extent
permitted by law against liability and all expenses reasonably incurred or paid
by him or her in connection with any claim, action, suit or proceeding
("Action") in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been a Covered Person and against amounts paid or
incurred by him or her in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other body to be liable to the
Registrant or its shareholders by reason of "willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office" ("Disabling Conduct"), or not to have acted in good faith in the
reasonable belief that his or her action was in the best interest of the
Registrant. In the event of a settlement, no indemnification may be provided
unless there has been a determination that the officer or trustee did not engage
in Disabling Conduct (i) by the court or other body approving the settlement;
(ii) by at least a majority of those trustees who are neither interested
persons, as that term is defined in the Investment Company Act of 1940 ("1940
Act"), of the Registrant ("Independent Trustees"), nor parties to the matter
based upon a review of readily available facts; or (iii) by written opinion of
independent legal counsel based upon a review of readily available facts.
Pursuant to Article IX, Section 3 of the Trust Instrument, if any
present or former shareholder of any series ("Series") of the Registrant shall
be held personally liable solely by reason of his or her being or having been a
shareholder and not because of his or her acts or omissions or for some other
reason, the present or former shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of any entity, its
general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Registrant, on behalf of the affected
Series, shall, upon request by such shareholder, assume the defense of any claim
made against such shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
Section 9 of the Management Agreements between Neuberger Berman
Management 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
<PAGE>
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 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 16. EXHIBITS.
------- --------
Exhibit
Number Description
------ -----------
(1) (a) Certificate of Trust. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582.
(b) 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.
2
<PAGE>
Exhibit
Number Description
------ -----------
(c) 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.
(d) Schedule A - Current Series of Neuberger Berman
Equity Funds. To Be Filed by Amendment.
(2) By-laws of Neuberger Berman Equity Funds.
Incorporated by Reference to Post-Effective Amendment
No. 70 to Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(3) Voting Trust Agreement. Not Applicable.
(4) Plan of Reorganization. Filed Herewith as Appendix A
to Prospectus/Proxy Statement.
(5) (a) 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.
(b) By-Laws of Neuberger Berman Equity Funds, Articles V,
VI, and VIII. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582.
(6) (a) (i) Form of Management Agreement Between Neuberger
Berman Equity Funds and Neuberger Berman
Management Inc. Filed Herewith.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Management Agreement.
To Be Filed by Amendment.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. To Be Filed by Amendment.
(b) (i) Form of Sub-Advisory Agreement Between
Neuberger Berman Management Inc. and Neuberger
Berman, LLC with Respect to Neuberger Berman
Equity Funds. Filed Herewith.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Sub-Advisory
Agreement. To Be Filed by Amendment.
(7) (a) 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.
(b) Schedule A - Series of Neuberger Berman Equity Funds
Currently Subject to the Distribution Agreement.
To Be Filed by Amendment.
(8) Bonus, Profit Sharing or Pension Plans. None.
3
<PAGE>
Exhibit
Number Description
------ -----------
(9) (a) Custodian Contract Between Neuberger Berman Equity
Funds and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective Amendment
No. 74 to Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(b) Schedule of Compensation under the Custodian
Contract. Incorporated by Reference to Post-Effective
Amendment No. 76 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(10) Plan Pursuant to Rule 12b-1. None.
(11) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters with Respect to Neuberger Berman
Equity Funds. Filed Herewith.
(12) Opinion of Counsel Supporting Tax Matters. To Be
Filed by Amendment.
(13) (a) (i) Transfer Agency and Service Agreement Between
Neuberger Berman Equity Funds and State Street
Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582.
(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.
(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.
(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.
(b) (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.
(ii) Schedule A - Series of Neuberger Berman Equity
Funds Currently Subject to the Administration
Agreement. To Be Filed by Amendment.
(iii) Schedule B - Schedule of Compensation Under the
Administration Agreement. To Be Filed by
Amendment
(14) Consent of Independent Auditors. Filed Herewith.
4
<PAGE>
Exhibit
Number Description
------ -----------
(15) Financial Statements Omitted from Prospectus. None.
(16) Power of Attorney. Filed Herewith.
(17) Form of Proxy Card. Filed Herewith.
5
<PAGE>
ITEM 17. UNDERTAKINGS.
------- ------------
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR
230.145c], the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3)The undersigned registrant agrees to file an amendment to the
registration statement, pursuant to Rule 485(b) of Regulation C of the 1933 Act
for the purpose of including Exhibit 12, Opinion of Counsel Supporting Tax
Matters.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of Washington, the District of
Columbia on the 28th day of November, 2000.
Registrant: NEUBERGER BERMAN EQUITY FUNDS
By: /s/ Michael M. Kassen
----------------------------
Michael M. Kassen*
President
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Peter E. Sundman
----------------------- Chairman of the Board November 28, 2000
Peter E. Sundman* and Trustee (Chief
Executive Officer)
/s/ Michael M. Kassen
----------------------- President and Trustee November 28, 2000
Michael M. Kassen*
/s/ Richard Russell
----------------------- Treasurer (Principal Financial November 28, 2000
Richard Russell and Accounting Officer)
(signatures continued on next page)
*Signature affixed by Arthur C. Delibert pursuant to powers of attorney dated
November 13, 2000, a copy of which is filed herewith.
<PAGE>
Signature Title Date
--------- ----- ----
/s/ John Cannon
----------------------- Trustee November 28, 2000
John Cannon*
/s/ Faith Colish
----------------------- Trustee November 28, 2000
Faith Colish*
/s/ Walter G. Ehler
----------------------- Trustee November 28, 2000
Walter G. Ehlers*
/s/ C. Anne Harvey
----------------------- Trustee November 28, 2000
C. Anne Harvey*
/s/ Barry Hirsch
----------------------- Trustee November 28, 2000
Barry Hirsch*
/s/ Robert A. Kavesh
----------------------- Trustee November 28, 2000
Robert A. Kavesh*
/s/ Howard A. Mileaf
----------------------- Trustee November 28, 2000
Howard A. Mileaf*
----------------------- Trustee
Edward I. O'Brien
*Signature affixed by Arthur C. Delibert pursuant to powers of attorney dated
November 13, 2000, a copy of which is filed herewith.
<PAGE>
Signature Title Date
--------- ----- ----
----------------------- Trustee
John P. Rosenthal
/s/ William E. Rulon
----------------------- Trustee November 28, 2000
William E. Rulon*
/s/ Cornelius T. Ryan
----------------------- Trustee November 28, 2000
Cornelius T. Ryan*
----------------------- Trustee
Tom Decker Seip
----------------------- Trustee
Gustave H. Shubert
/s/ Candace L. Straight
----------------------- Trustee November 28, 2000
Candace L. Straight*
----------------------- Trustee
Peter P. Trapp
*Signature affixed by Arthur C. Delibert pursuant to powers of attorney dated
November 13, 2000, a copy of which is filed herewith.
<PAGE>
ITEM 16. EXHIBITS.
------- --------
Exhibit
Number Description
------ -----------
(1) (a) Certificate of Trust. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and 811-582.
(b) 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.
2
<PAGE>
Exhibit
Number Description
------ -----------
(c) 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.
(d) Schedule A - Current Series of Neuberger Berman
Equity Funds. To Be Filed by Amendment.
(2) By-laws of Neuberger Berman Equity Funds.
Incorporated by Reference to Post-Effective Amendment
No. 70 to Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(3) Voting Trust Agreement. Not Applicable.
(4) Plan of Reorganization. Filed Herewith as Appendix A
to Prospectus/Proxy Statement.
(5) (a) 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.
(b) By-Laws of Neuberger Berman Equity Funds, Articles V,
VI, and VIII. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registrant's
Registration Statement, File Nos. 2-11357 and
811-582.
(6) (a) (i) Form of Management Agreement Between Neuberger
Berman Equity Funds and Neuberger Berman
Management Inc. Filed Herewith.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Management Agreement.
To Be Filed by Amendment.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. To Be Filed by Amendment.
(b) (i) Form of Sub-Advisory Agreement Between
Neuberger Berman Management Inc. and Neuberger
Berman, LLC with Respect to Neuberger Berman
Equity Funds. Filed Herewith.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Sub-Advisory
Agreement. To Be Filed by Amendment.
(7) (a) 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.
(b) Schedule A - Series of Neuberger Berman Equity Funds
Currently Subject to the Distribution Agreement.
To Be Filed by Amendment.
(8) Bonus, Profit Sharing or Pension Plans. None.
3
<PAGE>
Exhibit
Number Description
------ -----------
(9) (a) Custodian Contract Between Neuberger Berman Equity
Funds and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective Amendment
No. 74 to Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(b) Schedule of Compensation under the Custodian
Contract. Incorporated by Reference to Post-Effective
Amendment No. 76 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(10) Plan Pursuant to Rule 12b-1. None.
(11) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters with Respect to Neuberger Berman
Equity Funds. Filed Herewith.
(12) Opinion of Counsel Supporting Tax Matters. To Be
Filed by Amendment.
(13) (a) (i) Transfer Agency and Service Agreement Between
Neuberger Berman Equity Funds and State Street
Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File Nos.
2-11357 and 811-582.
(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.
(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.
(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.
(b) (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.
(ii) Schedule A - Series of Neuberger Berman Equity
Funds Currently Subject to the Administration
Agreement. To Be Filed by Amendment.
(iii) Schedule B - Schedule of Compensation Under the
Administration Agreement. To Be Filed by
Amendment
(14) Consent of Independent Auditors. Filed Herewith.
4
<PAGE>
Exhibit
Number Description
------ -----------
(15) Financial Statements Omitted from Prospectus. None.
(16) Power of Attorney. Filed Herewith.
(17) Form of Proxy Card. Filed Herewith.
5
<PAGE>
ITEM 17. UNDERTAKINGS.
------- ------------
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR
230.145c], the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3)The undersigned registrant agrees to file an amendment to the
registration statement, pursuant to Rule 485(b) of Regulation C of the 1933 Act
for the purpose of including Exhibit 12, Opinion of Counsel Supporting Tax
Matters.
